The New Tasks of Government

"The new tasks will require a different kind of government" Peter F. Drucker

"The new financing will require a different kind of model" Propser

Action: "Get involved with industry wide initiatives of importance to you and your company by partnering with multinational groups like the Atomic Energy Agency, Which fights Nuclear Terrorism." Peter F. Drucker

Beyond the obvious (big time CEO's banding together to fight global corruption at the World Economic Forum .. So well organized by my friend Allan Boeckmann), there are other ways to look at peers getting together to change the picture.

Prosper brings individuals who have some money together with people who need some money in a direct banking relationship. Today Prosper.com has approximately 930,000 members and $191,000,000 in loans funded. An, obviously effective fractal personal finance market in which money is invested and paid back (and small dreams come true). There are other, similar organizations like KIWA which do this for international projects in underdeveloped countries.

To say the least, it is our turn to put our $10's and $20's together to make things better... we have the internet to pull us together in a big way.

Then I saw a blog form Rory Sutherland (sent to me by Sam Van Deest), in which Rory spoke about the need to maybe get back to financing our local infrastructures, cab shelters etc. in the way it used to be done in "Victorian" times, and as was intended by the state lotteries.

Well why not have a mechanism like ProsperPublic.com, where we can use the peer to peer power of the internet to fund certain public projects which we, the public think are important to our communities. I would venture to say that there are many communities out there that have been stymied by the local "red tape".

Why don't you let internet based "fractal" financing revolutionize your communities spending! You want a baseball stadium... see how many people will sign on for that "payback"?

Blog Discontinued

I am sorry if anyone out there has become interested in my Blog. My health situation is just so bad, that I can't continue to do this every day. I will try to continue once in a while later, but for now I am unable to go on.

The Pork and Barrel State

"Government becomes the master of civil society, abel to mold and shape it." Peter F. Drucker

Action: "Draft a ballot petition for a balanced amendment in your city including annual increases in property taxes, like Proposition 13 in California. Then go to city council meetings and evaluate expenditures against budget limitations." Peter F. Drucker

Zero Base Budgeting. Three words that send Pork Barreling into a frenzy It's amazing to see how many $$'s get dropped from a budget that is zero base. I see this mostly in my charity work. Someone has developed a program which must compete on a zero base with other worthehile programs... but can't.

Be prepared though for "bone crushing" front and back room action".

Failure of Central Planning

"Any Society in the era of new technology would perish miserably were it to run the economy by central planning." Peter F. Drucker

Action: "Do you micromanage your employees? Start empowering them by making sure they are properly trained to do their jobs, and then give them responsibility to do it. Provide room for failure." Peter F. Drucker

China seems to working hard against this "inevitability". All of the original software service providers doing business in and around the internet have had significant "shackles" put on their freedom of operations in China. Or they have been kicked out and replaced by government supported competitors (Baidu). It will be interesting to see the digital revolution unfold in China over the next ten years.

Example: Closer to home, it certainly came as a surprise to many a railroader when they found out that each car shipment of any commodity shipped by rail was registered in a national database. Anyone with knowledge of rail operations could simulate all movements of all commodities in and out of any shipping point on the national grid in any equipment. Soon every shipping department had models of their commodities being shipped in their own computers. So, when time came to renegotiate rates with the railroads, all of a sudden the previously dis-informed shipper had knowledge of all rates which were like or even similar to their own movements. With a little training, most shipping departments started to dictate shipping rates.

Look at your operations and determine whether operational data is available, but maybe not yet being used. Some of the models which Enron was building to make rates "fungible" were/are pretty interesting in the hands of users and utilities. The data is masked, but not severely so.

Management and Economic Development

"It can be said there are no"underdeveloped countries." There are only "under managed ones". PeterF. Drucker

Action: "What impact does your company have in the developing world? Are you activities there raising the managerial standards of local companies?" Peter F. Drucker

The developing world is also the home of a new type of customer, rarely, if ever seen in the developed world, except maybe in restaurants. The fractal consumer..."I'll share that". The entire base of India's mobile phone franchise was doubled in a short period of time by offering fractal ownership.

Using today's action, look closer to home for your markets. We already have fractal ownerships of jets, which not homes? Or other high cost items... cars.... etc. Have you exhausted that market segment for your products?

Reprivatization

"The strongest argument for private enterprise is the function of loss." Peter F. Drucker

Action: "First prisons, now wars are being manned by private companies. Make a list of which sectors will privatize next and determine how you can benefit." Peter F. Drucker

Privatization is not growing at the rate originally exoected.

Reinventing Government

"Government has to regain a modicum of performance capacity" Peter F. Drucker

Action: " Can your business profit from government incompetence much like FedEx and UPS have profited from the shortcomings of the U.S. Postal Service? If you work for the government, improve your effectiveness by concentrating on what works." Peter F. Drucker

I repeat (get the book) in order to read Dr. Drucker's thoughts on the topic.

How many congressional resignations will it take until the point sinks home? Our government leadership processes are in trouble. Are at risk of becoming mired in rhetoric just at the time when action is required? Will we actually see a viable third party with a real political agenda in the future, or more of the same? Where are the "Greens" when you actually need them as a political force?... Stuck in Germany and on the high seas, heading off Japanese whalers, I guess. That is certainly more fun than dealing with lobbyists in Washington D.C., I would think.

I have been involved in over 10 big privatizations of public "utilities" in Europe, North America, and Latin America. In each case, creating a fungible market for the NewCo's stock has been critical in its downstream success. What would the shareholder buy into?

If you look at your own company, are there any parts of the business that you know shareholders wouldn't buy into? Should you still be doing that "thing"?

Social Purpose for Society

"The absence of a basic social purpose for industrial society constitutes the core of our problem" Peter F. Drucker

Action: "Define an organizational purpose that goes beyond next quarter financial results and goes beyond maximization of shareholder wealth. Define a purpose that employees can believe in and challenges them to contribute their best work." Peter F. Drucker

It may surprise some of you that the Boston College School of Good Corporate Citizenship has been in operation since before 1985 http://www.bcccc.net/index.cfm . And BC is only the proverbial tip of the iceberg. Consulting firms have called it "Sustainability" for many years. Corporate Financial Officers have had Philanthropy as part of their reporting portfolio for decades now. And yet Dr. Drucker is right, shareholder wealth still depends upon short term, quarterly reports.

I, again make my oft repeated "call into the wilderness" to CEO's of Public Companies: "Stop quarterly profit and guidance reporting now". Yup, just DON'T do it... become the anti-nike. Do only what IFRS-1 requires. It may force a few useless financial analysts to get real jobs, but it will certainly trim the negative results of quarterly reporting at the roots.

Especially at this time of economic disruption and uncertainty our corporate leaders need to start reporting and focussing on other issues which will inform the American Social agenda with respect to our global competitiveness.

Why do our capital markets need to be efficient and healthy? How should the trained American knowledge worker relate to a national/regional/social higher purpose? Why is it important to the California farmer that the unemployed auto worker in Detroit receives re-education as quickly as possible? Do we need a new American Social Pact between corporations and workers, or do we just need to revive traditional values?

Need for a Harmony of Interests

"The demand for harmony does not mean that society should abandon its right to limit the exercise of economic power on the part of the corporation" Peter F. Drucker

Action: "Until early in 2004 many well-known mutual funds permitted large customers to trade after the close of business, which gave these large customers the advantage of knowing the sell price at the time of sale, a benefit unavailable to the common shareholder. Send an e-mail to the chairman of a mutual fund in which you own shares and ask for proof that you were not harmed by this practice." Peter F. Drucker

Too big to fail? Too important to follow regulations? Too critical to be held accountable for Social responsibility?

You and I now own more of GM than the Germans and French own of VW and Renault. Who are the socialists now. That happened under a Republican and a Democrat is perpetuating the mistake. Do we really need three BIG car manufacturers in this country? Especially when two of them just don't get it? You'd think that by now GM would have handed over the reigns to someone from Opel (it's European Sub).

This while 40 million Americans have no health insurance, and I pay twice as much as the French for a shorter life-span, and anywhere form 10 to 20% of those wanting work can't get it. We continue to prop up a dinosaur company, so that it can sell cars at ultra thin (if not negative margins) to Chinese new-consumers. If President Obama is going to be an owner, he needs to start acting as an owner and bite the bullet. GM's products have been obsolete in the American market for "decades"... Shut down GM-NA, and give some-one else a go. For example:

The Electrification Coalition is a nonpartisan, not-for-profit group of business leaders committed to promoting policies and actions that facilitate the deployment of electric vehicles on a mass scale in order to combat the economic, environmental, and national security dangers caused by our nation’s dependence on petroleum http://www.electrificationcoalition.org/

It's "Electrification Roadmap" was released on November 16th, 2009. In it, you will, no doubt find one of the pathways to follow in the next 50 years. Let's get ahead of the next curve, rather than throwing good money after bad.

Salvation by Society

"The end of the belief in salvation by society may even lead to a return to individual responsibility" Peter F. Drucker

Action: "The human resources department is not responsible for taking care of you; you are. Know what you are good at, make sure your results are equal to your expectations, and manage yourself. Continually ask yourself, "WHat should MY contribution be?"

I do not intend to hold forth about the return to individual responsibility. I think I'll sit this day out.

Maybe, I'll just give you a hint as to how I think about this. I don't think that my salvation is my responsibility, that was taken on and given by another. However, once saved it is my duty to 'be' and maybe even to shine. Hopefully, those next to me can shine brightly too.

That's my story and I'm sticking to it. More tomorrow.

Demands on Political Leadership

"Beware charisma." Peter F. Drucker

Action: "Seek out the most competent people in your organization, not necessarily those with the most charisma." Peter F. Drucker

Unfortunately there is this saying which many people misunderstand: "It's not what you know, it's who you know". Which leads to, in my opinion, far to much emphasis on the political side of network development early on in many young people's careers.

If I had a $ for every time one of my new young colleagues would ask me whom they should meet and how they should plan their careers, I'd be a wealthy man. Man answer always seemed to disappoint, especially those who were good at the networking game, the charismatic ones. I always told them, do the absolute best at the task you are giving, blow everyone away with the quality of your work and the results, and your collaborativeness. I promised that the rest would present itself, and a real network would develop around their capabilities, a very sound foundation to build a career. Was I wrong? I have always placed more importance on people thinking of me as highly competent, maybe com-passionate, but not as a 'political' guy. Truth be known, several clients did not want me to be a political guy... they had enough of those inside the organization.

Certainly there always seems to be a spot held at the table for the charismatic politician, and yes, it always pays to be collaborative within one's network, but the patina of the charismatic soon wears off when the shit hits the fan. In texas they have a saying: "Grosser Hut, keine Kuehe". ( A lot of Texans came from Germany).

Are there too many "politicians" in your organization?

The Nature of Freedom

"Freedom is never a release and always a responsibility". Peter F. Drucker

Action: "List specific goals in your work. Think of goals that will meet your need for personal fulfillment, while also helping your boss (shareholder) meet his or her performance objectives. Sell these goals to your boss and keep the boss informed of your progress." Peter F. Drucker

Once you have undertaken the Action today, you will, of course, be right in the middle of the awesome dilemma which Dr. Drucker describes. There is no freedom without responsibility. What's so great about freedom anyways? Nothing but stress and trouble...? I'm being somewhat facile, but you get the point.

Once we have made our choice, be it belief, action, philosophy, are we then still free? Isn't the only freedom absolute anarchy? Or is it that we have to actually have to give up 'freedoms' to be free? I'm sure St. Thomas Aquinas has played with that one. I just started reading him. ANybody out there got his viewpoint down?

Enjoyed the opening of the 2010 Winter Olympics in Vancouver. Now for the competition, may the best slider/gliders win: Go USA... Go Canada... Go Austria...

Role of the Bystander

"...the bystander sees things neither the actor or the audience notices." Peter F. Drucker

Action: "Be a bystander to figure out what has to be done in your organization. Then act, but know you are running the risk of shocking people."

I would add one word to Dr. Drucker's thought today, and that word is: loyal...bystander. Don't you think that word is important too? I have had more opportunities than most to act as objective bystander, as a matter of fact, that's how how I made much of my own living, when I wasn't involved in my own businesses or turn-arounds. When one is a bystander, it is imperative to understand that "the ammunition is live". A dis-loyal bystander can create much havoc.

Example: I remember a time, very early in my career when a Manufacturer of Railroad construction and maintenance equipment brought me down to his facility in Montgomery Alabama. I had become somewhat of an expert on railroad maintenance over the previous two years (what a great job that was, all over the continents, out in the wild country... lots of stories there lol). So, he asks me to take a look around and meet him for dinner later. I did a pretty thorough walk-about, and made some notes, organizing the message. Which was, if I remember pretty benign, but with some solid findings. At dinner he graciously let me have the floor after introductory pleasantries. I did my thing... I hadn't gauged the shock factor at all. He almost choked to death, got redder and redder in the face, and just about had a fit. Needless to say, that was a total waste of his and my time.

Communication, communication, communication... be careful. As a bystander, there is the huge lure to formulate one's thoughts as conclusions or solutions. Never! A bystanders job is to SPIN the story, so that the owner buys in. SPIN Selling by Neil Rackham . It is also the duty of the bystander to create either a compelling inductive or deductive logic stream which leaves the owner with viable options for improvement to choose from... The Minto Pyramid Principle: Logic in Writing, Thinking, & Problem Solving by Barbara Minto . I had the luck to be trained by Barbara in person, what a treat and privilege.

One of my favorite stories is about the time I worked for the Pope. He told me that he wasn't hearing enough prayers coming from the convents throughout Italy in the summer time. Unfortunately Hewlett Packard was eating up my time, and I put a young Manager on the job (given it was pro-bono). After doing extensive data analysis, and finding that the key flow interruption was during mid-day prayers, the team found that the Rsquared of prayer output and outside temperature was 82. Well that was a wrap, now we needed the options for the Pope. Unfortunately, I had to be in Cupertino for the presentation, and the Manager got up, did a great job with the findings, hypothesis, conclusions but then forgot options and went right to recommendations. We were fired on the spot. The team recommended that the nuns wear Bikinis in order to reduce the heat impact in order to raise the prayer output.

How dis-loyal.

Human Factor in Management

"Management is about human beings." Peter F. Drucker

Action: "Are you a great actor in a terrible play? What are you going to do about it?" Peter F. Drucker

"It's about the people, stupid" I won't take credit for that...

Maybe you are not as great as you think you are? But for the sake of blogging, let's assume that you are. As a matter of fact, let's assume you have strengths that need to be used more effectively and weaknesses that have to be made irrelevant. That is, after all, a manager's job, isn't it?

One thing the Internet bubble taught me was that the speed with which companies were changing required an organizational model which could react in step. GoreTex had long ago adapted the "amoeba" organizational model.

Example: I was quite close to some of the founders of a cool internet start-up called Ariba. This was during the days when my colleagues and I were participating in business start-ups on a significant scale for the first time. We even started Venture funds, and some of us went on to become entrepreneurs and venture capitalists. I asked one of my friends at Ariba what he would be doing in the next few months. His answer was telling. He told me that he would be doing whatever the team thought he would be good at, and when he was done with that, he would go to the next thing he was good at. He also implied quite strongly that he and his partners knew each others strengths and weaknesses quite well. It was not shameful to have weaknesses, as long as you did not hide them or deny them, so that they could be made irrelevant.

A dynamic organization needs a management model which fosters flexibility and getting the right person into the right job at the right time. Rigid organization structure has no place in organizations which continuously set themselves new challenges for growth. How about it Microsoft? Let some of the strong up-and-comers in Windows and Office take on leading roles in struggling growth businesses.

Have you drawn up your organization chart? Are you letting people see it and internalize it? Why? Maybe it's time to think about organization differently, more flexibly?

Modern Organizations Must Be a Destabilizer

"Only a society in dynamic disequilibrium has stability and cohesion" Peter F. Drucker

Action: "When is the last time you created or helped create a new product or service? Were you just copying a competitor, or did you actually hatch a new idea? Try again." Peter F. Drucker

The only way in which any institution can maintain continuity is by building systematic, organized innovation into its very structure (from the book).

Look at your own town/city as an institution which has huge impact upon how you and your children's children will live in the future. Has your economy become rigid, obsolete, lacking innovation? Likely this is because your innovation engine is broken. How do you know what to do?

You look at other models. You emulate the best practices of what other communities have done to get themselves out of the doldrums. Or, you look at successful, innovative communities to see what they have in common, again to learn best practice. Then you apply that knowledge to your community, to develop a vision of what your economy could look like. This is not theory, this is exactly how other communities have and are proceeding. Will yours be left behind?

As a result of some of my work in the past, we find that there are several critical components of the 'engine' that must be brought together properly to create an entrepreneurial culture (from http://www.jointventure.org/images/stories/pdf/2000internetcluster.pdf by A.T. Kearney with Joint Venture Silicon Valley) :

• Talent: Management, Science, Engineering, Marketing, Sales
• Pillar Companies: Capital, Management talent, Technical Resources, Bus. Partners
• Universities: Talent, Research, Networks
• Government: Tax, Regulations, Technology Parks, Consortia
• Support Services: Accountants, Lawyers, Associations, Incubators
• Investors: Venture and Angel funding, Networks

For other Publications on the topic see the JVSV archives: (copy and paste in browser)

http://www.jointventure.org/index.php?option=com_content&view=article&id=156:publications-archive&catid=13:silicon-valley-index&Itemid=183

You can also go to www.octaneoc.org . Which is an organization formed in approximately 2000 to fuel innovation development in Orange County. There are even books which deal with the 'science' of developing regional innovation engines such as: Institutions and Systems in the Geography of Innovation (Economics of Science, Technology and Innovation) by M.P. Feldman and Nadine Massard

I would challenge those of you who are worrying how your community is going to co-pete in the world economy to build systematic innovation structures into your regional governance. Especially now as we move through to the end of this turbulent transition to the information economy by 2030. It is time to leave the bi-partisan (polarized) politics behind and embark upon much more economically disruptive and innovative path for many U.S. Communities.

What will your children do for a living, and what will be their living standard vis-a-vis innovative Chinese and Indians? Or will they be relegated to continued real-estate selling?

Organizations Destabilize Communities

"In its culture, the organization always transcends the community." Peter F. Drucker

Action: "If Wal-Mart wishes to move into your neighborhood against the wishes of the neighborhood, what actions should Wal-Mart take? Under what conditions would it be wise for it to withdraw its move?" Peter F. Drucker

I have a home, where I lived for three plus years, in Laguna Beach Ca. A (most times) wonderful community by the Pacific ocean. Approximately 23,000 people with an annual per capita income above $58,000 last time I looked... Fairly affluent, but not even in the top 100 of U.S. locations with more than 2000 inhabitants. The main attractions in Laguna are: Art, Art, and Art (fine, performing, sun), and a very independently minded community which opens to, but shrinks back from hordes of tourists every year. There is no Wal-Mart, or for that matter any other large national chain located within the "city walls". LB has fought them off.

There are few roads leading in or out of the sleepy beachside community of Laguna Beach, making it a repository for many 1920s artists and counter-culture activists from nearby Los Angeles who settled the charming cottages tucked along the Laguna’s rolling hillsides. During the late ’50s and early ’60s, Laguna Beach nurtured a handful of key artists from the surf community. This has changed somewhat, but most of those who move there want to perpetuate the 'feeling'.

I understand why Wal-Mart was not allowed 'in'. I even agree with it. NIMBY (Not in my back yard). Even the hardware store is still a small, crammed family operation at the corner of PCH and (I don't remember). They used to know me... and where my Art was showing. Besides, do you know what land costs in LB?

Why would you want to fight that culture? Why destabilize this?

Balance Continuity and Change

"Precisely because change is a constant, the foundations have to be extra strong". Peter F. Drucker

Action: "When you make a decision or a change, ask yourself: Who needs to be informed of this?" Peter F. Drucker

"... and in what way should they be informed?" Bruce Klassen

Wow, there's a loaded one again. The management of change in business is all about communication of relevant information to the people who need to know. One could (and many have) write for days about this topic. Precisely because of that I am going to take a very simple approach. It has to do with strong foundations.

"Love your neighbor as yourself." – Matthew 22:37-39

"Love is patient, love is kind. It does not envy, it does not boast, it is not proud. ⁵It is not rude, it is not self-seeking, it is not easily angered, it keeps no record of wrongs. ⁶Love does not delight in evil but rejoices with the truth. ⁷It always protects, always trusts, always hopes, always perseveres." 1 Corinthians 13:4-8 (New International Version)

What does the Christian Bible have to do with change management. Well, in my experience change management is all about respect. Respect is inherent in the definition of 'love' by St. Paul in 1 Corinthians. Respect is, again in my experience, the foundation of good interpersonal relationships. So, in a time of change, reach back to 'orthodoxy' and start there with your communication plan.

No matter what religion you are, or if you have none at all. The philosophical message in these passages should speak to you if you are about to embark upon change which affects others. This type of love is not about "infatuation" it is about respect. The respect one owes ones employees, suppliers, shareholders etc. when one is about to undergo changes which affect them.

If this sounds familiar, make some changes to your communications plan. "Sometimes, I feel like a mushroom. They keep me in the dark, and every so often they open the door to shovel shit on me." unknown author.

The Educated Person

"The educated person needs to bring knowledge to bear on the present, not to mention molding the future". Peter F. Drucker

Action: "Read a book on politics, history, or anything that interests you. What did you learn? How can you put that knowledge to work?" Peter F. Drucker

"Could you forgive a radical islamic suicide bomber who was the cause of one of your childrens' death?" This was the question to us at a morning discussion group two years ago. I had no answer. I was spiritually and intellectually without an informed opinion. Since then I have read approximately 40 books and countless articles and blogs on Islam and its radical extensions, suicide bombing and others, in order to inform my viewpoint. I also have the privilege of having my niece marry into an Moslem family (although they are quite secular) from Jerusalem. My nephew, Tawfik has been instrumental in helping me to a balanced reading list, and discussions.

Amongst the most interesting writers and books I have read, so far are: Western Muslims and the Future of Islam by Tariq Ramadan , Islamic Awakening Between Rejection and Extremism by Yusuf Al-Qaradawi , Dying to Win: The Strategic Logic of Suicide Terrorism by Robert Anthony Pape. There are many, many more, but these three have been instrumental in helping me to understand today's reality with respect to extremist and reformist activities and thinking.

So, back to the question. No, although I tried to think it through, I came to the conclusion that I could not. I guess I'm just not 'perfect'.

I did learn, that there is a very high likelihood that such a suicide bomber would not be motivated by misguided any religious fervor, but rather by nationalistic reasons. I also learned that there is a high likelihood that the suicide bomber would not even be carrying out the fowl dead for misguided 'islamic' reasons, and would not be a true Moslem, certainly not one 'justified' by Islam in any way.

Do you have an opinion?

The Transnational Company

"Successful transnational companies see themselves as separate, non-national entities" Peter F. Drucker

Action: "Ask the foreign technical support center for your US-purchased computer or printer a question about the operation of your equipment. How does the quality of this support compare with that of your local cable company? Peter F. Drucker (loaded question)

Consolidate, functionally on a global scale in one location. Provide all of the customer support for the world out of one call center in Ireland. Provide the central design function for the world out of one location in Germany. Provide labor housing, recruiting, scheduling and management out of one center for all construction projects in Dubai? Maybe, after what we discussed yesterday, this is not such a good idea? Or, maybe a fad that will turn back around as companies figure out that many 'Ecosystems' are still very much regional.

Who hasn't seen this trend? No, that's not another loaded question. I am truly interested in seeing how many companies today are taking advantage of the 'other side of the coin', and doing it well.

I recently saw the latest add for ACCU-CHECK(R) Aviva (hope I have that right). Quite compelling actually, for the target market segment. It focused on the 'home' market, with local support 'from ordinary Americans', many with diabetes "just like you" is portrayed as an advantage. Will they, are they doing the same in international markets?

I wonder how Toyota is feeling today about its ability to act transnationally? The brand reaction will certainly be different by regional market. The last time I can remember Toyota getting its fingers severely slapped for acting 'transnationally', was when the IRS got them for irregularities in the taxation of 'transfer payments' internationally. This is probably still, along with customer service, where many transnational models have severe restrictions. Taxation of locally made profits before they are repatriated to 'home', wherever that may be in today's complex world of headquartering is jealously guarded, locally.

I am quite sure that Dell centralized all of its global final assembly of PC's in the USA in 2005 (oh yes, surprise!). This, supposedly in order to assure that this step in the supply chain ran faultlessly. How much of that was a decision was made in order to be closer to customer support (for which Dell was getting comparatively low marks), I can only speculate. An, on the surface, expensive decision in a negative margin game.

It looks like Apple has already made that decision for support of the iPad (in case I buy one). I'll just have to give my favorite people at the local Apple Store a visit, if the camera on the next generation, lower priced machine doesn't work (they just have to do it!, Common!!).

Shrinking of the Younger Population

"The next society will be with us shortly" Peter F. Drucker

Action: "Determine whether your organization is betting on young people, older people, or immigrants. Make sure you have a plan for the gradual decrease in the youth market and the increase in newcomers and the aged." Peter F. Drucker

"What did you say? My hearing isn't what it used to be" Bruce Klassen

All told, some 59 countries, comprising roughly 44 percent of the world's total population, are currently not producing enough children to avoid population decline, and the phenomenon continues to spread. By 2050, according to the latest United Nations projections, 75 percent of all countries in even under-developed regions will be reproducing at below replacement levels. I think I am correct in saying that only West African populations (Nigeria,Ghana) are currently growing at or beyond the 2.2 (live children per adult couple) replacement rate.

• Except for France, Western Europe needs 1.1 million immigrants a year above the current level to keep the working-age population stable between now and 2015.
• Japan's population fell by 75,000 in 2009, decreasing for the third straight year and dropping at the fastest rate since the end of World War II.
• Former Soviets are dying in record numbers from disease, suicide and substance abuse, and the top 10 fastest declining regions are all former Soviet Union States.
• Taiwan's population could start falling by 2017, a decade earlier than previously estimated, after the island's birth rate dropped to the world's lowest level.
• Even though the Mid-East still has a large bulge in the 25 to 30 age group, overall the populations are aging, and immigration is a striking drain on brainpower and the youth in those countries.

Additionally, in 2002, Babson College and the London School of Business released their latest index of entrepreneurial activity by country. It shows that there is a distinct correlation between countries with a high ratio of workers-to-retirees and countries with a high degree of entrepreneurship, and that conversely, in countries in which a large share of the population is retired, the amount of new business formation is low. So, for example, among the most entrepreneurial countries on earth are India and China, where (at least for now) there are roughly five people of working age for every person of retirement age. Meanwhile, Japan and France are among the least entrepreneurial countries on earth and have among the lowest ratio of workers-to-retirees.

Indeed, according to a study by the United Nations Population Division, in order to maintain the current ratio of workers to retirees in the United States over time, it would be necessary to absorb an average of 10.8 million immigrants annually through 2050. At that point, the U.S. population would be 1.1 billion, 73 percent of whom would be immigrants who had arrived in this country since 1995 or their descendants (Source: New America.net 2004). Just housing such a flow would require the equivalent of building another New York City every 10 months. Not to mention, where would these young immigrants come from given the global demographic problem.

Not since the decline of the Roman (World) Empire have we seen such a shift in demographics. If you have not considered this shift in your 30 year plan, you may want to get going, soon you may not remember. ;-)

Insurance products for the aging, along with all types of health enhancing and supporting products and services will be winners. That said, should I put my name down for an Apple iPad? I've never lined up for anything other than my citizenship ceremony.

Knowledge and Technology

"The new technology embraces and feeds off the entire array of human knowledges". Dr. Peter F. Drucker

Action: "List results for which you are responsible. What specialists are you dependent on to get these results? How can you improve coordination among these specialists?" Dr. Peter F. Drucker

In a recent interview Steve Jobs called Apple a software company. Who am I to argue with the 'man'? But I just don't see it that way. To me, Apple is the System Integrator par excellence. Taking known technology and knowhow and integrating them all into something special and new, with style. Maybe that's because one of my majors was System Design Engineering. I just see the world that way.

Peer to Peer networks are ubiquitous now, whether in our personal lives or in business or development. Success is determined by our ability to effectively communicate with each other at multiple levels.

Car manufacturers no longer 'manufacture', they assemble multiple level systems from a myriad of strategic partners and vendors.

We have recently seen the negative affect in the financial sector. Creating financial products based on faulty risk assumptions, as those risk levels changed is just another example of 'specialists' not coordinating at the appropriate time.

One particularly interesting application of this day's Action call is to look at your organization. Are you still 'subject' or product focused? Or are you making the necessary shift to be 'end use' or 'market' focused? Knowledge is increasingly being used across disciplines and subject areas, and our high performing organizations need to reflect that.

Example: What is an organization anyway? In very early work for a large 'innovations' company, one of my teams had the privilege of looking at approximately 150 'end use' facing production environments or value chains (in old lingo). We borrowed the term 'Ecosystem' from Biology and did extensive work on defining not only the players (at multiple levels) in those business ecosystems, how cash flowed, but where value (wealth) was being generated, and where it might migrate to over time, as markets matured. The strategic implications on positioning for maximum value generation in multiple end-markets were, of course, astounding and wide ranging. The key point here is that we are not only talking system integration of design, but also of organization. This kind of thinking then allows the manager of businesses to begin deliberate acquisition, divestiture, and partnering with the right peers in order to gain maximum value for shareholders. The organization of company resources into each 'Ecosystem' became fluid, and was the harbinger of further disaggregation of 'organization', as we knew it, in the future. Ecosystem alignment against end user markets became the driver of organizational structure, rather than subject matter expertise as in the 'old' corporation.

The Management Revolution

"What matters is the productivity of non-manual workers " Dr. Peter F. Drucker

Action: " What results are you being paid to achieve? List three tasks that you should eliminate to be productive."

Management of knowledge workers' tasks is distinct from the management of manual labor in manufacturing. Gathering of management knowledge about knowledge worker productivity is according to Dr. Drucker the new/current management science.

Ever heard of the term: "Herding Chickens"? That's what bad knowledge worker management sometimes looks like. I think it was in the iconic strategy book Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter that the topic was beautifully illustrated with the example of the 'smart' bees and the 'dumb' flies buzzing around in a clear bottle whose closed end was pointed toward the sun. Which group would be successful in their escape out of the open end? How much management do you actually need in knowledge work, if you have the best suited people? As I have said in previous blogs, I do believe that there is no substitute for having the right people, and then supporting them and their needs. 'It's about the people, stupid'. It is, in a competitive worker supply environment though, also important to learn how to quickly transfer the learning of the 'fly that gets out' to the other flies in the bottle. So constant, on the job education is another 'no brainer' winner in knowledge work. The 'learning' knowledge worker organization will be the most productive one. How do you structure your learning feedback, on the job for rapid dissemination?

Given that knowledge workers are independent, and far more likely to switch than manual workers, how else, do you increase productivity? I also differentiate here between 'service workers' and knowledge workers. Is the term 'task' even relevant for a knowledge worker? Has knowledge work been systematized to the point where it is actually feasible to intervene in order to improve productivity? I think it is here that the Action call shows the Professor's insight. If you are paid for sub-steps which, when aggregated lead to a marketable output, then how you approach productivity improvement is substantially different than when you are paid only on the results of your knowledge labor. I would contend, that both are manageable, but certainly in different ways.

I believe the key to manageability in the latter instant is in whether or not to perform the entire 'task'. Can one, for instance eliminate an entire step in a technology roll-out roadmap in order to save 'time to market' or overall development costs. In the former type of knowledge work, we are likely dealing more with the form and function of interactions between task executers and support functions throughout the process. Which interactions help, which hinder and which are inappropriate, as the individuals go about their separate tasks. Both situations are imminently manageable.

How do you aggregate knowledge about this type of work? Time studies are certainly not appropriate in the sense of those applied during the industrial revolution. However, I have experienced that this general technique can actually be used quite well. Some knowledge work lends itself extremely well to self monitoring (by category of time spent) to understand which are activities which can be eliminated to free up time for more directly value creating activities, because much of a knowledge worker's time is often taken up by tasks that they shouldn't have to do.

Example: At a large IT enterprise solutions seller/builder. While only 20% of an enterprise level client business manager's (senior solution selling person - CBM) was spent actively engaging the client in exploratory discussions, solution framing, and solution structuring, over 40% was taken up with back-end paper-work associated with the development and correction of bills of material for the actual solution. What is the CBM paid for? Certainly not the back-end processes. So figuring out that loading a client facing knowledge worker with the full weight of back-end processes is a good first step. How do you fix it? Is it possible to, actually 'triple' a CBM's productivity by freeing up more time for client interaction? That's where the fun begins, and usually involves, not only restructuring back-end processes to reduce complexity, but teaching the CBM how to use more time more effectively.

Example: At a well known software company. In complex software development I found that many improvements can still be made at the macro-level, either eliminating entire product development iterations, or changing interactive practices (handoffs, testing, etc). One of the most effective tools has been bench marking and process comparison. Best in class can also often be found outside the particular industry in other knowledge working environments. For example, we found that there are numerous complexity reduction archetypes from other industries which are directly applicable to under and on 'the skin' hardware, software and firmware development processes in IT industries. Particularly so in the soft 'skin' or firmware development aspects.

Improving our knowledge about knowledge work... the current management frontier... especially important for us in Americas Co. if we are to compete effectively in global Complex System development. Where do they teach an MBA in knowledge work?

Apple iPad: .... no camera, huh? I just can't get that one through my head. It's not like $829 is in-expensive. I haven't convinced myself, yet. But I think I'll have to wait for the next version, which will surely have a camera???

Face Reality

"Exploit the new realities" Dr. Peter F. Drucker

Action: "List three new opportunities created by demographic shifts - changes in the composition of the population and workforce - and the shift from national to regional to transnational economies. Pursue them." Dr. Peter F. Drucker

Very similar to my earlier blogs in January, this day, Dr. Drucker urges us again, in a slightly different way to test "what we know we know". Is what we 'know' really what the world is like, or is it a delusion, 'what it ought to be like'.

In turbulent times, such as these, it is more important than ever to 'face reality' both in business and other endeavors, even our personal lives. It is just so darn comfortable to go with the conventional knowledge, and so darn uncomfortable, at first, to go another way. I have disciplined myself to, at very minimum, ask 'WHY' three times, trying to hit five times. This can be extremely obnoxious for those around me, as you might assume. Why? Because there is usually so much garbage in the answer stream of 'what everyone knows' that it takes 3 to 5 times to get to the bottom of it... is it real, or is it Memorex?

I just had a personal, very personal situation last week, in which I was confronted with 'a rule', which I was expected to follow without question. I asked 'Why' several times, and came up with only one answer...'because I said so, and it's common knowledge...'. Well I looked around at the actual data, others doing the same thing... and I saw that no-one else was abiding by the 'rule', and even though the argument to conform was compelling, I had a new answer right in front of me... the reality was different. Now, there is a cost of going against the conventional wisdom... one gets ostracized, shunned, bullied, even ridiculed and may even loose privileges which go along with conforming. Once through though, and sticking to reality, you often find a completely different world on the other side... as did I. A much more real and satisfying world.

In The Art of the Long View: Planning for the Future in an Uncertain World by Peter Schwartz there is a wonderful story about how Shell Oil Co. avoided a multi-billion dollar investment in North Sea drilling, by testing the conventional wisdom that USSR oil would not come on the open market. The strategy team asked how that might change if a certain Gorbachow made it to power. Enough said....

Crossing the Divide

"Crossing the divide into new realities" Peter F. Drucker

Action: Next time you hear colleagues pounding the table for something that is clearly yesterday's news, find a way to tell them they need to wake up and smell the coffee. Peter F. Drucker

Again, I refer you to Geoffrey Moore (especially if you are in a tech business) Crossing the Chasm by Geoffrey A. Moore , Living on the Fault Line, Revised Edition: Managing for Shareholder Value in Any Economy by Geoffrey A. Moore .

Dr. Drucker speaks of significant discontinuities which befall us every so often, take 50 years to run their course, and when they are complete, and our 'lives' come out the back end, we can't even imagine how those that went before us lived, worked, socialized... everything has changed. While we are in "the Chasm" the turbulence of the "Tornado" is incredible. Looking back across the "Divide" afterwards, is meaningless, 'spilt milk' so to say. So, the eminent discontinuity finder, Dr. Drucker.

We are living in one of those time periods now. It is defined by the following equation:

• CC = (1/CS)**2 - The Cost of Computing (CC) is the inverse exponential function of the Cost of Switches (CS) or transistors - Or a variation on Moore's law.

This equation means that we are moving from a world where computing power was expense to where computing power costs $0.00 (Zero, nada, nichts, rien, no matter where you live). The no matter where you live is important, because this very same equation underlies a secondary impact, which means free, ubiquitous (everywhere) communications among people. Wow, picture your business (not difficult as we approach 50 years of consumer computing) at ZERO cost of communications.

Just ask any auto salesman how he feels about the information explosion in her business. Most businesses have to some extent been "information democratized". Actually, they won't remember how it used to be.

Importantly, especially in the next 10 years, watch undemocratic governments deal and rail with and against the democratization forces/powers of instant, free, and ubiquitous communications. We already see the "BIG BOY", China trying to counter this inevitable trend. How much strife will this bring? Is it bigger than the crusades? Will there be too much data noise to make any good decisions at all?

So, as you approach you daily Drucker Action Item, also look at your business, and project it operating in a world where everybody knows everything about you, as it happens. How will you take advantage of the trend, and how will you avoid being left on the other side of the divide or, even worse, tumbling into the Chasm?

Wow, it is cold on the mainland!

The Functioning Society

"Unless power is legitimate there can be no social order". Peter F. Drucker

Action: What will the emerging government in Iraq have to do to become legitimate? What must a legitimate government do to create status and function for Iraqis? Peter F. Drucker

Again, I suggest that you buy a copy of this book The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done by Peter F. Drucker in order to get the full benefit of Dr. Drucker's wisdom on this topic.

Social function for the individual and legitimate power are the keys to Dr. Drucker's thinking on this topic. So, ideally, one can approach an answer to his Action call. Across the divides, create the ability for the individual to succeed (in business or other social function), and put in place the institutional structure which makes that possible, continuously.

And, I suppose this is, theoretically the way to a solution for Iraq. I am skeptical though. I do not believe that the three 'divides' will ever, authentically form an agreement to cooperate in order to put in place such an equitable social and power structure. The Kurds, the Shia, and the Sunni communities (let alone the Baathist sub group), are in my view destined to continue on separate paths. I don't believe that any-one from the inside will have the power to authentically and legitimately change that dynamic for this 'country', artificially thrown together by Western Hegemonists in their day. Call me a pessimist.

With respect to businesses, I think Prof. Drucker's thinking also works... Provide the institutional framework, so that promotion (future wealth building) opportunities are available to all, no matter the gender, race, religion or location of each worker, and run the business in a way so that financial and consuming markets legitimize your existence through cash flow.

Terrorism and Basic Trends

"Management of an institution has to be grounded in basic an predictable trends that persist regardless of today's headlines". Peter F. Drucker

Action: Write down three basic social trends that your business is based on. Are these trends still in tact? Peter F. Drucker

Let's take just three of the basic trends from World Out of Balance (Kindle Edition)

by Paul A. Laudicina

• Globalization--rising levels of trade, communication, and travel
• Demographics--slowed population growth in developed countries, and increased growth in the third world
• Consumption Patterns--increasingly diverse consumer markets, causing fierce market competition
• Natural Resources and Environment--oil markets reaching a crisis stage, and other shortages predicted in the coming decades
• Regulation and Activism--calls for greater regulation point to long-term business challenges

Each of these trends should be a good starting point for any of you in business.

I would love to see some of the responses, if anyone is out there, and has the time. It would also really surprise me to see if anyone at all is not subject to these trends, or has another one that impacts them significantly.

Example: I think Japan and Italy have the highest negative population growth. I can't help but think that businesses in those Geographies are feeling it. I was just through a small town in South Italy, where many of the oldest (in my view, most interesting) homes were standing empty. On inquiry, I learned (my Italian is bad, but I get the gist) that the families were no more, the last had died, and that nobody had claimed the homes. Cheap real-estate in declining population areas!

Performance: The Test of Management

"Achievement rather than knowledge remains both the proof and aim of management" Peter F. Drucker

Action: Which of your management practices have yielded good results? Which practices should you abandon now? Peter F. Drucker

It's still nice in the Bahamas. What do you think about that iPad? Pretty cool, but No camera? Common!!! Skype is a key management tool, without the camera, well I don't know, for $829 (that's what the 64MB will cost). I think it's a big mistake.

Anyways, Achieve... I have a great story on this issue.

A global shipper of packages asked why they were not achieving higher productivity improvements through their ground stations after having hired a team of 80 (or so) industrial engineers, who had already produced reims of "knowledge" about how to speed up the flow of incoming and outgoing packages. They had studies coming out the wazoo on how to improve productivity. Still, over the months, nothing was changing... no improvement. Sure, there were some localized improvements, but they were just drops on the proverbial hot stone when one saw the overall potential, clearly.

The least productive ground station managers, when asked, usually had the same type of answer: "My facility is different than the other facilities in my division". The potential for cost reduction per package was significant (mid 9 figures per year), not to speak of the capital cost avoidance, and increased revenue impacts... this was BIG stuff on a strategic level. And still month after month, the same players in each division made their excuses, and darn it, they were different to other stations in their division.

The dam finally cracked when there was a suggestion to see if one could group "like" stations across divisions throughout the world. Bingo! No, not that easy. In order to 'achieve', they had to struggle long and hard, through the classification, politics and turf. Finally, transparent, data visible every 1st of the Month was published by station class to all Divisions, without comment or 'drumroll', and the miracle started to happen. The station managers at the bottom of the ranking became real visible, prompting calls from their Division GM's (why are 'we' looking so bad?), and this time the standard answer was no longer acceptable. And word also spread, that the top ranked were also receiving attention from Division VP's, of the congratulatory kind.

The dam broke, when top and bottom ranked station managers started calling each other to discuss how to help and get help: Peer to Peer! Soon the demand for the Industrial Engineers cranked up, and they became real busy. Soon the program was passing the standard of best in-house station to who could become best in class (against all competitors), and the program began to conclude (and deliver huge benefits) when station managers were given the challenge of becoming the ruthless competitor. Not ethically ruthless, but ruthless about anything that slowed them down.

Interestingly, throughout this time, there was only one VP who lost his job because of the changes. The guy who actively/vocally politicked against the comparison across divisions... which was the real innovation in a "turf" sensitive organization.

The example illustrates that it is not sufficient to "know" what is wrong. Management's duty is to actually make the changes necessary to achieve the results, as I think Dr. Drucker urges us to do.

Controlled Experiment in Management

"The story of Henry Ford, his rise and decline, and of the revival of his company is what one might call a controlled experiment in management". Peter F. Drucker

Action: Are you an owner-executive who treats all your employees as your helpers? Are you an employee who is treated as a helper? List three ways your organization could be more profitable if employees were encouraged to assume responsibility. Peter F. Drucker

Okay, I admit it, I'm sitting on a blue lagoon today and enjoying it, even while writing this blog. Thank you Kalik beer.

This is a great Action call. I would start with maintenance, first pass quality, and customer service/support. I have found these to be three practical areas to really let your front line employees not only do the work, but also devise ways in which to improve the results and gain responsibility. I'd even go so far to say that the real frontier today lies in pushing responsibility out to customers and users much more so than we have been doing.

Example; Maintenance: It was not until worker (IG Metal unionized) driven maintenance cells were formed, that the real causes and solutions to VW's paint plant productivity problems were discovered and implemented. Without the day-to-day working understanding of production issues in this complex system, no-one but the actual operators could affect the required changes.

Example; First Pass Quality: Without first pass quality responsibility being moved into the hands of the Japanese Auto line worker, Toyota would not be the world leader it is today. And the "Machine that changed the World" would be the computer and not the car. A well known story, but worth re-iterating often.

Example; Customer Service: When customer service and satisfaction was put into the hands of the front line sales clerk at Nieman Marcus stores, a lasting brand (even love brand) was coined. Maybe even supporting "needless markups" and margins.

Three years ago, I had also begun to see customer peer to customer peer maintenance and support connections being formed in retail technology (Tivo tried this in 2004/5). Imagine the TCO (Total Cost of Ownership) implications if maintenance and support issues were handled between customers, bypassing conventional, even Computer aided support. Usually, the smartest user/fixer is a geek customer, not employed by the company.

I have implemented so many instances of driving responsibility up to the front lines, at the customer interface, that I have also seen some of the worst failures. The unfunded, lip service only, 'pilot project' etc. do more damage than good, so if you are going that way, make sure you do it right, otherwise there is sure to be a mess. Are you ready to really trust your employees?

The Discipline of Management

"If you can't replicate something because you don't understand it, then it really hasn't been invented, it's only been done". Peter F. Drucker

Action: Are your management practices ad hoc or systematic? Peter F. Drucker

Probably, the most critical of these replaceable management practices are those which are critical to your competitive differentiation. If your "schtick" is market presence (sales), you had better have replicable processes that are better than the competitors. That's pretty much facile, and even then, many companies don't reach that level of execution (more later).

More difficult to do extremely well, and maybe even more of a competitive edge when executed flawlessly are what I would call "feeder" processes. The ones which make you efficient in your eco-system (I hope to cover this important topic in the future...maybe on a day when I don't get what Dr. Drucker is saying).

Example: Although CISCO's strength is in sales and marketing, their acquisition process is know to be best in class. In reality it is an extension of the product development process.

Example: Fluor supports it's excellent knowledge work in numerous fields with a People promotion/Succession process bar none. It is world class at feeding the right people at the right time into the most complex management jobs.

Example: Citi Banks risk management processes in sub prime were not what they should be, and management did not have the expertise/knowhow in that side business to assess the growing risk levels. They had not put management practice into place in a critical "feeder" process.

So, yes if you are excellent in product design, customer intimacy, or operational excellence it is not enough, you must also be excellent in the critical feeder processes. Does this mean they shouldn't be outsourced?

A Social Ecologist

"For me the tension between the need for continuity and the need for innovation and change was central to society and civilization" Peter F. Drucker

Action: Are you and your organization change agents? What steps can you take to both change and balance change with stability? Peter F. Drucker

My friend, geneticist Erhard Bieberich says that our genetic evolution has only progressed in a minute amount, since our days as “knuckle draggers”. However, socially, we are accelerating our evolution. Our role as managers is both to conserve the core and to be agents of change of the core. Hmmmmm, confusing... liberal conservative or conservative liberal?

Look at the social changes that GOOGLE is driving. Basically, information for everybody, from the source. The Chinese government says it doesn’t like this, because it is causing too much social change too fast. You know you are doing something significant if the government of the world’s largest population shuts you down... WOW. Is it GOOGLE’s role to continue to drive this social information revolution. What if they stop, have they impeded mankind’s evolution rather than do their duty to social evolution?