9 April 2009

Pinto's Point

Strategies to thrive during the downturn

By Jim Pinto

No one really knows whether or when the current economic slide will turn around. My own view is this is an inflection point, a serious break from the past, a wake-up call from old illusions.

For well-managed companies, this downturn offers the chance to re-examine fundamental value propositions and develop new strategies. Here are seven key strategies not just to survive, but to thrive, in the current business environment:

1. Upgrade human capital: Look around your organization. Who is rising to the current challenges? Look for leaders and support them.
2. Conserve cash: Reduce and restructure debt, preserve cash.
3. Invest in innovation: Re-direct your best people to innovation projects. Move early to anticipate emerging needs.
4. Acquire innovative start-ups: Look for attractive sources of future growth. Do not acquire ailing competitors just to consolidate.
5. Focus on customers: Double the amount of communication with existing good customers. Do not acquire your competitors’ cast-offs. Rebalance your customer portfolio.
6. Don’t stop advertising: Sign longer-term contracts with good media that is anxious to serve winners. Refine your advertising bang-for-the-buck, specifically with performance-based pricing.
7. Don’t cut prices: Do not try to match low-cost competitors; they’ll eliminate themselves. Work your sales relationships to keep price-conscious customers loyal.

Developing a positive mindset is crucial. It is important to keep asking, “What’s the opportunity?” as opposed to, “How am I going to survive?” If you keep your eyes focused on opportunity, you can see it and create it. Remain agile; be poised to grow. You can not only ride out shaky economic times, but emerge stronger and more successful.

For positive individuals at levels below top management, I have simple advice: Do not wait to be riffed, laid-off, or whatever the expression. Look for good, complementary partners, and start your own company. This is a good time to do something different.

Related links:

• Technology firms settle downturn strategies:
  http://www.nationmultimedia.com/2009/02/19/technology/technology_30095993.php
• How to Think About Pricing Strategies in a Downturn
  http://hbswk.hbs.edu/archive/2884.html
• Quit your job - become an entrepreneur:
  http://r.listpilot.net/c/isa/3r46hrl/1s44g

Behind the byline

Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his book, Pinto’s Points, at www.jimpinto.com/writings/points.html.