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Are you ready for the recovery?
The current recession is unprecedented in its ferocity and reach. Never before has the world been so connected, never before have the actions of a few had such an impact on the many. Fear and uncertainty reign and yet, despite this, tomorrow's winners are already getting busy. What's your plan?
It was Norman Lamont, the then Chancellor of the Exchequer in the UK, who popularized the phrase 'I see the green shoots of recovery' back in October 1991. They must have been the slow growing variety as growth didn't return until 1993. He was justifiably ridiculed for his over-optimism and to this day it is one of the things he is most remembered for (renting his apartment to 'Miss Whiplash' is still my personal favourite).
Baroness Vadera, Gordon Brown's Business Minister, used the same phrase in January this year. On the day that tens of thousands of job losses were announced, the stock market contracted by 5% and the global financial system continued its death spiral into the abyss she could also see 'green shoots'. She would have had a more sympathetic response if she had claimed to see little green men.
Here's the thing though. Every recession ends, every bust turn to boom. And while we shouldn't expect to hear our political leaders talking of green shoots any time soon (or ever again if they have any sense) the signs are out there. Maybe tiny, possibly the palest green, and undoubtedly vulnerable, but they are there.
More people viewing houses, the first small rise in house prices for 17 months, mortgage approvals increasing, mortgage arrears reducing, sales of durable goods increasing, retail sales stabilizing, the stock market making the biggest short term gain since 1933.and so on. Of course there is plenty left to concern us and there are many risks that may turn all of this into a false dawn, but one day it will be over; are you ready for the upswing?
Cut fat not muscle
The most important area is retaining your ability to compete. Tough times require tough measures and cost cutting is not optional, just be careful you don't cut too deep. Cutting fat is always a good idea; cutting muscle is never a good idea. An understanding the difference between what is a 'cost' and what is a 'value add' will be one of the key differentiators between the winners and losers in the recovery. Look at cost cutting from your customers' perspective. The more they feel it the more it will hamper your future growth. Winners don't cut muscle.
No doubt you will have already felt many emotions; fear, despair, anguish, misery, depression to name but a few. The point here though, is to understand your customers' emotions. Emotions drive actions, whether your customers are end user consumers or industrial buyers, emotions play a critical role. During times of upheaval priorities shift and needs change. Winners understand their customers and can 'feel' what drives their behavior.
Segment on a needs basis
Not all customers are alike; segmentation splits customers into groups who can be expected to respond in a similar way to a specific offer. Most segmentation is created around criteria that is easy to measure; size, location, industry, etc. Unfortunately 'easy to measure' and 'effective in use' are usually poorly correlated. Real insight comes from segmenting on a needs basis and while this is hard to do it is always worth the effort. Winners invest time to clearly define the needs of their target customers.
Create differential advantage
You have competitors, your customers have choices. Positioning your business correctly is more than important, it is vital. Once you understand the emotions and the needs of your customers, and you have maintained your most critical capabilities by cutting fat not muscle, you are ready to compete. A methodical approach to rating and weighting your customers' needs together with your competitors' abilities will give you a blueprint for growth. What can you do better? Where can you expect to improve? What benefits can you add? How can you reorient your customers? Where are the gaps? Winners will have a process for growth.
Look for innovation
Finally, look for opportunities to innovate. Times of great change are times of great opportunity. Microsoft and Apple were both born in the economic malaise of the 1970's. Typically it is the entrepreneurs and start ups who lead the way but that is no excuse not to be always thinking of ways to improve. Today's world is wired together like never before. Listen, observe and be ready to react. You need to pay attention to the stormy waters you are navigating right now but spare a little time to look at the horizon. Winners will always keep one eye on the future.
Sean Welham specialises in increasing businesses capabilities in marketing and strategy by designing and delivering bespoke in house programs that link robust academic concepts with simple but effective tools. Sean divides his time between the Europe, Asia and the US where he advises senior business leaders, coaches' high performance teams as well as delivering numerous specific programs for many of the world's largest and most successful companies. Contact him via his website http://www.seanwelham.net
Have a nice day!
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