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| Jan/Feb 2010 |
| Viewpoint |
The Uh-Oh’s: The Decade that Wasn’t
As the first decade of the 2000s (what are we supposed to call them anyway?) comes to a close, it’s no surprise that journalists, economists, futurists, and everyone else is making predictions on what the second decade of the millennium will hold. But if we’ve learned anything from the past 10 years, it is that the only thing we should expect is the unexpected.
At the dawn of the new millennium, the Dow was surging toward 12,000 with some economists predicting that it would reach 25,000. And why not? After all, the S&P 500 provided total returns of more than 300% by the end of the 90s. There was even the suggestion that recessions may become a thing of the past. Here are some other predictions that were offered at the start of the “Ohs”:
Actuaries predicted that there was less than a one in three chance that the United States would institute a national health plan or other mechanism as an alternative to employer-based health insurance by 2050. (While Congress has not yet passed health care legislation, as of this writing, it seems likely that significant changes to health care insurance will be enacted early in 2010).
Those same actuaries predicted a slowdown in prescription drug costs. (The General Accountability Office found that, from January 2000 to January 2007, the average cost for 44 brand-name drugs it studied increased 48.6%, while the Consumer Price Index rose 19.9% during that same period).
SmartMoney picked Nortel and MCI WorldCom as two big stock successes for the coming decade. (Nortel declared bankruptcy in 1999 – one of the largest business failures in Canada’s history – and MCI WorldCom made history in 2002 as the largest bankruptcy case in the US at that time.)
In February 2000, the New York Times asked 10 top investors for their top stock picks for 2010. In addition to Nortel, the “experts” included Enron. (Perhaps you heard the news?)
Maybe the best name for the decade is the “Uh-Ohs” – it began with great promise and optimism but quickly went south. By the end of 2009, the net worth of American households had declined when adjusted for inflation – for the first time since such data has been collected. There was zero net job creation since December of 1999 and economic output rose at its slowest rate of any decade since the 1930s. The S&P 500’s returns since 2000? A negative 23%.
Often, it’s easier to look back at the past and extrapolate that to the future. This last decade has shown the fallacy of relying too heavily on past trends to predict future behavior. And shockingly unforeseen events (the terrorist attacks of September 11 most notably) can radically shift priorities and expectations.
Despite many prognosticators failure to predict the devastating hit the economy took this past decade, the warning signs were there. A few economists feared the real estate boom was headed for a bust and that the impact would threaten to bring down the entire financial system. But the most respected voices on the economy didn’t seem to be reading from that script, even as late as a few months before the collapse of Lehman Brothers and AIG.
Reading trends and making predictions can be very useful in helping to plan for the future. However, as these examples illustrate, crystal balls can be cloudy. In our industry and in our association, a great deal has changed over the last 10 years, some of which we may have predicted and planned for, but a lot of which we did not foresee.
Last year, I wrote about the 7 attributes of a great association. One of the most important of those was having an organizational structure that is adaptable to change. In an information-driven, fast-paced business environment, nimbleness and adaptability are key factors for any organization’s success. While they may not always know how the future will turn out, they are better attuned at listening to what’s going on around them. As a result, they can better adapt and respond to it. Looking back on the past 10 years, have we learned the right lessons from the economic and organizational changes we’ve experienced? Are we finding new ways to be responsive to changing environments, economic realities and member needs? Are we ready for the decade that has just begun, even if we aren’t entirely sure what the future holds?
And while making new year’s resolutions can be as ill-advised as making predictions, here are few we should consider adopting: Let’s resolve to be more flexible and responsive to change. Let’s resolve to be more forward-thinking about our industry and our association. Let’s resolve to be more proactive, rather than reactive, to our environment.
A few resolutions that might help us manage the future, even if we can’t predict it.
Happy New Year and all the best for a prosperous and healthy 2010! |
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