Many experts agree that the decision-making challenges facing corporate chief executives and their top strategists are in some ways more difficult in the second half of 2009 than they were during nearly two years of unmitigated recessionary times. That is because managers must make risky decisions on issues such as increasing production back to pre-recession levels: do it too soon and a company could waste millions on unsold inventory, while inaction could lead to significant lost revenue opportunities if the United States economic recovery is strong and takes place quickly.

But management experts say the current month-to-month economic uncertainty has an advantage, too, by making it a good time to focus less on short-term goals and more on the big picture. That includes shoring up relations with existing customers, looking at shedding unproductive units, while strengthening the core brand and putting an emphasis on branding and on research and development – areas that should not have been abandoned in the first place – in order to be ready with new products when the recession is clearly over.

Not everyone is optimistic about the extent of the economic recovery. Some worry there could be a backsliding into what experts call a double-dip recession of renewed losses.

Wharton finance professor Franklin Allen looks at the commercial and residential real estate markets as a barometer of economic recovery, and so far that forecast remains cloudy. Allen advises CEOs to "be cautious and to hedge any big risks".

Wharton management professor Ian C MacMillan suggests the problem is the American consumer, who still faces a crushing debt load and is continuing to cut back spending to the bare necessities.

A recent report by Deloitte Consulting called, "Here Today. Where Tomorrow? Taking Action in Uncertain Times", describes the current status of the U.S. economy as "lumpy and bumpy" and stresses that the uncertainly is causing too many executives at the more than 100 major companies it surveyed to fret about short-term issues and ignore big-picture strategy. Deloitte's study warned that firms are fixating on "concerns such as liquidity and customer retention, not worrying about forward-looking areas like talent, profitable growth and structural change".

Clearly, many executives are struggling to read the tea leaves of an economy that is finally posting some of its first, very tentative upbeat economic data in roughly two years. There is also an upbeat tone to consumer confidence, but it is still well below the mark of a healthy economy.

The biggest conundrum facing corporate strategists involves some grim forecasts regarding employment and the pace of rehiring when compared to other recent economic slowdowns. Some experts are predicting a so-called "jobless recovery", with many firms trying to do more with less and in no hurry to rehire or fill positions that were slashed at the nadir of the recession.

Even as the stock market and other economic indicators improve, many consumers remain bitter toward Wall Street and other corporations over reports of huge executive bonuses – given rampant abuses in the home mortgage market and a $700 billion (Dh2.56 trillion) government bailout of financial institutions. Rebuilding consumer trust remains a top priority for corporate America – an area that company marketers should begin work on immediately, regardless of the short-term outlook.

Several leading CEOs agree that the downturn has been a good time to refocus on customer relations, including what can be done to garner goodwill that might translate into dollars when spending finally picks up.

Yoram Wind, a professor of marketing at Wharton, agrees that moves focused on building a closer relationship with core customers – either on the business-to-business side or rank-and-file consumers – are a critical priority that requires immediate attention, regardless of whether the so-called "green shoots" of mid-2009 are the real harbinger of an economic recovery or merely a false alarm.

"The game is to change," Wind says. "Those who succeed will be ones that focused on fundamental issues as the financial crisis and the recession intensified. If competitors are cutting back advertising or cutting their sales force, now is the time to increase or maintain them." He also joins other experts in hailing the rise in social media – which happened concurrently with the recession – and says that some firms now may find popular sites such as Facebook and Twitter to be a valuable tool for reconnecting with customers and restoring loyalty, if handled correctly.

Companies that have made steep cuts now also have an opportunity to think strategically about their future – whether that means expanding into adjacent lines of business or opting instead for a tighter focus on the core market when the inevitable turnaround hits.

Given this recession's substantial layoffs and uncertainty about large-scale rehiring in the short run, Wharton management professor Olivier Chatain suggests that another area of opportunity can be found in products or computing software that increase productivity. Companies that sell these types of products and services should be ramping up production and marketing now, he adds.

Wharton operations and information professor Morris A Cohen acknowledges that inventory management – along with hiring – are the most difficult issues facing executives right now. The unique aspects of this downturn make it hard to use the normal predictors – such as advance orders of machine tools – as guarantees of a long-lasting turnaround. "We are in the worst downturn since the Great Depression, which means that perhaps what happened over the last 20 years doesn't apply," he says. "Maybe this is [like the] one-in-a-hundred-year flood. People are more risk averse. They are saying that just because it worked out this way the last three times, doesn't mean it will work out this time."


- The New York Times Syndicate's Global Business Perspectives

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