Are you feeling the stress of this recession in your organization yet? We are.
At Harvard Business School three researchers have completed a study of how companies have responded to previous economic downturns in order to help those of us who are trying to make our way through this current mess. They discovered that only 9% of all companies came out of previous recessions stronger and more vibrant. Here's how they did it.
Companies used one of four strategies to weather previous recessions but only one of these strategies led to growth on the other side.
- Prevention-focused: The least likely to make it through a recession (at 21% odds) were those companies that responded defensively by making deep cuts in costs through massive layoffs, etc. Their employees were too demoralized and the infrastructure too weakened to survive, much less thrive.
- Promotion focused: Some companies responded by making risky and opportunistic new investments during a recession. Most of the companies that took this aggressive approach had their strategy backfire - they had 74% odds of being too bloated with the high costs of their new structure to grow in a post-recession economy.
- Pragmatic: The companies that combined both of the above strategies - making cut costs heavily on the one hand while making big investments in new directions on the other - had only slightly better odds (29%) of making it through to the other side in good shape.
- Progressive: The companies most likely to flourish on the other side of a recession (37% odds) were those who 1) refused to make massive layoffs but, rather, cut costs only for the sake of streamlining their operation and 2) made careful, strategic investments (e.g. research & development, asset development, employee training, strategic partnerships, etc.).
Here at ARE we have made a couple of decisions that we believe will help us weather this downturn and come out stronger on the other side. Instead of laying people off, we're looking for every possible way to do what we do more efficiently. For example, we're delivering more and more training using online technology. It's less expensive than traveling for both us and our clients. And we're not afraid to pull the plug on something if it's proving to be too costly. For example, we just canceled an onsite workshop we had planned to do because registration was low (duh - what pastor wants to come to a workshop during Lent?!). We're doing whatever we can to control costs and, if it comes to it, we're prepared to share the burden --- we've agreed to all take reduced pay rather than let anybody on the team go.
At the same time, we're making some strategic investments that will enable us to do any even better job of helping our clients and friends. We are producing books and resources at a ferocious pace, investing in innovative new ways to deliver workshops and training, focusing on staff development, strengthening our web presence, adding specialists to our team (e.g., in fundraising and branding), and exploring possible partnerships with other groups who share our values but have a different set of gifts and passions.
This progressive response to the current downturn came naturally to us because we practice Seeing Possibilities (along with six other Renewable Leadership Practices) - which is all about keeping both your head in the stars and your feet on the ground. We haven't tied ourselves down with a long-range strategic plan that keeps us focused on achieving some big vision out there on the horizon. We are committed, simply, to being who we are and seeing what we have for the sake of doing what matters, right here and right now.
We're not saying it's easy. But it does help to be clear.
How are you responding to the challenges you're facing?
Click here to read Roaring Out Of the Recession by Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen in this month's issue of Harvard Business Review.
Read more about the "big ideas" that guide us by clicking here.
Comments