Innovation, early cost-cutting and invest
ment in R&D are three common strategies
of companies which emerged strongly from
the Great Depression and from which com
panies can learn today.
Companies such as GE, P&G, and IBM
had common strategies during the Great De
pression, such as investing in areas in which
other companies had cut back, leading to
their success in the economic downturn of
the 1920s and ’30s.
According to a report by the Boston Con
sulting Group (BCG), there is much that today’s
top managers can learn from the Depres
sion era’s stars and the lessons are just as rel
evant today as they were nearly 80 years ago.
To understand what drove industry-beat
ing performance, BCG studied the compa
nies which performed relatively well. The
study focused on six leading companies –
GE, IBM, DuPont, P&G and, ironically, Gen
eral Motors and Chrysler.
The report, Green Shoots, False Positives,
and What Companies Can Learn from the Great
Depression, detailed strategies which involved
cutting costs and reducing excess capacity in
well-thought-out and disciplined fashions.
To retain as much of its talent as it could
and maintain its competitive advantage in
the long term, GE for example, shortened
the work week, cut wages, and shifted skilled
employees to lower-skilled jobs rather than
laying them off. And, arguably most pivotal
to GE’s long-term success, was its sustained
investment in innovation.