Stelter Daniel - Accelerating out of the great recession: how to win in a slow-growth economy

How to Win in a Slow-Growth Economy

David Rhodes and Daniel Stelter
THE BOSTON CONSULTING GROUP

Copyright 2010 by The Boston Consulting Group, Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

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For our wives, Alex and Brunhild

PART ONE
WHAT HAPPENED AND WHAT HAPPENS NEXT

CHAPTER 1
THE DAMAGED ECONOMY

CHAPTER 2
THE NEW REALITIES

PART TWO
WHAT TO DO

CHAPTER 3
EVEN IN THE WORST OF TIMES

CHAPTER 4
DEFENSE FIRST

CHAPTER 5
GO ON THE OFFENSIVE

CHAPTER 6
A NEW MANAGERIAL MIND-SET

APPENDIX A
ABOUT OUR METHODOLOGY AND SOURCES

APPENDIX B
ABOUT OUR SURVEYS

In the year following the collapse of Lehman Brothers, we wrote a series of papers entitled Collateral Damage, laying out our view of the developing economic crisis, the emerging new realities, and the actions companies needed to take to prosper in a damaged economy. Some of the ideas in those papers, together with some of the research, helped to underpin this book.

A number of colleagues at The Boston Consulting Group (BCG) helped us to develop that thinking, and we wish to acknowledge their contribution to our work. In no particular order, they are Shubh Saumya, Andr Kronimus, Sylvain Duranton, Andrew Dyer, Philip Evans, Mike Deimler, Grant Freeland, Jean-Manuel Izaret, Andy Maguire, David Michael, Takashi Mitachi, Alexander Roos, Jeff Gell, Janmejaya Sinha, Bernd Waltermann, Chuck Scullion, Rainer Strack, Stpan Breedveld, Rune Jacobsen, Frank Plaschke, Gerry Hansell, Lars-Uwe Luther, Jeff Kotzen, Eric Olsen, Jens Kengelbach, Mathias Schatt, and Catherine Roche.

There is a small group of people who came with us on pretty much the whole journey. They dug out obscure data from long ago, they helped to research the archives, they were our eyes and ears on the developing economic story, and they helped to make the experience a most rewarding one for us. We want to thank Nimisha Jain, Jendrik Odewald, Katrin van Dyken, Jim Minifie, Renato Matiolli, William Gore-Randall, Carolin Eistert, Kyrill Radev, Daniel Schneider, and Hiroki Inada for their wholehearted efforts.

In addition, BCGs editor-in-chief, Simon Targett, provided wise counsel throughout the challenging process of writing this book, while John Butman contributed his experience in the art of writing business books. Mary Glenn, our publisher at McGraw-Hill, encouraged us to develop our work as a book, and Knox Huston, our editor at McGraw-Hill, was both constructive and responsiveand we thank them for this. We would also like to thank Todd Shuster, our literary agent, of Zachary Shuster Harmsworth, and Eric Gregoire of BCG, who helped our promotional efforts.

But there are two people who deserve special mention: Alex Dewar and Namrata Harishanker not only helped with all the research and the development of our ideas but also made enormous contributions to the writing of the book itself. We thank them for their hard work, for their unceasing good humor in the face of our unreasonable requests, andmost of allfor the quality of their contribution. Any shortcomings are ours alone.

It was not at all what the experts predicted. Most of them did not foresee that an economic powerhouse could suffer so much damage in such a short period of time. They did not expect the fast-growing gross domestic product (GDP) to go so spectacularly into reverse, the real estate bubble to burst as violently as it did, and industrial production and capacity utilization to fall so steeply. Nor did they expect the stock market to plunge so dramatically from its all-time highalthough it would recover some ground subsequently.

No, the Japanese (and Western) economists and analysts of 1991 predicted none of these developments. They expected that the 4 percent compound annual growth rate in real GDP that Japan had enjoyed for a decade would continue unabated. They expected that incomes, property values, industrial production, profits, and share prices would continue to rise.