Up the downturn: How to survive in tough economic times

Guest post: Christopher Lochhead, the former chief marketing officer at Scient and Mercury, offers his advice on how companies can do more than pray for survival in a prolonged economic downturn.

It's easy to be great when things are going great. The real test of leadership is who are you when things are tough. Leaders take market share in bad times, and losers lose share, money, and market cap.

We seem to be heading into a multi-quarter (or maybe longer) downturn. Planning for a long downturn is the right approach, even if you think this is just a blip.

Strategy 1: Don't cut the budget

The first thing scared executives do in bad times is cut spending. It's easy. But often completely wrong. J. Paul Getty said, "Buy when everyone is selling. And hold until everyone is buying."

Downturns are time to invest in:

New technology

New marketing campaigns

New people (hire the best salespeople, product developers, etc. from your competitors, especially those doing layoffs and missing their quarterly numbers)

New products

New companies (buy or start some)

Strategy 2: If you have to cut, DO IT FAST. DO IT ONCE.

If your business is truly in the crapper, then you may be forced to cut. Most companies wait too long and don't cut deeply enough. Tear off the Band-Aid.

If you have data have that is telling you things are really bad, assume it is even worse. Don't get caught thinking it is just one bad quarter. There is no such thing. Cut at least 10 percent more than your CFO tells you to.

Remember there is nothing worse for morale than doing multiple layoffs. Never mind the bad PR and the multiple whacks your stock will take.

Strategy 3: Put your best people on your biggest project.

Legendary people produce legendary results. During a downturn take your best executive, regardless of their background, and put them in charge of the big:

New technology

New marketing campaigns

New hires

New product development

New companies

Downturns are great opportunities for change and growth. Good luck and knock 'em alive.

Christopher Lochhead

After almost twenty years in business and being the marketing chief at three public companies, Christopher Lochhead retired at 38. Now, he serves on a few boards and is a part-time strategy advisor. Every year he gives a handful of speeches, and from time to time writes something. Check out www.lochhead.com.