Article Treasure Cove

In period of mess , chances abound. All managers must do is keep their companies afloat, their eyes peeled for openings, and their bearings—as the old rules wash away

What do Carnegie Steel and Hewlett-Packard (HPQ) have in general ? Both were born at a time when people from all over the world was breaking down . Andrew Carnegie hurled his first steel mill during the Panic of 1873, the start of a long depression to build an industrial giant that made him the world’s richest man. Bill Hewlett and Dave Packard showed similar courage when they launched HP from a Palo Alto (Calif.) garage toward the end of the Great Depression.

History has shown that crisis breeds opportunity. Business chiefs may have to cut prices to survive 2009, but the smart ones are also out there looking for chances . They are willing to take the type of bold process that IBM (IBM) made during the recessionary days of 1981 when CEO John R. Opel aggressively became flatter the company’s landmark personal computer just as PC demand soared. Even in the current downturn, there are corporations like AT&T (T), which recently announced plans to buy two companies for a total of $1.2 billion.

Managers are now concerning with everything from shattered customer confidence to tighter credit, not to note the likelihood of a tougher regulatory environment. Decisions that made sense two years ago may assure disastrous in this climate—from giving outsize rewards to those who take big risks to borrowing heavily just because interest rates are low. Years of excessive credit have taken a toll: An unprecedented two-thirds of nonfinancial American firms covered by Standard & Poor’s have speculative-grade, or junk-rated, debt. (S&P, like BusinessWeek , is a unit of The McGraw-Hill Companies (MHP).) On the whole , U.S. businesses face a $238 billion wave of debt maturities that will come due by the end of 2009. “Many companies are questioning their survival,” says Gerry Hansell, a senior partner at Boston Consulting Group.

Executives have to lead “their people out of a psychological stench and at the same time tailor their business to concentrate on a new reality,” says management tutor Ram Charan. That’s good recommendation during any business cycle but especially important today. Here are some new recommendations for managing through a tough 2009—and beyond:

CHANGE YOUR MINDSET

Money is scarce . Markets are unsteady . Morale is harder to help in an atmosphere of anxiety . Acknowledge to yourself and your group that the world has changed. Dennis Carey, a senior partner at Korn Ferry International (KFY), debates that now is the time to question every technique that worked during boom years.

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