Raking through the ashes of economic meltdown will hinder recovery from recession. Directors must square up to the realities of a radically changed business landscape

Almost a year ago the Queen asked a group of eminent economists why no one had seen the recession coming. It took them nine months to frame a considered response.

In summary, they blamed the failure to foresee the timing, extent and severity of the crisis, along with the inability to head it off, on "a failure of the collective imagination of many bright people". What's more, they added: "People were doing what they were paid to do, and behaved according to their incentives."

But how bright were they really, if they were just following the crowd rather than challenging received wisdom? The conundrum stems from what Vijay Govindarajan, a professor of international business at the Tuck School in the US, describes as organisations' slavish adherence to the concept of "best practices", when they should instead be thinking about "next practices". There's no point benchmarking yourself against everyone else in the locker room, he points out, when everyone's socks smell about the same.

But despite the massive shock to global financial and business markets, organisations are still thinking in linear rather than non-linear terms. The world is an increasingly volatile place, characterised not just by fluctuating financial and commodity markets, but also by political uncertainty and extremism, increasingly complex global trade and unpredictable consumer sentiment, by climate change, terrorism, the threat of pandemics and so on.

So business bosses waiting for the return of the status quo and traditional sources of competitive advantage are deluding themselves. Virginia Merritt, managing partner of consultancy Stanton Marris, which recently published a paper called Strategy Evolution: adapting to a new world, says: "One company chairman asked me: 'How can I convince [my people] that things will get back to the way they were before?' I had to tell him that this was not the right way to come at the problem."

And raking through the ashes of what went wrong is not necessarily the right way to approach the question either, particularly if it takes the focus away from the culture change that is required to prevent a resurgence of the practices that contributed to the crisis. The augurs are not good. Banks are behaving like truculent children, pilloried in the past for lending incontinently, and now, after being bailed out at enormous cost to the taxpayer, charging small and medium-sized businesses too much for loans that are still too hard to secure.

Angela Knight, chief executive of the British Bankers' Association, does the industry no favours with her habitual defensiveness and refusal to accept that her members were in any way to blame for the crisis. Her claim that "demand for credit has dropped off" as an answer to demands that banks improve their lending terms beggars belief: businesses have been forced to pull in their horns as overdrafts are called in with little notice.

Meanwhile, too many large companies remain intent on rewarding executives for failure while cutting a swathe through their workforce: recent unemployment figures show the largest quarterly increase since comparable records began in 1971.

This wanton squandering of workforce talent is highly dangerous. When the economy recovers, we will be relying on a shrinking working population to work longer, harder and more creatively to support a rapidly ageing population and to counter the intensifying competitive threat from emerging economies.

Managing costs while at the same time building for the future is just one set of contradictory objectives that bosses will have to get used to reconciling in the increasingly complex business landscape. The trick is to square up to the challenge, not hide from it. As Nassim Nicholas Taleb, author of The Black Swan: the impact of the highly improbable, puts it: "You can take advantage of uncertainty if you know how to look it in the eye."

Unfortunately, judging by the apparent belief that things will improve without radical change, the wishful thinking, hubris and sense of denial that the economists believe got us into the recession, could serve to keep us there. As the Ernst & Young Item Club warned recently, hopes of economic recovery are "running ahead of reality".