The Sun Will Come Up—Tomorrow!

In the Broadway show ANNIE, the lead character sings the hit song of hope and faith, “Tomorrow.”  The lyrics are familiar to most of us, and include the title of this article.  It goes on to say, “..bet your bottom dollar that tomorrow, there’ll be sun.”  So it is for the companies in the U.S. economy.  The question in everyone’s minds is, “When is tomorrow?”  The next question is whether clouds of doubt and concern will obscure that sun.

The recession is technically over; the recovery underway. So far it is a jobless recovery and doesn’t feel different than the recession. In spite of this, consumers are slowly but surely gaining ground in small bits and pieces.  Spending is creeping up—in ups and downs—over the past months.  Spend a little, then cut back and save a little, then spend a little on the next occasion.

The problem of a self-fulfilling prophecy is described by the little story that follows.

The scene is bistro on the Champs-Élysées in Paris.  A young painter goes into the bistro and asks the waiter for a bottle of their finest wine to celebrate his greatest ever commission for a painting to go in the home of a rich businessman.  As he awaits the wine, he notices a paper lying on a chair at the next table.  The headline reads, "Hard Times Are Coming--All will suffer from downturn"

Alarmed, he calls the waiter and asks if he has opened the wine.  Finding that the expensive wine is unopened, the artist asks the waiter to bring him a more modestly priced wine instead.  The waiter asks why he wishes to change--is he less excited about his good fortune?  "No," replies the painter, "but see that headline," Hard Times Are Coming--All will suffer from downturn. I think I should be cautious.

The waiter goes to exchange the wine and meets the owner of the bistro who asks why he is not opening the fine wine.  The waiter relates the painter's story and tells the bistro owner of the headline "Hard Times Are Coming--All will suffer from downturn" The bistro owner continues to his office and as he does, he ponders the order he just placed for his bistro.  He has ordered the finest wines and cheeses, and all the trimmings--in a small part fueled by the latest order of fine wine by the painter.

He picks up the phone and calls his supplier, asking to reduce the size and downscale the assortment of food and wine for his next order.  The supplier inquires why and the bistro owner cites the headline "Hard Times Are Coming--All will suffer from downturn" The supplier, himself a small businessman, calls his largest supplier, and cuts his future orders orders-"just in case."  When the large company who supplies him sees the order from one of his best customers reduced sharply, the owner is notified.  The owner's concern is great, especially when is manager relates the reason---the headline "Hard Times Are Coming--All will suffer from downturn"

The owner of the large business decides he should cut down on his extravagances and calls the young painter canceling the painting he commissioned!  The young painter returns to the bistro that evening, and asks for a bottle of their cheapest wine.  The waiter is surprised to hear that he has lost the commission, and wants to drown his sorrows.  As he awaits his bottle of cheap wine, he reaches over and picks up the newspaper still lying on the chair next to him.  The date on it is two years ago.

Human nature exaggerates both pessimism and optimism. When times are good, people feel too optimistic; when times are bad they feel too pessimistic.  Thus the current circular cycle of fear (of job loss, etc.), uncertainty (of future prospects) and doubt (that anything specific will improve) leading to fear and the cycle repeats.

Let’s take a cue from ANNIE and make the opposite assumption—that the sun will come up, tomorrow.  That is probably the correct assumption, but can only come true is companies are prepared for it.  During down times, companies cut people and inventories.  Then when opportunities arrive predictably, like the sunrise, they are not prepared to capitalize on them.

Companies that are cautiously more aggressive are prepared to enjoy small up ticks in sales because they have adequate (not excessive) inventory. Companies that carefully cut “fat” and not “muscle,” can respond by launching that additional product, service or promotion that catches an up tick in consumer spending. Suddenly, the negative spiral can turn into a positive one.  A little success breeds a bit more confidence.  Products are introduced and promoted, and when competitors are “hunkered down,” those that aggressively seek customers can gain disproportionately.

Surfing provides an apt metaphor for this.  Surfers work hard paddling out to the place where the waves start to break.  Then they “idle” there watching and waiting.  Some may try to catch a medium-sized wave and ride it to the beach.  Their exhilaration at the success fuels their desire to try again, but for a bigger wave.  When the big wave comes, the risk of “wipe out” is greater, but the satisfaction of success is also greater. So it is with companies.  Think big, but try small, then adjust and raise your aspirations.

The essential challenges are two:  1) To believe that the “sun will come up—tomorrow” and 2) To be prepared to enjoy that success and turn the negative Fear—Uncertainty—Doubt spiral into one of Hope—Small success—Larger Success/Confidence.  Companies that do this will be the winners, and the losers will sit idly by, “licking their wounds” and blaming their ill fortune on the economy, instead of their own lack of resolve and positive action.

The question is, which one will your company be?

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