I was talking to a client the other day who had read my last blog entry (imagine, a reader!) and who pointed out that a bunch of the work they had given us was a direct response to the recession. Recession as demand driver, funny. But it’s true. I went back over the last six months to look at the work we’ve been given that stems directly from the recession, and it’s a bunch, about 20% of what we’ve been doing:

First there’s ongoing tracking work – as the downturn got going a few clients asked to keep tabs on specific issues such as the actions of competitor companies, core sector news etc, so on a daily and weekly basis we’ve been:

- Capturing and distributing articles that look at competitor response to the recession (price movements, packaging changes, cost-cutting drives, marketing campaigns and so on)

- Preparing newsletters that contain summaries of the more significant developments. Most of these are sector specific, so, for instance, one looks at how all the large consumer goods companies are responding

- Writing monthly and quarterly sector reviews that largely summarize the findings of the above two

- Preparing monthly economic reviews that pull together historic and forecast economic data, sometimes with summaries of competitor actions

And then we have a bunch of ad hoc work that roughly groups under these themes:

- Lesson capture – looking at past downturns and pulling out insights that can be applied today – Do companies do better when they acquire during downturns or upswings? Is it better to cut deeply and early or hold out for smaller later cuts? Do innovation and new products pay off better in recessions? What role can messaging alone play as consumers pull back on spending? There’s lots of it, and coming from many angles.

- Impact studies – trying to gauge the changes underway, where they may head and how profound they will be. We’ve done these for a range of sectors – real estate, homebuilders, banking, personal care and food – but they almost always point back to consumer demand and changing consumer attitudes.

- Bankruptcy studies –  looking at different sectors to identify weak players and likely bankruptcy candidates, which we do using things like asset impairment rates, debt maturities,  cash flow analysis, Altman Z-scores, leverage and coverage ratios, bankruptcy ratios, going concern metrics etc.

- Trend analysis – trying to get a sense of how things are evolving, how fast and in what direction. Trends are capricious things and this work is more art than science, so we often back it up with site visits and interviews (for example, we’ve been doing a lot of looking at Japan lately, most recently seeing how companies communicate to consumers fatigued from its lost decade).

- Future views – thinking about how the commercial landscape will change, how attitudes will diverge from previous trends, assessing what consumers will be looking for, judging which players will fold, which will conquer, and so on. It’s sort of reality-based navel gazing.

And here’s a funny thing – the first recession-based work we were given happened over a year ago, in January 2008. Things were fine then (consumer confidence was high, GDP growth strong, unemployment low and so on), but some of our clients were seeing weakness in parts of their business and, interestingly, the National Bureau of Economic Research (NBER) dated the onset of this recession to December 2007, although they didn’t announce it until December 2008. Here’s betting that in the next couple of months we’ll get our first assignment looking at ways of how to profit from an upturn that comes on the heels of a sharp contraction. And that will be a good thing.