Recession: The best time to rebuild your company

When I was a student at the University of Wisconsin-Madison, I have often heard my business professors say that companies must continue to invest in marketing even during a recession because that will help them come out of the recession stronger than ever. I must admit I was a bit skeptical. I was thinking to myself, "Really? Do these academics know what they are talking about? Spend more money in a recession? That's counter intuitive." Many, many years later, I realised that I have been taught by some very smart professors in that university because I have seen the proof with my own eyes.

The last global financial crisis that was precipitated by the fall of Lehman Brothers caused many of my clients to see a sharp drop in business. The average fall was around 30% but some clients experienced drops of up to 80%.

I remembered having breakfast with one of our clients to discuss the next step in his rebranding project. This CEO looked distracted and he was frowning more than usual so I asked him what's wrong? Is he worried about the business? He told me (still frowning heavily) that business has dropped about 30% but he's not worried about that because he expects the market to rebound in 2 years but what is giving him sleepless nights is how he can make full use of the slowdown to ensure that when the economy picks up again, his business will pick up even faster than the rest of his competitors. I asked him, "What do you have in mind?"

And this CEO told me, "You know we are already doing a rebranding project with your firm because I now have more time to work with you guys to iron out the flaws in my corporate branding strategy. I don't know what they are but I know they are there. It's your job to find out and help me improve the brand so that when the economy picks up, I have a better brand to fight with my competitors. But that is just one thing! I also need to figure out how to prepare my engineering team and my marketing team better. I am cracking my head to see what kind of training programmes or courses I can send them to. And I am also trying to hire more people now, put them on whatever projects we have so that by the time we get new projects, they will be ready."

I am rarely speechless. That morning was one of those rare occasions that I was speechless. Instead of cutting back, this company is investing in rebranding the company and retraining its engineering and marketing teams. But this company wasn't unique. Among my clients, many were doing that - they were investing in things or competencies that will help them compete better when the economy picks up. One client decided to replace its entire IT infrastructure with a state-of-the-art ERP system that is able to give management and the sales team real time information on inventory, sales, and each geographic market's performance while they are on the go. One client decided to hire an additional 100 people because according to them, a recession is the best time to grab talent and anchor them to the company. One client decided that the recession is the best time to do cross-training so that their people can learn how to do each other's jobs which according to the client increased productivity and reduced errors.

There are many such cases from among my clients and you know what? These companies emerged from the recession much stronger. Some of them grew by as much as 250% post-recession. Some have managed to topple their long-time rivals. Some are now No. 1 in their key markets. It was an incredible thing to watch. And as their brand consultant, I had a front row seat. I watched them from the inside out.

The Winning Difference
Now that we are facing the prospect of another global recession, it is time to take stock of what you have, and what is lacking in your company. Then, decide on what you want to fix and what areas you want to pour investments into. All of this seems to make sense but how come only some companies are doing it. What is the key difference between companies that do it and companies that don't? It has nothing to do with money. Many of the companies who don't do it are cash-rich companies, mind you.

The difference is actually the mindset of the CEO. Companies that invest during a recession and win are companies with CEOs that have a positive, we-will-win attitude. They see the recession as something that is temporary. They believe that economies will go into recession, rebound, go into recession, rebound. They don't lose sight of the goals and the targets of the company. Are you such a CEO? Do you work for a company with such a CEO?

2012 will be an exciting time. Sure, there will be bloodshed and casualties in the corporate world but you will also see some visionary Singapore companies invest in rebuilding their brand through various means and they will emerge stronger, faster and deadlier when the economy picks up again. I can't wait and I hope that I will get a few more front row seats. 

Jacky Tai, Principal Consultant, StrategiCom