Recessions Are Great Teachers
July 28, 2019
Andy Grove, former Chairman of Intel, once stated. “Only the paranoid survives. Paranoids believe someone or some force is out to get them.” In this time of a thriving economy, companies have a tendency to relax and that, to me, is a big problem. Mr. Grove went on to say, “Success breeds complacency and complacency breeds failure.”
I had one company I worked with whose sales went from $1.3 billion to $338 million during the last recession. Their CEO told me they could have quit paying ALL their employees and they would have still been losing money. The CFO suggested they declare bankruptcy, but the CEO would not accept defeat. Rather than lay good people off, everyone took a pay cut; senior management took an even higher percentage pay cut. They had made one grave error; 90% of their business came from one industry. So, they decided to look for things they could manufacture in recession-resistant industries. The recession forced them to change and now they are a thriving company doing $2.1 billion in sales. Today, 57% of their business comes from one industry and their goal is to have no more than 30% from any one industry.
Their company is stronger today because of what they learned from surviving a recession. Our last recession was a humbling experience for many companies … but it should also have been a time of great learning as well. We definitely had to learn to do more with less if we were going to survive. There are things the last recession should have taught us that we should still be doing.
So, I decided to put together a list of things we should have learned in our last recession, to help serve as a reminder for us all to keep doing them. In Good Times or Bad Times … these should be standard things we all do. I hope you will find the list helpful.
"Your only true security in life
is your ability to perform."