Okay, so the principle of investing during a recession having been established (see: PIMS Points the Way Past the Recession), what did my former company do as it came face-to-face with an imploding economy. In fact, the company was heading straight into a perfect storm: it serves the construction industry which was already well into the downturn (in some regions, the downturn looked awfully like a drain and the sucking sound we heard was usually caused by falling prices); the exchange rate was working against exports but opening the market to cheaper imports; the company is a heavy purchaser of oil-based raw materials which until recently were at historic highs; meanwhile, other commodities it purchases heavily were being gobbled up by the Chinese; new technologies were being introduced by well-heeled competitors…the list of threats was long and forbidding.

Time to yank out the PIMS database. The marketing budget was not going down without a fight. In fact, I had little trouble convincing my colleagues of the need to keep investing in marketing and product development. To my surprise, we had even less trouble convincing the Board. The issue arose with our attempt to determine the extent of this investment.

I came up with a plan to focus expenditures on winning technologies, products, markets and even specific customers. My Power of One presentation explained why we should put all our money on leadership products, first movers, consolidators and core markets. I was successful on the principles of the thing, but not the details. My colleagues were all for focusing, but to most that meant keeping the pressure up on those areas and pulling back elsewhere. Which translated not into the reallocation of funds and resources but into cutting what had now become ‘non-strategic’ investments. Hmph…here I was, hoisted on my own petard!

Seeing the Big Picture

It was useful, however, to take a broader view of things. Pulling back on the marketing spend (as I would normally define it) was offset by pushing ahead in R&D and operating efficiencies. What is Marketing in fact? Arguably, the additional investment in R&D and operations covered two of the four Ps…maybe even three. In fact, the company was about to embark on the biggest capital program in its history.

So now the marketing exercise was to get the biggest bang for the buck being spent on the ‘focus’ items and find a way to keep the rest sailing along in their slipstreams.

Remember the last post? “In down times, consumers and businesses alike look to safe havens, familiar brands and dependable suppliers that focus on delivering consistent value.” While we kept plugging away at our key focus items, all items were ceremoniously dumped in the safe haven / familiar brand / dependable supplier basket. Public relations, customer service, complaint handling, loyalty programs…all those things that make customers comfortable with a brand were tightly managed with the safe/familiar/dependable relationship in mind.

The jury is still out on how, ultimately, this strategy will work. But the company is sticking to the plan and, in fact, has returned to the black well ahead of schedule. The future looks bright…even if, right now, that future feels very far away.

Note: Our best wishes for a speedy recovery to David St Lawrence over at Making Ripples. The long-time blogger, author, artisan, community activist, gentleman and friend recently suffered a heart attack. This obviously strikes close to home, given my history. Take care of yourself, dear reader, and pay heed when your body sends you signals that something is wrong.

“Market leaders market their way through a recession; all other companies try to save their way through a recession.” (Mike Ganey, Senior VP, ad agency Howard, Merrell)

These are tough times, to be sure, but they seem tougher because they are so oppressively omnipresent and so aggressively in your face. It seems that every time you turn around and everywhere you turn, you are confronted by bad news. A pall seems to have settled over the landscape, a pall that is pervasive and pernicious. There is no light apparent at the end of the endless tunnel that we have constructed in our minds.

But – trust me – this too shall pass. There will be a turn-around. It is an eventuality framed by a certainty.

True, you’ve got to survive the recession – or the depression, if you like, or the Second Great Depression, as some like, but when it is over – and it will be over – where and what will your company be?

Might I introduce, for your consideration, the PIMS experience. The PIMS (Profit Impact of Marketing Strategy) database, includes the real world business performance experiences of more than 3,000 businesses representing 16,000+ years of data. Originating at GE in the mid-sixties and further refined at the Harvard Business School, the PIMS database has been managed by the autonomous Strategic Planning Institute since 1975. The strategic data includes information on markets, competitors, quality, structure, environment and financial performance.

Its findings, endorsed by the Corporate Executive Board (I was, for a number of years, a member of the CEB Marketing Leadership Council), are illuminating:

• Marketing spend does not significantly damage return on capital employed (ROCE) during a recession;
• Companies curtailing their marketing spend damage their profitability when the economy recovers;
• Companies that increase marketing spend and that commit to product development during recessions reap the largest future rewards.

The supporting data applied to both B2C and B2B companies. It applied to companies equally in the U.S. and the U.K.

There are reasons for this:

• Brand building requires consistency. Companies can grow share by continuing to generate high levels of awareness, which ultimately translates into customer-perceived value or quality;
• R&D requires similar commitment. Technological advances don’t zig and zag in lockstep with economic cycles. Technology moves relentlessly forward.
• In down times, consumers and businesses alike look to safe havens, familiar brands and dependable suppliers that focus on delivering consistent value. Companies that pull back fall back. Companies that move ahead, stay ahead.

Nothing is ever that simple. But it is not that complicated either.

There are a number of excellent books on corporate strategy that merit your attention and that will provide value for your time and for a twenty. There are, of course, others not so excellent, books that at my most generous I would consider hollow in content, penned by pop authors contemptuous of their readers. Unfortunately, in business books as in so much else, popularity is not necessarily reflective of value.

There are times, however, when strategy junkies need a quicker fix than can be provided by books, good or bad. These cravings can be satisfied by reading various business magazines and blogs. Not all are of these are of equal value either and some blogs, especially, are thinly-disguised platforms for selling services and are unabashedly self-serving.

All this is to introduce a business magazine I discovered quite by accident in a store that offers for sale obscure magazines, toy soldiers and Marvel comic memorabilia. The discovery was the Spring ’08 issue of Strategy + Business. Published by Booz Allen Hamilton, the huge strategic management and technology consulting firm, Strategy + Business is - to their credit and my relief – neatly disguised and only mildly self-serving.

Interestingly, it wasn’t the feature articles that most captured my attention but the front section columns. A number of these should get you thinking :

Upturn Thinking in Downturn Years

In market downturns, the companies that emerge strongest are those that, while retrenching, push ahead with long-term strategic planning. One example of a company that did just that is Lucent; even while the telecom hardware business was in decline, CEO Patricia Russo pushed ahead with an initiative to identify new growth areas that would make use of Lucent’s core capabilities and provide stable revenue and income streams going forward.

New Metrics for Media Campaigns

The reach and frequency metrics used in assessing traditional media campaigns are losing relevance in this age of the web, social networking platforms, cell phones, PDAs, podcasts and video games. Marketers are looking to deliver “contextually relevant messages” to specific, i.e., targeted concentrations of potential customers. They are seeking more precise information on how this digital activity correlates to actual sales. As this information becomes available, they will increasingly embrace the pay-for-performance advertising model.

Undiscovered Riches in IP

In an age of commoditization and globalization, you might imagine companies would dig deep to find and exploit assets that yield sustainable differentiation. Among those assets, Intellectual Property may well be the next frontier. Companies are getting wise to the significant revenues that can be gained through patent and technology licensing. IP is moving out of the legal counsel’s office and into the corporate development arena. In fact, in the past 15 years, licensing revenues have burgeoned from $15 billion to $110 billion. To take it to the next level, companies will have to make their intellectual property both serve the business and be a business in its own right.

New Life for Tired Brands

Ford is attempting to revive the Taurus brand out of the ashes of the Five Hundred, and Proctor & Gamble is using Red Zone antiperspirants and deodorants to reposition Old Spice among teen males. Should and can old brands be revitalized? Have the attributes which once made the brands successful been eroded or been made irrelevant by competing brands? Are the products suffering from the poor opinion of its original customer base or poor awareness from new, potential customers? A proposed four-step Brand Vitality Assessment (which, no doubt, Uno Who could conduct) would provide the answers.

All in all, I rate this magazine a lucky find, one for which you might keep an eye out. You might also want to scour the back issues. Go to www.strategy-business.com. Of course, with Booz Allen Hamilton being a mega consultant, you should not expect a free lunch. Not while they’re trying to build the brand at any rate.