Comments

Thanks, Raj. Do we need the business equivalent of "defensive driving"? What would "defensive business" look like? Perhaps "Don't rely on single vendors or single customers." But single vendors are what the gurus have been recommending.

Posted by Mike L. at December 12, 2008 8:12 PM

Interesting analogy & agreeable relating to technology & world wide impacts with nano speed. There used to be plenty of $3M homes even in Mumbai!

Raj - surf the chaos & be smart in finance & real estate & enjoy the future outlook once an upswing starts.

Imagine though the coming years economically - do we have any clues about what governance is doing now - & the short & long term impacts?

Are we really creating a radical US inflation cycle if the velocity of money stays conservative in coming decades?

Once 30 year fixed mortgage rates go below 4% (5% today!) & the upswing starts - it is going to get wild - money for nothing for those who are worthy - be an international investor!

Posted by Paras at December 12, 2008 8:43 PM

Mike and Paras, thank you for your comments.

Mike, "defensive driving" is a great topic for another post but let me leave you with one thought.

Our capacity to survive and thrive in tough times is influenced by the ecosystem that we create. Our ecosystem will include but not limited to our customers, partners, vendors, advisors etc. You can take a look at your current ecosystem and make an honest assessment of your capacity.

Do you think you really have the capacity to deal with what's coming up in 2009?

If not, this is the time to revisit and revise everything.

best,
Rajesh

Posted by Rajesh Setty at December 12, 2008 11:05 PM

Great post Raj - thank you for your common sense and searching questions. One thing I cannot understand is why we have cars produced that can travel up to 150 miles per hour on our roads when, in the UK for instance, our legal speed limit is 70 mph. Can anyone explain why we have allowed this crazy state of affairs to happen? It is a fact that speed kills on the road and if we are serious about reducing pollution and seeking more safety on our road we would govern engines to allow maximum speeds of up to 70 mph. To me this is a no brainer and a simple question but one I have never got an answer to.

Posted by Trevor Gay at December 13, 2008 4:25 AM

Here is the brilliant Nassim Nicholas Taleb in a recent Charlie Rose interview:

http://www.charlierose.com/view/interview/9713

Posted by Judith Ellis at December 13, 2008 8:48 AM

“If things seem under control, you’re just not going fast enough.” —Mario Andretti
...

Posted by B. Alance at December 13, 2008 9:23 AM

I watched the Taleb video. One of the things he seems to be saying is its not just the breakneck speed that is a problem - its that the vehicle we were driving in is made from balsa wood and no one was able to see that.
He also mentions that this speed problem began in the 1980's with the obsession with getting the stock price to rise which means an extreme focus on quarterly earnings. I think this could also have something to do with why it seemd like a no brainer to send work off shore where it could be done cheaper and made the quarterly earnings look even better.

Posted by zed at December 13, 2008 12:21 PM

Hi
Paul Watzlawick will say a higher(different)logical level (change) and Ultra-Solutions: How to Fail Most Successfully

Posted by jamshid at December 13, 2008 3:20 PM

Raj...

I agree with you that we need new ways of thinking, new mindsets, and new habits going into 2009...

The challenge for the US is very different to those other economic downturns (oil shocks of 73 and 79, 87 stock market slump, 91 Iraq War, Dot Com bubble deflated, etc) with the possible exception of the Great Depression when unemployment was the curse and the "main street" downturn lingered until the end of WWII.

We have to be jet-powered car drivers not bullock drivers in 2009 - thus we need new perspectives on life and economics if we are to deal with the core "main street" issues of 2009.

Here is just a taste of what we face..... What I am about to say is not for the faint hearted I guess... We moan and groan about toxic sub-prime mortgage loans but the real problem ahead in 2009 is toxic jobs....

Even before Christmas 2008 the pain associated with de-leveraging toxic jobs may hit main street. The government bail out of the GM is not popular - not anywhere. It may still happen but it will never be a popular policy. Why? Because it will not work.

A bailout of GM is counter-productive to the real need in the US and the global economy which is clearly and simply to "get beyond people" or more specifically "people-based production" as we de-leverage the debt that supported a bankrupt economic order for the past 20 years. GM is not a wealth creator - it is a wealth re-distribution process.

GM provides over 525,000 jobs around the globe - they in turn support a multiplier of 5:1 (my conservative guess) with jobs in parts, dealerships, etc. These are all toxic jobs because as we now see they will essentially not exist on January 1 2009 unless or until GM is bailed out by the Congress or the White House.

Apparently, GM needs loans in the order of $US10 billion just to keep its doors open. Why? Because it runs essentially as a "sheltered workshop" with its labour wages deals, health care programs, and retirement entitlements.

GM is a C20th company with old habits, ways of thinking, and ways of doing. Its leadership is not clued into the changing nature of the C21st world.

GM may be bailed out before Christmas or it may go under. I prefer it to go under so that we can start to work through the pain of shedding the toxic jobs that are holding us all to ransom.

Richard.

Posted by Richard Lipscombe at December 13, 2008 4:23 PM

Rajesh - how about governance effect on the velocity of money? One example is the rising unemployment in many sectors - due to the new political free enterprise system. Another is the pay-to-play Chicago (same for Detroit & D.C.) area Democrats' corruption currently in the news - Barrack, Rahm, the governor, fast Antoin & goodbye Jesse, Jr.. Both feed a crisis of confidence & most people sit on their money when they observe that - which prolongs this serious downturn.

Posted by Paras at December 13, 2008 4:34 PM

Lot of good comments here. Thank you.

As we all know, so many things are happening in this country and in this world that we don't have control on. We can talk about what policies need to change and how someone should behave etc. While this is great, that is in no way sufficient to solve the problem.

What is urgently required is that (while trying to influence macro changes) relentlessly focus on solving "micro" problems for you and your ecosystem.

If more people are not part of the problem, there is a less of a problem to solve and may be we can get that solved quicker.

Best,
Raj

Posted by Rajesh Setty at December 13, 2008 6:57 PM

Every downturn brings new opportunities as consumers and people in business rethink and revisit their decisions.
This crisis wil bring forward new technologies or methods of work that have been around but weren't accepted by their market yet.

Stars of the past and current time, will become the losers or laggards of the next era.
The problem is nobody knows who what and when.

Web services will probably win.

Posted by LEADSExplorer at December 14, 2008 4:47 PM

LEADSExplorer,

That's true.

In fact, not only every downturn, every discontinuity (which includes a downturn) presents new opportunities that didn't exist before.

However, it is difficult to notice these opportunities during a downturn as there is a tendency to get overwhelmed by what's happening around us during downturns.

If we resist this (a bit) and focus on "opportunities," there are plenty of them out there.

Best,
Raj

Posted by Rajesh Setty at December 14, 2008 5:43 PM

Whether or no there is a downturn there are ALWAYS opportunities - its the mindset that see them that way or not.

Posted by Trevor Gay at December 14, 2008 6:28 PM

Raj
I grew up in Central Africa so saw cars and paved roads disappear and get replaced by wagons and grassy tracks. A society can lose sophistication very easily - from sports car to wagon.
Different market players drive different vehicles - to carry on with your metaphor. These drivers or market players (Banks)should not be getting bonus pay outs for 8 years, etc and then bailed out. Just because they crashed their fancy vehicle, why should they get compensated when others are not?
I see the Tom Peters Vehicle as being practical, funtional, fun and symetrical.
Perhaps we need an iCar?

Posted by Jacoline Loewen at December 14, 2008 6:41 PM

Hello Rajesh,

Very well said. This reminds me mistakes I have done. Does this mean, advancing technology reduces the gaps between global crises? Kindly visit my blog http://future-of-economy.blogspot.com, my two cents on the future of the economy you will see there.

Best Regards,
Veeranna Ronad.

Posted by Veeranna Ronad at December 15, 2008 1:26 AM

I am not sure I agree with this (no surprise there!)

I don't think the rate of down turns has speeded up - certainly in the UK we have had a long period of fairly stable growth. So I think the sports car/cart analogy is wrong.

It's not about speed it's about size. To me it's more like all of the problems have been slowely loaded into a large lorry. Whilst that loading has been taking place the road has been clear and everyone thinks there is no problem. now the lorry has been driven down the road and crashed causing a massive problem. The issue is not learning to drive faster it's learning to deal with something on a much bigger scale(i.e. global)

I do wonder if we would be better off with a mind set of having a mini recession every couple of years to bring things back in balance rather than a huge belter every decade. Rather than trying to surpress recessions should we be trying to ignite them and accelerate them to match the pace of modern business?

I agree with Trevor and Raj about opportunities - I think the challenge isn't just the mindset (although that is big enough) it's the skillset - we are hopeless at teaching children the basics of success, positive thinking, smart goals, etc.

Perhaps the basics should be should reading, writing, maths (spelt with an s at the end of course) and Entrepreneurialship

Posted by PaulH at December 15, 2008 3:04 AM

Excellent comments Paul and I hope we learn from this current recession that when things get back to something called normal (whatever that means) to adjust our individual and corporate aspirations away from greed and making a quick buck to a greater sense of social responsibility. Money has become a new religion where we are expected to worship the Dow Jones or similar index on news bulletins. As my hero Tony Benn says; “If they could put music to it they would make the following into a hymn …. ‘And the Dow Jones index closed at ……’

My (probably) conservative estimate is that 99% of the population don’t understand it and frankly don’t give a toss about it.

Posted by Trevor Gay at December 15, 2008 6:04 AM

Veeranna, thank you for the comment and will take a look at your blog.

Paul,

First, you are welcome to disagree

Second, let me clarify a few things. The point was not just about rate of downturns speeding up - it is that the TECHNOLOGY is playing a huge role in speeding up everything. Not just the downturn, the recovery cycles have also shortened.

Now about your point that growth rate in UK has been fairly stable, I agree. In fact, there are other countries like India for example - where they are seeing the kind of wild swings (bubble and bursting of it) for the first time in several decades. I was specifically focusing on US in the article as fortunately or unfortunately (today) what happens in US has a MAJOR impact on the global economy.

I agree with your point that we have to look at this from a global viewpoint and it is the TECHNOLOGY that has enabled rapid globalization - again boils down to the "speed" that technology brings to the table.

The list of basics I think should include more than reading, writing, maths and entrepreneurialship. The time has come to add soft skills such as building long-term relationships, building your personal brand etc.

My $.02 of course.

Trevor,

Thank you. My thinking is that "trying to make quick buck" whatever be the underlying intention is a recipe for failure.

Best,
Raj

Posted by Rajesh Setty at December 15, 2008 10:36 AM

Raj, great post, great Comments and responses thereto. One thing is missing, as it so often is, and that is any attention whatsoever of the "real people" who hold, say, these so-called "toxic" jobs which must be eradicated as quickly as possible in service to some greater good. The holiday season is a uniquely good time to focus on them. This exercise of economic transformation is in the end, as always, about people, one at a time or two at a time. It's about people with decent credit ratings trying to make mortgage payments after a "toxic company" summarily ends their health benefits and one of the couple's kids is in a car accident. We can respond quickly, or not so quickly, we can bail out GM, or not, we can race to the 21st century, or stay mired in the 20th or get stuck in between. Whatever. But in the end its all about the quality of individual lives and the stresses and strains to which people are subjected.

This is not a pro-speed or anti-speed comment, nor an offense vs defense comment. It's just a gentle reminder, amidst mostly sterile exchanges concerning oceanic solutions, to remember the Sues and Bobs and Jose's and Raj's all over the world trying to cope. Economic equations, by my lights, are meant to have names of real people attached.

As I consider "all this," I conclude that I'm very lucky to live in a rural community with relatively low wages. I can go to Kuwait City or Frankfurt or Delhi and talk to brilliant businesswomen and businessmen and government officials--and a couple of days later I'm at Mach's in Pawlet Vermont getting my morning coffee and talking to the plumbers and local bankers and waiting in line behind a field hand off to start repairing the fences for the Spring that's still 120 days or so off. Keeps you grounded.

Posted by tom peters at December 15, 2008 11:15 AM

Very good point Tom.

This is in a nutshell part of the problem with the debate about globalisation. If you take the world as a whole and average people out globalisation makes total sense. You can say that certain economies should and will move from manufacturing to services. That more jobs will be created etc.

But having to look a 55-60 year old engineer in the eye and say that after they have lost their job with little hope of meaningful employment again it kinda sucks.

Posted by PaulH at December 15, 2008 11:51 AM

Why are we forever moving from one kind of economy to another? Is it possible in such a vast country and world to have various sectors all thriving in one? Why the move? Why this one or that one? Manufacturing? Service? Finance? Why???

Thank you sincerely, TP, for such beautiful words.

Posted by Judith Ellis at December 15, 2008 12:45 PM

From my humble perch ... you have all made excellent points: "quick buck", to much focus on the DOW -> short term goals, and people. We need to focus on the people: abilities, capabilities. People deliver the products and services that create the VALUE, and the economic means to buy that VALUE. I find as I hear another company laying off people are they doing this to remain in favour with Wall St., because doesn't laying-off people, decrease our ability to buy the created VALUE and thus prolong our recessionary times? Granted many people have stated that there is a need to destruct our companies; don't they need people to provide and implement the innovation to re-build.

Posted by Paul Lythgoe at December 15, 2008 12:50 PM

In the interview above Nassim talks about a "Capitalism 2." In such a system of there is less leverage, banks become utilities where there is "no more privatizing gains and socializing losses," and more symmetry in investments of the up and down sides of a system with less debt, a system where cash is more relevant.

This Capitalism 2 notion really grabbed me in a powerful way. It seems more like a system of meritocracy. It will probably reduce Ponzi schemes like the Madoff one (How disgusting!), and require us to return to work that matter, the kind that includes relationships with others and producing products and services of value.

In such a system we will probably need to spend more wisely without a massive system of debt. Regarding relationships, if you look at trends in technology the polar opposite seems so. But I have never bought the idea that technology will supplant face to face relationships of all kind. buy viagra without prescription overnight shipping

Posted by Judith Ellis at December 15, 2008 1:09 PM

Thanks Tom, Paul, Judith and Judith :)

Great points.

On the topic of "toxic jobs," I think the responsibility lies on both sides, the person who is holding the "toxic job" and the systems that create and sustain the "toxic jobs."

Since it is hard for us to change the "systems" that create and sustain these "toxic jobs," the person who is holding the "toxic job" has to realize and wake up and do something about it.

In most cases, the person who is holding this "toxic job" is not aware that he or she is holding a "toxic job" and the responsibility then shifts to someone surrounding him to educate and make him or her aware of it.

The effort, however, seems to move towards changing the systems and structures that are deep-rooted.

Judith, I totally agree with you that technology is not a substitute for 1-1 meetings. What technology can do is to amplify and supplement the relationships that you are building.

Best,
Raj

Posted by Rajesh Setty at December 15, 2008 1:30 PM

Yes, those with "toxic jobs" should "wake up and do something about it." But does government and corporations have a responsibility to assist? (By the way, why "toxic jobs?" Isn't all decent work honorable? Perhaps obsolescent?) Those who find themselves without a job and without an education will become a large burden for the government and corporations will lose.

Government will assist on the front end or on the backend with a reduction in taxes on the national and local levels, increase in crime, increase in welfare, etc. The number of families applying for food stamps has increased dramatically. Corporations will be effected with the lack of capital to purchase goods. It was interesting to hear Wal-Mart CEO, Lee Scott, talk about the changes on Meet the Press Sunday.

Raj - I like the double thanks, thanks! :-)

Posted by Judith Ellis at December 15, 2008 2:26 PM

Thank you Judith.

I totally agree that Government and the Corporations have a responsibility - socially and morally and any other way you look at it.

What I am having trouble with is for anyone to have an illusion that Government or a Corporation will think about his concerns more than he or she should think about them.

There is so much happening in the world that if someone needs help, he or she should aggressively pursue skills and work hard to become someone who can "help others" first. The fastest way to get help is by being someone who can give help.

Have a great afternoon.

Best,
Raj

Posted by Rajesh Setty at December 15, 2008 2:32 PM

I agree, Raj. Thank you. And, a great afternoon to you too!

Posted by Judith Ellis at December 15, 2008 2:43 PM

"But I have never bought the idea that technology will supplant face to face relationships of all kind."

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Absolutely Judith - technology will always be the servant and never the master.

Having done all my Christmas shopping 8 days ago online and all delivered safe and sound within 48 hours I must say the technology is fantastic. But people are behind the process.

Forgive the diversion but in wishing all TP contributors sincere seasonal greetings I can honestly say I didn’t miss – not for one nanosecond - my usual Christmas shopping expedition into the town where - as is my want - I tend to ‘people watch.’ Last Christmas I penned my thoughts about the 'shopping types' I saw.

The 'sightseer' shopper:

This person seems intent on strolling, in a leisurely fashion, with their trolley, merely enjoying the sights. They do not appear to be particularly interested in taking things from shelves. They kind of, ‘gaze’ for a minute or two and then wander off down the aisle, seemingly content in their own little world.

The 'social' shopper:

This person decides to have a discussion with her friend about her recent disastrous hair appointment. The growing crowd of shoppers grow increasingly impatient trying to reach the parsnips that are situated behind these two social shoppers having their deep and meaningful discussion.

The 'angry' shopper:

This is the one who has had a row with his/her spouse about whether or not the shopping has to be done as a joint exercise. If looks could kill this person would have been a mass murderer in the supermarket today. No more explanation needed methinks

The 'aimless wanderer' shopper:

This person is different from the sightseer shopper. This person seems to have no plan whatsoever. He/she will be seen following the flow of trolley traffic in one aisle. The next time you see this person they are going against the traffic. They do not appear to have any idea of where things are so they constantly find themselves going against the flow.

The 'laid back philosopher' shopper:

This person has it all under control. He/she watches others rushing and looking stressed, rises above the mayhem and exudes an air of calm and authority. There is no look of frustration or anger – just sheer tranquillity.

Happy Christmas to all from Shakespeare’s County (Warwickshire) England

Trevor

Posted by Trevor Gay at December 15, 2008 3:20 PM

To Bob, Sue, John, Jimmy, and Barack.....

2009 is your time. This year is full of opportunity. Assets are marked down to bargain basement prices. Risk is priced at a premium so most people are convinced they should be risk averse. Risk taking is therefore going to be rewarded at levels not seen for a couple of generations. This is like the early 1900s all over again. Only this is the early 2000s so the globe is your stage not just your local community.

2009 is a good time to go global or to stay local. If you stay local then you should remain alert to your global opportunities and so retain an ability to network your products or services into world markets as well as you do into your local community. You may open the best biscuit making entity in your community - it may be all you want and need. On 14th July 2009 you might sell some of your best to a visitor from around the world and obligingly you package up some for them. They go home and tell their friends about you. If you have a no fuss web site you suddenly have an online global business and a local one. In the past you would have expanded your local presence into the next village. Now the whole world is a village. So you decide to stay put and not grow your business through your nation but grow it around the globe instead. You can thus stay local and grow the business into a global network. How good is that?

[ PS I well remember my driver cursing as he drove us toward Bangalore many many years ago - it was pitch black outside so all I could see was the reflection of our headlights back from the eyes of the bullocks coming towards us. How he weaved in and out of those bullock carts will forever remain a mystery to me. I could never have imagined then just how far the people of Bangalore would have come in their quest for economic security and social cohesion - it is a transformation of monumental proportions. I wish them all well in 2009 - may their powerful life forces guide them to a better place.]

Richard.

Posted by Richard Lipscombe at December 15, 2008 3:56 PM

My good friend Tom Asacker – realist and visionary - has published his 9 predictions for 2009 – it’s brilliant – you can read the full article at this link:

http://www.acleareye.com/thoughts/Article_Nine_Predictions_for_2009.pdf

My favourite two:

#2 Many things will change, but many people will not

#6 The passionate will not only survive, they will thrive

Thanks as always Tom - we will stay passionate :- )

Posted by Trevor Gay at December 15, 2008 6:21 PM

People, for a number of reasons, may not feel they have an opportunity for changing their employment or their lives. Whether these automobile manufacturing jobs are coming to an end due to cost competitiveness or technology I ask you if the bail-out money which is destined for GM and Chrysler would be better spent on the people in re-training programs? Use these people's experience and intrinsic skills in other areas: education, green technologies that are being considered in this next version of the economy.

I do not have specific knowledge of the proposed business plans from GM and Chrysler, however I am thinking of lending them enough money to support current operations for a short-term and more of the money to re-tool for the long-term, and then identify the people who would not be included in this re-tooling and get them on re-training programs, which would be financed as part of this bail-out.

Posted by Paul Lythgoe at December 16, 2008 11:09 AM

Sounds good to me, Paul Lythgoe. It's people centered with an immediate and long-term objective.

Posted by Judith Ellis at December 16, 2008 11:31 AM