In Search of ... Vision

There is plenty of blame to go around when you examine the current financial crisis. There are the banks – anxious to collect interest revenue, giving loans to people that can’t afford it, believing, hell, if they default, we’ll just take the house and sell it to a higher bidder. There are homebuyers – needing more than they can afford, being swindled by mortgage brokers and real estate agents to get in over their heads – not having an ounce of common sense in signing the deal – and no accountability after the fact.

But there is another culprit, less obvious, but one that threatens the very fiber of American business and our ability to climb out of this recession (and avoid future ones).

I have worked for many of the world’s greatest companies during my career. Companies like AIG, Ziff Davis, and Time Inc. were once considered among the elite American corporations. So what happened?

We all fell prey to Wall Street mentality. We started thinking in terms of quarterly results instead of long-term strategy. After all, it is the quarterly and annual results that determine bonus numbers, not whether or not you position your company to succeed long-term. So – the hell with strategy, the hell with long-term thinking – make the numbers NOW or you’re out.

But America wasn’t built thinking 3 months at a time. People and companies used to have vision and a desire to fulfill that vision. But now, it’s all about quarterly results, insane bonuses based on those results, and very unfortunate short-term thinking. Even in the current recession, a recent quote from a well-respected executive at a very large company was “revenue now, future later”.

The most unfortunate thing about the current downturn is that nobody seems to have learned from past mistakes. Companies have their hands out, but still have the same people making the decisions on how the bailout dollars will be spent. Many top executives are still trying to figure out how to come out of this crisis with the most dollars in their own pockets instead of how to get American workers back to work and make our economy productive again.

We must ask ourselves – where is the creativity? Where is the American spirit? When will we stop falling prey to greediness and start making sure that every American that wants to work and contribute to the betterment of the greatest country on earth be given that opportunity?

There is more than enough to go around if we just re-assess our values and re-assess our reasons for going to work every day. Is it really about just making more and more money, or is it to provide great products, great services, and fulfilling employment to ALL Americans, not just the top .1%? We need to stop the short-term, vision-less thinking that has dominated American business for the past 20 years and get back to the quest for excellence that made this country great.

I’m not being naïve – I understand that companies need to be profitable to stay in business. But there has to be a balance. Some decisions may mean a bit less profit now to have a more successful business down the road. Knee-jerk decision making based on Wall Street demands have driven some of our greatest companies to the brink of ruin. Is anyone out there learning this lesson, or are we going to keep having more of the same and face recessions and layoffs every few years for the rest of our lives?

The Cost of Being Rich

With all the (deserved) fuss lately over executive compensation, I started thinking -- "What does it really cost to be rich in America?". I'm not talking about Bill Gates rich, but lets just say the upper .1% or so.

Without being all scientific about it, I made some assumptions about what would put a person in that class. I think you'll all agree that these numbers would make a person quite comfortable and certainly in the upper echelon of how people live in the US:

• 1 primary residence ($2.5 million) and 1 vacation residence ($1.5 million)
• 2 kids at the best colleges ($50,000 each annually) and 2 kids at home
• 2 $100,000 cars and 2 $75,000 cars
• $15,000 per month for entertainment, plus $20,000 per month for club fees
• $15,000 per month for clothes
• 4 vacations per year at $25,000 each
• We'll even assume they're good people and give $100,000 per year to charity
• Plus other living expenses like utilities, insurance, groceries, and non-catastrophic medical coverage

This quite lavish lifestyle costs about $2 million per year. Add in taxes and we'll call it $3 million. Throw in another $500,000 for savings and investments. That's $3.5 million per year.

In 2007, the average compensation for a Fortune 500 CEO was $10.5 million. $7 million more than necessary to achieve the high standard of living above. A total of $3.5 billion in excess just across this group of CEO's. Enough to pay a $100,000 salary plus benefits to 25,000 people.

So someone out there please explain to me -- why would anyone need more than the lifestyle I have described above? Do these company's Boards of Directors really think that the excess they are paying their CEO is truly worth the productivity of additional workers? Wouldn't even these CEO's agree that their company could be more productive and provide higher value to their stockholders with more people providing their products/services?

Let me cite one glaring example. According to Forbes, John Chambers, CEO of Cisco, made $55 million in 2008. Using the model above, that is $51.5 million in excess, or the equivalent of about 370 workers. Cisco just laid off 3000 people.

The balance is way off.

Wasted Talent

One of the things that puzzles me these days is -- How the Hell are we ever going to get out of this recession?

Every day it seems, I get an email or a phone call or a Facebook/LinkedIn message from some incredibly smart, talented person from my past who has experienced the gut-wrenching sound of being told "We're sorry, but your job has been eliminated". It seemed like in the past, economic downturns were used by companies to rid themselves of the deadwood. This time around, it feels like they're cutting their best and brightest, while keeping around the people who won't complain about no raises, no bonuses, and no interesting work, while the company goes into a bunker and waits for the smoke to clear.

But that's the paradox -- how can we have an economic recovery when many of our country's most intelligent minds are not being productive, are unable to spend money and are actually taking money out of the system in the form of unemployment compensation?

In past economic downturns, some companies didn't bury their heads in the sand and wait for Wall Street to tell them everything was ok. They took advantage of the opportunity to attract great talent, build competitive advantage and leap frog their competitors as the economy improved. Look no further than Google for the best example of this -- they flourished when the Internet bubble burst.

So who is going to be the "Google" of this economic downturn? What company has the guts to forge forward while everyone else is running scared? These are the companies that will help us turn this around -- and they'll be the new leaders in the new economy that rises from the ashes of this monumental recession.

Time to Blog More (Or is it More Time to Blog?)

One of the side benefits of being in "job transition" (better known as being unemployed - but that's not the politically correct term these days) is having the time on your hands to share your thoughts with the world -- whether through blogging, Facebook, or over a networking lunch with similarly "career-challenged" folks. Well, since I set up this blog a year ago, I have posted exactly one thing, so allow me to indulge myself by sharing my thoughts with the world.