State of the Economy and You

Economic conditions are much improved for both companies and countries, executives say—but hopes for continued recovery are a little less bright than they were in December” screams the synopsis of a McKinsey Global Survey Results announcing the Economic Conditions Snapshot in February ’10. Now, when companies and executives are talking about the economic mend, the context is the virtual collapse in 2008 and the present condition. It is not a comparison to an ideal state. In a related McKinsey research conducted in January ‘10, 60% respondents polled “building capability among the top three priorities where capability is defined as anything an organization does well that drives meaningful business results”.

It is with reference to the above two research pieces that the claims of the media that “Jobs are back” and “Economic Recovery is Visible” are appalling.   Even given the Ellen Goodman quote, “In journalism, there has always been a tension between getting it first and getting it right”, this rant is way off the mark! Against this backdrop, we are now adding social media and the depth of discussion and the quality of content even gets worse.

As I was heading back to the change room this morning at the gym after my workout, an acquaintance at the gym came following back. He had wanted time from me for the past two weeks to discuss something and seek advice but things didn’t work out. However, he was determined to get a few minutes of my time and my perspective this morning as he was struggling with a decision he had to make and the question was “whether to stay in his job or opt for an invite from his ex-boss in an entrepreneurial venture”. And that established the context of this blog posting for me.

First the advice I gave this young man when I found out that his ex-boss was offering employment and not an entrepreneurial opportunity. I advised him that stock options are really not such a great investment instrument in the current economic market with the time and effort involved. On the other hand, I was very clear that if he had a radically differentiated idea with the ability to garner funds that budgeted for three years of Sales & Marketing, Payroll and Product / Service Development, he should become an entrepreneur right now without question. The matter was settled when the answer emerged clearly in that sweaty state we were both in, that keeping his current job with a multinational company was the safest option. He was going to go straight to work from the gym and inform his current boss that he was ready to take that flight tomorrow to Amsterdam to pursue his current professional life with renewed focus.

Most of what is being written here is from an IT & IS Products and Services industry perspective, but holds good for a large number of industry sectors similar in nature including Banking, Financial Service & Insurance, Retail & Manufacturing and other Professional Business Services. The sectors such as Healthcare, Telecom, Media and Utilities have a more fundamental challenge with respect to technology and a change at the core of their business to address. Travel, Transportation and Lifestyle are an offshoot of the trends adopted by the above industries anyway.

Evidence of Growth is in the “pipeline” with a probability factor greater than 85% for all opportunities listed and 40% of that 85% materializing into business in the next two quarters. If you dig deep into the CXO community of the enterprises who are sheepishly following the media rant about the story of economic recovery, you will notice that the evidence is missing; there is no pipeline. Right now, it is a strange mix of coincidences and desperation that is keeping business going. They know it and therefore they are not investing yet in new workforce. They are definitely beginning to hire and backfill positions that have been required in the last couple of years. But they are yet to make the investments to build capabilities. Some CFO’s who have yet to get busted by the earlier bubble syndrome of 2002 are keeping money available for acquisitions as their growth endeavor. But real capability building is still a lot of words and posturing, rather than a genuine attempt at recovery and growth.

As the advice given to my acquaintance, this stage of the economy demands money in the bank to spend on growth measures. But if it is going to be spent on more sustenance, this economic recovery is a further haul away. Finding Talent within and outside the organization that can create a fundamental differentiation to the business and ringing in an Industry Transformation is the way forward for business leaders. Mere movement should not be mistaken for signs of growth or recovery and it is wise not to fall into a trap of the media who are starved for content.

About Subbu Iyer

Subbu Iyer is an Innovation & Transformation Leader as with 28 years of serving customers globally. He is currently the Chief Designer & Transformer at Energizing Innovation, an enterprise that is being founded to facilitate continuous growth in enterprises and as a consequence create societal wealth. The Radical Shift that this enterprise intends to employ is focusing on the Potential rather than the Performance of a business. He has been a serial entrepreneur and an intrapreneur in his past life, having founded Nihilent Technologies and Nandaki Systems besides being associated in senior leadership roles with firms such as Coopers & Lybrand, Cambridge Technology Partners, Tata Consultancy Services, Wipro Technologies and Steria.
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2 Responses to State of the Economy and You

  1. Krishna Sirohi says:

    Impressed….

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