Aaron Shields’s Mind Terroir

When asked to define the purpose of business, most businesspeople will proclaim, “To make money.” The problem with this view is that it results in misguided business decisions. Making money isn’t the primary purpose of business, it’s a byproduct. As Peter Drucker elucidated decades ago, the purpose of business is to create a customer.

Focusing on making money leads to short-sightedness and leads to a lack of emphasis on long-term strategies. During a recession, anything that doesn’t lead to immediate cash is in danger of being cut.

The two areas that contribute primarily to creating and keeping customers are marketing and innovation. Yet, these are often the budgets that most companies cut quickly. Marketing is perceived as an extra cost, and when revenue declines the immediate conclusion is that innovation isn’t working enough to warrant the budget given to it and its better to focus on known assets.

But, spending on marketing and innovation during a recession is what companies should be doing to take advantage of their competitors taking a misguided approach. With marketing your brand position will be strong whereas theirs will weaken (and you can probably get more for your money because everyone else is spending less) and you have an easier chance at dominating share of mind. With innovation, you’ll be forcing the competition to play a hard-to-win game of catch up when they eventually realize that they’re way behind the market position you have created.

Instead of thinking about cutting costs and gaining short-term stability, think about how you can spend wisely to drive your long-term growth.

Tags:   brand · Branding · brands · Business · drucker · Innovation · Marketing · recessionNo Comments