There is an old saying, "when one door closes, another opens." This blog entry is focused on showing that you can often squeeze lemonade from life’s lemons. What drove the security market prior to 9/15/08, is no longer driving the market. The industry has changed, and the sooner business managers, chief security officers, and others understand this change they will be able to respond to the new risks, and new opportunities that lie ahead.
The security industry is not immune from the broad economic consequence of the financial downturn. Indeed a deep freeze has been put on capital spending budgets of many non-mission critical or regulation-required private industry projects and some municipal and state security projects where bond based finance is required. Nobody knows when the economic thaw will occur as the climate is actually getting colder. However, just at the time when one thinks the economic climate cannot get any worse, like a coin, there is a flip side, as bad as the economy is right now, the same economic hardship conditions create opportunities that pop up like a coiled spring.
During this past week, I have observed many clients, and clients of my peers, facing the grim economic realities and they are now considering deep, deep, -- did I say deep – cuts in capital purchasing, personnel, and operations, and an essential consideration in making any such operational cut is to consider and manage the consequence of such actions. Wise business operators will insist on preparation of budget downsizing plans that thoughtful consider consequence management and unintended consequences of their restructuring actions; such plans may include vetting new Business Process Outsourcing (BPO) providers and developing risk mitigation for downside risks of disgruntled employees, workplace violence prevention, intellectual property retention, and executive protection. Additionally, there may be increased demand for security services on targets of crime opportunity by disgruntled employees, fearful employees, and others causing crime opportunity risk for many types of crimes and crime targets to become recently elevated.
What is the take away for security managers -- What I am trying to say is for security consultants, managers, CSOs, when your "cheese" gets moved, you find where the new cheese is located. You reassess your risks associated with the actions of moving to new ground, and you move forward proactively. Waiting for your legacy business client opportunities or projects to thaw may keep you from thinking about new business opportunities created by this challenging market.
There are other lessons to be learned from managing through difficult politico-economic shocks. Drawing from a few lessons learned from recessions and economic shocks of times past -- I recall the last time my security consulting business was impacted by a significant economic shock. It was the terrorism events of 9/11. Providentially, do to a situation beyond my control, I was unable to reach the WTC site on the morning of Tuesday September 11, 2001. On that day, I had a meeting scheduled with NYPD, NYCHA, architects and planners to review progress on plans for video surveillance systems that my firm had designed for a couple of the boroughs and associated police substations. My client was located in the World Trade Center, Building 10 and at another office on nearby Broadway. Fortunately, I was not onsite when the terrorism events occurred but it was a close call -- that’s a tale for another time. There was an important business life lesson that I learned from these events.
Large-scale economic shocks change everything in the short-run. There is no steady state, and when conditions calm, frequently they have changed forever. One of the lessons that I learned from living through this economic shock was the impact on business that occurred with the event. First, the public confidence in the financial markets and economy were badly damaged by 9/11, as people feared touring to New York City, and airlines, hotels, and business travel ground to a halt immediately, and then when it started up again it was heavily biased toward ground transportation. Second, I noted that all of my customers impacted by the economic shock of necessity at first, and later for convenience, suspended transfer payments of their accounts payable. Few of my customers paid their invoices in September 2001 (so having emergency capital was essential for operations) as the A/R grew to 60 days, normally being only 30 days. Third, some of my clients were directly impacted adversely by the politico-economic events and their pain became my pain -- e.g., NYC's focus was necessarily redirected to their pressing requirements of restoring the public trust, creating a safe city, and getting the city working again -- meaning my jobs out in the boroughs were immediately tabled as secondary concerns, as the city focus centered on the WTC site and market recovery, and my company invoices requesting payment from the city for work performed prior to 9/11 remained unpaid for two years. Fourth, I learned that there is no safety in a government contract following significant political-economic events. My firm had a 5-year contract with the federal government that included a 5-year extension, and this contract opportunity was swept away through Congressional fiat as the money was needed immediately elsewhere in a different Department, and we were left with a cadre of professionals without work authority, and significant painful employment cuts were necessary to address the realities of the new demand. The economic shocks had resulted in somebody moving our cheese.
There is an upside to this story however. With almost the same intensity that the work opportunity imploded with the negative economic shock, other new opportunities sprung up quickly. For instance, our firm saw a three-fold increase in the demand for security risk assessments immediately following 9/11. Further, we saw demand from new customers in new markets not formerly within our operating niche. Another upside from this disruptive economic shock was the requirement for nearly all operations to cut costs, get more efficient, and be responsive with fewer dollars. If you were a provider of disruptive technologies that enabled customers to do more with less, then you had a wonderful demand pull from the market for your services, and it was in this environment that we moved our ground (i.e., our targets of economic opportunity), and we focused on the provision of remote monitored services and automating routine activities that enabled the mantra of faster, better, cheaper.
So the sooner you realize that the world has forever changed since the economic shocks that started with the collapse of Lehman Brothers on 9/15/08, the stock market collapse, and the disruptive and painful economic events occuring since that date, the sooner you will be able to move to the new markets that are indeed popping up. When life hands you lemons, make lemonade!
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