Posts from — October 2008

I was sitting here typing up a new post on Sociopaths in business (it’s going to end up being an e-book and a new Secret Rule) when I heard news that Studs Terkel, the Chicago radio commentator and general social commentator, passed on.

I read his Working: People Talk About What They Do All Day and How They Feel About What They Do (1974) in a class on sociology of work twenty years ago. When I came to Chicago, he was still occasionally on the air.

His Division Street: America and Hard Times are Chicago landmarks.

Sometimes work eats. Sometimes it doesn’t. And sometimes you leave a pretty decent body of work.

May you have been in heaven half an hour ere the Devil knew you had gone, Studs.

Some videos with Studs after the jump:

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ASSOCHAM threatens that Indian firms may lay off 25% of their workers in the next 10 days, according to Expressindia. This seems a bit excessive even by my apparently ghoulish attitude to the current recession/collapse. I’m not sure what this means or if it is simply posturing by Industry. A quarter of your workforce is a large number, especially if it is done across all industries.

Anyone have any insight as to what is happening in India with this? I’m seeing things from across the globe, and have never been there. It’s hard to see what is real news and what is not.

Even if you buy the numbers at Shadow Stats on “real” unemployment being 75% higher than the BLS numbers, that would still give us an unemployment rate of around 18% come end of next year, according to the pessimistic figures I’m seeing from Dohmen.

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Dr. Pepper, the venerable American cola brand (born of Texas!), has announced that they will keep their promise to provide every American with a can of Dr. Pepper if rock band Guns N’ Roses (GNR) would finally get off their backsides and release Chinese Democracy, the now going on 15 years late album. Which they have decided to do.

What an amazing marketing ploy.

Dr. Pepper has made it a bit more difficult than just handing out colas door-to-door: you have to go to their website on the day that the album is released to sign up for a “coupon redeemable for a 20-oz. Dr Pepper wherever the drink is sold.” And I’m sure that they won’t lose more than a few hundred-thousand colas.

For which they are going to go down in marketing history.

You may like to buy the world a Coke but Dr. Pepper’s at least covering America.

I noticed that I did not actually say what I was reading these days in my prior posting asking you for your list. My stack includes:
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Several weeks ago I threw my hat into the ring as the best choice for the US Vice President candidate of either party. Today, in an effort to extend my patriotic efforts to serve my country.

In exchange for a properly renumerated position, I am willing to come on board for the next year and take full blame for the entire financial mess. As an accomplished speaker and raised acting, I will go on every news channel and explain how I caused this problem. I will apologize while then playing the victim of others. This will dissipate the blame and help keep us all from focusing on the severe recession we are going into.

I know that the US federal government is strapped so I am willing to take a much smaller salary than the job deserves.
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As I sit here working late at night, with a couple of new posts looking like they will become books in themselves, I started wandering YouTube and found some recent interviews of Francis Fukuyama and Fareed Zakaria. I’ve read too much of Fukuyama’s output over the past seven years, finding The Great Disruption and Trust pretty compelling. But that has nothing at all to do with any of the things that I currently work on.

(Trust does, I suppose. But not in the way that Fukuyama builds his argument.)

All of that led me to think about Owen Jacobs comments at the last GO Society conference in Toronto, that high potentials (“modes 6 and 7″) in the Army were widely read folks. Which led me to then think “What are the readers reading?”

So, what are you reading these days?

In comparing this current collapse to 1929-1932, you hear economists talk about how the unemployment rates are so different. Back then, almost a quarter of the workforce was out of work. Today, the number is still below 7%. (I’m America, so these arguments are all US-based.)

There’s a problem with this thinking, because the current unemployment statistics no longer adequately measure the number of people currently without work who want a job.

Take, for example, my pal, Ahmed. He’s worked since 1991, and has been without any work or income for over 1/3 of that time. But he’s only been unemployed for two weeks.

Ahmed is part of the weird independent contractor economy. He left two jobs to follow his wife’s career. He was laid off from another (where he was counted as unemployed). The other positions were all independent contractor. He never wanted that type of life but his wife had demands for her career and once Ahmed got into the rut, no one in their right mind would hire him for a permanent position. So although he lacked any form of work or income, he was never unemployed because, at least in America, “unemployed” has a particular technical meaning.

And that’s true in many nations because governments have a big interest in saying that this number is small.

And it’s not just independent contractors who are among the uncounted unemployed.
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There’s a lot in the press these days about the irresponsibility of CEOs who lied, covered-up and generally made a lot of cash while destroying billions of dollars of value. For example, here’s something from the Vault’s article on “Are CEO’s Ready To Face Career Instability?“:

As [reviled Lehman Brothers CEO] Richard Fuld’s Congressional testimony aptly underscores, if ever a job requires regular supervision, it is the CEO’s. The risk of a CEO’s poor decisions is socialized across the spectrum of a company … and all levels of workers take the hit when such executives drop the ball. As we see all around us, even strong businesses can be run to the ground in a year….

Gilded nameplates aside, being CEO is still a job. Jobs come with responsibilities, and with the natural expectation that these responsibilities will be fulfilled.

[Emphasis and revilement added]

That’s right: CEO is still just a job. It’s not being a boardmember or a major shareholder. It’s working for someone else.
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When I returned last week to the small city in northwestern Indiana where I live, it struck me that most Americans do not share my feeling that the world fundamentally shifted. They see it as something happening out there. Partly it’s because a lot of my neighbors don’t have retirement funds invested — I live in a youngish, blue-collar section of town — I think it’s because of something I have only hinted at:

I was told a year ago that the meltdown of the US financial system was inevitable.

I happened to be meeting with a partner in London during Sept. 2007. If you are British, you may recall that something happened during that time: Northern Rock went under. The panic was enough to discomfort me, and I even told my wife to get extra cash out so that, should our own bank go under back in the States, we would be able to weather things until the FDIC kicked in. It was extremely worrying.

My partner and I met with a couple investor types. One was an Australian who had successfully started and sold a few startups and now had an web-based business. The other was a Hong Kong couple who had made their money the old-fashioned way by actually building a successful enterprise, and were now worth tens of millions of dollars. These were not political activists or financiers. Simply people who made money.

During dinner, the talk turned to the collapse of Northern Rock. Our guests began to talk about how the sub-prime loans had been packaged and sold across the world. According to the Australian, a (retired?) head of the Ozzie bank had given a speech two years before in which he outlined the problem and warned that it would bring down the West’s financial system. Australia was not immune because, while they didn’t have as many bad loans, they had become enmeshed in the American loans by buying these giant mortgage instruments. They explained how deep this problem was, and how deep the consequences were going to be.

They further speculated that American hegemony in finance was coming to an end. The world’s financial markets would shift to China, they thought. They were pulling their investments out of certain markets and into other areas. These weren’t people panicking: this was an impassioned but rational discussion.

These investors warned that the financial collapse was impending and inevitable. Everyone knew it. We then looked into it and my partner was convinced enough to move his funds into safer places. As did I.
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Wall Street Online (through Yahoo!) is reporting that the stock market has had a major affect on the main compensation method in many industries: incentives. Unless the market increases substantially, with the DJI running back up towards 12 000 or 13 000, the options that were granted for the last five years are not worth what they were optioned at, according to the article.

Sure, major CEOs are being hit with some shorts that went bad on them, having to liquidate a lot of their multimillion-dollar compensation packages to pay off calls.

Lower-level employees are also being hit. The software industry pays a great deal in various incentives rather than straight pay, which is actually kind of lousy in many companies. Their incentives over the last five years have become boat anchors, often worth less than they were “purchased” at.

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The New York Times has a business article on networking in your job hunt. It’s a pretty decent article. I’m no networking maven but I regularly get things from folks in my network. There’s nothing stunning in the article’s advice, but it is worth looking at because you can forget this in your discouragement.

Some of it’s best advice is “do not set yourself up to fail.” I’ll come back to that point in this week’s newsletter article but the points the article covers are good ones: don’t overreach your network, don’t think you are going to start cold-calling when you have never done it, etc.

Of course, going bankrupt in a the West’s recessionary economy — today’s uptick notwithstanding — is a powerful motivator.

Here’s two other pieces of advice that I’ve actually seen work:
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We’ve already looked at the American stock market activity from 1928-1942, bookending the collapse and America’s entry into the war at Pearl Harbor in Dec. 1941. Today I’ll look at Europe and the rise of despots, which is currently happening again.

I am speculating on what is likely to happen. That means that I am doing no more than making a guess. These guesses will focus on what you might need to do for your career. I’m not an expert in some of the topics I am discussing. Correct me where I have facts wrong.

What else happened during that time? There were wars and rumours of wars. New powers increased their scope by further wars. Machiavellian politicians rose in several nations and consolidated power. The nations who did well were militaristic and expansionistic.

Why did wars increase even though there was less money around? Partly because the offshore balancers chose not to get involved. But also because the decline of the markets shifted the balance of power. When a nation experiences an economic collapse, it is less able to field an army. This thinking may have led the Japanese to believe that they could force a settlement on the Americans.

Machiavellian personalities rise up because they are always there, waiting for opportunity. Although they make up about 5% of the population, they seem to make up around 15% or more of power positions. It may be that having a Machiavellian personality is a prerequisite for success in political situations.

Machiavellians rose up during the 1920s and 1930s in almost every form of government. This includes within democracies. Many were elected, with the populace fully knowledgeable of their predispositions. People elect dictators. That seems weird to many of us in the west these days, but it’s true. Machiavellians remove the elements that will balance their power because they say that it is necessary to protect the good people or restore prosperity.
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Reuters, the global english news service, reports on this months Ig Nobel Prize awards:

the medicine prize was awarded to a team at Duke University in North Carolina who showed that high-priced placebos work better than cheap fake medicine.

It sounds stupid but it is worth remembering in this time of crisis when con-men will be selling lots of placebos: the more expensive ones are more likely to work. Since the economic collapse is currently about confidence, placebos are as likely to work as anything else.
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FastCompany.com has posted an article on how the current crisis might affect you career (seen on Yahoo! Finance). It’s a mostly useless article except for the Mitchell Feldman’s comment in the third paragraph: “the real answer is that all employees are vulnerable right now.”

Which is about like saying that they have no idea.
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I have sat on my remarks about the current financial crisis for several weeks now. I’m taking this week to address it as it pertains to your career.

I’m not an expert in some of the topics I will discuss. You need to correct me where I have facts wrong. Also, I will be speculating on what is likely to happen. That means that I am doing no more than making a guess. These guesses will focus on what you might need to do for your career.

Several of you have already contacted me. Because you have no debt and no depreciating assets, you are in a better condition than others who are held captive by their current financial position. Who knew that the years of underemployment that has prevented you from enjoying “the good life” would turn out to be useful?

Gov. Palin visiting US Airmen in Germany, July 2007

I talk a lot about judgment and one can get a good idea of someone’s current capacity (how big of a job that they can do) from an interview where they “do work”. Elliott Jaques and Kathryn Cason describe this in Human Capability. But it can’t be just any interview topic: you need to get the person talking about a topic that they have spent time thinking and learning about.

I started thinking about this when I watched the recent interview that Katie Couric, an American television news anchor, did with the US vice presidential candidate Sarah Palin, governor of the state of Alaska. (CBS has the Couric/Palin interview available online [Part 1 & Part 2].) Couric is asking probing questions to get to Gov. Palin’s opinions on economic issues. Gov. Palin seems quite flustered and doesn’t really include details.

The interview was widely held as a poor one on the part of Gov. Palin, even by Republican editorialists. (Democratic editorialists were unlikely to view the interview as a success regardless.) But you can’t use this interview to gauge Palin’s capacity for work because it did not engage her on issues that she work on in the past.
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