There is so much to cover, let's start with a helpful concept and then dive into several important issues.
FOUR QUESTIONS: Here's a bonus from a forthcoming article of mine. We are all too proud, too concerned about our image or just too afraid to say four things that can make our lives (and careers) immeasurably better. Think about these and then try them. You'll be amazed.
1. I don't understand. (Would you please explain again?)
2. I don't know. (But I'll try to find out.)
3. Would you please help me? (I need your advice and help.)
4. I'm sorry, I was wrong. (Please forgive me.)
DON'T AMERICAN AUTO-MAKERS GET IT, YET?
I've been sitting home nursing a winter cold, which means I have more time to read and think, both of which are dangerous. Just a few days ago, I read a lengthy WSJ article about AutoNation and its dealings with US auto companies. A key topic was why inventory accumulates in models with feature combinations no one wants, while the best selling models/feature combos sell out of stock. Some of the statements and quotations in it just BLEW MY MIND. Try these few excerpts:
---"Adopting a system in which market intelligence drive manufacturing would represent a profound and wrenching change for the industry." HUH? Translation: Car companies want to make what they want to make, not what car buyers want to buy. Is anything wrong with that? YOU BET. It is exactly backward.
--"GM has one million unsold cars in the pipeline, while Toyota and Honda have 300,000." So what does Mark LaNeve, GM's North American Sales & Marketing head say about this? "It's not like we have some crisis," ARE YOU KIDDING ME? Translation: I am part of the problem or else I live on some other planet where I cannot recognize how wrong my company has things. WAKE UP!
--AutoNation's Toyota and Honda locations carry 35-42 days of inventory. It's GM, Ford & Chrysler locations used to have 65-70 days of inventory, but as domestic models continue to lose share, they now have 80-120 days of inventory. NO CRISIS, HUH? Translation: We'll [US makers] continue to build as many as we want, and of what we want to build and ignore what people want to buy and how fast they buy them. THE BIG 3 DESERVE TO GO BANKRUPT. (PS: Even brilliant car design/engineering guys like Bob Lutz CANNOT fix this one.)
--US Automakers are drowning in complexity offering too many choices, and still not making what people want to buy! [From the article] "While US car companies continue to offer a large number of options, they're not always geared toward particular buyers. Japanese companies, by contrast, typically manufacture a small number of variations tailored to specific groups of customers... and can move quickly to adjust if sales are poor." WOW. Translation: Those clever Japanese car makers have decided to make what people want to buy, and react when buying patterns change. HOW UNFAIR OF THEM
--Example: One Ford dealership is working his inventory down from 100 days to 83 and aiming at 65 days (still way more than Toyota or Honda would have). Why this is hard: "Ford makes a dozen versions of its big Expedition SUV, but just three of them account for 75% of the sales in all of south Florida." Wanna bet how many Ford "insists" they stock? I bet it's way more than 3. DUMB.
WHY IS THE MEDIA SO EXCITED ABOUT OPTIONS DATING AT APPLE/PIXAR?
First remember, both companies are doing great for their shareholders. Most readers (and media writers/reporters) have never worked as an executive developing compensation packages or been part of the Compensation Committee of a Board of Directors. I have, so let me explain why this whole backdating of options issue at Apple/Pixar is being overblown.
The most recent "incident" involves Pixar (where Steve Jobs of Apple is also the top guy) and its top animated film director John Lassiter. It seems that 3 months time passed from when the Options were priced and the date granted according to the signed documents. Sometimes it does take a long time. Sometimes the options are granted at the time the stock is low to reward the employee--and the documentation trails along afterwards.
None of that really matters, because if the management and board wanted to, it could simply have awarded Lassiter more shares at a different (higher) option price, but resulting in the same dollar gain when exercised/sold at a higher price in the future--or even given him some additional cash compensation. That is completely within the rights of Comp. Committees and Boards. The board's most important objective is to increase shareholder value, and keeping top people, creating award top products is a good way to do it. Two of those people are Jobs (at Apple) and Lassiter (at Pixar).
In some cases, there have been backdated options granted to far less successful and productive executives. In these cases, shame on that board and its compensation committee for failing to look out for the shareholders as well as they might have.
But remember one more thing. All such decisions are made about future results without the benefit of 20-20 hindsight. Second guessers will always be more accurate, but they can never predict the future, just criticize others about past decisions, which leads me to the next topic.
WHAT DOES HILLARY BELIEVE? IT DEPENDS ON WHEN SHE'S SPEAKING
--Oct. 10, 2002: "The facts that have brought us to this fateful vote are not in doubt."[Iraq vote]
--Dec. 15, 2003: ""I was one who supported giving President Bush the authority, if necessary, to use force against Saddam Hussein....We have no option but to stay involved and committed."
--April 20, 2004: "I don't regret giving the President the authority because at the time it as in the context of weapons of mass destruction, grave threats to the United States, and clearly, Saddam Hussein had been a real problem for the International Community for more than a decade."
--Oct. 2005: "I don't believe its' smart to set a date for withdrawal..."[from Iraq]
--Nov. 2005 "If Congress had been asked to [authorize the war] based on what we know now, we never would have agreed."
--Aug. 2006: On wanting Rumsfeld's resignation, asking for: "new leadership that would give us a fighting change to turn the situation around before it's too late."
--Dec. 2006: In renouncing her war vote: "I certainly wouldn't have voted that way."
--Jan, 27, 2007: She DEMANDS of a sitting President that he: "Extricate our country from this before he leaves office."
What she means is :DON'T LEAVE THIS MESS FOR ME. IF I GET ELECTED, I DON'T WANT TO DECIDE ANYTHING ON IRAQ WITHOUT THE BENEFIT OF 20-20 HINDSIGHT, OR A WAY TO BLAME YOU IF IT GOES WRONG.
It's rational to change positions when new information becomes available. President
Bush has been rightfully criticized for doing too little of this. BUT, Hillary, like many "second guessers" is good at knowing what should have been done in the past, especially if new and better information is available now. The problem is THE PRESIDENT HAS TO DECIDE ABOUT THE FUTURE AND DO IT IN THE PRESENT. Hindsight is the luxury of cynics and second-guessers.
Chief Executives--of companies or countries--have to decide based on the best information available at the time and then execute to support those decisions (this area of execution was Bush's real Iraq failing).
IS RUDY GUILIANI THE RIGHT GUY? OR IS MITT ROMNEY? OR BOTH?
I become increasingly convinced that Senators do not/cannot make effective Presidents. They have become too rooted in the debate on alternatives and NOT in the decisive action needed in the top EXECUTIVE office of our nation.
Using that criteria to narrow the list of candidates for President: My 2008 tickets now are Guiliani and Romney,( in whichever order seems most electable) opposing Clinton and Obama. Keeping John McCain in a leading GOP role in the Senate makes more sense than trying to elect a 72-year-old (controversial) President. More on this in future editions of THE ENTERPRISE
HOW IS IT THAT A JOURNALIST CAN SEE WHAT OUR GOVERNMENTAL LEADERS CANNOT?
Many of you know I don't always agree with Thomas Friedman's politics. I do think he is a wonderful journalist and very perceptive when it comes to Geo-political solutions especially involving the Middle East, where he has lived and worked extensively. The conclusions he posed in a recent NY Times Op Ed piece are so obvious and so practical, it makes one wonder why no one in Washington, DC has reached them. The reason, perhaps, is that the polarized politicians in our nation's capital would actually have to agree on something. And that, is a very tough sell these days.
I have copied Friedman's Op Ed piece below for you to read and consider. We find ourselves living in interesting and dangerous times. Only if we apply our collective wisdom to the important choices we face, can we influence the outcomes in a positive direction. Let's do it.
Best,
John
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February 7, 2007 Op-Ed
Yes, We Can Find the Exit
By THOMAS L. FRIEDMAN
©The New York Times
MOSCOW
Listening, from Moscow, to the debate in Congress about Iraq is troubling: it sounds as if the American people are being offered two routes to a dead end: either follow President Bush and have troops surging into a roiling civil war, or go with one of the Congressional resolutions and denounce the surge, but without any alternative strategy for securing U.S. interests. I believe there is an alternative strategy, but it will take two concrete numbers to implement: a date — Dec. 1 — and a price — $3.50 cents a gallon. Let me explain.
What is the U.S. interest in Iraq right now? It’s to quell the civil war enough so the parties may eventually reach a negotiated settlement, and if that proves impossible, to get America out of Iraq with the least damage to our interests.
We will not quell this civil war with a surge of troops alone. The only thing that will do that is a power-sharing, oil-revenue-sharing deal between the parties. The only way we will get serious negotiations going is with leverage that America does not now have: leverage on the parties inside and outside Iraq. Negotiating in the Middle East without leverage is futile. These folks know how to calculate the balance of power down to the last ounce.
So how do we get leverage? The first way to do that is by setting a firm date to leave — Dec. 1. All U.S. military forces are either going to be home for Christmas 2007 or redeployed along the borders of Iraq, away from the civil war. Right now everyone in Iraq is having their cake and eating it — at our expense. We have to change that.
The Sunnis, who started this whole murderous cycle, participate in the government, negotiate with us and also indulge the suicide bombers and the insurgents. The Shiites collaborate with us, run their own retaliatory death squads and dabble with Iran. The Saudis tell us we can’t leave, but their mosques and charities funnel Sunni suicide bombers to Iraq and dollars to insurgents. Iran pushes its Iraqi Shiite allies to grab more power, while helping others kill U.S. troops. Ditto Syria.
O.K., boys, party’s over: we’re leaving by Dec. 1. From now on, everyone pays retail for their politics. We will no longer play host to a war where we’re everyone’s protector and target. If you Sunnis want to go on resisting, we’ll leave you to the tender mercies of the Shiites, who vastly outnumber you. You Shiites, if you want to run Iraq without compromising with Sunnis, fine, but you’ll have to fight them alone and then risk having to live under the thumb of Iran.
You Saudis and other Arabs, if you don’t use your influence to delegitimize Sunni suicide bombers and press Iraq’s Sunnis to cut a deal, we won’t protect you from the consequences. And Iran, you win — yes, if we leave, you win the right to try to manage Iraq’s Shiites. Have a nice day.
But at the same time, we have to impose a tax that creates a floor price of $3.50 a gallon for gasoline — forever. This is also about leverage. It says to all the parties: we are going to conserve enough gasoline and spur enough clean alternatives to fossil fuels that no matter what you all do in the Middle East, we will not depend on you for energy.
Today in Iraq, none of the key parties have to make any choices, and we don’t have any choices. That is the definition of “stuck.” Right now we can win only if all the parties in and around Iraq act in the most farsighted and flexible manner. Otherwise we lose in our attempt to democratize Iraq, and we’re left holding the bag. We need to be in a win-win situation that we control.
“I don’t think at this stage that the promise of 20,000 more troops will change any minds in Iraq,” said Michael Mandelbaum, author of “The Case for Goliath.” “But the threat of a lot fewer U.S. troops might conceivably get everyone focused. Right now, the U.S. is the passenger in a car that other countries are driving — and it’s not going in the right direction. We have to change that dynamic.”
Indeed we do. Once we’ve set a date to leave by and a gas price to live by, we, for the first time, will have choices in Iraq. We can stay to broker a deal if the parties want to be guided by their better angels or, if they want tribal instincts to reign, we can leave by Dec. 1 and insulate ourselves from Islam’s civil war with a new energy policy.
To put it another way, if setting a date to leave miraculously brings them to their senses, our aspirations for the Iraqis will have been achieved, and we’ll be stronger. And if it doesn’t, but we have set an exit date and a gas price, we’ll be out of Iraq and more energy-secure — and we’ll also be stronger.
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