VisionFarm

BCG is publishing a series of reports about the economy called “Collateral Damage.” As has been my proposition from the beginning, being prepared for change before you even realize it’s coming is the secret to surviving the current world - political, social, economic, environmental - transformation. Not surprisingly, most leaders don’t recognize the fundamental shifts that could put them out of business. As many as one-half of the companies surveyed in December, 2008, had not made any adjustments to their strategic plans!

Leaders are complacently continuing along their merry path, likely in some sort of unconscious denial and maybe even with some anxious hand-wringing. The whole series is an excellent read, but this quote in particular summarizes their opinion (one that I share):

Astonishingly, companies are still underestimating the size and scope of the economic crisis. They are generally too optimistic about their own performance and believe that they have taken sufficient steps to respond to the crisis. They often tend to be too inward looking in their forecasts, relying on their own 2008 experience rather than fully assessing the changing external environment: managers do not like to create or accept negative plans. Consequently, although taking action, companies have not adopted the steps either to protect themselves from the worst eff ects of the downturn or to prepare for the upturn. Companies that were the first to feel the effects of the crisis are busy fighting fires, while those that have not yet been affected are still scouting for opportunities and have not invested in getting prepared.  

We believe that this is worrisome news. In the absence of early, measured responses, companies risk having to hit the panic button—overreacting to events somewhat late in the day. These exaggerated responses can cause significant harm to individual businesses; if repeated on a large scale, they will have material negative consequences across economies, amplifying the scope of the downturn. 

Read the full report.