Wreck the boat or miss the boat?
Posted on July 3rd, 2009 by Michael
What should businesses do in a recession? What decisions should they make about business development? What are the consequences of their decisions? Will they wreck the boat or miss the boat?
This excellent article from The New Yorker is food for thought and discusses these questions >>>
In the late nineteen-twenties, two companies—Kellogg and Post—dominated the market for packaged cereal. It was still a relatively new market: ready-to-eat cereal had been around for decades, but Americans didn’t see it as a real alternative to oatmeal or cream of wheat until the twenties. So, when the Depression hit, no one knew what would happen to consumer demand. Post did the predictable thing: it reined in expenses and cut back on advertising. But Kellogg doubled its ad budget, moved aggressively into radio advertising, and heavily pushed its new cereal, Rice Krispies. (Snap, Crackle, and Pop first appeared in the thirties.) By 1933, even as the economy cratered, Kellogg’s profits had risen almost thirty per cent and it had become what it remains today: the industry’s dominant player.
January 9th, 2010 at 2:30 pm
I actually admire the thinking in the KELLOGG camp and others like it …..relying on the certainty of recovery as INEVITABLE ,and being ready for it….strikes me as smart thinking .
Enduring the uncertainty with everybody else, but using whatever energy, resources, and brainpower available to PLAN for the upturn …seems to me to show a superior understanding of REAL market behaviour .
Interesting that companies following that example in later recessions typically not only did well , but sustained their periods of leadership and growth …..surpassing the short-term gains of those who trimmed their sails as the storm hit……better it seems, to ride out the economic storm, and plan for the fair weather advantage that is sure to come.
I think LIFE is like that …remaining full of hope …is better than giving up hope and becoming downcast…..the journey up from rock bottom is sometimes just too far and too steep….
August 2nd, 2009 at 7:59 pm
Michael,
I whole-heartedly agre with the Kellogg’s idea of ’stepping up’ not down during a crisis. The global financial crisis is a time of change, where survival is not based on size, but on innovation. We held an event back in March called Spark09 (www.spark09.org) for the very reason of getting people to develop new ideas so we can fast track our exit out of the crisis. Meanwhile, it served as a massive stage to market my company, ClarkMorgan. While all our competitors were keeping their heads (and brands) down, we were hosting 420 people, and 19 speakers, in mainland China’s tallest building - The Shanghai World Financial Centre.
For the record, we’re now flat out with business. Crisis, what crisis?