Running an organization in the current environment is a day-to-day, grind-it-out challenge. It takes focus, persistence and flexibility to manage through it.

At the same time, ensuring long-term success means planning for and adapting to the future. Research has shown repeatedly that companies faring the worst following past recessions were those that adopted a defensive strategy, while those that went on to enjoy sustained performance gains recognized the changes around them and actively pursued the opportunities they presented.

The challenge is understanding the nature of the differences you’ll face. It will be particularly important to anticipate how the traumas of the past year will affect the people your success depends on – your customers, investors and employees. Most have suffered significant losses, and many of the assumptions they based decisions on have been upended. Right now they’re vowing not to repeat the mistakes of the recent past. They are going to reassess the companies they align themselves with, and the considerations that go into their future decisions and actions will not be what they were before.

Your customers – individuals and businesses – have taken a beating from which they will recover slowly, and they’ve learned to defend cash because credit isn’t as safe and easy as it seemed. After the recovery, they will spend less and do it more carefully, choosing value over prestige. Having already changed buying habits in the short term, they’ll reassess brands and merchants before their spending ramps back up. Plan to update and sharpen your value proposition and overall positioning – what worked before may be off-key now. Help your customers understand the practical benefits of your products or services and give them new ideas that will help them meet new goals. With trust in business at historic lows, it’s also important to invest in relationships and building credibility as a partner.

Investors have lost trillions, seen the investment banking industry collapse and watched historically safe investments evaporate. When sidelined money starts returning to the market, investors will be reassessing companies with new, more risk-averse eyes. It will be more important than ever to make a crisp, current and compelling case for your company, to tell a story that makes it clear how your strategy meshes with emerging market dynamics. There will be a premium on companies that reduce the investor’s sense of risk by providing a thorough and regular flow of information and insight. Further advantage will go to companies that market themselves directly to investors, either without intermediaries or through one of the newly emerging channels to the buy-side.

And your employees? If they haven’t lost a job or had their pay cut, they have friends or family who have. They’ve also pushed their retirement date back and are afraid and insecure like workers haven’t been for a generation. With employment cut to the bone at most companies, the inevitable upswing is going to reignite the war for talent and create massive opportunities for job change. Companies that will fare best have shared the burden of the downturn and are working hard to earn their employees’ trust now. Communicate constantly, whether you have significant updates or not. Be transparent about the company’s conditions and prospects and how you’re making decisions. Ask for input, listen carefully and respond to employees’ concerns and ideas. Finally, engage them early in marketing the organization as a future employment opportunity to their friends and business associates.

In each of the next three weeks, we’ll dig deeper into the fundamental changes and anticipated impacts and will make specific recommendations for altering your own company’s interaction with your investors, customers and employees. The following week, we’ll conclude with a look at the drastically shifting landscape within the news media that still exert a strong influence on all of them.

In the meantime, let us know how you anticipate your own company’s relationships evolving and what you’re

planning to do to prepare for it. We’ll share what we learn through my new blog, Communication Matters,

as we go along.

Scott ChaikinChairman and CEO, Dix & Eaton

Dix & Eaton

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Looking Beyond the Downturn: Ready for Recovery

May 2009

emerging trends