Performance at GM, Performance in Baseball

Today I read two starkly different news items. Both deal with performance. One seems to be about 10 years ahead of the other:

Rick Wagoner of General Motors vacated his CEO post today. The reason is that he didn’t do a good job anticipating the need for more fuel efficient cars. The US Federal Government is involved in the decision because of the impact to the economy a bankrupt GM would have. But all this started long ago and no one ever really took the time to fix the big problem. So what is the big problem? The separation of the worker from the company via the union. These two entities need to improve the standing of each other, but somewhere along the way it became adversarial and protectionist. Because of this lots of great car ideas are never developed. The worker has a defined job and management has defined terms for using its workers. It is no wonder robots have taken many of the jobs, the humans weren’t leveraging what made them better – their minds. As health care costs rise and pension payments continue to submarine the company it will be interesting to see what comes of the union. And I’m actually pro union, when the social contract is out of balance.

Stephen Strasburg is a pitcher for the San Diego State Aztecs. He can throw a baseball 103 mph. That is tied for the fastest recorded in a ball game. And he doesn’t just rear back and throw fastballs either, he has change ups and movement. Mr. Strasburg is likely to be the number one pick in the baseball amateur draft by the Washington Nationals. Being number one usually means a pretty good pay day. The top notch pitchers in the past have signed $10 million contracts. But being number one doesn’t necessarily mean greatness at the major league level, so there is risk. What is interesting about this pitcher is his agent. Scott Boras represents Mr. Strasburg and will negotiate on his behalf. Mr. Boras is very good at creating leverage for his clients and getting very good deals for them. The price tag he is asking for Mr. Strasburg is $50 million (over 6 years). That is a 400% increase over what the baseline is. The argument is that Mr. Strasburg is a once in a generation pitcher who can do things no other pitcher can do. This may be true, but as stated, the risk is immense. And what does this type of deal do for the economics of the draft? What is the price of next year’s once in a generation player? I’m all for a player maximizing their income when they can get it (you never know what the future holds), but it can’t be disproporate to the market for the product as a whole. Just ask Mr. Wagoner.

Jeff Bezos of Amazon is Working with the Average Employee

Maybe I’m a sucker, but I always like to read about how a CEO is working down in the trenches with the average worker. Sometimes it is just a fluff piece for the news, but I want to believe that most of the time it is to get a real idea of what is happening. But if it is just an hour or even a day I’m not sure that they get the genuine working environment. That is why I’m impressed with Jeff Bezos of Amazon. He is spending a week in a distribution center in Lexington, Kentucky to learn about how it really operates. After a day or so, the novelty of the CEO being there will wear off and honest feedback will be provided. Here is a link to the article I found on it called Jeff Bezos Works In Kentucky Distribution Center For A Week.

A “Bonus” entry for Working Thoughts

Certain terms lose their meaning depending on how they are applied. I mention this in another post about “Talent” called Using the Term “Talent.” But sometimes a term means one thing to one group of people and another thing to another group of people. I remember when I was 15 years old, my friends and I had what we believed to be a clever language where certain words were really code for something else. It worked just fine and no one knew or cared otherwise.

“Bonus” is now somewhere in the realm of losing its meaning as well as meaning something different depending on the context. The assumed meaning is that it is a reward for a job well done and the company is prospering. But in many finance based companies, a bonus is just a form of variable pay. It isn’t a matter of if, but how much? Ultimately, it communicates to the employee where he or she stands with the company.

I was like many other people and outraged by the recent bonus news, but it is wrong to paint everyone at these different companies with a broad brush. And if you want these companies to truly recover then you have to retain the best workers. This has gotten out of hand of course, but bonuses to some employees are warranted.

Another similar situation is how Banks are abandoning their golf tournament naming rights because of the backlash. These are contracts already paid. So someone assigned the cost of bad publicity to be more than what was paid for the naming rights. This lost advertising opportunity hurts many parties – local sign companies, caterers, car service companies, and tent rental companies, just to name a few.

All this is because people see a headline and look no further. The sensationalism of the news is creating a shallow understanding of what is really happening and its impacts. It doesn’t seem like the story is being told with any genuine intention of informing the public. It is like it’s own language.

Financial Discipline is Good. Your Dreams will Thank You

Tomorrow is always a day away. That was a popular theme over the last 15 years or so as many individuals adopted a mindset of living for the moment. As everyone knows, the bill came due. But the means to pay for it never materialized, whether it was the big promotion or the job change or the side business never started up.

Now behavior is changing. Saving and financial responsibility is the thing to do. Planning for a year from now isn’t good enough, you have to go ten years out. The last time people have thought like this as a mass group it was the Great Depression generation. But I’m not completely sold that this is a financial scar or simply a bad bruise.

There is a love/hate relationship with discipline. You feel good for pushing yourself to accomplish something that is difficult. But some relief is needed as a kind of reward for the dedication to begin with. John Tierney in the NY Times wrote a piece called Oversaving, A Burden for Our Times. The theme of the writing is how there is guilt associated with deviating from the discipline but that guilt fades if the activity, event, or purchase was worth it and memorable. But withholding some deserved reward creates an anxiety.

We are such a goal oriented society that sometimes the goal takes on weight in our lives that is disproportionate. This is the death bed realization type of stuff. I feel this is the seminal value change that is occurring. Just like how the Great Depression inspired saving and discipline, this crises will generate not goals, but dreams.

An Interview with book author Robin Fisher Roffer

Recently I ran a review of the Book The Fearless Fish Out of Water: How to Succeed When You’re the Only One Like You by Robin Fisher Roffer. I was hoping to do a quick email interview with her and she accepted. Here’s how it went:

Thank
you for taking the time to do this interview with Working Thoughts. My
readers benefit from hearing different perspectives. So lets get into
the questions.

Q1) Now that your book is released, what is next for you?

Right now I’m running all over the country giving keynote speeches and workshops around my new book. While I’m in each city, I’m sitting down for media interviews. It’s very exciting!  At the same time, I’m working with my clients to reinvent their brands so they can become more relevant. Despite this challenging economy, Big Fish is thriving!

Q2) Who influences you and where do you find inspiration?

My 9-year-old Roxy who fearlessly goes to school each day knowing who she is. She is a mirror to the best parts of myself. Also, my father who raised my sister and me by himself while running a small ad agency as well as people who use their influence for the greater good like Bill Gates, Bono and Oprah and those who have made a real difference like our new president,  Steve Jobs and Ellen DeGenerous… none of whom conformed to any norm. I’m also influenced by the wild, natural beauty of Santa Fe and its deep history.

Q3) How does someone become a Fearless Fish? Were they born like this? Influenced by their parents? Or what? 

Parents can be instrumental in helping their children to be fearless, especially right now as they are facing major challenges. Being a good role model is essential. My dad (who lived through The Depression) taught me two major lessons to help me be fearless: 1) discipline is the key to happiness and 2) believe in yourself and you can do anything. You also become a Fearless Fish by seeing the possibilities, rather than the obstacles in any situation. It’s about changing your lens.

Q4) I think there are several attributes to be a Fearless Fish. Here is my list: confident, motivated, high tolerance for criticism, contrarian to a fault, bigger than the town (metaphor), and solve problems differently than their peers. How accurate is my list? 

I like your list! However, Fearless Fish are positively different and can be a part of a culture without drowning in it. So, they can be contrarians, but not to a fault.

Q5) Do you think Fearless Fish are more likely to be entrepreneurs? 

Yes, eventually they have to go their own way to be truly happy and fulfilled.

Q6) Do Fearless Fish struggle in prolonged group dynamics? 

Fish out of water can struggle in groups, because they only focus on how they don’t fit in. Fearless Fish see the connections and learn how to share their opinions without alienating everyone. They do the 180º turn and stand in the shoes of the people they are trying to influence and answer the question, “What’s in it for me?”

Q7) Do Fearless Fish have some sort of grand plan that they strive for, whereas others might not have an idea of what they want for themselves? 

Yes, my intention in writing the book is to give people who feel like they’re fish out of water a permission slip to celebrate what’s different about them and turn their uniqueness into an advantage without selling out. Through the exercises at the end of every chapter, readers arrive at a “grand plan” that is aligned with their purpose or what I call “career destiny.” 

A Viable Electric Car Business Model?

I like new business models, but sometimes it isn’t a new business model at all, just a new industry to apply it to. That is what Shai Agassi is trying to do. He has a project called Better Place, which is trying to create a viable electric car platform.

The business model Mr. Agassi is using is the same one as cell phone carriers. Instead of buying minutes of use on the network, you buy miles. And just like you need a cell phone to access the network, you need a battery to drive the electric car. That is what I really like about the model, it assumes that battery technology will improve and probably at a fast pace, so why saddle the consumer with that churn? It disincents them to buy an electric car and you never get the scale you need.

David Pogue of the NY Times highlighted Mr. Agassi in a couple of pieces recently. One was in the paper and it’s called Electric Cars for All! (No, Really This Time) and the other was on CBS Sunday News and it is called Making The World A ‘Better Place’

There are still many hurdles to overcome, but two major obstacles have crumbled recently.
    The first is cost. The cost of the electric car was too high for any serious adoption to happen. The cost has to be slightly under the cost of a gasoline car because of the initial hassles and learning curve. This model equates a driving mile to $0.06 to $0.08 whereas a gasoline based mile is $0.10 to $0.12. This cost savings adds up. For instance, if you take the $0.08 for electric and $0.10 for gasoline and drive a typical 12,000 miles over a year then your numbers look like $960 for electric and $1200 for gasoline. A $240 yearly savings.
    The second is the US Auto Industry and their pull in Washington. But it wasn’t just because they are hurting financially. It also is because the variability of the price of oil creates constant management of the decision making process. How do you plan when in June of 2008 the price of a barrel of oil was $143 and by December it was $40. There are significant costs in just managing the what ifs.

I still see two major hurdles in the way though. Infrastructure and Culture. Mr. Agassi is addressing the infrastructure element by working with state governments like Hawaii and California in the US, Israel, and European nations and partnering to cover the cost of installing devices that are similar to a parking meter, but act as a recharger. Many people are habitual with what they buy and a product or service has to be a real differentiator to get people to change. I think this idea is that significant. But good ideas have to leave no doubt and if I’m a 68 year old man in Texas I’m probably not interested.

I recommend looking at Shai Agassi’s resume. He’s the type of person who shapes the future. By 30 years old he was financially set after selling his first start up and before he was 40 he was shaping one of the worlds largest software companies – SAP. Although things didn’t work out for him to become the CEO, he did expand his knowledge of integrating different components for success. In software it could be the business rules, the programming code, the database, and the tech infrastructure. With electric cars it is the battery technology, the fill up behavior, the cost model, and the government. Integrating each of these with scale and timing is a tough task, but it looks like he knows it.

I believe there is an earnest desire in the US to move to an electric car platform. Just make it easy on consumers.

Working Thoughts 03-20-08

Interview Question: How much sleep a night do you get? Part 1

    

Three Requirements for Entrepreneurs

Anthony (Tony) Tjan  is the founder/ CEO of Cue Ball, a a venture and early growth
equity firm investing in the information media and consumer sectorswrote a recent blog entry for the HBR.com site called Great Entrepreneurs’ Secret: Smarts, Guts, and Luck. On the surface those are three secrets we’ve heard before, but I like some of the lines he has. I pulled some out:

Regarding Smarts:

The best self-made entrepreneurs possess outstanding street smarts, intuition, emotional and conceptual intelligence
as much as–and often more so than–book smarts, analytics, and
managerial intelligence. It is why founders are usually very good
getting companies to a certain level, but usually less good at scaling
their idea. The CEO who scales a company probably did could not have
founded the business and, vice versa, the person who founded it
probably could not have scaled it. The exceptions of Michael Dell,
Steve Jobs, Bill Gates, and Howard Schultz are just that: exceptions.
They possessed the rare capability to bridge across the analytical and the creative,
across the left and the right side of the brain. For our early stage
investments, I am biased toward the right side- the more creative,
conceptual and street smarts. “Visionary Skills 101”, just does not
seem to be on many MBA curriculums.

Regarding Guts:

Great entrepreneurs have the guts to go after big ideas. They are
willing to put themselves out there when most worry about, “What will
others think?” The definition of entrepreneurship that Harvard Business School Professor Bill Sahlman made
prolific- “the relentless pursuit of opportunity without regard to
resources” forms the center of the entrepreneurial mindset. Entrepreneurs don’t worry about the resources they lack, but about the resourcefulness required to get the big idea done.

Regarding Luck:

Recognizing that luck is part of the success formula helps maintain the
necessary and important humility during the entrepreneurial journey and
beyond. Circumstances beyond one’s control will always occur. Accepting
this vulnerability and understanding that sometimes you just need the
cards dealt in your favor is necessary to maintain the conviction,
courage, and momentum of entrepreneurial enterprises.

Working Thought 3/18/08
A Brief Answer as to “Yes” and “No”