Running a business is tough at the best of times but when times become tough the job goes beyond challenging. Reading around what some expert commentators were saying about what to do in a recession, I started to realise just how challenging it was.
I was lucky to study Economics during my MBA under Prof. Joe Nellis (Cranfield University). He’s written an article on “How to Thrive as the Economy Falters” in the September issue of “Finance & Management”. His seven rules for survival are:
- Cut the right costs
- Sell hard and negotiate hard
- Focus more on performance management
- Be realistic … and slightly optimistic
- Innovate, innovate, innovate
- Improve customer relationships
- Get ready to invest
I think that list starts to give a hint as to one of the reasons as to why it is so challenging; there is a distinct whiff of the bipolar about it; cut costs and get ready to invest, negotiate hard and improve customer relationships, performance management and innovate. Hmm; not so sure about the “realistic” bit.
When helping organisations think about what new products they should be bringing to market it can be really helpful to do some “scenario planning” a technique for envisioning some of the ways in which the world could be different in the future. That is particularly hard when we are in the middle of such an economic melee, but I think we can be certain that the post-recession world will be significantly different from the pre-recession world. One reason for that is what happens to technology in a recession.
Nat Torkington argued in O’Reilly Radar on 7 Oct 2008 in “Effect of the Depression on Technology” that a recession will be a good thing for technology (but perhaps not for your technology company). Recession leads to redundancy and that means a whole bunch of bright technologists sitting in their garages thinking about getting around to building that “thing” that they’ve been too busy at work to focus on. Garage start-ups abound in a recession and have nothing to lose, but watch it; they’ve got their eye on your shirt.
But don’t give up just yet. Bill Buxton (Principal Scientist at Microsoft Research) in Business Week, 2 Jan 2008, in “The Long Nose of Innovation” argues that the bulk of the innovation that goes to build really “wow” products happens over a long period of time. He cites the computer mouse as an example tracing it from first prototype in 1965 through to first ubiquitous use in Windows ’95, 30 years later. He goes on to argue that the bulk of value is added to innovation as the ideas are augmented and refined.
So those guys in that garage are a threat, but perhaps not as immediate one as you might think, particularly if you are focussing on innovation during the recession. When (or if) your company makes it through the recession, you are going to need new products to address the new needs of the new world. You are going to have to be smarter, more competitive and more nimble than ever before, and that’s where innovation comes in.
Start by accepting that if the world is going to change, and if Bill is right about the long nose of Innovation, then all the usual excuses just won’t hack it anymore. The; “Done that”, “Been there”, “Tried it last year”, “Got the T-shirt” folks just kill creativity and stop you thinking beyond your past to how the world, your market, or you, might be different in 2010.
Get real about what is possible in the future. You need to accept that your organisation is not going to change its spots overnight. You will inevitably be looking to build new product from current technology or new products for current customers. That is because you have something of enormous value tied to those things; your brand.
Embed creative thinking and innovation into your business, not just to do some “blue sky” thinking, but to do some really tough and practical things:
- Innovate to reduce costs and improve processes; faster, quicker, cheaper
- Innovate to find new markets for existing products; develop your brand to appeal to them
- Innovate to find new benefits to offer your customers, after all they too are looking to cut costs
- Innovate to extend your product reach up and down the value chain; in markets where your brand has value
- Innovate to find new collaborations with other manufacturers to build wider product offerings or to cross license technology
As you forge ahead into the new world, you have to figure out how to communicate how you are changing and adapting to your customer base and it is the evolution of your brand which will do that. It’s particularly challenging because as Joe Nellis implied some of things you need to do appear contradictory and that is likely to induce corporate cognitive dissonance. If that leaks out in your communications and brand your customers will be at best confused, and at worst repelled.