Thomas Schinkel and Associates

2010: Malaise or Renaissance?

Business Success May Depend on a Subtle Shift in Mindset

by

Thomas Schinkel

December 2009

What can we expect in 2010? Pondering what the immediate future will bring is a popular pastime, especially at year’s end. There are plenty of prognosticators out there who will tell you with the utmost certainty that one group of trends or another will prevail. Economic growth, unemployment, housing starts, the condition of real estate markets, the stock market — the targets are too numerous to begin to list. It serves no practical purpose to parrot any of those predictions here.

Does 2010 have a malaise in store for us or will it be the beginning of a Renaissance for America? My own sense is that there are so may unresolved issues that it is too early to tell. In other words, not much of a forecast!

But I do want to draw attention to something more subtle, less tangible and definitely not measurable by the sort of mainstream metric that economists love. It has to do with a subtle shift in thinking about business and strategy, the traditional domain of the Chief Executive Officer. How to structure the organization, how to allocate capital, innovate in house or acquire knowledge from the outside, etc. – in the traditional paradigm the CEO is in charge of planning for the company’s growth, especially long-term. This mindset is captured in the following drawing:

But the crisis of 2008/2009 has shaken up many conventions and traditions, and today

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Fallout from the Bailout

By

Thomas Schinkel

October 5, 2008

Rescue or Bailout? Wall Street or Main Street?

Have you noticed? Less than three days after the deal was done, it is already politically incorrect to call it a bailout plan. The correct wording now is ‘Rescue Plan’, and it is not Wall Street that is being rescued; no, it is Main Street that is being bailed out. What a difference a week makes!

Leaving that one for what it is seems to be, at least for now, here are twelve talking points for the “ME” generation, exploring what can be expected in the aftermath of “Project Main Street’s” approval by Congress last Friday. Keep in mind that as of today it is entirely unsure whether the bailout is actually the correct cure for the problem, as defined.

1. Rising Unemployment

Expect unemployment to rise above 7%. And it will take a long time to get this number down to where it was before 2008. Also expect underemployment to rise. More and more people will look for part time jobs, time share jobs, two part time jobs and any other arrangement to bring in cash.

2. Reduced Consumer Spending

Consumers have been spending well beyond their means for years on end. Low interest rates and the resulting housing bubble merely aggravated what should have come to a halt as far back as 2000/2001. Expect a wave of austerity throughout all levels of the economy.

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