It’s the making of a tug of war when organisations are struggling to survive and being faced with only two options, spending out of trouble or buttoning down the hatches and riding out the bad times. Managers and business leaders of today are dealing with the realities of going out of business more than any in previous times but whatever methods they are using, it is a case damned if you do and damned if you don’t.

For those who choose to invest out of trouble the question is where to invest? innovation, marketing, organisation restructuring (including redundancies because they cost money) or in operational effeciencies. Each area of business is plausible in their potential to move a business forward and create new opportunities. Innovation could help an organisation become more efficient, create more products and bring in new customers. All of which could be a source of additional earnings and growth out of the troubles but what about the risk? Risks lie in every opportunity that exists in investing further into innovation because there is no guarantee that customers will buy the new product or employees will work more efficiently. Consider the case of Microsoft’s venture into mobile phone handsets or VW’s $80000 luxury sedan the Phaeton, both plausible ideas with potential gaps to fill inthe market but total failures when they were put on the market! Risk is a real possiblity but should it be avoided at the cost of loosing a business?

The opposite of investing out of trouble is austerity. Possibly THE buzz word for 2011 and the David Cameron premiership, austerity has been touted to mean making cuts and finding savings from the operations then using those efficiencies to drive growth without any further investments. While this prudent approach to business sounds plausible, I feel the costs and implications of those costs to the future of the business or economy have been disregarded. A major aspect of the austerity is redundancies which removes people from their posts and with them goes all their knowledge on the organisations and on their jobs. Knowledge management has become increasingly important as organisations become of cognisant of the investment they put in training people to the levels required to work effectively and efficiently in the organisation. So knowing that organisation can easily write off this investment is astounding, maybe it is because they don’t have a monetary value of the investment because if they did, I am sure there would be a strategic rethink around redundancies. Honda and Toyota are good examples of avoiding redundancies when they went into reduced production and prolonged holidays to preserve employment for their staff during the aoutomotive industry down turn in 2008. Today, the strategy is vindicated because all staff are back working and applying their knowledge to help the organisations respond to increasing demand from the market.

I am sure other will find hole is my thinking but it is not hard to tell where my preferences lie!