It must be tough to be a senior executive businessman/woman in a Canadian enterprise these days. After toughing out the single-lightest recessionary period in the world between 2008 and 2012, in an economy that is chugging along at a tepid but “expected” rate for its horsepower, you have to endure the criticisms of economists, of all things.
Last week it was Don Drummond, formerly of some large Canadian bank, who called out these executives for not doing enough to get more productive especially when the opportunity presented itself. What he meant was, “Why didn’t you spend on new equipment, processes, innovations, and so forth when your dollar was strong in foreign markets making those acquisitions cheaper than they’ve been in decades?” Or, why are you being so cheap about getting better?
That kind of general diagnosis had to hurt, probably a lot like getting your waist measured by your doctor and being told that while 46″ is not sufficient to call you morbidly obese and win you entry to a popular evening reality show, you are FAT. (Huh? What? Me?)
Before the excuses and rationalizations had died down, in steps another silly economist, the governor of the Bank of Canada, Mark Carney. His suggestion: get off the piles of cash you’re sitting on and invest some of it [probably best into innovations and productivity enhancing equipment]. In other words: “You’re doing what we want our households to do while counting on those households to continue underwriting the Canadian economy. Step up.” Then he went on with some mumbo jumbo about returning the cash to the investors if you don’t know what to do with it. Man, that had to sting.
In this case, it stung so bad that specific instances of this diagnosis being wrong were trotted out of the woodwork: Magna invests (and so they do)…; Suncor is getting ready, so they’re building a warchest; and so on. But, one could say, these are the exceptions that prove the rule. Even if they’re not, cash hoarding statistics are clear. The cash is out there in corporate treasurers’ hands DOING NOTHING.
Yeah, yeah… rainy day… things could go bad… concern…
But, as my wife is wont to say to me periodically, “The truth hurts.”
Invest in productivity and innovation. That’s the growth and expansion that relieves the organization of having to cower over whether it will be OK through a small downturn. Or, be insulted.
Sorry, the comment form is closed at this time.