21
CORPORATE RESPONSE TO THE CRISIS
sINCE the financial crisis first struck in late 2008, most corporate entities have cut costs to increase efficiency and reduce waste. For the most part, this has helped them to survive the worst of the crisis and strengthened their balance sheets. But although cost cutting will remain important, the risk of undermining performance through efficiency drives has grown now that the easy options have already been taken. Among the survey’ s respondents, 61 % say that the risks associated with cost cutting have increased.
A common problem is that, when faced with a crisis, companies cut costs across the board without considering how this will impact their ability to compete effectively. Companies may find that, having reduced headcount to achieve cost-cutting targets, they subsequently have to rehire in to manage an increasing workload or capitalize on a new business opportunity.
Growth opportunities driven by innovation
The growth agenda has become more complex and challenging, but this does not mean that there are no opportunities available. In particular, innovation continues to be seen as important. Almost 60 % think that the opportunities for innovation in products, services and operations have increased as a result of economic turbulence. History has shown that some of the best product and service innovations emerge during times of economic difficulty.
Clean technology attracting attention
One specific sector that is attracting significant attention, despite the downturn, is clean technology. Among a recent survey’ s respondents, 55 % think that the opportunities here have increased. A combination of high oil prices, changing consumer sentiment and government regulation or tax breaks has helped to create a fertile environment for investment in clean technology.
In 2011, global investment in clean technology hit a record high of US $ 260 billion, an increase of 5 % compared with the previous year. But despite the enthusiasm for clean technology, this remains an industry in its infancy, where shake-ups and disruptive new entrants remain frequent.