Saturday, May 30, 2009

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

In January we lost just over a half a million jobs (598,000 non-farm jobs). If Chrysler closes, we loose 55,000 direct jobs and an unknown number of secondary jobs. Secondary jobs are suppliers to Chrysler and places that sell things like food and clothing to Chrysler employees. When we loose almost 600,000 jobs in one month, 55,000 doesn’t sound so bad until you put that number in to a human perspective.

The number of employees directly impacted by a possible Chrysler shut down is greater than the entire population of the town I live in. Imagine every business in my entire town closing the doors!

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 city, didn’t crack their macro view. Once the leading indicators got large enough to get their attention it was too late to for them 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 and since events have proven them right they are the most likely to spot a solution first. Besides, they’ve been thinking about the problems, as problems, longer than anyone else. Everyone else was too busy saying, “there is no problem - the economy is fundamentally sound”!

Sunday, May 24, 2009

Memorial Day

Back in the 1950s there was a TV entertainer named George Goble (see this Wikiapedia link). During an interview he was asked if he served in World War II and he answered yes I was pilot. The audience applauded.

When asked what he flew, he replied, C-47s and the audience applauded again. When asked where he was stationed, he replied, Omaha, and the audience laughed. He gave his trademark long pause and stared at the audience, then replied, “That’s where they sent me”.

Some served in combat, some as clerks, some in the reserves but all veterans have this in common, they served where their branch of the military sent them.

As a Viet Nam veteran, I have a common bond with all veterans; we put our name in the hat and took the luck of the draw. Each of us was willing to put aside our own lives for some period of time to support and protect our country. However dramatic or humble the service, that willingness is what I believe we honor on each Memorial Day.

In an unbroken tradition that stretches from the Revolutionary War to Iraq the women and men of our armed services have put themselves at greater or lesser risk for their extended family – the United States of America!

Tuesday, May 19, 2009

The worst mistake you can make in a meeting

The worst thing you can do in a meeting is make your employees think you are holding them responsible for things beyond their control.

When you talk to your employees about “owning” a process you must remember that they can only own it if they have the authority to drive and control the process. You cannot be responsible for something you don’t have control over.

Your employees can only think to their level of influence. If you have a mixed level of managers and workers in the same meeting, make sure that each knows which parts of the briefing apply to their level.

They need to know the high level goals of the company, business unit, and department but only in general. They only need to know the details of the part they can influence because they will not be responsible for anything beyond their control.

Friday, May 15, 2009

About those banker's bonuses

This Time article in their online version discusses the importance of paying the Citibank traders their bonuses.

The well-reasoned and thoughtful article is based on the premise that since they make huge amounts of money for Citibank, keeping them is in the bank’s best interest. If they left, not only would Citibank loose the profits, but since these men and women are so good, business would naturally leave Citibank and follow them to their new firms.

Horse pucky!

If these guys are the best and brightest, why did they recommend buying stocks and derivatives at prices that “The Market” over valued.

Don't think they were over valued? Ask the market that crashed to burst the bubble. If we accept that the current economic situation is a market correction for improperly priced financial products, then the people who must carry the largest responsibility are the people who advised buying at that price. If they were that wrong then, why should we want to keep them?

If your business judgment was that bad, would your boss want to keep you much less pay you a bonus?

I am constantly flabbergasted by the policy makers and pundits who have a totally different set of performance standards for the CEO of a major company than for the slob that fixes their plugged up commode.

Wednesday, May 13, 2009

Thinking too global?

One problem with the government’s response to the “global economic crisis” is their focus on the word “global”.

In an episode of the TV show West Wing, one of the characters asked the president “Why is an American solder’s life worth more than a ...” and inserted the name of the fictional country they were talking about. By the end of the episode the president answered, “It’s not”.

While that may appeal to our sense of honor, it misses the point. The President of the United States was not elected to preserve and protect the lives of whatever country is under discussion, he was elected to preserve and protect the lives of Americans!

We did not elect our President, our Senators, or our Representatives to support the global economy. We did elect them to take care of the citizens of the United States of America. Events have shown that they worried so much about the impact of their decisions on “global” markets that the forgot the impact on their own citizens.

We've bled jobs to foreign countries for years because of trade agreements that made it cost effective for businesses to shift work away from the United States. Yes, we got cheaper products, but lost jobs so much faster than we created new ones that we destroyed our biggest customer base.

If your friends and neighbors don't have jobs, they can't buy your stuff!

Monday, May 11, 2009

What are you telling your workers?

If you wouldn’t accept the answer yourself, don’t try to sell it to someone else. (Least of all a subordinate!)

Flying from the east coast back to Seattle, we were told the flight had been moved from to a different gate. A real inconvenience when the gates are in different terminals at Dallas-Fort Worth airport. On arriving at the gate we were told that the plane was going to be 2 hours late.

I could have accepted the delay except for the aircraft loading at the gate for Sacramento with a departure time of 5 minutes before my scheduled flight to Seattle. Airlines don’t plan for two aircraft scheduled to depart with in 5 minutes of each other to occupy the same gate. Obviously someone knew that the Seattle flight would not be filling that gate at that time far enough in advance to schedule the Sacramento flight to load there.

The change in plans is a so what, travel can be like that. The insulting part was to get an answer that was obviously not true! The truth was obviously that we should have been told - Your flight is delayed 2 hours. It is now scheduled for 5PM at gate 16.

How would you feel if your boss gave you an answer that you would not accept from a subordinate? Worse yet, how do you feel about yourself if you give a subordinate an answer you wouldn't accept from them?

The single test for the answer you are about to give is “Would you be satisfied with the same answer from a subordinate or supervisor” if the answer is anything less than an unequivocal yes, DON’T SAY IT!

Tuesday, May 5, 2009

Why do your workers feel betrayed?

Why are American workers so upset with all the job loss? Not because it’s hard to pay their bills, not because they may loose their homes, not because they can’t afford to see a doctor – it’s because they are expected to pay ALL the costs of the economic down turn!

Most of us had little control over what the companies we worked for did. They built too much capacity without asking us what we thought of that decision. They made loans (that turned out to be questionable at best) with out asking us if it was a good deal. They supported legislation that made it cost effective to ship our jobs “off shore” and never gave us a chance to argue against that practice.

Then when those choices turn out to be very bad choices, we pay for the mistakes!

When those decision makers get fired they still get bonuses that are larger than most of is will make in a lifetime. Bonuses for making choices that cost us our jobs and damaged many American businesses to the point they are facing bankruptcy.

The vast majority of workers did their work with a commitment to making the best products and giving the best service, now decisions outside their control have left far too many without their old jobs and no place to find a new one. This, while the decision makers are getting paid well enough to retire at a much richer lifestyle than those average workers will attain IF they can find a new job.

A big part of the problem is that American managers have created an adversarial system between managers and workers. They did this by not understanding that without someone putting boxes on truck, the product never gets to the customer. Yes, yes, I know – freight dockworkers are easy to replace since a lot of people can do the work and training costs are low.

It all comes back to the decision makers’ confusion about value versus cost. Just because something is cheap, doesn’t mean it’s not valuable. One of the cheapest parts on your car is a 12-cent cotter pin that holds the steering linkage together. But how valuable is keeping your car's steering linkage from failing?