How projects can prepare for a possible recession

All indications point to a recession, making projects more important than ever

Throughout much of this year, economists, politicians and financial leaders have debated over whether the U.S. economy was heading toward a recession or already in the midst of one. According to one definition of a recession (two consecutive quarters of negative gross domestic product [GDP]) the U.S. entered a recession this past summer. However, when coupled with a strong labor market and corporate earnings growth, GDP performance simply complicated the debate for most experts, and there remains a divide over how real or impactful a recession will be at this time. 

However impactful, most recessions do follow a pattern. They average 17.5 months in length, put increased pressure on costs, and demand greater flexibility, creativity and resilience—all characteristics that a successful project exemplifies. 

During a recession, a project’s ability to identify future challenges, articulate solutions, and drive a plan forward, are more important than ever. Here’s how to design projects now that prepare for a future in flux. 

Flexibility 

Flexibility is not the absence of a plan but a proliferation of contingency plans. Forward-thinking organizations, for example, had plans in place for a COVID-19-type scenario, with ready-to-roll remote work options and medical and mental health campaigns. 

In the case of a recession, which is neither unexpected nor unprecedented, project teams should plan for slashed budgets, staffing cuts, material no-shows, and dramatically altered project objectives. Be ready not only to respond to shifting conditions but also to point to the ways you’ve been proactively hedging bets in preparation. 

Creativity 

Before the post-World War II economic boom the U.S. was in a recession between 1948 and 1949, during which the McDonald’s we all know was born. Facing cost pressures and staffing challenges in their traditional restaurant model, the McDonald brothers fired their carhops, designed and installed new equipment, and simplified their menu so that less-skilled workers and fewer employees could prepare good food consistently. They called their new model the “Speedee Service System,” and it simplified workforce management, lowered prices, and allowed the brothers to franchise. Ray Kroc’s subsequent scaling of McDonald’s into the powerhouse it is today wouldn’t have been possible without this recession-era transformation. 

A recession makes efficiency and cost reduction a necessity. Use that necessity as fuel to identify the elements of your operation most susceptible to breaking under the increased pressures of a recession. Focus your innovative efforts in those areas and create opportunities to test your innovations in small ways in the relative calm before the storm. 

Resilience 

If there is an upside of the COVID-19 pandemic for the companies and operations that survived, it is their proven track record of resilience. If you’re leading a project in preparation for a recession, look at the past two years to assess what worked and what didn’t in your specific operation. Celebrate and replicate the successes and plan ahead to avoid the pitfalls. 

A recession can be an incredible proving ground for organizations willing to tap into their flexibility, creativity and resilience. By anticipating and planning for a variety of “what if?” scenarios, projects can truly lead the organization through a recession.