Booming business: sales and marketing
When business is booming management will invest in marketing by advertising and events in order to generate more leads. At the same time more sales reps will be hired as opportunities are everywhere. However this is the case of the ever decreasing increments: the more you add of the same the less each additional unit will bring.
Glooming business: R&D
Once the economy goes into a recession or depression then management will decide to spend less money on marketing and decrease the number of sales people. Instead they will invest in development in new products in the hope they catch on and bring a new stream of revenue. However this is too late as a new product will take years before it generates significant sales revenue.
The opposite decisions
These decisions have all to do with a short term view and greed: take the money now instead of preparing for the future.
Actually management is doing the opposite that they should be doing:
- When business is booming investing in new products should be considered as this prepares for the future.
- When business is glooming then investing in marketing and sales should be considered as the sales from the existing products should be maximized.
Does your management prepare for doom and gloom when business is booming ?