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companies that win in an economic
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downturn see the threats and downside
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potential but Focus instead on strategic
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opportunities rather than simply
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surviving a downturn they seek to climb
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the Pyramid of ambition and win market
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share some parts of your business might
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be fighting to survive While others are
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in a position to attack and these
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attackers will then be able to help
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other parts of the business to survive
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by generating cash so understanding this
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for each part of your business is
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crucial not only to survival but also
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for positioning for the
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upswing winning companies leverage their
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capabilities reinforce core strengths
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look for weaknesses in their competitors
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and seek opportunities to make
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inroads the most important thing for
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executives today to understand is that
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recessions come and recessions go the
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trick is to be prepared to win as we
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come out of the recession and it is to
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be prepared with the assets to be
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prepared with the capabilities and to be
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prepared with the financial wherewithal
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so that you can take share rapidly from
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a weakened competitor set as we come out
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of the recession being ready being
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focused being being structured and being
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prepared to win will be the key
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differences between the winners and the
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losers here are five ways to capitalize
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on the global
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downturn think counter
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cyclically the usual reaction in a
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downturn is to tighten payment terms
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instead consider giving more profitable
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customers more lenient payment terms
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make terms stricter for less attractive
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accounts the net impact on income will
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be neutral or even
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positive also increase marketing or
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innovation Investments taking money out
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of your Innovation budget your portfolio
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in most cases is close to suicidal
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you're often better served by increasing
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rather than cutting back it's really
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what's going to provide the opportunity
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to come out of the recession faster
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stronger and more competitively
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advantaged so so I tell companies that
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that would be the last place typically
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that I would cut you want to keep that
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R&D keep the technical function going so
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when the Market's opportunity emerges
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you're ready to
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respond uh that kind of you know a
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rather dramatic pathology of this sort
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is General Motors efforts in electric
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car General Motors push perhaps
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prematurely to Market but in response to
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that completely ended that effort and
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now now in their current distress
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situation scrambling to resurrect uh
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that R&D that technical capabilities uh
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that had been present in The Firm raid
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your competitors customers and
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talent While others cut back on customer
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service costs increase your
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Investments it's critical that you
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understand where the profitable targets
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are which customers are your best
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customers which customers are where you
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make your money and make sure that you
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invest heavily behind those customers so
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you retain them you might also be
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focusing on your competitor's best
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customers a downturn can create
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opportunities to try out aggressive
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Maneuvers like attacking the profit
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stronghold of your
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competitors a large Diversified
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Industrial company that we'll call Wolf
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uh that was very strong across all of
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the sectors that it played in had a a
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competitor who's more narrowly focused
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uh that we'll call sheep
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during a downturn sheep ran into some
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financial difficulty not because it
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wasn't a terrific company but because it
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was so focused on this particular sector
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wolf had some very strong Innovation
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capabilities and decided that now was
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the time to pounce and so they developed
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a product line that went after the 20
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highest
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selling uh products or SKS in sheep's
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portfolio fast fast forward what
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happened sheep eventually had to put
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itself up for sale they were able to
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find a buyer the company was
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W and keep an eye out for talented
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people who've been Let Go by
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competitors another key strategy is to
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alter your business model in strategic
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game-changing ways and the perfect time
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to create a new business model is during
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a financial downturn when it's harder
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for competitors to see
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a great example is what Apple did in the
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2201 time frame it was not only IOD but
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it was the iTunes it was the software
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which was easy to use it was the very
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large music catalog that they brought
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and then finally Apple had a consistent
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pricing model and so when you put that
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all together Apple changed the business
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from I'm selling a piece of hardware an
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MP3 player to a fundamentally different
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proposition which is I'm enabling you as
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a consumer to easily and smoothly
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seamlessly download and play back the
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music that you want to hear and that's a
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very different business and business
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model than I'm making a piece of of
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hardware and selling it and so the first
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mover Advantage by changing your
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business model can be greatly enhanced
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because it just takes that much longer
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for your competitors to see what's going
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on and be able to react to it strategy
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is most interesting at points of
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transition uh so this is incredible
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opportunity for firms who can think
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clearly about strategic opportunities to
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really establish themselves strategy in
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markets of calm can make incremental
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differences strategy in transition
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period such as this can really reset
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positions for firms for many years
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perhaps even a decade or so finally the
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downturn is also a great time to go
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bargain
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hunting and we found that the value of
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deals is actually 15% higher in a
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downturn than in other times so the
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downturn not only opens up opportunities
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to find assets cheaply it also allows
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you to integrate them in a way that they
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fit into your current company companies
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that invest in the downtimes can avoid
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overpaying other Bargains can be found
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on intellectual property many
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traditional sources of funding for small
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companies have dried up if you have cash
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you can often acquire IP at fire sale
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prices each of these strategies requires
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an ability to see beyond the immediate
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crisis winning companies look at a
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downturn as a chance to recreate their
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industry on their their own terms
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