You Can't Thrive When Your Strategy Is Merely to Survive The natural impulse is to hunker down when the economy slows, but tough times are uniquely suited for boldly setting your brand apart.
By Daniel Newman Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Business is a fickle companion -- one quarter you're basking in the glow of increased earnings, and the next you're wondering where you went wrong. Since the world we live in is constantly changing, it's easy to stay in a reactive (rather than proactive) mindset. When fear sets in, you're focused more on keeping your business afloat than on innovating and making it better. In volatile or sluggish markets, it may seem like riding out the storm is the best approach, but research suggests that the opposite may be true.
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A recent whitepaper by Bradley Johnson of Advertising Age asserts that difficult times are actually the best for separating yourself from the competition. To make his point, he takes a critical lens to three time periods: The Great Depression (1929-1933), the Great Stagflation (1973-1975) and the recession of 1980-1982. He points to an interesting trend: innovation from these eras shaped the markets for decades to come.
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A case in point: during the Depression, General Motors had to find a way to protect its investment in the upscale Buick brand. Rather than phasing out this model altogether, it focused on getting people to buy used Buicks in lieu of cheaper new cars. The idea was unprecedented at the time, but now the idea of buying a used high-end car instead of a new cheap one is common.
Post and Kellogg provide another interesting case study. In response to the Great Depression, Post scaled back on advertising and expenses. Kellogg, by contrast, heavily pushed its advertising and invested serious dollars into a new cereal: Rice Krispies. Today, Kellogg is still the dominant player in the cereal world. It will be interesting to see how these two companies pivot to a market that is rapidly turning away from ingredients like added sugars, dyes and artificial flavorings.
Understand the costs of complacency.
Riding out the storm may seem like a safe bet in a volatile market, but complacency costs are too high. Businesses afraid to take risks are the ones that will capsize in times of market uncertainty. I've mentioned these risks before when it comes to digital adoption, but the philosophy is the same here.
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Take a look at Post and Kellogg again through a modern lens. As I said, it will be interesting to see who comes out on top in this current market, which is quickly moving away from processed foods. Both enterprises have started to adapt by altering their recipes to be free of dyes and artificial flavorings. That's survival. But to thrive, these organizations will have to come up with a way that forces their competitors to pivot and adapt to them.
You see moves like this often in competitive sports. They don't always seem like mind games to the casual observer, but both parties are thinking of ways to leverage their strengths to expose their opponents' weaknesses. Game, set, match.
Survival is complacency -- and if your business model relies on complacency, it's already in trouble.
Be proactive, not reactive.
Today's business markets move faster than they used to thanks to technology and a consumer-based focus. The cost of reacting is, first, missed opportunities. If you want examples of reactive companies that failed to pivot, look no further than Blockbuster, Kinko's and Kodak. These enterprises dug in their heels to weather a storm. Instead of innovating, they stagnated. By the time they realized their mistakes, the market had shifted and they were too far from shore to recover.
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Being proactive means making bold moves in the face of adversity. I don't mean to downplay market uncertainty, budgeting constraints or harsh economic realities. Change requires agility, market awareness and vision coupled with swift execution ability. Remaining complacent in the face of an unforgiving market shift can give way to failure, while making a bold move could result in market domination.
