Recession blues

Since this recession I’m losing my baby, Because the times are getting so hard”
BB King, Recession Blues

Surviving the downturn is the hot topic of the moment. We watch every minor movement in the economy and convince ourselves that the recession is here and with the downturn will be the ultimate decline of our business.

The last person to listen to is the old grey-hairs who start the conversation with the phrase, “When you’ve survived as many recessions as I have…”. (Well, that’s what I thought when I was in my twenties and setting up my first business!)

Please note that, despite what they say, there is no evidence that their actions saved their businesses. What we have here is called “survivorship bias” – we only listen to what the survivors claim made them successful and assume these actions caused their success – the old cause and effect (or chicken and egg) conundrum. What’s important to note here is that we ‘listen’ to the winners but not to the losers; and both justify their position by (re-)writing their own history to fit the results; so listening to their side of the story may not be that helpful.

Most ‘research’ ignores the key fact that the difference between the winners and the losers is marginal. There are more similarities than differences. Maybe the big difference is just luck: being in the right place… or bumping into the right people… or randomly deciding the right price… or making ‘that phone call’. Meanwhile the successful, the survivors, attribute their ‘results’ to their skill. Nonsense – success comes from doing the right things and being in receipt of a generous dose of good luck!

Surely it is more than a decent dose of luck and a jammy role of the dice!