Lessons from the Crisis: How to Turn Adversity into Opportunity

A Critical Look at Business Performance During and After Recessions

Business leaders know they should “never let a good crisis go to waste,” but very few of them actually live this maxim. In a study of companies’ performance during and after the past several recessions, one of us found that 17% didn’t survive (because they filed for bankruptcy, were acquired, or went private), and of those that did, the vast majority — 80% — were still struggling three years later to match their pre-recession growth. Only 9% of surviving companies “roared out of the recession,” posting results that exceeded both their peers and their pre-recession performance.

The Rare Breed: Companies that Thrived Amidst Adversity

So, what sets these exceptional companies apart from the rest? Our study identified a key characteristic: they managed a delicate dance, playing both offense (investing in growth opportunities including new businesses) and defense (cutting costs and finding operational efficiencies) in response to external shifts. Even while reducing overall spending, they were able to carve out resources for new endeavors.

A Balance of Growth and Cost-Cutting

These companies didn’t just focus on cutting costs and hunkering down; they also recognized the need to invest in new opportunities and grow their business. By maintaining a balance between these two approaches, they were able to achieve remarkable results.

A Call to Action for Business Leaders

So, what can business leaders learn from these exceptional companies? The key takeaway is that, in times of crisis, it’s essential to strike a balance between offense and defense. Don’t just focus on cutting costs; invest in new opportunities and growth. Don’t just hunker down; stay agile and adaptable.

Conclusion

By embracing this balanced approach, companies can turn adversity into opportunity and emerge stronger and more resilient. It’s a challenging and complex task, but for those who can pull it off, the rewards are substantial.

FAQs

* What percentage of companies didn’t survive during and after the past several recessions? 17%
* How many companies were still struggling to match their pre-recession growth three years later? 80%
* What percentage of companies “roared out of the recession,” posting results that exceeded both their peers and their pre-recession performance? 9%
* What is the key characteristic of companies that thrived amidst adversity? They managed a delicate dance, playing both offense and defense in response to external shifts.