MIT Sloan Management Review Article on Preparing Your Company for the Next Recession

Winter is coming: Inverted yield curves, rising interest rates, and a rash of layoff announcements have convinced many economists that the global economy is headed for a downturn.1 Recessions are bad for business, but downturns are not destiny.

The worst of times for the economy as a whole can be the best of times for individual companies to improve their fortunes. One study found that lagging companies are twice as likely to overtake industry leaders during a recession, relative to nonrecessionary periods.2 Another study, of nearly 4,000 global companies before, during, and after the Great Recession, found that the top decile of companies grew earnings by 17% per year during the downturn, while the laggards saw profits stagnate or decline.3 The difference between the companies in the two groups translated into $6 billion in enterprise value on average.

About the Author

Donald Sull (@culturexinsight) is a senior lecturer at the MIT Sloan School of Management and a cofounder of CultureX. Charles Sull is a cofounder of CultureX.

Learn more about MIT SMR.