As a result, too many vulnerable businesses will have made insufficient or the wrong restructuring moves. There have been few high profile collapses as yet. MFI and Woolworths are just the initial and largest to date of the retailers facing collapse. Others will follow during the first quarter of 2009 as they run out of cash or are unable to refinance debt. Private equity deals concluded over the preceding couple of years will not be far behind. Like MFI and Woolworths, many other companies sealed their fate months ago when they failed to recognise that their management did not possess the attributes required to be successful during an economic downturn and change their leadership and their business model in anticipation of the turbulence to come. There is an important lesson here for those companies not yet in serious difficulty. Leading a business through a recession requires something other than the more stringent application of the scientific management techniques of control and analysis. The natural tendency to take the risk out of companies by re-establishing a previously successful business model reflects the impossibility of seeing beyond the short term. It has the strategic logic of driving a car forward while concentrating on the rear view mirror. To succeed during a recession requires the adoption of counter intuitive processes. What directors are confronting is not an external problem of economic turbulence. It is also an internal problem of not knowing how to operate in such conditions. Only those able to lead with ingenuity, formulate creative options and act with the confidence to abandon previously favoured plans and projects will see their company emerge with the strength to prosper in the eventual economic spring. *Anthony Holmes is a turnaround expert Related articlesVale WoolworthsHow to survive an economic downturnDo FDs make good CEOs? Picture source
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.