At this writing, fierce disagreements persist about whether, and where, recession is headed. History suggests that such a debate is itself indicative of a prolonged sideways economic period, during which some countries will slide deeper into economic morass (e.g., Japan) while others (US, UK) are well-positioned for an early rebound.

But one statement about which almost no one argues is that the decade-long era of too-easy revenue growth is now dead. It is not just that the tech star-companies now find that reliable corporate accounts are scaling back capital spending.

Consumers are also grossly overextended, and the presumption that they can sustain the long-in-the-tooth boom for a few quarters more is quickly emerging as fiction.

At such times, corporate attention understandably switches to expense reductions: with revenue growth flat, scaling back unnecessary costs is the only way to defend company cashflows and thus protect valuations.

But all but the most self-destructive of companies focus on the fat, not on goods and services essential for the recovery. For if there is one characteristic of slowdowns since 1970 is that each is shorter than its predecessor.

The last official recession of the world´s pacesetting economy, the US, lasted only 14 months, in the early 90s. By our calculation at VBM Consulting, the present slowdown (although not officially a recession) has already been in place for eight-nine months.

At such times, the effective Value Maximizing CEO keeps one eye on expense levels with the other eye on capabilities. THIS is the time to find that alternative supplier of essential raw materials and fittings—the smaller account which is willing to price at zero-profit levels for a year in order to dislodge a larger, less effective competitor.

A parallel situation arises in services. Vapid consultants churning confused processes and forgettable measures and metrics are unaffordable at any cost, at any time.

But what about those few, elite contributors about whom your own people say, “They create substantial value by helping us develop superior alternatives to our present approaches”? That´s another matter, entirely.

Scaling down to these latter, highest-value consultants becomes an absolute imperative at such times. How do you come to know who they are?

Certainly NOT by self-proclamation. Look to your key people responsible for building your corporation´s future value through expense-side approaches such as central services and on the revenue-side, in new product launches. And then give your people the core support that they need to succeed, fully.
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