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Intellectual property Recession Strategy
Intellectual property Recession Strategy Recession Strategy |
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Page 2 of 2 The impact on Australia What is likely to happen in Australia in each industry and business is different of course, but some broad effects will apply to all. There are three things that guide TMG’s judgment. 1. The harder the landing and bigger the decline for the US recession, the tougher it is for everyone else. 
A ‘harder landing’ means things contract quickly and business does not have time to run down inventories, restructure their capital or otherwise prepare. A ‘bigger decline’ means the contraction of the economy is larger so that even given time, it is more difficult for businesses to be prepared to weather the difficulty. Combined they drive both hefty job losses and many business failures. When this happens in large numbers in a short time frame, people lose more confidence, fear the future and spend even less, making the landing harder and the decline bigger. The recession looks like being hard and big in the US.When the US economy shrinks every supplier to the US, including Australia’s major export customers (like China and India), will feel it, and so will Australia’s economic growth. 2. The sooner and more aggressive governments respond, the easier it will be to weather the period. 
The warning signs of this global turmoil were clearly evident several years ago. Governments are responding late. However, the global cooperation and aggressiveness of the responses is substantial. The US struggled to get it’s response together and is in election mode. Britain, although a little slower, provided a deft and much greater than expected response. Major economies are coordinating their responses across Europe and China, India and Korea are also engaged. Australia’s response so far has been more aggressive than anticipated.In concert, the responses will probably soften the landing for the Australian economy by spreading negative impacts over 6-9 months. 3. When rational behaviour starts returning, the recovery is underway. 
When stock prices start responding to news about company performance (instead of following the herd), that’s a good sign. When companies begin reporting on new projects, that’s a good sign. When interest rate changes move back to being 25 basis points, that’s a good sign. When the monthly change in the number of job adds is small, that’s a good sign. When government largesse stops, that’s a good sign. When property clearance rates get back above 2/3rds and valuations are no longer declining, that’s a good sign. Stability is the catalyst for confidence.With the possible exception of stock markets, we are not seeing the above signs quite yet but the effects of government action in September / October should begin to affect behaviour in the December quarter. By Christmas, whether or not this downturn is short and shallow or long and deep for Australia, should be fairly apparent. TMG’s ‘crystal ball’ at this time guesses the likely outcome is long and shallow for Australia. (9 months near 0% growth). (Note: The US is around 20% of the global economy and the biggest consumer of just about everything. But it used to have a greater slice and other nations, such as China, Canada, India, Russia, Korea and Brazil, to name a few, play a bigger role. Where 10 years ago, this occurrence in the US might have been a knockout blow to the global economy, such an effect is not a certainty today. The greater issues to resolve are reversing the trend of US budget deficits and bringing debt in the western world to within more sustainable levels. If policy changes encourage those things to occur over 10 years, then emerging from this crisis should be low inflation and sustained modest global growth. This is a non economists opinion – so probably as reliable as anyone else) The impact on Business 
Remember, this is a downturn, not a nuclear blast. The global share market may be down 40%, but every day the global population gets slightly larger. There may be a run of business failures but this creates opportunities to absorb customers and buy better equipment at distressed prices. Competitors may focus inwardly on survival leaving you focused on new customers (theirs!) Customers will be looking for something better or new. Change and innovation are the allies of business, not the enemy. Step 1 – Collect cash Obviously, review your credit policies and collect cash. If you have customers with a record of slow payment, collect the debtor now and tighten their access to credit inversely to the volatility of their payment history. Collecting will only get harder, not easier – do it now. Step 2 – Make your short term forecast Given what is happening, what is your best and worst case forecast for each quarter of 2009? If you are in repossessions or budget retailing, you’ll be expecting an upturn. If you are in recruitment or home decorating, you’ll be expecting a downturn. If you are in fast food or gardening you might see things moving up or down. You have to make a forecast, with all its uncertainty, and plan on that basis until circumstances prove otherwise. Otherwise, there will be no plan, rising confusion and increased risk. Step 3 – Restate your long term forecast 
Restate your long term goals and the strategy you have for achieving them. If they remain the right set of goals and strategy, try not to do things that undermine their achievement, unless you have to. More think long and hard about how you can turn this change environment to one which advances you toward your goals more quickly. This turbulence could be an unexpected opportunity. If your long term goals or strategy no longer apply, replace them.Step 4 – Look for more value Scour every process for changes that might do one or all of; increase productivity; decrease cost; increase customer perceived value. Look along the supply chain, workflow processes, payments, and all recurrent costs, for example, in search of opportunities to gain more from existing resources. Do it quickly and assertively, identify where to focus and get the projects moving – but don’t let this make you entirely inwardly focused. Step 5 – Identify and resolve work culture issues 
Have someone objective (external) look at your organizational work ethic and culture and give you a report on employee engagement, effort and energy. Tough times can be a valuable catalyst for changing to a more energized workforce. Once the outlook is brighter, this important window of opportunity will begin to close. So again, do it quickly and assertively, identify where to focus and get the projects moving – but don’t let this make you entirely inwardly focused.Step 6 – Weed and Feed If you do have to let people go, ensure you let your least valuable and least productive people go and simultaneously, spell out and be accountable for the forward plan through these times with those who remain. (Try to do this once, don’t under club and have to do it again) Step 7 – Out flank competitors 
Review your competitors by customer segment looking for two things; the most accessible new business you could attack; the most vulnerable existing business you should defend. Here is a chance to grow – pick up some great new customers. If some opportunities involve innovative changes in your products or services, so much the better – you’ll stand out as forward thinking and a business of tomorrow.Step 8 – Invest in the future It is likely that low interest rates will make this a good time to upgrade equipment either to increase your competitive advantage or reduce cost (or both). Get the business case into place with your financiers sooner rather than later. Further, talk to your competitors. It just may be that mergers and acquisitions that would strengthen a long term market position are more readily visible in this climate. Yes there are immediate pressures, but there are also immediate opportunities. Step 9 – Communicate well Tell your people where the company is going and how it is going to get there. Demonstrate the leadership they will need to see and feel if they are going to shift there energy from ‘what if’ worries to ‘what’s next’ action. Tell your customers where the company is going and how you are going to get there. (albeit a different take on the same message you gave your people) Represent the brand, value proposition, commitment and customer orientation that will help you keep and gain customers through this period. Step 10 – Get help early 
If you can’t see the path forward clearly yet, then get help right away. The situation is likely to get worse before it gets better so don’t hesitate. Whilst the pressures may manifest in a set of forecast financials, the causes may not be financial but strategic or operational. There are a myriad of ways to manage through these difficult times without loosing sight of the future. Even under great pressure, solutions can appear that take companies forward.You can contact the Author, Peter Boyce, Director of Consulting @ TMG on 03 9010 9010 or by email on 
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