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Call it workplace whiplash. With lightning speed, we've gone from prosperity and peace to recession and war. Soaring earnings and fast-track hiring have given way to missed numbers and rolling layoffs. And leaders are wrestling with the same questions: Where does it make sense to cut? Where would it be insane to cut? And where would it be smart to invest? A roundtable of seasoned business leaders assembled in Dallas to come up with short-term tactics for surviving the downturn and long-term strategies for winning in the future.

Lightning Round 1: Mistakes That Losers Make

Alan Webber (founding editor, Fast Company): What's the most common mistake that companies make in responding to a market downturn?

Roy M. Spence Jr. (founder and president, GSD&M): First, too many companies don't understand their own business models and don't trust their customers. In a knee-jerk reaction, they cut their marketing and violate the rule that Sam Walton used to tell me: Whenever you get confused, go to the store. The customer has all the answers -- and all the money.

Fred Chang (president and CEO, SBC Technology Resources Inc.; SBC Communications Inc.): The big mistake that people make is cutting their R&D budgets. They don't see R&D producing immediate benefits in the first 6 to 12 months, so they say, "Let's cut that!" You have to fight the natural tendency to think in 6-to-12-month cycles. Instead, you need to remember that this is a long game. When the business cycle recovers -- and it will -- you need to be ready to get past your competitors.

Ian Downes (vice president and executive sponsor for cost reduction, Cap Gemini Ernst & Young): It's almost a reflex: Reduce your head count across the board. But we've done a lot of research on this, and we've found that 50% of all companies that cut their head count across the board end up in a worse position as they come out of difficult times. Across-the-board head-count reduction doesn't work.

Morris Miller (managing director and cochairman, Rackspace Managed Hosting): Too many companies find themselves trying to make up for lost time, and, as a consequence, they cut too deeply. You really have to look nine months out. You may have to lay some people off, but you should focus on keeping your core team together.

Steve Moffitt (CIO, global communications, Dynegy Inc.): The biggest mistake? Not seeing a downturn as a time to make investments. During a downturn, you can acquire assets and capabilities at the low end of the market and be positioned to take advantage of them during the upturn.

Tom Rohrs (senior vice president, global operations; member of the Silicon Business Sector Executive Committee; Applied Materials Inc.): I think that the most common mistake is a kind of corporate egalitarianism. Companies take 10% away from everybody, instead of separating out what's core. They need to determine what's critical and invest in that, even if it means taking 20% away from everything else. There's too much democracy, because nobody wants to make anybody else unhappy.

Katrina Roche (senior vice president and chief marketing officer, i2 Technologies Inc.): I'd have to say just the opposite of what Morris just said: Companies are unwilling to cut deep enough the first time. They're too optimistic that the market will come back. If you don't cut deep enough that first time, you will damage the culture in the company.