Lessons From The Recession

Consumer and business confidence indicators are rebounding, and in both the b-to-b and b-to-c sectors, it’s pretty clear that the worst of the Great Recession is behind us. But many companies had to learn important – and painful – lessons when times were hard, and these lessons should not be forgotten now that the economic environment is improving.

Here are some points worth remembering:

Inertia is always dangerous, and can be fatal. When the recession hit half a dozen years ago, many CEOs failed to acknowledge that the world around their company was changing, rapidly and dramatically.

They seemed to feel that, if they just hunkered down and continued to do business as usual, everything would soon return to normal. Some did “pretend planning,” factoring unrealistically optimistic assumptions into their projections. The spreadsheets looked great, but in the real world revenues sagged and profits evaporated.

Waiting to act. Some decisions, such as reducing headcount, halting development on a promising project or restructuring to cut costs, are tough. But they don’t get any easier if you delay taking action.

Certainly it makes sense to gather all the facts, analyze the alternatives available to you, and make sure you have selected the best course of action – even if “best” means the least bad of several unattractive choices. But once you make that decision, implement it.

Looking for one problem. Sure, the Titanic sank because it hit an iceberg. But that happened because the ship’s captain failed to heed ice warnings, the lookouts didn’t have binoculars, the hull’s rivets were flawed and so on. Similarly, few companies get in trouble because of just one problem.

If your sales are down, it may be that your people are not making as many calls, or that your competitor is offering a better or cheaper product, or better terms, or is running more effective ads – or it may be that two, three or more of these are true. Or your product may be obsolete, or your customers’ needs have changed.

Don’t think about problem-solving as a task. It’s a process that should be ongoing, when times are tough and when everything seems to be going right. Continually seeking out your company’s weaknesses and addressing them effectively is the hallmark of leadership.

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