Big Think

Michael Masnick on April 3, 2009, 3:24 AM

This is a good kickoff to a discussion about managing and thriving in the downturn. I think all of the points mentioned are certainly worth thinking about and exploring in more detail. I think the key though is digging in a little deeper and figuring out not just the overarching strategy, but how to execute.

The real trick, then, to managing and thriving in a down market is to sniff out the key opportunities created by this changing market. Obviously it depends what industry you’re in, but in almost every industry, a new opportunity is created by the crisis: for example coming up with ways to be a more efficient/lower cost supplier.

There’s tremendous opportunity in the innovation space. While capital may be harder to come by, now is a time where small experiments can create big returns. Old businesses are teetering, and that is opening up huge opportunities for other players.

I would say that the keys to managing and thriving in a downturn are:

(a) Take a step back to observe the fundamental market that you’re in. That means getting away from a product focus and really understanding the benefit you provide (e.g., “transportation” instead of “trains”).

(b) Analyzing that fundamental market on two separate axes: (1) How the current economic crisis is changing that market. What will it do to the major players. To the customers. To the suppliers. To the distribution channels. Etc. (2) How technological innovation may be changing the market as well. What areas are being disrupted or disintermediated.

© From there, analyze your own strengths and weaknesses to determine where the opportunities are. If you are at risk of being in trouble due to the economic or technological changes, begin to look at an alternative path (even cannibalizing your own business). If you are already well positioned to be the disruptor, then push forward.

(d) Certainly be aware of the economic environment, but be bold. Great companies are made in tough times — and it’s not because they cowered behind closed doors worrying about liquidity. It’s because they saw the opening and went for it. Not all bets pay off, but now is a great time to shoot for that opening and look for the big win.

Peter Hopkins on May 2, 2009, 9:19 AM

Echoing what Michael said, in understanding the changing the nature of your industry, it’s critical to understand where the next major efficiencies will be found.  If you can position your firm to deliver a pro-recessionary advantage — a cost savings or an innovation that negates the need for more expensive alternatives — you’ll be well positioned to sell yourself as a true value.

John Shepherd on May 4, 2009, 9:33 AM

I also believe that you have to understand where the technology in your industry is going, and be ahead of the curve to the greatest extent possible.

Amanda Stillwagon on June 2, 2009, 10:16 AM

Great advice for a topic on the top of everyones minds.  I like that he pointed out that a company should not make cuts without thinking them through first.  Any large decision should get at least a little consideration first.

R Tango-Lowy on June 3, 2009, 5:03 PM

I agree with Michael’s comment that “great companies are made in tough times.” Far too often companies progress in spite of themselves when times are good and freeze up when times are bad, a non-strategy that leaves the organization gutted and powerless to compete just when they most need agility, innnovative thinking, and the resources to act.

I think Tom Raffio, CEO of Northeast Delta Dental put it nicely on his blog (http://tomraffio.wordpress.com):

the most difficult time to change and to reinvent the organization is when things are going well, because folks get complacent and “why change things if the current formula is working?” However, the time to look at diversification, new markets and new products is when one’s back is not against the wall, when the management team and employees can look at opportunities withoug being financially stressed.

Dave Altavilla on June 4, 2009, 3:26 PM

“The microscope and the telescope,” those are great analogies.  I couldn’t agree more.  Also, I would offer, as long as you look through the microscope and you find that you’re operationally “fit”, as you noted, I think it makes really good sense to invest through the down-turn. 

Obviously, on the surface, there are great buying and leveraging opportunities out there right now, for good deals on capital equipment, human resources etc.  However, there are also great opportunities to re-invest in your company’s own internal “engine” operationally as well.  Smart business people know, if you can invest during the downturn, as well as survive it, then you’ll emerge from the downturn even stronger than your competition.  This speaks to your notion of strategy, Thomas.  One part of that strategy I feel should always be re-investing in your business where the opportunity presents itself.

Marissa Brassfield on June 4, 2009, 5:13 PM

There are a number of salient points in this discussion, and I’m particularly intrigued by Michael’s introductory comment and John’s thought on staying ahead of the curve and understanding where the technology in your industry is going.

While the specifics will differ from company to company, this is an economic climate that has the potential to benefit innovators who dare to carve out a new niche within their industry or into another one entirely.

Arthur Bland on June 8, 2009, 11:45 PM

Hi Amanda, I think it should be big consideration since it’s a big decision to make too. ;)

Cordt Akers on June 10, 2009, 3:31 PM

As an employee of a large company, I could not agree with Mr. Stewart more about opening up within a company during difficult times. Top managers seem to become defensive and critical, perhaps  in fear of losing their own jobs. The atmosphere of mistrust only serves to make people uncomfortable, stressed out and less productive. As Stewart says we don’t need to pull our heads in like turtles, but reach out to everybody on the team to talk about ideas and solutions that would  benefit all involved. High employee morale is key to any successful company, even during the most diificult times.

Bradley Talbot on June 11, 2009, 6:41 PM

Stewart lists off three GREAT concerns for CEO’s to start, but I have serious doubts about the ability of CEO’s to handle the third suggestion: looking for strategic opportunities. 

First, I think that cost cutting and leanness and financial viability are forefront on the CEO’s mind. It is an entire switch to think of building operations in any capacity when cutting is first.

Second, within the company itself, I think that it is a potentially very big hit to employee morale when friends are being cut from one division and new people are added to another.