What's ailing business in Atlanta, and what can we do about it? Economists seem to say we are imagining the pain. They point to gross domestic product, the total value of all U.S. goods and services sold, up 0.3 percent last year, up 5 percent in the first quarter of this year, and up 1.3 percent in the second quarter.

But there are alternative measures of a recession. Take profitability. Standard & Poors says that the operating profits for the S&P 500 were down 31 percent last year, the biggest decline in 50 years. Earnings per share were actually down 51 percent, the biggest decline since the Great Depression. So, earnings are in recession.

Here's another measure: bankruptcies. The United States had a record 1.5 million bankruptcies last year and about 2 million layoffs, three times to four times more than in the recession of 1991. Telecommunications have been hit hardest, along with technology equipment and software providers.

These companies stockpiled inventories in the Internet boom years, then saw demand plummet. Travel, too, is reeling because of discretionary spending cuts. Even if the overall economy begins to recover, some Atlanta companies will continue to suffer.

Put yourself in the shoes of a CEO, and you can understand the dilemma. It's no surprise that senior executives are taking extreme action to delay spending, cut investments and reduce work force. At the same time, good managers know that this is a crucial time to get ahead. Of more than 700 companies that weathered the recession of 1991-92, we found that about a fifth of the companies that entered the recession lagging their industries leapfrogged to the top quarter. Meanwhile, more than a fifth of those at the top fell to the bottom.

How can you spot potential leapfroggers? Look for companies allocating resources to outdo competitors. Walgreen Co., the Chicago-based drugstore chain, has expanded its lower-cost, generic drug business as consumers, feeling the recession's pinch, have become more price sensitive. The result? Walgreen grew earnings and sales in the fourth quarter of 2001 by 17 percent over the prior year and gained market share on its key competitors. Walgreen plans to build 475 new stores and two new distribution centers by the end of this year.

Leapfroggers are cherry-picking assets, too, at bargain-basement prices. United Parcel Service, for example, acquired more than 25 companies in the past 30 months. It deferred purchasing six out of 12 Airbus jets it planned to buy in order to raise $456 million to purchase Fritz Co.'s, a forwarder and customers brokerage business, core to UPS' delivery network. Circuit City has been quietly, but surely, investing in remodeling stores. It has exited some categories, such as washing machines and refrigerators, and has replaced them with offerings core to the business—such as software and networking gear.

Overall, we'll see potential winners maintaining cost discipline in the face of increased investment and rising wages; taking a measured approach to finding new sources of growth, not too far afield from core businesses; building loyalty with customers, partners and employees; and seeking to reclaim lost momentum through strategic mergers and acquisitions.

Keep your eye on Atlanta businesses flipping these switches prudently. They stand the best chance of winning in turbulence.