“If you ask 50 Economists a question, you’ll get 50 different answers”. True, but have you ever wondered why ? Perhaps because Economics is as much Art as Science, as much about the predictably unpredictable nature of human behaviour as it is about numbers and mathematical trends, with those intertwined influences making truly accurate predictions a near impossibility.
Human behaviour is a huge part of economic forecasting. In fact, a key economic indicator is called “Consumer Sentiment”. If people think things are getting better, they spend more money, take out loans for homes, cars etc. That money goes to work, stimulating economic activity and so boosting the economy for everyone. Feel good and things will be good, a self-fulfilling prophecy ?
One can then see why political, business and media leaders tend to lean towards an overly optimistic outlook on economic recovery, as they want to see that self-fulfilling prophecy effect. This is a big part of why we are hearing people say they are “Optimistic for Recovery” for 2011.
This also explains why we are seeing well intentioned “stimulus” efforts being made globally , but many are simply “chasing ghosts”, looking for capital and investment that simply isn’t ready to come at this stage of the economic cycle.
Ah, but won’t “Consumer Sentiment” save us ? No, Human behaviour will only carry an economy so far if it has structural flaws that need addressed. The numbers don’t lie on this, and they don’t look good. 2011 will be another tough year, a “double dip” year most likely, with the only really good news being that economies do move in cycles (that “human behaviour” effect again), and the numbers indicate that recovery will begin sometime in 2012.
How then, should you act ? I’ve written and spoken for quite some time on the need for businesses and countries to focus on being globally competitive. Whether for a country or for a business, 2011 is a year to “Position for Growth”.
2011 is a year to focus thoughts, efforts, resources on getting your business, your organisation, your country ready to capitalise on longer term recovery by “fixing what is broken” and entering 2012 efficient, effective, targeted to your customers needs, and raring to go ! You need your leadership ready when the recovery comes to focus on bringing in new business, not focussing on stripping costs out from inefficiencies and administrative issues. You need your people full of belief in your purpose and having recaptured the energy that the last few years have sucked away.
There are various areas that I work through with clients as a business coach in implementing such strategy, but let me highlight just two for you to think about for your own organisation.
First, “Cash is King”. If you haven’t already done everything you can yet, then you must take 2011 to focus inwardly on your organisation. You have to enter 2012 as an efficient, nimble and well-oiled machine, but a machine that is both lean (and so cash-efficient) and ready to scale up efficiently to meet the needs of your customers in a growing economy.
Second, who are you and what solutions do you provide to your customers, now and in the future ? This is called your “Positioning”. The last few years have been tough, you need to take time to review and recapture what it is that makes your organisation of value to your customers. Also take this time to focus on your people, they are the lifeblood of your organisation, and they need to be energised by 2012.
“Positioning for Growth” isn’t easy, it is hard. However, if executed well, it will give you a big competitive advantage in the future over those who spend 2011 simply being “Optimistic for Recovery”.
