The “Evolution of Economic Value” during the last 100 years based on Generation Transition Periods (GTP)
100 years of economic growth SIMPLIFIED into three forms of value over three Generational Transition Periods (GTP):
As we share our summary below, the chart above depicts when each form of value was established and the story below shares how it was formed. The Economic Value created by each generation adds to the foundation in which the next generation builds upon, we do not believe there is a replacement of value, but more of an evolution of value as our needs and wants change, our desire for more “value” does as well. We are in the midst of one of the Greatest Economic Evolutions in history because we were not meeting all the needs of our employees, customers and clients. The US Economic system is the greatest in the world because it evolves to meet the needs of the people. The best companies will “harness the collective genius of their people” and lead the way!
The story starts in the 1930s, just a year after the Stock Market Crash of 1929 which led to the Great Depression, a period in which the US economy was stagnant at best. It wasn’t until the early 1940s that America started to pull itself out of the Great Depression, as the mass production of war supplies provided a much-needed boost to the American economy.
As World War II came to an end, America was on top; we had won the World War and we had all the confidence we needed to start some of the finest companies we have all come to know - many of whom still exist today.
The US Economy was starting to create real Financial Value – value that was being created by the methodologies that helped us win the war, such as mass production and scaled distribution.
From about the mid-1940s to the early 1950s, commerce at a mass corporate level was being established for the first time in America’s history. As businesses started to grow, employment grew as well and the purchasing power of the US consumer was being recognized for the first time in history. From the 1950s to the early 1970s the generation that won the war started America’s growth in enterprise, began to see what economic prosperity felt like and what having Financial Value meant to their families.
The importance of Financial Value was established and the influence of it was foundational to the modern U.S. Economy.
The Silent Generation as they are referred to, established the foundation of our economy. They also started something else, the next generation known as the Baby Boomers. This generation grew up seeing their parents start to establish their economic prosperity, but as with any generation, the next generation is urged to be better. The Silent Generation had courage, pride, an incredible work ethic but as a whole, they did not have formal education.
The Silent Generation established the foundation of our economy. They also created something else, the next generation known as the Baby Boomers. This generation grew up seeing their parents start to establish their economic prosperity, but as with any generation, this next generation was urged to be better. The Silent Generation had courage, pride, an incredible work ethic but as a whole, they did not have formal education.
As the Silent Generation began to see the benefits of Financial Value, they believed their children should become formally educated through our colleges and universities. The emphasis on college and university education was not just for the elite anymore, it was becoming available to the masses and their focus on education lead to the next form of value- Intellectual Value.
As this generation transitioned and was preparing itself to become the future industry leaders, the markets stalled from the late 1960s to the early 1980s, a period known as “stagflation,” when the Silent Generation passed the baton of leadership to the Baby Boomer generation.
By the early 1980s, the Intellectual Value that had been taught to the Baby Boomers in the universities, including such things like the use of metrics, the importance of understanding balance sheets and income statements, financial ratios, how to use leverage, along with the advancement in technology, meant that more and more numbers could be crunched through software programs. The data points the numbers created became the indicators that companies used to make the strategic decisions for their companies.
The Baby Boomers had fully embraced their parents’ will for education and brought a level of Intellectual Value through their leadership tenure to companies at a level that had never existed before. The markets took off from the 1980s through the 2000s, using and leveraging this advancement in Intellectual Value andultimately producing more Financial Value.
As our economy and markets flourished during the 1980s and 1990s, the next Generation of Leaders were developing, Gen X and Gen Y (Millennials). They grew up in the 1980s and 1990s and saw the benefits of the Financial Value their grandparents created in our economy and the power behind the Intellectual Value their parents brought to the US economic growth engine.
As this new generation of leaders entered the marketplace, they have helped push the Economic Value Formula to evolve into the newest form of value, Relational Value.
To summarize:
Financial value – is the value created from the output, it is transactional in nature. The more you can produce, the more money you can make.
Intellectual value – is the efficiency, effectiveness, and productivity aspect of the output. It is process-based. Enhanced improvements to output create more Financial Value and therefore, in theory, the more Intellectual Value utilized, the more financial value could be created.
Relational value – is about meaningful output, it is solution based, problem-solving and personalized to the end user, employee, client or customer.
Financial Value (the money you make) and Intellectual Value (the process in which you make it) are absolutely critical to the advancement of our economy. However, we as human beings evolve and desire more in life. The impact of those first two forms of value in a bubble can help the economy or they can hurt it over the long term if the impact on people is not at the core of business decisions. Relational Value is the final form of value that essentially aligns people, customers, clients, employees, and team members together as one.