The Value of an Economic Consultant: The Lagging Division

out of a recession (not the most recent, but another recession), a company had
one line of business with flat sales.  The
company’s other divisions were hitting double-digit growth rates, but this one
division had no growth at all.


the meeting to report my results, I could tell that the CEO doubted the
division manager’s ability.  I was
tempted to sit as far away from that guy as I could, to avoid becoming
collateral damage when the CEO fired him. 
But first I had a story to tell.


had gone back into every past recession-recovery episode to look at how that
market segment performed.  It turns out
that the problem division was in a part of the economy that always lagged in
the recovery.  Although other economic
sectors would take off early, this one division was in an industry that didn’t
get moving until 12 to 24 months after the recession was over.  I had my charts.  More importantly, I think, I had confidence
that I knew what I was talking about.


CEO accepted my recommendation that they simply wait a while.  He didn’t appear fully convinced, but he
respected my judgment and decided to wait.


months later, the problem division blossomed. 
Sales shot up and profitability soared. 
Pretty much right on schedule.  I
said to the division manager, “Who would have thunk it?”  He smiled and pointed at me, and said, “You
thunk it.”


part of the success: the division had stable, mature management in place.  If a new division manager had been brought
in, he or she would have shaken up the sales team, instituted new programs, and
generally disrupted what was really a decent group.  The division’s sales were probably several
million dollars higher thanks to stable leadership.  Sometimes management needs to be changed, no doubt
about it.  Before firing someone, though,
make sure it’s poor performance that is the problem, rather than common
economic patterns.