Still Smiling: Cisco CMO Sue Bostrom has found fresh growth by using technology to network with leads on Cisco's site. | Photograph by Nigel Parry
Surviving this economic crisis is like going to see the latest Vin Diesel movie: Sure, it's bad, but believe it or not, others have seen worse. How do the grizzled vets get through the ordeal? They don't just sit there.
Major companies such as Charles Schwab, Cisco, Corning, IBM, and Intel have all experienced crises more severe and life-threatening than our current one, making today's maelstrom for them more akin to Fast & Furious than, say, The Pacifier. Nothing creates fresh perspective like having stared into the abyss and living to tell the tale.
No wonder, then, that each of these companies is approaching today's meltdown with distinctive strategies for not only surviving but also thriving. Intel and Corning are protecting their core advantages at all costs. Cisco, Intel, and Schwab view customer interaction and community as essential. IBM and Schwab are exhibiting a refreshing aggressiveness in chasing new business. Together, these five companies display a range of creative solutions that any business, fire-tested or not, should be applying right now. And unlike the Diesel, that's no joke.
Sean Maloney just wants people to buy things. "The last six months, people everywhere have been scared about what's happening in the world," says Maloney, Intel's chief sales and marketing officer. An ebbing tide -- and moribund electronics market -- grounds all boats: Intel's first-quarter revenue was $7.1 billion, down 26% year over year.
In an attempt to get ahead of the game by the next upswing, the company is doing some spending of its own. After closing some smaller plants, it announced earlier this year that it would invest more than $7 billion upgrading its factories in the United States. "We doubled down on manufacturing," Maloney says. "People said, 'You're insane!' " But Intel's entire competitive advantage -- its ability to keep pace with Moore's Law and even exceed it -- is in its manufacturing processes. "All our heavy-duty stuff is internal R&D on manufacturing," he says. "We lost that in the '80s and nearly went bankrupt, so it's a fairly fanatical focus for us. Never again."
At the same time, Intel is changing its development model to be more inclusive of customers and their needs. "We make transistors smaller and smaller in 18 months' time," Maloney says, "but we have almost no idea how to do it five years out." That's where customers come in, collaborating with them on chip development. As large institutional clients hired microprocessor-server specialists and started asking for very specific capabilities, Intel responded. For example, Intel's latest chip, Nehalem EP, is expected to allow one server to replace nine existing ones and pay for itself in just eight months. "Our job," Maloney says, "is to give them something so wonderful that they'll spend money again."
If anyone should be able to build a shatterproof fortress, it's Corning. But during the telecom crash earlier this decade, the specialty glassmaker for everything from medical devices to consumer electronics to cars saw revenue nosedive from $7 billion to $3 billion in 18 months; Corning almost burned the village trying to save it. "We vowed never to let that happen again," says president and COO Peter Volanakis. Corning's executive team, the same senior managers as during its epic fall, instituted an early-detection system to identify signs of trouble as well as four "operational rings of defense" to help it manage through a crisis in a measured, strategic way.
The first step? A good offense. Corning created its own market-research system, relying not just on its customers but also on its customers' customers, even checking stores to measure demand for the products it helps to create, such as LCD TVs. Corning also stockpiled cash, which enabled it to absorb a $400 million loss in the fourth quarter of 2008 without selling off part of its business, as it had to in 2002 to make a debt payment. And it helped that the company modeled worst-case scenarios and a response to each.
As trouble started brewing last year, Corning implemented its first ring of defense: discretionary spending cuts, reduced production, and hiring limits. As things got rapidly worse through the fall, management quickly implemented the second and third rings: shorter work weeks in Europe and Asia, limiting its use of contractors and temps, and, finally, layoffs. But as hard as it was to trim the staff by 13%, that was a far cry from the telecom crash, when it shed 21,000 of its 43,000 workers. This crisis feels more under control, the actions "more thoughtful," Volanakis says.
Most important, Corning has avoided the last ring, which would include reducing its $630 million annual R&D spending. Its lifeblood is new products, such as those it's aggressively pushing this year -- scratch-free touch-screen glass for cell phones and laptops, smaller next-generation data centers, and a laser-light engine that turns a laptop into a projector. "We're an R&D-based company," Volanakis says. "R&D is the absolute last thing we'd cut."
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Recent Comments | 17 Total
May 26, 2009 at 4:38pm by Loraine Antrim
What Cisco has done is not only use technology to connect with their prospects, but the entire company connects with their partners, customers, investors and each other via the technology. By using collaborative 2.0 tools, Cisco has gained a leg up not only in a down economy, but is setting the standard for ANY economic climate. It's not just using the web as a lead generation tool, it's leading the market in innovative collaborative practices. Would that all companies were so forward thinking!
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Loraine Antrim, Co-founding Partner
Core Ideas Communication
"We Create Smartmouths®"
June 2, 2009 at 4:34pm by Melyana Klue
I doubt "reassurance" is a "hot commodity" -- I'm certain Schwab isn't the only financial advisory firm attempting to hang on to their current clients or attract new ones with this approach.
June 16, 2009 at 6:34pm by Craig Miller
There's certainly a world wide alarm because of the crisis, some businesses have been more affected than other, though I've come to see how some of them have taken advantage of the situation like on currency trading
June 30, 2009 at 10:33am by Connie Glover
The distinction between crisis management and crisis leadership are clear and decisive. To manage a crisis one follows a fairly prescriptive path with a focus on damage control and getting back to status quo. To display crisis leadership, however, is to have foresight, networks, decisiveness, the capacity to learn, and a willingness to take risks. Many good business leaders can manage a crisis— few have shown to display crisis leadership.
It it is often the handling of a crisis that leads to more damage than the crisis event itself. Effective crisis handling involves much more than good communications and public relations. I believe that we have little appreciation for the role of learning from crisis. Crisis events can create a potential for significant opportunity to be realized for individuals, for organizations, and for countries. Crisis leaders understand these issues and it is their ability to act on them and learn from them that separates crisis managers from crisis leaders.
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Erika Hayes James, PhD
Associate Professor, Darden School of Business
www.erikahayesjames.com
June 30, 2009 at 10:33am by Connie Glover
The distinction between crisis management and crisis leadership are clear and decisive. To manage a crisis one follows a fairly prescriptive path with a focus on damage control and getting back to status quo. To display crisis leadership, however, is to have foresight, networks, decisiveness, the capacity to learn, and a willingness to take risks. Many good business leaders can manage a crisis— few have shown to display crisis leadership.
It it is often the handling of a crisis that leads to more damage than the crisis event itself. Effective crisis handling involves much more than good communications and public relations. I believe that we have little appreciation for the role of learning from crisis. Crisis events can create a potential for significant opportunity to be realized for individuals, for organizations, and for countries. Crisis leaders understand these issues and it is their ability to act on them and learn from them that separates crisis managers from crisis leaders.
--
Erika Hayes James, PhD
Associate Professor, Darden School of Business
www.erikahayesjames.com
October 11, 2009 at 1:47am by cristi m
There was a time when financial and economic growth was confused with development. Now is the time to reorient our thinking in the region. It is not an easy thing to do, especially when the train is already in motion, but we believe that at least three questions must be asked: What is the new role of the State in relation to public finances and the macroeconomic cycle? What is its role in public spending and allocation of resources? And what should it do to achieve increasing levels of equity and environmental sustainability?
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