The New Normal?

Here’s one of the questions I’ve been asking at Sierra College for a few months: is this the new normal for our economy, at least for a while?

In most recessions, the economy tends to contract a bit and then pop back up to the previous high and start growing from there. In this recession, it appears we’ve stopped contracting, but serious growth looks to be a ways off.

We also have to consider the fact that our budget is a trailing indicator by about two years. So our budget situation at Sierra is likely to get worse over the next year or two, and then fail to see much improvement for a while (unless there is a big game-changer in the state’s budget, which the laws of economics would seem to make impossible).

The normal modus operandi in business is to ask “when will the climate improve so I can go back to normal?” An article I was reading this morning by Ram Charan in Fortune made the point that this is the wrong question to be asking.

Last October, GE CEO Jeff Immelt decided he had had enough. For months, GE managers had been dutifully preparing reports for him explaining declines in their businesses in excruciating detail. He laid down the law.

“I don’t need that to be part of your presentation,” he told them. “I already know the market’s slow.” As Immelt puts it, “The presentations had to go from ‘The market’s slow’ to ‘There’s an 80-locomotive order in Egypt — let’s go get it.’”

In that one stroke, he put an end to the agonizing game so many leaders in corporate America have been playing since the recession began: the waiting game. If we can just hold on, they are still telling themselves, one of these days things will finally get back to “normal.”

But Immelt and the other top CEOs I work with have come to a radically different conclusion. Forget about waiting for normal to return: This is the new normal.

The question we have to ask at Sierra is: what game-changers can we pursue to do more than survive — to really thrive — if this is the new normal?

Do we really want to consign ourselves to five or six years of being in crisis mode, or should we figure out what kind of institution we should be in the new normal, get the pain over quickly, and start building for the future?

I don’t have all the answers to those questions, but those are the questions I’m trying to raise as a board member.

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http://www.cgservices.com/ Garrett O'Brien

A recession is a self-correcting process of any economy — it is unavoidable as much as mnay governments and administrations will attempt to innoculate itself from such… to arrest or avoid a recession would require someting bigger than the country itself to accomplish.

In countries that support capitalism the economies will rebound and grow from the falling point — it is a self-correction that has been evident with our country since we were colonies as well as England and other countries before us (earliest examples are found in “Wealth of Nations”, Adam Smith)…

In countries were social reform, socialism, facism, and just about any governement “-ism” is in place, the rebound is almost non-existent unless you look at decades – and even then the economy does not rebound to the magnitude that it could have under capitalism… Cuba, France, Venezula are some quick examples of nationalized systems that have not been able to recover from any one or more recessions that have hit their own system…

Given this administrations “community organization agenda” we can safely assume they are looking to bring our nation into a form of economy that is not capitalism… Immelt has decided to stand behind the Obama administration's community efforts and GE will gain accordingly… this will prove overtime to be shortlived and over the long haul to be determental to GE… Immelt has not had a very good record with GE and the dividends have the proof…

In our current circumstances, we have three options available to overcome all this:
– the elections of 8 Nov 2010 where 33% of the Senate and 50% of the House is up for re-election…
– seek impeachment possibilities if the 2010 elections are favorable for such (impeachment highly unlikely unless this country faces on unrecoverable financial failure that threatens our very existence)…
– the elections of 12 Nov 2012 where the Presidency, another 33% of the Senate and the other 50% of the House is up for re-election…

Whom we elect will determine how much we want a recovery…

Either way we are here for the long haul given the debt weight we have been strapped with — even GE is affected by all this and have placed all the eggs in one basket called Obama…
http://twitter.com/aaronmurray Aaron Murray

The new normal. Yes, this is how I should be thinking myself, as I am trying to get my photography business back on it's feet. I have been waiting, but if this goes on much longer it will become less about waiting and more about just not moving forward.

As it is has become the new normal to not spend unless a surplus already is in our hands, my business has really taken a huge hit to clientele. I have found myself back in school, taking photography classes and learning new techniques and strategies. Trying to re-connect to the photography community, and rethinking my entire approach to the industry has become much more than a pastime.

I think we are in for a second wave of this “recession” before it is all over, but even if we are not, it does look like we are locked into this flight pattern for a while to come. Maybe not quite 5 years, but a 2-3 year plan is on my drawing board.
http://www.aaronklein.com aaronklein

yep, that sounds wise. everybody is rethinking their plans, that's for sure.
http://www.aaronklein.com aaronklein

I actually think Immelt is a pretty good CEO who was dealt a tough hand of cards. That being said, his numbers do need to improve soon. I also dislike watching big business in bed with big government – it remains to be seen how this story plays out.

I think it is becoming clear to the broad middle of this country that President Obama's initiatives always emanate from a place of big, large, centralized government with big, new, large amounts of spending. As a result, he's losing independents in droves. Read the David Brooks column in the NYT this morning for a good picture of what's happening there.
n8rose

I find this very interesting! I have to agree that it seems as though a new standard is being drawn. But then again, nothing is ever as it seems… In terms of Sierra College, we could use a unified vision. One that speaks to all (not an easy task for sure!), that serves the district. Certainly crisis mode isn't working for us, we need a new standard, and not for tomorrow, but for today! Spending time on campus it is clear that our students are needing us to “get with the times” and make everything they need accessible to them when they need it (now). Our current approaches are leaving a little to be desired.

Me personally, I like to rip the band-aid off and deal with the outcome… I really think adopting technology (not 90's technology — but, the modern stuff) would be greatly beneficial for the students and the district as a whole. There is certainly much that can be done.
http://www.aaronklein.com aaronklein

Nate — Excellent points. Change is always painful, and academic institutions tend to change very slowly, as I've learned over the last five years.

That being said, you hit the nail on the head — students have some very specific needs driven by changes in the world. There are parts of Sierra College that are incredibly innovative and work their tails off to harness those changes for good; there are some other parts that say “it shouldn't be that way” and resist change for as long as possible.

“rip off the band-aid and deal with the outcome” — great way of saying it.

And count me as one of your biggest fans with all of the incredible stuff you do at Sierra.
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