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Friday, November 26, 2010

Giving Thanks for Just In Time

“Full enough is a Feast.” How far we have truly managed to come it seems from that autumn day in 1621 where the 53 survivors of the Mayflower had their first harvest celebration meal which was the English custom in that time. We now call this event our Thanksgiving Holiday, and while we will remember it with some type of wonderful feast perhaps and time with family, it has taken on a different spin.


Thanksgiving now is followed most notably by Black Friday to careen us into the Christmas Holiday shopping season. Don’t get me wrong. I love the holidays and I love shopping, but I also LOVE the market economy. There is nothing like the Black Friday battle over endless sales to bring out the real Bulls and Bears so lets visit for a minute on this thing we call the Free Market.

The market economy is one of the basic economic systems in the modern world. When Adam Smith wrote The Wealth of Nations in 1776, traditional agriculture formed the heart of nearly all world economies. As industry began to dominate in the 1800’s particularly in Europe and the United States, Industrialists wanted to control their own businesses. Turning to Smith’s laissez-faire ideas, they pushed for free markets and an end to government interference. Laissez-faire put simply is the doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights. The free market, free enterprise, or as we affectionately call it “capitalism”, has at its heart a special trinity of elements. First is the battle of supply and demand, second is the desire for self-interest where producers and consumers only consider their own personal gain when making decisions and third is my personal favorite: competition. Dampen or temper any one of these three elements and you move down the slippery slope to mixed economies. Mixed economies can be seen quite frequently both in foreign and domestic trade where there is a blend of both government and private industry competing to make key economic decisions. Further down that slope is the more centrally planned economy, also known as a command economy or a socialist economy. At this end of the spectrum you will find a decline in not just the quality of goods, but also the availability of goods that you search out. We participate in this everyday from banking to health care to grocery shopping to songs that we download to our iPod.

Pause for a minute to think just how your opinion about the market place has changed since the economy sank two years ago. Call forward what you know about your grandparents and their view of money having lived perhaps through the Great Depression. They most likely represent a spendthrift culture with a high appreciation for being a frugal saver. While our recent down turn thank goodness has not been as bad as that, it has caused a measurable change in our shopping behavior or as Ellen Byron writing for the Wall Street Journal observes, we now have a new name: The Just-In-Time Consumer.

If I asked you to open your wallet, most of you could present some type of bulk shopping club card. For over two decades, Americans bought big, bought more, and stocked up with the confidence that bulk shopping, often on credit, would provide the best value for their money. It seems that this long recession with its high unemployment, plummeting home values, and depleted savings has altered the way that many people think about their future. Consumers are more likely to buy with the thoughts of do I “need it now” and will I “use it up” hence earning the moniker of the Just-In-Time Consumer. There will be a pause before a purchase with consumers asking themselves, “Do I really need this, can I really afford this?” says Thom Bischok, president of global innovation and strategy for Symphony IRI Group.

The lower sales volumes seen of late are attributed to “pantry de-loading.” People are just cutting back on inventory. Ladies, think about how many products you use from shower to hair to make up in the morning and ask yourself if you are now going without a few. Look at your pantry at home to observe that you have fewer product duplications and you stretch out store visits.

Just-In-Time consumption is disrupting long established purchase cycles as consumers buy when they need it, not way in advance. Put simply, we are getting by with what we have and doing just fine thank you very much. Or as the saying goes, “The rich man has enough.” Have a Blessed Thanksgiving!

Friday, November 19, 2010

Pick your Ally to Change the Change: BCA, US Chamber, NAM

            Change.  Not just a buzzword during the Presidential elections, but a word that rose to a frenzied mantra.  Now that the smoke is clearing from our  recent mid-term elections, we are beginning to get the clear picture that something really has changed in the collective conscience of the country, and it may not be what some in Washington had hoped for or envisioned.  It would seem that previous to the 2008 elections, it was enough to ask the civic minded person to engage and vote.  Now that is just not enough.  Gone are the days of passive involvement, and trust in leadership whether it would be corporate leadership (with a now 20% approval rating) or political leadership (with a now 11% approval.)  Enter the Watchdog.  Welcome the Self-Advocate.  All Hail the civic minded, highly engaged voter who not only shows up on Election Day, but is highly informed and ready to get involved.  

I want to share this thought with you on the heels of my participation in the recent Committee Days for the Business Council of Alabama (BCA).  Committee days are key to driving the Pro-Business Agenda that BCA supports for our state.  In their commitment to our legislative process, BCA looks to the business volunteer leadership who has led BCA for over a quarter of a century with vision, courage, integrity and commitment.  This weeks Committee days were filled with heavy hitter leadership participation from all business sectors for Alabama.  If your company supports BCA, your organization has taken a serious step toward not only civic engagement, but having personal ownership in driving the drivers of legislation and leadership. 

            Two key speakers supported the Committee days this week, and their messages were on target with the mission of BCA.  In attendance to support this event were Jay Timmons, Executive Vice President of the National Manufacturers Association (NAM) and Katie Hays, Executive Director of Congressional and Public Affairs for the US Chamber of Commerce. 

Timmons spoke to the need for “clearing the bureaucratic brush”.  According to Timmons, American companies want to compete and win in the aggressive war of competition, and do not need to be encumbered by taxes and legislation that is a functional anvil on the backs of manufacturing.  The United States is second now to Japan, but soon to be the highest in corporate tax rate with a cost to do business in the US at 17% higher than other countries.  NAM supports better policies to create jobs and bring us out of the recession, and it advocates for the Free Market System.  Timmons expressed concern that voters are less and less educated on benefits of a free market.  “We will not survive as a service economy alone, and a manufacturing economy born in innovation, advancement and competition is crucial to building tangible wealth and strength for us,” said Timmons.

Hayes gave an election recap with recognition that there is certainly a lot of new blood in office with 13 new senators and 30 new governors.  “The role of the new governors is clearly significant as they work to interpret for the state what is happening at the national level and as well they should,” said Hayes.  As we exit this week from our Lame Duck Session with only one more session this year, there is a lot to accomplish in a very short period of time.  According to Hayes and the US Chamber of Commerce, President Obama must signal openness to compromise.  If the 2001/2003 Bush tax cuts expire, we will experience one of the largest tax hikes in America’s history.  $3.8 Trillion will be placed in the government’s hands only 45 days from now unless action is taken.   There is a lot of legislation in limbo in addition to the expiring tax cuts.  Other business tax provisions that are a priority for businesses are card check legislation, climate change legislation, transportation funding (SAFETEA-LU) reauthorization, discussion of the Debt Commission's budget report suggestions, immigration legislation (the DREAM Act), cyber security bill, trade legislation, and Medicare insurance legislation. 
The list is daunting, but chins up; Washington is listening now and now is our time to change the change.  We are the small-business bloc which is code for the “hardworking voter” or the “everyman.”  It is rare to find a small business person that does not complain about competition against the Big Box Company so here is your word of caution.  Politics is now truly big business.  More money from outside groups has been spent on the 2010 midterms than was spent in 2004, which was a presidential election year.  Don’t think about this as money spent buying votes, but think instead of the broadcasters, publications, campaign ads, event companies, restaurants, and the political consultants that help to bring it all together.  It may continue to be a tough fight for the small business bloc to compete with big politics in this type of financial arena, so square up with some good allies.  BCA may be that great lineman to your business big or small when it comes to the pro-business grid iron.

Friday, November 12, 2010

Millennial Generation: We raised these kids, why can't we manage them?

“We raised these kids, why can’t we manage them,” was the salient quote from the recent lecture by Ron Alsop at the quarterly breakfast meeting provided by the Samford Brock School of Business. Alsop is certainly a noted and long time writer, and you may recognize his name as the business editor for the Wall Street Journal. He speaks frequently on the topics of corporate reputation, business education, and career development, but on this day, we learned about the “Millennial Generation.”


In his book entitled, “The Trophy Kids Grow Up,” Alsop writes at length on his research concerning the dynamic known as the millennial generation. Millennials are young adults born between 1980 and 2001. They are heralded to comprise a full 35% of our workforce in the next three years. Now is the time to appreciate how this huge driver of our workforce has been formed and what they have to offer. But first, take a pause and appreciate how they are different, and it doesn’t take long to see that the differences are marked.

Looking back since the early 1920’s we have seen several transitions in workforce trends. The Traditionalists (born 1925-1945) are clearly some of the most patriotic of our work force. The Baby Boomers (born 1946-1964) are those workaholics like me who take on way too much and wonder why there is so little free time. We love the effort and enjoy the output of our labors. Following the Boomers is the Generation X’ers (born 1965-1979) and they have a trend to tech savvy and latch key independence. Enter now to the workforce and the playground, the Millennial. This group has high self esteem born in the “they all get a trophy” competitive environment. Tech savvy? Please. They are tech savvy, multi-tasking super geeks with limited work place loyalty, but a parallel high civic mindedness. Dutifully watching over their millennial off spring is the seemingly ever present Helicopter parent. The Helicopter parent has been known to not only arbitrage for grades on behalf of their child in high school, but to attend a college interview when the child had a sporting event, and even ask to sit in on a job interview or two. Alsop reported parents that had requested that their travel to their child’s job interview also be covered, and how about an occasional “Parent Day” at work for good measure. This is truly an amazing shift as Alsop reminisced about us Baby Boomers being dropped off for college with a kiss, a wave, and a “see you at Thanksgiving.”

The young millennial in your office or home that are now nine years of age to thirty years of age are a force to be reckoned with as they are driven to succeed, prone to job hopping, and yet have very close parental ties. They seem to be less cynical at work than their predecessors, and because they like their parents, they also seem to like and get along with their managers. They are highly concerned with work life balance, and will take less money in the trade off for more fun. In a world where global competition is the name of the game, we would be advised to keep this in perspective as their Asian Millennial friends report that they are in fact less concerned with work/life balance and are ready to work. Time will tell, but this dynamic may change with work choice scarcity in the current recession for our job hopping, fun seeking employees.

A typical Millennial will state that they look at the work place as a social organization, not just a job, and they need to have fun. They report to be very credentials driven which is not surprising given their high self esteem. This group does not seem to have patience “paying their dues” and are not likely to desire the true entry level job. (It is this writers opinion that this is a great opportunity for the displaced Boomer who just love to work.) This seems to have been born in the environment where the driver is to get into a “good” college and all of the competition that goes along with this. Alsop reported that one parent interviewed had kept a spreadsheet of all their child’s accomplishments since kindergarten for inclusion in the interview process for college. Thus this group views the world as a “meritocracy” where you merit the advancement, and as such they are constantly asking for feedback. The challenge for employers is going to be a big one to retain the talent once you invest in the training of this group. Millennials want to be casual and enjoy work, and they make it clear that their lives come first, and jobs come second. Where did they get this idea? Probably from us workaholic Baby Boomers that give everything to work because “it matters”, only to find out in this current economy, you can in fact not just be replaced, but displaced and the company can do more with less.

There is a saying, “God gave you kids, because he isn’t finished with YOU yet.” This may be worth thinking about as we spend time raising and managing our Millennials.

Thursday, November 4, 2010

Skunk works Smells Like Money

Now that we are through our elections,  it would be wise to take a pause and think for a moment about what trying times and the birth of true innovation can look like.  After all, our circumstances are not new.  We need to take a creative pause as well as deep breath and prepare to take a little risk and make some hard decisions about how we view innovation and creative change.  I learned of a term that is new to me, but for many of you reading today, perhaps it is not new to you.  Recall from the early 1940’s a strategy called Skunk works or skunkworks.  

            A skunkworks project is one typically developed by a small and loosely organized group of people who research and develop a project primarily for the sake of radical innovation.  Skunk works was born within the minds of the leadership of the Lockheed Aircraft Corporation in 1943 as they were tasked by the United States Government to build a jet fighter to counter a rapidly growing German jet threat.  In one month, based on the request, Clarence L. “Kelly” Johnson and his team of engineers at Lockheed are reputed to have developed a proposal, received a go-ahead with funding, and began development.  A formal contract for approval from the “powers that be” did not arrive until four months of project work had already been completed.  This type of Skunk Work strategy came to be known as the way to move forward with innovation quickly with only a handshake and rolling up your sleeves.  No contracts.  No official submittal process.  No slow meandering “take your time while we analyze this” complacency.  Skunkworks operates with a high degree of autonomy and unhampered by bureaucracy. 

Kelly is credited with operating the Skunk works effectively and efficiently albeit in an unconventional manner certainly.  He broke the rules, challenged the bureaucratic system and unleashed innovation.  End result:  Progress.  Skunk Works then is a small group of people who work on a project in an unconventional way.  The group's purpose is to develop something quickly with minimal management constraints.  Skunk Works are often used to initially roll out a product or service that thereafter will be developed according to usual business processes.

Although people have speculated that the name Skunkworks was inspired by the poor hygiene habits of overworked employees; it was really taken from the moonshine factory in the cartoon series "L'il Abner.”  Lockheed Martin has trademarked the name Skunk Works but they also refer to this type of project by the more formal name "Advanced Development Program" (ADP).  Kelly’s rule for innovation at Lockheed helped turn the face of a corporation answering the call of their country.  Perhaps it can help you innovate as you face the demands of your own business and customers.  Lockheed developed 14 basic rules for running an effective skunkwork.  I have modified them here to fit my general business needs.  Perhaps they will help you too as you innovate and create your own skunkwork for your organization.
  1. The Skunk Works manager must be delegated practically complete control
  2. Develop strong but small offices
  3. The number of people having any connection with the project must be restricted in an almost vicious manner.  Use a small number of good people (10% to 25% compared to the so-called normal systems
  4. Keep it simple for greater flexibility
  5. Keep the paperwork way down, but do document the important things
  6. Check your costs monthly to stay on top of expenses, commitments and what is needed to finish the project
  7. Delegate to your project leader and give them greater than normal responsibility.   
  8. Inspection and follow up are key, but do not duplicate effort
  9. The leader must be delegated the authority to test his final product.  He can and must test it in the initial stages as well.
  10. The specifications for the project must be decided immediately.
  11. Funding a program must be timely so that the leader doesn't have to keep running to the bank to get support
  12. There must be mutual trust between the project organization and the project leader with very close cooperation and liaison on a day-to-day basis.  This cuts down misunderstanding and correspondence to an absolute minimum.
  13. Access by outsiders to the project and its personnel must be strictly controlled by appropriate security measures.
  14. Reward based on performance and nothing else