At the End of Every Recession There is a Decision Point

(from Issues for Growth, Vol.18, No. 11)

During a recession every company and every decision maker will cut costs and therefore buy fewer services or products. There will be no decisions on new directions for the company or implementing new solutions. During downturns, companies tend to stay with existing proven solutions and services as there is little or no room for experimentation.

The Dark Tunnel
As the world keeps wandering through the dark tunnel of the downturn, business will be spending less and less on products, services or solutions. The journey through the tunnel is long, cold and dark. However, one day the end of the tunnel will be there. Not all businesses or markets will emerge at the same time from their tunnel, but all will eventually get out as their business starts growing and expanding again.

Recessions bring the adoption of new solutions
At that moment, decisions on products, solutions, and services will be made rapidly as new opportunities with new business are present and lie ahead for companies. These decisions concern the services and solutions to run or operate their business. The more efficient and more beneficial these services and solutions the more likely to find adoption.

This is the dangerous decision point since it is a point of inflection. At the end of the tunnel people and companies will decide how to proceed with their business.

Some of the previously used solutions and products will be reordered, whereas other solutions and products will be compared with new offerings/ new models /new approaches that are now on the market. Since the market constraints and economies of scale have changed during the recession, the outcome from this comparison can result in new direction.
All recessions have led to the adoption of new solutions. In some cases these new solutions may have been existed for a while (even before the recession), but couldn’t find a market that would accept and implement the new solution in large quantities.

Change at the end of a recession – What happens to your offerings?
Your current offerings can continue to sell still relatively well into your market during this recession. However, once your customers’ business begins to pick up again, it might just be that they not choose your product or solution. They may choose a different solution. They may even decide on a radical change that is outside the normal pool of solutions.
Thus even if your current business is not doing to badly during this recession, there is no guarantee that such success will continue once the recession is over. Change can happen rather fast.

From companies with successful solutions to laggards and from challengers to leaders
Although we don’t know how long the journey through the recession tunnel will be, change will be upon us quickly once this downturn comes to an end. Successful products can become laggards overnight and the previous challengers can emerge and become leaders. Change can be driven by technology, social preferences, new economics of scale, new business models, or other innovation.

Will your solutions, products or services rise to become the leaders or will they fall behind and become the laggards?
How well is your company prepared to respond in 2010? Are you taking control of the things that you can? Are your actions strengthening your company - or weakening it? Are you building flexibility into your plans? Have you changed your approach to planning?