The world’s a very strange place at the moment. As a consultancy we’re fortunate not to have suffered too much, but horror stories abound – and a frightening chat with a prospective client the other day has brought home to me how badly the recession’s beginning to bite in some places.
A large, household-name company is looking at moving on to a three-day week. Its head of marketing is now bombarded with increasingly desperate calls from design consultancies, offering not only to pitch for free, but in some cases even to work for free ‘until things pick up’. In fact, some days his entire time is taken up fielding calls and high-quality unsolicited proposals from fantastic groups – but the sad fact is he has no budget.
At the Design Business Association AGM a few months ago, the general feeling was that the downturn was something that was being talked about a lot, but hadn’t hit yet. Since then, the climate has deteriorated rapidly. It’s prompted me to start thinking about how long it might go on, and how deep it might get.
Sir Martin Sorrell at first predicted a sharp upswing towards the end of 2009, but now he’s talking about the next couple of years, and, sadly, I’m inclined to echo him, at least in the case of the UK economy. While the whole world is currently feeling the pain, I believe we in the UK face a set of circumstances that mean the recovery is going to take a long time to arrive – and will be slow and painful when it does get here.
For a long time, the UK was touted as the economic success story of Europe, but the foundations of that success were built on sand.
Much of our ‘growth’ has been fuelled by irresponsible consumer borrowing, off the back of an asset price bubble. Think plasma screen TVs being paid for by slapping a bit more on the mortgage.
A large part of our national income was derived from financial services, but now half that industry is being bailed out by the Government, while the other half sits paralysed. The Germans and Japanese might be suffering badly too, but I guarantee their manufacturing-based economies will be churning out cars and machine tools again a long time before the world regains its appetite for the ‘collateralised debt obligations’ and ‘structured investment vehicles’ that we ‘manufactured’ in the City.
We mortgaged our future a while ago. Every country is considering fiscal stimuli to drive its economy out of recession, investing in public works like US president Herbert Hoover did in the 1930s. This is a great idea – pumping money into Crossrail, a new Thames Estuary airport, or even a new generation of nuclear power plants would be of real long-term benefit to the UK and might help kick-start things. Unfortunately, we’ve already built the new schools and hospitals through private finance initiatives; all that’s left for us to do is pay for them several times over during the next quarter of a century.
Meanwhile, most of the growth in employment over the past ten years has, in any case, been driven by expansion of the public sector, rather than growth in the private sector, all too often into meaningless non-jobs. How likely is it that we’ll keep creating more posts for ‘anti-objectification advocacy officers’ when the Government has no money?
So, the drivers that fuelled the growth are gone, we now pay to bail out the banks that used to generated tax income, and can’t afford to spend our way out of trouble. It all sounds bad, but what does it mean for us in the design industry?
Amid all the gloom, I see a glimmer of light at the end of the tunnel for British design. The reputation of our financial services sector may have taken a hell of a beating, but the UK’s creative industries are still seen as the best in the world. Times might be tough, and many groups are in for a rough ride, but those of us that hang on through it will emerge into a world where British design has lost none of its cachet.
So, what should we do to hang on in there?
In new business terms, it’s a dog-eat-dog world. Having built a dialogue with prospects over time certainly helps, but starting to prospect from cold in this environment is going to be tough. So do everything you can to make yourself indispensable to existing clients – you can bet there’ll be ten other groups knocking at their door every day.
If you can target work overseas, do so – but make sure you can do it profitably. And be aware that the streets in places like Moscow and Dubai may no longer be paved with quite as much gold as they were not so long ago.
And then take a hard, objective look at your business, batten down the hatches and prepare to hang on. It’ll be a tough ride, but those that make it through will come out – blinking, perhaps, but stronger.
Joe Bakowski is managing director of Stocks Taylor Benson
• Make yourself invaluable to your current clients
• Don’t think that you’ll be able to sell your way out of the recession – especially if it’s through new business activity
• If you can, look for opportunities overseas
• Make a realistic appraisal of your business early, and act on it