Jim Blasingame

Business futurist, award-winning author, speaker and columnist

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Jim Blasingame

The Concorde Fallacy and the Concorde Question

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What do some businesses have in common with supersonic transportation? Let me tell you a story.

In 1956, the Supersonic Transport Aircraft Committee met in England to discuss building a supersonic airliner in a partnership between British aircraft and engine manufacturers, and the government. Planning and development for the project – named Concorde – moved forward, and in 1962 France joined the group.

When the wheels came up on the first Concorde commercial flight in January 1976, the enterprise was already plagued by prohibitive cost overruns. By the last Concorde flight in 2003, the Anglo/French financial misadventure had become legendary.

The good news is this story produced a handy term that covers valuable business lessons. Evolutionary biologists coined the term, “Concorde Fallacy” as a metaphor for when animals or humans defend an investment of time and resources – a policy, product, business, or nest – when that defense costs more than abandonment and starting over in another direction. Four centuries before Concorde, in Part One of “Henry IV,” it turns out that Shakespeare’s Falstaff proposed a handy bit of wisdom for when we find ourselves with a rude decision about something in which we’re heavily invested financially and/or emotionally: “The better part of valor is discretion.”

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Jim Blasingame’s 2019 crystal ball predictions

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Here are my 2019 Predictions — my 20th set — by major category. Through 19 years, my record is 73.6% accuracy.

Small Business
 
Prediction: Small business confidence will wane slightly, but still maintain record levels above the NFIB’s 45-year average.
 
Prediction: With research showing younger generations less entrepreneurial than Baby Boomers (Kauffman), millions of divesting business owners will have to be more creative than ever to maximize the value of their business.
 
Prediction: Stronger balance sheets and better financial management than any time in a half-century will help the small business sector weather a maturing expansion and contribute to a quicker recovery.
 
Prediction: For the 12th straight year, small businesses will continue to limit borrowed capital to fund growth. This is why higher interest rates, the kryptonite of Wall Street, is less of a Main Street threat.
 
Prediction: Unlike corporate America, small business appraisal of the TCJA tax bill of 2017 will fall in the tepid category of “a mixed bag.”
 
Prediction: First under assault from Obama’s NLRB, and now Democrats and the courts, the U.S. franchise industry will face its greatest challenge over the attempt to create a labor organizing nexus between the mothership franchisor and employees of the separately owned small business franchise. This is the sleeper issue for Main Street in 2019.
 
Prediction: Trump’s beneficial regulatory abatement of the past two years will succumb to the reality of having to negotiate deals with Congressional Democrats.
 
Prediction: Artificial intelligence (AI) leverage will become increasingly available from granular applications for small businesses, but they will be slow to adopt.
 
Economy
 
Prediction: The greatest fundamental economic growth headwind will continue to be a lack of qualified employees to help businesses seize new opportunities.
 
Prediction: The Federal Reserve will raise rates at least once, a sign of strong economic fundamentals and inflation concerns.
 
Prediction: For the first time in decades, wage increases — both organic and by government edict — will put pressure on inflation, causing the Fed to respond (see above, and Dec jobs report).
 
Prediction: The U.S. economy will average above 2.5% GDP in 2019. Perspective alert: We were proud of 3% when the economy was at $6 Trillion; 2019 GDP will be $21 Trillion.
 
Prediction: If there is a recession in 2019, it will be due more to a cascading of Wall Street’s toxic hysteria about the Fed, Brexit, trade wars, if Apple’s Tim Cook suffers a kidney stone, or a possible attack by the planet Rhordan from the Andromeda Galaxy than from the underlying economic condition.
 
Prediction: U.S. stock markets achieved record levels, irrespective of economic fundamentals, and Mr. Gravity will lower them by the same metrics — whatever those are.
 
Prediction: The global safe-harbor of investing in U.S. assets will contribute to preventing a major stock market collapse, even if indexes descend into “bear” territory.
 
Prediction: Good news/bad news — A slowing global economy will hold crude oil in its deflationary trend, averaging under $55/bbl during 2019.
 
Prediction: China’s considerable internal challenges will help Trump accomplish significant trade deal progress if not completion.
 
Prediction: The U.S. will accrue unprecedented, multi-faceted benefits by becoming a net-exporter of energy products, from economic to monetary to trade to geopolitics.

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The real price of free information

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Standing here on the threshold of the third decade of the 21st century, we’ve watched the Digital Age transmogrify into the Information Age. Now awash with a digital record of everything that’s ever been said, written or happened, from area news to Aristotle’s ethical teachings, the barrier to whatever else we need or want to know is literally no higher than the tap of a finger. And if being up-to-the-minute isn’t fast enough, we now have the world, and parts of the cosmos, available in real-time.
 
And all of this information is a good thing — until it isn’t. In his song, “Against the Wind,” Bob Seger lamented that deadlines and commitments made him have to decide, “What to leave in, what to leave out.” As digitally driven information morphs from handy to firehose overload, we have to learn how to consume it with increasing discernment – what to leave in, what to leave out.
 
As the children of the Information Age, we’re constantly and increasingly at risk of becoming victims and/or purveyors of a potentially dangerous phenomenon: Availability Cascade. It occurs when we’re exposed to something so much — a maxim, a meme, misinformation or disinformation — that we begin to accept it as truth and reality, and worse, act on it without confirming accuracy or relevance. Here’s an old story from the Analog Age that demonstrates the power of Availability Cascade.
 

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In defense of the misunderstood scrooge

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This is Jim’s traditional Christmas column.
 
Some say I’m a scrooge. They might be right.
 
Here are three exhibits (some say excuses) in my defense of this indictment:
 
1. The early part of my career was spent in retail. Retailers know what that job does to your holiday spirit. There’s a syndrome for everything else; why not one for retail survivors? Let’s call it RPTHSS: Retail Post-Traumatic Holiday Shock Syndrome.
 
2. Since I don’t wait until the holidays to give someone a gift, I just don’t get all worked up about holiday giving. Not that the ladies mind getting stuff all year (let’s not lose our heads!).  It’s just that they want me to be giddy about giving at Christmas-time. Giddy? Bah! Humbug!
 
3. As an avowed and devout contrarian it would be antithetical for me to feel obligated to do what everyone else is doing. And if there’s one thing that has become part and parcel of the holiday season, it is obligation. For example:

a. If someone gives my significant other and me a last-minute Christmas gift, “Other” feels obligated to reciprocate. Not me. I’ll do something nice for them in March.
 
b. After the Christmas cards have been sent, if an incoming card is received from someone not on your list, do you rush to get a card out to them? I don’t. Maybe next year. In “The World, According To Ebenezer Blasingame,” giving should be voluntary, not obligatory. In fact, to a scrooge, not reciprocating is endearing. 

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Jim Blasingame’s 2018 Crystal Ball Predictions — and what actually happened

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Here are my 2018 predictions and what actually happened. My prior, 18-year accuracy is 73%.

Tech Stuff

1. Prediction: As a technology platform, blockchain stops being a novelty in 2018.
Actual: Every major corporation and government now has a blockchain strategy.  +1

2. Multi-year prediction: Blockchain will be the next Internet-class disruption.
Actual: Blockchain variations are becoming the future of Digital Trust, and therefore, more disruptive to any analog legacy entities. +1

3. Prediction: As your online activity grows – digital tools, games, social media, IOT, etc. – you’ll become increasingly aware that you are, in fact, the product being sold.
Actual: Surveys show online users are becoming increasingly concerned and discerning of their online behavior, especially social media.  +1 

4. Prediction: Scrutiny of Big Data platforms, like Google, Facebook, Amazon, will increase regarding manipulation, privacy and security.
Actual: Congress, the E.U. and users are investigating behavior of these platforms.  +1

5. Prediction: Bitcoin will not become a stable store of value (see Tulipomania).
Actual: In the past 365 days, Bitcoin peaked at $19,783 on the way to below $4,000 and dropping. +1

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Dispelling the myths of ownership

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Now that the economy is rocking and rolling, you’re increasingly likely to meet a starry-eyed human babbling on about becoming a business owner.

Probing for the object of this person’s entrepreneurial infatuation will precipitate what, where, how and when questions and, finally, the most important question: Why do you want to own a business? Answers to this last question, unfortunately, often produce what I call “The Myths of Small Business Ownership.” Here are the four most prominent ones:

Myth 1: When I’m an owner, I’ll be my own boss.

That’s right; you won’t have an employer telling you what to do. But you’ll trade that one boss for many others: customers, landlords, bankers, the IRS, regulators, even employees.

Modern management is more about inspiring, leading and serving than “bossing.” In a small business, everyone must wear several hats and the dominator management model doesn’t work well in this 21st-century multi-tasking environment.

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