So long ago that I no longer remember where or when, I heard this statement: The measure of a leader is not the measure of the cause.
How many effective and charismatic leaders who lead evil causes does history tell us about? How many great causes were lead by flawed men?
Back when I was in the army, we played poker for recreation. We had a saying that the cards spoke for themselves. That is when you laid down your hand, it didn’t matter what you said you had, you actually had what the cards showed. And the qualities of the leader both good and bad are not the qualities of the cause, good or bad. The results of the cause, good or bad, speak for themselves and define that cause’s qualities.
We’ve all seen televangelists that preach a Christian life but don’t come close to living it themselves. Does their inability to meet their own standard make that standard less worthy? I think not. Just as someone’s idea is neither better nor worse because they present it poorly or well.
The same is true for business ideas. The idea is either good or bad on it’s own merits not on the quality of the presentation. If the life’s blood of your business is a product or service then improving either the product, the service, the efficiency of production or delivery is crucial to your survival.
If improving your product or service or even developing a new product or service is important to your business, you’ve got to spend the time to look beyond the presentation to find your next big thing or next great employee.
Tuesday, December 1, 2009
Sunday, October 25, 2009
Why the economy imploded
A lot of well-trained, very smart people made decisions that seemed quite rational at the time. They followed their best training and the collective wisdom of their industry.
Since those decisions lead directly to the current economic crisis, we really need to understand what happened and why it happened to try so we can try to prevent this kind of global collapse from happening again.
Each of these people has somewhere between 250 and 500 hours of dedicated classroom training in economics, how it works, and how to manage businesses using that knowledge. If only one or two of this huge number of people, worldwide, had made the kind of serious misjudgments that lead to this crisis you might attribute it to their individual misunderstanding or misuse of that schooling or you might simply say they didn’t properly execute the steps that training recommended.
You might, if only a few of them had made those mistakes. That’s not what happened. Far too many of this select group acted in the same way at the same time for it to be simple human error.
Which seems more likely to you, that literally thousands of individuals, spread all over the world made similar mistakes at approximately the same time or that the knowledge gained in those 250 to 500 hours was simply wrong?
The fact the existing tracking systems, created by those same classically trained economists, didn’t catch a lot of people misusing or not properly executing the accepted economic wisdom makes it seem even more likely that the decision makers were doing exactly what that accepted economic wisdom expected them to do.
Without a detailed study of the current recession we can’t be sure, but it is unlikely in the extreme that so many people would all screw up in the same way at the same time. Much more likely that they were filtering the information through the same misguided theories.
I submit that a lot of people following a bad plan is much more likely than a lot of people screwing up in the same way at the same time. I further submit that the fundamental flaw in the underlying theories is that they mistake cause for effect!
There is an old saying that nothing happens until someone sells something, and from the limited perspective of the salesman that’s true. The broader view is really that nothing happens until someone buys something. Using that broader statement leads to other obvious conclusions.
For anyone to buy something they must have money; implying jobs that pay enough to buy that stuff. So any economic theory that does not hold as its keystone the availability of jobs and the income level of those jobs is fundamentally flawed. Yes, the current crop of economic measures and theories do include jobs and salaries, but only peripherally not as the central measure of economic health.
While this may seem simplistic or limited to someone trained in “classic” economic theory it seems obvious to the most casually observer that since one of the most highly trained economists, Alan Greenspan, didn’t see this coming that the training he spent a lifetime acquiring might have blinded him to factors that a lay person in his innocence recognizes as critical.
Benjamin Franklin is quoted as saying “Insanity is doing the same thing the same way and expecting different results”, we got where we are following our current economic theory and only examining and revising those theories stands a chance of charting a course out of our economic morass.
Since those decisions lead directly to the current economic crisis, we really need to understand what happened and why it happened to try so we can try to prevent this kind of global collapse from happening again.
Each of these people has somewhere between 250 and 500 hours of dedicated classroom training in economics, how it works, and how to manage businesses using that knowledge. If only one or two of this huge number of people, worldwide, had made the kind of serious misjudgments that lead to this crisis you might attribute it to their individual misunderstanding or misuse of that schooling or you might simply say they didn’t properly execute the steps that training recommended.
You might, if only a few of them had made those mistakes. That’s not what happened. Far too many of this select group acted in the same way at the same time for it to be simple human error.
Which seems more likely to you, that literally thousands of individuals, spread all over the world made similar mistakes at approximately the same time or that the knowledge gained in those 250 to 500 hours was simply wrong?
The fact the existing tracking systems, created by those same classically trained economists, didn’t catch a lot of people misusing or not properly executing the accepted economic wisdom makes it seem even more likely that the decision makers were doing exactly what that accepted economic wisdom expected them to do.
Without a detailed study of the current recession we can’t be sure, but it is unlikely in the extreme that so many people would all screw up in the same way at the same time. Much more likely that they were filtering the information through the same misguided theories.
I submit that a lot of people following a bad plan is much more likely than a lot of people screwing up in the same way at the same time. I further submit that the fundamental flaw in the underlying theories is that they mistake cause for effect!
There is an old saying that nothing happens until someone sells something, and from the limited perspective of the salesman that’s true. The broader view is really that nothing happens until someone buys something. Using that broader statement leads to other obvious conclusions.
For anyone to buy something they must have money; implying jobs that pay enough to buy that stuff. So any economic theory that does not hold as its keystone the availability of jobs and the income level of those jobs is fundamentally flawed. Yes, the current crop of economic measures and theories do include jobs and salaries, but only peripherally not as the central measure of economic health.
While this may seem simplistic or limited to someone trained in “classic” economic theory it seems obvious to the most casually observer that since one of the most highly trained economists, Alan Greenspan, didn’t see this coming that the training he spent a lifetime acquiring might have blinded him to factors that a lay person in his innocence recognizes as critical.
Benjamin Franklin is quoted as saying “Insanity is doing the same thing the same way and expecting different results”, we got where we are following our current economic theory and only examining and revising those theories stands a chance of charting a course out of our economic morass.
Sunday, September 20, 2009
Are you looking for the right things?
Bill Gates left Harvard in his junior year, Paul Allen dropped out of the University of Washington. Steve Ballmer graduated from Harvard with a bachelor’s in math and economics.
These three started with an idea and turned it into a major corporation.
If someone with the credentials of any of these three (two college dropouts and and a math major with no practical experience) came to you with the idea for Microsoft would you have bankrolled them? More importantly will you recognize the next Gates, Allen, or Ballmer?
I promise you that the Steves (Wozniak and Jobs) started in their garage because they had to, not because working in a garage was the “best” place to start. They believed, rightly or wrongly, that they couldn’t get any investor to give them the money to do what they wanted to do. Not because what they wanted to do was all that risky, but because the investors they could find had a lack of vision and were much more interested in the creator’s presentation skills than the fundamental idea.
What process do you have for the janitor to tell you about some hip, slick and cool new thing he found? Do you restrict your pool of new ideas to a select few managers at your staff meetings? And most importantly of all, will you remember that it’s your staff’s job to find the ideas, it's your job to pick the winner and figure out how to make money from it?
One of the problems with the economy today is the understandable urge to reduce risk. While managing and reducing risk seems like something any business should be doing, when you forget that without risk there is no growth, your business and the whole economy stop growing! One of the reasons Silicon Valley has had so many startups is the collection of people willing to take risks in that one small area.
The biggest blockage to a new idea is that a great idea is useless without someone else with money and a willingness to risk that money supporting the new idea.
These three started with an idea and turned it into a major corporation.
If someone with the credentials of any of these three (two college dropouts and and a math major with no practical experience) came to you with the idea for Microsoft would you have bankrolled them? More importantly will you recognize the next Gates, Allen, or Ballmer?
I promise you that the Steves (Wozniak and Jobs) started in their garage because they had to, not because working in a garage was the “best” place to start. They believed, rightly or wrongly, that they couldn’t get any investor to give them the money to do what they wanted to do. Not because what they wanted to do was all that risky, but because the investors they could find had a lack of vision and were much more interested in the creator’s presentation skills than the fundamental idea.
What process do you have for the janitor to tell you about some hip, slick and cool new thing he found? Do you restrict your pool of new ideas to a select few managers at your staff meetings? And most importantly of all, will you remember that it’s your staff’s job to find the ideas, it's your job to pick the winner and figure out how to make money from it?
One of the problems with the economy today is the understandable urge to reduce risk. While managing and reducing risk seems like something any business should be doing, when you forget that without risk there is no growth, your business and the whole economy stop growing! One of the reasons Silicon Valley has had so many startups is the collection of people willing to take risks in that one small area.
The biggest blockage to a new idea is that a great idea is useless without someone else with money and a willingness to risk that money supporting the new idea.
Wednesday, September 16, 2009
Your gut check is most likey right
I correspond (email) with my elder son quite a lot about various business issues. I like testing my experience-based ideas against his MBA trained thinking.
Our last discussion was about the missing data in the reports about unemployment. I believe that underemployment is the one of the biggest components in the current economic crunch. I also believe that the economy has to generate about 250,000 new jobs every month just to accommodate the people entering the workforce for the first time. You can see my blog post Digging Out for details.
When I complained that the reports don’t deal with either element very well and that the popular press doesn't tell the readers that this is critical but missing information, his reply was that collecting the underemployment data was difficult and would, probably, be lost in the noise of the bigger out-of-work number anyway.
I think this misapplication of the idea “if it can’t be measured it ain’t science” completely that ignores the fact that just because you don’t know how to measure it doesn’t mean that it isn’t critical. I also think that not including it has caused too many decision makers to miss key elements that are creating unintended consequences and pushing up unemployment numbers dramatically.
Just as you can see the differences between my poor writing and real art, your individual judgment will spot trends and underlying information that cannot be measured, reduced to numbers, and plugged into the currently popular economic equation. As long as you are analyzing the available information and not trimming to fit your pet theory, conspiracy or otherwise, your “gut check” much more likely to be right than the folks starting with a theory and complex math.
An if you think the complex math is more likely to be right, remember that John Nash, who shared the 1994 Nobel prize in economic science, developed the mathematical theory that underlies the complex equations that allows the development of derivatives trading. The same derivatives that drove the market collapse because those Nobel Prize winning equations didn’t really capture all the critical elements.
Alan Greenspan, former Chairman of the Federal Reserve Bank is a pretty smart guy and Wikipedia has this quote from him: In Congressional testimony on October 23, 2008, Greenspan acknowledged that he was "partially" wrong in opposing regulation [..of financial derivatives..] and stated, "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity — myself especially — are in a state of shocked disbelief." Referring to his free-market ideology, Greenspan said: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”
The other quote that comes to mind is from Upton Sinclair: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”
Our last discussion was about the missing data in the reports about unemployment. I believe that underemployment is the one of the biggest components in the current economic crunch. I also believe that the economy has to generate about 250,000 new jobs every month just to accommodate the people entering the workforce for the first time. You can see my blog post Digging Out for details.
When I complained that the reports don’t deal with either element very well and that the popular press doesn't tell the readers that this is critical but missing information, his reply was that collecting the underemployment data was difficult and would, probably, be lost in the noise of the bigger out-of-work number anyway.
I think this misapplication of the idea “if it can’t be measured it ain’t science” completely that ignores the fact that just because you don’t know how to measure it doesn’t mean that it isn’t critical. I also think that not including it has caused too many decision makers to miss key elements that are creating unintended consequences and pushing up unemployment numbers dramatically.
Just as you can see the differences between my poor writing and real art, your individual judgment will spot trends and underlying information that cannot be measured, reduced to numbers, and plugged into the currently popular economic equation. As long as you are analyzing the available information and not trimming to fit your pet theory, conspiracy or otherwise, your “gut check” much more likely to be right than the folks starting with a theory and complex math.
An if you think the complex math is more likely to be right, remember that John Nash, who shared the 1994 Nobel prize in economic science, developed the mathematical theory that underlies the complex equations that allows the development of derivatives trading. The same derivatives that drove the market collapse because those Nobel Prize winning equations didn’t really capture all the critical elements.
Alan Greenspan, former Chairman of the Federal Reserve Bank is a pretty smart guy and Wikipedia has this quote from him: In Congressional testimony on October 23, 2008, Greenspan acknowledged that he was "partially" wrong in opposing regulation [..of financial derivatives..] and stated, "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity — myself especially — are in a state of shocked disbelief." Referring to his free-market ideology, Greenspan said: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”
The other quote that comes to mind is from Upton Sinclair: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”
Monday, September 7, 2009
You’re supposed to find your passion, you’re supposed have a passion for your work.
How many really do?
If you didn’t go to college, your first job was probably whatever you could get. That job led to other jobs that turned into a career. Mostly life handed you lemons, you made lemonade and your career progressed by Hobson’s choice.
If you went to college, you took what you thought you liked – at 17! As you studied you may have changed direction but you graduated at 21 or 22 and then began to find many new and surprising directions that you never new about, much less considered when you picked your major.
Now, in the middle of a recession with jobs hard to find, you are being told that you must find a job that fits your passion. You’ve been too busy making whatever your Hobson’s choice got you into work to find out what you love. That also means a career change in a job climate were employers are not looking for crossover skills, they are looking for a “perfect match”.
You will find that most of the people claiming that you should find work you are passionate about are in social professions – psychologists or psychiatrists – or sales. You will never hear an engineer, a chemist or truck driver tell you to follow your passion. You rarely see “must have a passion for driving a fork lift or accounting” in a job description. The only jobs I remember seeing talk about passion is sales. All the push for job passion is driven by our workplace change from maker to designers and sellers.
I am writing this on a Mac book and in the process of making this laptop computer someone sat at a workbench checking resisters. Measuring the resistance value of some percentage of the incoming parts to make sure that they are correct. How passionate would you be about measuring the resistance of these small parts?
You might get a lot of satisfaction from doing your job well and knowing that you are part of making a great laptop for some unknown guy to write on.
But, passion? Not so much.
If you didn’t go to college, your first job was probably whatever you could get. That job led to other jobs that turned into a career. Mostly life handed you lemons, you made lemonade and your career progressed by Hobson’s choice.
If you went to college, you took what you thought you liked – at 17! As you studied you may have changed direction but you graduated at 21 or 22 and then began to find many new and surprising directions that you never new about, much less considered when you picked your major.
Now, in the middle of a recession with jobs hard to find, you are being told that you must find a job that fits your passion. You’ve been too busy making whatever your Hobson’s choice got you into work to find out what you love. That also means a career change in a job climate were employers are not looking for crossover skills, they are looking for a “perfect match”.
You will find that most of the people claiming that you should find work you are passionate about are in social professions – psychologists or psychiatrists – or sales. You will never hear an engineer, a chemist or truck driver tell you to follow your passion. You rarely see “must have a passion for driving a fork lift or accounting” in a job description. The only jobs I remember seeing talk about passion is sales. All the push for job passion is driven by our workplace change from maker to designers and sellers.
I am writing this on a Mac book and in the process of making this laptop computer someone sat at a workbench checking resisters. Measuring the resistance value of some percentage of the incoming parts to make sure that they are correct. How passionate would you be about measuring the resistance of these small parts?
You might get a lot of satisfaction from doing your job well and knowing that you are part of making a great laptop for some unknown guy to write on.
But, passion? Not so much.
Friday, August 21, 2009
Digging out
According to the website infoplease.com , there were just over four million births (in the US) in 1991. Why is that number interesting? Because those people will turn 18 this year, and 18 is the traditional age when Americans start working full time.
Some percentage will be stay-at-home moms (or dads), some will be unable to work because of health issues or physical disabilities. The actual number of people entering the work force each month is generally estimated at around a quarter of a million workers. This means that we have to create 250,000 jobs every month. We can create new jobs or fill existing jobs where workers retire or quit working for another reason; but 250,000 people need a first, full-time, permanent job every single month - forever.
This number should help you understand the news reports on the economy. Any month we don’t create 250,000 new jobs, we are loosing ground. Doesn’t matter which expert predicts that this month’s numbers show a trend, until we create 250,000 new jobs, we aren’t even close to coming out of this recession.
Economist (and reporters) use short forms for numbers because they work with such big numbers every day. One billion becomes 1 and nine hundred million becomes 0.9 with a note at the bottom “All numbers in billions”. That works for people who deal with it all the time – almost. The problem is that the number has no gut check value. It’s far too easy to loose sight of the human impact when you don’t write out the full number.
0.025 (billion) just feels like a small number while 250,000 makes it much easier to see the real, live people who need a job. Depending on the source, that 250,000 is open to debate, but whatever the number, until we crate that number of jobs EVERY month, we are nowhere close to coming out of this recession.
Some percentage will be stay-at-home moms (or dads), some will be unable to work because of health issues or physical disabilities. The actual number of people entering the work force each month is generally estimated at around a quarter of a million workers. This means that we have to create 250,000 jobs every month. We can create new jobs or fill existing jobs where workers retire or quit working for another reason; but 250,000 people need a first, full-time, permanent job every single month - forever.
This number should help you understand the news reports on the economy. Any month we don’t create 250,000 new jobs, we are loosing ground. Doesn’t matter which expert predicts that this month’s numbers show a trend, until we create 250,000 new jobs, we aren’t even close to coming out of this recession.
Economist (and reporters) use short forms for numbers because they work with such big numbers every day. One billion becomes 1 and nine hundred million becomes 0.9 with a note at the bottom “All numbers in billions”. That works for people who deal with it all the time – almost. The problem is that the number has no gut check value. It’s far too easy to loose sight of the human impact when you don’t write out the full number.
0.025 (billion) just feels like a small number while 250,000 makes it much easier to see the real, live people who need a job. Depending on the source, that 250,000 is open to debate, but whatever the number, until we crate that number of jobs EVERY month, we are nowhere close to coming out of this recession.
Monday, August 17, 2009
I’ll believe the politicians when they address the obvious issues in health care
I’ll believe the politicians when they recognize that the part of health care my employer pays for is part of my salary. When they demand that any cut in what the employer pays for health care is balanced by an increase in my hourly rate, so I can pay for the coverage my self.
I’ll believe when they demand insurance companies charge an individual the same amount as for an employee of the biggest companies for the same policy. The insurance company decided to put me in a group called individual instead of a group called company XYZ employee.
I’ll believe when they require insurance companies to accept my pre-existing condition exactly as they did when I started with XYZ Company. The insurance company decides to accept a pre-existing condition or not based on which group they assign me to.
Which group an insurance company assigns me to is an accounting fiction decided by that insurance company and nothing will change as long as it’s in the insurance companies interest (higher profit margin) to not change.
Remember, if the insurance company wasn’t making a profit selling that policy to XYZ company, they wouldn’t sell it. So it’s not a profit or no profit decision, it’s how much profit.
I’ll believe when they demand insurance companies charge an individual the same amount as for an employee of the biggest companies for the same policy. The insurance company decided to put me in a group called individual instead of a group called company XYZ employee.
I’ll believe when they require insurance companies to accept my pre-existing condition exactly as they did when I started with XYZ Company. The insurance company decides to accept a pre-existing condition or not based on which group they assign me to.
Which group an insurance company assigns me to is an accounting fiction decided by that insurance company and nothing will change as long as it’s in the insurance companies interest (higher profit margin) to not change.
Remember, if the insurance company wasn’t making a profit selling that policy to XYZ company, they wouldn’t sell it. So it’s not a profit or no profit decision, it’s how much profit.
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