In 2009, the strategy of many companies could be described as defensive. One could read the newspaper, listen to the news, analyze data, and talk to anyone and know that it was going to be a tough and troubling year. The stock market took its tumultuous fall, many jobs were lost, and firms everywhere focused on cutting costs any place they could. When the dust settled, 2009 was for many a year they would like to forget.
Now we are in 2010, and there are new road signs, which means leaders must take new actions. However, I caution those of you who use superficial road signs to determine what actions you need to take. Superficial road signs are newspapers, the radio, television, most magazine articles, and typical gossip with friends and family. Everyone is regurgitating the same stuff, and usually it is false, misleading, and/or past news. You cannot believe all that you hear and read. To have a great company you want to lead the herd rather than follow it. This takes courage, which usually follows knowledge and belief.
I had the benefit of listening to Economist Alan Beaulieu of Institute of Trend Research last week, and he shared quite a few data points that I think will be important for 2010. It also made me realize how many companies are not paying attention to these predictors and may miss them.
I find this happens for 3 reasons: no one in the company 1) is knowledgeable about what to look for, 2) thinks trend-reading is enough of a priority, or 3) believes that this kind of forecasting can be done with accuracy. Regardless of which of the reasons, too often companies act too slowly and cost themselves tons of money. Running your business by driving through the rear view mirror is a great way to have many accidents.
In this article I figured I would share with you some of Mr. Beaulieu’s key points as his economic predictions have been amazingly accurate over a long period and also suggest some other patterns I believe you should look at. To break away from the herd you must look for patterns to identify changes that are taking place in the marketplace so that you can take advantage of them and/or respond to them faster than everyone else. In addition, you need to talk to current, past, and prospective customers. You also need to look at the year-over-year, 12-month percentage growth trends in your business as compared to the key leading market indicators that correlate with them in order to spot inflection points.
In his presentation, Alan Beaulieu pointed out that the unemployment rate is a lagging – not a leading – indicator, so while the number is distressing and affects so many people right now, it cannot help you run your businesses more effectively. He did identify the following items that are important:
That said, he forecasts that
Okay, so do we know what the inflation rate is going to be, exactly how fast the economy is going to come back, or what interest rates will be in November? No! But I am pretty certain that based on what I saw from Alan’s data that he is directionally correct. So if you believe the economy is turning, and you want to go from defense to offense, and you think some of these changes are happening, what do you do? Here are some recommendations:
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