I hate to say it, but we're about due for a downturn.
Let me be clear, I'm not basing this on any macroeconomic, geopolitical or algorithmic insights. But it's been almost ten years since our last recession, and once you've lived awhile, you come to appreciate that there are cycles. The status quo never lasts.
The first downturn I lived through as a professional was in the early 80's. Fortunately, I was too young and poor to notice that the economy had collapsed. I somehow got (and kept) a job, despite the U.S. unemployment rate rising to over 10%. I had no assets and no savings, so I didn't pay much attention to the stock market, the housing market, or interest rates. The main thing I remember is that I lived paycheck to paycheck, and toward the end of every month I'd get worried about running out of money. But all of that had more to do with my crappy-paying job than any economic indicators.
The next downturn scared the hell out of me. It was the early nineties, and I had just bought my first house a few years earlier. The value of my home quickly plummeted more than 30 percent. My bonus got eliminated, my salary was reduced, and most painful of all, I had to lay people off that worked for me. That was wrenching. It felt wrong, it felt unfair, and it was truly agonizing.
I also panicked over the state of my department. I worried about my remaining staff, and the decimation of our operating budgets. All the grand plans we had created, and the lofty goals we had set, were either drastically redrawn or outright eliminated. I couldn't imagine that the company would survive, or that good times would ever return. But somehow they did, and by the end of the decade the economy was firing on all cylinders again.
When the dot.com bust hit in 2000, I worked for a global recruiting firm, and our revenue dropped close to 50 percent during an 18-month period. The firm was running out of cash, and I was the Chief Marketing Officer. I was tasked with cutting every non-essential program, and eliminating spend wherever possible. But as painful as it was, this time I was more prepared. Because I had learned something during the last recession.
I had come to view economic downturns like natural wildfires: they're inevitable and devastating, but unfortunately necessary. Wildfires clear out dying shrubs and debris, and return health to a forest. They create a platform for rebirth and growth.
I realized that the same was true in each of the businesses I worked in. The downturns forced us to deal with festering issues that we hadn't really wanted to confront. They uncovered programs that weren't essential, and that should have been curtailed or cut. And if I'm honest, the downturns also forced me to confront difficult people issues as well.
All of this came back to me recently when I had lunch with a young friend who runs a division of a large agency. The revenues for his unit have dropped dramatically in the first six months of this year, and he has been forced to make some difficult cuts. When I saw him, he was agonizing over the decisions, and was particularly upset over the possibility of layoffs. I tried to tell him that in the long term it would be OK, and that as painful as it might be, it would actually turn out all right for everyone in the end.
I don't think he believed me.