Who Is an Economic Adviser And Why Your Business Needs One
4 suggestions on how to get a good fit
Most successful entrepreneurs think that their business success comes from hard work and dedication. Others think it is how they distinguish themselves from the competition. But this is very misleading. Let me show you why...
The Hidden Secret of Business Success
You go survey the entrepreneurs who failed. That is when you will discover that what makes successful entrepreneurs successful is not what they say. They often don't realize what made them successful. And in many cases, people don't think about their success. They always want to attribute it to something they did.
In this amazing TED Talk, Bill Gross, a man who has been a part of multiple business successes (and even more failures) gave out the secret. More than anything else, the thing that he found to determine the success of a startup was timing.
In other words, is the world ready for it? Is the current infrastructure in the world ready for it?
I like to add some other factors. The first is location. Is the business in the right place where it can thrive? Apples don't grow in certain parts of the world. It doesn't matter how fertile the soil is. If you plant an apple there, it will fail in a big way.
The business world is filled with people trying to plant apples in hot temperate regions. And they wonder why their business isn't thriving. And they can't see the problem. They think they have to work harder, tend the soil better, etc. They have no one to tell them that apples won't grow with that climate.
Another factor is resources. You see a successful business winning and they don't tell you that one of their board members has a direct link to the President or Governor. And there you are, just thinking they are winning by 100% merit.
Yes, merit is a necessary component but it is not the winning edge. If you don't have a winning edge, merit is practically useless. If you have a winning edge but if you don't back it up with merit, the winning streak won't last long.
So, the three most important things to business success are timing, location, and resources. Hard work, talent, dedication, product design, competitiveness, superior branding, etc., are all secondary. Most businesses don't see this. And that is why they struggle.
Understanding Economic Cycles
Most businesses keep struggling because they have no one to point them to these core issues. If the product is not selling, they try to make their product better. To improve their service, they make new offers and get more salespeople. But those things won't add up significantly unless the business is in the right place, time, and association.
Economic cycles exist. And while most businesses think it is their genius that is making them a lot of money, they don't know that their success is a subset of the current phase of the economic cycle.
This is why the cycle changes and the business all of a sudden starts to struggle. They focus on doing more of what they were doing when things were booming and double their dedication, but still, the results are way below expectations.
They thought they were successful because of their actions. But they had no one to tell them that their success came from timing. The moment timing was no longer in their favour, they don't understand how to play anymore.
Some people understand these elements of business success. They understand resources, location, and most of all timing. They are people who devote their time to studying economic cycles and the impact of it. These people are often called Economic Advisers.
Introduction to Economic Advisers
By economic adviser, I don't mean someone who studied economic theory in some fancy school and has 5 PhDs. Such a person may also qualify in this context to be the kind of economic adviser I'm referring to. But here it is different. Let me explain...
Countries have economic advisers. Those economic advisers have to be well-versed in the economic affairs of the country, as well as the predominant economic theory the country uses. This is where the PhDs count.
However, for businesses, the landscape is always changing. You don't want an academic brain. You want someone who is deep into studying the tide of reality and how it flows. You don't want someone who knows the books, you want someone who knows what is going on.
An economic adviser for businesses has to have a deep and intricate understanding of the current state of the economy. They understand the phase the economy is in and can give tangible guidance and advice to businesses based on that.
For example, the R&D department comes up with a new product. And they are eager to get it on the market. The economic adviser can look at the product and give suggestions on how it should be improved and then marketed, based on the current economic climate.
Large organizations can have a whole department for this. Their work will be drenched in research. The difference between this and marketing research is that while marketing is strictly looking at clients (or customers) and potential clients, the economic team is looking at the broader society. This is especially people who are not clients (or customers) to understand in what way their behaviour influences clients and customers.
In some cases, the economic team finds a new market that the business is capable of serving without significant additional cost. The lifeblood of any business is the market. The only reason businesses fail is that there are not enough people buying what they offer.
And sometimes, people still like the business but they can't afford the products or services anymore. Or their tastes have changed. Or there is a new regulation that indirectly influences their taste. Only an economic adviser can detect this in the nick of time.
Surveys are never enough. People tell lies on surveys without knowing it. For example, you ask them why they use an iPhone and they say it is because iPhone has superior cameras. But that is often not true. But it is what those people believe.
So, surveys will never give the full picture. It takes an economic adviser who understands psychology, understands timing, understands economic cycles and trends, to be able to spot patterns that lead to huge revenue for the business.
How to Get an Economic Adviser
There are 4 different kinds of economic advisers based on the business and what you are looking for:
1. The Ex-Banker or Former Fund Manager
Why? They have a deep understanding of what moves the needle in a business. If they have spent more than a decade in the hedge fund or banking world, they have seen at least one economic cycle.
Economic cycles humble people. Someone who has not been humbled by an economic cycle isn't a good fit. Those are still people who believe in hard work, cutting costs and raising sales to be the primary driver of more revenue.
These are people who can tell very fast when something is going out of style and needs to be replaced. If you desire someone like this, watch a lot of business TV and see who catches your attention with their perceptiveness. Personally, my gold standard here is Mohamed El-Erian.
2. The Retired Global Investor
Here you are looking at someone who understands the broad spectrum of the global economy. This is way more important if you run a global company. You want someone who has played in (almost) every market and has a sense of the economic cycles and peculiarities in every continent.
A great example here is Ray Dalio. But good luck in getting someone like that. It is often impossible. But you can succeed in getting a piece of advice from time to time from them though.
3. An Ex-Central Banker
This is a game-changer. If you can get a central banker on your board, it would be super amazing. But they have lots of rules and constraints. So, I wouldn't be too sure if it were seamless.
This doesn't have to be a senior central banker like a Fed Governor. This could be a mid-level staffer. The benefit is that they have a wide view of the national economy. They have seen patterns everybody else in your business (without central banking experience) hasn't seen. And hence, they can recognize them.
If you run a national business and get the chance to bring on an ex-central banker, I fully recommend it. But do not narrow their work to what you want them to do. Let them look and decide. You must allow them to keep playing the role of a central banker to your business.
4. An Economic Researcher
This is the easiest category of economic advisers to find. You don't make a job post looking for an economic adviser. You don't accept resumes to get an economic adviser.
An economic adviser is someone you find and invite. You have to look for what you want. You look for who you want. And this means you have to first write out your criteria. And then see who fits.
Economic researchers are busy making themselves visible online. You can tell their depth of understanding by articles, posts, comments, and contributions. And there are a number of them. But each one is unique. So, you have to know what exact kind that will be a good fit for your business. And you reach out to them.
An economic researcher that will be useful to your company will be one that you can tell has a present knowledge and solid perspective of the industry you function in. Blindly hiring an economics professor will not do you any good. If the professor is to be considered, it should be a professor whose contribution you see as outstanding and feel will be a great fit for your organization.
I am an economic researcher but I am not a good fit for every kind of organization. You must know what will be a good fit for your business.
An economic adviser is someone who constantly weighs the viability of the offers (from a business) with the economic cycle, timing, location, resources, regulation, trend, and market (and non-market) psychology. Smart businesses have at least one economic adviser.
Very large businesses have an economic advisory unit. Just imagine Apple (the company) having a whole department to study non-Mac users in the US who switched to Mac in the last 2 years, those who bought a non-Mac PC, and those who switched away from Mac in the same period. Not particularly looking for anything. Just looking for patterns.
Economic advisers are pattern finders and identifiers. If you want a business that lasts for decades, you need one.