Many leaders are focused on cutting costs due to bad economic news. However, in downtimes, leaders who focus on innovation come out ahead. According to the Harvard Business Review, “In the onslaught of never-ending change, it’s easy for leaders to freeze and focus on survival. Don’t freeze. Seize the silver lining and find unique opportunities to turn today’s ambiguity into tomorrow’s opportunity.”
Economic downturns create an enhanced window for innovation in several ways, including but not limited to:
1) Disrupting the economies of scale previously enjoyed by market leaders that are now saddled with underutilized assets.
2) Increasing the focus of both suppliers & customers on productivity gains and cost reduction; and,
3) Increasing the availability of talent with deep knowledge of the technical capabilities and product/service strategies of current market share leaders.
In a downturn, organizations that anticipate emerging trends can gain share by disrupting the market and overtaking market leaders. Downturns create opportunities for new market entrants, both within value chains and at the end of them (where they meet the customer). Therefore, leaders looking to retain or improve their position must deliver meaningful innovation rather than just layoffs and cost cuts.
How can organizations leverage changing market conditions while managing risk? Let’s use sailboat racing as a metaphor for business. On the racecourse the winds increase, decrease and shift throughout the race, much like market conditions shift. The best sailors use foresight – they carefully study detailed weather forecasts prior to the race and know where to position themselves relative to competitors to take advantage of the anticipated changing conditions. The winning boat is often the one that optimizes boat speed (operations), while anticipating changing conditions (strategy).
Today, organizations need agility and resilience due to the unprecedented level of uncertainty and complexity in the business landscape. Foresight creates agility by anticipating shifts in a dynamic environment. Foresight allows organizations to prepare for emerging trends, disruptions, and opportunities, enabling them to proactively shape their future rather than being caught off guard. Organizations increase resilience by integrating foresight with market research, reducing risk while gaining a strategic advantage through informed investments.
An economic downturn will eventually give way to economic growth, however, big trends such as AI, Virtual Reality, Digital Currency, and worker demographics are here for the long term. Reach out to us today if you want to learn more about how to leverage change to generate growth.