The Editor's Page -- The Dangers of Hair-Trigger Management

It is the prepared, not the panicked, who survive.

This weekend finally did it. Events convinced me that some sort of malady is beginning to infect increasing numbers of otherwise smart, effective people. The main symptom of this mysterious ailment is that the sufferer reacts to predictions rather than reality, attempting to manage situations that haven't happened yet, rather than just preparing for them. I call it hair-trigger management. The trouble is, as the sufferers make changes to avoid or take advantage of the predictions, they end up making matters worse. Reactions of government and business leaders to weather forecasts predicting the blizzard of the century in the northeastern U.S. served up the final evidence. Warned well in advance of the approaching storm and the possibility that all business would be shut down, those in leadership positions from all sectors of society effectively rolled up their sidewalks. Among other premature decisions made to avoid storm-caused calamities, governments banned trucks from highways and airlines "precanceled" flights, thus "prestranding" thousands along roadways and in airports throughout the region to keep the storm from, well, stranding them. This weather-related outbreak was short-lived, but it casts in stark relief a more virulent, long-lasting, and potentially fatal strain of the disease that affects the U.S. economy and a broad range of industries throughout the nation. That is the increasingly common practice of taking economic predictions as fact and acting upon them precipitously. Some warn this prognostication virus could spread to other parts of the world. As the disease progresses, stock analysts declare what's going to happen, then skittish listeners start making decisions as if the events have already unfolded. Companies announce plans to downsize their workforces, slash costs, and otherwise turn inward. Records suggest that a related epidemic occurred during the late '90s, when some of those very same analysts and advisors predicted a glorious future for new-economy dot.coms. The result: a massive euphoria (some called it irrational exuberance) that caused otherwise rational business leaders and investors to spend like drunken sailors. Immunity to this malady is simple good sense. It is, in the end, the prepared, not the panicked, who survive.

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