The business environment has changed and will not "return to normal"; instead, a "new normal" is emerging. The U.S. and the world economy have been in a recession for at least a year, and the media is starting to discuss a slow recovery. Whether the recovery is weak or robust and whether it is short-lived or long-term, there is no doubt that the business environment has changed.

For example, although credit will likely improve vs. the recent history, it will not return to pre-recession availability. Although businesses have significantly reduced workforces and are unlikely to make significant further cuts (after all, there are only so many people in the business, and someone has to produce, ship, and bill product), they are also unlikely to go on a hiring spree to build up to support pre-recession sales volume levels. Lastly, in our consumer-based economy, we have increased our savings rates from negative numbers to 5% while the baby boomer generation is beginning to retire (both of which result in reduced spending levels), and so it is unlikely overall sales volumes will return to the "old normal."

So, what is this "new normal"? It is a return to fundaments, which includes three core principles: 1) Cash is king; 2) Service is paramount; 3) Execution is everything.

1. Cash is King

During the recession, cash has been king, and I don't see this trend changing. If sales do not return to pre-recession levels due to a reduction in consumption demand and credit remaining tight, there will continue to be pressure on cash flow. Additionally, there is a potential for increased costs (for example, rising commodity prices, increased taxes etc), thus squeezing cash from both directions.

2. Service is Paramount

As businesses struggle to stay afloat and are distracted with day-to-day operational needs, it can lead to order fulfillment problems and a reduction in service levels. Also, as consumers and businesses are cash constrained, they are likely to become more focused on receiving a total quality experience when they choose to purchase. Thus, it is likely there will be a significant opportunity to gain market share when you are the one who is able to provide significant value with superior service.

3. Execution is Everything

Solid execution/implementation skills will gain popularity once again. Function will rise in importance over form. During booming times, form is valued - after all, the exact level of profit or cash flow is less critical when plentiful. Thus, it is enticing to have the latest, greatest gadgets, software features, processes/ programs, etc. Now, what matters is bottom line results -- and timing.

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