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Marketing Profit Hunt Series

 

 

A Recession is a Terrible Thing to Waste

"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair . . ." (Charles Dickens, A Tale of Two Cities) 

Charles Dickens wrote this in the mid-nineteenth century about a different time, but he could have been writing about the U.S. economy today. For some of us, this is "the best of times"; for others, it is "the worst of times."  Faced with identical circumstances, some companies rise to the challenge, tapping into the "best" in themselves, and achieve what others cannot even imagine.  If you work in management long enough, you will experience a downturn.  This is my fourth. 

Since 1948, we have had nine recessions; the average contraction lasts eleven months, and the average expansion is four years.  In separate studies of leading U.S. industrial companies, McKinsey and Co. and Bain and Co. found that successful players pressed their advantage and placed counterintuitive bets that proved to be transformational to their companies.  In an article in the McKinsey Quarterly (Preparing for the Next Downturn - April 2007), McKinsey’s analysis shows that in the last recession, 40 percent of U.S. industrial companies toppled from the top quartile of their industries; 24 percent moved from the bottom to the top quartile; and 15 percent emerged as new industry leaders.

What causes the opportunities that are created by recessions?

1.  Competitors can’t see the forest for the trees; they become so involved with their problems that they can’t see a solution.

2.  Competitors retreat in the market by cutting budgets and costs.

3.  Competitors without sufficient cash reserves cannot out-spend you.

4.  Low priced competitors depend on volume to survive, and it’s no longer there.

5.  Competitors in survival mode, who retreat from marketing planning and real sales generation, and who lose their focus on genuine customer satisfaction and motivated employees, bite the dust.

 The companies that rise to the top will have done so because they will have seized this rare opportunity to gain market share while their competitors shrink back and lose ground. That’s why I say, "A recession is a terrible thing to waste": it creates opportunities for companies to behave in a strategically counterintuitive manner and pull ahead of the herd.   Companies that take advantage of this opportunity can emerge from this recession stronger and better for the experience.

 The most important thing to keep in mind about tough times is that they pass, and are replaced by good times.  Where some people see danger, others see opportunity.  Those who recognize and act on the opportunity are the ones that prevail.

 

This article is fourth in the Marketing Profit Hunt series -

Surviving and prospering during the economic downturn.

About the Author:  Ken Wilson: Strategist, marketing guru, educator, facilitator, author, university lecturer and consultant, he can be reached at ken@wmg-mn.com  or 763-476-2216

Copyright ©2013 by Ken Wilson    All rights reserved 

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