The Great Progression – Reframing Periods of Dramatic Economic Change

17 June 2009
951 Views
Comments are off for this post

My “Situation Assessment: Today’s Economy” post looked at some positive forces and trends at play in today’s economic landscape. In this post, I want to step back and take a longer view, and include some learning I’ve had about economic change over the last 150 years.

I have been studying Periods of Dramatic Economic Change for the last 10 years and have read numerous books and articles. Usually, those periods are described with words like recession, depression, and panic – and until recent generations, these periods happened with some regularity.

If you take the view that Periods of Dramatic Economic Change happened regularly over much of the last 150 years, and that the American economy had amazing development and growth over that time, you can start to reframe what happens during those times. (…and, because I think we will be in a Period of Dramatic Economic Change for a few more years, what is happening now…)

Todd Harrison of Minyanville had a similar thought. In his “The Great Expression” blog post, he repositions The Great Depression as a time of creativity. I like this view, and would like to extend it and broaden it.

It seems to me that Periods of Dramatic Economic Change are times of Great Progression. It is during those times that people and organizations are forced to move forward and change, to adopt new ways of doing things and go in new directions, because during those times people narrow the focus of their spending on only those things that fit their needs most efficiently and effectively. Legacy industries and businesses, which were the most effective in days gone by, are able to hang around during Periods of Incremental Economic Change, usually selling to a slowly diminishing market. But during A Great Progression, when resources need to be spent more productively, there is only support for the most progressive people and businesses who can meet that need.

By way of example, I thought I would show The Great Depression as The Great Progression by showing how it worked in the 1930s. Here are some facts about the positive or progressive parts of the economy during the 1930s:

  • Earnings of the best 20 performing large companies were essentially flat from the peak in 1929 to the bottom in 1933 (Bridgewater Associates)
  • General Motors took the US auto leadership position from Ford
  • Radio adoption increased from 50% to 90% (Arik Hesseldahl, BusinessWeek.com)
  • 70-75% of the working population had a job throughout the decade
  • Hewlett-Packard, Polaroid, Texas Instruments, Tyson Foods, and Continental Airlines were started
  • Proctor & Gamble created the radio soap opera
  • Benton & Bowles, a radio-focused ad agency started in 1929, grew to $15 million in annual billings by 1936.
    • “Theaters that had once disdained selling popcorn and candy because it seemed cheap and undignified now discovered that candy returned a 45 percent profit and popcorn three or four times its cost…Snacking while watching a movie became commonplace.”
    • The drive-in movie theater made its debut in 1933, and many urban areas had at least 1 drive-in by the end of the 1930s.
    • “Improved production methods helped sharply increase the sale of canned fruits and vegetables.”
    • Clarence Birdseye developed a means of quick-freezing on a large scale, so that by 1934 Americans were buying 39 million pounds a year of frozen foods.
    • “A 1935 study reported that, compared to 1918, American meals were more varied and nutritious. Consumption of milk was up 25 percent, commercial baked goods had increased 40 percent, canned fruits and vegetables had risen nearly 400 percent, and oranges had soared 1,000 percent. Ironically, the very idea that eating less could mean eating better, especially if vitamin-rich foods were included in the diet, served middle-class Americans well in adjusting to economic depression.”
    • “The trend toward mass-produced clothing continued.”
    • The advent of the school bus [in the 1920s] supported the movement toward school consolidation.
    • “Students in ever-increasing numbers continued to enroll in institutions of higher education. 400,000 more students were in colleges and universities at the end of the decade than at its outset.”
    • Pool tables, slot machines, and bingo cards grew more popular in saloons after Prohibition was repealed in 1933.
    • “The rising flood of automobiles moved businesses to try catching the eye of passengers with distinctive roadside structures, signs, and billboards.”
    • Fortune (1930), Newsweek (1933), and Life (1936) started.
    • “Cigarette sales shot up sharply” and “Well-advertised cigarettes continued to increase their sales throughout the 1930s.”
    • Scotch tape became popular as people used it to repair household items.
    • The number of cars increased by about 15%, and the amount of gasoline sold increased by about 25%.
    • The popularity of inexpensive mass entertainment stayed about the same throughout the decade.
    • The generation of children born in the 1930s would be the smallest of the century and throughout their later lives would continue to experience the consequences (including less competition for college admission and jobs).
    • “Communities of 10,000 to 100,000 grew the most.”

As you can see, there were a number of positive things happening economically during the 1930s, and that Period of Dramatic Economic Change demonstrated some trends and forces that would last decades.

I want to acknowledge that Dramatic Economic Change is hard for many people. I think the best way we can help everyone get through The Great Progression that we are in today is to understand the opportunities that are presenting themselves now, to be creative and nimble, to focus on our unique strengths and interests, and to work hard. (As a management consultant, that’s what I’m always working with my companies to do.)

I think more people focusing on the positive, productive and progressive will help everyone to make it through The Great Progression that we are in faster and better. The question is not how we can succeed in spite of this economy, but how we can succeed because of it.