By GERALDINE MCBRIDE

WE know that the world economy works in cycles - expansion, prosperity, contraction and recession. The severity of each contraction and recession varies. Likewise, the expansion and prosperity stages can also hit differing heights. The ability of businesses to effectively weather these economic storms depends on how well they manage customers, talent, processes, products and profitability, among others.

In today's economy, being ready for anything might be the best plan for the future. To do this, you want to be seeing, thinking and acting clearly.

Is there an economic upturn on the horizon? Industry watchers would say that we are headed that way. Although we are not completely out of the woods just yet, it is imperative to keep looking ahead. Here are the 10 key steps that Asian businesses should employ to gear up for that recovery.

Step 1: Manage cash and cash flow

In this challenging economy, there is nothing more important than cash and liquidity management. For optimal cash management, best-run businesses have visibility into their current and future cash requirements and global cash positions. Plus, they have reliable insight that helps them better manage their receivables - and identify problems that can arise during the pay cycle, putting cash flow at risk.

Step 2: Focus on the core

Best-run businesses are sharply focused on their core, no matter how diversified. Businesses which are focused often expand into adjacent, synergistic opportunities. Olam International, a global leader in the supply chain management of agricultural products and food ingredients, is a good example.

The company chose to stay focused on a single commodity class, namely agriculture, and has since expanded into synergistic opportunities that share suppliers, customers, channels, costs and capabilities with their existing business. Examples are the expansion within their edible nuts and spices lines of business.

Step 3: Stay lean

A farsighted, lean agenda that addresses the unique requirements of various business processes at the corporate, shared-services and divisional levels. A leaner operation will pay out immediate cost reductions and ultimately improve competitiveness in a recovering economy.

Step 4: Manage costs and profitability tightly

Improving profitability involves more than a headlong pursuit to increase revenues and slash costs. It includes the ability to identify a company's most valuable customers and products, while testing the impact that changes in pricing and process improvements have on costs and profitability. This can give business leaders the insight to act decisively with a clear understanding of what the outcome will be.

Step 5: Be agile

Businesses need to rapidly align resources and people so as to drive speed, efficiency and profitability. This is key to achieving a high level of organisational agility - and ensuring focused execution across the business.

Step 6: Develop deep, worldclass talent

Who can lead the company into new markets? Who are your leaders of tomorrow? Are the right employees staying? Are the wrong employees leaving? Without the right talent, you risk not only missing the opportunity to cut costs, increase market share and revenue, but you have to spend even more to acquire new talent.

Step 7: Drive strategic investments

The downturn presents best-run businesses with endless investment potential - in expanding into adjacent opportunities - including both upstream and downstream. But do you have the proper insight and tools to make the right strategic investments - especially in these times of tight credit? Having access to capital is definitely a major factor, but more importantly, it is the deep business intelligence that unearths the potential for strategic growth.

Step 8: Improve risk management significantly

Major trends of the last five years - such as globalisation and radical shifts in business models - have escalated the need for business agility, while simultaneously throwing up roadblocks. The impact of these trends has triggered ripple effects from a governance, risk and compliance (GRC) perspective. Organisations that have moved to an integrated GRC approach have been able to realise a new level of confidence and transparency regarding compliance.

Step 9: Strengthen and nurture the business network

In every industry across the globe, companies are improving their bottom line by focusing on what they do best, while partnering others who have superior expertise and cost advantage to provide the other elements. To succeed, companies such as Procter & Gamble and Apple have deepened their understanding of customer segments and have orchestrated a customer-focused business network to deliver on shorter product life cycles.

Step 10: Operate best-run systems and processes

To achieve clarity and transparency, best-run businesses use worldclass solutions to help close the gap between strategy and execution.

The clarity provided by such a solutions portfolio, and the corresponding ecosystem, can help companies preserve profitability by addressing challenges such as cash management, risk mitigation, customer loyalty, streamlining of operations, sustainability and talent management.

Unlocking new business value is complex. However, we know that a business that does not enrich and revitalise itself with new value is likely to experience the same challenges it did in the preceding economic cycles. The plan is to change the game. This needs insight, efficiency and flexibility.

Clear enterprises - those that can see clearly, think clearly and act clearly - have the ability to overcome complexity by understanding what's going on in every aspect of their business and their business networks. They operate with increased speed, relevance and accuracy. They are prepared for risk and uncertainty, and they adjust their operations as market conditions change to remain accountable to all stakeholders involved.

In short, Asia's leading enterprises need to embrace these best-run business steps if they want to run businesses that are transparent and accountable; lean and agile; and customer-centric and collaborative.

The writer is president of SAP Asia-Pacific Japan

This article was first published in The Business Times.