Have you ever read something that makes you shout, out loud, "Yes! Right on! This is exactly what I have been saying!" That happened to me the other day with the Harvard Business Review’s perfectly on-target article, "Roaring Out of Recession."
We know that some companies survive recessions and come out even stronger on the other side, others tread water and then slowly sink, and then others just simply tank. Since few empirical studies have been done on which strategies work best during an economic recession, I was very pleased to see their findings in this study of some 4,700 companies.
I was even more pleased to discover that their research echoes much of what I have been saying in my reports, blogs, and podcasts about The Great Comeback over the past two years.
Here’s my Top 5 insights based on the article:
1. "Great leaders know that how they fight a war often decides whether they will win the peace." I love this quote, as it tells the whole story of what I have been calling The Great Comeback. It is not what you do after the Great Recession, but what you do during The Great Recession that spurs the Great Comeback.
2. "Only a small number of companies flourish after a slowdown." About 9%, their research shows. Yes, and this is so disappointing, because most lead changes occur during the slowdown. Are you still worried about The Great Recession or are you participating in The Great Comeback? Now is the time to pour on the gas!
3. "According to our research, companies that master the delicate balance between cutting costs to survive today and investing to grow tomorrow do well after a recession." Absolutely, I have said over and over and over to maintain talent, maintain strategy, and cut all other costs. Right on!!! But "cut, cut, cut" alone is not a good strategy for cost reduction.
4. "Prevention Companies" (cut, cut, cut strategy) average a post-recession 6.3% growth in sales and 4.4% growth in EBITDA, as compared to "Progressive Companies" that average 13% and 12.2%, respectively. So, this is clearly in line with Tompkins Associates’ plan for economic recovery and growth in The Great Comeback.
5. "During recessions, Progressive Companies develop new markets and invest to enlarge their asset bases. These companies also judiciously increase spending on R&D and marketing, which may produce only modest benefits during the recession, but add substantial sales and profits afterwards." Definitely, the Progressive Companies are the ones with a Comeback Plan, who understand when to slow and when to put the pedal to the metal.
Economic growth, capital spending, consumer spending, factory output, etc., are all gaining strength. The Great Recession is behind us, the question is what is ahead of you? Do you have a Comeback Plan?
More Resources
Go here for a sample from the "Roaring Out of Recession" article: http://hbr.org/2010/03/roaring-out-of-recession/ar/1
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