Things are bad, until we decide they are good again.

A post to start the new year on a useful note. The title stems from a conversation had in the boardroom of a client company several years back. It was the culmination of a discussion between partners facing necessary but discomforting changes--some forced on them externally, some due to managerial inattention or distraction.

The choice was simple, but like all really clear choices that involve people, it was one that had varying degrees of support. The choice was shift focus or stay pat? A) Explore new but untested (and un-procedured) lines of business. Or, B) ride their mature horse till it most likely dropped dead in the road. There were several camps. There was a palpable tension. Then, some plaintive speechifying ending with...

"If we have to shift our core everytime there's a downturn, what does that make us?" said partner #1

"Solvent," said one joker.

"This downturn is different," begged partner#2.

"How?" said partner #3.

"This one isn't responding well to good news," said partner #2.

"Or memos," said the joker.

Partner #1: "Very funny. This is a bad situation."

"Is it?" asked the joker.

As I recall things, this is where the discussion became a bit more productive. The good news of partner#2 was mostly visible only to partner two and his CFO dashboard. Partner #1's essential "core" was really a grab bag of previous choices, much discussed, and all as yet really uncommitted to.

Some of the partners were more troubled than others. Number 1, the most senior, was pissed his chances at defining the organization, beyond his dabbling and unrefined pet visions, had now passed. His choices were being dictated by market trends, competitors' practices and the desires of a younger staff to move into fresher work and more satisfying methods of achieving that work. Partner #3, in quiet moments away from the rest, would name "boredom" as her chief emotional response to her important position within the company.

It became obvious to the assembled group that their angst over "change" had less to do with the need to change and more to do with the fact that it wasn't in "The Plan."

Their plan.

Finally, after summarizing what he viewed as their "core"--enthusiastic problem solvers--and what he believed were some viable and useful courses of action, the joker dropped his line...

Things are bad, until we decide they are good again.

And that was the point. Times were "bad" because the times weren't cooperating with SOP. "Bad" equaled involuntary and dynamic. "Bad" equaled discomfort and challenges to worldviews. The times, they were a changing--had changed already--but they didn't get a permission slip.

The ultimate irony? A prior "Bad time" had been the catalyst for these partners to jump ship from an old line firm where they were associates and junior partners facing a grey ceiling. They left to do things their way; in what they saw as a better way. And so they did.

The memories of starting their firm in those times? Unabashedly Good. The best. And, because of the dynamism and the unknowable, not despite it.

Last I spoke to her, Partner #3 was no longer bored. Somehow, together, I think they learned how to survive what "Good times" can do to you.

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The catalyst for this post was a piece by David Brooks in the NYT containing this highlight:

In “The Unwisdom of Crowds,” in The Weekly Standard, Christopher Caldwell explores the contradictions between common-sense morality and the rules of finance. In a time of economic crisis, common sense tells you to hunker down and save money. But this is the exact moment when a central bank has to lend freely and spend profligately....Fundamentally, Caldwell is asking an uncomfortable question about the morality of capitalism. The system is not just based on hard work.

“To be blunt, credit is successfully re-established when financial elites say, ‘When.’ Credit is close to a synonym for the mood of the ruling class. To say an economy is based on credit is to say it is based on animal mysteries. Glamour, prestige, élan, sprezzatura, cutting a figure ... that is what the economy is made of.”

Exactly. Credit may be "frozen." But the refrigerant is nothing other than loss of faith and trust in the system and in its coin, honestly valued collateral. Smart people have been shown as deaf and dumb, yet they still hold the keys to the bus. Outlier economists predicting this have been vindicated if not wholly made heroes, yet. (Cassandra is still a low-percentage resume builder.) And, suddenly, theoretical invisible money seems a whole lot less attractive than actual signs of work being done and things being made.

Watch this date: January 20, 2009. Days or weeks from that day, a river of taxpayer capital is going to be unleashed for various and sundry projects. No bank board in its right mind will stand arms-crossed, holding its breath on some principle, as that tsunami of wealth and opportunity flows right under its nose. They WILL dive in with gusto.

But fight the urge to tut-tut as best you can. Some of these projects will fail, just as 70% of mergers and acquisitions fail. There will be inefficiencies, just as private healthcare needs 14 cents of a premium dollar for admin costs where medicare is capped at 4 cents per dollar. There will be folly and wild bets, just as we see in the local business section and the newsletters of every Chamber of Commerce in America. In other words, some of these projects will fail; and so what?

To our eyes, the point of this new money, and its potential, is not guaranteed success or some fairy tale of skyhigh ROI that a Bernie Madoff or a John Gutfreund peddles to the smart yet apparently quite gullible. Their schemes all relied on the urge for importance, power and heroism on the cheap, and quickly. Those guys counted on us wanting the benefits of courageousness and wisdom without us having to realize--work for and engage--those two things. Yes, leverage on the cheap, the appearance of derring-do but with the firewall of plausible deniability in the moral realm, explains both Madoff and the fall of the big money houses on Wall Street. (The WSJ interestingly tackles this smart/gullible conundrum here.) And, in a way, it describes our friends, The Partners.

Back to our point. This money is a proxy for vision, energy and optimism--for courage--when we can't hormonally or mentally provide our own. Economies are mostly psychology, as are corporate cultures. And psyches--or corporate worldviews--are, in most cases, up to us to decide or surrender to. Thankfully, one joker fulfilled his archetypal duty to his partners; he was a daredevil of simple truth-telling...

Things are bad, until we decide they are good again.