Wow, What A Week!

This blog entry may be a bit personal, but every once in a while I need to just talk about my feelings. Wow, what a week! I had a physical on Monday. The positive, my cholesterol dropped ten points. It is still a little high, but it is going in the right way, without drugs. My blood pressure is good, and my pulse is healthy. All is calm on the western front. I did gain five pounds, but I will be working on that. I have en Echo Cardiogram next Wednesday. We just want to make sure the heart is still working well.

I know this is probably TMI, but at my age, you think about how much time you have left, what you want to accomplish with the time, and what the quality of your life will be as you continue to mature.

When I was working on my Doctorate, I spent a lot of time reading Erik Erikson. His Psychosocial Stages made sense to me. Right now I am in middle adulthood, but on the latter end. I am still seeking equilibrium between Generativity and Stagnation. I still need to create and nurture things that will out live me. I am not having any more children, but I am seeking benefits for others.

Erikson ends his eight stages with the Maturity stage, which seeks equilibrium between ego integrity and despair. Erikson believed that “older adults need to look back on their life and feel a sense of fulfillment.” They need to feel wise, and have minimal regret, bitterness, and despair. I can hardly wait. Now that was sarcasm.

Erikson correctly identifies this as a common human trait. Time and time again we see examples of this all through the world. Rich people give up their wealth to help others, while the 1% sign agreements to give half their wealth away before they die. Men give up high paying jobs to become Pastors. Women raise their children then start non-profits. As we age we look for ways to give back.

I read another example of this in the WSJ this week. James Higa, an advisor to Steven Jobs, used to negotiate contracts for Apple with Music Companies. Now he is negotiating socio-economic issues in the Bay area in California. Higa is “among a growing group of techies seeking to bridge a widening income gap in San Francisco, riddled by rising home prices and persistent poverty.”  He is another in the army of successful people who are now using their skills to change the world. He may not see himself as one, but this gentleman has joined the ranks of thousands of Social Entrepreneurs throughout the world.

From what I can tell Higa’s group is similar to Hatch in Portland. “The Invention Hub – which officially opens on Tuesday in San Francisco’s Dogpatch neighborhood next to a luxury apartment complex – is a collaborative workspace.” Within this workspace is another group, Just Business, “which invests and incubates for-profit companies with a social good component.” Sounds like Hatch!

I have to say, I have found my niche, because I am enjoying working with future Social Entrepreneurs. Who knows where this will lead, but I am excited. I am healthy and ready to go.

And that is my thought for the day!

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The High Cost Of Low Cost

Each semester I participate in the senior project, the HUM410. I work with students as they write a paper grappling with a paradox. Business students, and athletes, usually focus on failure as it relates to success, or some other simple paradox. However, it seems that more and more of my students are focusing on the high cost associated with the consumer’s desire for low cost products.

I must admit they often miss the connection between personal responsibility and this paradox, but they do recognize the reality of big business’s desire to race to the bottom.  An article in this morning’s paper helped me think about this.

Gordon Oliver writes a column entitled Strictly Business. I enjoy reading it and his thoughts are often similar to mine. Today he pointed out a phenomenon in Clark County that illustrates the diminishing wage structure and buying power currently occurring in my neck of the woods.

Nordstrom and Albertson are large corporations but both are making decisions that will significantly impact what goods and services are supplied to Clark County consumers and at what price. Nordstrom has been in the Vancouver Mall since the Mall’s inception, but is now closing that store, as well as its store at the Lloyd Center. At first glance, its sad, and reflective of the competition between Clark County and tax free purchases in Oregon, but Gordon Oliver takes a different perspective that I think is important.

Oliver states, “ Nordstrom’s apparel, shoes and other merchandise are a price-point or two above the budgets of most middle income households.” This is true, but historically Clark County has supported this Nordstrom well. He then counters with, “Wal-Mart finds it market at the other end of the demographic scale, catering to households with below-average incomes.” No surprise there, but Oliver argues the fact that if Nordstrom is going away and Wal-Mart is opening two new stores in our community then this may give an indication of the reducing buying power of people in Clark County.

Risa Johnson Leverenz commented on Columbian.com that with these closings Clark County has been taken down an economic notch. The fact that Wal-Mart is expanding in our county, and has led to Albertsons closing two stores , and a locally own business, St. John’s IGA store, demonstrates the buying decisions of the county consumer.  The owner of IGA, Koistra, was heart broken, and I don’t blame him.

Who is to blame for this scenario? Is it Wal-Mart, Amazon.com? “Wal-Mart and Amazon offer low prices that allow us to stretch our tight budgets. But our gain comes at a price to the community. Even in the low-paying retail sector, Walmart stands out for its low wages . . . As for Amazon, a study by the Institute for local self-reliance using U.S. census data concluded that the company needs just 14 employees to generate $10 million in earned revenue, compared to 47 employees for a brick and mortar retailer.” The fact is both of these stores have analyzed their markets and have responded to the market demand, low cost.

Therefore, who is at fault for lowering wages and high-end stores closing? It really is the Smithian invisible hand, which represents the consumer. We drive the market with our buying habits. If we want local businesses then we need to support them, but if we want low prices, then we just need to keep doing what we are doing, buying books from Amazon and going to Wal-Mart. It is that simple.

And that is my thought for the day!

Thoughts On Our Business Program

Yesterday on Facebook I posted a comment. “I am tired of people saying we can’t do something, or it is someone else’s fault.” I may have been wrong in my assessment of my feelings, maybe a more accurate comment would be, “I am tired of excuses of why something doesn’t change.” The reason I start this blog expressing my feelings is the several articles I have been reading about Business programs, and one article in particular stood out. It was in last week’s Economist. Did you know that there are over 12,000 institutions worldwide that provide some sort of business education? This reflects the amazing opportunity that exists in the world. “Demand for good management is spreading to the emerging world and to the public and voluntary sectors.” All types of organizations are looking for better managers that can run their organizations in an effective and efficient manner.

Even though there is a huge need throughout the world, business schools are not responding to the situation well. Although we discuss creative destruction in our Economic classes in deference to Joseph Schumpter, we are ignoring this warning. MOOC’s are coming, academic cost inflation is a reality, and the image problems associated with big business is a reality. These are just a few issues affecting these 12,000 business schools. The biggest issue may be the disconnect between what we teach and what we do.

Michael Porter argued that the most dangerous place for a business to be is “stuck in the middle without an advantage of cost or quality.” The Economist warns business schools that they are “going to discover how right he was.” Ominous, and true; any business program that is subpar will have its very existence threatened.

First, if there is a discontinuity between what a business program teaches and the changing environment, it will need to change. Anyone who teaches in the higher education world has experienced that lack of change that occurs due to tenured professors. And as the Economist stated this is having a negative affect on business programs. “Tenured academics are untouchable and can block any change in a school.” At the school I teach at this is not the case, but the wheels of change move slowly. Innovation and change sometimes need to happen quickly. Yet business schools are often like big tankers that take forever to change direction.

Second, one must fight against the lemming syndrome of doing what everyone else is doing. “Business schools suffer from a bad case of Harvard and Stanford  envy; they dream of having fancy buildings and star professors.” Most schools cannot enter that competitive world; we are just trying to provide a good education for our students. So I agree with the Economist when they say, “The obvious solution for schools outside the top tier is to compete on cost or innovation.”

So what about a small business program at a small liberal arts college? How does a program like that compete? There are bigger schools in our area, Concordia, George Fox, and PSU, so how does a smaller program do what it needs to do to compete with those schools? I would like to point out I am focusing on a traditional business program. We have a vital adult program that has performed well over the last ten years, but now needs a little facelift. The following comments are related to our traditionally aged business program.

It is my opinion that what we have done up to this point in time at our school has been sufficient, but not as creative as it could have been, so we need to do something else. So what do we need to do? How do we create a program that students will choose to attend our school to study? I don’t think the particular detail of our program will draw a student to our school. What I mean is that if we offer a double major in accounting that will bring more students than an emphasis which is what everyone else does. I don’t think that is the case.

What I do think is we need to offer classes that we can teach well. Although I do think that offering a unique degree like Social Entrepreneurship will provide an opportunity for certain people to choose to come to our college. But what will matter is how well we provide the classes we do provide.

Therefore, for us to compete with larger schools, that have more resources, cost will need to be a factor. We need to provide more financial incentives to attend our school. And secondly, we need to provide a high quality program. Our program needs to engage our students in the classroom. This means a tight curriculum that is well taught. Secondly, there needs to be an opportunity to enact, or do business. I think this is more than just an internship, it is creating partnerships with businesses in our community. Getting our students to meet business leaders from the community will be critical in helping our students earn jobs with these companies.

What we have to do to compete is work on getting our costs down and our quality up. So that is our goal for the next two years. We will have to be more efficient in providing our curriculum, thus being able to provide more financial incentives for our students, stronger classroom experiences, and lastly more opportunities to meet business leaders in our community.

I think that is a great strategy!

And that is my thought for the day!

 

 

Leadership

I guess I shouldn’t whine so much about poor leadership. But the more I read, and the more I look at research, the more I see how society is not benefiting from the billions paid by students studying leadership. 50%, 60%, 75% of organizations are viewed as not being well led. Through out my career I have seen good leaders and bad leaders, with most trending toward the not so good side. Oh, I am getting even more cynical as I get older.

Yesterday the House Republicans backed off from a Debt spending limit. After the people complained about shutting down the government, I can understand why Boehner and crew backed off. However, it does not deal with the fact that we are continuing to spend our way into oblivion. Somewhere somehow there needs to emerge a leader who can creatively solve our debt and spending problem, but we continue doing the same thing expecting a different outcome.

There are some more personal examples that I would love to share, but it would not be appropriate at this point in time. But bad leadership is all around us. Now I am not saying I am a good leader, I hope I am and I am trying to make a difference. We’ll see what my legacy is when I retire, or pass on the torch. I enjoyed my time as a manager/leader at Boeing, and I am enjoying my work as Department Chair at Warner Pacific College, but whether I am a good leader or not, we just have to wait and see.

The area in our society where we need to see more positive leadership is within the area of growing inequality in our country. I read several reports this morning describing some of the economic changes that are occurring.

There has been a great deal of discussion on the value of college degrees. I think the numbers tell us that the value is still there. In 1965 young people with a high school diploma made .81 for every one dollar a college graduate made. “Today, young adults with just a high school diploma earn just 62% of the typical salary of college graduates.” This is the widest gap in 48 years. Pew Research Center stated, “In today’s knowledge based economy, the only thing more expensive than getting a college education is not getting one.”

Another set of numbers that I found very interesting this morning involved the “decoupling of wages and benefits from economic productivity.” Household incomes, as reported by William Galston in the WSJ, are 6.4% below where they were at the beginning of the Great Recession. After the recession was declared over, household incomes are still 4.7% below the ending number. In other words during the recovery period household incomes have not fully recovered to pre-recession levels.

Between the years of 1947 and 1973 total wages and benefits grew inline with productivity gains. Output during this time grew by 2.8%, while wages and benefits grew by 2.6%. In other words we all shared in the benefits of post war prosperity. However, from 1979 to 1990 productivity grew on an average of 1.4% with household compensation only growing .5%. As Galston writes, “The 1990’s were better: Productivity gains accelerated to 2.1% yearly, and compensation to 1.5%.” However, the gap has still widened, “because compensation rose at less than three-quarters of the rate of productivity.”

The question is why? According to the 2012 report for the Organization For Economic Cooperation and Development there were three factors leading to these issues. First involves the “worsening position of low education workers.” As I mentioned above, people with a High School degree are making less than they once did. Second involves changing technology. The ability of companies to be productive without hiring more workers has led to more gains for the owners of production and not the workers. And third, increased globalization, competition, and capital flows. Thus, “When compensation fails to keep pace with productivity, workers purchasing power becomes less able to sustain economic growth.” So now all of us know where our society is currently at, but the question still needs to be answered what do we do about it?

This is where we need a new style of leadership. First, we need to say, hi my name is the United States and I have a problem. Until we are honest with ourselves we will never figure out what to do. The first step involves all of us, and our elected representatives. Second, business leaders need to recognize that they have stake in this. Henry Ford came to a very important realization. His workers needed to make enough money to buy his product. He decided to pay his employees $5 per day. That was unheard of in the early 1900’s. He was called a communist by his cronies, but Ford was smart like a fox.

Our business leaders need to get a little smarter and start looking locally at the demoralized workforce it is creating. Diminishing loyalty of workers is a serious problem leading to deviant workplace behavior. Shootings, employee theft, and other actions give an indication there is a severe problem with our local workforce.

And lastly, just like the concept of all politics being local, the community needs to step up and begin to work together to provide opportunities for its citizens to develop the skills needed to be a part of the workforce. The number one reason for people not being hired by companies today is the inability to pass a drug test. Pass a drug test; are you kidding me?

So, we know what the problem is, but do we have leaders in or communities that are willing to step up to ensure the work gets done? It will take the government, business and the community working together to right the ship. Lets roll up our sleeves and get to work. I guarantee that all of us will benefit from this work.

And that is my thought for the day!

More Lessons On Leadership From Putin

Last night I watched the opening of the Sochi Olympics. The pageantry was beautiful, and except for a couple of snafus appeared to provide a wonderful start for the Winter Games. Any one was hoping for this to be egg on the face of Valdimir Putin will be disappointed. Putin will be a permanent fixture in Russian politics for many years to come. This is not to say that Putin won’t make a mistake somewhere in the near future that will limit his influence, but for now he is deeply entrenched in the Russian collective psyche and will continue to be so for years to come.

Putin is a thug, but thugness is as much a part of the Russian culture as is cronyism. The Oligarchs of Russian nobility have become rich as a result of Putin’s reign. But this is the normal way of doing business in that country. But, that is not how we in this country do business. Our culture is different therefore how business leaders behave is different. Or maybe should behave is more accurate.

If Putin does not like what someone is doing, like billionaire Mikhail Khodorkovsky, he has them arrested. After 10 years in prison Mikhail was released and subsequently left Russia, presumably with several billion dollars. But our situation here in the states is much different. We understand power a little differently. We are not afraid to question authority, and we recognize the need for more of a servant leadership mentality. Leaders are in power to serve their constituency, and when then take advantage of that leadership for personal benefit, we hold them accountable, eventually.

That brings me to my point. The leaders in this country better not forget the importance of taking care of followers. If this is forgotten the ability of followers to produce positive results will be hindered. Take Boeing for example. Boeing has just negotiated with the State of Washington to receive tax breaks. They did this to keep the 777X in the state. In other words, this new plane which is slated to revolutionize the industry, will be built in Washington by union workers, but to do this the union had to give back benefits like their pension.

Analysts are warning Boeing though. If they don’t create a more positive relationship with their workforce the company’s ability to build the new airplane, while continuing to deliver at higher rates, will suffer. With this new airplane analysts are predicting that Boeing will pull farther ahead of Airbus by grabbing a 55% share of the market. To accomplish this Boeing needs the help of its employees. Rather than continue to take away from the employees, Boeing management will need to revitalize its relationship with its workforce. However, it is not just Boeing, it is also all large employers in this country. Competition is becoming more fierce worldwide, therefore we need an engaged workforce to be successful.

The question is what do we have? We have 10.4 million men in their prime earning age out of work. A man’s most productive time in their work life is from the ages of 25 to 54. Yet, these men have been impacted by changing technology and globalization, which has transformed the workplace faster than any time in history. During the worst part of the recession 20% of men within this age group were unemployed. This has been reduced to 7% in December due to improving job growth, but “two-thirds of working age men weren’t looking” for a job. They were discouraged.

Men seem to be struggling, but “For women, the story is different. In the 1950’s, only about a third of women ages 25 to 54 had jobs. That rose steadily until the 1990’s, and then leveled off for reasons that aren’t clear. At last tally, about 70% were working; 30% weren’t.” Could it be that women are more compliant in the work place? Just a weird thought I just had.

We have all seen the reducing workforce participation rate, we see workers being let go prior to being able to collect pension benefits. We have seen worker hours kept low to ensure the company does not need to provide medical benefits. It seems there is a horrible attempt by the company’s desire to control cost to cheat the employee. This continues the downward spiral of the relationship of the worker and the company they work for.

Managers of the world unite and start treating our employees like they are human beings who need to be productive. Our employees are not commodities to be used up and thrown away, they are people that want to be productive and do good things. Let’s help them accomplish that. More value will be created that way!

And that is my thought for the day!

 

 

Thoughts On Microsoft’s Announcement

I have come to the conclusion that the most important element associated with company performance is the managing of resources. It really is entrepreneurial. The entrepreneur, if you remember, is someone who has the ability to see how something is currently operating, identify inefficiencies, and then create a new way of doing what needs to be done. The entrepreneur has the ability to creatively destruct what was occurring and replace it with something new. The entrepreneur will usually accomplish this with the limited resources they have at their disposal.

However, through the life cycle of an organization how resources are managed will evolve, but the need to do this never changes. The importance of resources and capabilities cannot be over emphasized enough to the future business leader. This need is relevant to all levels of management structure.

If we look at the first level of management the importance of managing your day-to-day resources is critical. You start your day walking around your department seeing who has shown up for work and who is missing. If there are gaps affecting the day’s needs then you need to move resources to ensure the work gets done! Are their missing supplies that keep you from completing your daily tasks? Then you need to work to get those supplies on hand to complete the day’s tasks.

Tactically, the midlevel manager needs to ensure the organization has the right resources. This could be employees, managers, whomever, but their job is to ensure that the organization has the right capabilities to respond to the changing environment.

At the senior management level the board needs to ensure that the CEO is the right person to lead and govern the organization to ensure sustainability and longevity. This is what we see Microsoft struggling to accomplish. Several moves were announced yesterday involving governance and strategy. The moves will be analyzed for days, and several years from now they will be judged as effective, or not, by the results produced.

Everyone knew Steve Ballmer was retiring. The question was who would replace him, and would they be effective. Many thought that the purchase of Nokia would bring a particular gentleman into the Microsoft family who could move into the role. However, the Nokia purchase has not been completed, so that did not pan out. Now an insider has been appointed to run the company. Satya Nadella  has been appointed to CEO. He has been with the company for 22 years, recently leading the Cloud Computing part of the Microsoft. What about Bill Gates?

Bill Gates has been replaced by a Mr. Thompson, which seems like an important move. Remember when Phil Knight stepped down from Nike and was replaced by William Perez? Remember how, due to differences between Perez and Knight, Perez stepped down after one year? This is very common when strong leaders give up leadership within the company they founded. Perez could not do what he thought needed to be done because Knight did not agree. Therefore, can Gates step down from the Chairmanship of his company to allow Nadella to do what needs to be done?

I think the placement of Thompson as the Chairman is an attempt to ensure the board is Nadella’s boss and not Ballmer or Gates even though they will be on the board. But Thompson has the ability as chairman to control how the board governs the company. This will be critical for Microsoft because their defensive strategy may not work anymore.

Holman Jenkins discussed the non-revolution that is reflected in the current announcement of Nadella and Thompson. “Staying the same by changing would seem to be the agenda behind the naming this week of a new Microsoft CEO, only the third since the company was founded.” Jenkins does a great job of arguing that Microsoft’s move into the cloud, Bing, and Nokia are all defensive strategic moves to warn Google and Apple to stay away from their core business of supplying PC software and services to Corporate America. “Its long been evident that such zero-sum, Cold-War thinking has been part of Bill Gate’s and Microsoft’s survival kit. Many of Microsoft’s investments are not supposed to make money – they’re supposed to deter attacks on Microsoft’s bread and butter.” This is an interesting argument.

I never use Bing, because I Google it. I will never use a Microsoft phone because I enjoy my IPhone. So why would Microsoft try to do something that is not within their core interests? I think Jenkins has hit the nail on the head. However, Microsoft still needs to pay attention to the theory associated with product lifecycle.

If there is anything I have learned in my forty years plus of being in business is that there is always a new idea. The new idea creatively destroys the previous idea. Thus, a defensive strategy only works so long. Microsoft is antiquated and needs to create need products, not just revise old products. If not someone will come along and meet the needs of an evolving market.

So congrats Mr.’s Nadella and Thompson. But, how you run Microsoft will determine if it stays around. It may be time to rethink the defensive strategy, and look into growth opportunities in new markets, etc. I think your investors and the market will appreciate it.

And that is my thought for the day!

Character!

Yesterday at Church my Pastor was discussing the heart. Jeremiah 17:9 states, “The heart is deceitful above all things and beyond cure. Who can understand it?” The heart in this case involves our decision making center. This center defines who we are as people. In other words it is about our character. Matthew 5: 13-16 states, “You are the salt of the earth. But if the salt loses its saltiness, how can it be made salty again? It is no longer good for anything, except to be thrown out and trampled underfoot.  You are the light of the world. A town built on a hill cannot be hidden. Neither do people light a lamp and put it under a bowl. Instead they put it on a stand and it gives light to everyone in the house. In the same way, let your light shine before others, that they may see your good deeds and glorify your Father in heaven.”

There are so many worlds that come to mind when I think about character. Honesty, kindness, gentleness, goodness, follow-through, integrity, and fairness, yet there are so many more words that could describe men and women of good character. However, even those who we see as good have a deceitful heart.

Just because we are incapable of always being good does not mean we should not try. Perfection is out of our reach, but attempting to have character is not. I just watched two Super Bowl winners declare glory to God first. This was no grandstanding activity that will change tomorrow. These were two men that made a matter of fact statement and moved on. It seems these two guys have found how to be good at what they do, but glorify God in the process.

I remember watching Miley Cyrus on Hannah Montana. She was outspoken about her faith, but my wife and I would say, “lets see what she does when she gets older.” Now we know she enjoys twirking and sticking her tongue out. I hope that what she learned as a child returns.

The lesson that I have taken from the Sunday message, and the example I saw in the two Super Bowl players, was the importance of living within your walk with the Lord. I cannot think of anything that would be more exciting than to win the biggest game in the United States. 108 million people watch this game, but these two men gave glory to God first.

Oh, and don’t forget how they played the game was even more important than what they said. Each of them played with class and dignity. Each of them performed in a manner that was consistent with who they were in Christ. No lies, no double standards, just living consistently with their call.

We may not be in the Super Bowl, but all of us are in a daily competition. We are striving against those elements that want to hold us back or destroy us. So how we fight the good fight is critical. I hope we learn from the example of these two men.

You know, I have not been a perfect man. I have a daughter who won’t talk to me. Some grand children I am not allowed to see. But I am trying to bring my family back together. My wife and I will be married twenty-five years in May. Ours is not a perfect marriage, but we are carving out a relationship that works for us. We aren’t perfect, but we are attempting to be consistent with what God has called us to do. I think that is what God expects from us. “He has shown you oh man, what is good, and what the Lord requires of you. To act justly, to love mercy, and to walk humbly with your God.”

So congrats to the Seahawks for dominating another very good team. And congrats to both teams for playing a good game with no fights. And may we learn to act justly, love mercy, and walk humbly with our God.

And that is my thought for the day!