Wall Street Journal Briefing: Preparing for the Recovery
I recently spoke with MIT Sloan Management Review senior editor Martha E. Mangelsdorf on the topic of innovation, the recession, and preparing for the future.
Excerpts appear in this Wall Street Journal Executive Briefing.
Here are a few takeaways:
- As a response to the economic crisis, many companies focus almost exclusively on the present, focusing on cutting costs and neglecting the future.
- Expansion always follows recession—and the expansion lasts longer and is more robust than the recession.
- A recession fundamentally changes the competitive landscape in most industries. There are new winners and new losers.
- The best time to prepare for expansion is during a recession, because during a recession, assets are cheaper and talent is cheaper and more available.
- In normal times, I say spend about 50% of company resources on the core business and about 50% on adjacency and breakout innovation—perhaps 35% on adjacency innovation and maybe 15% on breakout innovation. But during times like this, the percentages shift. I would shift to spending more like 70% on the core business and perhaps 25% on adjacency innovations—and maybe 5% on really breakout innovation. Why? Because companies cannot afford to make a serious mistake during this recession.
- There’s a big difference between planning for the future and preparing for it. Preparing for the future simply involves asking what the broad trends are. If people in your organization can at least have a shared perspective on some of the big, nonlinear shifts that may happen. Prepare for 2025 in 2009.