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How Companies Can Rise Above Faustian Economics

October 22, 2012 by David Rhodes and Daniel Stelter

After five years of riding the post-financial-crisis economic roller coaster, we do have some reasons to be cheerful. The specter of another Great Depression fizzled out (relatively speaking) into the Great Recession, which was followed by a somewhat fast—albeit muted—recovery. Politicians and central bankers deserve credit for pulling the right levers and acting with significant force—even if they never really unleashed the big bazooka. And they avoided too much fighting with each other. The world displayed a degree of global cooperation unmatched in times of such unprecedented upheaval. Asia weathered the crisis with aplomb, much of Africa and South America surged ahead, and the Middle East benefited from high energy prices. Only the West and Japan struggled—and even then, Germany prospered and the U.S. grew faster than the naysayers expected (though much slower than recent history). The Western economy may perhaps be out of the emergency room—but it faces several years in rehabilitation. Recovery from the abrupt end to the debt-fueled boom of the past 30 years will take time.

This seemingly perpetual economic uncertainty makes it hard for managers to run their businesses. As we have observed before, it is tempting to sit and wait. And as we have also observed, history teaches us that the future belongs to those companies that come off the fence, grasp the initiative, and take advantage of less confident, frozen competitors. Even in far worse economic times than today, managers learned that the future is not something that happens to the best companies; they have to make the future.