» November, 2009

The North Bay Business Journal, a publication of the New York Times, is a weekly business newspaper which covers the North Bay area of San Francisco – from the Golden Gate bridge north, including the Wine Country of Sonoma and Napa counties.

This page provides the Print-Friendly Version of the article, as published.

Any related materials or articles referenced in the column, or otherwise applicable, will also be referenced below:

The electronic version of the article, as published, may be found here.

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Article published -November 30 2009

Is fear or kindness the road to cost control? You decide

“Strive not to be a success, but rather to be of value.”

– Albert Einstein

Last time I presented the dichotomy of two opposing cultures and posed the question: If measured by financial performance, how can dramatically different organizations be equally successful? In this continuing series, we’ll explore some of the combinations and permutations of sound business principles and cultural patterns that often collide within an organization’s walls.

In many ways, it doesn’t seem fair that both charitable and churlish cultures can thrive. It’s easy to embrace the benevolent culture created by Sid Rich (we’ll call it Company South, “S” for Sid) as profiled in my last column.

That company deserves to be successful. Wouldn’t it be great if that was the company I worked for? Contrarily, when you look across the aisle at the rough and tumble world of Company North (“N” for Nasty), highlighted by temper tantrums, public floggings and a petulant devotion to spending a dime on anything, we’re either glad we’re not working there … or wishing we didn’t.

Some powerful lessons are evident as we compare and contrast these companies, their styles and culture, although some lessons are not very inviting.

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Take a moment today to leave your trials and tribulations behind and reflect upon all of your blessings. We have a lot to be thankful for living in the greatest country on earth, with all of its blemishes, and for our families and friends who nourish our lives.

I offer my special thanks today to everyone who contributes to the blessings and favor that grace my life and extend best wishes to you for a restful and bounteous Thanksgiving holiday with your families and friends.

Have a great holiday weekend.

The reports are continuing on the woeful effects of the Obama job stimulus program, heralded as the American Recovery and Reinvestment Act. The $789 Billion package was to create or “save” 3 million jobs but here’s the thing.

You know how your spouse says she or he just “saved money” when they bought something on sale … but you can never really find or see those “savings”? That’s the same logic the Administration uses to claim it’s “saved jobs” as they seek to defend the success of the stimulus package.

Not only is job creation meager, but the costs are staggering. The White House’s Recovery Act Web site – www.recovery.gov – shows, for example, that $660 million has been awarded to Bay Area transportation projects to create 997 jobs, which amounts to a staggering $661,986 per job. Last week, the site showed that California Congressional Districts 00 and 99 received millions of dollars in stimulus funding even though neither district exists.

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Like big bears hovering over the waterline picking off salmon swimming upstream, the economy is not  much of a friend to small business. As you probably realize, small businesses generated 65% of the job growth between 1993 and 2008, and represent about half of the private-sector employment in the U.S., according to the Small Business Administration. “Smaller firms, with fewer than 20 employees, account for 25% of all jobs, but they generated 40% of the [job] growth in the last expansion in 2001,” says Joseph Brusuelas, a director and senior economist at Moody’s Economy.com.

Nouriel Roubini, the NYU economist,  writes in a column published in BusinessWeek that the small business economy, is still mired in an “deep and persistent recession”. In fact, a Goldman Sachs analyst recently explained that small business sentiment is out of line with other measures of the economy, like GDP.

What’s the answer? A recent meeting of chief executives concluded that efforts need to center on getting more credit to small and mid-market businesses. The CEOs argued that the main impediment to a faster economic recovery was the high level of unemployment and called for ensuring that credit was available to jump-start hiring, with an emphasis on smaller businesses. I seriously doubt that’s the holdup and am inclined to agree more with the NFIB Chief Economist.

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We’ve all heard motivational speeches … but I don’t think I’ve ever seen one as powerful as this. It’s striking … moving … hard to forget … yet the message is universal. Let your kids see it … or savor it for when they really need it … or when you do.

Can we be this honest … so thankful for our blessings that we can invest every last drop of our being to put it out there for others … particularly when our blessings may be as hard to fathom as they likely are for this man?

The North Bay Business Journal, a publication of the New York Times, is a weekly business newspaper which covers the North Bay area of San Francisco – from the Golden Gate bridge north, including the Wine Country of Sonoma and Napa counties.

This page provides the Print-Friendly Version of the article, as published.

Any related materials or articles referenced in the column, or otherwise applicable, will also be referenced below:

The electronic version of the article, as published, may be found here.

**********************************************************************************

Article published -November 16 2009

Different Cultures, mean vs. kind, but same results

“You do not lead by hitting people over the head – that’s assault, not leadership.”

– Dwight D. Eisenhower”

He threw a lead crystal ashtray at his son’s head?” I asked. “Thank God he missed.”

“He threw his secretary’s typewriter through a second story window – it wasn’t open – into a parking lot full of cars below?”

These are just a few of the stories I heard after I joined the firm.

In short order, I recognized that the company’s cultural ancestors probably included a toga-clad, sweat-drenched galleon driver pounding out a cadence of “ramming speed” with a wooden mallet. Their cost-containment strategy was medieval. The company showed no obeisance whatsoever to any concept of structure or chain-of-command organization. The chairman slurped a workaholic tonic that abused everyone in sight, brooked little disagreement and intimidated employees, customers and vendors with equal disdain.

His miserly ways were never more visible than the occasion on which he lost his patience hearing about the infamous typewriter (remember those?) that wouldn’t stay fixed.

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The Wall Street Journal blogs frequently report on the VC industry and their recent entry, Start-Up CEOs Gripe About VCs’ Lack Of Operating Experience, caught my eye.

I have sat on close to a dozen small business boards and agree that directors without real experience bring little to the table. I’m not sure, however, that I would automatically exclude directors without operating experience because there are valuable perspectives that can be gleaned from successful executives across a broad variety of disciplines.

What’s painful is watching inexperienced directors from investment firms that want their associates to “get experience” at the expense of their portfolio companies. For my money, let them tag along as “shadow directors”, attending board meetings, reading the board packages and listening. Drill down with them after the meetings to get their perspective and suggested solutions to the problems presented. Only when you’re convinced that they’re ready, and I mean after years not months, should they assume an official board role. Don’t rush it … and don’t conclude that just because you’ve got a smart associate, they’ll make a smart board member. Maybe not.

Save for the unique investment relationship, no prudent company or shareholder would ever select an inexperienced director of any kind. Why would you … and why would any investment firm violate this obvious “prudent man” rule?

My last newspaper column, Can Small Companies lead in consumer-directed health care?, focused on certain health care ideas and the success that companies like Whole Foods have had focusing on individual responsibility for some of these basic costs.

According to a new report, over $700 million is wasted each year in the medical system, equal to roughly 1/3 of total health care spending in the U.S. Business Week dug beneath the surface to find 10 Ways to Cut Health Care Costs Right Now, to learn about other ways you can begin … NOW … to cut health care costs for your company and family.

Like I’ve said, I certainly didn’t intend to wade into this health care reform quicksand but just the thought of a 2,000 page bill that legislators haven’t read conjures a paperwork morass that, like a stealth bomber, sneaks in under the radar and does incredible damage before you wake up in the morning …

… not to mention how much stuff is buried in there we haven’t heard about yet or the laughable observations that it won’t cost anything. Where to start? How about David Broder’s observaations about its failure to deliver on cost controls, he being the former of Chief of Staff for Prez Clinton.

How about the Wall St. Journal report that the promised tort reform – sounds good – is coupled with a provision that provides incentive payments to states that adopt a “alternative medical liability law” … but ONLY IF it does not limit attorney’s fees or impose caps on damages”? Huh? Isn’t that at the core of tort reform in the first place?

How about the concept that none of this will cost anything  because the savings will offset the cost? Gee, we’ve never heard that one before.

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