Mark McDonald

Talking about the recovery is all the rage.  While it may be too early to know where the economy is going, its time to start listening to what people are saying and the language we use to describe what is going on.  Language reflects and directs our attention and expresses both how we think and feel about the world.  So a change in the language we use, particularly in the mass and business media is one of the signs to look for as we move forward

Government officials and the business media, CNBC, FOX Business, the nightly news, Wall Street Journal etc have all been mentioned as media outlets that are stoking fear over the economy by running stories and talking about poor economic conditions.  To their defense the data over the past six months has not been good. 

Bad news captures more attention than good news.  The next time you listen or read something look for the following words are indicators of continued economic tough times.  Here are a few words that are heard on Main Street and in the mainstream business media.

• Volatility – swings in the economy are out of proportion to what we were expecting.  The stock market, oil prices, unemployment, the international situation have all been described as volatile.  This is one of the harshest terms you can hear because it indicates that executives believe that whatever action they take will be overwhelmed by changes in the marketplace.

• Uncertainty – doubt about the future that limits our expectations.  Uncertainty is often expressed in response to where are we going and when will we get there.  Complex is a synonym for uncertainty.  When the answer is no one really knows, then you know that uncertainty is an influential factor.  Less harsh than volatility, but still a challenge as executives cannot form onions about the future.

• Cutting – reducing people, expenses, suppliers etc.  Executives cut when they do not know what else to do.  It makes sense, as you want to preserve what you have in the face of down times, but just cutting can also be thought of as a form of capitulation and the absence of a concrete plan.  Better than the other two, but not by much.

• Depression – a term for significant economic collapse, unemployment 20%+, business failure etc.  The term harkens back to the Great Depression, yes you still capitalize it, which no executive living managed their way through.  In language terms this is the boogieman terms that everyone will talk about but no one wants to come into the room.  You see this when people talk about how it’s the toughest it’s been since the Great Depression … and then their voice trails off.

• Recession – technically a contraction in economic output for two quarters, but often used to describe lower economic growth, higher unemployment and general bad times to come.  Notice how reluctant people are to call this a recession, they are not sure.  Surprisingly, from a negative language perspective this is a relatively positive statement – relatively – because it means that I have put the situation in a construct that I understand.

• Softness – generally associated with lower than expected demand or revenues.  Softness is used to describe a situation that is ok, not great, but the basics of the business are ok.

What is the language of recovery?  What are the verbal queues that people are shifting their thinking and outlook?  Well here are a few thoughts, in this case from the weakest term – the ones closely associated with weaker times to the stronger terms at the end of the list. 

• Preparing – making plans and taking action in the expectation of their being better times.  Executives who are talking about their preparations recognize that economics have changed sufficiently to begin and think about a positive change.  This is one of the weaker terms, its not saying that things are better, but you can see how they might be getting better.

• Restructuring – in terms of significant changes in company structure.  While initially seen as an indicator of tough times, because restructuring is accompanied by layoffs, it is a sign that executives have a plan, they believe that they understand what is going on and they are taking action to correct the situation.  The degree to which executives start talking about restructuring rather than retreating, or cutting, is a good thing.

• Year over year – comparisons with current performance against performance of the same time last year.  Year over year (YOY) is one of the systemic indicators of improvement.  It matters less that performance is behind history; as long as it is better than last year we are showing improvement.

• Opportunity – in the market, with customers, in terms of acquisition.  In down times you roll your eyes when people say that there is opportunity – think of opportunity to buy undervalued stocks, or the once in a lifetime opportunities in real estate.  You say yeah right in tough times, but you think maybe when you see things beginning to change.

• Investment – the sign that executives are committing resources to the future and that they expect the future to be better to generate the return.  The recovery may not be there, but if executives are talking about investment it’s a positive sign.

• Strengthening – an adjective provided to financial or market performance.  The wide spread use of this term is an indicator that we are turning or have turned the corner.

Global economic challenges are daunting and complex.  In February 2009 no one knows what will happen, but just as spring approaches and we begin to listen for the sound of birds we should keep an ear open to listen to the language of the economy.

What are the words that you look for as indicators of signs of tough or improving times?

What are your leaders saying, the language they are using and the actions they are taking?

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Category: 2010 CFO Economy     Tags: Business Leadership, Business Strategy, Economic conditions, Economic Recovery

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