Events aren't what they used to be. This is why.

by Douglas Rushkoff | August 10, 2011 | (0)

INTERNATIONAL ECONOMISTS ARE STRUGGLING TO FIGURE OUT WHETHER THE WORLD MARKET IS IN A SOFT PATCH, A SUSTAINED BEAR MARKET OR THE PRELUDE TO A DREADED DOUBLE DIP. They really don’t know, and they are increasingly freaked out about that. And while we in the live events industry might like to laugh it off, convinced we’re immune to all that high finance hedge fund mumbo-jumbo, in truth our entire sector is driven by it. At least it has been until now.

Events, for the most part, have been considered cream, funded by the excess wealth of the companies we work for, organizations we contribute to and corporations that want to win our business. In the 1990s, most of the events I spoke at were hosted by groups: real estate companies rewarding top sellers, associations helping members achieve the “next level” and pharmaceutical companies “training” doctors to use new medications. Everyone played golf, got massages and took historic tours of the odd downtown. 

As a result—and not entirely unfairly—events were associated with excess. Like a year-end bonus or incentive, an event was a way to pay someone off, celebrate success or demonstrate dominance. That’s why, whenever times got tough, events were the first expenses to go. And, predictably, we saw the event marketplace cool down during the dotcom crash of 2000, and then again in 2008 as Lehman Brothers collapsed along with mortgage-backed securities. 

Now that financiers are adapting to a new normal of low returns, soggy housing, challenged employment and occasional national bankruptcies, history tells us to brace for another contraction in the events business.

But that won’t happen this time, and here’s why: This crash is different. We are not looking at the cyclical crunch of investment markets, but the slow, steady realization by big business that traditional methods for wealth generation just don’t work anymore. This isn’t about the housing market. The housing boom and bust (or, more accurately, the mortgage derivatives crash) was just a last gasp by financial firms to milk a little more cash out of the economy during this sustained and, I’d argue, permanent lull in profitability. 

The real issue—the one that’s been troubling economist John Hagel at Deloitte & Touche since before 2000—is that corporate profit over net worth has been plunging since World War II. That doesn’t mean corporations aren’t rich. It means they don’t know how to make money with the money they already have. 

Workers grow more productive and efficient each year, but that isn’t translating into profits. Why? True innovation is down. In the U.S., organizations—corporate America, in particular—have focused innovation on financial markets rather than the creation of new and interesting stuff. Except for Apple and a few other technology companies, most of the former giants have left their core businesses behind to operate more like financial institutions. General Electric is much busier bidding on banks than making washing machines (actually, they sold off their appliance business years ago). 

This strategy allowed big companies to tip the money landscape so that capital rolled down to them. They collected by positioning themselves downstream. But they were loath to innovate on any real level—to use that capital productively. And so their core capabilities languished. They lost sight of whatever it was they were supposed to be doing. They lost their souls along with their competencies. 

So, unlike previous downturns (during which struggling businesses cut out events along with budgets), this downturn will have the opposite effect. Corporations have nothing but money. And we have what they need: networks of creative, competent people and the ability to bring them together in new ways. 

Remind your clients that events are not always just a reward for a job well done. They do not come after the fact; they are a means toward success. Focus your event planning and promotion on the value created by bringing together people who understand what no corporation ever can—that true innovation happens in real life, in real time and in person. One+

Douglas Rushkoff

DOUGLAS RUSHKOFF speaks and writes about communication, values, culture and organizations. His latest book is "Program or Be Programmed: Ten Commands for a Digital Age." He can be contacted via www.rushkoff.com.

TAGS: One+ August 2011 , column , business of meetings , executive leadership