Rodney Johnson - Without Warning

Since publishing the book Without Warning earlier this year, the interest in Silent Problems has grown. As a means to capture some of the more significant issues on the horizon, I’ll be compiling a list weekly pointing out a few of the silent problems entering the marketplace (note: One of the blogs I follow is threestarleadership by Wally Bock and this is a concept that Wally utilizes with great effectiveness. Thanks Wally for this idea). I encourage you to take notice, and watch how these problems unfold. But more importantly, prepare so they don’t become Without Warning Events. So for the week of June 29, here they are.

China Bank Risk - from the WSJ:  Chinese banks have lent freely to state-owned enterprises and local governments, partly on expectations that the central government will ultimately underwrite the risk…  Some lenders have let credit standards slip for stimulus loans even though such loans could bear some risks in the long term, the paper said. Most of the lending goes to railroad, highway and airport building projects that eventually are handed over to local governments to manage, and it’s the local authorities — not central government — that will guarantee loan repayments, it said. Banks often lack accurate and full information about local governments and their financial viability, increasing their credit risks, it said. Lenders’ asset quality undoubtedly will suffer if local governments later find themselves in financial trouble, it said.

My Take: China is a growing nation with economic might. Unfortunately, many of its processes and procedures are generally inadequate and untested. Little slip-ups will have an increasing impact on the global economy.

A Slow Burning Fuse - from The Economist: The Econimist is a great publication, and this week’s edition is no different. A special report on the world’s agining population is included. It’s a fascinating read with many charts that begin to show how big this problem is becoming.

My Take: Increasing life spans coupled with declining birth rates is a problem of immense magnitude. It’s impact is being felt by every segment of the population and will have a greater impact going into the future.

Organic Farmers Feel The Pressure - TwinCities.com: A year ago I wrote an article for an agribusiness publication about how organic farming would be one of the fallouts from the economic crisis. This quote begins to show how consumer spending habits can change. Sales in the U.S. of organic foods sold mostly at supermarkets are expected to drop 1.1 percent to $5.07 billion this year, according to the Chicago-based research firm Mintel. Whil the drop is small, it is the first in an industry that has seen annual growth of 12 percent to 23 percent.

My Take: The economic crisis has changed the buying habits of large segments of the population. Areas like “organic farming” which were considered recession proof are not immune, and will continue to feel the impact.

Social Media Amongst Fortune 100 CEOs: from estrategy.com: We researched the Fortune 100 CEOs in the US to see how many were using social media services like Twitter, LinkedIn, Facebook and Wikipedia. The results are shocking - not one CEO has a blog and only 13 have LinkedIn profiles. We found the top CEOs to be disconnected from the rest of the world. If they want to connect with their target audience and raise their company’s visibility, they need to change how they interact online.

My Take: Social media is coming of age, and impacting everything tied to sales and marketing. CEOs are more visible and vulnerable than ever.

Madoff Sentenced, from Bloomberg: Bernard Madoff was sentenced to 150 years in prison for masterminding the largest Ponzi scheme in history. Madoff appeared in court today before U.S. District Judge Denny Chin for the first time since his March 12 guilty plea for an epic swindle that may have reached $65 billion. “I don’t ask for any forgiveness,” Madoff, 71, told Chin. He said he deceived his brothers, his two sons and his wife. The courtroom burst into applause as Chin imposed the sentence, which is about six times longer than those meted out to the chief executives of WorldCom Inc. and Enron Corp.

My Take: Bernard Madoff had a problem that he intentionally silenced for over a decade. The wealth he gained access to and the lives he destroyed was huge. Unfortunately, it was a text book case about Silent Problems and how they can turn into Without Warning Events.

That’s it for Week One, and thanks for visiting. And of course if you have a silent problem story you’d like to share, feel free to drop me a line.