Friday, August 31, 2012

Mr. Romney's Rambler

Speeches, especially political speeches, are about emotion.

They're about story-telling, creating an emotional climate, establishing a tempo--and a temperature. A chemistry between the speaker and the listener.

At the Republican convention, we've seen this art in practice. Speeches with wit and humor, designed to make the room feel friendly and warm. Speeches with pathos and drama, designed to make the room feel intimate and wet.

And then there was Mitt Romney's speech.

It was . . . dull. Billed as "the speech of his life," a "defining moment" for his campaign, a chance for Mitt to show us who he really is, to talk about his Mormonism, to open up as a human being, Mitt muffed it.

Of course, he looked the part. He always does. So did Al Gore, who Mitt resembles in more than a few ways (like trying to live up to his father's example; being wooden and stiff; having an artless speaking style and the delivery of a cigar-store Indian--but I digress.)

But if a speech is about tempo and temperature, Romney's tempo was halting, faltering, and uneven. And the temperature in the room--and in the connection with the audience--was cold.

You know you've got a problem at a political convention when, as a speaker, you set up the time-honored ploy of a call-and-response, and the audience doesn't know what response you want!

Last night, the Republicans, unable or unwilling to chant "Mitt! Mitt! Mitt!" for fear of having a host of baseball gloves descend from the ceiling, were reduced to the generic "USA! USA! USA!"

That's how off-key and off-the-mark Romney's ramble actually was.

Does it matter?

Usually not. Great convention speeches can give way to mediocre (or worse) campaigns, and forgettable convention speeches can be forgotten in the wake of an election victory.

But it was interesting to note that Romney's defining moment was completely undefining--nothing new, nothing personal, nothing fresh, nothing memorable. And the speech of his life ultimately reflects much of the rest of his life--a solid, stolid business guy who really really wants to be President, but isn't sure what to say or how to say it in a way that will actually connect with real people.

Thursday, June 28, 2012

The Future Is An Oxymoron

Let's start with a few math formulas.

Change + Leadership = Innovation
Change - Leadership = Fear

And finally, the Rule of Thumb: Change happens when the cost of the status quo is greater than the risk of change.

Today the cost of the status quo is rising dramatically.

In the absence of leadership, the overwhelming response of the American public is fear. Fear of change, fear of loss, fear of the future.

Fear inevitably brings out the dark side of the American story.

Where America at its best is a nation of generosity, fear brings out a sense of entitlement.

Where America historically has operated as a nation of pragmatists, fear brings out self-deception.

Where America has cared deeply about community and protected the interests of those less well off, fear brings out narcissism.

Because of the deep and dark powers of fear, economic and social issues ultimately become issues of character. Character projected onto the canvas of daily events and regular decisions.

The same is true of technology.

Technology is never about technology. Technology is always about us.

Which is why technology tends to create an either/or dichotomy as a reaction.

Technology will kill us. Or technology will save us.
The answer is more technology. The answer is less technology.
The technology gives us the ability to stay connected to each other. Technology robs us of our privacy.
Technology gives us a huge amplifier. Technology gives us a badly needed simplifier.
Technology is all about going global. Technology is ultimately deeply personal.
Technology will lead us to dystopia. Technology will lead us to you-topia.

But what if the future isn't a dichotomy?
What if the future is an oxymoron?

Maybe we should stop looking at technology as a creator of trade-offs, and see it as a creator of a new space entirely. Instead of examining the choices along a spectrum, maybe we need to get off that vector entirely--rather than going wider, we go deeper.

Maybe we should ask different things of technology than what we've focused on so far.
Rather than speed, ubiquity, or availability, maybe we should ask for introspection, self-awareness, and meaning.

Maybe what we need is MeaningfulTech or IntroSpecTech.

It's not so far from what we're getting--not more, but deeper.

We already have smartphones and apps that make each of us the center of our own universe. That's the essence of i-world.

But what's missing are the apps and the technology to help us make meaning out of that world.
In a world where it's all about "me," how can I discover who "I" am?
How could the design of a device--the social design, the technological design--promote better answers to matters of introspection?
What if the best connection between my smartphone and me isn't to the outside world--but to the inside on?
What if Google Maps had charts to the inner recesses of what it means to be a human?
What if we had a technology compass to connect us to all the possibilities in the outside world, but starting with our own selves and our inner worlds?

What if you went onto your smartphone with an app that allowed you, not to meet up with your friends, your tribe, your co-workers, but with your self?
An app that says, "Find your self here." Facebook for One.

Then you'd have started to create a future that's an oxymoron.
Technology: The Essence of Making Meaning.

Saturday, June 16, 2012

Three Steps to Relevance

It seems to be a disease of our time.

Companies, organizations, all kinds of institutions know themselves to be profoundly important--even essential--to everyday life. But the problem is, they're just not relevant to us, the people who are living that everyday life.

Think of all the big companies and old, respected non-profits that are enormously powerful. But you don't actually know what they do. Or how they do it. Or why they matter.

The 100-year old giant telecom company that is global--but when you're asked what they make, sell, do, provide . . . you don't actually know.
The non-profit that has been around for ever, doing . . . well, doing good. But exactly how isn't clear any more.

If you work in one of these organizations, you know what it's like to be invisible, inaudible, and irrelevant. If you run one of these organizations, or sit on the board, it's even worse. It's bad for morale, bad for finances and fund-raising, bad for business.

Left untreated it could be fatal; the good news is, there are three steps you can take to relevance--you can fix it.

Step 1: Make yourself visible.

When I was learning how to drive a car, my dad told me, "Don't watch the brake lights of the car in front of you; watch the brake lights of the car in front of him."

The problem for many irrelevant companies is that they don't have a direct line of sight to an end-customer; they sell their product or service to an intermediate company, and that company sells it to the end user. So the irrelevant company is hidden from sight, shielded from the end-user's sight by the intermediate company.

If that's you, do what BASF did a few years ago: Start a campaign that explains to end users how important you are to them. "We don't make X," BASF's campaign said. "But we make the Y that goes into making X."

All of a sudden BASF was stepping into the end user's line of sight!
So that's what you guys do! You don't make the actual life-saving product I depend on, but you do make the chemicals that go into that product! I get it!

If you want customers to see you, you have to step out of line and make yourself visible.

Step Two: Make yourself audible.

Do you actually know the differences between micro-processors?
For that matter, do you know what a micro-processor is? Or what it does--other than process things at a micro scale?

Neither do I.

That said, I do know Intel. And I like Intel, although I don't know why exactly. I just know that I like what Intel stands for. Although if you pressed me hard, I couldn't exactly say what Intel does stand for, come to think of it.

I just know that when it comes to my computer, I'm glad I've got Intel inside.

And why am I glad?

I'm glad because Intel made a big deal out of the fact that, even though I can't open up my laptop and look inside, it's really really important that Intel is inside there.

They told me that over and over again. They made it fun for me to know that. They showed me guys hopping around in bunny suits.

And now I know that Intel is a good organization, and that as a consumer of technology, when it comes to what's inside, I prefer Intel.

Intel got a voice and talked directly to me. And it worked.

Step Three: Make yourself matter.

When it comes right down to it, you may not have a way to stand out or speak up about what it is you make or do.

But you do have something you care about.

Face it, every company, every organization, every institution has to have its own unique values. Facebook says it embraces The Hacker Way. Google says, do no evil. Even Hugh Hefner went to great lengths in the early days of Playboy magazine to articulate the Playboy Philosophy.

If you can't make us interested in what you make or do, tell us what you care about. What you stand for.

If you can't make it business, make it personal. That's about as relevant as it gets.
Person to person.

Three steps to relevance, with one thing in common, the one thing Steve Jobs understood when he started Apple back in the beginning.

One of Jobs' first calls was to Regis McKenna, Silicon Valley's marketing master.
Because, as McKenna wrote a few years later in HBR, "Marketing is everything."

Three steps to relevance, but they all start with one giant leap: into marketing.

Saturday, June 9, 2012

Essential But Not Relevant

I spent yesterday at a meeting of a large company that plays an essential role in the world of telecom.

The company is more than 100 years old; it has always been at the forefront of providing and maintaining the best service in its segment of the industry. It is a company that is absolutely essential to the mobile world that we all depend on and take for granted. If you are in the world of apps, you need this company; it you are in the world of social media, you need this company; if you love your smartphone, you need this company.

But if I told you the company's name and asked you what it actually does, you wouldn't be able to tell me. And if I asked you how you felt about this company, you wouldn't have any emotional attachment at all.

This company is essential--like a utility--but not relevant--nobody actually cares about them as a customer.

It's a fascinating category, this EBNR (Essential But Not Relevant).

Think about the many old and respected non-profits and social service agencies that dot the American landscape. Essential in the services they offer; but not relevant in a world that is rapidly changing, a world where more and more of us give money or time or support to organizations that seem faster, leaner, more efficient, closer to the problem, less bureaucratic or out-dated.

Think of the organizations that date back 50 years or more that were created to speak to an emerging demographic segment, a specific problem set, or an emerging way of life. The world has changed; a person who is 65 today has a different attitude toward retirement than someone in the previous generation; a person who wants to learn to become a public speaker or hone their leadership skills doesn't think about learning the skills and developing the confidence the same way that someone did 50 years ago.

Old and dependable companies can be essential but not relevant--which leaves them wide open to two problems: Either they can be undercut by a lower-cost competitor (from say, China) or they can be made obsolete by a new, innovator entry (from, say, Silicon Valley). Either way, simply being essential isn't a protected position. In fact, it's often a precursor to extinction: right before you die, you remind yourself that, hey! we're providing an essential product or service! the world must need us!

And of course, sometimes we consumers are wrong: we classify a company, product or service as essential but not relevant, and disengage from it, only to discover too late that it was, actually, very relevant. Think "government" here: no sooner do we voters start treating our various governmental entities as not relevant, than they do something to remind us how very relevant they are--like cutting spending on public education, for instance.

But from the point of view of the leader in a company, the sweet spot is clear: essential and relevant. You can't live without us, and you love us!
When you find that combination, then you have to embrace continuous innovation and ongoing adaptation to make sure that you keep pace--or stay slightly ahead of--the changes in the world that can push you backward into the Essential But Not Relevant category.

Sunday, May 6, 2012

Social Media/Social Innovation: Interview With Myself

A couple of weeks ago I was fortunate enough to be invited to participate in a 2-day gathering co-hosted by my visionary entrepreneurial friend, Lisa Gansky. Most recently Lisa has been exploring a set of ideas that she published in her book, "The Mesh," describing the different ways that sharing is better than owning. The gathering, co-sponsored by the EU, among others, was designed to apply Lisa's ideas to cities, and to look at the intersection of social media and social innovation.

(Small digression: One of Peter Drucker's many prescient observations was his comment that, when it comes to innovation, there is more opportunity when it comes to social innovation than any other field. As we watch traditional institutions and conventional categories of work, life, belief, and politics suffer a succession of system failures, it seems clear that innovation applied to our social operating systems can offer new, better, smarter, cheaper, and more efficient ways of living together. Now back to our regularly scheduled program.)

At the end of the gathering I came away convinced that social media and social innovation represent the frontier of change.

To try to clarify my own thinking, I sat down and interviewed myself.

Here's an edited and shortened transcript of that interview.

Q: How does social media create social change?

A: Remember back in the 1990s when the slogan you heard everywhere was "the web changes everything"? And it did. Well, social media is the next wave of web-ification that once again changes everything. It doesn't change only social innovation, but applied to social innovation, it is a powerful tool for clarity, speed, efficiency, personalization--and a different way of organizing how we do things, individually and together.

Q: Say more about this, please.

A: It turns everything it touches upside down and inside out. It takes old established businesses, industries, business models, transaction relationships, operating principles, economic relationships and destabilizes them. Cuts the ground out from underneath them. Makes them look ridiculous. It democratizes everything it touches. Social media helped advance Arab Spring and it is at work with Anonymous in unmasking a variety of social outrages. For good or for ill.

It takes the old, long-standing power relationships and flips them. Companies, even non-profits with old and established ways of relating to their customers suddenly find their authority undermined by a social technology that puts the individual person at the center of their own universe. Markets are preserved; in fact, markets are enhanced as an equal-opportunity location where we can take an offering of our own or find a host of different offerings on display--without having to go through expensive third-party market-makers and rent-takers.

But there's more. It's harder and harder to hold on to secrets. Positions of privilege and unassailable authority are hard to hold on to, simply by asserting the old mantras of wealth, prestige, and inside information. Social media is fundamentally a powerful force for social change.

Q: So where do you see examples of social change happening via social media?

A: Turn it around. Pretty much everywhere you see social media you will see social change. Lisa documents this connection with example after example in "The Mesh." And it's on the front page of newspapers, in magazines, on the web whenever there's a story about innovation or new social practices. A piece in the San Francisco Chronicle yesterday described how The Gap and other retailers are tweaking to the new practice among young people to swap their clothes rather than buy new outfits--and how social media helps create the swap marketplaces. Kickstarter has gotten a lot of attention for dramatically altering the way we can finance all kinds of artistic projects; Facebook is about to go public at the same time that it almost becomes passe.

One of the metaphors that Lisa introduced at the gathering was in the form of a question: "How is a city like a platform?"

In other words, how does social media, applied to the way we live in cities, transform virtually every aspect of urban life? How does it change transportation? Elder care? Day care? How does it change the use of office space and office buildings? Education? Getting mundane tasks done? If you map city life differently, do you change the way city life is lead--where people go to pursue all kinds of different interests, from playing basketball to painting to skateboarding to eating at food trucks?

Ultimately, I'm convinced that social media changes our cities from nouns to verbs.

We don't have a "department of transportation," we have a "moving around app."
We don't have a "department of commerce," we have a "buying and selling app."
We focus on how to make more innovative things happen--on the doing, the enabling, the connecting, the improving, the entrepreneuring, the incubating.
Cities should have a whole different social architecture, reflected in new categories that City Hall accepts, starting, I'd suggest, with a new "measuring app."
Start measuring the city in innovative ways; analyze the real cost of the status quo when it comes to a host of accepted urban practices, from parking meters to cab fares, from office rents to hotel rooms.
Social media looks very attractive when you start to see how it leads to innovation and lower costs!

Q: Are there things that don't change?

A: Absolutely! Like most "this changes everything" technologies, social media builds off of a set of old and established institutional frameworks and practices. Markets, for one. This doesn't do away with markets; it simply goes even further than the web in dis-intermediating them. But markets, like diamonds, are forever. Information, for another. The value of information is one of the oldest precepts of capitalism. Friction is another. Friction adds costs; social media takes out some of the friction. And some of the costs. Personalization. Trust. These don't disappear; some get amplified, some get re-invented, some get moved in terms of who holds the reins.

Q: Are there problems associated with this intersection of social media and social change?

A: How couldn't there be? Think of social media/social change as a powerful new tool, a new source of energy, a new competitive capability. A force that destabilizes the status quo. Where ever we see the ground shifting underneath the status quo, we see the potential for enormous social good and untold social destruction. The same force that can offer new solutions to people looking for more control and less cost in their health care, for example, also opens them up to scam artists, fraudsters, and worse. When we first witnessed Arab Spring, the reports were full of hope and expectation, and focused on the use of social media to spread the message and mobilize the people; now the stories are about how reality isn't living up to the early promise of change, and the backlash may be ugly. Social media doesn't guarantee outcomes or happy endings; it's a tool, and like all tools, how we use it says more about us than it says about the tool.

When it comes to social media, the technology and adoption of it is moving much faster than our capacity to generate social mores or legal instruments to buffer or restrain some of these anti-social social media instincts.

So the answer is, yes, there is cause for concern and for open discussion about the abuses that already have taken place, the inevitable mistakes and mis-steps that will add questions to some of these innovations, and the need for heightened awareness, new practices, innovative protections, and even new individual behaviors.
This is real life; so there will always be ways to take a powerful new tool and twist it in a way that applies it for things that are ugly, offensive, dangerous, even criminal.

But social media and social innovation are rushing ahead, and the opportunities to amplify positive change in a wide array of applications through this combination of technological software and human software are enormously exciting.

Wednesday, April 11, 2012

The Real Culture War: Respect vs. Cynicism

In their insightful book on iconic UCLA basketball coach John Wooden, “You Haven’t Taught Until They Have Learned,” co-authors Swen Nater and Ronald Gallimore make one point abundantly clear: John Wooden was a teacher first, a coach second. Yes, he coached his players to win at the game of basketball, starting each season with a lesson on the correct way to tie their sneakers, and ending with 10 NCAA championships. But more importantly, he taught his players respect. He taught them to respect themselves as athletes, each other as teammates, and most of all, the history and tradition of the game of basketball.

Which brings us to the recent horror-show of coaches in American sports.

Let’s start with John Calipari, head coach of this year’s NCAA champion Kentucky Wildcats, and, incidentally, the only coach in NCAA history to have two Final Four appearances vacated. As far as character is concerned, one Associated Press columnist started his coverage of Calipari and the title game by writing, “The words ‘trust’ and ‘John Calipari’ rarely turn up in the same sentence for a very good reason.” When you’re about to play for the national championship, this isn’t the kind of coverage you usually see—unless your record of conduct is so egregious, even the sports press can’t hold its collective nose any longer.

Or take Arkansas head football coach Bobby Petrino, whose Razorbacks are expected to start next season with a Top 10 ranking. Recently Petrino went for a ride on his motorcycle, wrecked it, and then lied about the accident, saying he was alone on the bike. In fact, he had a female passenger, a young former Arkansas volleyball player, with whom he was carrying on an extra-marital affair. A high school coach from Louisville who’s known Petrino for years described him this way: “As a coach, he’s a genius, he’s one of the elite minds. Personally, well, he’s a good coach.”

And then there’s Gregg Williams. If you want, you can go on the Web and hear what real live coaching sounds like. There’s a tape of Williams, as the defensive co-ordinator of the New Orleans Saints, telling his players before a playoff game with the San Francisco 49ers, “Do everything in the world to make sure we kill Frank Gore’s head.” Or “Every single one of you, before you get off the pile, affect (Quarterback Alex Smith’s) head. Early, affect the head. Continue, touch and hit the head.”

But this isn’t just about coaches. Or sports.

This is about America’s real culture war. It’s about the difference between a culture of respect and a culture of win-at-all-costs. And it applies as much to journalism, politics, and business as it does to sports.

A culture of win-at-all-costs will tolerate a coach who lies or cheats, as long as he wins—and doesn’t get caught.

A culture of win-at-all-costs will tolerate a news channel with journalists who distort the news as long as they get good ratings—and don’t say anything so outrageous that it loses sponsors.

A culture of win-at-all-costs will tolerate political candidates who flip and flop and make unfounded charges against their opponents, as long as they win elections—and don’t get unmasked as unrepentant hypocrites.

A culture of win-at-all-costs will tolerate companies that take advantage of their customers, lie about their products, and create a toxic environment for their employees as long as earnings and stock prices go up—and they don’t get exposed by a former employee in a tell-all column.

A coach who lies and cheats has no respect for the game that gives him his living, for the institution that employs him, or for players and fans; he simply believes that if he wins, all else will be forgiven. The same is true of a journalist who prefers a hot story to a true one. It’s true for politicians or business executives who do whatever they think it will take to win. They have no respect for their profession, their colleagues, or the public.

The opposite of respect, it turns out, isn’t disrespect.

The opposite of respect is cynicism.

The notion is that you can fool some of the people some of the time, and those you can’t fool, you can seduce by winning.

The 2012 NCAA basketball tournament is history; the NCAA football season hasn’t started; the NFL hasn’t resumed practicing yet. And to be fair, Petrino got fired from Arkansas--score one for respect. Williams has been suspended by the NFL--score another for respect. And Calipari is losing a big chunk of his semi-pro, one-and-done, rent-a-basketball team to the NBA. So maybe karma and respect go hand in hand.

But the news is on every night. Candidates for offices at every level across America are exchanging ludicrous charges. Companies in every industry are doing everything they can to lure customers and drive up stock prices. The culture war between respect and cynicism goes on every day.

So here’s the challenge.

Ask yourself which you value more.

Are you a win-at-all-costs kind of person? The kind who bets on cynicism as the bottom line of the human condition?

Or do you believe in respect? Are you willing to put your name down as someone who wants to build a culture of respect in America, in every field and every endeavor?

Maybe, just maybe, respect starts with something as simple as how we tie our shoes. At least that’s the way Coach Wooden taught it.

Monday, April 2, 2012

Rule #49: Border Guards

In 1968 I went to Germany to connect with my brother, Mark.

He was finishing up a Fulbright scholarship in German and when his academic program was over we took his newly purchased VW bug and drove to Prague. The Czechs were celebrating an outbreak of freedom from the Soviet Union (this was back when there was both a Czechoslovakia and a Soviet Union). Prague was filled with happy, carefree young people, students at bars and cafes, drinking beer and luxuriating in what was called Prague Spring.

We celebrated with them for a time, but finally we had to get back to West Germany (there was also a West and East Germany back then). To do that meant we would pass through an East German military checkpoint.

We pulled up to the checkpoint and a huge East German border guard armed with a scary looking sub-machine gun took our passports, looked at them dismissively, and ordered us to get out of the line of cars that had been allowed transit, and to park over in an area off to one side.

Three hours later we were still parked there. Waiting. Watching other cars pass through the checkpoint. Wondering what had happened to our passports. And looking at the big East German soldiers and their lethal-looking weapons.

Finally, my brother had had enough.

He waved one of the guards over and said in perfect German, "One of your buddies took our passports and he's probably all the way over in West Berlin by now."

The look on the border guard's face betrayed his emotions. He'd been insulted--in at least three ways.

First, who ever heard of an American who spoke perfect German--with the appropriate Bavarian accent?

Second, it was an insult to think an East German soldier would steal anything--especially from an American!

And third, no self-respecting East German soldier would ever even think of running off to West Germany!

The border guard goose-stepped back to the booth, found our passports where they'd been carelessly left lying around, and waved us through the checkpoint.

We made it--but only because my brother was brave enough to confront the border guard.

I've been telling that story lately to all kinds of groups of business people, in all kinds of companies and organizations, and all age groups and nationalities.

And I always get the same reaction: people nod. They know that each of us has his or her own border guards that keep us from growing, experimenting, innovating, listening, learning.

One man held up his hand when I told the story in his group and said, "My border guard is, I always have to be right." Another said, "I always have to be in control."

Sometimes a company's border guard isn't a person--it's a tradition. "That's not the way we do things around here." Or an unwillingness to experiment. "It won't work anyway, so why even try." Or a feeling of helplessness. "The boss will never go for that."

And, to be fair, sometimes a smart border guard is exactly what a company needs.

One of Steve Jobs' greatest strengths was his ability to say "no." When he came back to Apple, he cut off projects that made no sense, ended unfocused activities that weren't core to Apple's business. His border-guard-like focus kept Apple focused and prevented the company from wandering into areas that weren't what Apple was all about.

But for most of us, most leaders and organizations, that's not the case.

Most of the time, we get offered an opportunity to try something new, and some little voice in our heads tells us, "That's not really you!" Even if it could be. Our own border guard keeps us from innovating, from experimenting, from expanding into new, unexplored territory.

And companies and organizations that want to innovate, but keep finding themselves frustrated in their efforts--for them, the problem could well be the border guards, inside the company and out, that confine them to a small territory that is already too-well known.

"Our customers would never go for that."
"We probably couldn't sell it any way."
"Marketing would like it, but I can tell you right now, manufacturing will kill it."

There are more border guards than there are good ideas. Which is why so many successful organizations end up suffering from their own success. The border guards take over and erect a wall that keeps the organization from getting to the fresh thinking and new ideas that are on the other side of the border.

What are your border guards? Are they helpful in giving you focus? Or harmful in keeping you confined?

What are your company's border guards? Can you name them?

And what would happen if you confronted them? Maybe, just maybe, they'd produce your passport to the other side, and you'd discover a whole new, fertile area for your exploration.

It's worth a try!

Friday, March 23, 2012

The Case for High Gas Prices

Once again, gas prices are up — more than 30 cents over the past month. Some forecasters are predicting a price of $4.25 per gallon at the pump next month; others see it going up to $5 per gallon this summer.

And once again, the response is predictable, if not comical. The Republicans blame President Obama. They say that he blocked the Keystone XL pipeline and that he's secretly in favor of higher gas prices as a social engineering strategy designed to punish Americans into accepting alternative energy.

Obama blames Iran for disrupting oil supplies, sees growth in China and India as driving up oil consumption and, when asked whether he secretly favors price hikes, resorts to sarcasm to dismiss the accusation.

Me, I'm not running for office. I blame feckless politicians from both parties for the lack of a sane energy policy over the past 40 years. And unlike Obama or his Republican challengers, I want higher gas prices. At least for a while. Long enough for us to get the market signals right and to continue to wean ourselves off our fossil fuel addiction. The way I see it, every time we've been confronted by an energy crisis, Americans have done the right thing. Faced with the cold hard economic facts of life when it comes to oil availability and price, we've figured out for ourselves how to be innovative, resilient and sensible. Having plentiful cheap resources can make us wasteful; scarcity and high prices can make us smart.

If that's what it takes, I'm all for it. And if it can drag business and the government along behind us, I'm for that, too.

Take the auto companies. For years, General Motors resisted doing what everybody knew it needed to do to adapt to global competition and a changing market. Finally, the crushing financial crisis and rising gas prices pushed the hubris-haunted company into Chapter 11. Today, GM can claim record profits and its Volt electric vehicle, though struggling in the U.S., was chosen car of the year in Europe. The whole auto industry, which resisted the suggestion of government-mandated fuel economy standards back in the 1970s, today has demonstrated a new sense of responsibility for more ambitious requirements. Why? Because the automakers can read the writing of the gas prices on the wall.

Today, while politicians do their comedy acts about energy prices and Obama promises Americans he's doing all he can to keep gas costs at the pump from rising, pragmatic business people are doing what they know they should. Architects and developers are calculating the lifetime costs of the buildings they put up, with the knowledge that oil-based energy will only get more expensive over time. More and more Americans are looking to alternative energy sources for their homes; companies and communities want to kick the oil habit; the rise of car-sharing and increase in public transit use demonstrate how expensive gasoline can create new economic opportunities and spawn new habits. Last year, Americans took 200 million more rides on subways, commuter trains, light rail and public buses than we did the year before, the American Public Transportation Association reports.

And it's not just in the private sector or our private lives. One of the leading areas of change is in the military, which is going green for more than just environmental reasons. The Navy has figured out that the "all-in" price of oil means that it's cheaper, safer and smarter to switch our war-fighting operations from fossil fuel to renewable resources. They're doing it because they have calculated the real cost of oil and figured out that embracing renewable energy makes sound economic and military sense.

All that has been happening before the latest price spike. Now it's time to think seriously about what comes next. Beyond fuel efficiency in transportation and buildings, beyond alternative energy sources is the next big thing: the switch to local economic development.

As the late House speaker Tip O'Neill once observed, "All politics is local." It turns out that for a better, smarter, more sustainable future, all economic development is local, too. If we want to embrace a future with more and better jobs, more local autonomy and more sustainable communities, we need to look at this oil price rise as another market signal: It's time to focus on local economic development.

It's just plain smarter to produce and buy local products and services. Whether products come from local farms or local shops, local factories or local vendors, when we support community-based businesses we contribute to more home-grown jobs, stronger communities and a sustainable future.

It's the next stage of an evolutionary process that has been unfolding below the radar screen for the past 40 years. It's a simple enough equation to grasp: The more we see oil prices rise globally, the more we'll see the emergence of economic development locally.

Change happens when the cost of the status quo is greater than the risk of change. Right now, rising oil prices are driving up the cost of the status quo. That means it's time for all of us to embrace the risk of change. Once again. Because that's what we've done every time in the past when we've been challenged with higher prices and lower availability. It turns out, we're at our best, our most innovative and our most pragmatic when times get a little bit tougher.

(My column this week from USA Today)

Thursday, March 1, 2012

Leave Bad Enough Alone

A few days ago the Santa Fe school board summoned its courage and did the right thing: it voted (narrowly, 3-2) to buy out the contract of school superintendent Bobbie Gutierrez.

The actual vote was a long time coming, although to be honest, the last school board election which voted in three new reform-minded candidates was clearly intended as something of a referendum on the public schools and the leadership.

Voters, it seemed, were upset at the performance of the school system--poor graduation rates, overwhelmingly failing efforts to meet annual improvement goals--and the way the outgoing board did its business--a lack of transparency and very poor communications with the broader community.

In a remarkable piece of political theater, the outgoing board even voted to extend Ms. Gutierrez's contract as one of their last pieces of business, right before they were replaced by a board that clearly had serious reservations with the adequacy of her performance. The schools-as-theater got even more absurd when the in-coming board learned that one of Ms. Gutierrez's employees had doctored the numbers given to the old board before they voted--actually omitting data that showed areas of failure by the administration. She didn't think the board was looking for bad news, the employee explained.

So now the reformers have voted to buy out Ms. Gutierrez's contract--and surprise, surprise, the editorial writers at The New Mexican, Santa Fe's home-grown daily, are outraged! (No surprise there; The New Mexican has been an apologist for the superintendent and her poor performance for some time. Students don't test well in annual yearly progress exams? Must be the fault of the exams! The numbers were fudged on that memo to the out-going board? Don't make too much of it; let's move on!)

The New Mexican writes a mean editorial: There was no warning of this vote! It happened late at night! The people who voted to buy out her contract didn't campaign on that platform!

Lame arguments, but at least they're arguments

But then the editorial writer at The New Mexican veers from the lame to the inane.

There are two problems, says The New Mexican, with terminating Ms. Gutierrez's services.

First, the three school board members who voted to buy out the contract weren't born in Santa Fe.

That's right, The New Mexican is now in the camp of the "birthers."
If you weren't born here, you don't belong here!

In a state that still approves of giving undocumented immigrants a driver's license, the newspaper of record wants to revoke the voting rights of school board members who weren't born in Santa Fe.

But wait. It gets weirder.

The real reason not to buy out Ms. Gutierrez's contract?

Efforts at school reform in the past didn't produce great results. In fact, some were failures. Some superintendents brought in from outside didn't stick. Others didn't click. And others were okay, but not exceptional.

In other words, leave bad enough alone.

If the schools in Santa Fe aren't graduating students, aren't meeting mandated improvement levels, aren't teaching kids the skills they need to go on to college and get good jobs--well, at least life in Santa Fe is good. We've got a lot of artists. And Richard Florida says that's good. And we've got great festivals. World-class, in fact.

So if the schools are terrible, and the educational opportunities offered to Santa Fe's children rank at the bottom of the nation, well, what can you do?

Why bother trying? Why get rid of an ineffective leader who hasn't produced? Why try to improve the status quo?

After all, a truly ambitious new superintendent probably wouldn't have been born in Santa Fe either.

So here's Santa Fe's new motto, courtesy of The New Mexican: Santa Fe--We're mediocre, and that's great!

Tuesday, February 21, 2012

How a Population Strategy Works

In my last blog I suggested that what Santa Fe needs (as an example of how to spark local economic development) is a population strategy, one that would concentrate on the "missing middle"--the young people who can bring innovation, entrepreneurship, and energy to a flagging economy.

A population strategy can work. I know, because I've seen one work. I was part of the team in Portland, Oregon in the 1970s that put a population strategy to work. Here's what happened.

If you visit Portland today, you'll see a city that is widely admired, both here and abroad, for its livability. The downtown is charming, the neighborhoods desirable places to live. The public transportation system is a model, with light rail lines and bike paths that offer reliable, dependable, and affordable alternatives to the automobile. The Waterfront Park is delightful, the housing options in the Pearl District represent wonderful living spaces for a broad demographic.

It wasn't always like this. And it didn't happen by accident.

In the mid-1970s, a poll of Portlanders revealed a startling trend: middle income families with children were beginning to leave the city and move to the suburbs.

If you lived in almost any other city in America, of course, that kind of suburban flight had already happened. Freeway construction had torn through urban neighborhoods, worsening race relations had polarized communities, and the suburbs beckoned to many middle class, middle income families.

But it hadn't happened in Portland . . . yet.

At the time I was an assistant to Mayor Neil Goldschmidt, who was working to rescue and revitalize the city on a number of fronts, from stopping a disastrous freeway from wrecking Southeast Portland, to implementing an innovative Downtown Plan, to trying to make Portland's neighborhoods safer. This poll and the threat of losing a key demographic from the city's population became the policy glue that held all the pieces together.

The Mayor and his team adopted a Population Strategy: the goal was to use the city's resources and policy instruments to convince middle-income, employed families with children to choose to stay in the city. We wanted them to vote with their feet--by staying put.


Because middle-income, employed families with children provide social glue to an otherwise unstable community fabric.

Without that cohort, Portland would be a city like so many other cities--a place filled with retired people living on their pensions, and young, unmarried people, just starting out their work lives and careers. Nothing wrong with either group--but not enough in the middle to hold the community together.

We needed the middle-income employed families with children so there'd be a group of people who cared deeply about the health and well-being of the city's neighborhoods; who had a stake in the schools; who had the time and motive to volunteer to be den mothers and scout masters; who would look out for their neighbors and their neighborhoods; who could afford to pay taxes and contribute to charities. And if we lost that group, then we'd lose a critical component that held so much of the rest of the community together.

The Portland Population Strategy knit the pieces of the Mayor's vision together into a coherent approach to problem-solving.

Why stop the Mt. Hood Freeway? Because it would destroy the livability of Southeast Portland, destroy much-needed housing stock, dump more cars into downtown Portland, add more air pollution to the mix, and facilitate the flight of families to the suburbs of the East Side. Building it would mean Portland was committing suicide!

Why implement the Downtown Plan? Because a healthy city core would contribute to the health of the surrounding neighborhoods. If downtown was vibrant, there'd be another reason for people to live in Portland's neighborhoods, another attraction to urban life. There'd be shopping, jobs, conventions, arts, culture, vitality.

Why invest in crime prevention? Because safe neighborhoods, with neighbors looking after each other, not only stopped stranger-to-stranger street crime from happening; safe neighborhoods, where neighbors knew each other and looked out for each was an antidote to the anonymous suburbs. Community was better than isolation.

There were other pieces, as well: the quality of public education, improvements in parks and recreation, efforts to recruit new companies and new investments.

But what made it work was that the pieces all fit together, once you framed it in terms of a population strategy. Efforts to bring companies to Portland and have them locate their new factories and facilities in particular parts of the city were linked to transportation investments that both protected neighborhoods and made for an easy commute. When the first OPEC oil embargo drove up the price and availability of gas at the pumps, a Portland Energy Policy became another argument for living in the city: the commute was less expensive--and you could do it using public transit.

The reason Portland looks the way it does today draws directly from the Population Strategy of the 1970s. And interestingly, in making life better for employed, middle-income families with children, Portland has also made life better for the senior citizens living on their pensions and the new generation of young people looking to get started in their lives.

A Population Strategy can work--it can help a city focus its efforts, use its resources more wisely, and bring together the pieces of life and work that create a desirable, attractive, and livable community for everybody who lives there.

How do you make it work? It takes leadership and vision, courage and conviction. It takes a fresh way of looking at the world and an innovative way of solving problems.

But it can be done. And it can work. I know. Because I've seen it happen. And I've seen the results.

The first step? Looking at the data, seeing what's missing, what's at risk, what can leverage the most change. After that, it's a question of fitting the pieces together into a coherent whole. It's how a town can create its own future.

Thursday, February 16, 2012

All Economics Is Local

For those of you who don't recognize the reference, it was former Speaker of the House Tip O'Neill who famously said, "All politics is local."

Today, if you take a minute and look around, you'll see that despite all the rhetoric of globalization, all economics is local.

Take Santa Fe, New Mexico, my home town. Not even a town, at roughly 70,000 people, a village really.

The economic base of Santa Fe has been a three-legged stool: it's the capital of the state, so there are government jobs; it is a tourist destination; and it has had a booming real estate business for people looking for second homes or a place to retire. Cutting across these categories is the art market: Santa Fe boasts a large community of artists and a concentration of art galleries and artistic events, from the Indian Market to the Santa Fe Opera.

But the last couple of years have been tough.

State government has been starved for funds; tourists aren't coming to visit, and if they do come, they've curtailed their spending; and real estate, well, you know that story--that's the cause of much of the pain in the first place. That leaves the art community. And while it's an asset and a boon to the town, it has yet to become an economic force on its own terms: It takes tourists to come to buy the art, new home owners to need art to decorate their walls, collectors to feel flush enough to add to their art holdings.

The town is suffering. Help isn't going to come from the federal government. The state government doesn't have a strategy for state-wide economic development, never mind local economic development. Even if the economy starts to recover, tourism and real estate aren't going to return to pre-crash levels any time soon, if they ever do.

So it's time for serious reflection: What does a local economic development strategy for Santa Fe look like?

Most economists agree that there are two kinds of investments that can promote economic growth: investment in infrastructure and investment in human capital. Infrastructure investment can help put people back to work, and, if it's truly strategic, can add to a community's productivity and attractiveness--whether the investment builds a light rail line, adds new parks, or puts in place a city-wide Internet network. Investment in human capital is the smarter play, but requires longer-term thinking: better public schools produce a generation of well-educated kids who are capable of working smarter and generating more income; job retraining takes people out of unproductive, dead-end careers and outfits them to adapt to the changing demands of a changing economy, public-private partnerships provide mentors and markets to teach aspiring business leaders how to play the game and win.

But Santa Fe's problem--as is true for the small towns across the country--is different. It needs a new way to think about and look at an economic strategy. Public schools aren't going to get better any time soon; and there isn't the money or the political intelligence or will to create an infrastructure investment strategy. As the economy recovers on its own, the town may get a little healthier around the edges, and maybe complacency will return.

But the question is, what can and should Santa Fe do--right now--to craft a strategy for a better economic future?

I don't think the answer is to do more of what is already there, or even to do it a little better. Better marketing, better messaging, better packaging--that won't change the game.

Santa Fe--and the Santa Fe's of America--need to think different, not about what assets the town has, but about what's missing.

In Santa Fe's case, what's missing are talented, entrepreneurial young people. Santa Fe suffers from "the case of the missing middle"--young people in their 20s and 30s who can start businesses, grow enterprises, take entrepreneurial risks, look beyond government and tourism and real estate and art and see a much bigger picture.

It could be that this all-important cohort is missing from Santa Fe's demographic profile because there isn't anything meaningful, productive, or exciting for them to do in town. Or it could be that there isn't anything meaningful, productive, or exciting for them to do, because they're missing.

Cause and effect aren't the issue here, however. What's at issue is the need for an explicit strategy, targeted, not at jobs, or reviving tourism, or helping promote art.

Santa Fe needs to ask a different question if it hopes to get a different answer. The right question is all about a population cohort, not an economic category.

Santa Fe needs a population strategy that aims explicitly at keeping the young people who come to school in Santa Fe and New Mexico, attracting more young people to the mix, and giving them the tools, the incentives, the technology, the entrepreneurial opportunities that will make Santa Fe a vibrant place for creativity and innovation to flourish.

The right question for Santa Fe to ask is, "How do we attract, retain, develop, promote, and reward a missing demographic group--well-educated, technologically sophisticated, entrepreneurial young people?"

That's the right question, and asking it can lead to the right answers.

There are examples all over America of communities attempting just this strategy, creating incubators, partnering with academic institutions, offering technological incentives, pooling venture capital funds, sponsoring conferences and gatherings that bring young people together and give them a feeling that there is a community of like-minded individuals ready to work together to do really cool things. But it's not enough to know that there are lots of pieces lying around loose on the ground. Someone has to assemble them into a real strategy, so the pieces fit together and reinforce each other. They have to be particular to Santa Fe--or any other community looking for its population strategy--to the place, the history, the culture, and the context. And it takes work--real work--to execute a strategy. It won't just happen on its own.

In the end, all economics is local. And that means it's up to the people at the local level to articulate their own economic strategy, and then create their own economic future.

Wednesday, February 8, 2012

Solutions Close At Hand

If you haven't read Adam Gopnik's terrific piece, "The Caging of America" in the January 30 issue of The New Yorker, then take it from me--you've got to.

Not just because it's a brilliant description of the truly insane way in which our country approaches putting people in prison (and we do have more people in prison than any country on earth, or, as Gopnik reports, the 6 million Americans now incarcerated are more than were in the Gulag Archipelago under Stalin).

And not just because it is another in a very impressive line of pieces published in The New Yorker over the last half dozen years or so that look deep and hard at a difficult social problem and analyze just how and why we got where we are, and what really can and should be done about it--from gang violence in cities to cost overruns in hospitals.

The reason to read this piece is that it is an absolutely perfect template for what this country needs now, more than ever: solutions that work for problems that matter.

And we need to avoid fads, superficial remedies posing as serious solutions, false correlations that fail to prove causality, and catch phrases from any source that sound a lot better than they actually are.

So what's Gopnik say?

That America is brutally over-prisoned. The data are ugly.

More than half of all black men without a high school diploma go to prison at some time in their lives

In the past twenty years, the money spent on prisons has risen at a rate six times the rate of spending on higher education.

He describes how we got here: two different schools of thought about crime and punishment.

He points out the 2005 annual report of the Corrections Corporation of America, the biggest private sector company to which prison management contracts have been given, and chillingly points out that the company discloses that, the only real threat to its continued profitability would be if the supply of convicted criminals were to decrease. In other words, as long as we have crime and punishment, capitalism will triumph.

But the piece really gets interesting, turns an intellectual corner, when Gopnik reveals that crime in the streets of American cities--New York, for instance--has gone done as the prison population has gone up. This, despite the fact that 30 years ago or so, most people had pretty much resigned themselves to a future where a certain level of urban crime was simply a given.

Gopnik asks, what's the explanation--and brilliantly comments on the side: "things that work interest us less than things that don't." Exactly!

So what is the explanation?

He draws from a new book, "The City That Became Safe," written by Franklin Zimring, first telling us how rounding up the usual explanations doesn't suffice: it isn't demographic shifts, or jailing super predators, reducing the number of unwed mothers, changing the culture of welfare, alleviating poverty, reducing discrimination. It turns out the much-trumpeted "broken windows" strategy didn't do it, nor did cracking down on "turnstile jumping."

So what's the answer?

"Small acts of social engineering, designed simply to stop crimes from happening, helped stop crime."

The police put more cops in places where crimes were known to happen a lot--"hot spot policing."

The police used a program of "stop and frisk" (which Gopnik acknowledges is controversial).

Another key, common-sense insight: "Criminal activity seems like most other human choices--a question of contingent occasions and opportunity. Crime is not the consequence of a set number of criminals," he writes. "Criminals are the consequence of a set number of opportunities to commit crimes."

Toward the end of his piece, Gopnik reaches some very smart, plain-spoken conclusions.

We rarely find that a miracle cure is what cures a horrible disease. Most of the time, it's a small, common-sense approach to a problem that yields an over-sized benefit. Want to drive down the incidence of disease? Try better plumbing and more frequent hand-washing.

Most of the time, with most of our problems today, the literature--whether in books, op-ed pieces, or video talks on the web--is filled with hand-wringing and hopelessness. We can't fix public education until . . . We won't be able to remedy our health care system unless . . . There's no hope for the economy without . . .

And most of the time, we already have the answers to these problems. Right in front of us. Simple solutions that yield real results. Petrie dish sized projects, experiments, programs that actually work.

Adam Gopnik's piece reminds us of three things, three important truths: we need to stop focusing on the intractability of problems, and instead look hard at solutions that work; we need to be driven by tough-minded pragmatism, hard-headed empiricism, not fuzzy-headed ideology, and insist on real data and honest analysis; and we need to think small, think close to the ground, think practical.

If we do that, we'll not only discover how we got so deeply into some of these problems, we'll also learn that we're a lot closer to the solutions than we give ourselves credit for.

Wednesday, February 1, 2012


Here's my column from today's USA Today op-ed page:

The news that Facebook is preparing its initial public offering offers investors a bracing tonic after 2011, which The Wall Street Journal summarized as "another year of IPO blahs." At a minimum, Facebook's announcement will raise Wall Street's spirits.

But more important in today's economy, it raises fundamental questions.

What's the purpose of an IPO today -- compared with its original business rationale? Whose interests do IPOs serve -- and does going public actually harm a company's future prospects? Perhaps most important, have IPOs outlived their usefulness -- and will we see American business in the future that looks a lot more like American business in the past? Is it time to say RIP to IPOs?

One of the most vocal and well-informed critics of today's IPO market is Roger Martin, dean of the Rotman School of Management in Toronto. Martin is the author of Fixing the Game, a critical look at the pervasive problems with corporate finance today. I called Martin to get his take on Facebook's announcement, and on the role of IPOs in general.

"It's nice to have a liquidity event that will show just how rich Mark Zuckerberg is," Martin says. "But Facebook doesn't really need the money."

And that's the first big problem with today's IPO market. A company's decision to go public used to be based on its strategic needs: an IPO gave it much-needed growth capital.

Today, the IPO serves financial ends. "Private equity funds usually have three to five years to demonstrate to their limited partners what returns the fund has achieved," Martin explains. "They can't give their investors back their money or hand over stock in a non-IPO company. They need a "liquidity event," which not only rewards early investors but also represents a sizable payday for a company's founders and its initial employees.

Which poses another set of problems. "As soon as a company goes public, you often see a 'founder motivation problem,'" Martin says. "To make the company successful, the founder will work long hours and give the business almost all his or her attention. After the IPO, the motivation changes. The founder has had a big payday. You often see a founder gradually losing interest." To be fair to Zuckerberg, who has already turned down a king's ransom to sell Facebook, his passion for the business is likely to remain after the IPO; other founders, however, may lose focus.

As for attracting talent, Martin says, going public poses a similar challenge. "If employees got their options before the company went public, they face the same loss of motivation as the founder. And when it comes to attracting new employees after the IPO, if the stock doesn't perform as expected, attracting employees with the promise of stock options isn't going to work. Employees know their stock will be underwater."

Why wouldn't the stock go up? In a June column for The Washington Post, shortly after LinkedIn's IPO, Martin explained the problem: an almost unbridgeable gap between what the stock market expects a company to deliver and the reality of what it actually can deliver. Given LinkedIn's market capitalization of $8 billion, Martin calculated that investors would expect LinkedIn to generate about $560 million of value in the year ahead. But LinkedIn's profit in 2010 was $16 million. After doing the math, Martin concluded, "LinkedIn could grow net income 27 times over three years and still massively disappoint the market. To meet current expectations, it would have to generate 82 times profit growth in the same period."

And, says Martin, speaking about business in general, that gap between expectations and reality is what is preventing the U.S. from building great, enduring companies.

All too often, he says, what happens after a company goes public -- and then inevitably fails to reward its investors with the returns they expect -- is a spiral of disappointment. The stock goes sideways, the company is viewed as a failure, and sooner or later disappears or is acquired -- even though the company has sound fundamentals and a good competitive position.

Its IPO, which gave a few people a "liquidity event," has undermined the company's long-term ability to endure.

So what's the answer? RIP IPO.

The IPO has become such a standard feature in our culture of casino capitalism that we tend to take it for granted. But as Martin points out, the first 30 years of U.S. business in the 20th century were dominated by semi-public or privately held companies run by entrepreneurs or owner-managers.

"We're in an odd period right now," he says. "We thought that being publicly traded was the way to go. But it turns out not to be right: You can't build a company and its value over the long term given how the expectations market jerks companies around. I see us coming back to the days of privately held companies because of all the problems associated with being publicly traded."

It could turn out that this period of IPOs and publicly traded companies isn't the norm -- it's actually a passing fad, a financial anomaly.

If so, the real question won't be, when is your company's IPO?

It will be, when are you taking your company private?

Thursday, January 19, 2012

President as CEO?

Andrew Ross Sorkin had a column in the New York Times this week defending the role that private equity plays in the economy. The idea is, I guess, that all the talk about Mitt Romney and Bain Capital has somehow unfairly turned into an attack on venture capital, private equity, and other investment entities.

What it raised for me is a different question: Does Mitt Romney help his chances of being elected President by running on his business experience?

Now, it may be that he has no choice. That's his hand, along with his governorship of Massachusetts and his role in the Olympic games in Utah, and he has to play it. And particularly in the Republican primary, his business experience sounds more compelling than his Massachusetts political career.

But what about the general electorate?

How do Americans feel about business and business leaders?

In 2008, before the Wall Street imploded and took the U.S. economy with it, a poll of average Americans found that only 11% said they had "a great deal of confidence" in the people in charge of major corporations, while 35% said they had "hardly any confidence." And that was during the good times!

Then in 2009, as the economy deteriorated, 70% of Americans said that people on Wall Street were not as honest and moral as other people. When asked to rank the honesty and ethical conduct of different occupations, business executives came in near the bottom of the list: given a choice of "most admired" professions, "business executive" came in at 21 out of 23 choices.

Which raises a question: If your campaign is based on a career in private equity, as a CEO/business executive, how do you turn that to your advantage?

And what's your campaign slogan: Mitt Romney--He's Kinda Like a Wall Street Guy, But Not Really, Except When It Comes to Experience, But You Can Trust Him, Because He's Not Like the Other Wall Street Business Guys!

We're gonna need a bigger button!

Monday, January 16, 2012

Moral Authority?

Happy Martin Luther King, Jr. Day!

I was driving home this morning, listening to the radio. They were replaying the speech Dr. King gave in Memphis shortly before he was murdered.

All these years later, his voice, his words, his message are still inspiring.

It made me think back to an experience I had about 5 years ago.

I had just given a speech to a CEO and his top-level executives. My theme was change and leadership.

After my talk, the CEO thanked me and then addressed his team.

"Who would you say has moral authority in America today? Business, government, religion--any category. Who has moral authority?"

Who, in other words, would you listen to the way I was listening to Dr. King on my drive home?

Five years ago, the room fell silent at the CEO's question. Time passed. No one spoke.
No one came up with a name. Not one name.

After about 5 minutes of dead silence, the CEO changed the subject.

But when I got home, his question had made me think.

If there is no one today--no one in business, government, or the non-profit world--who has moral authority; if there is no candidate for President who speaks with that kind of honesty and integrity; no one running a Fortune 500 company who speaks with the public interest in mind; no one at the top of an organized religion or a major philanthropy who can address the moral issues of our time; if that's the case, then it's clear who we have to look to for moral authority.

It's up to us, people.

It's up to us.

It's up to us to care enough to speak out, to know enough to say what's right and what's wrong, and to love enough to stay true to the oldest truth of all: Love thy neighbor as thyself.

Dr. King's birthday is a good day to look at each other, and see in each other someone with real moral authority.

Ultimately, that was Dr. King's message.

It's up to us.

Friday, January 6, 2012

Boxing the Compass of Intangible Value Creation

I think it's fair to say that we live in an economy that is largely made up of intangibles.
A world of brands; relationships; causes; ideas; business models.

That said, most of the way we do our accounting--either actual accounting or informal, mental accounting--still looks at tangible assets as the coin of the realm.

In an economy of intangibles, what creates real value?

These aren't the only four attributes; but if the aim of the exercise is to "box the compass" of intangible value creation, here are the four key attributes:

1. Trust. Every serious study of the history of capitalism starts with this: capitalism only works because of trust. The trust that if I invest my money in your voyage to the New World, you will actually take that journey and, to the utmost of your ability, come back with a boatload of silk, spices, tobacco and other merchandise. Trust is the glue of capitalism. Which makes Wall Street's recent sins all the more egregious.

2. Creativity. The team with the best people wins--and in an economy of ideas, creativity is the mother's milk of innovation and value creation. Granted, you have to implement: real artists ship. But if you want to build an organization that creates value, get more than your fair share of creative thinkers, dreamers, and imagineers.

3. Courage. We live in dangerous times. If you dare to be different, to play the game by different rules, to follow your own creative instincts to where ever they are destined to lead you, you gotta have heart. The world will try to tell you you're wrong, your idea won't work, you're wasting your time. Courage!

4. Teamwork. All work is teamwork. If you want to create intangible value--and then keep on doing it--create a culture and a working environment where trustworthy, creative, courageous people bring their best ideas and best effort to work every day, and where they work well together.

In an economy of intangibles, those four attributes box the compass of intangible value creation.

Thursday, January 5, 2012

All the News That Fits, We Print

Admittedly, I'm a little late to the party: It wasn't until last night that I watched "Page One," the video documentary about life at the New York Times.
Or watched some of it. Most of it.

As far as I could tell, the point of the documentary was that the internet had destabilized the old-fashioned newspaper business.

This I already knew.

Today I went back to my speech file and dug out a talk I gave about 8 years ago--maybe more like 10--at the Stanford Publishing course. I was never asked back, so perhaps they had the same reaction to my talk that I had to the documentary.

But for what it's worth, here is the outline of that speech.

We've got through an old economy; an old new economy (of dotcoms); and now we're into the new new economy.

The old model told publishers to cut costs, that bigger was better, that history equaled staying power in the marketplace, that it takes time for brands to develop, that tangible assets are the way to keep score, and that there's really only 1 right way to be in business.

The new new model flips everything; turns all the old rules upside down: growth beats cost cutting, fast beats slow, agility beats history, instant karma beats old brands, intangible assets beat tangible assets, and doing things your way beats anybody's notion of 1 right way.

So there's the new game with the new rules:

1. Talent and ideas are the only scarce commodities. Readers are looking for what happens at the intersection of talent and ideas: energy!

2. Speed wins. The first one to the future wins the competition.

3. The customer is in charge. It's no use chiding them for wanting what they want; if you don't respect your customers, they'll simply go someplace else.

4. Need to know beats nice to know. When it comes to journalism, "interesting" isn't a compliment.

5. Don't sell a product; build a community. Every successful magazine (publication, Web site) creates a community that already exists but doesn't know it.

6. Great editors are great listeners, not great geniuses. Forget the image of the brilliant editor sitting in the corner office deciding what pearl of wisdom the readers deserve to get this issue. The goal is create a dialog with the reader, not subject the reader to a monologue. A magazine isn't a message in a bottle; it's a conversation.

7. Iterate, iterate, iterate. It's never done. That's the good news and the hard work. You get to start each issue, each edition, from scratch. You don't get to re-print your last issue and get that cover story just a little bit better. You get to try again!

8. Do you know what your brand promises? And do you keep that promise? Particularly in publishing, a brand has to stand for something. Stand for it, and then deliver it.

9. Content may be king, but context beats content. "The job of the leader is to make meaning," says John Seeley Brown. That's the same job of every publication.

10. In a time of enormous change, trust your instincts; decide now, analyze later. Change hurts, indecision kills.

Got it?
Start the presses!

Wednesday, January 4, 2012

West Point Wisdom

I'm not a big fan of war.

But I'm a huge fan of the lessons in leadership that they teach at our military academies. Over the last few years I've had the benefit of getting to know Tom Kolditz from West Point, and to hear Tom give a number of very powerful talks about the fundamental practice of leadership and strategy that West Point imbues in its cadets.

Last year I got to listen to a talk that Tom gave to the board of AARP and just last week, as I was continuing to clean out my desk, I found the 3x5 card on which I had written some notes from Tom's talk.

Here's what it says, in its entirety. Few words, lots of power.

Minimum Plan Requirements
(The idea is, before you take action, go into an engagement, begin an assignment, what are the absolute minimum requirements you must meet? and by extension, if you can't meet them, don't start!)

(That's the top line: What is your strategic intent?)

(What is your purpose in taking this action?)

(How do you propose to go about doing it?)

End state
(What is the end state you aim to achieve?)

(Identify the risk factors in taking this action.)

Simple. Direct. Plain English. Straight forward.
I think this stuff is so simple, so common sense-based, it's just plain brilliant!
The kind of honest questioning that goes on a 3x5 card--and if used diligently, not only leads to better results, but also avoids horrible mistakes.
The kind of thing that all organizations need in developing better leaders at all levels.

Tuesday, January 3, 2012

Everything Old is New Again

I found an old scrap of paper, a Xerox copy of a book review I wrote for the New York Times back in 1995.
It's called "Gibraltar May Tumble, How Prudential-Bache created the costliest fraud scandal ever," a review of two books, actually, one by Kurt Eichenwald, the other by Kathleen Sharp, both chronicling the Prudential-Bache Securities scandal.

It's deja vu, all over again: I wrote in the review, "By 1994 the Rock had become a house of cards."

And the explanation for how it all happened?

It starts with government regulatory changes--the 1981 Reagan tax reform bill and changes in the SEC set off a boom in tax shelters and ushered in a new era of real estate, energy, and airplane leasing partnerships.

Here are the last two paragraphs of that old, old book review:

"The picture that emerges from both books is that of a fundamental system failure at a great name in American business. The lesson is not encouraging. Mr. Eichenwald labels his book 'a cautionary tale about an abuse of the investor faith that is an essential building block of the American economy.' Ms. Sharp quotes a former manager of the San Diego office of Pru-Bache Securities: 'I don't think you can use the Nuremberg defense and say, "My superior told me to do it." Yet that's what a lot of people did.'
"And from the epilogues in both books we learn where the major players are today: almost without exception, the innocent have suffered more than the guilty, the higher-ups have escaped responsibility, the smaller investors have lost the most. It's a sobering note at a time when Washington is again fiddling with the tax code and American companies are awash with cash and looking for deals. These two books suggest that eternal vigilance may also be the price of capitalism."

Or, perhaps more to the point, history doesn't have a way of repeating itself. It's afflicted with a chronic stutter.

Monday, January 2, 2012

Jared Diamond's Stages of "Collapse"!

And a happy 2012 to you as well!

I thought I'd kick off the new year with another of the gleanings from my desk-cleanings. Only rather than quote myself (if I don't do it, who will?), I want to bring your attention to the Four Stages of Collapse identified by Jared Diamond in his noteworthy book, "Collapse."

I'll simply cite them here, and leave each of us to ruminate on the obvious questions the list suggests (such as, I wonder how this might apply to the United States? to my company? to the social fabric? and other such questions).
So, here are the stages:

1. Failure to anticipate a problem before it arrives. (Because of a lack of prior experience or a tendency to forget prior experiences)

2. Failure to perceive a problem after it arrives. (Because managers are too far away to detect the signals; or it is a slow trend that is masked by wide up and down fluctuations; or because of "creeping normalcy" that makes the problem seem like "the new norm."

3. Failure to attempt to solve a problem after becoming aware of it. (Because even though it's bad for you, it's good for me; or because of the "tragedy of the commons" makes it hard to take action; or because the problem pits the interests of the power elite versus the masses; or because of a tendency to cling to values/mindset/beliefs/behaviors even after they no longer work; or because of groupthink and broad denial)

4. Problem becomes insolvable. (Too little, too late; too expensive to remedy; or it's simply beyond anyone's capacity to deal with).

Four Stages of Collapse: something to think about at the start of a new year!

All Rights Reserved 2009 (c) Alan Webber, Rules Of Thumb