I am not sure that the depth and breadth of the changes in our economy are sinking in, even at the highest levels. Going back to the Civil War-era the American economy has been unabashedly profit driven. Getting more people to buy more at higher prices was accepted without examination as the main and often sole goal of American business. The profit motive ruled over all and no one was the least bit embarassed about it.
This was a model that worked fairly well, or at least worked, so long as Americans were sold on salvation through consumption. We baby boomers fit right into the model for over five decades as our teen, young marrieds and mid-life consumption habits drove markets in film and music, automobiles, convenience food and stores and, of course, housing. As long as a massive population bulge wants more, more, more, a profit-centered business model is set up for success. With the proliferation of radio and the TV, entertainment became the centerpiece of our home lives and profit-driven consumer product companies paid for advertising that paid for the entertainment.
As the companies reached the limits of their ability to sell products for cash, new and creative ways to provide consumers with access to financing for ever larger purchases had to be invented. An unhealthy finance bubble was launched and tens of thousands of professionals were sucked into service greasing the consumer finance skids. When we reached the limits of our creativity, the finance fueled bubble popped. That is, once we had finally figured out how to make a loan to a person with no equity, no credit history and no proven ability to repay, we had taken credit as far as it could reasonably go. Some say we took it even further than that. Independent of the credit bubble, I believe demographics are lining up against an economy based on spiraling up consumption. A few years ago, my "greatest generation" mother begged me, as Christmas approached, "Please, please, no more gifts." This was not the mandatory "no gifts" routine. This was a person who had just been working on her estate planning contemplating the burden that her lifetime of possessions had become. This was a person who was dreading any further accumulation of stuff.
Since growing the credit markets is, at least for the short term, no longer an option, it seems to me that the whole concept of a growth economy is called into question. Which leads to the question: if companies are no longer to be measured on the basis of how much profit growth they can generate quarter after quarter, how should we evaluate companies?
Let me suggest that our new standard be service. What is your company doing for it's constituencies? How are your customers better off because your company exists? What is your company doing to better the lives of your employees? How are you helping your community? And the beautiful thing about the service mentality is that it applies all the way down the line -- you can measure your company on the level of service, you can measure your executives on the level of service, you can measure your employees on the level of service, you can even measure your kids or your pets on the level of service?
Wouldn't it be great if we were all determined to put more in than we took out? Imagine our society then.
This was a model that worked fairly well, or at least worked, so long as Americans were sold on salvation through consumption. We baby boomers fit right into the model for over five decades as our teen, young marrieds and mid-life consumption habits drove markets in film and music, automobiles, convenience food and stores and, of course, housing. As long as a massive population bulge wants more, more, more, a profit-centered business model is set up for success. With the proliferation of radio and the TV, entertainment became the centerpiece of our home lives and profit-driven consumer product companies paid for advertising that paid for the entertainment.
As the companies reached the limits of their ability to sell products for cash, new and creative ways to provide consumers with access to financing for ever larger purchases had to be invented. An unhealthy finance bubble was launched and tens of thousands of professionals were sucked into service greasing the consumer finance skids. When we reached the limits of our creativity, the finance fueled bubble popped. That is, once we had finally figured out how to make a loan to a person with no equity, no credit history and no proven ability to repay, we had taken credit as far as it could reasonably go. Some say we took it even further than that. Independent of the credit bubble, I believe demographics are lining up against an economy based on spiraling up consumption. A few years ago, my "greatest generation" mother begged me, as Christmas approached, "Please, please, no more gifts." This was not the mandatory "no gifts" routine. This was a person who had just been working on her estate planning contemplating the burden that her lifetime of possessions had become. This was a person who was dreading any further accumulation of stuff.
Since growing the credit markets is, at least for the short term, no longer an option, it seems to me that the whole concept of a growth economy is called into question. Which leads to the question: if companies are no longer to be measured on the basis of how much profit growth they can generate quarter after quarter, how should we evaluate companies?
Let me suggest that our new standard be service. What is your company doing for it's constituencies? How are your customers better off because your company exists? What is your company doing to better the lives of your employees? How are you helping your community? And the beautiful thing about the service mentality is that it applies all the way down the line -- you can measure your company on the level of service, you can measure your executives on the level of service, you can measure your employees on the level of service, you can even measure your kids or your pets on the level of service?
Wouldn't it be great if we were all determined to put more in than we took out? Imagine our society then.
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