Previous research on three major crises (1980, 1990, 2000) offers clear and ‘startling’ insights: 17% of the 4,700 companies studied didn’t survive them. 80% of the survivors didn’t have the same growth levels three years after the recession and 40% not even in absolute terms. A whopping 85% of the prerecession growth leaders lost that position and only 9% of all companies came stronger out of a recession.
What did the postrecession winners do differently? Companies that cut costs faster and deeper had the lowest sales and profit growth followed closely by those that didn’t and, instead, invested much more than their peers. The latter were outperformed by rivals combining both: cutting cost, laying off employees, and investing more than their peers. And the 9% clear winners, with 3.6 - 6.4 percentage points higher sales growth? They also did both but very selectively: restructuring existing activities by increasing operational efficiency of the entire business model (only 23% fired employees) and investing in future growth by developing new businesses, markets, and assets. Crises differ but using the time well to both optimise current activities and explore the future for new business opportunities helps.
Read more on Harvard Business Review - Roaring out of recession
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