Wednesday, January 27, 2021

Biblical Business: Return to the Land of Goshen?

Consider 2020 and the upheaval for many businesses and the once-in-a-century recession that wasn't related to a financial crisis, or lack of demand, but to a pandemic that artificially shut down businesses and reduced demand for a most things outside of our residences. Many of us pine for the "good old days" when we understood the economy and the rules of business. We knew how to recover from recessions, knew how to market and sell to new segments of marketplace, knew how to develop new products and services to attract more customers and capture more profits. Those rules didn't help in 2020 and now going into 2021. Many business owners have adapted within their business models, but business as it used to be may not be recoverable as new work-from-home (WFH) routines have been developed. The auto, hospitality and airline industries may never recover to pre-COVID levels. There may not be pent-up demand waiting to be fulfilled when it's safe to be in crowds again.

So then what?

I'm reminded of the Israelites at a couple of inflection points in their history. The Exodus from Egypt was a key marker in their history and a point that is remembered yearly in their Passover/Seder meals. It is the model for many other transitions throughout Judaism, Christianity and Islam. However, let's take a look at it as if we didn't know the conclusion to the story.

The family of Jacob settled in a part of Egypt called Goshen (the Nile River delta). When they went there, one of the sons, Joseph (yes, of Technicolor Dreamcoat opera fame), was already there managing affairs for Pharoah's government. The population of this family grew from 70 to 600,000 men (plus women and children--the population of many 2nd-tier metro areas or the states of Wyoming/Vermont/Alaska/N. Dakota combined). By this time, several generations of Pharaohs had come and gone. The latest one in this story enslaved the Israelites--which is astounding that it happened without bloodshed, except the killing of male babies. (Moses' generation of men was lost.) 

Enslavement had nothing to do with disobedience to God; it wasn't a consequence of poor choices or disregard for the rules.

Skip ahead 80 years when Moses comes back to Egypt to lead his people.

What was the goal God could have communicated to Moses? "Hey, we'll stop this slavery thing so you can live in Goshen in peace and prosperity again." "Hey, even though slavery won't end, we'll bless you in financially." "Hey, the financial system won't change but you'll be in charge of your own organization--no more overseers." "Hey, we'll improve your worth by developing more skills than brick-making for those pyramids and farming because there's no way to build a power base from there." "Hey, we'll attract venture capitalists/private equity firms in the form of Sheba/Ethiopia, Assyria, Persia, Macedonia, etc to rescue you."

Instead, God said the "temporary" living location is finished after more than 2 centuries. It's become too painful for the Israelites to stay. Also, after generations of slavery, there was a mindset--business habits and routines--that needed to be abolished. The options of how to conduct business needed to be proven ineffective. In effect, following Cortes' example, it's time to "burn the ships" so that we can't go back into old patterns of thinking and business practices. Time to go to a whole new place, a Promised Land. A whole generation that had lived as slaves couldn't adjust to the new thinking needed for the Promised Land so the journey was delayed until the only ones who succeeded were ones who couldn't remember the "old ways".

What's your business's Promised Land? How much is it tainted by "old ways" thinking and acting? What promises do you need to focus on? How much of your team is ready for new paradigms and ready to stick with those new ways of conducting your business?

Thursday, April 30, 2020

GDP Prediction

Simple math problem, perhaps. To predict GDP for the 2nd quarter of 2020, a full 13 weeks of economic lockdown, with minimal easing as of this date.

GDP for the 4th quarter 2019 might mimic the first 10 weeks of 1Q2020. That had growth of 2.1%. The last 3 weeks of the 1st quarter was low enough to drag the whole quarter into a 4.8 decrease. (By the way, the Fed Reserve of Atlanta estimated a 1.0% drop. These GDP estimates are often revised as more detailed info is input. But we’re using BEA numbers.)

Simply solving for x, we can predict what GDP might be for the 2nd quarter assuming our experience throughout the April - June timeframe is similar to the last half of March:

((10*.021)+(3*x))/13 = -.048

Therefore, based on available info, 2nd quarter of 2020 GDP will be -27.8%.

Fortune magazine reported that the range would be -8% to -15%. Morgan Stanley projects a -38%. As reported in Business Insider, the Bloomberg organization predicts -25%.

Since you’re living the 2nd quarter as this is written (we’re one-third through it), you know the impact on your business. And anyone’s prediction needs to be a broad range as to when the whole economy will rebound and you can have confidence that your customers will have financial security enough to spend.