THE ENTERPRISE--CHOICES AND HEROES
EARLY RISERS: I taped a very brief "Your Business" segment this Thurs. AM for MSNBC, as part of a panel discussing how small companies go after the BIG order--and when they get it--discover that it causes a lot of problems, challenges, etc. There's not a lot of time in that format to discuss what to do and how this happens, but we tried to hit the high points. The show should air Sun. Feb. 8 at 7:30AM and again Sat. Feb. 14 at 5:30AM. (Those who know me realize that I'll have my DVR set to record it since I nearly never get up real early.)
FIRST PRIORITY: STOP THE EMPLOYEE FREE CHOICE ACT
This law, if passed, will alter the balance of labor management relations so dramatically, that American employers will be crippled competitively for decades to come. In history, the Wagner Act did this in 1935 and it was not until the Taft-Hartley act was passed in 1947 that some semblance of balance was restored. PLEASE WRITE or CALL YOUR CONGRESSMAN AND BOTH SENATORS--regardless of their party affiliation or leanings. They need to know that their constituents oppose this incredibly harmful piece of legislation. Here's how to find them and their addresses:
http://www.visi.com/juan/congress/
To learn more about why and how this proposed legislation will be so damaging, and what employers can do in "self defense" read the attached white paper "You Have A Choice". It is excellent--and scary. Remember--no one is immune to this if you have qualified employees (non-managerial/supervisory employees).
GIVE FORD SOME CREDIT
One of my old UT contacts has been telling me that Ford should be singled out--not lumped with GM & Chrysler--in some of my barbs. It appears he was right. Ford has jumped to the top of the J. D. Power quality ratings. Under CEO Alan Mulally, it has also moved faster to finance itself (borrowing against valuable assets like its brand name), to shed complexity caused bt too many car brands and models (Jaguar and Land Rover are gone and Volvo is for sale). Best of all, Ford is making better and more attractive cars, and has turned down the government's bailout money (and hence will keep the government's paws out of its affairs). There is still one more place to simplify. The Mercury brand adds more complexity and confusion than it does value. I expect Mulally will have seen that too. Ford is still at risk as the government's largesse for GM could put Ford at a disadvantage economically--and the imminent demise of Chrysler (it's not IF--it's just WHEN) could mess up the vendor community that is shared my many car makers, including Ford. Let's watch as this drama unfolds and pull for Ford to make it. That would be a great tribute to founder Henry Ford's legacy.
EXCESS CAPACITY IS STILL A PROBLEM!
Globally, there are almost a hundred too many car factories. Global capacity is at about 95 million cars, which is about 35 million too many. China has the most--and it is consolidating due to sales dropping and companies dropping with them. After that, US car companies have 10-12 (of their 50+) in North America that still need to be closed. But nobody is immune--including Japanese brands. Excess capacity is a problem in many places. Retailers are dropping like flies. Airlines are still overburdened with too many routes, aircraft, etc. One of my contacts told me recently, "Kmart is history." Another thinks "Sears Holdings is worth more in pieces than as a single company" (Eddie Lampert will exploit that if it's true). Macy's is in deep doo-doo too. Why? It's hard to manage a chain of stores assembled from a bunch of other chains, and carrying (I read this somewhere) FOUR MILLION DIFFERENT ITEMS. Is that stat believable? Sure could be, when you think about sizes and colors of clothing, shoes, seasonal changes, domestics in patterns and colors, housewares, appliances, etc. I don't know if my computer has enough capacity to calculate Macy's COMPLEXITY FACTOR, but I bet it's immense. They just can't make the margins and turn rates needed to offer that many items. Machete, anybody?
WHICH AIRLINES WILL DISAPPEAR IN 2009?
It's hard to believe that one or more won't. There are fewer flights and based on my small travel sample, those remaining are only full at peak times. That's not good as planes need to move about to get to the right places--and flying them 1/2 -2/3 empty is a losing proposition. Best bet to fail: US AIRWAYS (weak and still struggling with an integration of the America West acquisition from several years ago. Worrisome: Low fare lines that keep fares competitive: AirTran and Jet Blue (Darn, we just got AirTran here in Columbus, which added some good low fares and new direct flights. Jet Blue was already here, but I only go through JFK under duress). Plus, Alitalia is already in bankruptcy in Europe, and Air Canada is in trouble over here. However, this is what recessions do--clean out the weaker competitors and excess capacity--which should lead to a more viable industry in the future. "Should"--I didn't way "will."
WHAT'S GROWING AND GOING TO BE STRONGER?
Health care--even though government meddling will affect it--is the best bet of all. As more and more people age, and want to sustain their quality of life, this field should continue to grow. If I was advising any young person on a field to get into, this would be at the top of my list (and they don't all have to be Doctors). Education is another good bet. As the "echo-boomers" roll through, no one disputes that his is a field that we need to become better at. Energy will be a big factor in the longer term. Right now, the collapse in oil prices has cooled the fervor for all kinds of alternative energy development, but it will heat up again--right as the price of oil does. Infrastructure could be the beneficiary of a lot of government spending. The US infrastructure (and its defense systems) is aging and needs repair, upgrading and rejuvenation.
HOW ABOUT SOME NEW IDEAS--NOT THE SAME OLD, SAME OLD
Sure we need to fix bridges and highways, schools and water treatment plants. These kinds of investments would create lots of jobs and leave us with a better, stronger and more efficient country. But when will someone take off the blinders and realize that we have the technology to build smarter highways that can monitor and even control traffic jams, adverse weather conditions, and develop alternate routings (to send to the Navigation systems being sold with more and more cars?) Our power grid is a limitation and needs some new networks and control systems (with better protection from outages and hackers). And when will we build high speed rail connections for new state of the art road beds, using (mag-lev?) suspension & (magneto-hydrodynamic) propulsion trains. I bet GE could lead the way and it would just take a few Billion from the Government to tip them into it.
As I said previously, it makes no sense for one person to ride an hour in a car/cab from downtown to an airport on the outskirts of Chicago, New York, Washington, Dallas, Atlanta, etc. etc. when a train could connect Boston-New York-Philly-Baltimore-Washington, and another short line could connect Atlanta & Charlotte, yet another for Milwaukee-Chicago-Toledo-Detroit/Toronto-Cleveland-Buffalo. While I'm wishing, how about a Cleveland-Columbus-Cincinnati line. These could almost be situated on elevated rails running down the center of current Interstate Highways (I-95, I-71, etc.)
ONE MORE SLAP AT COMPLEXITY
Some interesting study results (Booz & Co.): A typical supermarket circa 1980 had 15,000 items. In 2007 that number is 45,000. The typical consumer actually buys about 650 of them each year. HUH? And by the way, the top 25% make virtually all of the profit and the bottom 25% are all money losers. The failure rate of new products is very high and the half-life of them is very low. Can you spell COMPLEXITY CRISIS? One exists everywhere--it's just myopic executives that are in denial and afraid to get rid of marginal products and loser customers because "sales will drop." Ironically, if half the resources consumed by the losers were cut, and half were reallocated to the best customers and products, sales will go up and profits will go up faster. IS ANYBODY OUT THERE LISTENING?
THE SMART ONES ARE TAKING ACTION
Wal-Mart has mandated a "win-place-show" hierarchy in its merchandising and supplier selection (Anybody recall Sears old good-better-best method?) General Mills figured out that if it eliminated half of the 50 versions of Hamburger Helper® (with 25 different pasta shapes!) and omitted the unnecessary spice and cheese packets, it could reduce the size of the box, still containing the serving size the same, and reduce the cost by 10%. Simply eliminating multi-colored Yoplait® yogurt lids saved $2 million/year. HP figured out how to balance innovation with proliferation--Dell didn't. The result? Dell struggles with poor service and HP gains share like crazy. THIS STUFF WORKS--SO WHAT ARE YOU WAITING FOR?
THE BORDER FENCE IS STILL NOT DONE--AND IS IN QUESTION
It's still not done, and where it is, nobody is sure if it's working. Why? Nobody knows how to measure if its working or not. Remember these famous lines: "What gets measured, gets done." "If you can't measure it, you can't manage it" (The latter is old friend Will Kaydos line--remember to pick up his book THIN ICE--AND MELTING--to learn what is really happening to America. Otherwise, our government will keep making misinformed decisions, and our fellow citizens will keep electing the wrong people to represent them in Washington and in State houses.
JUST ABOUT THE TIME I BECAME CONVINCED...
That social networking sites had good, viable purposes, they are in jeopardy. Why? Drops in advertising revenue mostly. Most of them are FREE! That's their appeal. But somebody has to pay the bills somehow. FREE is not a viable business model. Didn't we learn that about 10 years ago in the dot-com fiasco? (Got a Pets.com sock puppet anybody?) Some will make it. They are gaining critical mass or attaching themselves to someone with a profitable model to fund them (Facebook, MySpace, LinkedIn, Twitter, etc.) Others will either merge or dissolve. That's the way industries evolve.
DEFLATION IS COMING--AND THE STIMULUS BILL NEEDS TO HEAD IT OFF
The problem is that the "stimulus bill" that Obama and the Democratic Congress are trying to railroad into place is NOT A STIMULUS BILL! IT'S A POLITICAL PATRONAGE BOONDOGGLE OF EPIC PROPORTIONS. Some of the media are picking up on this--finally. Spending a few hundred million here and there and a few billion here and there on pet projects does not make a stimulus. A stimulus bill needs a few (let's say 5, 10 max) guiding project types that it can support. Infrastructure, Housing, Energy, (not giveaways to failed banks/bankers or to crony buddies' pet projects). As written it is A MEGA-EARMARK BILL. Awful. Terrible. Gotta fix it. Obama is right about one thing. It needs to be done FAST. That means "dictating" the terms and conditions to the House and Senate. Here's where he will "earn his spurs" as a President--or not. We'll see.
HOW ABOUT SOME HEROES
We have way too few heroes these days and our role models for younger people are all wrong. Celebrities who can act like someone, or sing/play great music or are talented athletes are NOT NECESSARILY HERO-MATERIAL. A few might be. Peyton Manning--a clean cut guy who's really good, funds hospitals for kids with some of his wealth. He could be a hero. LeBron James--and inner city kid who is smart, talented, and a leader--for his Cavalier team and more visibly, with Kobe Bryant, for the US Olympic team. But I mean real heroes.
Here are two I nominate:
--Chesley "Sully" Sullenbarger who landed a crippled jet on a rough Hudson River allowing all the passengers to get off and didn't try to land it where many civilian lives might have also been at risk.
--General David Petraeus who withstood the barbs and arrows of a misguided Congress and used his knowledge of how to merge cultural relations and military might to "save" the Iraq "war."
--Our war-torn Iraq and Afghanistan Veterans who went over there and gave their time, their efforts and in many cases their life and limbs for our country's cause. Those are real heroes. Join me in thanking every one you meet. Welcome them home with thanks, respect and jobs. They deserve it.
PEOPLE ARE THE KEY TO EVERYTHING--LEADERS ENABLE PEOPLE TO SUCCEED
Get the best people. Add a few strong leaders. Choose a good business segment. Devise something that creates value, such that you can consistently deliver on that promise. There's a good start. Oh, yes, Add a good CEO to run it all. That leads me to a teaser. I met a fellow, Nat Stoddard, whose path and mine almost crossed a few years ago (but didn't) and who has written a fascinating and useful book entitled: THE RIGHT LEADER—Selecting Executive Who Fit. I met Nat, visited with him, listened to him speak about the book and read the first 1/4 of it. IT'S GOOD STUFF. I'll cover more about it as I get further through it, but IF you happen to be in the midst of that kind of challenge. It's "hot off the presses," so you can only "preorder" it on amazon.com. Stay tuned for more info.
HOW LONG WILL THE RECESSION LAST?
Nobody knows. Through most of this year at least. Maybe a slight uptick in 4Q for Christmas. Slow growth coming up in 2010, with a few starts and stops. But I want to remind everyone of something I learned over years in business. When times are good, everyone is too optimistic. When times are bad, everyone becomes too pessimistic. There is still business out there to be had. Do you want to spend your time working hard and smart trying to get it, or wringing your hands and worrying. I know what I prefer. "When the going gets tough, the tough get going." Now get out there.
All the best, John
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