In Barbados, any “green shoots” of a recovery are yet to stick their heads above ground. And since this country traditionally follows its major trading partners into a recession and out of one, it may be some time yet before such shoots become visible.
But simply waiting for a global recovery to gather momentum and pull Barbados along in its wake isn’t the answer for local businesses, according to Philip Atkinson, Assurance Leader with PricewaterhouseCoopers SRL in Barbados.
Barbados, he says, is caught in a U-shaped recession and the bottom of the U is long and flat. “We still have a way to go before we reach the end and start to climb out of it.”
In the meantime, just holding strain until economic conditions improve could be a dangerous approach, he says. So too could be a pre-occupation with cost-cutting and survival, with no longer term view of what the business environment may look like in three to five years.
“I know most executives aren’t in the mood to hear this right now, given what they are grappling with, but companies need to be looking down the road and around the bend. When we come out of this recession the world is going to be different, and we need to have a sense of how different because the old ways of doing things won’t cut it.”
Atkinson believes companies that will be best able to capture growth when the recession ends will be those that have used their “time in the tunnel” to examine their business model from top to bottom and determine if it is still sustainable.
“It is time to examine the processes that make your company unique and ensure that they combine all the best qualities of efficiency, innovation and forward thinking,” he says.
He suggests companies focus first and foremost on areas such as human resources, products and services, and information technology, all of which can generate major risks to the business.
“We need to ask hard questions: are we offering the right products and services? Are they what the world will want to buy in 2015? Is there some line of traditional business we should be getting out of? Should we be outsourcing some mundane tasks? Do we have the right people in the right positions to carry the business forward?”
Companies also need to widen their interpretation of risk as they scrutinize the business, he says, or they will be in danger of overlooking major threats.
“Financial risk tends to be well covered in most instances, but do you have the right systems in place to identify and report on the other areas of potential risk? I’m talking about such things as fraud, poor information security, inadequate IT systems and expertise, lack of meaningful information about customers, and being too slow to market.”
And let’s not forget about shareholders, regulators, board members and also staff, Atkinson warns. “No matter how positively your brand is perceived in today’s environment, no one has blind faith anymore. You have to provide transparency to build trust, and you can only do that if you provide timely, accurate and complete information.”
In essence, he concludes, “The way forward over the next year or two calls for a good deal of critical self-review by our companies followed up by action.”
Christopher Sambrano, PwC’s Advisory Services leader, agrees with the prescription. But in addition to putting their existing business models on the examination table, he believes senior executives in search of post-recessionary growth must also look very closely at the “vacant space” around their businesses and how they might be able to exploit it.
“In almost all industries there is vacant space that can go unclaimed, because businesses are focused on competing in – and trying to dominate – the space they know best,” says Sambrano. “The danger here is that we can pass over unique growth opportunities because we don’t consider them to be a good fit.”
The first step in seizing vacant space within an existing market is for companies to take a long hard look at their “customer value proposition” – what they make or provide to create value – and find a way to make it more satisfying.
“It goes without saying that all customers or clients these days want quality, convenience and affordability,” says Sambrano. “The challenge now is to combine these elements in a way that is obviously profitable but also provides a unique value proposition.”
This may mean finding new products, brands and sources of supply, or combining complementary products and services. Consumers want choice and convenience, he says, and they also wish businesses to recognize that people’s spending power is being severely constrained.
Sambrano suggests businesses might respond by forging direct relationships with suppliers and manufacturers in countries such as China, Brazil, Belize and Guyana, rather than by doing business through the traditional distributors in developed markets. Or they may combine with, or acquire, businesses that provide the products and services that will allow them to offer a one-stop or full-service solutions.
“We need to knock down the existing walls and do things more cheaply,” he says.
But seizing vacant space on a larger scale means venturing into the unfamiliar territory of new markets and services; in other words, going well beyond the reaches of the Caribbean region and the traditional trade routes, and using the new social and other media to reach customers.
Sambrano points out that Barbados continues to define its major trading partners as being the U.S., The U.K. and Canada. He believes the time has come to add other names to the list, such as Brazil, India and China.
“These are the countries where growth is taking place and where large sections of the population are becoming more affluent by the day,” he says. “Are there no opportunities to buy their goods and services or sell them ours? We’ll never know if we see our operating space in traditionally narrow terms.”
Sambrano acknowledges that such approaches may be uncomfortable, and our existing regulations may present obstacles. But local businesses will be at risk if they remain wedded to old ways.
“If there was ever a time that we needed to drastically change the way we do things that time is now,” he says. “It is a time that calls for speed and the courage to make bold decisions. We must be competitive on a global basis.”
But it is not only business that must do this, he emphasises. Government agencies responsible for facilitating business must put in place processes and customer service standards that represent international best practice.
“We have a high-cost regime in Barbados. If we can’t lower that cost we must match it with speed, service and quality. When it comes to adjudicating and completing transactions, we are nowhere near the level that the global marketplace expects.”
Nevertheless, attracting those international investors and customers is vital if Barbados wishes to maintain its pace of development and raise its standard of living. And this means they must encounter a customer-friendly environment that facilitates as well as regulates.
“Obviously we need strong regulations, but we need to strike the right balance, because investors and customers are not coming here only on our terms,” Sambrano says. “We must recognise that it is a fiercely competitive world, and that these potential investors and customers have plenty of choice.”
The PwC advisory leader says there is no question that Barbados has much that is worth preserving. “But at the same time, we must be willing to adapt and make the investments in change that are needed. We must make that change quickly and we have to do it right.”