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- 17% of the companies in the study didn’t survive a recession: They went bankrupt, were acquired, or became private.
- About 80% of the surviving companies had not yet regained their pre-recession growth rates for sales and profits three years after a recession.
- 40% of the surviving companies did not return to their pre-recession sales and profits levels three years after a recession.
- 9% of the companies flourished after a slowdown, doing better on key financial parameters than they had before it and outperforming rivals in their industry by at least 10% in terms of sales and profits growth.
- Firms that cut costs faster and deeper than rivals don’t necessarily flourish. They have the lowest probability, 21%, of pulling ahead of the competition when times get better.
- Businesses that boldly invest more than their rivals during a recession don’t always fare well either. They enjoy only a 26% chance of becoming leaders after a downturn.
- Companies that were growth leaders coming into a recession often can’t retain their momentum; about 85% are toppled during bad times.
- Companies typically combine three defensive approaches—reducing the number of employees, improving operational efficiency, or both—with three offensive ones: developing new markets, investing in new assets, or both. This yields nine possible combinations, some of which are more effective than others.
- Few prevention-focused corporations do well after a recession, according to our study. They trail the other groups, with growth, on average, of 6% in sales and 4% in profits
- Despite a focus on growth, promotion-focused companies’ post-recession sales and earnings rise by only 8% and 6% respectively.
The Winning Combination (Cost Cutting + Innovation)
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