Page 57 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

We believe that there have been—and will continue to be—
fundamental changes to some of the critical components of the
global economy. It is too early to say quite how far-reaching and
deep these changes could be—or indeed whether all of them
will materialize. But we do expect to see some real change—
driven by the damage to economies around the world and rein-
forced by the looming threat of prolonged slow economic
growth—in a number of areas: the role of governments; the
dynamics of trade; the shape of industrial, fiscal, and monetary
policy; the mind-sets and behaviors of consumers and compa-
nies; the profitability of corporations; the structure of compa-
nies and entire industries; and the importance of innovation.
Complicating the picture is another major uncertainty: Will
we see inflation or deflation? For corporate leaders and
investors, this is an important question. In a deflationary envi-
ronment, it will be even harder to achieve tangible growth
because the price levers become virtually impossible to exploit.
These potential changes together constitute what we call the
new realities under which businesses must operate. In Chapter
6 we explore in more detail how some of these realities might
shape the managerial mind-set. But first, let us establish what
these new realities are and how they might change the compet-
itive landscape.

■ THE RETURN OF THE ■
INTERVENTIONIST GOVERNMENT

Since the early 1980s, there has been a worldwide trend—driven
originally by President Ronald Reagan in the United States and

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