By Dave Holloman
December 9, 2009
Economic downturns often accelerate existing trends. Strong companies gain share at the expense of weaker ones. Industries consolidate. New ways of operating emerge. Jeff Immelt, CEO of General Electric, is has said on numerous occasions the current economic climate is an opportunity to “push the reset button.” Fair enough. The question before us then is what kinds of reset strategies, or buttons, are available to us. There are two types. As economic pressure is exerted, resourcefulness comes into play first. People and organizations find ways to do more with less, leaning on emerging trends to squeeze the budget one dollar at a time. Cost and efficiency are the drivers, or the reset button. As economic growth returns, a new dynamic will emerge in 2010, leveraging emerging trends to exploit new opportunities. In this upcoming phase, growth is the primary driver. Yep, reset button.
Three paths will emerge in 2010 as viable strategies to “push the reset button.”
Social Networking goes Enterprise and Mainstream
Trial and error will give way to scale this coming year. There are a few companies taking extraordinary action in social networking on the web. They are increasing their brand equity, engaging in a deeper way with customers, and reaching new ones. They have been the exceptions to date. Other than a few, most of the enterprise market has dabbled and made mistakes in the Twitter and Facebook channels. With the combination of leading adopters and trial and error, companies now have relevant examples of success and organizational learning to capitalize. Both Wal-Mart and Honda are examples. Honda recently launched a multi-channel campaign focused on community building. Don’t you know someone who owns a Honda? The company is banking that you not only answer “yes,” but are also willing to connect through Facebook and share that experience. Early results of this campaign are promising. Since launch, fans of their Facebook page have risen dramatically. This marketing campaign follows an earlier foray into the space that failed, and resulted in a shut-down of this first campaign. They have learned and, early indications are, getting it better. The same can be said of Wal-Mart. After some early mis-steps in 2007, Wal-Mart recently launched a Facebook campaign that has, in the first early weeks, attracted about 200,000 fans.
Honda and Wal-Mart are examples that will be increasingly common in 2010. With rare exception, companies did not get social networking campaigns right the first time, but are learning from these efforts and achieving success.
Free Agent Majority
The economic consensus appears to be that the US economic recovery will be characterized by slow growth. A recent UCLA report underscores the modest recovery scenario. With the millions of unemployed, a return to full-time employment for many will therefore remain elusive. At growth below 3%, it will take more than 3 years to reduce unemployment back to the pre-recession levels of 5%. companies that are today hesitant to turn on the hiring tap will largely remain in this position.
His recovery picture highlights the importance in the rise of temporary hiring. The rise in temporary hiring has been one of the brightest recent trends in the jobs picture. In past recoveries, rise in temporary hiring has been a leading indicator to the return of robust full-time hiring. Those precedents will not hold if the scenario of a more modest recovery comes to pass. Instead, temporary hiring will become more permanent, and less transitory. The rise in the virtual workplace, more executives being comfortable contracting out their services, and companies relying more on a variable cost labor force will all combine this coming year. (For more detail, see a recent article in the Wall Street Journal on this trend). In 2001, Daniel Pink published a widely read book titled Free Agent Nation. In 2010, indeed it will be.
Hold the Greens
The credit crisis has been a setback for the emerging green economy. No doubt that it will arrive, but not in force in the coming year. Renewable energy projects require a high percentage of upfront capital. Debt financing is the fuel that powers renewable energy. Yet the economy remains starved for credit. Despite the recent signs of recovery, availability to credit and debt remains difficult. Private equity investments are increasing in this area, but wide scale deployment of the green economy will be deferred to later years. In 2010, the green economy will be somewhat on hold. Some may mistake this area of the economy as a reset button, but it is really the pause button being looking at.
In place of the green economy, look to good old physical infrastructure instead. Certainly, China’s government has been and will continue to direct billions of investment in this area (see The Other Stimulus). The US will likely continue to invest as well, upgrading its aging infrastructure.
The reset button is a phrase that speaks to future ambition, using new technologies resourcefully to gain efficiency, and tapping new sources for economic growth. As the recovery takes hold, leaders will seek out these opportunities that include the mainstreaming of social networking, increase in the free agent labor force, and delay of the green economy.
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