Despite what the statistics say, most companies in Northern Colorado are still experiencing the effects of the recession. Some are experiencing an upturn, but many are not.
In times of economic hardship, there are typically three directions that companies take:
- They don’t manage to survive. They get bought out, dissolve, or are acquired, but don’t emerge from the downturn as an independent entity.
- They hunker down. Focused on survival, they conserve every resource, avoid every possible risk, and ultimately emerge as a weaker version of their former selves.
- They reinvent themselves. Some leaders recognize that an economic downturn usually represents an opportunity to lead in a restructured industry, and make carefully considered investments to leapfrog the competition.
Most companies that survive are in the second category: They emerge from a downturn weaker. Those few that are able to look to the future will create a leadership position for themselves, if only because the competition is weaker.
Let’s look at an example close to home: publishers of newspapers and magazines.
It’s no secret this industry has been hit hard. Readers have less disposable income; so do advertisers. But those who are watching the longer trends realize that our current economy really just accelerated movement away from reading paper to reading online. Look even more deeply, and you see that societal patterns have been shifting away from reading itself, and younger generations are even replacing media viewing with more participative interactions. Growth has shifted to participation in online communities, where businesses take on a role as a valued contributor of news that’s relevant to each specific group.
Publishers who think that they’re in the business of “publishing news” will likely see a continued decline of business, even as the economy generally rebounds. It doesn’t much matter whether they focus online or offline, because the model as a whole has been declining for well over a decade.
Advertisers, of course, are shifting along with their changing customers, to mechanisms that don’t even look like advertisements any more. They’re sponsoring events, they’re engaging in discussions, and creating relationships with their customers.
If you’re in a publishing industry that’s based on advertiser revenue for showing ads next to news and information, will you survive? Perhaps, but leadership will shift to those companies with the courage to look ahead to where their customers are going, and take a few risks.
Principles apply to other industries
Most of us don’t have to deal with anything that wrenching, but the same principles apply.
Suppose you’re in a construction-related business. Most new construction is at a standstill, and only slowly reviving. Projections aren’t particularly optimistic, because of the huge glut of housing and office space on the market.
You might be tempted to hunker down, Your bank account is telling you that it’s good to lay off workers. You’re picking up even the tiniest of jobs, bringing in whatever income possible, to see if you can survive until the industry revives.
You’re basing this on a projection that the industry in 2014 (or 2017 or 2020) will rebound to essentially the same conditions we had during the boom cycle.
This is dangerous.
While you’ve been focused on reducing your risk, others out there realize that the revival will look different from the previous building boom. Customers will be placing energy conservation much higher than before, including self-sufficient energy sources. Roles of players in building projects have shifted, changing how customers relate to general contractors, architects and subcontractors.
These changes will continue even as the general industry rebounds. If you’re connected with these trends, what are you doing to position your company to lead in this future reality? The leading companies will come from those who were courageous enough to look forward, despite the tough economy.
I see many examples of how this doesn’t have to be particularly expensive. For instance, you might grow some new capability in your company by sending key employees to specific classes while business is slow. Perhaps you can take some time to dig deeper into key market trends, determining whether they’re going to be important to your particular customer base. You might seek out some specific kinds of customers which represent your brighter future.
Just don’t spend all your effort hunkering down. More courageous companies will pass you by.
Carl Dierschow is a Small Fish Business Coach based in Fort Collins. His website is www.smallfish.us.