History always repeats itself, probably because mankind doesn't listen well

I woke up early on Sunday morning and followed the usual morning routine of a bit of reading, catching up on the news and e-mails – to be confronted by a tsunami warning. A devastating earthquake in Chile was sending a wave across the Pacific towards Australia. I followed up on the story during the day and fortunately, no killer tidal wave made it to our shores.

What was shocking was the images on news.com.au of people in Australia, New Zealand and Hawaii swimming in the sea after the alarm had been raised but before the threat had been downgraded. Do humans suffer from long-term memory loss when it comes to tragedy?

The tsunami that hit Thailand around Christmas of 2004 killed over 200,000 people and left many more homeless. It was a crisis of epic proportion. And 5 years later, our response to a tsunami warning is either to sit on the beach to watch it come in or get in the sea because the waves should be awesome! I am not exempt from this idiocy, but a South African couple I know were on honeymoon in Thailand when the tsunami hit and were both nearly killed. The story they shared was a miracle. A mix of luck, perseverance and gut wrenching grief. As a result, the word tsunami brings up a very real image of destruction and disaster.

The same will occur in businesses. The lessons learnt from the corporate failures in early 2000 and the very recent global financial crisis will be forgotten – especially by those who escaped unscathed. Or they will simply not be learnt by those too young to be affected. This slow learning curve or the inability to remember tragedy is the reason why large scale financial catastrophes will always return.

Links

Pictures of people watching for the tsunami

Interesting Excel visual of the business cycle clock

Recession or Natural Selection?

Recession is not necessarily a dirty word. In fact, there is actually an upside in recession - you just have to look for it. For consumers, the upside is that businesses which offer poor service, have higher prices or incapable management tend to fade into obscurity.

The natural selection enforced by recession forces these businesses to fold and remaining are healthy businesses which should allow the economy to prosper when the tide turns.

There has been much debate around the bail out of the motor manufacturers. Based on the analogy above, I would liken the bail out to messing with the natural order of things. Yes, many jobs are at risk but long term you really are not doing the global economy a favour. Other motor manufacturers who run more efficient companies should have benefited by a massive boost in market share, they deserved it and it has been denied them.

If you run your own small to medium size business, bail outs are not your concern but the lesson is still there. Aim to be more efficient, offer better service and you could find yourself gaining market share and even being a more profitable enterprise. This does not always mean spending less, it really means spending wisely.