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bigthink, microsoft


Closed: 10 Jun 2009, 11:59PM PT

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Implementing Big Ideas During A Recession

The current economic situation has certainly reduced the financing prospects of a good number of big ideas, but that doesn't mean the development of innovative businesses and technologies should (or will) grind to a halt. Obviously, though, starting up during a boom is a bit different than bootstrapping during a recession. But that just means more garage startups get created in actual garages -- focused on creating truly valuable services and technology.

So what kind of big ideas are possible to develop during a recession? How can government help (or hinder) economic growth under the current financial conditions? What kinds of technology revolutions may be primed to go right now -- and what can help give them a boost? What areas of business are thriving currently and are poised to continue to grow even when the economy recovers? How do companies plan for long-term growth and avoid pessimistic short-term thinking?

Microsoft People Ready Business is sponsoring this case to create interesting discussions at BigThink's section on Navigating Today's Economy. We're looking for unique perspectives that will inspire further conversations, and selected insights will be published on BigThink.com.

16 Insights

 


In a recession, businesses are looking to save money.  If a product or service is developed that can replace or consolidate existing products or services and do so at a cost savings then businesses will bite.

That means that the "big idea" might actually not be "new" but instead "better". 

The sale here is difficult because you are entering an established market.  That said, if you are able to execute well and get your message across, then you have a real chance to succeed.

So, in this economy, the "big idea" that can be developed is most probably the "better mousetrap".

 

Owner of a small business offering software development services, from legacy systems to new development.

As a consultant that works with government and private markets, I see a significant downturn in new projects.  However, it appears to be mostly because the crowd mindset is to "hold back" instead of "move on."  A few clients just go for it, and are seeing ROI almost immediately, as expected prior to economic changes--though at a significantly lowered rate.  This is most noticeably in media and IT security.

As business gets past this temporary issue of money, the long-term bet is to do the same planned projects, and understand as the masses also begin to come around the bend, you'll have already done the things you thought you needed, and they start paying out immediately, and you'll have capital to do even more.

The whole is at least the sum of its parts - and that applies in business.  The parts that make up every business include people so it is unsurprising that similar businesses in similar situations respond differently.  A business that has been guided by vision and courage might invest a large chunk of its capital during a recession while a mindless and lumbering behemoth would fail to invest properly even during a boom.

The influence of the 4/5th estate, media, is undervalued historically but I think that it has as large of an impact on innovation as the investment of companies.  I think that it is as laudable or culpable as any other institution in the economic state of the world.  The media in China, and even supposedly "free" media that wants a voice inside China are responsible for a virtual slave state that has been the economic mule of the rest of the world for decades.  The media outside of cold-war USSR had a significant and productive impact on the fall of the Berlin wall and of Communism.  Media can make or break superpowers - and it has no accountability except in the case that it is truly free.  The lessons of China should teach that an oligopolized media is not free, and a great firewall overcomes a multitude of bloggers.

I think that the recession is better for inovation than a boom.  When the choice is to innovate or not feed your children - innovation tends to have more substance, and be more prolific.  It is inarguable that passion drives inovation.  During the boom the passion to gain money drives the greedy to inovate.  During the recession the need to provide coupled with the evolutionary selection against fluff-inovation drives more than just the greedy to be substantially inovative.  A metaphor for this is - when it is a boom then the wolves among us do a majority of inovation wheras during the drought both the sheep and the wolves inovate.

I think that a market, a true market, could work.  There are interfaces like inocentive, but it is not a market.  I think that a true market, held by a reliable third party where inovations could be bought and sold would be an effective way to make the most of an adverse climate - both for the inovator and for the business.  This might take the form of a radical and substantial reform of the patent system using proper optimal decision theory instead of politics.  

BSME from ASU, years of experience.
We all keep making the mistake of just trying to figure out how to use software to gain efficiencies in *parts* of processes, and all that ends up doing is creating more work, and more inefficiencies. In media production management, and other complicated processes like health care management, we need human beings to step back and think about the actual processes being handled and where the tasks start, and stop and *how* the transfer of information between those tasks should work. Instead, we keep getting new programs and widgets that only address a small portion of a much larger process, and that only mucks things up further. This is a big challenge, because taking on a complicated process used to be reserved for huge companies with their own gigantic capital expenditure budgets. But since big companies often hire out services to smaller companies, no one ever steps up to analyze the inefficient processes because none of the smaller companies doing the work have the capital or the incentive to change how they do things. Only when presented with a "faster/better/cheaper" toolset that really takes into account the entire process chain will real change be enabled.
Eleven years of media producing and production management experience.
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Michael Munroe
Sun Jun 7 9:49am
This is a good point. The metaphor is a hiker in the mountains. He can climb the nearest hill and he will be at a higher height than he was, but certainly not at a peak. He has to walk downhill before he can start climbing the highest mountains.

Large companies tend to become more risk averse in a bearish economic climate. They will make small-scale changes that, at best, can only achieve local optimum. They do not at any time like to go through the large-scale changes that can achieve actual (and not pencil-whipped) competitive advantages and improvements of substance.

Business Process Management is an emerging science that has made significant gains, but without company traversing analyses there can be no company-wide improvements. The height of the peak it enables depends on how pervasive you are willing to let it be. (http://en.wikipedia.org/wiki/Business_Process_Management, http://www.gartner.com/it/products/research/asset_129488_2395.jsp)

The ideas that are developed within a recession usually are more focused on needs, than wants.   What that means is that if you can create something that is focused on the needs of your clients (such as my own startup with small business accounting).

Recessions do create other business opportunities, such as the fact that small businesses tend to increase in those times, due to the attrition from larger corporations that are trying to make their numbers look good to their shareholders.   Being that the largest expense for any corporation is the labor, cuts in that area make a significant impact in the quarterly numbers which provides shareholders with a sense of security for a time period.   Thus, any sort of targeting of small business needs become more likely and less of the innovation trend towards things that can be cutback (such as entertainment).

Government can both help and hinder a process as such.   With the recent financial bailouts, you see billions of dollars thrown at failing banks for decisions that were ill-thought out and rewarding poor corporate behavior.   Yet, with all of the statistics showing that small businesses increased both in hiring and assisted with bringing the US out of recession, they are not given much of anything.

A larger corporation would probably do better if they did batten down their hatches, but also begin to re-model their business models with their core technologies around product lines that are difficult for customers to give up.   For example, it's easier for a family to cut down on going to the movies and instead, renting at home.   It's also fiscally more responsible for families to be able to play a video game than go to an amusement park.   These types of decisions by your clients and customer base will impact the product line itself.  Thus, they have to be developed out to see what has the best likelihood of success.

Chief Strategy Officer of Firelace, Inc. Our flagship product is Merchant's Mirror (http://www.merchantsmirror.com), an online accounting suite for small businesses.

In the New Zealand Public Sector there is a significant focus on efficiency and effectiveness, this is being driven by cost take out to try and help New Zealand ride the wave of economic downturn.  The need to get the employees investing time in the right thing creates an opportunity for a suitably minded entrepreneur.

In the UK over the past few years, the NHS has out tasked transcription services.  One of the net beneficiaries is Dict8, a company that distributes the doctor's session notes to home based medical secretaries for typing up.

Pfizer are already out tasking presentation creation, amongst other things, with their PfizerWorks solution.  If a company could evolve around this kind of work there could be benefits to both sides of the relationship.  The client would save money by not wasting executive and manager time on mundane tasks.  The service provider would make money on selling the service and their distributed, home based, employees could carry on working from home thereby adding more money into the local economy.

The solution could look like a hybrid of GetACoder and the Insight Community, where work could be tasked out to the appropriate resources for completion.  Capital costs should be minimal by adopting existing technology, the core of the idea would be in the desktop integration that allows a manager to out task, review and agree straight from their desktop.  The technology already exists in many forms, Google Docs, Zoho or Textflow all have elements that could successfully enable such a solution to be created.

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Michael Munroe
Mon Jun 8 7:34am
Your point is mirrored in biology. Symbiotic systems can be more flexible than non-symbiotic systems. They can find biological niches that are otherwise not occupied. Once a true symbiotic relationship is formed, then the overall direction of small improvements can move to support the symbiosis.

It is an interesting question if two truly separate institutions can act sustainably in a symbiotic way.

Recessions ground large organizations.  Locked in groupthink and the inability for individuals to drive or commit to risky change for fear of change, big companies under-innovate and focus on reducing risk and maximizing current revenue from existing lines of business.  Thinking about (and investing for) the future dries up.

But recessions provide opportunities for individuals and small teams to implement big ideas.  Recessions create flux, and smaller teams are better equipped to make nimble changes to take advantage of change.  Examples?  Consumers (businesses and people, B2B and B2C) are more open to re-evaluating consumption decisions to save costs, finding new providers, cutting or renegotiating long-term leases or expense commitments.  While buyers and sellers review their relationships with middlemen and put pressure on transaction costs, at the same time more consumers and businesses need good, quality information on how to change and adapt, where to find new services and providers, how to trade, barter and sell assets and services.  Creating, analyzing and using structured data becomes even more important for people and companies to find niches of opportunity and swim against the tide; creating pockets of success are important seeds to build consumer confidence and corporate energy for innovation and change.

Government's role during recessions is to provide opportunities for individuals and small teams, not support large industries, because true innovation will not come from supporting the business models of the past. Layoffs and "reorganizations" are inevitable even if governments bailout dying companies.  Instead of attempting to support existing jobs, governments are better served to help create new jobs, starting by helping smaller organizations find and hire the newly laid-off and by helping the newly unemployed create their own businesses.  How?  Reduce the transaction costs behind corporate change, make it easier for new companies to find and access startup equity and credit, and level the playing field for small and large organizations.  Even if revenue is tough, small businesses that create value, solve problems and acquire customers can "cash in" when the economy recovers; either revenue improves or the company can sell it's valuable asset to the public (IPO) or to a private acquirer (mergers and acquisitions).

Businesses need time, people and money to turn costs into revenues, and government's role is to help time, people and money flow towards the right opportunities.  Instead of blindly repairing the old, build bridges to the future.

Taylor Davidson focuses on evaluating and structuring business and financial plans to help launch new products, services and companies. He writes on the web at http://taylordavidson.com/writing

The best ideas can always get funded, big or small. Just because there is a credit squeze does not mean there is no credit at all - especially not in big companies, many of whom actually are making money on their own. Instead, what has happened is that the margin required for an idea to get funded has been squeezed upwards. This is a health filter, actually: The easy credit during the IT bubble led to a lot of ideas which in hindsight were pretty stupid getting funding (sock puppets, anyone?). But more importantly, it led to the same mistake as I think is inherent in the question, which is a common mistake: Starting big with a small idea.

If your idea is to create a new compiler for an existing programming language, it makes no sense to hire two hundred people, make a big PR and advertising splash, and try to convince people that you change the world. It is a low-key effort that has to grow slowly, and if you should be lucky enough to have bought a half-assed operating system, and then lucky enough that your major competitor for selling it goes flying instead of talking to the customer, then you might put another guy on investigating it. Not betting the farm on every idea which passes your door is a virtue, at the same time as you need to be sure it really is a big idea before you do. So starting small, making sure it works and that people want it, works whether the idea is big or small.

It is not even sure that it is a good idea to get external funding. Having a big idea and creating something big out of it are two different things - the virtues of good management are something we ought to learn from the current crisis, if anything. A good idea which grows and grows can create organic growth, which is far more valuable than growth on doubtful grounds.

And perhaps that is the key: You may think it is a great idea, but customers may not. Or at least, not under the terms you launched it. A business, or a project for that matter, is not static, it is a process which develops over time. No business idea looks the same now as it did when the company started, unless you started yesterday. Taking what works and ocontinue to use it to tweak the idea is another example of good management - and good entrepreneurship.

The crisis has made it painfully obvious how little management competence there were even in the biggest companies. But the cure is certainly not obvious to any government. Where there are programs for research funding (and they have not been cut because of shrinking tax revenues) the exploitation comes at best in third place. Execution is not something which is highly prioritized. In governement, it never was. The crisis ought to help us focus on this: Business is not about making Powerpoint strategies, it is about making money every day. If the result of the crisis is more people getting more business savvy, then the economy will start growing.

And perhaps companies will be able to focus on broad education initiatives which target business knowledge and development, too. There is no business education like actually running a business, and it is cheaper to start with a small one than starting big. Small businesses are not very different from well-run big businesses, either - the number of zeros is just different. Badly run large businesses, of course, are "too big to fail" and will be kept alive just because it would cost too much to shut them down. As we have seen plenty of examples of lately.

If the governements anywhere knew what they were doing, they would support the creation of small businesses. Not only do they generate more jobs per dollar of capital than big businesses, they create a growth economy. Neither the Japanese nor the German growth wonders after the war would have been possible without small and medium-sized businesses. Nor would the Chinese growth. And there is nothing that says a small business has to be knowledge-poor, either.

If you want to start a business today, you are lucky, too. It has never been easier and cheaper to start a business thanks to the Internet, and it has never been easier and cheaper to make it grow (and we do not necessarily talk cloud services here - it is sufficient to think outsourcing). The problem, now as ever, is finding the idea, but in reality it does not matter so much what the idea is, as long as it is big enough and management is smart enough to make money from it - sustainably, over time.

Small businesses implementing big ideas efficiently. That is the recipe for growing out of the recession. Now, just do it....

Profit 101

The formula for success in business from day one has been 'buy low, sell high'. The exact time FOR big ideas is therefore during a recession, when prices are for goods and services are as low as they may ever get.  Once a big idea is rolling, the cost of keeping it rolling into the good times may be far less than the initial startup cost of the big idea.  Therefore, all businesses should look to implement their largest expenditures on projects, or their biggest ideas, during the recession. Short-term investors will avoid making purchases during recessions because recovery seems distant, but the smarter investor realizes that the risk is low and the reward very high for long-term growth.

Communications Management and Integration

I assert that big framework, architecture, or other infrastructure investments (virtual/software or physical assets) are the smartest investments during a recession.  These are the investments with the highest ordinary initial cost to recurring cost ratio.  Conversely, investments to avoid are those with a high reliance on customer revenue to meet high recurring costs, for example, custom services on existing frameworks.  Custom services tend to have a high maintenance cost, and the only way to drive down that cost is to spend a lot on maintaining strict project control.  Either way, the recurring cost of that investment would be very high and should be avoided to minimize recession-time overhead.

Consistent Utility Growth

Utilities including but not limited to energy production and telecommunications appear to be driven by a constant demand unrelated to any ongoing economic problems.  Rich or poor, everyone uses energy and communicates with others, so these are no-brainer investments.  In an economic uptick, I would expect these areas to achieve a growth spike as people's budgets suddenly have room to expand necessities into indulgences.  During and directly after a recession, people are still wary of uncertainty.  I would expect to see consumers buy more of a service that they already know they need vs. a brand new service (i.e. upgrade their Internet bandwidth vs. switch to some unknown new technology)

Government Helps Those Who Help Themselves

The government's largest expenditures are at the federal "everybody everywhere" level, i.e. defense, medicare, and other related investments.  Anything that builds upon the government's direct investments will do well.  Business owners relying on some sort of government subsidy to achieve a profit (i.e. TARP funds) are not in that position.  For example, I would put my money on top of a new gov't-funded road via new trucks.  I would not put my money into trying to get government road-building funds directly in order to fund some vaguely defined pet project.

How to Fail at Business

If you want to fail in the business world, only think short-term and never make large investments.  Sure, you might save money at first, but count on your competitors reaping the benefits from chances that you weren't willing to take.  I don't advocate random investment just for the sake of funding everything you can.  Instead, I recommend prudent, regular investments into technologies and assets that will grow the business.  I would recommend random investment over stingy investing, though, because the stingy investor will never land on a good buy.  Even though the random investor will lose some money on bad bets, they will make money on good bets as well.  If they are fast to move their money, even the random investor can turn a profit.  The stingy investor wants to wait for the economy to pick up. 

Dear stingy investor: people are making money now, so you could be waiting for a signal that's never coming.

I am a Sr. Systems Engineer for a major telecommunications company, and I have a long family history in the Computer Science field.

 

Recessions are the best time to take chances, make that leap, and truly reinvent your business.  When times are good it is all too easy to keep doing what “works”.  But when times get a bit tight that’s when businesses can dig deep to find long lasting success.  There are some classic examples of truly innovative businesses starting in the worst of times. HP was founded in 1939 during the Great Depression.  Microsoft was founded in 1975 during the Oil Embargos. Siebel was founded in 1993 when things looked a bit grim.  What drove these businesses was desperation and a lot of sweat.  In today’s landscape business looking to truly break out need to:

1) Re-evaluate the value you bring to your customer.  Simple ask yourself “What business am I in?  List all of the potential answers then match it up with what your consumers need.  Boil that down till you have a view of your business that is positioned for growth.  Dunking Donut’s is in the “fuel that gets me though my day” business.  The New York Times is in the “Information I need to know” business (there will always be a demand for “news” – it’s the “paper” part that is killing them).  United Airlines is in the “get me there” business.  New perspectives will open new possibilities. 

2) Redefine your Market.  Who do you sell to and how do you sell to them?  Look for opportunities to expand the audience for your products and services.  Or look to narrow your audience while increasing the value you bring to that audience.  Now is the time to look for new ways to get your products to your consumer.  We’ve talk to death about leveraging the internet, but that doesn’t always mean e-commerce.  There are new subscription, micro-payment, and direct response models developing that show promise.  Don’t forget mobile.  The iPhone and other smart phones are redefining this must have accessory.

3) Challenge your competition.  When times get a bit tough the tough find and exploit their competitor’s weaknesses.  Now is the time to review your distribution model, your vendor relationships, and price structure with an eye for where you can position yourself to take share away from the competition.  While your competition is hunkering down you’ll be bringing a new approach that adds value to every part of the value chain.  Talk to your partners and find out how to help them through this down turn.  They will reward you now and even more when things look up.

4) Create a new Market.  Ten years ago there was no Red Bull.  Five years ago there was no Kindle.  And two years ago there was no iPhone Aps Store.  Invention is the fuel for growth.  And the world is in need of innovation across the board.  We need to rethink our cars, our energy, healthcare, television, food – the list goes on and on.  The US car industry is not dieing it’s being reborn.  Green energy is a reality that will create amazing new products and services.  Healthcare is a mess – new businesses will fix it.  Television is still a passive medium – that’s about the change.  And we’ll all a bit fat – let’s rethink our food.     

5) Develop talent for growth.  Success is driven by having the rights folks with the right skills.  Now is not the time to pull back on talent development.  Take a deep look at your team and identify where your strengths are and where you have weaknesses.  What worked before won’t work in the future.  You need the team that will drive the business forward toward that ever changing future rather than holding you back.  Empower your newer team members with projects that expose them to different areas of the business.  Push your more seasoned staff to think differently and throw off the restraints that hold back innovation.  


Recessions are not a time to panic.  They are a time to re-evaluate your businesses value proposition.  If your business can add value during these times you’re poised for enormous growth when things recover.

Rob Walker is a serial innovator that merges the online with the offline to create new business opportunities. He waxes poetic on his blog www.internet-marketing-db.com

Nature is elegant.  It solves problems.  In nature we find the ears of the bat, the neck of the giraffe, the legs of the cheetah and the eyes of the hawk.  It experiments and finds new ways of doing things.  Failed experiments die away, whilst successful experiments reproduce themselves and become more populous.  Nature is the way it is because it hosts the greatest competition of all: the competition to survive.  That same competition underpins every competition between complex systems.  Those complex systems may be countries, as in the cold war victory of the US over the former Soviet Union, or animals, like the gazelle that must flee and the lion that must eat, or the rivalry between businesses competing for scarce resources, market share, and revenues.  There is no bigger idea than the simple idea that the fight for survival promotes change, and grants prolonged life to those that make the right changes, whilst killing off those that do not change or make the wrong changes.

So what lessons can be learned from nature right now?  The human race has woken up to the greatest fight for survival since Homo sapiens first emerged.  Our species has done wonderfully, and has expanded rapidly in living memory, growing from a little over 1.5 billion at the start of the twentieth century to over 6 billion by its end.  We have learned to make more and more food from the same amount of land.  We survived the Black Death.  Our own predilection for war caused great losses, but the human race kept recovering and replacing the dead with more living.  Problem after problem has been overcome by science and technology.  The irony is that our very success now poses our greatest threat to survival: that we might destroy our climate, torching our Earth and turning it into an inhospitable husk.  The battle against global warming is the struggle which will increasingly grip our attention and inspire our creativity.  Necessity is the mother of invention, and there is no greater necessity than to preserve our world.

We can wage the war on global warming at both the macro and micro levels, and we will devise plenty of strategies.  This will generate an incredible variety of opportunities for all kinds of enterprise, at every scale.  By the same token, governments will be increasingly focused on the goal of saving the planet, not least because of the biological drive that says every citizen, whether President or peasant, wants their offspring to survive.  Governments will be looking for ways to back potential winning solutions, both big and small.  Businesses will imagine, pioneer and perfect many new kinds of solutions to solve energy problems we previously did not know we had.  Good solutions, like creating new kinds of renewable energy and devising more efficient lifestyles, will survive beyond what a normal business would call long-term.  By recasting the human struggle for survival, we are also redefining the economics of the human race, changing the index for prosperity from increased consumption to more efficient consumption.  In the process, we are rearticulating the objectives of every business.

What strategies will the human race explore, as it fights against global warming?  Some strategies will be about cleaning up the mess we created, like removing the carbon that is already in the atmosphere, whether through mechanical scrubbers or genetically modifying plant life to breathe in more carbon dioxide.  Others will be about doing the same things as we do now, but with diminished impact on the environment.  This includes finding replacements for oil as the portable fuel source for vehicles.  We will innovate about how to achieve our same overall objectives, whilst doing fewer things that consume energy.  This will promote technologies for homeworking, teleconferencing and organizing people in remote groups, so they can work together without needing to be in the same room.  It also means organizing ourselves so that food is grown locally, and not transported over vast distances.  Yet other strategies will involve supplying our energy needs without using fossil fuels, which involves both harnessing resources like wind, wave and sun but also storing energy efficiently, so we can save the energy we make to be used when we need it.  As well as efficient creation of energy, there will also be more enterprising solutions for efficient distribution of energy, through innovations like installing smart meters in homes and businesses, or by improving the cost-effectiveness of microgeneration, so electricity is produced where it is being used.

Nature solves problems through constant innovation in the relentless fight for survival.  The human race will do the same; harnessing its innovative gifts and finding ways to keep nature on a constant course, and hence ensuring our planet remains inhabitable.  It is the biggest idea of all, as true in a recession as it is during a boom.  This single big idea will give birth to countless ideas of every kind imaginable, and probably many more that we currently cannot imagine.  The only sure way to fail is to duck the challenge and do nothing to innovate for a low-energy, sustainable-energy future.  Some businesses may decide to ignore the fight on global warming, and will only react when energy prices force them to react.  The winners in the recession, like in all enterprise, will be the businesses that turn a threat into an opportunity.  The businesses that will prosper in the long run, will be the businesses that are in the vanguard of the war on global warming.

 

Eric is a blogger, podcaster, business consultant, chartered accountant and has a masters degree in Information Systems. Eric has been a consultant for over 10 years, giving data integrity advice to telcos and new media consulting to small business.

Viewed through a dramatic lens, the current recession is nothing more than a setting of the local heroes stage for the daring and game-changing acts of those brave souls who dare to bear the torches that will lead us all back to the light.

Here's how to be a hero:

a) A hero channels the old masters. The battle that businesses are fighting now isn't so very different than the one businesses were fighting during the Great Depression, or even the battle against ignorance that the old European powers were fighting during the Middle Ages. The Middle Ages gave birth to gunpowder, agriculture, and clocks. The Great Depression gave birth to Motorola, Hewlett-Packard, and the Pittsburgh Steelers. Western civilization has been around the block enough times that nobody should feel like they're fighting a battle of any sort for the first time. Find out who your real ancestors are, and learn from their mistakes.

b) A hero doesn't mince words. In a time of crisis, the glory goes to those who spend less time weighed down in process, and more time taking bold steps toward a solution. Arm yourself, and your clients, with tools that will facilitate communication that leads to action, rather than just to more communication.

c) A hero finds new ways to work with what he has. Since most clients are spending less, that means that the decision-makers on the client side have to make more actual decisions. Gone are the days of copying and pasting last year's budgets and doing business with last year's vendors. Buyers need to actually earn their living by making real decisions, with no default position to fall safely back on. I learned this lesson firsthand when, as the head of media buying at a small agency, I helped launch the first Kindle with a tiny media budget. Innovation on the product side was out of our hands, so our focus turned to tools that would make a difference in areas we had control over: CRM, workflow, research, presentation, and optimization.

e) A hero shares the glory with others. Entrepreneurs and C-level executives are, by definition, competitive people. They don't just want to coast; they want to win. Don't make them feel like you are coming to their rescue. Instead, play the role of the apothecary who provides the magic potion, or the smith who forges perfect sword, or even the friend who whispers a key piece of advice just before the battle begins. Let the client believe that they, not you, are fighting their way out of the recession. Let the client be the hero.

image by Randy Son Of Robert

Michael Bennett Cohn has worked in ad sales, media planning, software development, and strategic program management. Before his life in business, he studied the hero's journey while earning his master's degree in screenwriting from USC.

The American Recovery and Reinvestment Act of 2009 (ARRA) is infusing states with money, and is prompting states to make significant changes to how they deliver services to their citizens and implement projects which have been sitting unfunded. 

Increasing costs and declining revenues from taxes have led many states to make significant cuts in programs and state services over the last number of fiscal years.  The American Recovery and Reinvestment Act of 2009 requirements stipulate that the money is not to be used to back-fill deficits in state coffers, but is to be used to generate jobs by implementing new projects. There are a variety of strategies that states should use to ensure effective use of the stimulus funds:

Systemic evaluation: Change in government is typically incremental.  However, ARRA funding offers state agencies the opportunity to do a systemic evaluation of their programs.  Many states have undergone years of budget cuts, and have been left with a patchwork of services, or perhaps more aptly, a Swiss cheese of services. The ARRA offers an opportunity to evaluate and realign services to be more effective.

Temporary employees:  States have the ability to create and fill positions as part of the ARRA.  Using temporary employees to remove backlogs of work, support major changes, or provide specific expertise can be an effective way to help government make the changes they need.

Area Specialists:  Some state agencies embarking on projects will find that their department does not have the expertise necessary to complete the project.  With the current ARRA funding, states can hire area specialists on short term positions to fulfill the unique needs of the department in implementing these projects.  Possible areas of consideration are project managers, technical specialists, or web application developers to round out the project team and add that missing element to the department's roles on a short term basis.

Improve infrastructure: Many states and state agencies are dealing with legacy technology and aged infrastructure.  Using ARRA dollars to improve how information and people move can be a major area of consideration.

Ideally, states will use the money to evaluate their battered systems, and realign services making them more efficient, rather than the patchwork they have been left with through years of cuts.  The benefit of the ARRA 2009 sending money to state agencies, is that they will in turn be able to invest the money in updating their processes and systems creating a more efficient government going forward, while creating jobs and infusing the local economy with necessary money in the short term.

State government does not generally deal in systemic change, rather more incremental change. The funds will allow states to embark on a project with the knowledge that they will be able to implement the changes needed, whether it's changing where or how services are delivered, or updating infrastructure and technology.  State agencies will be able to tap a wealth of talented individuals and area specialists to assist them with making the shift, as well as working with vendors to obtain the materials and technology necessary to implement their projects.  The use of contractors, temporary employees and area specialists will be key in the completion of many of the projects funded by the ARRA.  Such large scale change in government is unique.  Hopefully, the changes to state and federal systems will lead to a more efficient government and the spirit of transparency and accountability will extend beyond the American Recovery and Reinvestment Act.

For more information on the Recovery Act visit Recovery.gov and be sure to visit their Opportunities page for business opportunities as a result of the Act.

The New Zealand Trade and Enterprise group recently carried out a study of 'recession survival strategies'  They examined several multinationals that weathered the storm of several past recessions:  The Great Depression, Oil Crisis, 1987 Stock Crash, Asian Financial Crisis, and the Dotcom Bubble of the late 1990s.  

“Businesses should think cautiously in the short term but be ambitious and plan for the long term. There is no doubt that times are increasingly tough, but to survive, businesses have to look to the future.”

They concluded that seven factors helped businesses through the recession, and also that these factors are well applied to small as well as large business interests:

1. focus on the core business
2. process and efficiency
3. strategic divestment
4. contingency planning
5. acquisitions and strategic alliances
6. increased advertising and marketing
7. increased investment in research and development

Note number 5. Aquisitions and Strategic Alliances.   It's fair to say that during a recession the strong don't just prevail, they often wind up as the beneficiaries of very favorable pricing on the assets of failed competitors.  So one big idea many small to large businesses should be considering *right now* is how to make a big increase your companies value using the "bargain basement" prices you now find on some real estate, partnership services, and even purchases of all or part of your competition.

Another big idea to consider is working with the fact that government will be playing a larger role in business and business finance than in all of US history, and will be funding innovation and new job creation at unprecedented levels.   However one feels about this from an economics standpoint it certainly offers big opportunity for those willing to think about job creation and innovations, especially those that match up with the emphasis on energy saving and green technologies.

Can you implement big ideas during bad times?   Yes, and sometimes bad times can even be turned into the best times.

Sources:

Central Pennsylvania Business Journal:
http://www.centralpennbusiness.com/weekly_article.asp?aID=97892587.23401 16.923819.1850923.663332.671&aID2=71054

New Zealand Study:
http://www.thebigidea.co.nz/work/enterprise-news/2009/apr/54817-recession- survival-strategies

Lenny Mendonca on Business in Recessions:
http://bigthink.com/lennymendonca/lenny-mendonca-on-leading-in-challe nging-times

 


Publisher of travel, history, and news at several regional and national websites and blogs. Major annual conference coverage includes CES Las Vegas and Search Engine Strategies San Jose.

The country is facing some of the greatest economic challenges since the depression, but despair won't help your business in these stormy times.   Many experts suggest that now is the time to trim expenses, focus on core business values, and consolidate your holdings.  However the current conditions and instability are also creating new and unique opportunities every day that may call for broad and sweeping changes in the way you think about your business and open the doors for some big and bold decision making.   

Can you think big during these troubled times?   Of course you can!   Obviously this is not the time to throw caution to the wind, but big ideas can spring from unusual circumstances. New financing paradigms are coming into play - many with very stable government backing, and the recession has created some of the cheapest prices real estate has seen in decades.  Many fortunes are likely to be made in the coming years as innovative solutions are found in areas where massive changes are making old models ineffective and costly, and also in areas where government support and subsidies will bear some of the cost of developing new solutions and building viable infrastructure.  Two examples are the coming boon in energy projects from power savings to green power generation, and the coming boom in online security applications to serve government and consumers who increasingly are at risk from cyber crime, scams, cyber terrorism, and more.

In some sectors, especially technology and those that intersect with technology, we've seen broad based changes.   Legacy magazine and newspaper print publishing is under huge stress from lean and flexible online publishing, blogging, and oceans of free online content and social interactions.   Big ideas in this sector are called for on both sides of the equation - to preserve the enormous value of existing print empires like the New York Times and also to *attack* those empires with better online publishing environments that harness the power of the legions of online writers but manage to preserve the quality controls we enjoy with legacy publishing enterprises.

Sea change ideas are generally hard to implement in a business environment where everybody is fat and happy.   The subprime mortgage crisis is a great example of an environment where incentives tended to make both lenders and borrowers *ignore* the perilous house of borrowed cards that collapsed last year.  People are not comfortable with major "rocking of the boat" until the boat is sinking, and by then it is often too late.   But now the opposite rule applies.  Hundreds of legacy business models are threatened with extinction.    Old rules sometimes no longer apply yet the uncertaintly and instability of the economy has frozen many businesses large and small in their tracks - fearful of moving ahead or even innovating.

So consider being the exception to the rule, seizing the day and the opportunities that are always all around us even in the worst of times.

Publisher of travel, history, and news at several regional and national websites and blogs. Major annual conference coverage includes CES Las Vegas and Search Engine Strategies San Jose.

Ignore the herd mentality, and pay attention to one simple truth: The economy is recovering. Over 93 percent of economists believe the recession will be over by Christmas. Growth might be slower than usual, but the worst is behind us -- and things won't be worse next quarter than they are this quarter.

And in fact, there's a couple of unique ways to take advantage of this unique economic environment. The 2009 Recovery Act will now provide up to $35,000 in "short-term relief" for any businesses "to help ride out the current uncertain economic times and return to profitability". It's an example of new government money that's pumping into the economy. Investigate relief programs that may be targeting your specific industry, and you may discover there's extra federal money that wasn't available in 2008.

In fact ,the bad economy is actually creating some opportunities. In fact, as newspapers are struggling, Craigslist's revenue is expected to jump 23 percent this year, to over $100 million (according to a recent report), as more and more people take advantage of its free classified ads. And public libraries are reporting big jumps in circulation, according to the Boston Globe. Last month Walmart reported their total sales actually rose 4.5 per cent from the year before (though the increase was masked by currency fluctuations. Many consumers are still doing things that they did last year -- but they're doing in a cost-conscious way. Understanding that could be the key to thriving in this new world.

But there's also another key factor at work: this recession isn't spread evenly. For all the talk of the worst economy in a century, one dotcomer I know asked sincerely -- "Where is it?" For example, in April Apple Computer reported a 15% jump in their profits over last year. There's still a core of high-end consumers who aren't hurting as much. It's like the economy's been polarized, with larger markets at the extreme ends of the spectrum. So don't buy into a general sense of gloom without first investigating its unique effects your own target audience.

Also, remember this: there's more happening now than just a recession. Just for example, the digital revolution continues to rock our world. After the FCC completed their spectrum auction last year, wireless networks began getting a lot more interesting. (The Consumer Electronics Association is pushing for even more spectrum for "advanced wireless services.") There's an incredible consumer demand for mobile devices -- many in product categories that didn't exist 10 years ago. And this trend signals that the internet is about to "jump the rails," going from that invisible thing that's behind your monitor to...that invisible thing that's everywhere. There's mobile services that will follow, but also new location-specific ways to sell the same products.

And there's another related trend to watch. All those high school students who were using MySpace will very soon become 20-something college grads with disposable incomes. The explosion of online publishing is creating a glut of "micro-media" -- but if you can reach the right aggregators, you can reach these audiences in much more effective ways. They've used cell phones and social networks throughout their formative teenaged years, and they'll be more comfortable with online purchases (and more interested in online services). They may finally create that vast online economy that entrepreneurs were desperately angling for in the late '90s

I had a friend who once teased that he was going to repeat a single phrase to his newborn daughter, one piece of wisdom that would carry her through difficult times. The phrase? "Buy low, sell high." Ten years later, I heard Suzie Orman offering the same piece of wisdom, and I followed through. I invested in diversified mutual funds starting in September, and they've risen along with the stock market -- nearly 20% so far.

I think it proves an important lesson. Optimism can be profitable -- especially at the end of a recession.

David Cassel is a recovering technology reporter - and a successful online entrepreneur.
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its about earth ,insight in future economic activity .optimism and understanding of the absolute.
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