The Voice of Experience

What’s the best strategy for making it through a bad patch? The answer comes from 12 experienced business leaders who have been there, seen it, and made it through — old pros who speak with the voice of experience.

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 ( 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

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.

Among other things, we decided to train people who didn’t have advanced degrees to act as caseworkers. We forged partnerships with local family-care homes to provide extra beds. And we launched a day-treatment program, because we didn’t have enough staff to run the wards all night. In the end, several of our solutions allowed for better care than the ways of the good old days. Today, programs like day hospitals are standard in community mental-health centers nationwide.


Succeeding in adversity makes success all the sweeter. At the end of the day, it’s not how far you fall but how high you bounce.

Sheila Wellington worked in mental-health facilities for 18 years. Before joining Catalyst in 1993, she was secretary and vice president of Yale University, where she was the first woman to hold the office. Her book, Be Your Own Mentor: Career Strategies for Women, was published in February by Random House. Catalyst is a nonprofit research and advisory organization working to advance women in business.


Peter G. Peterson

The Blackstone Group
New York, New York

Don’t sacrifice your long-term vital future for the temporary present. Just as it is a mistake to assume that boom times go on forever (an assumption that got us into this e-commerce fiasco in the first place), it’s also a mistake to assume that the business cycle has been repealed and that today’s bad times will go on forever. The latter assumption can lead to so much emphasis on cutting costs today that we forget that we’re also managers of the future.

That advice applies not only to organizations but to the country as well. Today, more than ever, we need business leaders who not only build their own companies but also assume new roles in building the macroeconomy. Trouble on the horizon — such as the imminent retirement of the huge baby-boomer generation and the $15 trillion or so of unfunded liabilities for social security and medicare — isn’t going away. And severely reducing the country’s revenue base through tax cuts could, over the long term, make an already unsustainable problem even more so.


This issue of entitlement reform is as politically toxic as it gets. But since our unsustainable senior-citizen entitlement programs threaten the medium-term and long-term macroeconomic future, it’s exactly the kind of issue that requires sustained business leadership. It will be up to e-commerce executives — who are often young and not normally active in public-policy issues — to pay attention and get involved. After all, they’re the ones who will be operating in the macroenvironment of the future.

Peter G. Peterson, a former U.S. secretary of commerce and former chairman and CEO of Lehman Brothers, is chairman of the Council on Foreign Relations and of the Federal Reserve Bank of New York, among other organizations. He is also founding president of the Concord Coalition, an organization devoted to fiscal responsibility, and is a special limited-advisory partner to Millennium Technology Ventures LP. His latest book is Gray Dawn: How the Coming Age Wave Will Transform America — and the World (Times Books, 1999). The Blackstone Group is a private investment bank in Manhattan.


Sir John Marks Templeton

Chairman of the John Templeton Foundation
Founder of the Templeton Growth Fund
Nassau, Bahamas

The cliché is true: Tough times build character. The best thing that ever happened to me was when the Great Depression hit, and my father couldn’t give me one more dollar for college. In order to return to school, I had to learn to be self-reliant, resourceful, and diligent. I took several jobs — the most lucrative of which was playing poker with rich boys — and I was able to pay my college expenses. When dealt a bad hand, you learn to play smarter.

Given the changing economy, many young investors today are probably looking at their first bad hand. The smart players will learn from history. The wildly insane Internet bubble wasn’t so different from previous bubbles that I’ve studied in my 88 years. In almost every case, within a year after the bubble burst, people were eager to buy again. Invariably, it was too soon. Think about the great stock-market collapse of 1929. After a few months, stocks began to climb, and people jumped in again, thinking the downturn was over. But it lasted for three years. You’d be surprised how low the market can go and how long it can take to recover. If you had bought on the top day in 1929, you wouldn’t have seen a net profit for 17 years. The lesson? Don’t buy too soon.


Investment advice aside, I’m a big believer that those who do good do well — in any economy. Simply put, the storekeeper who offers low prices and top quality will draw more customers and beat his competitors. The employer who focuses on giving employees better opportunities and benefits will attract and retain talent. If you’re genuinely enthusiastic about helping people, you’ll rise above these difficult times — and be better off for it.

Sir John Marks Templeton ( founded some of the world’s largest and most successful investment funds, including the Templeton Growth Fund, which averaged 15.2% a year during its 45-year history, exceeding all other mutual funds during that time. In 1992, the Wall Street legend sold his funds and founded the John Templeton Foundation, which finances more than 150 projects worldwide that encourage progress in religious and spiritual knowledge. He is the author of 17 books, including his most recent, Story of a Clam: A Fable of Disenchantment and Enlightenment (Templeton Foundation Press, April 2001).


Warren Bennis

Distinguished Professor of Business Administration
Founding chairman of the Leadership Institute
Marshall School of Business
University of Southern California
Los Angeles, California

I’ve been alive for 76 years, and I think this is a damn good time to be on this earth. The Internet Age has presented us with a marvelous opportunity: We’re all starting out fresh, having to learn the ropes together. What we’re seeing now are little setbacks. And if there’s one thing that the older generation understands well, it’s that there are things called “cycles.” And cycles teach you patience.

I don’t want to make it sound easy, because it can be heartbreaking to have to fire people when it’s time to tighten the belt. Nevertheless, running a business in a bumpy economy is as terrific an education as a young person can get. It’s not unlike being in a platoon of infantrymen and getting sent to the front lines, as I was at age 19. The stakes are different, of course. But what the experience teaches you is similar: You learn quickly to make courageous choices.

If you’re a leader, probably the biggest mistake you can make during any kind of downturn is to choke up. Remember the Flying Wallendas? When Karl, the patriarch of the Wallenda family, was in his seventies, he fell 120 feet to his death while trying to walk a tightwire between two office buildings in Puerto Rico. Later, his wife said that before the stunt, for the first time in his life, Karl had seemed concerned about falling. When it came time to perform, he fell because he was so focused on not falling, rather than on getting to the other side.

In tough times, remember Karl Wallenda. When you concentrate on not losing, rather than on winning, you’ll find yourself dead on the ground.

Leadership guru Warren Bennis ( is the author of numerous books, including Managing the Dream: Reflections on Leadership and Change (Perseus, 2000) and On Becoming a Leader (Addison-Wesley, 1989). He is now at work on Geeks and Geezers: Partnering Across Generations with coauthor Bob Thomas. It’s due out from Harvard Business School Press in 2002.

William F. Miller

Herbert Hoover Professor Emeritus of Public and Private Management
Stanford Graduate School of Business
Professor emeritus of computer science
Stanford University School of Engineering
Palo Alto, California

When the economy slows down, put your resources where you are strongest. It’s tempting to do the opposite — to try and shore up your vulnerable spots. But unless those vulnerable niche activities are extremely large and have great potential, you’ll just be throwing good money after bad.

For example, as president of SRI International during the strained economy of the late 1980s, I eliminated areas where we weren’t as competitive so that we could focus on what we did best. As provost at Stanford, I had to shut down entire departments where we simply weren’t the best.

Those kinds of decisions aren’t easy to make. But when times are hard, you need the courage to make choices in a thoughtful and purposeful manner. The last thing you should do is panic. When you panic, your brain shuts down; you stop listening and learning.

Fortunately, I believe that what we’re going through now is a simple slowdown — not a long bust. The bubble has been slightly deflated, but it didn’t burst. We have a huge amount of momentum going: global business being conducted on the Internet, a new wave of wireless and nanotechnologies that are on the brink of maturity. The pace of the economy might slow down a bit, but that momentum will continue to encourage growth.

William F. Miller ( is chairman of Borland Software Corp. and of Sentius Corp., and is president and CEO emeritus of SRIInternational. As Stanford’s vice president of research — and later, as vice president and provost — Miller championed the establishment of the Office of Technology Licensing. In February, he was inducted into the Silicon Valley Hall of Fame.

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 (, 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.

In 1951, Lillian Vernon started her mail-order business from her kitchen table with $2,000 that she had received for her wedding. Today, Lillian Vernon Corp. is a $240 million specialty catalog and online retailer. Her autobiography, An Eye For Winners, was published by HarperCollins in 1996.

Frank S. Greene

Founding partner
New Vista Capital
Palo Alto, California

My advice to young entrepreneurs? Don’t be so quick to run out and start a business. Young people today think they’ll miss their big chance if they don’t get involved in a startup immediately. But what many people don’t recognize is that the basic skills of building a company are the same today as they were 20 years ago: Know how to create customers, deliver on your promises, and keep your costs lower than your revenue. The problem is that many people are simply too inexperienced to start their own business. We see a lot of technologists with a bit of project experience who suddenly want to start a company. But their lack of knowledge about management, profit and loss, and building an organization — the kinds of things ultimately needed to grow a company — makes them a poor investment.

Don’t get me wrong. We invest in companies knowing that there’s a lot of learning that needs to occur. But we look for people who are smart enough to realize that they don’t have all the answers.

Ultimately, downturns in the economy reinforce the fact that good companies survive, and flaky companies get weeded out. At the end of the day, if your company can show that it can create value for investors, people will put their money into your business — no matter what ups and downs the economy brings.

Frank S. Greene has worked in private venture capital since 1986 and was founding CEO of two information technology companies, Technology Development Corp. and ZeroOne Systems, from 1971 to 1989. Previously, he developed high-speed semiconductor computer-memory systems at Fairchild Semiconductor R&D Labs. In addition, he served as assistant chair of Stanford University’s electrical engineering department. Started in 1993 as a fund to assist minority entrepreneurs, New Vista Capital assists startup companies in business planning and in raising capital.