"normal times"

I read a recent survey of leading executives in "innovative" firms that was conducted by Booz Allen.  The results weren't surprising to me.  Many of the leading innovators are actually accelerating their innovation efforts in the recession, betting that customers will demand new products and services as we come out of the downturn.

But that wasn't the only thing that interested me about the survey.  What was really interesting was the professed mindset by one of the executives they interviewed.  A gentleman from IBM suggested that in a recession or downturn "...that really drives a need for innovation and a level of creativity that you might no otherwise have in normal times."  My question is:  what is "normal times"?

Executives in business seem to be no less likely to have the "up and to the right" concept of market advancement that the rest of us have.  That is, we expect each year that the markets will rise and the economy will grow.  We never anticipate or plan for a slowdown, a downturn or a recession.  These periods are considered "not normal".  Yet if we look back over any reasonable period of history we can find plenty of slowdowns, downturns and recessions.

Less than ten years ago we were coming out of the "dot com" bubble, where the economy slowed and jobs were scarce.  In the early 1990s the economy was very slow, which led to the ouster of the first Bush and the presidency of the first Clinton.  There was a dramatic slowdown in the economy in the late 70s and early eighties that coined the phrase "Stagflation" and led to the presidency of Reagan.  The oil embargo of the early 70s also sent price shocks through the market.  This list is just off the top of my head - evidence that the market doesn't constantly rise (remember the 500+ point market drop in 1987?) and the economy doesn't promise an endless stream of new jobs.

So, what is this IBM executive expecting when he pines away for "normal times"?  He's probably recalling a short period of time (2003-2007 for example) when the market grew rapidly.  That time period has been bracketed by the dot com bust and the financial meltdown, both of which impacted the economy and job growth.  Why aren't these considered "normal" times as well?

And, rather than expect the market to consistently rise and the economy to grow, why aren't executives better at predicting where the economy is heading and the implications for their business.  As Wall Street watchers like to say, the most common word in any analyst call is the word "surprise", as in "we, the management team, were surprised by the (Fill in the blank) that happened to the market".  Why do the executives get the big bucks if they are constantly surprised that the environment does not provide continuous "normal times"?

The economy has the ability to lull you to sleep, secure in a comfortable cocoon, safe in your assumptions that the economy will continue to perform the way you are comfortable with, and then rapidly shift and force your firm to think differently.  Perhaps we should be a little less intellectually lazy and constantly test our assumptions about the economy.

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Less than ten years ago we were coming out of the "dot com" bubble, where the economy slowed and jobs were scarce. In the early 1990s the economy was very slow, which led to the ouster of the first Bush and the presidency of the first Clinton.

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