How to Market in a Downturn

In every downturn marketers find themselves in poorly charted waters because no two downturns are exactly alike. However, in studying the marketing successes and failures of dozens of companies as they’ve navigated recessions from the 1970s onward, we’ve identified patterns in consumers’ behavior and firms’ strategies that either propel or undermine performance. Companies need to understand the evolving consumption patterns and fine-tune their strategies accordingly.

During recessions, of course, consumers set stricter priorities and reduce their spending. As sales start to drop, businesses typically cut costs, reduce prices, and postpone new investments. Marketing expenditures in areas from communications to research are often slashed across the board—but such indiscriminate cost-cutting is a mistake.

Although it’s wise to contain costs, failing to support brands or examine core customers’ changing needs can jeopardize performance over the long term. Companies that put customer needs under the microscope, take a scalpel rather than a cleaver to the marketing budget, and nimbly adjust strategies, tactics, and product offerings in response to shifting demand are more likely than others to flourish both during and after a downturn.

Understanding Downturn Psychology

In frothy periods of national prosperity, marketers may forget that rising sales aren’t caused by clever advertising and appealing products alone. Purchases depend on consumers’ having disposable income, feeling confident about their future, trusting in business and the economy, and embracing lifestyles and values that encourage consumption.

But by all accounts, this downturn is severe and global. The wave of bad economic news is eroding confidence and buying power, driving consumers to adjust their behavior in fundamental and perhaps permanent ways. They now realize that spending in much of Europe and the United States over the past three to four decades was built on a quicksand of debt and dwindling savings and home equity. Marketers abetted consumers in defining the good life in material terms and urging them to live beyond their means. In the ensuing meltdown, consumers face piles of bills, stagnant or falling incomes, and shrinking nest eggs. At the same time, a series of corporate scandals; failures in the financial, housing, and insurance sectors; and taxpayer bailouts of mismanaged businesses have fostered consumer distrust and skepticism of marketers’ messages. It’s no surprise that in January 2009 the Conference Board’s U.S. Consumer Confidence Index sank to the lowest level since tracking started in 1967.

These combined effects create a profound challenge for marketers, not only during the downturn but in the recovery that will eventually follow. The first step in responding must be to understand the new customer segments that emerge in a downturn. Marketers typically segment according to demographics (“over 40,” say, or “new parent” or “middle income”) or lifestyle (“traditionalist” or “going green”). In a downturn such segmentations may be less relevant than a psychological segmentation that takes into consideration consumers’ emotional reactions to the economic environment.

Think of your customers as falling into four groups:

The slam-on-the-brakes segment feels most vulnerable and hardest hit financially. This group reduces all types of spending by eliminating, postponing, decreasing, or substituting purchases. Although lower-income consumers typically fall into this segment, anxious higher-income consumers can as well, particularly if health or income circumstances change for the worse.

Pained-but-patient consumers tend to be resilient and optimistic about the long term but less confident about the prospects for recovery in the near term or their ability to maintain their standard of living. Like slam-on-the-brakes consumers, they economize in all areas, though less aggressively. They constitute the largest segment and include the great majority of households unscathed by unemployment, representing a wide range of income levels. As news gets worse, pained-but-patient consumers increasingly migrate into the slam-on-the-brakes segment.

Comfortably well-off consumers feel secure about their ability to ride out current and future bumps in the economy. They consume at near-prerecession levels, though now they tend to be a little more selective (and less conspicuous) about their purchases. The segment consists primarily of people in the top 5% income bracket. It also includes those who are less wealthy but feel confident about the stability of their finances—the comfortably retired, for example, or investors who got out of the market early or had their money in low-risk investments such as CDs.

The live-for-today segment carries on as usual and for the most part remains unconcerned about savings. The consumers in this group respond to the downturn mainly by extending their timetables for making major purchases. Typically urban and younger, they are more likely to rent than to own, and they spend on experiences rather than stuff (with the exception of consumer electronics). They’re unlikely to change their consumption behavior unless they become unemployed. Regardless of which group consumers belong to, they prioritize consumption by sorting products and services into four categories:

  • Essentials are necessary for survival or perceived as central to well-being.
  • Treats are indulgences whose immediate purchase is considered justifiable.
  • Postponables are needed or desired items whose purchase can be reasonably put off.
  • Expendables are perceived as unnecessary or unjustifiable.

All consumers consider basic levels of food, shelter, and clothing to be essentials, and most would put transportation and medical care in that category. Beyond that, the assignment of particular goods and services to the various categories is highly idiosyncratic.

Throughout a downturn, all consumers except those in the live-for-today segment typically reevaluate their consumption priorities. We know from previous recessions that such products and services as restaurant dining, travel, arts and entertainment, new clothing, automobiles, appliances, and consumer electronics can quickly shift in consumers’ minds from essentials to treats, postponables, or even expendables, depending on the individual. As priorities change, consumers may altogether eliminate purchases in certain categories, such as household services (cleaning, lawn care, snow removal), moving them from essentials, say, into expendables. Or they may substitute purchases in one category for purchases in another, perhaps swapping dining out (a treat) for cooking at home (an essential). And because most consumers become more price sensitive and less brand loyal during recessions, they can be expected to seek out favorite products and brands at reduced prices or settle for less-preferred alternatives. For example, they may choose cheaper private labels or switch from organic to nonorganic foods.

Consumer Segments Changing Behaviour table

Managing Marketing Investments

During recessions it’s more important than ever to remember that loyal customers are the primary, enduring source of cash flow and organic growth. Marketing isn’t optional—it’s a “good cost,” essential to bringing in revenues from these key customers and others.

Still, company budget cuts often affect marketing disproportionately. Marketing communication costs can be trimmed more quickly than production costs—and without letting people go. In managing their marketing expenses, however, businesses must take care to distinguish between the necessary and the wasteful. Building and maintaining strong brands—ones that customers recognize and trust—remains one of the best ways to reduce business risk. The stock prices of companies with strong brands, such as Colgate-Palmolive and Johnson & Johnson, have held up better in recessions than those of large consumer product companies with less well-known brands.

Surgically trimming the budget is easier to do during a downturn than in prosperous times. Tough times provide an imperative to cut loose poor performers and eliminate low-yield tactics. When survival is at stake, it is easier to get companywide buy-in for revising marketing strategies and reallocating investments. Managers can defy old mind-sets and creatively search for superior solutions to customer needs instead of relying on the next line extension. The challenge is to make well-defended, case-by-case recommendations about where to cut spending, where to hold it steady, and even where to increase it.

Assess opportunities.

Begin by performing triage on your brands and products or services. Determine which have poor survival prospects, which may suffer declining sales but can be stabilized, and which are likely to flourish during the downturn and afterward.

Your strategic opportunities during the downturn will strongly depend on which of the four segments your core customers belong to and how they categorize your products or services. For example, prospects are reasonably good for value-brand essentials sold to slam-on-the-brakes consumers, who will forgo premium brands in favor of lower prices. Value brands can also effectively reach out to pained-but-patient consumers who previously bought higher-end brands, a strategy Wal-Mart aggressively used with its “everyday low prices” policy in the 2001 downturn. Value brands have opportunities with postponable products, as well. Repair services can market to the pained-but-patient group, who will try to prolong the life of a refrigerator rather than buy a new one.

Where the business opportunities are uncertain or declining, it may be time to part with brands or products that were ailing prior to the downturn and are on life support now. For those that remain, companies should concentrate their marketing resources on maintaining relevance to core customers in order to sustain brands through the downturn and into the recovery.

Allocate for the long term

When sales start to decline, companies shouldn’t panic and alter a brand’s fundamental proposition or positioning. For instance, marketers catering to middle- or upper-income consumers in the pained-but-patient segment may be tempted to move down-market. This could confuse and alienate loyal customers; it could also provoke stiff resistance from competitors whose operations are geared to a low-cost strategy and who have intimate knowledge of cost-conscious customers. Marketers that drift away from their established base may attract some new customers in the near term but find themselves in a weaker position when the downturn ends. Their best course is to stabilize the brand. Even cash-poor firms would be wise to commit a substantial portion of their marketing resources to reinforcing the core brand proposition. Reminding consumers of how the brand matters can add to the cushion provided by previous investments in building the brand and customer satisfaction. De Beers came to this realization after it reduced its U.S. marketing budget early in 2008 in response to the grim economic outlook. When research revealed that diamonds represent enduring value to a majority of consumers, the company doubled its Christmas advertising spending over the previous year’s. Brand-awareness ads in several media proclaimed, “Here’s to less,” and enjoined us to buy “fewer, better things” because “a diamond is forever.” Although Christmas sales in the United States softened compared with the previous year’s, prices were stable—and trends in consumers’ desire to buy diamonds remained healthy.

Where opportunities are stable or uncertain (but leaning toward stable), firms should push their advantage. In past downturns, consumer goods companies that were able to increase share of voice by maintaining or increasing their advertising spending captured market share from weaker rivals. What’s more, they did it at lower cost than when times were good. On average, increases in marketing spending during a downturn have boosted financial performance throughout the year following the downturn. (Of course, not all increases have raised performance. Therefore, especially in the current, deep downturn, resources should be judiciously targeted to viable business opportunities.) Firms with deep pockets can make cost-effective acquisitions that strengthen their brand portfolio or customer base. In the 2001 downturn, Smucker’s acquired the Jif and Crisco brands from Procter & Gamble. These brands were too small for P&G and not in any of its core categories, but they proved to be a good strategic fit for Smucker’s. In the current downturn, Smucker’s is acquiring another such brand from P&G—Folgers. Though it does not meet P&G’s margin targets, with renewed marketing attention it has the potential to be an important source of future sales for Smucker’s.

In deciding which marketing tactics to employ, it’s critical to track how customers are reassessing priorities, reallocating budgets, switching among brands and product categories, and redefining value. It’s therefore essential to continue investing in market research. As the downturn winds down, consumers will regain buying capacity but possibly will not return to their old purchasing patterns. Market research should explore whether consumers will go back to familiar brands and products, stay with substitute products, or welcome innovations.

It’s critical to track how customers reassess priorities, reallocate funds, switch brands, and redefine value.

In recessions, marketers have to stay flexible, adjusting their strategies and tactics on the assumption of a long, difficult slump and yet be able to respond quickly to the upturn when it comes. This means, for example, having a pipeline of innovations ready to roll out on short notice. Most consumers will be ready to try a variety of new products once the economy improves. Companies that wait until the economy is in full recovery to ramp up will be at the mercy of better-prepared competitors. Even during a downturn, new products have an important place. Live-for-today customers, with their undiminished appetite for goods and experiences, often appreciate novelty. And the other segments will embrace new products that offer clear value compared with alternatives. Because new-product activity slows in recessions overall, launches can economically gain visibility. In 2001, for example, Procter & Gamble’s successful introduction of the Swiffer WetJet established a new product category that eased the chore of mopping floors and weaned consumers away from cheaper alternatives.

Balance the communications budget

During recessions cash-strapped marketing departments are under pressure to do more with less and demonstrate high returns on investment. Typically, the share of the advertising budget devoted to broadcast media shrinks, whereas the share that goes toward efforts with more-measurable results, such as direct marketing campaigns and online ads, grows. Point-of-purchase marketing—promoting price cuts or generating in-store excitement—also tends to pick up during recessions.

Internet advertising in particular is targeted and relatively cheap, and its performance is easily measured. Despite a deepening downturn, marketers spent 14% more on online ads over the first three quarters of 2008 than they did over the same time frame in the previous year. Another factor driving this growth in digital-ad spending is consumers’ migration to online social media such as MySpace, Facebook, and LinkedIn, which help people intensify networking efforts amid layoffs and a tough job market. The new-member sign-up rate at LinkedIn, a site that focuses on professional networking, has doubled in the past year.

That said, broadcast media still remain important for building mass-market consumer brands. Although strong brands can be carried for a period on the momentum of previous brand-building investments, no brand can afford to coast solely on earlier efforts. Brands that are out of sight on the television screen will sooner or later be out of mind for a large percentage of consumers. Indeed, while advertising in newspapers and magazines and on radio and local television all declined in 2008, advertising on the four national broadcast television networks in the United States remained steady.

Consider how PepsiCo has adjusted its marketing: Management first used past experience to assess the impact the downturn would have on each category of drinks. It then reassigned marketing resources to volume-growth opportunities rather than making across-the-board cuts. For instance, even though carbonated beverages (especially nondiet) had been gradually losing share before the downturn, consumers consider them to be a good refreshment value—so management reasoned that the downturn should not force a steep decline in the category. All four consumer segments view them as either essentials or treats, and the tried-and-true Pepsi brand should hold up well in a downturn.

PepsiCo’s goal is to reinvigorate its carbonated soft drink category with substantially increased marketing investments in Pepsi, Mountain Dew, and other products. These investments include a new upbeat “Optimism” ad campaign, new packaging, and new point-of-purchase materials. PepsiCo also plans to increase activity in digital media specifically to target the youthful live-for-today segment.

Marketing Throughout a Downturn

During downturns, marketers must balance efforts to pare costs and shore up short-term sales against investments in long-term brand health. Streamlining product portfolios, improving affordability, and bolstering trust are three effective ways of meeting these goals.

Tailoring Your Tactics Table

Streamline product portfolios

In the comparatively mild downturn of 2001, marketers were able to get by with temporary, minor adjustments to production quantities and avoid wholesale revisions of prices or product lines. In a deeper downturn, marketers can benefit by cleaning up their product lines and so should seize the initiative early rather than waiting to be forced into making changes.

When faced with declining demand, marketers should continue to reduce excessive complexity in product lines that feature too many marginally performing sizes and flavors or trivial differences among product models. Overly broad product lines soak up marketing costs and tie up resources and working capital in slow-moving inventory. However, as we said before, streamlining the product portfolio does not mean shutting down the innovation pipeline. Innovative improvements to core products will grab attention and motivate purchases, particularly of expendable goods and services.

Realignment with market conditions requires frequent reforecasting of demand for each item in a product line as customers’ buying habits shift. For instance, slam-on-the-brakes consumers will sacrifice variety or customization in favor of simplicity and lower prices on essentials and treats. In the case of durables purchases that cannot be postponed, pained-but-patient consumers will trade down to models that stress good value rather than enhanced features. Consumers in both segments will reject products with features that diminish durability or increase operating costs.

Improve affordability

Slam-on-the-brakes and pained-but-patient customers in particular will be shopping around for the best deals. All businesses will increasingly compete on price.

In tough times, discounts that require little effort from consumers and give cash back at the point of sale are more effective than delayed-value promotions such as sweepstakes and mail-in offers. Many marketers will need to increase the frequency and depth of temporary price promotions. At the same time, they must carefully monitor consumers’ perceptions of “normal” price levels: Excessive promotions lead consumers to revise their expectations about prices downward and can threaten profitability in the recovery period because people will resist the steep increases as prices return to “normal.” Extreme price deals can also lead to costly price wars.

While premium-brand market leaders shouldn’t move their brands down-market, they can introduce a “fighter brand,” a lower-priced version of the premium offering sold under a different name and backed by minimal advertising. On the heels of the 1991–1992 downturn, Anheuser-Busch, for example, introduced its Natural Pilsner brand, priced lower than Budweiser, and Miller brought out value-priced Colders 29; in the early 1980s downturn, Procter & Gamble developed Banner as a cheaper alternative to Charmin. When the downturn ends, the fighter brand can either be quietly withdrawn or continue as a value entry in the overall product line.

Restaurants and other businesses often configure offerings by using key retail price points proven to resonate with customers, as with the 99-cent burger or the $399 dishwasher. PepsiCo sets prices suited to different consumer segments—for example, selling the 24-pack size at $5.99 for pained-but-patient consumers who can afford to stock up as well as the two-liter bottle at 99 cents for slam-on-the-brakes consumers with slim wallets.

In addition to offering temporary price promotions or list-price changes, companies can improve affordability by reducing the thresholds for quantity discounts, extending credit to their customers, or having layaway plans. Reducing item or serving sizes, and then pricing them accordingly, is another effective tactic. For service businesses such as cable and mobile telephone companies, lowering consumers’ up-front adoption costs and reducing penalty charges can help attract cost-conscious and cash-poor consumers. Depending on whether customers are seeking the lowest absolute price or the most bang for their buck, service businesses can, respectively, unbundle offerings or fold more services into the bundle—or offer both options.

Bolster trust

Worried consumers—even in the comfortably well-off and live-for-today segments—see familiar, trusted brands and products as a safe and comforting choice in trying times. Reassuring messages that reinforce an emotional connection with the brand and demonstrate empathy (for example, by conveying a sense that “we’re going to get through this together”) are vital. As Dell fights to regain the ground it lost in the past few years, it has released various print ads containing different messages that seem designed to resonate with each of the four segments: “Out of the box, within your means” (which will appeal to the slam-on-the-brakes segment), “Depend on Dell for simple solutions in tough times” (pained-but-patient), “The ideal laptop works anywhere, in any economy” (comfortably well-off), and “Weak economy, powerful you” (live-for-today). Crest has also focused on fortifying its emotional connection. Before the 2008 Christmas season, Crest ran spots for its Whitestrips product that centered on the theme of “I’ll Be Home for Christmas”: As the song played in the background, a young woman arrived back in her small hometown, flashing a smile showing off her white teeth. While the ad clearly conveyed the product’s cosmetic benefits, it also tugged at viewers’ heartstrings with its depiction of a Christmastime family reunion.

Reassuring messages that reinforce an emotional connection with the brand & demonstrate empathy are vital.

Empathetic messages must be backed up by actions demonstrating that the company is on the customer’s side. If sales are declining, the last thing to do is take the problem out on customers by reducing quality while raising prices. Loyalty programs should reward not just big-time spenders but also people who purchase small amounts frequently. Rather than simply impose ever-higher fees on customers who exceed their credit-card limits, card issuers should alert people when they are close to going over their limits. Retailers can educate consumers on how to shop smart and save money. For instance, some supermarkets during previous recessions prepared flyers detailing nutritious, low-cost meals. And companies can engage customers in brand activities that convey caring. An American Express campaign, for example, invited card members to vote on which charity the company would support on their behalf.

While it is important to build emotional connections, don’t neglect to reinforce trust by reminding customers that buying the brand is a sound decision. Aleve got this right when it added to its pool of commercials an ad with the message, “That’s value. That’s Aleve.”

Positioning for Recovery

Survivors that make it through this downturn by focusing their attention on consumer needs and core brands will be strongly positioned for sunnier days ahead. However, companies must understand how people’s behavior may change following the downturn so they will be able to offer products and communicate messages aligned with the needs of new consumer segments.

After most recessions have ended, consumers’ attitudes and behaviors return to “normal” within a year or two. Following more extreme downturns, though, consumers’ heightened sense of economic vulnerability can persist for a decade or longer. The deeper and more prolonged a downturn is, the greater the possibility that there will be profound transformations in consumers’ attitudes and values. Witness the long-lasting caution regarding consumption characterizing Americans who lived through the Great Depression or present-day Japanese who endured a stagnant economy throughout the 1990s.

Usually, repercussions are not so extreme as that. In the United States, postwar recessions have lasted an average of 10 to 11 months. The harshest were the 16-month-long downturn of 1973–1975, during which consumption growth was –0.9%, and the 18-month “double-dip” downturn of 1980 and 1981–1982, during which consumption growth was negative in the first dip but rebounded in the second. The last downturn, in 2001, saw no decline in overall consumer spending, although many individuals cut back.

However, the current downturn, as noted, is unusually severe, and consumer confidence and trust in business are at record-breaking lows. Given these facts, there is a good possibility that consumer attitudes and behavior shaped during this downturn will linger substantially beyond its end. While the comfortably well-off and live-for-today segments may carry on as usual, the slam-on-the-brakes and pained-but-patient segments—by far the large majority of consumers—may well retain the consumption habits they’ve learned. They’ll seek value and trusted brands, remain considered in their purchases of treats, and continue to delay purchases of postponables. Consumers can also be expected to retain their distrust of business, an attitude forged by the corporate malfeasance that fueled this downturn.

Marketers should prepare now for a possible long-term shift in consumers’ values and attitudes.

This profile suggests two lessons for marketers. First, the discipline around marketing strategy and research they developed during the downturn—and the ability to respond nimbly to changes in demand—will continue to serve them when the economy recovers. And second, they should prepare now for a possible long-term shift in consumers’ values and attitudes. The shock of the downturn and anger about the abuses that drove it promise to accelerate preexisting trends toward reduced materialism, commitment to sustainability, higher expectations of corporate social responsibility, and resentment of cynical marketing that treats people as soulless and mechanical consumers. Increasingly, customers will demand that business act in their and society’s best interests and will factor company practices into their brand choices. During and after the downturn, it would be foolhardy for marketers to ignore those changing expectations. While businesses are putting customers under a microscope, their customers are, in turn, examining them more closely than ever.

By John Quelch and Katherine E. Jocz from Harvard Business Review

Managing Change – Three Ways To Manage Change In Your Business

Any business that is serious about innovation and growth will have to master the ability to manage change because innovation will always lead to change. Before we get into the five points of the article, it’s important to provide a little context regarding change management in business and why it is such a huge area for improvement.

A PwC Report in 2013 from the Katzenbach Center with over 2,200 participants from various levels of business highlighted that the global success rate of major change initiatives is only 54% and 65% of employees feel pressured to adapt to too many changes at once. Already we can see that managing change is a difficult process as just over half succeed and more than half of employees feel pressured by change. Furthermore 48% of respondents stated that their company’s lacked the skills to ensure that change could be sustained. While an astounding 44% of survey participants reported to not understanding the changes they were expected to make. With these seemingly damning results the conclusion from the report was that any change management process should focus on being culturally driven from the top down and should be characterised by open communication and clear purpose.

With this information in mind here are three ways to improve your ability to manage change successfully in your business.

1. Drive Change Through Culture

In the Katzenbach Center report it was outlined that 84% of respondents believed that an organisation’s culture was vital to the success of the managing change. What this points to is that it is vital when aiming to make any long term changes within your business to consider the culture of your organisation and to understand that any significant change will be affected by the culture. With that being said a great way to try to drive change with your culture is by getting your employees excited about the changes by outlining their personal opportunities for development and growth during the process. Nothing motivates people more than showing them the personal benefit in what they are doing.

Another approach that could be used is to create a ‘Cultural Change Board’ to help drive change. This board would be made up of key individuals within your business who hold influential positions and importance to the culture of the company. While the owner or director and managers may be driving the strategic implementation of the change, this board would help get the rest of the employees on board. An example of individuals that might be a part of this group could be an individual who has great personal relationships across the whole business; this individual could be asked to get the others excited about the transformation by talking about its benefits. Another individual might be a long term employee who can add some perspective on how the employees and business are going with the transformation to the executive and managers. Another individual might be a young, innovative manager who is typically known as an ‘ideas’ individual. All three members of your ‘Cultural Change Board’ should liaise with management to convey the opinions and feelings about the process transformation. This technique not only opens up a strong line of communication between the staff and management but also helps to more firmly connect the change to the culture, as other employees will see these influential staff members as willing participants. If you can successfully use your businesses culture to drive the changes you want to implement your chances of success and long term adoption increase significantly.

 2Role Modelling From The Top Down

This step of the change management process seems to be very simple but its value cannot be overestimated. It is imperative that from day one of the transformation process that the desired process changes are integrated into the daily processes of all relevant employees. This goes from the most junior floor staff all the way through to the director or board members.

Role Modelling of the new processes in manager and staff daily routines has a twofold effect. Firstly employees that see their leaders undertaking the process changes will feel inclined to participate themselves. Seeing your manager or director undertaking the proposed changes creates a personal accountability for the changes in each employee. The second effect is that employees that see others undertaking the new changes in their daily routines will have a support network to draw upon. If individuals are unsure of how to execute the process or change they need only look at their neighbour and mimic their execution.

Obviously this point is very self-explanatory but the impact of not holistically carrying out the changes across all levels of the business cannot be overstated. A lack of consistent engagement with the changes will kill the transformation very quickly.

3. Fully Engaging With Change

Engagement with the proposed changes goes beyond simply telling employees to undertake the process changes or modelling them yourself. Engaging with change is a process that is enriched by structured communication. Some businesses when undertaking significant change will hold large ‘Town Hall’ style meetings. At these meetings employees from all levels of the company are invited to discuss how the changes would impact them.

Another method of opening up communication and increasing engagement would be to host IC (Innovation and Change) Meetings where a smaller numbers of employees would meet with their direct managers and discuss how the changes impact them, how they (changes) will help them and talk about how they will go about implementing the changes. These smaller meetings are great opportunities for management to get a feel for how their employees are dealing with the changes and to get a macro view of the transformation process.

A fantastic idea for managing change that was used by a global publishing house was hosting an Internal Change Fair. This fair basically brought together all the various departments and management teams to produce a short presentation or display that highlighted how the changes were being introduced and managed going forward. It provides a great way for individual departments to showcase innovative thinking and for driving change by making it slightly competitive amongst employees.

Change management is vital to any evolving small-medium enterprise; never forget that change starts at the top and that most people struggle with it. The role of the manager is to facilitate the easiest pathway for their employees to adapt.

Daring To Dash…Business Intelligence Dashboards

This article will discuss what a business intelligence dashboard is, some of its benefits for small business owners and some of the difficulties dashboards face for large scale adoption among small to medium enterprises.

What is a business intelligence dashboard?

A business intelligence dashboard at its most basic is a piece of software that displays important information about your business in real time. A dashboard system automatically processes data from your business’s major systems (e.g. point of sales systems, customer relationship management software, accounting software, staff rostering software etc) and presents that data securely to you in a visual format in real time.

On business intelligence dashboards the metrics that may be displayed can vary greatly from business to business as it depends on the owners/managements needs and the available outputs from their internal systems (Where the dashboard gets all its data from). Some metrics that may be displayed might be sales (daily/weekly/monthly comparisons), number of sales (by department or store and or comparisons), revenue, net profit, gross profit, costs, transactions per staff or countless others.

Below you can find a generic example of what a business intelligence dashboard may look:

Demo Dashboard


What are the benefits of having a business intelligence dashboard?

A professionally constructed and implemented dashboard can be a very powerful tool for owners and management to monitor and improve their businesses. Just three of the major benefits of operating a business intelligence dashboard are:

1) Information Accessibility: A dashboard consolidates a large proportion of meaningful data that businesses produce. A dashboard makes the collection and aggregation of the data easy often displaying multiple systems worth of data in one to two pages using graphs and tables. The process of analysing data which may have taken days or weeks to gather and analyse before can be done in real time, as often as business operators would like from either their computer or mobile devices via the internet.

2) Business Improvement: A dashboard makes business improvement and strategic planning easy as it places all the information managers need right on their computer monitor or mobile phone. A dashboard provides all the analytic and comparative data needed to improve and review business practices. Without data a business can’t improve itself, a dashboard supplies the data needed in an easily accessed and reviewed manner.

3) Reduced Administration Time: A dashboard reduces the need for staff or managers to store, aggregate and analyse data that the business generates. Gone are the days of generating countless reports or creating complicated Excel analysis matrixes. The dashboard automatically processes the data directly from business systems and presents it in a ready to use format.

These are only some of the many benefits of a sophisticated business intelligence dashboard; other tangible benefits may include: Modernisation of record keeping systems, employee performance improvement, visual goal tracking, comparative analysis, data that is mentally easier to process.

What are some difficulties with implementing a dashboard?

There are always difficulties when implementing a new technology into a business, the two major difficulties for business intelligence dashboards are the selection of the dashboard’s metrics and of course the construction of the dashboard.

1) Metrics Selection: A dashboard being an informational tool is only as effective as the information it is told to display. What this means is that business owners and developers have to be thoughtful and informed about what are the “key” business metrics for your business and also what are the underlying metrics for those key data sets. For example, if a key metric for your travel agency is sales then important underlying metrics that might need to be displayed could be number of leads produced/used, quotes/invoices sent, uptake rate of quotes, sale closure rate and or average transaction value. What data your dashboard displays will vary greatly depending on your business industry and needs so it is something that should be thought about in detail prior to contracting a developer.

2) Dashboard Design: Building a dashboard is a sophisticated and detailed process which requires expert knowledge and superb technical skills. This is because a dashboard needs to not only gather all your important information automatically but also analyse and display it in real time. Luckily for business owners and managers there are some very capable business intelligence companies out there such as Resurg which can cater for their dashboard needs. If you are interested in possibly discussing or implementing a dashboard for your business check out our dashboard page and give us a call or email us.

FREE Health Check for BIG 4 Holiday Parks

Resurg Group are now an offical partner of the “BiG 4 Centre of Excellence” providing profit improvement programs for all members.

Resurg have been a trusted partner of BIG 4 for nearly 10 years, with proven programs to increase sales and profit for parks.

Resurg provide a FREE HEALTH CHECK service for any park.  For details click here.

Competitive – Transient Advantage: Is It Leaving You?

As was mentioned in the first article in this month’s newsletter this article will focus primarily on how to assess whether your competitive advantage is at risk of being eroded while also presenting some further reading and content regarding developing competitive advantages in
small businesses.

Within a business environment that is increasingly being dictated by a transient-advantage economy; here are eight statements to ask yourself to determine whether your business might be at risk of losing some of its advantages:

1. I don’t buy or use my own company’s products or services
2. We’re investing at the same or higher levels and not getting better margins or growth in return
3. Customers are finding cheaper or simpler solutions to be “good enough”
4. Competition is emerging from places we didn’t expect
5. Customers are no longer excited about what we have to offer
6. We’re not considered a top place to work by the people we’d like to hire
7. Some of our best people are leaving
8. Our stock or services are perpetually undervalued

Taken From: McGrath, G, Rita – Harvard Business Review, Competitive Strategy, Issue – June, 2013


further rading









Competitive – Transient Advantage: Further Reading and Viewing

Title: Small Business Management: Launching and Growing New Ventures
By: Justin Gooderl Longenecker
This book has excellent sections on sustaining competitive advantage while also providing short examples and case studies discussing how to maintain and identify competitive advantages. Some of this book can be accessed for free online from Google books at the above link, some of the best pages are from page 33 – 47. In next month’s newsletter we will be discussing some of the content from this book in more detail.


Title: How To Boost Innovation: Why Small and Mid-Market Businesses Could Trump Start-Ups
By: Caitlin Fitzsimmons
A brief article from Business Review Weekly that discusses the importance of innovation from SMEs to the Australian economy and also provides a interesting graphic outline “Australia’s Innovation Ecosystem”. It is an interesting read to show the convergence of the variety of forces that drive and control business innovation. It also provided some albeit old (April 2014) context regarding the state of business and innovation.


Title: New Research Finds Workplace Culture Holds Many SMEs Back from Moving into the Innovation Fast Lane
By: Microsoft
The article is actually a press release regarding a research report that Microsoft recently carried out regarding business innovation. It provides some interesting statistics relevant to Small/Medium Enterprises in Australia and also provides links to their report where greater levels of information can be found. This research paper will be discussed in brief in next month’s newsletter.

Business Innovation: The Transient Advantage






As was mentioned in last month’s newsletter this month’s main article will be focusing upon Professor Rita Gunther McGrath’s writings about developing a transient advantage in business and how companies in rapidly changing industries should be undertaking innovation and strategy implementation. This article should be particularly useful for those business owners within the Fast-Moving Consumer Goods (FMCG) and the Travel / Tourism industries.

To begin with let’s summarise briefly what was covered last month in regards to creating a transient advantage. It was noted last month that business is becoming increasingly focused upon rapid, targeted evolution rather than longer term and broad planning. In many industries, in particular the FMCG and Travel industries business owners are beginning to realise that sustainable advantage is now becoming rare, where as transient advantage is becoming the norm. This means that innovation and strategy implementation is more often than not taking the form of quick cycle strategies or innovations rather than long cycle strategies, in order to evolve to a rapidly shifting marketplace. That summarises what was covered last month from here on out the rest of this article will be dedicated to discussing the implementation of a quick cycle, transient advantage innovation model. We will be doing this by looking at McGrath’s Wave of Transient Advantage and discussing some of the necessary skill sets and operational requirements needed to facilitate implementation of the optimal innovation model.

The first discussion point are the stages of developing a competitive advantage which simplified for brevity may consist of five distinctive phases which are:

1. Launch Phase
2. Development Phase
3. Exploitation Phase
4. Reconfiguration Phase
5. Disengagement Phase

These five phases all have a specific role to play in the strategic planning and integration of innovation and change within businesses, none more important than the Launch Phase. This initial phase is where companies focus on identifying opportunities for change andinnovation that may convey an advantage. It is also in this phase that the company allocates resources to develop the opportunity identified, these resources may include but not be limited to allocating staff, consultants, capital or simply time. This phase of innovation and strategic planning requires both the dreamers and managers. This is a phase which will benefit from employees who are ideas people and have the ability to test and adapt their ideas, while being able to manage and request the appropriate resources. It is this managing and requesting of the appropriate resources that leads to the Development Phase or colloquially known by McGrath as the “ramp up” phase. This is the phase when the initial launch idea is beginning to be initiated within the business to scale. This means that what may have started as a one department or one agent’s trial of the new innovation or program is now being resourced and delivered across multiple areas, staff or businesses. It is in this phase that the innovation process needs to be strictly managed and monitored by those with the authority to allocate resources. Following a successful phase of development and implementation there should be an Exploitation Phase. When transitioning to the exploitation phase it is important to bear in mind that the turnaround between launch and development should be fairly fast (weeks or a few months, always less than a year) to provide the maximum possible transient advantage.

It is during the Exploitation Phase that businesses should be capturing the majority of its profits, efficiency ratings and increased market share due to their innovation or strategy. So basically this phase is all about making money! Your company and its staff should be focusing on exploiting their new found competitive advantage and marketing their innovation to consumers. The more exposure and effective use of this advantage the more profitable your investment in its development becomes. While this phase is predominately about gain results or profit from your planning it is also the phase that has the most constant analysis and monitoring so I would argue it could equally be called the Exploitation and Analysis Phase.

The addition of Analysis to this phase is because in order to capitalise and assess the efficiency of your innovative practice or strategy there needs to be a large amount of analytic review of the businesses data. As a result this phase in particular requires employees or consultants with the ability to perform complex analysis of data and KPI information to determine the success, strengths and weaknesses of the implemented changes. This data may take the form of stock reports, sales reports, customer surveys or dashboard data analysis such as the one that Resurg operates. With that being said one of the clearest indications of the success of the innovation during this phase is that your competitors will react to your changes and seek to decrease your advantage. Ironically this means that the stronger the advantage you create the faster it may decline as your rivals throw resources into closing the competitive gap. It is this rapid decline in your recently acquired but quick declining advantage that leads to the Reconfiguration Phase.

This Reconfiguration Phase is very easy to explain in that it is fundamentally about making any changes to your existing strategy or innovation to keep it fresh and effective. That being said this is often one of the most difficult stages as it can be exceedingly difficult to rethink a business process or strategy and modify it to fit different circumstances. It is for this reason that often the Disengagement Phase will come shortly after or even during this phase. This last phase is when the innovative process, strategy or device has had its competitive advantage reduced to warrant the repeating of the five phase cycle to develop a fresh advantage. As you can clearly see some of these phases of innovation roll from one into the other, this is especially true for those businesses that undergo very rapid changes in market or data due to shifting market forces, consumer wants or seasonal supply and demand curves. Just explaining this best practice process of innovation makes it abundantly clear that companies must be looking at quick cycle innovation and strategic planning to stay ahead.

The whole idea of understanding these five distinctive phases of innovation and planning when seeking a transient advantage is so that your company can identify how it can create a pipeline for developing competitive advantages and innovative practices. By understanding what each phase entails it can help business owners and managers to understand what staff they need for each phase and what their goal should be for that phase.

In the second article of this newsletter we will briefly outline some of the key statements about whether or not your business is suffering a loss of competitive-transient advantage and provide some links to interesting further reading and viewing regarding developing competitive advantage in small businesses.

Business Today: Fast Facts

The Technology Driving Business

There are four key technological factors driving innovation and growth in business today that have been discussed in almost every major business publication, these are:

1. Big Data and Real-Time Analytics

2. Cloud Computing Solutions

3. Social Networking

4. Anytime, anywhere communication through internet connectivity (Telecommuting etc)

These four areas of business are seeing exponential growth and not only in technology industries, over the coming decade more and more industries will have to come to grips with the evolving technology landscape in business.

Video: Managing People by Steve Jobs

For any business owner or manager it is important to be constantly reflecting upon your management style and practice. This video of Steve Jobs talks about delegating responsibility to foster positive team environments and how to retain great employees through running a business by an idea rather than hierarchy. This video touches briefly on the idea of a “Catholic” business and a “Buddhist” business (although it isn’t mentioned formally). These business models are run through rigorous structure (Catholic) and one that is run by unifying philosophy (Buddhist e.g. Apple)

Video: Animation – Motivation and Driving Employees

This video is a great animation that is easy to understand which discusses motivation and driving employees based on academic research. This video talks about incentive based reward systems and why, when and how they work. The video also discusses positive motivational models with real examples and the elusive purpose motive. While the video is ten minutes in length there are some great insights in this video that can be taken in during a lunch break or on your daily public transport commute.


Business Innovation: Not Just A Buzz Word

“Innovation distinguishes between a leader and a follower” Steve Jobs

In business today consumers are spoiled for choice and have nearly unlimited access to alternative vendors due to internet. In this era it is no longer good enough to just be one of the multitude, in order to prosper, succeed and lead business owners must look to the future. The future is accessed not by surviving but by identifying problems and innovating to solve them. As Steve Job’s said in a business market that desperately needs leaders innovation can be the distinguishing factor.

While many of you may be saying “my company constantly has to innovate due to factor X” or “we ARE innovators within our industry because of Y” there will be some who say “We don’t need to…” or “We don’t have time” or even “We can’t afford to…”. Innovation like Job’s also said isn’t about how much time or money you can pump into solving a problem it’s about creating the environment and having people thinking about the problem in a creative way. With that being said here are four ways you can help to foster an innovative environment:

Establish a Formalised Innovation Process 

The first barrier to fostering an environment of innovation in any business is creating a process or means for ideas and solutions to be communicated, examined and tested. What this basically means is that if an employee or manager was to come up with a great idea for solving a problem or innovating an old process what would they do with their idea? The first step for fostering innovation in this case would be to have a clear line of communication for the idea. The process for communicating ideas and solutions can take the form of a informal ‘innovation’ manager who documents and presents the ideas to upper management, innovation roundtables at staff meetings, suggestion boxes or office hours for managers, allowing free communication. The important point is that there is a formal means of communicating ideas for staff and managers in a way that will be healthy and productive.

That being said arguably the best means of formalising innovation is to add a “P&S Discussion” (Problem & Solution) to staff meetings. You can present to the group 2-3 problems that are being faced by your company whether it is adding value, refining/improving redundant processes or fixing operational efficiency, provide some easy problems and then supply a more difficult problem. Small successes will help foster a positive and creative thinking environment while the larger problem will provide a challenge. Using this method it is almost always a good idea to split your meeting into micro groups and give staff time to brainstorm solutions. Allowing staff to work together in groups can help foster creativity and will allow multiple levels of expertise, experience and prior knowledge to look for solutions together, as the old saying goes “two (or more!) heads are better than one”.

To help foster the critical and creative environment during these discussions try offering small incentives for participation or the best/most ideas. These reward don’t have to be large or monetary but can be anything your employees might view was a motivator such as a provided lunch or extra break time. A tally or displayed points board and the nature of giving incentives should help to motivate your employees not only through the reward but by a desire to compete against their peers. Creating competition in a healthy manner (observed) can often drive employees to think outside the box and can provide real value when it comes to innovation.

Innovating To Appropriate Scale

What this step really means is that business owners have to carefully choose how large of a idea or innovative project to implement. An innovative idea and its planning should target either a well known problem or provide a new way to add value to your business. The reason this is important is because business is driven by consumers and unfortunately consumers wants and needs change over time, stability is a lie. If your company comes up with a great new process or idea but it will take 12-18 months to implement, will it still be relevant and what if it doesn’t add as much value as you thought at a later date? Investing time and resources into designing, planning and implementing a new process or idea can be costly so owners and managers should think about what their desired outcome for that particular innovation will be and how long it will convey a competitive advantage. In today’s rapidly evolving business environment where the average life for some of the largest companies on the S&P 500 has declined from 61 years in 1958 to 25 years in 1980 to only 18 years in 2011 (Reuters) it is clear that competitive advantages erode quickly. What these statistics show is that change is constant and fast in big business so it is undoubtedly doubly so for small to medium enterprises. An evolving, transient business environment needs quick cycle innovation in order to convey an advantage however short term. It is this “Transient Advantage” created through quick cycle innovation rather than slow cycle innovation that Rita Gunther McGrath would argue in her book The End of Competitive Advantage: How to Keep your Strategy Moving as Fast as Your Business that drives business profitability and success.

In industries where competitive advantages quickly erode such as fast-moving consumer goods, travel agents, electronics vendors, publishers or service industries any change that provides a competitive edge can mean the difference between profit and loss. That being said larger scale innovation and planning can be successful but more often than not the safer option is to innovate your business through quick cycle innovations as they still provide benefits but for less potential loss. Any company looking to grow their business in these industries should be looking at innovation as a driving force for growth and due to the transient nature of those industries their mantra to borrow from the US Marines should be “Improvise, Adapt and Overcome (in a timely manner)” through innovation.

For more specific information regarding creating a transient advantage see next month’s article.

Collaborate With A Partner 

This step’s value for fostering innovation cannot be underestimated. While making your employees think about creative solutions for problems is a good start to innovating processes and business models there is something that is even better. Having your company and employees work collaboratively with other employees or businesses. Collaborating with a partner for innovation may take the form of having an annual meeting of multiple store owners or managers where solving problems and innovating is the focus or it may also be a partnership with another business that can provide a service or expertise that your business currently lacks. Resurg would be an example of a potential business that could help foster innovation and collaboration through our Performance Workgroups Program where we gather non-competing businesses in the same industry to discuss problems and solutions. These Workgroups are content rich and ideas focused and look to provide tangible goals and targets for members to work on over the year.  Even attending industry conferences or networking meetings can provide worthwhile opportunities for collaboration. Don’t be afraid to seek expertise from your industry just choose your partner well.

Understanding Failure and Using It

While this tip may seem very self explanatory and common sense it is integral to the success of any company looking to innovate. Companies that understand failure is an inevitability are better prepared to deal with that fact when it happens. Failure is just the opportunity to re-examine the problem or plan and strengthen it. Failing during the innovation process should not be seen as the end but just the beginning of the process as the best solutions often come from trial, error and thorough testing. Having an environment where an idea’s failure isn’t viewed as a negative will encourage staff and managers to experiment and improve their ideas. Failure shouldn’t be the killer of creativity and innovation but the impetus for it.











10 Tips to Employing Deaf or Blind Individuals

By Dilara Earle and Justine Eltakchi

You may have never met a blind or deaf person before, let alone had a blind or deaf employee, so perhaps you don’t know what to expect or how to go about things a little differently. The thing is, the spectrum is far larger than most realise – or assume – and we may not necessarily have a cane, or always use sign language. More than likely, we’ll have very strong lenses that look like normal glasses or we’re bilingual – in both oral English and sign language. Read more

Federal Budget 2015: A Cautiously Improved Outlook For Small Business

Some journalists are characterising the budget as “the right budget” while others are calling it “confidence boosting” which is primarily true, particularly, if you are a small business owner with an annual revenue under $2,000,000. This budget for small business can be summarised by three things; tax breaks, tax cuts and tax code simplification. That being said, don’t believe the hype some of the media is promoting about this being just what the economy needed, while it is definitely a step in the right direction it is only the first step on the staircase to meaningful improvement. Notable journalist Ross Gittins who is the Sydney Morning Herald’s, Economics Editor summed it up perfectly when characterising Read more