Learing to Love Recessions – Deciding What to Cut and What to Keep

No matter what label you put on the current state of the economy, companies are looking for ideas to help their business cope with reduced sales and challenging capital markets.

As we publish this blog, the number one Google sponsored link for the search term “recession” is a link to a Book of Revelation based forecast for the end of the world. This is sobering, but so misguided. Recessions can be difficult, stressful, and they can lead to the “end times” for some companies. But companies who thrive in tough times do so by “loving” recessions as an opportunity to position them selves for accelerated growth as the economy rebounds. Time and time again, companies who have increased shareholder value spring to leadership positions during recessions, differentiating themselves from survivors by thriving in new market conditions.

• Flexibility – Their management teams strive for balance sheet and operational flexibility, spend cash strategically but aggressively on acquisitions, and improve their processes to position them to absorb acquisitions more efficiently. Enabling process improvement may require some tough decisions about retiring and replacing (or, integrating) legacy systems using service oriented architectures and mash up tools.

• Talent – Innovative leaders realize that in difficult economic times, good people can be easier to recruit and use recessions as an opportunity to upgrade their talent pool, performing assessments of their existing teams and making important decisions about staff capability and cost.

• Innovation – Importantly, they also use techniques such as open innovation, gathering valuable customer data from social networks and other sources. Successful companies innovate to create product and service diversify into adjacent markets and new geographies.

• Invest in what is measurable – They shift marketing dollars online to more measurable techniques to reach customers and develop sales leads such as eMarketing / mail, analytics, eNewsletters, webinars, streaming video combined with other methods for measurement, etc.

• They balance innovation and strategic projects with disciplines such as IT portfolio management, which help them decide what to keep – or invest in – and what to cut. This creates opportunities and tensions within corporate boardrooms and line management. Innovation can create real value, but portfolio management may if not used properly kill innovation as companies seek to address short-term cash or profit and loss challenges. Companies who cut too deeply loose capability they need as the market improves.

• Some companies emerge from a recession stronger and more highly valued than they were before the economy took an unpleasant turn for the worst.

By making strategic choices that sometimes defy conventional wisdom, they increase their stock market valuations relative to those of their former peers and thus gain more power to shape their industries.

Michael F. Arrigo

Michael Arrigo, an expert witness, and healthcare executive, brings four decades of experience in the software, financial services, and healthcare industries. In 2000, Mr. Arrigo founded No World Borders, a healthcare data, regulations, and economics firm with clients in the pharmaceutical, medical device, hospital, surgical center, physician group, diagnostic imaging, genetic testing, health I.T., and health insurance markets. His expertise spans the federal health programs Medicare and Medicaid and private insurance. He advises Medicare Advantage Organizations that provide health insurance under Part C of the Medicare Act. Mr. Arrigo serves as an expert witness regarding medical coding and billing, fraud damages, and electronic health record software for the U.S. Department of Justice. He has valued well over $1 billion in medical billings in personal injury liens, malpractice, and insurance fraud cases. The U.S. Court of Appeals considered Mr. Arrigo's opinion regarding loss amounts, vacating, and remanding sentencing in a fraud case. Mr. Arrigo provides expertise in the Medicare Secondary Payer Act, Medicare LCDs, anti-trust litigation, medical intellectual property and trade secrets, HIPAA privacy, health care electronic claim data Standards, physician compensation, Anti-Kickback Statute, Stark law, the Affordable Care Act, False Claims Act, and the ARRA HITECH Act. Arrigo advises investors on merger and acquisition (M&A) diligence in the healthcare industry on transactions cumulatively valued at over $1 billion. Mr. Arrigo spent over ten years in Silicon Valley software firms in roles from Product Manager to CEO. He was product manager for a leading-edge database technology joint venture that became commercialized as Microsoft SQL Server, Vice President of Marketing for a software company when it grew from under $2 million in revenue to a $50 million acquisition by a company now merged into Cincom Systems, hired by private equity investors to serve as Vice President of Marketing for a secure email software company until its acquisition and multi $million investor exit by a company now merged into Axway Software S.A. (Euronext: AXW.PA), and CEO of one of the first cloud-based billing software companies, licensing its technology to Citrix Systems (NASDAQ: CTXS). Later, before entering the healthcare industry, he joined Fortune 500 company Fidelity National Financial (NYSE: FNF) as a Vice President, overseeing eCommerce solutions for the mortgage banking industry. While serving as a Vice President at Fortune 500 company First American Financial (NYSE: FAF), he oversaw eCommerce and regulatory compliance technology initiatives for the top ten mortgage banks and led the Sarbanes Oxley Act Section 302 internal controls I.T. audit for the company, supporting Section 404 of the Sarbanes Oxley Act. Mr. Arrigo earned his Bachelor of Science in Business Administration from the University of Southern California. Before that, he studied computer science, statistics, and economics at the University of California, Irvine. His post-graduate studies include biomedical ethics at Harvard Medical School, biomedical informatics at Stanford Medical School, blockchain and crypto-economics at the Massachusetts Institute of Technology, and training as a Certified Professional Medical Auditor (CPMA). Mr. Arrigo is qualified to serve as a director due to his experience in healthcare data, regulations, and economics, his leadership roles in software and financial services public companies, and his healthcare M&A diligence and public company regulatory experience. Mr. Arrigo is quoted in The Wall Street Journal, Fortune Magazine, Kaiser Health News, Consumer Affairs, National Public Radio (NPR), NBC News Houston, USA Today / Milwaukee Journal Sentinel, Medical Economics, Capitol ForumThe Daily Beast, the Lund Report, Inside Higher Ed, New England Psychologist, and other press and media outlets. He authored a peer-reviewed article regarding clinical documentation quality to support accurate medical coding, billing, and good patient care, published by Healthcare Financial Management Association (HFMA) and published in Healthcare I.T. News. Mr. Arrigo serves as a member of the board of directors of a publicly traded company in the healthcare and data analytics industry, where his duties include: member, audit committee; chair, compensation committee; member, special committee.

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