In the Final Analysis - SAS Executive Vice President Mikael Hagstrom on the challenges facing global leaders today

Last week, the Financial Times reported the results of a June survey of purchasing managers in the manufacturing industry, which has been particularly hard hit by the global economic downturn. Managers in China reported their “third consecutive monthly rise in output and the largest increase for a year,” while European managers reported “the most positive signs from industry in the past 10 months.” This was echoed by the Wall Street Journal, which reported a positive movement in the United Kingdom’s “purchasing managers’ index” which had risen from 45.4 in May to 47 in June. “The move lifted the indicator to a 13-month high and closer to 50 – the level that indicates business activity has ceased contracting. Readings above 50 indicate economic expansion.” And for the US, Bloomberg reported that there were “signs the economy began to stabilize in the second quarter.”

But to balance out those reports, there are others that point to a more gloomy outlook. Although the monthly number of jobs lost declined in the US (from about 670,000 jobs each month from November to March to about 430,000 jobs each month from April to June), the overall jobless rate rose to 9.5%. The number gets higher. The New York Times reported that when “the so-called underemployment rate – which captures not only the jobless but also those working part time because their hours have been cut or they cannot find a full-time job – increased to 16.5 percent.”

While economists and other experts have provided a wide range of analyses – from the prediction of a global depression to a robust and rapid recovery – no one really knows what will actually happen. If anyone claims this, ask them why they didn’t buy Cisco in 1990 and sell it in 2000 (where a $1000 investment would have returned $330,000) or Microsoft in 1984, Stryker in 1988, etc.

To today’s executive, however, external indicators are essential to successful leadership. For example, we’re working with one of the world’s largest pension/insurance groups which – until recently – focused on data that they aggregated and owned. But to compete in 2009, they have found that external data is becoming more and more critical.

In the final analysis, today’s executives must derive insight from both internal and external data sources. By doing this, the leader will be able to minimize risk, maximize value, and optimize performance.