This seems to be the topic that is on everyone’s mind these days: Are we in the early stages of an economic recovery and what will happen now?
Take a simple test: What do YOU think? The answer, I’ll bet was “I’m not sure.” And if that’s right, then you are representative of the majority of America (and maybe a lot of other countries).
What do you do when you are uncertain? You are cautious, right? You watch your spending and keep it to the basics — the needs and wants that are modest, etc. Well, there is your answer. This recovery will evolve slowly, because there have been few recessions like this one — ever. Because so many people, and companies (that are managed by people) are being cautious, spending will be cautious, reducing the likelihood of a fast, robust recovery.
Consumer spending is slowly coming up — but just a little. That’s partly due to tax refunds and lower taxes due to investment losses; partly due to the “stimulus mentality;” and partly due to the moderate recovery of the stock market. Corporate sales and earnings are still soft, and trailing last year. They’ll beat last year come 4th quarter because the 4Q last year was a disaster.
Corporate spending is also (want to guess?) slowly coming up – just modest spending and just for the high-return or “absolutely necessary” items.
So what should you do now? Keep being cautious. It’s the only prudent thing to do. But be on the lookout for opportunities.
I like a metaphor here to illustrate. It is how surfers behave. They work hard and paddle like crazy to get out just beyond where the surf is breaking. Then they just “idle” out there, paddling around in place, making sure they are in position to catch the next big wave, but being cautious and choosy. When they sense a big one coming, they paddle hard again to catch it at just the right point.
Then they ride it for all they are worth, hoping they can stay up on their board and not wipe out. If it was a good wave, and they are skillful, they get a nice ride almost onto the beach, where they can …you guessed it… paddle hard to get out for the next wave and do it all over again.
This recovery will come in waves, too. The companies that take good care of their customers, watch their costs and spend their resources wisely-on innovative new products and meaningful product improvements — will enjoy the ride on each successive wave. The more the surfers do it (and do it right) the more skillful they become. The ones who wipe out still have to paddle back out and try again. The ones who succeed start looking for bigger waves to catch.
You see, business is not some magical process. Someone develops a product or service that meets a need or a want, for which customers will pay money. Then they produce and deliver the product (or service) and if they do it well, they get to do it again. If they don’t, someone else catches their next wave, and they are wiped out-at least temporarily-and then they have to work even harder to get in position for the next opportunity.
Smart people try to learn from their mistakes. They also conserve their energy (and money) to spend on the best opportunities. My question for you is: do you understand which opportunities are your most desirable ones? Consider this question carefully because answering it correctly is the key to choosing the right waves and riding them the right way. In metaphorical terms, can you recognize the good waves when they are coming? And then are you skilled enough to ride them?
Work hard. Study carefully what your customers value. Stay close to customers. Keep your eyes and ears open about what competition is doing. Survey the environment constantly. Then consider what you can do well-and actually deliver on consistently.
Those are the “waves you should choose, and the rides that will be good ones.” Work within your resources (energy) and learn from each successive wave. At the end of the day you’ll be tired, but happier. After all, business is like a sport-where the score is kept in money and the prize is that you get to play again.* * * * *
About the Author: John L. Mariotti is President and CEO of The Enterprise Group — Time-shared Executive Advisors. He was President of Huffy Bicycles, Group President of Rubbermaid Office Products Group, and now serves as a Director on several corporate boards. He is the author of a number of business books on Partnerships, Marketing and Strategy. His latest book, THE COMPLEXITY CRISIS was chosen as one of 2008’s Best Business books. His electronic newsletter THE ENTERPRISE is published weekly. His Web site is www.mariotti.net.
