Fernando Alcoforado*
“How to survive a recession & trhrive afterward” is the title of Walter Frick’s article in the Harvard Business Review magazine May-June 2019. In this article, Frick states that the recession can be caused by economic shocks (such as the steep rise in the price of a barrel of oil), financial panics (such as preceding the Great Recession of 2008), rapid changes in economic expectations (caused by a bursting bubble) or some combination of the three.
Frick says that during the recession there is falling demand and increasing uncertainty about the future. Frick presents research results that show that there are ways to mitigate recession damage on a company. He points out four ways to be adopted: 1) Deleveraging or reducing debt before the economic downturn); 2) Focus on decision making; 3) Look beyond the layoffs of workers; and 4) Investment in technology. Frick shows that research and case studies examining the Great Recession of 2008 focused on four areas: debt, decision making, workforce management, and digital transformation. He found that the recession puts great pressure on management change and that to successfully evolve the company needs to be flexible and ready to adjust to change.
Frick says that companies with high debt levels are quite vulnerable during the recession because they need more cash to pay interest and the principal of their debt. There is a risk of default. To keep paying their debts, companies with more debt are required to cut their costs, especially with layoffs. Surveys show that companies that performed better after the Great Recession of 2008 dramatically reduced their debts from 2007 to 2011. Frick says that a company’s performance during and after the recession depends on the decisions to be made and who makes them. Research shows that the need to make difficult decisions favors the centralization of decisions. However, decentralized decision making would be better placed to resist macro shocks because it increases the value of local information. If the company decides not to decentralize, it must obtain information from its employees at all levels of the organization in decision making.
Workers’ layoffs are inevitable in an economic downturn such as the Great Recession of 2008. Layoffs are damaging not only to workers but also to companies because hiring and training are costly. After the Great Recession of 2008, to avoid layoffs, the surveys found that several companies considered reducing hours worked, granting time off and pay for performance in order to reduce labor costs. Investment in digital technology to reduce costs was used after the Great Recession. In addition, it has been used to make companies more transparent, more flexible and more efficient. Digital transformation has helped business managers understand the business and how the recession is affecting it. This whole set of measures proposed for companies to survive the recession and thrive after it is, however, insufficient as set out in the paragraphs below.
In general, the principles that guide companies in the process of planning and operational management are as follows: 1) seek to reach some stable state of balance by adapting the organization to changes in the external environment; and 2) believe that decisions made and subsequent actions will lead to desired outcomes based on the principle of the relationship between cause and effect. Conventional management models consider management as a negative feedback activity, that is, it establishes a strategy and leads the organization in the desired direction by correcting the deviations between the planned plan and the results achieved. At a time when everything is changing rapidly, it can be said that the principles governing these management models are outdated because it is impossible to achieve a stable or balanced state in organizations in an external environment such as the current one characterized by the instability of the economic system which makes decisions made by its leaders at any given time may not lead to the desired outcome as it will be inexorably affected by mutations that will occur internally and externally over time. The major challenge facing organizations in the contemporary era is the need to manage their systems in an environment of high complexity and often chaotic change.
To cope with environments classified as “unstable” or “turbulent”, organizations must be dynamically self-organized and thus prevent their decay and death. The self-organization that is being embraced in modern enterprises in the contemporary era envisions the adoption of an intelligent and consistent decision-making that enables decision makers to have the right information at the right time about the current internal situation and future scenarios of changing external environment to the organization (local, national and world economy, competitors, technology, consumer market, etc.) that can only be made possible as long as there is data collection, management and distribution to turn it into insights. Self-organization can be achieved by adopting Business Intelligence in operational planning and management. Business Intelligence is a Gartner Group term that emerged in the 1990s that describes corporations’ ability to access data and exploit financial information and resources by analyzing it and developing insights and understanding about it, allowing them to increment and become more information-driven decision making.
Deploying Business Intelligence (BI) in a company is primarily intended to provide managers with operational and managerial information quickly and consistently. Business Intelligence is basically about the way entrepreneurs deal with data. In an environment of high complexity and often chaotic change like today, Business Intelligence enables organizations to have a reliable and consistent set of information that seeks to support the decision making process in the organization. The use of Business Intelligence proves to be one of the mainstays of business competitiveness in the new millennium, bringing with it more dynamism, flexibility and cost reduction, always aiming at improving the quality of the product or service offered. Importantly, a Business Intelligence project does not end after its implementation. BI is a set of processes that aims to deliver the right information to the right person at the right time that requires close alignment between three pillars: 1) Data collection: Everything that happens in the business is analyzed to determine aspects. such as productivity, seizing opportunities, bottlenecks, market reputation, etc; 2) Organization and analysis: All data captured in each company action are organized in a database and presented visually, to facilitate the analysis of decision makers; and 3) Action and monitoring: Decision makers make decisions based on the information analyzed, and monitor their results to see if they are succeeding.
Through the BI system, all relevant data appears in dashboards that facilitate decision making at all organizational levels. Companies that use Business Intelligence can optimize processes much faster and more directly than those that do not. The processes of a company make a big difference in the results, whether in terms of product quality, sales and customer retention, employee satisfaction, etc. As there is no perfect company, it is crucial to look where the bottlenecks are to prevent them from becoming serious problems that threaten the future of the organization. Through BI, you can find all these breakpoints in your business and take practical steps to address them as soon as possible. The same principle cited with respect to fault recognition applies to the identification of opportunities. Innovation is the engine of companies that stand the test of time, and this only happens when their managers are able to identify opportunities and pursue them before other companies do. With the powerful insights Business Intelligence offers, it is easier to find market opportunities to focus on. The strong foundation in data analysis as a source of strategic information permeates both Business Intelligence and Big Data.
In information technology, the term Big Data refers to a large set of stored data. Big Data is said to be based on speed, volume, variety, truth and value. Business Intelligence seeks to bring the right information to the right people at the right time for decision making. This requires asking the right questions and knowingly analyzing the data to understand business dynamics. Big Data, on the other hand, analyzes a huge amount of information to show patterns and correlations, in many cases totally unknown. While Business Intelligence analyzes current data and shows the next actions to take, Big Data opens up a wider range of possibilities that can turn into avenues for innovation. Ideally, you combine the strengths of Business Intelligence with those of Big Data for a broader understanding of the data generated that will result in even better and more innovative decisions. Professionals from various sectors of a company should be encouraged to use data as the basis of their decisions. But above all, it is crucial to remind them that this is not just about seeing obvious information in dashboards. You have to look deeply for the best solutions by also looking at data that is not on the surface. With all the members of the company involved, using Business Intelligence as gold panning not just consulting, the company will have a business intelligence strategy that works.
Companies that embrace Business Intelligence and Big Data will be better able to survive the recession and thrive after it.
BIBLIOGRAPHY
BAUER, Ruben. Gestão da Mudança: caos e complexidade nas organizações. São Paulo: Atlas, 1999.
BARBIERI, Carlos. BI – Business Intelligence: Modelagem & Tecnologia. Rio de Janeiro: Axcel Books do Brasil Editora, 2001.
FRICK, Walter. How to survive a recession & trhrive afterward. Harvard Business Review, May—June, 2019.
PRIGOGINE, Ilya, STENGERS, Isabelle. O Fim das Certezas – Tempo, Caos e as Leis da Natureza .São Paulo: UNESP, 1996.
SHERMAN, Rick. Business Intelligence Guidebook. New York: Elsevier, 2015.
WIKIPEDIA. Inteligência empresarial. Disponível no website <https://pt.wikipedia.org/wiki/Intelig%C3%AAncia_empresarial>.
* Fernando Alcoforado, 79, awarded the medal of Engineering Merit of the CONFEA / CREA System, member of the Bahia Academy of Education, engineer and doctor in Territorial Planning and Regional Development by the University of Barcelona, university professor and consultant in the areas of strategic planning, business planning, regional planning and planning of energy systems, is author of the books Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona,http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social Development- The Case of the State of Bahia (VDM Verlag Dr. Müller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011), Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV, Curitiba, 2015), As Grandes Revoluções Científicas, Econômicas e Sociais que Mudaram o Mundo (Editora CRV, Curitiba, 2016), A Invenção de um novo Brasil (Editora CRV, Curitiba, 2017), Esquerda x Direita e a sua convergência (Associação Baiana de Imprensa, Salvador, 2018, em co-autoria) and Como inventar o futuro para mudar o mundo (Editora CRV, Curitiba, 2019).
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