For consulting firms, THE UPSIDE TO THE RECESSION OF THE PAST TWO YEARS is that it may have unleashed a new wave of innovation and corporate growth that otherwise would have been buried in better economic times. When times are tough, companies are forced to work smarter, be more creative, and jettison old methods of business that are no longer working. The net result is a changing of the guard in the business world as those companies that are unable to make the switch get passed by their nimbler competitors.
A study by management consulting firm Bain & Company showed that during the 1991-92 recession, there was a significant re-ordering of the pecking order of companies in a wide variety of fields. Specifically, companies that were in the bottom quartile in their industry jumped to the top quartile of their industry at twice the rate during recessionary times as compared to non-recessionary times, according to the study as reported in The Economist. Other studies have reached similar conclusions that recessions bring out the best - and the worst - in companies.
From an investment standpoint, this suggests that the winners coming out of this recession may be quite different from those who went into it as winners. This "changing of the guard" may create new investment opportunities and we should diligently do our best as consultants to find the winners from among the wreckage...or the losers, for that matter.
There is always a tendency to harvest client budgets or convince onerself that getting more out of a ststic enquiry flow is good business. Taking your eye off filling up the reservoir of potential clients or new products or markets allows others to enter the market. Recessions highlight this inertia and always generates a period of reflection. This is a result of panic, threat from new market entrants or a planned business development or diversification strategy. Clearly I advise on the latter !
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