What did you do in the downturn? It’s a question some companies are starting to ask of themselves even as the recession and its impact still weighs heavily on most of us, and survival for many companies may still be up in the air.
Looking back at this point may be wishful thinking, of course, or the result of reading the fine print of too many financial indexes too closely. It’s doubtful anyone at YRC Worldwide or Zim Integrated Shipping Services is ready to say it’s time to look back at lessons learned.
Yet it’s actually important for many companies to take a hard look now at the strategic and tactical decisions made going into the recession and during the downturn rather than to wait for the dust to settle so much that it obscures reality.
That’s why it was intriguing last week to see corporate executives undergo a kind of self-assessment organized by consulting firm McKinsey & Co. on what went wrong and what may have gone right over the past year. Of course, there’s no year-over-year decline in self-serving statements, but there are, nevertheless, important lessons from the downturn’s survivors.
Take Herbert Henkel, chairman and CEO of Ingersoll Rand, who said in the McKinsey Quarterly report that a company should “always question whether the ‘halo effect’ of a business or business situation is blinding you to what lies on the horizon.”
In fact, most companies have strong evidence of where their business is going right in their own operating reports — if they choose to look at the numbers without bias. Henkel said he was alarmed, for instance, when he saw orders in the company’s European refrigerated transport business sliding in the summer of 2008 even while other business units were healthy.
“I couldn’t help thinking, ‘What if that figure really is indicative of what’s out ahead? What are we going to do about it?” he said in the McKinsey report.
The company cut its forecast to zero growth, got plenty of resistance to that forecast and then watched the business decline 15 percent. But the plan to react was in place.
That hardly gave the manufacturer a free pass through the recession — Ingersoll Rand’s profit was down by half in the quarter ending June 30, and its projections for revenue weren’t much better than anyone else’s — but it’s an important point, made stronger for anyone in the transportation business, because so much data about business developments are available to those choosing to read them.
Looking with clear eyes at those trends can help you follow the sixth lesson from McKinsey: Keep faith with the future. “If you don’t invest in the future and don’t plan for the future, there won’t be one,” George Buckley, chairman, president and CEO of 3M, told McKinsey.
There was evidence of that last week when transportation companies announced new services on a series of fronts. All they need now is for shippers to invest along with them.
Paul Page is editorial director of The Journal of Commerce. He can be contacted at 202-355-1170, or at email@example.com.