Getting ready for the ‘new normal’

5 January 2010
Welcome back. Given the year we’ve just had, the miracle is that we’re all still here at all – you reading this, me writing it. Twenty years from now economic historians will marvel at how close we came to complete financial meltdown in the past 12 months. Even now we are only just finding out about massive emergency loans, made to Royal Bank of Scotland and HBOS at the end of 2008, which propped those two banks up, and which had to be done without the news getting out. It’s almost as if we had accidentally wandered on to the set of Spooks. And that is the first thing to say as we launch ourselves, with ever-so-guarded optimism, into 2010. For many of us, in terms of business, 2009 was a near-death experience. It takes time to recover from a shock like that. Colleagues, competitors, suppliers and other acquaintances are unlikely to have avoided serious grief and anxiety either. So before we get stuck back into “business as usual”, take a deep breath and reflect. What is the “new normal” going to look like? And how normal is it really going to be? Less inhibited optimists declare loudly that we cannot possibly go back to running our companies and financial institutions in the way that we used to. Some predict a kinder, gentler world, in which supply chains are far more collaborative and less confrontational. The CBI has argued that more stringent risk management will mean that some of those extended, global supply chains will be trimmed, and that greater use of local suppliers will ensue. That is one scenario. Another, less encouraging one involves a race to the bottom, with hardened executives deciding to get much tougher with each other, extending payment terms while relaxing any squeamish ethical concerns to seek out cheaper – if less socially responsible – options. Never mind Copenhagen and carbon, believers in this kind of “new normal” say: “Get me the stuff I want now at a price that I like.” Where do I stand on the optimism/ pessimism spectrum? Professionally, journalists rarely struggle by being too bleak. I have always been attracted by the theory that states that the difference between optimists and pessimists is that the optimists don’t know all the facts. But then some long-suppressed optimistic instinct kicks in and protests. Is it possible that 2010 will really turn out to be as scary and unpleasant as 2009? Sure, the government’s fiscal stimulus has to end some time, and unemployment is likely to remain high for a while longer. But as the business guru Réné Carayol said to me in a conference call for Barclays business customers before Christmas, in 2010 “we will get the recovery we deserve”. I quite like that. In one sense, of course, it is meaningless. If demand isn’t there for your products or services, this year isn’t going to be any happier than last year was. But what I think Carayol was getting at was that there must also be opportunities out there to do better. The economy has shrunk, but it isn’t stone dead. Deals still have to be done. Customers still have to be served. So, cautiously, soberly, I am going to allow myself to indulge in a little bit of positive thinking this January, and I urge you to do the same. Let’s get back to work and do the business.
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