Smart Economy

When will the recession / depression end ? Part 25 New Financial sector Business Models or New Creative Workarounds?

I listened to US president Obama last Wednesday on the White House lawn, just before AIG’s CEO Liddy testified before the American congress on AIG’s bonuses. The significant point that Obama made at the end of his speech, was a fundamental change or shift to the status quo. Coincidentally or not, most mainstream newspaper reports missed this key idea and quote.

“People are rightly outrages about these particular [AIG] bonuses. But just as outrageous is the culture that these bonuses are a symptom of., that have existed for far too long. A situation where excess greed, excess compensation, excess risk-taking have all made us vulnerable and left us holding the bank. And  one of the message that I want to send is as we  get out of this crisis, as we work towards getting ourselves out of recession, I hope that Wall Street and the marketplace don't think that we can return to business as usual. The business models that created a lot of paper wealth but not real wealth in this country and have now resulted in crisis can't be the model for economic growth going forward." said Obama.

The New Yorker magazine featured this cartoon (on the right) earlier this month (March 9, 2009) , which is a more likely scenario for the financial sector….One business person says to the other….These new regulations will fundamentally change the way we get around them…

 

Walter Derzko;

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

When will the Recession / depression end? Part 19 Put Infrastructure Where it's Needed; Ontario on the Move

Put Infrastructure Where it's Needed-Ontario on the Move

Last December I posted a series of suggestions for Canadian Prime Minister Harper and US

President Obama to consider when funding infrastructure. See Top 10 smart technologies for Obama and Harper to consider for their infrastructure / cyberstructure / cognistructure program

Now Richard Florida & his team weighs into the game. This comes from a press release from the Martin Prosperity Institute at the University of Toronto this morning--Walter Derzko

Ontario on the Move - Put Infrastructure Where it's Needed

Economic history has shown that changes in infrastructure systems have often underlain phases of significant economic growth. Railroads in the 19th century, highway systems of the 1960s, and the internet infrastructure of the late 20th century are prime examples.  The innovation that gives rise to new infrastructure systems is often a response to severe stress and is often driven by desperate circumstances.  Ontario's opportunity lies not in reacting to a crisis but in proactively investing in the infrastructure necessary for future success.

 
This Week's Working Papers:

 

These working papers highlight the diverse array of challenges and opportunities Ontario

faces as it transitions toward the creative age. They represent the next three of twenty working papers that we commissioned to support the core analysis of our report: Ontario in the Creative Age. We hope you find them engaging.

• Infrastructure and the Economy: Future directions for Ontario by Chris Kennedy, Bryan Karney, Eric Miller, and Marianne Hatzopoulou
• Ontario's South Asian Transnationals: Unlocking the Potential of an Untapped Resource by Azmi Haq
• Learning from the Past - Volume 1: The Automotive Industry and Economic Development in Ontario; a Historical Perspective (1904 to the Present) by Stewart Melanson

READ MORE >>

 

Walter Derzko, Smart Economy. Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

Related Recession / Depression Posts

When will the recession / depression end? Part 19 Put Infrastructure Where it's Needed; Ontario on the Move

When will the recession/ depression end? Part 18 Hormones and Boom and Bust Cycles

When will the recession / depression end ? Part 17 Recap from the World Economic Forum in Davos

When will the recession end? Part 16 It's all over, well sort of.

When will the recession end? Part 15 Year-end predictions for 2009 starting to come true

When will the recession end? Part 14 Four options for America's race to the bottom

When will the recession end? Part 13 Thirteen economic questions that economists can't answer

When will the recession end? Part 12 Bad times are good times for startups

When will the recession end? Part 11 Bank of Canada optimism

When will the recession end? Part 10, The Conformity Trap or Don't count on your economist for advise

When will the recession end? Part 9 Humor will signal recession /depression bottom

When will the recession end? Part 8 Lessons Learned from the last Post 9/11 recession; designing brilliant winning business models

When will the recession end? Part 7 False signals of recovery

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will this recession end?

82 Signposts to the current Recession Depression Summary from 2008

 

© 2005-2009

Walter Derzko -"Changing the world, one idea at a time"©

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

• ".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead

• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

When will the Recession / Depression end ? Part 17 Recap from the World Economic Forum in Davos

Economists Nassim Taleb and Nouriel Roubini were popular speakers at the World Economic Forum in Davos last week, mainly because they were in the minority of economists that predicted the recession/depression well in advance...( as opposed to most other mainstream economists who were in total denial as late as the fall of 2008.)

A blog post on Seeking Alpha called Fresh From Davos: Taleb and Roubini Summarize Their Warnings captures the key points made by these two speakers about the current re/depression.

Nassim Taleb

1. The same people who did not see the financial crisis coming are still in charge. The same bankers who got us in trouble, are being given more (taxpayer) money. They all need to be thrown out and replaced by people who saw the crisis coming. (He nominated Roubini!)
2. Banks will need to be nationalized.
3. The financial system needs to be more robust against "black swans, discontinuities or wild cards." This will require living with less debt.
4. We need to eliminate the socialization of risk, privatization of profits.
5. Taleb is 100-200% in cash (so he has some shorts), so he can pick up the pieces when opportunity arrives.
6. Taleb believes deleveraging has just begun. There are 4-5 years to go because of the massive deleveraging still required.
7. We should get out of the mentality that we need to build debt on top of housing to drive the economy.
8. Investors should deleverage portfolios. Instead of dedicating 2x to equity, keep more cash and allocate a small portion to out-of-the-money options since you never know what is going to soar (or crash I imagine).

Nouriel Roubini

(note that he tried to shed the nickname Dr. Doom)

1. The condition in labor markets is crucial (in other words, unemployment numbers are NOT lagging indicators right now).
2. We need to resolve problems in the financial system: nationalize insolvent banks, clean them up, and sell them back to the private sector.
3. We need to invest in real (productive) physical and human capital (in other words, stop misallocating so much capital to housing).
4. Going forward, the economic news will be worse than expected. This produces about 20% further downside risk in the stock market.
5. Investors should stay in cash until about 12 months from now.
6. About $3.6 trillion in write-downs are needed to get through this crisis. We are through $1 trillion so far.

Walter Derzko, Smart Economy, Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

Related Recession / Depression Posts

When will the recession / depression end ? Part 17 Recap from the World Economic Forum in Davos

When will the recession end? Part 16 It's all over, well sort of.

When will the recession end? Part 15 Year-end predictions for 2009 starting to come true

When will the recession end? Part 14 Four options for America's race to the bottom

When will the recession end? Part 13 Thirteen economic questions that economists can't answer

When will the recession end? Part 12 Bad times are good times for startups

When will the recession end? Part 11 Bank of Canada optimism

When will the recession end? Part 10, The Conformity Trap or Don't count on your economist for advise

When will the recession end? Part 9 Humor will signal recession /depression bottom

When will the recession end? Part 8 Lessons Learned from the last Post 9/11 recession; designing brilliant winning business models

When will the recession end? Part 7 False signals of recovery

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will this recession end?

82 Signposts to the current Recession Depression Summary from 2008

© 2005-2009

Walter Derzko -"Changing the world, one idea at a time"©

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

• ".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead

• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

82 Signposts to the current Recession Depression Summary from 2008

When will the recession end? Part 7 False signals of recovery

Many hopeful economists and political analysts are desperate to find any source of good news signaling that we may be at the bottom of the recession / depression or starting to rebound to coincide with the Barack Obama inauguration. Many will point to the 300 basis point jump in the Baltic Dry Index-the obscure London based indicator that tracks the health of global maritime trade. The index,  measures the costs for shipping dry bulk commodities such as  iron ore, coal, coke, steel and grains, It topped out at over 13,000 basis points last May and by December nose-dived 96% back down to earth to 663 b.p.as global trade virtually collapsed, pushed down by a credit squeeze and sliding demand for global trade. Now it's started to rebound off its lows, inch up ever so slightly. Yesterday, the index climbed 9 b.p. to 920 points from 911 points on Tuesday.

Some analysts will jump for joy pointing at these Baltic Dry Index rebounds but ship-owners are apparently not as enthused.

 

This shows the danger of just tracking naked numbers, without digging deeper and exploring the reasons behind these moves. In the stock market they call it a dead cat bounce.

 

According to my sources, some oil companies are starting to use layed up dry bulk ships as storage vessels for oil. With no where to store & ship oil as it flows out of pipelines, these ships are tied up in dock. Oil companies are waiting it out until oil prices rebound to sell their commodities to overseas buyers-not an encouraging sign. So yes, these ships are consigned, but not actually traveling anywhere yet-so that's why the BDI has inched upward, giving you a false positive signal.

 

UPDATE- "Bloomberg is quoting Frontline Ltd, the world’s biggest owner of supertankers, as saying that about 80 million barrels of crude oil are being stored in tankers, the most in 20 years, as traders seek to take advantage of higher prices later in the year."

 

The financials around global maritime trade have not improved either, in fact in some cases have gotten worse.

 

-Shipping firms are increasingly canceling orders for new dry bulk carriers due to the uncertain business environment.

-Indian & Chinese shipowners are laying up more vessels that carry dry bulk commodities.

-Excess capacity in the business is a major problem says Purchasing.com...."even if demand comes back in 2009, there is still a strong chance of overcapacity due to the shipbuilding order boom that took place when rates were at their peak. According to the Wall Street Journal, in the last two years 50 million tons of capacity have been added to the global fleet of 420 million tons. "But in 2009 and 2010, over 175 million tons is due to come into service."

-Frozen credit lines have paralyzed the shipping trade since mid-September, drastically reducing shipments and, in turn, the use of dry bulk carriers.

-Also a lack of access to letters of credit, in which banks guarantee payment for merchandise, is another major barrier to the resumption of global trade. 

“It is not a sustained rally as of now,” said  India’s biggest ship-broking firm, Mumbai-based Trans Ocean Agency Pvt. Ltd. “It is momentary. The problems with letters of credit persist.”

Adding...."that given the extent of the fall over the past few months, a minor improvement of even 5% or 10% will not make a difference. ... “It could be a technical bounce-back.”  say news reports.

"Conditions should become clearer when China, the world’s biggest importer of iron ore, completes price negotiations with suppliers for its new annual contract beginning February." say shipping experts. Everybody will be waiting with anticipation.

Excess capacity is a problem in many industries including housing and the autosector, and we won't be heading out of the recession / depression until the supply/demand ratio evens out--that's basic economics 101,that all the optimist economists ignore and don't tell us.

Downstream Container traffic is no less robust

"Lloyd's List quotes the Drewry Container Forecaster, who now estimates that global container traffic totalled 153m teu last year, representing growth of 7.2% from 2007. A few months earlier, Drewry had been forecasting trade expansion of 8.6% for 2008.This year, growth is expected to slow to just 2.8%, with a few isolated trades such as the Asia-Middle East and Asia-Africa corridors likely to post some positive figures. The big east-west routes are in terrible shape, with Drewry forecasting that the Asia-Europe trade will shrink by 4.1% in 2009, following growth of just 1.9% in 2008. Pacific traffic is also very weak , with Drewry calculating that eastbound volumes from Asia to

North Americadropped 5.7% last year, with a further contraction of 3.2% forecast for 2009.

Trade data from Asia's export tigers has been disastrous over recent weeks, reflecting the collapse in US, UK and European markets. South Korea's exports fell 30% in January compared to a year earlier. Exports have slumped 42% in Taiwan and 27% in Japan, according to the most recent monthly data. Even China has now started to see an outright contraction in shipments, led by steel, electronics and textiles.
A report ING yesterday said shipping activity at US ports has suddenly plunged. Outbound traffic from Long Beach and Los Angeles, America's two top ports, has fallen by 18% year-on-year, a far more serious decline than anything seen in recent recessions. Source- Denmark's A.P."

Walter Derzko, Smart Economy, Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression featuring 45 opportunity scenarios.

Related Posts

82 Signposts to the current Recession Depression Summary from 2008

When will this recession end?

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

When will the recession end? Part 7 False signals of recovery

When will the recession end? Part 8 Lessons Learned from the last Post 9/11 recession; designing brilliant winning business models

© 2005-2009

Walter Derzko -"Changing the world, one idea at a time"©

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

• ".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead

• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

While the media, the US government and Pro-Obama political analysts (read economic cheers leaders) are boosting the mood of Americans before next week’s presidential  inauguration, and some economists are even forecasting a mild recovery in mid or late 2009 on the basis that some US stocks are posting 10-20 % gains from their November 2008 lows and the hope that the Obama stimulus package will be enough, people on “main-street” aren't buying it . More and more they are starting to throw the word “economic depression” around more casually and with reluctant inevitability and inescapability.

 

 

According to a recent USA Today/Gallup poll, 35 percent of Americans think that a "depression" -- is very likely, and another 39 percent think it's at least somewhat likely.  That’s 74% or 3 out of 4 Americans that are reluctant to spend, reluctant to invest and reluctant to borrow money, even if they find someone that will lend money to them and in general risk-reluctant. Frugality is in; Cheap is Chic and  “Save a dime on 2009". It’s the top topic of all US talk shows from Regis to Dr Phil & Oprah. A total collapse of economic confidence and trust. This could lead to a run on one or more banks if conditions don’t improve or worsen in 2009-2010 or if there is a sudden unexpected geopolitical shock.

"Depression" -- is defined by the poll as "an economic downturn that is much more severe than most recessions and would last several years"

 

Other signals include news of more home foreclosures, trends toward double digit unemployment in some areas, continued layoff announcements or chapter 11 bankrupcy, desperation in job seekers, retailers announcing bankruptcy,  severe price deflation or stagflation (dropping wages and rising living costs and prices).

 

Prediction markets such as Intrade (that track the wisdoms of crowds) puts the chances of a depression occurring at some point in 2009 at 58 percent.

 

Some more  respected and conservative academics are acknowledging the risk of depression. Richard Posner, an influential law professor at the University of Chicago, believes the United States has entered a depression. The conservative lecturer believes Keynesian-style stimulus would be a better solution to the economics crisis than tax cuts.   Posner acknowledged that "depression" is an ambiguous term, but in the Becker-Posner Blog, a daily commentary he writes with Nobel Laureate Gary Becker, he argued that the current environment fits his own definition: "There is no widely agreed definition of the word, but I would define it as a steep reduction in output that causes or threatens to cause deflation and creates widespread public anxiety and a sense of crisis."

BOTTOM LINE; It's up to you. People can see these trying times as a time of crisis (and do nothing) or as a hidden window of opportunity (and act) or a time of transformation (and promote change)

Related Posts:

82 Signposts to the current Recession Depression Summary from 2008

When will this recession end?

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

© 2005-2009

Walter Derzko -"Changing the world, one idea at a time"©

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression featuring 45 opportunity scenarios.

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

• ".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead

• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

The Opportunity Clinic - 28 Tactics for Managing Your Business (& surviving and thriving) in a Recession Part 1of 28

 I started to review and update the process of designing a business model for a new startup from the material I teach in my Innovation and Entrepreneurship classes-specifically the Opportunity Clinic.

 

Coincidently, Fortune magazine features an article this week on How to Manage your Business in a Recession, ( by Geoff Colvin. Fortune. New York: Jan 19, 2009. Vol. 159, Iss. 1; pg. 88 ) where they conclude:

“It’s hard to be upbeat about a recession, but it truly is an opportunity. Marathoners and Tour de France racers will tell you that a race's hardest parts, the uphill stages, are where the lead changes hands. That's where we are. When this recession ends, when the road levels off and the world seems full of promise once more, your position in the competitive pack will depend on how skillfully you manage right now.”

In this article, Fortune  identifies 10 strategic issues or tactics to manage your business in a recession. I’ve added 18 more strategic questions of my own from the Opportunity Clinic, to get a total of 28 tactics or strategic issues that each business or entrepreneur should be seriously considering and re-evaluating now, if they have yet to do so.

 

Why 28? Well it comes from the core components of your Business Model, which  is made up of 6 key generic areas or components such as:

• How do we create value ? (factors related to our offerings)
• Who do we create value for ? (or Market factors) 
• What is our source of competitive advantage ? (or internal capability factors )  
• How do we differentiate ourselves? (competitive strategy factors)
• How can we make money?(economic factors and Revenue model)
• What are our future ambitions ? (investor factors , business goals )etc

In turn, these general components can be further subdivided into 28 strategic issues or questions, that every entrepreneur should be asking  himself or herself when first designing a business model for their business idea or concept.

In recessionary times however, tactics that made sense in fast growth times can be absolutely disastrous, even survival-threatening for many businesses. If you haven’t done so, business needs to step back and explore each one of the assumptions behind their original business model idea. Criteria for assessing the overall business model in recessionary times could include profit potential, robustness (ability to withstand changes in assumptions about underlying internal or external conditions), adaptability, resilience, and sustainability.

 

Part 1 View Unemployment as an Opportunity Window (competitive strategy factors and internal capability factors)

The December 2008 figures for  unemployment in Canada, USA, Europe and Asia were generally grim sounding and greeted with doom and gloom by the media and most politicians-the worst or steepest drop since the 1930's in some cases. Stating the obvious, Fortune says: "

 

"Managing in any recession is difficult; managing through this one is especially hard because it's different from previous ones in multiple ways. Most immediately significant, employment is plunging more steeply than in a long time--by more than two million jobs [in the US} last year, more than during the previous two recessions, and this one is far from over."

However, entrepreneurs should look at the plus side and see this as an opportunity to capture new talent that is normally difficult to recruit in good times and fill key positions with experienced staff that may now be out on the street looking for jobs. A good friend of mine, who was formerly a Country Sales Manager with a top 5 consulting firm, is now looking for a job. Anyone need to fill a Sales position with an excellent candidate?

Fortune reminds us to: 

 

"Reevaluate people--and steal some good ones.

Just as most investment managers look like geniuses in a bull market, most employees can look like excellent performers in a booming economy. Now is when you identify the impostors. Working hard at that task is important, because if you need to lay people off, as you well may, it's critical that you choose wisely. A subtler danger: If salaries or bonuses need to get whacked, you may be tempted to reduce them equally across the board in an effort to show that we're all in this together. But think of the message that practice sends to your best performers, who will feel they're being punished rather than rewarded for their great work. Mel Stark of the Hay Group consulting firm points out that in his survey of the World's Most Admired Companies as ranked by Fortune, the best ones take extra pains to reassure their "most driven and focused employees," the ones it is most important to keep. Instead of spreading the pain, reward your best workers well, even in a recession. Then scout for competitors that are sharing the misery equally and steal their best performers."

In summary,  protect your own best performers from competitive poaching, and do some aggressive hiring and poaching yourself, while times are bad.

Cognitive Skill?What's negative, positive, different and interesting about unemployment in this recession?

Walter Derzko< Smart Economy, Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression featuring 45 opportunity scenarios.

Related posts in this series:

The Opportunity Clinic; 28 Tactics for managing your Business in a recession Part 6 of 28 What's in your Recession Playbook?

The Opportunity Clinic; 28 Tactics for Managing your Business in a Recession Part 5 of 28 Category Killer Innovation-India's $10 laptop

The Opportunity Clinic - 28 Tactics for Managing Your Business in a Recession Part 4 of 28 “Left Behind “Opportunities- Go Green & Go Slow

The Opportunity Clinic - 28 Tactics for Managing Your Business in a Recession Part 3 of 28 Design Opportunities- Hope or Nostalgia

The Opportunity Clinic - 28 Tactics for Managing Your Business in a Recession Part 2 of 28 Innovation or Efficiency?

The Opportunity Clinic - 28 Tactics for Managing Your Business (& surviving and thriving) in a Recession Part 1of 28

 

Related Posts over that past year:

• Opportunity Recognition in Difficult Times

• Recession - Proofing your Business - Spotting & Designing Opportunities in a Downturn

• Recession - Proofing your Business - Spotting & Designing Opportunities in a Downturn – June 25, 2008, Ontario College of Art Design, Toronto, ON

• Recession-Proofing your Business-Strategies and Tactics for smoother sailing in turbulent seas

• Master Class in Opportunity Recognition for entrepreneurs and intrapreneurs> May 30th 2008> University of Toronto

• Turning Misery into Opportunity

• Vacuum leaves pullout opportunities;

• How will baby boomers handle the recession? Zoomers, Doomers, Gloomers, Opportuneurs

• Recession, Depression and Shortages as Opportunities

• Restructuring of American Business-A New Business Model?

• Using New Yorker Cartoons for Opportunity Recognition /Sense-making & Pattern Recognition

• Text Mining for S&T Scouting, Foresight and Opportunity Recognition

• The Opportunity Clinic-swapping opportunity scenarios 08-002

© 2005-2009

Walter Derzko -"Changing the world, one idea at a time"©

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

• ".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead

• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page 

 

 

Roadmap to the financial crisis

Ever wonder how we got into this financial mess? Thanks to one of our blog readers (who wishes to remain anon) for sending me this picture from blog.mint.com (original source ) If you're a visual thinker like me, you'll appreciate this system dynamics-like flow chart chartof activities and consequences  ranging from now vintage  Greenspan (circa 2003) to recent  Bush (2008). Here is a visual guide to help you to understand the events leading up to the government bailouts.

This is also an unprecidented time for opportunity-sensitive and change-savvy entrepreneurs that can take advantage of the changing trends and unevitable uncertainty and chaos, resulting in obvious and more subtle opportunity scenarios.

Related posts-Opportunity Recognition in Difficult Times and Do you know how to spot Opportunities?

{Click picture to enlarge and get full view]

Do you know how to spot or design new business opportunities? 07-053

Several people have called me in the past week asking how I could help them create or spot new opportunities in their businesses. "Chance favors the prepared mind", so the saying goes. So, it follows that if you had a repertoire of examples of different generic opportunity windows, you can use them as a templates for either 1) designing opportunity windows for your business or 2) as a checklist for scanning to spot unique opportunity scenarios when the circumstances present themselves.

I've actually developed a workshop on that topic that I call the Opportunity Clinic (c) & here's an overview and example

The Opportunity Clinic is a robust methodology and framework bundled into a two day workshop that I developed in the 1980’s and 1990’s that helps companies, large and small explore their emerging “opportunity space”. I got the idea from Aultshuller's TRIZ model, which are essentially invention formula's or invention algorithms developed from his search of patents in the former Soviet Union (FSU). He came up with 40 principles. Why can't the same be done for opportunity examples and ideas? It's like taking an opportunity window and asking yourself: What's that an example of? or What's the underlying concept or principle here? and how do I transfer that concept from one application area (where it's common) to another, where it's novel or foreign?

It’s applicable to individual products or services, clusters of products or services, or industry verticals. It can be used at any point in the product life cycle and works at any time of the business cycle from downturns and depression to market upswings. (Hint: downswings actual produce the most new opportunity windows, but most companies are in too much of a panic to recognise them)

The Opportunity Clinic  helps companies answer such basic questions about opportunity windows as: Could it Happen? Will it Happen? How will it Happen? Should it Happen?   and align their opportunity windows with the best time to launch them in their product /service life cycle or business life cycle.

The Opportunity Clinic can focus on up to 20 “vectors” to look for or design opportunity windows, but usually we just concentrat on one or two in a session, ie, designing or creating opportunity windows for marketing, sales, branding, R&D, new products etc. While most useful in business setting, the Opportunity Clinic can also be used by the not-for-profit sector and government ministries and agencies

The actual process is a fairly simple 7 step excercise, done over two or more days, as part of a strategy retreat.

I work with a client to:

1) identify what an opportunity window is and develop a list of the current opportunity scenarios  that the organization takes advantage of now, or will in the near future

2) map out their current cluster of opportunity windows/scenarios  and populate the Generic Opportunity Map.

3) move forward; we then focus on the white spaces, the cells on the Generic Opportunity Map that are blank and ask why?

4) design new opportunity windows; depending on where the client’s products/services are in their life cycle, we then work with a client to ‘co-design” new concepts for opportunity windows using lateral thinking skills (based on the work I did as Director of the Idea Lab at the Design Exchange in Toronto)

5) compare tactics from unrelated industry verticals; alternatively we resort to selected examples from a list of over 250 generic opportunity windows from various industries that we have in our database (see example below)

6) prioritize ideas; working with a client’s existing stage /gate process we help a client prioritize their list of novel opportunity windows, based on selected criteria and requirements

7)farm out low priority opportunity windows; if good opportunity windows are designed that don’t fit into the client’s strategic mix, we explore creative ways to farm out these opportunity windows to other third  parties and still benefit from the ideas.

Here's an example from our Generic Opportunity Windows Database

[…]

3.0 Operating Asset Opportunities Via Concept Challenge (how do we do things)

3.1 The Business Model Opportunity Window

3.1.1 Steady fixed pricing Opportunity Window vs Dynamic pricing Opportunity Window

3.1.1.1  Time-based dynamic pricing Opportunity Window

a retail outlet in Rochester drops prices on men’s and women’s clothes; the longer that clothes sit on the rack the steeper the price drop, till it hits the wholesale floor level price

3.1.1.2 Demand-based dynamic pricing Opportunity Window

the new Coke Vending machines change pricing based on weather and demand for the product

3.1.1.3 Dynamic volume-discounting Opportunity Window

LetsBuyIt.com a Dutch European e-tailer operated with an innovative twist on the standard e-tail business model: as more users requested a product, bulk-buying discounts were passed on to customers and the price comes down. Its shopping site offered more than 50,000 products and services this way, notably consumer electronics from makers such as Aiwa, Logitech, Nikon and Pentax. Source: TechWeb Jan 1,2001 http://www.techweb.com/wire/story/TWB20010101S0001

Want to learn more? Call or email me asking about the Opportunity Clinic for your organization

© 2005-2007

Walter Derzko

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

.....Strategy without action is a day-dream; action without strategy is a nightmare"- old Japanese proverb

".......Ours is the age that is proud of machines that think and suspicious of men who try to." - H. Mumford Jones

"Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  A. Einstein

"Change is difficult, but complacency and stagnation are showstoppers..." Walter Derzko

"Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  - Margaret Mead

P. S. if this is your first visit to my blog, please go to our Welcome page

Sensemaking in 2007 (Part 1 of 4) 07-003

As managers and leaders start thinking about strategizing and making plans for 2007, it's worthwhile to pause and see what awaits us in 2007 and beyond.

All organizations, public and private face an increasing turbulent external environment, which can be described as uncertain, ambiguous and full of anomalous weak signals and equivocal cues that suggest disconnected, irregular change instead of smooth, incremental, evolutionary change that was characteristic of the last 30 years in business and government. This new complex dynamic requires us to rethink and challenge our conventional approaches and assumption to strategy and strategic thinking. Increasing uncertainty leads to anxiety, cognitive confusion and to a hyper-cautious state that paralyzes organizations and its leader into inactivity and a yearning for maintaining what we know --the status quo. Alternatively, if we ignore our complex environment, and the anomalies and cues that do not conform to our current business models or existing mental models, we are in danger of seeing at the very least, a growth in inflexibility and corporate hubris in step with a drop in institutional resilience, if not a misplaced over-confidence behind key decisions, a string of which could be fatal for many organizations.

Paraphrasing, Alex Wright, a Senior Lecturer at the University of Wolverhampton Business School in the UK, one challenge facing our leaders and decision-makers in 2007 is to be better prepared for accelerating uncertainty and for managers to make sense of new situations and phenomena (separating threats and opportunities) and to develop a perceptive of the future based on cognitive pluralism, instead of naive determinism.

David Pollard is his blog noted the same escalating tendency. In a post entitled World of Uncertainty he writes on Dec 22, 2006:

"Perhaps the counterpoint to my point Tuesday about the need for ‘less talk and more action’ is the need to embrace complexity and, with it, uncertainty, including uncertainty about what to do. An editorial in today’s NYT by a theology professor expresses alarm about the author’s perception that there is an increasing demand for certainty and absolutism in our society, and an increasing intolerance not only for opposing orthodoxy but also for ambiguity, ambivalence, and compromise."

"This inflexibility and lack of resilience is the sign of a society that is growing increasingly unhealthy and unable to adapt to changing realities. It manifests itself in nostalgia for simpler times and a lazy propensity to seek and settle for simple answers, where there are none, or at least not any that work. It’s understandable as we grow increasingly impatient at our inability to bring about urgently-needed change, but doctrinaire thinking tends to work only for those who want no change – you can win converts for the status quo, because there’s only one status quo, but the minute you start to preach one single change prescription for the world’s problems you face opposition and resistance not only from conservatives but from other progressives who want to go forward in a different direction. Complexity precludes achieving broad consensus on What to do. That’s depressing, because it reduces the probability that we’ll be able to bring about any meaningful change before our civilization collapses from its excesses, so it’s something most progressives don’t want to admit, or even think about."

In light of what David Pollard summarizes above, we should be placing far more emphasis on ignorance management, which is a much broader and larger domain, then knowledge management.

© 2005-2007

Walter Derzko

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Economy Bog: Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

.....Strategy without action is a day-dream; action without strategy is a nightmare"- old Japanese proverb

".......Ours is the age that is proud of machines that think and suspicious of men who try to." - H. Mumford Jones

"Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  A. Einstein

"Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  - Margaret Mead

P. S. if this is your first visit to my blog, please go to our Welcome page

The Future and Cultural Values

In doing background research on an article I'm writing on the Future and Inter-cultural Values, I ran across an intereting piece of interdisciplinary work from the political science, cultural anthropology and sociology fields.

The Values Map above ( Inglehart and Baker (2000), visually illustrates the strong correlation of values in different cultures.  You will notice that countries are clustered in a remarkably predictable way.

These world-wide Value Surveys were designed to provide a comprehensive measurement of all major areas of human concern, from religion to politics to economic and social life. From this we see that  two dimensions dominate the picture: (1) Traditional/ Secular-rational and (2) Survival/Self-expression values. 

"These two dimensions explain more than 70 percent of the cross-national variance in a factor analysis of ten indicators-and each of these dimensions is strongly correlated with scores of other important orientations." note researchers.

The Traditional/Secular-rational values dimension reflects the contrast between societies in which religion is very important and those in which it is not. 

A wide range of other orientations are closely linked with this dimension.  Societies near the traditional pole emphasize the importance of parent-child ties and deference to authority, along with absolute standards and traditional family values, and reject divorce, abortion, euthanasia, and suicide.  These societies have high levels of national pride, and a nationalistic outlook.  Societies with secular-rational values have the opposite preferences on all of these topics."

"The second major dimension of cross-cultural variation is linked with the transition from industrial society to post-industrial societies-which brings a polarization between Survival and Self-expression values.  The unprecedented wealth that has accumulated in advanced societies during the past generation means that an increasing share of the population has grown up taking survival for granted.  Thus, priorities have shifted from an overwhelming emphasis on economic and physical security toward an increasing emphasis on subjective well-being, self-expression and quality of life."

Inglehart and Baker (2000) find evidence that orientations have shifted from Traditional toward Secular-rational values, in almost all industrial societies.  But modernization, is not linear-when a society has completed industrialization and starts becoming a knowledge society, it moves in a new direction, from Survival values toward increasing emphasis on Self-expression values.

"A central component of this emerging dimension involves the polarization between Materialist and Postmaterialist values, reflecting a cultural shift that is emerging among generations who have grown up taking survival for granted.  Self-expression values give high priority to environmental protection, tolerance of diversity and rising demands for participation in decision making in economic and political life.  These values also reflect mass polarization over tolerance of outgroups, including foreigners, gays and lesbians and gender equality.  The shift from survival values to self-expression values also includes a shift in child-rearing values, from emphasis on hard work toward emphasis on imagination and tolerance as important values to teach a child.  And it goes with a rising sense of subjective well-being that is conducive to an atmosphere of tolerance, trust and political moderation.  Finally, societies that rank high on self-expression values also tend to rank high on interpersonal trust."

"This produces a culture of trust and tolerance, in which people place a relatively high value on individual freedom and self-expression, and have activist political orientations.  These are precisely the attributes that the political culture literature defines as crucial to democracy."

Questions to ponder.....?

• Is it me or does it seem to more people that Canada, the USA  and Russia are slipping and backsliding along some of these value spectra?
• How will values change and in what direction will they go, as post communist countries go through their transition periods into a market or semi-market economy?
• How often do values shift & change? Every decade? Is it accelerating?
• Are there noticable generation to generation (G2G) changes visible every decade?
• Is there a significant correlation and link between genetics, culture and happiness?

© 2005-2006

Walter Derzko

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Strategic Foresight,, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

To arrange for an in house presentation on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

.....Strategy without action is a day-dream; action without strategy is a nightmare"- old Japanese proverb

.......Ours is the age that is proud of machines that think and suspicious of men who try to. - H. Mumford Jones

"Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  A. Einstein

P. S. if this is your first visit to my blog, please go to our Welcome page