A Consultant's Chronicles

Line of the Week 3-15-09

Given that this week was St. Patrick's Day, the line of the week belongs to the famed Irish-American Pulitzer Prize winning columnist Maureen Dowd.  Reflecting on Barack Obama's "generally less than authoritative manner," especially most recently when it came to handling the latest installment of the bonus debacles with AIG [re: needing to be cued by teleprompter to be angry], she had this to say:

"...he should keep in mind one of my dad’s favorite Gaelic sayings: 'Never bolt the door with a boiled carrot'...”

Words to live by.

Liddy Speaks: Why AIG Spent Money On 'Women & Grog'

Today Edward Liddy, the current CEO of AIG will be grilled by Congress today although truth be told, they along with the president are [in my view] "a day late & a dollar short" when it comes to their suddenly found outrage over the obscene amount of money spent on bonuses to a company in desperate need of taxpayer largesse.

Money Spent On 'Women & Grog' 

Nonetheless Liddy has written a cogent opinion piece summarizing the problem which apparently began in 1987...1987!!!! That's a span of 3 presidents who potentially could have caught & fixed this before it became a multi-headed monster so there is more than enough blame to spread around to all political parties. The best that can be said is that he [Liddy] didn't structure this insane compensation & is working for just $1 having taken over as CEO in September of 2008. I encourage everyone to take the time & read the piece because it does succeed in tamping down some of the anger because it reveals a real plan. Whether AIG will be able to keep the promises he is implicitly making is another story. However, in describing these insane bonuses, I think legal scholar Jonathan Turley summarized it best in an interview when he said:

"...When you give millions to the 'Pirates of Penzance,' you can hardly be surprised when they spend it on women & grog..!"

Sadly, his comment feels far too close to the truth!

Corporate Tax Cuts & Job Creation: 'Who's Zooming Who'

There is absolutely no shortage of things to write about today but since jobs [or lack thereof] are on the minds of so many, I've decided to write a post about something I just read in Business Week about the drug company Pfizer. Apparently in an attempt to make the best use of their high value employees' time, they have developed a subsidiary company called Pfizer Works where they can outsource specific & mundane chores like number-crunching, creating PowerPoint presentations, etc. The essence of the plan is to outsource specific tasks. It's all done very methodically because employees document via work order each assignment, i.e., what they want, need, and the deadline for the job. Conceptually it actually sounds pretty good. After all, why pay employees who receive large compensation to do what is rote production work. This is the kind of thing that is the small business person's dream. If you are getting the impression that I am setting you up for some kind of "but" in this, you'd be right.

Why Not Reward Companies That Create Jobs Here At Home

Pfizer Works has 2 outlets: one is in Chicago & the other is in India. Excuse me? There are lots of competent unemployed folks here who would love those jobs so why send them to India? I happen to know of 2 small businesses in san Jose that specialize in making elegant PowerPoint presentations.  Why not keep all of Pfizer Works here? Increasingly I have a hard time seeing large corporations get big tax breaks for sending jobs overseas particularly since part of the argument for those cuts is that the companies create jobs. Right now we have a surplus of people who would happily take those jobs. Why should big business be rewarded for creating jobs in another country? Although it's a less extreme version [compared to a comapny like AIG], it strikes me as yet another example of rewarding corporate bad behavior when those very same "carrots" could be used in a more positive way here at home. That my view...   

Line of the week 2-8-09

This week's line of the week goes to Senator Arlen Specter (R-Pa) in an editorial he wrote explaining why he voted for the controversial economic stimulus plan. Essentially he felt that his reasoning was best expressed by a quote from President Kennedy, which said:

"...In politics,... nobody gets everything, nobody gets nothing and everybody gets something..."

This is the essence of compromise at its core; true in politics, business & life. The big problem is too many people want 'everything' & simply can't be happy with 'something.'

Is There Any Optimism Given the Current State of Our Economy

Although I don't always agree with her, I am nonetheless a fan of Peggy Noonan. Aside from being smart & keenly observant, her writing skills are second to none which was apparent as the speechwriter for Ronald Reagan.

Changing the Drumbeat of Doom & Gloom

In one of her weekly columns, she was discussing Obama's speech about the state of the economy and what's needed to change the current dismal equation, when she said something that made me jump up & take notice. She gave Obama credit for actually providing some optimism in what has been a perpetual drumbeat of gloom & doom [let me admit here that regrettably I have been one of the "drummers"]. She basically reminded me of 2 points, which I thought important to share, the first seems almost painfully obvious:

"...This is not a nation of 300 million people in extremis and on a morphine drip; it's a nation of 300 million people who are alive, alert and ready to go..."

The bottom line here is when living in a state of constant crisis, it's easy to lose sight of the things we can do. Our history has shown time & time again that this country is quite possibly most remarkable when our "collective backs are up against the wall."

The Importance of "Speaking Truth to Power"

She also noted that in recent history, never was there a more important time to "speak truth to power" no matter who the "powerful" might be-even a President [or a bit closer to home, a manager, company executive, or board member]. Duly noted on both counts.
  

Yuletide Greetings: The Business Year In Review & Beyond

  Merry Christmas! 

Here are some fun "bon mots" to bring you Christmas cheer that I found & just had to share :

At Christmastime 2008,
In this, our fragile fiscal state,
We search our economic soul
And find the world's a lump of coal,
Where many cover food and rent
Then wonder where the paycheck went,
Or, if they dare to peek, they gaze
At 401s with fractured (k)s.
Plus, as you're reading this, you'll find
The value of your home declined
(Poor Sheila Bair works overtime,
But still foreclosure figures climb),
Or if you sought a small-biz loan,
The bank just laughed you
off the phone.
You're Big Biz? Well, it's still no dice:
The credit market's Arctic ice.
The Dow fell stomach-churningly,
And Bear Stearns is a memory,
Nor is there any point in dreamin'
Richard Fuld will bring back Lehman.
Messrs. Paulson and Bernanke
Mainly leave folks dazed and cranky;
As the bailouts get rewritten,
The reaction? Less than smitten.
On the front page, Bernie Madoff;
On Page Two, new thousands laid off.
'08's theme, if such there be,
Is simply negativity,
Where every bond or fund or stock
Is in a state of constant shock
And every industry's dismayed
Enough to plead for federal aid.
In such a climate, can we cope
With anything that smacks of hope?
What, hope? That hoary, corny thing
To which a nation used to cling
When ears beneath fedora hats
Heard F.D.R. give Fireside Chats?
With every indicator down,
Against all odds, it's back in town.
So Christmas greetings first to him
Who made the outlook seem less grim:
For Prez-elect, salute so calm a
Presence as Barack Obama....

Click here to read the rest....

**Yuletide poem was created by Mark Miller & can be found in its entirety in BusinessWeek

TARP: Take Assets, Run Pronto

Last night I acted like one of Santa's elves wrapping presents, tying bows... you know the drill. Anyway I decided to use the time constructively by watching the netcast of "Meet the Press" while I wrapped. It was David Gregory's debut as the new official host after Tim Russert's premature passing  & he did a first rate job.

Romney: The Lights Are On But No One's Home

His show was divided into 2 parts: the first part explored the scandal swirling around the Illinois Governor for trying to sell the Senate seat but more compelling was the business roundtable that followed. Gregory had 4 financial major players on: former Governor [MA] Mitt Romney, Google CEO Eric Schmidt, current Governor [MI] Jennifer Granholm, former HP CEO Carly Fiorina, & current Wal-Mart CEO Lee Scott. I found 2 comments made especially striking. First, basically Mitt Romney asked where was the Bush administration & Congress? He rightly pointed out that they need to be working right now because we can't afford to wait for Barack Obama’s presidency to become "official," not when we are bleeding 100,000 jobs /month. While Romney agrees that we need to put people back to work with government jobs, he noted that such projects take time to get off the ground so we should be working on them now. He is absolutely right of course but why do I think that something that seems so glaringly apparent is of such import? Unlike so many other people right now, Romney is looking to the "right people at the right time" to take action. There is far too much talk about Obama assuming the reins early in order to deal with the crisis. While it's tough to be promoting George W. Bush, he is president [like it or not] until January 20th 2009 so he needs to start remembering that fact & get busy. This is no time for a "legacy tour" [or a Congressional vacation]. Given that one of the hallmarks of our democracy is the orderly transfer of power, while the desire is understandable, this is also no time for a hasty & constitutionally questionable change in when a new president takes over.

Fiorina: Financial Instiutions, Do Your Job

However, Fiorina made the most pointed & to my mind the most "spot on" comment of the show. While the group was discussing the ups & downs of an auto bailout Fiorina pointed out the most distressing thing about the issue.  Earlier she noted that the financial institutions were still sitting on the money they were given by the taxpayer bailout [aka TARP] so credit is still not flowing making it difficult for the engine of small business in particular to help drive our economy. In the context of the auto bailout she asked why the "big 3" had to come to the taxpayers for money when it is the job of the financial institutions now flush with capital to do just that. Once again, instead of working for the national interest, Wall St, is busily taking care of Wall St. This was a defensible position when they were using their own money but now that taxpayer money is propping them up, they should be obliged to work for the greater national good to help get us through this mess.  Lending money to the "big 3" would be a good place to start. When she said that I wanted to throw ribbons like confetti in agreement! I always had mixed feelings about the bailout & completely hated its final iteration, which had to be loaded with Congressional pork before it could pass. Now I am thinking TARP really stands for " take assets, run pronto!"

  

Leadership: A Tale Of Two Men

So now we are told it's official: we are in a recession. For most folks this is not exactly breaking news. It does however raise an interesting question about where we are as a country right now in terms of "who is in charge?" No one is seriously dealing with Bush right now yet until January, constitutionally he is still to use his term, "the decider." Therefore the next time one of my [potential] clients looks at me as if I had three heads & asks " 'leadership training [?!];' what is it & why on earth should I pay for THAT," I will simply refer them back to this time in our history. Here we are two months away from the inauguration of our new president while our current "Commander-In-Sleep" seems “MIA” in the middle of one of the biggest crisis in generations. At the moment it seems that he's busying himself visiting exotic places & pondering pardons while this country feels like a rudderless ship floating along without a destination, an anchor, & most critical of all, absent a captain. It appears that even the ship's mate [a.k.a. the VP] has abandoned it.

One President At A Time

One man [Bush] won't do anything because he seems caught in some weird twilight zone between conflicting ideology & the laissez-faire attitude befitting the lamest of “lame ducks,” which has engendered paralysis on his part. On the other hand, the other man [Obama] can't do anything because he has no power given that we have only one president at a time. Until Inauguration Day, he is simply the "president-elect" so his "authority" is based only on the promise of what's to come in January [[although at this point he has given so many press conferences that he is starting to flirt with impropriety].  Realistically however, all he can do is play cheerleader & send messages of a strong transition in motion. Although it's not reflected in its most classic form, the net effect is something akin to a psychological phenomenon known as "diffusion of responsibility*." This is a phenomenon that is used to describe why people in groups either tend not to act or are slow to act in emergencies. Essentially the presence of others allows them to "pass the buck." When it comes to our current crisis, in this rather exclusive "group," Barack Obama is a participant by circumstance with very little choice.

People Want To Be Led

Whether it's a corporation, a team, or a nation, people want to be led [sadly we are very much like sheep in that way] so when there's a leadership void during a crisis, things unravel very fast. In an economic downturn 2 key things have to be addressed: the brass tacks of addressing the heart of the problem & repairing the national psyche because 50% of our economy is psychological. As a result, the challenge to put all the pieces back together is getting  increasingly more difficult with each passing day. None of it can be done without real leadership which is a skill that can be learned [although some people do seem to have it as part of their DNA] which is why even in this economy it's one training that reaps rewards for years to come. 

*John Darley & Bibb Latane (1968) created the award winning theory of diffusion of responsibility.

The Message Should Reflect the Moment

One of the many lessons businesses can learn from the 2008 upside down, inside out presidential campaign is just how important it is that the [candidate's] message reflects the moment. For example although it has worked many times before, this year was not the time for McCain to deploy character assassination strategies ahead of a thoughtful plan about how to handle our sinking economy.  When people are scared and uncertain about their financial future, everything else fades into the woodwork. 

Reality vs. Gloom & Doom

By the same token today when employees are worried if they will have a job tomorrow, managers have the difficult task of staying realistic without spreading gloom & doom especially as we approach the holiday season. Workplace morale is already likely to be low & getting lower. Unfortunately while everyone associates December with Christmas, shopping, presents, family, and good cheer along with a host of other adjectives many of which have been imprinted in our minds by Hallmark, it is also the month connected with the "pink slip." CEOs everywhere have already begun to lay the groundwork throughout the nation & in the media for a significant amount of bad news to come & some fairly hefty job cuts have already begun.

Thrift is "in"

As a result, by way of matching these times, throughout the media we hear messages that reflect these times; for example, thrift is now "in" [note: I am actively choosing not to ask how something that has to happen by default can be considered "in" or hip but that's another post]. This includes doing everything from shopping at Wal-Mart & consignment stores to clipping coupons. What can CEO’s & managers do to help calm things in the workplace? They too can match the moment. At the risk of stating the obvious, now is not the time to be talking about fat Christmas bonuses for anyone nor is it the time to contemplate things like luxury business travel, golf junkets, etc. Basically, when asking employees to “tighten their belts,” leaders must demonstrate that they are doing the same thing.  Amazingly, there are still too many people in the financial world who are not getting this message.

Line of the Week 11-09-08

This week's "line of the week" is a study in contrasts; contrasting style, philosophy, and therefore as a surprise to no one, contrasting success.

 Recently, celebrity chef Mario Batali was interviewed. Reflecting on his rise as well as the challenges faced to maintain top-notch restaurants especially in this environment, he commented on a personnel issue that pertains to ANY business. When asked about his biggest mistake he said:

"...Letting people get lured away by people offering them 10% more. The big lesson is that you do not have to make all the money—you can share a lot of it..."

However, compare his philosophy with an observation made by Maureen Dowd this week about one of the major players in our nation's financial mess:

"...It’s W., Cheney and Edward Liddy, the C.E.O. of A.I.G. — who can’t seem to stop the conga line of bailout beneficiaries from going on luxury retreats, even though taxpayers have to keep ponying up..."

There's a reason Batali is a huge success while Liddy [& other so-called financial wizards] have come to the federal government "hat in hand" begging for a bailout.

In the interest of full disclosure, I am a huge fan of at least three of Batali's restaurants in NYC-Babbo, Becco, & Otto. If you are headed to NYC any time soon, you are bound to have something wonderful at any or all of them. What's even more amazing is that there are over 10 more places to choose from!