It starts quietly, the defense of the Keynesian failures. Published Wednesday in Global Post – Northwestern economist Robert Gordon opines that “We’ve had a lot of inherent advantages: abundant natural resources, favorable demographic trends, relative political stability supported by the protective benefit of two oceans, to name a few. But from colonial times to the present, our happy economy has also been powered by three separate industrial revolutions:
- the introduction of steam engines and railroads
- the inception and widespread use of electricity and the combustion engine
- the invention of computers, the web and mobile communications.”
“Gordon writes that future growth in consumption per capita — the main engine of the consumer-based US economy — could fall below 0.5 percent a year for what he calls “an extended period of decades.” Yes, that would be a big deal. For some context, between 1860 and 2007 that annual growth rate was 1.9 percent. What’s driving this structural economic slowdown, according to Gordon? He argues that six “headwinds” are buffeting the US economy, and that these factors were in place even before the Great Recession of 2008.
Count ’em:
- changing and unfavorable demographics,
- rising education costs and poor secondary school performance,
- growing economic inequality,
- increased competition due to globalization,
- energy and environmental costs and challenges, and
- high levels of consumer and government debt.
Taken together, these headwinds will slow growth dramatically into the foreseeable future.
Here’s the money quote of Gordon’s paper, which is titled “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds, doubling the standard of living took five centuries between 1300 and 1800. Doubling accelerated to one century between 1800 and 1900. Doubling peaked at a mere 28 years between 1929 and 1957 and 31 years between 1957 and 1988. But then doubling is predicted to slow back to a century again between 2007 and 2100.”
This slowdown is happening because the productivity gains associated with computers and mobility have been far less dramatic — at least so far — than the two previous industrial revolutions, all of which leads Gordon to his depressing theme: “Economic growth may not be a continuous long-run process that lasts forever.”
As Milton Friedman would say – we need to have the freedom to choose for ourselves. Government at times becomes the beneficent uncle and everyone becomes inured to poor performance. The adults are arriving in the room with the convention underway. Choose wisely. The time is now.
Parts Pondering v1.8
The parts business is in a rut. We have been doing the same thing for decades now. Isn’t it time to put a fresh face on the parts business and offer customers improved service and convenience?
Start with the tired counter. The stand-up counter has been dead for a long, long time. Some of you just don’t recognize that. Put in a sit down work area. Make it pleasing for your customers AND your employees. Do any of you remember why it is that we have a high stand up counter? Well it is for all of those books we used to have to have as parts catalogues and service manuals. They are now gone the way of the dinosaurs for most significant suppliers.
Move to a self service station in your instore merchandising area. Allow the customers the convenience to price items and place orders themselves. Think of the gas station. They have completely redone their business with their self-service gas pumps and the “service” station. This is not your grandfather’s gas station.
Move to strip malls that are more convenient for your customers. Put is a small fast moving item, supply items, convenience items inventory. Operate like a “NAPA” store. The closer you are to the customer work site the more convenient you are. You might even consider putting a trailer on the customer work site. Make it convenient for them. Make it easy.
Move to the internet. The customer has been purchasing things on the internet now for a few decades. They look for information. They check out different suppliers. They check prices. Are you in the game? You will be left behind if you don’t get in the game.
You are in the retail business in the parts business. I wouldn’t know that from walking into many of your stores. You will both adapt and participate in the market or you will be left behind. The time is now.
Friday Filosphy #27
Do not confine you children to your own learning, for they were born in another time.
Chinese Proverb
Every heart sings a song incomplete, until another heart whispers back.
Plato
Fear makes the wolf bigger than he is.
German Proverb
Thought of the Day #7
It starts quietly, the defense of the Keynesian failures. Published Wednesday in Global Post – Northwestern economist Robert Gordon opines that “We’ve had a lot of inherent advantages: abundant natural resources, favorable demographic trends, relative political stability supported by the protective benefit of two oceans, to name a few. But from colonial times to the present, our happy economy has also been powered by three separate industrial revolutions:
“Gordon writes that future growth in consumption per capita — the main engine of the consumer-based US economy — could fall below 0.5 percent a year for what he calls “an extended period of decades.” Yes, that would be a big deal. For some context, between 1860 and 2007 that annual growth rate was 1.9 percent. What’s driving this structural economic slowdown, according to Gordon? He argues that six “headwinds” are buffeting the US economy, and that these factors were in place even before the Great Recession of 2008.
Count ’em:
Taken together, these headwinds will slow growth dramatically into the foreseeable future.
Here’s the money quote of Gordon’s paper, which is titled “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds, doubling the standard of living took five centuries between 1300 and 1800. Doubling accelerated to one century between 1800 and 1900. Doubling peaked at a mere 28 years between 1929 and 1957 and 31 years between 1957 and 1988. But then doubling is predicted to slow back to a century again between 2007 and 2100.”
This slowdown is happening because the productivity gains associated with computers and mobility have been far less dramatic — at least so far — than the two previous industrial revolutions, all of which leads Gordon to his depressing theme: “Economic growth may not be a continuous long-run process that lasts forever.”
As Milton Friedman would say – we need to have the freedom to choose for ourselves. Government at times becomes the beneficent uncle and everyone becomes inured to poor performance. The adults are arriving in the room with the convention underway. Choose wisely. The time is now.
Marketing Missiles v1.7
My good friend Jay Roszell just posted to his blog – Growth without Pain – “What is the True Cost of Sales Training.” In it he lists off the costs of the training which includes the usual suspects but he goes further and touches on “opportunity costs.” The cost of any activity cannot be measured in a vacuum. You have to recognize that there is a opportunity that will be lost when the employee is not out on the job while they are at training.
This is the same as a “redo” work order. We charge the time of the technician to the job a second time which is applied to an internal expense account. But do you charge that at the man’s wage? The Man’s rolled up personnel cost? or to the customer retail price? or to the retail price and the rolled up employee cost. There is an argument here to be made isn’t there?
Of course this is true about training in general. How much it costs to send employees to outside training events. Whether they be Industry supported such as the AED Foundation classes and webinars and special meetings or to University or Community College extension classes, or a technical or vocational school. I want to go to Jay’s point that without ongoing training and coaching all training will fail.
Too many people graduate from school and decide that – “phew that is over with.” I am sorry to be the one to burst their bubble. I am afraid that is where learning truly begins. As you know I taught “Education” to prospective teachers at McGill University in Montreal – a long, long time ago. The object was to teach techniques to be used in the teaching of a skill or a subject. BUT the most important skill that I thought should be taught was the skill that would enable each student to be able to teach themselves. That would be a life skill that would be theirs forever. It worked with many but not all. That is my failure as a teacher.
But the point I want to arrive at in this blog is that LEARNING is a differentiator for your business. There are customer service measures everywhere that talk to different measures ofr customer satisfaction. Such as “how many different equipment salesman in a year covering your customer caused the customer to be dissatisfied with that company?” Why can’t you keep a salesman in your company? The same is true for instore personnel and Field Service Technicians. In fact it is true for all customer contact personnel.
So why do employees leave? Usually it is dissatisfaction with their boss, or the Company, rarely about money. But I want to suggest there is something else at work here. The employees will leave if they do not feel that the Company is giving them an opportunity to grow. That’s right – the opportunity to grow. How does an employee get ready to take on a more challenging job? Is it all learning as you go or is there some training involved. I know you know that training is involved, and training is expensive. But just think how much more expensive it is to have dumb employees doing the jobs at hand.
So make the investment in training your employees. The AED Foundation used to ask for 40 hours a year. I now want 80 hours each year for each employee. That is right nearly 5% of the employee paid year. But I want more. I want the involvement in the management to ensure that the training “took” and not just blame it on the employee if they revert to old ways a couple of weeks after the training has been completed. That is a cop out. It is MANAGEMENT that must ensure the proper behavior from the employees and learning is just one more of those responsibilities. The time is now.
Management Musing v1.7
Manager is a hyphenated word – Man Ager. I am sorry that is not gender neutral but I am sure you know what I mean. Aging a person is from having to depend on others. Aging is from waiting for others to “get it” especially if you think that you have it. What is terribly wrong with this is that by following old fashioned styles of management the manager is the limit to the capacity of the group. That is right isn’t it? Can you see that and understand that?
Well I don’t like being a limit to anything. There really should never be limits to anything. The limit that might be acceptable is our inability to get it done. We simply are not capable. No schooling, or fitness programs, or special pharmaceuticals will solve the mystery of each of our limitations. Just reconcile yourself to the fact that you have limits and move on. The joy of management is you will be able to find and attract and hire and retain people who don’t have the same limitations that you do and watch them succeed in areas that were not possible for you to succeed. This is a wondrous thing.
Last time I talked about mentoring as a method to develop new talent and new employees. This is something different isn’t it? You have hired talent and they are on the job. Control oriented top down structures are toxic to creativity. Innovation, particularly of the disruptive sort, is unlikely to flourish when a few key executives have the choke hold on resource allocation. (Clayton Christenden). What the employees need today is freedom and responsibility. You need to allow them to fail but not in such a way that they hurt themselves or your group. That is where you the manager come on to the field of play. You are the conductor ensuring that everything works together in harmony. And yes that accelerates the aging process. But just imagine the joy you have watching your children succeed at something. This new reality allows you to experience that joy at work too. The time is now.
Words of Wisdom #12
From my days in the Systems business are these beauties. From a consultant who worked for IBM as a project manager.
Two important lessons – first is that putting more people on a job doesn’t guarantee anything and second that it is easy to remember things that aren’t in writing as completely different than what was agreed to in the beginning.
The time is now.
Thought of the Day # 6
Mises said in a lecture in the 1960s:
“The government and the journalists who were writing for the government told us about this ‘deficit spending.’ It was wonderful! It was considered something that would improve conditions in the whole country. But if you translate this into more common language, the language of the uneducated, then you would say ‘printed money.’ The government says this is only due to your lack of education; if you had an education you wouldn’t say ‘printed money,’ you would call it ‘deficit financing’ or ‘deficit spending.’
“Now what does this mean? Deficits! This means that the government spends more than it collects in taxes and in borrowing from the people; it means government spending for all those purposes for which the government wants to spend. This means inflation, pushing more money into the market; it doesn’t matter for what purpose. And that means reducing the purchasing power of each monetary unit. Instead of collecting the money that the government wanted to spend, the government fabricated the money. Printing money is the easiest thing.
Every government is clever enough to do it.”
Book of the Week – August 25th, 2012
With the beginning of the political conventions I thought it would be instructive to return to Milton Friedman. Free to Choose was written in 1980 and reprinted in 1990. It talks about the changing opinion of socialism and capitalism. But it gives warning which had we heeded it we would never be where we are today.
“Idealistic faith in socialism still lives on, but only in some ivory tower enclaves in teh west and in some of the most backward countries elsewhere.” If that isn’t a repudiation of the “Harvard and Yale” intellectually arrogant belief in Keynes rather than Hayek and the “we know better than you” bureaucrats in all of our capitals I don’t know what would be. Read the book and you will see we have been forewarned about our government encroaching on free enterprise for capital, defending indefensible programs “as is” such as social security and medicare, teaching for teachers and unions not for parents and especially for students and much much more.
This is a time like few others in our brief history. This is akin to the civil war in import. Do we want more government or less. The time is now.
Thought of the Day #5
Experience should teach us to be most on our guard to protect liberty when the government’s purposes are beneficial. Men born to freedom are naturally alert to repel invasion of their liberty by evil-minded rulers. The greater dangers to liberty lurk in the insidious encroachment by men of zeal, well-meaning but without understanding.
Justice Louis Brandeis – 1928
Truer words applicable to the current election are rarely found.
The time is NOW.
Friday Filosophy #26
The more I practice, the luckier I get.
Jerry Barber
It is never too late to be what you might have been.
George Eliot
Only that which is temporary endures.
French Proverb