Elanso

Jim Lee’s APICS e-news article on being creative in hard times (sorry no direct link- go to www.apics.org for subscription) deals with the “innovation” of investing in hard times:

When an economy weakens, inflation and interest rates also tend to decline. Lower interest rates reduce the costs of capital expansion. However, because of increased uncertainty over the economic future, most companies would rather hold off investment projects despite lower financing costs. Businesses aiming for the long term should instead take advantage of the lower capital costs.

I’ve seen this type of creativity in the best companies over and over again in my business- technology enablement of business processes. When the going gets rough, we go to the innovative companies who see reduced financing costs and lulls in demand as opportunities to upgrade their technology and get ahead of the competition. This requires that you think in terms of economic cycles (we always come out of a dip, usually much stronger) and understand what will change and what won’t change (oil prices for example).

Do your executives simply reign in improvement projects in hard times? Does this make sense? Why or why not?

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