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Victor Cheng’s Four Rules for Recession-Proofing Your Business

Victor Cheng‘s four rules for recession-proofing a business, based on his analysis of the patterns behind businesses that grew during 12 recessions over the past 136 years:

- an opportunistic focus on growing
- a product or service addressing a problem that persisted, or got worse, during a downturn
- solving that problem in a unique way
- then, when all of the above are in place, aggressive pursuit of growth

The challenge, for many businesses, is their inability to see through the ‘fog of war’ created by shifting customer demand and associated uncertainties. Cheng contends firms therefore need new mechanisms + processes for figuring out what the heck is going on in the marketplace. They need to:

- detect what customers are doing + what they want (the equivalent of x-ray vision glasses)
- shrink decision cycles + in so doing, shrink the costs of making mistakes
- rack up high success rates through the iterative testing enabled by short decision cycles.

When done, and done well, Cheng found the businesses he studied achieved rampant growth during recessions. They became: bigger + more profitable; more aware of their uniqueness; more known in their markets; better able to quickly detect + respond to market conditions; more like VC’s in their willingness to make mistakes in their hunt for home runs (given their new found abilities to contain the cost of their mistakes).

The patterns behind his findings: companies need new customer metrics, delivered in real-time, based on behavior, framed in the context of processes, able to be analyzed in aggregate, with a focus on outcomes, delivered in ways that change the way people think and behave. It’s much easier to say than do, but it can be done. When done, it’s a paradigm-shifting, holistic, approach that’s profit-generating. It can be so, despite the state of the economy.

It all starts with a focus on growth.

—–
The wisdom in these findings is Victor’s. The mistakes, if any, in this summary of his findings are mine.

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2 Responses to Victor Cheng’s Four Rules for Recession-Proofing Your Business

  1. Riposter says:

    I see you can now get the book's content free (HTML or PDF) at his Small Business Bailout page

    Paul

  2. Pingback: The Pulse of a Firm's Learning Triggers the Adaptiveness of Its Practices | Amacus : Informed Innovation in B2B Sales.

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