We all felt the tremor of giants falling during the global recession. It cost US households on average $100,000 in lost wealth and income and some 10 million US homes now face foreclosure.
In his new book, Why Some Firms Thrive While Others Fail, Johns Hopkins University fellow Thomas H. Stanton says that this didn’t need to happen. With better governance and management, organizations like AIG and Fannie Mae could have survived. Stanton has the credentials to make such a proclamation – he was a senior member of the Financial Crisis Inquiry Commission and saw what made some firms flourish while others foundered.
According to Stanton, firms that survived the economic crisis possessed:
- Discipline and long term-perspective
- Robust communications and information systems
- Capacity to respond effectively and early on
- Constructive dialogue between business units and managers.
What holds all of these factors together is strong leadership. A steady hand and maintaining constructive dialogue across all business units was a key difference between firms that fell and those that still stand today.
