We've had some serious - and sometimes passionate - discussions on "Horses" these last few weeks, and I laud so many of you for chiming in with your feelings and thoughts.
We've examined the impact of our current predicament on the outsourcing industry, how globalized delivery has such a pivotal role to play in improving businesses' competitiveness, and even how struggling industries and faltering economies could embrace global delivery to create new jobs and industry. It's proving to be a time for many of us in the outsourcing industry to reflect on how this business has developed over recent years, and why we must focus on helping enterprises compete more effectively at a global level, than simply stripping out short-term overhead.
To sum things up, my old friend Lowell Williams sent me his thoughts yesterday on the current economic situation.
Phil: your cri de coeur is well taken. We are in a terrible state with hollow revenue jacking up false P:E ratios, debt obligations that separate risk of payment at maturity from underwriting and spreads, failed product leadership in Detroit and elsewhere and a political unknown elected because he was the farthest thing away from the current President we could find.
I don’t think we will “get it right this time.” Such is not the fate of men. What we can and should do, however, is to get it right for a long time and for the global labor and product markets in which we find ourselves. While finding our way out of this, there are certain rules we should follow:
1. Ignore instant economists who tout the new world order. From the Tulip Bulb Bubble forward, there is a fairly constant ratio of greed, innovation, herd instinct and financial panic. Every time we hear we have found a “New Paradigm” let us remember that the man uttering those words will shortly not have a Pair of Dimes to rub together. Expansion and contraction are certainly constants of the modern industrial age, and we should focus on getting the fundamentals right for the medium- and near-term.
2. Reward product leadership, innovation and correct growth. The bailout of Detroit should contain strong sanctions for those who brought their companies to ruin. No one either told GM leadership to keep producing SUVs nor the American consumer to buy them, but since GM wants my tax dollars to keep their factories running, I have no problem going after them to pay back bonuses, cancel stock options and give them a very short runway to get new products to market. Washington needs to show genuine leadership here as the price of assisting jobs preservation and labor leadership needs to sing a new song as well.
3. The ABA and Wall Street need to reach down into the pile of bankers who were punished by the Street for not exposing their banks to short-term “profit” run ups that undermined the solvency and stability of the lender. The analyst community called them stodgy and ill-prepared when Countrywide was helping finance a building boom throughout the nation, but those same women and men who were shunned by Wall Street are now at the helms of the banks who will lead us forward into a genuinely sound expansion when we hit the bottom of this collapse and start rebuilding.
4. Washington and state capitals need to lead. Each of them has a role to play in charting a national and local energy policy. Tremendous innovation will come in the US in environmental matters, and Thos. Friedman is postulating that green innovation will equal the software and networking businesses of the last eight years. Government needs to help where it can but stay out of the way.
In sum, we are condemned to cycles of expansion and contraction, but we can make sure that the next cycle is built on solid innovation, education, and creative fundamentals.
Well said Lowell. May it be so. May it be so.
Posted by: James Gotlieb | Nov 16, 2008 at 12:33 PM