Business Insight Zone

Harder times ahead?

I stay out of the predictions business as much as I can. But we’re hard-pressed to find good news about the economy these days — headlines like Labor report: “Shockingly awful” seem much more common — and there are good reasons to think that things are going to get worse before they get better.

One person who’s been making this argument consistently for a long while now is uber-commenter Dave Livingston, whose work as a consultant, combined with his penchant for economic analysis, has led him to conclude that:

• the current downturn is likely to get worse, or much worse, before things improve; and
• many business leaders — including smart senior ones — have been caught flat-footed by this downturn, and in many cases still don’t grasp its implications.

(For a fuller view of his data and arguments, you can sample recent posts of Dave’s here, here, and here.)

A Shift in the Landscape

In “Landscape and weather in the business world,” a post I wrote in August 2007, I laid out one way of thinking about the economy as it affects the business world. The short version: some conditions are transient enough to be thought of as “weather,” others are permanent enough that we can regard them like “landscape.”

We would carry on the analogy if we chose — with erosion, droughts, etc. — and we’d note that the boundaries aren’t always sharply drawn. Still, the perennial challenge remains: to determine which conditions are the weather and which are the landscape, and to respond appropriately to each.

When we look around at the economic landscape today, parts of it are unrecognizable in comparison to, say, August 2007. An easy case in point is the massive deleveraging that is transforming the global financial sphere, but there are similarly sweeping changes in technology, and it’s safe to assume that U.S. regulatory, fiscal, and foreign policies will look much different in the coming presidential administration than they have during the current one.

What’s It to You?

So here’s the thing: what if this IS a deep tectonic change in the business landscape? What if consumer spending (more than 2/3 of the U.S. economy traditionally) doesn’t bounce back for ten or fifteen years? What if business credit continues to be harder to come by? What if there is no froth in the world economy between now and 2020?

I’m not being rhetorical.

Try this: get out a piece of paper and make some categories.

• My own job
• My profession overall
• My company
• My industry

Now spend a few minutes thinking through these economic possibilities at each of these scales. Has your industry relied heavily on consumer spending? Has your company relied on carrying lots of debt? Are you personally overleveraged? Viewing yourself coldly, are you underskilled or overpaid (or both)? Does your profession suddenly look like it has way too many aspirants for way too few positions?

Carry on in that vein for a few minutes — I’ll understand if you want to do this sitting in an easy chair by the fire at home, maybe with a glass of wine to dull the sting — and leave yourself open to whatever the analysis tells you. Try it a few times over the coming days, if you have the stomach for it.

Stay Strong

Believe it or not, my point here isn’t to get you down, but to get you thinking. In his comment on yesterday’s post about helping people find jobs, Dave Livingston said that the best thing you can do for friends who have been laid off

is help them get their feet back on the ground. Most of us derive a large measure of our self from work. An unexpected layoff is confidence destroying — it makes the Universe groundless, as the Buddhists say. A corollary — being po’d and thinking negative thoughts is o.k. You should be. Denial doesn’t do any good. THEN you have to let it go . . .

In fact, I’m encouraging you to think through the negative thoughts now, especially if you have a good job.

I recommend that you think through them not just for yourself but for your company, too. Whether we’re talking about your own career or the health of your firm, It’s far better to face up to the toughest possibilities now than to be surprised by them later.

And keep this in mind: we’ve still got it pretty good, you know? While lots of folks are feeling economic pain right now, it’s clearly not as bad as living through the Great Depression or Weimar Germany — or, for that matter, any number of civil wars from the annals of history.

Get Aggressive about the Long Haul

It can be fascinating to see how some people strike it rich in business through being in the right place at the right time, or by having a lucky few years surfing a particular kind of economic wave. But these aren’t the ones to imitate.

No, it’s much more impressive to build a business that thrives in good times and bad. This is part of the reason why people idolize General Electric, which has paid a dividend in every quarter since 1899, and Warren Buffett, who has been making lots of money for his investors in all economic weather (and a few shifts in economic landscape) for fifty years.

Here’s your challenge: to think aggressively about what you can do today — this week — this month that promotes your prosperity and your company’s for the long haul regardless of the weather, and even regardless of changes in the landscape.

(For individuals, deliberate practice is a good place to start; for companies, the kind of relentless, atom-by-atom improvements that have taken Toyota to the top. More on that in a later post.)

The question isn’t can you thrive in good times and bad — you CAN — but will you?

~

Photo by Ken Lund, used under a CC-Share Alike license.

Category: Economics, Management