The Voice of Experience

Robert Crandall

Former CEO
American Airlines/AMR Corp.
Palm City, Florida

There are no elegant formulas for surviving an economic downturn. It takes plain old hard work. You've got to keep your nose down and your fanny up. And although some people convince themselves that a challenging economic climate can present a great opportunity, I wouldn't be so optimistic. Obviously, not everybody can continue to get by. While it's true that bad times can make some people more resourceful, it's the best-funded company that has the real opportunity. In the end, the strong get stronger, and the weak get weaker.

That's why as a leader, in good times or in bad, your goal is always the same: to beat the competition. Sales may be sluggish, and profits may be low, but the real issue is, are you doing better than your competitors? Success is always relative.

In the end, the smart, aggressive leader takes advantage of the slow economy and skins that guy down the street. If you're the guy who gets skinned, don't kid yourself that the challenging environment is a great opportunity. It could leave you out in the cold.

During his 25 years at American Airlines, Robert Crandall created a number of breakthrough programs, including AAdvantage, the industry's first frequent-flier program. In 1983, he launched an expansion program that more than tripled the company's size and transformed it from a medium-sized domestic carrier to a $20 billion-plus international concern.

Martin Cooper

Cofounder, chairman, and CEO
ArrayComm Inc.
San Jose, California

Perseverance is the key -- in any economy. my first rule of business is that there are no easy businesses. Every single one is hard. Having perseverance means, most critically, persevering through failure. I love to talk about my successes, but the only way that I've ever learned anything is through failure. You have to live through failure to understand how to succeed. And those are the lessons you never forget.

Until recently, it seemed that if you didn't go public after a year and a half -- and if the founders weren't at least multimillionaires -- then people saw the business as a failure. And yet, how can you really do anything important in a year and a half? It takes at least two or three years to develop a real product. Finding customers and getting to the point where you're generating revenue takes another few years.

If you look at your business in terms of that kind of time frame, why would any bumps in the economy bother you? That's why I have trouble thinking about the financial environment in terms of slowdowns and speedups. In five years, you're bound to see some peaks and valleys. Just make sure you have the strategy and the funding in place to get through the valleys.

Martin Cooper (marty@arraycomm.com), a pioneer in wireless communications, was director of research and development at Motorola, where he worked for 29 years. In 1973, he invented the cell phone and placed the world's first cell phone call from a street corner in Manhattan -- to his chief competitor. In 1992, he founded ArrayComm Inc., which specializes in developing spectrally efficient wireless technology.

Lillian Vernon

Founder and CEO
Lillian Vernon Corp.
Rye, New York

When the economy changes, lifestyles change -- and so do consumer needs. Keep up with those changing needs, and you'll have a viable business. When I started my company 50 years ago, I discovered an unexploited consumer niche: a new population of women entering the workforce who had little time to shop. I offered them personalized handbags and belts, which tapped into their need to feel unique, and I sold my products through mail order, which made shopping convenient. The first year, my business brought in $32,000 in sales and continued to grow.

In the past half century, Lillian Vernon Corp. has survived through many cycles in the economy, as well as internal changes. Sometimes, I've had to make difficult decisions. In 1983, for example, we faced a surge in growth and needed considerable cash to expand our operations, add new staff, and update an obsolete computer system. I asked the bank for a $13 million loan. As a result, we were able to pay off our bills before our busiest holiday season, and we purchased more- sophisticated technology that could keep pace with our growing sales.

Getting that loan was critical. I'd been afraid to go into debt, but the alternative -- bankruptcy -- was equally distasteful. In the end, because of the momentum that extra money provided, I was actually able to pay off the loan before it was due. To survive any kind of downturn, be prepared to make difficult decisions, and stay focused on your customers. History has shown that the U.S. economy is cyclical: It always has periods of decline after a boom. If you can satisfy customers' changing needs, your business will survive -- even when consumer spending declines.