The Gutsball Blog
Business Cycle Realities
This may spark a reaction in some circles (e.g. the Obama Administration?), but I do not believe we are in the midst of so much as a mild economic recovery. U.S. unemployment is over 8%, Europe is a mess; even those juggernauts of growth, India and China are experiencing stalled economies. In years past, it was said that “when the U.S. sneezes, the world catches a cold.” That’s arguable today, but for whatever the reasons, most of the globe seems to have come down with the flu and it’s been spread around by a number of countries with symptoms.
What do business leaders do? What are the tactics for weathering the storm? Ensuring survival? Maintaining morale?
‘Tis the Season
It’s that time of year again. Yes, I know the kids are back in school and soon the leaves will begin to change color. The esoterics are something I’ll deal with another time perhaps, but today I want to discuss that time honored corporate rite, the creation of the business plan for next year. Many companies are somewhere along the completion spectrum right about now.
Let’s start with the premise, whether you are a middle manager or a CEO, that everyone has a boss; meaning that somewhere along the road your business plan submission will be reviewed by someone who will think you’ve presented a compelling case based on a cogent thought process. Or, and this happens all too frequently, that someone will think you are all wet and send you back to the drawing board.
If you are the CEO of a publicly held company, you and your investor relations team have spent lots of time during the year in a push / pull dance with sell side analysts on Wall Street. Half of the effort is devoted to convincing them that your strategy is sound and growth prospects bright, while at the same time trying to finesse a dumbed down earnings projection so that The Street doesn’t set the bar so high that it can’t be jumped over. Eventually, a consensus earnings and revenue forecast is achieved. It’s at that point that the CEO turns to his or her planning team and says something like, “go forth into the organization and bring me back some numbers that are X% higher than The Street’s consensus. We need wiggle room.”