Financial Turmoil, Recession, and Successful Business
By Moshe Zeidman in Reader
Posted in Credit Crunch, IT Success, Government policy, business goals, Business processes on September 26, 2008 at 3:50 pm
“It’s not the Wall Street Crash of 1929, It’s not going to be The Great Depression of the 1930’s, it’s all quite different…er…honest…”News items on the BBC website entitled “What Would Armageddon Look Like?” and CNN’s “The bailout: What’s at stake”, want to convince us that notwithstanding the turmoil on the world’s stock markets, the failure of 150 year old banking institutions, and the collapse in confidence in the mortgage market, it will be all okay in the end. The end may be a while in coming, but we don’t need to panic.
Clearly, panic is the one reaction to a crisis least likely to generate constructive action. It is also true that the underlying economic basis of many of the Western economies does not resemble the US in the late 1920’s and early 1930’s. However, away from the statistics and the economic modelling, the most crucial element upon which markets and business depend, has been sorely weakened. There is a failure of trust.
It’s easy to point the finger of blame at hedge fund managers, those who sold ’short’ and made money from the losses of others - perhaps with justifiable complaint, but the malaise goes deeper than that. Financial institutions were risking the investments and savings of others, on assets that could not be properly valued, that were held ‘off balance sheet’, and out of the public eye.
When the value of things and the reality of their worth diverge, trust becomes undermined. If there is one prediction I am willing to make from the midst of this mess, it’s that a new framework upon which to establish trust will have to be built. I am willing to guess that it will not be restricted to the financial sector.
When the first retail business collapses because it cannot maintain its credit line, the message will reach us load and clear - If our relentless pursuit for growth and profit is divorced from true sound financial principals, then eventually we lose touch with the commercial reality of what we sell and the value it brings to the market.
As IT business professionals we need to look again at providing honest products and services priced according to their worth, not what we think we can ‘get away with’. Honesty must be at the core of all our business dealings, and define the way we operate. In the post-credit crunch world, integrity in our relationships with customers, suppliers, and employees, will be the true self-regulatory framework we all need.
Rated: 73.33% (3 votes)
Loading ...Comment by Sharon Jackson - September 29, 2008 on 7:43 am
So how do you define what your product or service is worth? I was recently casstigated by a marketing advisor because she said I was pricing myself too low whereas I was considering what I felt my target audience could afford to pay.
I am wanting to build my business along the principles you describe, however, a question I should ask is ‘Am I in a minority?’
Comment by Moshe Zeidman - September 29, 2008 on 9:15 am
It is important to be guided by normative market rates for products and services, but as you demonstrate, it is also important to be guided by your conscience. What do you truly believe the appropriate value should be? Over inflated prices will not last - customers see through it, but to work for less than you are worth will breed long term resentment – the business will stagnate. I believe there are times when we must act even if we are in the minority.
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