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Libey Incorporated
Economic Outlook
Secrets of the Catalog Master
Vol. MMV No. 1 January 2005
Advisors and Intermediaries To The Catalog Industry
Philadelphia, Pennsylvania
Donald R.
Libey, Editor
Macro Change
by Donald R. Libey
We all are sensing change coming upon our world and our society. Whether those changes are orderly and progressive or chaotic and regressive is worth thinking about as we begin 2005. Ultimately, we will all exist within the design of an increasingly global society and within the design of an increasingly complex commerce, both of which are evolving and mutating, seemingly by the hour. The portents and signs of the future that are beginning to appear, however, are increasingly disturbing.
The Power of Long Range Thought and Visualization
This article is perhaps a somewhat rambling departure from the usual and usually practical information I attempt to write for the newsletter, but it has become time for all of us to truly think and to try to make sense of the many small but indicative changes that are occurring, not only in direct marketing but almost anywhere you look. Only after serious and long thought and reflection will we gain even a partial understanding of the progression from the small changes to the ultimate macro changes that are occurring so that we will have the necessary insights to make the far-reaching decisions and strategic shifts that will successfully guide our businesses over the next 10 to 25 years. To underscore the importance of that process of necessary thinking, reflect on this unsettling realization: If we had truly thought deeply and visualized accurately back in 1995 and had fathomed the potentials of investment prospecting, interactivity, the Internet, email, integrated channels and how search engines would centrally drive comparative pricing, we would all have done almost everything differently. That was only a decade ago. Our entire world changed within the last 10 years, and most of us chose to be followers rather than pathfinders.
Dedicating a part of your strategic mind to figuring out the future is not a waste of time. For young managers, their entire career, indeed their lives, may well be shaped by what they determine today. For senior managers, they have, for the most part, at least a decade of relevance left, but-more important-they have the harvest of the exit reward still to achieve. Our companies are being irreversibly shaped by the decisions we make today. How very sad it is that most of those decisions in most of those companies are being made based on last year's data and not on today's clear evidence of the coming future.
Symptoms of Macro Change
It's really all of the little things that shape the big things: IBM sells its computer manufacturing to a Chinese company; K-Mart buys Sears; the entire airline transportation model disintegrates in a failed fifty-year experiment of feeders and hubs and unions; "illegal citizens" (a new oxy-euphemism) have taken over the hospitality, construction, restaurant, labor, and manufacturing industries, and are poised to capture the service industry; high-tech skills are outsourced to India, China and elsewhere; a run down, sixty-year old, two-bedroom house in San Diego costs $790,000; the pharmaceutical industry is a fraud; the energy industry is a fraud; the financial investment industry is a fraud; schools and bridges crumble; the highest paid government employee in Iowa is the football coach at the University of Iowa; the gross national product is driven by addictions to consumption and parasitic lawsuits; gasoline prices will never drop below a national average of $1.70; there are growing numbers of poor; you get an obscene tax break for buying an even more obscene Hummer; the ragged claws scuttle across the ocean floor; the center will not hold.
And yet, things have never been better: Sales and profits are up; we will need 50% more housing to shelter the exploding U.S. population in the next 25 years; life expectancy is almost double that of 1920; quality of life is good; we've never had so many billionaires and millionaires are common; the rate of new business formation is unprecedented; broadband has arrived as predicted; the Postal Service is making a profit and raising rates double-digits; the catalog industry is expanding; investment money is plentiful; prospecting models are working; business valuations are improving.
Note the polarity, the dichotomy, the strange juxtapositions? These are the cardinal symptoms of huge changes in the offing.
Power Shifts
Europe and Asia are going to assume greater importance and control over the world economy and policies. America's economic and policy leadership role will moderate. The practice of American democracy is only 229 years old; the American economic and political leadership period has really only existed since 1946, a scant 59 years in the merciless sweep of history. For much of recent history, most of this country belonged to Mexico and Spain; we have only occupied it for a century-and-a-half or so. Within 20 years, the United States of Europe will be far larger economically and in population than the United States of America; China and India will present formidable near-term scale. The balance and quality of economics as well as lifestyle will begin to shift, perhaps even reverse. Our national and world position and our dominant economy are not permanent, immutable fixtures in a shifting global evolution of power, wealth and ideology. At various points in history, dominant economic and political power has been held by Great Britain, Spain, Portugal, The Netherlands, Austro-Hungary, Rome, Byzantium and others. Power shifts are historically normal. They are also caused primarily by shifts in economics. The world's masses must be fed, clothed and sheltered. That is the changeless common thread through all of history regardless of technology, finance, war, political ideology, education, or anything else. Economic power is gained by the merchant nations who dominate and control the feeding, clothing and sheltering. When that control is lost or abdicated, power shifts. That control is currently shifting whether you care to admit it or not. It is shifting to Asia and the financing is shifting to Europe. And, in its turbulent wake, as a consequence of the vacuum created by the power shift, we will weather polarity, dichotomy and juxtapositions due to the domestic dislocations that occur. This is what is beginning, what is occurring in the micro changes leading to or stemming from the macro changes. This is not news. Ross Perot told us this was going to happen back in 1992, just a little over a decade ago.
Granted, these are tidal influences that we cannot change. However, we can-and must-attempt to understand our businesses in relation to these long-term macro changes and then learn to adapt the strategies we employ to govern the micro components of who, what, where, when, why, how and how much that steer our corporate futures. If we can't do that much in the face of unprecedented change, then we have no individual or collective business leadership and we will fail.
Attitude Shifts
Again, it's all the little things that make up the big thing: Customer service and customer loyalty almost totally disconnect; Christmas softens to Holidays, then reduces to Shopping Event, which is further minimized to It's Too Much of a Hassle, until ultimately becoming just another day; the focus on sports is more intense than on education; gratification replaces achievement; loyalty erodes to opportunism; certitude ascends over acceptance; special interests eliminate community; whining replaces positivism; price or money becomes the sole arbiter of everything. The big thing that changes is vitality: It mutates to cynicism in the same way that symptomatic baggage handlers for U.S. Airways no longer care enough to come to work after being beat up on wage and benefit concessions by a bankrupt employer poorly attempting to deal with a failed business model exacerbated by a complete absence of management's understanding of the future of its industry.
As with our response to macro power shifts, we have an obligation to our businesses to understand the attitudes that are changing and, again, adapt the strategies we employ in response to those changing attitudes to improve our percentage chances for future success and, indeed, survival. The responsibilities of not only leadership, but stewardship of our industry, demand that we think and envision to the best of our abilities where we are going and to what future position we want to lead our companies.
Signs and Portents
There is massive change coming. I don't know what it is or when it will occur, but I do know the signs, symptoms and indicators are actively creating turbulence all around us, some positive but a great deal less positive. Begin to enumerate what you see. Evaluate events with a view to their place in a reformatting economy, domestic society, world position and a new, interrelated global society. For a year or so, stop looking at trees and attempt to clearly understand and see not just the forest, but the 100 Acre Wood surrounding your business, the U.S. and the world. Until you do that necessary work, you cannot evolve a guiding strategy for the future of your career, your business or our industry. In the 30 years that I have been doing whatever it is that I do, I cannot remember a time when the need was so evident or so palpable for superior strategic thinking.
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