Counter-Cyclists

Sometimes you stumble on an article which for some reason just speaks to you. Just when you thought you had the perfect articulation of what you want to express in your head, you read how somebody has done it so much better...

As mentioned earlier, my work is at an enterprise software vendor. Hit pretty hard by the current conditions. We are going, like many of our public peers, through the phase in which we need to adapt to new temporary market conditions, and keep our key indicators (EPS, ...) in check. And, as many of our public peers, we react by contracting after having expanded in better times. Tightening our belt when the conditions are poor. Both blaming a black swan (the mortgage crisis) and taking credit for having seen it early (because it does not reflect well not seeing what we should have seen, or - although not this time - because our brains do not let us treat pure randomness as such, we must see order - read Taleb's books [see http://www.fooledbyrandomness.com/]).
The well understood risk is reduced ability to deliver, reduced ability to support our customers, reduced ability to deliver growth, etc. The EPS will look ok, but the risk is big that our compromised abilities will render us obsolete when the environment changes.

I have been through these cycles many times. And I have seen what separates those who risk their survival at every crisis from those who turn the threat into opportunity: the latter are counter-cyclists. I did not know how to express it simply and clearly, but that is what they are.
This article from Wharton [see http://www.whartonsp.com/articles/article.asp?p=429379] describes that very nicely.

Counter-cyclists keep control over the expenses and growth through up turns. They do not suffocate innovation and growth - they apply the same caution in up turns as in down turns, being selective, being focused. That may seem like a defensive strategy, but is not.
Because counter-cyclists leverage their control over these expenses and growth to avoid over-reacting in down turns. They can afford to increase their expenses and enable growth generating activities during the down turn, precisely when the competition is weaker, and putting them in a premium position to take advantage of the following recovery.
They can cherry pick the best employees - those that the others "have" to let go to protect EPS. They can cherry pick their investments - those that the others "have" to let go to protect the numbers, to focus on core values, etc...
they can choose the moment they divest, where they divest, etc.

This is really not rocket-science - and is obviously taught in MBA and various management classes, illustrated by a number of examples. We can even find Latin phrases that express the core of this.