Is a downturn inevitable? Given all the talk in the past couple months, it seems that a downturn can no longer help but to become a self-fulfilling prophecy if it has not already set in. The only question is how long and how deep?
How should companies approach these uncertain times? Most of the companies I am talking to seem to be continuing much with business as usual. Granted, I am not currently working with investment banks nor home builders, but even a company I am working with that is focused on consumer banks is seeing strong interest in their new product. Not all banks used leverage and risky instruments to grow quickly and most have strong balance sheets. Sure there’s turmoil and risk. But only a small percent of businesses really “did anything wrong.”
Bernie Thompson has a post on Lean Software Engineering urging companies to Get Lean to Survive the Downturn. It focuses on executive priorities during a downturn and basically postulates that the right things to do before are the right things to do now. He suggests that:
…to steer the corporate ship to account for the increased external risk and uncertainty:
- Re-prioritize to focus on the highest probability, nearest term revenue opportunities
- Cut spending to preserve cash
- Look carefully for unique opportunities in the surrounding turmoil
He concludes with “The urgency of a downturn may, in fact, be the best opportunity to adopt changes that will pay off even more when things turn up again.”
I happen to agree with this assessment and especially like the third point which he elaborates on in the article. Now is a great time to continue to improve how you operate and to re-invest in the future. Sure, increase focus and tighten up on discretionary spending (both are part of being lean,) but keep delivering the fundamentals while improving on the key differentiators. And stay on the look-out for opportunities that may only be available in these more unsettled times.
Oh, and don’t forget to surround yourself with positive people and turn off CNBC. Let’s stop the prophecy in its tracks. I’m not sure the downturn has to affect the broader economy like it did Wall Street. Get out there and keep improving.