Taking Advantage of the Downturn
This morning I received a disappointing email announcing Microsoft would be laying off about 5,000 employees over the next 18 months. I am hoping for the best when it come to my team and my own employment. The people I work with are a talented and intelligent group of people. Unfortunately, layoffs are a sad outcome of all companies during this recession. Some are hurt harder than others, with entire operations shutting down. The reality is that everyone is adjusting to the rough times ahead.
It would be ignorant to think this storm will go away in a short time. The damaging housing, credit, and financial ripple is taking its toll across all of America’s functions. It is like the bullwhip effect you learn in Supply Chain Management. Everyone is trying to react to the variability of supply and demand, as a result people will over estimate and underestimate. It will take some time before things stabilize.
I wonder if things could be done differently. Why can’t companies be more lean and efficient during the good times? Ideally, recession periods are the best time to expand your portfolio and get your edge on your competition. Any company dealing with layoffs will result in inefficiencies, lower morale, and restructuring. This is downtime that can be used as a competitive advantage. Why can’t we think about expanding during rough periods? Why not reinvest in strategic areas to come out as a stronger company?
This can be done, and has been done. Being lean during the good times. Three years ago Mark Hurd enacted cost-cutting in order to tune the company, streamline its operations, and expand its portfolio. Expand your talent during recession periods. After the dot-com bust, there was talent everywhere picked up by Amazon, Microsoft, and other larger companies through smart-hiring and acquisitions.
A few years from now, we will look back at how every company handled this situation. Companies and their leaders will be measured on their reactions, how they dealt with employees, and how they navigated through this unfortunate time.