Book Review: Accelerating Out of the Great Depression

How are you reacting to today’s recession? That seems to be the question most media sources are addressing today. But an objective, comprehensive look at the Great Recession is harder to find.

Boston Consulting Group senior partners David Rhodes and Daniel Stelter attempt to do just that in their newest book, Accelerating Out of the Great Recession: How to Win in a Slow-Growth Economy. The book, which targets high-level corporate decisionmakers, covers how today’s economic crisis happened, what the current business environment looks like, and how companies can stay successful in current recessionary conditions.

How They Figured it Out

Rhodes and Stelter surveyed 450 executives in the US, UK, EU, and Japan to get a barometer of the current business climate. Those executives run companies with sales ranging from $1 billion to more than $20 billion. The book, in other words, targets leaders of large corporations, as one might expect from a consulting tome.

Rhodes and Stelter also researched thousands of public companies that succeeded during the Great Depression, the 1970s-80s US stagflation period, and Japan’s Lost Decade. Through their research, they determined what factors made those companies succeed. Note that they did not include private companies, and do not focus much outside of their target geography. As a result, the book contains conditions and prescriptions specific to the US and particularly Europe, and is most applicable to large, public corporations.

Inside the Book

AOGR (to shorten the title) is divided into two parts. Part I explains we got into this crisis, what caused it, and why it will take years to recover. It compares the US now to Japan during its Lost Decade (1991-2001). You also learn about the things that typically happen during a prolonged recession: Consumers deleverage, governments become more interventionist, and global trade flows redirect, for example.

The authors emphasize that although the world managed to avoid another Great Depression, we’re going to grow slowly. This is not a temporary blip in the economy, the way some might have us believe. No single region or country, notably China, has the economic heft to pull the world out of this.

Part II tells you how to succeed as a business in the current economic conditions. It underlines what successful companies did to get out of the Great Depression, notably the Big 3 US automakers.

You also learn how to protect your company’s fundamentals, for lack of better jargon, in recessionary conditions. Tips include reducing costs, keeping your business structure flexible (notably by avoiding vertical integration), and pricing strategically.

After covering your defensive bases, AOGR tells you how to go to battle in a hypercompetitive, but recessive, economy. If you’re a regular business book reader, you’ve probably heard these tips before: Innovate, advertise and market more, invest in M&A, and don’t get into a price war, for example.

The final chapter was my favorite. It gives you specific tips on leading your company during a recession. The authors share tips on relevant leadership issues, like dealing with globalization and honing your political skills. They also emphasize revisiting ethics, compensation systems, and shareholder influence.

Thoughts

AOGR provides a big-picture overview of current business conditions, based on a historical perspective. It offers sound prescriptions on how to succeed in recessionary conditions, bolstered by research and case studies.

Despite containing a fair amount of business jargon, AOGR is not a technical read. It’s unusual to find an objective, comprehensive overview that’s this easy to understand. For that reason, I found AOGR valuable.

I do have a few criticisms. For one, the book was a bit Eurocentric. I’d like to see any book talking about America’s economy go into more depth about endemic conditions like our lack of a manufacturing base, restricted capital flows, healthcare problems, and job-creation issues. Based on case studies and number of details on the European economy, I also got the sense that the authors, themselves Europeans, were more intimate with the Europe’s situation.

Also, the book’s research was specific to large public corporations in Europe, Japan and the US. It doesn’t talk much about BRIC countries, which are crucial to today’s global economy. So I wouldn’t see it as a definitive, all-encompassing resource on thriving in the Great Recession. Rather, it applies most to the demographic, as it were, mentioned above.

To conclude…

I recommend this practical, well-researched read to any corporate leader fitting the target audience. I also recommend it as a general overview for anyone who wants to read about the Great Depression in plain, historically-relevant language. If you want a more US-specific read, or a book that features more contentious material, look elsewhere.

Disclosure: We received a free promotional copy of this book.