HBR’S 10 MUST READS

ON MANAGING
IN A DOWNTURN

BY HARVARD BUSINESS REVIEW

 Contents

Companies that prepare for a recession pull ahead 3

during and after
A change in mindset 4
Timeline of the deal 5
Jumping the S curve 6
The hidden S curves of high performance 7
 Companies that prepare for a recession pull ahead during
and after it
Aggregated average EBIT indexed to 2003

Global financial crisis Double-dip recession

800
Prepared companies
17% aggregated average CAGR
700

600

500

400

300

200

100
Unprepared companies
4% aggregated average CAGR
0
2003 2005 2007 2009 2011 2013 2015

Source: Bain analysis of Capital IQ data. Includes 388 prepared companies and 3,113 unpre-
pared companies worldwide.
Note: A double-dip recession is when GDP becomes negative after at least a quarter of positive
growth. EBIT and CAGR are not adjusted for inflation.

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 A change in mindset
Cause-oriented thinking
Control
Was this adverse event inevitable,
or could I have prevented it?
Impact
Did I cause the adverse event,
or did it result from external forces?
Breadth
Is the underlying cause of this event
specific to it or more widespread?
Duration
Is the underlying cause of this event
enduring or temporary?
262841_03_029-040_r1.indd 38
Response-oriented thinking
What features of the situation can I (even
potentially) improve?
What sort of positive impact can I personally
have on what happens next?
How can I contain the negatives of this situation
and generate currently unseen positives?
What can I do to begin addressing the problem
now?
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 Timeline of the deal: July 10, 2008, to April 1, 2009

262841_04_041-050_r1.indd 46
January 23
FTC approves
the deal, and April 1
Dow Jones industrial average
Dow has only Deal
11,000 January 19, 2009 between
two working
Gupta meets with Dow’s days to close it. Rohm
July 10, 2008 March 31
10,000 CEO, who wants to defer and Haas
Dow Chemical Gupta
a decision until June. and Dow
agrees to buy actually
leaves for closes.
9,000 Rohm and Haas.
retirement.

5
8,000

December 29
7,000 December 18 $9.5B Kuwait Petroleum
Gupta thinks he is deal falls through for Dow.
leaving the company
6,000 for retirement.

March 4
January 26 Dow reopens
Rohm and Haas files suit in talks with
Delaware. A court date of Rohm and
March 9 is set. Haas.

23/05/19 11:30 AM
 Jumping the S curve
High performers are well on their way to new-business success by the time their
existing businesses start to stall.

Business performance Path of high

performers

Third
industry-
leading
business
Second
industry-
leading
business

First
industry-
leading
business

Time

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 The hidden S curves of high performance
Three aspects of a business mature—and start to decline—much faster than
financial performance does. They need to be reinvented before you can grow a
new business.

Maturity

Distinctiveness of Talent development

capabilities slows as companies learn
lessens as to do more with less and
competition competition forces the
intensifies and lowering of costs.
imitation occurs.

Financial
Market relevance performance
ebbs as the basis S curve
of competition in
Three hidden
an industry shifts
away from the S curves
dominant model.

Time

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