Many mass media outlets fail to recognize the underlining facts, when stating that the American economy is in recovery. They fail to mention that the American unemployment rate has increased a merger 1.3% sense January of 2008, and the average student debt per person continues to forge upward, due to the 600% increase in college tuition sense 1970.

In Steve Denning’s “Leadership in the Three Speed Economy”, he identifies the “economy” as an aggregate of three major and largely independent economies, the “Traditional, the Financial, and the Creative”. Each economy works at different speeds, dynamics, and trajectories simultaneously, and as one sector of the economy declines another begins to rise.

Steven Denning argues that the long-term economic growth of the “Traditional Economy” or real economy; which produces goods and services, is in a vulnerable state of reformation. Denning argues that, “responding to a marketplace in which customers require quicker, faster, cheaper, and more convenient lies outside the performance capabilities of firms run with the traditional management and leadership practices.” It is more and more difficult for corporate entities to grow, due to the high marginal costs associated with a strict vertical structure of middle management, and their capital investments.

The second economy Denning refers to as, “Financial Economy”, composed of large corporate banking institutions. Although, this sector of the economy is reaching record profitability, it is believed to be largely susceptible to future economic turmoil. Denning states, “a world of financial instruments that are increasingly focused on making money out of money, often disconnected from the real economy”, for a large portion of financial profits are based on gambling techniques known as “financial derivatives”. This process is structured to make banks money based on artificial assets, such as stocks and interest. When trading artificial assets based on an inflated currency, the “Financial Economy” is susceptible to successive crashes in the market, such as the Dot-Com Crash of 2000.

The third and most important economy for the future of America, resides in the “Creative Economy”, which Denning refers to as “a real economy that generates products and services for real customers, based on the interconnected constellation of technological innovations, and dramatic reductions in cost, size, time, and convenience.” This economy continues to grow even through the “Great Stagnation” of 2008, because it recognizes and embraces long-term customer value.  Successful firms in the “Creative Economy” focus on mobilizing innovative products, and mass customization techniques. The “Financial” and “Traditional” economies are vulnerable to the innovative practices of the “Creative”, and must adopt similar practices in order to survive the shift of power from seller to buyer. Denning, recognizing that long-term profitability is based on the continuous creation of customer value, for traditional business practices will no longer suffice. Although the future is ambiguous and difficult to define, it is imperative that businesses in the future recognize the changes happening in their industry, and remain committed to the real economy’s customer demands.