Observations in a Year of Recession from Continuum on Vimeo.

I found this collection of illustrated factoids pinned to a piece of foam core in the back corner of our studio the other day. I was drawn to their simple and effective communication style, as well as the diversity of the observations. Upon tracking down the illustrator (Rose Manning), I asked if I could use them. I wasn’t quite sure what for, but in the end, I took them and set them to a bit of music. Titled “Observations in a Year of Recession”, the three minute video seems to capture aspects of what the last year has felt like for many of us. Beyond the headlines of government bailouts, Wall Street failures, and falling home prices, the factoids focus on how this transition has affected the people who make up our economy, not just the businesses. I shared the video with a few friends and a simple question kept coming back – Is there a bigger picture to be drawn from these observations?
I suspect there are many implications one could read into this collection of tidbits. Here are two of mine:

1) TIME FOR DISRUPTIVE INNOVATION
I believe people will be more receptive than ever to disruptive innovations. In a recession, we are more actively making value-based purchase decisions. We are more conscious than ever about how we spend our money. This is not simply about finding the lowest price; people are seeking out the strongest value proposition. We are re-prioritizing purchase decisions based on what’s most valuable, rationally and emotionally. In today’s economy, people are willing to trade off some level of quality for a better value. This is one of the classic market dynamics in which disruptive innovations can flourish. The market is primed for new, better-value solutions.

Now is the time to explore opportunities to recalibrate a category, or create a new one, through the introduction of disruptive innovations. By offering a better-value product or service, in a way that the market does not expect, new market leaders can be established. On example that comes to mind is the netbook. I don’t think there could be a better time for a full court press of netbooks into the mainstream. Consumers will be more receptive than ever to a lower cost option, even if that cost comes with a decrease in performance.

2) MANAGE YOUR VALUE PROPOSITION
As people seek out the strongest value proposition – the brands that have diligently focused on value are being rewarded. McDonald’s, who has had a relentless focus on value, is being rewarded with strong growth during this economic downturn. Similarly, WalMart has benefited, as its value proposition is more in tune with today’s economy. And I don’t think this is just about low prices; each of these brands has worked diligently to improve their offering. As a result, I fully suspect at least some portion of the added market share they pick up today will likely stay with them as our economy rebounds.

In today’s market, the focus has to be on optimizing your value proposition. More than simply reducing your price, every brand needs to find the right combination of price and quality. And if you’re going to demand a price premium in the market, much as Apple does, you must be sure your offer is appreciably differentiated in a manner consumers can relate to and in a way that they value. This seems obvious, but as we see the onslaught of store brands winning market share from traditional brand leaders, it is a stark reminder of how an open market works.

I hope to hear about insights and implications others can tease out of these observations, or from your own experience through the last year.