If you’re in your 20s, you probably remember the Great Recession through the eyes of your parents: the stress they brought home from work, the vacations that got cancelled, perhaps even the job that one or both of them lost.
If you’re in your 30s, you may have an advanced degree because of it -- lousy times for jobs are great times to stay in school. If you’re in your 40s or 50s, it wasn’t the first recession you lived through, and you knew it wouldn’t be the last. And if you’re in your 60s or older, you may be still working because of it.
Death and taxes aren’t the only things that are inevitable; so are recessions. It seems one is always lurking around the corner. But a recession can be as helpful as it is unavoidable because it forces us to revisit our principles and reset our expectations. That’s a good thing.
Technically, the Great Recession lasted only a year and a half -- from December 2007 to June 2009. Practically and psychologically, however, it lasted almost a decade. Late in 2009, we were all still reeling from its effects, so much so that my firm felt the need to launch a 90-day effort at FindYourNerve.com to encourage business leaders to keep their chins up. Re-reading some of the posts from today’s perspective offers a kind of macabre entertainment.
For example, on Oct. 1 of that year, I kicked things off by writing:
“The economy isn't a shapeless, faceless, impersonal entity; the economy is us. And if each of us determines that we will right our own ships over the next few months—taking prudent risks, believing in our people and betting on recovery—the future we envision will be self-fulfilling. Then as the new year dawns and the days once again begin to grow longer, we can leave the long winter that was 2009 behind.”
Alas, we didn’t leave it behind. Not right away, anyway. Nine months later The Economist boldly proclaimed, “The American recession is over.” But it wasn’t, in my mind, or in the minds of most Americans. Uncertainty is a stubborn thing, and it lingered for years.
Well, buckle your seatbelt, because we’re again due for a decline. One of the last things I wrote at FindYourNerve.com was this: “I suspect that in a decade or two, when any of us pause for a moment to reflect on our careers, we'll view the events of 2009 as among our greatest learning experiences.” Unlike the hopes I expressed in my first post, that statement has proven true. As we anticipate the dawning of a new downturn, I offer you four hard-won lessons.
Lack of alignment is the most sinister problem we see in companies that are struggling against the tide. If you’re not pulling together, you’re pulling apart, and even the best strategies are ineffective if they’re not being fully executed. During the Great Recession, my business partners and I regularly looked into each other’s eyes and took inventory of where we stood. If there was any division, we addressed it. Immediately. A tornado is no time for a family feud. You have to keep everybody in the shelter together.
Even in good times, it’s tempting to chase business you normally wouldn’t, but that’s especially true when the top line is in decline. Recessions can be clarifying moments in the sense that they cause us to question our assumptions, re-evaluate our strategy and recommit to (or modify) our plans. Just make sure to view your short-term goals through a long-term lens. When things turn back up, you don’t want your company to have become something it’s not.
You can save your way to survival, but not to success. Sure, you may have to trim your budget, and the easiest places to do so are where you don’t feel immediate pain, such as marketing, R&D and training. But even if it doesn’t hurt today, that doesn’t mean you’re not damaging tomorrow, so be careful where and how much you cut. And don’t forget that when everyone else is selling, Warren Buffett is buying. The best time to gain share is when your competitors are loosening their grip on it.
Stay the course
Dollar-cost averaging is a strategy by which you invest a fixed amount of money at regular intervals over a long period of time. It works because your money buys the most precisely when you’re least inclined to invest. What’s true for your retirement plan is true for your company: There’s no replacement for showing up every day, rain or shine, and keeping at it. Every time you start over, you’re starting over, and a silver bullet will never beat a steady aim.
Four simple lessons. All hard won. All proven over time. And all, by the way, backed up by significant research. Consider them now, before the storm hits, and you’ll be better prepared for when it does.
None of us can say exactly when the next recession is going to begin, or how long it will last. But all of us know it’s coming. We have no excuse not to prepare.
Each month, When Growth Stalls examines why businesses and brands struggle and how they can overcome their obstacles and resume growth. Steve McKee is the president of McKee Wallwork + Co., a marketing advisory firm that specializes in turning around stalled, stuck and stale companies. The company was recognized by Advertising Age as 2015 and 2018 as Southwest Small Agency of the Year. McKee is also the author of “When Growth Stalls” and “Power Branding.”