Post 4 in the series: Managing in a Downturn.
We’ve seen that recessions are opportunities for those who refuse to obsess on the constraints of the external environment (post 2) and that one corollary of this is that you shouldn’t retreat (post 3).
Another corollary is that you shouldn’t overreact. Baveja, Ellis, and Rigby’s article continues:
Companies that fared poorly during the last recession exhibited a common response: they overreacted, then “stayed the course” even when rougher seas lay ahead.
The lesson? If your strategy isn’t showing results, reevaluate it. don’t expect it to start paying dividends just because the economy is recovering. Winning firms react to trouble early, scrapping ideas that aren’t working and turbocharging those that are. Firms that hunker down can miss opportunities and create even bigger problems down the road.
So don’t overreact, but if you do, make sure to course correct in a timely manner.
Perhaps the primary and most important example of over-reacting is excessive cost-cutting. That will be the subject of the next post.
Posts in This Series