Pulp and Paper Canada

Features Environment Sustainability
Business Cycles


June 1, 2002
By Pulp & Paper Canada

Topics

Business downturns are times of retrenchment, but they are also times of opportunity. The next business cycle will emerge, but the business landscape will not be the same. Just as has happened with pr…
Business downturns are times of retrenchment, but they are also times of opportunity. The next business cycle will emerge, but the business landscape will not be the same. Just as has happened with previous business cycles, there will be new challenges, which will represent either opportunities or serious threats — depending on your state of preparedness.

As the next business cycle approaches, critical questions need to be asked with respect an organization’s future prosperity:

How will the next business cycle be different from the last?

What can we do to ready ourselves now?

Can we afford to compete on the same basis as before?

Why do some organizations still prosper during recession?

Are opportunities being overlooked?

What will the new rules be?

How can we reduce the vulnerability of our business to economic turmoil?

Each business cycle brings new surprises. Recycling, Asia, microprocessors, and inflation hit us in the 80’s; forestry practices, globalization, the Internet, rising US$, and irrational exuberance in the 90’s. What do the 00’s have in store for us? – Kyoto fallout, more consolidation, bio- and nano-technology, wireless sensors, declining US$, consumer retrenchment? These are just a few of many possible business theatres that will redefine the basis for competitiveness.

An economic downturn is the time to sow the seeds for strategic advantage. It is not the time to hunker down in the burrow like the groundhog in wintertime. While downturn is certainly the time to look after short-term survival, it is not the time to wait for better times. Downturn presents a strategic breathing space, a turning point to explore the opportunities of new competitive horizons. It is certain that the 00’s will be quite different from the 90’s. The early realization of new opportunities in the next cycle will define the winners and the losers. For an organization, the confidence of their customers, investors and employees will come from recognition of fresh market perspectives and business opportunities.

The basis for an informed understanding of future business environments is the identification of Key Driving Factors. Driving Factors are not trends, they are distinguished by having uncertain outcomes, they are the path over the horizon. Trends on the other hand have easily predicted outcomes, they are the path to the next traffic light. By identifying Key Driving Factors and establishing a Scanning Protocol within the organization, first steps can be taken toward identifying winning strategies for the next cycle. This process is The Business Weather Forecast, which was covered in an earlier column. The topic of Driving Factors will be covered in more detail in next month’s column.

Why is this important?

Whether you believe we are coming out of a downturn / recession or we will stumble along for a while yet, a new competitive environment with new challenges will emerge as the next business cycle gets underway. However, it is a business’s response to these new external challenges that will decide its success or failure, not the external challenges themselves. The groundhog in the image is a reminder that just like the famous Punxsutawney Phil [or his many imitators] peeking out on to the new business landscape in the hope that it will bring “higher prices and stronger markets” but retreating if these are not on the horizon, the high risk behavior is assuming business as usual and doing nothing. Successful businesses will be prepared with the appropriate new business strategy for the new business landscape. “The future always arrives when good-byes are being said” — (Elazar Benyoets)

Alan R. Procter is an international consultant helping organizations exploit the future in their business strategies. He can be reached through futureviews@alanprocter.com


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