Roger Trapp: 'Zombies are all the rage in the movies and books this year. So it should not really be any surprise that they have entered the business language'

“Zombie banks” first emerged as a term in the late 1980s and came to be associated with the crisis that affected Japan in the 1990s, turning a once-thriving economy that was the envy of the world into a byword for stagnation. Now, Mark Thomas of the management consultants PA Consulting claims that the financial crisis that started in the autumn of 2008 has left behind a “zombie economy”. In his recently-published book of the same name, he states: “Even though many countries are emerging from a technical recession, the crisis has created a new class of groups and institutions which, although not completely ceasing to exist, have lost the ability to function normally.” As he explains, this means that, while these organisations do not cease to exist, they have become unable to perform the functions “that we expect of them in supporting growth of the economy.” Accordingly, zombie banks cannot lend as we need, zombie consumers cannot consume as we need and so on.

The worst may be over. But, with a general election campaign now in full swing and with higher taxes and a curtailed public sector likely whatever the outcome, the economy is not about to improve any time soon. As a result, organisations of all sorts need to prepare for a time when it is anything but business as usual.

Thomas, who is head of PA’s strategy and marketing practice and previously wrote a highly-regarded pamphlet “Thriving and Surviving in the Economic Crisis”, says they need to start by repositioning themselves urgently. Any business that has not been reinvented since the start of the crisis in September 2008 will no longer be well-positioned for the coming four to five years.

This involves taking four key steps. One, secure liquidity; Two, create a portfolio of potentially winning businesses; Three, remodel each business to ensure it can perform strongly in the new world; Four – depending on the success of the first three steps – take bold action to stake a greatly enhanced position in the new world.

Of course, all of these are much easier said than done. And Thomas acknowledges that taking action could be especially tough for smaller, independent businesses. This is despite the usual belief that smaller businesses are better able to deal with changing market conditions because of their greater agility.

As he explains, the current crisis is “at its heart” a liquidity crisis and “without liquidity companies cannot survive”. Larger companies can circumvent the problems in the banks by tapping the equity markets (as has been common in recent months) or using the bond markets. Such options are not really feasible for smaller businesses, which are therefore much more dependent on the banks and particularly on their bank managers’ attitudes towards them.

Equally, smaller businesses are unlikely to have a range of businesses with which to balance their exposure to the economic situation. Even larger businesses have tended to reduce the breadth of their operations in response to “focus” being the current management mantra. And smaller companies tend to see concentrating on niches as the way to succeed.

But Thomas is adamant that business leaders need to abandon the “binary mindset” of cutting costs in order to wait for the recovery and then moving into a more expansionary phase. Companies need to control costs and at the same time to reposition their businesses in order to meet the changed demands of customers. He cites how John Lewis, arguably everybody’s favourite retailer of the moment, has shifted into “affordable luxury” as an example of the sort of new thinking required.

Nobody is going to find the coming years easy. The sheer geographic reach of the downturn thanks to the rise of globalisation means that there are few markets in which to expand. But Thomas argues that those businesses that take the steps he recommends and seek to ensure that their leaders recognise the severity of the situation in which they find themselves will stand a better chance of surviving and prospering.

More than a decade ago, Andrew Grove, the former chief executive of the computer chip maker Intel, entitled his autobiography “Only The Paranoid Survive”. Such an outlook is all the more important now.

“The Zombie Economy – Leadership in Times of Uncertainty” by Mark Thomas is published by PA Consulting. To find out more about the crisis and how it might affect your business, visit paconsulting.com/financial_crisis.

PROMOTED VIDEO
News
peopleBenjamin Netanyahu trolled by group promoting two-state solution
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Life and Style
fashionEveryone, apparently
Voices
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
Arts and Entertainment
A new Banksy entitled 'Art Buff' has appeared in Folkestone, Kent
art
Life and Style
Playing to win: for Tanith Carey, pictured with Lily, right, and Clio, even simple games had to have an educational purpose
lifeTanith Carey explains what made her take her foot off the gas
Arts and Entertainment
The White Sails Hospital and Spa is to be built in the new Tunisia Economic City.
architectureRussian billionaire designs boat-shaped hospital for new Dubai-style Tunisia Economic City
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Husain Abdullah returns an interception off Tom Brady for a touchdown
nflLeague has rules against 'sliding to ground on knees'
Arts and Entertainment
Critics say Kipling showed loathing for India's primitive villagers in The Jungle Book
filmChristopher Walken, Bill Murray, Scarlett Johanssen Idris Elba, Andy Serkis, Benedict Cumberbatch, Cate Blanchett and Christian Bale
Life and Style
tech
Extras
indybest
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

SQL Developer (Stored Procedures) - Hertfordshire/Middlesex

£300 - £330 per day: Ashdown Group: SQL Developer (Stored Procedures) Watford...

Day In a Page

Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?
Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

Homegrown ballerina is on the rise

Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
Education, eduction, education? Our growing fascination with what really goes on in school

Education, education, education

TV documentaries filmed in classrooms are now a genre in their own right
It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

It’s perfectly reasonable to negotiate with villains like Isis

So why don’t we do it and save some lives?
This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

Is a sub-2-hour race now within sight?

Dennis Kimetto breaks marathon record
We shall not be moved, say Stratford's single parents fighting eviction

Inside the E15 'occupation'

We shall not be moved, say Stratford single parents
Air strikes alone will fail to stop Isis

Air strikes alone will fail to stop Isis

Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
Nadhim Zahawi: From a refugee on welfare to the heart of No 10

Nadhim Zahawi: From a refugee on welfare to the heart of No 10

The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
Witches: A history of misogyny

Witches: A history of misogyny

The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
Shona Rhimes interview: Meet the most powerful woman in US television

Meet the most powerful woman in US television

Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

Endangered communities photographed 'like Kate Moss'

Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style