As we move through the middle of the decade, we see firms managing assets by listening to the voice of Wall Street (VOW) more, and to the voice of the customer (VOC) less. We see an alarming rise in cutting of value-creating mechanisms such as R&D, marketing and longer-term investments to appease Wall Street for the quarter. This focus on Wall Street鈥攁nd away from customers and markets鈥攊s coming at a terrible price: a falling rate of innovation and the stagnation of organic growth. Growth is key to the health of our economy and, ultimately, to building value for shareholders. You can鈥檛 hoard your way to growth.
A Pivotal Juncture
According to the , American companies are at a pivotal juncture. Over the postwar period from 1947 to 2013, the trend for economic growth in America was 3.3%. But since 2007, the rate has downshifted to a mere 1.5%, which translates into a meager 0.7% in growth per capita in the United States. Even more troubling, the nonpartisan Congressional Budget Office (CBO) projects that growth will only average 2.5 % over the next 10 years and drop off to 2.0% at the end of the period.
The global economy is not doing much better. In an important speech, International Monetary Fund chief Christine Lagarde warned us of a coming 鈥渘ew mediocre鈥 era. She cited that the global economy is at an important 鈥渋nflection point.鈥 She calls for governments and firms around the world to recognize this trend, and make changes to see if we can build new momentum.
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Ralph Oliva is a director of the Institute for the Study of Business Markets (ISBM), and professor of marketing in the Smeal College of Business at The Pennsylvania State University.
Laura Patterson is the president of VisionEdge Marketing, Inc. She is the author of three books, most recently Metrics in Action: Creating a Performance Driven Marketing Organization.