Reader,

I was on a call Friday with a financial analyst, and we spent a bit of time wondering about the similarities of the 1929 Market Crash and the probability of a recession in 2026. Certainly, the specifics are different, but are there some similarities? Yes.

That conversation got me thinking about bad and good surprises over the last 100 years that, just maybe, should not have been so surprising. Here are a few for your consideration.

Stories of Surprises

1929 Market Crash: A LOT of speculative leverage plus a fragile credit market wiped out thousands of banks and many, many investors.

1941 Pearl Harbor Attack: This may have been a case of not paying sufficient attention to potential reactions to our actions. In the 1930s Japan had imported 80% of its oil from the U.S. In 1940 we limited exports of aviation fuel, scrap metal, and strategic materials. In 1941 we, along with Britain and the Netherlands, cut off Japan’s access to oil.

1950s Mass Consumer Society: Post-WWII demand for housing, autos, appliances, and television fed our factories and provided “middle class” jobs to millions. This growth also brought about the era of the “professional” manager and growth of worker unions.

1973 Oil Embargo: We supported Israel during the short, impactful Yom Kippur War in October of that year. OPEC embargoed oil and it brought the price of oil from $3/barrel to $12/barrel. Although inexpensive by today’s standards, that quadrupling of energy price on an economy that was dependent on cheap energy triggered global recession and inflation.

1980s “Quality Movement:” Japanese manufacturing excellence, quality systems, and improved product cycles shocked Western companies such as GM, Ford, and RCA who assumed that scale would protect them. Bigger was not better. The surprise was that managerial assumptions, not just factories, had become obsolete.

1999 Dot-Com Bubble: Speculation about the new Internet triggered business models that counted “eyeballs” instead of profit. “Internet companies” entered and exited the business landscape with incredible speed.

2010s Smart Phone Ecosystem: Mobile computing became the primary interface for commerce and communication. Retail, media, banking and even transportation all changed.

2019 Covid Pandemic: We, collectively, ignored epidemics that occurred “over there” and assumed that viruses would never get on an airplane. In the 2018 timeframe we saw “other places” experience Zika, Ebola, MERS, Lassa Fever, Yellow Fever, Cholera, and, my favorite, given our anti-vax dude in Washington, a global measles resurgence that resulted in 140,000 deaths.

Patterns

There are plenty of examples of leadership surprises that we could explore. Those above are only samples but might show some patterns for a “prepared mind.”

• Smartphones are an example of how a new technology can redefine a competitive landscape.
• The 1973 Oil Embargo revealed the hidden vulnerability of economies and business systems to a trigger event.
• The Japanese emphasis on quality showed that new operating models can disrupt entire industries faster than new products.
• The mass consumer era of the 1950s tells us that consumer expectations bring about the need for organizational adaptation.

Some obvious advice

It’s our intention to help leaders and, more importantly, emerging leaders:

• Make note of weak signals and “strange happenings.”
• Formulate the mess.
• Question all assumptions.
• Decide and act in spite of uncertainty.

Book Projects

My thanks to my six beta-readers for Navigating the Wicked World.

I’m in the process of outlining a “rewired” version of the 2006 The Prepared Mind of a Leader. I’ll share that outline soon and I hope you’ll provide comments.

Cheers,

Bill