Reems of bad vibe data this week and the ongoing twin threats of recession and inflation plague the headlines--not just the financial pages headlines, but the mainstream page A1 headlines as well. We're all tired of it, Bob. It's not as if we wouldn't like our headlines to read, "Mortgage Rates and Home Price Resets Spark New Housing Surge." But, get used to it; it's reality. Get over the idea that the drumbeat of negative press coverage of housing's crisis actually sells more copies of newspapers or sparks higher TV ratings. It doesn't. Those businesses are hurting too. Newspaper circulation revenues have not picked up since bad news started hitting the housing market; you're not seeing media's gain from home builders' pain. Ad revenues aren't exactly robust these days either, except maybe for a handful of promotions to announce deeper discount sales at retailers who are running behind on their per-store sales for the post-Presidents' Day selling season.

The real matter with many financial markets right now is that hope + risk makes frothy bubbles, while fear + risk not only bursts bubbles but disrupts supply and demand dynamics at the same time. Hope will account for spot rallies and premature plays for the cheapest time to buy. But volatility serves the interests of some--particularly those on the futures trading floor--even as it becomes a recurring nightmare for any of us whose hope is for an end to the deterioration, and a start to the normalization, whatever the level is. The extent to which we hitch our future to the arrival of "the bottom" probably corresponds directly with the measure of elusiveness of the trough.

Meanwhile, what to do? First recognize, maybe, then act. As hindsight lends clarity to the financial Rube Goldbergery that swept housing economics into its force field until 2006, the thing business leaders might do well to recognize is illuminated in the March 2008 issue of Harvard Business Review in an article called "When Growth Stalls." Among a checklist of "Red Flags for Growth Stalls" include two that are specifically relevant to home building--as prone as the business is to the ebb and flow of economic cycles. One "red flag" is "our core assumptions about the marketplace and about the capabilities that are critical to support our strategy are not written down." A second, possibly even more telling danger signal may be this one: "We test only infrequently for shifts in key customer groups' valuation of our product/service attributes."

The key premises of the HBR piece are two-fold. One is that almost nine out of 10 reasons for revenue stalls are within management's control. What does that say about the management disciplines of home builders? Secondly, less than half the companies in the Harvard study that experienced a growth stall were able to resume moderate to high growth within a 10 year period following the inflection point.

So even when the business cycle comes back--by the end of this year, or this time next year--there are two issues home building's leading operators should consider. One is how to ascertain a more precise, risk-adjusted measure, not only of their land asset values, but of their home buyer customers and shifts--even psychological ones--that could impact business performance.

Another, more immediate consideration, especially for those companies who have maintained sufficient cash reserves to whether the worst the markets have to throw at them, is the notion of a "shadow cabinet." As the article's authors describe it, "the shadow cabinet is a standing group of high-potential employees who tend to be in mid-career and are often in line for promotion to the director level." The article goes on to say that the benefits are many, "because it provides such a powerful seasoning for the employees who participate, it becomes a mainstay of the leadership development curriculum. And because senior executives are usually most attached to the assumptions underlying current strategy (it is their strategy, after all), they find the fresh perspectives offered by this creditable, well-informed constituency extremely valuable."

The pervasiveness of today's housing downturn will be an ongoing story to tell about the big builder community--the impact and consequence will unfold for months ahead of now. Clearly, though, even as the cycle and all the headlines turn positive at some point down the road, management will need to do a better job at picking up intelligence on the multiple influences and risks to demand trends. It's time now to get the talent you have on the path of managing to ways to counter growth stalls in the future.

General Custer, what's the strategy? "Never to get ourselves in this situation again."