November 11, 2006

Note To Joe Nocera: Almost There

Joe Nocera of the The NY Times visited the annual Corporate Social Responsibility conference this past week and came away dazzled by the paradoxes. The contradictions would have been hard to miss. For example, what must Joe have wondered as he spoke to Exxon Mobil's and Chevron's corporate social responsibility representative the week following the Stern Report catalogue of the catastrophic risks of continuing to treat environmental damage as an externality. Ditto for Pfizer's 'do-gooder' who, as a person undoubtedly seeks to better human kind and cannot be held individually accountable for his company's maniacal focus on bottom line practices such as kick-back like rewards for doctors who push Pfizer products, research and development trials conducted without objective oversight, campaign funding to politicians who support extending legalized monopoly, product development efforts aimed at minor improvements over fundamental innovation, and marketing campaigns that draw attention away from health risks while misleading consumers about the actual costs of new drugs.

Ditto for Ford Motor Company -- whose advertising mantras for years and years (e.g. "No Boundaries") use the imagery of pristine environmental experiences to push gas guzzling SUVs. Or, how about General Electric? Having fouled the Hudson River for decades, GE poured tens millions of dollars into delaying court-ordered cleanup and miselading the public about it's actions because, from a shareholder point of view, the costs incurred in delay outweighed the costs of the clean up. McDonalds? The same week it's representative chatted about the company's sense of social responsibilty at the NY City confab, McDonalds was also funding the effort to fight a NY City ordinance banning transfats.

The list could go on. Joe could not avoid the paradoxes. When, for example, the McDonald's rep claimed corporate social responsibility is "core to the way we do business", Joe noted: "You could wonder about that."

Nocera picked up this theme again in his conclusion. Having ceaselessly breathed in paradox and contradiction, Joe opined that for companies to become substantively responsible -- as opposed to PR-oriented "responsible" -- would demand all responsible values become core to those companies' business models.

Hurrah for Joe! He is dead on correct. Now, Joe, go back, re-read and re-think this declarative statement you make earlier in the article:

"Do shareholders come first -- above other stakeholders (another favorite buzzword at the conference... encompassing customers, employees, activists and so on)? Of course."

Joe, Joe, Joe. There can never -- never -- be fundamental change to the core business models if shareholders come first and their concerns are the trump card of any discussion. Never.

But, Joe, listen up carefully. This last comment does not reflect today's either/or orthodoxy. The orthodoxy embedded in your all-too-facile "of course". The orthodoxy that insists that either the shareholder comes first. Or the shareholder comes last.

No. The shareholder cannot come last. We saw a long run of the poor consequences from the 1950s through the 1980s of what happens when the shareholder came last. We must pursue shareholder value. We must celebrate shareholder value.

But we must not make shareholder value the trump card of all human affairs conducted by business -- especially if we, as I think we should, choose capitalism as an essential philosophy for the well being of the planet.

Joe, if you are to help us change the core business models then you've got to erase your robocall "Of course" about the primacy of shareholder value. You've got to think again and somehow, some way discover the more profound declaration that the shareholder, like other core constituencies, must abide in equivalency of importance. The shareholder does not come first. Nor does the customer come first. Nor does the employee come first.

The shareholder does not come last. Nor does the customer come last. Nor does the employee come last.

Sustainable and ethical corporations must shift their core business models to this formulation: "Shareholders provide opportunities to the people of the enterprise and their partners to deliver both value and values to customers who generate returns to shareholders who provide opportunities to the people of the enterprise and their partners to deliver both value and values to customers who generate returns to shareholders who..... and on and on."

That is an ethical and sustainable scorecard. And it reflects this unprecedented and undeniable fact of the 21st century human condition: we live in a world of markets, networks, organizations, friends and families in which our organizations are the new communities that determine the fate of our planet. Our primary ethical challenge can only be met when organizations reintegrate our legitimate concern for value with our equally legitimate concern for other values. Failing this, our most dominant organizations -- for-profit enterprises -- will continue putting value first and, thereby, continue propelling our global society toward social, environmental, political and economic disasters.

Joe, consider only this illogical aspect of your all-too-easy-and-orthodox "of course": Who are these shareholders who come first? I'm imagining you are a shareholder. But, let me ask this, are you a customer? Are you an employee?

Put differently, does Joe Nocera the human being come first? Or, do your concerns only matter to the extent that you happen to own stock in one more enterprises?

Should we put one of our dominant shared roles (investor) above the other dominant shared roles of our new age of human kind (employee, customer, family member, friend)? And where does that leave the extraordinary number of folks on this planet who are not investors?

Joe, if we wish to take your constructive insight about changing core business models as an essential condition to the fate of this planet, then we must move beyond either/or-ism to both/and. We must not elevate any role to trump card status while also avoiding subordinating any role as a last concern.

We must learn to practice the new golden rule: "As employees do unto others as customers, investors, family members and friends what we would have them do as employees to us as customers, investors, family members and friends."

When the employees and executives of Chevron, Exxon Mobil, Pfizer, Ford, General Electric and McDonalds begin practicing this golden rule in earnest, we'll all witness social responsibility (as well as environmental, medical, legal, political, technical, family, spiritual and economic responsibility) blended into the daily lives of those who make, sell, distribute and service the many good things we depend on for leading our lives.

We will experience and have good things to have that are truly 'good'.

Posted by Doug Smith at 12:44 PM | Permalink

September 02, 2006

The Size Of The Pie And The Share Of The Pie

For those who have the courage and wisdom to pay attention, among the most important contributions of the now decades-old quality movement in the contemporary business world is it's demonstration of 'both/and' thinking and acting. When people adopt and pursue shared purposes built on 'both/and' principles, they identify and articulate two or more objectives that are in constant tension with one another. For example, within the broader field of quality, an organization might pursue both fewer errors or defects and faster speed of delivery. These two objectives struggle with one another. A group pursuing only speed has an easier, less constrained set of solutions than the group pursuing both speed and fewer defects because the former can simply speed things up and accept more errors.

The benefits of both/and approaches, though, go far deeper than the stated objectives themselves because they support and promote effort that is more fully human -- more challenging and, therefore, more creative and more fulfilling. While elitists might disdain the deeper meaning within the work of a team of folks at the front lines of a company pursuing both speed and fewer defects, the people on the team itself will and do report that with success comes the experience of both deeper affiliation and deeper meaning. No, such folks do not equate either the affiliation or meaning with the poet's truth or beauty -- but they do know and sense the importance of collaborating with other human beings on something that matters. As Marlow in The Heart of Darkness admiringly, respectfully says of the man who helps him guide the boat up the river, these folks do work, they do something.

And they do it together, fully challenged by both/and realities of human existence.

Our planet is beset by powerful men and women who ignore the way of both/and humanity in favor of single goals and single answers. In this, they pursue self-interest over shared interest and personal power and wealth over shared purpose and the rule of law. In contemporary geopolitics, we see this abhorrent, destructive self-interestedness in the form of powerful governmental, corporate and media officials who claim truth stripped of reason as a shield to their own pitiful failure to embrace the opportunity for a more fully human experience given to them at birth. They love single answers because they are the easy road to self-enrichment. They eschew both/and because, down that road, lies shared struggle and shared responsibility.

In economics and business, we see this single answer extremism primarily in the form of our age's deep and widespread acceptance of shareholder value as the trump card for business performance. The primacy of shareholder value is today as widely shared as the belief in motherhood. And, yet, unlike motherhood, the beliefs and behaviors of shareholder value extremism march us toward and over the cliff of despair and destruction every single day. Whether it is exploding mortgages, layoffs, deteriorating benefits, moves to privatize social security, ongoing environmental destruction, decades-old erosion of real wages, poverty that is hidden by false statistics, rising obesity and eating disorders, failure to equate energy policy with national security -- etc, etc, etc -- the either/or thinking and action of single answers have now endangered our planet and put the futures of our children and their children at grave risk.

The Philistine plutocrats admonish us to either accept the primacy of shareholder value or destroy our markets, our business prospects, our jobs and our country. That is the 'either/or' proposition that has an iron grip on our society today.

And, it is the either/or proposition that has propped up the irresponsible, self-interested officials in government, corporations and media who have spent the last three decades promoting the false notion that the 'size of the pie' -- the size and growth of GDP -- somehow exists in isolation from the 'share of the pie' -- the distribution of income and wealth. Both matter.

Both matter to the aspiration embedded in our national heritage known as 'liberty and justice for all'.

Not for some. For all.

Not just for the top 1% who now control more than 40% of our wealth.

For all.

Not just for the top 20% who control more than 80% of wealth.

For all.

"For all" includes the bottom 40% who actually have less than 2% of our society's wealth.

For all.

Just like the quality team who challenge themselves to be more fully human by tackling both speed and fewer errors, all of us -- every day we wake up -- have the choice to demand of ourselves and those who would claim to lead us that we commit our resources, our capabilities, our hearts, our minds and our guts to building a society that aspires to both a larger pie and a just distribution of that pie.

We cannot and will not find our way to this 'both/and' pursuit of happiness, though, until we once again adopt belief and behavior that demonstrably care about people beyond ourselves. Nor until we -- and especially the 'we's' of organizations -- explicitly evict shareholder value extremism from our midst. We must not condemn shareholder value itself -- only the tenets by which it is made a golden idol, a trump card of either/or-ism whose shininess blinds us to the corrosive reality with which it destroys our common humanity -- including, importantly, the humanity of those who practice and espouse it.

Let us now -- right this moment -- turn our eyes toward both the size of the pie and the share of the pie. And let us do that work together.

Because the clock is ticking. And our children our crying out for us -- their elders -- to take shared responsibility for creating a safer, saner and more sustainable future.

For all.

Posted by Doug Smith at 01:30 PM | Permalink

July 07, 2006

The Shared Idea Of Citizen

Dan Gillmor is a highly respected commentator on the subject of citizen journalism and, among other things, how citizen journalism will/might affect the ongoing shifts in the world of news organizations. This week, he responded to the proposed shift in language from citizen journalism to networked journalism by acknowledging the usefulness of the distinction and also sticking to his phrase. As he writes:

Not a bad distinction. But the most vital part of this is the fact that it leads us to a better informed citizenry. That is the ultimate goal, at least in my thinking.

The American Heritage Dictionary defines “citizen” in four ways:

1. A person owing loyalty to and entitled by birth or naturalization to the protection of a state or nation.
2. A resident of a city or town, especially one entitled to vote and enjoy other privileges there.
3. A civilian.
4. A native, inhabitant, or denizen of a particular place: “We have learned to be citizens of the world, members of the human community” (Franklin D. Roosevelt).
I’m a proud American (even when I’m not proud of my nation’s official actions or its political leaders). I am a citizen, for sure, in the first definition.

But in this context I use the word more to reflect the other definitions, not just as one who is a formal citizen of a nation-state. In a globalizing world, the distinction is less important than it used to be — not unimportant, by any means, but no longer necessarily the defining status of a human being. Before this radical evolution is over, in a few decades, formal citizenship may seem almost quaint.

The citizens I refer to are members of communities, large and small, geographic and interest-based. We inform each other, using networks and other tools.

Citizenship carries responsibility in any community. Indeed, the idea of being responsible to one’s self and one’s neighbors (virtual or otherwise) is an essential part of what I’m trying to accomplish.

Look closely at the dictionary definitions. With the exception of 'civilian', citizen is strictly defined with regard to place: nation, state, town and so forth. This is not surprising. Our parents and grandparents and all ancestors who came before them lived in places. They connected to other people and they shared values and shared fates with other people because they lived together with those people in places. Our shared idea of citizen is, therefore, replete with place-based content. So is our shared idea of community.

But our actual experience of what it means to owe loyalty to a group, or enjoy protections and privileges of participation in a group have dramatically shifted from the context of place to the context of organization -- whether that organization is formal or informal, for-profit, non-profit or governmental, or large or small. The same goes for our actual experience of the non-place specific meaning of community. In our new world of markets, networks, organizations, friends and families, 'community' happens when we share purposes that we pursue with others -- not because of the addresses where we happen to reside.


All of which means that Gillmor and the rest of us need much greater clarity about the variety of issues Gillmor raises:

Do we wish to save the meaning of citizenship from becoming quaint?
If so, how do we strip it of place-requirements while simultaneously shifting the responsibilities of citizenship to contexts of organization and shared purpose?
Is 'interest-based' participation sufficient to support the meaning of citizenship? Are the privileges and responsibilities of citizenship contingent only on shared interest? Or, must there be shared purpose and the obligation to pursue those purposes together?

And. then, there is also this question:

Is the overarching objective of citizen journalism or networked journalism -- or, for that matter, any potentially powerful new idea related to the safety, sanity and sustainability of the planet -- to foster a better informed place-denominated citizenry? Or, however important that might be, would the more potent objective be to foster much better informed folks who can take responsibility to be the best possible employees/executives, customers/voters, investors, networkers, family members and friends -- that is, responsibilities in the core roles that define life in a world of markets, networks, organizations, friends and families?


Posted by Doug Smith at 01:30 PM | Permalink

July 04, 2006

Threshold Of Decency

Dear Mr. Durrett,

In your column about Ann Coulter, you write:

The line we walk is to try and ensure our opinion pages embrace a wide array of viewpoints and style. As I recently wrote one of our longtime readers, we pay attention to the political balance of our syndicated columnists. When you see conservative Cal Thomas on a page, you usually can count on the more liberal Leonard Pitts Jr. in close proximity.

I believe this stated standard is incomplete. Regardless of where any writer might sit on a spectrum, there should be an additional requirement for publication in a newspaper claiming readership from any community of adults, children and families: a threshold of decency.

Decency, of course, like any standard -- even the standard of 'spectrum of political opinion' -- demands judgment. And, in the news business, one would expect those judgments to be broad ones. Still, it is difficult to understand how Ann Coulter sits above any threshold of decency. Any single one at all.

Instead of decency, however, you cite 'taste' as the standard to accompany 'array'. And, it seems the 'tastes' you heed are those of your readers: If any reader (enough readers) enjoy Coulter's barbs and one liners, then the standard of taste is satisfied.

This, in turn, suggests that you seek to appeal to a market segment of readers who might buy your paper in order to enjoy Coulter. It means that your concern for value -- for building circulation and profits -- governs any concern you might have for other values such as decency.

You and your colleagues at The Shreveport Times make a choice about your values -- about what you really stand for -- every time you publish. Today, your 'brand' -- "what you really stand for" -- includes giving voice to a kind of hatred that, as you write, is motivated largely by self-promotion on the grounds of political spectrum and taste.

This, in turn, means that should any of your, say, 6 or 8 year-old children ask any of you, "Daddy/Mommy, why do you publicize Ann Coulter's views in Shreveport?", you can explain to them, "Well, we do it because it is important for people in Shreveport with these sorts of tastes to read well-known celebrities who express extreme views so that we can publish other well known celebrities with opposite extreme views."

And this, in turn means, that when your 6 year-olds become, say, 14 or 17 year-olds and, say, take on an editorial role in their high school paper and give voice to a popular kid who espouses hatred and violence, you'll be okay with it.

Or, maybe you won't be okay with it. Maybe you and your colleagues will wonder, "What's happening to our community?"

Posted by Doug Smith at 12:33 PM | Permalink

June 05, 2006

Value Madness

The fixed and seemingly inviolate obsession with shareholder value might -- might -- now deny government agencies the information needed to prepare for hurricanes. Again, I say might. According to this article, a supercomputer's forecasting methodology created by government funded scientists at Florida State University (I repeat: State university - as in a government entity) has been licensed by that State university to a private company, Weather Predict. According to the licensing agreement, Florida State scientists are not permitted -- yet -- to provide forecasts to any agency without permission from Weather Predict.

The article points out that the supercomputer has among the best track records in accurately forecasting hurricanes.

The article also mentions that Weather Predict's CEO assures one and all that, of course, nothing will get in the way of helping out government agencies during the hurricane season; and, that his company is currently working on making sure such arrangements are in place.

So, let's recount:

Government money funds employees of a government institution (Florida State) to create a supercomputer that accurately forecasts hurricanes.
The institution sells this know how to a private sector company.
The private sector company now sits between the use of the computer and the well being of folks who live in the United States of America.
Those folks are citizens and taxpayers -- whose money funded the invention.
Weather Predict's CEO promises 'to work it all out".

One can imagine a State University licensing technology to the private sector - both to take advantage of it's own advancements as well as to encourage market-based uses of weather prediction. No problem.

But, it's absurd that the licensing agreement fails to limit the license itself to a range of uses that are free and clear of any need of the forecasts for the public good.

And, having failed at incorporating such language in the contract, it is absurd that the issue of protecting the public use of forecasts made by a supercomputer created out of public money is still up for negotiation.

Weather Predict is now endangering millions of lives as it tinkers with how best to make a profit.

This all might work out. Let us hope so. But it is absurd -- it is immoral -- that the situation even exists.

Posted by Doug Smith at 12:30 PM | Permalink

June 04, 2006

Not One Ounce Of Prevention

Today's LA Times has a well written article about the shortage of doctors in the US, including succinct explanations of why the shortage has happened, some of the consequences we can expect and what it will take to remedy.

As I say, it is a well written and concise article. And, because of that, it illustrates a profound problem: The incredible difficulty folks have in thinking comprehensively and out-of-the-box.

Read the article and you will come away with this conclusion: Medical difficulties stemming from too few doctors are best and (only) cured through more doctors.

Quickly now: We need more doctors (and nurses and other health care providers).

But, the arithmetic in this is stultifying. It's all about solving problems of quantity with quantity. Not one word about 'thinking differently" about how to approach health care.

Not one word, for example, about what medical schools teach doctors about the challenges of health care in a world of markets, networks and organizations. For example: What about epidemiology, public health and prevention?

How can doctors, nurses and other health care providers change the ratio of inputs and resources from 'too heavily weighted toward curing those who are sick" to a better blend of 'prevention and cure'?

In a world of markets, productivity is critical to sustainability. Input/output relationships matter a lot. But if our public discourse is limited to arithmetic relationships -- that is, to increase outputs, limit your solutions to increasing the same amount of inputs -- we are left only with the same rate of productivity. Want more cures? Get more doctors!!

If we are to shift the ratio of productivity, we must find better uses and approaches to the inputs. And that means we should be focusing tremendous effort and creativity on what medical schools and others teach and think about prevention, early detection, low-tech interventions and an incredible variety of other means toward building a healthier society.

Posted by Doug Smith at 12:09 PM | Permalink

May 13, 2006

Letter To Billmon About Leviathan

Dear Billmon,

Thank you for Leviathan. The picture painted of an already-happening police state is a dark one -- yet one I fear millions of us might sleep walk to and through unless we wake up to the new realities and responsibilities of living in the world of markets, networks, organizations, friends and families described in On Value and Values: Thinking Differently About We In An Age Of Me.

We can save our nation and the world from the nightmare of Leviathan. But, first, we need to identify who 'we' are -- or, rather, when we are a 'thick we' versus a 'thin we'. The fate of our nation lies with choices made by 'thick we's' as well as 'thin we's". But right now, the choices discussed in popular culture's democracy topic lie mainly with the 'thin we's' -- the we's such as NASCAR dads et al shaped by common interests expressed in markets as opposed to thick we's shaped by actual shared fates and shared purposes for which those in the 'thick we' must hold themselves mutually accountable for implementation. "Thin we's" elect folks (e.g. Bush v. Kerry); 'thin we's' consume things (e.g. hybrids v. Hummers); 'thin we's' -- in roles as consumers and voters and investors -- are courted by thick we's competing in markets and networks.

'Thin we's' matter -- a lot. We cannot shift and evolve without shifts and evolution in thin we's. But, thin we's are not in some sense real we's. Unlike organizations, friends and families, thin we's are more like collectivities of me's. Thin we's never hold themselves accountable as we's for choices. Rather, and this is key, thin we's look to thick we's -- to organizations -- to implement the choices for them and to deal with the consequences of those choices. Thin we's elect officials; thin we's buy cars or computers or cereal; thin we's invest in companies. But it's thick we's who must implement the full range of implications of those choices.

Today, our most powerful thick we's are organizations, not towns or neighborhoods. That is different from the time of Hobbes, from the time of Jefferson.... indeed, from the time of Eisenhower when he warned of the military-industrial complex -- when he foreshadowed a powerful and scary upshot of the transition from a world of place-based thick we's (towns, neighborhoods) to organization-based thick we's in a world of markets, networks, organizations, friends and families.

Even Ike could not have had more than a foreshadowing about what happens when networks are thrown into the mix with markets and organizations -- when the strategies of organizations seeking to grow/thrive in the context of markets (including, what Schumpeter described as our political markets) get wired up in networks. Perhaps, the picture you paint in Leviathan would not have surprised Ike -- but he would not have conceived that the reality might have happened in quite this way or with what a friend describes as quite this 'gradual suddenness'.

Today, the most powerful and dangerous thick we's in our nation -- those private sector corporations led by shareholder value fundamentalists, government organizations led by Bush Administration power fundamentalists, and those fundamentalist Christian churches being led by satanists instead of Christians -- are indeed making choices that can lead to the Leviathan nightmare. But, note that such choices are being made far more hierarchically then democratically within the thick we's themselves. The choices jeopardizing our society are coming from the top of such thick we's and they are being made in secret.

That, however, is neither fated nor required by how organizations should or must work. All organizations -- just like all societies -- even Hobbesian ones -- blend hierarchy and democracy. Always. Hobbes' blend was 99.9 parts hierarchy and .1 democracy. But, let's remember that even the fearful Hobbes permitted people to undo the government through revolt.

If you look at choices that matter where you work -- where ever that may be -- the blend is not 99.9 hieararchy to .1 democracy. It may, in your view balance more toward hierarchy. However, having advised/consulted to hundreds of organizations in close to fifty different industries over more than a quarter of century, I observe that the blend has shifted toward more democracy. The challenges of competition demand it. Indeed, the challenges of implementation and performance demand it.

One of the great failures of the Bush Administration comes from the shared beliefs and behaviors of Bush, Rumsfeld, Cheney and others who simply and stunningly have not had executive experience in this new world where organizations cannot succeed with 99H/1D approaches. While I personally believe far too many critical choices in organizations are still made far too hierarchically and secretly, I cannot from personal experience or observation point to a single top management group of a successful company on the planet who continue to use 1970s H/D mixes to meet the needs of 21st century performance. Not one. Instead, what I read/observe daily about the Bush administration and, consequently, what we all read daily about the trail of failure and incompetence that follows in the wake of their outdated 99H/1D bet on hierarchy. (Indeed, I believe we can bet that the only effective part of the Bush Administration -- the part run by Rove for the past many years -- uses a different blend of H and D. Why? Because that Rovian part is focused on actually solving real problems against which they have to hold themselves accountable for actual -- not made-up -- performance.)

The shift in corporations, non-profits and the hinterlands of government enterprises not yet infected with the Bush approach has not gone to .1 H/99.9D. I'm not saying that. Nor do I believe such an extreme imbalance in the direction of democracy is more promising than Hobbes. Not even the Athenians had 99.9D/.1H. But, the shift is on -- especially with regard to issues such as quality, customer orientation, front-line problem solving and so forth. What has not happened, however, is a shift toward a more blended approach on issues that cut to the heart of what a corporation stands for and how the vision/mission/strategy of the corporation -- the common good of that particular thick we - contributes to the greater good of the planet. There we continue to see hierarchy and secrecy -- we see after the fact attempts at 'buy in' instead of before the fact inclusiveness and shared problem solving. One can be dead certain, for example, that the phone companies did not widely discuss and debate within their respective thick we's the choice about whether to hand over the phone records to NSA. (And, no surprise, we may now see that those executives have condemned their employees, their investors and their customers in ways that a more open, better blended democratic and hierarchical process would have avoided.)

You rightly worry in Leviathan about the profound effects of habits formed in organizations where, in our roles as executives and employees, we make assumptions about the values and purposes associated with nanny networks, security cameras, political speech and so forth. OnVVS points out that our most predictable beliefs and behaviors (which I equate with our actual values as opposed to just abstract ones) derive from a blend of relationships, roles and ideas. All these sources of shared values most powerfully reinforce each other when we are part of a thick we who share meaningful parts of fates and purposes together -- friends and family to be sure -- but, in our 21st century, the context beyond friend and family most present in our lives is that of organization.

Organizations -- again, not limited to work organizations and not limited to private sector either -- are where we interact persistently with other folks beyond friends and family. The habits of belief and behavior we form in organizations are reinforced by relationships there, roles there (e.g. boss/subordinate; marketing v. engineering; team problem solving vs boss/subordinate problem solving) and ideas there (vision, mission, strategy, brand... things like 'shareholder value' and 'the customer is always right' .... indeed, the entire concept of 'corporate values'). What you note as your greatest worry -- point five in Leviathan at the bottom of the section 'Mining Disaster' about the replication of behavior and values found in corporate America -- is one of the core pivot points and generative experience bases in our lives in markets, networks, organizations, friends and families. DeTocqueville reported on the power and potential of replication of behavior and values found in small towns. OnVVs argues that, for tens upon tens of millions of us, small towns are not our thick we's. Organizations are. And, only when we learn to take responsibility together for the choices of our organizations and how those choices contribute to the greater good, will we move and evolve forward. Only then will we revitalize how best to use the inheritance and legacy of the Founders in our dramatically differently structured lives and world. Only then will we migrate and revitalize our democracy where we actually live together with other folks (organizations) instead of only where we make consumption choices (markets).

Yes, we might stumble forward. We might continue our deep seated beliefs and behaviors that have us act as if what happens at work is 'only business' and that somehow we can offset the consequences we cause in pursuit of profits and shareholder value as the obsessive, singular trump card concern by somehow acting righteously as consumers or investors .... that we can somehow in our individual roles oppose our actions as 'me's' and thin we's in ways that effectively counter the unbelievably stronger array of resources and power of our thick we's.

But, we cannot leave a safe, sane and sustainable planet for our kids and their kids if we continue to travel down this path and confuse the pursuit of happiness with the pursuit of value over values. We cannot solve the problems of, say, rampant obesity, unaffordable housing, predatory lending, gasoline/oil addictions, environmental depredation, the attack on science -- or government spying -- unless we take a stand inside the organizations where we work that have something to say and do on these matters.

Nor can we sustainably respond to these challenges if we abandon value. Value matters. But, until our brands, strategies, missions, products and services bake equivalent concern for all values, including value, into the common good of our thick we's, we will continue to walk the dark path forward. If we fail to take responsibility for the thick we's in our lives and mindlessly perpetuate allowing secretive, overly hierarchical approaches to reinforce a path we seemingly are on today, then surely the Leviathan follows.

But there's nothing written by Hobbes or anyone else for that matter that says or mandates, "This must be so."

We can act differently. We must. As Gandhi said, 'We must be the change we wish to bring about." In part, that means let's do what we can as "me's" and "thin we's" to elect a president -- and a Senator and a Congressperson and a Governor and a state, county or local legislator -- who have the vision and courage to see this new world we live in and lead us to a more promising future for our children and grandchildren. But, as per Gandhi, we cannot hope to find that path through merely replacing Bush and friends with different and competent leaders who, while benevolent, continue to bet on unsustainable blends of hierarchy and democracy -- or on a concern for value that remains dis-integrated from a concern for values. I can imagine a president who is the leader needed. When I do, I also imagine that she or he reminds us that we are responsible for the future of this planet -- and that our responsibility exists both in choices we make as consumers, voters, investors and other "me or I" roles -- but, especially in and as part of our thick we's. For it's in those we's that the resources, knowledge, information and motivation is most powerful. A president or any leader can show us this path forward. But, we -- as thick we's -- must walk it -- must make and implement and take full responsibility for choices together. It is in our real, every day thick we's -- the thick we's of where we work, learn, play and pray - that we face the choices that will determine the fate of the planet.

And, it's there we can turn things around. The thick we's of auto companies can drop Hummers in favor of hybrids -- if they have the courage to blend concern for value with concern for values. The thick we's of food companies can reverse how their products and advertising and marketing contribute to obesity and other eating disorders. The thick we's of Homeland Security, the FBI, the IRS and others can stand up and say, "Our job is to govern, not to rule with the iron grip demanded to reelect Bush and the ideologues of Bush forever more."

All this is possible -- if thick we's learn and even demand healthier blends of hierarchy and democracy in how they govern themselves.

But, that is most likely to happen when we learn first to 'think differently about we' and about our responsibility to blend our legitimate concern for value with our equally legitimate concern for values.

Posted by Doug Smith at 04:36 PM | Permalink

April 27, 2006

Family Values

Advice given to lawyers from a general counsel at a recent panel discussion:

"If there's a family crisis or something with the kids or other clients, we don't care about it -- get the job done," Linda Louie, general counsel for the National Hot Rod Association, told an audience of about 100 women Wednesday. "You are a commodity to us -- show me how you can solve a problem."

That is, show me how you can solve a problem I have because in the world of markets, networks, and organizations, it's all about me instead of we and the only thing that matters is whether you are adding value to my problem because, face it, you're just a commodity, a cog in the wheel. Family crisis? That's your problem not my problem. Kids? Ditto. Face it. Value is the trump card -- every thing else is just road kill.

That's Linda's view. What's yours?

Posted by Doug Smith at 03:43 PM | Permalink

April 23, 2006

The Decency Line

By mid-2005, according to the Economic Policy Institue, 28% of families living in the US did not have the incomes to afford the items in EPI's basic family budget for secure, safe and decent lives. There are 108 million households in this nation. So, 30 million familes cannot make ends meet and fall more and more in debt with every passing month.

That was almost a year ago. Since then, we've seen interest rates rise, consumer debt continue unabated and the price of energy (home heating oil; gasoline) skyrocket. The Bush Administration's sabre rattling toward Iran has had the predictable effect on the price of oil, now well over $70 a barrel and rapidly driving up producer prices that, in turn, will drive up consumer prices for more than just gassing up the car.

With nearly 30% of families already living below the 'decency line', the outlook for economic sustainability and sanity in the US is grim. There are many differences in affordability of life depending on where one lives (e.g. rural vs. urban), size of family, and local price patterns (among other things). Still, a very gross picture emerges from comparing the median income to the median family budget required for decent living. According to the latest figures I could find:

In 2005, the median family budget required $40,000 of income.
In 2004, the median family income was $43,200. (So, make it $44,000 for 2005)

The median is the point at which half the households are above; half below.

At 108 million households, this means 54 million operate, at best, within $4,000 of not being able to make ends meet (30 million of whom already cannot).

These are pre-tax incomes, by the way. So, the margin for (t)error is even less than the $335 per month indicated.

Everyone sees what's happened at the gas pump this last month. And, the Washington Monthly online has an interesting statistic: the typical household uses just over 90 gallons of gas a month. In the past year, of course, the price of gas has gone up more than 50 cents per gallon -- meaning this one item alone has eaten up $45 a month -- or, more than 13% of the margin of (t)error.

If you live well above the 'decency' line, these movements in gasoline (as well as interest rates and other) prices are annoying. And, it's not even noticeable if you are someone like Lee Raymond who just retired with an obscene pay package from ExxonMobil -- a company that, under Raymond's immoral leadership denied it had any power over gasoline prices. But, we are rapidly approaching a point where half the households in this nation will not be able to afford a decent, basic life.

Posted by Doug Smith at 02:04 PM | Permalink

April 18, 2006

Health Care and Ideology

Part of our cultural orthodoxy hates government and loves the market. It typifies the all-or-nothing, either/or-ism of our times. For the Republican Right Wing, this means: Thumbs up to markets; thumbs down to government. (It only means that in their advertising. In real life, the Republican Government of Bush and pals have piled up the largest government spending and deficits ever. And, they happily savage the rule of law in favor of a government that knows no bounds.)

But, in the orthodoxy, the talking points and the assumptions always begin with market idolatry and government-bashing. We will not find a path out of this darkness without adopting a both/and view -- without seeing when and why markets work best and when and why governments work best and, most importantly, how markets and governments can collaborate to achieve optimal and sustainable solutions.

Health care provides a prime exhibit for our 'head in the sands, either/or' approach. Today, health care spending is out of control while the quality of our health care lags other that of other nations. Like so much else in contemporary life, health care is increasingly a haves vs. have nots affair. Those who can afford insurance and those who qualify for government help versus those who fall out of both buckets.

Chaos reigns. But, instead of sincerely tackling this grave and complex challenge, those who claim to be leaders instead demagogue about markets vs. government. Unfortunately for the orthodoxy, however, the private markets idolators are increasingly pushing a fiction. Consider only this: Overhead and other costs not spent on direct care account for 13% of the expenses of private sector insurers and only 2% for Medicare. Government is over 600% more efficient and effective than markets!

Why? Well, one reason has to do with the ideology of shareholder value fundamentalism. Instead of seeking sustainable returns that benefit shareholders, customers and employees in some reasonably blended fashion, the shareholder value radicals pursue profits and only profits in order to satisfy expectations of financial markets that, not coincidentally, they themselves shape. It's a self-fulfilling prophecy of doom: we must have more profits because the financial markets -- that is, ourselves, say we must have more profits.

So, how does a private insurer insure steady and growing profits in health insurance? Well, by combining steady increases in premiums with steady increases in costs used to screen out unhealthy people as well as fight off claims from all people. Why do private sector health insurers spend 13% of their budgets on things that don't make us healthier? Because private health insurers are more in the business of making profits than the business of insuring people.

Medicare doesn't have this motivation. And, under the assault of the 'we hate goverment' crowd, Medicare has had decades of pressure to reduce any costs that cannot be linked to direct benefits. Which -- in the both/and spirit -- is both a good thing -- and also a bad thing in that such pressures have probably also led to reducing coverage that might be needed.

In any event, the orthodoxy celebrates markets for their efficiency -- yet also fuels the capital markets ideology of shareholder value fundamentalism that, in turn, drives up administrative costs of private insurers more bent on financial results than insurance results.

But, there's more. Our capital markets also support the market for corporate control. One way of gaining more leverage over the bottom line is through market consolidation. Healthy market competition disappears when markets are so concentrated that either monopoly or oligopoly power sits in the hands of too few. Which, of course, is just what has happened among private sector health insurers who now have dangerous amounts of market power in most of the United States.

And so how are you feeling right now? Have you been reading along and thinking to yourself, 'this is a severe criticism of markets and celebration of government?" I hope not. I'm not contending that either markets or governments are the single answer. Instead, I'm suggesting that our nation faces a health care crisis of great complexity. We can solve it. But, to do so, we must understand and deploy markets when they work best and government solutions when they work best. None of which will happen so long as the conversation remains one of our typical screaming matches.

Posted by Doug Smith at 03:44 PM | Permalink

April 17, 2006

Principle of Disagreement

Edward Rothstein of the The NY Times has a wonderful summary and set of reflections about a recent Yale conference on strong leadership versus the popular will. Here's my letter to him:

Dear Mr. Rothstein,

Thank you for the excellent report from the recent Yale conference about leadership and democracy. There is a strand -- a view -- that may not have been fully revealed at the conference; namely, that all human societies find some blend of hierarchy and democracy in how they govern or manage themselves. Sometimes that blend balances toward one or the other -- but there's always both at work. The discussion about strong leadership - about lions and eagles -- sounds like it reflected the uses of hierarchy which, as your fine article pointed out, might be 'good' or 'bad' -- the same as democracy.

Perhaps most critical, though, is your point near the bottom about the principle of disagreement. Think of this in terms of beliefs, behaviors, and attitude -- and ask yourself, from what sources do those beliefs, behaviors and attitudes spring so that they become a predictable set of values? How does it happen that a principle of disagreement exists in real life, not just in democractic/hierarchical theory?

(And, quick note: hierarchy itself cannot work well in the absence of some 'principle of disagreement'. See, for example, the recent Time magazine piece by the retired general who points out that officers owe their duty to the Constitution. In other words, even within the hierarchy of the military, there is a source for legitimate disagreement.)

There are a variety of well established sources for what makes human belief and behavior predictable -- that is, how it might happen that a principle of disagreement becomes habit. In addition to genetics (e.g. evolutionary psychology), human relationships, shared roles and status and shared ideas all shape values.

Those who attended the conference, like your readers, cannot answer your profound questions about the principle of disagreement and virtue without taking a deep breath and 'seeing' that these sources of shared values have radically altered as a result of how we live our lives today (versus how the folks who were discussed -- Lincoln, Hitler, and so forth -- lived theirs).

They -- and importantly those who followed their leads -- lived out lives mostly in contexts of place: of neighborhood and town and among friends and family so determined. Not all. Not 100%. But mostly. And, the values they predictably shared (e.g. a principle of disgreement; the blend of hierarchy and democracy in problem-solving and government) happened as a consequence of the human relationships, roles, status and ideas they shared because of place. In this sense, place operated like a forge whose heat forced folks to share values so that they could co-exist and achieve what mattered to them.

We don't. We live in markets, networks, organizations, friends and family. Our shared values derive from relationships that happen in these contexts (e.g. the folks we interact with at work often shape our values more than neighbors whose names we might not even know), from the strong shared roles of customer, employee and investor, and from ideas that spread because of markets and networks. For example, unlike our ancestors whose place-based ignorance stemmed from an absence of new ideas, our ignorance comes from too many ideas and the lack of information about which are accurate and useful (see, e.g., the widely shared idea of 'WMD' a few years back - the use of a powerful idea in our new contexts of markets and networks by leaders more bent on hierarchy than democracy -- importantly, even within their own organizations, let alone the nation.).

One of the predictable patterns of belief, behavior and attitude in our new world of markets, etc. is 'either/or-ism': the all-or-nothing, on-off, 'red' versus 'blue' pattern that so quickly turns any interesting question into declarations instead of real debates. This is not a healthy sign for any real principle of disagreement.

And, yet, if we examine our life in organizations, we find that the blend of hierarchy and democracy quite often offers a healthier support for the principle of disagreement than our life in markets. Markets aren't very promising contexts in which to disagree in constructive ways. We make choices in markets (Pepsi v. Coke; Republican v. Democrat; and so forth). But, even when we vociferously support our choices, we are not engaged in either real debate or real dissent. We are more likely acting out our role as consumers (or investors) in an unbelievable large context (markets) where our voices aren't actually heard in the manner of dissent or problem solving about truly shared purposes so much as feedback to those selling us ideas and products.

This behavior in markets is useful. It does provide feedback. But we should not confuse it with the principle of disagreement in the context of family, among friends or in organizations. It is in those contexts where our roles, relationships and ideas must blend to help us make choices that actually go beyond consumption to some form of the 'common good' -- that is, toward the identification and implementation of shared purposes that matter to our lives together with other people we actually know and care about.

This is why the blend of hierarchy and democracy -- and the presence or absence of leaders who interact with followers in testing the limits of both -- matters much more in organizations than markets.

When I look at organizations that are even reasonably succeeding in today's chaotic world, I tend to see a principle of disagreement that is healthy and predictable. When I look at organizations that are failing (e.g. the Bush White House), I do not see this.

Your excellent article is profoundly important in it's note about the essential nature of a principle of disagreement. Now, let's hope that more and more of our colleagues and others will start connecting the dots of where, why and how such a principle thrives versus does not -- and why it matters to the safety, sanity and sustainability of the planet.

Posted by Doug Smith at 02:24 PM | Permalink

April 16, 2006

The New Golden Rule

Over the past 36 years, the prevalence of obesity among 12 to 19 year old Americans has doubled -- among children 6 to 11 it has tripled. Today, the percentage of kids who are either obese or overweight ranges from a low of 21% in Utah to 40% in Washington DC -- and the average across the US is 31%. Meanwhile, government officials report that poor diet and exercise will help push obesity-related diseases past tobacco as the #1 killer in the US.

This epidemic in eating disorders presents a classic case for how our culture of individualism conspires to darken the prospects ahead. The policy battle will rage between those who hold parents and kids individually accountable versus those who look to government regulation for answers. Meanwhile, the food companies who produce, distribute, market and advertise the diets and foods that are killing Americans in growing numbers will sit on their hands, happily making profits while claiming to be 'socially responsible." In reality, as this recent BBC item notes, the food companies don't 'care a jot'.

In the real world, though, the food companies -- and the employees and executives who work in them -- are the best positioned to do something about this crisis. They have the resources, the know how, the data, and the motivation -- if only they would replace shareholder value fundamentalism with blended values strategies for growth and prosperity. If only they would act to make capitalism sustainable instead of suicidal. Our culture of individualism will rant and rave about consumer and investor boycotts. Fine ideas. But, the real power to do something without waiting for governments to force action lies with the food companies and the thick we's who work there.

It's classic. The executives and employees of the food companies spend their working hours sitting on their hands - then spend their nonworking hours in the midst of kids who, because of food company products and marketing, are seriously overweight or obese.

Eventually, we'll find we have a 'red vs. blue' kind of split with regard to food companies -- one that already exists with tobacco companies. When this happens, those who work in food companies will be vilified. Why are they waiting? Why not act now -- and do so according to the new golden rule in our age of markets, networks, organizations, friends and families:

"As employees, do unto others who are consumers what you would have them as employees do unto you as a consumer."

Posted by Doug Smith at 02:02 PM | Permalink

April 13, 2006

The Dangerous Union

Today's most dangerous union has no meeting or hiring hall, no dues, no plans for strikes and no formal organization or name. There are no workers in this union. There are folks who work. But neither their self image nor the image of them held by others would translate through the word 'workers'.

Today's most dangerous union is small relative to population as a whole. Only one in ten families have full-fledged membership -- although another ten to fifteen percent of families hope that one day they'll gain admission.

Today's most dangerous union embraces all faiths, ethnic groups, genders and sexual orientations. It welcomes those who detest as well as love their fellow human beings, those who are hard headed and hard hearted as well as softies.

Today's most dangerous union dominates every industry and sector. They rule and control markets and governments. They need not issue threats or decrees or five year plans. Their shared ideas and shared values are as predictable as night following day. They are the orthodoxy of our times.

Today's most dangerous union includes folks from all walks of life, all kind of jobs and titles, all manner of hobbies and skills and predilections.

Today's most dangerous union has all manner of diversity and, at the same time, one unyielding answer to all of life's most pressing questions: Shareholder value fundamentalism.

The single answer now destroying our nation and our planet -- not to mention sustainable shareholder value itself.

Posted by Doug Smith at 04:27 PM | Permalink

April 09, 2006

The Shared Idea Of Transparency

All values, including financial and economic value, reflect patterns of belief and behavior. Think, for example, about pricing. Yes, pricing derives from some balancing of costs incurred, competition and some sense of what the item in question is worth to those who might buy it. All three, though: cost, competition, worth to the customer --- mirror belief and behavior, both rational and irrational.

So, what makes for predictable patterns of belief and behavior? Some of this is found in our DNA. In addition, though, we learn or pattern our belief and behavior through how each of us individually respond to what happens in our relationships with others, the roles we play in our lives (e.g. employee or parent), and in the ideas we absorb and act on. My guess, for example, is that the other day when audience members booed a man who told President Bush he was ashamed of Bush and Bush's policies, those audience members responded through some mix of shared ideas having to do with respect for the office of president -- as well as the ideas that undoubtedly helped select them for audience participation -- that is, the ideas the Bush Administration has used for more than five years to ensure that the president only speaks to supporters so that the television images portray unified enthusiasm.

The shared idea of Truth -- with a capital T -- has done much damage the American body politic ever since the Republican Party embraced Truth Seekers in it's big tent. Like most aspects of contemporary Republicanism, this has gone from bad to worse during the Bush years. Bush himself is said to have the 'black vs. white' world view of many recovering alcoholics -- the predictable belief and behavior to cast all issues and questions and policy choices in stark contrasts. That, of course, fits the shared idea of Truth strongly held by Truth Seekers. And, it means that Truth Seekers will vote disproportionately for a Truth Seeking Republican Party.

It also means that folks angered or dispirited by the the dangerous and already incurred consequences of a government of Truth Seekers (e.g. preemptive wars, the Unitary Executive, Terry Schiavo.... the Rule of Truth instead of the Rule of Law) pattern their belief and behavior around being anti-Truth Seekers. The stark contrasts becomes us v. them. And so, our nation's culture wars slip into a Cold Civil War.

Finding our way out from this suicidal pattern will rest on many things, including luck. But one sure part of any sane path forward will be to drop the shared idea of Truth in favor of shared ideas of accuracy and transparency. Enough with whether every single thing said or done is the Truth. How about putting serious resources behind making sure folks know whether X or Y or Z is accurately described and are transparent.

Consider, say, the federal budget. Is it transparent? No. The full cost of the Bush wars are not included in the budget. Tens of billions are provided under additional appropriations. How about the number of troops and other personnel in Iraq? Not transparent. Tens of thousands of defense contractors have folks in Iraq. They are not counted. Neither of these are about the Truth. As Joe Friday said on Dragnet: "Just the facts, maam."

How about executive compensation? Is it transparent? No. How about net pension liabilities? No. How about unemployment figures? No. How about poverty? No. How about the information we need to judge the future of Social Security? No. Do we get to see and read legislation in any kind of remotely reasonable time frame before it is voted on by legislative bodies? No.

Do our elected representatives even get to see such legislation? No. It is now standard practice for the ruling party to schedule votes past midnight while actually making the legislation -- often hundreds, even thousand of pages -- available for perusal only hours before the vote. This, for example, was what happened with the disastrous prescription drug law.

Speaking of which. Were the projected costs of that law accurate or transparent? No. And the Bush official who hoped to fix that got fired.

Why? Why the lack of dedication to accuracy and transparency?

Because our popular culture has a much stronger, more predictable set of beliefs and behaviors dedicated to the shared idea of Truth and Truth Seeking.

And, it is destroying us.

Posted by Doug Smith at 12:33 PM | Permalink

January 29, 2006

Beggar Is Better

The path to a growing, robust economy is through impoverishing workers, according to Eduardo Porter of the New York Times. You see, here's the skinny: Unions have been too successful. Private-sector union members, on average, make 23% more than non-union employees. This, in turn, means that unionized companies -- such as Ford and GM -- operate at a severe competitive disadvantage. Porter must believe this is the sole disadvantage explaining why these auto giants have announced layoffs of 60,000 workers in the past few months. Porter doesn't seem to think product strategy, distribution channels, shareholder value demands from the financial markets, executive compensation, or anything else is worth throwing into the mix of any explanation about the failures of these companies. Or, at least if he is thinking such things, his editors have deleted such musings.

You see it's that 23% advantage that's killing competitiveness. The path to business success, by this logic, lies in reducing the wages of workers (and, of course, it also lies in reducing health and other benefits). Beggar thy workers! That's the answer!

It's an answer and strategy that has characterized the US economy for decades. Real wages have steadily declined for more than thirty years. Meanwhile, folks at the top of the heap are doing better and better. Since we're looking at car companies, let's consider Michigan. In the past 20 years, families in the bottom 60% of the population have seen their incomes rise a total of, at most, 26% -- or at best just over 1% per year. Those in the top 5% in Michigan -- the auto executives and other well-to-do who guide the economy -- have seen their incomes double -- rise by a total of over 100%; or, straightlining for simplicity, by 5% per year. Put in dollar terms, the lowest sixty percent of families have gotten pay raises of between $165 and $2200 per year while the top folks have seen their incomes rise by over $4800 per year for 20 straight years.

The same pattern pertains in other states. And, according to a spokesperson for New York's Business Council, this is a great thing because the wealthy pay 'huge sums in taxes' enabling New York State to have generous social services for the poor.

So, here's the strategy: Beggar workers so that companies can be competitive so that the executives and shareholders of those companies can continue doubling their incomes every twenty years so that those folks can pay 'huge taxes' to support government social services needed to respond to poverty which, of course, will be rising rapidly as we make sure that workers continue to see their incomes remain flat to declining and any health and other benefits disappear.

To Eduardo Porter and the editors at The New York Times this is as good as a glory road to national health and prosperity. And, it's all down to the the success of the American Union movement.

Posted by Doug Smith at 01:55 PM | Permalink

January 28, 2006

Prescription For Failure

Here's a math question about a household budget. Say you want to understand the effect of trend lines comparing household income to a single item of household expense. That expense might be food or clothing or heat.... or, in this case, interest payments on debt. Here's the question:

What happens if household income is rising at the rate of six-tenths of 1% per year and interest payments on debt are rising 8.5% per year?

Answer: The share of income eaten up by interest payments is metasticizing like a cancer.

Now, if your income is $1 million per year and the base line interest payments are even $40,000 a year, this trend is not particularly troubling.

But, what if you are a doctor and your income is $150,000 per year while the base line interest payments from medical school and other debt are $30,000 per year? Well, then your household income is in cancer-like territory because a year from now your income will be $150,000 times 1.006, or $150,900 but your interest payments will be $30,000 times 1.085, or $32, 550 -- a net problem (before taxes) of $1,650 of more expenses than income.

Five years later, this net problem grows to slightly more than $8,000. $8,000 that the doctor needs to find from other household expenses -- or to offset with income from a second job (or, perhaps by agreeing to participate in income-generating programs offered by pharmaceutical companies). That's a cancer.

And, those are the trends lines currently describing average doctor income and average doctor indebtedness. Average. Therein lies this not-so-hidden prescription for the failure of our society's health care (at least if by 'society' we mean 'liberty and justice for all' -- for 100% of society instead of just part of society):

You are going through medical school looking at these trend lines and you have this choice -- you can sign up to be, say, a pediatrician who works with kids from all parts of society (top to bottom) at an income below the the average, or you can put yourself in a bit more debt to become a specialist focusing on the top 20% of society who have 80% of the nation's assets and, through both insurance and private means, can afford to pay bills that permit your income to be 6 to 8 times the average.

You can put yourself and your family in the position of the $1 million household with beginning debt of $40,000 -- or you can put condemn your family budget to a metasticizing cancer.

You can choose to participate in a health care system that serves the top 20% -- or you can choose justice and fairness for all.

Given our culture's sociopathological obsession with value and individualism, what's your bet on the pattern of choices made?

Posted by Doug Smith at 01:37 PM | Permalink

January 18, 2006

Exploding Mortgages

A survey just out from the National Association of Realtors tells us that 43% of first time-home buyers put no money down. None. Nada. Zilch. 43%. Not 23%. Not 10%. Not 5%. 43%. More than 4 out of ten.

How? Well, as housing prices have escalated during the real estate bubble, the real estate and financing industries have accomodated the unsustainable inflation through a creative range of mortgages that put all the pain 'down the road' -- in a distant future that first-time (indeed, many repeat) buyers -- dreaming of owing a home or making a killing in real estate investing -- easily overlook. Risks? Well, of course there are risks. "But if you... or if I.... don't get in on the action now, beware!"

The self-interest of mortgage brokers and real estate agents motivates them to 'help out' these first-time buyers. It's how these professionals make their money. That is not bad and it is not evil. It's human nature.

Still, the future of 43% of those purchasing homes for the first time is a precarious one. The dream can easily turn to nightmare if (1) rates rise in their adjustable mortgages; (2) home prices fall; (3) jobs are lost; (4) some one gets sick; (5) credit card debt pushes the home owner into bankruptcy; or, (6) any combination of the above.

A core principle of leadership in our new world of markets, networks, organizations, friends and families demands that concern for value be blended with concern for values such as family, social, political, sustainability and more. Leaders must see the whole of their lives. They must stop the dangerous practice of leading one way from 9-to-5 when they are at work 'making a living' and another way the rest of the day when they are at home or play or in church 'just living'.

The President of the National Association of Realtors is choosing to split his concern for value and values when he says he is not worried that 43% of first-time home buyers put no money down. "If the number was higher than that, I'd be concerned."

And how much higher would that be? 44%? 100%?

Posted by Doug Smith at 02:00 PM | Permalink | TrackBacks (3)

January 16, 2006

Martin Luther King Jr.

As we reflect on the birth, life and dream of Martin Luther King Jr., let's commit ourselves to having the courage to be the change we wish to bring about. Only adults can take responsibility for their own change. No one else can do it for us. If we wish to find leaders who care about building a better future for our children and the planet, then we must find a way to exert that leadership ourselves. If we wish to continue the great democratic project begun in 1776, then we must commit ourselves to democracy itself because it is simply not possible to build and support democracy with anti-democratic methods. If we wish to commit ourselves to the rule of law, then we must do so through respecting law above person because it is simply not possible to adhere to law without adhering to principles -- even when those principles require taking action against people whose self-interest and ideology seek to destroy the law instead of uphold it. If we wish to do well and do good at the same time, then we must act to heal the breach between our legitimate concern for value and our legitimate concern for values. We must cease forever our illusory notion that we can somehow make value (profits, wealth and winning) the trump card for all serious questions. We must stop the madness of shareholder value fundamentalism terrorizing our new world of markets, networks, organizations, friends and families. We must not repeat the errors of radical, anti-value revolutionaries. We must not succumb to the temptation to destroy the value that has and can bestow material well being. But we must move past our obsession with value and reintegrate value the singular as a healthy, sane and sustainable conern in the house of values the plural. We must save value from itself by humanizing it with the better part of our natures. And, we must do this as employees, customers, investors, networkers, family members and friends. We must do this. No one else will do it for us.

Posted by Doug Smith at 01:34 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 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

November 20, 2005

Edelman's Opportunity At Wal-Mart

Wal-Mart has hired Richard Edelman's firm to lead the giant retailer's public relations response to the intensifying debate over Wal-Mart's values and practices. This is a wonderful opportunity for Edelman and those who work in his firm to put into practice Edelman's own values about the responsibilities of public relations professionals in our complex 21st century. According to an Edelman post in November 2004, , PR firms should avoid the 'anything goes' standard of lawyers of claiming that since all deserve representation, firms can take on any client regardless of that client's character and values. He believes PR firms should have a higher standard on who are represented and what is said on their behalf. In addition, he believes in full transparency of work methods. "It is more than what you say. It is how you say it that matters." Finally, Edelman writes of how important it is for PR firms to have a seat in the highest councils of companies in order to ensure that these high principles are adopted and applied.

His firm now has an extraordinay chance to live these values. As we know, Wal-Mart increasingly means controversy in a manner not unlike Iraq or tax cuts or Supreme Court nominees. What the Wal-Mart brand stands for -- every day low prices, low wages, employees with benefits, government subsidy of employees without sufficient benefits,local business erosion, keeping inflation low -- is subject to many claims.

Edelman must have decided that Wal-Mart was a worthy client deserving of the very best in PR help - that is, that Wal-Mart met his first principled test on 'whom to represent'. Now, on a daily basis, those who are working on the Wal-Mart account have the chance to apply the rule on what is said and how it is said.

One suggestion: In choosing how to counter various anti-Wal-Mart assertions, challenge Wal-Mart's highest executives to adopt a policy of acknowledging what is reasonable in those claims.

For example, avoid limiting yourself to writing only this on the Wal-Mart website:

"As of today, 620,000 associates have signed up for health insurance coverage in a Wal-Mart sponsored plan."

Why not present this information about the 620,000 associates while also explaining how many of them went beyond signing up for benefits to actually receiving them. Then note that hundreds of thousands of Wal-Mart associates do not have health insurance. Go on to explain Wal-Mart's position regarding associate health insurance as well as government subsidy. Provide readers of the website an understanding of Wal-Mart's objectives in this area and what the company is doing to pursue these objectives. For example, in choosing how to say what steps Wal-Mart is taking, include the Susan Chambers' memo that has recently been completed regarding an approach to benefits at Wal-Mart being recommended to Wal-Mart's Board of Directors.

It is important and undertandable that a PR firm hired by Wal-Mart should present Wal-Mart's side of the story. It is also important -- both for Wal-Mart and for Richard Edelman - to insure that the public debate and discussion of the challenges Wal-Mart faces are conducted with high standards that Edelman would have all in the PR field apply. Bending over backwards to insure that Wal-Mart's side of the story is presented in a manner that encourages real debate, real discussion and real problem-solving will be the highest, best testimony to Edelman and his firm.

Let's wish him and his firm well as they move to the higher ground.

Posted by Doug Smith at 05:10 PM | Permalink

November 05, 2005

Thick We's

In his book The Ethics of Memory, the contemporary philosopher Avishai Margalit differentiates between what he calls 'thick we's' and 'thin we's'. Thin we's have abstract, thin bonds -- all Americans, all human beings, all "20-somethings". Margalit is more interested in exploring ethical issues among people whose relationships are 'thicker'; who have shared experiences and shared memories that raise questions of caring and hatred.

There's much we can do with this distinction. Especially, if we expand and enrich the two concepts to fit how we actually lead our lives in the 21st century. In my book On Value and Values -- and in the posts to this website like my other writing -- a 'thick we' is made up of people who inescapably share one or more meaningful aspects of their fates with one another and who inevitably must together balance individual self-interest with the purposes they share as a 'we'. Because they share fates in various real, tangible and everyday ways, thick we's must both shape and implement some common good together.

Let's unpack this a bit. Your family is a thick we. You have friends who together with you make for a thick we. Those with whom you interact daily at work are a thick we. If you regularly play soccer or go bowling with others, that's a thick we. If you attend religious services with a persistent set of folks, that's another thick we.

In each of these illustrations, there is some meaningul and important aspect of your fate - of your health, wealth, well being, etc -- that is wrapped up with the same aspects for the other folks involved in your thick we.

In contrast, people who might identify themselves with 'thin we's' have simliar interests or concerns, but do not really share any aspect of their fates with one another in tangible, gritty and everyday ways. They do not even know one another by name. There's nothing requiring them to shape a common good or take action together -- to hold one another accountable -- for implementing their common good.

Consider, then, "red" versus "blue" Americans. Yes, these thin we's matter a heckuva lot to the future of the United States (and the world). But, 'red' and 'blue" Americans are better understood as market segments comprised of individuals who in their roles as voters and customers influence political and other markets. Importantly, the people in these 'thin we's' have no responsibility whatsoever to implement or hold themselves accountable for the actions of the candidates or the impact of the policies supported. Rather, as voters, consumers, family members and friends, people in thin we's look to the thick we's elected -- political parties, congresses, executive offices, governmental organizations -- to shape and implement the share purposes of those organizations - -of those 'thick we's'.

Thus, Congress is a thick we. Indeed, it's an excellent example of the following nuance: in differentiating thick from thin, I am not suggesting 'good vs. bad'. Thick we's have the strongest and most predictable shared values - but those values - that blend of belief, behavior, attitude and speech -- can be predictably bad, predictably good or predictably in-between. Congress is a thick we on whom the thin we's named 'red' versus 'blue' Americans depend. The question for Congress -- like any thick we -- is what constitutes Congress' common good, Congress' shared purposes, Congress' blend of concern for value ('reelection') with the concern for values ('governance'; 'liberty and justice for all")?

It is in thick we's -- not thin we's -- that our concern for value (money, profits, winning) is most tested against our concern for values (family, social, political, religious and so on). It is in thick we's -- not thin we's -- that our individual concerns about ourselves -- about 'me' -- are most tested against the concerns and purposes of the group, of the thick we.

In the early 21st century, most thick we's in which any of us participate tend to favor one of these concerns over the other. At work, our thick we's -- the organizations in which we are employed -- routinely use value as a trump card over values. The shared purposes -- the common good -- is denominated in terms of profits, winning, shareholder value and the like.

At home, in church or at play, our dominant concern is one or more values as opposed to value.

All of which contributes to the profound split between value and values in our culture. We lead dual lives -- pursuing value over values from 9 to 5 and the reverse during the remainder of each day.

This is not sustainable. Consider only resources and power. We live in a world of markets, networks, organizations, friends and families. The vast majority of power and resources lie in organizations and, therefore, shape where those organizations will take the markets and networks of our world -- indeed, the world itself.

Today, the vast majority of those organizations pursue value over values. Others -- and the less powerful ones -- pursue values over value. Neither of these strategies are sustainable. Churches, schools, non-profits and so forth cannot sustain themselves by ignoring and being blind to value. But -- and this is by far the more serious challenge -- neither can for-profit organizations (whether Wal-Mart or GM or Roche -- or a small bookstore or cleaners or barbershop) sustain itself if value -- if profits, wealth, shareholder value or winning -- is the trump card for every single serious issue and question on the table. Eventually, that approach eviscerates and hollows out the values -- social, political, spiritual, environmental, medical, legal and others -- on which the very value pursued rests.

Thick we's have become the central, most critical crucible in which our thin we's fates -- all six billion of us on the planet -- are now being shaped. If we can restore a healthy, blended concern for both value and values in our thick we's, we can and will pass along a healthier, saner and more sustainable planet to our children and grandchildren.

Posted by Doug Smith at 02:14 PM | Permalink | TrackBacks (14)

October 30, 2005

Mirror Mirror

According to recent census data, roughly 9.000 folks live in Spanish Springs, Nevada -- a bedroom community outside of Reno. Not surprisingly, the ever expanding gambling industry -- which, I would guess a majority of those 9,000 depend upon for their incomes -- has set its sights on building a high-end resort/casino in Spanish Springs. Given that so many Spanish Springs folks work directly or indirectly for the industry, one might have thought: no problem.

Wrong. According to this local news piece, "Spanish Springs Homeowners expressed their concerns against gaming in their neighborhoods....Reasons varying from crime to traffic to drunk driving are all a part of why many Spanish Springs residents do not want a casino near them. Many neighbors say they want gaming to stay in tourist areas and in downtown ... not near any neighborhoods."

This takes NIMBY-ism to a higher level. It's okay to make our living off a 'gaming' industry that generates crime, drunk driving and traffic -- not to mention gambling addictions, prostitution, spousal abuse, bankruptcies and more. Just keep our employers -- and those who pay our employers -- out of our 'family-oriented' neighborhoods.

We're for 'gaming' during 'our shift' -- but we oppose it the rest of our day.

Sounds confusing to me. Wonder how it sounds when the parents in Spanish Springs explain it to their 8 to 10 year olds.

Posted by Doug Smith at 04:36 PM | Permalink | Comments (1) | TrackBacks (2)

October 23, 2005

Ben & Jerry's Redux

Many who admired Ben & Jerry's iconic status as a socially responsible company worried about the dilutive effect of Unilever's acquisition of the ice cream maker in 2000. And not without reason. According to current CEO Walt Freese, the company under Unilever softened its commitment to continuing the efforts of its founders. There's a lesson in this about corporate social responsibility (which we'll return to below). But, in addition, there's a profound lesson about brand.

If most people knew one thing about Ben & Jerry's brand it was this: the mission and the company were not just about crazily named ice cream. The brand stood for both making good ice cream and taking action to improve the lives of people.

When Unilever went 'soft' on Ben & Jerry's social mission, they also turned their backs on one of their own core competencies: branding. They jeopardized the soul of Ben & Jerry's brand. So, CEO Freese's decision to embark on a $5 million dollar campaign to save small family farms is both good corporate social policy and good corporate economic policy. It is Ben & Jerry's redux -- a return to what the company stands for.

From it's beginning, Ben & Jerry's brand -- like it's mission -- stood for both the pursuit of value and the pursuit of values. The two were intertwined; each contributing to the success or failure of the other. Like many other businesses facing growth and competition, Ben & Jerry's stumbled. Eventually, the company reached a point of mediocrity -- but it was mediocre performance with regard to both value and values. The failures on both fronts reinforced each other -- just as the earlier successes had done.

The orthodox business press (those who worship shareholder value as if it were an idol), jumped on the failure as evidence that Darwinian concern for profits is the one true path. Celebrations must have ensued when Unilever took over the troubled company.

Based on Freese's announcements, these celebrations were premature. But, there's yet another and deeper lesson in all this: It is a heck of a lot easier to reestablish a brand that stood for integrating value and values than to change 'value-only' brands into more sustainable promises and experiences.

Unilever has hundreds of brands for products it makes and distributes around the world. As our interconnected globe of markets, networks and organizations spirals into ever increasing complexity and messiness where social, environmental, political, technological, religious, medical, and legal challenges cannot be disentangled from economic ones, Unilever -- like all enterprises -- must find its way to an integrated concern for value and values.

This goes beyond the profoundly unethical so-called balanced scorecard -- the wolf in sheep's clothing that justifies concern for values only if it promotes shareholder value. Instead, drawing from the heritage of Eastern philosophy, we must learn to see and act on our legitimate concern for profits with our equally legitimate concern for all human values. Each -- like the original vision of Ben & Jerry's -- must serve the other in reinforcing ways. This is not the one-way street of the balanced scorecard (concern for employees and customers okayed as long as shareholders benefit). The ethical scorecard demands that the pursuit of value serve the pursuit of values that serves the pursuit of value that serves the pursuit of values.... and on and on.

It's extraordinarily difficult and complicated to turn a behemoth of Unilever's size away from 'profits and value only' to a more sustainable approach. The sheer number of issues they are tackling is mind boggling. The challenge they've set to find some coherent and transparent way to set goals and evaluate progress is daunting. (And, as can been seen in their 'five year record', they have yet to wrap their minds around the true integration of the financial with the non-financial).

Still, kudos to the employees (including executives) of Unilever. They've given deep thought to the challenges ahead. They have publicly declared their intention and commitment. And, with enough focus on performance -- real outcome-based goals that integrate concern for value with concern for values -- they have a real chance to get where Ben & Jerry's was at the beginning: a brand that stands for the fully human enterprise.

Posted by Doug Smith at 01:28 PM | Permalink | TrackBacks (1)

October 19, 2005

Shareholder Values at Roche

As of today, scientists know two things about avian influenza ( the 'bird flu"). First, that the disease is deadly. Second, that transmission from birds to humans is rare. In the dice game of mutation, however, both characteristics could change. Humans might become vulnerable to birds. The disease might become less deadly.

Mutation at this biological level happens lightening fast. Both shifts could very well happen over the course of this autumn and winter. All of which means we need to pay attention to the pace and effectiveness of the other mutating phenonmenon -- human kind's medical response as determined by markets, governments, networks and organizations.

Looking over the past several decades, we can find much to give us confidence here. There is a nearly vertical growth curve in indicators of scientific advance (patents, scholarly articles, technological advances, etc). And, still, we must remind ourselves that we are human. There is that other part of the picture: greed, selfishness, fear, bigotry and so on. There is the track record of governments that have not distinguished themselves in terms of performance that matters such as planning, preparedness, fairness, coordination and so forth.

And, there is the profit motive -- the celebrated engine of bringing good things to life. Good things like Tamiflu, the patented pharmaceutical owned by Roche. Big Pharma has not distinguished itself over the past several years in adhering to the Hippocratic Oath, that, among other things, demands all health professionals to 'keep the sick from harm and injustice'.

Roche, like other big pharmaceutical companies, has recently written a caveat into this oath: so long as they can pay, we can make profits and we can preserve our patent rights.

All of which means Roche's reversal of its announcement last week that it would remain the sole manufacturer of Tamiflu is good news on two counts: (1) that Roche will now consider licensing others; and, (2) the speed of the change.

One week. That's much, much faster than any similar shift has happened with those pharmaceutical companies who have refused to sell anti-viral AIDS patented medicines to impoverished peoples. It is, as the management gurus like to say, a dramatic improvement in cycle time.

At least two potential causes are known. Kofi Annan has put pressure on Roche. And, Cipla, an Indian pharmaceutical company announced it is nearing readiness to distribute an un-patented version of Tamiflu. Put differently, we can see both governments (the UN) and markets (competition from Cipla) at work in the 'mutating phenomenon" that will determine human response.

Both are good news. Now, let's ask Roche and it's shareholders (as well as employees): At what profit margins will you license Tamiflu? Will you use 'quality requirements" according to the Hippocratic Oath, or as a smokescreen for restricting distribution?

Put differently, what do you stand for? What are your values?

Posted by Doug Smith at 12:17 PM | Permalink

October 16, 2005

Meaningless Politics

We know we live in fractious, partisan times. Our public discourse weighs in with more heat than light. Truth is up for grabs. Not that truth is an easy matter. Still, our contemporary beliefs, behaviors, attitudes and speech have made the always challenging prospect of determining truth – especially shared truths – more complicated.

For the moment, though, let’s distinguish between truth as evidenced by reasonably observable facts from truth that is more purely linguistic and definitional. “The sun rises in the morning and sets in the evening”. Few among us, whether “Red” or “Blue” or “Liberal” or "Moderate" or “Movement Conservative” would debate this empirically observable statement.

Facts, though, often require more work to observe. Do 21st century market economies contribute to the risks of global warming? As we’ve seen in the debate over this question, even facts (e.g. about ‘causes’ and ‘risks’) can find themselves heavily subject, even perhaps hostage, to the other flavor of truth sharing: truth as language.

The most famous recent example of this flavor may be former President Clinton's declaration: “It depends on what the meaning of ‘is’ is”. His was, at a minimum, the classic lawyer’s response to a question; namely, ‘let’s define our terms’.

There is a critical difference, though, between lawyers who define terms for purposes of a particular transaction and the body politic having some minimal agreement on the language needed to govern together – to make sense of shared lives.

And, so, consider this incident from a recent election. A candidate for a city office receives a questionnaire from a politically active interest group. One of the questions asks ‘whether the candidate would favor city ordinances” supportive of the interest groups proposed policies?

The candidate responds, “I prefer a legislative solution to the issues raised by these questions.”

As a matter of language, ‘city ordinances’ are legislation. The candidate has been asked, “Would you favor legislative solutions of the type we’re proposing?” The candidate answers, “I prefer legislative solutions to the questions you raise.”

The candidate has given a 'non answer' answer. But, the problem here goes beyond a candidate being slick. The audiences for this comment -- voters and others including young adults and children -- become accomodated to langauge without meaning. They are told by candidates who, if elected, will be their political leaders, that there is a difference between 'city ordinances' and 'legislation'.

We cannot have shared values without shared language. It is not humanly possible. If we politicize language beyond the reach of shared meaning, we cannot govern together. Indeed, we cannot hope to live together in anything other than cheap ignorance and moral despair.

Posted by Doug Smith at 01:02 PM | Permalink | Comments (1)

October 11, 2005

Delphi's Viral Bankruptcy

Two centuries from now Robert Miller, the CEO who took Delphi Corp into Chapter 11 last Saturday, will be as little remembered as Ebenezer Monroe -- the farmer who may have fired ‘the shot heard round the world’ on Lexington green in 1775.

Miller’s filing, though, has already ricocheted across the planet. In just a few days, the Delphi bankruptcy reached into and shook up the lives of hundreds of thousands of people. Tens of thousands of United Auto Workers (current and retired) –- and their families -- awoke Sunday to the possibility of strikes, radically reduced wages and benefits, lost jobs and diminshed or eliminated pensions. Eventually, some will follow Delphi to bankruptcy court.

Thousands of auto parts suppliers (hundreds who sell to Delphi) are already revisiting options that include fire sales, mergers, closing down and, yes, bankruptcy. Tens of thousands of people work for these copmanies. They, too, heard Miller’s filing. Tonyia Young worries her employer Guide Corp. will match the steep wage and benefit cuts planned at Delphi. Tonyia will undoubtedly witness some in her position follow Delphi into bankruptcy.

Men and women who run small businesses near Delphi and other affected companies could hear the “bang!” of Miller’s court action, too. Said Mary Mosley, owner of the Lighthouse Bakery and Deli about a mile from a Delphi plant: "It's scary because a lot of businesses are connected to Delphi. It makes a big difference."

Some of these merchants will follow Delphi into bankruptcy.

What to Mary and Toniya were anxious murmurs must have been a sonic boom to people at GM. It’s not just the $1.2 billion Delphi owes GM. Far worse are these twin threats: (1) Any disruption in Delphi operations could shutter GM plants heavily dependent on Delphi parts; and, (2) GM might have to reassume $11 billion of liabilities it had hoped to shed when it spun Delphi off six years ago.

By Monday, GM stock had plummeted and some openly speculated on what was once unimaginable: That GM might follow Delphi into bankruptcy.

Not everyone rose to cold gruel for Sunday breakfast. Chinese auto parts manufacturers whose business has tripled since 2001 are looking at the kind of sustained growth that, fifty years ago, prompted the head of GM to brag, “What’s good for General Motors is good for the country.” European auto parts suppliers who've done a better job of implementing strategy than Delphi see opportunities to pick up assets and become stronger. And, many investors think the tea leaves finally point to the kind of industrial restructuring that can make them rich (or richer).

Unlike these potential winners from Delphi's bankruptcy, the thousands of workers, families, businesses, merchants and others who stand to lose will see the viral contagion pile trouble upon trouble onto the quality of their lives in the places they reside: personal and business bankruptcies, divorces, worsening drug and alcohol abuse, broken local government budgets, deteriorating services, a sense of isolation and despair.

In 1775, people like Ebenezer Monroe shared fates with others because of the places they lived together. People from other places were unwelcome if they brought trouble with them. We don't live in a world of places anymore. Instead, ours is a world of markets, networks, and organizations. In our new world, place is contained by - and is subject to -- business, not the reverse.

And, so it is that CEO Miller's message heard round the world is quite the opposite of what echoed from Ebenezer Monroe's musket. Monroe exclaimed to the British, "Take your business out of my place!" Miller of Delphi proclaims to all adversely affected by his Chapter 11 filing, "Take the problems of your places out of my business.”

Posted by Doug Smith at 08:46 PM | Permalink | TrackBacks (1)