Life After The Recession – The New World Order

AGILITY, STABILITY and CONTROL – “mantra” of the new world order

• The mantra seems contradictory, however in the new world order Global Inc. cannot remain averse to CONTRADICTION as that will be the new definition of INNOVATION and everybody understands that every industry thrives on innovation.
• Organizations in the new world order would resort to fast & furious approach to sustain profitability without loosing focus on stability (AGILITY & STABILITY) and there would be heightened government participation and self-vigilance by every organization in governing the unbridled growth (CONTROL)
• Those who don’t follow this mantra, will fall prey to the SLOW-Motion syndrome
• The recession was market’s way of brining new upgrades in the way organizations function
• The new world order is the beginning to achieve an AGILE World Order

 The current economic situation and the ensuing social turmoil (which I sincerely believe is an offshoot of organization excesses or should I say human excesses as organisations are comprised of humans) has helped all of us as individuals as well as organizations to grow to a different level and become wiser. We can say the situation is an accentuated version of the great depression of 1929 and the dot com burst of 2000. During 1929 and 2000, only handful economies were affected and because they controlled the maximum wealth, everybody felt that the entire world was affected by these economic catastrophes. However, with the world becoming flatter and more and more countries integrating with one another, more and more companies setting up their operations across the globe, this time the effect is distributed among multiple countries & organizations.

The mighty American corporations like Lehman Brothers, General Motors, Merrill Lynch, Chrysler, which are (or should we say ‘were’) the face of the western corporate world, failed to resist the turbulent times and fell within no time, Banks across the world performed poorly, manufacturing organisations had to stall production due to slack in demand and lack of enough credit, technology organisations had to cut down their staff to sustain their operations. The irony of the situation is, people vouched by their success stories and B-schools used their success stories for teaching their students.

Individuals and organizations which are in the thick of this financial and economic quagmire are now forced to be more cautious, thoughtful and wary before treading into new areas. The crisis has taught employees a lesson to stop trusting their organizations for securing their jobs and be prepared for such situations by themselves. On the flip side, organizations have discovered a very unscrupulous, unexplained and illogical weapon of making employees redundant whenever such a crisis recurs. No organisation has till to date come out with a persuasive explanation of resorting to this measure to save cost. Surprisingly none has opposed or even shown discontent over such measures. Probably the worst is yet to happen given the fact that such decisions not only affect the employee, but also his/ her family. Multitude of such instances affects the entire social fabric. No wonder the psychiatrists’ business is on the roll these days.

HOPE NEVER DIES

Organizations are now fed up of being fed up, of being stressed, of being pushed to the limits. A lot of hard work and thinking has gone in averting and containing this crisis. Everybody wants a break, a change, with a hope that things will be normal again. This desire would bring in a ‘new world order’, and it would be manifested in the way we behave, the way we live and the way we operate, not only at an individual level, but also at the household, organization, social, economic and political level. The underlying “mantra” of this new emerging world order would be “AGILITY, STABILITY and CONTROL“. Sounds contradictory, however, if not, organizations should be prepared to be the victim of the SLOW-Motion syndrome.

 

SLOW-Motion Syndrome:  S – Sluggish in reacting to the industry changes L – Lenient in acknowledging change parameters O – Outwitted by competitors W – Wait for the next good opportunity

One does not have to go far; the recently concluded Indian election result does coincide with this new “mantra”. People have opted for a stable government at the centre, without paying heed to any caste or religion based agenda promoted by most of the political parties; hats off to the common people for their wisdom and perception.

Transformation is the key:

For all the organizations, a lot of initial time has gone into salvaging the situation. The new world order would see the most agile and most responsive surviving this crisis. By this time organizations have figured out new business drivers, identified their KPIs and defined control processes. In the new world order, emphasis will be more on

1. Stringent monitoring key business drivers and critical processes

2. Making every attempt to stabilize and control expenses

3. Maximize returns on capital invested

4. Rationalize every investment

5. Ensure every strategic and capital intensive move is scrutinized till the last level of details.

6. Ensure the supply chains are more agile

They cannot afford to be laggards in implementing these processes and begin controlling the KPIs as otherwise there is a risk of them being imperilled by the SLOW-motion syndrome.

Historically two phenomena have been observed:

1. The stock markets across the world have been hovering close to the GDP of their respective countries. This means, the governments will try to keep the markets above a certain threshold by fine tuning the economic and industrial policy.

2. It takes 2 – 3 years for the markets to return to their original peak levels.

Help these phenomena is the improving credit situation across the markets. The trust factor that had been dealt a major blow, is gaining ground again. Nowt is up to the organizations to proactively grab these opportunities made available to them and make the most of it. The faster they act the faster they will reap the benefits.

 Local Governments: New Superpowers

 The local governments will play a very crucial role via Economic and Monetary policy route to govern and monitor the growth (read unbridled growth) of the organizations. Its policies will be more conducive to domestic investment thus encouraging investors to keep the money within the country at the same time to lure foreign investors. Governments, in the process of shelling out stimulus packages and acting as saviours of the mega organizations, will be recognised as Superpowers in its own stride. This will bring the local government closer to the industry

 LEAN Sourcing – a strategic tool

 Two things have come out very evidently in this recession.

 First – Push people to any limits and they will deliver, not because of love of work, but to save their jobs.

Second – there was no rebellion or effective opposition by the people of any of the free nation to stop job cuts. This should and will happen as people have realised how such harsh measures disturb the social fabric affecting not only the person himself, but also his family and social environment.

Though the job cuts might have given sleepless nights to many, however it has given organizations a very efficient and agile tool to control costs. LEAN (Or Agile) sourcing will be developed as a strategic tool focussing on need-based sourcing rather than forecasting-based sourcing. This is because, organizations in the new world order have learned that firing excessive employees is rather an unpleasant activity and nobody wants excess people costs on their balance sheets.

The People Advantage – Supply driven growth

People will behave wiser and start managing their lives better that they have been doing till now. They will be inclined to do more saving rather than splurging on unnecessary luxuries. More saving and deposits will mean more money with the banks for lending thus encouraging industries to borrow. As industries invest and produce more, they will have more to sell and offer to the people. More production means more employment and more money in the hands of the people which in turn means more spending thus increasing demands for the goods produced. This is a self powering cycle which will be supply driven rather than demand driven 

To summarise, the new world order will see a new set of rules being implemented and followed by the organizations. There will be no right or wrong moves till we reach a stage of stasis. In fact the stasis itself will be the new world order however it will take a little longer to come by as compared to the time it took in previous recessionary times, because as I mentioned, this recession has affected many closely knit nations at the same time and that too unexpectedly. The new world order is not the goal to be achieved, but a beginning to reach where we start thinking about achieving an AGILE WORLD ORDER