Jeff Judy

Jeff's Thoughts -July 23, 2008

Fail? Survive? or Thrive?

There's no doubt that it is a tough time to be in any credit-related business, and things are probably going to remain difficult for a while yet. But we know that we'll eventually come out the other side of this crisis, and we'll emerge into a somewhat different environment, with an altered cast of players.

Some companies have already failed (or been acquired on fire-sale terms), and more are set to follow their unfortunate path. Many will survive this ugly mess, and will resume business as usual, albeit slowly, when better times return.

But a few will be poised to thrive when all this is behind us. While the survivors are slowly rebuilding profits, these thriving enterprises will regain their strength much more quickly, perhaps even exceeding their past performance at the expense of the mere "survivors."

The common theme that links the failures, the survivors, and the companies that will thrive, is strategic planning, and particularly, the timing of that planning. Regardless of how formal and sophisticated your strategic planning process is, strategic planning is about the future, and it requires vision of two kinds: a vision of a future business landscape, and a vision of where you want to be in that landscape.

I know from my own consulting practice that for many organizations, strategic planning is a very short-range process. It gets to be a routine rubber stamp of "what we'll do next year," a plan that is just a tweak of last year's plan.

The current failures are paying for not taking strategic planning seriously in years past. Their lack of vision, and their lack of effort in looking ahead and preparing for a possible different future, are costing them dearly now.

The survivors in our industry are hanging on because they looked a little farther ahead (or, in some cases, were lucky). They didn't let very short-term profits and opportunities completely overwhelm their longer-term need for quality and diversity of assets. They didn't (entirely) short-circuit sound processes and safeguards, built from a longer-term vision, for immediate gains.

But the ones who will thrive are engaged in strategic planning, right now, for a brighter future. Even though the current firefighting, the disaster response, demands enormous attention, they are disciplined enough to think about the future after this crisis has passed.

Now, I can't tell you exactly what that future will look like. The regulatory environment will probably be a little different. The confidence of our customers, and their willingness to trust us to look after their best interest, will surely have faltered. The competition may be quite different.

But it isn't my job to be your oracle. It's my job to encourage my clients to develop their own, market-specific visions of what life could be like on the other side -- producing multiple models, if necessary -- and then to start laying the groundwork, today, for thriving in that future life.

Sure, it can be hard to visualize better times, at the moment. That's why only a few institutions will have the courage and discipline to plan for them now. And that's why, if you concentrate solely on surviving this downturn, you can expect to hand over some of your customers and your profits to those gifted few competitors who are planning, today, on taking away your business tomorrow.