Upturn thinking in a downturn

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I know I go on about how strategy professionals should have anticipated the current difficult conditions instead of piling on with unsustainable growth [especially in the banking sector’. But here’s a reminder of the opposite from strategy+business, which points out that the long-term success of companies may reflect not just how well they handle a downturn, but also their foresight in preparing for the upturn.

The article reports the efforts of a team at Lucent during 2002 to identify growth opportunities that led to the launch of Lucent Worldwide Services. Aimed at offering services to a diverse customer base, this business would be less cyclical than the core telecoms equipment business.  A question though – if this services business was a good idea, how come it didn’t get done before? This ‘solution’ doesn’t seem to have anything in particular to do with escaping from the downturn. Indeed, if it had been implemented before the downturn, maybe Lucent would not have had quite such a crisis in the first place.

It’s a pity too that Lucent got in the 2000 mess in the first place that forced them to cut staff from 106,000 to 62,000 – like many in its sector in the late 90s, it believed gravity had been abolished and that the telecoms industry would keep needing more equipment at a rate that would cover the planet in fibre and switches a metre thick. Many of those thousands of employees were being hired at a frantic rate when it was already apparent that the bubble’s growth was slowing and the bust was imminent.

Cisco, in contrast, had much less difficulty at that time because of better strategic thinking ahead of the troubles.

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