Jan 05 2012

Global Trends: Drivers, Values, and Strategic Questions for Credit Unions

Report  
Number  
258

Every business leader is forced to wrestle with the prospect of what’s next. This report looks beyond the next few years at four scenarios that are possible next steps beyond the Great Recession.

Andy Hines
Lecturer & Executive-in-Residence
University of Houston
Report Number 258

Executive Summary

The year 2007 was a good one for publishing about the importance of expecting the unexpected. Throwing cold water on the idea that algorithms could simply mathematize markets, stocks, trends, and the economy, Nassim Taleb, in his 2007 best seller The Black Swan, popularizes the old (and problematic) assumption that all swans must be white. Why must they? Because all the swans we’ve ever seen have been white. “Black swan” events, like World War I, the attacks of September 11, and (smaller, but closer to home) the failure of corporate credit unions, teach that unexpected and huge events are what move history, precisely because they are huge and unexpected. Only novice planners expect the future to flow predictably from the past.

So while the future is unknowable, that doesn’t mean we should throw up our hands. Author Andy Hines, uses this report to introduce four possible mega-trends and encourage credit unions to plan around each. He recognizes the power of probability by ordering his scenarios, judging which seem most likely today and which seem least likely.

What is the research about?

Unlike other approaches to scenario planning in credit unions, this analysis starts outside the industry with the external, macro environment and imagines the credit union implications based on those environmental trends. The analysis identifies important indicators for judging which of the scenarios will come true.

In this report, Hines presents four North American and global scenarios as possible next steps beyond the Great Recession. He addresses their correlations to society, technology, the economy, the environment, and politics and then explores the credit union implications of each.

What are the credit union implications?

All four scenarios are possible, although some are more plausible than others. 

  • Long Boom (continuation)—The most familiar possibility shows the recession as a painful bump in the road, and soon domestic and international economies will pick up roughly where they left off. Steady long-term growth is the continuing norm; society and business look a lot like they have for the past 20 years.
  • Stagnation (collapse)—The most dire scenario treats the Great Recession as a prelude to further recession and long-term stagnation. It is not an apocalypse, but it’s a world in which the economy and society do not respond to government intervention, and consumers and society slow down. Security becomes paramount.
  • Our Turn (new equilibrium)—This exercise imagines a world in which the recession continues to be severe and is conquered only as emerging markets take the reins of the global economy, displacing the governments and consumers of the developed world.
  • Soft Path (transformation)—Here environmental and social sustainability move from “nice to have” to “need to have” values as worldwide consumers fundamentally reassess priorities. Local products and services flourish in an environment that defines success and progress in sustainable terms.

This report is sponsored by CO-OP Financial Services.