Coping with a sudden market downturn

The events of 2008 are a powerful reminder that companies must be ready to cope with a sudden economic downturn. A global economic crisis is certainly one reason for such a sudden decline, but the business environment may also be seriously affected by other types of events, such as legislative reforms, unexpected disasters like the September 11 terrorist attacks, or the appearance of a revolutionary technology or a new type of competitor, for example. Such game-changing events often shake companies to their foundations and can put their very survival at stake. Even venerable land-marks like Eastman Kodak, RCA and PanAm, for example, never managed to recover their leadership position after being hit by a major crisis.

It is no secret that crises create many challenges. Leaders must keep the business going even as profits are plunging, find ways to motivate a dazed organization, and devise an effective transformation strategy to ensure the company’s long-term success once the storm has passed. In this Herculean task, even the tiniest misstep may be fatal and managerial nerves are put to the test.

The selected books analyze how some companies manage to emerge from such crises relatively unscathed and sometimes even stronger for the experience. They show that the survivors are able to pull through by doing three things in particular:

– Get organized to grasp the situation rapidly and understand the changes at work.

– Focus efforts on the most essential functions of the business.

– Oblige people to change their behavior drastically.