Flevy Blog is an online business magazine covering Business Strategies, Business Theories, & Business Stories.

A Robust Approach to Downturn Management and Transformation

Editor's Note: Take a look at our featured best practice, Digital Transformation Strategy (145-slide PowerPoint presentation). Digital Transformation is being embraced by organizations across most industries, as the role of technology shifts from being a business enabler to a business driver. This has only been accelerated by the COVID-19 global pandemic. Thus, to remain competitive and outcompete in today's fast paced, [read more]

Also, if you are interested in becoming an expert on Business Transformation, take a look at Flevy's Business Transformation Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

* * * *

Financial crisis, adverse supply shock, technological disruption, or natural hazards and disasters significantly affect global businesses.  Recessions caused by these global incidents and problems have serious outcomes on commodity prices, stock markets, economies, and even countries.

A Downturn can be described as a contracted business cycle with a significant decline in economic activity across markets with subsequent drop in spending, GDP, real income, employment, and manufacturing.  Downturns cause inflation, decline in sales revenues and profits, and cutbacks on R&D and other crucial expenditures.  The scenario challenges businesses because of tightening credit conditions, slower demand, layoffs, and general insecurity.

The organizational readiness to manage and curtail the adverse effects of downturns is the top agenda for the senior executives.  However, the uncertain nature of an economic crisis often triggers rash responses or even inaction.

Any haphazard responses or inaction can make recovery of an organization from a downturn costly later on.  Downturn management necessitate a calculated approach to confront the uncertainties, anxiety among the employees, and to unlock opportunities out of such crisis.  An effective approach to deal with the downturn crisis encompasses 2 key phases:

  1. Stabilize
  • Determine Exposure
  • Minimize Exposure
  1. Capitalize
  • Invest for the Future
  • Pursue M&A Opportunities
  • Redesign Business Models

Let’s dive deeper into the 2 phases.


This phase entails a series of actions to safeguard the organization from downturns and maintain the liquidity required to sustain the period of uncertainty.  Leading organizations take downturns as an opportunity to deploy planned yet urgent, high-priority interventions to maintain standard functioning of the enterprise.  They carry out careful analysis to appraise and curtail the risks of exposure.  Key steps required to stabilize the organization during a downturn include:

  1. Determine Exposure
  2. Minimize Exposure

Determine Exposure

This step demands a methodical assessment of risks associated with exposure.  This necessitates evaluating various scenarios and their impact on the organization as well as on the industry.  The step helps in ascertaining the units that are more susceptible to downturn risks and warrants prompt action.   The analysis of various scenario assists in highlighting and communicating the rationale—for interventions required to manage the downturn—to the people across the organization.

Specifically, the step involves initiating 3 fundamental actions:

  • Conduct Scenario Analysis
  • Quantify Impact
  • Analyze Competition

Minimize Exposure

Once the executives have determined the impact of downturn exposure on their business, it’s time to work on reducing the exposure from crisis risks.  An understanding of the effects of a downturn exposure on the business helps the senior executives discern the most appropriate method to subsist and make the most of their organizational performance during the downturn.

In order to subsist and minimize downturn exposure risks senior leadership needs to maintain enough liquidity and access to capital to make sound investments in future, keeping a check on cash flows by generating weekly / monthly cash reports, cutting down or delaying discretionary spending, carrying out interventions to improve fundamental business, improve business processes, and maintain the organization’s market value and positive outlook for the investors.

Specifically, the executives have to work on achieving these 3 objectives:

  1. Protect Financials
  2. Protect Existing Business
  3. Maximize Valuation.


The Capitalize phase focuses on growing the business and making the most of the economic situation.  Leading organizations prudently manage downturns with greater diligence and immediate, well-thought-out response.  Downturns do not preclude executives from investing in critical interventions.  Most investments take time to fruition and postponing crucial investments may put an organization on the back foot when economic conditions normalize.

To capitalize on these hard times, senior executives need to carefully think about and prioritize the various investment options and endeavors critical for improving productivity and revenue, consolidate the business through mergers or acquisitions, hold back spending on projects with unclear results, shelve the endeavors that do not have a key role in future success, and invest in developing their people.

Specifically, they should chart out 3 key actions to take advantage of the crises and emerge rejuvenated after these tough times:

  1. Invest for the Future
  2. Pursue M&A Opportunities
  3. Redesign Business Models

Interested in learning more about the phases and key actions required to manage Downturns?  You can download an editable PowerPoint on Downturn Management and Transformation here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”

– Michael Duff, Managing Director at Change Strategy (UK)

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

“Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”

– Omar Hernán Montes Parra, CEO at Quantum SFE

280-slide PowerPoint presentation
Unlocking Transformational Leadership: The Complete Chief Transformation Officer (CTO) Business Toolkit In the ever-evolving landscape of modern business, staying competitive and relevant is not merely a choice--it's a necessity. With the rapid pace of technological advancements, [read more]

Want to Achieve Excellence in Business Transformation?

Gain the knowledge and develop the expertise to become an expert in Business Transformation. Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

"If you don't transform your company, you're stuck." - Ursula Burns, Chairperson and CEO of VEON; former Chairperson and CEO of Xerox

Business Transformation is the process of fundamentally changing the systems, processes, people, and technology across an entire organization, business unit, or corporate function with the intention of achieving significant improvements in Revenue Growth, Cost Reduction, and/or Customer Satisfaction.

Transformation is pervasive across industries, particularly during times of disruption, as we are witnessing now as a result of COVID-19. However, despite how common these large scale efforts are, research shows that about 75% of these initiatives fail.

Leverage our frameworks to increase your chances of a successful Transformation by following best practices and avoiding failure-causing "Transformation Traps."

Learn about our Business Transformation Best Practice Frameworks here.

Readers of This Article Are Interested in These Resources

21-slide PowerPoint presentation
Rapid changes in conditions and circumstances can erode our company's market position slowly or quickly. Strategic Drift happens when our company fails to take countermeasures in good times. The result is our company falls from the market carousel. Without delay, our company must embark on a [read more]

22-slide PowerPoint presentation
49-slide PowerPoint presentation

About Mark Bridges

Mark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.

, , , , , ,

Complimentary Business Training Guides

Many companies develop robust strategies, but struggle with operationalizing their strategies into implementable steps. This presentation from flevy introduces 12 powerful business frameworks spanning both Strategy Development and Strategy Execution. [Learn more]

  This 48-page whitepaper, authored by consultancy Envisioning, provides the frameworks, tools, and insights needed to manage serious Change—under the backdrop of the business lifecycle. These lifecycle stages are each marked by distinct attributes, challenges, and behaviors. [Learn more]

We've developed a very comprehensive collection of Strategy & Transformation PowerPoint templates for you to use in your own business presentations, spanning topics from Growth Strategy to Brand Development to Innovation to Customer Experience to Strategic Management. [Learn more]

  We have compiled a collection of 10 Lean Six Sigma templates (Excel) and Operational Excellence guides (PowerPoint) by a multitude of LSS experts. These tools cover topics including 8 Disciplines (8D), 5 Why's, 7 Wastes, Value Stream Mapping (VSM), and DMAIC. [Learn more]
Recent Articles by Corporate Function






The Flevy Business Blog (https://flevy.com/blog) is a leading source of information on business strategies, business theories, and business stories. Most of our articles are authored by management consultants and industry executives with over 20 years of experience.

Flevy (https://flevy.com) is the marketplace for business best practices, such as management frameworks, presentation templates, and financial models. Our best practice documents are of the same caliber as those produced by top-tier consulting firms (like McKinsey, Bain, Accenture, BCG, and Deloitte) and used by Fortune 100 organizations. Learn more about Flevy here.

Connect with Flevy:


About Flevy.com   /   Terms   /   Privacy Policy
© . Flevy LLC. All Rights Reserved.