Over recent years, the global economy has faced a major downturn causing unemployment and government debt to surge. However, it can be argued that if managed properly, this short term pain could come with long term benefits.
During times of unquestioned growth and stability, people can become complacent and waste become rampant. This will result in increasing inefficiencies and falling productivity resulting in incomes increasing at a lower rate than people would otherwise expect. But if we're growing anyway, what difference should this make?
This path of falling productivity, increasing inefficiencies and faltering discipline is simply not sustainable. Therefore, if we are not going to willingly maintain suitable levels of discipline during the "boom" years, we need a catalyst to force us to. This catalyst will normally take the form of a recession which will always occur if we fail to maintain discipline during the growth years.
Such a recession will force us to scrutinise spending, both on a corporate and individual level. This will also force us to make better and more efficient use of our money including paying off our debts, monitoring what we spend and questioning what we buy. Agreed, this may and has made the economic slowdown longer and deeper, but I argue this short term pain is needed to ensure our long term growth remains sustainable and secure.
Simply, such a recession forces companies to go back to basics, get creative and focus on their core competencies. This creativity includes finding new innovative ways to reduce costs and improve product development. This may include, among other things, improving the efficiency and effectiveness of our increasingly complex supply chains. This requires significant improvements in our technological and information sharing capabilities. This doesn't necessarily mean more spending, but simply smarter spending and spending on what we need, not what we want. This is what I meant in part on companies focusing on their core competencies. This spending can also be made more effective by changing the way we do business. This includes companies placing a greater focus on developing effective solutions by working with their partners and stakeholders. This greater collaboration and cooperation will improve communication, cut waste and save money with minimal investment.
This greater focus on core competences may also mean cutting or decentralising the so called dead weight, the areas of the business outside the organisations core competence. This will better allow each part of the business to focus on what it's good at, thus improving quality and reducing costs. This doesn't mean companies have to completely divest from other industrial arenas, I still believe that diversification is a good thing. I am simply saying that these competences should remain separate where appropriate with each business unit focusing on its core strengths. And I believe economic slowdowns such as the one we have seen in recent years encourages us to focus on those strengths and forces us to refocus where we want to be in the years to come.
Jason Cates
During times of unquestioned growth and stability, people can become complacent and waste become rampant. This will result in increasing inefficiencies and falling productivity resulting in incomes increasing at a lower rate than people would otherwise expect. But if we're growing anyway, what difference should this make?
This path of falling productivity, increasing inefficiencies and faltering discipline is simply not sustainable. Therefore, if we are not going to willingly maintain suitable levels of discipline during the "boom" years, we need a catalyst to force us to. This catalyst will normally take the form of a recession which will always occur if we fail to maintain discipline during the growth years.
Such a recession will force us to scrutinise spending, both on a corporate and individual level. This will also force us to make better and more efficient use of our money including paying off our debts, monitoring what we spend and questioning what we buy. Agreed, this may and has made the economic slowdown longer and deeper, but I argue this short term pain is needed to ensure our long term growth remains sustainable and secure.
Simply, such a recession forces companies to go back to basics, get creative and focus on their core competencies. This creativity includes finding new innovative ways to reduce costs and improve product development. This may include, among other things, improving the efficiency and effectiveness of our increasingly complex supply chains. This requires significant improvements in our technological and information sharing capabilities. This doesn't necessarily mean more spending, but simply smarter spending and spending on what we need, not what we want. This is what I meant in part on companies focusing on their core competencies. This spending can also be made more effective by changing the way we do business. This includes companies placing a greater focus on developing effective solutions by working with their partners and stakeholders. This greater collaboration and cooperation will improve communication, cut waste and save money with minimal investment.
This greater focus on core competences may also mean cutting or decentralising the so called dead weight, the areas of the business outside the organisations core competence. This will better allow each part of the business to focus on what it's good at, thus improving quality and reducing costs. This doesn't mean companies have to completely divest from other industrial arenas, I still believe that diversification is a good thing. I am simply saying that these competences should remain separate where appropriate with each business unit focusing on its core strengths. And I believe economic slowdowns such as the one we have seen in recent years encourages us to focus on those strengths and forces us to refocus where we want to be in the years to come.
Jason Cates
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