I noted this interesting quote: “a business professor at INSEAD, the renowned global business school, hammering to his students: “You know what should be the priority of a company? It’s not growth, or anything else. It is to survive!”” from a post on Facebook business model by Frederic Filloux. In my experience as an entrepreneur and wathcing also our industrial clients be born, live and die, I find this assertion quite true.
In particular, over-extension in growth is often a very fatal situation: the burden of debt can’t be repaid when the industry comes down or when execution does not follow. Focus on survival, prudent management should definitely be essential priorities.
I am always amazed on how tough it is to be profitable and build substantial reserves to cover downturns, and how quick things can go down when there is a downturn. There is an essential non-symmetry that is very difficult to overcome even when ones reacts quickly and massively to a downturn, cutting costs.
Finally it is all about natural selection: extinction is the rule, and survival is the exception. Substantial growth is the uber-exception, so when it happens, care should be exercised!
