The Case for Cautious Optimism

SAP's chief executive believes we're in the middle of a W curve and that it will be well into 2010 before a real recovery occurs

By Léo Apotheker

Sept. 15, 2008 will remain firmly etched in my mind. I was on my way to Moscow for meetings with SAP's customers and partners when I heard the news that Lehman Brothers had collapsed. By the time I reached the Russian capital and switched on my BlackBerry, I realized from the sheer number of incoming reports that this would trigger a worldwide domino effect. My meetings were interrupted again and again as the assistants of my business partners came in to deliver notes and whispered messages. Margin calls were coming in from brokers, and heavily leveraged businesses and people were in deep trouble. In the ashen faces of my business partners, I saw that their business plans were ruined as the credit markets seized up. By the end of the day, we had entered a new, starker world—a world of uncertainty, mistrust, and unpredictability, a world where optimism seemed in short supply.

I immediately responded by sending an e-mail to the most senior SAP (SAP) managers, calling for a contingency plan. I knew that no time could be lost. The last critical days of the quarter were ahead of us. Then, as now, I do not believe that hoping for the best by crossing one's fingers is a viable strategy. I always want to be prepared for the worst-case scenario, but remain optimistic that once we assess the situation realistically we can act.

Business people by nature are optimistic because they want to create new products, create jobs, open new markets, build brands, and sell the entire package. A recent SAP-sponsored online poll by the Economist Intelligence Unit that surveyed more than 1,000 executives worldwide concludes that global business conditions are expected to improve within 12 months. This sentiment is truer for the Americans surveyed than it is for their counterparts in Western Europe. (On a scale from 1 to 10, the North Americans surveyed put their expectations at 6.3, while the Western European respondents rated their expectations at merely 5.0.) In my view, these results reveal the historical experience of Europeans: We tend to be more skeptical and easily disillusioned. The sobering effects of the last century have wiped out the willingness to get overexcited about anything. Personally, I am cautiously optimistic that we will have a new business order when we emerge from this crisis.

Crisis Creates Opportunity

Of course, the big question is when we will recover from this crisis. I think we will experience a W curve before that happens. Right now, we're in the middle of the W. From what I am seeing, it will be well into 2010 before a real recovery occurs.

But times of crisis can also be times of opportunity. One can use such times to build "muscle mass" in organizations, as it were. We now have an opportunity to change the old ways of business, working hand in hand with governments. We must make sure that we have an adequate amount of regulation, but not too much. Given the huge recovery packages provided by governments, there will be intersecting—sometimes competing—interests of business, government, and people. Governments and business leaders now have the responsibility to get it right. Why? Because we have a moral responsibility that our children and grandchildren don't see a repeat of this, and that we leave behind a better, more sustainable planet.

In general I support the idea of stimulus packages, especially as some governments use the opportunity to invest in infrastructure. Any investment designed to increase the competitiveness of the market—broadband, Internet access—and not just protect the investments of the past is, to my mind, a sound strategy. IT can actually accelerate all elements that improve competitiveness, helping economies and societies gain better business environments. In the health industry, the U.S. is much more highly regulated. The so-called free market is not as free as it is cracked up to be.

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