Volume 26 • No 12 • 2003
ISSN 0742-468X • Since 1978
On-line Since 2000
Will American Businesses
Ever Recover?byDaiv Russell
Editor’s Note: Daiv Russell is a Software Engineering Strategist with Envision
Software, Inc., Envision Software, Inc. a Florida based
technology consulting company committed to helping companies
solve problems, increase revenues, and reduce costs by guiding
software development teams through project management chaos,
transmogrifying staff into inexorable, raging, IT SWAT teams –
delivering value with frightening prowess, precision, and agility.
The economy is a crazy thing. The Dow Jones Industrial Average
and S&P 500 are some of data used to determine America's economic
health. The values of those constituent stocks are based upon
prices people are willing to pay for them. The stock price is
determined by the shareholders as a prediction, or guess, in many
cases, of either earnings or growth. Companies are only likely to
increase their earnings or value in a “good market.” But the very
nature of a good market is determined, in part, by the
perception of the people who value those stocks.
When people feel distraught about the economic climate, stock
prices go down. The naysayers rush to scene with their bag of “I
told you so’s.” More and more sensationalist media are saturated
with news of the bad economy. Soon, even though you may only
distantly know of three people who were laid off (and may very
well have deserved it), this news becomes the topic of everyone’s
conversation. Fearing that they, too, may soon be laid off, they
slow their purchasing and start saving for that inevitable rainy
day that will soon bear down upon them.
Eventually, the companies that they normally buy from start to
notice a decrease in consumption. As a result, they shift gears.
Their suppliers do the same. Rinse. Lather. Repeat. And
eventually, Johnny (or a close friend) loses his job, just as
he predicted. Boy! It sure is good that he was prepared.
Which came first, the bad economy or the emotional upheaval?
Last year, Stanford Graduate School of Business proved that
intense election night reporting actually sways voters. Earlier
this year, we watched The New York Times lose their executive
editor and managing editor due to fabricated news items. And
right now, we are watching America’s economic recovery go
uncovered, as stories about unprecedented economic gains are
buried deep and dispensed with a grain of salt.
As we witness this strong comeback, the headlines are filled with
yet more sensationalist news of economic scandal, this time in
the mutual fund industry. So, instead of bolstering the economy
and fostering a sustainable comeback, the reaction from the half
of American families investing in mutual funds will be to make a run on the bank, plummeting demand for, and in so doing, the
price of, American stocks.
“See, I told you we were in an economic crisis. I told you we
wouldn't maintain that third quarter growth rate,” will be
broadcast across the media yet again. The front pages will be
plastered with pictures of baby boomers who just watched their
401k plans shrivel further. People react to this sensationalism,
and in a variation of the
Hawthorne Effect,
whereby monitoring people affects their
behavior, they try to cash out before their retirement funds are
completely drained. Rinse. Lather. Repeat.
This is our call to action
Just as the popular media can impact the future, so can we. The
bleak picture of tomorrow, which has been drawn for you, does not
have to become reality.
As business owners, executives, or managers, it’s up to us to
alert our customers and suppliers to the growth that we are
experiencing. We need to send out a wake-up call to the
purchasers and committees who are storing up for the nuclear
winter unwittingly predicted by mass media. Share the positive
messages with your customers. If you have a newsletter, write
about the growth and not about the woe. Hunt for the news
clippings at the back of the business section about our economic
recovery, and send them to your customers. We need to counter the
effect of yellow journalsim with our own “green” journalism.
Will American Businesses Ever Recover?
Copyright© 2003 by Envision Software
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