Narrator: In the early 1980s, as high inflation ravaged the U.S. economy, Jack Welch, the CEO of General Electric, saw a threat to his company's very foundation. He turned to a trusted advisor, Ram Charan, with an urgent task: teach GE’s executives how to survive. Charan developed a program nicknamed COIN, for "Coping with Inflation," which armed GE’s leaders with the practical tools to manage costs, maintain profitability, and navigate the economic storm. GE emerged from the period in great shape, its success a testament to proactive leadership in the face of crisis. Decades later, as the world faces a similar convergence of inflation, recession, and stagflation, Charan, along with Geri Willigan, has distilled these timeless lessons into a modern playbook. Their book, Leading Through Inflation and Recession and Stagflation, serves as a practical guide for today’s leaders, arguing that waiting for central banks to fix the problem is not a viable strategy. Instead, survival and success depend on swift, decisive, and intelligent action.

Narrator: The authors argue that the first and most critical step in combating economic turmoil is to create a dedicated, high-urgency mechanism for response—a 'war room.' This isn't necessarily a physical room but a new operational rhythm focused on detecting early warning signals and driving a coordinated plan. The goal is to move from a state of passive anxiety to one of proactive engagement.

This principle is illustrated by the actions of DuPont under CEO Ed Breen. As supply chain disruptions and price increases accelerated in 2021, Breen’s established weekly leadership meeting effectively became a war room. The company’s chief procurement officer began providing regular, detailed briefings on rising freight and raw material costs. This real-time data allowed the leadership team to reason out what was coming next and, crucially, to act. DuPont moved quickly to contain costs by finding alternative materials and transportation modes, but in parallel, they did not waste time in raising prices to protect their margins. This dual focus on defense and offense, driven by a centralized intelligence hub, made DuPont’s earnings far more resilient than its peers.

Similarly, Catalent, a biopharma manufacturer, noticed rising wage inflation and employee turnover as early as June 2021. While many dismissed inflation as transitory, CEO John Chiminski and his team saw it as a serious threat. They formed a leadership group that met weekly to analyze the data and launched a company-wide "Total Cost Excellence" initiative. By creating this focused structure, Catalent was able to get ahead of the curve, taking significant costs out of the business while simultaneously rebuilding its muscle for necessary price increases.

Narrator: In an inflationary environment, the income statement can be misleading; profit on paper means little if a company is running out of cash. The book stresses that "inflation consumes cash" by tying it up in more expensive inventory and bloating accounts receivable as customers delay payments. Therefore, a laser focus on the balance sheet and cash flow is paramount.

Indorama Ventures, a global chemical company, provides a powerful example of preemptive cash protection. Recognizing early warning signs of inflation in late 2020, the company took decisive action. In 2021, they locked in approximately 68% of their debt at fixed interest rates, shielding themselves from future rate hikes. They also secured additional lines of credit, boosting their total liquidity to around $2 billion. As one executive noted, "Liquidity is very important to us, because you never know when oil will go to $200 a barrel." This proactive balance sheet management created a vital buffer against uncertainty.

DuPont’s leadership also demonstrated an obsession with cash. They implemented an aggressive plan to improve working capital, standardizing metrics for accounts receivable and educating leaders on industry benchmarks. They understood that in a low-interest environment, it was easy to offer customers generous payment terms to win business. But as inflation rose and capital became more expensive, they retrained their organization to prioritize collecting cash promptly, recognizing that every day a payment is late is a day the company is effectively giving an interest-free loan.

Narrator: Static, annual pricing reviews are a recipe for disaster during high inflation. The book advocates for a radical and urgent shift in pricing approaches, moving toward more dynamic and segmented models. The story of two lumber distributors owned by the same private equity firm starkly illustrates this point. Distributor A used an index-based pricing model, where prices automatically adjusted with the rising cost of lumber, plus a fixed margin. As costs skyrocketed, its revenue and cash flow exploded. Distributor B, however, relied on individual customer negotiations. Its sales team struggled to keep up with the rapid cost increases, and the business was severely weakened. Distributor A ended up with enough cash to acquire its struggling competitors.

Beyond the model itself, the authors emphasize the importance of communication and tactics. When DuPont needed to implement price increases of up to 30%, their salespeople were understandably hesitant. However, leadership coached them to be transparent, explaining the specific cost pressures and assuring customers the increases were across the board. This honesty built trust and prevented significant customer attrition. Other companies, like Catalent, found success by proactively renegotiating contracts, explaining that the "extraordinary times" required new terms that accounted for inflation.

Narrator: While cost-cutting is essential, the book warns against indiscriminate slashing that can weaken the business in the long run. The goal is to find reductions that actually build a more resilient and efficient operation. This often means looking beyond internal operations to the entire value chain.

A medium-sized footwear company in Southeast Asia provides a compelling case study. Faced with dwindling consumer demand and customers unable to absorb price hikes, the CEO refused to simply pass on costs. Instead, the company focused on strengthening the entire ecosystem. Internally, they streamlined their organization by cutting layers of management, which accelerated decision-making. Externally, they worked with their subcontractors to improve manufacturing processes and optimize capacity. They also helped their customers by urging them to place seasonal orders early, allowing for better planning. Furthermore, they re-evaluated their geographic footprint, moving managers from high-cost cities to production locations to be closer to the action. The CEO’s philosophy was clear: "If we strengthen the whole end-to-end value chain, we can win the game for the future."

Narrator: The cumulative effect of inflation reshapes consumer behavior and can render existing business models obsolete. The most forward-thinking leaders use this shift as a catalyst for fundamental renewal. TVS Motors, an Indian motorbike manufacturer, exemplifies this strategic pivot.

In early 2022, as costs rose and demand in some markets slid, Managing Director Sudarshan Venu realized that simple cost-cutting was not enough. He initiated a granular segmentation of the company’s markets, products, and dealers. This analysis revealed that some customers were no longer profitable. In response, TVS shifted its focus to a smaller, more profitable segment of customers willing to pay for premium products with innovative features. They accelerated innovation in this area, launching new models that could command higher prices. Simultaneously, they overhauled their dealer network, switching from extending credit to a "cash and carry" model. This move, while difficult, exposed weaknesses in the supply chain and forced dealers to become more efficient. As a result, TVS increased its margins, grew its market share to an all-time high, and built the financial strength to thrive when the economy recovers.

Narrator: Finally, the authors assert that navigating inflation is not just the job of the CEO or CFO; it requires a coordinated, all-hands-on-deck approach. Every function in the organization has a critical role to play. The book provides detailed checklists for each department, from sales and operations to HR and R&D.

For example, the sales and marketing teams must move beyond traditional relationships to deeply understand customer profitability and be trained for difficult pricing conversations. One retail company, struggling to negotiate a price increase with Walmart, hired a former Walmart executive to run role-playing sessions with its sales team. This training gave them the insight and confidence to successfully secure the new pricing. Human Resources must help identify leaders who can adapt, update performance metrics to prioritize cash, and run training sessions to reduce employee anxiety. The CIO must pivot from large, long-term projects to short-term digital initiatives that generate cash quickly, such as tools to optimize inventory or manage receivables. When every part of the organization understands the stakes and their specific role, the company can move as a single, resilient unit.

Narrator: The single most important takeaway from Leading Through Inflation and Recession and Stagflation is that leadership is the determining factor in a crisis. Passivity is a death sentence. The leaders who succeed are those who act with urgency, treat cash as their lifeblood, and use the external pressure of inflation not as a burden, but as a powerful catalyst for change. They don't just survive; they use the disruption to streamline operations, innovate their business model, and strengthen their entire value chain.

The book leaves leaders with a profound challenge: to reframe this period of economic uncertainty. Instead of merely hunkering down and waiting for stability to return, the real opportunity lies in using this moment to build a tougher, smarter, and more resilient organization. By doing so, they not only navigate the rough patch but position their company to "ride high when stability and growth return—as we know they will."