Saturday, April 25, 2009

You can’t be creative and think statistically

New ideas are by definition different from what went before if they weren’t, they’d be old ideas. Statistics are a snapshot of history thus only report on old ideas. The more you concentrate on what happened last week the less you think about what comes next.

Statistics may help you see what did or didn’t work well in the past, but they do not show you what will come next, for that you have to forget statistics and think outside the limits of how you did it when you took that snapshot. Everyone is familiar with the phrase “Think out side the box”, the statistical snapshot of the past is part of the limits of the box.

Albert Einstein said “The significant problems we face cannot be solved at the same level of thinking we were at when we created them”. Which is essentially the same as my much more informal statement, and if one of the most creative thinkers in history recognized that the past is a prison to new ideas you should at least consider that you need to stop looking at those spreadsheets and charts of last year and last week.

To prepare for the future, you have to put the past out of your mind, put your feet up on the on the desk, stop answering your phone, and think about what may come next and how to turn it to your advantage.

Wednesday, April 22, 2009

The Susan Boyle Effect

Who the heck is Susan Boyle?

She is a singer on the TV show “Britains Got Talent 2009” who’s voice just blew the judges out of the water.

So what! So, she absolutely doesn’t look the part. If you watch the video link above, you can see the judges and the audience’s reaction to her appearance and accent when she walks out on stage.

Then she sang. She sang and the world changed! You suddenly see her as a professional singer with the wardrobe, makeup, and hairstyling all perfect. This should be more than an interesting cultural note, it should be a wake up call to how you find and hire talent for your business.

Susan boyle’s resume was her appearance and accent and the audience and judges discounted her on that initial look. When she sang, she demonstrated her capabilities and they are magnificent.

The TV show American Idol is entertainment and the failures are almost as entertaining as the successes. Without a venue like Britians Got Tallent, Susan might never have gotten past the initial “she really doesn’t look like my preconceived idea of what a singer should look and talk like”. What a talent the world would have missed.

Is your system so narrow and your preconceptions so strong you are missing great talent for your business? Before you start claiming you don’t have time to talk to everyone, think about the following:

A backhoe without an operator is a lawn ornament while a worker with a shovel will still get work done. Maybe not as much or as quickly, but the worker is the key, not the equipment.

If presentation skills are not part of the job you are filling, then presentation doesn’t matter. The number of workers who have focused task skills AND presentation skills is much smaller than those with just task skills. Every time you hire based on how good the resume looks and how well they interview, you risk hiring a skilled presenter and not a skilled worker.

We all knew people in school who tested well but had no clue what the class was about or how to apply the lessons. Is your HR process screening for great singers or people who just look and talk like great singers? Unlike a TV talent show, you have to hire the worker to “hear them sing”. Make sure your process is getting the workers you need and not just the ones that are easy for HR to pick.

Monday, April 20, 2009


In the military they talk about “tooth-to-tail”, referring to the ratio of supply clerks (tail) to fighters (tooth). Keeping the tail as small as necessary to support any given number of teath is an ongoing leadership effort at all levels for military commanders.

One of the big contributors to the current economic crisis is the tooth-to-tail ratio of the biggest American business. Too many administrators and managers to too few workers. Workers in this usage is defined as people who actually design, build, sell, or deliver a product or service to the customer. Now, there are essential support functions. Someone does have to to do payroll, clean the restrooms, and so on.

But too many managers and administrators getting too large a salary and bonus at the top is the first place to cut. The guys and gals on the shop floor should be the last.

To push the military tooth-to-tail analogy just a little further, without the logistics tail to supply the fighters teeth, you have an inefficient army, but inefficient armies have won wars. A superb logistics system with no fighters has never won a war

In the same way, the people who actually build the product or deliver the service to your customer are the key to your profits. All the rest of the functions are support and deal with the efficiency of your process, not if it delivers your product or service at all.

Thursday, April 16, 2009

Is profiting from failures ethical?

Back when the railroads were first building their network of rails, many startups failed, were bought up at bankruptcy prices, and then went on to financial success once the debt was washed away. We saw the same thing with some of the long distances fiber-optic cable companies. They borrowed huge sums of money to build their infrastructure and couldn’t earn enough to pay back the loans, individual assets were bought by other companies at bankruptcy prices, and then used by the new owners to make a lot of money.

In the current economy the push seems to be to wash many companies debt to retired employees away by reneging on their pensions and health benefits. Allowing the retirees to “fail” will help the companies to stay afloat and to generate a profit in place of their current losses. The “new” profit comes directly from the money not being repaid to the original investors or in this case the people who already worked for the retirement payments and health benefits.

Do the beneficiaries of those bankruptcies have an ethical obligation to the people who lost their investment (in form of hours worked or in the cash used to buy stocks) in the original company? If those investors and employees had not fronted the hours or money the asset would not have been created, and these future profits never realized.

Monday, April 13, 2009

Fighting tough times

I just saw yet another article recommending that people use the current economic crisis as a time to reevaluate their life and, for those who loose their jobs to ask “What would your life look like if money was not an issue?”. The suggestion is that since you’re out of work anyway, try to turn the lemon into lemonade. Always a good idea, but what do you do if the answer is “My life would look exactly like it did before I lost my job!”

Simply telling workers to use the forced time off for self examination and to find a new direction is useless. Real advice would give them some way to evaluate their personal capabilities and interests, advice on matching their personal capabilities and interests with a new career field, directions on how to learn new skills and how to pay for the classes and living expenses while taking the classes, and instructions on how to connect with an employer to put those new skills to work.

Don’t bother claiming that it’s the individuals job to figure out the answer to those questions, you’re the one who decided to set yourself up as the “expert” by giving advice in the first place. Unless and until you can answer those questions, your not only not helping, you are diverting attention from the real problems and solutions.

Wednesday, April 8, 2009

Open markets create customers for US business

This has be an article of faith to almost all economist for my entire lifetime. Calling it into question is treated by both economists and politicians as heresy and the people who question this particular “faith” are treated as economically challenged.

Well lets look at the results of this particular idea.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced on Friday, March 13, 2009 that total January exports of $124.9 billion and imports of $160.9 billion resulted in a goods and services deficit of $36.0 billion. That means we bought 36 billion dollars from foreign companies than we sold.

Somehow these practices didn’t create more customers for US businesses it created more customers for the foreign companies. And in creating those customers, Americans lost their jobs.

According to the US government Bureau of Labor Statistics web site as of March 2009 the total unemployment was 8.5%. With 301,000,000 people in the US, that’s 2,558,500 people.

In addition to spending that $39 billion somewhere else, we gave up a huge amount of money in salaries for people who lost their jobs.

Lets suppose that each person earns a salary of $25,000 per year. That means the nation as a whole is loosing $63,962,500,000,000.00 each year they are not working.

The entire trade deficit as of January 2009 was $36,000,000,000.

If we subsidized US companies by the amount of the deficit ($36,000,000,000.00) we could put at least half the unemployed back to work. I say at least half, because those people would be buying things and paying taxes and that would spark the economy to hire even more people.

The biggest problem with the proposed solutions is that the “usual suspects” who advised us to make the trade policies and business regulations that got us here are the people being asked for the solution! Let me make sure I understand - the people who recommended policies that failed are now being touted as the experts who can solve the problem.

If your mechanic hosed up your car, would you take it back to them to fix it? And why should economic advisers be treated any differently?

Friday, April 3, 2009

It’s really scary how fast we get used to stuff

I was just reading an article a the CNN website titled “15 Companies That Might Not Survive 2009” by Rick Newman. Rick named Chrysler as one company that might not make it through the year.

In January we lost just over a half a million jobs (598,000 non-farm jobs). According to the 2005 annual report from Diamler Chrysler, Chrysler had 84,100 employees. If Chrysler were to go the way of American Motors or Studebaker all of those workers will be on the street. When we loose almost 600,000 jobs in one month, 84,100 doesn’t sound so bad until you put that number in to a human perspective.

The number of employees directly impacted by Chrysler going out of business is twice the number of the entire population of the town I live in. Imagine every business in the entire town closing their doors! Then imaging it happening twice in a single location.

One of the most important skills a senior manager needs is to be able to switch back and forth between macro and micro thinking. That is looking at the “big picture” and the individual details. Knowing the size of your market but still being able to understand the needs of individual end users.

I believe that part of the reason our economy is in such disarray is the planner’s lack of ability to deal with big numbers and still see the individual costs. By focusing only on the macro, the big picture, they missed a lot of leading indicators embedded in the micro. Problems for a single individual in one place, a single company in another, or a single industry in yet another, didn’t crack their macro view. Once the leading indicators got large enough to get their attention it was too late to for anyone to stop the downward spiral.

It’s time to find the “contrarians”, the people who tried to call your attention to the dangers of your current plan. Those folks who said “those trade agreements are not a good idea”. The economists who warned their banks that they were taking on too much sub-prime mortgage risk. The investment experts that warned against buying too heavily into derivatives.

Those people saw the problem long before anyone else events have since proved right are the most likely to spot a solution, particularly since they’ve been thinking about the problems as problems longer than anyone else. Everyone else was too busy saying “there is no problem” and “the economy is fundamentally sound”!