THE ENTERPRISE
DON'T WORRY, BE HAPPY
A couple of decades ago a musician named Bobby McFerrin had a hit song by that title. It was a happy sounding song, and in spite of whatever was going on, when you heard it, some part of you decided to stop worrying and be happier. Why don't you? Stop. Sit down and write a list of all the things you will change by worrying about them. See that blank page? Right. All you can do, is all you can do. Do something positive about the things that are making you worry. Don't just sit there and worry.
Worried about the economy? You can't do much about that one unless you are in some VERY influential spot in government or are obscenely rich--like Warren Buffett or Bill Gates kind of rich. Not you? Right. Worried about your business? That one is something workable. Find the best products you have and the best customers you sell. Ask yourself WHY do these products sell so well, and WHY do these customers buy from us instead of the competitors. Instead of worrying, find the answers to those two WHY questions. Once you do, get out there and sell more of those products; take incredible care of those customers. And while you are at it, ask them "what else can we do for you?"
If GM had followed that advice over the past few decades, things might be different now. What happened was GM started to sell what GM wanted to sell instead of what auto buyers wanted to buy. Then they resorted to trickery--trying to disguise flawed cars as good ones, or identical cars as different ones. Customers are really pretty smart. They see through those schemes. Worst of all, GM had leadership that was so worried about the "scoreboard" they failed to learn how to "play the game better." You can't rig the scoreboard (that's Wall Street, the stock price, profits, cash flow and return on equity. You have to create value--and then sell it at a fair price--assuming you created it at a reasonable cost that will leave some profit.
HAPPY? HINDSIGHT SAYS, NO WAY!
It's hard to BE HAPPY if you are at GM or Chrysler. Cerberus (who owns most of Chrysler) vicious style of investing has earned them a lot of enemies over the past decade or so. These enemies are hoping it gets what it has coming to it. GM has "destroyed" $384 Billion of value over the past few decades (and now it wants billions more from the Federal Government so it can destroy that.) That amount was enough to buy all the stock of Toyota, Honda and Nissan. I think hindsight is 20-20 about which one of those "investments" would have been a better one.
But what to do with the huge, bleeding carcass that is GM. It does make some good vehicles. There are some capable people there--the evidence is in those vehicles. Bob Lutz could have been the Steve Jobs of the auto industry--maybe he still can. But he needs someone who is willing to "prune hard" on the carcass (pun sort of intended). I read that a guy named Fritz Henderson is #2 or 3 guy there and might be the right kind to do that. He's not a car guy (that's not so good) but he's an "action oriented, get it done, problem solver" (I hear--and that is good. Some Congressional Committee is not going fix or run GM--so it would be nice if someone who "knows where the bodies are buried" could step in a lead a REAL turnaround.
OBAMA: GET MITT ROMNEY TO HELP
I'm not sure why Mitt Romney would want to help except that his roots are in Michigan and his father was an auto industry leader, and he's a "fixer." For Obama it would be a real coup. If Romney succeeds, Obama gets credit for choosing him. If he fails, Obama can blame him. What's in it for Romney? He keeps his name in national prominence and maybe enough people will quit worrying about his Mormon faith and "Mr. Clean" life, appearance, etc., to realize that he should be a player on the "big stage," maybe even in the White House. In 8 years, it could be him against Hillary--both of them in their late 60's...
TWO BAD ACTS: EMPLOYEE FREE CHOICE ACT & FAIRNESS IN BROADCASTING ACT
The Congress has two bad ideas in their hopper of legislative wishes and wants. Obama spoke out for one of them on the campaign trail. I hope he's smart enough to realize that even the unions who helped get him elected don't deserve the devastating Employee Free Choice Act (or "card-check bill" as it has become known). See my "letter to the editor" at the end of this edition. It explains why this law is really bad for America.
The other is the knee-jerk reaction to conservative talk radio. Liberal talk radio has been and continues to be a dismal failure. I'm not sure why. Perhaps it is because too many of the "low-end" liberal supporters don't want to think in between elections, so they don't listen to talk radio. Who knows. Anyway, rigging the radio mix of shows by reinstating the old "equal time" provisions under the guise of the Fairness in Broadcasting Act (boy do they know how to name these bombs so they sound so wonderful) would also be a blow against democracy in the USA. Of course, given the liberal media bias in TV and newspapers during this past election, that may be just what they want. The only question is: would CNBC have to put Rush Limbaugh on for an hour to offset every hour of rant by Keith Olbermann? If you missed the parody of him by Ben Affleck on Saturday Night Live (the night McCain was on, near the election), it was a gem.
NO MORE NUKES--OUR AGING ARSENAL
Obama has also pledged "no more nukes." One small problem. Our "arsenal of nuclear warheads" (which he wants to shrink) are so old, that they may not work when needed. Is that a god idea? Remember vacuum tubes that used to run our radios and TVs back in the 1960s? That's what is still in control of part of our nuclear weapons. Scary? You bet. At least we need to bring them up to current technology while some of the people who know how they work are still alive. What? That's right. There hasn't been a thriving career path for nuclear bomb builders for a long time, so the only knowledgeable people who can help upgrade them are YIKES--my age give or take a little. It might be wise to create a nice little niche for "nuclear" engineers to help at least keep our engines of war from being like 1960 Chevys. Of course we can always find this knowhow in Iran, China, etc. (OH GOD!)
TENNESSEE HAS A GOOD IDEA
Tennessee has the first government funded health care program--named Tenn Care. it almost bankrupted the state. Someone forgot the Tennessee is bounded by 7 other states, so all the sick, uninsurable people in those states who were anywhere near Tennessee, just came over the border and signed up. Finally, Tennesseans elected a moderate Democratic governor Bill Bredesen, who had been an executive with a health care company. He killed off Tenn Care, but replaced it with a new plan that is being tested right now. It doesn't cover the "biggies" like transplants and major surgeries, but it does cover the day-to-day care that often helps prevent the biggies. It is that kind of medical problem that haunts the average American. The plan has fairly low maximum limits, but is also low cost and really saves a lot of families from waiting until the health problems get much worse--and require very expensive treatment. it also clamps down on drug spending and supports generics. Between this one and Mitt Romney's MA plan, there might be a good solution brewing.
EXPORTS--CRITICAL TO AMERICA'S FUTURE
Regular readers know that I am a long time friend and admirer of Ram Charan. The piece below my signature this week is his. It outlines something that Americans could get behind enthusiastically, and President Obama could really play up. I think it is a wonderful idea, so I am sharing it with you. Just like I said at the outset: Don't Worry, Be Happy." The best way I know to do that is to work hard on achieving something that is meaningful and makes a difference. That IS the American way.
Best, John
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RAM CHARAN'S IDEA
A goal we can believe in!
As President, Obama should get us focused on one clear economic mission: boosting U.S. exports.
A renowned management expert offers his plan to help America compete.
By Ram Charan with Jia Lynn Yang Last Updated: November 6, 2008: 9:34 AM ET
NEW YORK (Fortune) -- We are now experiencing a full-blown crisis of confidence in America's economy. It shows up in consumer spending, which fell more than 3% in the third quarter, the sharpest drop since the dark days of 1980. Corporations are cutting their capital investments drastically for 2009. People see unemployment rising and have good reason to think it could happen to them, if it hasn't already. By September, 760,000 jobs had been lost in the U.S. this year, with more mass layoffs announced every day.
As President-elect Obama said in a speech in October, "At this rate, the question isn't just 'Are you better off than you were four years ago?' It's 'Are you better off than you were four weeks ago?'" The current administration has rushed to put emergency measures in place: stimulus packages, a bailout for the banks, low-interest loans for the auto industry. All that rescue work is necessary to ease the severity of the recession and to reassure people that help is on the way.
The new President, however, must go a lot further than that. He needs to restore faith in America's economic engine. He must show real leadership to do that. But what does that mean in a situation like this? It may seem counterintuitive at the moment, when there are so many short-term dangers, to get Americans focused on the long run. But that's what the new President needs to do. As Obama himself said during the campaign, "It is going to be part of the President's job to deal with more than one thing at once." Confidence depends not only on urgent, short-term patchwork but also on the pursuit of believable and attainable goals. That's what a true leader does: sets a goal that is clear and then inspires people to focus on achieving it. That's how great organizations are run, and that's what this great country desperately needs at this moment. The next President can get us out of this psychological and economic funk by pointing the way ahead, especially with one overarching objective.
Here's what I propose: Set a goal to get our fair share of exports and jobs in the world. That means putting aside our protectionist impulses and rolling up our sleeves to compete with the rest of the globe. Americans can do this: Our productivity is still among the highest in the world. And according to the Bureau of Labor Statistics, business sector productivity in the U.S. increased 19% from 2000 to 2007. The U.S. is the best in the world at nurturing new businesses and technologies, we have the best institutions of higher learning, and even our labor cost is competitive with Europe and Japan. But somehow all that doesn't translate into an ability to capitalize fully on our strengths.
A key barometer for measuring how we stack up competitively is our level of exports. Very simply, it tells us whether our companies are innovative enough and efficient enough to sell things that other countries prefer. In 2007 exports accounted for 12% of our country's GDP. The President should set a national goal of raising that figure by five points. (It's a reasonable place to set the bar: In Germany exports account for more than one-third of GDP.) When we accomplish this, we can revitalize communities by producing more jobs. We will increase our tax base, which will help us meet our growing obligations. We would also wipe away our exploding trade deficit, which threatens our economic future.
One can argue it's never been more necessary for us to produce and invest more. Instead of feeling defensive and mournful about how globalization has changed our economy and taken away jobs, let's respond by competing smarter. Here are specific ways the next President can lead the way.
Revitalize the Department of Commerce.
Rename it the Department of Exports and Imports and make this cabinet post as critical as Treasury or Defense. Appoint a heavyweight who gets things done. Hold the secretary accountable by requiring the department to publish its goals. We should make this whole economic approach part of State Department policy as well, since our diplomats can find out what needs to happen on the ground to get our exports moving.
Start an idea competition.
The U.S. has the best analytic capability in the world. That can give us the facts and insights we need about our trade opportunities and obstacles. The President should launch a competition among the country's top half-dozen consulting firms with a $10 million prize for creating the best plan showing us how to get ahead, region by region and sector by sector. Get them to run analyses on what other areas of the world might be receptive to our products. And have them focus on smaller, mid-sized companies, which have a lot of room to grow in terms of exporting more.
Urge states and regions to drive the effort.
The next President should call on every governor and mayor in this country to sit down with local businesses, unions, and education leaders to figure out their distinct advantages: What can they do better than not just the town next door but also companies in Ireland and Mexico? Some states and regions are already doing this. The state of Maine is aggressively focused on giving its local boat-building industry the resources to compete worldwide. The state linked boat builders with local economic-development groups and training organizations, including the University of Maine, which offers classes on advanced composites for boat building. Last year a Maine delegation traveled to Shanghai for the China International Boat Show. Without a coordinated effort, that never would have happened.
Examine where we need to spend more on infrastructure.
Discuss priorities for highways, bridges, and airports based on hard facts and analysis. Make them transparent by publishing the results. Let the public see what's needed and allocate the money accordingly. "The infrastructure system is completely broken," says Bruce Katz, vice president of the Metropolitan Policy Program at the Brookings Institution. "It's an unaccountable free-for-all. Earmarks dominate the conversation, as opposed to any sense of a national vision."
Devote more federal money to industrial research.
Innovation creates jobs. We should increase federal funding for basic research by giving money to the long-delayed America Competes bill, which was signed into law last year by President Bush but has not received any funding yet. Also, corporate tax cuts for R&D need to be made permanent. Just because the economy is slowing doesn't mean that companies should stop looking for the next big idea.
Establish a bipartisan committee to report back quarterly on where the country stands.
Our level of exports can serve as a scorekeeping device for us all to follow. This group should help keep us up-to-date on where we're improving and where we're vulnerable. In the second presidential debate, in October, one of the best questions of the campaign came from a 78-year-old woman from Chicago named Fiorra. She asked, "As President, what sacrifices will you ask every American to make to help restore the American dream and to get out of the economic morass that we're now in?" The answers from both candidates were underwhelming.
The bottom line is that people are craving leadership. They're awaiting directions. Mr. President, get the spirit of America moving again. All you need to do is set a clear goal, explain why it's important, and then present steps toward achieving it. This time, during this crisis, I have a hunch people will follow.
Management consultant Ram Charan's latest book, Leadership in the Era of Economic Uncertainty, will be published in January by McGraw-Hill. To top of page
First Published: November 6, 2008: 9:31 AM ET
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How the “CARD-CHECK BILL” WOULD DEVASTATE the AMERICAN MIDDLE CLASS
John L. Mariotti 2008
Last Sunday's Dispatch editorial page carried a column of misleading half-truths by Joe Rugola, President of the Ohio AFL-CIO. I wonder who benefits from a law making it easy for Unions to organize workers through coercion, deception and trickery? Wait, I know: A Union like the AFL-CIO that gains lots of dues from new members who never intended to join. Unions have been spreading nonsense like this for years--but now this “card check bill” has a chance to become law. It sounds so “harmless” named The Employee Free Choice Act. Who could be against “free choice?” And why would anyone oppose it? Here’s why. If this law passed, jobs will leave the USA in massive numbers and the middle class will not be "revitalized" as Mr. Rugola says; it will be devastated by the loss of even more jobs.
First a disclaimer: I am not "anti-union." For 10 years, I ran Huffy Bicycles, here in Ohio, employing 2000 United Steelworker members. We had a great relationship. We worked together; we fought; found consensus and then learned how to compromise and cooperate for everyone’s good. In the early 1990’s USWA President Lynn Williams called us, "The model of labor management relations for the 21st Century." But that’s far from the typical union situation.
What I’m worried about is the unions that harm companies and workers they represent, by not truly representing the best interests of the workers. These unions are out for power—and money—and will use their membership to get it. When unions grow in power, you get crippled companies like General Motors. The union uses its bargaining power to extort too much from employers. If management gives in, the company becomes non-competitive and employees lose their jobs to competitors. If management "digs in," the company and union employees must endure long, crippling strikes (such as Boeing just did). This is a "lose-lose" proposition.
Even this analysis of how unions harm employers is not the most compelling argument against the "card-check" law. It is that such a law deprives employees of the (true) free choice they want to make. Its name is even totally misleading.
During union organizing drives, employers are prohibited from doing four things (recalled by the acronym TIPS).
Ø Employers cannot Threaten (union organizers can—and do);
Ø Employers cannot Interrogate (union organizers can--and do);
Ø Employers cannot Promise (union organizers do this often--promising more wages, better benefits, more sick leave, etc.—which can only come from the company, weakening its competitive position);
Ø Employers cannot Spy (union organizers also do this, in order to find the best time to pressure an employee to (just) "sign a card."
Currently, signing a card only means an employee might vote in a secret ballot election on whether they want a union. If the union gets enough (30%) employees to sign cards then it can petition the National Labor Relations Board to hold a representation election. In this election, employees vote in a secret ballot whether they DO or DO NOT want the union to represent them (usually at a cost two hours pay/month). Only when a majority of the eligible employees (people working at the company in the defined "unit") vote “yes” —does the union represent the workers—all of them. Then the company is required bargain in good faith with the union. The bargaining goes on until an agreement is reached or, failing that, a strike is called.
Under the proposed “card check law,” all eligible employees can be forced to be part of a union if just 1/2 of them simply "sign a card." There is no secret ballot of any kind. These cards can be "forced upon" employees anywhere—at home, at work, at church, out with the family, wherever. The pressure to sign a card can include coercion, threats--or worse—both real and imagined. When half or more employees "cave in" and sign a card, the company is ordered to bargain with the union, AND if they don't reach agreement quickly, the matter is forced into binding arbitration. An outside "arbitrator" listens to both parties and then dictates the outcome.
The adverse effects of the "card check" are many--here are just three of them:
Ø Employees’ rights are lost—there really is NO “free choice,” —and employees are vulnerable to union organizers "pressure tactics"
Ø Secret ballot elections are NO LONGER used to vote for—or against—a union
Ø Collaborative bargaining is NO more--because the union now has the power to force agreement—“or else”
Worst of all, when companies are working and competing without a union, and a union is introduced into that environment, everything changes. It was as if a husband and wife decided to bring in a third party through which everything would be decided. Companies and employees cannot easily work together anymore, because the union is in the middle and it has "rights" (and will exercise them)--to be in on all decisions.
The only thing unions can do is pressure companies to "give up something"—since the union brings nothing at all of its own to "give up."
Ø When the company gives up more wages and benefits (as the organizer promised) labor costs rise and competitiveness falls.
Ø When the company gives up control on work rules, previously flexible enough to adapt and meet the customers' needs, they are replaced by a rigid and unbending (lengthy) contract between the company and the union (not the employees!).
Ø When companies' costs go up and flexibility goes down, the next step is not far away—lost business and lost jobs.
Why? Because lower cost, more flexible competition comes in from somewhere that has few or none of the union (or government) restrictions. Companies try the products and find them to be just fine. The American company loses the business and the newly unionized work force loses its jobs. The winners will be the union officials whose jobs remain secure and well paid, with nothing to do but collect their share or remaining paychecks, while trying to “justify” why they deserve two hours a month of every worker’s hard-earned pay.
American jobs will flood out of these newly unionized plants—plants where perhaps half (or more) of the people really didn't want a union, but were afraid to say "no" in public, and had no way to say "no" in private. That is how and why the middle class of America will be devastated economically by The Employee Free Choice Act.
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