In times of economic uncertainty, successful companies take calculated risks to reinvent themselves and seize fleeting business opportunities. In this blog, we share five steps to strategically build a strong future.
Peter Drucker said, “In times of uncertainty, the only sure thing is that the status quo will not last. This is the time to be bold, to take risks, and to reinvent yourself.” “Economic uncertainty” is a dagger of a phrase – it usually means cuts are coming. In times of uncertainty, consumers are more likely to cut back on spending, and businesses are more likely to cut back on labor and production. We’re understandably reluctant to take financial risks when we fear our economic future.
To quell those fears, think about economic uncertainty as a double-edged sword rather than a dagger. There are indeed opportunities amidst the uncertainties. Companies that make strategic adjustments and take calculated risks during economic downturns set themselves up for future growth and profit.
Consider these Fortune 500 powerhouses that took advantage of opportunities hidden in uncertain economic periods to secure their futures:
- Disney’s Mickey Mouse comic strip debuted at the start of the Great Depression (1930).
- Microsoft was founded on the heels of an oil crisis and a stock market crash (1975).
- Amazon introduced its web services platform after the dot-com bubble burst (2002).
- Netflix built its video streaming service during the Great Recession (2007-2010).
- Apple sold more than 53 million iPads in the first year of the COVID-19 pandemic (2020).
So, how does your business seize opportunity within economic uncertainty? Here are five ways you can take advantage of opportunities despite our current uncertainties.
1. Understand your current position.
Whether you’re a C-suite executive setting enterprise strategy, a director or manager leading a department or team, or a motivated employee looking to improve your work, you need to know where you currently stand in your role, company, or market.
In times of economic uncertainty, it’s important to review the basics of your business. Seek to better understand the value you offer your customers and the advantages you have over your competitors. Ask yourself:
- What are your customers’ needs or wants?
- What are your competitors’ strengths or weaknesses?
- What’s your value proposition or competitive advantage?
- Is that value or advantage shrinking or growing?
When stay-at-home mandates went into effect in early 2020, consumers needed computing solutions that could transform living spaces into makeshift offices and classrooms. Rather than taking up a whole table with a computer, monitor, keyboard, mouse, and more, many of us turned to tablets.
Apple didn’t need to do anything differently to boost iPad sales during the COVID-19 pandemic. It has long known how much customers value compact computers and has dominated the tablet market for more than a decade.
2. Envision your future state.
Once you understand your current position, you can begin to envision your future state. Economic downturns provide a rare pause for your business to develop a strategic plan or reevaluate your existing plan without the risk of falling behind the competition.
If you want your business to remain relevant through economic booms and busts, you have to discern what’s now and what’s next constantly. Your business’s future state can quickly become its current position, and then it’s time to re-envision your future state again. Ask yourself:
- Does your business have a unified vision of its future?
- Is the business moving towards that future as intended?
- Has your business’s current position changed its aspirations for the future?
- How might economics, technology and culture shape your business’s future?
When Netflix began in 1999, it created a late-fee-free future for DVD renters. By the mid-2000s, improved internet service meant more households could skip DVDs altogether and download instead.
In response, Netflix began iterating its streaming service in 2007. Then, as consumers cut back on discretionary spending amid the Great Recession, Netflix offered all DVD rental subscribers unlimited streaming at no additional cost.
The switch to streaming proved to be the pivot Netflix needed to catapult them into the future.
3. Assess your capabilities, both what you have and what you need.
Now that you know where you are and where you want to be think about what capabilities you need to get there. Getting to your future state requires a plethora of matured capabilities from people, structures and processes to information, technology and metrics.
Even when the economy is uncertain — perhaps especially when the economy is uncertain — you want your business to grow. Assessing your business’s capabilities will help you identify high-impact areas for growth, and every capability enhancement you make will move you a step closer to your future state. Ask yourself:
- What skills does your workforce have now, and what skills will they need next?
- Will your operating structures and processes support your future state?
- Do you have the information and technology to get you from here to there?
- How will you measure success in the future?
When the dot-com bubble burst in the early 2000s, Amazon’s e-commerce business thrived, but its technology struggled to keep pace. Their software engineers spent more time building infrastructure than developing applications.
To improve engineering capabilities, Amazon created a shared computing and storage platform. Once the infrastructure was built, leadership realized their new platform could be incredibly useful to outside developers.
Amazon opened its web services to developers in 2002 and then to the public in 2004. Necessity was certainly the mother of invention for Amazon Web Services.
4. Look for business opportunities in today’s economy.
After assessing your internal capabilities, it’s time to take a look at external circumstances and find hidden opportunities. Remember, economic uncertainty is a double-edged sword. With the right timing and the right strategy, you can find ways to cut the competition without cutting your own advantage.
The opportunities hidden in an economic downturn are often fleeting, so it’s important to stay vigilant and act fast. Ask yourself:
- Can you cater to your customers by improving quality or service?
- Can you edge out your competitors by reducing costs and increasing speed?
- When labor and supply prices dip, can you expand your workforce or better your bottom line?
- While other companies scale back operations or sell off assets, can you invest, expand or acquire instead?
Both unemployment and inflation were high in the early 1970s, making prospects grim for young adults starting their careers. Computer programmers Paul Allen and Bill Gates created their own opportunity.
When they saw Popular Electronics’ January 1975 article about the Altair 8800, they contacted the manufacturer to pitch a software program for the microcomputer. Never mind that the software hadn’t been written yet – Allen and Gates saw their chance and took it. By April 1975, they had programmed the software, secured the deal, and incorporated Microsoft.
5. Create a roadmap for tomorrow’s economy.
Rest assured, the economic uncertainties of today will eventually give way to a different economic outlook tomorrow. What works for your business now may not be what works next. Take today’s market “downtime” to map a plan for the future of your business so you’re ready when tomorrow comes.
Approach your planning with equal parts art and science. You can explore the possibilities with creative thinking, but you must also research those possibilities with practical reasoning. Ask yourself:
- What trends are on the way out?
- What industries are on the rise?
- Can new technologies make your work more efficient or effective?
- How will you balance continuous improvement and sustainability with innovation and agility?
On January 13, 1930, the New York Daily Mirror printed the first Mickey Mouse comic strip. Soon after, a New York stationery maker paid $300 to print Mickey’s likeness on writing tablets.
Walt Disney quickly realized the earning potential of Mickey Mouse merchandise and saw it as a way to save his struggling business.
Save the business it did, with approximately 40 licenses and $35 million in sales by 1934. Licensed Mickey merchandise carried Disney through the Great Depression and set the scene for a magical future.
Boldly Build Your Business’s Future
Even when the economic outlook is uncertain, you can be sure of one thing – your competitors are looking to cut into your business in any way they can. Don’t put the metaphoric dagger in their hands. Instead, pick up your double-edged sword and fight back with business strategy. Your company’s success depends on your ability to take advantage of opportunities despite uncertainties.
In a fluctuating or faltering market, seek to understand where you are (current position) and where you want to go (future state), then assess what you need to get there (required capabilities).
Once you know your now, your next and your needs, take a moment to seize the hidden (and likely temporary) opportunities within the uncertain market. Use the downturn to your advantage and strategically map the risks your business will take and the reinventions your business will make to build a prosperous future.
Business resilience requires preparation and adaptability. Our 11-question assessment can help you determine how resilient you currently are and next steps for improvement.
