The combination of turnaround management , blue ocean strategies and disruptive innovation as tools in guiding companies in overcoming their recession problems and develop a long-term healthy economic performance

1962 | P a g e J a n u a r y 1 5 , 2 0 1 6 The combination of turnaround management, blue ocean strategies and disruptive innovation as tools in guiding companies in overcoming their recession problems and develop a longterm healthy economic performance Karaoulanis Andreas andrekaraoul@gmail.com ABSTRACT The contemporary financial environment creates several uncertainty obstacles for a variety of companies all over the globe. In order to be able to escape from such distress situations, companies need to develop a certain set of strategies which they should implement in the right way. Blue oceans strategy, turnaround management, disruptive innovation and strategy as simple rules are some of the core strategic approaches the author suggests in order companies to overcome crisis and sustain a longterm healthy economic performance.


INTRODUCTION
According to Knight (cited in Kliesen et al., 2013), uncertainty is an unknown risk. In general, uncertainty springs from different kind of sources such as, demand uncertainty, supply uncertainty, competitor's uncertainty and "externalities 1 " (Wernerfelt et al., 1987, p.189). It is important to notice that political decisions (i.e. threat of currency default), unstable governments, and new heavy tax laws, are creating the last years external uncertainty.

FIVE MAIN STEPS FOR OVERCOMING RECESSION PROBLEMS
According to Courtney et al. (1997, pp.75-78), there are four levels of uncertainty: "In volatile markets, corporate management should focus on processes more than positioning" (Eisenhardt et al., 1997, p.77).
There are several strategic steps companies should take in order to avoid potential threats during recession/ uncertainty periods. These steps are the following: Step1: Choose the right analytical tools.
SWOT analysis with a combination of PEST analysis, can help companies to detect their weaknesses (SWOT analysis), while it can scan the businesses environment in order to spot the opportunities needed (PEST analysis). Also by identifying their weaknesses and strengths (SWOT analysis) they should focus on themselves and create the right opportunities. By eliminating weaknesses, they can create opportunities, or by focusing on strengths can open new ones. Creating opportunities in an uncertain environment can be vital. The use of PEST analysis can be helpful in terms of analyzing the Political, Economic, Socio-Cultural, and Technological changes in SMEs' business environment. This can help them understand the forces of change that shaping the market (Mindtools, n.d.). Also, companies, in order to acquire a better insight of the character of the crisis-uncertainty in their market segment, can participate in industry consortia (Courtney et al., 1997, p.77), something which will help them to better analyze the situation.
Toyota's lean production system paradigm, with it's the "just-in-time" method (Ohno, n.d.) can be very helpful especially during stressful economic times. By using Toyota's lean system re-developed in order to follow the specific company's needs, companies can eliminate "wastes" which will inevitably lead to bigger, unnecessary inventories. In that way, they can decrease costs, increase quality of service with a faster flow and services to their customers (Ruffa, 2009). Going lean can improve operational efficiency, which is one of the three defensive approaches 2 a company should use in a crisisuncertain environment (Gulati et al., 2010, p.67) Step 3: Use of internet and disruptive technologies.
Following the example of several Greek SMEs during the last ongoing recession, we can easily see that they miss several strategic points in terms of business development and sales. One of these is that many of Greek SMEs, do not have an online sales point. By establishing their internet and-or mobile network of sales, they can, without much expenses which is crucial in so uncertain environments, expand their market share by attracting customers from different locations in Greece. Also, by creating an online tool in order to achieve customer interaction, they can gain a competitive advantage. This "customer as innovator" (Thomke et al., 2002) approach can create waste elimination, customer satisfaction thus customer retention and bigger market share. Greek SMEs should adopt a disruptive innovation approach in e-market. Adopting such disruptive technologies, can help SMEs to confront uncertainty, because they can achieve better customer satisfaction thus customer retention.
Step 4: Investment in new business and assets.
Investing in new assets is being considered to be an offensive approach (Gulati et al, 2010, p.68). For example, when prices for acquiring a store are at their lowest level, a company can buy a bigger and more central positioned store. Also, companies can invest in new adjacent business, i.e. a furniture company can invest into carpets or tapestries selling or other home based accessories. In that way, a "black swan" can be avoided, i.e. when business is going bad in the furniture market, the furniture company can find a grip in its adjacent business sales. Also companies can make incremental investments which could put the company in a privileged position. They can achieve such a posture by joining forces with other companies in the same market fragment. With little investments they can wait until the environment will J a n u a r y 1 5 , 2 0 1 6 become more certain before formulating their strategy. Such joint ventures should be limited, and mainly in distribution, in order to minimize the risk (Courtney et al., 1997, p.74).
According to Best (2014, p.24), the marketing cost of retaining customers, is 5-10 times lower than acquiring them. By increasing the number of retention customers, companies which facing recession will be able to increase their profits and create the basis upon which they can stabilize their sales in such unstable environment. In order to increase customer retention, they should increase customer satisfaction, as there is a strong bond between them (Best, 2014, p.24). For example, due to heavy antagonism and low prices in Greece's constrained market, customer retention springs from better customer satisfaction. Companies in general and especially SMEs should focus more on customer satisfaction in order to acquire a competitive advantage and create more customer value which accordingly will lead to increase company's profits. Retain current customers in such a turbulent and uncertain market environment like Greece's, can create a stable source of profits and monetary liquidity.

USE OF METRICS IN STRATEGY FORMULATION
Some of the available metrics companies can use in order to survive the crisis-uncertainty, are the following:   17), suggests a six-category scale ranges from "very dissatisfied" to "very satisfied". The levels of customer satisfaction are rated from zero for "very dissatisfied" to 100 for "very satisfied" customers. Finding the CSI, the case company can determine-predict in a degree, the customer's future behavior thus their rate or retention, as high levels of customer's satisfaction generally correspond to high levels of customer's retention (Best, 2014, pp.454, 484).

INNOVATING
Nowadays, companies compete ferociously against one another in order to prove and declare their uniqueness instead of struggling to prove their potential superiority (Dawar, 2003). Companies are trying to innovate in order to correlate their potential specific brand name with what their customers have in their minds about their brand (Dawar, 2013). In that way of thinking several brands tend to launch a specific image creation which correlates their brand with an abstract image of a specific brand quality they want to demonstrate in order to gain their competitive advantage.
But this is not the only way innovation tries to create a competitive advantage. Customers have specific considerations while trying to purchase a product. These considerations usually are costs and risks over the entire purchase, consumption, and disposal cycle of the product (Dawar, 2003). In order to understand their customers' needs and try to solve their potential problems, many companies innovated in several ways in order to give to their customers' what they wanted and gain a bigger market share.
The example of Hyundai during the great recession of 2008-2009 which introduced a risk-reduction guarantee to target their customers' concerns, which was the fear of losing their jobs or income, is prevalent and signifies the importance of innovation solving customers' problems (Dawar, 2013). As Dawar underlines, Hyundai, instead of offering a price reduction as other automobile companies was doing, offered to its potential customers a risk-reduction guarantee which said "if you lose your job or income within a year of buying the car, you can return it with no penalty to your credit rating" (Dawar, 2013). J a n u a r y 1 5 , 2 0 1 6

THE SIMPLE RULES OF STRATEGIC DECISIONS
According to Eisenhardt et al. (2001), there are times when managers need to jump into chaotic markets in order to probe for opportunities. To build successful forays and shift flexibly among opportunities as circumstances dictate. In order to do such moves, managers recognize the need of simple rules to guide them through the chaos. This is where the simple rules ides was born.
While in traditional strategy the competitive advantage, companies strive so hard to acquire, comes from exploiting resources or stable market positions, in strategy as simple rules, advantage comes from successfully seizing fleeting opportunities. This simple rules as strategy, according to Eisenhardt et al. (2001), fell mainly into five broad categories, which are the following:  How-to rules, which keep managers just organized enough to seize opportunities,  Boundary rules, which sometimes delineate boundary conditions that help managers sort through many opportunities quickly,  Priority rules, which can set priorities for re-source allocation among competing opportunities,  Timing rules, which can help companies to be synchronized with emerging opportunities and coordinate the companies' various parts to capture them,  Exit rules, which help managers pull out from yesterday's opportunities. (Eisenhardt et al., 2001).
As Warren Buffet said "Chains of habits are too light to be felt until they are too heavy to be broken." (Maltoni, n.d.). According to Maltoni (n.d.), simple rules works due to several reason, the most important of which are the following:  They confer flexibility-to pursue new opportunities while maintaining some consistency,  They can produce better decisions-especially when we have limited time frames and a shortage in information, simple rules makes it easy for managers or even simple people to take sound decisions.
 They allow the members of a community to synchronize their activities-by using such simple rules, community, or company members etc., can achieve things that under different circumstances could be far more difficult to achieve.
Although simple rules are not a panacea in problem solving and strategy implementation, they can very handy in several ways and even help marketers escape from very difficult and frustrating situation, while they can offer them the way to embrace new successful opportunities throughout a chaotic market momentum which under different circumstances can take them to the verge of disaster. Eisenhardt et al. (2001, p.116) argues that their perspective is more useful when markets are in a chaotic state. They believe that rules can drive companies to competitive advantage but not all the rules and certainly not so many rules. Managers should establish an equilibrium between rules and knowledge of how and when to act. Timing is important (Eisenhardt et al., 2001, p.112).
It is also important to underline that according to Eisenhardt et al. (2001), rules are not a panacea. On the contrary, although companies should follow rules religiously, strategists should know when the right momentum is to change them. This is a point of congruence between them and Porter, as they all see the great role of managers-strategists. As Porter indicates (2008, p.79) "The job of strategist is to understand and cope with competition", which in simple words means that strategists should have the first and the last word in implementing the right company's strategy. Dawar (2003) is trying to describe how companies can achieve competitive advantage by focusing downstream to their customers. So Dawar is more focused in just one direction.

TURNAROUND/CHANGE MANAGEMENT
As Kraus et al. (2013) indicated, today's quickly changing economic environment increases the possibility for many companies that during their lifetimes it is probably to face an economic crisis themselves too. If such a situation will take place, companies need to be able to identify the crisis as early as possible in order to develop the right "weapons" to use and get out of the crisis stronger than before (Hauschild, 2008, cited in Kraus et al., 2013).
According to , patching is the strategic process by which corporate executives routinely remap businesses to changing market opportunities. This is a crucial process when markets are turbulent . Lenahan (2006;2011;2005), underlined that maintenance is the "sum of activities performed to protect the reliability of the plant", while with the term reliability of a plant, the author implies "a plant that is available when required and capable of performing to designed specification economically and safely for the life of the plant". It is obvious from the above that maintenance is the step which prevents the company from reaching turnaround management. According to Neil Harvey (2011), who quotes Goodman's definition of a turnaround: "A turnaround is to produce a noticeable and enduring improvement in performance, to turn around the trend from down to up, from not good enough to clearly better, from under achieving to acceptable, from losing to winning." What springs from that definition is that almost any company can be said that is in a turnaround phase (Andrews, n.d.).