“Nobody could see it coming,” schadenfreude edition
One of the most outrageous things I heard about this current financial crisis was that “Nobody could see it coming.” Early warning was written all over this systemic collapse – and people actively made fun of this view.
Watch this video of economist Peter Schiff and the ridicule he must endure for accurately predicting the systemic weaknesses in the economy.
Think about this kind of dynamic the next time you need to spread news of a systemic disruption in your organization.
Early warning: credit card debt shows fundamentals of the economy changing
We speak often about the need for early warning when it comes to business intelligence. Usually, after something really bad has happened, leaders say “Oh, if only we had known sooner. Let’s get more interested in early warning.” This is also accompanied by observations like, “This was a failure of imagination” and “we’ve got to think out of the box.”
I submit that most times, people don’t want to see the most important changes. Such tectonic shifts mean that precious institutions (and assumptions) might be shaken to their foundations.
For example, have you ever seen this chart of American credit card debt?
It matches housing prices perfectly, matching real economic growth for twenty years, then skyrocketing after 2001.
But these together, and you can clearly see the fundamentals of the American economy changing in a radical fashion. Something about the largest economy in human history changed dramatically, and nobody really stopped to make a comment.
If we want a prosperous sane economy and functioning government institutions, leaders have got to get serious about the deep philosophical and analytical dialogues that need to accompany these kinds of changes.
The last thing we want is to watch an even bigger catastrophe than the past month, followed by the all-too-typical chorus of “we should be interested in early warning,” and “nobody could have seen it coming.”
You can see it coming as long as you are willing to watch what’s really happening.
It’s time.
Bank failure, “early warning,” and the leadership of the future
This financial meltdown was foreseeable. Still, it seems that the concept of “early warning” is really called into question. In the intelligence business, we pride ourselves on scanning the horizon, nominally to look out for bad things and potential good things on behalf of leaders.
If early warning and business intelligence is truly taken seriously, how could this have happened?
Surely, somebody among the myriad of financial giants and government agencies has a system of intelligence, futures analysis, early warning, whatever you want to call it. Why was so little action taken? Everybody involved in management must take note of the post-mortem of this situation and the lessons we can learn – lessons we must learn.
Often, we are called upon to deliver bad news to leaders, that a real threat is on the horizon that does not match their current strategy. There is a powerful psychological force that makes people reject bad news, or to accept it very slowly. I wonder if recent events won’t make leaders more psychologically flexible, more prepared to accept early warning.
The 21st Century requires leaders with these skills. When major institutions are lead without these skills, the consequences are evident to us all.
About Eric Garland
Eric is one of the world's pre-eminent thoughtleaders in forecasting and strategy. He helps leaders of business and government make critical decisions about their futures.New project: Manufacturing 2020!
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