Global economic insecurity has Australian businesses asking themselves a number of important questions: how will it affect us? How bad is it going to get? How long will it last? And even, how will we survive? But one question is less frequent, and it’s one that should be addressed by any company hoping to maintain its competitive edge in today’s climate and beyond: how can we take advantage of conditions to boost productivity, re-focus on our key objectives, and ultimately widen the gap between ourselves and the competition?
In the current changing environment, top performing organisations in any sector can capitalise on the confusion, lack of adaptability and increasing internal focus of less effective competitors to grow market share and demonstrate their differentiators. It is far easier to be successful in a buoyant market, and the current climate provides the truly strong performers with the opportunity to demonstrate that when the going gets tough, the tough get going.
On a recent month-long trip around Europe and the Far East I was able to see first-hand the effects of international uncertainty on a number of different cities, each with its own unique set of economic strengths and weaknesses. Of those I visited, Dublin was the hardest hit, suffering from the withdrawal of several key American players in the market, which has resulted in mass job loss and a plummeting morale. London has experienced the double whammy of a finance and business sector sorely affected by events in America, and a sharp rise in the cost of essential services. Cash-rich cities in the Far East, such as Hong Kong and Singapore, speak of recession and crisis economies, but in actual fact are still hiring and appear relatively unscathed by events overseas.
Governments everywhere are taking swift remedial action and applying many of the hard-earned lessons of the early 1990s. But will it be enough? Without a crystal ball it’s really a case of wait and see.
So what is likely to happen here in Australia? Sometimes distance can be a great advantage. The reverberations of the crisis have hit us later than elsewhere, which has given local businesses the opportunity to assess what’s happened in markets overseas and modify our actions and responses accordingly.
We should also keep in mind that we have our own, unique set of economic conditions; ones that will quite possibly protect us from the toughest jolts experienced in countries such as those I saw in America and Ireland. Our economy is in a pretty good state; our national debt is manageable and inflation isn’t onerously high. We are still in full employment at five per cent. This figure is estimated to rise to six per cent in 2009, but it’s still only a little above the common definition of full employment used in the western world of around five per cent. And I believe it is likely to come down fairly quickly due to the tangible skills shortage in the key areas outlined above (over the next five years it is estimated that we will still face a shortage of more than 200,000 skilled workers), combined with an ageing population and a declining birthrate.
But to the person on the street, it’s also about perceptions. Those of us who experienced the recession of the early 1990s remember the lean times and grueling economic conditions. This was not a time to walk out of a job or close your doors if you really didn’t have to.