Category Archives: Economy

 

Recession refers to decline in a country’s gross domestic product (GDP) growth for two or more consecutive quarters of a year. A recession is also preceded by several quarters of slowing down.

The global economic slowdown started in late 2007 with the emergence of sub-prime losses in the United States. It further tumbled down with the risky loans and over-priced assets. This lead to the crash in stock market, companies shutting down, people losing jobs and therefore led to less spending in the market which spiraled into further downfall of the world economy.

In India the effect came as the sensex crashed while the foreign investment started to withdraw and dwindle. The real estate sector got affected severly. The common man suffered as jobs were lost, exports decreased and the common man’s confidence in the market reduced. Comparitively, India has been one of the few countries least affected by the recession as it’s GDP fell from 9% average of the past four years to only 6.7% in 2008-09.

To summarise the global recession affair, it was the mismatch between the wealth and money. Wealth means an asset or experience which is valuable to us and money is the means to get it. There was more money and less wealth for that money in the market. Due to which, the fluidity of wealth reduced. The transformation of wealth into money and vice-versa reduced.

This phenomenon affected everyone. Let’s see how we can use it to our best.

Pros of Recession

  • Low cost of resources – As the demand of the resources go low, the prices have also contracted. The cost of land, machinery, labour is lower today than a year back. The same amount of productivity can be achieved today with lower investments. The market is full of potential resources waiting for takers who can place them in the right frames. If investment is made today in increasing the morale of one’s workforce, this effort during low times will last a very long time and would ensure loyalty and higher efficiency.
  • Survival of the fittest – When the going gets tough, the tough gets going. A plant that grows in tough terrain under difficult conditions is always much stronger and healthier than the ones which grow under ideal conditions. If a start-up can fight and steer it’s way through the economic slow-down, then it has already been through the toughest battle grounds and has only one path to follow – the one that goes upwards. Recession is the best time to learn from the mistakes that the other organization have made. Also, it is better to fail early to succeed sooner.
  • Adaptability to Change –Today for survival every organization needs to be flexible enough to adapt to any new economic, social, political or technological change. The volatile environment of the economic slowdown ensures that one learns how to bend and twist.
  • Economic Low, Creative High – New constraints which have never been encountered in the past cannot be worked with old  and tried and tested ways. New problems call for new solutions. Therefore, the time is ripe to create new solutions. Newer outlook, perspective, understanding, research methods and solutions.
  • Lean Management – With limited resources to spend, new organizations can perfect the art of lean management. Keeping the expenditures low while getting maximum efficiency and creativity. Better methods of managing resources once learned during recession can be an advantage for future growth against any competition.
  • Customer Loyalty – If one serves the customer during the low times and creates a space for itself in the customer’s minds and hearts, when others are not spending enough energy in doing so, this effort can reap huge benefits in the long run. The bond with customers if created during the times of need, lasts long enough in the good times too.

Cons of Recession

  • Reduced investment of companies in Research and Design – The most common reaction of organisations to the economic slowdown was to cut down on any expenditure which directly did not affect their turnover. The concentration was on survival by making the most sales to get more cash flow.  Research and development investment is rather seen as expenditure by most organizations. In situations like these, the emotional connection with the customer can be lost forever. Any investment made right now to understand the customer and connect to him would repay huge benefits. This necessarily does not translate in heavy investment but in smart investments.
  • Lesser business in the market – With the dwindling consumer confidence, the demand has gone low and thus less movement of goods and services in the market. This is a challenge which the organizations must rise to and test their abilities to innovate.
  • Difficulty in getting finance – The uncertainty of the point of recovery has caused most investors to play safe and invest in businesses which have had a promising past. New innovations are finding it hard to get financed. For this the entrepreneur must take the onus to communicate and convince the investors of the potential of the business idea and it’s future prospects. It is also a chance for the entrepreneur to streamline the workings of his business to reduce the requirement of investment.

Design is the answer

When the winds of change blow, some people build walls, others build windmills.
– Anonymous

Design with it’s inherent nature of understanding the context first and creating something for its future is the ideal solution to the current problem of recession. An analysis of the situation at a systems level today can avoid any future mistakes to cause similar situations. Design arms one with such tools to gauge the system, understand the people in the system and creatively solve the problem. Design also considers the consequences of our actions on our planet and it’s people. Thus, design is emphatic at it’s very core.

With it’s multi-disciplinary approach, design can create new solutions to problems of today and the future. Against the popular misguided notion of design creating more junk than useful things, with design we can reduce any excess production and costs, create better products and services with fewer and better resources, create larger markets through better products and services, streamline processes, motivate the workforce, understand the user and thus lead the economy towards recovery. The reiterative process of design would make sure that constant feedback is included into the system for constant improvements and allows quick adaptability.

Posted on 4th October 2010  |  No Comments  |  
 

Business Needs DesignOver the years “design” has become ever more popular and is slowly getting into an every man’s vocabulary. But till date “design” equates to a mere decorative process and often thought as the final steps in delivering the offering.

Successful businesses across the world have demystified this cliched thought about design and have harnessed the power that Design holds. These are the companies that have taken the innovative leaps and have become business leaders in their domains.

Design is like that magic potion which has all the ingredients to create success.

It starts with a deep research into the context and the subject, it is only from understanding the problem well that a designer is able to create a solution which is perfect! Designers also have an invaluable quality to empathies with the user of their creation. With their unique tools of understanding the user, it becomes possible for them to design that offering which gets welcomed by the user and the market.

Designers also have holistic views and are good at cross-connecting and thinking freely, this gives them the necessary canvas to imagine and innovate. Bringing out this innovation requires a synergy between the Business functions, Design and Technology.

Business Innovation by No FormulaeDesign which was traditionally restricted to the fields like graphic, product, industrial, fashion, interior, architecture etc. is expanding and percolating more into the Business functions. Design principles are being applied to things like finance, operations, marketing and processes. From a Business of Design designers are progressing to Designing Businesses.

With it’s inherent quality of creating something new, design is all about innovation. Using the tools of design, businesses can adopt a usercentric approach. Design brings understanding of the emotions and logic of the user. When the experience of the user is kept in consideration, chances of failure almost disappear.

Posted on 4th October 2010  |  No Comments  |  
 

Flow of Money by No FormulaeMoney is something that gives you power to get something you want when you give it away. After discussions we realized that money is just commodities in exchange. Money is worthless unless it exchanges hands, unless it flows. Just like the flow of money is critical to the functioning of money, so is water essential to our existence. Therefore we took the metaphor of water to explain our view on money.

Just like water changes forms, so does money. Ice is like gold, realty, etc., liquid is like cash and gas is like credit cards, stock and virtual money.

Just like water, there is an unequal distribution of money around the world. Very few have access to it and most of it is saturated in the hands of a few. Like the glaciers are the largest source of fresh water (68%), the same way the rich of today are the glaciers of money, holding it with themselves and not letting it flow. There is a scarcity of water and just like water, money is not valued properly. We cannot do without either money or water.

Also when water stagnates and there is no flow or movement, it becomes infected and unfit for use. Various insects start breeding and the water becomes dirty. Similarly, without flow money becomes useless. It is only a few pieces of paper, after all, to which we assign value.

Posted on 4th October 2010  |  No Comments  |  
 
 
No Formulae © 2012 | Connect with us   FacebookTwitterMail