Page 111 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

Businesses across different industries and regions were affected
differently in terms of when and how they felt the impact of the
crisis. For some companies—those least affected—the best
response proved to be a program of actions not so very different
from business as usual. Faced with shrinking demand but man-
ageable costs, they endeavored to coordinate preserving their bal-
ance sheets and managing costs with improving the top line,
primarily through smart pricing strategies. But for the worst
affected companies, nothing short of a complete corporate turn-
around was required—and this necessitated a swift and aggressive
cost-reduction strategy to preserve their viability.
In the aftermath of the Great Recession, companies now
must adapt to an economic recovery that will be as slow as the
downturn was deep. Companies that can stabilize themselves
and adapt quickly to the new realities we have discussed will
find that the damaged economy presents some new opportuni-
ties. The evidence from past recessions suggests that with many
competitors weakened, companies deploying the right offensive
strategies can surge ahead for a long time to come.
However, in a damaged economy, defense must come first. In
such an environment, weak business models will be revealed, and
weak companies will find themselves under disproportionate
pressure as margins are squeezed and profits drop accordingly.
In Chapter 5 we will talk about going on the offensive—how
strong companies with solid business models must start think-
ing about differentiation to gain market share in a world where
everyone competes for their piece of the slow-growing pie. But
first, in this chapter, we will see how companies practice the sort
of defense that can get them through the worst of economic
times and continue to serve them well as conditions improve
slowly. Such companies aim to do three things:

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