Technology giants Meta, Stripe and Lyft are laying off thousands. The Ukraine war is keeping gas prices near record highs and stoking geopolitical uncertainty. The Federal Reserve has jacked up interest rates to their highest level since 2008. Economists are predicting a U.S. recession within the next year.
This is no time to be launching new initiatives, right?
Wrong. Recessions are a particularly great time to build new things — if managers and their company leadership can overcome their paralyzing fear.
While your competitors are responding to uncertainty by a well-worn recession playbook — cut back on new investment and hiring, reduce P&L duplications to bring down costs, and lock down any non-core spending – this is your opportunity to use their fear against them.
It’s human nature to get emotionally attached to what’s happening in the present rather than the future, hence the scary feeling that there’s no end to the bad news. Our brains are wired to respond to threats by playing it safe.
Yet history shows us that many successful leaders and companies are staunchly future-focused, even during tumult — especially during tumult. They overcome their fear and bring others along with their visions for the next big thing. They have perspective, such as the fact that most recessions last less than a year and have helped birth some of the world’s most successful enterprises.
Microsoft MSFT, +6.79%, FedEx FDX, +5.85%, Airbnb ABNB, +5.85% and Uber UBER, +8.76% are just a few examples of companies that were founded during bleak economic times. True innovation leaders such as Elon Musk of Tesla TSLA, +7.42% create such outsized success precisely because they can look past the messy present and laser focus on the future.
Spurning innovation may instinctively seem like the safe play during rough times, but it’s actually a risky strategy. Managers and companies that stand still during the recession will be spinning their wheels when growth returns, watching their more innovative peers shoot past them.
How can you become more future focused?
1. Be ruthless about pushing for change. Some defensive measures, such as rationalizing costs, are warranted. But don’t confuse getting rid of inefficiencies with killing off future growth opportunities – initiatives that have the potential to change the company, even its industry. Naysayers may shake their heads, stockholders may initially be dubious. Forge ahead anyway.
Ford F, +7.44%, for example, has done an excellent job of pivoting its massive internal combustion engine business model to one focused on electric vehicles. It’s stopped selling most cars, turning its attention to building EV technology internally, as well as developing a robust supply chain for other components. Yet Ford, like all automobile manufacturers, found the greatest pushback to come from their own dealers. Why? Auto dealers make most of their money from servicing cars, not selling them. And electric vehicles don’t break down nearly as much as their gas-guzzling predecessors.
2. People focused on the present are wired to hate change — win them over. The dealer outcry goes to show how innovation champions need more than ideas. They also need persuasive skills to bring — or drag — others along. In any organization, you’ll find people have vested interests in maintaining the status quo and resisting change. Studies have found many associate the concepts of “creativity” and “innovation” with “nausea” and “vomit”, even if they outwardly support transformation.
So it’s vital to have a two-pronged strategy for winning over the doubters. First, start by articulating the vision. Rearticulate it as much as needed. People need to be reminded they are part of something bigger that’s worth making some sacrifices for in the shorter term.
The next step is to try out the ideas through intensive experimentation. PowerPoint presentations aren’t enough. A concept needs to be battle-tested in real-world conditions to prove its worth and to strengthen the case that it is really a game-changer.
3. Whatever you do, don’t wait. The most innovative companies — your competitors — are right now working on launching new innovations even as we stare into the barrel of a recession. Just think of the huge opportunities that emerged from the brief Covid-induced recession in 2020, driven by the shift to teleworking and online shopping. Transformations will occur on the other side of this recession, whether related to the continued shift toward personalized food, the demise of cash, the changing office or other big trends.
Being innovative at this time won’t be easy and you will feel that fear. Don’t worry — it’s just your brain trying to make you safe.
Dev Patnaik is co-founder and CEO of strategy and innovation firm Jump Associates. He has no business relationships with any companies mentioned.