It is interesting to live through the downturn and watch the different business reactions. This weekend I had a conversation with a CEO of a billion dollar company and he had just banned all ‘non-customer facing’ travel (a common step). The cascading impact or ‘snowball’ effect of companies tightening their belts is not hard to fathom:

• Company puts in tight travel controls reducing airline, hotel, car rental and restaurant expenditures
• These businesses buy less consumable product to support their business (oil, paper, sundries, etc.)
• Commodity or primary industries see their businesses reduce revenue resulting in their tightening belts

A big circle of cascading impact. In the US, a high profile example is Circuit City and their recent announcement to close 155 stores due to poor consumer demand. A oft quoted McGraw-Hill article about recessions and marketing spend make the case for not cutting in key areas – one being advertising:

In a study of U.S. recessions, McGraw-Hill Research analyzed 600 companies from 1980-1985. The results showed that business-to-business Firms that Maintained or Increased their Advertising Expenditures during the 1981-1982 recession Averaged Significantly Higher Sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were Aggressive Recession Advertisers had Risen 256% over those that didn’t keep up their advertising.

It would appear that for companies with deep pockets, the downturn represents opportunity. They just need to seize the opportunity ….

On the broader topic of leading through a downturn, a Marcus Buckingham quote was sent to me this week which summarizes it well, "What sets real leaders apart is their ability to turn people’s legitimate anxiety about the future into confidence. They do that by showing people vividly what the future is going to look like.”