The Next 30 Years: Smaller

An election just passed and the results indicate a very unsatisfied voter. It makes perfect sense. Middle class jobs are scarce and wealth is gravitating only to the uber-rich. We’ve had a thirty year mirage in the standards of living.

Thirty years is a time period I key in on. President Ronald Reagan made thirty year policy decisions and we are at the dawn of a new thirty year window. Besides the politics of it, the transition of leadership throughout companies and communities is just now beginning. Those in their 30s and early 40s are set to grab leadership positions within the next three years.

This is a very positive development.

The values of those ending their leadership position are different from those set to attain it. For instance, the sense of privacy for a 25 year old is nothing like it is for a 60 year old. Sharing on facebook, twitter, and on blogs means you are comfortable with potential embarrassment. There is no hiding skeletons in the closet anymore.

But the main value I see differentiating the two groups is one of scale of competition. The older guard wants to amass competitive advantages and really leverage economies of scale. But the younger guard wants to go smaller. Manufacturing shaped the economics of the 20th century, but a knowledge economy is shaping the present day. Concepts like Design and Branding are ever more important. And perception plays a part in how they are valued. Perception isn’t a Deming TQM or Six Sigma concern.

Bigger versus smaller separates the path. Bigger wants to protect the status quo – scale is expensive. Smaller wants nimbleness but with standards. Think Microsoft with the Office Suite versus Apple’s App Store. Microsoft has a cash cow with Windows and they leverage it to sell Office. People are familiar with it and it works. But how much has it really changed over the last 10 years? Not much, but people keep buying it. Now think about Apple with the App Store. They developed a platform for small developer shops and large ones to compete on an even field. Apple manages the standards and sets up the merchant services. The developers can leverage the scale Apple already built with the platform and sell. Compatibility and interoperability aren’t deal breakers either. This simplifies the cost to compete. Ideas sink or swim based on their merit and marketing.

As we embark on the next thirty years, expect to see a shift in values. It’ll be less of an us and them world and competition will be a loose definition, almost encouraged. Attitudes will change. Smaller is captivating. What do you value?

Working Thoughts 11/4/08
Why Voting Matters

Well Said Leadership Characteristics

Every Sunday the NY Times runs an interview of a business leader called Corner Office. The questions are about leadership, hiring, and career advice. The answers are usually insightful. For example, this past Sunday George S. Barrett was the interviewee. He’s from Cardinal Health – the Chairman and CEO to be exact. Adam Bryant asked a question about Leadership and got a response I wholeheartedly agree with. Leadership is essentially about particular characteristics and how they are conveyed. He sums it up well below:

Q. What’s your philosophy of leadership?

A. Articulating it in a single sound bite is hard for me, but I’d say this. I do think leadership is largely about trust, and trust has a couple of dimensions. It starts with competence. People have to believe that you really know what you’re doing. They have to really trust in your judgment because the data is so complex out there that they have to believe you can see through all the silliness and have some sense of the right course.

People have to trust that you have a point of view about what this enterprise is going to look like. What do we seek to be? And they have to trust that you understand them, that you get them. Not necessarily that you know them personally, but you understand what it’s all about to work here and that you have their interests at heart. I think that when you can do those things, it can be a powerful combination.

I think people sometimes equate leadership with charisma and decisiveness. I think those are powerful tools, and I hope I have both,but they’re not to be confused with leadership. I know a lot of very charismatic people who lack judgment and competence, and they’re not great leaders. They’re just fun to be around. And I know some very decisive people who lack judgment, which is terrifying.

Also, I think a leader has to be comfortable with having the weight on their shoulders. And that’s not for everybody. It can be hard, and it’s a different experience if you haven’t had to experience this. That’s not for everybody, but I like it because I don’t feel like I’m alone. I windup bringing the group together, and we own the weight. I love that part of it.

I also believe that leadership is a two-way street. I tell my team, “I expect to learn from you as well as you’ll learn from me.”

Working Thoughts 8/17/07 (this is a seminal belief of this blog)
At What Point Does It Stop Being Education?

Working Thoughts 8/17/09
Job Losses and the Self Employed

Considering a Passionate Outlet: For You and Your Employees

Derek Christian worked at Proctor and Gamble for 12 years and decided he needed a new challenge. My Maid Service is his outlet. He’s organized a small business around cleaning the homes for the affluent of Cincinnati. But as it says in the story on CNNMoney.com Small Business section, Christian experienced customer satisfaction issues.

Cleaning homes requires a high level of trust. Trust is earned over a period of time, so not only did My Maid Service have to have competent employees, but it has to have trustworthy ones as well. And trust is in the eye of the beholder. The problem is that very few people aspire to be a maid. His workers did the job as an income bridge on the way to another job. This results in very high employee turnover, creating a constant erosion of valuable client trust.

Christian recognized this non-monetary part of the business and took the position of the employee. He recognized their desire to find a job more closely aligned with a career and came up with a win-win. The agreement is that an employee signs on for two years of service and during that time Christian pays for online and local classes in the field of interest.

Dan Bobinski, a Boise-based management consultant and author of Creating Passion-Driven Teams,says Christian’s training strategy is both uncommon and strategic.”He’s looking at their motivation and saying ‘If you stay with me doing these menial jobs, I’ll pay for what you really want to do.'”

That can deliver bottom-line benefits. Hiring and training entry-level employees costs an average of $2,000, so spending money on programs that keep existing staffers around longer is a smart investment, Bobinski says. And training is one of the best benefits a company, even a small one, can offer. The number-one reason people leave their jobs is that they don’t feel challenged, he says: “People,especially of this generation, want to learn new things.”

It’s easy for a boss to think their employees are as excited about the work as they are. But the truth is they rarely are. It’s important to understand what they are really passionate about and foster a mutually beneficial relationship.

The Chicken and the Egg – Influence and Motivation

A couple of days ago I wrote an entry called Consider Your Influence . The idea being that we are influenced by not only people, but by other sources such as art. In the piece I mentioned Tim O’Reilly and Steve Jobs as two prominent thinkers in the technology world. Each of them is very wealthy, but neither of them does it for the money. They are motivated by something beyond a pay check. Dan Pink in his book Drive: The Surprising Truth Behind What Motivates Us , which I reviewed expands on why people behave a certain way. What influences behavior? This PBS video helps:

 

The Next 10 Years a Leadership Change will Occur

Have you ever had one of those moments where you are leaned over a bowl of cereal with a spoon in one hand and your coffee in the other and time is standing still? The moment is frozen because you remembered why you were doing something in the first place. I recently had that moment with this blog. I didn’t intend on it to be a daily account of the machinations of the job market. The global meltdown helped foster that view of mine, but really it was a lack of creativity.

Seven years ago a guy by the name of Paul Kaihla wrote an article in Business 2.0, a defunct business magazine, called The Coming Job Boom . It was a dark time for technology employment as the tech bubble had collapsed two years earlier. But the premise of the article is sound: Baby Boomers are getting old.

Here we are in 2010 coming off a severe economic reckoning. 18 months ago retirement portfolios were wrecked by the decline in the markets. They’ve rebounded, but scars remain. What does this mean to the business community and industry in general? The answer is that the next ten years will determine the fate of the US. Wow that’s a hyperbolic statement, but hear me out.

The demographics of the Baby Boomers are unmistakable. They are the largest group of people this country has ever experienced, both from a total count and as a percentage of the population. They also were the benefactors of two major US innovations: a free market method to war enablement and the public education system. Both are taken for granted now, but each one propelled the US during the middle portion of the 1900s. Because of this, the Baby Boomers have led this country in one way or another since the mid 1960s. That’s fifty years of leadership experience and problem solving set to retire. The graph below shows a generalization of the different populations segments.

As depicted, the crest of the Baby Boomers begins in 1951 – 60 years ago. For the next ten years, that crest is going to, in mass, think about things that aren’t work. Things like grand kids, travel, cooking, and golf. As I hinted before, I think the economic situation has delayed the great exit for a few years. And many older workers were laid off as well, so a job to bridge to retirement, whenever that is, is sought by many. However, the allure of retirement is a strong pull and fluctuations in the past haven’t disrupted it, so we shall see. If the numbers hold, the three groupings should look like this, resulting in about 14 million boomers retired by 2020.

So the question is, who will replace the Baby Boomers in business and industry? The answer is multifaceted. First is the sheer volume of people. Gen X and Gen Y aren’t big enough and they don’t have an educational advantage. The US is still the greatest innovator on the planet, so creativity and problem solving are assets. But it begs the question as to how these skills are distributed across the generations. I’m fairly optimistic about this one, but it could very well be concentrated in the senior bracket.

Here is a picture showing the proportion of the population by age grouping over the next 10 years. Some time in 2013-2014 the balance between Gen X and the Boomers will tip.

What I see happening is a combination of several factors. Gen X is already at an age of prime leadership responsibility, but many are blocked by the boomers preventing valuable learning opportunities. This can, and I think has, create resentment and a lack of trust by the two populations. Another aspect about Gen X is that they are very much technologically savvy and yet they are weighed down by a legacy culture, which was implemented by the Boomers. Things like Thursday night comedy on TV and face to face meetings. Gen Y is not burdened by these norms and is headed in another direction altogether. The Baby Boomers have recognized this and have partnered with Gen Y in a kind of mentor style relationship. This is accelerating the learning curve for those in that demographic and plucking a few more lead roles from Gen X. So although this looks like doom and gloom for Gen X, I can’t completely buy that Gen Y will leap frog them. So the chart will probably look like this:

The change is a bit subtle, but instead of Gen X completely filling the vacancies, I see it being the vast majority with the Boomers and Gen Y supplementing them. The Baby Boomers will redefine flexible work, especially those in the upper middle class, and work until 70. Gen Y will see the weaknesses in Gen X and go their own way. This means further partnering with India, Brazil, and especially China.

It also means that talent will very much be at a premium. And education is still a separator, but in a negative way, if you don’t have it, you are out. Now is the time to identify the individuals in the different groupings who work well together and foster some sort of cluster which pushes each person to be creative and allows for learning to occur.

I hope one day this week, you’ll have a cereal moment and think about your current job and how it help you over the next pivotal 10 years.

Google and China: A Social Take

Google is led by three individuals: Sergey Brin, Larry Page, and Eric Schmidt. They set up a stock structure which allows them to maintain real power over the company. The reason they installed such caution is for situations like what recently occurred with China.

China, as a communist country, maintains tight control over the flow of information inside their borders. Information is power, so these type of decisions aren’t to preserve the innocence of children. Google for about three and half years (2006 ’til early 2010) operated in China under the authority of the state. This manifested itself as censored results on searches. In January of 2010 it was reported that Chinese operatives hacked Google’s servers and specifically went after human rights activists. One method for the intrusion was to replace computer source code with compromised source code, which has back doors coded in. This subverts the usual way intrusions are detected with IP addresses. Google, Sergey Brin specifically, said they had enough and basically pulled out of China.

From a business stand point this is a shocker. China has well over a billion people and many of those people are recent members of the middle class. The advertising revenue potential of China is immense to Google and any other company.

This is why it’s important for Brin to have huge numbers of voting shares, because just about any other shareholder group wouldn’t let this happen. But the move has many positives for Google.

For starters, Google’s algorithm and feedback loop can’t have biased noise coming back in. It pollutes the relevancy part of their model. If searches are constrained to only certain sites or types of data it begins to undermine what is really being looked for and what isn’t. The integrity of the search is eventually out the window.

Secondarily, and possibly more important, it’s generalized that generation Y is socially prioritized. They ask about topics like green energy, pollution, and human rights. They don’t want to work for companies that are seen as evil and Google preaches “Don’t be evil.”

Just earlier this year 60 Minutes ran a story about a company producing something called the Bloom Box. The story is about an invention that produces energy more efficiently and with less transmission loss than local power stations. It isn’t cost competitive yet, but the angle the early adopters are taking is that this type of investment allows them to tell talented 20 somethings that they are socially responsible. This person can work for Union Carbide or Google. Google wants to recruit them and losing a few dollars on energy production is a cost worth absorbing.

The question is: Is 36 year old Sergey Brin, as a leader of Google, really foregoing the potential profits of China or is he protecting the image and brand of Google within the US? Is this about the prospective labor pool needed to sustain Google as an innovative company in an industry where 5 years is a long time.

Open-Book Management, Motivation, and Progress

For the last three months I’ve really been focused on motivation in the workplace. I’ve settled on a few main themes with particular emphasis on the ability to make progress. When people are committed to a goal, every step toward that goal is rewarding. It’s kinda like football. For every offensive possession the goal is to score a touchdown. Those six points are an emotional revelation.

However, the path to a touchdown is rarely one play. Usually, the score is a series of plays, gobbling up portions of the field chunks at a time resulting in first downs. It could be a running play, a pass play, or a creative trick play. These first down benchmarks are rewarding as well. They show progress to the overall goal of a touchdown.

On nytimes.com is a blog in the entrepreneur blog called You’re the Boss. Today I read an entry by Jack Stack titled Starting Over in Lexington: Turning the Plant on Its Head which describes the success of an implementation of something called Open-Book Management. I probably should have heard about it prior to now, but I’m fascinated by the idea, especially as it pertains to motivation.

Open-Book Management is a management style where the financial aspects of the company – costs of good sold, revenue, profit, cash flow, and so on – are made available to the employees of a company for consideration as they perform their tasks. The theory is that when people know how what they are doing affects the bottom line of a company, they will become more invested in changing the bottom line: they won’t be simple hired hands. The referenced blog post provides some great anecdotal evidence of this.

As Rob and I walked the shop floor, he told me story after story of how people in the plant — not the management team – were making the biggest difference. Because managing the cost of parts and materials is so central to the success of a re-manufacturing business, the associates were completely rethinking how they went about their jobs on a daily basis. They kept coming up with new ways to save and reuse materials – a savings that goes right to their bottom line.

Tony Johnson, a machinist, after learning how much it cost to outsource the machining of engine blocks, found a way to do it himself. Rick Draper, another machinist, figured out a way to use scrap material from used engine cylinder liners to make sleeves used in repairing transmission parts — rather than buying new sleeves.

In fact, the employees figured out so many ways to avoid using new parts that they created a whole new problem: They were buying and returning too many new parts, which was becoming a big hassle for the planners and parts-handling team. Through the efforts of assemblers like Paul Carrico, who cut his returns down to two or fewer per job, overall returns have now been cut by 70 percent over the last three months – reducing costs, increasing efficiency and improving cash flow.