This conversation is one of three installments summarizing Lowell Bryan and Richard Rumelt’s reflections on the implications of the financial crisis. This first installment focuses on the broad managerial implications of the crisis. The second examines the public-policy response to the downturn. The third explores what the crisis means for corporate strategy today.

Eight months have passed since the collapse of Lehman Brothers punctuated the global financial crisis, touching off reverberations in the real economy that continue to reshape the business environment. Is it too early to start drawing management lessons from the crisis? Lowell Bryan, a director in McKinsey’s New York office, and Richard Rumelt, a professor of strategy at UCLA’s Anderson School of Management and the originator of the resource-based view of strategy,¹ don’t think so.

In December 2008, they began formally addressing what strategists should make of the financial crisis, when the Quarterly published Bryan’s “Leading through uncertainty” and Rumelt’s “Strategy in a ‘structural break’.” In late April, McKinsey’s Allen Webb asked Bryan and Rumelt to reflect together on the most important lessons executives can begin to draw from recent economic events. While acknowledging, in Rumelt’s words, that “it takes about five years for these things to unfold, so what we see now is just the beginning,” the two strategists engaged in a rich discussion about topics including the nature of risk, the effectiveness of performance-measurement systems, and the difficulty of getting governance and incentives right. A portion of that discussion follows.