extract the e-book "Performance Objective"
Jaulent Patrick - Mary Agnes Quares - Philippe Mularski
Norman Lamont, Chancellor of the Exchequer under the government of John Major, the equivalent of our Minister of Finance had coined the phrase of "green shoots". He had used in October 1991 in the midst of a recession that would lead to the worst crisis that prevailed in England since 1930, saying it had detected "the green shoots of economic spring " !
We allowed ourselves to repeat this phrase to illustrate the concept of leading indicator. The "green shoot" wants to be, like the leading indicator, a "preacher" of a good or bad situation to come and that managers must able to detect quickly.
To put a little humor in our regard, we offer you some "green shoots" from everyday life:
- The number of people who donate the subway is a green sprout. Its evolution is certainly related to disposable income and thus to economic growth.
- Consumption of sunscreen is a green sprout. It announced an increase in tourism in sunny regions.
- The number of cranes manufactured each year is a green sprout. Its evolution is related to the construction of new buildings, changes in the supply of material, to increase the volume of credit.
- The number of coins or notes that you lose is a green sprout. When people find themselves in financial difficulties, they are generally more attentive to their currency.
- The number of people who takes their car washing machine is a green shoot, apart from periods recession this number tends to increase.
- The number of ads of people wishing to sell items is a green sprout. Its evolution has no doubt connected with the economic situation.
- The length of our hair is a green sprout. When we have financial difficulties we tend to space out our haircut (and vice-versa).
Have you noticed that in times of crisis the news herald more bad news. These negative messages are exacerbating a bit more the situation, they reinforce the perception of the recession and loss of confidence in the future. Result, people spend less, they save. Conversely, positive news stimulate a sense of confidence and, thereby, contribute to improved economic growth. Thus, the number of positive messages disseminated by the media is a green shoot, negative messages are only weeds.
No need to look very sophisticated indicators to predict the recovery, we are surrounded by leading indicators, still need to know to identify them.
