THE ENTERPRISE--Summer variety
THE ENTERPRISE
PUBLICITY FOR THE COMPLEXITY CRISIS
My interview with Nan Russell on "Work Matters" is currently being aired. You can listen to it here: http://www.webtalkradio.net/content/view/58/30/
Click on "Play Now" for this current week's program. You can use the "Podcast" button to access and download the audio file. (You will need Version 7 or higher of Internet Explorer for the Podcast download to work.)
CORRECTION: ADVANCE NOTICE TO READERS OF THE ENTERPRISE: Missed one of the Entries! SKUs!
I am building a subscription-based database of "Complexity Factor" (CF) calculations for companies that choose to participate. I will be offering special advance deals to my regular contacts—to submit data from their companies--either owned or operated--and then share in the results. Company-specific information will be kept absolutely confidential, and only merged with other data to yield benchmarkable averages and ranges of "CF" data to see where they stand. If you or some of your contacts, clients or companies want to get in early, here is the information that will be requested:
Annual Sales Revenue (for the past year, specify the currency)
SKUs (Finished Goods Stock-Keeping-Units or their equivalent in non-product industries.)
No. of Customers (any active, with business transacted in the past year)
No. of Suppliers (all, not just inventory items)
No. of Employees (include temps and contract employees and part timers as Full Time Equivalents)
No. of Markets (served markets like OEM, consumer, contract, etc. not geographical)
No. of Legal Entities (especially those that exist in foreign countries)
No. of Locations (with meaningful facilities--which requires your interpretation)
Once I am ready, I will devote an entire issue of THE ENTERPRISE to the start-up. I have more than a dozen entries already, so if you are working for, or involved with a company that wants to participate, EMAIL me the data noted above. it will be kept confidential and only disclosed after aggregation with many companies data.
Also attached is the "lost attachment" from last week.
ENERGY ANSWERS: USE LESS; FIND MORE; FIND DIFFERENT KINDS—CONCURRENTLY
If the political demagoguery would stop, even a moderately intelligent elected official (there are some of those, I think) should see the obvious. Three approaches are required. No one of them is sufficient to all the needs. Why can't our governmental leaders see this? Or can they, but it doesn't serve their political agendas to admit and act on it.
Exploration/Expansion of Oil (short & mid-term)
ANWR Drilling (mid-term)
Offshore Drilling & Usage of Current Lease Rights (short term)
Shale oil Development (mid-term)
Refinery Construction & Expansion of Existing Capacity (short and mid-term)
Conservation (short, mid, & long term)
Fuel efficient vehicles, homes, offices, factories, stores and cities, (street lights on highways where not needed, flood lights on signs, etc) etc.—NOW
Reduce usage on transportation, unnecessary lighting (Christmas lights), excessive cooling & heating, etc. —NOW and Future
Use more fuel efficient products and practices (high mileage cars, programmable thermostats, CFLs, etc) —NOW and Future--more of them...
Timers to turn off lights in unoccupied offices, public places, and ultimately in homes (provide tax incentives to install them)
Innovation (mid-long term)
Nuclear (most certain, proven alternative source, with least risks)
Solar (largest source, usable in certain environments, with simpler--mirror based--plants)
Hydroelectric and Tidal (using gravity)
Geothermal (selectively usable at premium installation cost)
Wind (Selectively usable for certain locations)
Renewable (Cellulosic ethanol, re-growable raw material, etc.)
Clean Coal (Only when the best alternative for a location, cost, speed, etc.)
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BULLISH PREDICTIONS (although John Mauldin is usually more "bullish" than average, or at least more cautious.)----------
"We appear to be entering a period of serious stagflation with sharply rising expected and actual inflation combined with large downside risks to growth and employment."
"I would argue that what we are seeing is an acceleration of expected consumer price inflation in the context of a sharp expansion in global liquidity. It is hardly surprising that the prices of those commodities, such as oil, for which the short-run price elasticities of supply and demand are low move upwards strongly when there is a rise in expected general inflation. The oil market is a very convenient vehicle to speculate on expectations of higher levels of general price inflation. Hence my view is that the 40% jump in oil prices that has occurred over the past few months - roughly the period during which financial conditions have been loosened sharply - is a reflection of the expectation of either an acceleration of global inflation, or a depreciation of the US dollar, or some combination of the two."
—Malcolm D Knight, General Manager, Bank for International Settlements
The quote at the beginning of this letter is from the managing director of the Bank of International Settlements, or the central banker to the central bankers of the world. (Thanks to Simon Hunt for the quote.)
Stagflation is a strong word to use, but Knight is surveying a world that is increasingly looking like it is in trouble. A Morgan Stanley study suggests that 50 countries around the globe have inflation running at 10% or more, and that this represents over 3 billion people.
Almost all of those countries have negative real interest rates, or interest rates that are below inflation (as here in the US). Central bankers around the world are slowly raising rates and tapping on the brakes, but they are going to be under increasing pressure to do so. Thus, Knight suggests that global growth is due to slow down even as inflation is rising.
—John Mauldin, Investor's Insight
AN OBAMA PRESIDENCY AND A DEMOCRATIC CONGRESS WOULD LIKELY EXACERBATE THESE ISSUES
Increase taxes don't help in tough economic times—they hurt. History has proven that government intervention (meddling) in free enterprise and trade don't help—it hurts. Bush's policies and behavior didn't help these issues—he hurt them—as did his GOP allies in Congress. Is John McCain the next version of Bush? I don't think so. This is an argument I have regularly with those who do think so. McCain was almost the "anti-Bush" and that's why he is not so favored by traditional, further right conservatives. In 2000 he was definitively the Anti-Bush, until he was done in by campaign dirty tricks and unfounded rumors in South Carolina. He is a rebel. McCain is a change agent—whether you like his positions or not. After the mainstream media gets done deifying and crowning Obama, it would be wise to look more closely at him, his policies and what he has done for his entire life. It's easy to be someone you're not in a short political campaign. Looking at the candidate's entire life, experiences, behaviors and positions is a much better picture of what he will be like in office.
Bottom line: You can become arrogant and elitist even if you come from modest beginnings. Examples:Entertainers (like Rosie O'Donnell to name just one). many professional athletes, (and Michele Obama, too).
This year should be an unusual one, with the "Obamacons" (former Neocons/GOPers now for Obama) and the Blue Dog Democrats (these used to be called moderates and might have been either Republicans or Democrats) voting their principles instead of aligning with the liberal left. Perhaps these two groups more accurately represent Americans than either party's extreme wings. One time, a long time ago, I said I'd even vote for a McCain-Lieberman ticket. Now I'm betting on Bobby Jindal of Louisiana as a strong VP candidate for McCain. Obama's pick is more of a question, but I'd lean toward Bill Richardson of McCain's home state. Both guys have "chops" that the candidates need. Jindal is young, non-Caucasian, a strong speaker and a conservative. Richardson is an older, seasoned government-veteran, with a broad range of experience (incl. foreign policy), and should appeal to Hispanics too. Anybody got better choices?
ANSWERING AN OFT ASKED QUESTION ABOUT COMPLEXITY
I am often asked if getting rid of and managing complexity is the "whole answer." Absolutely not. Getting right of complexity is the first part of the solution. Removing the excess, and redirecting the resources--talent/people and money that were being wasted on complexity into "true innovation" is the second part of the answer. Growth—sustainable and profitable growth—is necessary for companies to survive and prosper. Proliferation (and the attendant complexity it adds) is the wrong way to get that growth. Innovation in either incremental (bagged lettuce) or "leap" (FedEX, Swiffer) is the key to long term success. There's no faking innovation. Creativity is not innovation. It's just one of the steps in innovation. I'll write more on this topic as the summer progresses. Until then, get out there and look for unmet needs, under-served requirements. Those are the ones that pay off. And, managing complexity wisely can create value through managed variety. After all, the purpose of a business is to create and keep a customer, and to consistently deliver the best value to that customer. Complexity is just a big pothole in the road to doing that/
Best, John
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