Executive Assessing Business Innovation

Innovate, Exit or Die: What Senior Executives Understand About the Economy (That Most Americans Do Not)

Yes, the DOW is at record highs, and the Fed announced a rate hike and signaled subsequent hikes would occur later this year. Consequently, most investors are giddy and optimistic, because to the untrained eye, it appears the U.S. economy is healthy.

Unfortunately, the stock market is hiding the fact that the United States is 9-18 months away from a major market recession, on the scale of 2008-2009, during which over 5 million jobs disappeared and $6.9 trillion of shareholder wealth was wiped out.

Most senior executives and experienced wealth planners (not the same as a financial planner) know these facts. They understand that despite the current stock market hype, another serious economic crash IS coming. The question is: As business leaders, what should we do to prepare?

Simple: Innovate, exit or die.

Three major recessions occurring in less than two decades means that some companies are not healthy enough to survive yet another major market crash. Let’s get real: If another market crash occurs, how will your company fair? Are you prepared?

As I work with business leaders across the globe, I see three responses:

  • 1) Head in Sand (AKA Die): Business leaders who ignore these clear leading indicators and do not prepare, will likely perish. For some, it will be a slow death as their brand becomes less relevant and customers shift loyalty elsewhere. For others, it will be swift and fatal. Even the largest brands die off when they fail to innovate. Remember Nokia? They held a huge market share in North America as the cell phone craze swept the continent. How many Nokia phones do you see today? Not only did Nokia fail to innovate, but the company also failed to listen to their customers who craved smaller phones, with more capabilities that were easy to use.
  • 2) Exit: If a major recession comes and your Board of Directors decides to “exit” (AKA sell or merge), consider starting that process now to reap the rewards of a decent valuation. For those who wait, the business climate may force an exit through merger or acquisition, however, at rock bottom valuations due to the economic insecurity a third recession will certainly create.
  • 3) Innovate: Smart brands are reinventing themselves right now. They are repositioning their brand to attract new market segments (such as millennials), divesting low-value assets and/or launching new products or divisions to help navigate this uncertain world. These are the brands that are amplifying their vision and preparing for battle. They are rethinking their ideal customer profile and are presently seeking loyalty over profits.

Learn how to grow sales and improve ROI – while you innovate – in this recent post.

If you’re still reading and prefer not to stick your head in the sand, then let’s examine how real the dire predictions are. For starters, the stock market is grossly overvalued. In addition, U.S. and global debt are at record highs, while consumer wages are at record lows (in modern times). That combination is a recipe for disaster, and some analysts predict that the bottom could fall out late this year, although most expect it to occur in late 2018.

So, what would it look like to innovate?

  • 1) Define the Opportunity: If a recession occurs, what is the opportunity for your brand? Is it time to serve a different demographic? Should you launch a new product? There is always opportunity in change, and smart brands are proactively carving out a new niche now, to insulate themselves from financial harm.
  • 2) Build a Survival Plan: Where can you innovate to become stronger in a recession? What is the one area of your company that must be shored up to survive a recession? Don’t try to change everything; just identify the one key area of innovation that will ensure your survival.
  • 3) Get Lean: Pull budgets in, cancel new positions (unless they are critical) and compassionately reduce overhead everywhere possible.   Do this proactively, not in response to the recession. Finally: How can you hoard cash now to be prepared for next year?

Authenticity is key to long-term business growth. Read our recent post Truth Sells: Five Keys to Authentic Promotion to learn more.

Although making budget cuts can work, innovation is the best way to prepare for a recession and flourish over the long-term. Innovate now, don’t wait. Innovate. Exit. Or Die. Those are your choices. We’re choosing to innovate now.

To learn how our team helps innovative brands grow, give us a call at 844.808.3246 or visit the Promote On Purpose contact page to connect with us online.

Terri Maxwell

Terri is a serial entrepreneurial geek who considers building businesses better than a party. Her love for business is matched only by her passion for life.

Oh, and…football.

Leave a Reply

Your email address will not be published. Required fields are marked *