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Recovery is near: Is it going to be V-Shaped or U-Shaped? [It Depends]
During a crisis like the one we're in right now, anticipation is key. The question on everyone's mind, is: Will this recovery be "V-Shaped" i.e., a return to normal as fast as it went down, or a "Slow Recovery," i.e., a more U-Shaped classic return to normal compared to previous downturns?
The answer is, "It Depends." I have spoken with many fellow business owners over the past couple of weeks. Like many of you, I also read the headlines and analyses. Here's what I make of the current situation, and here are some easy-to-follow tips for anticipating whatever is coming next:
Contrasted to previous economic downturns, the fundamentals of the economy were strong when COVID-19 began to affect the business climate. With some exceptions, most sectors and regions were doing fine. For example, and as far as I can tell from my discussions, we saw the winds shifting in Aerospace a while back when planes were grounded and programs questioned. The production of aircraft was slowing down as a result. COVID-19 accelerated that trend into a crisis. As one of my friends said the other day, "Traffic is pretty much at the level of the 1950s right now."
Wow! If people don't fly, aircraft are parked, and demand for maintenance and jet fuel goes way down. It will take time to get back to normal. Some say a year or more.
Conversely, demand for certain commodities has shot up dramatically. Items used for personal protection or sanitation against germs or viruses have been hard to find for months. The supply chain is slowly catching up, at least here in the U.S.
The common wisdom was, and remains, to balance your portfolio of products, services and go-to-market strategies as much as possible to soften the blow of situations like the one we're in. Now is the time to re-evaluate your business model.
As we discussed in my recent podcast with Brad Stoller, the main question is how do we plan and prepare for the future?
Here are several tips:
- Market Map Your Business. Evaluate where your position is and where it could or should be. Think 90-120 days ahead. If you are heavily invested in V-Shaped markets, good. If not, plan to expand into those markets while maintaining your position in the U-Shaped (slow-to-recover) markets as best you can. They will rebound eventually.
- Act Quickly. Time is not on your side either way. If you are in V-Shaped markets, everyone else is coming in. You need to double up your marketing efforts to be where your customers are. Chances are the old marketing and sales tactics won't work as effectively as before. If you are in U-Shaped markets, time for inbound (content-rich, non-interruptive) messaging is now. Win the hearts and minds of your customers with compassion and empathy. They are in the same boat as you are and need help from their partners right now. Be that person.
- Adjust Frequently. As I talk frequently to many of our clients, I have come to understand that the key to succeeding in the current environment is to review the effectiveness of actions every day, every week or every month. Strategic planning used to be a yearly exercise. It is now imperative that you conduct it much more frequently.
In closing, the "perfect storm" I described in my last blog post is here to stay for a while. The combination of demographic changes in the workforce, technology adoption and social distancing are calling for a business model level challenge as it impacts every aspect of your operations from customer-facing activities to supply chain management.
If you have questions about succeeding in today's dynamic business environment, let me know how we can help you.
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