Here We Grow Again

Will there be growth in the spring?


"For the past three years, Corporate America has been nothing if not stingy. Stalled by sluggish demand, companies have slashed spending on new factories and equipment, salaries and bonuses, technology, benefits, and travel. They have exited unprofitable businesses and sold off nonstrategic assets. They have downsized, outsourced, and offshored."

Sound familiar? It should — that was how we began our March 2004 cover story about companies' efforts to refocus on growth following the 2001 recession.

This time around, however, companies aren't simply dealing with "sluggish demand," but with the aftermath of a truly historic recession. CFOs navigated through the storm with the usual array of cost-cutting measures, but the calmer waters we've now entered may actually pose an even more severe test.

Indeed, as senior editor Kate O'Sullivan points out in "Ready, Set, Grow?" deciding when and how to push the levers of growth may well be the single biggest challenge facing CFOs today. For every positive sign of recovery, there seems to be a countervailing indicator that argues for caution, if not further cutting.

This isn't lost on our cover subjects, who aren't pushing levers so much as precisely calibrating the dials on very fragile balance sheets, and watching carefully to see which way the needles move.

In 2004, the emphasis was on creating "adjacencies" to a company's core competencies, expanding into ancillary lines of business that leverage some facet of a company's expertise while allowing it to "stretch" (as one popular business book at the time put it) its way to growth.

Today, for all the talk of a "new normal," most companies are basing their growth strategies very much on the old normal, looking to reinvigorate core competencies that have often been pared down to the core of the core. Some may grow through acquisitions as well, although as one CFO told us, "There are a lot of great valuations out there, but I don't know if that makes for great deals." Assessing the gap between a great value and a great deal is just one challenge facing CFOs in these early days of recovery.


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