Evolution Shift
A Future Look at Today
March 18th, 2011

Shift Age Forecasts – A Deeper Look: The Reorganizational Recession of 2007-2010

In the last column here, I pointed out that a number of my Shift Age forecasts have come true. I wrote about several of them and how I get an odd sense of déjà vu when these forecasts become reality. In this and coming columns, I will revisit them – not to gloat, but to provide explanation, because people read and hear forecasts differently from explanations of the actual events they become.

In 2007, I forecast that humanity, and particularly the developed countries of the world, would enter the “reorganizational recession of 2007-2010.” Considering that this is a blog that looks into the future, it might seem contradictory to be looking back at this event, but by doing so, I can explain why it was accurate and why understanding it will help us better navigate and understand what lies just ahead.

The reason for the length, breadth and depth of the 2007-2010 recession was that it was a reorganizational recession between the Information Age and the Shift Age. Most economists look at recessions through the eyes of history, measuring whatever recession we are currently in against past recessions. Phrases such as “this looks to be another jobless recovery similar to the recessions of the 1990’s” or “the recovery will be on the back of the consumer – when the consumer starts spending, we will emerge from this recession” (both paraphrases) are common and represent economists looking at economic downturns purely through economic filters. That is why they have had to keep revising their forecasts. The Great Recession of 2007-2010 was more than just a bad economic recession; it was a reorganizational recession.

When the world drifted into recession in 2007 and then went into economic free fall in the fourth quarter of 2008, I said that it was not only reorganizational but that it would last longer than any recession in memory.  I also said that it represented a transition from the largely 20th-century way of doing business to the new 21st-century reality of the global economy. The analogy I’ve used is the 1970’s, and the multiple recessions that occurred from 1973 through 1982. During that time, the developed countries of the world went through the very painful reorganization from being purely Industrial Age economies to becoming Information Age economies.  Economies based on atoms to economies based on digits. This took a decade to occur.

The accelerating speed of change suggested to me that humanity would pass through a period of five or six years and would emerge economically into the Shift Age. Some economies will emerge in 2011 substantially different from what they were when they entered the recession four years ago. Entire industries have entered the creative destruction phase. New dynamic business sectors based on the accelerating electronic connectedness of humanity have taken root. These are Shift Age companies. New businesses based on non-physical realities are now thriving.  They are Shift Age companies. The ascendancy of entirely new businesses and business models is the reality today, just as it was in the 1980’s, after the decade of economic upheavals between the Industrial and Information Ages.

Hundreds of CEOs and business leaders have told me that this concept of a reorganizational recession is the context that has helped them understand the disruptions they confront in the marketplace. When asked, “When will things come back?” my answer has always been, “They will not come back.  It will get better, but it will be in different forms, shapes and ways.”

Oh yes, remember that chestnut that we will exit the recession when the consumer starts to spend again? Since 2008, I have strongly said that “thrift will be the new cool, the new extravagance” and that the consumer has been scarred, and this scarring will last for years. I have continually forecast that consumers will not lead countries out of recession as quickly as they have in the past. The parents of the early-stage baby boomers lived through the Great Depression, and that scarred them for life. It affected the way they looked at the world for the rest of their lives. Well, consumers in general – and in particular, the American consumer – have been scarred by the Great Recession of 2007-2010 because the things we believed in, such as ever higher real estate values and ever increasing 401Ks, were proven false.

The Shift Age is about saving more, living with less, owning less, living in smaller homes, driving smaller cars, having fewer physical goods and more digital goods. Growth for the sake of growth – an economic axiom prior to this reorganizational recession – is now seen as hollow in a world whose very existence depends, to some degree, on sustainability.

As we emerge from the Global Recession of 2007-2010, we see a changed landscape from what existed before. Welcome to the Shift Age!

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In times of global uncertainty and disruption it takes a futurist to provide context and understanding.

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