The perfect storm that has seized Wall Street, causing economic upheaval and the demise of many venerable institutions around the globe, has been years in the making. The main forces at work were greed and ignorance (ever-present human scourges) and misguided public policies (a scourge that has grown in severity over the past three decades). The confluence of these forces has led to the worst economic crisis since the Great Depression.
Some of the early lessons that have already emerged from this crisis include the following:
* The creation of wealth almost always requires a great deal of time. Its destruction, however, can occur with breath-taking speed.
* Although economic life is fragile, prudent people and organizations have adopted guiding principles and behaviors that have shielded them from the worst of the destruction.
* Those that have fared best have focused on creating real value in the work they do, and have eschewed dressed-up Ponzi schemes that generate quick, but ultimately unsustainable, profits.
Without a doubt, the collective hangover that we are about to experience will be a doozie. But we will all - in our increasingly connected, global economy - emerge more sober, and hopefully, wiser.
Any possible silver linings? Yes. We would expect some combination of the following new trends to shape our lives - and our organizations - over the next decade:
1. Economic entities - from board of directors to investors to employees - will become more conservative.
2. There will be a shift in focus from this quarter's earnings to long-term value creation.
3. Systems for measuring, accounting, and reporting on corporate activities will undergo major revisions designed to foster transparency and a focus on sustainable profitability.
4. Compensations systems will be overhauled to align executives' pay with sustainable profitability for their organizations.
5. These shifts will inexorably lead to an authentic focus on the people side of the business, since it is people who are the source of sustainable profits.
