Management in tough times is like driving?

[charlesbecker]

With the recent economics events, I thought this excerpt from an article in today's Wall Street Journal was interesting how they compared executive management strategies in tough financial times with driving. I was hoping they would also mention shuffle steering and heel and toe shifting, but at least they were on the right track.

From the WSJ 9/24/08
Many industry leaders fall from the top during recessions because they assume that a strong market position is an insurance policy against trouble. That approach breeds overconfidence. Executives postpone taking precautions or reach for the same levers they pulled in the past -- like hedging their bets by diversifying. When the downturn hits hard they usually over-react. They slash costs and staff indiscriminately, cut capital expenditures, squeeze suppliers, and avoid strategic acquisitions. Then when conditions improve, they must spend heavily to regain momentum.

The better approach: slow in, fast out—like a good driver heading into a sharp curve. Winners in recessions tend to brake quickly heading into a downturn by managing costs carefully and consistently. It's like downshifting to a lower gear to slow momentum and increase responsiveness. They focus on what the company does best, reinforcing the core business and spending to gain share. They aggressively monitor the competition to ensure they have the best possible line through the curve. That sets them up to accelerate at the apex of the curve, when the economy starts to improve.



About the Authors
Darrell Rigby is a partner with Bain & Company in Boston and head of Bain's global retail practice.
Steve Ellis is Bain's worldwide managing director.

[SDGT3]

Interesting. Something tells me he's been to a driving school or 2.

[cam]

The way people here in Orange County drive its no wonder so many lending institutions here spun out