drought-pix_200In this final post of the series, I want to build the connection between the large-scale economic impacts we’re going through and the five basic recession strategies available to your enterprise. It is easiest for me to think of the implications of this crisis in ecological terms. A mild recession is like a short drought: it temporarily stresses plants and animals but most bounce back when rain returns. On the other hand, a sustained drought throws the ecosystem into disequilibrium, lowers the carrying capacity for supporting life, and disrupts the interdependency of species with dramatic adapt-or-perish consequences.

Sadly, it seems clear that our economy is rapidly downshifting to a smaller, slower-growing state that may last for many years. Just as global warming is disrupting natural habitats, the economic downturn is altering the economic habitats of businesses and non-profits far and wide. As consumer spending and business investment shrink, many enterprises are no longer in equilibrium with their environment. They are in a race against insolvency.

Faced with shrinking revenues, there is a natural survival response to cut costs and redouble past efforts to drive sales. In highly contested markets with excess capacity everywhere, this strategy yields diminishing returns. It is certainly no guarantee of remaining cash positive.

Instead of doing more of the same for less and less return, the path back to fitness requires doing less of the same – and doing more to create new demand and reduce competition. Design your short-term strategies to become both cash positive AND uncommon.

The next post will explore the five basic recession strategies.

five_recession_strategies_20090820With the gift of hindsight, I can report that it is possible to adapt and transform in severe economic conditions. It’s painful, but possible to come out stronger. Twenty years ago, the Boston area experienced a deep recession that decimated the design and construction industry. A highly-contested marketplace became downright dangerous as companies slashed costs and took huge risks to win work. It did not take long for me and my Beacon Construction colleagues to recognize that hyper-competing in this environment would eventually end in failure. Through trial and error, we discovered strategies for finding and winning work outside the hotly contested mainstream. In the process, we evolved into a far leaner and smarter organization that became an attractive acquisition for Skanska USA.

Since leaving Beacon in 1994, I’ve spent many years as part of a national research-based initiative to identify and disseminate patterns of entrepreneurial success. This knowledge, and in particular the systematic way that top entrepreneurs harness adaptation to changing circumstances, are the foundations for this blog.

Links to the Economic Climate Change series:
Past recessionsJobs and incomeConsumer spending & debtNon-consumer factorsAdaptation & opportunity

4 Responses to “Gauging economic climate change, Pt. 5: Adaptation and opportunity”

Trackbacks/Pingbacks

  1. Gauging Economic Climate Change: Wrap Up | Recessioneering
  2. Gauging economic climate change, Pt. 3: Consumer spending and debt | Recessioneering
  3. Gauging economic climate change, Pt. 4: Non-consumer factors | Recessioneering
  4. Gauging economic climate change, Pt. 2: Jobs and income | Recessioneering

Leave a Reply

You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>