Herding Cats – 4 Leadership Lessons from Top Publicist Jeff Ballard

Herding Cats – 4 Leadership Lessons from Top Publicist Jeff Ballard

Charlie Sheen, Chandler Massey, Johnny Depp, Paula Abdul, Zac Efron, Rob Lowe, John Davidson, Dick van Patten… This is just a short, partial list of the people Jeff Ballard works with, and has worked with in some cases for nearly 30 years, as one of the top publicists in the entertainment industry.

Often CEOs will say that leading people is like herding cats.  And too often, many leaders are unable to help some of their most talented managers reach full potential.  Highly capable people can have insights that are hard to understand, and can be impatient to take action.  In far too many cases organizations lose highly talented people because the leaders are unable to maintain long-term relationships and coach/assist those people productively.  Or, even worse, the highly talented people are misunderstood and the organization pushes them out rather than figuring out how to get the most out of them.

Think of Steve Jobs.  Fired by Apple, he later went on to great success at Pixar.  And returned to save Apple from bankruptcy.  Yet, few leaders – or organizations – would even have considered hiring him.  Because they don’t know how to get the most of someone so highly talented.

As a publicist for some of the top actors in Los Angeles, Jeff Ballard has worked with, assisted the growth of, and become long-term friends with some very talented people.  And layered on top of this is the impact of celebrity, and chronic media frenzies that can position and reposition these people in the public eye – as well as the eye of producers.  What most CEOs would consider a once-in-a-decade set of issues for helping a developing high-performer move their career forward is literally daily activity for Jeff Ballard.

And through all of this he maintains some of the longest known relationships in what is widely considered one of the most fickle industries in America.  In the fast changing entertainment industry people are often dropped like chattel as trends shift.   Yet, Jeff Ballard’s clients stick with him for decades, and wax eloquently about how he has helped them to grow as people, and move their careers forward.  While you’ve probably never heard of him (unless you are in the entertainment business,) Jeff Ballard has developed some of the sharpest leadership skills anywhere.

Charlie Sheen, Conner Greene, Jeff Ballard on set of "Anger Management"

Charlie Sheen, Conner Greene, Jeff Ballard on set of “Anger Management”

How does he do it?  How does he help highly talented people to achieve even greater results year after year?

1 – Be helpful.  Seriously.  Don’t just hang around.  Don’t wait to be asked to do something.  Be helpful.  Every interaction is an opportunity to help someone.  Think about how you are creating opportunities to help people.  Think about their capabilities and their goals and always be helpful.

Too often leaders take their relationships for granted.  Or worse, they see people in their network as a route for the leader to accomplish his goals.  They see others as someone who can help them.  One of Jeff’s great skills as a leader is seeing his role as helping others.  The more he helps others, the better things work out.

When Chandler Massey lost his phone, and he needed to do some interviews, Jeff ran to a store, bought a phone and a plan, and got the technology in Chandler’s hands in time for the interviews.  This seemingly small thing was critical to the success of that event.  But it demonstrated that by focusing on how to help, Jeff was willing to do what was necessary – whether big or small.  And that builds long-lasting relationships.  Chandler thanked Jeff by giving him his Emmy award.

Part and parcel with this, make sure you are only building relationships with clients, and your ecosystem, where you can add value.  Too often leaders will take any business.  Explore any relationship. But if you over-reach and take on a client, acquisition, merger, new product, new project, etc. where you are unable to really add value – unable to really help accomplish the goal – bad things will happen.  So think ahead, and understand how you can be helpful.

2 – Add value fast.  Every chance you can.  Fix things – even things that may seem unimportant to you our outside your wheelhouse.

Dick van Patten once asked Jeff Ballard what to do about a broken sauna.  Although far from his job, Jeff quickly took a look and then actually fixed the sauna.  When producers are looking for actor A to be on a show, like Entertainment Tonight, for a variety of reasons this may not be a good fit.  But rather than saying “no” – or worse, just letting requests go unanswered – Jeff will look quickly to understand the producer or media person’s needs and come up with a value added answer.  Jeff constantly thinks about recommendations where all parts of his ecosystem could possibly help meet their needs.

When you constantly think about how to add value – and immediately – then people respect you.  And they learn to trust you.  When you are helping people reach their goals they listen to what you say.  They are open to discuss alternative solutions.  Far too often too many leaders think of themselves as “great deciders.”  Or as the person responsible for making a “yes” or “no” answer and then moving on – leaving those around them to solve problems for themselves.  But great leaders listen, and think about how to add value.  Quickly.

3 – Separate talent from the person.  Everyone is unique.  Not everything a person does is on the direct path to greater success.  But that doesn’t mean they aren’t talented – and able to continue to perform at superior levels despite something that didn’t go so well.  Don’t be so foolish as to let the talent slip away because you are having issues with the person.

For actors, or sports celebrities, this can be easy to see.  The media reports on something they say, or do, and it is easy to become negative about that individual.  But, the next great performance (a movie, TV show, concert, CD, home run, winning goal, etc.) demonstrates that the person has talent.  Leaders have the job of getting the most out of the talent – and not trying to manage the person – or worse, losing the talent because of “personal issues.”

Far too often organizations end up losing highly talented people because of the “black mark” syndrome.  An up-and-comer does well for several years, but then something misses.  For example, passionate effort to launch a new product or business creates conflict in the organization, and he shouts or otherwise acts out.  HR is called in, and the manager is rebuked and forewarned — but worse he is now “marked” as problematic.  All that talent is forgotten, undeveloped – or it simply goes to a competitor.

People are people.  Some are easier to work with than others.  But what’s important is whether they have talent, and whether as a leader you can bring out the most of that talent.  Leaders don’t have the job of “changing people” (which far too often they really try to do,) but rather of helping people around them cultivate, develop and demonstrate their talents.  If we focus on the talent we achieve far superior results while helping the person achieve their personal goals.

4 – Stay relevant, and keep those around you relevant.  The world changes quickly.  It is easy for leaders to expect those in their network – and especially their inner circle – to become complacent.  To rest on their laurels of past success.  Which all too quickly leads to problems.  So it is critical that leaders constantly look around for what is emerging, and keep reminding their network of what is necessary to remain relevant.  A pat on the back lasts one second, but helping someone stay relevant sustains their success far into the future.

Leaders can become so fixated on “performance” that they dehumanize those they coach.  If, instead, they focus on providing guiding lights to people they can encourage them to adapt to change.  They can help those they work with to stay current and growing.  Too much time is spent reacting to what just happened, rather than figuring out how to achieve the long-term goal.

Jeff works constantly with his clients to understand what the market is seeking now, and will be seeking in the near future.  Rather than reacting to events Jeff and his talented clients spends considerable time discussing what outcomes are desired, and whether or not a planned activity will lead to that outcome.  By focusing on future relevancy Jeff leads clients to become proactive about achieving their goals. He helps them to make decisions today which are directed toward a future goal, rather than reacting to an historical event.

Over and again famous clients and top producers compliment Jeff Ballard for his honesty, integrity and loyalty.  But these are not simply attributes.  Many of us have these attributes.  Rather, these are outcomes from Jeff Ballard’s long history of constantly helping people in his network, adding value quickly toward solving their problems, constantly focusing on bringing out the talent rather than chastising (or managing) the individual, and keeping everyone relevant and proactive rather than falling into patterns of reacting to something that already happened.

Jeff Ballard’s publicity firm is far from the largest in Los Angeles or New York.  Yet, he helps clients who are famous, as well as new talent such as Conner Greene who you probably do not know.  And no competitor can offer the long-term track record of performance Jeff has provided.  Regularly clients who move to large publicity firms return to Jeff, seeking his counsel and advice in recognition of his leadership – generally absent from his competitors.  Repeat business that all leaders seek, but don’t often achieve.

The next time you find yourself struggling to lead the people in your organization think of Jeff Ballard.  His insights about leadership, rooted in the complex and difficult world of media publicity for celebrities, could help you be a far better leader in your organization.

 

Why Yahoo Investors Should Worry about Marissa Mayer

Marissa Mayer created a firestorm this week by issuing an email requiring all employees who work from home to begin daily commuting to Yahoo offices.  Some folks are saying this is going to be a blow to long-term employees, hamper productivity and will harm the company. Others are saying this will improve communications and cooperation, thin out unproductive employees and help Yahoo.

While there are arguments to be made on both sides, the issue is far simpler than many people make it out to be – and the implications for shareholders are downright scary.

Yahoo has been a strugging company for several years.  And the reason has nothing to do with its work from home policy.  Yahoo has lacked an effective strategy for a decade – and changing its work from home policy does nothing to fix that problem.

In the late 1990s almost every computer browser had Yahoo as its home page.  But Yahoo long ago lost its leadership position in content aggregation, search and ad placement.    Now, Yahoo is irrelevant.  It has no technology advantage, no product advantage and no market advantage.  It is so weak in all markets that its only value has been as a second competitor that keeps the market leader from being attacked as a monopolist! 

A series of CEOs have been unable to develop a new strategy for Yahoo to make it more like Amazon or Apple and less like – well, Yahoo.  With much fanfare Ms. Mayer was brought into the flailing company from Google, which is a market leader, to turn around Yahoo.  Only she's been on the job 7 months, and there still is no apparent strategy to return Yahoo to greatness. 

Instead, Ms. Mayer has delivered to investors a series of tactical decisions, such as changing the home page layout and now the work from home policy.  If tactical decisions alone could fix Yahoo Carol Bartz would have been a hero – instead of being pushed out by the Board in disgrace. 

Many leading pundits are enthused with CEO Mayer's decision to force all employees into offices.  They are saying she is "making the tough decisions" to "cut the corporate cost structure" and "push people to be more productive." Underlying this lies thinking that the employees are lazy and to blame for Yahoo's failure. 

Balderdash.  It's not employees' fault Yahoo, and Ms. Mayer, lack an effective strategy to earn a high return on their efforts. 

It isn't hard for a new CEO to change policies that make it harder for people to do their jobs – by cutting hours out of their day via commuting.  Or lowering productivity as they are forced into endless meetings that "enhance communication and cooperation." Or forcing them out of the company entirely with arcane work rules in a misguided effort to lower operating costs or overhead.  Any strategy-free CEO can do those sorts of things. 

Just look at how effective this approach was for

  • "Chainsaw" Al Dunlap at Scott Paper
  • "Fast Eddie" Lampert at Sears
  • Carol Bartz at Yahoo
  • Meg Whitman at HP
  • Brian Dunn at Best Buy
  • Gregory Rayburn at Hostess
  • Antonio Perez at Kodak

The the fact that some Yahoo employees work from home has nothing to do with the lack of strategy, innovation and growth at Yahoo.  That failure is due to leadership.  Bringing these employees into offices will only hurt morale, increase real estate costs and push out several valuable workers who have been diligently keeping afloat a severely damaged Yahoo ship. These employees, whether in an office or working at home, will not create a new strategy for Yahoo.  And bringing them into offices will not improve the strategy development or innovation processes. 

Regardless of anyone's personal opinions about working from home, it has been the trend for over a decade.  Work has changed dramatically the last 30 years, and increasingly productivity relies on having time, alone, to think and produce charts, graphs, documents, lines of code, letters, etc.  Technologies, from PCs to mobile devices and the software used on them (including communications applications like WebEx, Skype and other conferencing tools) make it possible for people to be as productive remotely as in person. Usually more productive removed from interruptions.

Taking advantage of this trend helps any company to hire better, and be more productive.  Going against this trend is simply foolish – regardless the intellectual arguments made to support such a decision. Apple fought the trend to PCs and almost failed.  When it wholesale adopted the trend to mobile, seriously reducing its commitment to PC markets, Apple flourished.  It is ALWAYS easier to succeed when you work with, and augment trends.  Fighting trends ALWAYS fails.

Yahoo investors have plenty to be worried about.  Yahoo doesn't need a "tough" CEO.  Yahoo needs a CEO with the insight to create, and implement, a new strategy.  And a series of tactical actions do not sum to a new strategy.  As importantly, the new strategy – and its implementation – needs to augment trends.  Not go against trends while demonstrating the clout of a new CEO. 

If you've been waiting to figure out if Ms. Mayer is the CEO that can make Yahoo a great company again, the answer is becoming clear.  She increasingly appears very unlikely to have what it takes.

How “Best Practices” kill productivity, innovation and growth – Start using Facebook, Twitter, Linked-in!


How much access do your employees have to Facebook, Twitter, Linked-in, GroupOn, FourSquare, and texting in their daily work, on their daily technology devices?  Do you encourage use, or do you in fact block access, in the search for greater security, and on the belief that you achieve higher productivity by killing access to these “work cycle stealers?”  Do you implement policies keeping employees from using their own technology tools (smartphone or tablet) on the job?

In 1984 the PC revolution was still quite young.  Pizza Hut was then a division of PepsiCo (now part of Yum Brands,) and the company was fully committed to a set of mainframe applications from IBM.  Mainframe applications, accessed via a “green screen” terminal were used for all document creation, financial analysis, and even all printing.  The CIO was very proud of his IBM mainframe data center, and his tight control over the application base and users. 

In what seemed like an almost overnight series of events, headquarters employees started bringing small PC’s to work in order to build spreadsheets, create documents and print miscellaneous memos.  They found the new technology so much easier to use, and purchase cost so cheap, that their productivity soared and they were able to please their bosses while leaving work on time.  A good trade-off.

The CIO went ballistic.  “These PCs are popping up like popcorn around here – and we have to kill this trend before it gains any additional momentum!” he decried in an executive meeting.  PCs were “toys” that lacked the “robustness” of his mainframe applications.  If users wanted higher productivity, then they simply needed to spend more time in training. 

Additionally, if he didn’t control access to computing cycles, and activities like printing, employees would go berserk using unnecessary resources on projects they probably should never undertake.  He was servicing the corporation by keeping people on a narrow tool set – and it gave the company control over what employees could do as well as how they could do it making sure nothing frivolous was happening.  For all these reasons, plus the fact that he could assure security on his mainframe, he felt it important that the CEO and executive team commit with him that PCs would not be allowed in Pizza Hut.

Retrospectively, he looks foolish (and his efforts were unsuccessful.)  PCs unleashed a wave of personal productivity that benefitted all early adopters.  They not only let employees do their work faster, but it allowed employees to develop innovative solutions to problems – often dramatically lowering overhead costs for many management tasks.  PCs, of course, swept through the workplace and in only a decade most mainframes, and their high cost, air conditioned data centers, were gone. 

Yet, to this day companies continue to use “best practices” as a tool to stop technology, and productivity improvement, adoption.  Managers will say:

  1. We need to control employee access to information
  2. We need to keep employees focused on their job, without distractions
  3. We must control how employees do their jobs so we minimize errors and improve quality
  4. We need to control employee access externally for security reasons
  5. We need consistency in our tool set and how it is used
  6. We made a big investment in how we do things, and we need to leverage that [sunk cost] by forcing greater use
  7. We need to remember that management are the experts, and it is our job to tell people how to do their jobs.  We don’t want the patients running the hospital!

It all sounds quite logical, and good management practice.  Yet, it is exactly the road to productivity reduction, innovation assassination and limited growth!  Only by allowing employees to apply their skills and best thinking can any company hope to continuously improve its productivity and competitiveness.

But, moving from history and theoretical to today’s behavior, what is happening in your company?  Do you have a clunky, hard to use, expensive ERP, CRM, accounting, HR, production, billing, vendor management, procurement or other system (or factory, distribution center or headquarters site) that you still expect people to use?  Do you demand people use it – largely for some selection of the 7 items above? Do you require they carry a company PC or Blackberry to access company systems, even as the employee carries their own Android smartphone or iPad with them 24×7?

Recently, technology provider IFS Corporation did a survey on ERP users (Does ERP Mean Excel Runs Production?) Their surprising results showed that new employees (especially under age 40) were very unlikely to take a job with a company if they had to use a complex (usually vendor supplied) interface to a legacy application.  In fact, 75% of today’s users are actively seeking – and using – cloud based apps or home grown spreadsheets to manage the business rather than the expensive applications the corporation supplied!  Additionally, between 1/3 and 2/3 of employees (depending upon age) were actively seeking to quit and take another job simply because they found the technology of their company hard to use! (CIO Magazine: Employees Refusing to Use Clunky Enterprise Software.)

Unlike managers invested in historical decisions, and legacy assets, employees understand that without productivity their long-term employment is at risk.  They recognize that constantly shifting markets, with global competitors, requires the flexibility to apply novel thinking and test new solutions constantly.  To succeed, the workforce – all the workforce – needs to be informed, interacting with potential new solutions, thinking and applying their best thoughts to creating new solutions that advance the company’s competitiveness.

That’s why Fast Company recently published something all younger managers know, yet shocks older ones: “Half of Young Professionals Value Facebook Access, Smartphone Options Over Salary.” It surprised a lot of people to learn that employees would actually select access over more pay!

While most older leaders and managers think this is likely because employees want to screw off on the job, and ignore company policies, the article cites a Cisco Connected World Technology Report which describs how these employees value productivity, and realize that in today’s world you can’t really be productive, innovative and generate growth if you don’t have access – and the ability to use – modern tools. 

Today’s young workers aren’t any less diligent about work than the previous generation, they are simply better informed and more technology savvy!  They think even more long-term about the company’s survivability, as well as their ability to make a difference in the company’s success.

In other words, in 2011 tools like Linked-in, Facebook, Twitter et. al. accessed via a tablet or smartphone are the equivalent of the PC 30 years ago.  They give rapid access to what customers, competitors and others in the world are doing.  They allow employees to quickly answer questions about current problems, and find new solutions.  As well as find people who have tried various options, and learn from those experiences.  And they allow the employee to connect with a company problem fast – whether at work or away – and start to solve it!  They can access those within their company, vendors, customers – anyone – rapidly in order to solve problems as quickly as possible.

At a recent conference I asked IT leaders for several major airlines if they allowed employees to access these tools.  Uniformly, the answer was no.  That may be the reason we all struggle with the behavior of airlines, I bemoaned.  It might explain why the vast majority of customers were highly sympathetic with the flight attendant that jettisoned a plane through the emergency exit with a beer in hand!   At the very least, it is a symptom of the internal focus that has kept the major airlines from pleasing 85% of their customers, while struggling to be profitable.  If nobody has external access, how can anybody make anything better?

The best practices of 1975 don’t cut it in 2012.  The world has changed.  It is more important now than ever that employees have the access to modern tools, and the freedom to use them.  Good management today is not about telling people how to do their job, but rather letting them figure out how to do the job best.  Implement that practice and productivity and innovation will show themselves, and you’re highly likely to find more growth!

Where did all the jobs go? 9 recommendations for Mr. Obama!


Friday we learned, as the New York Daily News headlined, “August 2011 Jobs Report: NO Net Jobs Created.”  U.S. unemployment, and underemployment, remain stubbornly stuck at very high levels.  This situation is unlikely to improve, as reported at 24×7 Wall Street in “August Lay-off Plans Up 47%” with the latest Challenger Gray report telling us 51,144 people are soon getting the axe.  No wonder we saw a dramatic decline of nearly 15 points, to 44.5, in the Conference Board’s Consumer Confidence Index – near record-low levels. 

This has all the Presidential candidates talking about jobs, and President Obama signed up to deliver a jobs speech to Congress. 

The problem actually goes beyond just jobs.  Buried within consumer concerns lies the fact that for most people, their incomes are going nowhere.  Adjusted for inflation, almost everyone is making less now than they did when the millenium turned.  Generally speaking, about 15% less than 11 years ago!  Most family incomes are about where they were in 1998.  For the wealthiest, income since the mid-1960s has grown only about 1.5%/year on average. For everyone else the improvement has only been about .5%/year. And universally almost all of that increase occurred between 1992 and 2000 (for anyone who wonders about Bill Clinton’s resurgent popularity, just look at incomes during his Presidency compared to every other administration on this chart!)

Real income growth 1967-2010 from BI
Source: “U.S. Household Incomes: A 42 Year Perspective” Doug Short, BusinessInsider.com

But will anything the President, or the candidates, recommend make a difference?

So far, the politicos keep fighting the last war, and seem surprised that nothing is improving.  The recommendations for putting people back to work in factories, such as autos and heavy equipment, or  building roads simply defies the reality of work today.  America has not been a manufacturing-dominated jobs country for over 60 years!  All job creation has been in services!

Service v Mfg jobs 1939 to 2010 from SAI
Source:”Charting the Incredible Shift From Manufacturing to Services” Doug Short, BusinessInsider.com

For this entire period, productivity has been climbing.  Just 50 years ago most people spent 1/3 to 1/2 their income on food.  No longer.  Today, few spend more than 5 to 10%, and everyone can enjoy an automobile, telephone, television and computer – regardless of their income!  We have all the stuff anyone could want, and in many cases a lot more of some stuff than we need – or want! 

The old notion of “what’s good for G.M. (General Motors) is good for America” is simply no longer true!  As we recently witnessed, a multi-billion dollar bail-out of the largest American auto maker may have saved some unemployment – but it did not create an economic turn-around, or create a slew of jobs! 

Today’s jobs are all in information – the accumulation, assimilation, analysis and use of information.  Few “managers” actually manage people any more – most manage a data set, or a computer program, or some sort of analysis.  The vast majority of “managers” have no direct reports at all!  The jobs – and incomes – are all in information.  Job growth is in places like Facebook, Google, Linked-in, Groupon, Amazon and Apple (the latter of which outsources all its manufacturing.)

No President or economist can manufacture jobs today.  As we’ve seen, interest rates are at unprecedent low levels – yet nobody wants to take a loan to hire a new employee!  In fact, business productivity is at record high levels as business keeps accomplishing more and more with fewer and fewer workers!

Profits per worker 2001-2011
Source: “Corporate Efficiency is Getting AbsurdBusinessInsider.com

Public companies aren’t going broke, by and large.  Most have cash balances at record levels.   Only they keep using the money to buy back their own stock!  Every month sees a wave of new stock buy back commitments, as 24×7 Wall Street reported “August’s New Massive Stock Buybacks… Over $30 Billion!”  Business leaders find it less risky to buy back their own stock (supporting their own bonuses, by the way) than invest in any sort of growth program – something that might create jobs.

So what’s the President to do?

We need to radically jack up the investment in innovation! Think about that last period of very low unemployment and growing incomes – in the 1990s.  We had the explosion in technology as people began using PCs, the internet, mobile phones, etc.  New technology introduced new business ideas (mostly services) and created a rash of growth!  And that created new jobs – and higher incomes.  Innovation is the jobs engine – not trying to save another tired manufacturing company, or pave another highway or extend another bridge!  Today those projects simply do not employ very many people, and the “trickle down” affect of a highway project creating more jobs has disappeared!

Bloomberg/BusinessWeek reported in “Failing at Innovation? Bank On It

  • Government spending on higher education has been declining since the 1970s reducing the number of graduate students and innovation projects
  • Federal share of R&D has been less than 1% since 1992 – all while corporate R&D spending has declined dramatically!  The days of spending “to put a man on the moon” has disappeared, as we fairly quietly mothballed the space program and commence to dismantle NASA
  • The number of entrepreneurs is actually declining!  There were fewer startups with 1 or more employees in 2007 (before the financial collapse and ensuing economic mayhem) than in 1990
  • New companies are not employing people.  In the 1990s the average startup employed 7.5 people, but now the number is 4.9
  • Meanwhile “infrastructure” spending today is the same as it was in 1968! 

We’ve done a great job of cutting taxes, but we’ve simultaneoously gutted our investment in R&D, innovation and doing anything new!  If you wonder where the jobs went it wasn’t oversees, it was into higher corporate cash levels, more stock buybacks, increased bank reserves and dramatically higher executive compensation! 

We don’t need more tax cuts – because nobody is investing in any new projects!  We don’t need more unemployment insurance, because that – at best – delays the day of reconning without a solution.

Here’s what we do need today:

  1. Implement a tax on corporate stock buybacks.  At least as great as the tax on corporate dividends.  Buybacks simply drain the economy of investment funds, with no benefit.  At least dividends give returns back to shareholders – who might invest in a new company!  And if buybacks are taxed, executives might start investing in projects again!
  2. Quit giving such large depreciation allowances for physical assets.  We don’t need more buildings – we’re overbuilt as we are right now!  Again, it’s not “things” that make up our economy, it’s services!
  3. Re-introduce R&D credits!  Give businesses a $3 tax break for every dollar spent in R&D and new product development!  Prior to President Reagan this was considered normal.  It’s not a new idea, just one that’s been forgotten.  If we can give credits for oil and gas drilling, which creates almost no jobs, why not innovation?
  4. Cut payroll taxes on the self-employed and small business.  Today self-employed pay 2x the payroll taxes, so it’s a big dis-incentive to entrepreneurship.  Give start-ups a break by lowering employment taxes on small employers – say less than 50 employees.
  5. Allow investors in start-ups to write off up to 2x their losses.  It takes away a lot of the risk if you can get most of your money back from a tax break should your investment fail.  And for all those corporations that abhore taxes this would incent them to invest in small enterprises that have new ideas they’d like to see developed.
  6. Remember the Small Business Administration (SBA)?  Re-activate it by giving it $100B (maybe $200B) to guarantee bank loans of small businesses.  Bank lending has ground to a halt as banks eliminate risk – so let’s get them back into their primary business again.  In WWII the government guaranteed every loan for the construction of the Liberty Ships – and behold business built 2,751 of the things in 4 years!  
  7. Increase funding for higher education.  Increase the grants for science, engineering and new product research at America’s universities.  Increase grants for students in science and engineering, and allow students to deduct out-of-pocket educational expenses from their taxes.  Allow corporations to deduct all the expense of employee education – uncapped!  Allow corporations to deduct the university grants they make!
  8. Invest in today’s digital infrastructure.  Once we paid to send men to the moon – and a flood of innovation (from microwave ovens to powdered drinks and frozen food) followed.  Today we should invest in a nationwide WiFi network that’s everywhere from rural forests to city buildings – and make it all FREE.  Digital networks are the highways we need today – not concrete ribbons.  Create tax deductions for people to buy smartphones, tablets and other products that drive innovation, and make it easy for innovators to network for solutions to emerging needs.
  9. Streamline the process for small companies to test and sell new bio-engineered products.  The existing complicated process is a legacy of big companies and traditional pharmaceutical research.  Make it easy for entrepreneurs to test and launch the next wave of medical technology based on the new bio-sciences.  Offer federal-backed safety insurance to protect small businesses that show efficacy in new solutions.

These are just 9 ideas.  I’m sure readers can think up 90 more (in fact, I challenge you to offer them as comments to this blog.) If we invest in innovation, we can create a lot of jobs.  But we need to start NOW!

Hyperdigitization: A Shift Toward Virtual


Today’s Guest Blog is provided by Mike Meikle.  He offers some great insight to the declining value of manufacturing as producitivity continues to skyrocket, pushing all of us toward understanding and competing in markets where greater value lies in digital products rather than physical.

Summary

  • Hyperdigitization is the economic shift toward “virtual” goods and services
  • Manufacturing jobs have dropped 31 percent but output is at a near record $1.7 trillion.
  • Economic output of Hyperdigitization is $2.9 trillion.
  • Google, Facebook and GroupOn all have large revenue streams/valuations yet no physical product.
  • Industrial Age economic model of static business models is rapidly fading.
  • Organizations must release their innovative capabilities to survive and thrive.

Recently, I was engaged by ExecSense to give a Risk Management & Outsourcing Trends for 2011 webinar targeted for Risk Management executives.  Since I only had an hour to cover a vast amount material, I could only briefly touch on some interesting topics. One of these was Hyperdigitization, a jargon-laden term that means economic output is moving toward “virtual” goods and services.

So how does hyperdigitization tie into outsourcing trends?  As companies continue shift their business processes to outside service providers, firms will have to develop ways to protect their intellectual property and virtual output.  Since intellectual property is data, risk managers will have to develop and monitor Key Performance Indicators (KPI) and Key Risk Indicators (KRI) to ensure their firm does not sacrifice their long-term competitive advantage for short-term cost savings.  This penny-wise, pound-foolish strategy has been discussed previously by Mr. Hartung.

But before we dig further into explaining hyperdigitization, let us review an example of the current fading Industrial economic model.  One of the chief laments heard throughout the Great Recession is that America doesn’t “make” anything anymore.  Manufacturing jobs have left primarily to cheaper labor, less regulation, lower tax countries.  Without construction jobs to fall back on, this has left a broad swath of the population unemployed.  Unfortunately this high unemployment fallout is a result of our economic model shifting away from Industrial Age practices.

While the jobs may have left (down 31%) productivity boosts have pushed the U.S. manufacturing output to near record highs of 1.7 trillion dollars.  We make more goods with less people due to technological advances.  Contrary to the economic doomsayers this is a positive trend, one that has happened before (agrarian-based economy) and will undoubtedly happen again.

What does this hyperdigitization of economic output mean in real terms?  Well, based on a Gartner report, about 20 percent of U.S. economic output in 2009 or 2.9 trillion dollars. That’s nearly double the U.S. manufacturing output.  We are awash in virtual products and services.  Think about Google alone.  The company is worth $163 billion at last estimate and does not have one physical product.

Other examples are Facebook and GroupOn.  Both are projected to be worth $65 billion and $25 billion respectively.  Yet again, neither has a physical product.   These three companies have based their business models on information arbitrage; the process of mining available data for new opportunities.

So where does all this intellectual property (data) that generates billions in profit come from?  People, who are supported by a corporate culture that values innovation and measured risk taking.

As the global economy gets exponentially more competitive, organizations need to be fast, flexible and innovative; a near polar opposite of the Industrial Age business model. A large percentage of companies are still mired in outdated business practices that protect the status-quo (Extend & Defend), squash risk taking and stifle innovation.  This has especially become prevalent in the era of downsizing culminating in the practices of the Great Recession.

In order to compete in an economy driven by hyperdigitization, the human capital of an organization has to be made a priority.  Developed nation’s economies are shifting away from static business models that produce generic widgets and services.  To thrive in the hyper competitive, constantly shifting global economy, organizations will have to create and promote a culture that emphasizes and values the Information Age success triumvirate of risk taking, innovation and rapid-execution.

Thanks Mike!  Mike Meikle shares his insights at “Musings of a Corporate Consigliere(http://mikemeikle.wordpress.com/). I hope you read more of his thoughts on innovation and corporate change at his blog site.  I thank Mike for contributing this blog for readers of The Phoenix Principle today, and hope you’ve enjoyed his contribution to the discussion about innovation, strategy and market shifts.

If you would like to contribute a guest blog please send me an email.  I’d be pleased to pass along additional viewpoints on wide ranging topics.