It may be an issue of the chicken and the egg – which comes first. For Smith, he says that in good times “a rising tide lifts all boats.” While I certainly agree with that, and have for years said that money covers a multitude of mistakes, I don’t agree that it is innovation during a recession that separates out the efficient from the rest of the pack. Take for example the good people at your local grocery store or the corner breakfast café that is always packed. These people are not huge innovators or efficiency mongers. On the contrary, there is likely a lot they could be doing better according to Smith’s model. But what separates them out is the intimate value they bring to their customers and relationships.
Perhaps if you’re big and bloated, then innovation and efficiency certainly helps to cut costs and find savings while consumers pull back on their spending. But that’s isn’t true success – it’s only refining your business in the areas that should have been addressed while you were on your way up. I call that “paving as you go.” But those companies that have taken the time to develop deep insight into their customers’ core desires, and know how to link and deliver meaningful value to those desires – those are the companies that thrive in a down economy.
During this recession, I still see people at restaurants, the movie theaters, plays, bars, sports events, and in hotels. It’s not that we’ve stopped spending, but we’re only spending on those companies that make us feel good, tap into our hopes and dreams, and deliver consistent value for our scarce dollars. So, I’d say to Smith that if your company is focusing on innovation and efficiency, you’re still going to be behind the true leaders – those whose focus has always been on value delivery.
-- David Kinard, PCM