Is it 1944?

Posted by Milos Sugovic

There’s a lot of talk about it, I’ve blogged about its onslaught, and it’s finally here: D-Day. But is your business ready? 

Businesses need to talk about the deflation, what it means for operations, and how it’ll affect stakeholders in the months (hopefully not years) to come. There’s a need for explanations. Look at the increase in Internet search volume for the word “deflation.” Jumping on the discussion bandwagon is not always a bad thing -- especially if it’s on hot-button topics.

I’m afraid some are still optimistic that a recovery is around the corner. Problem is, producer and consumer prices exhibited a jaw drop last month, and this graph doesn’t really forecast sunshine. Granted, a drop in the inflation rate in one month isn’t an indication of a trend, but economists have been warning us of deflationary pressure for months as the pace and depth of the reversal thus far has been unprecedented.

A deflationary spiral like Japan’s 18-year-long recession is not good, and there’s no need explaining why it must be avoided. But many businesses aren’t prepared to step up to the challenge. Those that followed the trends and made sure to include inflation indexation in their contracts will have less to worry about. But that’s only a lucky few. Others will find themselves in tough times making tough decisions. And that’ll require rock-solid crisis communication capabilities. 

The economy is already in crisis mode and businesses should be too, especially with regards to strategic communications and public relations. It’s absolutely critical to communicate with your stakeholders about the actions that you’re taking during tough times. At the very least you’ll reassure them you’re here to do more than just watch the show.