The Voice of Experience

Walter Wriston

Former CEO of Citicorp/Citibank
Chairman emeritus of Citibank
New York, New York

I've driven through my share of rainstorms, listening to some radio announcer in a windowless room telling me that it's a sunny day.

During a change in economic climate, the biggest mistake a leader can make is not to recognize it. So never stop looking out the window. Accurately assessing the business cycle is key to your company's success.

When I ran Ronald Reagan's economic-policy board, I met some prominent CEOs who failed to recognize that a change in climate was in the offing. They looked at their current numbers, saw that their order book was full, and believed that everything was terrific. But no graph goes up forever. That was true then, and it's true today.

In economic hard times, you have to shift your attention from the top line to the bottom line. Start thinking about profit, rather than revenue. Cash is king, especially when the wind blows. Get back to basics like inventory control, receivables, payables, and cash flow -- all of those boring things that people have nearly forgotten about in the new economy. Focus on generating cash, and your company will be positioned to take advantage of opportunities that the cash-strapped can't afford.

And just remember to recognize when the weather is shifting. Rain or shine -- look out.

Walter Wriston (walter.wriston@citicorp.com) joined Citibank in 1946. He served as president and CEO for 17 years until his retirement in 1984. From 1982 to 1989, he was chairman of then-president Ronald Reagan's Economic Policy Advisory Board. Wriston is the author of Risk & Other Four-Letter Words (Harper & Row, 1986) and The Twilight of Sovereignty (Scribner, 1992).

Lee Iacocca

Founder and chairman
EV Global Motors Inc.
Los Angeles, California

After 50 years in business, I can tell you that there are no free lunches. There are no overnight sensations. All of the clichés in the world are true. Unfortunately, a lot of young businesspeople are learning that truth the hard way right now. But shakeouts are a fact of competition. Did you know that between 1909 and 1919, there were 120 car companies? How many are left in the United States today? Two.

But I'll also say this: Don't get down at the first downturn. Just be sure to take care of your customers. You have to go eyeball to eyeball with them and say, "Do I have a deal for you!" And then stand behind your product or service. Don't worry about stockholders or employees. If you take care of your customers, everything else will fall into place.

You have to understand your customers, and you have to follow them. You have to change as your customers' lives change. I've followed baby boomers all of my business life. I got them first with the Mustang around 1964. And then 20 years later, when they acquired kids, dogs, and nannies, I got them again with the minivan. Now I'm planning to get them again with the electric bike.

But in a downturn, you have to knuckle down and ask yourself, What the hell really works here? We started out distributing our bike through car dealers. Now we see that we've also got to move into areas like resort communities and rentals. Even after all of these years, I still have to get back to fundamentals: If you don't have the right distribution system, you've got a problem.

Lee Iacocca joined Ford Motor Co. in 1946, working his way through the ranks to become president in 1970 -- a position that he held until 1978. During the recession of the late 1970s, he was named president of Chrysler. He managed to pull the company from bankruptcy, generating $2.4 billion by 1984. He retired in 1992. The E-Bike can operate either as an electric bike or as a conventional pedal bike. The privately held EV Global Motors Inc. has about 20 employees and 150 E-Bike dealers across the United States.

Sheila Wellington

President
Catalyst
New York, New York

When the going gets tough, the tough get creative. Saying, "We've always done it that way" just won't work. In the early 1980s, I ran a state mental hospital in Bridgeport, Connecticut -- a depressed backwater city that fell on disastrous economic times. There was a budget freeze for state-run facilities. We had thousands of patients, and we were short-staffed. We had no choice but to rethink our approach completely. As a leader, I had to assure my people that together we could handle anything.