May 19, 2009

Is the economic storm blowing you off course, or helping you set a new direction?

Some people see an upside to the downturn, can you?

I had a conversation yesterday with a director in one of Europe's most successful professional services companies. It is clear that in spite of the present sales related challenges being faced, the company’s management team can see an upside to the downturn.

There is a precedent, with the director pointing to a previous setback, that in hindsight propelled their business forward. The company clearly expects that this downturn will, in the fullness of time, represent another important turning point for its business.

A crisis can be a strategic turning point.

Like many companies, this client of ours has had day rates cut by 10-15% percent. However such is the state of the domestic market for its engineering related services that contracts can now only be won if they are discounted heavily, with many companies in the industry being prepared to price at a loss to stay in business. Much less so our client, which has a diverse international profile of clients – the result of internationalization drive that was fuelled by a previous shock. The director explains:

‘We lost a major contract a number of years ago, but that turned out to be as much a blessing as a curse. The contract was so large that it would have kept our entire organization busy for more than 3 years and would have kept us completely focused on delivery with no time for business development. In the end the project never happened, but its loss, in hindsight, was both a blessing and a curse. That is because it accelerated our search for new business internationally. Today we are in a much stronger position as a result.

Setbacks can propel you forward.

I can see this present setback as potentially having the same effect, in other words causing short term pain, but ultimately benefiting our organization. I do believe that most companies will be in a stronger position at the end of the present economic turmoil, that is if they can respond to the challenge and stay alive amidst the turmoil.

Pointing to a multi-million project just won in the Middle East and a full domestic order book for the next quarter, the director emphasized the downturn is causing pain but will benefit his business in the longer term. ‘It will accelerate our strategy for the future of our business – a global focus on higher value more profitable work and the use of strategic partners for the rest’.

The downturn illuminates where the value is.

‘We want to focus on where we have a unique competence, where we can add most value and where the money is to be made. That is the high level project scoping, conceptual work and overall project leadership'.

'What today is the bulk of our business – the day to day delivery and implementation and labour intensive, but less profitable elements of major projects will be delivered through strategic partners in the future’ he explained. That will require a shift in our focus, as well as our skills and perhaps in our team’ he concluded, but will represent the foundation for the next phase of our growth'.

Setting direction, or simply being blown off course?

Clearly some people see an upside to the downturn, can you? Could the global slowdown represent a strategic turning point for your business, pointing you on a new course that ultimately will ensure greater long term success?

Is the slowdown illuminating where your organization can add greatest value to its customers, or highlighting those most profitable and weatherproof areas of opportunity for your business?

Maybe the present economic storm is not blowing you off course, but helping you to set direction. In this respect the ancient saying holds true ‘tempests and storms make for great pilots’.

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