Archive for October 2009
The Wall Street Journal’s article on uncertainty causing issues for small business excellently examines how and why political decision making impacts small business decision making so profoundly. Certainly, large business can feel the effects of political intervention or policy debate, too.
The article does not explore another source of tremendous uncertainty – unstable monetary values. If business owners cannot predict, with some level of assurance, what their dollars will be worth in six months or a year or two, they cannot make wise investment decisions.
Many writers and many of my friends know far more about this subject that I do. But I posit that monetary uncertainty has caused at least as much hesitation on the part of small business owners as any political decision made or under consideration.
Of course, a business never has complete clarity in its decision making; uncertainty, fickle customer behavior, and tough-minded competition necessarily injects uncertainty into the business environment. But those forces, ultimately, derive from the market, which sends necessary signals for effective response to wise business leaders. The pernicious aspect about monetary uncertainty, in the modern world, is that business cannot adequately analyze all the possible outcomes and still manage operations – especially in small businesses.
The Economist has a piece on management gurus this week. Pretty good synopsis of the problem with management gurus, but not much more. Indeed, perhaps the only writers besides those of business books with a poorer reputation for quality, from research and insight perspectives, are military ‘historians.’ Exact statistics on this don’t exist, but it sure seems that 90% of both – like of mergers and acquisitions – destroy value.
Why is this? In business, surely the rapid pace of change can make new, fresh, innovative, even radical ideas obsolete. As noted in the Economist article, five years after In Search of Excellence was published, many of the profiled companies hit the skids. And several companies in Good to Great and Built to Last have struggled since their publication in the 1990s – and Circuit City went bankrupt this year. These instances would seem to denigrate the ideas in those tomes, and perhaps they do. Or perhaps those lessons have been learned, and new practices and ways now differentiate successful management from the average.
The question remains: Why are so many business books so bad? Why are so few worth reading? Maybe business books do not differ from other kinds of writing – few authors stand the test of time. But, as I stated, business authors seem particularly unremarkable in their insights: just perusing a local Barnes & Noble business section, can you really say that most of the books on the shelves are worth their weight in paper?
More thoughts later, including my list of the few great business books out there. But for a preview: few of the great business thinkers would be considered ‘gurus.’
Looking back on history, we sometimes find a temptingly simplistic path from one age to the next. We seem to witness inevitable forces sweep across the story of history — forces like liberty, the rule of law, or democracy. Today, that unstoppable force — anticipated for decades, if not centuries, and now prepared to forever alter the course of humanity — appears to be globalization.
As proof of its inevitability, nearly all discussion on globalization focuses on whether it will cause mass benefits or misery for mankind. For nearly a decade, I cannot recall ever reading a article questioning it as a future, sweeping phenomenon.
Enter Patrick Deneen, a professor of political theory at Georgetown University. In his article “Conventional Wisdom? Checking Globalization,” he questions the inevitability of globalization. Now, I love this piece simply because it thrust before me an idea so contrary to my own thinking; it forced me to re-evaluate whole assumptions I had made for more than a decade.
Professor Deneen does an admirable job making a cogent argument that the trend of history may in fact turn toward localization, and not in the direction of a globalized world. In the last year, how many farmers markets have opened in major cities? How many ‘buy local’ (however ‘local’ is defined) campaigns have begun, perhaps as misguided notions to restore health to the local economy, but also perhaps as a reaction to people buying everything from everywhere but here. Certainly, Deneen’s evidence does not overwhelm. It leaves a dull sense in the reader that the matter needs greater exploration.
Does the answer matter? Who cares if we live in a more local or global world? While I cannot articulate reasons now, my sense says yes, it does matter. More thoughts on this later.
Chris Cillizza’s recent Washington Post The Fix blog “Obama’s Populist Turn” (http://tinyurl.com/yjd8v4c) notes that only 40% of Americans trust in corporate America to do what is right. That’s a low number, given that about half of Americans are employed by corporate America (depending on the definition of ‘corporate America’). It’d be instructive to look at trend data here.
Broadly speaking, though, it is corporate America that has most benefitted from the government’s largess in the last 18 months. Moreover, corporate America maintains close, often very close, relations with the government — and has for decades. (Robert Reich’s Supercapitalism contains an excellent history of this phonomenon, if a flawed interpretation of that history.) Thomas Donlan’s excellent article in Barron’s this week explores the more recent manifestations of this cozy relationship: http://tinyurl.com/yf9eqxn.
My question is: does corporate America suffer, in the public’s perception, because of these close ties to the government? To look at the matter from another viewpoint, I’d bet that the public has much greater trust in small business, which has a less organized and formalized relationship with the government. Now, we may not be talking about causation here (close ties to goverment causes the public’s distrust of corporate America) and maybe not even correlation, but the notion of some possible connection struck me this week.
The WSJ Weekend Interview with John Mackey, CEO of Whole Foods: http://tinyurl.com/yasljuj
What the American People Really Want to Stimulate the Economy: Entrepreneurship-Friendly Policies, by Douglas Shoen
Lots to comment on here, and I may not get to it. But it was interesting to see how supportive Americans are of entrepreneurs, even though only a small percentage of Americans are entrepreneurs themselves. But Americans are aspirational people, and — setting aside ‘Keeping Up With The Jones’ materialism — are generally not jealous of others’ successes. Especially when success comes as a result of risk-taking and incredibly hard work.
A reader (in a direct email to me) very justly pointed out that my original post had a number of flaws. For instance, my blog would lead you to believe that issues relating to ‘doing good for the community’ are recent concoctions of places like business schools. Of course, this is false, and, as the reader points out, “groups like Kiwanis and Rotary, groups made up of business leaders looking to “give back to the community through service” have been around for generations, and continue to thrive.” Moreover, my blog may have inadvertently conveyed the idea that I think all ‘doing good for the community’ is hooey or only slyly done by business for PR reasons.
The original post certainly inadequately conveyed my thoughts on the issues at hand. The main point was intended to be: businesses do great good by being good businesses. And, as a follow-on, leaders do great good by leading their organizations effectively. And, we have suffered difficult economic times recently, in part, because many people did not lead their organizations effectively. (Of course, some very capable leaders have ultimately succumbed after waging great battles to right their businesses in these enormously challenging times, too. This is not a blanket indictment of all leaders at every failed or struggling firm.)
This poor leadership has caused devastating consequences – both for markets as a whole, but more importantly, for men and women now without employment, or with diminished savings because of lost company valuations, or suffering a host of other ills.
So, while leaders can ‘do good for the community’ (as can businesses) through a variety of activities – participating on non-profit boards, as one example – they can do tremendous good by first creating and developing successful, profitable businesses