In a tough economy, don’t let the need for austerity cripple future prosperity
By Leo Valiquette
For those of you who may have missed it, London has been a battlefield between police and tens of thousands of hostile student protesters over the past week as Britain’s coalition government targets higher education with its austerity measures intended to help with economic recovery.
Now, I don’t claim any deep knowledge of British politics, or more than a layman’s understanding of economics, but I couldn’t look at this powder keg situation without thinking that it is a sterling example of focusing too much on a short-term fix at the expense of long-term gain, a trap that can snare the management team of a company as easily as a government in power.
Despite campaign promises to the contrary, both Conservatives and Liberal Democrats in Britain’s coalition government are voting through legislation that will allow university tuition to be as much as tripled and other support programs, such as teaching grants, to be canceled.
While this may put money in government coffers in the near term, I find it difficult to understand how making it more difficult to obtain an education serves the best long-term interests of the British economy, or any industrialized economy. I tend to agree with the general sentiments that Ian Parkinson, president of the Bolton branch of Britain’s National Union of Teachers, expressed in an article last week. Talented youth will be priced out of higher education, making it that much more difficult to find gainful employment in a tight job market, he said. And if the next generation of workers cannot secure well-paying jobs and are saddled with huge student debts, what impact will this have on overall consumer spending?
While the immediate economic pressures cannot be ignored, what happens five, 10 and 15 years from now, as baby boomers retire and shortages of skilled labour in key sectors of the economy become more acute? How can a nation innovate and be competitive on the global stage if its young people can’t afford the education that will prepare them to take up the torch?
It is an approach that attempts to fix an immediate problem without giving sufficient consideration to the future. Janice Calnan, a specialist in organizational change with whom I have worked, asserts that any organization in need of change, regardless of whether it is a government, a publicly traded company, or a startup trying to bring technology to market, must focus on a vision of where it wants to be, rather than on the immediate problems it faces. Focusing on the problems, she says, only begets more problems.
My interpretation of this is that focusing too much on your immediate challenges and how to resolve them will cause you to lose sight of the big picture. It is tactics in the absence, and at the expense, of strategy.
At inmedia, we have seen numerous companies fall into the same trap. When times are tough and key stakeholders, such as shareholders and investors, want to see results to improve fiscal performance, out comes the axe. Unfortunately, PR and marketing activities are often viewed as areas of business that don’t have enough impact on the bottom line and take the first hit.
But when the volume of leads filling your pipeline is in decline, the marketing machine must become that much more aggressive. We have consistently advocated that companies that maintain — or even increase — their marketing presence during a downturn emerge from the downturn stronger than their competitors since they are in a position to springboard into the new opportunities as they arise.
One way to prime the pump and differentiate your brand from competitors is to employ a highly consultative approach, rather than market yourself based on cost and features. In this way, you develop a thorough understanding of the prospect’s pain and the willingness of the prospect to address that pain. They will come to see you as a trusted partner who is eager to serve their best interests. Having established this kind of relationship, where do you think they will turn when they are ready to spend again?
While reducing cash burn and improving cash flow are, of course, paramount when times are tough, austerity measures must be implemented as part of a long-term strategy. Don’t axe those activities that are vital to your ability to act when opportunity comes knocking. Without such vision, your organization may find itself too weak and forgotten by the market to take advantage of the recovery when it comes.
Picture: The executioner’s, or “heading,” axe on display at the Tower of London.
