WEATHERING THE STORM: Leadership Lessons from a Global Financial Crisis
This research project reviewed studies of business adaptation during the 2007-2008 global financial crisis. We looked for common characteristics and behaviors resulting in long-term success. What we found were three components that made a critical difference: organizational resilience, business strategy and entrepreneurial activities. How and why did these factors give some companies the edge?
Amidst a global pandemic, organizations in every sector face hard choices.
Some will weather the storm. They will survive the crisis and thrive.
Others will struggle to recover pre-crisis revenue and impact.
Too many will collapse or wither away.
Are there lessons to be learned from past crises? What can we learn from 2007-2008? What helped organizations survive the financial crisis? As we attempt to lead through the COVID-19 crisis, how do we set our organizations up for success?
Invest in practices that create interdependence = Resilient organization
Companies that implemented alternative corporate social responsibility strategies before the crisis were more resilient during the crisis. Resilient companies:
- Support employee rights and safety, including those of your suppliers;
- Consciously commit to a diverse workforce; and
- Support the rights of indigenous people.
Culture of diagnosis = Ability to survive a crisis
Companies that thoroughly understand themselves and their environment are more able to deal with crisis. These companies make a practice of understanding and predicting:
- Areas of vulnerability in a crisis;
- Roles, responsibilities, expectations and limitations of internal and external stakeholders;
- Shifts in stakeholder perception of the organization’s mission and vision; and
- Organizations that have experienced crisis in the past (real or simulated) were better able to handle the 2007 crisis.
Retrenchment + Investment = Ready to thrive
While it may seem risky, balancing cost-cutting and investment in innovation during a crisis is the path to success.
- Most organizations focus on short-term survival and opt not to innovate.
- Most prefer retrenchment strategies like reducing staff and slashing budgets for R&D, training and marketing.
- Companies that combine retrenchment and investment strategies are more likely to thrive during an economic crisis.
Autonomy = High performance
Multinational companies that allowed units, subunits or subsidiaries to play by their own rules outperformed those who insisted on uniformity.
- Units make important decisions without consent of headquarters.
- Units do their own R&D, generating unique data and innovation.
- Units develop new products to meet the needs of their environment.
Want to Learn More?
Explore Our Research
from our international research team.