By Rick Telberg
Since World War II, the United States has averaged about one or two recessions every decade. Over time, accountants and finance managers have become accustomed to operating on one of two strategies: upturn or downturn – one geared for growth, the other for contraction
But this time it could be different. Between the dot-com bust and credit crash, the old rules may no longer apply. Intuit CEO Brad Smith, for example, has been telling anyone who’d listen that we need to get accustomed to “a new normal.”
Now, two business gurus have laid out a new plan for this new terrain. In “Chaotics: The Business of Managing and Marketing in the Age of Turbulence,” authors Philip Kotler and John A. Caslione steal a phrase from Fed chief Alan Greenspan’s memoirs and set out a new case for a prolonged period of economic change and uncertainty that defies predictable cyclicality.
What’s YOUR personal strategy for beating the recession?
Accountants and accounting firms — professional services firms and knowledge workers – should be relatively well positioned for the New Normal. But they will need to adapt.
Kotler, a revered marketing professor at Northwestern’s Kellogg School, and Caslione, a mergers and acquisitions consultant, lay out a few core strategies for this new and treacherous environment that are especially relevant for CPA firms and finance departments.
Rule 1 – Keep recruiting. “Firms and finance departments need to focus on the bigger picture of long-term growth,” Kotler and Caslione say. And be careful about layoffs, because it’s expensive to re-hire and could be fatal if your best employees get scooped up by the competition.
Rule 2 – Keep training. Use the downtime to increase education and to re-tool for the changing business scene. “During downturns, people need new and more advanced skills and knowledge,” according to “Chaotics.” “And training certainly provides a morale boost, as well.”
Rule 3 – Keep talking. “Be honest with employees about difficult times,” they advise. Rumors are toxic. Nip them in the bud with candor.
Rule 4 – The CEO can’t do it alone. C-level executives and line managers need to be mobilized to meet with staff in small groups to interpret corporate strategy for the operational level and to stay focused on key tactical objectives.
Rule 5 – Nail down your core clients and markets. Focus on your main source of revenue. “Turbulence is not a good climate for venturing into new customer segments,” they say. “It’s time to secure the home front.”
Rule 6 – Push aggressively to win market share. Look at weakened competitors as a source of new business.
Rule 7 – Listen to clients and stakeholders. “Chaos has a way of changing everyone, including your core customers,” the authors say. “Their needs and wants are in flux.” Stay close. Redouble market research and customer satisfaction surveys. And try new advertising ideas. “You don’t want to find yourself relying on old marketing messages that no longer resonate.”
Rule 8 – Don’t cut business development. Maintain the marketing budget. Increase it if you can. “With the market being buffeted, your customers getting whipsawed, and your competitors making bold moves on your turf, turbulence is the worst time to cut anything in your marketing budget that targets your core customer segments. In fact, you need to add to it.” Shift money out of new customer segments if you need to.
And above all, stay alert and nimble. With change comes new and unforeseen opportunities. Customers have new problems. They expect you to come up with new solutions. Will you be ready?