In the crowded world of business jargon, The New Normal, is a fast rising superstar. Its making a lot of noise, attracting attention, and rapidly gathering followers!
- The Economist recently carried an issue discussing the new normal for Modern Economic Theory.
- BusinessWeek carried its own version of the new normal - companies rethinking the fundamentals of doing business.
- Authors like Scott Anthony and Roger McNamee discuss the new normal on dimensions such as turbulence and uncertainty. The good doctors then offer their own prescriptions on how to thrive in the new normal.
At a time when pundits and gurus are shouting themselves hoarse that the old rules of business don't apply, and that a new normal prevails, thinking managers must step aside and ask - have all the old rules gone by the wayside, or do we need to be more circumspect, asking ourselves which rules to retain and which to adapt and modify?
So, is the new normal really never before encountered scenarios and dynamics? Or is it merely a set of scenarios and dynamics that societies and businesses have been experiencing for several decades now operating in a new context?
This is not your father's economy is a standard rallying cry of the new normal protagonists. But it hasn't been our father's economy for a long time now. Rewind to 1980 and Alvin Toffler's The Third Wave. Surely the post-industrial society was a new normal then, not your father's economy, as some might have said. It represented a series of disruptions and environments different from the Second Wave (Industrial Revolution). Whoever interpreted that to mean wiping the state clean was not thinking very deeply. And if you need proof, all that you have to do is listen to the loud lamenting about shrinking manufacturing bases eroding the stability of some of the richest economies in the world, USA included.
And if you need more proof, talk to the bleeding economists. The more enlightened deeper thinking variety will tell you that the so-called new normal, the state of the global economy and the economic recession, is a result of those running companies, countries, and governments having forgotten the old normal - in this case John Maynard Keynes and his macro-economic insights. And merely to refresh our memory, Keynes himself was trying to jump start tired, post-WW II, not your father's economies!
There is little doubt that the challenges of running a business continue to change as the context or the environment within which a business operates changes. Each context/environment throws up a different set of normals. However, that does not mean that all rules go out of the window. Businesses that have survived several rounds of new normals, share a common religion; they show undying devotion to three enduring fundamentals.
- Updating and Refreshing Beliefs and Assumptions - in Darwin's world species did not survive because they could not adapt. In the business world, certain world views, assumptions, and beliefs have to disappear, periodically and regularly, if the company is to morph, survive, and grow. Companies like P&G, IBM, and MacDonald's have all faced near death experiences for failing to refresh and update their concept of success and their beliefs and assumptions concerning the key drivers of success. Once they were able to update and refresh their world view, they emerged as stronger market leaders.
- Investing - especially in people. Long term and sustained growth is possible only if companies invest in their value creation capabilities and none is more important than the people a company invests in. There is no doubt that technologies create value, and proprietary technologies have the potential of creating even higher value. However, in the ultimate analysis it's the people that unlock the value of these technologies by creating applications and uses for which the market is willing to pay.
- Creating, Renovating, and Innovating Relevant Customer Value - too many words perhaps, but given how often companies forget to put customer value in the driver's seat we may need more. In every environment, no matter how uncertain, complex, or turbulent, the fundamental equation of a company's value remains constant - a company is only as valuable as the value it creates and delivers to its customers.
When individuals, companies, and countries are bleeding economically, it is easy to suspend one's own critical judgment and succumb to the belief that the new normal has ushered in a never before encountered set of scenarios, requiring radically different thinking. Nothing could be farther from the truth. Paying homage to enduring fundamentals still offers a sound way of navigating today's troubled waters, much the same way it enabled navigating yesterday's troubled waters.
The perils of ignoring the demands of changing environments and market contexts has been well documented. Its time we became equally mindful of ignoring enduring fundamentals as well. A few lines from Robert Frost best capture the essence of the discussion:
we dance around in circles and suppose
the secret sits in the middle, and knows!
It seems like "the new normal" is the terminology du jour. People find it compelling because it offers some reassuring way of making sense of what to expect in the future, particularly for companies who are looking to find their way. But I agree with your point of sticking to some fundamentals, which are more or less unchanged despite the changing context around them.