Leading up to the financial crisis of 2008, iconic Sequoia Capital sent out a 52-page long keynote to their companies with the dystopic title “R.I.P. Good Times”. Another keynote (with a slightly less dramatic title) was sent out a few months back with the message “the safe move is to plan for the worst”. How can we Adopt to Endure (title of new Sequoia deck!) and emerge stronger from the crisis at hand? Where do we need to focus and prioritize to grow when competitors stumble?
The last decade of business has been characterized by (almost) free capital and the aim has been to grow (often profitless). In peculiar times as such, the bottom line has seldom been the big priority – evidently not for start-ups and scale-ups, but neither for the more established industries and assets like energy, fashion and stock prices. The relentless focus on top-line growth has impacted everything from business logic to brand building. Companies have grasped the opportunity to invest in a broader scope, bigger product portfolio and new branches organized in off-springs and sub-brands. But now times have changed; inflation, supply chain interruptions and geopolitics have once again put margin on the map and profit will only increase in importance going forward. Profit means cutting costs and improving efficiency - essentially to remain focused on what matters. And Peter Drucker summarizes it neatly in his timeless quote: “Business has two basic functions - marketing and innovation. Everything else is a cost”.
But to double down on your brand and innovation in times of uncertainty might feel counterintuitive and will demand a heavy dose of bravery. However, research shows that building and maintaining strong brands is one of the best ways to reduce business risk (HBR, 2008). The stock prices of companies with strong brands have held up better in recessions than others, and those actors have emerged stronger than competitors. So now is the time to bring out some courage and focus on brand-building efforts to build for the future (Fortune, 2020). Therefore, we at Seventy believe this could be the time:
· To clarify, streamline and focus your business with the guidance from a renewed position and/or purpose statement
· To treat your brand as an asset to invest in because when willingness to spend money decreases, the tendency for businesses and people alike is to go with a brand they trust (HBR, 2008)
· Challenging times present an opportunity for a brand to engage with its customers by showing that we understand their shifting needs and communicate values in a more relevant way
· To rethink and segment your audience and product portfolio in new-recession-adjusted-ways: segment audiences according to reaction to recession and products according to level of necessity during cost and budget cuts
Building a brand is about consistency, and to go radio silent in times of uncertainty is not advised. To maintain brand equity is a marathon, not a sprint – and that means constant efforts during both good and bad times. To come out stronger, invest in your brand when others don’t.
Ping us. We help the brave make a purposeful difference.