THE ENTERPRISE--ON DENIAL AND DEFIANCE
FILTERED INFORMATION--A DEADLY THREAT
I have told many corporate executives that IF there are more than a few layers of people in their organization between them and the employees doing the work, then the execs do not have a clue what really happens at the plant floor or the call center desk. Why? It's not because the execs are stupid. They are not; they are bright and motivated. It is not because they cannot understand what goes on. It is because their entire world is constructed to isolate them, and feed them filtered, "cleaned up" information.
ISOLATED, INSULATED, AND MANAGED FROM THE HARSH, BRUTAL TRUTH
Executives spend much of their time in meetings among other executives. The best and brightest execs actually get outside and meet with customers (and once in a while, suppliers, too). Unfortunately, every encounter with "workers" is orchestrated too tightly, and the environment is too threatening for honest feedback to come from workers skipping over 4, 5, 6, 7 layers of middle management to the ears of the CEO. What does reach the C-suite is "filtered" information. Thus the best and brightest in the C-suite are making decisions based on flawed information at best, incorrect information at worst. What kind of decisions result from this process? Not the best, and sometimes, downright goofy ones.
IS THE PRESIDENT OF THE COUNTRY ANY DIFFERENT?
I doubt it. His schedule is crammed full. His staff is made up largely of career politicians--people who made their way by telling others what was "politically expedient and correct." Perhaps the President's inner circle, his Chief of Staff, etc. tells it to him straight. But very few others do. George W. Bush suffered mightily when Karen Hughes left his senior staff. He no longer had his "truth teller," his "barometer of reality." Who does this for Barack Obama? Rahm Emmanuel is gone. Maybe his golfing and basketball buddies tell him the truth. One can only hope so. Michelle moves in her own rarified circle. The kids attend private schools. Obama has no religious leaders--not since Rev. Wright was publicly exposed as a radical and a bigot. In fact, (Obama may not be a Muslim, but IF he is a dedicated Christian--as he claims), it is ODD that he has attended Church so few times in his nearly two years in office.) Many would say he is missing out on a Voice of Wisdom from a Higher Authority.
DENIAL, THE FIRST STEP OF GRIEF--OR THE ROADBLOCK TO PROGRESS
In business and in life, being in denial is a frequent trap. In the book Death & Dying, Kubler-Ross lists Denial as the first step. "This can't be happening to me." In business, failed programs whether strategic or tactical are often blamed on everything but the real reasons. Why? Denial. To admit the real reasons for failure is to admit that someone (maybe you) did something wrong. Human nature resists this in every way possible. You hear it from Nancy Pelosi; you hear it and see it from Barack Obama. He is "blind and deaf" to what the American voters are telling him.
WILL SOMEBODY PLEASE EXPLAIN THIS TO THE PRESIDENT?
He worries that the people don't understand; that perhaps he didn't explain clearly enough. I wince every time I hear his proud comment on how much the stock market has come back. First, it's not because of him; it's in spite of him, and because corporate America got down to serious cost cutting--something he needs to learn how to do. And he's only partly right about the stock market, since the Dow was over 14,000 and dropped to under 7,000--a 50% plunge. It's only up to the 11,000 range, still down about 25% from its peak. To get back where it was, it had to gain 100%, and it hasn't. If it only dropped 50% why does it have to gain 100%? See the chart below. Investors everywhere need to understand this!
(from Gary D. Halbert's newsletter Forecasts & Trends).
Legendary investor, Warren Buffett, has said, “The first rule of investment is don’t lose. And the second rule of investment is don’t forget the first rule.” In my investment management practice, one of our main goals is to avoid large portfolio losses. I publish the following table often, but it can’t be repeated too frequently, in my opinion. The breakeven table below illustrates just how devastating large losses are, and how difficult it is to recover from them:
Amount of Loss Incurred Return Required to Break Even
Note that if you lose 30%, you have to make almost 43% Unfortunately, millions of investors bailed out during the severe bear market of 2008 and early 2009, and never got back in. That’s because most investors are simply not emotionally built to lose half of their investments and remain invested. They have not enjoyed the stock market rally since the bear market low in March of last year, and this same fear emotion won’t let them get back into the market.
THERE IS THE PROBLEM! INVESTORS WHO "BAILED OUT" HAVE NOT "ENJOYED" THE MARKET'S CLIMB
Many investors became fearful and took their money out of the equity markets and put it in fixed income investments. Those have NOT grown anything like the stock market. Thus, they are still stuck somewhere much lower than where they were. Add to that the collapse of the housing market, and the pressure of no more money from second mortgages and huge risk of foreclosures--and Americans DO NOT FEEL BETTER OFF!
BUSINESSES DO NOT TRUST OBAMA--AND FOR GOOD REASON--HE SAID ONE THING & DID ANOTHER--MORE THAN ONCE
Businesses hate investing in a period of uncertainty. Obama and the Democrats in Congress have been publicly and vocally critical of business (greedy Wall Street, etc.), and their policies and politics have reflected that. Worse yet, most of the Obama administration has been busy passing punitive regulations, making life more difficult for businesses. It's little wonder that the $2 Trillion on businesses balance sheets is sitting there waiting for a more favorable investment climate.
As long as Obama is in the White House--that day will not truly come. That's why 2012 is so important. Further, the very "rich folks" that Obama would like to tax and tax and tax are the very investors who either put their money to work in new businesses--or NOT! And until the TAX & REGULATE frenzy is over, do not expect a vigorous recovery. AND OBAMA IS NOT GOING TO CHANGE MUCH! He will say he is, but he won't. It is against his nature and his entire belief system. He is into DENIAL AND DEFIANCE! The "dumb America voters just don't understand!" (YES, WE DO, MR. PRESIDENT--AND THAT'S HOW WE VOTED.)
MORE EVIDENCE OF HIS DECLINE? OF AMERICA'S DECLINE UNDER HIS LEADERSHIP?
November 11, 2010 -- 5:30 p.m. EST
China's Hu Rebuffs Weakened Obama
SEOUL—President Barack Obama limped toward the close of the Group of 20 summit, weakened by an anemic economic recovery and an election drubbing that has left world leaders questioning U.S. authority. In private meetings with Mr. Obama Thursday, Chinese President Hu Jintao resisted his pressure on currency revaluation. Mr. Obama also failed to secure a free-trade agreement with South Korea by his imposed Thursday deadline, a blow to a U.S. president who has pledged to double U.S. exports over the next five years.
WHY 2012 IS CRITICAL--ALREADY:
While the Democrats still in control of the White House and Senate talk about "working with the new Republican majority in the House," they must have their fingers crossed behind their backs. They lie. If forced to "work with the House" (by whom?) they might act like it. But make no mistake. They believe the American voters are the ones who erred. They are in denial. Americans just didn't understand them and their tax and spend, big government policies that were being crammed down American's throats. Perhaps Americans understand quite well!
BY THE WAY--WILL SOMEBODY TELL SARAH PALIN? PLEASE, BEFORE SHE WASTES HER TIME & EFFORT & LOTS OF MONEY
Us serious adults think she is cute, perky and entertaining. But there is no way I'd want her as my President any more than I wanted Obama. One ROOKIE in a row is plenty. She needs to campaigN for candidates on a serious note, and not play the cutesy stuff. Then in maybe 10-15 years, she will develop enough knowledge, maturity and "gravitas" to actually run for something again. Try Senator from Alaska--that seems to be a mess right now. But NO THANKS, SARAH. I have a long list of people ahead of you. We want to WIN in 2012! No matter how narcisstic, detached, untruthful, deceptive and misgjuided Barack Obama is, he is one hell of a campaigner and will still get a huge share of the minority vote (Blacks, Hispanics) and a lot of the uninformed youth vote--those who haven't grown up enough yet to really think it through.
ON PUBLIC EMPLOYEE UNIONS--A POX ON OUR COUNTRY:
"The process of collective bargaining, as usually understood, cannot be transplanted into the public service." Said Franklin D. Roosevelt in 1933. A public employee strike, he said, "looking toward the paralysis of government by those who have sworn to support it, is unthinkable and intolerable." I will add, it is also incestuous. Public employee unions contribute heavily to elect officials who will then feel beholden to them, and increase their wages and benefits, while not demanding more work or productivity. This is in direct conflict with the interests of taxpayer--citizens. Public employee unions are one of the greatest threats to the American government and way of life that exists today. (The includes teachers' unions!) Something must be done to limit them, their growth and power/influence.
OK, YOU ALL GET IT BY NOW
The GOP controlled House can't change America or the government policies by itself. It's just a great start! Democrats control the Senate and "the anointed one" Obama is still in the White House. All the House can do is slow the spending, force realistic budget cuts, and pressure Obama and the Democratic liberals in Congress to either go along--or be recognized and the cause of the problem. In states like OH, where a new Governor and the GOP controls both houses of the legislature, much more can be done. The states can show the way for the Federal government. I think John Kasich and the people we elected in OH will do that. I sure hope they do.
John L. Mariotti, President & CEO, The Enterprise Group, Phone 614-840-0959 http://www.mariotti.net http://mariotti.blogs.com/my_weblog/