First, the ability to adapt and the ability to react are not the same.
We react to a contract being cancelled; we adapt to changing market conditions. Reacting is a response to an event; adapting is a form of evolution. Organizations, like species in the natural world, adapt to improve their fitness to succeed in their environment. (According to Scientific American, the extinction of Neanderthals may well have been caused by their inability to adapt quickly enough to rapid climate swings and not by competition or inter-breeding with modern humans. See terrific 6-minute video.)

Second, the ability to adapt has three parts:

• Finding opportunities to add value within an enterprise’s doable sphere
• Enrolling the necessary resources (employees, partners, capital, technologies)
• Executing well

The ability to continually find and deliver new value to customers trumps all other business competencies. Organizations that do it well see themselves as “can-do” market leaders; others label it “change” and wring their hands.

Third, each act of adaptation is a strategic initiative: an assignment of resources to a potential opportunity. The great entrepreneurs — like Carnegie, Disney, Walton, and Gates — forged their success not from a grand vision or technological genius, but from a cascade of adaptations aimed at creating new value. These strategic initiatives are eventually aggregated and relabeled, erroneously, by history as a Grand Strategy. The truth is far more instructive!

Fourth, creating new value faster is a competitive advantage. In 1997, I first read Wheelwright and Clark’s book Revolutionizing Product Development and have been referring to it as a book of strategy ever since. In this simple but powerful diagram, they capture a truth about business in a rapidly-changing environment: if you are a fast-cycle enterprise that can adapt (create new value) quickly, you can overcome slower competitors despite their lead and improve your fitness despite turbulence.

Facing the giant disruption of a 1979 NYC transit strike in the first year of his start-up Perfect Courier, Brodsky goes looking for advice from a customer who’s been through strikes before. The dialogue he retells is priceless — a remarkable insight into adaptive enterprising.

By pivoting on a dime into providing a contingency car service during the strike, Perfect Courier survives and Brodsky gets wiser:

Aside from the additional cash and the new sales, I took away from the episode one of the most important lessons I’ve learned in business: When in doubt, go to your customers. They will tell you what they want and lead you to solutions you’d never come up with on your own. Indeed, just about every successful new initiative I’ve taken in business since then has come from listening to customers.

Here are excerpts from The Care and Feeding of Creditors:

Creditors head my list of culprits who can drain cash more quickly than you can take it in. It’s an interesting paradox. When creditors know you’re in trouble, they push as hard as possible for as much as possible before your business collapses….

Survival means saying “no” to creditors pushing for payment on past debts….A “no-nonsense” policy [i. e. desperation plan] can keep money in your till:

1. Make absolutely no payment on past bills owed trade creditors.
2. If a supplier refuses to ship C.O.D. without payment on a prior debt, switch suppliers. Few suppliers enjoy a monopoly….Once you call their bluff, most suppliers will agree to ship C.O.D. without payment on a past debt.
3. Don’t allow creditors to recoup payment by withholding trade or volume discounts, promotional allowances or other purchasing incentives. You want the same price and allowances as any other cash customer.
4. If you return goods for credit, insist on a credit agains future purchases. Don’t let anyone apply the credit to the prior balance.
5. Refuse to provide collateral, a mortgage on business assets, or a personal guarantee, unless you are receiving a big benefit, such as additional credit, in return.
6. Forget excuses. Your check is not in the mail. Your accountant does not have the checkbook….Be honest. Say you need time to decide what to do with your creditors’ old bills. You know it, and your creditors know it, so why not be honest and just say it? Creditors will respect you and won’t badger you for payment every day until you run out of excuses.
7. Never acknowledge your debt or the fact you’re in trouble in writing. Do it verbally but avoid specifics. A written admission of insolvency can give your creditors ammunition to throw you into bankrupcy.
8. Don’t be intimidated. That’s the key to success. Creditors can be intimidating. They’ll threaten…. In reality, general creditors can do very little harm. They’re toothless dogs who love to bark.
9. Refer all legal correspondence to your attorney….
10. Post these rules by your phone….You face hostile creditors every day and it can be tempting to write them a check to get them off your back. Yet survivors know how to say “no.”

Obviously, Goldstein is describing a last-ditch defense when you have to sacrifice supplier relations in order to get through. When things aren’t yet at that stage, paying suppliers quickly in a recession (and other times) can garner enormous good will. When I have a tight month, I sometimes send 10% as a message of intent to pay.

An uncertain customer is often frozen into indecision. The unpredictability in the marketplace triggers a host of roiling emotions catalogued in this graphic (below) for a related article in TIME. When that happens, many customers freeze up despite outwardly projecting heightened activity and determination.

Selling anything of consequence in a recession requires a strategy for thawing out the customer. Here are five points I’ve found helpful:

#5 – Put the idea of a quick, big sale out of your mind. Defrosting takes time.

#4 — Reduce their stress. Be disarmingly patient and put the prospect at ease. Show interest in their predicament: both the business and the emotional aspects.

#3 – You have an outsider’s perspective – put it to use. Share what other customers are thinking and doing. Be a resource and a problem solver. Suggest options. Talk out alternatives and scenarios.

#2 – Help the customer figure out a first investment that will be advantageous no matter which scenario unfolds. Sell the customer on “being prepared.”

#1 – Make that investment a small, tangible product or service — perhaps a study or trial — with little or no downside. Make the price and the cost/benefit a no-brainer.

Then over-deliver like crazy and you’ll raise the temperature for further thawing.

I’ll be discussing the what, when, and how of each one in future posts. But first, I’d like to get this blog launched by discussing recessions in general and some of the long-term economic changes that organizations should consider in crafting their strategy. To do that, look for a series of posts entitled “Gauging economic climate change.”

***Update 2/22/2009: I’ve refined one of the strategies in the graphic (Substitute) and will be exploring these five strategies in some of my next posts. A shout out to my friend Dan Lasman whose insightful critique led to this change!

***Update 3/8/2009: With the Economic Climate Change completed, I will begin writing more about these recession strategies this week. Sign up for email updates and you’ll receive them as they come off the presses!