Thinking Managers

Robert Heller of describes how recessions present both threats and opportunities.  Which it is to you can often be down to a state of mind.

Opportunity & Business Strategy

In times when central bankers (like the Governor of the Bank of England) announce the demise of ‘the nice economy’, and lower ranking economists and other pundits sound the same pessimistic note, you could be forgiven for looking back nostalgically at the days when venture capitalists, for example, liked to sound a much more positive note, promoting opportunity as a business strategy.

Examine this quote, for instance: “We’re seeing an enormous number of business plans from people who have ideas… And we’re also looking for green ventures and using Google and other modern tools to find innovators. So it’s as good a time to invest as we’ve ever seen.”

Believe it or not, that was not said during the recent height of the nice economy, but in the current nasty days. The words came from Bill Joy, a venture capitalist from the legendary Silicon Valley firm of Kleiner Perkins Caulfield & Byers.

According to Business Week, Joy’s outfit is backing up his words with money, in sectors like mobile computing and the green economy as mentioned above.

There is a great paradox of the modern economy which is embodied right there. In a dark overall climate, there are increasing opportunities for generating bright success. Credit might well be more difficult to find, and debt more expensive to service. However, it remains true that excellent opportunities to acquire and invest capital still abound.

You should always remember that there is always an opportunity, whether it be a new technology, business strategy or product line. Look for anything that will either cause the market to change or could exploit a changing market.

Also make the effort to study rival opportunities. Don’t rely on just wishful thinking. Be paranoid about the threat of rivals and worry about their strengths rather than concentrate on weaknesses.

Be courageous and take a lead from the ‘vultures’ circling the US economy and swooping to purchase assets and make big bets on Wall Street. One such bird, Philip A. Falcone, scooped a profit to the tune of $11billion last year by exploiting the catastrophic fall of the subprime markets. A Falcone ally told Business Week: “He will look at anything… If it’s cheap, he’ll buy it.”

The vulture concentrates on the bargains themselves rather than worrying about the overall climate which created those bargains. By taking a ‘safety first’ business strategy, the manager will automatically rule out the wealth of opportunities that in reality (such as buying cheap assets) could be less risky than trying to stay put.

One famed opportunist’s firm lived through the previous financial upheaval when the bubble burst. He comments: “What I told our company was that we were just going to invest our way through the downturn, that we weren’t going to lay off people. And we were going to keep funding.”

Apple’s Steve Jobs is the opportunist in question is. He employed the business strategy of upping R&D spending in order to come out ahead when the downturn ended. “And that’s exactly what we did. And it worked. And that’s exactly what we’ll do this time.”

You can be sure that opportunity will knock. And the mother of opportunity is adversity.
About the author
Robert Heller is one of the world’s best selling authors on business management.