Not many deny the argument (can I say fact?) that the economic downturn of 2008-9 is the worst to hit global markets since the great depression of 1930’s. There are many theories that experts put forward as the reason for this economic crash, but I believe that the trigger came with the bursting of housing bobble. The unsustainable ‘investment’ that most housing consumers so colossally indulged in turned in to liability overnight. Surplus credit cash chased limited investment options and most of it ended up as mortgage loans, pushing the demand for assets and their prices north that came crashing down by mid 2008 exposing the pre-recession macro-economic imbalance. The ‘Buy-to-Let’ fad came to a screeching halt.
What started as financial crisis soon turned in to global meltdown. The GDP began to shrink by third quarter of 2008 and early 2009, capital investments began to decline, trade and industrial production dropped, unemployment rose, financial markets collapsed, business travels bottomed out and finally many households were ruined. But all was not lost; this recession has created a band of ‘Recession Entrepreneurs’ who are exploiting the opportunity to innovate and differentiate. Make no mistake, these recession entrepreneurs can be seen not just starting up new enterprises but are also found within many firms that are currently surviving the economic onslaught. And then there are a few who are thriving despite economic slowdown.
X is one organisation that has decided to take the current economic challenge, which has affected so many across all sectors, head on and has decided to change itself for better. X has adopted the spirit of ‘Recession Enterprise’ or ‘Phoenix Enterprise’. A classic example of a phoenix enterprise is the online web portal e-Bay that was born out of 2001 recession; not only have many suppliers who market their products through e-bay have now tapped in to previously unexplored market, but so have many customers found a market place where they can buy what they want and when they want, all at a price of their choice. Benefits to stakeholders, be it customers, suppliers, partners or employees are many. Stakeholders stand to gain from the ripple effects of the changes that a phoenix enterprise like X adopts.
Phoenix enterprises don’t just do well during market downturn but are also well positioned to take off during the post recession upswing in macro economy. As can be seen from the UK-GDP chart, UK economy is expected to move in to growth phase by mid-2010, most organisations would have lost great deal of stamina fighting the recession battle and will be ill prepared to take advantage of upcoming opportunities. Post-recession upswing in the economy is also the ideal time for firms to get that all elusive first mover advantage. Another interesting phenomenon is that many phoenix enterprises collaborate to develop unique value position in the market leading to a ‘win-win’ situation for them.
X’s decision to expand its service-line and its geographical presence has many benefits to its stakeholders. Customers currently choosing to engage multiple vendors on different projects will now have an option for a one-stop-shop for their Electrical, Mechanical and Building contracting new works and repair & maintenance, thereby reducing their transaction cost in the short term and bringing down their total cost of ownership in the long term. For suppliers this would mean steady demand and capacity management thereby enhancing their cash-flow predictability. Partners and employees benefit with increase in opportunities that come their way by being part of a market leading organisation. Based on economic predictions from different sources happy times are still at least a year away. The challenge is in now and opportunity to change is today. This very appropriately reminds me of Billy Ocean’s evergreen song ‘When the going gets tough, the tough get going’!
PS:Some identities have been concealed due to non-disclosure agreement.
