In the current economic environment almost every business and individual is hunkered down focused on a day to day strategy of survival.  This is a natural reaction to uncertainty, but some of the best opportunities for competitive advantage result from these ‘near death experiences’.  How does the old line go?  ” What does not kill you will make you stronger!”  I suggest a more productive use of time and motivated resources today is to focus NOT on today but on how you position your products and company for the coming recovery.

There are several reasons this makes sense.  First, your competitors are in the same boat you are–uncertain and hunkered down—but are you smarter than they are?  Do you know the strengths and weaknesses of their products?  Their customer relationships?  There’s market position?  So how can you use this time of retooling to position your products to overtake the competition as the markets recover.  Time is never an ally in these things.  While the economists tells us recovery will likely start in the 2H of 2009 it probably won’t feel like it until 1H of 2010.  So maybe you have six to twelve months to get your competitive act together.  How will you spend it?

Here are my suggested New Year’s Resolutions for you:

1. Talk to your customers honestly. Understand their business situation and look for ways to partner with them to reinforce your working relationship.  Ask your customers how they use your products. What do they like and not like?  If you use this time to retool it may as well be devoted to improvements your customers want.
2. Give your product some WOW! Are there quick fixes you can make that improve satisfaction?  Get feedback about how your products stack up to competitors and enlist your customers in the retooling process by helping you prioritize what improvements you make.  It is easier to keep a customer than get a new one–so enlist yours in a community of users that looks out for each other during the rough times.
3. Create New Products. I know this sounds counter intuitive in this ugly economy, but the downtime is your best opportunity to take those ideas for new products and productize all that intellectual property you are sitting on.  By blending your capabilities with the business needs your customers are describing, can you create new products that will blow the competition away as the market improves?
4. Right size the business, don’t neuter it. Cutbacks in staffing and investment are necessary in these times.  But be careful that you don’t undermine your core competencies and thus prevent the retooling and refocus on the recovery ahead.  Push your best people in front of clients.  Leverage your good relationships for wallet share of services.  Offer to partner if a customer can help you speed your time to market for new product ideas by being a beta tester and product collaborator.
5. Champion your company’s future not its problems.  Your people want to know where your company is going and whether they have a future in it.  Now is the time to be a true evangelist.  Sharpen your message about the product or company vision and preach the gospel often. You want these folks remaining to quickly move beyond grieving to be motivated about taking names and kicking butt in the recovery ahead.

As we watch the spectacle of the still proud but now impoverished US auto industry come begging to Congress for a rescue plan “just like the banks got”, two thoughts came to mind. First, great—now everyone is getting in line for a bailout instead of helping themselves turn the corner. And second, if we’re going to throw this much money at stabilizing our economy does anyone in Washington care about getting our money’s worth from this when we look back on it 10 years from now?

The pressure on President Obama to come to the rescue on January 20^th is enormous. At this point in the year-long (so far) recession the risks mostly seem on the downside. That is it is likely to get worse and feel worse in the near term before it starts getting better. Economists already tell us this will be a deep and painful recession that will last 24 months or so—or about 6 months longer than those of the mid 70’s and early 80’s.

The Bush Administration and the Fed have gone to unprecedented efforts to pump liquidity into the financial system but the predictable response to such uncertainty has been for lenders to take the money but not increase lending for fear of more liquidity problems ahead. Of course, this just makes things worse as the credit crunch ripples through the economy. The first stimulus package of $600 checks flushed a lot of money into the economy but didn’t do much stimulating as people put the check in savings or paid bills.

Pressure is building for another stimulus package bigger than the first, now from President Obama and the Democrat-controlled Congress eager to show the new team hard at work to “fix the economy.” Expect them to throw money at it.  Estimates of the size of this stimulus are $500 to $900 billion—without the earmarks for those waiting in line for bailout. Expect a mix of infrastructure spending, help for state and local governments, unemployment insurance extensions, and earmarks for energy efficiency and a thousand other pet causes.

Infrastructure spending does create jobs and we certainly need it, but it is slow to stimulate the economy and a significant percentage of the money spent flows into the global economy for the products and commodities the US now mostly imports. The good news is that infrastructure actually built will begin to come on line about 2010 when the economy is coming visibly out of this mess and begins to grow again. And grow it must because the near term deficit will be staggering.

If we use the stimulus and bailout efforts to retool, to improve efficiency and reduce further our energy intensity, to reform poor contracts, bad financial structures, replace failed programs and policies and focus on improving the US global competitive position for the long term—it still won’t be worth the pain of such a deep recession—but what does not kill us will certainly make us stronger.

The current economic crisis gives us plenty to worry about. Markets despise uncertainty and yet seem to find ways to profit from exploiting it. We are in the middle of a deep recession with forecast estimates of recovery stretching from early to mid 2010 depending upon our mistakes and luck.

But for many, volatility and uncertainty can be a wonderful thing since every strategy that every client put together is now back on the table as facts on the ground, market conditions, and the opportunities and risks they present have changed. As we look for insight to see through this fog of uncertainty, most know they must refresh their strategies refocused on the future. In so doing, we regain confidence by executing around a focus on the future when we need it most.

What has not changed is the power of scenario analysis as a tool for rehearsing the future and managing uncertainty. Only a few months ago we were debating how high oil prices might go and the implications of such a spike. In doing so, we fell into the most common strategy trap of all—assuming that current conditions will be projected into the future as they are now. Now as we experience falling oil prices and a tanking economy we are talking about the broken fragmented future ahead. But the same lesson holds true on the correction side of any business cycle.

The truth is we have just experienced the amazing power of “what if” in living, frightful shock and awe. Both high oil prices and low oil prices offers an alternative view of the future that is sharp, distinct and fraught with possibilities and risk.

So what should we do now? Think! Think broadly about the opportunities and risks we face. Think about how these changing economic and market conditions are affecting competitors. Think about the shifting balance of power, market share, capacity for change and global positioning and the opportunities and risks offered.

Think about strategies that perform well across several alternative scenarios.

Thankfully, time is not an ally. If the economic forecasters are correct about the length and depth of the recession we have a narrow window of opportunity to get our acts together to assess the opportunity in this carnage. For those on the sidelined or in trouble this seems like an eternity.  But for those adapting their business plans to re-position their business for a competitive future in the recovery ahead—immediate action is needed to use this time wisely. Even the process of considering the future is liberating for those who find themselves like deer in the headlights. Strategic thinking that is focused on positioning for the future is like a flashlight peering into the darkness.