Cyclical and Structural Change
You can't argue with a hundred years of success.
–William I. Walsh1
Actually, you can argue with success when the environment changes around you. The economic world is changing and success is fleeting. In the early 1950s, A&P, which was then the leading grocery chain in America, ranked only behind General Motors in annual sales. America's tastes changed. They wanted choices, not the limited availability associated with the Great Depression and World War II periods of thrift. A&P stores did not provide the level of variety, nor cleanliness, expected by the new, growing middle class suburban households that began to emerge after the war. America's tastes had changed and the offerings of A&P did not.2
FORCES OF ECONOMIC SUCCESS
Three forces interact to drive economic success: economic activity, historical bias, and the parameters of future success.
1. Economic activity provides the overall flow of information and sets the character of surprises and our decision framework. Yet, in practice, decision makers conduct stress tests, risk assessments, and simulations that do not deal with the cyclical nature of economic behavior. Most business and public policy decision makers are not trained to deal with or think in terms of the business cycle. Forecasting for most consists of straight-line projections from a spreadsheet. Also, dealing with the business cycle demands a set of assumptions and the interaction of those assumptions can require scenario ...