Companies who strategically invest during a recession are rewarded with growth that outpaces competitors who focus primarily on expense reduction and risk mitigation. Growth gurus including Blueprint to a Billion's David Thomson have studied the last century's economic cycle to prove it. His research, along with the experience of CFOs highlighted in a recent article on CFO.com, "Spending into a Headwind," clearly show you can't cut to greatness. At some point you start cutting into muscle, not just the fat.
2011 can be the year you make transformational changes in your organization. Aggressive, strategic acquisitions, coupled with investments in the marketing and sales programs that bring measurable results, can catapult your market position and financial strength. I believe the "Wall Street Darlings" of 2012 will tell you they implemented in 2011 the four, can't-be-missed strategies I recommend:
Buy your way up the "food chain" of products and services valued by your customers. Periods of economic recession present the best time to acquire capabilities and competencies for which your top customers will pay a premium, but you currently lack. Prices are simply lower. Buy now before the value of acquisition targets rise back to premium, post-recession levels. Not only will your customers reward you with their dollars, but the acquired employees at the typically troubled target company will reward you with their hearts.
Rebalance Marketing and Sales budgets. Marketing is usually the first to go in a recession because most executives struggle to measure any financial return from any specific marketing endeavor. This area of discretionary spending, therefore, is easy to summarily dismiss. What a mistake. Transform expenditure into investment by funding programs that focus on customer retention and account expansion. These programs cost less than going after new customers, and you are rewarded with profitable revenue since you have already realized the costs of on-boarding.
Vet and invest in innovation. Even in a good economy, innovation in a vacuum is disastrous. And if you are tight on cash, placing your bets on products and services your customers don't buy will put your company in serious jeopardy. Instead, gather decision makers at your most important customers and prospects to discover and maintain alignment with market needs. Uncover the transformational versus incremental moves your company must make in order to win the war, not just the small battles.
Keep it simple. If you do have cash available, don't just add priorities and programs without understanding their contribution to sustainable, predictable, profitable growth. Maintain focus, discipline, and aggressiveness where the opportunities maximize returns, position, and margins. The Maximum should be no more than three organizational priorities!!!!
Our team's B2B Executive Strategies Newsletter discusses these topics further, both the theory and practical application. You can read the December 2010 edition at http://tinyurl.com/2f8pgub. We would love to have you as a frequent reader, so please join our list to receive future editions at http://www.geehangroup.com/contact-us/.
My best to you in 2011. Hope to see you ringing the Opening Bell soon!