How to Grow Your Business in a Downturn - Part 1
In order for us to fully understand the state of the “new normal” for business and how that impacts how we can grow our companies in a downturn I’d like to start out this blog series by looking at the current context, then we will look at some stunning insights into what happens before, during, and after a recession, we will also look at a winning strategy for company leaders during a recession, and finally we will discuss a framework for how to grow.
First, let’s look at three tectonic shifts that define our current context:
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Tectonic Shift #1
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Our economy has lurched rapidly lately from manufacturing to services and specifically to highly-inefficient government services. From 2000 to 2010 we lost a full one-third of our U.S. manufacturing jobs -- a loss of 5.7 million jobs -- while we only had job growth in four non-exportable sectors of our economy. We lost a total of 10.5 million value-added jobs in all other industry sectors, and unfortunately, government is now our largest employment sector with twice the number of jobs compared to manufacturing.
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And the current investment focus, according to a recent survey of several hundred middle market executives, is in technology to further reduce payrolls, a mindset that is captured in this takeaway quote from the survey report.
"…if a job can be automated—if it can be reduced to an algorithm, an application, or a set of instructions—it probably will be."
Source: Deloitte, “Mid-Market Perspectives: America's Economic Engine – Competing in Uncertain Times”, September, 2011
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Therefore, future growth is not likely come from the U.S.
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Tectonic Shift #2: Real demand growth will come from BRIC countries, not the U.S. BRIC is an acronym that stands for Brazil, Russia, India, and China, the four largest “growth” economies that will -- according to most forecasts -- drive global growth for decades to come. In fact, by 2016, China is expected to surpass the U.S. as the world’s largest economy.
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Tectonic Shift #3: In terms of the social/behavioral triad of consumption, communications, and connectivity, as a global population we are inundated with 24x7 information. Our global “online” population will explode from 2 billion in 2010 to 5 billion by 2020. By next year, cell phone penetration will reach 70% of the planet’s 7.1 billion people. Imagine an entire connected and global population willing to either build or bury your completely-transparent brand.
Now that we have these three tectonic shifts that define our current context, our next post in this series will look at two insights based upon rigorous analysis of what happens before, during, and after a recession.
Continue on to Part 2 of this series...
- October 1, 2012
- Strategy
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