January 8, 2014
Timothy Taylor is a leading U.S. economist based in St. Paul, Minn. Taylor is the managing editor of the “Journal of Economic Perspectives,” which is published by the American Economic Association. He is also author of the book “The Instant Economist: Everything You Need to Know About How the Economy Works.” He is a frequent guest lecturer and offers daily notes on economics on his blog, the Conversable Economist.
In this interview, PR executive and PRSA member Stephen Dupont, APR, gets Taylor’s take on economic issues that corporate and agency PR executives should consider in the coming year.
What are some key economic trends that C-level executives and their top communicators should keep an eye on during the coming year?
I’ll give you four that are on my radar screen.
First, the combination of a financial crisis and a recession has meant that a lot of companies have been in wait-and-see mode on hiring, on expanding capacity and on introducing new products. Since the Great Recession officially ended in June 2009, there’s a fair amount of evidence that many households and firms have made the necessary financial adjustments. At some point in the next year or so, I expect substantially stronger growth and lower unemployment rates as more companies shift into higher gear and start expanding capacity and introducing new products.
Second, information technology keeps leaping forward. Think back to what the Internet was like 10 to 15 years ago, or what your company’s information technology was like at that time. It will change that much again in the next decade. The companies of the future (as well as the jobs of the future) will be those organizations that keep finding ways to integrate this technology into their processes.
Third, international trade is now worth about $20 trillion, and about 60 percent of that is trade in the intermediate goods that are part of global supply chains. Global supply chains are one major way that firms in high-income countries such as the United States can tap into the more-rapid growth of emerging economies around the world. Part of your business, either through your suppliers or your customers, is probably already entangled in these chains. The key for U.S. companies is to keep tapping into these global supply chains to leverage greater value for their stakeholders.
Fourth, the first members of the enormous baby boomer generation were born in 1946, and they’re heading into retirement. (This group turns 70 in 2016.) As potential workers, this group has substantial experience and would like to keep working, but only with the right mix of flexibility and responsibility. As potential customers, many in this group have money to spend, mostly on goods and services aimed at their self-image and needs.
Many corporate communicators worry about business disruption — the impact of events like Superstorm Sandy or a cyberattack. How much should communicators worry about and prepare for events such as these?
Top executives and corporate communicators should be disciplined in carving out some time from the day-to-day grind and preparing for such events.
If there are one or two extreme weather events that can occasionally happen in your area, you should have a plan for responding. You should also consider other business disruption events such as an infrastructure problem, like a huge power outage or a problem in the relevant transportation grid. And, sadly, your organization also should have a plan for how to react to a mass shooting (perhaps even involving a disgruntled employee) or a terrorist attack.
The best communication is rarely spontaneous. When a stressful event happens, having even some partial preparation in place means that you can do a much better job of reacting in real time.
How does the reputation of a company contribute to maintaining competitiveness and economic viability in today’s global market?
Reputation matters, but the days are long past when any company can coast on its reputation. Customers want a certain combination of price and quality. If a company from China, India, Brazil or Poland undercuts your price substantially, many of your customers will desert you. It’s an unsettling but all-too-real fact of today’s global economy.
Of course, if you are breaking into a new market, the ability to undercut established brand names can work in your favor. Successful companies understand that reputations do fade and that those reputations must be earned again, over and over, with each customer.
What role do you think social media plays in shaping the global economy?
On one side, social media offers the possibility for a good, service or idea to “go viral” and become widely known very quickly.
On the other side, social media has a short attention span, and there’s a hot new topic every few minutes.
Companies should avoid chasing the next hot topic and think more broadly about their total Web identity, including both the company’s own website, as well as information available about the firm from third-party sources and information spread by social media.
Many C-level executives are trying to understand the concept of Big Data and how to leverage data about their customers or systems to optimize the financial performance of their organizations. From an economic perspective, can there be too much data?
Many folks in the C-suite have felt buried under too much data for decades, but now the problem is worse than ever. The only good news is that the same information technology systems that are collecting Big Data can also provide more-efficient processes to extract the data that matters the most, faster.
It’s easier than ever for companies to figure out top and bottom performers, or to know quickly if a production line speeds up or slows down. There are high-powered statistical tools that surf Big Data in search of insights, but most organizations don’t have that capability yet.
Instead, my sense is that most organizations should try to think about their business as a series of small experiments in design, pricing, production methods, marketing and so on, and use their data-collecting and analysis systems to get real evidence on which experiments should be expanded and which should be ended.
Why should PR professionals and corporate communicators be more aware of economic trends? Why should they school themselves on keeping up with the current economy? What should they be paying attention to?
Economist Joan Robinson was once asked why people should study economics, and she answered, “To avoid being deceived by economists.”
Economics is a language. Even though PR professionals and corporate communicators aren’t going to speak that language themselves, they need to understand it. This point isn’t unique to economics. Economics isn’t just about numbers: It’s about politics, psychology, history and more.
Corporate communicators will often need to know the language of legal and regulatory requirements, of science, and of technical details especially relevant to their firm. But every company is a nexus of economic relationships, among suppliers, workers, customers and investors, and the language of economics can help communicators better understand those relationships.
Stephen Dupont, APR, is vice president of public relations and branded content for Pocket Hercules (pockethercules.com), a brand marketing firm based in Minneapolis. Contact him at: www.linkedin.com/in/stephendupont.