Monday, October 06, 2008
Turtles vs. Giraffes
byMany people I know in the business community keep talking about the rough, present-day economic climate that we face in the immediate future. There seems little doubt that companies everywhere are going to have to ask some difficult questions. Unless you are in a business that is relatively immune from our challenging business climate — say perhaps a publisher specializing in economic doom and gloom books – it seems a certainty that growth, or even stability, is not going to come from grabbing an upward trend in consumer or B2B spending.
So how does a company maintain or grow when the economy is in disrepair? Economic downturns seem to create either a turtle or giraffe mentality among businesses, and the turtles, by far, make up the majority.
Turtles try to weather the threat of a downturn by pulling in their necks and hunkering down hoping the protective shell they built in better times will help them through the turmoil. They cut budgets. Cut staff. Cut marketing. Cut R & D.
Giraffes stick their neck out. While their competitors are running scared or laying low, giraffes are out scouting the landscape for opportunities, and they are doing so in an environment that is suddenly devoid of competition. Berkshire Hathaway (Warren Buffett) is a giraffe with his purchase of Goldman stock. While many investors are herding toward the exits, Warren Buffett walks in to take advantage of the emotional detritus on Wall Street. Citigroup also appears to have a giraffe mindset in their offer for Wachovia.
The turtle mindset is predominant in times of uncertainty because there is panic and it is the safe thing to do. Also, if a company’s balance sheet isn’t strong enough, it may be the only thing that can be done. However, for companies that have the mindset, the courage, and a healthy enough balance sheet to take some calculated risks, this can be a time to leapfrog the competition that is much more difficult to do when things are rosy.
Lastly, whether your company adopts a turtle or a giraffe mindset, this is the time to make absolutely certain that your investments in marketing and technology (whatever they might be) are producing the maximum return on your investment. More on that here.
