The trouble is that some people believe that there are times of certainty. The truth is that anything can happen at any time. The bad news for your marketing and sales team is that your business leaders and investors expect you to impact the top and bottom line regardless of the situation. This expectation persists even though the world is now facing not just one but five crises – all at the same time:
Simon Sinek, the author of The Infinite Game, asserts that crisis is The Great Revealer that nothing is certain in life and business. There has never been more uncertainty than there is now.
Together with their marketers and sellers, business leaders must make changes, and they need to make them now. The past is gone, and there is no going back; for now, we are in the midst of a great acceleration that demands that we make our way of doing business obsolete before generational, technological, market forces or the competition does.
Simply put, no one knows how long the crisis caused by the coronavirus will last or how long it will take before manufacturing returns to pre-COVID-19 levels. According to J.P. Morgan, while past recessions have persisted for a year on average, it took just nine months on average to return to the previous output level. The exception was the post-global financial crisis of 2008, which lasted for 18 months but required 21 months to return real GDP to its pre-crisis level.
The good news is that we can mitigate risks/be safer, avoid mistakes, follow winning moves, and leverage insights that, in doing so, increase the probability that we may thrive on the other side of these times.
One of the realities of economic forecasting is that if you continue to predict an upcoming recession, you will eventually be correct. Since the Great Depression, there has been a recession or economic disruption about every six years. In fact, before the pandemic, the U.S. was coming off its longest stretch of economic growth. Cycles repeat themselves, and we just don’t know precisely how or when.
We also can learn from history in terms of economic recovery. While it is impossible to predict the future, companies that follow a particular path are far more likely to sustain or even grow during economic uncertainty and reap more rewards as the economy improves. This approach has been confirmed by:
Before outlining that approach, it’s worth discussing a broader context. History also repeats itself because “winning” companies usually take the same page from a recession playbook, as do “losing” companies from another.
Confronted by a recession or “black swan” event such as 9/11 or the COVID-19 pandemic, many CEOs quickly implement policies to lower operating costs, cut discretionary expenditures, reduce headcount and preserve cash. Business leaders who follow this playbook also often put new business initiatives on hold, halt M&A activity and minimize R&D investments.
Their response is characterized by defensive moves, with little attention paid to initiatives that could lead to growth on the other side of the disruption. This is problematic for many reasons, including:
The promoting playbook might emerge from an optimistic, sales-driven leadership culture that often serves companies well in good times. Yes, there usually is opportunity in the face of adversity, and there are benefits to:
But if a culture of “positive groupthink” marginalizes the “voice of reason” and gravity of the changing conditions, the results can be devastating. Such as:
The Harvard Business School study previously mentioned showed that the companies that fared the best through three different recessions were the ones who were able to master the delicate balance between cutting costs to survive today and investing in growing tomorrow.
The difference between being pragmatic and progressive is nuanced. A pragmatic approach will include playing offense in some areas and defense in others. A progressive approach may employ both in the same place. For example, after the 2001 recession, many big-box retailers closed underperforming stores. Staples, however, not only closed underperforming stores but also increased staffing at high-performing stores.
With that in mind, a Progressive Playbook might look like:
Companies that followed the Progressive Playbook experienced the most significant increase in sales and earnings among the HBS study groups. They also are most likely to boost morale and fare better by being progressive during an economic downturn.
What do these “winning” companies share in common and in contrast to “losing” companies? According to Bain & Company, companies that fared best through the Great Recession and the recovery were prepared to gain market share and accelerate as the economy recovered. They were more likely to:
Companies that lost market share in the Great Recession and were slower to rebound:
From 2007 forward, the average enterprise value of “winning” companies grew at a rate three times higher than “losing” companies.
What is certain is that companies can take strategic and tactical steps during economic uncertainty that put them in the best possible position to succeed when the economy rebounds.
Here’s how to strengthen your marketing prowess:
Learn from the past. History tells us how to mitigate uncertainty and prepare for the upcoming economic rebound. It’s your call.
We can help you develop strategies for winning more business during uncertain timesContact Us