Four Tools to Deal with the Crisis. And Defeat It

The crisis we are going through is essentially an issue of management, not of policy, both in its root causes and its solutions. The origins of the crisis are to be found in the overconfidence with which managers of financial and non-financial companies have taken decisions on growth and investment, as well as in the multiple, widespread errors in dealing with motivational processes, as these were based on short-term horizons, and rewarded exclusively with money and power. Policy-makers have had to find emergency solutions to a problem of historic proportions. But these emergency actions now need to be supplemented by an in-depth overhaul of managerial and organizational practices, to identify the tools that are most effective for dealing with the gargantuan challenge we face. The first tool managers have is two-pronged and better known in theory than in practice: organizational management learning and the development of strategic competencies. Only rapid and efficient learning enables the construction of durable competitive advantage, as any strategy textbook can tell you. But if you go and look if companies are actually investing in this to prevail in their competitive challenges, you're likely to be disappointed. Very few firms have been able to institutionalize and continuously improve internal learning processes.

The second tool revolves around the management of acquisition processes. A cunning policy of growth through acquisitions can be the fastest and most effective way to restructure your portfolio of assets and position your company in industry segments where it can compete with better chances of success. But we see that companies have invested in the financial process of acquisition rather than on the actual process of integrating new activities. What happened to the support systems for decision-making, the processes of management control, and especially the constant refinement of the practices of selection and due diligence of the business counterpart, as well as planning and execution of the post-acquisition phase? The same unflattering observation can be made about that other tool of growth coming from external sources: partnerships. Here, in the vast majority of cases, we are witnessing pure amateurism. Even companies that have accumulated experience in cooperative processes usually lack structures, procedures, and learning routines to turn that experience into serviceable knowledge. There are two other, less evident, tools. One is developing a culture of ecological and social sustainability in operational processes and strategic decision-making. Such a culture among stakeholders (shareholders included) represents the best protective shield against the worst of the downturn, and is the safest and fastest way to identify strategic solutions and implement the internal change that a crisis normally requires. Last but not least, managers have the best tools between their ears. The human brain can envisage indirect consequences of environmental change, but especially devise creative answers and foresee the best possible solution paths. Management decision processes are now supported by recent developments in neuroscience that allow us to more readily analyze micro-factors and identify critical elements. This provides companies with an even better weapon against this and any crisis.