I believe the American people are optimists by nature. They are doers.

I also believe in the American spirit of renewal as I have seen this country reinvent herself several times over my work life.

The recovery from inflation is one that I talk about a lot these days. The baby boomers, of which I have to admit to being one, thought we were the greatest generation of business people of all time.We started work in the 1960s and saw our sales go up, profits go up, and incomes go up.Wow, what a time.

There was only one thing wrong with it. Inflation was the cause, not our brilliant management skills. Paul Volker and Ronald Reagan taught us that in a very painful lesson.

This time we are waking up from the dreams of the past 25 years. Business was terrific and we seemed to have found a way to slay the dragons of recessions. They were mild, short, and shallow.Wow, what a time.

There is only one thing wrong with it. Debt was the cause, not our brilliant management skills. And we are right in the middle of this one, aren’t we?.

The New Reality
Most of us are calling this another business cycle. I don’t! I call this the “New Reality.”We aren’t going to go back to business as usual after this cycle is over—not a chance.We are going to find a new way of doing business.

There are some ugly truths lurking out there in the statistics that bombard us on a daily basis. November unemployment was 10.2%, but it was really 17% when those who stopped looking were counted.

But the really tragic statistic is the debt load. In 1980, for every dollar of worldwide gross domestic product (GDP) there were 3.7 dollars of debt. There is nothing too bad about that level of debt. It’s a touch high perhaps, but controllable. However, by the time 2005 rolled around and the stewards of the world’s finances had weaved their magic, the debt had risen to 30 dollars of debt for each dollar of GDP (Charles R. Morris, The Trillion Dollar Meltdown, 2008). Impossible to comprehend, but that is the cause of our worldwide financial crisis—excessive debt.

Most of us know by now that the U.S. consumer drives 70% of the U.S. GDP. I also think we all realize now that is undergoing a huge change. Volker says we need to reinvent America where the U.S. consumer is only 50% of the GDP, and I think he’s right. I just hope the powers that be listen to him and start enacting policies to redirect the country properly, away from debt-driven growth and toward managing growth within our means. That’s a novel concept, isn’t it?

Time for Doing
So that takes me to the “action”—the “doing”—portion of this message. Let’s take leverage out of our businesses and our lives as much as possible. Let’s go back to the lives of our grandparents, great grandparents, or whenever the generation was in your history that said if you don’t have the money for it, don’t buy it.

No, I am not saying only use cash. But I am saying use your money wisely. I also think we need to preserve and maintain products more conscientiously.

A lot of good product has been traded in before its useful life has been spent. Keep things longer, particularly capital goods. For example, motors and pumps can be used for quite a long time if they are maintained properly. This will be a novel thought for many of you, but maintenance is something that other people do and you can too.

Once we get to this “New Reality,” the debt level will be sustainable, our businesses will be predictable, and the best firms will win the business. Until then, it is important to be one of the businesses that makes it through this tough time.

It is time for the “doing.” Reduce your debt and eliminate waste in your business and your life. You will feel much better about yourself and your business. And as a nice consequence to such responsibility, you will be saving Mother Earth too. Oh my.