Sinking the boat or missing the boat

James Surowiecki writes in the April 20, 2009 edition of The New Yorker that during hard economic times, companies cut costs including labor, advertising spend, and research & development, as well as forego acquisitions even though prices are lower.  However, companies that remained market leaders during the 1990-1991 recession increased spending according to a McKinsey study.  Research by Bain found that recessions can be opportunities for companies to leapfrog over their competitors.

Thus, CEOs and senior management have a difficult choice.  They can choose to slash costs in order to win a war of attrition — becoming lean to survive the recession assuming that their competitors drop out of the market or business altogether.    Alternatively, they can invest in advertising, research & development and acquisitions in order to grow market share and transform themselves into market leaders.  However, there is no guarantee.  Do you risk sinking the boat in order not to miss the boat?

The enemy is inertia

I was recently in Austin to give a presentation and I joked with the client that what would really make me happy would be if they used my results.  Routinely I find myself fighting against the option to do nothing.  Even during final presentations, when the work is done and paid for, I find an unwillingness to change the status quo.  Rather than battle the silos, the culture, or the project approval process to put in place recommended strategies and tactics, it is easier to put the final report on a shelf and call it a day. 

On new business pitches, I worry more about inertia more than I do the competition.  Has the client or prospect really committed to making changes to their business?  If so, we can have a discussion about the many ways to solve the business problem at hand.  If not, there is little I can do if someone is unwilling to commit time or resources.