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A trying 12 months for Europe has proved a painful eye-opener for many nations, but with lessons learnt, 2011 promises to be better for all.

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London Business School: How to seize the upside of the downturn

I n hard times, managers need to balance short-term cost cutting with long-term value creation. London Business School’s Professor Donald Sull discusses three ways to create value in difficult times.

In the midst of a downturn, most managers fixate on the abundant bad news: Demand is down, prices falling, credit scarce, and layoffs likely. Obsessing over threats obscures a surprising but crucial truth about downturns — the worst of times for the economy as a whole can be the best of times for individual firms to create value for the long term.

In past downturns, some firms including Toyota, Nokia, Cisco, Samsung, and Emirates Airline emerged from an economic crisis stronger than when they entered. Managers can harness a downturn to make any number of possible changes, but three actions in particular are likely to create long-term value.