Darden dean: ‘We’re ... crossing the chasm’

The dean of the University of Virginia’s business school has some advice for companies seeking to survive the financial crisis: Embrace the anxiety, but seize the opportunities.
“My message to you is get serious. We’re in a period of time I call crossing the chasm or the gorge or the trough. We need to realize that this is not your mother’s — not your typical — kind of event,” said Robert F. Bruner, dean of the Darden Graduate School of Business Administration. “Take this opportunity to reinvent and re-imagine.”
Bruner addressed a crowd of high-tech business leaders with the Charlottesville Business Innovation Council on Thursday at Darden. Bruner is a noted expert on economic crises whose latest book is “The Panic of 1907: Lessons Learned From the Market’s Perfect Storm.”
Bruner said the market’s conditions have converged again to create a “perfect storm,” leading to a recession that will almost certainly grow worse before it begins to recover.

“This one’s a whopper,” he said.
Bruner urged business leaders to recognize that the current downturn is “not your garden variety recession,” but rather a more profound reset of the market.
Smart companies, he said, will understand consumers’ fears. They will aim to protect their business’ long-term health. And they will reinvent, reorganize and renew themselves in such a fashion that they can snap back quickly once the economy starts to improve.
Wise executives, he added, will hone their services to cater to the evolving demands of cash-strapped consumers. In such an economy, he said, the demands of the customer must come first.

“I urge our students to focus on what they can offer, not what they want to do,” Bruner said. “I would say this applies to all businesspeople. You may have the aspiration to make your enterprise into something newer, bigger, greater — but with conditions like these, you need to focus first and foremost on what customers are willing to pay for.”
Not all industries are expected to see difficult times during the economy’s rough patch, Bruner said. Health care companies are likely to grow for the next one or two years, he said, particularly as President Barack Obama’s health insurance initiatives move forward.
Some large technology companies are also making strategic acquisitions, he said, despite shedding some employees and cutting expenses.
Yet many other industries are feeling the pain, he said. Newspapers are in a “virtual freefall” and carmakers are posting huge losses, despite government bailouts.

A member of the audience asked Bruner if he supports the idea of nationalizing banks. He declined to say one way or another, but he weighed the proposal’s pros and cons.
On the one hand, he said, it would stabilize the financial market. But on the other hand, it would create a moral hazard, in which depositors, investors and bankers might once again take overly risky moves without fear of consequences.

Bruner took an informal poll of the crowd’s perception of the recession. The vast majority of the local business leaders apparently believe that the economy will not improve until the first quarter of 2010 and will not reach parity with pre-crisis conditions until some point later than the first quarter of 2011. They also seem to believe that this recession will be “bad” but not as bad as the Great Depression.
“We are not a Pollyannaish group in this room — and with good reason,” Bruner said. “We all feel rather beaten up by these events.”