THE ENTERPRISE--PRIORITIES: CONQUER COMPLEXITY & THEN INNOVATE
PRIORITIES--KEY TO CONQUERING COMPLEXITY & FOCUSING ON THE FUTURE
The hardest job of most leaders and many managers is setting priorities and sticking with them. Critics of the Bush administration ignore that he's made protecting the US aggressively from Islamic terrorists his number one priority--and done it. But what's up with our Congressional leadership these days? They are spending untold hours on the issue of who used steroids among pro baseball players, as if that is a national security issue. As oil passes the $100/bbl. mark, they might be better off figuring out how to make the US more energy independent (and it is not corn based ethanol; the Iowa caucuses are over for another 4 years now, so get off that kick.)
Nuclear power simply MUST move up the priority list. (oh my, is everyone afraid--try inhaling smoke and particulates from a coal fired plant!) Drilling in ANWR, drilling offshore, using oil sands/shale, finding specialty regional solutions like windmill farms (Teddy Kennedy already killed this one in MA--spoils his view.), tidal power ("free, but limited), hydroelectric, the new solar systems using mirrors, etc. etc. If this country were serious about finding new sources of energy, it could dramatically reduce dependence on OPEC, Chavez, and the latest African dictator du jour. But we'd rather "witch hunt" in the Bush White House for someone to indict, and question baseball stars about their drug habits. There is something wrong with the US' priorities--that's for sure.
A FEW THINGS YOU MIGHT WANT TO KNOW ABOUT ASIA
There are 210 million Internet users in China., up 50% from last year, and continuing to grow fast. The costs of typical products imported from China rose 14-15% last year due to the government decision to stop rebating VAT (Value Added Taxes) the appreciation of the Chinese Yuan vs. the US$, the increased cost of labor--due to a shortage of skilled labor in the more advanced manufacturing areas of China--and increased costs of "regulation--China style" --to deal with pollution and energy shortages. Sounds like a developing economy's typical problems, right? It's also a source of US inflation.
Work is moving inland from coastal areas. 1000 shoe factories closed last year in the Pearl River delta area--and that was only 10% of the ones located there. The mass exodus of factory work is moving inland where labor is more plentiful and cheaper but far less skilled. Look for continued problems with quality, delivery, and shabby workmanship. China is also imposing new price controls on some items, notably food. You know what price controls do? Create shortages. DUH? Vietnam is growing into the next place for production to run. Its inflation rate last week was reported at 14.1%, and its economy is booming, with growth at 8.5% for last year.
Heparin, one of the most widely used blood thinners in the world is being recalled due to deaths from unknown contamination. What is it made from? Pig intestines? Where? In squalid workshops in China of course. What are the sanitation and quality conditions? Deplorable. One of the factory owners admitted that the inspections on the part of his factory where he makes sausage are far more frequent and stringent than on the part where he makes the raw material that become heparin. Watch out for it.
SEARS HOLDINGS EXECUTIVES EITHER FIRED OR ABANDONING SHIP (RETIRING?)
Eddie Lampert dumped his 3 yr. Pres. of Sears, Aylwin Lewis. He's restructuring SEARS into multiple business units. This is a good trick to practice "victory by definition." He can reallocate expenses and declare some of the brands as doing well and try to make them appear very valuable (to sell), while others are losing money like crazy. Clever guy. His VP for Craftsman retired last week; his VP for Kenmore appliances is "retiring" this week. His HR and Customer Service VPs also left last week. There are always way to "rearrange the deck chairs," but this ship is sinking fast and the management is bailing out. Watch your credit exposure.
THE MESS IN WASHINGTON--A REPORT FROM CONGRESSMAN PAT TIBERI (OH)--SCARY
I've heard the frustration in my Congressman's voice, as every important issue that he raises, gets killed by the Democratic "do-nothing" House leadership. Here's the latest report from my Congressman in DC: [DISCLOSURE: I intend to vote for him again...and as long as he keeps running.]
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The lack of progress on passing a terrorist surveillance bill that would reauthorize an important tool our intelligence community uses to track terrorists who want to harm Americans. This program expired about two weeks ago, forcing members of our intelligence community to “lawyer up” before being allowed to monitor phone calls between suspected terrorists in foreign countries. The Senate passed a good, bipartisan bill to reauthorize this program, but the Democratic Majority has refused to consider the Senate bill. A good summary of what has happened in the past few weeks regarding this bill is summed up in <http://tiberi.houseenews.net/mail/util.cfm?mailaction=clickthru&gpiv=1999910560.47277.445&gen=1&mailing_linkid=4061>this featured video. We need to pass a new terrorist surveillance bill quickly to remove the intelligence barriers to help prevent future attacks. [NOTE: Video is at http://www.gop.gov/web/guest/home]
We received some sobering reports this week on the state of our economy. Growth has slowed and home foreclosures continue to threaten families. All the while energy prices are on the rise again.
A bill was introduced this week to reform Medicare since for the second year in a row Medicare spending has hit certain levels. Several years ago, Republicans passed legislation requiring a mandatory response from the Administration to try and reign in excess spending if Medicare spending reached a certain level for two years in a row. This trigger could open the door to crucial conversations about how to make sure our children will still be able to receive benefits.
All of these issues are critical, “kitchen table” topics concerning every person’s safety and well-being. “Is my family safe?” “Will we be able to pay our bills?” “Will my parents be able to get the health care they need?” They are things I hear about again and again from constituents and I know they concern families across Central Ohio.
Democratic Leadership? [MY NOTE: What leadership?]
Given the few very important issues listed above, here’s a brief look at the weeks accomplishments in the House under Democratic Leadership.
We passed five bills naming post offices, roads, or other federal buildings.
We passed seven non-controversial bills, including measures involving the use of the Capitol for inauguration ceremonies.
We passed another “No Energy” Energy bill. The Democrats’ bill does not do anything to reduce fuel costs or increase domestic oil production. In fact this bill would likely cause massive tax hikes, in the range of $18 billion. This is the fourth time we’ve considered bills like this, and every time the bill hasn’t passed the Senate.
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All I can say is "keep on, Pat, we need more people like you in Congress."
Meanwhile, the Democrats blame President Bush for being wrong, ineffective, misguided. It is becoming more and more clear the mistake the American people made in the last election putting these misguided people (that's the nice way to say it--I wanted to write "idiots") in office. Worst of all, the mainstream media has sufficiently misled, lied and deluded its gullible American viewers, listeners and readers into thinking this is the way the country should be led.
ONE POINT I AGREE WITH OBAMA ON--WE NEED CHANGE--OF WHO'S LEADING CONGRESS
What we need is change in who controls Congress--the House and Senate--and with the abominable leaders currently in place--Pelosi and Reid. Overall, the public opinion polls show in what low regard they are held...but unfortunately, the upcoming elections will likely keep Democrats in control of Congress--unless something radical happens to wake up the American people. What an awful dilemma we face. Get out there and help people to understand why/how to vote them out.
RECESSION OR NOT--IT DOESN'T MATTER
Whether we are technically in a recession is less important than what is going on and how "slow things are." Inflation is rising, and will be a problem soon. Consumers are hunkered down--and wisely so. Housing is still in the doldrums, overhung with way too much inventory. The jobs outlook has been OK, but it will follow the trends and slow down, further worrying consumers and investors. Wall Street is spooked, and the market is down, making everyone feel "poorer." The dollar is weak (of course, we are spending beyond our means--and if we get Democrats in the White House, and controlling Congress it will get much worse before it gets any better) and lower interest rates to stimulate the slow economy will likely drive it down further--a problem of great proportions.
DON'T PANIC--THE BASICS STILL APPLY
What to do? "Keep your powder dry." Conserve cash. Contain spending. Cultivate customers. Most of all, there are two proactive approaches: Simplify, focus and drive out wasteful complexity, which saves you money without sacrificing anything but "losers" among products, customers, facilities, activities, etc. Then use the organizational time and effort that is freed up to innovate. The only path to true growth is innovation. Find new ways, new solutions, new products, new opportunities--and then exploit them with a vengeance.
I will be spending all my time over this year helping clients learn how to do exactly these two things: save money by simplifying and focusing their businesses, and then innovate. Contact me if help is needed. You'll read lots more on these themes in future edition--and if I sound like a "broken record" about them--FINE--that's what is needed. Single minded, relentless pursuit of the right priorities is the path to success. Try it, you'll like it.
Best, John
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