Some companies have found a silver lining inside this big gray cloud of a recession. It provides superb air cover for otherwise poor operating results. Consider it a derivation of the “Devil made me do it” theme. The mantra for some of these businesses is “the recession had a big negative impact on our operating results in the quarter, blah, blah, blah…” In other words, “the recession made us not do it.”

Don’t get me wrong. Certainly the recession has hurt many, if not most businesses globally. The interconnectedness of the world markets caused the economic malaise to spread faster than the swine flu (think Friedman’s “flat world”). But it is way too convenient and downright intellectually dishonest to lay 100% of the poor operating results at the foot of the recession boogey man.

The home improvement retailers are a good case in point. For the second quarter, the usually high flying Lowe’s saw a 19% drop in earnings and the 12th consecutive quarter of same store sales declines. Their CEO attributed the dismal results to “cautious consumers.” Meanwhile, their main competitor, the Home Depot reported second quarter earning declines of just 7%, to wit their CEO said “our business performed well in a down market, we captured market share and drove operating productivity.”

Clearly there are nuanced differences in these businesses, but not 12% worth. But the recession is a plausible excuse for operating missteps and with so much career at-stakeness, executives are amply motivated to point to exogenous factors for woes in their businesses.

The reason we should all care about this phenomenon is simple. Poorer performing companies fuel the negative sentiment of the bear market loyalists. They appear on the cable channels pointing to the “W shaped” or “jobless” recovery and generally stoke the paranoia that we are in the first of a kind, never-ending recession. Complete nonsense. These are the same so called experts who did not see the recession coming in the first place.

Do not let this paranoia cloud your judgment about the economic recovery. It can have a debilitating effect on your ability to be agile, opportunistic and prepared to exploit the upturn to your greatest advantage.

This entry was posted on Tuesday, August 18th, 2009 at 11:04 am and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.