Given the state of the markets these days, I'm doing a lot of listening and learning and the comments from one of my best private equity clients continues to ring in my ears. On a recent call with a partner of one of the world's largest and most successful private equity firms, I asked him about the mood and focus in his firm. After some discussion of the magnitude of the financial crisis and the challenges we all face, he said, "Rob, none of us were fully prepared for this mess, but we tell ourselves to never let a good recession go to waste."
We all understand the concept, but it's helpful to remember the positive long term effects of cyclical downturns and recessions. Success and growth are good and we're all hoping for good times ahead, but the realities of the moment require a reset based on reduced demand and the likelihood of relatively flat growth at best even when things do improve. The partner went on the say, "No one can hold management accountable for the results in the 4th quarter, but they better reset the business based on that depressed demand for all of 2009." There you have it; expectations are being set around the likelihood that the remainder of 2009 will be just as bad as the 4th quarter of 2008.
These are extremely difficult times, and much like our President seems to have learned there's no upside in trying to predict that the end of the recession will occur during the second half of the year. "Prepare for the worst and hope for the best" should be the song of the day, and for those of us who are still in denial it's time to fully accept the challenge. Before you assume that I'm suggesting a complete shift to full turnaround mode, another comment from my private equity client was telling. He said, "The true measure of a CEO is whether he or she can still make important strategic investments while simultaneously rightsizing the ship."
Leading your company through these turbulent times may be the biggest challenge you will ever face. Having said this, better times will come and when they do our companies should be in terrific shape and focused for success. Remember, "Never let a good recession go to waste."
How are you balancing the need to reset your business and make important strategic investments? When do you think we'll see solid growth again?
