Now if you didn’t, please don’t feel too bad. Most economists also missed the signs of contagion.

What is contagion? Some dictionaries call contagion the “spread and transmission of disease, ideas, influence and emotions.” Other financial dictionaries cite contagion as “the likelihood of significant economic changes in one country spreading to other countries.”

What the dictionary definitions omit, however, is the rapid speed of transmission in contagion.

With today’s global economy tightly linked by capital, labor, and information flows at the speed of light, it’s not uncommon for bad news, nervousness, or outright panic to spill across borders and disrupt even the most stable of companies and industries. Indeed, everything’s connected, and sometimes in ways that we can’t quite see under the surface.

With just a few recent examples, the concept of contagion is quite prevalent in today’s periodicals:

• A European official recently compared the growing European debt crisis to the Ebola virus.
• To stop the debt crisis contagion, Eurozone finance ministers rolled out a rescue package designed to “shock and awe” investors with a whopping “$644B emergency facility to protect the Euro area from potential disaster.”
• Researchers at Kellogg School of Management at Northwestern University have found that if your neighbor strategically defaults on their home mortgage, the odds increase that you will choose to do the same.
• The Financial Times writes regarding Kyrgyzstan, “When demonstrators took to the streets … few, if any, foresaw that what started as a protest against a rise in electricity prices in the remote copper and gold belt of Kyrgyzstan would develop into a full-blown revolution that toppled a central Asian government.”

Whether it’s financial default of countries, companies or persons, government upheaval, or the decision to walk away from a mortgage because “everyone’s doing it,” small ripples of contagion tend to cause big waves elsewhere. And once those waves start rolling, it’s hard for marketing executives with their best laid plans to get out of the way.

The warning signs aren’t really hard to spot. In fact, they’re everywhere. What’s difficult to extrapolate is whether a rock thrown in the pond lands with a thud, or causes a full-blown title wave. And that’s the difficult part of understanding contagion, because in complex systems the next crisis could come from the smallest of beginnings.

With this in mind, how can a marketer separate signal from noise?

The first step is to read and listen. Pay close attention to global media for disruptions, trending topics, and events gaining critical mass. Reach out to peers for their perspective on today’s events (the more cross-industry perspective the better). Also, talk to customers for their point of view.

Second, watch your own company key performance indicators. In times like these, a strong analytical infrastructure with near real-time data feeds can help alert you to coming challenges. Use analytics to identify variances, strengths, softness, and project trend lines.

Third, leverage internal and external expertise to help distinguish matter from mania. Providing you have access to or have already hired the smartest brains, learn from PIMCO on how they hold weekly meetings to “square off in hours-long debates that are a cross between Socratic dialogue and bare-knuckled slugfest.” Challenge, debate, and try to project outcomes from today’s events.

The next crisis could come from left field, right field or drop from the sky. However, armed with the above processes, the probability of being blindsided is greatly reduced.

It would seem in the “Great Recession,” capacity planning and management should be a minimal consideration. In fact, capacity utilization for many industries is at an all time low.

For example, from January 2008 to January 2009, according to the Financial Times, the demand for automobiles in the United States fell from 15.9 million to 9.6 million per year. And Wall Street Journal reports Federal Reserve Chairman Ben Bernanke told the House Budget Committee recently, “The slack in resource utilization remains sizable”.

As companies attempt to cope with a “new normal,” painful restructuring processes have included reducing “capacity” in human resources, plants and equipment, information technology, number of brands, distribution channels, and even debt covenants. All this restructuring is intended to pare down capabilities to what is perceived as a new reality in market conditions.

Indeed, observing macro-economic conditions, it’s tempting to write off “growth.” However, “growth” is far from dead.

Take for example, the exponential growth trends of Facebook and Twitter. In January 2009, Facebook touted its 150 millionth user, and in May 2009 surpassed 225 million users! One site projects Facebook to have 300 million users by the end of the year. Twitter’s growth has also been phenomenal–audiences grew 40% in just 30 days (March-April 2009).

In fact, “growth” exists (often exponentially) in areas such as data volumes, populations, energy usage, Moore’s Law, GDPs of select countries (India, China etc), education expenditures, and unfortunately–state and national debts!

Growth also can be found in micro-segments and categories such as increases in market share of private label brands vs. national brands on grocery store shelves, or Apple’s share of the smartphone market.

Once our eyes are opened to growth trends, it’s quite easy to see signs of expansion everywhere!
The ability to meet the needs of your customers now and in the future is a critical function of any business. That’s what capacity management is all about.

Spikes in demand could mean that your company is leaving money on the table and/or failing to meet customer needs. Need proof? For customer reaction, simply perform a web search on keywords “Twitter down time” or “Twitter outage” and you’ll gain evidence of how important capacity management really is.

Indeed, capacity management isn’t a one-time, annual event. It should be a continual process of making sure your business can scale up or down to meet customer needs. With a thumb on the pulse of demand, marketers have a responsibility to help establish a well documented capacity plan and process that considers future business requests.

Sound like simple, common sense, right? Properly predicting demand is anything but easy. Considerations must include a clean and accurate set of historical data, an analytical infrastructure to compute and analyze data, an understanding of the current state of the business and its capabilities, future growth projections based on applicable trends, and then a gap analysis of what it would take to scale based on various “what-if” scenarios.

Capacity management is all about reducing surprises. Take a good, hard look at your business. What’s growing? Something surely is.

What marketing campaigns are you preparing? What happens–for goodness sake–if they’re too successful and demand exceeds available supply? McDonald’s in India had to scale back marketing campaigns for Chicken McNuggets because they couldn’t keep up with demand. Good marketing is making promises your company CAN deliver.

Can you accurately predict if and when you’ll run out of resources to meet customer needs? Can you afford not to properly manage “capacity”?

Questions:
* There appears to be a glut of capacity worldwide (i.e. shipping, telecommunications, manufacturing etc.). Should marketers be concerned with the concept of capacity management?
* What are the ramifications of getting capacity management wrong?
* Businesses are adding flexibility to meet spikes in demand through vehicles like cloud computing, temporary labor and outsourcing. Can you think of others?
* Suppose “capacity management” is built into the function of an annual strategic planning exercise. What might be a pitfall of this approach?

Walt Disney was a man with bold dreams and the willpower to make them happen. After completing Disneyland in 1955–a huge undertaking in its own right–Disney turned his attention to his grand masterpiece; EPCOT. According to the site, “The Original Epcot Project“, Disney said, “EPCOT will take its cue form the new ideas and new technologies–emerging from the forefront of American industry.”

EPCOT was intended to be a “community of the future” that would be a demonstration for best-in-class design, ecology, technology and even citizenry. In a utopian vision, Disney had dreams that EPCOT would be a, “planned, controlled community, a showcase for American industry and research, schools, cultural and educational opportunities.”

There would be no slum areas and there would be full employment. No one would own private property and apartment rents would be economical. Cars would be relegated underground and EPCOT citizens would be transported by monorail or automated “people movers“. It was a sweeping, breathtaking ideal.

Unfortunately, Disney died in the planning stages of his final masterpiece. And while the vision of EPCOT was carried forward by his brother Roy Disney, it never quite became the paradise community envisioned by Walt Disney.

Conceptually, EPCOT was breathtaking in its audacity and scope. The fact that it was never completed as intended shouldn’t detract from some powerful takeaways for today’s marketing executive:

1. Start with a problem. Walt Disney looked around at American cities and noticed that some were disorganized, squalid and plagued with crime. He thought he could do better. Disney started with a problem and then looked for a solution. Marketers know that too many companies build products or services “in search of a customer”, instead of a customer driven approach. Start with a problem to be solved–ideally one that belongs to a customer!

2. Dream big and bold–with purpose. A man of tenacious resolve, there’s few that doubt Walt Disney would have at least come close to his ultimate vision had he lived another decade. About his ambitions Disney said, “We know what our goals are, what we hope to accomplish. And believe me, it’s the most exciting and challenging assignment we’ve ever tackled.” In today’s “Great Recession” economy, the easy route is to play it safe. However, bold marketers know that now is the time to start laying the groundwork for your most ambitious plans to connect with customers.

3. Build on success. Walt Disney created EPCOT on the back of a successfully completed Disneyland. He built credibility for an even larger vision and likely had investors falling over him to fund EPCOT. The consultant’s mantra of “eating the elephant one bite at a time” applies here. When planning marketing programs, think incremental value, one step at a time, instead of big bang approaches that can lose their energy, funding and sponsorship.

4. Flexibility is paramount. When the EPCOT concept was presented to Walt Disney’s Board of Directors, some balked and demanded Walt also build a new Disney World theme park in Florida. While Walt wasn’t interested in re-creating Disneyland, he acquiesced in order to gain approval to build EPCOT. In fact, he warmed up to the idea of building Disney World as a “draw” to get visitors to visit EPCOT. Today’s marketer works within tough confines of budget cuts and limited staffing resources. Work must be balanced with the right resources working on the right priorities within limited timeframes. Intransigence is out–flexibility is in.

EPCOT was “one man’s dream” to build a prototype community of tomorrow that would inspire its own citizens and guests to think about not what is, but what could be. If tough economic times have you downcast, be encouraged by Walt Disney’s boldness and enthusiasm for the next big thing. Then, go make it happen!

Questions:
* Did you know the history behind the EPCOT project? Has Walt Disney inspired you? If so, how?
* Walt Disney said that EPCOT would be an experience people can’t find anywhere else. What other things about the Disney experience are unique? How does Disney maintain the magic?
* What other marketing takeaways can be gleaned from Walt Disney’s EPCOT project?