Opportunities Amid the Tumult Part 1

December 31, 2011

As we have long noted, the world faces a prolonged period of disruption and dislocation. The best we can expect is slow growth and volatile financial markets. Too many countries have too many problems that will take time to address. That presumes that these problems are being addressed, and largely speaking they are not.

China’s financial system remains vulnerable with limited regulatory oversight and high “private” debt levels, while its secretive government is in transition. India’s public services are chaotic, while it still fails to mount a broadly-based educational system, even as its population surges. Europe struggles to cobble together any semblance of a coherent strategy, while its deficit containment policies guarantee economic distress in much of the E.U. Meanwhile, the U.S. is missing in action, with its president lacking either vision or the desire to fight, leaving the clowns of Congress running amok.

There will inevitably be a number of false “dawns”.

Canada’s only immediate problem is the turmoil of its trading partners.

Moreover, that most insidious enemy of all market economies gathers strength, as the disparity between the rich and the middle class and the middle class and the poor continues to widen almost everywhere. This trend cannot continue. One way or the other, it will stop.

What is the individual to do in these tumultuous times?

First, remember that the world has faced graver situations before, and emerged intact. Remember too that almost all countries have the resources to solve their challenges; the problem is the lack of public leadership and the will to act. Resolving these issues will certainly require a hit to the standard of living of most of us. But that only means most of us would give up some the junk we do not need, nor ever did.

Second, the real threat to our well being is not the mountain of debt that so excites us. Rather, it is the vast waste of human talent that has already occurred, and the added waste which inevitably awaits us. Part of this waste is the result of society failing to offer a secure platform for accomplishment; part of it is the result of ignorant, frighten, confused and thoughtless individuals making truly idiotic decisions.

Third, decide explicitly that you will understand and use the distress to advance the deployment of your talent. The way forward for any individual could hardly be clearer. Concentrate on creating innovations that either increase productivity significantly, or that make a major contribution to solving an urgent social or marketplace necessity. Necessity, it should be noted, is always in the mind of the beholder. Your advantage rises in direct proportion to the fact that this is not what most persons choose to do.

Fourth, you must turn your back on the herd. It will not be easy, but in challenging times, the herd’s reaction is almost always to jump off a cliff. And if the first cliff does not kill them, they just look for another cliff. So let the herd chase get-rich-quick internet fantasies, develop ever more useless phone apps, multiply social networks until no one has time to work, create games of no originality, develop stock trading strategies to bamboozle the unwary and when in doubt sell more advertising.

Fifth, look for productivity or product innovations the old fashioned way – with equal measures of hard work and craftiness. [Notice how reading that sentence makes the herd’s approach so beguiling.] Of course, only a fool would look for innovations in a fields or markets in which the innovator had no or little inherent interest.

Since many good ideas exist but are ignored, look for innovation using all of the search technologies available. Search creatively. Use mathematical analysis intensively. That includes asking experts wherever they are. And when aggressive search fails to yield an answer, or provides only part of an answer, conduct equally aggressive research and development. In other words, create your own intellectual property – the true currency of the 21st century.

Where would you get the resources to conduct your own R&D? Subsidize your research from your “day” job. Create a cash cow to fund your research. Use your craftiness to fund cheap ways to conduct research. Use volunteers/friends/family to help. Be resourceful.

Are these tactics not obvious? Clearly to most they are not and that is why serve you so well.

But might your search and R&D both take considerable timet? Yes, they might. And here is one other “secret” of success. Patience in a world of impatience just might make you a warrior prince, if not king.

The next post will address specific industry opportunities. Right now I have an opportunity to harvest.