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Dog Daze of Summer, the Doldrums and No Hockey Stick for the National Economy

by Mark P. McDonald  |  August 19, 2020  |  Submit a Comment

It is late-August, the dog days of summer. Technically the term dog days relates to celestial events.  Traditionally things slow down in these last weeks of summer before school starts.  People complete their summer plans and get ready for the final push to close the year.  It’s a time for reflection, relaxation and restoration.

We have much to think about in these dog days.

Normally, the end of summer is the start of annual business planning cycles and the final sprint to close business in the calendar year.  That combination is different this year as the economic impact of the COVID-19 public health crisis influences personal and professional decisions.

Recent decisions regarding back to school, the pending U.S. Presidential election and the normal planning process put the national economy repeatedly in start, stop and pause mode.  The resurgence of infection rates, the inability or unwillingness to flatten the curve only add to these influences.

We are in the doldrums, a nautical term referring to an equatorial region of the Atlantic Ocean with calms, sudden storms, and light unpredictable winds.  Economically, this means uncertainty, mixed signals, shocks and a general downturn in activity.

Living in the Doldrums

Business leaders see the doldrums as they plan for the year end and start 2021 plans.  Should we go ahead with projects and plans for the rest of this year, or push them back into 2021?  How should we manage our financial performance for the remainder of the year?  If we are doing ok, do we turn in a year that is good enough for COVID?  Or do we want accelerate expenses, delay revenues and take a loss to reclaim past taxes paid?

More decisions, greater uncertainty could put us in the doldrums for the rest of this year.

Business activity and economic recovery will continue.  But the end of year spending rush appears to be muted.  Traditionally the need to spend the current year’s budget drives demand in Q4 – the famous hockey stick.   Without the year end push, there is limited support for a broader scale or rapid recovery.

In this scenario, the economy becomes becalmed.  It lives in the doldrums with insufficient energy to break one way or another.

Becalmed sailors faced a choice.  They could wait for winds to return.  They could break out the row boats and use them to pull the shift forward.    Many are waiting for the trade winds to blow.

Looking Forward

Looking forward, leaders and planners indicate seeing their shadow.  Perhaps six more months like the last six months, taking the COVID recession well into 2021.   It is a realistic, if unpopular point of view.

During the next few weeks, the dog days, leaders need to plan for the future in new ways. 2021 will not be last year plus or minus 10%.  Likewise, it will not be a return to 2019 with a margin of error.  From where we stand now planning is a tactical and detailed exercise looking at specific industries, customers, products and trends.  This is fine brushwork and no place for broad strokes.  See Pivot Forward – Planning for 2021 for additional points.

Be calm – not becalmed, be focused – not frantic and move forward

The 2021 budgets and plans are the start of the rest of your company’s future.   It will be time for leaders to get their companies moving in new ways.  It is a time to focus on customers, what you know and prepare for what you cannot see.

Enjoy the last days of summer before we start the hard work to close out a tough year and prepare for the next.

Related Posts

Pivot Forward – Planning for 2021

Bounce Forward or Bounce Back – a time to choose

Customers, Investors, Employees, or Suppliers who is paying for the COVID-19 recession?

What is next, and what we do about it.

 

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Category: covid-19  leadership  management  personal-observation  strategic-planning  strategy  

Mark McDonald
VP Analyst
12 years at Gartner
33 years IT Industry

Mark McDonald, Ph.D., is a Vice President and Fellow Emeritus in Gartner for General Managers Program. Read Full Bio




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