Upheavals

Who will pass the L’Oreal test?

About 18 months ago, I argued that one of the greatest dilemmas facing companies as we headed headlong into recession was going to be how they coped with what I called at the time “the loss of pace”. Who would find impetus in deceleration? Who would use the sudden lack of customer demand to rethink and rescope, and who would apply “ostrich economics” and carry on trying to do business the way they always had, even as their revenue engine spluttered and in some cases stopped beneath them?

This morning in an article in the Sunday Star Times, Rod Oram offered his views on who is coping and who is not, and why. One of Oram’s most interesting observations is that the companies many may have considered least capable of agile response - the mega-corps - have, in two instances at least (GE and Wal-Mart) proven to be remarkably quick off the mark. General Electric has instigated real-time management across businesses that have hugely long lead times; Wal-Mart has not only got onside with environmentalists with a new environmental rating system, but in doing so has shown that resource efficiency, and therefore waste minimisation, is also a sensible commercial motivation.

Oram cites Air New Zealand and Fletcher Building as two examples of local organisations that acted before the decline hit and are all the more resilient for those actions. “Two critical characteristics separate thrivers from strugglers in this deep, long recession,” he says, “the ability to spot trouble coming and to act boldly before it hits.”

So, rather than thinking of this as a recession, perhaps we should be looking upon these times as the conditions in which decision makers prove the value of their salaries. If Oram’s right, too many may well fail the L’Oreal test. They won’t be worth it.

POSTED: Sunday, 26 July 2009

Back to Archive