Here are my current interpretations of the marketplace drifts – economics, politics, technology and demographics – to help CEOs of private companies produce new reflection and thinking for refreshing and reformulating their core offers, strategies, narratives and practices. I acknowledge the contributions of my network to my thinking, particularly Dr. Arthur Laffer.
The US economy is continuing to grow slowly and with some volatility. First quarter economic growth was revised to a negative at -2.9% (annual). Current estimates of one year growth of US GDP is less than 2% (trailing four quarters). The Federal Reserve has announced bringing Quantitative Easing (QE) to a close by October and is in discussion about when to increase interest rates.
My anticipation – the 10 year treasury rate, currently at 2.53%, will remain below 3% through 2015; prime rate, currently 3.25%, will increase 1-2% by 2016.
I continue to anticipate the US economy will not exceed current rate of growth until policies change to be more favorable for economic growth. Drivers for economic growth are decreased regulatory burden/costs, flatter/broader tax policy with lower marginal rates, free trade, sound money and fiscal restraint. I continue to be hopeful our citizens will demand better policy and turn away from the apparent belief increased government can take care of everyone. I believe we are beginning to see movement in this direction.
“Liberty has never come from the government. Liberty has always come from the subjects of the government. The history of government is a history of resistance. The history of liberty is the history of the limitation of government, not the increase of it.” Woodrow Wilson
The only way we will get better policies is a shift in the balance of power in the federal government. While it could be my optimism showing, Effective employment or the percentage participation in work in the US remains at an historic low of 62.8% (data here).
I am on record anticipating the Senate will return to Republican control in the November elections.
I also see signs of reality coming into existence with the ongoing challenges to government and other pensions.
“Let us not seek the Republican answer or the Democratic answer, but the right answer. Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future.” John F. Kennedy
The increased availability of technology to individuals through shared work spaces with tools for industrial design, prototyping and low-cost manufacturing seems to me an extension of the empowerment of individuals and small groups that started with the personal computer. With no claim of expertise, the Maker Movement illustrates the increased ease for a small team to develop and test new products at very low cost. Another innovation that decreases cost and increases random collaboration is Coworking. These types of innovations are, of course, not limited to the US. I’m sure they are available of becoming available in major metropolitan areas around the world.
“ The march of science and technology does not imply growing intellectual complexity in the lives of most people. It often means the opposite.” Thomas Sowell
The major demographic force that’s begun, and will continue for several decades, is the “retirement” of the Baby Boomer generation. As a member of this generation myself I see the reality within my circles of the facticity that (1) we are not guaranteed to have the health to continue our career past 60, (2) goods and services are priced in the marketplace (aka “there’s no free lunch”), and (3) the ability to make valuable offers exists only when our offers provide sufficient marginal utility to the buyer. Many of my generation has not saved and invested to have financial autonomy, not have they held the practices for competitive learning and accumulating knowledge and power to allow them to transact successfully in their mid-60s.
I anticipate continued pressure for increased government spending, an antigrowth force. How we as a society will resolve these challenges remains to be seen. For those with time remaining in their careers this situation highlights the unavoidable requirement to earn, save and invest enough financial and pragmatic capital to survive, be free and live a good life. Regardless of what action our government takes, there are not enough resources to provide a satisfactory life to those who find themselves no longer able to participate in the marketplace. A reminder of the statistic above - currently 37% of the population of the US is not working (in the recorded economy - some may be in the underground economy).
“A dream doesn’t become reality through magic; it takes sweat, determination and hard work.” Colin Powell
- How are new practices for designing and prototyping products being used in your market?
- Inventory and assess your current standard practices to see where you can lower costs and/or improve value.
- Are your capital structures well constituted for your mission and the current marketplace environment?
- How is your business affected by economic and political conditions in China? What new thinking and actions are required for you to be prepared for the variety of likely possibilities?
- Are you learning at a sufficient pace to earn, save and invest enough to survive, be free and live a good life?
- What new offers, practices, narratives and strategies will increase the rate of growth of enterprise value in your firm?
“Hope is definitely not the same thing as optimism. It is not the conviction that something will turn out well, but the certainty that something makes sense, regardless of how it turns out.” Vaclav Havel