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Leadership beyond a downturn

Richard Milne
Financial Times, page 14
12 September 2009

In this article in the Financial Times Richard Milne looks at how business leaders should prepare for the post-crisis world.  Richard spoke to PA’s Mark Thomas, head of strategy and marketing at PA Consulting, about how executives should cope with the downturn and recovery.  Benoît Potier, chief executive of Air Liquide, Sir Nigel Knowles, chief executive of DLA Piper, Bruno Lafont, chief executive of Lafarge, Jeff Immelt, chief executive of General Electric and Gerard Kleisterlee, chief executive of Philips also contributed to the debate.

Mark commented on how the apparent speed with which economies have returned to growth has once again underlined the need not to put too much trust in forecasts. Mark says companies should prepare for three potential scenarios: a quick V-shaped recovery, a much slower L-shaped rebound or the dreaded double-dip recession that is W-shaped.

"It is an uncomfortable situation for leaders . . . [but] if they are banking on a V then they could be really caught out," he says. Such a nuanced message may put a premium on real leaders rather than managers who are only able to transmit a more straightforward direction.”

With warnings of a credit crunch still ringing out, Mark describes an ongoing priority as "making sure that, come what may, you will remain liquid". He also encourages investigating whether companies can better redeploy their capital as studies suggest as much as 50 per cent of it is "dead capital", tied up in poorly performing businesses.

The article goes on to comment on the opportunities for strong leaders who manage all of this.  Many commentators had expected strong companies to find buying opportunities during the crisis, but with credit so tight little happened. Kraft's takeover approach to Cadbury and consolidation in the telecoms, chemicals and microchip sectors give rise to new claims that the best companies will be able to profit.

Mark concludes that companies should "Start to take advantage of companies who have struggled."

You can view the article in full here 

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