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Product and Growth Lessons for Hard Times

An article on growth and competitive intelligence may seem a little “tone deaf”, especially in the middle of a crisis. Nothing, however, gets better if we stand still.
 
Within the “tough times” and struggles of different world events, many companies have found ways to make it through and thrive in the era after the crisis. 

What did we learn from the last crisis?

If we look back in 2002, a report was published by McKinsey (Link to report), this report studied the actions and outcomes of 1,000 companies over a period before and after the recession of 1990-91. 
 
The study focused on the behaviors and decisions during the recession that had an effect on post-recession performance. What they found was astounding: 

“While most companies tightened their belts, successful leaders (referring to the post-recession market leaders) trading lower short-term profile for long-term gain, refocused rather than cut spending… Yet, in expansionary periods, successful leaders spent significantly less than did their former peers. 

The study also explained more, using an auto-racing analogy that I love, and have been using in my different posts on the subject.

“Think of a recession as a sharp curve on racetrack – the best place to pass competitors, but requiring more skill than straightaways. The best drivers apply the brakes just ahead of the curve (cut excess costs), turn hard towards the apex of the curve (identify the short list of projects that will form the next business model), and accelerate hard out of the curve (spend and hire before markets rebound).”

That was not the only insights found though, a Harvard study (Link to this report), looked at 5000 companies and divided up the responses of different companies into 4 groups:
    • Prevention – Everything is about cutting the cost
    • Promotion – Optimism that ignores the severity, and instead focuses on shallow growth.
    • Pragmatic – A combination of the first two. Overly relying on cutting people.
    • Progressive – Combination of the first two, refocusing and removing fat.
They then added an odds on how likely companies in the different groups would out perform their rivals coming out of the recession. Those answers are:
    • Prevention – 21%
    • Promotion – 26%
    • Pragmatic – 29%
    • Progressive – 37%

What lessons can be applied now?

Both studies provided frameworks to help with decision making: Based on your current market / financial strength (Link), and sales / EBITDA (Link).
 
The key thing in all of this is understanding how customers and competitors will change, because they will. Every single competitor out there today and every single customer will be evaluating the actions they need to perform to weather and excel during this crisis. Competitors will drop off your radar, target different channels, do proactive acquisitions, modify product and positioning. In customers, you will see changes in search, email and social habits, and in their needs and priorities. These changes are important to detect, monitor, and strategically grow with.
 
You competitors are going to follow one of the behaviour patterns that you see above, and leaning into the curve (racing analogy) needs you to know the position of everyone around you.
 
Your competitors are going to be looking into the changing behaviour of their consumers, and if they are finding themselves in the mixed or declining market, will be making major changes.

Many in the enterprise category may find themselves in the “pained-but-patient” behaviour and find their product as a treat. This means that different tactics need to be theorized and actioned to push forward. Walmart aggressively grew during the 2001 and 2008 recessions by pushing their “Great Value” brand, and “everyday low prices” strategy.

Many companies and products will be templated to move down-market with minimal changes. This often confuses loyal customers, but could mean the a big player in your space may suddenly be pushing into your home-turf. This happens every recessions and ultimately causes them to drift from their established base. Finding competitors that are drifting from their target market leaves them in a weaker position when the recession ends. This is a great time to stabilise your brand.
 
In other words, tailor your tactics, but keep a close eye on the competition that does not!
 

If you have the resources to grow, this is the time to do so. Ad costs/competitive focus will be lesser, and the world is not stopping. It is just slowing down.

Get Rival CI now to monitor the changes your competitors are doing with their tactical changes, pricing, positioning. You need to know everything about your competitors to be able to pass them in this curve and come out stronger on the other end.

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