What’s scarier than investing in your company in the midst of an economic downturn? Not investing in your company in the midst of an economic downturn. An HBR article describes how well thought-out investments (while biting your nails) during an economic pullback can actually position a company better for the future.
But that takes courage as threats of recession loom on the horizon and while supply chain issues and Covid complicate pretty much everything. Talk about VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) – it’s enough to make a management team want to hunker down and ride out the storm.
However, the authors of the HBR article advise companies to resist their impulse to put off new projects and to cut R&D, headcount, and employee training. Instead, they should invest in valuable opportunities in a thoughtful and considered way. The good thing about a downturn is that it eventually turns around and things get better. And if you haven’t been building for the future, you’ll be playing a game of catch up.
The article outlines 3 things businesses can do to capitalize on a potential downturn:
- Study past successes. Economic recessions are generally followed by even longer economic expansions. “Dream big” and plan for the expansion – like Samsung did in 2008-2009.
- Be a first-mover, and invest when your competitors aren’t. Assets can often be purchased during a downturn at “fire sale” prices.
- Accelerate your digital transformation. Just because a tech company’s stock drops doesn’t mean its solutions aren’t relevant to your company anymore.
Conventional wisdom says that good things come to those who wait – but that might not be the best investment advice for business leaders during an economic downturn.