3 design-based strategies for beating an economic downturn (Part 1)

The economic prospects for 2008 don’t look too promising for the world’s most developed economies. We’re in for a slowdown, or possibly something worse.

When market conditions change, it stands to reason that a change in strategy can make sense. I’ve got 3 design related strategies that will prove useful if there are lean times ahead.

  1. Innovate your way out
  2. Optimise, to squeeze more from what you have
  3. Cut costs by improving the customer experience

There’s quite a lot to each one of them so I’m going to post them one at a time.

Strategy 1: Innovate your way out

If you’re not going to make enough money from what you’re already doing, come up with something new for a new source of revenue.

Apple provides an impressive example. Here’s a quote from the San Francisco Chronicle in 2001, when times were hard for the IT industry and the whole US economy:

“Apple has maintained its workforce at about 11,000 throughout the year. In a meeting with analysts last week, Chief Executive Officer Steve Jobs said: “Almost every single competitor has been doing massive layoffs and retrenching and restructuring, but we’re doing quite the opposite. We’re not laying off boatloads of people. We’re taking those talented people and saying that if we’re going to get out of this, we’re going to get out of it by innovating our way out of it.”

If you have managed to put some cash put by for a rainy day, Steve Job’s approach is a good way to go. But only if you know how to innovate properly. Innovation doesn’t mean throwing money at blue sky projects and hoping for miracles. You can cut out masses of risk by using a structured design process:

  • Contextual research. This isn’t market research with surveys and focus groups. Contextual research is about observing and participating in people’s lives to get the dirty truth about what they need, what they want and how they behave. The innovation often seems obvious when you’ve got the right information.
  • Conceptual thinking. Get your team together. Have lots of ideas. Stay out of the details and explore the new and usual stuff – that’s where inspiration comes from.
  • Evaluation with target users. Make cheap prototypes any which way you can, and watch target customers try it out. Even if the feedback is not what you want to hear, it’s better to face harsh reality in the R&D lab than out in the open market.
  • Iteration. Your first attempt will be shaky. Keep testing and fixing your product’s design until your customers tell you its ready.

Start now, and ride the up-cycle

Depending on your line of business, getting a new product design and launched can take a while. So innovate during the downturn, when talented staff are at their most faithful and affordable, and be in position to ride the up cycle when it comes.

When times are hard, it feels safe to keep a low profile – cut back, don’t take risks. But if your current strategy doesn’t fit the climate, doing nothing might well be riskier. If you’d like more insight into how innovation can help businesses prosper, Bruce Nussbaum has a list of ten books you should read.

Strategy 2 will be: Optimise, to squeeze more from what you have.

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