“Economists,” Nobel laureate Paul Samuelson famously quipped, “have correctly predicted nine of the last five recessions.” Impossible as it is to forecast the timing or depth of the next downturn, executives enjoying today’s upbeat economy should also be preparing for the recession that will inevitably follow. Many weren’t ready for the last one; by our reckoning, nearly 40 percent of leading US industrial companies toppled from the first quartile in their sectors during the 2000–01 recession, and a third of leading US banks met the same fate. At the same time, 15 percent of companies that had not been industry leaders prior to the last recession vaulted into those positions during it.

To understand how to make the most of a recessionary environment, we analyzed the performance before, during, and after the 2000–01 recession of some 1,300 US companies from a broad range of sectors¹ and identified which of these companies emerged from it having gained or maintained leadership status.² For these industry leaders, we analyzed which characteristics they exhibited before the recession that might help explain why they outperformed their peers. Although recessions strike different sectors in different ways and at different times, the postrecession leaders in...