While business leaders have to prepare for a downturn, they should also remember that adversity creates opportunity to gain competitive advantage, says Martin Reeves in The WARC Guide.
This month, The WARC Guide looks at marketing in the COVID-19 recession, which, as GroupM’s Brian Wieser has made clear, will be both longer and deeper than expected – even countries that escaped the worst of the pandemic can’t avoid the economic consequences. (Subscribers can read The WARC Guide to marketing in the COVID-19 recession in full here.)
Writing in The WARC Guide, Reeves, managing director and senior partner of the Boston Consulting Group, acknowledges that companies’ reactions to downturns are most often defensive, delayed, and insufficient.
“But downturns also present opportunities – and to realize them, companies must go beyond such a defensive stance,” he says.
“Competitive volatility increases during downturns (for example, the rate at which businesses jump into or fall out of the Fortune 100 each year rises by 50%), implying an opportunity to use the downturn to create competitive advantage.”
There are a number of ways to approach this (for more details, read Martin Reeves’ article in full here), but one is to tackle needed internal change.
Reeves cites the example of American Express, which in the 2008 financial crisis was threatened by rising default rates and falling consumer demand. After cutting costs and divesting non-core businesses to stay viable, the company refocused on new partnerships and embraced digital technology. Its stock price rose by more than 1,000% in the following decade.
“Downturns offer a pretext for far-sighted leaders to initiate and accelerate ambitious change efforts,” he notes.
Recall that Apple released its first iPod in 2001 – the same year the US economy experienced a recession, contributing to a 33% drop in the company’s total revenue. Still, Apple forged ahead to transform its product portfolio, investing in innovation and increasing R&D spending by double digits. As a result, the company launched the iTunes music store in 2003 and new iPod models in 2004, sparking an era of high growth.
Companies can similarly use the downturn to drive urgency and reinvent their companies for long-term advantage, Reeves advises.
Read Martin Reeves’ article in full: Opportunity in adversity: Four moves for long-term growth.
WARC is also running a series of webinars next week on marketing in the COVID-19 recession as part of its WARC Talks 360 series: you can register here.
The WARC Guide is a compilation of fresh new research and expert guidance with WARC’s editorial teams in New York, London, Singapore and Shanghai pulling in the best new thinking globally. It also showcases the best on WARC – case studies, best practice and data sourced from across the platform.
Sourced from WARC