"By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope."
Those were the words President Obama used to describe the economic situation earlier this week, and for many business leaders they created more questions than they answered. How big of a glimmer does one need, for example, to be persuaded to loosen the purse strings? How close to the edge of the woods does one need to be to ease up on layoffs and plan for a future in which business is once again about growth and innovation, rather than mere survival?
It likely didn't take a speech from the President to raise those questions, however; most business leaders have been dealing with a version of them since before the current recession had even been officially acknowledged.
Even so, the speech may have given fresh impetus to a special class of business leader—those looking at the recession as an opportunity in which to strengthen their company.
An article on the financial page of this week's issue of The New Yorkermakes the point that previous economic downturns have seen paradigm shifts in companies at the top and bottom of their respective sectors. Nothing surprising there, but what may raise an eyebrow is that many of the firms that have risen to prominence in troubled times have been the ones that continued to spend on things like advertising, R&D, and acquisitions while their competitors took the seemingly more prudent course of reining in spending and waiting out the downturn. Citing examples such as Kellogg's, which came to the fore during the Great Depression, and Apple, which introduced the iPod during the last recession, author James Surowiecki makes a compelling case for firms taking risks at times when others won't, and propelling them to greatness in the process.
Perhaps the "glimmers" that President Obama is seeing have something to do with that, as there certainly are firms out there making moves to position themselves to come out of the recession stronger in relation to their rivals than when they entered it.
For proof, witness the titanic mergers taking place in Big Pharma, or EBay's recently-announced $1.2 billion acquisition of Gmarket—a deal that emerged hot on the heels of its stated intention to spin-off Skype. Even IBM's recent dalliance with Sun Microsystems—albeit a failed one—shows that some in the business community are thinking beyond the current bottom-line obsessions to the opportunities that lie beyond the current difficulties.
According to Surowiecki's article, it's smaller firms rather than industry leaders that potentially have most to gain at times like these, with the writer noting that most firms "hunker down, cut spending, and wait for good times to return." That creates an opportunity, he says, as "when everyone is advertising, for instance, it's hard to separate yourself from the pack; when ads are scarcer, the returns on investment seem to rise."
It takes a strong constitution for any leader to commit their firm to increased spending at a time like this. But bearing the examples of Apple and Kellogg's in mind, it's clear that there's also great reward to be reaped—and the time to start preparing for that is now.
Phil Stott is a staff writer at Vault.com in New York. Originally from Scotland, he has also lived and worked in Japan, South Korea and Eastern Europe. He holds an MA in English Literature and Modern History, and a Masters in Research in Civil Engineering, both from the University of Dundee.
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