Business Leaders Committing Suicide

I think we know by now that one of the biggest obstacles to an economic recovery is an off-the-cliff fall in consumer spending.  This is leading to lack of investment in new plants, equipment, research and development, exporting or any other growth producing activity.  Of course as more people lose jobs the more the fear contagion spreads so the more consumption and investment shrinks and the more jobs are lost.

All I hear and see from business leaders is hand-wringing panic.  By now we hear from idiot economists who didn’t foresee the sustainable bubble bursting that the world wide global economy is being “reset” at a lower level.  Steve Ballmer, CEO of Microsoft, recently said while he announced the layoffs of 5000 smart productive employees that his economic analysts don’t see a recovery in demand for personal computers for many years, if ever.  Meanwhile Microsoft made $4.17 billion in profits, which is enough to pay the people laid off for a decade even if they did no productive work.  What Ballmer did, of course, is what business leaders are doing all over the world.  He made sure the 5000 people he just fired and the millions that watched him do it would be too scared to buy a new computer or upgrade their software to Windows 7.

Yes, we are seeing the rotten cycle of short-term, me-only leadership.   Most CEOs today earn bonuses based on stock price increase based on maintaining high-as-possible short-term profits.  The easiest way to do that is cut expenses.  And the big expense target is always the same…employees and now product development.  What’s insane is that this kind of myopic leadership accelerates the decline in consumption and insures that few exciting or improved products or services will be developed.

The problem is our business leaders literally don’t know how to think differently.  They behave like sheep in a panic stampede.  Now is the time for leaders to lower the cost and time for consumers to buy their product by removing waste and all non-valued features.  Now is the time to invest in new solutions to the problems we face or the joys we desire.  Now is the time to remove the dysfunctional or obnoxious aspects of our workplaces.  Now is the time to dream of ways of creating sustainable abundance and attack the worldwide market with better ideas.  Most of all, now is the time for business leaders to step up to their social responsibility to creatively employ their workforce in producing value.

The needs of the world have not changed.  In fact they are growing.  The only reason leaders of profitable business are laying off people is that they are scared to think differently.  They are scared to lead.  They need to get out of the way and let someone with courage and imagination lead.  Next time a leader of a profitable enterprise layoffs hard working, value producing employees, he (or she) ought to lay himself off.

Oh yes, I am off to Washington D.C.  I am trying to get a certain Senator to support the 1% Percent Solution.  Let’s create jobs by unleashing our entrepreneurial energy toward socially strategic enterprise.

Microsoft is Stupid!

Culture is a powerful thing.  It can make your company smart or stupid.  Microsoft announced the layoff of 5000 people last week because it can’t find anything productive for them to do.  It should be remembered Microsoft is not fighting for its life.  It actually reported a profit of $4.17 billion.  I am of the firm belief that the foundation of Corporate Social Responsibility is that competent, committed employees should not be fired while a company is profitable.  It’s even more outrageous when Microsoft has tens of billions in cash languishing uninvested because they can’t think up new ways to grow.  This is an immense failure of leadership.

At Microsoft, such failure is routine.  Maybe it’s just me, but it seems like Microsoft had one major business innovation.  It was creating a software monopoly with P.C. chipmakers and pre-loading their software on most P.C.s.  It was brilliant bar-fisted marketing, but what technology have they created that we love?  Early on they bought MS-DOS, a clumsy, clunky operating system that the P.C, would start on.  Then Windows was a lousy rip-off of Apple’s graphical interface (inspired by Xerox—that’s another story).  And that’s about it.  Their attempts to be a cool portal with MSN can’t compete with Yahoo.  Their search can’t compete with Google.  And their Zune MP3 player hardly exists against the ipod.

And speaking of ipods, Apple made record profits in the 4th quarter of 2008 because consumers love their products.  IBM is still growing profitably with their professional service business.  Google keeps figuring out ways to make searching better and more profitable.  Smart mobile devices are growing worldwide and all Steve Ballmer, CEO of Microsoft, can do is blame his shrinking profits on a collapse in P.C. demand because the global economy is shrinking.  It’s like GM blaming their going-out-of-business sale on gas prices while Toyota becomes the number one carmaker in the world.  It’s about product, baby.  Always has been.  Cool, in-demand products come from a culture of value innovation.  But Microsoft’s culture seems to make their people stupid.

Microsoft is famous for recruiting really, really smart people.  They also give generously to charities and are well-behaved corporate citizens.  But their first Corporate Social Responsibility is to hold leaders accountable for their persistent inability to use their resources to create products and services that people value.  Laying off 5000 people is reprehensible.  This is a failure of leadership that cannot be blamed on a shrinking economy.  In the world we currently live in we need leaders with moral imagination and cultures of enthusiastic innovation.  We need to all pray for Steve Jobs recovery.

The 1% Solution

We are living in a puzzle of paradox.  On the one hand we are staring at the single light of an oncoming train barreling down the tracks of a collapsed economy.  On the other we are giddy with optimism that President Obama’s leadership will usher in a new era of inventive solutions that will bind us together in a new future.  As recent national New York Times/CBS News Poll declares, 80% of Americans believe Barack Obama will lead us to responsible prosperity and world peace.  Wow.  That’s hope on steroids.  But just below our optimism are nagging questions.

We are all upset about bailouts without accountability.  Banks who seem to have no trouble tracking every transaction on my debit card suddenly can’t tell us where they stashed or how they used $350 billion.  It’s all co-mingled with all the rest of their assets in a giant money bin they tell us.  Right.

Next we gulp when we’re told that the government has to spend a trillion dollars to stimulate our economy.  Hey, they are going to build roads and bridges and get us back working on high paying union jobs.  Yea…that’s good I guess, but how come every time I drive down the freeway by a construction zone all I see are lots of people standing around and a few people working?  And why do these projects take so long to complete?

It seems to me that flushing billions down the sewer of our giant broken banks without any accountability and huge public works projects is like treating cancer with aspirin; it may be necessary, but it’s not a cure.  The problems our bombed out economy is dealing with are far deeper than bank balance sheets and a new freeway interchange.

One massive game-changing problem is that globalism and technology has stopped our incomes from growing.  Don’t get me wrong.  Global trade and technology aren’t bad in and of themselves.  But when they are primarily used as tools to increase the wealth of a few, their toxic side effects are potent.  A global workforce has radically swelled and depressed wage growth in developed nations.  This combined with automation and software has rendered lots of well-trained and educated people’s skills irrelevant.  A recent side effect to no wage gain is the decline of consumption so our markets can no longer sustain the rapid industrialization and output growth of Asia and Eastern Europe.  Of course there is a silver lining to the collapse of the old economy.  We’ve been way too wasteful.  We bought stuff, lots of stuff, we didn’t need, and we gravely abused our planet.  It was all unsustainable.  But since the old economy paid our bills, its collapse comes with a raging river of human suffering.

So here comes the cavalry.  The bugle blows and Obama rides to our rescue.  Well maybe.  I hope so.  He’s intelligent, reasonable and inspiring.  But is government the right tool to fix what ails us?  Our own government’s Office of Management and Budget (OMB) recently estimated that one-third of our annual $3 trillion in taxes is wasted.  We receive no value for it.  That’s just the way it is.  A trillion gone.  It’s true that some things government does best.  But mostly what I want government to do is make and enforce laws that promote fairness and justice.  I want them to keep the playing field as level as possible.  I want them to prevent corruption.  I want them to take the “special” out of special interests.

But one thing they are not good at is valued job creation.  The fundamental problem of government employment and government contracting for services is non-existent accountability.  When there are no consequences for under performance, underperformance is usually what we get way too much of.  Helping big business is not much better.  For the past 30 years they’ve been in the business of cutting jobs, not creating them.  For instance, General Motors has shrunk its global workforce by 75% over the past three decades as its market share shrank.

So what’s the best thing we can do?  Let’s try something completely simple and completely radical.  Before I propose it let me be clear there are lots and lots of details to work out.  So I need your help with creative solutions to all the ways this could fail.  But just hear me out.

Our core economic challenge we have is to create reasonable paying, needed jobs.  Jobs that create value.  Jobs that have performance accountability.  Jobs that build a sustainable future.  Jobs that make our nation stronger and benefit the world.  And we need to create these jobs not through a government bureaucracy but through ingenuity of millions of citizen entrepreneurs and professionals working with local, national, and global business.  Here’s how.

Our federal government can issue a tax credit equal to one percent of gross sales of all businesses with a business license.  So a $1 billion business would get a $10 million reduction on their taxes that they could carry forward if they had no profits.  A small business with $250,000 in sales would get a $2,500 credit.  However, this credit would only be valid if the money was directly invested in a new business that made money by benefiting humanity or healing the environment.  New businesses would qualify by meeting well-established Socially Responsible Investing Standards (SRI).  (This means no investments in cigarettes, vices, weapons or heavy polluters.) There are also many standards to judge socially responsible enterprise used in social venture capital competitions held throughout the world.   A simple annual audit form would have to be submitted by the new business to qualify for further investment in future years.

Based on our total GDP this ought to create about $100 billion in private capital to go in a new company and job creation for sustainable solutions to our most urgent problems.  This money would not go through the hands of bureaucrats but would be our money directly invested by us.   If we maintained this for five years it would be close to $500 billion invested in our new future.  My view is this would stimulate innovation, job creation, and sustainable business thinking faster and more broadly than anything else.  Of course not every business would work.  But the efficiency of the market place would reward good ideas and competence and bureaucratic waste would be minimized.

Oh, one last thing.  We’d all be investors.  You see we, the taxpayers, would own 10% of any new business funded by our tax credits.  Who knows, our investment in the future may even help pay off our national debt.  No, this won’t solve all our problems…but it would spur new business formation in the businesses we need for our future right now.

So, what do you think?  How would you improve it?  If we can create a workable program, I am off to Washington.  Obama, you better buckle up.

It’s Time to Dream

Decades ago Dr. Martin Luther King Jr. called all Americans to look up toward a new mountaintop.  He called us to conquer our fears and discard our prejudices.  He inspired us to create the best society we could imagine.  In fact, the challenge he thrust forward was to re-imagine a society that genuinely rewarded both good work and good character.  Last night, Cheryl, a documentary film director (http://www.thepurplecouch.com) sent me a quote from Dr. King’s last speech at the Riverside Church in 1967:

“On the one hand we are called to play the good Samaritan on life’s roadside; but that will be only an initial act.  One day we must come to see that the whole Jericho road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life’s highway.  True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial.  It comes to see that an edifice which produces beggars needs restructuring.”

Dr. King’s speech calls back to the original American Dream articulated by Jefferson in our Declaration of Independence.  It’s the dream of an entire people united in a vision that the best society is one that promotes the most opportunity for happiness and seeks to eliminate the causes for all avoidable suffering. Our founders understood that liberty is not simply an absence of rules.  That’s just anarchy.  Liberty is personal autonomy safeguarded by institutions that prevent the powerful from exploiting the rest of us.  Real liberty requires an absence of corruption and equal access to power, education, and capital.  It requires a level playing field supported by political, social, educational, and cultural institutions (John Kay, Culture and Prosperity).

Jefferson, Washington and Franklin understood that it isn’t enough to declare liberty; political and social institutions must support it.  They distrusted the asymmetrical power of the wealthy.  They knew liberty with education, resources and access to tangible assets is very different from liberty without those things.

We all share a mutual social responsibility to make today the beginning of something more than we have become.  It is time to stand for the very best future we can imagine in all that we say, do and choose.  That’s what today is.

Remember to Play

Today was extraordinary.  The surf has been nearly dead flat for 10 days.  In the middle of winter that almost never happens.  Meanwhile the weather has been sensational.  High seventies, no clouds, no wind.  The water is clear.  A big storm that got stirred up near Japan finally sent overhead waves our way.  And by early this morning, these beautiful blue-green watery highways began forming and I went surfing.  It’s so energizing.  The cold water, clear morning light and super smooth wave faces.  When I came back my wife said she was so happy to see me back to my “real” self.  She said she can always feel the stress and tension in me if I go too many days without my playtime in nature’s biggest spa.  It got me thinking that all of us need to remember to play in ways that renew us.  For me the best way doesn’t involve video games or green fees; it’s just me and the ocean.  But everyone’s different.  What renews each of us is as individual as our fingerprints.  The main thing is that we know what it is and do it faithfully.  Regularly.  Play is an important part of psychological well-being.  When we neglect it we get cranky or worse, do and say stupid things.  Play…what a great idea.

Heating Our Homes and Helping the Environment

With freezing cold weather upon us, it’s important that we are wise when it comes to how we heat our homes.  It is estimated that the average household spends $1,900 a year on energy costs, but did you know that the energy waste for the average family is between 25-35% of the total energy it uses?  If we are conscientious, this doesn’t have to be the case.  There are easy ways to save energy and several great websites that offer great tips to such as The U.S. Department of Energy, Federal Trade Commission, and Flex Your Power.

Energy Star program has come up with four simple recommendations that will help you HEAT your home and save up to 20% on a typical energy bill.

•    Home Sealing - Seal all air leaks and check to see if you need to add insulation. Pay particular attention to the attic and basement as these are where the biggest gaps and cracks are often found. Check for drafts around windows and doorways by holding an incense stick around potential leaks. If you see the smoke flow horizontally, there is a leak in that area.
•    Equipment Maintenance - Just as you would get a check-up for your health each year, make sure that you get a check-up for your heating system. Have a professional come out to clean any dirt or build-up from your heating system as well as check for routine maintenance that can help it run more efficiently. Something you can do is replace the furnace filter as it will help save energy while improving air quality.
•    Ask For Energy Star products. After testing in individual categories, these products have proven to be more energy efficient.
•    Thermostat. Programmable thermostats help you save energy by adjusting the climate while you are away. Using a programmable thermostat with the appropriate settings can save up to $150 a year in energy costs.

What’s the Greatest Thing We Can Do?

Take steps to lower our energy use (and waste).  We will help the environment and our wallets!

Sustainable Abundance and Our New Economy

Winston Churchill was always big on planning for the worst.  He advised something like,

“Imagine the thing you most don’t want to happen and plan for that.”

Good advice.  Most of the voices we hear talking about our economy are polarized.  Doom-sayers talk in words of deep depression and total collapse.  While others see a “bottom” to our economic downturn in mid 2009 and then steady progress ahead.  Well, fine and dandy.  The fact is no one knows.  The vast interconnected global economy is relatively new and the scale on which assets have evaporated is huge.  So everyone is guessing.  Perhaps the most important thing to do is to take the economy personally.  That is, make personal plans to “prosper” no matter what.  More on that in a second.

Consumer Economy is Unsustainable

First I, although like everyone doesn’t really know what’s going to happen, will tell you how I am planning on things being and what I am doing about it.  The core problem we face is that we built our prosperity on a consumer economy built on a scale that it is unsustainable.  For instance, in Italy there is 1 square foot of retail store space for every citizen.  In Britain there is 2.5 feet of retail shop space per person.  In the U.S. there is 20!  Maybe, just maybe we have too many stores.  Surveys show most Americans only wear 20% of the clothes and shoes we own.  We have more TV sets in a typical home than we have people living in the house.  The picture is clear.  Americans spend 40% more per person on consumption than the number two consuming nation.  That’s just not the way to build our future.

Now here’s the economic pie in our face.  We financed all this consumption with debt.  Even though American workers capitalized on technology to become far more productive since 1995, nearly all these gains showed up as increased business profits rather than increased wages.  So to keep the consumption machine rolling Mr. Greenspan lowered the cost of borrowing, deregulated credit rules and inflated real estates and said buy, baby buy.

That’s our old economy.  That’s over.  I don’t see how it will be revived.  Now as economist Jeffrey Sachs points out,

“Every major part of our economy—health care, energy, transportation, food and finance—is deeply troubled.”

And we’ve got another problem.  The largest group of consumers, baby boomers, is going to be increasing their savings and reducing their consumption.  We should.  We have no other choice. But the result will be an anemic consumer economy with lots of closed down stores.

Economic Crisis

Now our government is going to do everything it can to keep our boat afloat by spending and investing.  We are going to spend money on unemployment insurance and lots of other emergency safety nets to keep the out-of-work going.  We also are going to rebuild our roads, bridges, sewers, and grids.  And I think we should.  Heaven knows our infrastructure is blown-out, old, and creaky and millions of paychecks will keep otherwise unemployed families doing productive work.

But after a few months of Obama optimism, I think we’ll all get a big dose of the deeper reality.  I believe we’ll see we’ve got a long road ahead.  Years of work to re-invent our economy to be a primary producer of value instead of a consumer of stuff.  During that phase it’s quite likely most real estate will be finally valued at 50-60% of its price in 2006.  It seems inevitable because fewer people will qualify for loans and incomes will not be sufficient to pay bloated mortgages.  This will be hard, but the sooner we get “real” with real estate the sooner we can recover.

But the real economic engine of the future will come down to developing the technologies of sustainability.  Everything human beings use has to be re-invented to use less raw materials, less energy, and be recyclable or reusable or the earth will simply run out of minerals, water, and clean air.  Not to mention trees, oil, and fish.  If we focus on developing the processes, the products and the technical education for workers to invent and maintain and repair the technologies of sustainability, then the U.S. can be the world leader in creating a future of sustainable abundance.  If we do this right we may be able to get beyond grasping to increase our standard of living and truly increase our standard of life.  I believe this is our best shot at our best future.  If we fail we have to face a future of competing for scarcity that inevitably leads to mass suffering and eventually war.

So what’s the best thing you can do? Become engaged in the economy of sustainability.  Advocate it at work.  Learn about it, become an expert in it.  Re-train yourself.  It’s an opportunity for all of us.  It is a new way of looking at every profession, every industry, every job.  From accountants to actors, waiters to welders, all of us can up level our work to create sustainable strategies that save money, save resources, and create value.  That’s the mindset we need.

As for my personal quest, it’s to change the objectives of business leadership from personal wealth to create the greatest sustainable value for all.  Don’t be cynical.  It can happen.

How do you see the future?  What are you doing?

It’s Time for Direct Democracy!

The World Values Survey did a survey of what kinds of governments end up having citizens that have the most happiness and the most satisfaction.  The #1 principle is Citizen Voice.  What’s missing today in America is Citizen Voice, civic collaboration, and an agenda from the people of the best solutions we can come up with.

The Purple Couch interviewed Will Marre.  One of the things that excites Will are efforts like The Purple Couch.   Listening to people who sit on the couch and talk about their life experiences and the conclusions and wisdom they have, inspires him.  Let it inspire you, too!

Listen to Will’s two-minute video interview below.

Laid off and loving it!

It’s been a rough month.  The holidays turned into holydays as the passing of both my mother and mother-in-law amplified sadness and joy simultaneously.  Sadness at their passing.  Joy at reclaiming family members long lost in the normal rush of life.  Nevertheless, it all left me exhausted.

So I went surfing.  For the first time in weeks the sun shone warm and waves rolled in.  Miraculously there were only two of us in the water.  In the normal crowds of Southern California that is astounding.  Not only that, my fellow surfer was Jim, an old friend who always helps me catch the best waves.  He has that special surf antenna that sees waves before normal people do and paddles to where they will crest.  His surf vision is like a dog’s hearing.  Jim is ever optimistic.  He’s had his share of life challenges.  Tougher than most.  But you’d never know it.  He was recently laid off from a great paying job in which he excelled.  No matter.  In the great wisdom of management by the numbers he was caught in the economic downdraft.  Jim’s response…Joy!  You see Jim’s a saver.  He’s an astute observer of the economy, human nature, and the world at large.  He knew the fake boom wouldn’t last so he prepared for the worst.  And the worst happened.  He’s out of a job but has reserves to see him into his next business, which he is designing to take advantage of our economic catastrophe.

As Jim sat on his board bobbing on the blue Pacific he said, “Life has been so good to me.  The things I enjoy the most, I enjoy everyday.  Now I have time to build the sandbox and teach my kids to bike without training wheels.  And I get to surf really great waves while everyone else is at work.”

Of course Jim is concerned about the future.  But he’s prepared for the worst.  So he doesn’t live in fear.  He lives in abundance of the moment.  And he consciously lives each day with respect…for himself, his family, and his fellow beings.  Jim may love the salt water, but he’s the salt of the earth.  I am proud to call this wise man my friend.

Beat Greed

In the past few weeks another Wall Street Wizard has been exposed as a master fraud.  Bernard Madoff ran a huge investment fund that got spectacular results no matter what was happening in the economy.  He deceived very sophisticated money managers, college endowments, charities, as well as wealthy individuals by running a Ponzi scheme.  A Ponzi is a very unsophisticated fraud where a constant stream of new investors’ money is used to create the appearance of investment success even when there are big losses.

So now Mr. Madoff will join the fraud masters of Enron and World Com at a federal prison for the rest of his life (he’s 70).  Why would someone obviously smart act so stupid?  Hmm.

When we compare the past 20 years to the 1920s leading up to the not-so Great Depression the parallels are striking.  In the 1920s the man who drove economic policy was an extreme “free market” champion, Andrew Mellon.  He believed in low interest rates, loose credit and no-regulation.  Everyone became a Wall Street investor.  Taxi drivers, housewives and maids.  Ticker tape machines were installed in beauty parlors so customers could check on their bets.  All the cheap money and speculative fever drove up stock prices astronomically beyond a company’s real value.  When the music stopped and everyone scrambled for chairs, there were none.  It was 1954 before the Dow Jones regained its “value” of 1929.  And all of Franklin Roosevelt’s programs didn’t really end the Depression.  The economy in 1938 was only a little better than 1933.  It took turning America into a war factory to put enough Americans back to work to create a launching pad for a middle class.  Gulp.

Our Andrew Mellon is named Alan Greenspan.  Free money and no regulation brought us the Internet bust and the great real estate frenzy that created fake wealth.  He turned our entire economy into a Ponzi scheme.  Now we can only hope that we can re-convert our economy from a consumer orgy to a productive juggernaut where we actually invent solutions and make products that benefit humanity.  This will require exceptionally wise leadership and fully committed citizens.

But the question that plagues me is why after all we’ve been through as a nation in the past 100 years would we be so shortsighted?  It’s simple.  Greed and selfishness are fear driven emotions that lurk in all of us unless we commit to a path of moral maturity.  Psychologists speak of moral maturity as the path healthy people travel from infantile self-interest to high-functioning consideration of the impact of our choices on everyone else.  It’s called being responsible.  Responsible for the consequences of every choice we make on everyone that choice effects.  Which ultimately is everyone.  This is evidently harder than it sounds.  Every financial panic since the invention of banking has resulted from the same fundamental cause.  A Brit named John Law drove France into bankruptcy three centuries ago when, as the Alan Greenspan of France, he whipped the French into a speculative frenzy investing in companies to mine all the gold he expected to find along the Mississippi River in French Louisiana.

Since the pattern of power and greed is persistent in all of human history it is up to us as citizens to limit its impact by having institutional checks and balances to restrain the selfish leaders.  We must constantly support morally mature leaders who embrace their responsibilities to our common good.

What’s the Greatest Thing We Can Do?

The very best thing we can do is to be responsible ourselves.  We need to take care not to be seduced to buy things we neither need nor actually want.  We need to advocate our personal sustainability by eating, sleeping and working in a balanced way.  We need to quiet our fears and embrace opportunities to give rather than gain.  We need to every day choose, as Gandhi said,

“to be the change we seek.”

We need especially not to do this as sanctimonious martyrs but as genuine leaders who lead our lives in the joyful knowledge that each of us create the ecology of our own happiness.  We are not alone.  There are tens of millions of us in every place on earth.  The light is getting brighter.  If you have any examples of light of personal responsibility and joys of overthrowing fear and living in financial bondage please comment.  The inspiration of each other’s choices is incalculable.

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