Goldratt's optimism

7 June 2009

08 June 2009 | Rebecca Ellinor

Businesses must consider long-term strategy and stop blaming the economy for their woes.

That's the advice of Eli Goldratt, physicist, business management guru and originator of the "theory of constraints", who added: "I don't believe two years down the road anybody will remember the recession."

In his "Securing the Future" event at the Institute of Directors in London last month, he warned against sacking staff that may need to be rehired in a matter of months.

"I'm not talking about survival - if you have no choice but to fire people to prevent the company going under, you should have taken action before. I'm talking about profitable companies laying people off to improve the bottom line. They are cutting their future, signalling to employees there is no loyalty."

Goldratt added that while the financial crisis was "unbelievably real", we were coming out of a global economic downturn more quickly than people realised.

He said while the "scare" is not yet over, in some industries - such as those that supply to retail, with the general public as its end customer - "the dip has disappeared".

Whereas "industry servicing the infrastructure - all the machines and systems and so on - the dip will continue for another six months, because as long as there's even a trace of a scare companies will continue to defer investments."

Goldratt pointed out that wages for workers in India and China were rising faster than their GDPs, and these countries were becoming consumers - not just producers.

He said this change over the next decade would lead to the "biggest economic boom in the history of mankind".


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