Reinvention is a wonderful word. For those of us fighting for survival in a depressed housing and lending environment, this may not be the first word uttered when asked about the future of the industry. Yet reinvention is precisely the opportunity available to us and our management teams as they try to assemble the pieces for future personal and organizational survivability.
Why reinvention? Why not intervention or rescue or even help as the word of choice? To find this answer, we must attempt to place all the financial, technological, processes, staffing adjustments and articles holistically into context.
The financial market and securitization rebalancing efforts underway were not created by a onetime event. It accumulated gradually but with escalating fervor as a result of credit standards, available equity, and a consumer-debt mindset that pushed ratios to record highs. Furthermore, of the over $110 trillion dollars of global debt, bonds, and government securities, less than 10% are tied to our mortgage markets. Subprime and Alt-A account for less than 20% of that reduced total.
The lack of process enhancements coupled with declining customer satisfaction and a deficiency of passion for continuous improvements, created organizational management teams that were content to ride the wave into the future without consideration of when it would crash into the beach. Or as one departed executive stated, “we’re still dancing.” The failure to address and invest in the first-order relationships that would create sustainable improvements and differentiation in favor of quick profits, lead to untenable customer and secondary market impacts.
Now with top line revenues falling, customers evaporating, foreclosures and delinquencies rising, and the secondary currencies illiquid, the immediate organizational reaction is less about reinvention and more about efficiencies – aka survival. The dichotomy for many firms is that as they struggle to survive, they are not looking forward or striving for innovation. The markets are not only changing, they are permanently changing requiring a forward looking team that understands the relevance of applying innovation (s) as a sustainable way to prosper.
Is the pain over after we claim to understand reinvention and the challenges facing acceptance? Alas, no. We may even not have the worse behind us and there is a good chance that the markets will face a “double bottoming” in 2008. Yet, like a patient seeking a cure, we must recognize that the road to sustainable health can only be obtained with reinvention.
Mark P. Dangelo, Managing Principal
Advisory Services, Transformations, Custom Research
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