Comments

For much of the world times have always been hard. We could learn from this.

There are some amazing stories of why business rather than government is so important in dealing with poverty in C.K. Prahalad's The Fortune at the Bottom of the Pyramid and in William Easterley's The White Man's Burden.

From reading these books I would hazard a guess that the businesses (banks?) that fail will be those who try to select the best customers and the winners will be those who are able to deliver products and services that anyone (globally?) can afford. Though sadly that last category is likely to include drugs and lottery tickets.

Posted by Michael Saunby at March 28, 2008 7:12 AM

Listening to the Radio coming home yesterday; the host said that you will know when we are in a Recession when you can actually find a parking space at Wal-Mart or on Friday night at the Texas Roadhouse. Additionally, the most popular item during Christmas won’t be a Video Game or the iPod

Posted by RTodd at March 28, 2008 7:50 AM

Recession, depression? What recession? This is a golden opportunity for excellence to shine through. Businesses that focus on quality and service will win through.

Those that focus on quality, service and marketing will prosper. When most companies are cutting budgets (and marketing and training are favourite areas to hit) it is those that maintain or grow their marketing budgets and effort that will grow market share, grow their business and prosper.

Logic has it that if your competitors cut their marketing it is not too difficult to grab their market share merely by maintaining, or growing, your marketing in bad times.

But please don't confuse additional marketing spend with better marketing. There are hundreds of marketing strategies available that allow businesses to grow without spending a fortune.

Posted by Stefan Drew at March 28, 2008 9:48 AM

I am in position to have a vision 20 years ahead for my company and for my homeland, Croatia. I gave it to my CEO when there was tough decision and he liked it. Today, I work with great minds of Croatia on my vision.

To march fearless, masterful and victorius acros the forest of doubt and fear in today's world is to have a strong, clear vision and courage.

I'm happy to see mr. Peters in Zagreb in June. Right on time:-)

Posted by Ina Matijevic at March 28, 2008 9:54 AM

Thank you, Richard, for a great post! I have been discussing with clients and potential clients this very question for months now. And just last night I went to sleep in the very wee morning hours mapping out strategies for clients and myself for survival. It is indeed tough. But opportunities persist!

My thought has been that during the Great Depression (aka the Great Slump in the UK :)) there were more millionaires made than any time in history, all during a time where things seemed very deem. In fact, my grandfather in Illinois was a building contractor during this time, laying foundations for many of the high-rises in the Chicago area. During this time he was also having picnics once a month for all the "poor children" with grilled meats and the like...all during a time when everything was so very scarse. My mother, included herself as one of these when, in fact, her father was the provider of the picnics. It must have been a mindset.

A few months back a friend emailed an article about Dave Bing, a Detroit Pistons All-Star basketball player turned successful businessman. In the article, he was asked why is he building along the waterfront in Detroit when of all places, the housing market where repressions are among the highest in the States. His response was that he was preparing for the return of good times. He also remarked that it was during a similar time that he began Bing Steel (known now as The Bing Group) and he heard the very same criticism. He started his company during the worst time for steel manufactures. The economy was then in a terrible slump. Here is a relative quote by John D. Rockerfeller on the Great Depression: "these are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again.”

Intuititive capable people probably prepare all along by using captial wisely and preparing staff effectively and making necessary adjustments as they go. Perhaps unlike the the Big Three (no longer so Big) who did not prepare their workers for transitional times, making those necessary adjustments. (I understand that this is a undertaking in mindset and spending, the company's and staff indeed.) Line workers became very used to three figure salaries (with overtime) and hefty benefits, including healthcare for grown children 'til the age of 25! Or, maybe the remark is better addressed to uncompromising unions? (This remark is not meant to start a discussion on the benefits of the white collar and working class...but hey!) To get a head start...I'm for the cutting back of all salaries and benefits during times that call for it. I am also for work that matters. Work that matters is important during a depression...and always. This is preparation.

Regarding opportunities in such a time as this, counter-intuitiveness is necessary as well as honest preparation by board members, senior executives, frontline management, and employees to what will be expected by all, including tightening the belt, becoming leaner and smarter. Extraordinary times require extraordinay measures. I don't think we think this way anymore. This thinking will create greater opportunities. And there are ALWAYS opportunities. I have been in search of them worldwide. Anyone need a consultant with this mindset that can produce results?

Posted by Judith Ellis at March 28, 2008 10:57 AM

Yes, we can all pull our hair, moan and worry. Or, we can get busy and do good work. Which should be our motivation in any kind of economy.

As FDR said, "The only thing we have to fear is fear itself."

(And that common sense thing works well too!)

Posted by Mary Schmidt at March 28, 2008 12:20 PM

What depression? Are y'all drinking something funny mixed in yer liberal media kool-aid these days? The Amercian economy has not hit a recession, let alone a depression. I get it--you consultants must first convince potential clients there IS a depression and that YOU have the answer to finding the way out. Yes, I'm cynical, because at best you people rely on what others tell you more than your own senses and experience. At worse, you are charlatans looking to scare clients into paying you for nothing. I also heard Y2K will come around again in 2010 and we're all going to die from bird flu this coming winter. Help! Help! The sky is falling!

Posted by Red Island Rhodes at March 28, 2008 12:27 PM

We agree with Mary... we can get busy and do good work instead of worrying.

We also agree that a depression is certainly not on its way... recession may be teetering but depression talk is a bit extreme?

Posted by Brick Marketing at March 28, 2008 12:47 PM

Richard King thanks for this topic - you are correct 2008 is our gateway to tough times. Depression may not be too strong a word to use for the financial sector and it has become a virus that is quickly spreading to affect all of us....

Here is my take on this year... These are tough times for everyone. Most people have not yet adjusted to them properly - including me or is that especially me.

I work for myself so I should be able to adjust quickly. But I have been so slow to do so. However after a conversation with a good friend earlier this month I have begun to take my own good advice. Recently, I slashed my fees by 66%.

Why so much and why now? Because the market will not pay me in 2008 what it would over recent years and it certainly will not pay anything like those rates over the next 12 months. Am I less valuable today than yesterday? No! I am probably more valuable and I probably have a far better quality service/product BUT the sticker price is too high.

Services like mine have been over priced for the past 3-5 years - just like house prices. Our costs are relatively low and can be trimmed even further now that the internet has gone global. Yeah the flat world of the internet has changed everything within my industry too. There are millions of new players in my market space. They all claim to be as good as me at what I do and they charge very little for their services - so I have to go meet the market. Are they as good as me? Some maybe far better and there is the rub I do not know and neither do my potential clients. So price is an important variable again.

My rational for all businesses right now - including my own - is to slash prices. Take price out of the equation when you tender your product or service. Then work as hard, if not harder, on your product or service to make it better. How can we do that? We can start by making all our offerings more relevant and more remarkable. In general it is very very difficult to be both 'relevant and remarkable' in your own community - that is why prices are about to be slashed.

At the global level prices are also about to be slashed but for a very different reason. At the global level prices will begin to fall again because of the impact of network economics. When you have millions of customers that you can treat as individuals then you can slash your prices and still make huge profits - Google, Amazon, Skype, etc have all proved the point.

Being both 'relevant and remarkable' starts when you also slash the number of things in your offering. Most of the things in your current offering could now be priced as free goods or services. Why? Because they do not add value. Indeed some of them are of no 'use value' to your customer unless or until they are free.

My prices are down below where they were 10 years ago. Where are your prices and what can you do to improve your 'use value' to your customers?

Richard.

Posted by Richard Lipscombe at March 28, 2008 6:10 PM

I am not an economist and better brains than mine will argue I am making this too simple. But it seems to me this is to some degree about how we view the world.

For instance in 1969 I started work in the National Health Service (NHS) as a clerk and a very naïve 16 year old. I was told by the ‘older’ folks who had been around the block a few times such things as ‘morale is the lowest I’ve ever known it in the NHS.’ Now I am a 55 year old – just as naïve - and people are telling me today ‘morale was never as low as this in the NHS when I was a youngster 30 years ago’.

I am with Mary, Judith and Richard L on this – we have choices. We can disappear into our safe underground bunker, keep our fingers crossed, hope the storm passes and that we have enough tins of baked beans to keep us alive until that glorious state called ‘calm’ returns - whatever that word 'calm' means.

Or …

We can use the lyrics of this Timothy Schmidt song by The Eagles (I know John O’Leary will forgive me even if everyone else doesn’t for mentioning The Eagles yet again)

‘Don't leave it up for someone else
Don't feel sorry for yourself
Why don't you do something?
Do something
It's not over
No, it's never too late
Run away?
You can't run away
For your honor
For your pride
You'll sleep better
Knowin' you tried
To do something’

Final thought …. This weekend I will no doubt see - as every weekend - hundreds of shopping trolleys full to overflowing in TESCO’s and yet I read here about an alleged coming 'depression' … At the same time I hear that 20000 people die every day – mainly children - due to extreme poverty ….

Seems like this ‘depression’ is already a pretty acute ‘illness’ for some folks on our one planet.

I will, no doubt, be told I don't really understand these things.

Posted by Trevor Gay at March 28, 2008 8:14 PM

Every single minute of life is about change. And the change comes in the form of crisis, or depression or whatever you want to call this. It is the ability to embody this that brings the best performance.

Change and thus crisis, is the greatest opportunity to look for the path nobody else has traveled before. And in these paths is where talent and courage show up.

How would it be if there was an understanding that the real thing is the direction we are going and how we response to whatever comes to us?

Problems? No!
Crisis? No!

Attitude? Yes!
Opportunity? Of course!

It is about dreaming and navigating towards our horizons!

Posted by Liberto Pereda at March 30, 2008 5:04 AM

Sorry it has taken me so long to get back and wrap this blog up, but frankly, I'm still working out my personal feelings on this situation. So, I've taken a deep swig from my bottle of liberal media kool-aid and offer the following short list of "smart moves for tough times".

First, price. When money is tight, and after all is said and done, the decision to buy is likely to come down to price! Thanks Richard for being so candid about charging much less now for your services than you did a few years back. I think we will all have to "suck some of that medicine up" over the next couple of years. Smart move number one.

Second for me is a having and instilling a positive mindset. Attitude is crucial when it comes to getting through tough times. History teaches us this lesson above all others. Have nothing to do with prophets of doom. Everyone on the payroll has to be engaged. Everyone has to be well worth their wages. No exceptions! In fact, focusing on mindset might be as important than focusing on cost? Now there's a thought!

This leads me to my third smart move which is to focus precious marketing resources on customers who have bought from you in the past and markets where you are already well known. Focus on having something new and relevant to offer existing or lapsed clients. Contacting, or even better, going to see past customers is probably the best business development strategy for a recession.

One final thought. Tom's "expensive" end April London conference is almost sold out (and not just to men in suits, I promise you). Why is this happening when there is so much bad economic news around? Tom has been visiting and speaking in London for twenty years to my certain knowledge. His events are legendary and people turn out for them. The price is clearly right, even for tough times!

Posted by Richard King at April 9, 2008 10:44 AM

Common sense is of course far too uncommon in the business world. People and politics will always be the biggest problems regardless of economic up or downturn.

We know markets are driven in a cyclic fashion, bullishly led on the emotion of euphoria and bearishly tanked with the emotion of fear.

Those in the know prepare for the upturns and downturns and profit accordingly.

Improvement of quality, service and the people involved is a winning strategy regardless of the economy.

The fundamentals get lost in the heady mix of euphoria and/or fear depending on the timing.

Posted by Tom at January 3, 2009 10:51 AM