The reality is that we’re still going to be responsive to global concerns creating a noticeable impact on sales. 

With a 98% chance of a global recession and a trifecta of challenges in high energy prices, rising wages in response to inflation, and consumers losing purchasing power, there’s an argument for streamlining the sales tech you currently have and scrutinizing procurement of more that you think you need. 

Doing ‘more with less’ may well be a sound goal, as every aspect of your business comes under cost-saving scrutiny. 

Warren Buffett, a celebrated investor, once described inflation as a ‘giant tapeworm’ – as it ate up organizations’ dollars meant for investment. While components and prices remain painfully high in many sectors, companies dig into their pockets to avoid passing costs onto customers – and to the detriment of capital spending. 

In the UK, McDonald’s raised the price of its cheeseburgers for the first time in 14 years, and by 20%: they won’t be the last to be forced to make similarly tough decisions. 

So, where does this leave your sales tech procurement strategy? Is the play to hunker down and wait and see before making new investments? 

The picture is a little more complicated if we look at the insights from the Harvard Business Review’s groundbreaking study following the 2007 financial crisis. 

Essentially, playing only defense in the coming months, they suggest, could be the most damaging strategy for your business long term. 

It showed that of the 4,700 public companies surveyed, 80% had not yet regained their pre-recession growth rates for sales and profits three years after a recession.

Only 9% of the companies were ‘post-recession winners’: doing better after the slowdown than before. 

And their commonality is perhaps different from what you’d think. 

From the HBR: “Firms that cut costs faster and deeper than rivals don’t necessarily flourish. They have the lowest probability—21%—of pulling ahead of the competition when times get better, according to our study.”

Their study recognized four responses to recession:

1. Companies who make primarily defensive moves to avoid losses and minimize risk – the 21% probability group. They implement policies that reduce operating costs, shrink expenditure, cut ‘nice to haves’, rationalize portfolios, often let go of staff, and preserve cash. They also postpone making new investments. 
   
   
2. Companies who employ broadly offensive moves: investing heavily, acting opportunistically to acquire talent, or even new businesses. Interestingly, they only have a marginally higher probability of performing well after a recession: 26%. 
   
   
3. Companies who take the strategy of a mixture of defense and offense – the HBR calls these companies’ ambidextrous’ – did better again: 29%. 
   
   
4. But within this third group, a ‘progressive’ subset deploys a precise combination of defensive and offensive actions earning them the highest probability—37%—of ‘breaking away from the pack’. These companies reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invest relatively comprehensively in the future by spending on marketing, R&D, and new assets. According to the study, their multi-pronged strategy is the best antidote to a recession.

And a note here: redundancies are not necessarily a route to survival: in the 2000 recession, Staples closed down some underperforming facilities but increased its workforce by 10% – and three years later, was still 30% more profitable than its closest competitor. 

Operational efficiency, for sure, is linked to software and tech: we see companies in 2023 having the opportunity to make maximal savings with minimal impact on the workforce. 

As defensive-focused companies post-recession still feel its impact, seeing growth, on average, of only 6% in sales and 4% in profits, compared with 13% and 12% for the ‘ambidextrous’ companies, the message is clear: while one eye is on improving operational efficiency, the other is on investment.