Recession Strategies From IDEO And Potatoes

I ran across an interesting article on the IDEO Website called Reframing Recession: Lessons from the potato (.pdf). The article discusses how potatoes became a popular food item in the 1790’s amidst the turmoil of a devastating grain market and repeated crop failures. The potato’s rise to the family table was driven by consumers’ innovation in trying to fill an overarching goal — feeding their families.

The article does a nice job of using this story to frame the reality of poor economic times: There’s still opportunities for growth. Here’s a very interesting observation from the article:

When the economy is down, people look to different product categories to solve persistent needs, making trade-offs that reflect both conscious and unconscious decisions. In the last recession we called this “The Lipstick Effect” – as budgets tightened, women still sought out ways to address their need to flaunt a little and sales of cosmetics went up. Just as in 2002, Estée Lauder’s makeup sales have recently felt an uptick – 11% in the third quarter of 2007.

The article ends up by making the following five recommendations:

1. Hang out with your customers. Since customers will be looking to fill their needs in  different, cheaper ways, you need to spend time understanding their core needs. This is pretty much the 1st principle of Experience-Based Differentiation: Obsess about customer needs, not product features.
2. Watch out for a new breed of unlikely competitors. Just like the potato replaced grain in the 1790s, consumers may turn to new categories of products as substitutes for your offerings.
3. Be inspired by extreme value. Look for models to copy, across any industry, where people are getting more value for less.
4. Go elephant hunting with a slingshot. Go find opportunities where you can provide a cheaper, simpler solution to replace expensive, complex ones. I like this one a lot. As a matter of fact it’s very close to one of the five disruptive customer experience strategies that I’ve called Ultrasimplicity.
5. Don’t be afraid to prototype. Get some changes out in the field and be willing to learn, even through small-scale failures. The article provides this good advice: “Tougher times are exactly when you should give those managers who are closest to your customers the freedom to act on their insight and to experiment.” In the post Keep Customer Experience Momentum In A Recession, I also discuss the importance of innovation in a downturn.

The bottom line: Don’t react to a recession by clamping down on innovation.