Are you ready for the recovery?

My view
Bob Moritz

Image: Bob Moritz, US chairman and senior partnerThe dramatic impact of the recession on global business is clear, and for many, it was worse than expected. In response, most companies cut costs, reduced headcount, trimmed back plans for expansion, and began to rethink their approach to risk.

In my last column, I expressed cautious optimism about our economy and its prospects for recovery. I also drew out a few implications of doing business in a post-crisis world. Now that the recovery is at least on the horizon, I’d like to continue that discussion—this time with the benefit of data from our 13th Annual Global CEO Survey.

What will the post-crisis environment look like? We can’t be entirely sure, but based on our research, we can make some pretty good educated guesses.

In the post-crisis environment, consumers are likely to be much smarter about how they spend their money, and they will be more active in terms of influencing the products and services they’ll buy.

Additionally, access to capital will continue to be a challenge, the gap between rich and poor likely will increase, the G20 likely will become a more dominant political force, regulation is and will continue to be a top-of-mind issue, and governments will become more protectionist.

In such an environment, what are companies doing to position themselves for post-recession success?

For most executives, cost cutting remains a priority. A majority indicate that they will implement a cost-cutting initiative in the next 12 months. CEOs are also focused on making major changes to the way they manage risk and to how they allocate investments.

At first, this might appear to be an extension of the “hunkering down” mentality present at many companies during the downturn. But other data contradict that assumption. For example, compared to last year’s survey, significantly more CEOs in the current study expressed confidence about achieving revenue growth in the next 12 months.

But is this optimism being translated into positive steps to position companies for success? I think so. Despite a challenging environment, businesses are focusing on existing markets for growth and investing in leadership and talent development. Our survey also shows that, over the next 12 months, organizations that will be adding to their workforces outnumber those that will be cutting.

If you’re paying attention to the basics If you’re paying attention to the basics—prudent investment, focus on people, concern for the environment, attention to customers, awareness of risk, heed to reputation and brand—you most likely are ready for the recovery.

This is not to say that CEOs do not have serious concerns. They do. Topping the list of potential threats is the possibility of a protracted global recession, which is followed closely by over-regulation. In addition, worries about protectionist tendencies are up from last year’s survey.

Even such concerns, though, can be viewed in a positive light, as they motivate companies to take stock of their strengths and weaknesses and build new capabilities. In short, by anticipating change, and proactively addressing it, companies are poised to cope effectively with today’s challenges, while positioning themselves to seize tomorrow’s opportunities.

Such companies are ready for the recovery. Are you?

If you’re ignoring such areas as R&D and new product innovation, leadership and talent development, strategic technology infrastructure or applications, and capital investments, you’re probably not.

But if you’re paying attention to the basics—prudent investment, focus on people, concern for the environment, attention to customers, awareness of risk, heed to reputation and brand—you most likely are.

This is what successful companies do all the time, regardless of economic circumstances. These are qualities that transcend temporary economic cycles and see the best organizations through challenging times to long-term prosperity. Already positioned for success, when the recovery comes, they’ll be first to benefit.

That’s my view. What’s yours? We’d like to know. Send us your comments at pwc.com/view.

Bob Moritz is chairman and senior partner of PwC.