The Fundamentals Rule

At this point I’m not sure which is harder to get a handle on: Where the economy really is? or Which of the expert opinions are accurate? I’m no economist nor do I have radical breakthrough theories, but based on my business experiences I at least have a credible viewpoint that is consistently applied. Fundamentals rule.

The current economic mess and events leading up to it was created by individuals and organizations convinced they had figured out ways to either ignore or redefine fundamentals. Of course the most notable of these modern-day business Icarus’ initiatives was sub-prime mortgages. In this interconnected global economy even sound businesses have been crippled by the residual effects of “Corporate Camp Run A-muck”. However, not every company ignored fundamentals which is why there remain glimmers of good news that are roundly reported and featured by the popular business press.

I’ve had the benefit of working across a wide range of business/professional services sectors and also consulting for some of the world’s largest manufacturers. And while I respect that each company and every industry has certain nuances, the driving fundamentals are always the same. Organizations that have stayed true to these fundamentals are more than holding their own even under the direst economic conditions while those that are renewing their commitment to sound business principles are inching their way back. However, companies that have not yet fully (re)discovered fundamentals do so at their own peril.

As always, there’s an interesting and useful conflict that must be managed. While sound fundamentals always ground and drive a business, companies that operate in an extreme mindset may also become less innovative. Progress and growth is fueled by innovation; management’s most critical responsibility is to foster innovation yet honor fundamentals by not allowing a company to become mindlessly reckless. Icarus may have been a tragic Greek mythology figure, but at the same time his story didn’t deter the Wright Brothers.

Innovation, guided by fundamentals, creates sound, secure and sustained success. The mixed signals we’re getting about where the economy currently–“The Worst is Over,” “We Haven’t Hit Bottom Yet,” etc.—reported on a daily basis is my cue that the struggle between fundamentals and flying too close to the sun continues. But in the end, fundamentals always rule.

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