With jitters about worldwide depression and financial meltdown gripping the globe, we consider some scenarios for a busted economy – maybe it is more local than global.
Archive for September, 2008
Future brightspots will result from this mess
Wednesday, 24 September 2008 14:44
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Here at Competitive Futures we regularly tell clients, “Just because something is a disaster doesn’t mean it will be a disaster for everyone.” History is filled with stories of leaders who perceived danger early, acted appropriately, and profited.
I’m a bit fatigued of straining about this financial mess, and naturally began to ask, “OK, what’s going to be 
positive out of this?” Despite the ugliness here, there will likely be many positive developments resulting from this crisis of business and governance. One example is quite close to home for me.
My father is in his 28th year running the Rutland Agway, a store dedicated to farm, home, and garden in Central Vermont. Recent economic trends have sent both farming and manufacturing to far-flung states or countries. Giant retailers like Home Depot came to take a piece of the diminishing supply of disposable income in the state. For local stores, things got pretty tight for a moment.
Fleeing jobs and rocketing fuel oil prices are putting a massive financial strain on rural households. How are they responding? By going local – planting gardens like never before. Staying at home, avoiding pricey vacations – and sprucing up the backyard with fertilizer and lawn mowers. And suddenly, times are better in the home and garden business. (On top of it, Vermonters are back to eating their own delicious local foods!)
What else could be positive about this? Think it through – there will plenty of time to think about disaster soon enough.
Scientific management in the face of economic meltdown?
Tuesday, 23 September 2008 17:26
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Managers love spreadsheets. Quantifiable trends. Robust columns of numbers, properly formatted, 
balanced checkbooks. This is business! We’re not guessing, we’re not estimating, we’re taking a scientific approach to management!
Verifiable numbers are supposed to guaranteed better results, fewer scandals, more rational behavior.
In the wake of Enron, Global Crossing, and other book-cookers, the government hastily brought forth the Public Company Accounting Reform and Investor Protection Act of 2002, better known as Sarbanes-Oxley. These new, stringent requirements would supposedly protect investors from capitalizing companies that were, in reality, bleeding money while their executives took bonuses from Liberian hedge fund partnerships and the like. I come to understand from financial colleagues that Sarb-Ox is so complex it would make a Jesuit’s head explode.
This complexity was supposed to better results, fewer scandals, more rational behavior.
What’s the future of numbers if the numbers are wrong by hundreds of billions of dollars?
If we can’t manage scientifically, how will we manage when all this is said and done?
Strategic illusions and imminent disaster
Tuesday, 23 September 2008 11:09
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James Pethokoukis at U.S. News and World Report believes that this $700 billion (come on, at least a trillion) bailout is much cheaper than the $30 trillion cost of not bailing out Wall Street and allowing the free market to function.
$30 trillion.
Let me ask – are we saying that our economy could possibly be upside down by multiple trillion dollars without us knowing it?
If that’s so, is this illusory wealth? What is real? What is a social construct? How can managers know anything? Why then do we have leadership, management, and regulation of any sort?
Man, I feel like these questions are necessary, but they sound like Albert Camus after nine glasses of Bordeaux.
Is our economy really that much of a post-modern construction?
It’s times like these that you really miss Peter Drucker.
Nice time to check the foundation of industries
Monday, 22 September 2008 15:48
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It seems that the fundamentals of the banking industry were unsound, and that ultimately this led to a collapse. It’s a question of structural assumptions – what is underpinning our industry? What might change? When could a tipping point come? These heady questions are often left to us futurist-types, but it seems like this week it would be a good idea for everybody.
For example, I would like to propose a betting pool on when the healthcare industry in America will need/receive its bailout. Between the demographics of the Boom generation’s retirement and the massive wasteful spending of our current system, the now $2 trillion industry has been forecast to increase to $4 trillion by around 2020.
My assumption – which I state here – is that this is structurally unsound. The economy as a whole will crack long before we get to $4 trillion. If we don’t change the structure of the industry, it will require one of those bailouts. What year do you figure it might be? 2015? 2023? 2025?
What about your industry? What assumptions are you using to justify the long-term profitability of your company? This isn’t gloom and doom, things might be great for you. But what’s the structural long-term?
This is a good week to ask those questions. The implications of failing to do so seem quite clear.