Transcript Thoughts on the Econalypse

Thoughts On The
Doug Curling
Managing Principal
New Kent Capital
1
thought
You Can’t
Manufacture
An Economy
1
thought
It’s Still Ugly Out There!
Bank of America to
Eliminate up to
4,200 Jobs
Oct 24, 2013
Pandemic of Pension
Woes Plagues Nation
Aug 5, 2013
1
thought
Consumers
Under Duress
• 47 million Americans are on Food Stamps (USDA)
• Record number of US homeless school children (ED.gov)
• 44 million Americans have no health insurance, another
38 million are under insured (PBS)
• Number of Americans on disability increases for the 195th
straight month (SSA)
• “Lost Decade for Family Income” (WSJ)
1
thought
Unemployment
Unemployed
ST
Discouraged
LT
Discouraged
U-3
U-6
SGS
11.3m
21.4m
36.4m
Oct 2013
7.3%
13.8%
23.5%
Oct 2013
9.0%
15.9%
22.3%
Apr 2011
4.6%
8.4%
12.3%
Jan 2007
Source: BLS
1
thought
Understanding
Unemployment
• Unemployment Rate drops as labor participation rate
slumps – 66.2% (3/07) to 64.2% (3/11) to 62.8%
(10/13)
• We need to add 150,000 – 175,000 jobs per month just
to stay even !
• If we add 300,000 jobs per month we will not return to
2007 unemployment levels until 2017.
1
thought
Consumers
Are Not Alone
• U.S. Commercial Mortgage-Backed security (CMBS)
delinquencies jump to record high 9.65% (Trepp)
• FDIC seized 118 banks in 2010 – 40 in 2011, 51 in 2012 and 23
YTD in 2013 (FDIC)
• White House projects federal deficit would spike to $1.65 trillion in
current fiscal year (WSJ)
• States face $555 billion in unfunded pension costs (WSJ)
• Muni default risk greater than ever (CNBC)
1
thought
It’s Ugly Overseas Too!
ALITALIA
SAID TO
Propose 2,000
Job Cuts
Italy’s
Unemployment Soars
to Record High
Nov 11, 2013
China Faces Years of
Slowing GDP Growth
Aug 8, 2013
Oct 31, 2013
Thomson Reuters
to trim 4,500 jobs
by end of 2014
Oct 29, 2013
2
thought
Things Suck – And Only
The Delusional Believe
It’s Going To
Be “All Good”
Anytime Soon
So What Do We Do?
3
thought
Cash is King !
• When Times Get Tough Hold Cash
• Hire Better, Buy Cheaper, Negotiate Harder
• Ability To Hunker Down Until “It” Passes
The Worst Crisis Is A Liquidity Crisis !
4
thought
Few Companies
Become Great When
Times Are Easy
There’s Limited Survival Supplies
In The Bunker – And Eventually
You Have To Get Back To Job #1
“This Is Too Good A Recession To Waste”
– Dr. Kincaid
Final Thoughts:
Leadership In The Storm
“But Mr. Chairman – I can’t eat an iPad.”
Leadership 101:
The Primary
Task Of
Every Leader
Is To Define
Reality
Define Reality
Leadership 101:
• “Facts Are Stubborn Things” – John Adams
• Defining Reality Is NOT Fun:
- It Means Recognizing Weaknesses
- It Means Admitting Failures
- It Means“Guesstimating” What We’re In For – And
For How Long
• Unless You Explicitly Define Reality, Everyone Will
Start Guessing … And They’ll Guess The Glass Is
Half Empty Instead Of Half Full
“Let's work the problem, people. Let's not make
things worse by guessing” – Apollo 13
Leadership 201:
The Secondary
Task Of A
Leader Is To
Lay Out A Plan
For Success
Lay Out The Plan
Leadership 201:
• It’s Not About The Cuts We Made, It’s About Where
We Need To Spend Our Money
• If You Need To Make Reductions – Make Them
QUICKLY and Make Them ONCE
• Quietly – But Consistently – Create and Play Up
“Momentum Metrics”:
- Newly Launched Products
- Customers Committed To Trials
- Data Records Added
“Any Neanderthal Can Cut Costs – Give Me
Someone Who Knows How To Spend Money”
– F. Ross Johnson
Leadership 301:
Reinforce Belief
Across The
Organization
That By Working
Together OUR
Plan Will Succeed
Reinforce Belief
Leadership 301:
• Communicate In Terms Of The Larger Group –
“WE Were Not Able To Achieve The Financial
Results WE Had Planned”.
• Develop A Culture Of Candor To Eliminate The
“But You Don’t Understand” Factor
• Be Very VISIBLE And Very ACCESSIBLE
“If You Do What I Say – Then I Will Stand With You”
– Coach John Thompson, Jr.
PS:
“This Is Not Who I Am, This
Is What I Do.”