Welcome!

Industrial IoT Authors: William Schmarzo, Elizabeth White, Stackify Blog, Yeshim Deniz, SmartBear Blog

News Feed Item

Companies Banking on Quick Recovery Risk Making the Same Mistakes as Companies That Failed During the Great Depression, Says Boston Consulting Group Report

Study of More Than 60 Leading Indicators Worldwide Shows That Talk of 'Green Shoots' Is Premature as Global Economy Continues to Decline

BOSTON, MA -- (Marketwire) -- 06/15/09 -- Chief executives risk falling into the same trap as those among their predecessors in the Great Depression who were too quick to call the end of the downturn, according to the findings of a report released today by The Boston Consulting Group (BCG).

In "Green Shoots, False Positives, and What Companies Can Learn from the Great Depression," BCG found that, for all the talk of "green shoots" today, most of the popular leading economic indicators show that the world economy is still shrinking -- if at a slower rate than at the beginning of the year.

It warns CEOs to guard against the kind of hasty optimism -- based on an excessive reliance on one or two promising indicators -- that undermined some companies during the Great Depression. In June 1930, after a stock market rally that saw the S&P regain 60 percent of its lost value, Herbert Hoover, the U.S. president, confidently announced that "the depression is over."

In a study of 61 leading economic indicators in five of the world's largest economies -- the United States, Germany, France, the United Kingdom, and Japan -- BCG found that only five are in the "clearly positive" category. Another 15 are in the "positive trend but too early to confirm" category. The rest are ranked among either those showing some deceleration in the rate of decline but no consistent upturn (36) or those continuing to show a consistently negative trend (5).

Although this represents an improvement -- 37 of the 61 indicators were ranked in the most negative category in December 2008 -- the report's authors conclude that there are few signs that the global economy is back on a positive trajectory. They warn that nearly half of all the indicators showing signs of an upturn are driven by monetary policy. Of those indicators that are not related to monetary policy initiatives, less than a quarter have shown any positive sparks.

Daniel Stelter, global leader of BCG's Corporate Development practice and coauthor of the report, said, "In recent conversations at companies the world over, we have detected a change in the mindset of many executives. Many seem to be adopting a more optimistic economic outlook. They tell us that they see 'green shoots.' But although government intervention means that we are unlikely to see the bank failures that contributed to the paralysis of the 1930s, we should nonetheless learn from President Hoover's hubris -- and take it as a warning to be cautious about any premature celebrations of the upturn."

Major Risks Remain

BCG's report, part of its ongoing "Collateral Damage" series of papers on the downturn, also points to a set of factors which suggest that, even when the green shoots do start appearing, the recovery will be sluggish.

-- The empirical evidence is discouraging: similar recessions have lasted seven quarters, on average

-- The deleveraging of the U.S. consumer has barely begun

-- Credit is not flowing yet

-- The banks have not been restored to health

-- The not-so-stressful "stress test": the U.S. government's stress test was more a negotiation than a true assessment of banks' health

-- Governments do not have unlimited resources

David Rhodes, global leader of BCG's Financial Institutions practice and coauthor of the report, said, "For us, the key issue is not the precise timing of the upturn but the nature of the recovery. We expect this upturn to be sluggish -- as with all upturns after a recession that is synchronized around the globe and preceded by systemic financial stress. And in a sluggish economy, trading conditions will be tougher, competitive advantage more important, and broken business models exposed."

BCG's "Collateral Damage" Series

Based on its long history of helping companies survive and thrive during global economic downturns, BCG created its "Collateral Damage" series, which explores the "new realities" of a world in crisis. The series is providing a big-picture analysis of the crisis as it evolves in different regions, countries, and sectors. It offers senior executives practical guidance for protecting their companies from the worst of the crisis and preparing them for economic recovery.

Current titles in the series include:

-- Collateral Damage: What the Crisis in the Credit Markets Means for Everyone Else

-- Collateral Damage, Part 2: Taking Robust Action in the Face of the Growing Crisis

-- Collateral Damage, Part 3: Asia, Advantage, and Action

-- Collateral Damage, Part 4: Preparing for a Tough Year Ahead: The Outlook, the Crisis in Perspective, and Lessons from the Early Movers

-- Collateral Damage, Part 5: Confronting the New Realities of a World in Crisis

-- Collateral Damage, Part 6: Underestimating the Crisis

To receive a copy of the report or arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or [email protected].

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 66 offices in 38 countries. For more information, please visit www.bcg.com.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

IoT & Smart Cities Stories
Bill Schmarzo, Tech Chair of "Big Data | Analytics" of upcoming CloudEXPO | DXWorldEXPO New York (November 12-13, 2018, New York City) today announced the outline and schedule of the track. "The track has been designed in experience/degree order," said Schmarzo. "So, that folks who attend the entire track can leave the conference with some of the skills necessary to get their work done when they get back to their offices. It actually ties back to some work that I'm doing at the University of San...
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...
When talking IoT we often focus on the devices, the sensors, the hardware itself. The new smart appliances, the new smart or self-driving cars (which are amalgamations of many ‘things'). When we are looking at the world of IoT, we should take a step back, look at the big picture. What value are these devices providing. IoT is not about the devices, its about the data consumed and generated. The devices are tools, mechanisms, conduits. This paper discusses the considerations when dealing with the...
Bill Schmarzo, author of "Big Data: Understanding How Data Powers Big Business" and "Big Data MBA: Driving Business Strategies with Data Science," is responsible for setting the strategy and defining the Big Data service offerings and capabilities for EMC Global Services Big Data Practice. As the CTO for the Big Data Practice, he is responsible for working with organizations to help them identify where and how to start their big data journeys. He's written several white papers, is an avid blogge...
Dynatrace is an application performance management software company with products for the information technology departments and digital business owners of medium and large businesses. Building the Future of Monitoring with Artificial Intelligence. Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more busine...
If a machine can invent, does this mean the end of the patent system as we know it? The patent system, both in the US and Europe, allows companies to protect their inventions and helps foster innovation. However, Artificial Intelligence (AI) could be set to disrupt the patent system as we know it. This talk will examine how AI may change the patent landscape in the years to come. Furthermore, ways in which companies can best protect their AI related inventions will be examined from both a US and...
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups.
Chris Matthieu is the President & CEO of Computes, inc. He brings 30 years of experience in development and launches of disruptive technologies to create new market opportunities as well as enhance enterprise product portfolios with emerging technologies. His most recent venture was Octoblu, a cross-protocol Internet of Things (IoT) mesh network platform, acquired by Citrix. Prior to co-founding Octoblu, Chris was founder of Nodester, an open-source Node.JS PaaS which was acquired by AppFog and ...
The deluge of IoT sensor data collected from connected devices and the powerful AI required to make that data actionable are giving rise to a hybrid ecosystem in which cloud, on-prem and edge processes become interweaved. Attendees will learn how emerging composable infrastructure solutions deliver the adaptive architecture needed to manage this new data reality. Machine learning algorithms can better anticipate data storms and automate resources to support surges, including fully scalable GPU-c...
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...