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Dealing With the New Normal: Economic Situation, Market Outlook and Business Performance

Dealing With the New Normal: Economic Situation, Market Outlook and Business Performance

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Published by Dave Livingston
We barely survived a very difficult downturn but are now facing a sustained period of sub-par growth, poor job creation, major changes in consumer demand and related challenges. Meanwhile Markets are over-valued and anticipating a return to the old normal - raising the risks of poor returns. At the same time businesses are struggling to catchup to the surprises of the downturn, improve performance and re-position themselves. Any stakeholder needs to under the relationships between the economy, markets and business performance and assess which ones are likely to well in this new environment compares to the many who will not. Whether your an investor, employee, executive, customer or business partner you will have to cope with these challenges and should consider adjusting your decisions in line with the situation we see emerging.
We barely survived a very difficult downturn but are now facing a sustained period of sub-par growth, poor job creation, major changes in consumer demand and related challenges. Meanwhile Markets are over-valued and anticipating a return to the old normal - raising the risks of poor returns. At the same time businesses are struggling to catchup to the surprises of the downturn, improve performance and re-position themselves. Any stakeholder needs to under the relationships between the economy, markets and business performance and assess which ones are likely to well in this new environment compares to the many who will not. Whether your an investor, employee, executive, customer or business partner you will have to cope with these challenges and should consider adjusting your decisions in line with the situation we see emerging.

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Categories:Types, Business/Law
Published by: Dave Livingston on Jan 02, 2010
Copyright:Attribution Non-commercial

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02/28/2010

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 Economy, Markets and Business: Anticipating and Preparing for the New Normal 
Llinlithgow Associates
January, 2010.
 Economic Situation , Market Outlook and Business Performance Requirements
 
Economy +Geo-PoliticsIndustry
 Business
Strategy
Operations
 
 
Strategy without execution is fantasy. Execution without Strategy is thrashing. And without a Management Systemboth are improbable
Business is facing a decade of severe performance pressures ….…. And it’s not clear that many are prepared or preparing!
y = 0.63x - 0.00R
2
= 0.62-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%10.0%Output(YoY%)
    E   m   p    l   o   y   m   e   n    t    (    Y   o    Y
Employment vs GDP: 1960-2009
Real GDP growth of 4.0% is required for breakeven employmentgrowth of 2.5%.Expected growth of 2.5%leaves us short. Weneed 46 million jobs inthe next decade but willprobably get 20 millionat best.Many businesses weresurprised by the depth of the downturn and not well-prepared.Now they are struggling torecover.Few are prepared or preparing for a sustainedperiod of strains andchallenges.
 
 
Strategy without execution is fantasy. Execution without Strategy is thrashing. And without a Management Systemboth are improbable
The “New Normal” will not return to the old “business-as-usual”
Companies whose growth depends on the inclination and ability of the American consumer tospend are under pressure. Americans remain deeply pessimistic about the economy's currentstate, … But consumers do not see themselves simply trimming on a temporary basis. One inthree (33 percent) strongly agree that changes to their lifestyles are most likely permanent.
(GQR Research. Fall, 2009).
How long will it take the unemployment rate to go back down to 5 percent? A rough estimate canbe obtained by looking at the rate of decline in the unemployment rate after recent recessions: … ,or almost 7 years.
(Mark Thoma, Economic professor. Dec.,2009)
We have not been on a sustainable economic track and that has to be changed. But thosechanges don't come overnight, they don't come in a quarter, they don't come in a year. You canbegin them but that is a process that takes time.
(Paul Volcker, Der Spiegel. Dec., 2009).
Seven years later, what are the lasting lessons of Enron? There were two or three. This was a veryyoung and inexperienced management team, and I think both management—and possibly theboard—thought the good times could never end. That's one lesson: the good times do end. We'regoing through that right now.
(William Powers, Enron CEO. Newsweek, October, 2009).
Plenty of lessons can be learned from the glut of businesses that have fallen under the swiftsword of a merciless recession. There are a number of mistakes being made, but the number onecause of failure is misguided strategy—not sloppy execution, poor leadership, or bad luck.
(Paul Caroll,Business@Emory . August, 2009).
Volatility is here to stay. What this does is force managers to harmonize two critical capabilities:on the one hand, strategic clarity and consistency; on the other, agility and resilience inoperations. This may seem counterintuitive, but organizations can handle extreme change onlywhen they can address it within a clear strategic framework.
(C.K. Prahald, Businessweek.September, 2009).
Although it is true that most companies do not explicitly articulate an operations strategy, thedecisions made by operations executives ultimately produce — or erode — competitiveadvantage. Are you certain that your operations managers know the right choices to make — or are they mindlessly pursuing “best practices”?
(Tim Lasseter, BCG. December, 2009)

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