Thursday, June 30, 2011

Modern Business: Flintstone or Jetson

Imagine getting off the train and lugging your suitcase without rollers. You are also lugging a locking latch briefcase with your monogram on it. It weighs about twenty pounds since it contains a field manual, your last project binder, a three-hole punch, box of colored pencils, case containing protractor and drafting tools, a sheaf of carbon paper, half a ream of lined paper, another half of white paper, a heavy duty stapler and staples, and reference material you have been toting along because you haven’t been home in three weeks.

You are looking for a payphone so you can “drop a dime” and make a three minute call to your office and you are lugging the newest and baddest gadget that transforms how you do your business as a traveling management consultant – the all new Remington Rand, full key-board electric adding machine. For $169.50 plus tax, this baby means you do not have to use your client’s equipment. It weighs a little, but the convenience is worth it. Your carry your portable manual typewriter in your suitcase for ease. You manually produce your spread sheets, pie charts and graphs.

The year is 1960. The average annual income is $5,600, according to the US Commerce Department, and you are making almost $10K after taxes. You travel by train because costs a lot less than air travel. For example, a round trip airline ticket cost about $75 to fly from Cleveland to Washington, D.C. That would be around $400 today. Your client got invoiced for it but they sure liked your electric machine.

In a world without apps, business had been expanding over the previous decade and saw the Dow Jones Industrial Average climb from just under 200 to knock at 700’s door, briefly. People, not programs, made investment decisions. Modern business was like passenger train service – 1960’s improvements to 1940’s technology.

People like George S. May realized that business was composed of algorithms. Ratios and percentages ruled decision making. That meant that newer and better technology was interesting but only in so far as it added convenience and expedience to decision making. The idea that business is business prevailed. Business did not care about anything except making and protecting profit. It is not that people were not important, they were. It is just that profit motive dominated business thinking.

Liberal minded humanists tended to resent the focus of the business community on profit over people. In every era they have raised their voices in objection to the perception that business exists only for profit and, in fact, they are correct. Successful business tends to be myopic because, as I say, business is business. That brings us to the latest breed of technical minded social networkers who see themselves as the new humanists and seek to transform the business community in modern ways.

So let’s consider Fred Flintstone and George Jetson. Brilliant creations of Hanna-Barbara, the characters are enamored of gadgetry in their respective gadget centric societies. They do their jobs working for companies run by bosses whose sole interest in making a profit. Business does not care about fads or gadgets. Just ask Fred or George.

Article first published as Modern Business: Fred Flintstone or George Jetson on Blogcritics.

Tuesday, June 14, 2011

Are Their Lips Moving?

The adage goes like this: How can you tell when a client/customer is lying? Their lips are moving. Adages come from somewhere, especially when they are deprecating. I do not know where that somewhere is. If I did I would tell you. I am not your client. Nor are my lips moving. And why would I lie to you? The reality is, however, that the adage must be based in some arcane fact because in my consulting practice I have found it almost painfully true.

The worst part of this bitter truth is not the distortions of fact but the lies that clients tell themselves so often that the falsehoods might as well be truths. I call this phenomenon “breathing one’s own ether.” I am not talking about the ether that was proposed by the Greek philosopher Aristotle and later used in optical theories as a way to allow the propagation of light, although I could. My ethereal euphemism refers to the ether usage during the 1930s that was the first anesthetic to make patients lose consciousness quickly and completely.

Clients slap on an invisible face mask, turn on the regulator, inhale deeply, and remove the mask from their face, lungs filled with the vapor. They look me squarely in the eye and begin to recite well-rehearsed lines from the abyss of falsehood. What is worse is the look on their face when the expect me to believe them and see clearly that I do not.

As a consultant it is not my job to believe anything that a client says anyway, unless it can be verified in writing. The absence of verifiable documentation is at least a good place to start. Even if there is documentation, its veracity must be challenged because to do otherwise is to engage in a world of ambiguity, which is something I expect from salespeople and the essence of another essay.

Here is an example. “Having my spouse work in the business saves the company money.” The false economy of having a family member work off the payroll creates other issues than a compensation plan that sucks. It compromises the integrity of the business, creates huge boundary issues between personal relationships and work relationships. Job description, supervision, company policy and procedure are all compromised. It is not a successful plan.

Let me cite a couple of television shows to exemplify what I mean. One is a comedy and the other is a reality show. One is about delusion and the other about denial. First, the comedy:

Breathing one’s own ether is the reason I have a hard time watching The Office. Its central character of the American version, Michael Scott is played so well by Steve Carell that it is painful for me to enjoy. The character is delusional. He believes he knows everything and that he is a great boss. Grant you, good comedy relies on a dose of pathos. If only Michael wouldn’t believe his own bull, but then the show would become a tragedy. In business, it frequently is a tragedy and Michaels exist more than you might think.

The reality show about people breathing their own ether is Kitchen Nightmares. Gordon Ramsay’s confrontational style aside, his clients are beyond delusional, they are in denial. It is kind of like watching grown people having their faces rubbed in their own poop by the genial bombastic “Chef” with a capital C. The owners that Ramsay confronts have signed on for abuse when they insist that wrong is right. Although I have entered the frontier of outright confrontation in my practice, you do not get letters of endorsement with bombast. Nor am I producing a reality style show.

Whether it results in delusion or denial, the problem is that the behavior becomes an obstacle to success. Michael Scott and Ramsay’s restaurateurs are in their own way.

If I were to produce a show about the management consulting practice, I would call it Extreme Make-Over: Business Edition. Come to think of it, let me slap on my own invisible mask and take a snort or two. Heck, I could sell it to Cadillac, or Donald Trump, or Budweiser, that’s it. I could star in it too; I used to be a TV weatherman and was every bit as good as David Letterman. It will be perfect for Fox or the Learning Channel. We’re talking, you know. Are my lips moving?

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Originally published on Blogcritics, June 11, 2011

Saturday, June 4, 2011

Factory Tours and Facts

When politicians and pundits talk about small businesses and job creation, many of them seem to rely on Chamber of Commerce created public relations photo opportunities and televised factory tours for their information rather than finding out the facts. Here are some facts that most politicians and pundits ignore in their fantasy world of U.S. businesses.

The Small Business Administration defines a small business as “one with fewer than 500 employees.” Here is the short version of what the SBA says is important about small business to the U.S. economy.

  • Represent 99.7 percent of all employer firms.
  • Employ just over half of all private sector employees.
  • Pay 44 percent of total U.S. private payroll.
  • Have generated 64 percent of net new jobs over the past 15 years.
  • Create more than half of the nonfarm private gross domestic product (GDP).
  • Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
  • Are 52 percent home-based and 2 percent franchises.

Want to astound your friends? Ask them, “Who produces 13 times more patents per employee than large patenting firms?” The answer: US small businesses do. Furthermore, you can add, according to the SBA, “These patents are twice as likely as large firm patents to be among the one percent most cited.” You’ll get “wow” and puzzled looks. But I digress.

The National Association of Self Employed adds that of those businesses employing less than 500 people

  • 77.6% are non-employers, or self-employed.
  • 17.3% employee 11 to 19 people.
  • 2% employ more than 20 folks.

Some perspective is in order. Go to the sports page and think about Pro Football for a minute. I am not talking about the sports teams themselves, but about the financial impact the NFL wields on franchise towns like Green Bay, which is not a major market. Business News Daily says an “NFL Lockout Could Sack Small Businesses.” According to the Daily, “The livelihoods of thousands of small business owners and their employees are at stake in each of the NFL’s 32 cities. Restaurants, bars, team apparel stores and other small businesses located within walking distance of NFL stadiums are bracing themselves for a potential lockout and the ramifications it may have.” Would you like to talk about a seasonal business?

So let’s talk about Washington political rhetoric. It continues to suggest that the slow recovery is because banks will not lend to credit worthy borrowers. According to the non-partisan National Federation of Independent Business, that is not the case. The NFIB reports that the economy generated a lot of jobs by making bad loans and they are gone now. Community banks across the country have plenty of money to lend, but “the pipeline of good applicants collapsed in the recession.”

Remember the football lockout I mentioned? The NFIB says that on the job side “it is going to take a rebound in consumer spending, particularly in the service sector to make a significant dent in the number of unemployed. The manufacturing sector is doing very well, but it does not create many jobs.” Factory tours and the Chamber are good for television, not so much for business facts. Facts are boring.

Article first published as Factory Tours and Facts on Blogcritics.