LONDON: Most brand owners are ill-prepared for another round of financial instability, and might thus miss out on the chance to benefit as their rivals cut costs, new analysis has argued.
PA Consulting polled 200 executives representing leading companies from around the world, and found they had, in the main, not even begun systematised planning for a recurrence of previous problems.
Only a third of firms had seen the recession starting in 2008 as an "opportunity", but this group posted total shareholder returns (TSR) some 10% higher than the norm.
By contrast, the two-thirds of enterprises that had perceived the fiscal slowdown as a "threat and solely sought to ride it out" proved less successful.
"My fear is that the same pattern will recur: there would be one-third who responded in a positive way and two-thirds who have a kind of victim mentality, who just look to survive rather than see how they could take advantage of it," Mark Thomas, a PA Consulting strategy advisor, said.
In a similar trend, operators that were well-placed to act quickly in the event of economic uncertainty logged a TSR that was 13% greater than the typical figure following on from the 2008 meltdown.
The broader value of possessing a rigorous, pre-determined approach was demonstrated by the fact that while 82% of corporations had cut costs, their results differed widely.
Organisations "slashing" staff levels, for example, had a 10% lower total shareholder return than those which either "contained" or "avoided" making cuts in this area.
Recommendations made in the study included developing various contingency plans, ensuring sufficient capital is available and removing any "baggage", like poorly performing brands, early, instead of undertaking "fire sales" in a down market.
"We have to look at it as an opportunity," Gifford Tanser, HR director at Boehringer Ingelheim, the pharma company, said. "The system is in chaos, so if we can be the ones who go in and help sort out that chaos by changing our business model that will make us very successful."
The opportunities to gain market share should also not be ignored, the report suggested. Old Mutual, the financial services group, has embraced such a view by deepening its emphasis on consumer insights.
"We are getting back to being customer focused. In a crisis, people become really insular," said Don Schneider, Old Mutual's group HR director. "Risk and cost management remains important, but we need to refocus on the customer and create opportunities for growth."
Data sourced from Financial Times/PA Consulting; additional content by Warc staff