The one strategy that has fared best during past economic downturns

business manager building jenga-like strategy blocks

Harvard Business Review analyzed 4700 companies across 3 global recessions to identify 4 generic strategies that were followed and identified the one that fared best. Which are you following?


There’s much talk about the “new normal” or, as we like to call it, “business as newsual”. Things will indeed be very different going forward and yet, we’ve learnt enough from history to make wise decisions going forward.


All of us running businesses at the moment are faced with some pretty tough choices. And we need to make these choices with weak, confusing and contradictory data as our guide. There is no doubt that in a couple of years’ time, when the economic academics have a chance to analyze this, our mistakes and opportunities (taken and not taken) will seem obvious. Oh, how I envy my future self!


Looking at past crises and recessions helps with making these choices because we know that the leaders of that time were in a similar predicament and we can see what they did and what the consequences were. In this light, I was sent a link to an HBR article, penned in 2010.


The 4 strategies followed by businesses during an economic downturn

Harvard Business Review analyzed 4700 companies over 3 global recessions and identified 4 generic strategies that were followed:


Sam blog infographic


HBR then looked at which of these strategies was most likely to outperform their rivals AFTER the recession. Spoiler alert: The prevention focused companies fared worst of all and the progressive companies best of all. The is a great article and I recommend all business leaders to read it and think about it in the context of the decisions they’re facing right now.


It seems that I am involved in at least 5 conversations every single day where either a customer, a partner or a friend is considering battening down the hatches and cutting expenditure to the bone to ensure survival. The data presented in this paper confirms the way I think about it: Cutting down on things that make your business more efficient is exactly the wrong place to be doing it. Rather, you should be engaging your employees about how to invest in growing efficiencies. They will appreciate that their employer is being progressive. These investments into efficiencies will pay off now and then pay themselves off again when all of this is over, and the economy starts to grow again.


My favorite line from the article? “Almost all business leaders reluctantly admit that the current crisis also marks an inflection point: The world after it is unlikely to resemble the one before it. Their priority, when they get a moment’s respite, must be to remake their organizations to cope with the ‘new normal.’”- penned in 2010. Sound familiar?


Read more: Strengthen relationships, plan and sell during business slowdown.