From the Archives...

The Transition Economy

[Matt Taylor Journal page 305, July 21, 1982, 5:39am]
An extract from an article prepared for the Independent Bankers Association program.

In the next 25 years we will see as much social, economic, political and technological change as has occurred since the Middle Ages.

This change will be global; it will alter the way that business is done in every sector of the economy. It will totally alter the economy itself.

The inability of major institutions to foresee and plan for this change has created a crisis of unprecedented proportions. In the period starting now, from 1982 to 1987, we will see a complete disruption of the global economic system. This will be a turbulent time. After 1987, a new economic order will start to emerge--one based on a set of assumptions essentially different than all economic systems in the known history of humankind.

The nature of this economic shift is now clear--if you know where to look; it is no mystery. It will not be bad--if organizations do not [employ] their human and financial resources in a historically futile attempt to maintain old ways based on conditions that no longer exist. However, this change will be so vast in scope and occur so quickly, that those individuals and institutions that resist will be unmercifully swept aside.

There is no way to defend against this kind of change. There are great opportunities to move with it and shape it. The result of this period will be economic wealth that even two decades ago would have seemed a fantasy.

At the forefront of this change is what is now called the "Information Economy." Developments in computers and robots already tested in laboratories will forever alter the very nature of production, distribution and consumption, and more importantly, alter our concept of what wealth and money is. Information will become money and wealth. This is not just change, no matter how great; it is a change in kind--a social transformation.

The major risk of this period lies in how we'll manage the transition from one historical period to another. If you think of all that has occurred since the Renaissance compressed into one generation you can sense the magnitude of the situation. Can this change be stopped? No, the drivers of this change are already "out of the bag" and are being employed to deal with the change that has already taken place.

The risk lies in misinterpreting negative economic signs only from the vantage point of the existing economy and thus taking actions that will accelerate confusion and "decline." This is what we have been doing for several years. We have unfortunately eaten up much of our margin. The solution lies in defining this "new" economy and in developing a practical strategy for surviving the transition period. Fortunately the knowledge and tools exist to do this. What has not existed until now is the method to bring these resources together and create a functional synthesis; and the political opportunity has not existed to create the new legal structures required.

No one person, no one organization or profession has the answers to what this "new" economy will look like, let alone the experience to engineer practical solutions. Neither does Taylor Associates, although we do have one of the broadest views. What the principles at Taylor Associates have invented is a method of bringing the pieces together in a way that creates action plans that can be accomplished and corrected over time.

We at Taylor Associates saw this crisis over 20 years ago and have invested years of research into creating Management Centers which have been designed to facilitate the decision, design and management process in an entirely new way. A way consistent with the rate of change that is swamping all conventional planning and management methods. This new method allows us to bring together experts from many diverse fields--often those who see themselves "competitors" and "enemies" and create a new model from their various perspectives--in other words form a new whole from many expert parts. Then they design a program that can be tested and corrected as it is applied. This method allows individuals and organizations to evolve their thinking and work at the rate that circumstances are changing in their environment. What has been happening over the last 20 years and the last 5 in particular is that the disparity between how fast organizations can change and the rate of general change, has been growing. This is the problem; we have misinterpreted this by looking at a series of individual problems unrelated to the whole system and have "logically" taken reasonable actions that have led to greater problems. Band-Aid, reactive management.

Management Centers are the result of over 20 years of active research into planning and management; they are the synthesis of the "state of the art" from many fields: humanities, science, engineering, business, etc. Over the last 3 years, these methods have been tested and refined with a number of issues and clients--Management Centers now exist as a mature working system.

It is clear that if change of even a fraction of the amount described in this paper occurs, the Banking Industry as we know it will collapse. We have discovered, however, in our research that several reasonable, viable alternatives exist. The Banking industry is the life blood of our economic system--it will be on the forefront of this change; it will not follow it as has been possible traditionally. How well banking does in the next decade will be the measure of how well we have managed the biggest social transition in our history.

Our proposal to the Independent Bankers Association is that the special capacities of Management Centers (that have never existed before) be used to develop a program that can solve the dilemma that now exists in Banking. To do this, all of the expertise and resources from every major field of knowledge and work will be pulled together to jointly design a program. The results of this process will be:

  • A new model of what is happening
  • A strategy to deal with it
  • A training program for member banks that is adaptable to their specific needs
  • A specific legislation program to establish a new banking structure
  • An implementation strategy and an "update method" for staying on track

This program will be available to the Colorado members within 6 months and can be "sold" to the National organization to recover costs and to amplify the effects.

If confrontational methods are employed to solve these questions, several years and many times more money will be spent in arriving at solutions--the costs and risks incurred in the meantime will be tremendous.

There are new conditions before us.

There are new methods for meeting the challenge.

The results will be new and will open the door to a new era of opportunities.

copyright 1982, MG Taylor Corporation. All rights reserved
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