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Predicting/Preparing for Economic Transitions 35

The way in which a business or organization responds
during an economic downturn sets their customer paths for
future revenues. Many businesses experience the knee-jerk
temptation to “batten down the hatches” during economic
hard times. While this is a reality in many different cost di-
mensions of the business, doing this in a pundit Alan’s
fashion will result in significant revenue loss in the future.
McGraw-Hill conducted a study which revealed that busi-
nesses that maintained their marketing efforts during the
1980–83 recession increased sales by 32% during the down-
turn and by 275% within two years of the economy’s re-
covery. Conversely, businesses that cut back on their
marketing lost 12% of sales during the economic downturn,
and were only able to regain 19% in the same two-year
post-recovery period.

“We sacrificed too much top-line investment for a bottom-
line focus” Balance the focus between the top line and
bottom line of the P&L. It is key during tough economic
times to maintain a balanced perspective on not only the
bottom line but the top line of the P&L. While it is critical
to focus on the bottom line of costs during tough economic
times, it is equally or maybe even more important to think
about new and innovative ways to grow the top line. The
talent: maintain the top line during economic contractions
with an eye to how that will grow the top line in recoveries
and onto prosperity.

“We shut down our organization’s innovation by too much
focus on cost-cutting” Keep top-line revenue innovation
alive in tough times with an eye for better times. The natural
inclination in tough times is to squelch top-line revenue
innovation ideas with a bias toward a bottom-line focus.
Businesses that follow this path will pay the top-line revenue
price in good times. One wise, seasoned retailer sat down
and interviewed with a prospective employee and asked him
a strategic question: “What type of business person are you?