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December 31, 2005

Recipe for Failure

Recently, I came across this evaluation of a post-acquisition effort to integrate managers of an acquired company into the culture of the buying company. The author has decades of experience in organizational development and training and, one imagines, has contributed to and participated in hundreds if not thousands of corporate culture and change exercises. This particular one caught his attention for being -- his word -- "sadistic".

Here's how the consultants spent the four days familiarizing the managers with 'the way we do things around here' in their new company:

- Provoking and pushing people to see how long it would take to break them, in front of their peers.
- Insulting and belittling people.
- Embarrassing people.
- Putting people on the spot repeatedly and uncomfortably.
- Telling people they did not have what it takes and would not make it in the new company.

In retrospect, the author believed the consultants had been sent in to "test us ... in such an aggressive manner that the weak would wash out and only the strong would survive."

If so, the consultants surely failed because an organizational culture that belittles, pushes, breaks, insults, embarrasses and destroys confidence is one in which only the weak survive. Strong people and strong leaders do not do these things. Bullies do. But not strong people.

Posted by Doug Smith at 05:46 PM | Permalink | Comments (1) | TrackBacks (1)

December 29, 2005

Annals of Incompetence

What do a South Dakota radio station, Virgin Islands perfume shop, a Utah dog boutique and scores of Dunkin Donuts and Subway shops around the nation have in common with nearly 17,000 other small businesses? Two things:

First, they received more than 85% of the billions of dollars Congress asked the Small Business Administration to distribute through lenders to small businesses in New York and Washington DC needing to recover from September 11th.

Second, they were in no way affected by the terrorist attacks.

Getting something -- anything -- wrong 85% of the time demands extreme "Brownie/FEMA" like incompetence -- incompetence on a scale that, seriously, shreds the use of the word 'administration'. Are you or anyone you know aware of any program or business or initiative that failed in its purpose and objectives 85% of the time?

Response of SBA Adminstrator Hector Barreto: "SBA implemented the program as Congress intended."


Posted by Doug Smith at 07:57 PM | Permalink | TrackBacks (4)

December 27, 2005

John Yoo and The Liar's Paradox

Most readers have heard of The Liar's Paradox: "This sentence is false." For most of us, it is a kind of linguistic game -- a curiousity demonstrating the flexibility of language. For philosophers and logicians, however, it has sparked centuries of debate and reflection -- one upshot of which is to point out the sentence's primary purpose is to confuse us.

We must try to make sense of the world we live in. We cannot always depend on clear language to be clear - and the Liar's Paradox teaches us to be wary of those who manipulate our desire for clarity to mislead and confuse us.

Consider, then, this version of the Liar's Paradox: "The rule of law is that there are no rules."

Or, if you prefer, read any number of memoranda and books by John Yoo, the lawyer whose devotion to executive branch 'flexibility' eviscerates the plain meaning of constitutional law in favor of confusion. Yoo's writings about 'flexibility' are now policy in an executive branch who -- in the name of The United States of America, in our name -- apply them to "lock up human beings indefinitely without charges or hearings, to subject them to brutally coercive interrogation tactics, to send them to other countries with a record of doing worse, to assassinate persons it describes as the enemy without trial, and to keep the courts from interfering with all such actions."

Yoo claims that September 11th demanded legal reasoning in the face of unprecedented challenges -- challenges for which, he asserts, there were no books to look into. For a lawyer, this is an astonishing statement -- among the most venerable aspects of lawyering is looking to the past for guidance. His assertion is a sham. That there are unprecedented aspects of today's complex challenges (e.g. asymmetrical warfare) is not a logical corollary for the statement: there are no books to look into.

There are in fact zillions of books and other writings to look into (including The Constitution) for guidance about how to conduct an effective campaign against terrorism within the dictates of the rule of law and a constitutional form of government that separates powers into three branches and guarantees certain rights to its citizens.

John Yoo is described by professional colleagues as brilliant. He is undoubtedly clever. But cleverness and wisdom are no more identical than the rule of law is with the rule of lawyers.


Posted by Doug Smith at 01:05 PM | Permalink | Comments (1)

December 26, 2005

The Founder's Dilemma: Giving Life Twice

Whether a founder, an entrepreneur or even a later arriving star, men and women whose genius gives life to organizations regularly confront a profound choice: renewing that gift of life by letting go, or risking the death of the enterprise.

As challenging as it is to birth (or rebirth) an enterprise, the effort does have this reinforcing quality: both the founder/entrepreneur/renewer and the enterprise are at a beginning. The horizon is filled with unknowns giving energy and promise to each -- to the organization and to the founder. In creating the enterprise, the founder is also creating him or herself. This win/win phenomenon applies to for-profits and not-for-profits both. A dream pervades the scene to inspire all -- and especially the founder -- seeking to make that dream real.

None of which is to minimize the extraordinary array of difficulties, challenges and pitfalls. Indeed, that is why converting dreams into reality is the stuff of legend. It is why founders take on the mantle of the gods -- not literally -- but surely figuratively. Founders and entreprenuers are special in special ways.

This specialness, this legendary status is self-understood. Founders and entrepreneurs are aware of it -- they have to be because, in fact, they are not gods but human beings. They know what they have accomplished. And, it is not just pride that explains their faith in themselves. Founders and entrepreneurs sincerely and appropriately believe their guiding hand is a matter of special trust and mission.

Nor are they alone in any of this. Most who participate with them in the thick we -- employees, boards, advisors and others -- esteem and respect the specialness and honor of the founder and entrepreneur -- the life giver of the organization.

All of which makes the opportunity for the second gift of life the more extraordinary one. Founders are human. They age and tire. Or, circumstances and change outrun the founder's creative energy and fire. Or, both.

Consider, then, the Boys Choir of Harlem -- the magnificent dream brought to life by Walter Turnbull whose efforts were well described when he won the Heinz Award:

"Dr. Turnbull himself has traveled a long and difficult road. From the fields of the South where he chopped cotton as a child, to graduating with honors in classical music and vocal performance from Mississippi's Tougaloo College, Dr. Turnbull eventually settled in New York City where he hoped for a career as an opera tenor. But that professional ambition was sidetracked when he took a job teaching music in Harlem to support himself. There he discovered that despite the lure of the streets and unstable home lives, "music caused kids to focus." Thus, the idea for the Boys Choir of Harlem was born.

It began 30 years ago, when he gathered 20 youngsters in the basement of Ephesus Church.... Dr. Turnbull's infectious enthusiasm, his dedication, and his relentless enforcement of discipline paid handsome dividends.... By the end of 1979, both a touring choir and the Girls Choir of Harlem had been established.

The desire to prove that children from Harlem could succeed academically propelled Dr. Turnbull to create the Choir Academy of Harlem, opened in 1986 as an on-site school serving grades 4 through 8. The program was refined and expanded over the years, until today it is a co-educational, college preparatory school offering grades 4 through 12 to over 500 students. Similar choir academy programs are being established in Detroit, San Francisco, Milwaukee and Chicago, each with advisory support from New York.

Dr. Turnbull specializes in more than cultivating the love of music in children, he is equally dedicated to turning lives around. He and the Choir give at-risk youths a chance to succeed, an opportunity many of them might never have had without Dr. Turnbull's love and commitment. Most are from single-parent households receiving some type of government assistance. But the Choir teaches these youngsters to walk with pride and to hold their heads high, regardless of their circumstances. Dr. Turnbull has commented, "It's not just about the Choir. It's about discipline. It's about feeling good about yourself. That's hope."

Walter Turnbull received this honor in 1998 -- about the time, as the award describes, that the growth and future of the Boys Choir was filled with possibilities of expansion. That 'best future', though, was going to demand stepped up organizational and leadership skills ranging from development and fundraising to marketing, education, strategic alliances and finance.

All of which meant that even as Turnbull was being deservedly honored by Heinz, he confronted the second 'life-giving' moment. And, unlike the first, this moment for him -- like all founders and entreprenuers - was filled with contradictory instead of reinforcing energy. The "best future" for Boys Choir was not a future best led by Turnbull. This was not 'win/win' in that sense.

It was - and is for all founders and entrprenuers -- win/win in a very different sense. By letting go, by passing leadership onto others, the founder simultaneously gives second life to the organization and a very new and different kind of life to him or herself: the opportunity to seek new meaning and new possibilities unconnected and unconstrained by the organization. In giving second life to organizations by letting go, founders give second and new lives to themselves that are fresh and exciting because truly new.

Or, like Turnbull evidently chose, founders can turn their backs on new life for themselves and their organizations. Whether out fear of the unknown in their own life, or pride that will not let go, founders can condemn themselves and their organizations to the dead hand of grasping at a best past now gone by.

When this happens, things fall apart. None of which means the organization must die with the founder. But all of which means the founder's choice has cast the organization into a wilderness from which, quite often, only a new 'founder' with win/win energy, creativity and dreams might -- might -- save it.


Posted by Doug Smith at 12:52 PM | Permalink | TrackBacks (1)

December 24, 2005

The Santorum Brand: Update On Meaningless Politics

An earlier post discussed Pennsylvania poll results indicating that Senator Rick Santorum's personal brand, while well defined and understood by Pennsylvania voters, was nonetheless not doing a good job of appealing to a majority of them. Beginning with the Clinton impeachment, Santorum chose to brand himself in ways that gained him notice within the national Republican Party by making well publicized statements in support of extreme born-again fundamentalists, including his very open support for the scientific claims of intelligent design creationism.

Thus, in 2002, Santorum used an op-ed piece to speak clearly and loudly on behalf of what his brand meant on this issue; "Intelligent Design is a legitimate scientific theory that should be taught in science classes."

Among the many steps Santorum took to identify his brand with these ideas was his joining the advisory board of the Thomas More Law Center, an organization well funded by the extreme right wing interests and given to throwing its money and legal expertise to any effort seeking to have local governments establish religion through the inclusion of intelligent design creationism in science classes.

The First Amendment prohibits government from establishing religion. We read and hear much these days about another right wing nostrum: original intent -- the notion that the meaning of the Constitution is frozen by what the words meant to the Framers. It's a not-even-thinly-veiled effort to restrict government to operations within the ambit of late 18th century meanings and conditions. If you can't fit your proposed approach to 21st century realities within the original intent of 18th century writers, then fuhgeddabodit.

The Santorum brand includes original intent -- it's necessary to his efforts to gain and maintain voice and power in national Republican circles. Brands like Santorum's have never required any logical or principled consistency. That the plain meaning -- the original intent -- of the Founders prohibited establishing religion has never barred Santorum from actively supporting the Thomas More Law Center project to do just that. Really, in the Santorum approach to brand management, dealing with this seeming inconsistency merely requires definitional shifts. "Intelligent design creationism has nothing to do with establishing religion because it is science."

Naming things is the key to Santorum's brand strategy. Truth is entirely a matter of definition and the marketing and public relations needed to shape shared ideas in support of that definition. Thus, to Santorum, 'science' is a word like any other word and it's meaning is determined by what leaders like Santorum tells us it means.

Thus, the Santorum brand also includes this strain of definitional meaning. The kind of careful exploration of what science means that was on display in the Dover case courtroom is irrelevant and unnecessary to the Santorum brand. A corollary of the Santorum brand, of course, is this: words have no meaning. "Science"? "Truth"? "War"? "Clear Skies"? "Family Values"? "The Rule of Law"? "Mission Accomplished"? "Victory"?

The Santorum brand stands for the proposition that if you wish to understand how and when to use these words, pay attention to Santorum and he'll tell you.

Now, we learn that Santorum -- has re-tooled his definitions and brand a bit -- by dropping his affiliation with the More Center after the recent court decision castigating the then-majority of the Dover school system who forcibly installed intelligent design creationism in Dover school classes.

Key word: after.

One can almost hear Santorum and his brand advisors huddled together strategizing over how to play the result of the court's decision. "If the Judge rules in favor of the Board, we hold a press conference with the Board members and folks from the More Center to celebrate this victory for American values. If the judge goes against us, we drop the affiliation with the More Center, making sure to blame the More Center from its methods so we can appeal to Pennsylvanians who mistrust 'outsiders'."

The earlier post also noted that the Santorum brand was doing best among anxious, fearful, emotional and confused teenagers. And, so to Hamlet, Scene II when Polonius happens upon Hamlet who, unbeknownst to him, has overheard the plotting against him:

LORD POLUNIUS
O, give me leave:
How does my good Lord Hamlet?

HAMLET
Well, God-a-mercy.

LORD POLONIUS
Do you know me, my lord?

HAMLET
Excellent well; you are a fishmonger.

LORD POLONIUS
Not I, my lord.

HAMLET
Then I would you were so honest a man.

LORD POLONIUS
Honest, my lord!

HAMLET
Ay, sir; to be honest, as this world goes, is to be
one man picked out of ten thousand.

LORD POLONIUS
That's very true, my lord.

HAMLET
For if the sun breed maggots in a dead dog, being a
god kissing carrion,--Have you a daughter?

LORD POLONIUS
I have, my lord.

HAMLET
Let her not walk i' the sun: conception is a
blessing: but not as your daughter may conceive.
Friend, look to 't.

LORD POLONIUS
[Aside] How say you by that? Still harping on my
daughter: yet he knew me not at first; he said I
was a fishmonger: he is far gone, far gone: and
truly in my youth I suffered much extremity for
love; very near this. I'll speak to him again.
What do you read, my lord?

HAMLET
Words, words, words.


Posted by Doug Smith at 12:28 PM | Permalink

December 20, 2005

Kong Attacks Financial Markets!

Dateline Wall Street: King Kong has broken free from theaters nationwide to attack the transparency and integrity of financial markets!! Cleverly dressed in the guise of unfunded pension and other benefit liabilities, Kong has eviscerated the credibility of the balance sheets of hundreds of the nation's largest companies. The crisis seems to have unfolded with startling speed. What may have been minor adjustment errors when Kong was first brought to America now amount to nearly $450 billion!! Said one analyst, "This devastates the S&P 500." But while investors and others reel from Kong's rampage, those at the Financial Accounting Standards Board responsible for getting Kong back under control seem dazed, like deer in the headlights. "This is very political and complicated," said one spokesperson who sought even greater anonymity than is usually accorded accountants as their professional due. "We're going to need several years to work this out."

Several years? Haven't they seen the movie?

***********************************************************************************************************

More than half the households in America own equities. And way more than half have folks who are employed, with millions of these employees working for companies that have contracted with them to provide pension and other benefit coverage.

Our world of markets, networks, organizations, friends and families is so complicated that probably only a small fraction of people in investor households know that hundreds of publicly held companies now have pension liabilities that outstrip pension assets by just under $300 billion, or that other benefit obligations (e.g. health and prescription drugs) outstrip other benefit assets by nearly $150 billion.

$450 billion of obligations that are not funded. That's a lot of money. For example, it is the same amount just approved for the 2006 defence budget. And, according to Standard & Poor's, it equals a fifth of the tangible book value and 70% of the 2005 earnings of the S&P 500.

No wonder the Financial Accounting Standards Board (FASB) is hard at work trying to figure out how to handle this in a way that helps investors and others get the information needed to make judgments about the economic and financial well being of companies.

FASB will not, of course, require companies to make any radical adjustments. There won't be a new rule demanding an immediate write-off against earnings. Still, one wonders what 'transparency and integrity of financial markets' means when companies have had and will likely continue to have so many ways to miscast their degree of control over these King Kong liabilities. Just one example from S&P: "These evaluations derive from current estimates of what returns and interest rates will amount to over decades. Agreeing on the current Q4 2005 estimate poses quite a challenge -- estimating Q4 of 2035 would appear to be far less of a science."

30 years. Company accountants must consider all the factors that might happen over thirty years in determing the current value of liabilities. Really, now, let's get ourselves some perspective. Even those many, many, many accountants who do their professional and personal best are merely guessing. And, we know too well that plenty of accountants -- and chief executives and chief financial officers -- 'manage financial statements'. For them, "30 years" is an open invitation to "make it up!" (And, by the way, it's also an open invitation to prosecutors with personal agendas to go after even well intended chief exeuctives and chief financial officers under Sarbanes-Oxley).

So, stakeholders beware! Whether you are an investor or an employee with an interest in any of these companies, beware! And be prepared. The odds are that the obligations will be re-written and reduced, the generally accepted accounting approaches will be 'smoothed and managed' to minimize the financial reporting strain, and the real story underlying all of this -- the nation's broken system of sharing the risks and costs of health care and old age -- will continue to go untended or made worse through radically increasing the individualization instead of sharing of such risks.


Posted by Doug Smith at 02:38 PM | Permalink

December 19, 2005

The Science of Market Research Turns On Science

Market research is a social science as opposed to natural science. Market research, when done well, uses the scientific approaches of sociology, anthropology, psychology, political science, linguistics and more to identify, characterize, understand, respond to and, yes, shape human belief and behavior.

Like other social sciences, market research operates with less elegance than natural science. It is tougher work because subject to more doubt and uncertainty. Still, top executives in thousands of companies across the land authorize (cumulatively) billions of dollars and tens of thousands of person hours in market research -- all with a view to fulfilling visions of growth and performance.

It's been five decades or more since folks in corporations figured out that scientifically sound approaches to understanding markets could and would generate innovation as well as promotion that, in turn, could support growth. The science of market research is as much embedded in our market economy as the profit motive.

Given all that rides on the scientific soundness of their research, marketing and other functionaries must beware of coming into a meeting with the Chief Executive, Chief Marketing Officer and other C-suite denizens with shoddy work.

Yes, it's critical for the researchers to understand the vision, mission and strategy of the company and to do their research with a view to promoting performance and growth. But, it's the rare CEO who encourages and welcomes ideology completely bereft of facts and sound method. Executives whose interests suffer from market research findings will argue against those findings. But, debating such results is a far cry from an ideological drive to eliminate market research itself. Where would be the gain in that? Yes, you might -- in theory, but rarely in practice -- gain your point and advance to the top job. But once you had a board and financial markets demanding growth, what would you do? Reinstitute the science of market research that you so assiduously destroyed?

Again, yes, there are soft aspects to market research and yes, there are debates guided more by self-interest than fact or logic. But, still, look at the pattern of dependable and predictable belief and behavior in companies across the land: a huge investment and reliance on the science of market research.

Science.

Now, what does the science of market research tell those who seek to gain and hold governmental office?

According to Chris Mooney's new book, market research has guided those currently in control of the Republican Party to promote an attack on science as a means of generating votes and attaining, holding and using elective office.

With regard to climate change, biodiversity, contraception, drug abuse, air and water pollution, missile defense, evolution and other high profile matters, market research of likely voters has evidently indicated that elections can be won by throwing the entire edifice of science into doubt -- in effect, destroying science in order to gain power.

The recent results of this market research are impressive. Elections have been won. Authority over governmental policy has been gained. That authority has been used to further the erosion of the public's faith and trust in science (that's right: 'faith and trust').

The medium-to-longer term effects of this market research, however, are troubling. Again, in a corporation dependent upon scientifically sound market reserach for growth, innovation and sustainable performance, high level attacks on the foundational soundness of such research would, at best, generate short term gains -- and those gains would be measured only in terms of the internal political power of those leading the attacks. In the medium-to-long term, there could be only two results: either the destruction of further growth, innovation and performance because the attackers who gain power refuse to shift course -- or, a period of confusion, fear and anxiety as those with sound, scientific market research skills and expertise try to adjust to their former attackers now claiming to seek their help.

Among the many potentially tragic aspects of using scientifically sound market research to destroy scientific soundness is this: CEOs and others whose company performance depends on scientific market research disproportionately contribute money and other resources to those taking the lead in the desctruction of science.

These CEOs and others, of course, can change course. They have tremendous power to determine who controls the Republican Party and whether that Party's policy will continue to pursue the attacks on science that, ultimately, will destroy the soundness of the Party's own market research.

As they sit in discussions with those in power, let us hope the CEOs and others will think through the implications in a manner consistent with what they'd do in their own companies. Yes, there are undoubtedly many opportunities for short term gain in terms of tax and regulatory policy by supporting the attack on science. But, even with such gains, the medium-to-long term prospects in a 'science-less' economy and society for the performance of these CEOs' companies -- not to mention their children and grandchildren -- are dim.

Posted by Doug Smith at 01:58 PM | Permalink | TrackBacks (1)

December 18, 2005

Letter To The New Republic

To The Editors,

In "Bad News", Franklin Foer warns against a vast left wing conspiracy of bloggers hell bent on 'savaging' newspapers such as the NY Times and Washington Post -- papers whose objectivity, writes Foer, is an essential bulwark against the right's alliance with business and mastery of partisan media.

Yes, Foer acknowledges in Rumsfeldian terms, there have been some 'bad apples' at the 'papers of record'. Still, he excitedly exclaims, absent (real?) journalists writing 'without fear or favor', the rest of us will remain clueless about critical events with "a strong basis in fact'.

One can almost see Jimmy Olson's gratitude to Foer, our very own Clark Kent out there protecting truth (I mean 'objectivity'!), justice, and the American free press from the evils of the Internet!

There is one tiny problem though. It's found on the very next page of The New Republic in a piece contrasting a meaty proposal by four Congressmen worried about the Republican culture of corruption with House Speaker Hastert's useless concept about training legislators in the 'nuances of House rules."

Both proposals have 'a strong basis in fact'.

Only Hastert's was printed by The New York Times.

Bad news, indeed.

Sincerely,
Douglas K. Smith

Posted by Doug Smith at 05:34 PM | Permalink

Values Then and Now

Then:

"Those who would sacrifice essential liberties for temporary security deserve neither liberty nor security."

-- Benjamin Franklin

Now:

Commander-in-Chief George W. Bush acknowledges that for several years now he has acted preemptively and unilaterally without legally required judicial review* to authorize the sacrifice of individual liberties through government monitoring of phone calls and emails of Americans Bush himself personally believes have posed a threat to security.

* The Foreign Intelligence Surveillance Act of 1978 established a Court to ensure judicial review of executive branch requests for surveillance of Americans. Between 1979 and 2002 (the year Bush chose to use his personal, unreviewed judgment for when to sacrifice personal liberties), the FISA Court did not reject a single warrant application. Not a single one.


Now:

"The president does not get to pick and choose which laws he wants to follow. He is a president, not a king,"

-- Senator Russ Feingold upon learning of Bush's personal surveillance program.


Posted by Doug Smith at 11:51 AM | Permalink | TrackBacks (1)

December 17, 2005

The Five-Step Shuffle

According to a new study cited by Christian Sarkar, it is more important than ever for Chief Financial Officers to:

(1) focus on delivering against growth and earnings commitments expected by financial markets that punish missed commitments while also
(2) complying with the morass of rules and regulations imposed by an angry Congress seeking to get re-elected by 'doing something/anything' to protect the integrity of
(3) demanding and punishing financial markets who, it will be recalled, were
(4) reeling from illegal and unethical behavior of -- well,
(5) Chief Financial Officers and others obsessively focused on delivering against growth and earnings commitments demanded by financial markets that punished them for missing such commitments.

Got that?

No wonder Reuters reports "CFOs too bogged down to focus on strategy."

Posted by Doug Smith at 04:58 PM | Permalink

December 16, 2005

Be A Global Capitalist For $25

Absent the nightmarish destruction of the Internet (which, according to Legal Affairs is a concern to take seriously), globalization is as much a condition -- a force at work -- in our 21st century world of markets, networks, organizations, friends and family as gravity. Such forces drive the good, the bad and all in between depending on our shared purposes and shared values -- as seen in the wikipedia entry on globalization. It describes manipulation by mass media, controlling governments and multi-national corporations as well as growing possibilities for mutual understanding and friendship.

As with so much in our battle of value against values, globalization seems inclined toward the negative when it comes to matters of capital and profits, inclined toward the positive when it comes to matters of family, friendship, shared understanding and shared fates.

All of which makes Kiva -- a peer-to-peer microfinance organization launched by Matthew and Jessica Flannery -- worth noting. The Flannerys have blended a concern for value with a concern for values by integrating the economic as well as the personal possibilities in globalization. Through Kiva, you -- yes, you -- can be a global capitalist. You can lend money to entrepreneurs living continents away and, through the wonders of the Net, stay in contact as they use your loan to make life better for themselves, their families and their communities.

And you can do this for as little as $25.

The Flannerys have brought microfinance to your home computer. Microfinance is a worldwide industry built on an ancient notion: commercial lending to business. Only, as the name suggests, the loans are tiny. Experts estimate that as many as 30 million 'microentrepreneurs' have launched and grown businesses with the help of tiny loans. In world of 6 billion people -- the vast majority of whom are poor -- 30 million, while impressive, is just the tip of the iceberg.

Moreover, microfinance is profitable. Given the huge size of the market as well as the attractive economics, it is no surprise that the number and size of microfinance loan funds is growing rapidly -- and that giants like Citibank are now in the field.

Neither Citibank nor large non-profit players, however, are likely to give you the chance to be a global capitalist. So, go sign up at Kiva. And the next time the International Monetary Fund or World Bank comes to town, get a seat inside the room instead of throwing rocks in the streets.

Globalizaiton is a force. How do you want to shape it?


Posted by Doug Smith at 12:44 PM | Permalink

December 14, 2005

Hope For The Holidays

Thomas Rice (who with his colleagues at the Interaction Institute for Social Change have brought hope to literally millions of people) sent along this reflection on HOPE by Vaclav Havel and suggested that it be shared with others:

HOPE

Either we have hope within us or we do not.
It is a dimension of the soul and is not essentailly dependent on some
particular observation of the world. HOPE is an orientation of the spirit, an
orientation of the heart. It transcends the world that is immediately
experienced and is anchored somewhere beyond its horizons. HOPE in
this deep and powerful sense is not the same as joy that things are going well
or willingness to invest in enterprises that are obviously headed for
early success, but rather an ability to work for something because it is good,
not because it stands a chance to succeed. HOPE is definitely not the same thing as optimism.
It is not the conviction that some thing will turn out well, but certainty that something makes sense
regardless of how it turns out. It is HOPE, above all. which gives the strength to live and continually
try new things.

Vaclav Havel

Posted by Doug Smith at 09:10 PM | Permalink | TrackBacks (1)

Board Governance: Too Many Cooks At Red Cross

With the resignation of Marsha Evans, the Board of Governors of the American Red Cross must once again search for someone to continue the much needed modernization of the giant charity. Perhaps the Board should change how they govern themselves before asking yet one more leader to take on that job for them.

While most of us link the Red Cross with disaster relief of the Katrina variety, the charity is in fact a highly complex, large organization. In 2004, Red Cross spent more than $3 billion on services including disaster relief and recovery, blood and biomedical, services for military members and families, health and safety, volunteers, young people and nursing.

This size and complexity would rank Red Cross in the Fortune 1000 -- a set of companies whose Boards of Directors, by the way, average 11 members.

In our work on teams, Jon Katzenbach and I repeatedly found the the effectiveness of small groups begins to deteriorate badly at about 10 to 12. There is no iron clad rule dictating Boards be 'small groups'. Still, if the 1000 largest companies in the world average 11, the small numbers probably amount to what the gurus like to call a 'best practice'.

All of which would be worth pondering by the 49 people listed as members of the American Red Cross Board of Governors.

Posted by Doug Smith at 04:19 PM | Permalink

December 12, 2005

Visibly Poor Performance

Harrisineractive has just published it's 2005 Survey of the "Reputation Quotient" for the sixty most visible companies in America. The top company, Johnson&Johnson, received a "B" grade (albeit just barely: J&J got a numerical score of 80%).

Of the rest of the top 60:

27 got a "C"
24 got a "D"
8 got an "F"

Overall, not much movement when compared with the 2004 results

A Zero
B Zero
C 31
D 19
F 10

In today's irrational financial markets, 'intangible assets' such as brand often account for significant parts of a company's overall market value. The vast majority of these 'most visible 60' have large market capitalizations. Leaving us to ask, "Does reputation have anything -- anything -- to do with brand?"

We know that extreme reputational damage -- Enron -- can link to brand and market capitalization. But, it must really be only at the extremes. Because when not a single one of the most visible companies merits an "A" grade and, in fact, nearly all get "C's" and "D's", what Harrisinteractive is measuring must not have much to do with how folks pick and choose stocks.

Put differently, folks out there are deeply worried about the mediocre to lousy reputations of these visible companies. But, when it comes to their IRAs or other stock holdings, they must just be 'holding their noses".

Suggestion: next time your at the dinner table with your kids, explain this to them (and to yourselves).

Posted by Doug Smith at 06:51 PM | Permalink

Performance, Problem Solving and Gender Stereotypes

Does the performance of your organization depend on excellent problem solving?

Does the performance of your organization depend on men and women solving problems?

What do you mean by 'problem solving'? What kind of problems does your organization need to solve?

What percentage of those problems are not really problems at all? That is, they are situations for which answers are readily available and simply in need of quick, crisp and efficient ways of 'taking charge'?

What percentage of those problems are actually problems -- that is, challenges for which no one in your organization has any current easy answer?

When you think about these real problems, how many of them are purely technical in nature? That is, how many are like jigsaw puzzles requiring that you figure out a set of technical, mechanical, or otherwise physical pieces and assemble them?

How many of your problems are purely social or are 'sociotechnical'? That is, how many are both about figuring out some objective set of pieces to a puzzle but then also figuring out how to get people within your organization (and possibly beyond -- alliances/customers/and so forth) to 'make it happen'? How much of getting folks to 'make it happen' demands figuring out how to take care of the interests, skills, readiness, reluctance and other human attributes that often spell the difference between a problem solved on paper and one solved in reality?

Think about these questions as you read the latest report from Catalyst about how organizations across the country continue to shoot themselves in the foot by using 'either/or' stereotypes about men and women who, truth and every day reality be told, are BOTH needed to move toward any organization's best future performance.

Or, perhaps you disagree. Perhaps you believe in your soul that your organization can best move forward to solve its most complicated and critical problems by relying disproportionately on male leaders or female leaders?

If so, go ahead and hang a sign on the door that says, "Here at XYZ Corporation, we know that our best future depends on male problem solvers." Or, if you answered with the other gender, "Here at ABC Corporation, we know that our best future depends on female problem solvers."

If, on the other hand, you believe your best future depends on men and women and women and men both leading and collaborating and collaborating and leading in finding and implementing the best solutions to your most critical problems, then perhaps you'd better start acting like you believe it.


Posted by Doug Smith at 02:39 PM | Permalink

December 11, 2005

Craig's Fist

Christian Sarkar alerts us to an urgent call for government action and political will by Craig Barrett, Chairman of Intel. who warned BusinessWeek the United States continues to fall behind other nations in producing the scientists and engineers demanded for sustainable national economic performance. The percentage of science and engineering degrees granted in the US have trailed competitor nations by double digit differences; and, when engineering is isolated, the US rate is one-sixth that of Japan, less than one-tenth that of China.

Barrett calls on government, particularly Governors, to exert the political determination needed to raise science and engineering education standards. And, he asks others in the business community to join Intel in supporting such efforts.

One commentator at the BusinessWeek online site writes in, "I agree with Mr. Barrett's comments. But why aren't any politicians taking note of this issue?"

Well, perhaps because people like Craig Barrett throw their political dollars in support politicians like Rick Santorum and George Bush whose political platforms weaken instead of strengthen science. Year upon year of high profile attacks on evolutionary, environmental, health and other sciences have popularized an anti-science cultural orientation that, in turn, has fueled instead of stemmed eroding education standards and career aspirations.

Craig Barrett's warning is spot on. Our nation -- our governments, our businesses, our schools and our young people -- will revitalize our best future with a sustained commitment to better science and engineering education and careers. Let us all stand up and applaud Craig Barrett.

And, let's hope that all of us, including Craig Barrett, will do more than shake our fists at the dangers of an irrational approach to science. Let us hope all of us will put our money where are mouths are so that warnings like Barrett's are more than lip service.

Posted by Doug Smith at 12:35 PM | Permalink | TrackBacks (1)

December 10, 2005

The Spirit Of The Law

Our founding fathers and mothers had an easier time grasping the upside of 'the rule of law, not men'. Not that the late 18th century in North America was some kind of Eden. But, the variety and persistence of capricious interference from across the great pond gave a daily primer on how laws -- principles -- applied fairly were a superior approach to governance when compared with power exercised in pursuit of personal whim.

Viewed this way, the rule of law might be updated for 21st century folks by comparing what it means to go about daily life subject to the 'rules' of well ordered principles instead of personality -- the rule of principle versus the the rule of personality.

Which do you prefer?

Which better serves some sense of being treated fairly in daily life?

Imagine, for example, that you are about to go through a subway turnstile when you notice that a stranger is having trouble getting a token to work in the machine. You make a pretty quick judgment about helping or not helping. In this case, you decide to help and you give a token to the stranger who -- faced with his or her own busy life is grateful for the relief from what promised to be a hassle involving purchasing a better working token. The stranger quickly reimburses you the price of the token.

You're feeling pretty good. Your gesture of kindness is a tiny one. It's not likely to guarentee you any 'lifetime good person' award. Still, it is in small things that we all have our best, most regular chance to 'do good'.

Now, what are the odds that you have read or are otherwise familiar with a 1992 law that prohibits selling tokens to others? Seriously, now. What are the odds? About zilch. About 1 nano-milli-micron away from zilch. Unless, of course, you're a transit cop. Then the odds of being aware of this law rise; say, to fairly high probability.

In our 21st century market democracy, there are, in practical effect, an infinite number of laws on the books. Really. Consider it this way. If you were to sit down and attempt reading every law already written, you could never complete the task because, by the time you even imaginably got toward the end, there would be thousands of new legislated laws -- not to mention adminstrative rulings and judicial opinions.

"Notice" -- that is, some basic notion that we are aware of laws that our actions might violate -- is a key aspect of our aspiration to be ruled by principle instead of personality. Even in hoary England of post-Magna Carta times, though, notice was a difficult matter. Today, though, 'notice' is what lawyers call a 'legal fiction' -- a concept we can, at best, strive for in applying 'the spirit instead of the letter of the law'.

In the token example, the odds of notice are zilch for both of the passengers. The odds of notice are much higher for the transit cop. And that means our market democracy -- our aspirations for living out our daliy lives ruled by principle instead of personal whim -- depend on the actions of the transit cop.

So, now you're the transit cop. What do you do? You, too, must exercise judgment. You must do your best to apply the spirit of the 1992 law -- especially if applying the 'letter' of that law would, in your judgment, actually violate the spirit.

For a moment, let's recast the event itself. The passenger with the extra token sees another passenger struggling and declares, "I'll help you out. But I want $20 for the token."

Or, imagine that the interaction between the two passengers is just as written up near the top of this post -- only instead of using the token to go through the turnstile, the struggling passenger reverses course and exits the station.

As a transit cop doing what you can in your small sphere to practice the beliefs and behaviours attached to the rule of principle versus personality, you might exercise judgment quite differently in these latter two situations than in the first.

Let's say, however, that even in the first described situation, you as transit cop are concerned about a possible violation of the 1992 law. Even then you have some options in applying the spirit of the law. For example, you might approach the donating passenger and inform him or her that there is a law against the sale of tokens -- in other words, you might give a warning for 'next time'.

Or, you might ask the donating passenger to give the money back.

Or, as Susie Madrak of Suburban Guerilla alerts us by way of the Associated Press, you might be a transit cop in Atlanta and choose to handcuff the donating passenger and cite him for a violation of the 1992 law.

This is what you have done -- you the transit cop. This is how you do your job. This is how you choose to exercise your judgment in the pursuit of the rule of principle instead of personality. And, assuming you've had 'notice' of the rather longstanding and pretty well understood ethical notion of 'do unto others', this is how, presumably, you would like to be treated in any analogous situation. Which means, of course, you as transit cop better get on the Web and start reading -- first all the laws of every jurisdiction in Georgia and then onto every jurisdiction throughout the remainder of our market democracy.


Posted by Doug Smith at 12:29 PM | Permalink

December 08, 2005

Ford to GM: Me Too!!

According to the Boston Globe, bad strategy and thinking inside the box catch up with Ford:

"Ford Motor Co. is reportedly considering the elimination of 30,000 salaried jobs and the closing of 10 North American factories. The news follows colossal job cuts and plant closings disclosed last month by General Motors Corp.

Both companies are hamstrung by costly health and pension benefits, excess production capability, increasing foreign competition, and reliance over the past decade on highly profitable SUV and pickup truck sales, which have been slumping because of rising gas prices."

Posted by Doug Smith at 12:20 PM | Permalink | TrackBacks (1)

December 07, 2005

Staffing Teams: Be Sure To Pick "Learners"

Thirty years and hundreds of team experiences have produced two seemingly paradoxical guideposts to staffing teams:

No team succeeds in the absence of people with the skills, behaviors and working relationships required for performance.
No team succeeds without folks on the team learning something new.

If read carefully, these two insights indicate it is simply not possible to predict in advance every dimension of skill, behavior and working relationship required for team performance. Can and should team leaders be careful and thoughtful about staffing teams? Of course. But, the second point would indicate that too many team leaders suffer from an illusion that somehow, someway there's a 'Dream Team" out there and if they only spend enough time, they'll be able to pick that team.

Indeed, if you think back to the last Olympics, you might recall that the US "Dream Team" did not win -- in major part because the players selected lacked a significant but necessary requirement: an orientation toward learning how to adjust their individual games to the requirements of international rules and styles.

In other words, even this 'Dream Team' needed to learn to succeed.

So, yes, by all means, be thoughtful in staffing teams. Pay attention to what you imagine will be the skills, behaviors and working relationships demanded by performance.

But, when it comes time to pick your team, please remember this: Pick 'learners'. Pick folks who have an orientation to taking risks, trying new things out, and not freaking out at the thought that things might not go as planned.

When it comes to successful teaming, picking learners is a 'best practice' in picking winners.

Posted by Doug Smith at 06:59 PM | Permalink

December 05, 2005

The Values Bubble In Real Estate

Today's Los Angeles Times reports that the incidence and variety of mortgage fraud is increasing as rapidly as insurgencies in Iraq. It's a good introduction to what happens when an 'anything goes' profit motive is given a field day by political forces who claim the 'only good regulation is no regulation'.

Mid-way through the article, Eric Von der Porten, a Silicon valley mortgage banker laments, "Is it suddenly okay to hoodwink national banks and government-sponsored mortgage companies?"

Memo to Eric: There's nothing sudden about this at all!

For more than thirty years, our nation has embarked upon an all-or-nothing adventure in hating government. Starting with the Reagan administration, the governing philosophy has assumed that regulation and government are bad. That trend began rationally -- for too many decades those in power operated as if Total Regulation was the single answer. Now our dominant single answer is, No Regulation.

There is a lot of possibility, of course, between No Regulation versus Total Regulation. Most markets work best when there are some agreed upon rules. Often, those rules are easiest and most practicable to install and enforce if done by some third party. Sometimes, those third parties can be private sector, non-institutional government organizations (for example, professional sports leagues that set and adjust rules). More often in the history of human beings, though, the third parties have been governments.

When done well, rules and regulations set predictable behaviors -- values about fairness and approach -- that provide all who participate some predictability they can rely upon. That kind of predictability in values also arise among small numbers of people who persistently interact -- say in families or teams. When the context rises to zillions upon zillions of folks interacting over markets and networks, however, a government that sets, enforces and updates rules and regulations can spell the difference between orderly markets and Hobbesian, anything goes markets. (And, again, let's be clear: a regime of Total Regulation provides order but kills all vitality and innovation while simulataneously increasing costs to unsustainable levels).

So, here we are: We live in a world of markets, networks, organizations, friends and families. We live in a world where the costs of 'either/or' approaches -- either No Regulation or Total Regulation - become increasingly unsustainable. And, we live in a world where our politics is currently dominated by a discourse of either/or-ism.

That we are experiencing a 'value' bubble in real estate is not new news. But, as this artlcle points out, we also are suffering through a 'values' bubble -- inflationary expectations that somehow, someway individuals and companies left entirely to their own devices will routinely do the 'right thing' because -- now listen carefully -- because it is in their self-interest. This is the governing orthodoxy. Markets are the only solution to every problem. Self-interest is what makes markets work. Therefore, sayeth Socrates, Self-interest is the only solution to every problem.

Evidently, unbridled self-interest is not a full solution to orderly real estate markets that produce the greater good.

Posted by Doug Smith at 01:32 PM | Permalink

December 02, 2005

When Bad Things Happen To Bad Strategies

Crafting (and especially implementing) good strategies in our chaotic, fast changing 21st century world of markets, networks and organizations is tough work. It's why the folks who head organizations get paid the big bucks. Still, even a Forest Gump could glimpse this about strategy: somehow you've got to make sure that you direct your company's resources and talent at providing customers what they need at a price that keeps your resources and talent in business. It's a 'both/and' challenge -- one of matching answers to internal questions (who are we and what do we need to be good at?) with responses to external questions (where's this market headed and what does that tell us?).

As noted in a previous post, GM recently confirmed it would be firing 30,000 employees and shuttering a dozen auto plants. That's 30,000 familes who will not see 2006 as a happy new year. I also noted that GM's own press releases indicated the giant auto maker was investing in the flexibility to be more responsive to customer needs by putting itself in a position to create 15 entirely new cars/trucks each year -- and then promptly announced they'd use this new found capability to produce 'more than a dozen' brand new versions of gas guzzling SUVs, large cars and large trucks.

Do the math. "More than a dozen" out of 15 leaves somewhere between zero to two alternative offerings to the marketplace.

30,000 employees and their families (and the local economies of where they live) have been put on the altar of GM's future for this strategy.

So, here's a couple of updates on GM's strategy:

GM's November sales were off nearly 8% from a year earlier -- helping to drag US automakers' total share of the US market down to historic lows. The Japanese, who have led in the production and sale of hybrids and other smaller vehicles, picked up most of the gain.

GM's response?

First, to announce a 'red tag' sale in which buyers of it's largest SUVs will get as much as $10,000 off the purchase price. Excuse me? Why is GM directing it's new found flexibility for entirely new and different vehicles at producing new versions of SUVs that it's got to put 'red tags' on in order to sell? Does that make sense to you?

Second, to shutter part of GM's most famous auto plant -- the Saturn plant in Spring Hill, Tennessee where, some decades ago, GM was going to re-invent the auto industry with a bet on small, quality cars made and sold differently.

As Gump says, "Stupid is as stupid does."

Performance in our crazy world is helped through learning from others. Suggestion: Take a look at how your organization's resources and talents line up against the evolving picture of customer needs. Then evaluate your efforts against a "NOT GM" scale. The better you do -- the more your strategy is unlike GM's -- the better your organization's future and performance is likely to be.

Posted by Doug Smith at 12:39 PM | Permalink | TrackBacks (2)