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Creating opportunities out of uncertainty

By Darryl Sparey is MD and Co-founder of Hard Numbers,

Companies with a focus on efficiency and delivering return on investment for their clients can create opportunities despite the challenges of working through a global crisis

“We can complain because rose bushes have thorns, or rejoice because thorn bushes have roses”

Like most quotes on the internet, the above is attributed to Abraham Lincoln. Whether he ever said it or not is, probably, neither here nor there. The message is spot on, particularly for the times that we’re living in now.

It is undeniable that the pandemic which has swept through the globe has been a tragedy, and the effects of it have been far-reaching and will be long-standing. And in business, we’re now left with the task of figuring out how to reclaim a semblance of normality as the wheels of the economy inevitably continue to turn. The road ahead looks very daunting indeed – the full economic impact of the COVID-19 outbreak is still being measured. The hard numbers are that the UK economy is expected to have contracted by around 23% in Q2 of 2020 and is 13% below the government’s economic forecasts at the start of this year. Footfall at our shopping centres, the engine room of the “real economy”, were down over 80% in April as a result of the lockdown (source: Capital Economics).

However, history tells us that every economic crash lead to periods of massive disruption and dislocation, but also huge innovation as new products and services are created to meet the changes in demand generated by the altered world order.

WhatsApp, Uber, Slack, Square, Groupon and Cloudera are all large, successful businesses. Many of them are now household names, but they all started in the 2009 recession. And if we go further back in history, you’ll see a similar pattern. Some of last century’s success stories all began in a recession too:

  • General Electric (GE) – The Panic of 1893 was a serious economic depression in the United States that lasted for 16 months and saw business activity drop nearly 40% across the country. This was the context into which Thomas Edison launched General Electric. The company, now with a market capitalisation of over $66bn, was one of 12 companies listed on the Dow Jones Industrial Average in 1896, where it remained for over a century.
  • Disney – Walt and Roy Disney incorporated Walt Disney Productions in 1929, the year after the first animation of Steamboat Mickey was released. 1929 was the very start of the Great Depression, which saw worldwide Gross Domestic Product (GDP) fall by around 15% (for context, worldwide GDP fell less than 1% in 2008-2009). Disney is now worth over £220bn and if, like me, you have children at home, you probably thanked your lucky stars that Disney+ was released in the UK at the very start of this pandemic.
  • Federal Express (FedEX) – FedEx is a great ‘disruptor’ story. What started as a school project for door-to-door delivery at Yale by Fred Smith, went on to deliver express distribution and provide services for more than 3.6 million shipments every day. The business was launched in the recession of 1969–1970, but Smith was creating an entirely new business category, and established companies were wary of spending valuable capital on unproven market entrants. FedEx is now valued at over $36bn.

What connects all of these examples is their utilisation of technology. In every instance they either used a new technology or innovation and built their company on this (Slack and General Electric, for example). Or they saw frustration and inefficiencies with how existing services work – hailing a taxi, shipping mail, paying for goods in-store – and applied existing technologies to do things in a better way.

Efficiency is a key feature here. Groupon, FedEx, Slack and WhatsApp, can all claim to have created technology which enables their customers to do things more efficiently than they would otherwise. In the case of Groupon, it’s both time saving (I no longer have to search through online or printed media for vouchers) and money saving (vouchers to save me money on things I’d otherwise be buying more expensively).

Another great example would be AirBnB, which was launched in August 2008, right around the time of the last major global recession. Whilst AirBnB undoubtedly has challenges currently, its business model for much of the last ten years was perfectly suited to the times in which it was launched. It saved consumers money, by connecting them with high quality, affordable accommodation in major cities internationally.

Companies, like consumers, are now more budget conscious than ever. They are looking to save money, or to have a greater level of certainty that if they invest money, it is going to lead to a demonstrable return on investment.

This is the context in which I have launched a new business, but as a marketing consultancy it is also a context in which marketing budgets under more scrutiny than ever. During the bull run of the last few years, when money was cheap and relatively easy to come by and more easily spent, there were lots of communications initiatives which felt ancillary, at best, to the two core activities in any business – making things, and selling things. In the boom-times, it might have seemed very important to expensively build a “story telling” platform for your company or conduct huge research exercises and endless white-board sessions to “find a purpose”. Now, all line items in all corporate marketing and communications budgets have become discretionary. Every single marketing pound spent will need to justify itself.

Recessions are when things get real. The fripperies and froth of the boom years are jet-washed away by the hard-commercial realities of the need to try and grow the top-line and protect the bottom-line. Recessions are when the C-suite takes a long, hard look at the effectiveness of everything. And if they can’t understand what they’re reading, if they can’t clearly see the one acronym that matters – ROI – that spend gets cut. Recessions are when the C-suite wants to see hard numbers.

Do you see roses, or do you see thorns? Do you see opportunities, or do you see risk? It’s a point very prescient to anyone starting a business right now. There is, of course, a benefit to being an established business now – not least an existing cash flow! But the longer you trade as a business, the more inflexible you become. By starting with a blank sheet of paper, you can tailor your message and how you talk about ourselves and services to the audience and the economy you’re now addressing; one that has been irrevocably changed in recent weeks.

So, do I see thorn bushes, or do I see roses? As I said at the start of this article, the effects of this pandemic are as tragic as they are vast. But as we find a way forward, companies must continue to drive the economy. And that momentum, combined with the new focus that businesses have creates opportunities for the right companies, with the right value proposition. Only time will tell if we’re all successful or not. But what I do know is that success comes from the consistent and disciplined application of effort. So I’ll be in the garden, every day, trying to grow.