With the 158 year old Lehmann brothers (the investment bank not the siblings) declaring themselves bankrupt, and economic gloom filling (and selling) newspapers and setting the tone for hysterically downcast television presenters you could be tempted to keep, like Amy Winehouse, a bottle handy. You could also be forgiven for hiding until the storm has passed.
The truth is that the best way to deal with a recession is to innovate your way out of it. You could just cut back on everything but you will also cut back on the very things that can help you to survive and grow. You could just continue to spend as if there was no recession but you will run out of money and waste opportunities to improve the way you innovate.
Spending nothing leaves all the positive moves to your competitors. They can get closer to your customers. They can release next generation products that establish new markets. They can increase the value of their brands and take advantage of the next wave of growth.
Sit still and be left behind – even in a recession. Customers spend longer making choices and looking for increased value from their purchases. They will work harder to buy new and improved. If your product is old and unchanged, they may abandon it.
Continuing as though there was no downturn is a missed opportunity. If you can't really afford such extravagance, you may simply run out of money. If you have deep pockets, you may encourage complacency rather than imaginative, bold solutions. In a crisis, there is a temporary willingness to consider better ways of doing things but you will waste them if the message spreads that there is no need to improve.
Get rid of what doesn't work. Unnecessary meetings, forms, procedures, and checklists clog corporate arteries. They may even increase in times of uncertainty. To feel in control, managers squeeze their people harder – overloading schedules, undermining efforts to improve. The better way is to build a moderately sized bonfire and work collaboratively to burn red tape.
Cut back on what doesn't help. Eliminating waste is at the heart of continuous improvement efforts. Travel expenses are costly. Help your people make the shift to technology that makes travel less necessary. Cisco has halved travel budgets and used some of the money to install high quality video conferencing facilities. In an upturn, it can either reinstate travel or continue to benefit from the new efficiencies. Forget hiring the Olympic medallist or the Everest mountaineer. Invest money to bring in outsiders who can help not merely entertain. Re-assess training, offices, stationery, business units.
Engage your people. One worker complained he lost his job because the company wasn't making money but in twenty years no one had asked him for any ideas to improve the situation. There's never a better time to strengthen working relationships. There's never a better chance to engage employee inventiveness in the causes of cost savings and revenue growth. People have to know that making suggestions will not talk themselves out of a job. Give people the honesty and trust they need. You can cheat but there is a price to pay.
Reach out to customers. The people who buy your products are also thinking about how best to deal with a recession. Your suggestions and proposals for saving them money will receive more attention than usual. There is an opportunity to build strong relationships in the 'heat of battle'. A sense of gratitude for solutions will often endure beyond the downturn. Customer will show greater willingness to consider radical solutions. They will be more likely to commit to you for longer than in the carefree atmosphere of a boom.
Question Assumption, Encourage Adventure. Why can't you deliver a product twice as fast? Why can't a product be twice as economic? Toyota started their Hybrid car development during a recession. Can you create a mass market from a luxury or niche product? Apple launched the iPod during a recession. While your competitors are full of fear, uncertainty and doubt, you can introduce innovations that others cannot easily imitate because they question traditions. They may even look foolhardy or silly and avoid attention.
Reward Smart Thinkers. Through your efforts to bring people together and identify great ideas make sure you also identify and reward the smart thinkers. Some people shine during difficult times because the answers are not obvious. They find ways of squeezing, stretching, and supporting growth. If you ask demanding questions and do not accept compromises, you will eventually unearth the real problem solving talent in your company.
During a recession, many companies grow. After a recession, some companies grow faster than the competition. This is more likely if they have new products that fit customer needs better, engaged people who creatively collaborate, an absence of unhelpful assumptions, and a streamlined business.
Innovation is relevant to all these objectives. Every crisis brings opportunity to improve. They say we gotta go and give up. And I say... No, No, No.