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Views from the Prairie

April 09

The Paradox of Economic Recovery

The local newspapers are trying to call for recovery. The business pages point to up ticks in the market as signs that we might be in a recovery. They point to certain banks actually having a profit as proof that "things might be turning around". They are desperate for some signs that the end is near. Unfortunately, their hope won't be fulfilled.

It is one of the paradoxes of the human condition that when we have such a bad economic downturn, we won't have recovery as long as a lot of people are searching for that recovery. Why is that? We are in a major restructuring of our economic system - these happen on a regular basis. But, each restructuring will require major changes by many people in our society. People are not willing to make these difficult choices as long as they have hope that the situation will "recover". We all would like to continue to operate like we did before.

As humans, we like to have things "the same way". Just look at how neighborhood associations try to keep out developments or try to manage what people can do with their homes. People do not like to change.

However, the world is not static. It changes year by year (and sometimes month by month). It changes economically, politically, and our environment changes year by year. If we do not change, those changes will add up to be enough to either destroy us or leave us in the dust.

There are a number of small towns in Europe that have a medieval town square. Those towns were prosperous back then, but failed to participate in later prosperity. For example, Bruges was a major trading town in northern Europe and became wealthy through that trade. They built a fancy square. However, they failed to respond to the river silting up and the trade moved on. The town was an economic backwater till tourism found it again. Similarly, Japan has been criticized in the economic press for not taking the painful steps to change their economy after their stock market crashed. The result has been many years of stagnation.

It is very difficult for people to make major changes. Instead, we drag out the decisions we need to make and drag out the time it takes us to do the painful changes it takes to have an economic renewal. If we see hints that things might "recover" to how they were before, we put off the changes we would need to make. Thus the looking for recovery delays the real recovery.

Because the changes needed are not enjoyable, many people and many companies need help in making those changes. This is where bringing in a consultant can be helpful - helping you identify those changes you truly believe that you need to make. If you would like that help, give us a call.

Box Content: Looking for Recovery Delays the Real Recovery

Do You Want to Make Changes?

Expect opposition

There is that old saying, "you can tell the pioneers by the arrows in their backs." If you have come to the conviction that you have to make some changes, get ready. Nobody is going to like what you do. You will also fail - a lot. That is part of the process.

In corporations, people who want to cause change often get stabbed. Bob Knowling was an agent of change at Ameritech. He is was told by his boss that if the boss didn't hear from someone each week that wanted Bob fired, Bob wasn't doing his job as a change agent. But, when things are bad and going worse, change is what is needed.

Jim Stengel was a Proctor & Gamble Global Marketing Officer. He points out that to make significant change; you have to start with your ideals. When the world is falling apart around you, you need to have your foundation based on an ideal instead of on making a profit. The profit will come when you are consistent with your ideals.

The other reason is that when you have to try, fail, and try again, the only things that will survive that process are the ideals you hold most dear. Any accountant will see that what you are doing isn't making good economic sense, but the ideals will pull you through all the failures to where you are making a profit again. By focusing on the ideals, you focus on fixing a real need which is the true basis for a company. Jim Stengel says, "Return of ideals is more strategically sound to business and more compelling to humans in what they value".

People will oppose any changes when they are afraid. By pointing to an ideal, people can be motivated past their fears into the changes you are calling for.

Quote: The future is going to be different, yet we think we can model it. John Mauldin


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Prior Years

  1. 2008