A Better Way To Lead In A Downturn
The situation continues to evolve
The COVID-19 crisis continues to unfold rapidly and unpredictably, creating disruption across the world. With the latest forecast from the IMF projecting that global GDP will shrink by 3 percent in 2020, businesses are clearly in an unprecedented situation–at least since World War II.
Unlike previous crises, the impact of COVID-19 is being felt deeply in our personal, social and professional lives and navigating the challenges this poses calls for an understanding of human nature, as well as business practices. For many businesses it is hard to think about anything other than survival in this moment. If previous crises are anything to judge by, however, the decisions and actions we take now will ultimately determine our success in not only surviving the current crisis but thriving afterward.
In the shadow of the 2008-2009 financial crash, Gulati, Nohria and Wohlgezogen presented compelling research in their HBR article about how companies that strike the right balance of defensive and offensive moves fare the best in a post-recession recovery. The central finding of their research was that companies that simultaneously made defensive moves focused on operational efficiencies, as opposed to headcount reductions, and offensive moves focused on asset investments and market development, achieved significantly higher sales and EBITDA growth compared to their competitors. These lessons remain helpful as we enter another global recession.
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