Roaring Out of Recession

Gulati, R., Nohria, N., & Wohlgezogen, F. (2010). Roaring out of recession. Retrieved March 9, 2010 from: http://hbr.org/product/roaring-out-of-recession/an/R1003C-PDF-ENG

This article presents the result of a study published by Harvard Business Review that looks into performance of companies prior to, during, and after the last three periods of recession and also compares the survival/growth strategies the firms used during these periods. They state that neither deep cost cutting nor aggressive investment during recessionary times is a good solution for coming out ahead in the long run. Firms that were able to find the right balance between costs cutting today to survive and investing for the future has the best chance of coming out of the recession ahead of the pack. The authors classify companies and their management approach to recessionary times into four categories types: Preventive-focused, which generally cut cost dramatically; promotion-focused, which invest in offensive moves; pragmatic, which combine defensive and offensive moves; and progressive companies, which use an optimal mix of offensive and defensive moves. The study shows that the progressive companies do better than all the other type firms and about twice as well as the average firm in general. This is a very informative study that gives managers insight into how they should operate their business in recessionary times. There needs to be a balance between costs cutting and new investment in order to survive and flourish during and after these periods.