How can SMBs survive the 2020 global economic crash

Razorfish 60 minutes

There are indications that the next global economic crash will happen in 2020 or soon after (J.P. Morgan, Noriel Roubini, Forbes).

The last global economic crash was in 2008 and the one before that was in 2000. 2008 was caused by overconfidence in customer ability to objectively buy real estate, and 2000 was caused by overconfidence in the digitalization. I “survived” both crashes: in 2000 I have seen most of my friends loose more than 90 % of their savings over night; in 2008 my father’s business was wiped out over night.

BEM apps interprets market changes through values delivered by products and content. Using that approach we define a global economic crash as a necessary process of elimination of soft values. What happens is that companies gradually increase the use of content and soft values neglecting hard values. Hard values require substantial research and investment, while soft values require lower cost and faster content production. While only few companies can create hard values – real functional products, all companies can grow with content and soft values. As companies compete, the more soft content is shared and more customer purchase decisions are based on soft values. These soft purchase decisions became less and less relevant and eventually result in a systemic purge which resets the economy to more hard values.

The coming global economic crash will cause a drastic drop in revenue of all products which substantially rely on soft values and will cause a substantial loss of equity in all assets which are based on soft values (especially intangible assets). While big companies can survive it because they have resilient safety measures (real estate, cash, diversified products, and access to many markets) SMBs will be dramatically damaged.

What can SMBs do to minimize the damage of the economic crash?
– Increase the promotion of hard values via content, while maintaining soft values already promoted. Simply add hard values without taking out the soft values;
– Train the sales team to also emphasize hard values, while not neglecting the soft values;
– Add new products which deliver more hard values which work well in a system with current products;
– Continue with investments in the digital transformation. Focus on hard, proven, objective, and immediate benefits of the transformation.

Reminder – soft values are all the values which do not deliver objective tangible positive change to the customer and for which customer made an objective calculated decision. This would categorize all promises of future benefits as soft values. For example, sustainability is a soft value because it is a promise of a better future and not an immediate objective experience of the customer.

Good luck.

Written by: Nikola Tosic
Publishing date: 17 Jan 2019