In his latest column for Forbes online, Rick Wartzman explores how to manage effectively through a slow-growth economy.
“Peter Drucker lived through 10 different post-war recessions in America, including the biggies of the mid-1970s and the early ’80s, but none of them generated the lingering strains and stresses that we’ve seen in the wake of the past downturn,” Wartzman notes.
“Technically, we pulled out of the Great Recession more than three years ago,” he adds. “Yet the unemployment rate remains painfully high (at 8.3%), and GDP growth is tepid (having expanded at just 1.5% in the second quarter). Even the pace at which we’re tossing out our garbage suggests more stagnation ahead. The rest of the world isn’t doing too hot, either.”
To cope, Wartzman draws six lessons from Drucker’s writings:
1. Don’t adopt a bunker mentality. Companies “must avoid making ‘no growth’ a self-fulfilling prophecy,” Drucker wrote in The Frontiers of Management.
2. Expect the unexpected. “Keep in mind that during slow times, markets don’t always adhere to conventional wisdom,” Wartzman writes.
3. Be extra careful with your capital.
4. Abandon those areas that hold no promise.
5. Think before you cut. Too often, “management picks up a meat-axe and lays about indiscriminately,” Drucker wrote.
6. Don’t be greedy. “The hostility to top management on the part of middle and even upper management is very hard to exaggerate,” Drucker cautioned. “The next downturn I think will turn against them.”