Invest In Agility During Downturns

Circa 2000 I was co-founder of a tech company that had grown from 2 to 200 people in five years. When the Internet bubble burst, my company went into survival mode, including three rounds of layoffs. I was even a victim of the second round—yes me, a co-founder. But I was supportive of that: my role had become an overhead position and the company needed to narrow its spend. The company survived and was sold in 2006 for $12M (or $16M if you include $4M cash in the bank).

So I get it when companies need to tighten up on their spend during a recession. But some things you should invest more in at that time. Tim Cooke famously said that Apple invests more during an economic downturn. Well, they can—they have the cash needed to get them through any recession. But there are some things that if you allow them to whither, then when you come out of the recession, you will be a “dead man walking”: your company will be headed inexorably toward failure.

When a recession ends, things do not always go back to what they were before.

One of those things is agility. Agility makes you lean and responsive. When a recession ends, things do not always go back to what they were before: things are different. When a recession ends, your cash flow resumes and you are in a position to pivot, but if you are not agile, then you cannot do that: you are locked into your old strategies.

A recession is the time to invest in improving how you do things, so that when the recession ends, you can quickly see how things ended up and pivot. A recession is a time to invest in improving your agility, your quality, and your connectedness with your customers. It’s a time to sharpen your swords and limber your muscles. It’s a time to get ready to spring.

Unless you are operating so on the edge that you cannot invest in anything at all, these are the things that you should be investing in: things that enable you to quickly seize the changes brought about by the recession—before your competition does.