| Mouth-Offs | Finacial outlookThe cycle for organizations is to build a system that receives payment for an efficient delivery of goods or services. Once the system is built, companies just crank out goods or services hopefully making more money than it cost to build the system. Eventually times change, markets evolve, and demand shrinks or grows and the organization has to restructure its system.
Economic boom times are when the money rolls in and goods or services are being cranked out. Although restructuring and building new systems is very valuable, it can be expensive and a difficult time to make money. Thus, when many businesses are undergoing difficult restructuring, we say the economy is in a recession.
The key to business is to either continuously make gradual changes to their systems or start making changes before a crisis ensues. But since most organizations delay change for as long as possible, when they finally concede, they have lots of expensive work to do. For example, Asia had been resisting free markets and bank reform for years. Finally their markets are plummeted, forcing countries to root out corruption, open up markets, and restructure banking systems. Thus Asians needed a recession to force arrogant politicians to make real important structural changes.
Although recessions are not necessarily the most fun or wealthy time periods, they are the time when governments and companies are forced to look at their structure and make important changes. Thus recessions are the time of the greatest real growth. Boom times are when we make money and have fun, but usually isn’t the time for making great advancements.