As the European and American economies start to emerge from the doldrums, there are new challenges for businesses that have made significant cutbacks during the period of recession since 2007. Many companies ceased investing in new facilities or researching new products; they shed staff or ceased to fill vacant posts. They may now have strong cash reserves but can they respond rapidly enough to cope with the demands of a rising economy?
If orders increase substantially can businesses that have ridden out the recession with minimal staff and a lack of investment in new products find the capacity to meet the rising demand. They may have survived the recession but they now need to do more than simply survive the good times. They need to invest in new products, employ and train new staff, evolve and adapt if they are to take advantage of the new opportunities that a growing market will present.
Astute companies will recognise that there are opportunities for those that can expand rapidly after an extended recession but are naturally concerned that initial market confidence may not lead to sustained growth. Managing growth can be just as risky as managing cutbacks, perhaps even more so since growth involves significant financial investment. It is often the financial commitment required for growth that prevents companies, with the necessary cash reserves, from embarking on that course of action. Knowing how to balance investment with potential returns is the key to creating a successful, growing business.
So what does this have to do with project management?
Project management has always provided a rigorous framework to manage change to achieve a business objective; whether that is the development of a new product in a fast-moving industry or implementation of new business processes. It has always been required to balance costs against benefits whilst recognising and mitigating the associated risks of the change.
As the tough economic times seem to be receding at last, the very attributes that have always made project management so important are even more important in order to continue to deliver projects efficiently but also to be able to accurately advise on the best projects to pursue with a realistic view of the risks involved. Project management procedures also ensure adequate resources are available and are assigned to new projects; of particular importance to companies that have reduced their staff numbers over recent years.
So good project management provides the structure that ensures the investment necessary to take advantage of a growing economy delivers the anticipated benefits. It will ensure each project fits the corporate strategy for growth, that the risks associated with the investment are fully understood and that the necessary resources (human and financial) are available to complete the project.
In this current post-recession era businesses should take heed of mistakes that whole industries have made in the past. For instance, the ship building industry in many countries, including the UK, failed to invest in new manufacturing processes so that now, as it looks like a new boom era for the shipbuilding industry is beginning, it is unlikely that the UK ship-building industry will ever regain its world standing.
Since ships are extremely expensive, the industry has always risen and fallen as economies have done so. In recessions, freight rates fall so new ships are not economically viable but that reverses in periods of growth. In the USA there is currently a ship-building boom unlike anything seen since the 1970s (“Boom in energy production sends US shipyards into overdrive“).
The difference between the current fortunes of the UK and US ship-building industries is a classic case of where complacency in a post-recession era can lead to the decline of a business or industry at the point where it should be poised for growth.
Project managers should take note of this tale if they want to see their profession leading growth in their organisations in the coming years. Any company enjoying short-term profits as a result of economic growth without investment in improving processes and productivity would do well to learn a lesson from the past and invest wisely in projects that will ensure a long-term future.
Of course, the question remains as to whether project management, or more accurately project managers, have what it takes to drive their organisations in the right direction.
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