When Imagination Fails

Most often when there is a regime change. Many work to change things back to the way that they were. Others simply wait for things to return to normal.

It is often a failure of imagination.  People cannot imagine that the world is not going to be what it was.

As many folks are fighting changes that came about as a result of the Global Financial Crisis, they are pushing and pushing for things to go back to the way that they were.  They understand that world, they even think that they understand how to prosper in that world.  They believe that if you take away the single thing that went sooo bad, the sub prime mortgages, that everything else will go back to being just as it was.

Nothing could be further from the truth.  Things will never go back to how they were.  Much of how things were was supported by the excess wealth that we all thought that we had because of the inflated values of our homes.

And does going back to the world of 2005 but without sub prime mortgages make any sense anyway?  Do we really think that we know which of the many things that happened prior to the Crisis were the actual causes?

Many things changed in the 78 years between Global FInancial Crises.  Some of them were the reason for the increases to global wealth and some were the causes of the abrupt reversal of the favorable economic trends.

The changes that are resulting from the 2008 GFC could be the start of the next regime.  Or else, we coud go through a start and stop process as the US did in the 1930’s where government policymakers shifted back and forth in their approach to the economy and to financial market and financial market participants.  Eventually they settled on a system.  The economy went through good growth under that system until the late 1960’s when a new set of major changes were made and a new regime was started.  The 1970’s were a period of financial turmoil into the early 1980’s until that regime settled into a stable situation.

A few will adapt quickly and thrive in the new regimes.  Others cling to the idea that somehow someway, the good old days will come back.

Take a look at the past experience.  It is time for a new regime.  It has taken ten years or more for a new regime to settle.  We have five or six years to go.

Use your imagination.  Imagine a new future regime.

 

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2 Comments on “When Imagination Fails”

  1. riskviews Says:

    Sloppy thinking about Sunk Costs is one of the things that stand in the way of proper decision making about these situations.

    Historical Cost valuations are almost totally immaterial in a regime change.

  2. Rolande Mbatchou Says:

    Nice article!

    I want to add that there is a huge need for innovation: OLD products/services, technologies, industries, and regulations have matured and NEW ones have emerged. As a result, companies should now strive to promote leadership through innovation and leave their old ways behind. Innovation is the route to economic growth, to take advantage of new opportunities and for better returns, and for competitive advantage.

    Here is a quote to sum up everything from Alan M. Kantrow, editor of Harvard Business Review: “For companies to survive a discontinuity (in our case, a regime change), they must face the rather unpalatable reality that there may have to be fundamental changes in who they are, what they do, and how they do it, as wrenching and dislocating as it may be.”


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