Turning a Down Economy into Opportunity
by Matthew Parente

One of the biggest areas of concern for companies is the effect of external forces on their business. While each individual company has no control over such things as the economy, the weather, and what the competition does, these things have a huge effect on individual businesses. There's a fairly simple course of action to take control of the business and insulate the organization from outside forces, yet many companies, even Fortune 500 companies, don't fully appreciate its value. This simple tool? Effective planning.

Too often, business and marketing plans are looked at as too rigid or ineffective. In fact, it's not the plan itself that is at fault but the processes that went into creating them. In a time when certain external forces, such as the economy, worsen and planning becomes even more important, many companies decide to "wing it" and take immediate action to save the organization. In the case of a bad economy, most organizations will be trying to regain lost revenue through controlling the traditional 4 Ps of marketing (product, placement, price, and promotion). This will be successful for some companies, but most will not see an appreciable increase in revenue through these means because, as the saying goes, there's no getting blood from a turnip.

However, organizations that look to solve more substantive issues will likely have more substantive results. In many instances, the specific solution is to improve the value network (some call it the value chain). The value network is usually taken for granted (at best) or flat-out neglected ― and changes here can result in profitable, innovative solutions for both the organization and its customers.

A company's value network is the collection of business functions, systems, and processes that are designed to deliver value to the customer. The value network, as a critical mechanism for innovation, also becomes a key part of the business strategy because it creates systems that will:

• Create a natural barrier to entry for competitors
• Make the business more competitive in the marketplace
• Ensure profits in good economies
• Insulate the company from losses in a bad economy

As mentioned earlier, many companies will look to marketing's traditional 4 Ps to navigate their way through hard times. While the 4 Ps are a useful tool, it frequently does not go far enough. Creating a value network will serve much the same basic function as the 4 Ps, but takes it several steps further. The 4 Ps can be fairly easy to replicate, however replicating systems and processes are much more complex. As such, the value network becomes intertwined with the overall corporate strategy.

Strategy is a combination of all the things that you do. For example, for Wal-Mart or Southwest Airlines to compete on price, all of their processes need to work together. All the little details must exist to support their driving goal, which is to provide the lowest prices for their customers. The features of these companies, part of their 4 Ps ― the warehouses, the airplanes, etc. ― are fairly easy to replicate. Yet, the way their processes, capabilities, and personnel are integrated and executed is what makes each of these companies unique and successful, even in the worst of economic environments.

With the external environment adversely affecting the business, and by looking inward and reusing existing resources, organizations have a much better chance at implementing a profitable, innovative value network. Why? Because the external environment provides the necessary motivation to change. It also provides a well-defined boundary of what the problem area is, which is important, since innovation cannot happen without a well-defined problem space. Furthermore, innovation isn't just about creating "new things." More than that, it is about creating new value. From this vantage point, the best example of an innovative solution is sliced bread: two existing resources (bread and slicing) combined to create new value.

So take this economic news as a signal for opportunity, not despair. These types of opportunities do not happen all the time, and the ones that are able to take advantage of the situation are the ones that are going to have the more profitable, long-term success.

About the Author's Company

Aperio Marketing offers organizations a better, more efficient way to build competencies for executing strategic growth. Their pragmatic approach to creating processes that clients can follow make Aperio Marketing a first choice among small- and mid-sized businesses that are devoting their energies to development and trusting Aperio Marketing with their growth.

For more information on how you can discover the benefits of resourceful innovation, visit them online: Aperio Marketing.