Business leaders too often react to a recession by cutting costs, stopping spending, discontinuing new product launches — and waiting.  The theory is that the market is bad, so it's an uphill slog to try doing anything new.  Supposedly, a smart leader waits until things improve before spending again. 

An example of this thinking is at GM.  The retired executive brought back to head marketing, Bob Lutz, supports killing off the Pontiac brand to make GM smaller and leaner.  But he realized this week that there was a car in the Pontiac lineup called the G8 which was selling pretty good.  Designed in Autralia, this 2 passenger sports car had sales up 56% from last year – something no other GM car could boast.  So Lutz said he'd find a way to keep making and selling the car.  But now, Lutz has reversed position and in "GM's Lutz Makes another U-Turn" from the Wall Street Journal he says "upon further review and careful study, we simply cannot make a business
case for such a program. Not in today's market, in this economy, and
with fuel regulations what they are and will be." In other words, we can interpret these comments as "we at GM want to save money and try selling the cars we've got – whether you like them or not – rather than move forward with a car you may really want."  This kind of thinking is not the way to grow out of a recession.

On the other hand, we have Tesla Motors.  The company Mr. Lutz laughed at a few months ago claiming it wasn't a serious car company.  Tesla has one car for sale today, a superfast 2 seater sports car that is 100% electric.  Today in Marketing Daily we read "Tesla Plugs Dealership into Manhanttan's Chelsea".  Tesla is selling 100% of its production, and it is supporting that by opening a new, stylish dealership in Manhattan.  While GM is eliminating a hot seller, Tesla continues to promote theirs.  While GM closes dealerships, Tesla opens a new one.  Tesla is making a car, albeit a low production model, that people want.  It is going where the market is shifting.  That's how you get out of a recession, you give customers what they want. 

I met another great example last week at Morgan Aircraft.  You've never heard of this company unless you've been to an air show.  While the makers of private aircraft like Cessna and Gulfstream are shutting down production, Morgan has raised millions of dollars while developing a new aircraft  slated for market introduction in about 4 years (flying in tests today, still needing FAA approval).  But the Morgan isn't a typical plane as you know it – what's called a "fixed wing" aircraft.  The Morgan is able to take off vertically, like a helicopter, then fly horizontally like a plane.  This dramatically improves the use of a plane by eliminating airport runways, and thus the commuting requirements to/from airports for business flyers.  Morgan has identified the early users of their aircraft, which will allow successful introduction as it expands the market for its technology.  Morgan brings to market something new, something different, something that gives buyers a reason to buy – better economics and improved ease of use.  That's how you raise money and build a business in a recession – by offering something new that creates demand for your product.

Perhaps even Starbucks' new leadership is getting the idea.  After months of doing "the wrong stuff" (as reported in this blog), The Seattle Times reports "Starbucks Tests New Name for Stores."  Only this is way beyond a name test.  The new stores have a different menu, including liquor, a different ambiance, and even different coffee making equipment.  This is something new.  Will it matter?  We don't yet know, because (a) we haven't heard of any Disruptions in Starbucks to make us think this is a really serious initiative that could displace the earlier commitment to "coffee", (b) we don't know how much permission the developers of the new idea have to really do something new – like maybe not sell coffee at all, and (c) we don't know if there are any significant resources committed to the project.  So it's too early to know if this is really White Space.  But at least it's not another flavor of coffee or repackaging of coffee or more of the same – which was killing Starbucks.  If the leadership really starts creating some White Space projects to develop new stores then even the beleagured Starbucks has the opportunity to grow itself out of this recession.

Recessions dramatically bring home market shifts.  Those clinging to old Success Formulas are exposed as very weak (like GM) and are targets for failure.  Those who reach out to provide solutions to new market demands can not only grow during the recession, but upstage older competitors.  They can change market competitiveness to favor themselves, and grow dramatically by overtaking the Locked-in competition.  Recessions end when businesses launch new products and services that meet the needs of a shifted market.  So if you're waiting on the recession to end – just keep on waiting.  When it ends you just might find you are so out of the market you aren't competitive any longer.  Instead, get with moving toward the new market needs today so you strengthen your business and become a leader in the near future.