The question many corporate executives are debating, especially those in charge of guiding their companies direction, is “Is there a new normal”? The short answer is yes…and no. Let me explain.
- We have gone through a number of economic crisis and shifts in this century–the depression, the post war boom, the silicone valley boom and bust, the recession in the 80’s and this latest severe depression. Each has had it’s impact but all have led to change.
- Irrespective of economic change we see innovation leading to industry disruption–technology breakthroughs that impact how we communicate, our entertainment choices, our medical treatments, how our automobiles function, etc. There are few industries that are untouched by change.
- Change is happening at an ever increasing rate. Product cycles are shortening, competitive advantages are shorter lived, and customers are expecting real time data and service in managing their commercial relationships.
- There is some evidence that Americans are becoming more sensitive to the environment, more interested in microeconomics for developing countries, and finding new ways to entertain themselves without spending at the same levels–such as staycations, homemade gifts, etc.
The question in all of this is what is sustainable and what is not?
- There is always change after an economic downcycle but it appears that consumers generally have a short memory as the pattern of boom and bust has repeated itself more than once. We do not see a long term change in savings patterns after each of these of these downcycles. In fact, what stimulates spending is often new innovation which brings “must have” new offers into the market.
- What is a “must have” is dictated by a couple of key things–what generation is producing most of the spending, and what do they value. They will spend money in alignment with their core values.
- Those industries already struggling due to technology changes or falling out of favor with consumers, such as banking, publishing or senior living will continue to struggle at an increasing pace until they adjust to the new normal–which is a reflection of how consumers want to receive their services and the value they are willing to put on it.
- The shift of managing life while on the go will continue–so more purchases will be through online devices as well as more services will be delivered through it.
- So what is the new normal? The new normal is that the shift of power to consumers continues. It now encompasses industries that heretofore thought they were impervious from change due to tradition or regulation. The changes will be due less from adjustments to spending concerns as getting things the way consumers want them–things that offer real value as they define it.
In summary, the new normal is just an acceleration of what we had before the bust –an ever increasing shift in power to consumers to dictate the products they want and the way they want them. Technology will be a key, innovation will be critical, and companies who prefer the status quo will face big challenges. If you haven’t yet addressed how you will accomodate this new higher standard of your customers, now is the time.
