Telling It Like It Is

THE ENTERPRISE--HELP IS HERE, IN THOUGHT AND ACTION

THE ENTERPRISE--HELP IS HERE, IN THOUGHT AND ACTION

IF YOU HAVEN'T BOUGHT THE COMPLEXITY CRISIS YET, YOU'D BE WISE TO DO IT RIGHT AWAY.
It contains some of the best advice about what will help in tough economic times.  I'll be speaking in 5-6 places too, so depending on where you are located, you might be able to come and get some "inside tips" that are not in the book.

IF YOU HAVEN'T READ MY FIRST TWO BOOKS--THEY'RE BACK...AND AS TIMELY AS EVER
After going "out of print:" because they were 10 and 12 years old respectively, THE POWER OF PARTNERSHIPS and THE SHAPE SHIFTERS  are now AVAILABLE in trade paperback versions on amazon.com. 
Here are links for them.
http://www.amazon.com/Power-Partnerships-Beyond-Reengineering-Production/dp/0595481965/ref=sr_1_2?ie=UTF8&s=books&qid=1201240480&sr=8-2
http://www.amazon.com/Shape-Shifters-Continuous-Competitive-Advantage/dp/0595481957/ref=sr_1_1?ie=UTF8&s=books&qid=1201240528&sr=1-1
They were considered by many readers (and me) to be my best books ever (until this new one of course ;-).)   They represent a lot of value for less than $40...and if you buy them both, amazon offers free shipping.

MORTGAGING OF AMERICA--WHY ARE WE SURPRISED?
Why are we so "surprised" in retrospect about the sub-prime mortgage debacle?  Why are we amazed at  "interest only" home loans and loans that exceed the value of the property?  Didn't I just describe how our government has worked over the last few decades?   Think about it.  The USA has been spending beyond its income level for years, interrupted only by a brief interlude during Bill Clinton's administration for which he took credit--but which was the result of policies from the prior administration.  It takes a few years for government misadventures to hit the books--just like in companies.  Then Clinton and Greenspan let the dot-com bubble inflate, making things look better than they were.  Lax regulations and Wall Street's greedy oversight let the crooks from Enron, Worldcom, et. al. claim earnings when there were none.  The emperor truly had not clothes.  Once their manipulation was exposed, all those earnings were restated to losses.  Of course the taxes paid in the good days helped balance the books in the 1990's, and then the losses helped hurt the 2000's.

A DEBTOR NATION--DEEPLY IN DEBT
So what are we doing now?  Our bubble this time was housing.  It was created by encouraging lenders and borrowers to do exactly what we do as a country--live beyond our means.  We spend beyond our means as a country, because nobody (including George W. Bush, and too many in Congress) had the courage and good sense to say :"NO" and veto the spending.  Worse yet, 70% of our budget is in entitlements (Social Security and Medicare, etc.) in Defense (which Bill Clinton raped for his "peace dividend" and to balance his budgets) and in Interest on our national debt.  We too are "interest only" borrowers.  We sell our debt.  We sold it to Japan in the 1980's and early '90's and to China for the past decade or so.  We have sold our second mortgages, if you will, to Saudi Arabia for years.  We needed the money to run our government spending at way beyond our means--and to pay for oil (from the Saudis and others) to fuel our country.

WE ARE JUST "SUB-PRIME" BORROWERS AS A COUNTRY
How are we as a country much different from the irresponsible lenders and borrowers of the s.ubprime debacle?  We aren't.  We are now taking "second mortgages" via our leading financial institutions accepting the investment of huge sums of money from "sovereign-wealth funds—Singapore, Kuwait, South Korea, et. al.—just more foreign "mortgage bankers."  Our government's solution, in the short term, is fiscal stimulus--"print more money" and pass it out, hoping US consumers will spend it in continuing to live beyond their means.  To get more money, there are only two options.  Take if from those who have more (in taxes) and give it to those who have less (in tax relief rebates).   This is a Band-Aid™ on a big wound instead of the long term solution, lower gov't spending AND lower taxes to encourage investment, savings and spending.

THERE IS NO MAGICAL SOLUTION--PYRAMID SCHEME HUCKSTERS HAVE PROVEN THIS
Inflation reduces the purchasing power of currency.  It simply buys less, thus goods from places like China cost more to import.  US Exports benefit, but we have been a huge net importer for years, so that is a game we will also lose at playing.  Printing (creating) more dollars with no real value to back them will only serve to make the value of our money less.   When you create more money but it is backed by no more value, that's called "inflation," and the money is quickly devalued by outside interests.

ARE WE WILLING TO DO IT RIGHT (AND PUT PEOPLE IN CONTROL WHO UNDERSTAND HOW)?
What we need to worry about is if...or rather when...foreign "bankers" like China, no longer want or need our debt.  On the other hand, true tax relief on a large scale (with responsible spending) can, and does stimulate investment, especially if one the benefactors are business and those well-to-do citiuzens who will spend it to make more money.  That's a true stimulus and it does create growth in the US economy, which increases tax revenues the right way.  Doing this while containing government spending is the way back from a recession.  The good news:  Mitt Romney and John McCain (and Rudy Guiliani) understand this.  Hilllary, Barack and John Edwards do not.  There are your choices of which path to take--in life, in business and in voting.  Spend within your means and stimulate income producing growth to earn the additional money you want to spend or reinvest.  These laws are as immutable as the laws of nature.

A SELF-HELP PIECE THAT IS 6 YEARS OLD...BUT STILL USEFUL
"THE MORE THINGS CHANGE, THE MORE THEY STAY THE SAME"
The following paragraphs were pulled right out a an e-document I wrote in 2002, entitled Managing in Tough Times, and it is still for sale on amazon.com.  I left out a huge amount of the document, including that the circumstances surrounding the "tough times" then were almost diametrically opposite of now.  the dollar was very strong, 9/11 had just rocked the US to its roots, and oil was much cheaper.  A whole litany of other circumstances were different too, but the one common denominator was that tough times were ahead.  So why am I reusing it here?  Because it applies every bit as well now as then.

POLITICS ARE SO INTERESTING--THE CHOICES ARE BECOMING CLEARER
Perhaps one of the things that mystifies people about Mitt Romney's candidacy is that he contends Washington is broken, and that he's the guy to fix it.  He's probably right--although he may not be assigning a high enough "degree of difficulty" to the task--but he's done it before.  It is increasingly clear that the choice is likely to be either Mitt or McCain. (Now because I said that Rudy Guiliani may rise from the "near dead" to make it a 3-way race.)  But that is not as likely, now.

The point is that economic indicators are pointing to a recession, in spite of government stimulus programs (which may help, but will worsen the excessive spending issues in Washington.)  Romney stands tall (pun intended) as the best candidate to lead America in this situation.  John McCain is a strong, and perhaps more capable leader in foreign relations and defense matters, so you will have an interesting choice.  (Or you can choose the inspiring rookie or the "harridan and her husband" but be careful about that--either will be a disaster for America.)

SO WHAT SHOULD YOU DO?
Start by reading these excerpts from my 2002 paper.  If you are wondering how the same approaches can possibly apply in such different times and conditions, it's because the fundamentals are...well, ...fundamental.  Getting back to basics works more often than not.  Here's a "freebie" to get your thinking about what to do...

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EXCERPTS FROM MANAGING IN TOUGH TIMES, ©John L. Mariotti 2002
Managing in Tough Times could easily be the title of a paper on Managing in All Times.  Competition is increasing.  Change is increasing. Globalization is increasing.  Technological complexity is increasing.  Industries are consolidating.  The weak are failing and the strong are getting stronger.  What is a management to do in the face of such a turbulent and brutal environment?

The answer in a word-ATTACK!  Capitalize on change.  Preempt competition.  Grow through globalization (but wisely, and with purpose).  Use the speed and reach of technology to advantage.  Ally with the strong.  Crush the weak.  Act fast, decisively, with purpose and prudence.  Take the initiative.  Remember that the best way to predict the future is to create it.

Harsh words?  Damn right!  It is a jungle out there and only the fittest-the toughest-survive and prosper.  The first requisite element to surviving, growing and surviving is leadership-strong, decisive, but servant leadership.  Without this element, managing in tough times, or any times is an iffy proposition at best and a formula for failure at worst.

I heard a story on the popular NBC-TV show “The West Wing” and it struck me as a good theme to start this part.  The story goes like this:

A man was walking along the street and as he passed a construction zone, he fell in a deep hole, and with walls so steep, he could not get out.  He yelled for help.
The first passerby was a doctor, who asked if he was injured.  After answering that nothing was broken but he hurt all over, he saw a prescription float into the hole and the doctor was gone.
The next passerby was a minister.  The minister asked if the man was all right, and a prayer on a piece of paper came floating into the hole.
The third passerby was the man's best friend-and the man in the hole was jubilant-until the friend jumped into the hole with him.  The man asked his friend, “why did you do that”?  “Now we're both in the hole”.  The friend answered “yes, but I've been down here before and I know the way out”!

Many business people are struggling with a big slowdown after the longest economic recovery ever.  The tone in these people's voices is one of panic.  Like the man in the hole, they have never been down here before. I have!  And I know the way out!  And the next few sections will be about what to do while we are down here and “the way out”.

So, consumers stop spending as much-which ripples through the economy another time.  Lower demand equals lower sales, and higher costs as well-the result-much lower earnings and no relief in sight.

So here we are, “in the hole”.  What do we do to get out?  The answer is not simple, but many of the key elements of it are.  I'll list ten key elements of “what to do” here.

1.    Don't panic, you'll only make it worse.  Think about a sound plan before “just doing stuff”!  Flailing around wastes time, energy and money while demoralizing the organization.
2.    Don't “hack and slash”, blindly trying to prop up the next quarter, because these multi-faceted problems won't get fixed in a quarter or two.  Take your lumps now, and make things better next year.
3.    Do-study where you have added fat in the good times, and get rid of it.  Consolidate functions and jobs, and eliminate the “nice but not necessary” things.  Use the power of technology to streamline processes-but don't just cut people and expect fewer folks to do the same work-you'll make things worse!
4.    Do-understand where you make your profit and where you don't-and then get rid of the losers-that goes for products AND customers.  Consider the long-term competitive implications of these moves too. “What you sell, to whom, and how” is a critical decision.
5.    Do-know your costs; which are fixed and which are variable.  Then reduce the fixed costs to get your breakeven down where you can make money even in a down market.  Drive out complexity, which creates waste and hidden costs.
6.    Do-watch your cash flow and asset utilization.  Lack of profits will eventually kill you, but running out of cash will kill you right away!
7.    Evaluate people with the thought that fewer, better quality are better than more, lesser quality.  Cut fat, not muscle.  And don't get squeamish, because if you don't prune wisely now, your whole company could die of the excess burden!
8.    Get closer than ever to your customers (and to your suppliers and employees, too!), because they are essential to getting out of the hole.  Get inside the mind of your customer, and serve them superbly.  Communicate a lot, and don't lie-or even “sugar-coat” the truth-to your suppliers and employees.  They need to know how tough it is ... or might become.
9.    Do plan to attack the competition and take share from them while they are in denial, saying “woe is me, the market is down and that's why my sales are down”.  It's a great time to gain share without giving up profit margin to do it.
10.    Finally, above all remember the old saying, “united we stand, divided we fall”.  Pull together and eliminate any internal competition.  Focus on the outside competition and beating them-by serving the customers needs and wants better than ever.

See, that hole wasn't so deep after all.  It always looks deeper when you are down in it alone
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If your company or one in which you have invested is in this kind of a jam, remember that help is no further than a phone call or an email away.  I've been "in the hole" and I know some other talented people who have been there too.  We know how to get out of it.  I won't say it's easy, or even "simple," because it's neither.  But wouldn't it be nice to have someone down there with you who's been down there and knows the way out?

Yes, we do charge for "getting out of the hole" lessons--but compared to the financial impact of not getting out--it isn't all that much money. Call or email now, before the hole starts caving in on you.  Help can be on the way pretty fast.

Best, John

THE ENTERPRISE--TIMELY TOPICS

THE ENTERPRISE--TIMELY TOPICS

HOW DO YOU MAKE $80/BBL OIL INTO $100/BBL OIL?
Answer:  Have the US $ lose 25% of its value against major foreign currencies.

WHY ARE CERTAIN PEOPLE AFRAID OF A SECURE NATIONAL ID FOR VOTING, DRIVING, ETC.?
Answer: Because it would prevent fraudulent misrepresentation of who a person is, and what their motives might be.  The threat to privacy is a "bogeyman" issue of absolutely no merit.

CHINA--A FUTURE FULL OF GROWTH AND TURMOIL.
The Nov. 12 edition of FORTUNE magazine carried a story about an entrepreneur who learned the hard lesson about the true cost of sourcing in China.  It seems so simple, and is anything but simple.  As time goes on, there will be more people to help do it, but the pressures building within China will be the new challenges--growing inflation, labor shortages (qualified workers--there's plenty of people), quality problems, delivery problems and port delays, commodity supply and costs, energy shortages, banking and currency changes and intellectual property problems--just to name a few.  The old Latin phrase applies as never before: Caveat Emptor--"let the buyer beware."

YOU READ IT HERE A LONG TIME AGO
"Why Sears Needs Extreme Makeover" was the WSJ article's headline.  Conde' Nast's PORTFOLIO (new magazine) called it: "Sears-Kmart: Marriage from Hell."  Bottom line--Eddie Lampert may be a brilliant financier and a financial genius--but he's not a retailer.  Worse yet, he's apparently hard to work for, and runs off many of those he hired to "fix" this mess.  Maybe it's not fixable--or maybe everyone trying to fix it, including Lampert, is going about it wrong.  What Sears basically needs is to magically take the awful remnant of Kmart, and somehow turn that pumpkin into a gleaming coach.  It then needs to take that great hard goods retailer named Sears and either get "some fashion sense" or get the hell out of fashion and just sell good quality underwear and socks like they used to.  And Martha Stewart is not the "fashion sense."  In case you haven't looked, Martha has largely defected to Macy's upscale stores.

Sears Holdings needs to have a big "fire sale" and sell the real estate under most of the Kmart stores. The few good ones can be updated into free standing Sears locations, the downscale ones will  make dandy "Dollar Stores" which is almost what Kmart has become accidentally.  The others can be turned into spendable cash instead of cash drains.  Can the chain make it then?  Probably not, but it will extend the life by 3-5 years and give it time for the world to change still more.  Ultimately, Sears will struggle to do what Penney's has done--which is become relevant in the 21st century.  Most likely it will do what Wards did--and just go away.

SUPER TUESDAY IS JUST AROUND THE CORNER--WHO WILL EMERGE?
Today Mitt Romney wrapped up a nearly uncontested Nevada  Caucus win, as did Hillary Clinton.  John McCain eked out a win in SC over Mike Huckabee, and as one pundit put it, "if Huckabee can't win there, where can he win?"  The Presidential primaries are starting to remind me of the recent football season's BCS Bowl Championship competition's last few weeks.  It seems that McCain has risen from the ashes, and is now, arguable the co-front runner--or something.  He is also considered the best choice to beat either of the Democratic front runners. The last polls tabulated on http://www.RealClearPolitics.com  showed McCain up by 4 points on Clinton and 1 point on Obama (both within the polls'  margin of error of course).  No other GOP candidate was within 5 points of Clinton or Obama.

Last week I "stimulated" some of my more conservative readers by reprinting articles that praised John McCain.  I have said for a long time, that IF he could be elected, I thought Mitt Romney is the best all-around qualified presidential candidate.  McCain comes in second in my list because of all the things said about him last week.  We may not like where he stands all the time, but we know, and he will stand strong and firm there... to the end.  Mitt is, well, smart, well qualified, a person of character, and (I think) a man of high moral fiber.   (Not that morality is a top of the list issue in America--if it was Hillary would be claiming a different kind of experience than she is touting.)

The others are struggling.  Rudy Guiliani MUST win the FL primary or he's damaged goods, as he's chosen to "pass" on all the earliest primaries/caucuses.  Fred Thompson's loss in SC is probably the end for him too.  John Edwards WILL stick around to the end, in hopes that he can be a "king/queen-maker" and  trade his delegates at the convention for an influential spot in the nominee's administration if he or she is elected.  Ron Paul--who knows what he thinks he's doing.   Michael Bloomberg--I sure hope he stays out of it.

Just so I don't have to rely solely on my own take on these things, posted below is another columnist on leadership and executive experience in the upcoming election.  And yes, to those readers who want more business content--this IS business content, as the outcome of these elections will dictate the environment in which business operates for nearly a decade!

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FROM DAVID BRODER IN THE WASHINGTON POST
The Resume' Gap
A Democratic Field Without an Executive
(my emphasis added)
By David S. Broder
Thursday, January 17, 2008; A23

It was fascinating to watch the three top contenders for the Democratic nomination discuss their concept of the presidency during Tuesday night's MSNBC debate in Las Vegas. But it was also stunning to realize that the three current and former senators who have survived the shakeout process -- Hillary Clinton, Barack Obama and John Edwards -- have not a day of chief executive experience among them.

By contrast, the Republican field is loaded with people who are accustomed to being in charge of large organizations. Mitt Romney and Mike Huckabee were governors of their states of Massachusetts and Arkansas, Rudy Giuliani served as the mayor of New York, and John McCain, as he likes to remind audiences, commanded the largest squadron in the Navy air wing.

In the past, voters have preferred to entrust the White House to those with executive credentials. John Kennedy was the last sitting senator to be elevated to the presidency. Since then, the former governors of Georgia, California, Arkansas and Texas have dominated the list of successful candidates. All of them stumbled during their tenures in the White House, and only Ronald Reagan left the presidency with his place in the history books seemingly securely enhanced. But the public remains convinced that the Oval Office is a place for executive talents -- which makes the current Democratic field something of an anomaly.

Romney's comeback victory in Michigan on Tuesday reflects that bias. He began to regain his footing after Iowa, when he subordinated his ideological claim to being the conservative champion in favor of portraying himself as a tough-minded executive who could reform both laggard private businesses and swollen, ineffective government bureaucracies.

He drew a useful contrast to "broken" Washington, the home base of Sen. McCain and two of his three Democratic colleagues -- Obama and Clinton. Edwards is a former senator. Huckabee had made a similar case for himself, citing his decade of leadership in Arkansas. And Giuliani had asserted a record of accomplishment in rescuing New York from fiscal crisis and reducing the city's crime and welfare rates.

All of this places an unusually heavy burden on the three Democrats to show they can do more than talk a good game of leadership -- and actually lead.  What emerged in the discussion that Brian Williams and Tim Russert encouraged in Las Vegas were three very different concepts of presidential roles.
--Obama, who answered first, said it involved much more than managing the office and seeing that "the paperwork is being shuffled effectively." He said it centers on setting national goals, recruiting people of different perspectives and then mobilizing public support behind their policies. He acknowledged a degree of disorganization in his personal and business life and said he needs help "keeping track" of things.
--Edwards, as is his habit, described himself as a battler -- ready to fight passionately for his causes -- and acknowledged that emotion sometimes clouds his judgment.
--Clinton called herself a change agent, with 35 years of experience, but emphasized that the presidency involves managing the bureaucracy and insisting on accountability -- not just setting goals. A perfectionist, she acknowledged that an impatience for results is at times a problem for her.

The discussion provided more clues to the differences among the three Democrats than voters had previously been given. In concept, Clinton's definition of the office is more complete than either of the others', probably reflecting her own close-up view of the presidency during the eight years she lived in the White House.

But the very failings she and Obama acknowledged earlier in the debate, when apologizing for words and actions by their supporters that had inflamed racial tensions in the campaign, showed the difference between discussing leadership and practicing it.  The burden of proof of readiness to be president is heaviest on those who have never borne executive responsibility. And that is something voters will have to weigh, whichever of the Democrats is the nominee.

[email protected]
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IF as some are predicting, we get a Congress in which both houses are controlled by Democrats, and we get a Democratic president, our country is in for a period of prolonged pain for business and its economic health.  The health care problems we face now will pale in comparison to the foreign relations havoc that a poorly prepared, and totally inexperienced chief executive will wreak.

A few excerpts from Stratfor's recently published "Net Assessment" of the US might interest you.
(http://www.stratfor.com)
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    First, the United States controls all of the oceans in the world. No nation in human history has controlled the oceans so absolutely. That means the United States has the potential to control, if it wishes, the flow of goods through the world’s oceans — which is the majority of international trade. Since World War II, the United States has used this power selectively. In general, it has used its extraordinary naval superiority to guarantee free navigation, because international trade has been one of the foundations of American prosperity. But it has occasionally used its power as a tool to shape foreign affairs or to punish antagonistic powers. Control of the oceans also means that the United States can invade other countries, and that — unless Canada or Mexico became much more powerful than they are now — other countries cannot invade the United States.

    Second, no economy in the world is as large as the American economy. In 2006, the gross domestic product (GDP) of the United States was about $13.2 trillion. That is 27.5 percent of all goods and services produced in the world for that year, and it is larger than the combined GDPs of the next four countries — Japan, Germany, China and the United Kingdom. In spite of de-industrialization, industrial production in the United States was $2.1 trillion, equal to Japan’s, China’s and Germany’s industrial production combined. You can argue with the numbers, and weight them any number of ways, but the fact is that the United States is economically huge, staggeringly so. Everything from trade deficits to subprime mortgage crises must be weighed against the sheer size of the American economy and the fact that it is and has been expanding.

    The United States has two simple strategic goals. The first is to protect itself physically from attack to ensure its economy continues to flourish. Attacks against the United States are unpleasant, but invasion by a foreign power is catastrophic. Therefore the second goal is to maintain control of the seas. So long as the oceans are controlled by the U.S. Navy — and barring nuclear attack — the physical protection of the United States is assured. Therefore the United States has two interests. The first is preventing other nations from challenging American naval hegemony. The second is preventing other nations from acquiring nuclear weapons, and intimidating those who already have them. ...
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Stratfor's closing statement sums it up.
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    The United States is, in fact, more powerful than it appears, more important to the international system than many appreciate and, if not clever, certainly not as stupid as some would think. It is not as powerful as some fantasize. Iraq has proved that. It is not nearly as weak as some would believe. Iraq has proved that as well.

The United States is a powerful, complex and in many ways tortured society. But it is the only global power — and, as such, it is the nation all others must reckon with.
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The USA is also remarkably resilient so it will muddle through, just as it has muddled through some of George Bush's more incredible blunders.  At least he has been constant (and right) in his belief and position about defending our country and its freedom.  It was just how he went about it that was poorly done.

I hope you will give serious thought as to which candidates, and in fact which party's policies you believe are right for American.  Forget Bush and the past 8 years in that regard.

The future starts when a new government is sworn in.    Howwell  have things gone (and how differently) since the last elections, when the Democrats took over both houses of Congress?  What will change if we get (another) President Clinton (it gags me to even type that--I'd rather have Bill back for a 3rd term than her in office) or a President Obama?  Obama is now being criticized within his party for a favorable reference he made to Ronald Reagan's performance as President.  I guess you tell the truth at your own risk in this party's campaign.

Your life, your job, your business and the future of your family depends on this momentous choice.  Give it a lot of thought and be sure to be informed about your choices --and exercise your right to vote when that time comes.

Best, John

THE ENTERPRISE-SURVIVE & PROSPER

THE ENTERPRISE-SURVIVE & PROSPER

FINALLY, SOMETHING BUSH & CONGRESS CAN AGREE ON
From the NYTimes: Bush and Congress Seen Pushing for Stimulus Plan
Concern about a possible recession is bringing the president and lawmakers closer to agreeing that an economic stimulus package is needed soon, officials said.  Of course agreeing on what to do and how--that will be a different story!

PRIMARIES--A SORTING OUT PROCESS
It now appears that the Democrats have a 2-person race.  Do you prefer a somewhat younger person of good character and charisma--but who is very light on experience, and whose policies, such as they are...are suspiciously naive (Obama).  Or do you prefer the prototypical politician, who will say whatever she has to, and do whatever she has to, to get elected.  She is so emotionally committed, she was almost reduced to tears by the thought of losing ... and denying America her leadership (Clinton).  The problem with her is two-fold.  She have been proven to be untrustworthy and her veracity has been suspect--or worse AND, if you think her "experience" is as extensive as she claims, then you won't mind having your surgeon's spouse operate on you next time you need surgery.

THE GOP---STILL MUDDLED
Mitt Romney soldiers on, his intellect and grasp of matters shining strong, dimmed only by the multiple barbs he takes for his shifting positions in the past.  Rudy Guiliani waits patiently for the races he can win or at least compete well in.  Mike Huckabee continues to be the best preacher in the race, if not the best candidate.  Fred Thompson finally showed a little fire in attaching Huckabee, because he knows SC is his "last stand."  Is Michigan nearly Romney's last stand?  Perhaps.

JOHN MCCAIN--A RETROSPECTIVE OF THE MAN
Then there is John McCain, who has regained my respect and support by his constancy of purpose and the strength of his character.  I supported him against George W. 8 years ago, to no avail.  Tonight, I'll cite others words about McCain to describe the man.

   

Dorothy Rabinowitz of the Wall Street Journal said, ..."his name is attached to terms like "the old warrior" or simply "old soldier."  There's indeed something suitable in the word as regards McCain, but it is nothing to do with his age.    That ingrained pride of his that forbids pandering for political gain—that would be shamed by lying about his deeply held views—is what is old about him.  Old in the sense that honor of this kind is sufficiently rare, now, that's its a subject of wonderment to people when they find it in someone, as they have in John McCain."
    In its Dec. 8 issue, THE ECONOMIST said it differently.  "...  Mr. McCain is such a  familiar figure that it is easy to forget how remarkable he is. He fought heroically in Vietnam, spending more than five years as a prisoner of war, when many politicians of his generation discovered, like Dick Cheney, that they had "other priorities."  He has repeatedly risked his political career by backing unpopular causes.
    Mr.Mc Cain's qualifications extend beyond character.   Take experience.  His range of interests as a senator has been remarkable, extending from immigration to business regulation.  He knows as much about foreign affairs and military issues as anybody in public life.  Or take judgement.  True, he has a reputation as a hothead.  But he's a hothead who cools down.  He does not nurse grudges or agonise about vast conspiracies like some of this colleagues in the Senate.  He has also been right about some big issues.  He was  the first senor Republican to criticise George Bush for invading Iraq with too few troops, and the first to call for Donald Rumsfeld's sacking.  He is one of the few Republicans to propose sensible policies on immigration and global warming.
    Mr. McCain's qualities are particularly striking if you contrast them with his leading rivals.  His willingness to stick to his guns on divisive subject such as immigration a stand in sharp contract to R. Romney's oily pandering. ....  There are signs that Republicans are swallowing their doubts about Mr. McCain.   ... Mr. McCain is surely worth another look."

(That was written a month before the Iowa and New Hampshire primaries.) 
My first test of a leader, whether of a company or a country is does he/she have three C's:  courage, character and competence.  John McCain passes with flying colors on all three. 
Which of the other candidates pass this test?

I never thought I'd be quoting Larry Lindsey (formerly one of Bush's economic advisors), but he said a few things I heartily agree with in the WSJ 10 days ago. 

In a column entitled "What We Want in a President" he said,

"I have become a firm believer that the character traits someone brings to the job are more important than the issue papers or debate sound bites that get so much attention in the primaries."

Lindsay went on to cite three questions that the next President should answer (affirmatively):

1--Has the candidate faced a crisis or overcome a major setback in his or her life?
2--Has the candidate had a variety of life experiences?  The presidency is a job for a generalist.
3--Can the candidate tell the difference between a foreign enemy and a political opponent?

Finally he said, and again, I concur,

"We should seek an individual who is ruthless about protecting us against others, but acts with charity toward all and malice toward none at home: a tall order."

As we face a challenging 2008, we must think about such points while choosing our next leader.

SURVIVE AND PROSPER?  HERE'S TEN STEPS!
This is the most common question I hear:  How will we (me, my company, my employer, I, etc.) survive and prosper in the slow economy ahead in 2008 (and beyond?).  I wrote this as part of the PR materials for my book, THE COMPLEXITY CRISIS, but decided to share it with my readers here.  If you like the logic in these ten steps, you'll love the book.  It's hard to lay out a complete action plan in a page or two, but there is enough here to merge with your knowledge of your business situation that you can start taking action.  Hopefully, you already have started.

First, in any downturn, you must economize-cut spending on all but the most essential needs.  There's no room for waffling on this point.  If you don't absolutely need it, cut it and save that money-you'll need it as things get tougher.  Cut small unnecessary expenses as well as big ones—the little ones add up too.

Second, identify your best, most profitable customers and products (and who else buys those products).  Sort annual sales and profit in descending annual dollar order (add a cumulative percent of total column too.)  Call on those valuable customers (in person if possible).  Ask how you can work more closely with them (and do more business).  They're worried about surviving and prospering too.

Third, find who else buys your most profitable products (that you didn't already call on) and contact them.   Ask how you might be able to "help them" (and do more business with them).  Are there ways to sell them more of your best, most profitable products?  How?

Fourth, go to the bottom of your lists and cut wasteful complexity.  Those products and customers cost you more to keep than to lose.  If there are a few customers (and products) you'll save (because they have great potential)—sell hard to increase their volume.  The rest of them (customers and products)—drop outright, or raise prices—a lot (20-50%).  That big increase will encourage the customers to leave, and the products (and customers) you keep will be profitable.  Also, raise minimum order sizes (double, at least) and change freight terms too.  Or add a hefty “shipping and handling charge” on small orders-or both.

Fifth, it's time to ask your valued suppliers for help.  They are facing a downturn too.  You are their “agent.”  If you lose business, they will too (unless they sell to your competitors).  Ask them how much they can reduce your prices, and how you can work together to reduce their costs.   Together, you need to hang onto business.

Sixth, you'll need to cut staffing--after you have cut the low volume customers and products,.  Your goal should be to cut the poor performing customers and products by 25-30%, which will only reduce sales by 3-5%, but it will cut your organization's workload a lot—in customer order entry/service, in fulfillment/distribution, in accounting/collections, etc. 

Now it's time for the tough step—cutting the weakest people—or, if they are "all good," and you want to keep the organization intact,  cut the working hours they get paid for.  Some employees might willingly go from full-time to part-time.  Be careful to obey Wage & Hour Laws and consider how hours worked impacts benefits like health care insurance and vacation/holiday pay.  Most organizations get “fat” in good times; so first look for fat to trim. Analyze recently created positions, and recently hired people, doing things that are not critical to survival.  .

Seventh, cut facilities.   If you can consolidate to fewer locations, that will save a lot.  You will cut some jobs, and also cut overhead costs for buildings, utilities, insurance, taxes, etc.  Cutting locations reduces many hidden costs like tax returns, audit fees, travel, telephone, maintenance, etc.  This is a rich place to reduce overhead costs during a downturn.  Go after it.

Eighth, consult your trusted advisors-whoever they are (consultants, board members, colleagues, etc.) and then estimate how long you'll have to endure.  If the downturn is expected to be long (a year?), then you may have to go back and do this all over again as things get even tighter.  Learn about things like variable contribution pricing, break-even points, and marginal return on sales. 

Watch your inventory too.   It can become like a millstone if you load up on the wrong stuff, and use up your precious cash.  Collect the money owed you diligently.  Be polite, but unyielding and firm-they bought the products, you delivered, and now they owe you the money-on a timely basis.

Ninth, (perhaps first) manage your cash position and status with lenders very carefully.  If you don't use one normally, start doing a forward (weekly) cash flow projection-look 13 weeks out for a start).  This will help you calculate how your cash flow varies since expenses and revenue don't flow evenly.  If you run out of cash and can't pay your bills that's the beginning of the end.  The same goes if you violate covenants in your loans. you might be out of business.  Finding new lenders is much harder during a downturn, especially one driven by bad credit decisions.  Test your “staying power” too.  Choose a very low level of revenue and calculate how much reserve you need to keep the company running and the critical people employed.

Tenth, don't panic-“lead.”   The people are looking for leadership-especially in a downturn.  Keep a “steady hand” steering the business-and communicate often.   This is tough duty, but each step is critical.  Be as positive as you can.  You have to keep serving your customers and delivering your products to keep revenue coming.  The support of your vendors and lenders is also critical.  Last, but perhaps first, you'll need the support and understanding of your employees.  Keep them fully informed about how tough the going might get.  Don't “sugar coat” the news.  People are remarkably able to handle bad news, if they feel they are getting an honest story.  Make them your partners.

Last, think about how you'll rebuild the business to take advantage of the upturn when it comes.  Make a plan for that too. After all, that's the purpose of this entire exercise-survive so you can prosper later.   And keep the faith-all downturns end-the only question is if you'll take the steps needed to be the winner when things turn back up. Good luck-now get to work!

I hope these ten steps will help you or your clients, or companies in which you have invested.  I don't think a recession is coming, but it is clear that we are in for a slow, difficult year in 2008, and maybe beyond.  The losers will wail and wring their hands.  The winners will be those that do the right things and survive...and then prosper.

Best, John

THE ENTERPRISE--POLITICS AND PREDICTIONS

THE ENTERPRISE--POLITICS AND PREDICTIONS

I WROTE THIS PART THURSDAY NIGHT AFTER THE IOWA CAUCUSES:

AMERICA'S FUTURE
I spent part of this afternoon editing the "position paper" outline that came out of the 11th Reunion Conference we held in Sept., whose theme was Finding America's Future.  The general tone of the conference was that we are facing an unprecedented array of problems and our government and its leaders are not doing well in most respects.  I guess we were fairly typical of most Americans, given the latest approval (or should I say "Dis-approval" ratings) for Congress and the President.  As colleagues who attended the conference helped pull together the notes and issues, the breadth and depth of them became strikingly apparent.  No wonder our polarized political leaders struggle with them.

Anyway, we agreed to press on.  One of our group is currently finishing a book detailing America's issues and making a call for action.  Another, who helped pull together the notes I was editing is politically more to the left than I am, but she and I agreed that we'd try to set that aside and compile a "balanced" platform (no, neither of us is running for anything).  Our purpose was to give the attendees of the conference a set of issues and some general consensus positions to share with their elected leaders, as a by-product of our 2-1/2 days of discussion.  Thus I will continue my editing, and then give her another shot at editing my output.

My reason for telling you this is that it is easy to lose hope when staring at the range and enormity of the issues our nation faces.  Then we must listen to a dozen or more Presidential hopefuls, taking a stab at these issues, but limited by a voracious media to what they can convey in 10 second to 1 minute sound bits.  Impossible.  But thus it is.

THIS WEEK I GO TO BED WITH HOPE AGAIN
The Iowa Caucuses just wrapped up on Thursday evening.  I'm sure everyone has heard the outcomes ad infinitum by now.  That is not the point.  The point is that a system in Iowa, a mid-western state with relatively conservative values is an odd one.  I might say the name "Caucuses" could be spelled "Circuses" by mistake.   Then Democracy in America did a funny thing.  It reared its majestic head, and selected a pair of "winners" that were, in some corners, surprises.    Mike Huckabee and Barack Obama have been campaigning with mixed success for months.

YOU MUST LISTEN TO THEIR SPEECHES IF YOU HAVEN'T
All of the top finishers' speeches are posted on this site, at least as of Thursday night:  http://campaignnetwork.org/
I heard two men tonight speaking in a way that inspired great hope in my heart.  I don't know if either will be their party's candidate for President.  Nor do I know how "qualified" each of them are to be President.  Tonight I didn't care so much about that.  I cared about the message each of them conveyed.  It was not a partisan message.  Sure Obama raised a number of things that he'd attempt to do that I disagreed with.   I'm sure Huckabee would also raise concerns because his appeal was less artfully crafted than Obama's and lacked some of the "campaign rhetoric/details."

HOPE AND CHANGE
Both of them fanned the embers of hope in my heart that here were two men, two candidates from the opposing political parties that talked tonight about America.  The speeches were, in some regards eerily similar, in that neither put much importance in "red states and blue states," and both put a lot of importance on the UNITED States.  Both signalled a desire to make up for their apparent "lack of Presidential experience" with a desire to CHANGE the way America Works.  And GOD knows it needs to change.

MAKING SENSE COUNTS
Perhaps these honest, hardworking Americans in Iowa gave the largest share of their "caucus votes" to these two guys because they simply "made sense."    They spoke "to" the people, not "at" the people.  New Hampshire's primary is only 5 days away, and that is an entirely different slice of American people.  Who knows how they will vote?  I sure don't.  But I do know one thing.  I realized tonight that a leader is about more than experience in specifics of what to do than how. (Both Obama and Huckabee are heavy on the "what I'd do" and light on the "how I'd do it."  A leader is about getting those he is leading to believe a workable solution can be found--and that is the first step toward finding one.

I'll be curious if their message of hope and change resonates with American voters in New Hampshire next week, and in South Carolina the week after than, and then Florida and Michigan and the rest of the USA.  At least for me, I'm going to sleep tonight with new hope that perhaps something is emerging from this agonizing process of finding a President--and that something, to paraphrase both of their words--is an America that will once again become what we all hope and want it to be.

NOW IT IS SATURDAY NIGHT
I just sat through 4 hours of debates between both Republican candidates and Democratic candidates.  While my observations are different, my conclusions are not that much different.  I thought this was the closest to a productive "debate" that was televised.  Once again, the liberal bias of (in this case ABC) showed (to me anyway).  I thought overall Charles Gibson did a fine job.  The bias was in the nature or the questions asked and the phrasing of them.  The GOP questions were very effective at exacerbating the differences of the candidates, and that was useful.  The Democrat's opening few questions were "softballs" that allowed them to make campaign speeches against whoever the GOP runs.  it was so transparent that they had to work at finding points of difference to distinguish themselves vs. the others in the NH primary this coming Tuesday.

AMERICA IS IN THE MOOD FOR CHANGE
I've now had a chance to read all the criticism of Mike Huckabee's moralistic, religion-based, good old boy appeal--and his assumed lack of background knowledge on many key issues, notably foreign policy.  (He toned down a few phrases from his speech already tonight.)   Many believe that IF the Republicans do nominate Huckabee, the election is over, because he can't win.  First, I'm not sure he'll be the nominee.  Second, I'm not so sure that only he and one other candidate CAN win for the GOP.  How's that for a definitive statement this early.  What the heck, I can only be wrong, and it won't be the first time (or the last)!

PREDICTIONS--RIGHT OR WRONG

OBAMA IN NH
I'll go out on a limb here.  I think Obama will beat Edwards and Clinton in NH.  I don't think he knows any more about foreign policy or about "running something" than he ever did.  (He and Huckabee are tied for so little foreign policy knowledge.)  I just think America wants a change and while John Edwards did very well tonight--I think Obama represents that change in the Democratic party.  (How the role of independents and where they vote plays into NH voting is an unknown wild-card.)  Obama is just not qualified to lead the world's largest and most complex country from an experiential basis.  His policies could set the country back decades.  None-the-less, the leader, above all else, must inspire those that he leads.  And he must surround himself with the best and the brightest talent--and not all those who have a similar mindest (Bush's error).

MCCAIN IN NH
I think John McCain will win NH, and this will be a devastating blow to Mitt Romney.   While I still think Mitt is superbly qualified, I think he is wounded, and fading.  America is apparently just not ready for a "CEO President."  The only two Republicans who I think have a chance to win are McCain and Huckabee.  Given the differences in their age and positioning, it's possible that a McCain-Huckabee ticket might have a good chance against any Democratic ticket.  I've said all along that McCain is too old, and the Presidency is an incredibly wearing job.  He is also an American hero, and his ideas that were too moderate for  many tried and true conservative Republicans might be looking better real fast now(compared to Huckabee).  McCain needs a "President in waiting" in case his age or health becomes a problem.    Why not Huckabee?

WHAT DOES THIS MEAN?
Guiliani is still in it--strong in big states in the east and west--but you can sense that he, too is on the bubble.   Romney is fading--he's proud, proper, principled, and smart, but just not getting there..  (Tonight's GOP debate was marred/disrupted by Ron Paul's "out of left field" positions--he needs to get out of the way--but won't.)  Fred Thompson was measured and wise enough tonight--but it's too little, too late for him.  At best, he becomes a fall-back candidate if there is a grid-locked GOP convention (which could happen).

"HOPE SPRINGS ETERNAL"
So here I am back where I was Thursday night.  The mood of the country is fed up with "government as usual."  It is ripe for change.  The change may be as much wrong/bad as it is right/good, but such it is in our Democratic processes.  Most of all, with change, comes hope.  We'll see how I feel over the next few weeks leading up to Super Tuesday.  But I am still "hopeful."  Somehow our mixed up, messed up, divided, polarized country seems to muddle through--and the group of people still hanging in there may yet yield a leader to enable that hope to be realized.   I sure "hope" so!

Best, John