Calm is a good way of living life, especially if interspersed between two high intensity timelines. Perhaps that is why it’s called calm! And a similar period of cautious calm is what we are experiencing in the business world. It is as though the world is sitting quiet to record even a whisper or an inkling of a sound that points at the recession ending. But as it always happens that one senses what one wishes to sense, we find reports and statements being made in public that make us believe and have a hope against hope that the recession could actually be coming to an end. But is this lull actually the best plan of action or perhaps the lack of it??
One very interesting fact about the uncomfortable calm we are in is that neither are we sure if the high-intensity period is arriving in the near future nor are we sure of how long the bad times are going to last. But isn’t it taught in almost every B-school in the world that managers need to work with incomplete information and take measurable risks. And is it really beneficial to act when the world lies low scathing in pain? Mckinsey & Co in its paper titled ‘Learning to love recessions’ (June 2002: Richard F. Dobbs, Tomas Karakolev, and Francis Malige) talks of how some companies by their sheer act of getting active in times of recession have resulted in improving their value and emerging stronger from the recession. The article specifically mentions high risk activities like M&As carried out in times of recession by such companies to have fetched higher returns than the ones that pursued the same activity in boom time. It is interesting to find that 63% of the former organisations laid low when times were good and used the pent up capital to make an impact when the world was down with recession flu!
These are strategic decisions that defy man’s conventional Make-hay-while-the-Sun-shines wisdom and yet result in returns that are significant and differentiating in character. So what’s the take away for us HR folks? Get cracking in bad times. This is the best time to act. Just when all the competitors lie low in a circumspect manner trying to evaluate options in a state of corporate confusion, some others are cashing in on the opportunity to make the most of the clear strip available on the talent highway. A testimony to the fact is the participation of SMEs and start-ups along with PSUs that made a beeline at India’s premier B-schools last year. The puzzle was not all that cryptic that we can’t understand. The demand-supply mismatch let these firms to make the most of the situation and lap up talent in a way never done before. It just went to show how the economy lets the spirit of initiative to drive growth: a drive that is coupled with the need for a change and is dependent on the hunger for growth.
The role of the state is debated in many an economy stuck between capitalism and communist ideologies. While the communist ideology believes in the rule of the state and state run business to achieve inclusive growth, the capitalist model blames the role of the state for reduced productivity and complacency in performance of industries. A country like India is effectively a hybrid of both – and hybrids are interesting. The government and the corporate come together in various Public-Private Partnerships to ensure viability of a venture that had social benefits. Interestingly Dr.Montek Singh Ahluwalia , Deputy Chairman of the Planning Commission in one the interviews mentioned that in times of recession when the business world is suffering, it is the state that needs to come forward and stimulate economic activity. Investments in improving infrastructure can be one such intervention by the state in such times. This will pave the way for a smoother transition of the corporate world with the requisite infrastructure in place, once the recession begins to subside.
The calm therefore need not be universal in character. If one actor is down with a flu the other needs to fill in. Because the show must go on!