GEOStrategy

Employing Reptilian Strategies to Survive an Economic Ice Age

“That which doesn’t kill you only makes you stronger” 

Some eons ago, when I was working a long-term assignment in Egypt, we were fortunate in that, unlike neighboring Saudi Arabia, beer and liquor were sold legally.  The local beer, however, tasted like a cross between formaldehyde and Aqua Velva.  Local entrepreneurs knew this and printed t-shirts with a picture of a bottle of the beer juxtaposed over a cockroach with the caption: “that which doesn’t kill you only makes you stronger.”  I survived my experience in Egypt due in no small part to an abundant supply of that beer and I’ve never forgotten the words of Friedrich Nietzsche on that t-shirt.

The Wall Street Journal reported the IMF predicts the global economy will come to a standstill in 2009.  Zero growth.  A veritable economic ice age and a good time to remember that the first duty of a CEO is survival of the enterprise. The second duty, of course, is to maximize profitability and the third is to grow the business.  Unfortunately, these jobs cannot be tackled sequentially.  The art of strategic management is finding the right balance between the three because each strategy affects the effectiveness and outcomes of the others.

Some view industrial manufacturing in the U.S. as having gone the way of the dinosaur, but in many ways this is a compliment. Set aside the cockroach for a moment (who wants to be compared to a cockroach?), and forget the big bad dinosaurs of Jurassic Park like Tyrannosaurus rex. Go to school on the ancient business model that survived Darwinism: crocodiles, alligators and birds. Crocs, gators and birds have survived since the dino-age by being flexible and adjusting to the environment.

Niche manufacturing is here to stay if its leaders understand how to adapt to a changing environment as well. In this current economic ice age, it is important for the CEO to have survival instincts and be willing and able to adapt business models to pursue growing and profitable sectors while moving out of contracting and low margin businesses.

This is not the time to be paralyzed into inaction, nor is it the time to place risky bets.  It is the time to examine and evaluate market opportunities, assess competitive risks, and refocus your business on the best market sectors.  Then, it comes down to aggressive tactical execution with a reptilian instinct to dominate your markets. 

Timing is important.  A study of past recessions indicates that different sectors enter and exit a recession at different times and the contraction and recovery curves vary from shallow to steep.  Disregarding these truths can lead to inappropriate decisions.  Businesses in lagging industries may think they got lucky and dodged the recession and so fail to make critical moves early enough. Others, not realizing that their industry may recover soon and more rapidly than others, may act too conservatively.  Up-to-date market intelligence, sound analysis, and strategic guidance are more vital now than ever. Crocs may appear to sleep on a promontory perch and hawks may make lazy circles in the updrafts but they are actually reconnoitering the competitive terrain and when the market opportunity is identified, their strike is well-timed, precise, and effective.

These surviving dinosaurs have adapted to the changing environments and endured ice ages, floods and draughts. Don’t become part of the primordial economic ooze. Find opportunities, evade threats and grow your business.

Geo Strategy Partners hasn’t been around as long as the crocodiles, but we have been helping our clients identify market opportunities and analyze the competitive landscape since 1992.  Our methodologies are proven and have survived the test of time.  We plan to survive this economic ice age and the next and look forward to helping our clients not only survive in uncertain times, but to thrive and position their organizations for profitable growth as the economy recovers.