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"Fair and Balanced" is the theme of FOX network and it sounds good...but we all know that each and every individual has their own biases...some good and some bad.
I will try to state what I think... and be as objective as I can... but some of you will have a different opinion and we welcome these views and will try and do them justice...
It appears that there are only three viable candidates... Obama, Clinton and McCain... so let the show begin..
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Thursday, March 27, 2008
What happened to Usury Laws?
What ever happened to the usury laws?
It is interesting that there has been so much discussion about reducing interest rates to help solve the foreclosure problem. The Federal Reserve has reduced interest rates so low they are negatively impacting the older population who are on fixed income. It has significantly contributed to the decline and fall of the United States dollar and is increasing the prices of oil, heating oil and other commodities, which again impact the middle class, working people and those on fixed income.
But it is interesting there is NO DISCUSSION about the exorbitant "credit card fees and interest" charged by the credit card companies. These companies have encouraged credit card users to have several cards and only to pay the minimum payments. They charge what should be called "usury/ loan shark" interest rates at time in the low 20 percent level. If someone misses a payment they charge hefty fees.
The result is that many consumers are maxed out on their credit cards and pay a significant part of their discretionary income on just paying interest.
There should be an analysis of this situation and a move to force the credit card companies to reduce their interest rates to a reasonable level and stop behaving like loan sharks.
This may be an easier and more effective solve or at least reduce the current liquidity situation.
Bill Rothschild, author of The Secret to GE's Success...available on AMAZON and at your local book store...Visit www.strategyleader.com for more blogs and strategic leadership books and articles.Saturday, March 22, 2008
The TOILET PAPER INFLATIONARY INDEX...
We all know that gasoline, heating oil, measuring liquids, meat and poultry are regulated by law, a gallon is a gallon, a pound is a pound and so on. So, Exxon Mobil, can't make you fell as though the price has not increased by just giving you less for the same price..The same is true of the butchers, the dairy companies, and many other regulated consumer markets.
But Proctor Gamble, one of the best managed, highly admired companies and their key consumer packaging companies, like Lever Brothers, Johnson and Johnson, Kellogg are able to create the image that they have not raised prices, by reducing the quantity in the package and keeping the price the same.
Judge for yourself---Just look at the size of the regular toilet paper, paper towel package and you will visually see inflation at work. The same is true of over the counter medicine, like aspirin, vitamins etc. or the amount of cereal you get in a package. In most cases the package is the same or even big, with the headline: family, giant size, but when you open up and look inside it is only three quarters to half full.
This is inflation and it is never discussed or used to show that prices are increasing. In fact, it also provides the wrong impression about sales, since consumers must buy more packages to just keep up with their needs it gives the impression that sales are increasing, when they or not. Further, it contributes to the "garbage/ land fill" problem since there are more paper or plastic packages being thrown away every day.
This is just another indication that the country has a major inflation problem that is not being addressed. It supports the issue I raised in an early blog about the UNITED STATES GOVERNMENT and INDUSTRY ORGANIZATIONS...having elected to GIVE US FEEL GOOD NUMBERS... so that we don't worry and they can work on other problems, likes solving the banking and falling dollar crises.
CREDIBILITY is the key any successful society and leaders. I strongly hope that everyone will start to be honest and describe reality, even if it is not popular...Leaders must be honest... this involves those who sell to consumers...when the price is going up... don't make the consumer feel it is not...keep the same package and charge more...or tell them that they are getting less for the same price.
Let's be truthful. We must stop deceiving the public, but most of all we must stop deceiving ourselves. This is the only way that we can focus and solve all of the major problems facing us.
Thursday, February 28, 2008
Who says the value of the dollar doesn't matter?
The Bush administration and the Federal Reserve act as though the declining dollar is not a real issue. They keep reducing interest rates which has caused the dollar to reach all time lows.
Unfortunately, the declining dollar has had and continues to have a major impact on all Americans.
First of all it has contributed to the unprecedented rise of oil prices ($100 p;us) since the oil producing nations sell their output in dollars. So as the dollar declines OPEC raises prices, even though demand has declined and supply is about normal. This has caused a significant rise in the prices of everything and is causing high inflation.
Second, it has enabled countries, like Dubai and China, to purchase American companies and assets are bargain prices. In fact, you might say that they own the United States since they have enormous amounts of dollars and have a very favorable balance of trade.
Third, tourists from Europe, Mid East and Far East are able to come to the United States on special shopping tours to purchase products are bargain levels, while US citizens who wish to travel to these parts of the world can't afford it.
Of course the retort is that the United States exports increase. The porblem is that we really don't make much in the country to benefit from this growth and to create jobs and enhance the wealth of Americans.
It appears that the new Federal Reserve Chairman is doing everything to save those who created the sub-prime mess and are allowing the country's assets to decline and inflation to increase aggressively. Why are they ignoring this issue and making decisions, like continuing to reduce interest rates, which makes the value of the dollar lower and hurts all of those on fixed incomes?
We need sound long term economic strategies and policies and not just politically expedient short term fixes.
Thursday, January 31, 2008
It takes a CRISIS TO CHANGE AMERICA...
Over the course of American history, the United States has faced a number very serious crises and has been successful in overcoming them. However, the country's response has always been reluctant and reactive, versus proactive.
Lets take a few examples:
During the 1920's the United States and the world enjoyed unusual prosperity and "perceived wealth". It was called the "roaring twenties" and no one believe it could end. There was rampant spectulation and spending over the head. Unfortantly, the world found that nothing goes up forever and it came to a "crashing halt". Though Hoover tried to turn around the situation, it took the drastic moves of Roosevelt to stop the fall and move the country upward. Roosevelt instituted welfare programs, social security and even was willing to allow cartels, under the NRA.
The country was willing to accept a loss of individual rights because there was no choice.
In the mid and late 1930's, Hitler conquered Europe and was on the verge of destroying England, Japanese took over most of the far east, but the American people felt safe and didn't want to fight other people's war. It took bombing of Pearl Harbor to get their attention and willingness to give up everything to fight to win.
Russia launched the Sputnik and the country again became fightened and was willing to invest in a space program...Sept 11th is the most recent crisis and reactions.
In each case, the country was willing to give up their rights and had leaders and resources to recoup and be successful.
In my last blog, I described what I consider the current crisis, which includes the problems of the GREAT DEPRESSION, fighting a war- almost alone, and the lack of concern on the part of the country's leaders.
It is not my intent to be a "gloom and doomer" or to say that it is too late to address and beat the crisis, but I am convinced that it will require STRONG CRISIS leadership and the willingness to accept reality, set priorities and recognize that our resources are limited and time is running out.
In the next two blogs I will describe the characteristics of a crisis leader and the ACTIONS REQUIRED NOW...
Thursday, January 31, 2008
Country needs Surgeon Leaders at all levels.
In 1993, I published my book: "Risktakers, Caretakers, Surgeons, Undertakers- the four faces of strategic leadership" because I had concluded that one of the major reasons companies, organizations and government's failed was because they had the wrong type of leader. The underlying premise is that leaders had to fit the life cycle of the organization and its strategic drivers. (Drivers are those areas that provide the organization with a sustainable competitive advantage, such as innovative products, unique sales and marketing skills, ability to have lower costs and so on.)
For instance, if an organization is a "start up venture" and trying to grow aggressively by product or service innovation, it requires a leader that is a missionary, highly intuitive, willing to adapt and betting their career on this new venture. I call this type of a leader, a risktaker. However, when the organization requires more management and selectivity, a "caretaker" leader is required. When the organization is sick it requires the skills of a Surgeon leader who is able to not only save the patient but make the organization healthy for the long term.. Undertakers were rare at the time that I wrote the book , but in recent months have multipled in number and appear to be the most typical type of today's leaders. Undertaker leaders are the individuals who are able to walk away and not worry about the future of the organizations. In many American companies, today...the undertakers walk away with hundreds of millions, never look back and their companies either are merged or sold in pieces, leaving the other employees without jobs and sometimes without pensions.
The United States Presidents have been primarily risktaker and caretaker leaders, but the country now needs " skilled SURGEON leaders" in both the executive and legislative bodies, who can do preventive surgery and permit the country to live within its "means" and not become so overweight and ill that it requires "emergency surgery in the intensive care ward".
My next few blogs will discuss the type of leaders required and the actions required to permit these leader to succeed.
Wednesday, January 30, 2008
A Nation in Crisis needs Crisis Leadership
Whether we want to admit it or not, the United States is moving into a crisis. In fact, it may already be in a crisis. I am not just talking about the "sub-prime mortgage/ liquidity crisis" but crises in all key aspects of the nation.
Let me explain.
- First of all we are a "debtor nation". It starts at the top and goes down to the individual. The nation continues to rack up huge negative balance of trade each month. China, Dubai and other nations literally own the country and it gets worse, since we continue to be dependent oil and export our manufacturing and service jobs. The individual household is maxed-out on their credit cards and since their wages either remain stable or decline and cost of living increases, they are in jeopardy every month of going bankrupt.
- Second, we have over extended our military and spend billions each month to keep Iraq secure and rebuild its infrastructure. We don't have enough military to respond anywhere else and can't afford to spend money we don't have.
- Our infrastructure, roads, sewers, railroads, electricity etc have been HARVESTED and are being fixed in a piecemeal and shabby way. Everyday there is grid lock in the major cities. When it rains the electricity goes out and we get flooded.
- Everything is for sale... we are willing to sell off our businesses and financial institutions. "greedy self serving" executives are willing to cash out and allow the highest bidder or most convenient investors to buy our assets CHEAP.
- We have already exported our good jobs, given away our technology and open up facilities and R&D labs in China, India and other countries that are not secure and are not willing to honor our patents and copyrights. Even our financial service jobs are being exported.
I could go on and discuss our declining educational and health care institutions, but this has already been " beaten to death".
In short, even if we would like to ignore the reality...we are in crisis and need a new type of leader.
In my next blog, I will describe the type of leaders we need and why the current "presidential, senator and congressional leaders at the national level and the governors and their legislators at the state and local levels ALL LACK THE RIGHT TYPE OF LEADERS.
In addition, I will describe PAST situations when our country was in crisis and how the right type of leaders rose to the top and saved us....
Immigration Problems Need More Than Good Management.
I recently read the Jack and Suzy Welch weekly Business Week column "Immigration: A Reality Check" which urges the reader to face reality and view the immigration problem from a management perspective. There are some good insights in their comments, but what they fail to include is that the reality is that there is not one immigration problem, but several, each with its own causes and each must be solved individually.
Legal Versus ILLEGAL Immigrants. The Welchs' quote a Tuft's immigration history professor, who says that all immigrants have tried to stop the next wave of immigrants. This is probably true but we are not dealing with "legal immigrantes" we are dealing with "illegal immigrants". My own and my wife's ancestors all came from foreign countries, but they came here legally and this makes them different from the major issue facing us to day.
At Least Four Different Segments and Problems. To solve the problem, we need to segment the problem into the different types of illegal aliens and the reasons they have violated our immigration laws. These are few of the key types:
- Visa violators- I have read that 45% of the illegals are here because they came on legal Visas and never went back home. Clearly, this means that we need to know who comes to this country and who doesn't leave? One expert pointed out that if Fedex and UPS can track millions of documents and packages daily and know where they are at all time, why is it so complicated to know who and where those who are violating US Visa rules are? All passports now have barcodes and so we should use them to monitor who enters the country and when they leave. If they don't leave we can track them down and deport them.
- Seasonal, "slave- like laborers"- Second, there are millions of people who are coming here to work in "poor paying, seasonal jobs", who are being hired by "greedy" individuals who are only interested in taking advantage of their poverty and inability to earn a living in Mexico. Several decades ago, there were immigrant children working in sweat shops in most of our urban areas. Their employees claimed that this was the only way to compete. However, laws were passed and implemented to stop this practice and the employers were put in jail if they violated the law. What is so different about the current situation where greedy people are exploiting the current poor illegal workers? These dishonest business people argue that if they didn't have these "slave" labors they would go out of business. I don't think this is true since many employers in these industries follow the law and are still able to make money and stay in business, even when they have to compete against those who violate the law and take advantage of these poor people. It is true we might have to pay a little more for our fruits or vegetables or to have services provided, but I think most of us would be happy to do so or be willing to do without.
- Foreign Students- Third, there are thousands of foreign students, who "the Welchs' describe as entrepeneurs, in our colleges and universities who don't leave our country when they graduate and in fact, many don't even show up for classes. Again, we have laws that must be inforced and it is the responsibility of the Universities and trade schools, to know who is in class, who is in violation of the law and report them.
- Mexico has failed- The fourth and maybe, most important reason is that Mexico lacks the leadership to use its natural resources and strategic position with the United States to create good paying jobs. Over the past several decades, many US companies moved their manufacturing to Mexico to take advantage of its lower labor costs and proximity to the United States. Obviously, the Mexican government has not been able to capitalize on these gifts and oppotunities to create a stable society. It is pathetic that Mexican citizens will risk their lives, leave their families, even pay to be "imported into the United States" and to take poor paying, difficult jobs in order to escape from their homeland. This is a complex problem, but if Mexico can't take care of it own people, the broken borders will continue and even get worse.
In short, these are just four entirely different situations, each has a different cause and must be solved individually. If we enforced our current laws we would at least stop the growth of the illegal immigrants.
Another assertion in the Welchs' column is that it is impossible to deport all of the 12 million plus aliens already here. This is true. But it doesn't mean that all of the current illegals are the same. Again we need to segment them and deal with each separately. This is just common sense and sound strategic thinking. For example:
- Hard working individuals, who want to be citizens and pay taxes. Some of those here illegally are hard working, good people who want to pay taxes and be given a chance to become citizens. However, we must be fair to those who become citizens by following the rules and it must be highly selective, since not everyone fits into this category.
- Opportunists- Others are just here opportunistically and have no interest in becoming citizens or paying taxes. They take jobs, don't pay taxes, send the money home and plan to leave. They have no desire to be citizens and pay taxes. Often, many in this category go on welfare and take away the funds that should be allocated to citizens who deserve them. These should be deported.
- Criminals and Terrorists- A third group are criminals and even potential terrorists. These should be dealt with like any other criminals and put in jail and then deported. If their native countries will not expatriate them, then they stay in jail. This will communicate the message to these unwanted individuals and will deter more to follow.
In conclusion: This is not just another management problem and the reality is that we are dealing with a very complex number of different problems. However, these problems can't be ignored or just passed over as "reality". They impact our homeland security, economy, legal system and ability to retain our national identity. We need real strategic leaders, with the courage to stand up and be counted and not just try and satisfy the few greedy business people or to get the votes of those who favor ignoring it. Timing is NOW...it will require consisten actions and not just slogan and words.
While Rome Burns- the circus continues!!
Leaders set priorities and try and solve the most vital problems facing their organization.
It is obvious that our elected representatives are not real leaders. Yesterday's Roger Clemens' circus is an excellent example of a lack of leadership.
Our elected officals are more concerned about the use of performance enhancing drugs in major league baseball, than trying to pass legisltation to enable our law enforcement officers to provide real security, or determining how to fix the out of control immigration problems, or helping their constituents to get good paying jobs... in short, they lack the ability and willingness to set priorities and solve them.
The press are equally to blame. Many of the networks had full coverage of the meeting, almost like the McCarthy hearnings, and are more interest in covering the sensational, than the critical events and issues. When they get an issue they beat it death and then move on to other issues and do the same. This approach seems to sell advertising and newspapers so it must be what some of the people want. But it is clearly a waste of time and distracts us from solving key issues.
Time is short, the real issues need to focused on and some solutions found.
Thursday, October 18, 2007
How attractive is CHINA as a market and place to bet your future?
There are over 1.5 billion Chinese. It is an enormous, double digit growth market and most MAJOR companies believe that they must be there to be long term, even short term, winners. Therefore the common logic is that you must be in this market to grow and even just to survive. Is this true? How much focus should companies place on China? Can they ever make any real returns on their investments of money, people and technology? I am not convinced that this is the best place to put most or even all of your resources and would like show you by a comprehensive assessment of CHINA why I am concerned.
In the 1960's, this was the folklore that led many companies to over diversify and move into the BIG/ FAST Growing markets. In my recent book, " The Secret to GE's Success". I describe how GE in the 1960s, moved aggressively into nine "large, fast growing markets" and failed in five of the nine.
Over the next few weeks, I will focus on THE ATTRACTIVENESS of CHINA and provide some challenges to the viability of succeeding in this market.
I welcome your insights and so please challenge my opinions, analysis and experience and we will both learn.
Marie Antoinette School of Management-1
The October 19, 2007 edition of the Wall Street Journal reminded me of my desire to write a book on the type of management that appears to be prevalent today, the management style called " ME FIRST". One of the articles was about the "Villa Compounds " being built in China. The article described that these enormous "mcmansions", in a gated community outside the Beijing airport. The article also pointed out that there are now over 100 BILLIONAIRES in China.
This phenomena is not new, nor is it reserved to China. All around the world the number of billionaires are increasing and they all follow the "Marie Antoinette/ Louis XVI model". Unfortunately, if these individuals study history they will learn that this type of ostentatious behavior always fails and they should recall that both Marie and Louis XVI were both beheaded.
I plan to discuss this situation more in future blogs... Please share your opinions and perceptions.
Tuesday, February 12, 2008
Leaders fail because they over-promise.
Leaders fail because they create unrealistic expectations and don't achieve them.
I have emphasized that the country is in crisis and that the current political approach is to promise immediately cures to solve our healthcare, educational, infrastructure, homeland security and the Iraq war. The theme is a "time for change"...but it is clear that all of these problems can't be solved immediately, especially since we lack the money, people, systems and "will" to do them all.
One prime exampe is solving the mess in Iraq. This has become another devicive unpopular war, like Viet Nam. Solutions proposed is that we "immediately withdraw our troops" and let the Iraq government fix its own problems. Others are vowing to fight until we win, even if it takes decades, both are creating unrealistic expectations and both will fail.
Business CEO get themselves in the same trap because they want to please ALL oftheir stakeholders and especially their stockholders or Wall Street. This is the fatal flaw... you can't satisfy everyone equally and you must set priorities and implement them. Companies in crisis do the same as the politicans and promise to fix the problems quickly and they too fail.
There are no simple solutions to complex problems and situations, they must be segmented into smaller pieces and each dealt with individually... The first step is to set priorities.
Strategic Portfolio Prioritization.
Though the politicans and CEOs run the risk of losing their jobs, I would recommend that they segment the problem or business and focus on those parts where they can win and be willing to delay or ignore those areas that they can't win. This is called Strategic Portfolio Planning and Prioritization.
Do What they Say.
Once the portfolio has been assessed and priorities set, then the leaders and politicans must be will do do what they say and not deviate from the game plan, unless it is not working.
Tactics are the Secrets.
Keeping the key stakeholders informed is vital, but you can't tell them everything. It is okay to communicate the overall strategy, but never the detailed implementation plan. Timing and degree of response are the secrets that must be protected.
For instance if and when the US will withdraw troops from Iraq, it is okay to say we plan to withdraw them, but not the specific units, the number and the timing. These are the keys to success and the enemy must not know the details. The same is true of companies. If a company plans to introduce a new innovative product line, it is fine to tell people you are working on it, but not the detailed execution plan.
In short, creating expectations is vital and it requires sound strategic thinking, decision making, prioritization and precise, secretive execution. "Only promise what you can deliver, if you can do it, say so and move on...even if it means losing your job". You and the key stakeholders will be better off in the long term.
Lack of Common Courtesy!
When I grew up... I was taught that if someone sent you a letter, or called you on the telephone, you would respond, because it was the "just common courtesy".
Today we live in a world of CONTINUOUS interaction... we have email, cell phones, call waiting and so on.... we even have machines that tell you " your call is very important to us", but then either puts you on a waiting list or prescribes ways to avoid waiting...
This is one of the "fatal flaws" of our society... I call it "virtual response"... that is it really is not a response or interest in people at all, but the pretense we really care.
All generations are involved.... you can call your peer age group and get the same response...they may look at the phone ID and say it can wait, or it is not important... you can call your classmates, friends, former associates and get the same "lack of response"...Many have accepted that the fact that you don't want to speak to someone it is okay.
During most of my career, I have had the good fortune of dealing with people who had "real people answer their business phones, or who would personally pick the phone or answer their letters or emails... They demonstrated interest...even if their message was not what I wanted to hear.
I have many notes from CEOs who personally responded...Jack Welch was the best at this since he would personally write notes in his own handwriting and tell you what he thought, even if it was not positive.
His successor is not like this... you write him a note and you don't even get an acknowledgement.
When I published my latest book: " The Secret to GE's Success" I sent our several dozens of books to individuals that have a STAKE in GE and though I didn't expect them to endorse the book, I did expect a THANK YOU.... only a few showed common courtesy...
When I grew up I was taught to say thank you... even if it was just some one opening the door, or giving me some information and especially if they had the courtesy to send me something for nothing.
The combination of "lack of common sense" and a "lack of courtesy" (which I discussed last week in by blog)... could partially explain why the United States, and other developed and developing nations are having trouble anticipating and dealing with key issues, like the recession, the greed in corporate and governmental offices and the so called "War On Terror".. we are too busy passing the blame and not talking to each other...
I recognize that it is wrong to have simple answers...but often it is the simplicity that helps identify, specify and solve very complex problems.
Monday, October 15, 2007
Print Media Response to Declining Readership and Advertising
It is clear that all of the major newspapers and magazines are losing readership and advertising dollars. Many prefer to get their information and news from the Internet or cable. The printed publications, like Wall Street Journal and Business Week, seem to believe that the solution is to make their articles and analyses shorter.
As a reader of both these publications I totally disagree with their response. The publications are not informative and lack the depth of insights that I liked. They are now just printed versions of the electronic media and don't have any distinctive advantage or appeal.
As a strategist I would have recommended that go the other direction. Make their publications truly different and provide in-depth analyses and insights. The Economist is an excellent example of this type of publication and I learn more from it and gain insights that I could not get anywhere else.
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