An important observation by Jim Collins in How The Mighty Fall: And Why Some Companies Never Give In:
During its darkest days, Xerox faced the very real threat of bankruptcy, yet Mulcahy rebuffed with steely silence her advisors’ repeated suggestions that she consider Chapter 11. She also held fast against a torrent of advice from outsiders to cut R&D to save the company, noting that a return to greatness depended on both tough cost cutting and long-term investment, and actually increased R&D as a percentage of sales during the darkest days.
“For me, this was all about having a company that people could retire from, having a company that their kids could come and work at, having a company that actually would have pride some day in terms of its accomplishments.”
And it worked:
For 2000 and 2001, Xerox posted a total of nearly $367 million in losses. By 2006, Xerox posted profits in excess of $1 billion and sported a much stronger balance sheet. And in 2008, Chief Executive magazine selected Mulcahy as chief executive of the year. At the time of this writing in 2008, Xerox’s transition had been going strong for seven years — no guarantee, of course, that Xerox will continue to climb, but an impressive recovery from the early 2000s.
The lesson, for organizations and life, is not to cease expenditures for growth during challenging times. This can seem appealing, but it backfires. People who are only mindful of costs don’t do many things to write home about.