2023 | Recession-proof but future-focused

A take on what you can do as a business leader to pilot your organization in tough times.

It's no secret that we're currently going through a recession, a time of economic crisis. This is a time when businesses have to be especially careful with how they spend their money. However, just because times are tough doesn't mean that you can't plan for the future. Businesses can look toward the future and create a recession-proof information technology strategy, which in turn enables them to emerge from this tough period as leaders. How do you emerge stronger from this recession? How do you plan for growth with a positive outlook in the middle of a recession? Let's unpack the answer to these questions.

Why do we dread recessions?

Recessions create constraints. It's quite common that declining customer spending sets off a chain of consequences. Mostly, one could translate it to a slowdown or even a decrease in business growth with an impact on sales, profits, marketing, talent acquisition, research, and innovation.?

Yet, that's not what scares most businesses. Rather it's the abrupt end they or valuable people in their team could face. For reference, the 2008 financial crisis claimed 1.8M small businesses in the US that had to shut down between 2008 and 2010, and 8.7M people lost their jobs between Dec 2007 and Dec 2008, according to the US Bureau of Labor Statistics.

Let your "Raison d'être" guide your decisions

Go back to your vision. Remind yourself why your business exists in the first place. Healthy business models rely on a product or service that directly or indirectly solves a problem in the market. Instead of acting from a place of uncertainty and out of fear during a recession, going back to the business roots reestablishes the foundation for the decision bricks you need to add. Look at your long terms goals and then consider coming up with new short and medium-term ones to keep you on track.

Research new ways to leverage technology

Technology's main purpose is to help us achieve much more than we are able to through human abilities and capacity. It's the first brick that you can use to enhance your business. How does happen exactly??

• Start with your customers in mind and think about how you can better serve them during a time when they need all the help they can get. Think of ways to adjust your communication with customers, and their user experience as they interact with your product or service. Use technologies that provide your customers with easy access to your team which in turn allows for more personalized interactions. Consider adding analytics and market data that can help them make better-informed decisions, but also help you listen and understand how their businesses have to adjust to meet changing market demand.?
• It's time for you and your team to fuel your creativity and think outside the box. Start by facilitating access to knowledge and learning opportunities to enable your team's development. Help them to expand their understanding of your market, and empower them to review market data to identify changes in your customer's contexts, needs, and demand. Whether you are leading a small or large business, a division, a department, or a team within a mid-size business, this is a time when you have to work closely with the people around you. Challenge yourselves and the team to come up with crazy ideas and crowdsource them through shared platforms such as Google Docs or Evernote. Encourage them to connect with experts in your industry via LinkedIn, and intelligent professional networking platforms like Lunchclub.ai, and normalize ad-hoc brainstorming sessions whenever possible.
• Finally, think of increasing internal efficiencies such as adopting processes & software that streamline the fact-based input from your customers and team into a new and relevant offering of your product or service that solves their burning challenges. A methodology like Business Process Reengineering can very well help you identify weaknesses, waste, redundancies, and ways to improve your internal workflows. Focus on simplifying and standardizing your processes, and then use automation software to speed up similar and repetitive activities such as contract writing, billing, reporting, or payroll. This will win back precious time for your business, customers, and team.

Be ready to transform

Understand that the same business model and revenue streams that worked under normal conditions may need to change in a recession. Based on what you learned from your market, clarify what parts of your model have been affected and may not recover. Recent examples can be found in the accelerated switch from brick-and-mortar to digital storefronts during the pandemic. Concrete cases such as the use of telehealth for non-urgent doctor visits and medicine prescriptions, the ubiquity of online consumer consumption, or work-from-home presented businesses with challenges in how they manage their people, processes, or assets. While some of these might return to pre-pandemic approaches, consumer behavior has migrated to a digital-first demand which will continue to dictate how businesses respond.

Naturally, this doesn't happen overnight and the leadership of an organization has a key role in setting its environment up to be favorable for creative problem-solving, significantly more so than under normal market conditions. Consider how you could diversify the number of customer segments or the number of geographic markets that your product or service caters to. With businesses scrutinizing all expense items, increased attention to the correlation between investment and time to return on investment will play a major role during the recession. For instance, when developing software, there are methodologies that allow for the release of software versions that integrate simple yet fully-fledged features. This provides customers with frequent access to new functionalities which they can use for rapid prototyping with their own team or end customers.

It may be counterintuitive to consider the fact that as you transform your business model so do your own customers. Understanding this reality in a recession will position you to transform along with your customers. Even so, it’s crucial to remember that your business exists to solve your customers’ challenges, and whatever shape your business model takes, it needs to exist to support your customers’ journey to achieve their own vision.?

Prioritize?

Perhaps the most important business decision you do need to make in a recession is to choose what you’ll invest your time, resources, and energy on. It may be tempting to choose all from a list of a few dozen initiatives. This is a time when focusing on a handful of concrete highly measurable goals will help you to stay aligned with your long-term vision, as well as what you set out to achieve mid-term through the recession. Not to mention the fact that funding is scarce, you will need to make a selection based on those actions that have the highest probability for clear results. Striking the right balance is a test in itself.?

No business is created equal, and this is why I’ll list a few questions to help you with the thought and decision-making processes:

• What will most likely be the next normal? Are there certain trends that may help you identify areas you could leverage in your decision? Look at how packaged goods companies had to figure out how to sell online within a short period of time, or all the digital products and services that popped up to support a massive shift to work from home.
• What previous assumptions no longer hold true? Look at the highest impact areas in a recession most tied to the purchasing behavior for both consumers and businesses such as drops in high-ticket products & services toward affordable & incremental rapid return, lower risk options; or the change in one’s ability and willingness to go out and about when they’ve learned in the pandemic they don’t need to leave their homes (i.e. work, groceries, healthcare).
• What past historical data could you look at to estimate the degree of change in demand that similar recessions have brought? From unemployment to the impact of debt on the different market segments, to the scrutiny that came with any investment decision after the Wall Street failures and bailout fiasco.
• Are there outliers in terms of what customers perceive as valuable which may indicate ideas of how you should pivot or cut? The work–from–home revolution brought about a new era of professional nomads. They were the odd folks before the pandemic, but they’ve become quite a norm. This has created opportunities for travel-related industries.
• What are the risks of adopting new processes, services, or products to answer those changes in demand? Once you’ve take the decision to adopt certain technologies or initiatives, you have to take into account they may not last past the recession. For instance, while working from home is ubiquitous these days, there are businesses and professionals alike who value the level of communication and quality of work created by in-person work.

Finally, not all of your initiatives and changes will turn out the way you expect. In the famous words of Winston Churchill:

“Those who plan do better than those who do not plan, even should they rarely stick to their plan.”

Yet, having an action plan that sets you on the right path is significantly wiser than trying to wing it in the middle o a recession. By the end of it, you will have grown along with your organization. A recession isn’t a drill. It’s the real deal: fighting through what can very well make or break your organization.