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Why is the current crisis unfolding as it is?

The global COVID-19 pandemic is about to develop from a health crisis into a worldwide economic and social crisis. Week by week, the business press reports unsettling numbers indicating the economic scale of the crisis. Financial markets dip, unemployment surges, GDP growth plummets into negative territory, well-known companies go into foreclosure or bankruptcy. To most leaders, this severe economic crisis came as a complete surprise. But is all this really a surprise?

Not if you read William Strauss and Neil Howe’s book The Fourth Turning and noticed the writing on the wall. An economic crisis has been predicted for some time, and the coronavirus just exacerbated it. Today, let’s take a look at cycles in business and life, the fourth turning, the impact of generational theory to make sense out of it, and how it all relates to TIPS, Thinkergy’s Innovator Profiling System.

Cycles in business and life

Many phenomena in business and life unfold in cycles, often with four distinct phases. In an earlier blog article titled How cyclicality drives business and innovation, I discussed many of these cyclical phenomena at great length. Here, I briefly reiterate some well-known examples of cyclical flows:

  • The change of seasons in a year (spring, summer, fall, and winter).
  • The short-term business cycle (expansion, peak, recession, trough) that unfolds over an average of six years.
  • The long-term business cycle (with similar phases as the short-term cycle), which lasts 50-75 years, according to the famous US investor Ray Dalio.
  • The company life cycle with its phases of adolescence development, launch and growth, maturity, and decline.
  • The human life cycle with its phases of childhood, young adulthood, midlife, and elderhood.

In their book, The Fourth Turning, Strauss & Howe identify a generational cycle that, similar to a long human life, unfolds over 80-90 years. Called the saeculum, they observe this generational cycle unfolding in predictable regularity century after century throughout time. Like the human life cycle, a saeculum is also split into four distinct phases of ca. 15-25 years: The ‘first turning” is a High, .the second a phase of Awakening, the third one of an Unraveling, and the fourth turning is a Crisis.

The fourth turning

In their book, Strauss & Howe suggest that the “fourth turning” (the fourth quarter of a saeculum) is a period of prolonged crisis, leading to severe economic turbulences and often even war. In US history, they identified the American Revolution (1773-1794), the US Civil War (1860-1865), and the Great Depression and World War II (1929-1946).

Written in 1997 book, Strauss & Howe’s book predicted that roughly by 2010, we would reenter the Fourth Turning that may last up to 2030. Ten years later than anticipated, the COVID-19 pandemic is causing a crisis that is simultaneously disrupting the medical, economic, and social spheres. So, were Strauss & Howe out with their projection? Maybe not after all.

I believe that the Fourth Turning already started in 2008 with the Global Financial Crisis. Much of the dramatic effects of the coronavirus-health- turned-economic crisis directly relate to the market imbalances, anomalies, and bubbles that developed in the aftermath of the 2008 Financial Crisis. Since then, global debt levels have nearly doubled across all asset categories – household, corporate, and sovereign debt. In many countries, interest rates are close to zero — or even negative. Stock and property markets got artificially inflated, given a lack of high-yielding fixed-income investment alternatives.

Let’s admit it: These imbalances causing market anomalies and bubbles were due to be corrected in the coming years anyway. The COVID-19 outbreak has just accelerated the needed corrections. 

Now, it’s not unlikely that we’re in for a “once in a lifetime” economic crisis. According to Strauss & Howe, a crisis phase is unavoidable after a phase of unraveling, and it lays the foundation for a new high of more progressive, enlightened development. The same pattern of the turnings plays out in every saeculum throughout the centuries. But why does a crisis follow a phase of unraveling? Because of the behavioral differences of generations. And because at different turnings in a saeculum, different generations have more or less power and influence based on the phase in their life.

How generations play out their role in a crisis

Before writing The Fourth Turning, Strauss & Howe made their name with their generational studies. Their generational theory explains how, during the critical socialization phase, different events and economic circumstances impact the values and behaviors of a generational cohort. An earlier article in this blog titled How generational shifts will impact business and innovation (Part 1) & (Part 2) discussed the generations that are currently still active in the workplace, and how they differ in their work behaviors.

Building upon their prior work in The Fourth Turning, Williams & Howe argue that a generation is born in a particular turning and then goes through all other turnings during their life. For example, as a member of Gen X, my childhood unfolded during an awakening phase, and my young adulthood was during an unraveling phase. In my midlife, I now have to face and master a crisis before leading a new high in my elderhood.

In the next fourth turning, the crisis period of a saeculum, Strauss & Howe suggest that:

  • Dogmatic Baby Boomers in global positions of power will have to lead us through a crisis that mostly, they have caused by their excessive behavior during the awakening and unraveling phase; 
  • Problem-solving Gen Xers will step in as crisis managers to pragmatically deal with and resolve crisis issues,
  • Collaborative Millennials (and older Post-Millennials) will do most of the work at the front-line (and in the worst case of a crisis escalating into a war, be sent to the front)
  • Conformist (Younger) Post-Millennials will grow up and come to age in a suppressed time of crisis.

Strauss & Howe suggest that within a saeculum, the same generational archetypes (Heroes, Artists, Prophets, and Nomads) reappear in a fixed order. Heroes have their childhood during an unraveling, Artists during a crisis, Prophets during a high, and Nomads during an awakening.

How the generational archetypes connect to TIPS

Interestingly, I see some connection between the turn of generations as described by Strauss and Howe and TIPS, Thinkergy’s Innovator Profiling System. More precisely, it seems that different generations connect to the four TIPS bases (theories, ideas, people, systems), which are social attractor fields that energize people’s actions. In other words, when one generation is socialized, certain defining events happen, and a certain sociological Zeitgeist predominates that aligns with the spirit of a particular TIPS base.

When I connect the different generational cohorts to the TIPS bases, it seems that:

  • Millennials are highly social, helpful and collaborative (People-base); 
  • Gen Xers are more solution-oriented, independent, and innovative (Ideas-base); 
  • Baby Boomers are more indoctrinating, argumentative, and dogmatic (Theories-base); and 
  • Post-Millennials and Traditionals are more dutiful, conformist, and conventional (Systems-base). 

But of course, all eleven TIPS innovator profiles (All-Rounder, Coach, Conceptualizer, Experimenter, Ideator, Organizer, Partner, Promoter, Systematizer, Technocrat, and Theorist) exist in every generation. However, they may behave in slightly different ways and may play a more or less prominent role in a certain generation. 

As such, Strauss & Howe’s four generational archetypes seem to connect to one TIPS base: Heroes relate to the People-base, Artists to the Systems-base, Prophets to the Theories-base, and Nomads to the Ideas-base. Here, I have to admit that not all names selected by Strauss & Howe seem to fit well to the TIPS bases, but the concepts do. For example, Strauss & Howe explain that the generations that are separated by another one (e.g., Boomers vs. Millennials, or Traditionalists vs. Gen Xers) have a high imminent conflict potential because of opposite values and behaviors. The same holds for the corresponding TIPS bases (Theories vs. People; Systems vs. Ideas).

Conclusion: Master the crisis first, then get ready for a new high

It seems like we’re in for a crisis that will last longer and have more severe implications on individuals, businesses, economies, and countries than we like. At least, that’s what we can expect if buying into Strauss & Howe’s turnings theory. But there is comfort in these dire prospects: so far, a major crisis was always followed by a new high that leads to tremendous progress and elevates humanity to a higher level.  

So, let’s hope for a miracle that scientists can quickly come up with an effective cure or a vaccine against the coronavirus, so that we can return to normal life sooner than hoped and can avoid a deeper economic crisis. Let’s also hope that the current events will be the catalyst to making humanity rise to higher levels of collective consciousness. Let’s hope that after the crisis, we begin a new Renaissance based on digital, ecological, and human tech-focused innovations. Let’s hope for a new “Innovaissance” driven by creativity and innovation, digitalization and ecological renewal. But for now, let’s prepare for the worst and hope for the best.

  • Do you need help and orientation in the current crisis? Do you look for someone with both conceptual foresight and creative problem-solving skills and know-how? Contact us to tell us more about what’s keeping you up at night.

© Dr. Detlef Reis 2020. The article is published in the Thinkergy Blog on May 7, 2020.

Credit: Photo by Martin Sanchez on Unsplash