10 Ways to Innovate During a Market DownturnNatalia Persin
Market downturns are an unfortunate part of the economic infrastructure since it often brings with them negative outcomes. Most often, in reaction, or rather, pre-action, many businesses tend to begin hunkering down and stay that way until the slump is over.
Experts, however, understand that market downturns are often only temporary, and as such, businesses should not jump to making huge cuts across the board. While you may have to do some belt-tightening, there are ways that you can innovate that keep your business moving forward.
Wondering how your company can innovate during a market downturn? Read on to find out.
What Exactly is a Market Downturn?
The phrase market downturn often comes with feelings of dread and anxiousness since it often means that you will not be able to bring in the same revenue. This is because this is a situation where consumers are not buying, and businesses are struggling to sell their products.
Most businesses who notice the signs showing that a recession is on its way often shore up their spending practices and try to make do with less. They can predict in these moments that more than ever, consumers will not be spending as much, therefore, the profits will be less.
Because this is the case, many business managers and owners decide to head the losses off at the beginning by cutting costs. This may mean that they decide to cut their advertising budget and other ways they might invest for the good of the company.
What Causes a Market Downturn?
While there is not usually just one cause of a recession, it can typically be pointed in one direction or another. For example, with the recent pandemic, a recession was inevitable since there was not as much consumer spending as was typical.
An economic recession can happen because of a lot of many different factors, which include major worldwide events, a decline in overall consumer spending, manufacturing issues, and more.
Why is Innovation Important During a Market Downturn?
A market downturn typically means that consumers are not spending as much money, and as a result, companies are suffering. This is typically because the job market is not secure, and layoffs are a reality among many people.
For those in the business world, this could mean the beginning of the end, especially if you are a smaller company. Many companies do not survive during lean times for several reasons, but many are because they do not continue to innovate.
When business managers or owners hear the word innovate, they instantly think that it is not a reality since they cannot afford to spend money on things like advertising. However, not all innovations are costly and should be explored nonetheless.
For many companies, innovation is the only thing that keeps them afloat during these lean times since it causes them to think outside the box. There is never a better time to brainstorm new ideas than when the market is in crisis.
10 Ways to Innovate During a Market Downturn
One of the last things companies think about doing during a market downturn is developing new ideas. This is often because they worry about having the funds to make it happen, at least in an effective way.
Keep in mind that innovation does not have to mean that you are spending thousands of dollars on advertising and other marketing plans. This can mean even the smallest changes that can make a huge difference in helping you to survive the crisis at hand.
If your company is interested in learning more about ways you can innovate during a market downturn, keep reading.
1. Lead the Charge
Oftentimes when an economic crisis occurs, employees look to management for how they should react. If a manager or business owner is panicked, the employees often are as well.
This is why during a market downturn, you, as a leader, should lead the charge of innovation. If you show your employees that despite the crisis, your company will continue to make strides toward the future, they often feel much calmer about the situation.
Instead of immediately turning to making cuts and laying off employees, managers should first challenge them to innovate. Holding meetings to brainstorm ways to innovate and outside the box thinking can be very motivating for everyone involved.
2. Create priorities
While during normal business times, priorities can be spread over several areas, this is often not the case during economic downturns. This is because most people are in a survival mindset.
If you take the time to create priorities, then instead of casting a wide net, you can focus on the areas that may make the most sense. This means that your company may only focus on bringing in new customers or on retaining existing customers.
For example, if you have lost customers due to the economic downturn, you may want to expand the target market and find ways to reach new customers. This can be a focus of your marketing efforts and can be done without breaking the bank.
3. Define your objectives
This idea goes right along with the previous one of making priorities, however, it delves a bit deeper into actionable steps. Once you have identified the areas that need to be focused on, you can define the objectives behind them.
Are you trying to attract new customers? Do you want to create a new service or product? Even though the market is in crisis, it does not mean all production ideas have to come to a grinding halt.
Defining your objectives can help you and your team stay focused on what is important and what is a priority. This often results in everyone coming together to create ideas that are focused on only a few things instead of many.
4. Listen to your customers
If you are not sure where to begin with innovation during a market downturn, you should first turn to your existing customers. In most cases, they have certain needs and wants that are not currently being met.
Send out surveys that focus on finding out what it is they need from your company during these lean times. Many great ideas have come from allowing customers to have a voice in what you can do to innovate your company.
5. Find new opportunities to market your business
During a market downturn, often the last thing business owners want to do is spend more money on advertising or other marketing tools. This is because they have most likely taken a hit where profit is concerned.
This is when out-of-the-box thinking should come into play to discover new avenues of marketing that can help. For example, if your business has never gone to social media to market, now may be a great time to go down that road since word of mouth can have many great benefits.
6. Think of internal innovations that can be made
Keep in mind that not all innovations have to be outside of the company and should not be the primary focus. This is because, during an economic downturn, you are often not spending as much money on your marketing efforts.
This is a great time to spend on making internal innovations that can improve the way you and our employees conduct business. This could mean that you brainstorm ideas for keeping employees motivated through incentives and other programs such as wellness.
7. Take smaller risks
The first reaction by many companies when the market takes a nosedive is to begin making cuts to staff and other areas. This does not have to be the primary focus during these times, however.
Taking smaller risks is still taking a risk that can end up being beneficial during both the downturn and in the period after the crisis ends. Small changes can make the biggest difference when you are facing an economic downturn.
8. Turn to technology
Most people know that technology is an important part of the future well-being of any company during this day and time. This is because technology can go a long way to reaching areas that you may not have been able to before.
Even though much of the effective technology can be somewhat pricey, an economic crisis may be the best time to invest. The risk of spending funds on technology can be rewarded by positive outcomes such as new customers or other innovations.
9. Seek new partnerships
It is important to understand that during a market downturn, your company is not likely the only one that is suffering. Businesses all around are most likely experiencing leaner times that can affect their bottom line.
While it is not suggested to reach out to competitors, you can seek out companies that can partner with you to move forward. This can result in more advertising that is done through the partnership that does not cost you anything.
10. Close the gap in innovation systems
A market downturn is a perfect time to assess where your company stands on innovation systems. Are there areas that are less productive than others? If so, it may be a great time to shore them up.
Taking the time to look through your various innovation systems to identify what is working and what is not can be beneficial to your company not only during the crisis but also during the recovery period.
Benefits of Innovating During an Economic Downturn
In addition to innovation being an important part of the strategy when there is an economic crisis, there are several benefits that are often overlooked. This often happens because companies are so focused on the downturn that they forget to look elsewhere for inspiration.
Check out these benefits to why you should innovate during a market downturn:
- The bounce back
In most cases, where there is a downturn, there is often also a time when things begin to bounce back into place. This is when things begin to settle down in the market and businesses begin to see consumers spending more.
Businesses that have been innovating throughout the downturn will often benefit from the bounce back much sooner than other companies. This is because they never stopped thinking about what to do next.
Because these innovative businesses continued to bring in new ideas and ways to reach new customers, they can recover much more quickly. Many businesses have brought in new customers to add to the customer base that may be returning to the market once things bounce back.
- Vulnerable competitor
During a market downturn, many businesses think only about how the crisis will affect them and their bottom line. While doing this is important to plan for the future, it can also take your mind off of what could be.
This means that while your company may be feeling the effects of the downturn, other companies are also feeling it. This is especially true for competitors that are within the same industry.
Innovative companies have to keep their mind on the competition because this is often when competitors are most vulnerable. If you innovate while competitors are making cuts, your company will reap the benefits when the market bounces back.
- Think about the future
Another benefit to innovating during lean times is that it allows you to think about the future and exactly where you want your business to go. While tightening up expenses may be necessary, it can also be a time to think about the future of the company.
Discovering new ways to reach customers and build your business is the key to future success, whether times are lean or not. When companies think about the future, they are often ready to go when the market is out of a crisis.
Developing various innovations can also bring in a sense of camaraderie within the workplace that helps to lift spirits and overall morale. This allows employees to be optimistic about the future of their jobs.
Is Your Company Ready to Innovate?
Now that you know some creative ways you and your team can innovate despite being in a market downturn, it may be time to take action. Finding new ways to do business can be as easy as looking for other companies for inspiration like many hiring managers do when they are looking for inspiration.