Six Winning Characteristics - An Article by Tim Pile

22nd February 2012

Based on experience from the last four recessions, based on much published evidence, based on observations of this current economic trough, there seem to be a number of defining characteristics that separate the winners from the rest.

In no particular order, though the first characteristic is arguably the most important, the most counter-intuitive and certainly the most empirically robust:

One. Investment.

assuming the business can actually afford to, there is a large body of evidence to show that those businesses that invest in a recession derive disproportionate benefit. One report identified a group of companies which 'made strategic decisions that defied conventional logic'. During the recession, these companies maintained investment levels not just in marketing but in all key areas - deal making, R&D, advertising - arguing that tough times required greater effort and offered greater opportunity. There is also the PIMS database which evidences the competitive advantages of investment and also shows clearly that those which had increased their spend in the recession logged a substantial increase in profits during the economic recovery. Observation (less scientific, admittedly) during the current downturn indicates strongly that those companies willing to actually invest are performing disproportionately well now and positioning themselves brilliantly for the recovery.

Two. Export.

Many would argue that the hallmark of the current economic strategy is to encourage export and depress domestic demand. The Global economy is being rebalanced and growth opportunities are not just in BRICS but in many other developing economies. The current winners are often focussing on this area - directly or indirectly.

Three. Ideas and innovation.

Winners are those who really value ideas. Who focus on new ways to deliver value to their customers; who use the tough times to reinvent the business model; who understand the sanctity of a great idea and its ability to differentiate their brand so as to compete more effectively; who realise that ideas are pursued by capital; who have a bit of the entrepreneur inside them.

Four. Segment.

There are always sectors that perform relatively well in a downturn. The aforementioned PIMS database highlights a number (e.g. entertainment) from previous recessions. I want to avoid becoming a hostage to fortune but there are some very obvious winning sectors right here and now. One just needs to study the latest set of 20-30 trading statements to get a clear steer. Leisure? Luxury? Non-deferrable 'essentials'? Entertainment? Technologies? And perhaps I am showing my economic bias, but there will be an increasing investment in state funded infrastructure and capital projects.

Five. Customer obsession.

A statement of the glaringly obvious but the customer often gets forgotten in tough times - but not by the winners who step up their obsession. And in the current fractious and fragmented world, where trust is destroyed, we have to find new ways to build a new relationship with these customers, new ways to engage.

Six. Leadership.

Last but not least, the winners tend to have superb leadership. Great leadership not great management is required! Leaders who invest in ideas and innovation; who listen to and respect their customers - who know their enemy, respect them but are passionate about beating them; who allow the right side of the brain to lead; who allow instinct and intuition to drive behaviours, not just the numbers.