Recession? What should we do?

With the “R” word being mentioned in the financial press on a daily basis, executives are faced with difficult decisions regarding where to continue investments and where to cut costs. It has been my experience that, an impending downturn signaled immediate cuts in what was considered “discretionary” spending – marketing, HR programs, strategic planning and innovation programs. Focus of management tends to shift to cost control, expense reduction and reduced headcount. I think this is a mistake.

I was happy to see articles recently in both Fortune Magazine and Harvard Business Review arguing that a downturn is exactly when you do not want to cut spending on top-line growth activities like strategy and marketing. Organizations that remain true to their strategy and continue investments in brand building, key personnel, R&D and other growth initiatives come out of a downturn stronger and better positioned to take market share from less forward thinking competitors. Focusing extra attention on your best customers and prospects can reap rewards both in the short-term as well as build loyalty for the long-run.

I believe that a slowdown is a good time to examine priorities and identify wasteful spending, but executives should fight the temptation of across-the-board-cuts. Selective cuts in one area to enable reinvestment in future growth will pay dividends long after this quarter’s challenges.

Utilize a down cycle to improve your firm’s strategy, management and marketing and set yourself apart from competition by positioning yourself for success and motivating your workforce to endure beyond the “R” word.