As Time Goes By, Is the Economy Getting Better or Worse?

It’s time to look back two years ago and see what happened. The trough of the unemployment situation started October 2008 and abated some by April 2009. The losses in those months were historic: -554,000, -728,000, -673,000, -779,000, -726,000, -753,000, and -528,000. A normal really bad month is -250,000. These numbers were 3 times that. All told some 4,741,000 jobs were lost during this time period and remember, this is just the bottom of the trough.

As time passes employment seems to be improving. Just today a key benchmark was surpassed: the weekly jobless claims fell below 400,000 for the first time in two years. These are people filing for unemployment benefits for the first time.

Two years is 104 weeks and unemployment benefits last, at their longest, 99 weeks. It’s estimated that 3,500,000 people are no longer eligible. This social safety net, weak as it is, is gone for an additional 1.13% of the US population. There are two questions now. First, have, or will, these individuals acquire skills that are needed in the marketplace? Second, are they geographically trapped (can they move to a location that does need their skills)? Perhaps it’s a new era of the migrant worker. “Make no mistake, moving is living.”

The answers to these questions will have potentially costly effects on the US economy as conditions slowly improve.

Which reminds me of a year ago. I saw and enjoyed a George Clooney movie called Up in the Air. Clooney plays an employee of a company that conducts lay offs for other companies. Although, the movie coincided with a year into the recession (end of 2009) the theme was about layoffs. There were several scenes featuring people who are shocked, heart broken, and terrified about what is next for them. It’s a stomach punch.

A year or so later comes another similar movie called The Company Men. It stars Ben Affleck, Chris Cooper, and Tommy Lee Jones as three men let go from their jobs. The movie is about their emotional fight of being someone who no longer has a work identity. But as Up in the Air was about ending the employment relationship, The Company Men is about redefining it.

Scared of Ideas or Open to Change?

He hears the alarm clock, hits snooze, and lays there for ten minutes somewhere between sleep and awake. “In the Hall of the Mountain King” by Edvard Grieg plays:

He does what I think is one of the hardest things in the world to do, he puts the first foot on the floor in the morning. He goes to the bathroom, runs the shower, and peers into the mirror. Everyday its the same. Same time, same song, same struggle. Everyday.

Routines are good for many aspects of our lives. We need to focus on what is different in our environment and routines keep us safe to do so. But the comfort of a routine can be disabling as well. For instance, there’s a field of study called Terror Management Theory and it describes what people do to repress an awareness of mortality. Here’s an excerpt from HarvardBusinessReview.com called Employees See Death When You Change Their Routines which enumerates three means for warding off these thoughts:

Studies show that we create three existential buffers to protect us from this knowledge: Consistency allows us to see the world as orderly, predictable, familiar, and safe. Standards of justice allow us to establish and enforce a code of what’s good and fair. Culture imbues us with the sense that we have contributed to, and are participating in, a larger and enduring system of beliefs.

As a manager it’s important to know which of your employees are lulled into this perceived safe zone and will need some coaxing when change is on the horizon. They’ll want to hold onto the way things are – they’re good at them, they understand what’s expected, and they are familiar – but it’s counterproductive. You’ll need to invest in re-establishing these buffers for them…

Unless they are risk takers. Many entrepreneurs don’t like routines. They want constant change with a little bit of chaos mixed in. Companies like Google seek them out because they tend to be disruptors and a disruption can be a money maker. Just last week the NY Times ran an article about how Google gave 10% raises across the board. Google’s growth has brought with it the bureaucracy of a big company. Some entrepreneurs are fleeing the company. The reason is because they can’t affect change quick enough. Their supply of patience is sapped.

Both types of worker, the comfort in routine and the risk taker, must answer this question posed by Bob Brennan of Iron Mountain to this employees:

What do you recommend we do?

You can get a real sense for who’s invested in moving the company forward, and who’s watching the company go by, with that very simple question.

Q. Why?

A. People lay out problems all the time. If they’ve thought through what should be done from here, then you’ve got somebody who’s in the game, who wants to move, and you can unlock that potential. Bystander apathy or the power of observation, in and of itself, is not very valuable. There are amazingly eloquent diagnosticians throughout the business world. They can break down a problem and say, “Here’s your problem.” But it’s prescriptions that matter. So how do we move from here, and what specifically do you recommend?

Working Thoughts 11/29/07
It’s Not a Recession but it Sure Feels like It

Working Thoughts 11/29/08
There Are Jobs for Low Level Employees?

My Experience, Our Story

Every Sunday millions of Americans sit in a hard wooden pew to attend church. Regardless of the denomination the session culminates in a pastor of some kind delivering his sermon. It’s a learning situation emphasizing morals and what is expected of someone within the church community. The message is delivered usually in one of two ways – by describing negative actors who are sinners and thus need forgiveness or by sharing examples where someone demonstrated moral conviction despite dire circumstances.

There are splats on the white wall with the consistency of a slug on a humid night. They’re maroon with some tan mixed in. A few splats are sliding to the floor. Thirty seconds ago I shot a man through the abdomen and I’m about to kill another. It’s fun. Of course this happened in a popular video game; my brain is able to rationalize the fiction of it while tapping the visceral sense of survival. Viva adrenaline! I’ll play for a couple of hours, which will feel like 10 minutes, and occasionally I’ll be the one slumped on the floor, but I’ll try again and again.

We learn through experience, whether it’s our own or someone else’s. We use immediate feedback to correct behavior in the moment in time – the present – the video game. We also use our memory of what happened as a means to anticipate and learn from others – the pastor’s story.

Last week I sat with some friends and watched football. I ate an order of hot wings as I normally do. However, this time they were a little sweet. They didn’t taste bad, but I know the flavor of hot wings and this wasn’t it. So this Sunday I asked the waitress what the story was? She replied that it might be a slightly different recipe because of the cook that was there. I told her I wanted hot wings and not ones that are sweet. As soon as the order came out a part of my brain – the insula – activated and I knew they were sweet. My experience from last week was recorded and I didn’t need to eat the wings to know the taste. I ate them anyway, but I asked for a side of hot sauce.

In management it’s important to use effective story telling to bypass the time commitment of experience. If one person on the team can spend a day in training and then relay their memory of the event on to another 20 then the productivity of the group will improve tremendously.

The difficult part is that people learn in varied ways. I think that’s one of the reasons why Microsoft Powerpoint is so popular: on one slide is a bullet list of the key points, the next is a graph, the third is a picture of a team at a table planning something, and the last is a summary. But now it’s time to steal ideas from marketing and develop campaigns.

Suppose I’m trying to change the culture of a team of 20. I’ll need to have one-on-one meetings with each person to lay it straight; to be direct with what I want. Next I’ll follow that up with a Frequently Asked Question (FAQ) document answering questions that collectively each person needs a response too. I’d also possibly do an interview with someone from outside the team who would benefit from the desired changes and publish the account for the group to read. If video or other media friendly resources are available I’d look into those as well. The point is, I’d tell the story in as many formats as I can and then I’d follow it up with reinforcing ideas as much as possible.

I’m not a preacher or a video game. My goal is to tell positive stories and produce experiences that are lasting… for the whole team.

Working Thoughts 11/15/07
Cloud Computing and IBM

Working Thoughts 11/14/08
My Interview with Norm Bogner of 4Refuel

Learning about Risk and Reward in the Marketplace

The US has a culture where commerce permeates everything. It’s practically omnipresent. Because of this many Americans unknowingly learn facets of business that other cultures do not. A Harvard Business Review blog entry by Vijay Govindarajan called Marketplace Literacy: A Reverse Innovation Opportunity? pulls out three aspects of business: the skill being sold, the know-how to be efficient and the know-why to be effective. Here’s an excerpt example:

Marketplace literacy itself can be viewed at three levels: the concrete level of vocational skills or a trade, the more abstract level of business know-how, and the level of understanding, or “know-why,” about the marketplace. For instance, suppose a poor woman who knows how to cook (a vocational skill) starts a food shop. To run the business, she needs know-how — specifically, she needs to know how to set the menu and prices, choose a location, and promote her business. She also needs “know-why” — to understand why it’s important to be customer oriented, why to choose one location and not some other, and, ultimately, why to go into this business and not something else.

The second two items really leverage planning. Knowing details, spotting trends, and anticipating demand levels enable a good business person to set up a business for success. Many people in the US get lulled into a belief that their intuition is the same thing as truly understanding what can or will happen. Another HBR blog entry discusses the differences between foresight and intuition. It’s by Jeff Stibel and it’s called How Forethought (Not Intuition) Separates the Good from the Great. Here’s an excerpt:

But let’s beclear: Intuition is different than forethought. Intuition is another oneof those necessary but not sufficient traits. Without intuition, thehuman race would have been finished a long time ago. Intuition rests onthe ability of the brain to read patterns, and react accordingly. Forinstance, you don’t need to accumulate hundreds of details about acoiled object in your path to jump out of the way. The brain decidesinstantly that it’s a snake. Now the object may merely have been acoiled rope — and you may have jumped into the air needlessly, to theamusement of passers-by. But that is because the brain is built to reactquickly. It doesn’t wait for all the details.

Here’show forethought is different from intuition. To have forethought, youneed an abundance of details and you must labor over them. There is noright answer when thinking about the future, merely an endless number ofscenarios. It is what the Stanford economist Thomas Sowell calls”long-range thinking.” Forward thinking is the brain’s way to chip awayat the edges of uncertainty, to make bets based on past experience. Thebest of the best do this incessantly.

Finally, I mention these two items because the US economy is essentially sitting still. The inputs – the data – used for decision making is not currently trust worthy. Legislation over the past two years, such as Health Care reform and Financial Reform, have left many businesses flummoxed as to what to do, so they’re not investing until a path is clear. Geoff Colvin in his article Uncertain of future regulation, businesses are paralyzed provides a stat that is indicative of a business environment in wait:

Once these mammoth laws are enacted, government agencies must write new rules to implement them. For example, the Dodd-Frank law requires 243 new rules, by the count of the Davis Polk & Wardwell law firm, and no one yet knows what they’ll require. 

But it’s also a time of getting ahead. Sunk costs are a reality in business and holding off on investments or hiring is valid to a point. The problem is waiting too long can lead to lost opportunity in the marketplace. After all, business is all about risk and reward.

Working Thoughts 10/21/08
The Next Stimulus Package Must be a Job Creator

Working Thoughts 10/21/09
US Values have Changed, but the Change is Subtle

Inspiration and Institutions

Malcolm Gladwell, the author of several best sellers including a favorite of mine The Tipping Point, wrote a New Yorker article last week about the bonds of Social Networking tools like Twitter and Facebook. To explain his point he describes the fears and risks of the “sit in” generation of the 1960s. Social change at that time required a particular type of nerve: courage and restraint. It was needed because the threats, occasionally deadly, were often carried out. They knew they had to endure because their weakness would lead to weakness in others. Gladwell calls these strong bonds.

6.2 million people have been unemployed for more than six months. Being without work for that long is troubling to the mind. Being available in case something comes up and the instability of simply not knowing is tough. Plus it’s lonely. But 6.2 million is a big number and it means there’s probably someone within your community who is in the same predicament. That is where a site called Unemployed-Friends.com comes in. It’s a means for those without work to exchange messages, thoughts, and prospects. But besides the fringe benefits of venting, it’s a market for helping each other. That’s the genius of it, these people have time and unused skills available. And this is just the short term benefit. Strong bonds might be the long term benefit.

When I was about eight years old, I remember the pull the professional wrestling. “Who won Wrestlemania?” I’d ask my dad because it was too late for me to stay up. This was the ’80s and wrestling wasn’t obvious about the scripted action yet. People like Hulk Hogan would get the crowd going with their back stage interviews. In the late ’90s a resurgence followed and people could smell what The Rock was cooking. The camera would pan the stands and see signs with clever sayings like “Hogan was a Flintstone” and “This Space for Rent.” Everyone would chant the catch phrases and nothing would be better than Jerry Lawyler’s high pitch announcement of a surprise wrestler “WHAT?! That’s Stone Cold Steve Austin’s music!” Simply exciting.

But this type of connection is weak. It’d only last while the entertainment was going and then it was time to move on to something else. I think this is what Gladwell was trying to get across with his New Yorker piece. That Twitter and other Social Networks are forms of entertainment and have no lasting kinship. But we are also in a society where the threat of an act is all that is needed. It’s pretty powerful. So getting a few thousand signatures via facebook isn’t the same as a “sit-in” but it sends the message to the offending party that they could be in a costly confrontation. And then they have to decide if it’s worth it.

I mention all this because I think a real test of these tools is underway. The US election cycle for 2012 will begin in about six weeks. About a year later we’ll begin to see a lot of movement around a third party candidate. Thomas Friedman in the NY Times writes about the idea in a Op-Ed piece called Third Party Rising . He should have used a former wrestler as an example – Jesse Ventura ran a grass roots campaign in the mid ’90s, about the time the Rock was cooking, and became governor of Minnesota. Michael Bloomberg might give it a shot, we’ll see, but I don’t think a third party can win, but he can get close, and the mere threat should send shock waves to the Democrat and Republican Parties. From a business perspective, the time is right to capitalize on the on coming need and use of the strong and weak bonds.

Working Thoughts 10/4/08
September 2008 Jobs Report and Wages

We Respond to Small Cues Very Effectively

I’m really into the potential of ubiquitous measurements. My last entry was about HP building sensors for everywhere and everything. It’s also know as the “internet of things.” The reason I think it’s coming and very powerful is because it let’s people know the impact of their actions in real time. Behaviorists have for years said that people are not rational in their decision making and I agree, but making data available is one way to change behaviors. We respond to small cues very effectively – just asking someone in marketing and advertising.

http://video.ted.com/assets/player/swf/EmbedPlayer.swf

Data Collection is Getting Cheaper, Better, and Automated: Sensors

My last entry was about the subtle delight my Chumby brings me as a device to have around the house. The value of it is two fold: the ease of use and the ability to connect to the internet.

Networking equipment is constantly getting cheaper and better, so the opportunity to innovate up the stack is there. Apple is widely regarded as the best at it, but other companies are very good too, you just don’t hear about it because it isn’t advertised.

Now there are companies taking networking to a greater level. HP, IBM, and others are partnering with enterprises and government agencies to install sensors where ever possible. The size of the sensors are small enough now so that no extra burden is added. The example I read about in a blog entry called Why HP Thinks Sensors Will Lead to The Next Big Wave of Computing by Richard MacManus describes a bridge like the Golden Gate Bridge with thousands of sensors installed and constantly relaying the health of the bridge back to a command center. Each sensor would correlate to a critical component of the bridge and create an opportunity for targeted preventive maintenance. And this is just one example. The internet of things makes these insights boundless.

The problem, and HP and others want to profit from it, is this will further accelerate an already accelerating data explosion. Most companies can barely deal with the data they have now. Privacy leaks, security breaches, and simple bone headed decisions happen frequently. We often want to look at the power of IT and say “fix it” but technology isn’t magic and the problem doesn’t reside there, it’s a people problem. Managing it has to be proactive. 

Here’s HP’s slide show about “Central Nervous System for the Earth” or CeNSE. I especially like slides 14-18: