Act like the recession is over

It’s been a tough run for us all over the last few years. From the time in mid-2008 when we saw the recession hitting until now, we’ve lived through challenging times with quite a few of our clients.

Of course technically, the recession is over. But there is still plenty of bad news that gives us all pause every day. Still, the truth is that this year was pretty good for most companies. A number of our clients have had double-digit growth and have good outlooks for next year.

But it hasn’t been easy. And what worked in the past won’t work now. Here are a couple ideas to help you chart a new course: Read more

The Moment is Now to Leverage Our Knowledge Intangibles

Intangibles make up 70% of the value of the average company. They drive competitive advantage. They determine the innovation capacity of a company. Yet they continue to be ignored.

And now we are at a moment of truth. Our economy seemingly made huge progress in the past decades. Computers created efficiencies and fueled profits. They also enabled many white collar jobs to be moved off shore along with manufacturing work. The economic consequences of this outsourcing and the mothballing of so much of our economic infrastructure were hidden by a series of economic booms in the 1990’s and early 2000’s. Then the “Great Recession” of 2008-09 exposed the fact that our economy was running on consumer spending fueled by financial profits that have long since disappeared. Today, we lack sources of job creation and true economic growth. Add to this economic challenge the even greater ones created by serious concerns about our environment, our energy use, our health care system, even our food production. We are in a very difficult position. Read more

Mintzberg on America’s Management Failures

Henry Mintzberg is the authority that I most respect on the subject of strategy. He has written both the best textbook and the most thoughtful critiques of current practices of strategy and strategic planning I know. The easiest way to get a feel for his perspective is Strategy Bites Back.

So I pay attention when he speaks. And he had lots to say in his piece in the Globe and Mail recently here entitled, “America’s Monumental Failure of Management” which I found thanks to a post by Richard Florida. Read more

Shift to a New Model of Capitalism

I don’t usually post on my blogs on Sundays. Not out of any religious sense. Just out of a sense that I don’t want to add to anyone’s reading list on what I hope to be a day of rest.

But today is different. I have been reading more and more people saying that this is a new moment. Wanted to weave the threads together. Read more

Intangibles and the Moment of Truth

Michael Mandel at Business Week has a powerful new video here about the stock market and our economy. Basically, he says the inflation adjusted return on the stock market (prices and dividends) over the past decade is -50%. This is equal to the decline in the Great Depression.

Mandel is talking about “the moment of truth” for investors in the stock market. I think it is a moment of truth for our nation. Read more

Cutbacks Replace Layoffs at KPMG UK

Thanks to the Creative Class blog for pointing here to the story here that 80% of the 11,000 KPMG British workers accepted a move to reduce work and compensation to four rather than five days per week.

The post includes some interesting discussion of the challenges of doing something like this in the U.S., although one comment points out that the city of Gary, Indiana has also done this. I have also posted other examples here and here.

I frequently argue that every business is a knowledge business. People are one of the key  knowledge assets. So finding a way to keep people is an important goal in today’s economy.

Are there other examples of this out there?

More on Avoiding Layoffs

Bill Taylor has a great post here that provides a nice footnote to my post here, “Smart Companies Avoiding Layoffs.” He asks:

Am I suggesting that leaders rule out layoffs, investment reductions, or budget cuts? Of course not. But I am proposing one simple discipline Read more

Smart Companies Avoiding Lay-offs

There is an article in this morning’s New York Times that reports on a new trend in this recession: companies avoiding lay-offs by cutting back hours and benefits to their employees. This is happening across the economy, not just in traditional manufacturing. The Times reports:

A growing number of employers, hoping to avoid or limit layoffs, are introducing four-day workweeks, unpaid vacations and voluntary or enforced furloughs, along with wage freezes, pension cuts and flexible work schedules. These employers are still cutting labor costs, but hanging onto the labor…The rolls of companies nipping at labor costs with measures less drastic than wholesale layoffs include Dell (extended unpaid holiday), Cisco (four-day year-end shutdown), Motorola (salary cuts), Nevada casinos (four-day workweek), Honda (voluntary unpaid vacation time) and The Seattle Times (plans to save $1 million with a week of unpaid furlough for 500 workers). There are also many midsize and small companies trying such tactics.

This is a very smart strategy in the knowledge economy where your intellectual capital is your “factory” and where firing a productive worker is akin to selling off your production lines piece by piece. Companies with a strong labor force can use their employees smarts to cut other costs (see my thoughts on this here) and will be much better prepared when the recession ends.

The Intangible Tipping Point

Michael Mandel at BusinessWeek has a great article and podcast here on the intangible economy. He points out that the job losses in the current recession have been concentrated in the tangibles sector while the intangible sector is adding Read more

Mindless Cost Cutting in a Recession

So today, they finally made it official and announced that we have been in a recession for a year. No surprises there. However, I share views of Anand Sanwal and Tom Peters here that this is no time for mindless cost cutting. For one thing, in the knowledge economy, cutting people is like throwing away the machines in your factory. It can be a very short-sighted strategy that costs you dearly in the future.

Not to mention the fact that it makes sense to think beyond the current crisis. I believe that sustainability could be the biggest ecnomic boom in history–if companies have the courage to jump on the band wagon. You’ll need your best people for that. In fact, given the fact that it has been years since we have had real job creation in our economy (see my post on comments by Michael Mandel here), there is a national urgency to this mission.