C. Richard Panico has an inspiring bit of advice for CEOs who believe they may be looking recession in the face: Don’t participate. That approach worked for him and his company, Integrated Project Management, during the last slowdown—and it’s an attitude he vocalized again last month during the company’s internal strategic-planning meeting which coincidentally unfolded as the coronavirus was beginning to spread worldwide.
“It was a statement I made to our entire company in 2008 when it was evident that we were at the beginning of a pretty significant recession,” Panico, who’s founder, president and CEO of the nearly $50-million consulting firm based in Burr Ridge, Illinois, told Chief Executive. “I was asked, ‘What will we do?,’ and I said, ‘We’re not going to participate.’ And while it was easy to say that, it wasn’t just an emotional response or reaction. I’d really thought about it.”
There was more than just tactical bravado to his thinking about the prospects for his company that won the 2018 Malcolm Baldrige National Quality Award, the nation’s highest presidential honor for business-performance excellence. At the onset of the Great Recession, Panico saw specific reasons why IPM indeed didn’t necessarily have to be afflicted by the general economic slowdown that was underway—reasons that may also apply to his company and to other companies today.
For one thing, Panico figured at the time, IPM was a $15-million consulting business whose share in its primary markets – health care, consumer, industrial, life sciences—amounted to “a rounding error against the total size of our market. My point was that even if half of that overall [potential] market was lost during a recession, it still would be an opportune time for us to grow. Meanwhile, firms that demonstrated only average care of their customers might fade as great and good companies like ours were more proactive.”
Panico also believed then and does today that CEOs can “read the tea leaves” of changing patterns in their business and whether customers are pulling back—as well as whether they’re simply tightening their belts, as many companies already are today, or whether they’re reacting to vulnerabilities in a vendor’s lines of products and services.
“You have to understand those tea leaves, then define very clearly in your strategy how you best apply your strengths to the markets where you have the most demand,” he explained. “During recessionary times, any efforts extended outside of the principal areas in which you are strong and your product is strong will dilute your efforts and be counterproductive.”
It’s also imperative for a CEO “to be transparent with your people” as any slowdown looms or takes effect, Panico said. “The more context you can create around a truthful situation, the better you’re going to be able to engage them. That’s even if what you are communicating portrays significant challenges; you must be extraordinarily transparent with them and enlist their support.
“And you’d better come to them prepared, with a strategy in hand, not only to survive but to win. That perspective and attitude is very important to winning. You need to engage both the intellect and the heart, being both effective and affective. ‘Effective’ is about having a great plan and being able to execute it. ‘Affective’ is being able to engage people’s hearts. When you can do both, you have a winning combination. Even an average performer, when appealing to their heart, it’s been proven that their performance will be enhanced. You need all hands on deck to focus on the strategy that’s been laid out.”
This approach worked for Panico during the Great Recession, when IPM didn’t lay anyone off, remained profitable and emerged stronger—on its way, for instance, to winning the iconic Baldridge award several years later.
This time around, Panico said, just as last time, he’s “maintaining an offensive posture. We’ve worked hard to put ourselves in a financial position to stay on the offensive. That’s critically important, particularly when you’re doing well. You have to understand your growth and, in that, you have to understand where opportunities lie to improve and take your business to the next level.”
With devotion to this strategy, Panico said, “There’s a competitive spirit that goes with it. You can’t have a defeatist attitude.”