Saturday, August 5, 2017

The Importance of Process

     In Chapter 6 of American Ways, I observed that "When Americans cannot agree on conflicting ideals and interests, they resort to agreeing on a fair and equitable process to resolve their conflicts peacefully."  Since the earliest days of the colonies, Americans have asserted their individual ideals and interests.  They often butt heads with other individuals doing the same.  While Americans have enjoyed certain rights, they have never enjoyed the right to infringe the rights of other individuals.  Had there been no agreed-upon procedures to settle numerous conflicts among individuals, Americans would have fought and killed each other off a long time ago.
     Processes are extremely important to Americans.  Most Americans have followed the axiom "live and let live."  But to people with self-absorbed interests and absolute beliefs, the ends justify the means.  We see this often in the business world of high-competition and high-expectations.  Profits are what matter most to many business people and investors.  But they have to stay within the boundaries of the law and social acceptability or they risk alienating authorities and customers.  We also see people with uncompromising values who are willing to go to extremes regardless of who else gets hurt.
     To most Americans since the 17th century, however, the means justify the ends.  There are "right" and "wrong" ways to get things done, not just favorable or unfavorable results.  If you live according to the rules, then you are entitled to your gains, and those gains become protected under the law with broad community approval.  You are also respected by the community of other individuals.
     What do the concepts of fair and equitable mean?  "Fair" means that all parties in a dispute agree to a process by which to settle conflicts and then abide by the outcome.  In the eyes of many Americans, "fair" may relate more to the process than to the results.  If the process is run according to consensual rules, then you have to accept the results as fair even if they are not what you wanted.  Then, you just move on.  "Fair" also means that the process was run without trickery, corruption, or perversion of the rules.  Many times Americans have tried to bend the process to get their desired results.  Therefore, procedural knowledge and transparency are required.  For example, judges, lawyers, and law enforcement agents must understand the American system of justice.  And "equitable" means that all parties are treated the same with no biases based on political favor, power, wealth, or social standing.  That's the concept, at least.  Unfortunately, achieving the ideal is a continuous struggle in the practical world in which wealth and influence play such prominent roles in the day-to-day affairs of both business and government.
     Furthermore, the concepts of fair and equitable in the operation of peaceful processes apply to the most powerful person in the country, the President of the United States.  He or she cannot excuse any means to justify the ends.  The Constitution lays out a process for national government with limited powers and internal checks and balances.  Just as a judge in a court, the President has to know the proper institutional procedures and follow them with transparency.  In addition, the sensitivities of the American people based on generations of social processes must be respected, even in the technological world of social media.

(C) 2017 Stephen M. Millett (All rights reserved)           

Monday, July 10, 2017

The Ideals and Self-Interests of Global Climate Change

     In Chapter 5 of my book American Ways, I set out one of the major patterns of historical American behavior:  Americans find clever ways to combine their lofty ideals with their self-interests and self-satisfaction, and only rarely will they consciously pursue their ideals at the direct expense of their own well-being (p. 143).
     Let’s take a simplified example from an extremely complicated issue:  global climate change.  On one side are those who assert that the Earth’s climate is changing rapidly, with many areas suffering from increased surface temperatures and storms; that global warming is potentially damaging to all life forms on land and in the seas; and that actions must be taken now to avert climate disaster in the future.  In particular the Paris climate accord of 2015 called for reductions in greenhouse gas emissions and a shift from the extensive use of fossil fuels with high concentrations of carbon dioxide to sustainable energy.
     Who benefits from such goals in the U.S.?  One might argue ideally that everybody will benefit by not enduring climate disasters.  Many arguments are based on the high ideals of quality of life, improved health and safety, and environmental stewardship.  But behind such ideals are many self-interests, too.  Scientists and R&D enterprises might receive more Federal government programs.  Insurance companies might reduce their risk exposure to large claims based on extreme weather events such as hurricanes, thunderstorms, and floods.  Obviously, there are farming, ranching, forestry, and fishing interests at stake if climate conditions reduce their outputs.  The shift to sustainable energy forms particularly favors investors and companies engaged in the production and operation of electricity-generating windmills, hydro-electric facilities, solar panels, geothermal systems, and perhaps large-sized batteries and fuel cells.
     In addition, the natural gas industry has been benefitting by the increasing use of methane as a fuel for central station generation of electricity.  Furthermore, greenhouse gas emission restrictions might reinvigorate nuclear energy. 
     Less well-known are shipping and tourism interests that see new business with the melting of the North Pole ice cap.  This aspect of global warming may also appeal to oil and gas interests seeking new drilling opportunities farther north.
       On the other hand, the opponents of the Paris climate accord and the environmental and energy policies of the Obama Administration denounce the notion of global climate change as fake news and perverted science.  They decry the environmental regulations of Big Government and the meddling of Washington, DC, in the smooth operation of the private sector.  They argue that global climate restrictions on greenhouse gas emissions will crimple the American energy industry, throw millions of people out of work, and lower the annual GDP growth rate.  But what are their vested interests?  There are the traditional interests in fossil fuels, especially coal.  In its extreme form, global climate regulations would virtually kill the coal industry, as coal remains a relatively dirty form of energy with typically high carbon emissions.  Five states produce over 70% of American coal:  Wyoming, West Virginia, Kentucky, Pennsylvania, and Illinois.  Coal interests are also strong in Ohio and Montana.  The industry hit a peak in 2006 and has been in steady decline for over a decade with lost jobs and reduced company revenues.
     Many electric utilities continue to rely heavily upon coal to operate central station facilities representing billions of dollars in plant investment.  Some electric utilities have claimed that further restrictions on their carbon emissions would result in skyrocketing electric bills for consumers and eventually leave tens of millions of Americans in the dark.
     The automotive industry might be severely impacted by global climate regulations on gasoline emissions, but many companies are gradually shifting to more efficient internal combustion engines, hybrids, and electric vehicles, as the consumer demand supports such products.
     In addition to the high ideals and self-interests at play, the global climate change debate has exposed deeply held social biases and hatreds:  the academic community vs. large corporations, tree-huggers vs. economic opportunists, rugged individuals vs. Big Government, conservatives vs. liberals, Democrats vs. Republicans, and the admirers vs. the detractors of Barack Obama.  For example, Vice President Mike Pence once said that the principal problem with Obamacare was Obama – he might have said the same of global climate change and the Paris climate accords.                  

© 2017 Stephen M. Millett (All rights reserved)

Sunday, June 11, 2017

The Get Even President

     Donald J. Trump is the Get Even President.  He has emerged as the champion of Americans who feel that they have been gravely wronged and who seek retaliation against their enemies, real and imagined.  Trump’s behavior reflects the mood of his base: confrontational, indignant, impatient, defiant, abrasive, and unapologetic.  Not far beneath the surface exist layers of pain, fear, and anger.
     Who are the people who support Trump?  The Trump coalition consists primarily of six groups, among which there are many overlaps.
     The first consists of highly partisan and “yellow dog” Republicans.  Their faith in the GOP is largely based on family political tradition, regional political preferences, the ideals of individualism and free enterprise, and vested interests.  They include Republicans who remain enamored with Ronald Reagan and adhere to the conservative principles of Robert Taft and Barry Goldwater.  They generally fear and loathe Democrats, who threaten them through government regulations, taxes, and social reforms.  Many Republicans continue to hold great disdain for Bill Clinton and his unseemly personal conduct as President; they also greatly distrust Bill Clinton’s wife, or “crooked Hillary” as Trump calls her.
     The second group is the American déclassé that I discussed in my blog posting of June 1, 2017.  These include people from the middle and working classes who suffered from the Great Recession of 2008 and never fully recovered.  Many lost their jobs, savings, homes, and their comfortable lifestyles and they want them back, now!  They feel victimized by various evil-doers in a corrupt system (“drain the swamp”) and exploitive illegal immigrants (“build the wall.”).  They are very angry, and in particular damn President Barack Obama.  Anything connected to him (such as Obamacare, environmental restrictions, global climate change, trade agreements, and post-2008 banking and financial regulations) must be reversed.
     The third group is Baby Boomers who are now approaching retirement and who still have vivid memories of the 1960s.  They recall the violence of the Civil Rights movement (especially the urban race riots) and the war in Vietnam, both in the jungles of Southeast Asia and in the streets of the U.S.  They resent the perceived shunning of Vietnam veterans as though they were war criminals.  They want a strong military that will be allowed to win foreign engagements.  They in particular want to “make American great again,” or a return to a world order in which countries defer to the U.S.
     Americans who have a persistent fear of criminals and terrorists make the fourth group.  They abhor street shootings and random acts of violence.  They remain traumatized by the Al Qaeda attacks upon New York City and Washington, DC, on 9/11 of 2001.  They generally supported American retaliation in Afghanistan and the unilateral, preemptive invasion of Iraq.  In contrast, they bemoaned the seemingly irresolute policies of the Obama administration in the Middle East.  They defend domestic gun rights and distrust Muslims (“the travel ban”).  They cheer a strong leader who will end criminal violence and foreign-generated acts of terrorism one way or another.
     The fifth group are members of the social conservative movement, especially those who embrace traditionalist social and religious views.  They are defenders of their own religious freedoms.  They may not always condone Trump’s language, but they support him as a national leader who will curtail abortions, gay marriages, and the mandated coverage of contraceptives in Obamacare.  Most importantly, they support Trump’s appointment of conservatives to federal courts, like Neil Gorsuch to the U.S. Supreme Court.
     Finally, the sixth group consists of Trump’s fans who love his books, reality TV shows, speeches, and tweets.  They are awed by his great wealth and CEO style.  They see Trump as spectacular political entertainment.
     Will these groups find satisfaction?  And will they be better off in the long run?



© 2017 Stephen M. Millett (All rights reserved)     

Thursday, June 1, 2017

The American Déclassé

     Toward the end of the 19th century, the French introduced the word déclassé to describe people who had fallen in social status.  The déclassé might include aristocrats who lost their titles or their estates for one reason or another.  They might also be middle class who lost their businesses, white-collar employment, savings, and homes.  They were reduced to the tattered trappings but no longer the substance of their former comfortable lifestyles.  They felt victimized and marginalized and often blamed others for their own misfortunes.
     Many Germans experienced a middle class déclassé in the 1920s due to hyper-inflation that wiped out long-term savings.  Then they suffered further from the Great Depression and deflation.  Financial reverses along with personal loses and the humiliating defeat in World War I caused many German déclassé to turn to hyper-nationalism, including German racial superiority as expressed by the Nazis.
     Now the United States has its own déclassé.  They were used to middle class standards of living until the Great Recession of 2007.  Some were upper- and middle-middle class who were overextended in debt, particularly inflated home mortgages.  When the financial and real estate bubble burst, many lost their houses, which were their principal assets as well as their homes.  Others lost their businesses and investments, too.  Meanwhile, white collar workers lost their jobs to process innovations and business cost reductions.  After decades of wages and benefits that lifted so many factory workers from the working to the middle class, millions of industrial jobs were eliminated by factory automation, offshore production, and layoffs by companies faced with reduced demand for their goods and services.  For many, the upward spiral of the American Dream had suddenly reversed its course downward.
     Particularly devastated was the new working poor, broadly defined, of people who could not find any jobs, or took jobs that paid significantly less than their previous jobs, or went into retirement without pensions and adequate savings.  They found themselves on the wrong end of the growing income-wealth-education gap in the U.S.  Having once enjoyed a middle-class standard of living, they now had to struggle to just make ends meet.  If they still bought the things they were used to, they went more heavily into debt.  Many became very bitter about their losses and retreated into social isolation and alcohol and drug abuse.  Some turned outward and blamed various other people, including Wall Street fund managers and bankers, the one-percenters, the Federal government that seemed pleased to help the chronically poor but not the working poor, and illegal immigrants who allegedly exploited public assistance programs.  In addition there was a growing fear of public violence and acts of foreign-generated terrorism.
     Some of the American déclassé personified their anger in President Barack Obama and railed against the well-educated and well-paid elites who appeared to dominate the Democratic Party.  They hated when the President lectured them about large corporation bailouts (but none for the “little guys”), mandatory healthcare insurance (which for some people resulted in unwanted coverage with unwanted premiums and new taxes), race relations, and global climate change.  What about good jobs with good pay?  What about people who were not working but getting public handouts?  What about illegal immigrants from Mexico?  What about Muslim terrorists shooting and bombing innocent Americans?
     Then came the elections of 2016…. 





© 2017 Stephen M. Millett (All rights reserved)

Wednesday, May 24, 2017

Who Protects American Individuals?

     Perhaps no country in history has valued individuals as much as the U.S.  American ideals amplify the rights and value of individuals – we talk about individual freedoms and opportunities and making life better in the future.  The American Dream is ideally open to everyone.  But who provides the safeguards that protect American individuals and allows them to assert their individuality?  
     At the basic level, each American has assumed responsibility for his or her own well-being and rights.  If you are an American, you have to watch out for yourself.  You are expected to work, earn a living for yourself, and provide for your family.  You have to guard your own home and personal safety the best you can at moments of danger.  Yet, no American is empowered to assert his or her prerogatives upon other individuals without justifiable cause.  We all live under the same laws that protect individuals and maintain social order.
     There have been times and places in which people had to defend themselves in the wilderness or on the frontier because nobody else was around to help them.  For most Americans, however, individuals tended farms and ranches, built businesses, and labored within communities.  Once Americans came into social organizations, they were expected to help their friends and neighbors and to live by the law.  Uninhibited individualism might have led to people willfully fighting and killing each other.
     The law as practiced by communities provides the police on patrol.  It also provides the courts and prisons that back the law up with consequences.  And who makes the law and pays for its enforcement?  In the U.S., from the earliest colonies, it has been the people working together through a prescribed process within communities.  Directly or indirectly, they made the laws, raised the taxes, and operated the public institutions.  In the final analysis, communities protect and serve American individuals in regard to personal safety, property rights, civil liberties, due process, and public health.
     To carry this point further, who protects American workers and consumers as well as honest business people in the pursuits of earning a living or building a fortune?  There have always been bad guys in stores and offices as well as in the streets.  Many business people are not criminal but are still self-serving and greedy while taking advantage of other people.  Who protects workers from inhumane conditions and treatment?  Who protects American consumers (who are also citizens and voters) from broken promises, misrepresentations, cheating, and swindles?  Again, the communities do, at all levels.  Local governments, for example, have passed zoning laws to protect private property and neighborhoods.  They have also passed building and health codes and maintained standard weights and measures.  State governments also protect individuals from certain business crimes and abuses of workers and consumers.  So, too, does the Federal government at the national level.  The whole purpose of regulations passed and enforced by communities is to protect individuals and maintain the integrity of the free enterprise system.
     In the face of combines to monopolize interstate products, services, and prices and in the face of nationwide corporations that proclaim “Let the public be damned!,” the protection of individual rights from abuses of Big Business was the one community that represented all the people:  the Federal government.  Or so argued President Theodore Roosevelt over 100 years ago.  In a growingly complex and rich commerce, the national community has to regulate the national economy.  Meanwhile, Americans through voting, expressing opinions, and demonstrating peacefully must guard against the abuses of the Federal government as well as those of huge interest groups, especially when the interests of a few, as expressed in hidden political donations and intense political lobbying, dominate government policies over the interests of the many. 

    



© 2017 Stephen M. Millett (All rights reserved)          

Friday, May 12, 2017

The Most Important Word

     I used to ask my MBA students what was the single most important word in business.  Many would respond “profits,” and indeed that is how many business people think.  But the most important word is “trust” – without that no business can be conducted.
     Customers buy products and services that they trust from providers that they can rely upon.  The quality and consistency of goods and services are reflected in their reputations and brands.  It may take years for a company to build an attractive brand, which can be quickly destroyed by an accident or loss of consumer confidence.  Businesses also have to trust each other:  if you pay out money, then you expect value in return, each and every time.
     When people know each other and share positive experiences, they might make agreements based on a handshake.  They trust each other to do as promised.  In far more impersonal and complicated situations, we rely on contracts, which are legally binding agreements whereby the law provides trust.
     Likewise, there was a time when people shopped at the same stores all the time – the storekeepers knew which customers wanted what products and whether they could be trusted to pay their bills.  In addition, an individual might use the same bank over a lifetime.  Credit from stores and from banks have always been based on trust, both personal and legal.  Today when we use our credit cards we trust that most if not all merchants will accept them and that the credit card companies can be trusted to protect us from fraud.
     Not all businesses, unfortunately, are trustworthy.  Some seek as much profit as soon as possible.  They cut corners.  Some businesses will act unethically; some will even break laws.  While many business people can be trusted – it’s in their long-range interest to be so – there will always be those people who cannot be trusted.  They may deceive customers and take advantage of them.
     Trust is also the most important word in government as well as in business.  Our system works because we trust it.  The power of the Constitution, like the value of our money, ultimately rests upon the full faith of the American people.
     Trust relates to  fairness, and as I wrote in my book, American Ways:  “In both private and public affairs, the management of fairness requires the sharing of information, transparency of procedures, the participation of stakeholders in decisions, and people abiding by the results of agreed-upon processes.”  (p. 339).  Since colonial times, officeholders at all levels have needed to build trust in many of the same ways that businesses have built it.  They have to offer services consistent with expectations and at acceptable prices (taxes).  They have to do what they say that they will do.  They have to be honest and abide by the law.  They have to include many people in their policy-making in order to achieve full cooperation and they have to be transparent with the real-time sharing of full information.  No lying, suppressing facts, contradictory stories, and broken promises. 
     Perhaps someday in the future we will see these qualities of trust restored to American governments.



© Stephen M. Millett (All rights reserved)  

            

     

Monday, May 8, 2017

Money in a Hurry

     Several years ago a senior economist told me that most business people manage “by the seat of their pants.”  I didn’t understand then what he meant, but I do now if I equate “by the seat of their pants” to a decision-making and investment-making style that emphasizes the here and now.  We might call it management by the moment.
     For example, in the early 1990s I was consulting for NCR, which was in the process of being acquired by AT&T.  I was told that when the CEO of NCR was asked how long his company had been in existence he allegedly replied about 424 quarters.  Indeed, a company’s stock price often goes up or down based on nothing more than the most recent quarterly report.
     The focus of American business on short-term performance dates back to the 1620s.  Governor William Bradford was outraged when the London investors pressured him for profits when his Plymouth colony was barely surviving, having lost half of its population during its first winter.
     The American short-term perspective has been based in part on the gold rush mentality that drove early European colonization of the New World.  During the 1500s, the Spanish pulled out enormous amounts of gold from Mexico and Peru, leading many generations of investors and immigrants to believe that in America the streets were lined with gold.  The colonists of both Virginia and New England, however, discovered no gold – but with hard work and some luck they produced crops (such as tobacco, corn, and wheat) and products (such as flour, lumber, and rum) that eventually paid off handsomely.  The real gold rushes came later in North Carolina (1799), Georgia (1829), California (1848), and Alaska (1896).  We still have periodic gold rushes today, but they occur mostly on Wall Street.
     There is an old American saying that if you are going to get rich then quick is the best way.  Yet, so many successful enterprises have taken years to develop, while most startups fail.  The get-rich-quick mentality survives despite common sense and history; many business people manage resources, employees, and processes with an eye to sooner rather than later results.  The problem, however, is that short-term thinking can lead to short-sighted decisions.  People become too satisfied with the expediency of today and put off potential problems to tomorrow.
     American business people in the 21st century will have to learn to think in the long-term because global competition and financial risks have become so great and the periods of return have become so long that they can no longer afford just short-term thinking.  They have to stop solving today’s problems when doing so sacrifices new product and service R&D, market positioning, and brand-building.  They must remember that all businesses survive on customer loyalty and repeat business, and they have to understand and anticipate how consumer behavior changes over time.  You have to satisfy customers both in the present and the future.

© 2017 Stephen M. Millett (All rights reserved)