In tough economic times, attitude and the courage of conviction are critical

*This content is brought to you by Thomas Oosthuizen

I quote from the 21/6 The Drum magazine, “For his Cannes Lions keynote, P&G’s brand chief Marc Pritchard urged marketers to ‘double down’ on creativity and innovation to drive brand growth against crippling economic headwinds”.

“A noble challenge’, but one that S4 Capital founder Sir Martin Sorrell ‘doubts the market will respond favourably to”.

Pritchard, the brand chief of P&G, with an annual marketing budget of $8.2bn, said it was the time to convince CEOs and finance chiefs that investment in marketing is vital to growth.

There is of course a risk in this, yet with experience and insight, we can mitigate this risk, against the upsides of growth.

When economic times are tough, an executive can either do nothing or take control and build for the future. Most companies will wax and wane with the tides. Few will counter the trend deliberately with a clear plan.

It is now accepted by boards for executives to state that prevailing market trends are counter to growth.

This is not good enough. If we cannot beat the odds, we should not have work. Harsh, but inevitable, in the world of today.

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With the data available today, algorithms can predict the future success of a company with far greater accuracy than humans. In pure numeric terms, it can assess thousands of variables, far more than any human can. This means the role of any executive must to go beyond that – it needs to introduce change, disruption, new competences, and new variables that counter the predicted trend.

If we do not do this, computers will run our companies better than we can.

There are historic databases that enabled this i.e., PIMS, which is, “a collection of statistically documented experiences drawn from thousands of businesses, designed to help understand what kinds of strategies (e.g., quality, pricing, vertical integration, innovation, advertising) work best in what kinds of business environments”.

Today, we have far more data in companies than ever before. Hence far more potential insight than ever before.

Surveys on how companies respond to and build value during economic declines, indicate the equity-value benefit of thinking different. McKinsey surveys after 2008, saw a 30% value increment for innovative companies.

Furthermore, when markets decline, lagging brands are impacted more. Hence, many companies are in worse shape after a market decline.

In my life of working with many companies, in many parts of the world, I realised attitude is everything. Executives with the right attitude – an attitude that balances growth with being frugal – prevail and ensure that any downturn does not persist. Emirates has always believed in building for the future, even though they are in an industry that is highly dependent upon market conditions and competitors.

I find that some executives always look at the future with an opportunistic eye, they may stumble and fall, but they always get up and try again. They have the confidence that their experience counts. Working with such people is inspiring.  

This attitude-to-life is also echoed by empirical evidence from neuroscience, as validated by scholars like Dr Joe Dispenza. They state that an attitude of “can-do” and taking control, will make people prevail against the odds.

This not only applies to business. It applies to life.

I know when I do not drive business, I will not have work. It is a hard lesson I learnt, having worked for myself for 25 years. As one old professor told me, “if you do not feel inspired, sit on your bum and inspiration will come!”

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About four years ago, a few entrepreneurs from Durban wanted to talk about a future where their business was brand-based. They had the courage of their conviction and established a business that survived through COVID and created crumbed chicken brands with strong market traction. Since, they have extended into brands like Chef Mo, Chef’s Select, Classic Chicken and ChikChik. Soon, the market for these products expanded as new entrants by other companies drove market growth. If these guys waited for the day that SA has high growth rates, they would have missed an opportunity. Once there is an upturn, their growth will just accelerate.

I call this the “multiplier-effect “of opportunity.

OUTsurance did not aim to just become the leader in direct insurance, it became a leader in its market by focusing upon the market at large. It was not constrained by trends or customer habit.

The Monster energy drink was not constrained by the dominance of Red Bull. It knew a “counter-attack” could work and it did.

Coca-Cola, one of the oldest companies, never stops innovating, thereby growing their market (as their market share in many markets is high, they often need to push volume growth).

South Africa launched several new brands during the decline of the last years, Rain, Discovery Bank, Bank Zero, Curro, and BrightRock. Even in industries where there was “low-growth”, some companies excelled, i.e., Capitec and Hollard.

They are also all differentiated.

These companies have one more thing in common, an executive team that “can-do”. They are not blind to market turbulence; they work around it.

The gin revolution was against a global decline in gin sales. Today the trend has been reversed. The market responds to new thinking and innovation.

Starbucks changed the decline in coffee sales in the US.

Dyson did not enter a vacuum cleaner market with a high growth rate, it entered a market where its design appeal was novel and different. It enabled it a higher margin and growth. Good product design drives markets, just compare Apple.

I have been very fortunate to work with many companies like this in my life – we can beat the odds. That is what executives are paid to do, not to wait for the “good-times” to return.

Sorrel, in the Cannes talk above, states, “…two things happen (during a decline): you first have to find the [territories] where there’s growth and, second, you have to accelerate digital transformation and efficiency…”.

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Companies with the right attitude, identify segments or markets where growth is easier to achieve, i.e., the UAE is a market that wants innovation, creativity and where consumers spend money on desirable products. Geographically it is a contained market which makes implementation easier. Hence, it is an easier market than the UK to drive hard currency revenue. Similarly, that applies to markets like Sweden, the Netherlands and Denmark.

The questions we ask are important. Growth may come from what we don’t know.

In almost any market, a strong challenger brand can succeed. To launch a “me-to” brand, will not work. It may work when the market grows fast, it will not work when it needs to gain market share from established rivals during an economic decline.

A customer needs to be able to answer, “why x?”

We as executives need to be fearless when the chips are down. The worst we can do is to do nothing, or to cut expenses in areas that will undermine an economic upswing. This can also only be done if a company knows where it makes its money and what resources support that.

The easiest way to grow, is often into ancillary markets or segments. Yet, then we need to think, test, and do.

With digital marketing, all this has become easier. From online product tests to small test-markets, digital technology enables an array of new opportunities. A company does not have to risk its lunch to innovate.

The question is, “do you have the guts to go against the grain?”

If not, there may be a long winter ahead.

I cannot afford to wait, that much I know.

For more information on Dr Thomas Brand, click here. 

Read also:

• Why must customers buy your brand? Will they still buy brands in future?
• People are the real inhibitors of change amidst digital disruptors
• True leadership demands the spirit of a pioneer