United States Companies have been giving away their technological advantage...

Over the past few days there have been several articles about the United States losing technological leadership. I am really confused why it appears that anyone is surprised. Lets look at what has been happening over the past several decades:

1. United States companies, including some of the giants, have not been investing in their United States research and development labs, but rather opening new ones in China, India and Europe
2. The number of foreign students in the technical programs has been increasing rapidly and many of them return to their native countries.
3. Many US companies have stopped their own technological training and rely either on outsourcing, hiring from the outside or relying on the Universities to do the job.
4. Many countries have permitted the open and frequent violation of United States copyrights and patents.
5. There have been many cases of industrial espionage. Just today, two Chinese engineers were found guilt of stealing from a US company and exporting the know how, illegally to China.

There is no question that many CEOs of major US companies have moved their facilities, know-how overseas... SO WHY ARE WE NOW SURPRISED THAT THE UNITED STATES IN LOSING IN THIS CRITICAL RACE.

Bill Rothschild, author of the only objective, insightful and comprehensive assessment of GE's successes and failures over its 127 years...THE SECRET TO GE's SUCCESS and GAINING AND MAINTAINING THE COMPETITIVE ADVANTAGE...which can be purchased on http://www.strategyleader.com/

The CRITICAL General Motors versus General Electric Labor Relations Difference!!!

Standing and Fighting - one of GE's success policies!!

Many leaders have taken the easy way out. Rather than taking strong stand against adversaries they have been willing to give in to unreasonable and uneconomical demands rather than standing a fighting.This is painfully obvious today when we witness the problems in the automobile and its supplier industries. General Motors and Ford are almost in bankruptcy and asking the Federal Government to save them and are not able to compete against its non-union foreign competitors.

Not only are their wages high, but they are forced to pay for workers who don’t work, fund pensions, and contribute to ever increasing health benefits. In addition, these companies are forced to operate in old, non-competitive factories in locations that have high taxes and worker protection laws.

All of these problems were not caused by the current management but by those who preceded them, especially the leaders in the 1950’s and 1960s. Following World War II, the United States experienced its most prosperous times. There was enormous demand for consumer and industrial products. During the war, the entire US manufacturing effort was focused on winning the war and not on providing consumer and industrial products. Further the US companies stood alone in the ability to provide these products worldwide, since the European and Far East producers had been devastated during the war.Unlike other major companies in autos, steel, aluminum and transportation, GE was unwilling to “pay off” the unions with overly generous, non-economic wages and benefits. Instead, GE leaders took a strong stand in the mid-1950s against the then strong labor unions dominance and uneconomic demand.

Led by Lemuel Boulware, GE’s refused to participate in industry bargaining and negotiated with the unions on a company basis. They carefully thought though what was in the balanced interest of employees, investors, stockholders and made a “fair offer” prior to the negotiations. Though they were willing to make some concessions, they were firm and were willing to take a strike rather than give away the shop. They christened this approach “Doing Right Voluntarily” and used these policies and practices to assure that the company didn’t mortgage its financial future. In addition, GE made it clear that it was ready willing and able to move its established plants to friendlier, non-union locations, rather than be blackmailed.

This practice became known as “Boulwarism” and though it received a great deal of negative press, it worked for a number of reasons:

First, GE had a long positive track record from the company’s inception of caring about its employees and their welfare. They instituted a suggestion system in 1906, a pension program in 1912 and insurance in 1920.

Second, the major GE union, the United Electrical Workers (UE) was a communist led union that appeared to be more concerned with having a people’s revolution than about the conditions faced by the GE workers themselves. This union was highlighted in the McCarthy hearings and was ultimately ejected from the CIO.

Third, the CIO created a competing non-communist controlled union, under Jim Carey, who aggressively sought to convert the UE members to the IUE. Further other powerful unions were part of the GE bargaining units, including the Teamsters and the IBEW. So Boulware divided and conquered the unions and didn’t have to face one dominate union, as there were in the auto, coal and steel industries.

Fourth, as we said GE did its homework and was willing to give the workers, both union and non-union, attractive and even innovative benefits before they were required. In most cases, the workers recognized that the benefits and wage increases were fair and balanced and were will to accept them without a strike. This neutralized the unions bargaining power.

Fifth GE hired the “Great Communicator” and the popular host of GE Theater, Ronald Reagan to tour all of the GE plants and spread the message of evils of Big Unions and Big Government. Reagan claimed to have visited 135 GE research and manufacturing facilities and met with some 250,000 individuals. It ultimately led to his own conversion and gave him the underpinning of his successful election to President of United States.

Sixth and probably most important, GE was willing to close plants in unattractive union locations and move them to non-union cities. This was very powerful, since it gave the company power that the auto, steel and coal companies didn’t have. GE was an early proponent of moving to the southern US and overseas.

Overall the GE Boulwarism approach enabled the company to maintain control over its own destiny and not allow Big Unions and Big Government to dictate to them. GE was unwilling to mortgage the future for short term gain and was willing to take a strike if it was needed. This was sharp contrast to the other industry leaders who accept peace at any price and didn’t appear to care about the long term implications of giving away the shop.

This is just one of the elements that has enable GE to prosper and grow over its 127 years of existence, while other United States giant companies have gone out of business or are one the verge of bankruptcy. The complete story can be found in my latest book “The Secret to GE’s Success”, published by McGraw-Hill and a global best seller...now in six languages, including Simplified Chinese, Japanese, Korean, Indonesian and Spanish, as well as being digital. It is being used in many MBA and Executive programs worldwide. Other strategic leadership books are available on www.strategyleader.com

JOBS, JOBS...it is all about REAL JOBS

We now a NEW, unproven, but "inspiring" new leader of the world and PRESIDENT. Clinton was elected because he told GEORGE the first, that it was the ECONOMY and he won. President-elect Obama said he would SAVE the world from the incompentence of GEORGE the second... now he must do what he said...but it is clear that the UNITED STATES has EXPORTED all of the key manufacturing jobs, under the banner of "free trade" which really means focusing on only the STOCKHOLDERS and MANAGEMENT and not all of the key STAKEHOLDERS.

In my most recent Chief Executive magazine article, entilted "Who’s Going The WRONG WAY?" I made the point that the United States may be the best place of US companies to MAKE its products...this is what I said:

Why the U.S.?

• The U.S. is still a very large, affluent and growing market for many of the products and services these companies provide. It has a low inflationary rate; stable government and legal system; a large skilled, highly productive workforce; and protects patents and copyrights.

Pros include: Stable wages and benefits. Wages and benefits in the U.S. become increasingly more competitive as unions and workers accept that they will not get pensions, must have their own 401(k) plans, and, in many cases, pay more toward health care. Strong infrastructure. The U.S. has increasingly focused on improving the quality of air, water and preserving natural resources.

• Quality of life is far superior and, while infrastructure has been neglected, it is still competitive and will improve in time. Information/communications networks are second to none. Abundant management and productive workforce. The university and professional schools in the U.S. are still among the best. There are an ample supply of qualified business graduates and, despite declining enrollments, science and engineering programs remain competitive and can be increased with the right incentives. State and local governments competing for jobs and investment. Major locations in the U.S., such as Michigan, New York, Massachusetts and Connecticut, are aggressively soliciting companies to build plants in their states with tax incentives and other support
  
• Security. U.S. laws protect copyrights and patents. Its workforce can be more loyal to their companies than to the nation. Travel is easier, safer and not as complex. It is easier to protect facilities and key people in the U.S. than in a developing, often unfriendly country. Stable and consistent financial requirements. The U.S. has a strong heritage of sound financial and accounting practices that are more stable and understandable than China or other developing nations

If a company wants to be incorporated in the United States and be considered American it must first serve its American workers, communities and governments... if it does not then it should set up it headquarters int China, India, or other countries and not consider itself an AMERICAN company... they are like the MAN WITHOUT A COUNTRY...they can live on ships and go to the most desirable port and not belong to anyone. If you recall the Man without a country he died having nothing and so will those to decide they are global and not loyal to any one country....MAJOR companies, like GE, GM, IBM, and other, have a choice... if they don't provide good, challenging and paying jobs in the US they have failed all their key STAKEHOLDERS.

Bill Rothschild, author of the ONLY objective, comprehensive and insightful book on GE..THE SECRET TO GE's SUCCESS...

Whose COMPANY is it?

Over the past few years, it appears that many CEOs have decided that THEY are the company and it is their TOY to do with it what they want.

Unfortunately WE have become a NUMBERS society... when the DOW is moving up we feel good, when it moving down we feel bad...the same is true of all organizations... if the CEO makes money and exceeds Wall Street expectations we think HE or SHE is a hero or heroine...and vice versa.

Unfortunately, we often fail to ask HOW DID HE or SHE MAKE THE NUMBERS...often it is because the MARKET grew...but unfortunately the company may not have grown as fast...so the numbers are up, but the company LOST share.

In other situations, the numbers were up because of a unique event, or because the tax requirements were lower or because the company got a good loan or investment... IN SHORT, this is society of numbers and not an OBJECTIVE assessment of how the numbers were achieved.

We need a RETURN to objective, quantiative/ qualitative EVALUTATIONS and not just looking at the NUMBERS and not asking WHY?

Bill Rothschild..author of PUTTING IT ALL TOGETHER, a guide to STRATEGIC THINKING... the first and best selling book on STRATEGIC THINKING.

Why Obama Won!!!

The November 17, 2008, Business Week , JACK & SUZY WELCH column attempted to explain why now PRESIDENT ELECT Obama won... the article had three reasons:

1. Clear, consistent vision


2. Execution


3. Friends in HIGH PLACES.

I would like to build on the Jack & Suzy perceptions...

1. first of all I don't believe that OBAMA had a clear and consistent vision... he was more like Bill Clinton who changed to meet the needs and wants of the audience... many believe he espoused a Centralist, even Conservative, view to get all of the constituencies to get elected


2. I agree he has MASTERFUL execution...his team was focused, precise and did what it had to do to get Obama elected... it may have been the BEST example of execution..


3. High places... it is clear that even the traditional capitalists... joined the Obama team and give it access to hundreds of millions dollars.

My take on the election is very simple...

Obama had access to hundreds of millions dollars... they say it was the "widows and orphans" but it is hard to believe that some many small contributors were able to provide the UNLIMITED MONEY that was spend and is still being spent to provide the new HOLLYWOOD, WASHINGTON opening of the OBAMA era...

Obama is a GREAT PREACHER... he is better than any of the evangelical preachers, including the Rev. Wright... he is inspiring when on the stage, but not when he has to answer real questions and SPECIFICALLY describe his plans.

In simple terms, OBAMA is a great showman...with a timely message... and infinite funding... NOW we will see if he is a REAL LEADER, which requires the unique talents of a RISKTAKER and SURGEON... which is very rare and difficult to EXECUTE.

As a UNITED STATES citizen... who is concerned about the present FIASCO...I hope that OBAMA can do what he says... and enable the US to remain a real, strong and positive WORLD LEADER..

Bill Rothschild, author of RISKTAKER, CARETAKER, SURGEON, UNDERTAKER, the four faces of strategic leader...available on http://www.strategyleader.com/ and AMAZON.

Destroying STAKEHOLDER Value and Confidence.

During the past six months we have witnessed many companies destroy their stakeholders' personal wealth and confidence. Note I use the word "stakeholders" and not shareholders. Stakeholders include employees, communities, governments, investors, stockholders and any one who has a vested interest or "stake" in an organizations.

There are FOUR factors that have contributed to this destruction:

1. Unrealistic expectations. Most of the LOSERS have promised results that were unrealistic, poorly conceived and missed them dramatically. It is truly amazing how much money major organizations have lost and missed their promised results.


2. Surprised Themselves. To make matters worse, the management of these organizations have not only surprised their stakeholders, but themselves. This is the worse SIN anyone can commit. It means that the organizations lack internal assessments and believe their press releases and not the reality of their situation. It appears that they have had staff organizations who were "yes people" and not willing or able to point out that the "emperor has no clothes".


3. Arrogance and unwilling to admit mistakes and take responsibility. Not only have these "so called leaders" fooled themselves, but have been so arrogant that they refuse to admit they made mistakes and were at fault. They use the "blame game" to say that everyone else was at fault and not themselves.


4. Rewarding themselves for failure. Finally they destroy organizations, put them in bankruptcy, do harm to their investors, employees, communities, but have the nerve to take HUGE compensation packages. They reward themselves tens of millions of dollars and benefits for FAILURE.
   It is amazing that these four characteristics can be attributed to major organizations. Some are still viable, but many have been destroyed forever and everyone has lost.

The real issues are: WHY DID IT HAPPEN AND WHAT CAN BE DONE TO PREVENT THIS IN THE FUTURE. I hope that the major MBA programs are studying this situation and will determine if they were also responsible for the problem and how they can prevent it in the future.
Bill Rothschild, author of the only comprehensive, objective and insightful assessment of GE's 127 years... THE SECRET TO GE's SUCCESS and Risktaker, Caretaker, Surgeon, Undertaker- the four faces of strategic leadership.

Posted by TheStrategist at 1:19 PM 0 comments