Opportunities in adversity: Accelerating the change by Ding T. Nera(September 7, 2009)

SUITS THE C-SUITE by Medel T. Nera
Business World (09/07/2009)

In the current market environment, companies must act swiftly to gain real competitive advantage and to create opportunities.

C-Suite members or C-level executives are considered the most influential group of people in a company. Collectively referred to as the leaders in a corporation, C-Suite is derived from the titles of senior executives that, in most cases, begin with the letter “C” – Chairman, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Information Officer, Chief Knowledge Officer, Chief Risk Officer, Chief Communications Officer, Chief Security Officer and the like.

Belonging to the C-Suite, of course, comes with great responsibilities, complex decision-making situations and extremely demanding work schedules. As members of the corporate leadership team, C- Suite officers should be constantly informed about the perennially evolving business landscape in order for them to steer their respective companies in both good and bad times.

This elite group – the C-Suite – was the focus of a study conducted early this year by Ernst & Young and the Economist Intelligence Unit. Called Opportunities in Adversity or OiA, the study provided a basis for discussion with C-Suite members as they grappled with the implications of the global economic downturn.

It was argued that during a credit crunch, the management of cash is a key determinant of success. Every company falls somewhere on a “stress pendulum” between “cash burn” and “cash earn,” and for every business there is an appropriate course of action to take. By executing that course of action quickly and effectively, management can seize a potential source of competitive advantage.

OiA involved interviews with over 300 executives around the world to see the impact of the economic crisis on their business and what they were doing about it.

About 74% reported that they were focused on “securing the present”; 40% expected to see a significant increase in protecting their current assets; and 39% were seeking significant performance improvements. Meanwhile, over 70% of the respondents believed there are opportunities to do more in the current uncertain situation, to take strategic decisions that will place them ahead of their competitors.

The OiA study showed five common themes and actions in this stress pendulum:

* securing your present – refers to liquidity and working capital management, cost reduction, accelerated divestments;

* protecting your assets – involves risk assessment, capital expenditures review, internal audit and controls effectiveness, as well as customer and
supply risk reviews;

* improving your performance – includes cost reduction, IT effectiveness, supply chain, process improvements;

* reshaping your business – considers mergers and acquisitions, shared services/outsourcing, strategic locations/offshoring;

* sustaining your future – puts focus on go-to-market initiatives, expansion to new markets, opportunistic deals, aligning the operating model for growth.

The past few months have seen enormous efforts from governments and management around the world to stabilize and redirect the global economy.

Evidence suggests that the fall has slowed; some even dare say that the crisis has turned around led outstandingly by some Asian economies. But whether the direction takes business up or further down is still unclear.

What we do know is that the speed of recovery depends on the actions we take – as companies and as individuals – over the coming weeks and months.

The OiA team has reviewed its experience to date to see whether any emerging trends or patterns provide additional insight to management in the current circumstances. We have also returned to the market – both to test our perspectives and to see the progress and the new priorities of the world’s C-suites as they continue to implement and accelerate the changes they have launched in their organizations.

What is clear from the latest OiA findings is that some companies are identifying and taking positive steps to capture organizational benefits and market opportunities. Managers who take action now are seen to be able to reap valuable results in the long run. Change for everyone is inevitable, but a minority is already emerging as leaders in accelerating that change. And theirs are the businesses that will be in the best position to win in the post-crisis world.

If the economy has really rebounded, management needs to be prepared for this. Typically, a rebound comes with speed, giving investors multiple choices and management very little time. Analysts are unlikely to delay their assessment of performance because programs have yet to be
implemented.

The economy is not a zero-sum game, where one side must always lose to let the other win. Only by the majority of businesses improving can the economy be turned around. The C-Suites of the business world know this very well and other corporate entities and individuals, entrepreneurs, private practitioners or just about anyone involved in running any business should take their cue from this reality.

We must act now and act with speed while there are opportunities in adversity.

Ding Nera is a partner and Financial Services Organization Head of SGV & Co. and Ernst & Young Financial Services Assurance Leader for the Far East.

This article was originally published in the BusinessWorld newspaper. It is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.