Friday, August 5, 2011

Are we on another melt down?

This week the Bears were in full form...they were looking for bad news and they had plenty of them to say let us sell pessimism. Over optimism and empty rhetoric of those in power, usually afraid to make hard decisions results in start of business cycles. This time has been no different.
Having said that I do think US needs a more holistic internal analysis of what its economies strengths are and what are the key drivers. As per me having failed to sell the idea that US is recovering and so invest in us (a clear marketing approach however subtle it has been) is start of a downward cycle for its economy. For sure acting as a policeman of the world does help in certain situations but not anymore as Industrial growth and innovation growth are not having US as its epicenter.
Europe is under a different cycle. A few easy going economies started the spiral and expected to be subsidies by EU. EU had to oblige in the interest of the bloc but unfortunately the number of countries wanting help keeps on increasing. So the hardworking Germans will think twice if it makes sense to subsidize the other countries for longer. But clearly consumption indicators and confidence is going down with a stretched financial situation. If a country is in debt then normal rules don't apply unlike an individual is an argument we hear often. But in a globalized environment it does affect as the currency, new investment flows and long term growth gets out the country of in crises as there are options for investors.
Coming to the BRIC economies-they still show strong medium and long term growth driven by middle class. But in connected world there is no escape from short term hiccups. Inflation reduction by interest rates increase is not working out well for them and people in power seem to have no other options but hope that growth slows down taking the heat out. So implicitly they are happy that the growth slows. China has officially said they want slower growth so that rebalancing can happen and more equitable growth is achieved. India has not said it but the government inaction on several critical matters has made this anyway. Once the financial spiral starts then concern for Non performing assets will start, credit will be squeezed and pessimism will spread. How long can be very subjective but for the new economies it will be surely short and recovery can start as early as end of Q4 this year. So driving with brakes and accelerator on is going to be the skill set that defines leaders in this quick business cycle patterns. If Bears wish a long melt down they are in old world..new world business cycles are going to be shorter and swifter with differentiated recoveries in different geographies. This does not mean world is less connected, it only means different parts have different resilience and needs to be managed differently.

Tuesday, August 2, 2011

Relationships...is there a business context?

MBA's and consultants drive buzz words...Relationship Management is one the most quoted word I have come across. Be it Customer or supplier end there is always something to improve in relationships. Extended enterprise is surely going to be the future as it is not how a company or brand works individually that can define competitiveness but more how collectively we are able to win in the market.
While all this is a fact I have to mention that in new economies be it China, India, Brazil or Mexico companies have to manage the relationships within their organization to drive up the performance. Especially when we have so many opportunities in the market and there is always a constant attrition of people who have adapted to the culture and politics of a company there is a need to keep a watch on how relationships evolve. Politics by the way is not a bad word. Manipulative politics is surely is. Ultimately with every function trying to jockey for power when there is limited resources politics is inevitable. Relationships at middle management is crucial to ensure this politics does not take a destructive conflict mode. Senior leaders should ensure that this does not go out of control. Sometimes we see that HR tries to make simple 360 degrees to find improvement opportunities of individuals. However this does not clearly capture the dynamic situation of relationships which spills either positive energies to people down the line or negative energies making people seriously start to look for other jobs.
I also see people try to resolve conflicts by creating a more clear roles and responsibilities, have workshops to explain it etc. It is true that clarity helps but if relationships are good there is much lesser discussions on roles. A positive conflict is always good but if it becomes a pattern with a shell formed between dependent functions then we see performance going down. My take is pay attention to relationships..there is a business context to it. A strong people person also maintains a strong network of relationships which can be leaned on. Less critical the person is more stronger the network is and more happy people reporting to the person are. They are able to use the halo effect positively and success fetches more success.

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Gothenburg, Sweden
Still finding introspecting to find who am I? Waiting for a Guru!