by Adam Hartung | Sep 5, 2014 | Employment, Investing, Politics
The Bureau of Labor Statistics (BLS) just issued America’s latest jobs report covering August. And it’s a disappointment. The economy created an additional 142,000 jobs last month. After 6 consecutive months over 200,000, most pundits expected the string to continue, including ADP which just yesterday said 204,000 jobs were created in August. So, despite the lower than expected August jobs number, America will create about 2.5 million new jobs in 2014.
One month variation does not change a trend
Even thought the plus-200k monthly string was broken (unless revised upward at a future date,) unemployment did continue to decline and is now reported at only 6.1%. Jobless claims were just over 300k; lowest since 2007. And that is great news.
Back in May, 2013 (15 months ago) the Dow was out of its recession doldrums and hitting new highs. I asked readers if Obama could, economically, be the best modern President? Through discussion of that question, the #1 issue raised by readers was whether the stock market was a good economic barometer for judging “best.” Many complained that the measure they were watching was jobs – and that too many people were still looking for work.
To put this week’s jobs report in economic perspective I reached out to Bob Deitrick, CEO of Polaris Financial Partners and author of “Bulls, Bears and the Ballot Box” (which I profiled in October, 2012 just before the election) for some explanation. Since then Polaris’ investor newsletters have consistently been the best predictor of economic performance. Better than all the major investment houses.
This is the best private sector jobs creation performance in American history
Bob Deitrick – “President Reagan has long been considered the best modern economic President. So we compared his performance dealing with the oil-induced recession of the 1980s with that of President Obama and his performance during this ‘Great Recession.’
As this unemployment chart shows, President Obama’s job creation kept unemployment from peaking at as high a level as President Reagan, and promoted people into the workforce faster than President Reagan.
President Obama has achieved a 6.1% unemployment rate in his 6th year, fully one year faster than President Reagan did. At this point in his presidency, President Reagan was still struggling with 7.1% unemployment, and he did not reach into the mid-low 6% range for another full year. So, despite today’s number, the Obama administration has still done considerably better at job creating and reducing unemployment than did the Reagan administration.
We forecast unemployment will fall to around 5.4% by summer, 2015. A rate President Reagan was unable to achieve during his two terms.”
What about the Labor Participation Rate?
Much has been made about the poor results of the labor participation rate, which has shown more stubborn recalcitrance as this rate remains higher even as jobs have grown.
Source: Polaris Financial Partners Using BLS Data
Bob Deitrick: “The labor participation rate adds in jobless part time workers and those in marginal work situations with those seeking full time work. This is not a “hidden” unemployment. It is a measure tracked since 1900 and called ‘U6.’ today by the BLS.
As this chart shows, the difference between reported unemployment and all unemployment – including those on the fringe of the workforce – has remained pretty constant since 1994.
Source: BLS Databases, Tables and Calculators by Subject – Labor Participation
Labor participation is affected much less by short-term job creation, and much more by long-term demographic trends. As this chart from the BLS shows, as the Baby Boomers entered the workforce and societal acceptance of women working changed labor participation grew.
Now that ‘Boomers’ are retiring we are seeing the percentage of those seeking employment decline. This has nothing to do with job availability, and everything to do with a highly predictable aging demographic.
What’s now clear is that the Obama administration policies have outperformed the Reagan administration policies for job creation and unemployment reduction. Even though Reagan had the benefit of a growing Boomer class to ignite economic growth, while Obama has been forced to deal with a retiring workforce developing special needs. During the 8 years preceding Obama there was a net reduction in jobs in America. We now are rapidly moving toward higher, sustainable jobs growth.”
Economic growth, including manufacturing, is driving jobs
When President Obama took office America was gripped in an offshoring boom, started years earlier, pushing jobs to the developed world. Manufacturing was declining, and plants were closing across the nation.
This week the Institute for Supply Management (ISM) released its manufacturing report, and it surprised nearly everyone. The latest Purchasing Managers Index (PMI) scored 59, 2 points higher than July and about that much higher than prognosticators expected. This represents 63 straight months of economic expansion, and 25 consecutive months of manufacturing expansion.
New orders were up 3.3 points to 66.7, with 15 consecutive months of improvement and reaching the highest level since April, 2004 – 5 years prior to Obama becoming President. Not surprisingly, this economic growth provided for 14 consecutive months of improvement in the employment index. Meaning that the “grass roots” economy made its turn for the better just as the DJIA was reaching those highs back in 2013 – demonstrating that index is still the leading indicator for jobs that it has famously always been.
As the last 15 months have proven, jobs and economy are improving, and investors are benefiting
The stock market has converted the long-term growth in jobs and GDP into additional gains for investors. Recently the S&P has crested 2,000 – reaching new all time highs. Gains made by investors earlier in the Obama administration have further grown, helping businesses raise capital and improving the nest eggs of almost all Americans. And laying the foundation for recent, and prolonged job growth.
Source: Polaris Financial Partners
Bob Deitrick: While most Americans think they are not involved with the stock market, truthfully they are. Via their 401K, pension plan and employer savings accounts 2/3 of Americans have a clear vested interest in stock performance.
As this chart shows, over the first 67 months of their presidencies there is a clear “winner” from an investor’s viewpoint. A dollar invested when Reagan assumed the presidency would have yielded a staggering 190% return. Such returns were unheard of prior to his leadership.
However, it is undeniable that President Obama has surpassed the previous president. Investors have gained a remarkable 220% gain over the last 5.5 years! This level of investor growth is unprecedented by any administration, and has proven quite beneficial for everyone.
In 2009, with pension funds underfunded and most private retirement accounts savaged by the financial meltdown and Wall Street losses, Boomers and Seniors were resigned to never retiring. The nest egg appeared gone, leaving the ‘chickens’ to keep working. But now that the coffers have been reloaded increasingly people age 55 – 70 are happily discovering they can quit their old jobs and spend time with family, relax, enjoy hobbies or start new at-home businesses from their laptops or tablets. It is due to a skyrocketing stock market that people can now pursue these dreams and reduce the labor participation rates for ‘better pastures.”
Where myth meets reality
There is another election in just 8 weeks. Statistics will be bandied about. Monthly data points will be hotly contested. There will be a lot of rhetoric by candidates on all sides. But, understanding the prevailing trends is critical. Recognizing that first the economy, then the stock market and now jobs are all trending upward is important – even as all 3 measures will have short-term disappointments.
Although economic performance has long been a trademark issue for Republican candidates, there was once a Democratic candidate that won the presidency by focusing on the economy and jobs (Clinton,) and his popularity has never been higher! President Obama’s popularity is not high, and seems to fall daily. This seems incongruous with his incredible performance on the economy and jobs, which has outperformed his party predecessor – and every other modern President.
There are a lot of reasons voters elect a candidate. Jobs and the economy are just one category of factors. But, for those who place a high priority on jobs, economic performance and the markets the data clearly demonstrates which presidential administration has performed best. And shows a very clear trend one can expect to continue into 2015.
Economically, President Obama’s administration has outperformed President Reagan’s in all commonly watched categories. Simultaneously the current administration has reduced the debt, which skyrocketed under Reagan. Additionally, Obama has reduced federal employment, which grew under Reagan (especially when including military personnel,) and truly delivered a “smaller government.” Additionally, the current administration has kept inflation low, even during extreme international upheaval, failure of foreign economies (Greece) and a dramatic slowdown in the European economy.
by Adam Hartung | Aug 29, 2014 | Current Affairs, In the Whirlpool, Leadership
It’s Labor Day, and a time when we naturally think about our jobs.
When it comes to jobs creation, no role is more critical than the CEO. No company will enter into a growth phase, selling more product and expanding employment, unless the CEO agrees. Likewise, no company will shrink, incurring job losses due to layoffs and mass firings, unless the CEO agrees. Both decisions lay at the foot of the CEO, and it is his/her skill that determines whether a company adds jobs, or deletes them.
Over 2 years ago (5 May, 2012) I published “The 5 CEOs Who Should Be Fired.” Not surprisingly, since then employment at all 5 of these companies has lagged economic growth, and in all but one case employment has shrunk. Yet, 3 of these CEOs remain in their jobs – despite lackluster (and in some cases dismal) performance. And all 5 companies are facing significant struggles, if not imminent failure.
#5 – John Chambers at Cisco
In 2012 it was clear that the market shift to public networks and cloud computing was forever changing the use of network equipment which had made Cisco a modern growth story under long-term CEO Chambers. Yet, since that time there has been no clear improvement in Cisco’s fortunes. Despite 2 controversial reorganizations, and 3 rounds of layoffs, Cisco is no better positioned today to grow than it was before.
Increasingly, CEO Chambers’ actions reorganizations and layoffs look like so many machinations to preserve the company’s legacy rather than a clear vision of where the company will grow next. Employee morale has declined, sales growth has lagged and although the stock has rebounded from 2012 lows, it is still at least 10% short of 2010 highs – even as the S&P hits record highs. While his tenure began with a tremendous growth story, today Cisco is at the doorstep of losing relevancy as excitement turns to cloud service providers like Amazon. And the decline in jobs at Cisco is just one sign of the need for new leadership.
#4 Jeff Immelt at General Electric
When CEO Immelt took over for Jack Welch he had some tough shoes to fill. Jack Welch’s tenure marked an explosion in value creation for the last remaining original Dow Jones Industrials component company. Revenues had grown every year, usually in double digits; profits soared, employment grew tremendously and both suppliers and investors gained as the company grew.
But that all stalled under Immelt. GE has failed to develop even one large new market, or position itself as the kind of leading company it was under Welch. Revenues exceeded $150B in 2009 and 2010, yet have declined since. In 2013 revenues dropped to $142B from $145B in 2012. To maintain revenues the company has been forced to continue selling businesses and downsizing employees every year. Total employment in 2014 is now less than in 2012.
Yet, Mr. Immelt continues to keep his job, even though the stock has been a laggard. From the near $60 it peaked at his arrival, the stock faltered. It regained to $40 in 2007, only to plunge to under $10 as the CEO’s over-reliance on financial services nearly bankrupted the once great manufacturing company in the banking crash of 2009. As the company ponders selling its long-standing trademark appliance business, the stock is still less than half its 2007 value, and under 1/3 its all time high. Where are the jobs? Not GE.
#3 Mike Duke at Wal-Mart
Mr. Duke has left Wal-Mart, but not in great shape. Since 2012 the company has been rocked by scandals, as it came to light the company was most likely bribing government officials in Mexico. Meanwhile, it has failed to defend its work practices at the National Labor Relations Board, and remains embattled regarding alleged discrimination of female employees. The company’s employment practices are regularly the target of unions and those supporting a higher minimum wage.
The company has had 6 consecutive quarters of declining traffic, as sales per store continue to lag – demonstrating leadership’s inability to excite people to shop in their stores as growth shifts to dollar stores. The stock was $70 in 2012, and is now only $75.60, even though the S&P 500 is up about 50%. So far smaller format city stores have not generated much attention, and the company remains far behind leader Amazon in on-line sales. WalMart increasingly looks like a giant trapped in its historical house, which is rapidly delapidating.
One big question to ask is who wants to work for WalMart? In 2013 the company threatened to close all its D.C. stores if the city council put through a higher minimum wage. Yet, since then major cities (San Francisco, Chicago, Los Angeles, Seattle, etc.) have either passed, or in the process of passing, local legislation increasing the minimum wage to anywhere from $12.50-$15.00/hour. But there seems no response from WalMart on how it will create profits as its costs rise.
#2 Ed Lampert at Sears
Nine straight quarterly losses. That about says it all for struggling Sears. Since the 5/2012 column the CEO has shuttered several stores, and sales continue dropping at those that remain open. Industry pundits now call Sears irrelevant, and the question is looming whether it will follow Radio Shack into oblivion soon.
CEO Lampert has singlehandedly destroyed the Sears brand, as well as that of its namesake products such as Kenmore and Diehard. He has laid off thousands of employees as he consolidated stores, yet he has been unable to capture any value from the unused real estate. Meanwhile, the leadership team has been the quintessential example of “a revolving door at headquarters.” From about $50/share 5/2012 (well off the peak of $190 in 2007,) the stock has dropped to the mid-$30s which is about where it was in its first year of Lampert leadership (2004.)
Without a doubt, Mr. Lampert has overtaken the reigns as the worst CEO of a large, publicly traded corporation in America (now that Steve Ballmer has resigned – see next item.)
#1 Steve Ballmer at Microsoft
In 2013 Steve Ballmer resigned as CEO of Microsoft. After being replaced, within a year he resigned as a Board member. Both events triggered analyst enthusiasm, and the stock rose.
However, Mr. Ballmer left Microsoft in far worse condition after his decade of leadership. Microsoft missed the market shift to mobile, over-investing in Windows 8 to shore up PC sales and buying Nokia at a premium to try and catch the market. Unfortunately Windows 8 has not been a success, especially in mobile where it has less than 5% share. Surface tablets were written down, and now console sales are declining as gamers go mobile.
As a result the new CEO has been forced to make layoffs in all divisions – most substantially in the mobile handset (formerly Nokia) business – since I positioned Mr. Ballmer as America’s worst CEO in 2012. Job growth appears highly unlikely at Microsoft.
“CEOs – From Makers to Takers”
Forbes colleague Steve Denning has written an excellent column on the transformation of CEOs from those who make businesses, to those who take from businesses. Far too many CEOs focus on personal net worth building, making enormous compensation regardless of company performance. Money is spent on inflated pay, stock buybacks and managing short-term earnings to maximize bonuses. Too often immediate cost savings, such as from outsourcing, drive bad long-term decisions.
CEOs are the ones who determine how our collective national resources are invested. The private economy, which they control, is vastly larger than any spending by the government. Harvard professor William Lazonick details how between 2003 and 2012 CEOs gave back 54% of all earnings in share buybacks (to drive up stock prices short term) and handed out another 37% in dividends. Investors may have gained, but it’s hard to create jobs (and for a nation to prosper) when only 9% of all earnings for a decade go into building new businesses!
There are great CEOs out there. Steve Jobs and his replacement Tim Cook increased revenues and employment dramatically at Apple. Jeff Bezos made Amazon into an enviable growth machine, producing revenues and jobs. These leaders are focused on doing what it takes to grow their companies, and as a result the jobs in America.
It’s just too bad the 5 fellows profiled above have done more to destroy value than create it.
by Adam Hartung | Aug 20, 2014 | Current Affairs, Ethics, Leadership, Travel
Have you taken a summer vacation? It’s almost Labor Day.
Peak vacation time is Memorial Day to Labor Day. Almost since the Industrial Revolution began, removing people from farms, the family vacation – away from work and other grinds – has been a much desired, and remembered, treasure.
If you haven’t taken all your days off, you were far from alone. Americans are increasingly skipping vacations. According to a Glassdoor survey, half of all Americans no longer use all their company agreed-to vacation time. Heck, 15% don’t take any vacation at all.
If you did take vacation, was your mobile device, and/or laptop, used for work? Or did you take the job with you? 20% say they talked to “the boss” while on vacation. 1 in 4 talked to a colleague.
According to a study by GfK Public Affairs and Communications, people suffer from feeling like their employer really doesn’t want them to take time off. In order to increase their sense of employment security, employees are trying harder every year to make themselves “indispensable.” This leads us to believe we really can’t be gone, or there will be a huge mountain of work facing us (and countless unpaid overtime hours spent digging out) when we return from a break. Or worse, the job won’t be there when we come back.
The study creators call this the “work martyr complex.” No matter how much we love family, we are martyrs to employers in order to keep that incredibly necessary, and fleeting paycheck. After all, we have no job assurance in America. Almost no white collar workers, other than C-level execs, have an employment agreement. And union membership has dropped to lows predating WWII due to a lack of unionization of white collar and service employees.
Where Europeans and other countries have multiple worker protection laws for everyone, Americans are – by and large – “employees at will.” Meaning an employer can fire you for just about any reason drummed up. Even anger created because something happened while you were on vacation. After 2 decades of CEOs who lead by “operational improvements,” causing round after round of cost cuts and layoffs, employees have learned that the day they take off could be the day their budget is slashed, or their job eliminated.
We cannot underestimate the role of leaders in this situation. Nobody can be productive 24x7x365. Everyone needs time off. And the more important the role, the more critical the decisions, the more time off is necessary. Just look at commercial airline pilots – would you want them doubling their flying time? A 7X7 pilot may make only a handful of important decisions every year, yet we want that cockpit filled with crews that are rested, alert and ready to make good decisions.
Why isn’t this true for a plant manager? Compliance manager? Sales manager? Audit manager? Communications manager? Is their role no less critical to the operation of the corporate “aircraft” and the safety of all the corporate employee “passengers?”
Yet, far too many leaders allow the combination of mobile technology and employees’ embedded fear of losing their jobs to breed an environment where vacation goes unused. No company tracks how often a boss calls, texts, emails or phones a subordinate when on a holiday. No company tracks how often a boss requires a subordinate to “check in” with the office while gone. Nobody pays any attention to how many hours an employee on vacation uses their mobile device or PC for company business while, ostensibly, “vacating” their work in order to relax and recharge. In fact, that is considered “dedication.”
All companies track how much time every employee takes off. Take too many days and employees are docked pay. Take even more days and that employee could well lose his job. But even though 95% of senior leaders espouse support for employees taking their vacations, have you ever heard of a company disciplining an employee for not taking a vacation? If half the company’s paid time off days go unused, the employer simply takes advantage of the possible cost savings and additional productivity. Usually saying it was the employee’s responsibility to figure out how to leave the job for several days without creating any problems.
In a quintessential example of the all-too-often real senior leader view of vacations, fifteen years ago I heard the President of Computer Sciences Corporation’s Commercial Division brag to the CEO, and a group of large clients, that only about 25% of the division’s allocated days off were ever used. He personally took credit that via his “disciplined leadership” employees showed up for work even when they could take days off. He even bragged about people working on major holidays like Easter, Thanksgiving and Christmas. He wanted everyone to know that he did not support a “lethargic” organization.
Chronic focus on the short term always has negative long-term implications. That division of CSC lost 80% of its revenue, and employees, as burn-out drove people away. Over and again we ovbserve that employees see themselves as not valued when they work in fear. Unused vacation days is a simple metric of a company culture that values short-term benefits over long-term performance, and a culture that supports fear over results.
If you didn’t use all your vacation, it’s really not your fault. It is the culture of your organization, the messages sent by leaders, and the metrics used by Human Resources. When employees matter, and the company wants long-term performance, then people know they are valued and they are comfortable taking days off. If you’re not taking all your vacation days it may well be a sign of problems in your company, and perhaps it is a good thing to use some of those days to find a different place to work. If you lead a company where employees don’t take allotted time off, perhaps you should re-assess your leadership and procedures, before it’s too late.
by Adam Hartung | Aug 6, 2014 | Defend & Extend, In the Whirlpool, Innovation, Lifecycle, Web/Tech
Remember the RAZR phone? Whatever happened to that company?
Motorola has a great tradition. Motorola pioneered the development of wireless communications, and was once a leader in all things radio – as well as made TVs. In an earlier era Motorola was the company that provided 2-way radios (and walkie-talkies for those old enough to remember them) not only for the military, police and fire departments, but connected taxies to dispatchers, and businesses from electricians to plumbers to their “home office.”
Motorola was the company that developed not only the thing in a customer’s hand, but the base stations in offices and even the towers (and equipment on those towers) to allow for wireless communication to work. Motorola even invented mobile telephony, developing the cellular infrastructure as well as the mobile devices. And, for many years, Motorola was the market share leader in cellular phones, first with analog phones and later with digital phones like the RAZR.
But that was the former Motorola, not the renamed Motorola Solutions of today. The last few years most news about Motorola has been about layoffs, downsizings, cost reductions, real estate sales, seeking tenants for underused buildings and now looking for a real estate partner to help the company find a use for its dramatically under-utilized corporate headquarters campus in suburban Chicago.
How did Motorola Solutions become a mere shell of its former self?
Unfortunately, several years ago Motorola was a victim of disruptive innovation, and leadership reacted by deciding to “focus” on its “core” markets. Focus and core are two words often used by leadership when they don’t know what to do next. Too often investment analysts like the sound of these two words, and trumpet management’s decision – knowing that the code implies cost reductions to prop up profits.
But smart investors know that the real implication of “focusing on our core” is the company will soon lose relevancy as markets advance. This will lead to significant sales declines, margin compression, draconian actions to create short-term P&L benefits and eventually the company will disappear.
Motorola’s market decline started when Blackberry used its server software to help corporations more securely use mobile devices for instant communications. The mobile phone transitioned from a consumer device to a business device, and Blackberry quickly grabbed market share as Motorola focused on trying to defend RAZR sales with price reductions while extending the RAZR platform with new gimmicks like additional colors for cases, and adding an MP3 player (called the ROKR.) The Blackberry was a game changer for mobile phones, and Motorola missed this disruptive innovation as it focused on trying to make sustaining improvements in its historical products.
Of course, it did not take long before Apple brought out the iPhone and with all those thousands of apps changed the game on Blackberry. This left Motorola completely out of the market, and the company abandoned its old platform hoping it could use Google’s Android to get back in the game. But, unfortunately, Motorola brought nothing really new to users and its market share dropped to nearly nothing.
The mobile phone business quickly overtook much of the old Motorola 2-way radio business. No electrician or plumber, or any other business person, needed the old-fashioned radios upon which Motorola built its original business. Even police officers used mobile phones for much of their communication, making the demand for those old-style devices rarer with each passing quarter.
But rather than develop a new game changer that would make it once again competitive, Motorola decided to split the company into 2 parts. One would be the very old, and diminishing, radio business still sold to government agencies and niche business applications. This business was profitable, if shrinking. The reason was so that leadership could “focus” on this historical “core” market. Even if it was rapidly becoming obsolete.
The mobile phone business was put out on its own, and lacking anything more than an historical patent portfolio, with no relevant market position, it racked up quarter after quarter of losses. Lacking any innovation to change the market, and desperate to get rid of the losses, in 2011 Motorola sold the mobile phone business – formerly the industry creator and dominant supplier – to Google. Again, the claim was this would allow leadership to even better “focus” on its historical “core” markets.
But the money from the Google sale was invested in trying to defend that old market, which is clearly headed for obsolescence. Profit pressures intensify every quarter as sales are harder to find when people have alternative solutions available from ever improving mobile technology.
As the historical market continued to weaken, and leadership learned it had under-invested in innovation while overspending to try to defend aging solutions, Motorola again cut the business substantially by selling a chunk of its assets – called its “enterprise business” – to a much smaller Zebra Technologies. The ostensible benefit was it would now allow Motorola leadership to even further “focus” on its ever smaller “core” business in government and niche market sales of aging radio technology.
But, of course, this ongoing “focus” on its “core” has failed to produce any revenue growth. So the company has been forced to undertake wave after wave of layoffs. As buildings empty they go for lease, or sale. And nobody cares, any longer, about Motorola. There are no news articles about new products, or new innovations, or new markets. Motorola has lost all market relevancy as its leaders used “focus” on its “core” business to decimate the company’s R&D, product development, sales and employment.
Retrenchment to focus on a core market is not a strategy which can benefit shareholders, customers, employees or the community in which a business operates. It is an admission that the leaders missed a major market shift, and have no idea how to respond. It is the language adopted by leaders that lack any vision of how to grow, lack any innovation, and are quickly going to reduce the company to insignificance. It is the first step on the road to irrelevancy.
Straight from Dr. Christensen’s “Innovator’s Dilemma” we now have another brand name to add to the list of those which were once great and meaningful, but now are relegated to Wikipedia historical memorabilia – victims of their inability to react to disruptive innovations while trying to sustain aging market positions – Motorola, Sears, Montgomery Wards, Circuit City, Sony, Compaq, DEC, American Motors, Coleman, Piper, Sara Lee………..
by Adam Hartung | Jul 28, 2014 | Current Affairs, Defend & Extend, In the Whirlpool, Web/Tech
Over the last couple of weeks big announcements from Apple, IBM and Microsoft have set the stage for what is likely to be Microsoft’s last stand to maintain any sense of personal technology leadership.
Custer Tries Holding Off An Unstoppable Native American Force
To many consumers the IBM and Apple partnership probably sounded semi-interesting. An app for airplane fuel management by commercial pilots is not something most people want. But what this announcement really amounted to was a full assault on regaining dominance in the channel of Value Added Resellers (VARs) and Value Added Dealers (VADs) that still sell computer “solutions” to thousands of businesses. Which is the last remaining historical Microsoft stronghold.
Think about all those businesses that use personal technology tools for things like retail point of purchase, inventory control, loan analysis in small banks, restaurant management, customer data collection, fluid control tracking, hotel check-in, truck routing and management, sales force management, production line control, project management — there is a never-ending list of business-to-business applications which drive the purchase of literally millions of devices and applications. Used by companies as small as a mom-and-pop store to as large as WalMart and JPMorganChase. And these solutions are bundled, sold, delivered and serviced by what is collectively called “the channel” for personal technology.
This “channel” emerged after Apple introduced the Apple II running VisiCalc, and businesses wanted hundreds of these machines. Later, bundling educational software with the Apple II created a near-monopoly for Apple channel partners who bundled solutions for school systems.
But, as the PC emerged this channel shifted. IBM pioneered the Microsoft-based PC, but IBM had long used a direct sales force. So its foray into personal computing did a very poor job of building a powerful sales channel. Even though the IBM PC was Time magazine’s “Man of the Year” in 1982, IBM lost its premier position largely because Microsoft took advantage of the channel opportunity to move well beyond IBM as a supplier.
Microsoft focused on building a very large network of developers creating an enormous variety of business-to-business applications on the Windows+Intel (Wintel) platform. Microsoft created training programs for developers to use its operating system and tools, while simultaneously cultivating manufacturers (such as Dell and Compaq) to build low cost machines to run the software. “Solution selling” was where VARs bundled what small businesses – and even many large businesses – needed by bringing together developer applications with manufacturer hardware.
It only took a few years for Microsoft to overtake Apple and IBM by dominating and growing the VAR channel. Apple did a poor job of creating a powerful developer network, preferring to develop everything users should want itself, so quickly it lacked a sufficient application base. IBM constantly tried to maintain its direct sales model (and upsell clients from PCs to more expensive hardware) rather than support the channel for developing applications or selling solutions based on PCs.
But, over the last several years Microsoft played “bet the company” on its launch of Windows 8. As mobile grew in hardware sales exponentially, and PC sales flattened (then declined,) Microsoft was tepid regarding any mobile offering. Under former CEO Steve Ballmer, Microsoft preferred creating an “all-in-one” solution via Win8 that it hoped would keep PC sales moving forward while slowly allowing its legions of Microsoft developers to build Win8 apps for mobile Surface devices — and what it further hoped would be other manufacturer’s tablets and phones running Win8.
This flopped. Horribly. Apple already had the “installed base” of users and mobile developers, working diligently to create new apps which could be released via its iTunes distribution platform. As a competitive offering, Google had several years previously launched the Android operating system, and companies such as HTC and Samsung had already begun building devices. Developers who wanted to move beyond Apple were already committed to Android. Microsoft was simply far too late to market with a Win8 product which gave developers and manufacturers little reason to invest.
Now Microsoft is in a very weak position. Despite much fanfare at launch, Microsoft was forced to take a nearly $1B write-off on its unsellable Surface devices. In an effort to gain a position in mobile, Microsoft previously bought phone maker Nokia, but it was simply far too late and without a good plan for how to change the Apple juggernaut.
Apple is now the dominant player in mobile, with the most users, developers and the most apps. Apple has upended the former Microsoft channel leadership position, as solution sellers are now offering Apple solutions to their mobile-hungry business customers. The merger with IBM brings even greater skill, and huge resources, to augmenting the base of business apps running on iOS and its devices (presently and in the future.) It provides encouragement to the VARs that a future stream of great products will be coming for them to sell to small, medium and even large businesses.
Caught in a situation of diminishing resources, after betting the company’s future on Windows 8 development and launch, and then seeing PC sales falter, Microsoft has now been forced to announce it is laying off 18,000 employees. Representing 14% of total staff, this is Microsoft’s largest reduction ever. Costs for the downsizing will be a massive loss of $1.1-$1.6B – just one year (almost to the day) after the huge Surface write-off.
Recognizing its extraordinarily weak market position, and that it’s acquisition of Nokia did little to build strength with developers while putting it at odds with manufacturers of other mobile devices, the company is taking some 12,000 jobs out of its Nokia division – ostensibly the acquisition made at a cost of $7.2B to blunt iPhone sales. Every other division is also suffering headcount reductions as Microsoft is forced to “circle the wagons” in an effort to find some way to “hold its ground” with historical business customers.
Today Apple is very strong in the developer community, already has a distribution capability with iTunes to which it is adding mobile payments, and is building a strong channel of VARs seeking mobile solutions. The IBM partnership strengthens this position, adds to Apple’s iOS developers, guarantees a string of new solutions for business customers and positions iOS as the platform of choice for VARs and VADs who will use iBeacon and other devices to help businesses become more capable by utilizing mobile/cloud technology.
Meanwhile, Microsoft is looking like the 7th Cavalry at the Little Bighorn. Microsoft is surrounded by competitors augmenting iOS and Android (and serious cloud service suppliers like Amazon,) resources are depleting as sales of “core” products stagnate and decline and write-offs mount, and watching as its “supply line” developer channel abandons Windows 8 for the competitive alternatives.
CEO Nadella keeps saying that that cloud solutions are Microsoft’s future, but how it will effectively compete at this late date is as unclear as the email announcement on layoffs Nokia’s head Stephen Elop sent to employees. Keeping its channel, long the source of market success for Microsoft, from leaving is Microsoft’s last stand. Unfortunately, Nadella’s challenge puts him in a position that looks a lot like General Custer.
by Adam Hartung | Jul 15, 2014 | Current Affairs, Defend & Extend, In the Swamp, Leadership
Famed actor and comedian Tracy Morgan has filed a lawsuit against Walmart. He was seriously injured, and his companion and fellow comedian James McNair was killed, when their chauffeured vehicle was struck by a WalMart truck going too fast under the control of an overly tired driver.
It would be easy to write this off as a one-time incident. As something that was the mistake of one employee, and not a concern for management. Walmart is huge, and anyone could easily say “mistakes will happen, so don’t worry.” And as the country’s largest company (by sales and employees) Walmart is an easy target for lawsuits.
But that would belie a much more concerning situation. One that should have investors plenty worried.
Walmart isn’t doing all that well. It is losing customers, even as the economy recovers. For a decade Walmart has struggled to grow revenues, and same store sales have declined – only to be propped up by store closings. Despite efforts to grow offshore, attempts at international expansion have largely been flops. Efforts to expand into smaller stores have had mixed success, and are marginal at generating new revenues in urban efforts. Meanwhile, Walmart still has no coherent strategy for on-line sales expansion.
Unfortunately the numbers don’t look so good for Walmart, a company that is absolutely run by numbers. Every single thing that can be tracked in Walmart is tracked, and managed – right down the temperature in every facility (store, distribution hub, office) 24x7x365. When the revenue, inventory turns, margin, distribution costs, etc. aren’t going in the right direction Walmart is a company where leadership applies the pressure to employees, right down the chain, to make things better.
Unfortunately, a study by Northwestern University Kellogg School of Management has shown that when a culture is numbers driven it often leads to selfish, and unethical, behavior. When people are focused onto the numbers, they tend to stretch the ethical (and possibly legal) boundaries to achieve those numerical goals. A great recent example was the U.S. Veterans Administration scandal where management migrated toward lying about performance in order to meet the numerical mandates set by Secretary Shinseki.
Back in November, 2012 I pointed out that the Walmart bribery scandal in Mexico was a warning sign of big problems at the mega-retailer. Pushed too hard to create success, Walmart leadership was at least skirting with the law if not outright violating it. I projected these problems would worsen, and sure enough by November the bribery probe was extended to Walmart’s operations in Brazil, China and India.
We know from the many employee actions happening at Walmart that in-store personnel are feeling pressure to do more with fewer hours. It does not take a great leap to consider it possible (likely?) that distribution personnel, right down to truck drivers are feeling pressured to work harder, get more done with less, and in some instances being forced to cut corners in order to improve Walmart’s numbers.
Exactly how much the highest levels of Walmart knows about any one incident is impossible to gauge at this time. However, what should concern investors is whether the long-term culture of Walmart – obsessed about costs and making the numbers – has created a situation where all through the ranks people are feeling the need to walk closer to ethical, and possibly legal, lines. While it may be that no manager told the driver to drive too fast or work too many hours, the driver might have felt the pressure from “higher up” to get his load to its destination at a certain time – or risk his job, or maybe his boss’s.
If this is a widespread cultural issue – look out! The legal implications could be catastrophic if customers, suppliers and communities discover widespread unethical behavior that went unchecked by top echelons. The C suite executives don’t have to condone such behavior to be held accountable – with costs that can be exorbitant. Just ask the leaders at JPMorganChase and Citibank who are paying out billions for past transgressions.
Worse, we cannot expect the marketplace pressures to ease up any time soon for Walmart. Competitors are struggling mightily. JCPenney cannot seem to find anyone to take the vacant CEO job as sales remain below levels of several years ago, and the chain is most likely going to have to close several dozen (or hundreds) of stores. Sears/KMart has so many closed and underperforming stores that practically every site is available for rent if anyone wants it. And in the segment which is even lower priced than Walmart, the “dollar stores,” direct competitor Family Dollar saw 3rd quarter profits fall another 33% as too many stores and too few customer wreak financial havoc and portend store closings.
So the market situation is not improving for Walmart. As competition has intensified, all signs point to a leadership which tried to do “more, better, faster, cheaper.” But there is no way to maintain the original Walmart strategy in the face of the on-line competitive onslaught which is changing the retail game. Walmart has continued to do “more of the same” trying to defend and extend its old success formula, when it was a disruptive innovator that stole its revenues and cut into profits. Now all signs point to a company which is in grave danger of over-extending its success formula to the point of unethical, and potentially illegal, behavior.
If that doesn’t scare the heck out of Walmart investors I can’t imagine what would.
by Adam Hartung | Jul 8, 2014 | Current Affairs, Food and Drink, In the Whirlpool, Leadership
Crumbs Bake Shop – a small chain of cupcake shops, almost totally unknown outside of New York City and Washington, DC – announced it was going out of business today. Normally, this would not be newsworthy. Even though NASDAQ traded, Crumbs small revenues, losses and rapidly shrinking equity made it economically meaningless. But, it is receiving a lot of attention because this minor event signals to many people the end of the “cupcake trend” which apparently was started by cable TV show “Sex and the City.”
However, there are actually 2 very important lessons all of us can learn from the rise, and fall, of Crumbs Bake Shop:
1 – Don’t believe in the myth of passion when it comes to business
Many management gurus, and entrepreneurs, will tell you to go into business following something about which you are passionate. The theory goes that if you have passion you will be very committed to success, and you will find your way to success with diligence, perseverance, hard work and insight driven by your passion. Passion will lead to excellence, which will lead to success.
And this is hogwash.
Customers don’t care about your passion. Customers care about their needs. Rather than being a benefit, passion is a negative because it will cause you to over-invest in your passion. You will “never say die” as you keep trying to make success out of an idea that has no chance. Rather than investing your resources into something that fulfills people’s needs, you are likely to invest in your passion until you burn through all your resources. Like Crumbs.
The founders of Crumbs had a passion for cupcakes. But, they had no way to control an onslaught of competitors who could make different variations of the product. All those competitors, whether isolated cupcake shops or cupcakes offered via kiosks or in other shops, meant Crumbs was in a very tough fight to maintain sales and make money. It’s not you (and your passion) that controls your business destiny. Nor is your customers. Rather, it is your competition.
When there are lots of competitors, all capable of matching your product, and of offering countless variations of your product, then it is unlikely you can sustain revenues – or profits. There are many industries where cutthroat competition means profits are fleeting, or downright elusive. Airlines come to mind. Magazines. And many retail segments. It doesn’t matter how much passion you have, when there are too many competitors it’s a lousy business.
2 – Trends really do matter
Cupcakes were a hot product for a while. And that’s great. But it wasn’t hard to imagine that the trend would shift, and cupcakes would be displaced by something else. Whatever profits you might have when you sit on a trend, those profits evaporate fast when the trend shifts and all competitors are fighting for sales in a declining market.
Remember Mrs. Field’s cookies? In the 1980s an attractive cook and her investment banker husband built a business on soft, chewy, warm cookies sold in malls and retail streets across America. It seemed nobody could get enough of those chocolate chip cookies.
But then, one day, we did. We’d collectively had enough cookies, and we simply quit buying them. Mrs. Fields (and other cookie brand) stores were rapidly replaced with pretzels and other foodstuffs.
Or look at Krispy Kreme donuts. In the 1990s people went crazy for them, often lining up at stores waiting for the neon sign to come on saying “hot donuts”. The company exploded into 400 stores as the stock flew like a kite. But then, in a very short time, people had enough donuts. There were a lot more donut shops than necessary, and Krispy Kreme went bankrupt.
So it wasn’t hard to predict that shifting food tastes would eventually put an end to cupcake sales growth. Yet, Crumbs really didn’t prepare for trends to change. Despite revenue and profit problems, the leadership did not admit that cupcake sales had peaked, the market was going to decline, competition would become even more intense and Crumbs would need to find another business if it was to survive.
Few trends move as fast as tastes in sweets. But, trends do affect all businesses. Once we bought cameras (and film,) but now we use phones – too bad for Kodak. Once we used copiers, now we use email – too bad for Xerox. Once we watched TV, now we download from Netflix or Amazon – too bad for NBC, ABC, CBS and Comcast. Once we went to stores, now we order on-line – too bad for Sears. Once we used PCs, now we use mobile devices – too bad for Microsoft. These trends did not affect these companies as fast as shifting tastes affected Crumbs, but the importance of understanding trends and preparing for change is a constant part of leadership.
So Crumbs Bake Shop failure was one which could have been avoided. Leadership needed to overcome its passion for cupcakes and taken a much larger look at customer needs to find alternative products. It wasn’t hard to identify that some diversification was going to be necessary. And that would have been much easier if they had put in place a system to track trends, observing (and admitting) that their “core” market was stalled and they needed to move into a new trend category.
by Adam Hartung | Jul 1, 2014 | Current Affairs, Defend & Extend, Leadership, Religion
Yesterday the U.S. Supreme Court ruled in favor of Hobby Lobby and against the U.S. government in a case revolving around health care for employees. I’m a business person, not a lawyer, so to me it was key to understand from a business viewpoint exactly what Hobby Lobby “won.”
It appears Hobby Lobby’s leaders “won” the right to refuse to provide certain kinds of health care to their employees as had been mandated by the Affordable Care Act. The justification primarily being that such health care (all associated with female birth control) violated religious beliefs of the company owners.
As a business person I wondered what the outcome would be if the next case is brought to the court by a business owner who happens to be a Christian Scientist. Would this next company be allowed to eliminate offering vaccines – or maybe health care altogether – because the owners don’t believe in modern medical treatments?
This may sound extreme, and missing the point revolving around the controversy over birth control. But not really. Because the point of business is to legally create solutions for customer needs at a profit. Doing this requires doing a lot of things right in order to attract and retain the right employees, the right suppliers and customers by making all of them extremely happy. I don’t recall Adam Smith, Milton Friedman, Peter Drucker, Edward Demming, John Galbraith or any other historically noted business writer saying the point of business to set the moral compass of its customers, suppliers or employees.
I’m not sure where enforcing the historical religious beliefs of founders or owners plays a role in business. At all. Even if they have the legal right to do so, is it smart business leadership?
Hobby Lobby Store
Hobby Lobby competes in the extraordinarily tough retail market. The ground is littered with failures, and formerly great companies which are struggling such as Sears, KMart, JCPenney, Best Buy, etc. And recently the industry has been rocked with security breaches, reducing customer faith in stalwarts like Target. And profits are being challenged across all brick-and-mortar traditional retailers by on-line companies led by Amazon, who have much lower cost structures.
All the trends in retail bode poorly for Hobby Lobby. Hobby Lobby does almost no business on-line, and even closes its stores on Sunday. Given consumer desires to have what they want, when they want it, unfettered by time or location, a traditional retailer like Hobby Lobby already has its hands full just figuring out how to keep competitors at bay. Customers don’t need much encouragement to skip any particular store in search of easily available products and instant price information across retailers.
Social trends are also very clear in the USA. The great majority of Americans support health care for everyone. Including offering birth control, and all other forms of women’s health needs. This has nothing to do with the Affordable Care Act. Health care, and women’s rights to manage their individual reproductiveness, is something that is clearly a majority viewpoint – and most people think it should be covered by health insurance.
So, given the customer options available, is it smart for any retailer to brag that they are unwilling to offer employees health care? Although not tied to any specific social issues, Wal-Mart has long dealt with customer and employee defections due to policies which reduce employee benefits, such as health care. Is this an issue which is likely to help Hobby Lobby grow?
Is it smart, as Hobby Lobby competes for merchandise from suppliers, negotiates on leases with landlords, seeks new store permits from local governments, recruits employees as buyers, merchandisers, store managers and clerks, and seeks customers who can shop on-line or at competitors to brandish the sword of intolerance on a specific issue which upsets the company owner? And one where this owner is on the opposite side of public opinion?
Long ago a group of retired U.S. military Generals told me that in Vietnam America won every battle, but lost the war. Through overwhelming firepower and manpower, there was no way we would not win any combat mission. But that missed the point. As a result of focusing on the combat, America’s leaders missed the opportunity win “the hearts and minds” of most Vietnamese. In the end America left Vietnam in a rushed abandonment of Saigon, and the North Vietnamese took over all of South Vietnam. Although we did what leaders believed was “right,” and fought each battle to a win, in the end America lost the objective of maintaining a free, independent and democratic Vietnam.
The leaders of Hobby Lobby won this battle. But is this good for the customers, suppliers, communities where stores are located, and employees of Hobby Lobby? Will these constituents continue to support Hobby Lobby, or will they possibly choose alternatives? If in its actions, including legal arguing at the Supreme Court, Hobby Lobby may have preserved what its leaders think is an important legal precedent. But, have their strengthened their business competitiveness so they will be a long-term success?
Perhaps Hobby Lobby might want to listen to the CEO of Chick-fil-A, which suffered a serious media firestorm when it became public their owners donated money to anti-gay organizations. CEO Cathy decided it was best to “just shut up and go sell chicken.” Business is tough enough, loaded with plenty of battles, without looking for fights that are against trends.
by Adam Hartung | Jun 19, 2014 | Current Affairs, Disruptions, In the Swamp, Leadership, Web/Tech
Yesterday Amazon launched its new Kindle Fire smartphone.
“Ho-hum” you, and a lot of other people, said. “Why?” “What’s so great about this phone?”
The market is dominated by Apple and Samsung, to the point we no longer care about Blackberry – and have pretty much forgotten about all the money spent by Microsoft to buy Nokia and launch Windows 8. The world doesn’t much need a new smartphone maker – as we’ve seen with the lack of excitement around Google/Motorola’s product launches. And, despite some gee-whiz 3D camera and screen effects, nobody thinks Amazon has any breakthrough technology here.
But that would be completely missing the point. Amazon probably isn’t even thinking of competing heads-up with the 2 big guns in the smartphone market. Instead, Amazon’s target is everyone in retail. And they should be scared to death. As well as a lot of consumer products companies.
Amazon’s new Kindle Fire smartphone
Apple’s iPod and iPhones have some 400,000 apps. But most people don’t use over a dozen or so daily. Think about what you do on your phone:
- Talk, texting and email
- Check the weather, road conditions, traffic
- Listen to music, or watch videos
- Shopping (look for products, prices, locations, specs, availability, buy)
Now, you may do several other things. But (maybe not in priority,) these are probably the top 4 for 90% of people.
If you’re Amazon, you want people to have a great shopping experience. A GREAT experience. You’ve given folks terrific interfaces, across multiple platforms. But everything you do with an app on iPhones or Samsung phones involves negotiating with Apple or Google to be in their store – and giving them revenue. If you could bypass Apple and Google – a form of retail “middleman” in Amazon’s eyes – wouldn’t you?
Amazon has already changed retail markedly. Twenty years ago a retailer would say success relied on 2 things:
- Store location and layout. Be in the right place, and be easy to shop.
- Merchandise the goods well in the store, and have them available.
Amazon has killed both those tenets of retail. With Amazon there is no store – there is no location. There are no aisles to walk, and no shelves to stock. There is no merchandising of products on end caps, within aisles or by tagging the product for better eye appeal. And in 40%+ cases, Amazon doesn’t even stock the inventory. Availability is based upon a supplier for whom Amazon provides the storefront and interface to the customer, sending the order to the supplier for a percentage of the sale.
And, on top of this, the database at Amazon can make your life even easier, and less time consuming, than a traditional store. When you indicate you want item “A” Amazon is able to show you similar products, show you variations (such as color or size,) show you “what goes with” that product to make sure you buy everything you need, and give you different prices and delivery options.
Many retailers have spent considerably training employees to help customers in the store. But it is rare that any retail employee can offer you the insight, advice and detail of Amazon. For complex products, like electronics, Amazon can provide detail on all competitive products that no traditional store could support. For home fix-ups Amazon can provide detailed information on installation, and the suite of necessary ancillary products, that surpasses what a trained Home Depot employee often can do. And for simple products Amazon simply never runs out of stock – so no asking an aisle clerk “is there more in the back?”
And it is impossible for any brick-and-mortar retailer to match the cost structure of Amazon. No stores, no store employees, no cashiers, 50% of the inventory, 5-10x the turns, no “obsolete inventory,” no inventory loss – there is no way any retailer can match this low cost structure. Thus we see the imminent failure of Radio Shack and Sears, and the chronic decline in mall rents as stores go empty.
Some retailers have tried to catch up with Amazon offering goods on-line. But the inventory is less, and delivery is still often problematic. Meanwhile, as they struggle to become more digital these retailers are competing on ground they know precious little about. It is becoming commonplace to read about hackers stealing customer data and wreaking havoc at Michaels Stores and Target. Thus on-line customers have far more faith in Amazon, which has 2 decades of offering secure transactions and even offers cloud services secure enough to support major corporations and parts of the U.S. government.
And Amazon, so far, hasn’t even had to make a profit. It’s lofty price/earnings multiple of 500 indicates just how little “e” there is in its p/e. Amazon keeps pouring money into new ways to succeed, rather than returning money to shareholders via stock buybacks or dividends. Or dumping it into chronic store remodels, or new store construction.
Today, you could shop at Amazon from your browser on any laptop, tablet or phone. Or, if you really enjoy shopping on-line you can now obtain a new tablet or phone from Amazon which makes your experience even better. You can simply take a picture of something you want, and your new Amazon smartphone will tell you how to buy it on-line, including price and delivery. No need to leave the house. Want to see the product in full 360 degrees? You have it on your 3D phone. And all your buying experience, customer reviews, and shopping information is right at your fingertips.
Amazon is THE game changer in retail. Kindle was a seminal product that has almost killed book publishers, who clung way too long to old print-based business models. Kindle Fire took direct aim at traditional retailers, from Macy’s to Wal-Mart, in an effort to push the envelope of on-line shopping. And now the Kindle Fire smartphone puts all that shopping power in your palm, convenient with your other most commonplace uses such as messaging, fact finding, listening or viewing.
This is not a game changing smartphone in comparison with iPhone 5 or Galaxy S 5. But, as another salvo in the ongoing war for controlling the retail marketplace this is another game changer. It continues to help everyone think about how they shop today, and in the future. For anyone in retail, this may well be seen as another important step toward changing the industry forever, and making “every day low prices” an obsolete (and irrelevant) retail phrase. And for consumer goods companies this means the need to distribute products on-line will forever change the way marketing and selling is done – including who makes how much profit.
by Adam Hartung | Jun 5, 2014 | Current Affairs, Leadership
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”
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.
