Undue caution can be duly detrimental to business

I've consulted with fortune tellers and palmists a couple of times because I find it intriguing that strangers I know nothing about appear to know so much about my life, even before it plays out.

But while it's always fun to find out what they think my birthdate says about my personality, I usually don't take their predictions seriously--especially since I'm still not a millionaire and I'm still not married to a Brit who takes me on his travels.

Predictions can be a bane, especially in today's volatile economic landscape where nervy investors are ready to twitch at every dismal forecast that supposedly points to a global recession.

They are a bane because businesses have started to react in anticipation of the impending economic slump. Companies are cutting back on investments and ordering a hiring freeze, leaving seats left by departing employees empty.

All this even before the global economy is in recession. If more organizations adopt this knee-jerk reaction and follow suit, slashing back on investments and manpower, predictions about an impending recession will surely take fruit, like any good self-fulfilling prophecy.

International Monetary Fund's (IMF) managing director, Christine Lagarde, last week cautioned governments against pulling back on spending or risk triggering a new recession and impeding the economy's already slippery road to recovery from the 2008 crisis.

"For the advanced economies, there is an unmistakable need to restore fiscal sustainability through credible consolidation plans. At the same time we know that slamming on the brakes too quickly will hurt the recovery and worsen job prospects," Lagarde said in an opinion piece published in the Financial Times.

Amid fears over the impact of the U.S. credit downgrade and debt crisis, and similar concerns in EU economies, Lagarde urged the Obama administration to "appropriately phase" the country's planned spending cuts so economic growth wouldn't be impeded.

Her advice should extend beyond governments to the enterprise community.

Hewlett-Packard's decision last week to discontinue its WebOS investment and spin off its PC business stunned the IT industry. The company had cut its outlook for the next two quarters and was seeing dismal sales of its WebOS-based tablet, TouchPad.

HP, though, is still the world's No. 1 PC manufacturer and it seems premature to take such drastic moves when the TouchPad is barely six months in the market since its launch in February.

Any major investment requires careful planning to ensure its execution is sound and it will yield the rewards it promises. But, undue caution can also have an adverse impact on the company's growth and competitive edge.

More importantly, at the end of the day, would the employees who were left to fill the vacated seats a company had refused to fill due to an unnecessary hiring freeze, be willing to stay with the organization when the economic doomsday prediction proves false?