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<v Speaker 1>Helping leaders motivate their people to a higher level of

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<v Speaker 1>performance through strong human relations, team building and gola GV.

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<v Speaker 1>This is the Seven Minute Leadership Podcast with your host

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<v Speaker 1>Paul Fellavaledo.

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<v Speaker 2>Hello everyone, and welcome to the Seven Minute Leadership Podcast.

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<v Speaker 2>It's episode two forty and today we're looking back at

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<v Speaker 2>the Great Recession two thousand and seven to two thousand

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<v Speaker 2>and nine, one of the most challenging economic downturns in

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<v Speaker 2>modern history. Many leaders made critical mistakes that hurt their organizations,

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<v Speaker 2>but their missteps also provide valuable lessons for us today.

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<v Speaker 2>So I'll walk you through real examples of leadership failures

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<v Speaker 2>from that period and give you practical ways to avoid

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<v Speaker 2>making those same mistakes in the future. So first up

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<v Speaker 2>is something we call reactionary layoffs, and this would be

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<v Speaker 2>the collapse of Circuit City. One of the biggest mistakes

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<v Speaker 2>leaders made during the Great Recession was cutting too deep,

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<v Speaker 2>too fast, and without a strategic plan. So what happened

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<v Speaker 2>Circuit City, once a leading electronics retailer, panicked when the

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<v Speaker 2>economy started slowing down in two thousand and seven, just

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<v Speaker 2>before the recession fully hit. They laid off thirty four

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<v Speaker 2>hundred to their most experienced sales associates to cut costs,

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<v Speaker 2>and the result was customer service tanked, loyal customers left,

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<v Speaker 2>and Best Buy swooped in to take the market share,

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<v Speaker 2>and within two years, Circuit City was bankrupt. So the

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<v Speaker 2>lesson here was, if you must make cuts, do it strategically.

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<v Speaker 2>Don't eliminate the employees or resources that are critical to

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<v Speaker 2>your customer experience and long term stability. Instead of mass layoffs,

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<v Speaker 2>consider temporary pay reductions, job sharing programs, or targeted costs

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<v Speaker 2>come cutting in non essential areas first and next up

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<v Speaker 2>is neglecting company culture and this would be the AIG controversy.

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<v Speaker 2>During the recession, many companies forgot that leadership isn't just

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<v Speaker 2>about numbers, it's about people. So what happened? Insurance giant

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<v Speaker 2>AIG received a massive eighty five billion government bailout to

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<v Speaker 2>stay afloat, but instead of leading with humility and transparency,

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<v Speaker 2>executives turned around and spent over four hundred thousand dollars

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<v Speaker 2>on a luxury retreat for top performers, and at a

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<v Speaker 2>time when thousands of employees were losing their jobs. This

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<v Speaker 2>tone def decision destroyed trust and led to public outrage.

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<v Speaker 2>So The lesson here is, in difficult times, optics matter. Employees,

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<v Speaker 2>customers in the public are watching how you handle adversity.

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<v Speaker 2>Instead of focusing on executive perks, double down on transparency

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<v Speaker 2>and support your workforce. Even small gestures like open QA

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<v Speaker 2>sessions or retention incentives or mental health resources can boost

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<v Speaker 2>morale and build loyalty. Next is stopping innovation, and this

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<v Speaker 2>would be the downfall of Blockbuster. Some leaders thought the

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<v Speaker 2>best way to survive was to freeze all spending, including

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<v Speaker 2>investments in future growth. So what happened here. Blockbuster, already

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<v Speaker 2>facing competition from Netflix, refused to pivot when the recession hit.

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<v Speaker 2>They had an opportunity to acquire Netflix for just fifty

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<v Speaker 2>million dollars, but in two thousand rejected it. Instead of

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<v Speaker 2>adapting to the streaming trend, they cut spending, stuck with

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<v Speaker 2>their outdated brick and mortar model, and by twenty ten

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<v Speaker 2>they were bankrupt. And the lesson here is don't stop

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<v Speaker 2>innovating just because times are tough. Smart calculated investments, technology

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<v Speaker 2>and efficiency can help you come out of a downturn stronger.

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<v Speaker 2>Look for creative ways to stay competitive, whether that's shifting

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<v Speaker 2>to digital, streamlining operations, or offering new services that match

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<v Speaker 2>changing consumer needs. And next is failing to learn from crisis,

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<v Speaker 2>and this would be the near collapse of General Motors.

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<v Speaker 2>Some companies didn't learn from past mistakes and walked straight

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<v Speaker 2>into disasters. So what happened here? General Motors GM had

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<v Speaker 2>ignored signs of financial troubles for years. They continued producing oversized,

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<v Speaker 2>gas guzzling SUVs, even as fuel prices soared and consumer

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<v Speaker 2>demands shifted towards smaller, fuel efficient cars. And when the

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<v Speaker 2>recession hit, GM was caught completely unprepared, sales plummeted. They

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<v Speaker 2>had to be bailed out by the government with a

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<v Speaker 2>fifty billion dollar rescue package in two thousand and nine.

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<v Speaker 2>And the lesson here is a aptability is key to survival.

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<v Speaker 2>If your industry is shifting, don't cling to outdated business models.

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<v Speaker 2>Anticipate change and pivot early. Regularly review your financials, market trends,

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<v Speaker 2>and consumer behavior so you're not blindsided when economic challenges arise.

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<v Speaker 2>And finally, over promising and losing trust, and this would

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<v Speaker 2>be the Lehman Brothers collapse. Leaders who over promised and

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<v Speaker 2>ignored financial realities found themselves in deep trouble. So what happened.

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<v Speaker 2>Lehman Brothers, a massive investment bank, assured investors and employees

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<v Speaker 2>that they were financially strong even as they made risky

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<v Speaker 2>subprime mortgage bets, and when the market crash, they had

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<v Speaker 2>no real plan. In two thousand and eight, they filed

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<v Speaker 2>for the largest bankruptcy in US history, triggering a global

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<v Speaker 2>financial crisis. And the lesson here is never make promises

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<v Speaker 2>you can't keep. Leaders need to be honest about challenges

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<v Speaker 2>and realistic about solutions. Transparency builds trust, and if things

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<v Speaker 2>are tough, communicate the steps you're taking to stabilize the

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<v Speaker 2>organization rather than pretending that everything is fine. So the

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<v Speaker 2>Great Recession taught us that leadership in crisis is about

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<v Speaker 2>balance and making tough decisions without losing sight of your people,

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<v Speaker 2>your mission, and your future. Avoid knee jerk layoffs, make

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<v Speaker 2>strategic cuts instead. Don't neglect company culture, it's your foundation.

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<v Speaker 2>And keep innovating even in tough times and learn from

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<v Speaker 2>the crisis. Don't repeat mistakes, be transparent. Over promising will

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<v Speaker 2>destroy trust, and remember, real leadership is tested in tough times,

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<v Speaker 2>so make sure you're ready. This has been the seven

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<v Speaker 2>minute Leadership Podcast, and I thank you for listening.

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<v Speaker 1>For more Paul fell of Alito podcasts, visit Paulfellavalito dot com,

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<v Speaker 1>um