Management and HRM: Chains, links and what's wrong with biz/work/econ systemics today!

Rough day at the dentist and then electric fuse blew when I returned to the flat where staying temp and not feeling at home in. What a day! But the building owners' rep energised her wits and local connections when I called her, so the fuse that was busted, the one at the basement, not the flat, was fixed very quickly!

She's a master of her work. Gotta love that!

Which brings me to the point of this post:

People who master the work they do in diverse and somewhat complete ways make life for all of us better! Kudos! She has been doing this work for years but I know many who do a job for many years yet still too "casually". They make our lives worse off, I propose.

People have to try to master the work they do out of respect for themselves, their job & the people involved. No room for zombies in management and workplaces today.

What I am saying is that no job is w/o value when the person who does it respects himself, the job, the clients and all ppl involved in general. No job!

And that is where work/econ systemics are failing today imho. The rating of jobs tends to devalue many and systems fail due to 5 cent screws or low pay and what is worse, low valued/rated jobs, economically and societally, ie jobs that thus attract people who, alas, do their job as if they are "zombies"! Or to put it differently, they are simply there (and just that). They are the real "bureaucrats" of not only the public but also the private sector? Their personal fault? Maybe to some extent, but also the management's, the "HR's", and systemic faults, I argue. And these are the ones where priority must be placed, to improve things!

So even jobs that are rated low are valuable if one realises that chain is a strong as its weakest link! 1 has to look at marginal benefit/cost. When one does that, one realises that no job is of low value to the "system" if the system is to work.

Games, in sports and in business

Seems that some have it all wrong. You actually compete in business but you participate in sports.

If you want to be a game changer ...

Game changing is a buzz-concept these days.

But IMO:

If you want to be a game changer, first you need to understand the game

On deadlines

Some know how to set deadlines. Others know how to meet them (the deadlines)

Good houskeeping, the European social democratic way

Good "housekeeping" in the EU member states is always a must but Sarkozy, the current Dutch government, Merkel and others must be sacked for obsessing about it!

For setting targets that are too unrealistic, in terms of the actual numbers as well as the whole philosophy of setting strict targets and obsessing about reaching them. That is also a problem with inflation (the 2% "magic" target), even the targets of the Europe 2020 "growth Strategy". Economics, including fiscal and budgetary ones, are not like Physics or Chemistry, they are part of social sciences and as such they must be treated with a grain of salt. People are not robots, neither are their economic, social, political and policy  actions.

Some politicians are willing to bend to the demands of financial markets.

Since many years ago I have written about the demands placed on listed companies by the financial market. The pressure to meet specific targets on a quarterly basis. And the negative impact that this has on the medium term performance of the corporation.

In recent years, the same pressure is being put on countries, their economies.

Time for that to stop! That should be one of the philosophies of the social democrats in the EU27.

Of course states, as companies do, need to improve their accounting procedures, know what they are spending and why (the why part is management accounting as opposed to financial accounting). To keep their finances solid but without "human sacrifices" of the obsession austerity kind. The preservation of the European Social Model and the need for the recognition of the positive role economic immigrants can play in the funding of the social model of an ageing EU27 (instead of scapegoating them).

To make a humanist EU the beacon for others in the world, since the American beacon has been dying out in recent decades (see also the resistance to not only HillaryCare of the Bill Clinton 1st term but also of Obamacare, especially the public option).

In a secular Europe, economic religions such as growth via austerity, classic, neo ir ordo liberalism and of course neo-Marxism have no place! Policy must provide solutions for real problems of real people.

Like in the movies

The latest piece of biz news from Hollywood, Disney film boss Rich Ross resigns after John Carter flop, reminds me of a report I must have read or heard, I think it was BBC Worldservice, some 10 years ago but has resided in my mind ever since.

Only one out of 10 films a Hollywood studio produces makes it bog.

Maybe 3-4 others make a profiit

The rest lose money, one of them a lot.

The 1 out of ten though makes or has to make enough money to also cover for all the losing ones!

I like the movie business, when a kid I wanted to study film at UCLA and go to Hollywood. Was not meant to be, because I considered the odds of success vs the cost of college to my parents, Anyway

It's about risk and return, both expected (risk and return) and real, the ex past facto.

That type of risk the average .man, woman or household does not fancy taking. Wants an as stable as possible life,, an environment to have and bring up kids.

Some, the "knights" are willing to live lives of more risk. For the expectation of extra return or some, for the thrills. Some because of the nature of many times of business, venturing or even trying. But those who take the risks should be the ones who incur the costs when the project turns sour, not the average people.

Knights in suits. Once upon a time, wearing a suit meant something. Especially a dark grey one. For years now that is not the case. That is why I have not worn one in years.

My point is: Should more (employees, managers, stakeholders, media, et al) realise that doing business in many sectors nowadays is like in the movies (ie they are like film studios)?

Mass vs Niche; Local vs National vs Regional vs Global

For some people (and companies) open spaces, are a challenge. For some a threat. They prefer straits and; local squares or alleys etc.

Some though "suffocate" in small, closed, markets. They need the open space, the seas of Europe or the ocean of the world to breathe!

Which brings me to a new chapter in this morning's rambling: Can small vessels compete in the ocean of globalisation or open sea of Europe?

Well, targeting a segment or even a "niche" of the global or European market is advisable.

The challenge of being global: 29 433th out of 21 558 090 in global ranking of followfriday (and 16 849th English speaking ranking).

Compared to being ranked 50th eg in Belgium or 300th in the UK or 1000th in the US, being, as a company or professional or anything, .

29433rd out of 21558090 (ie global) is in many ways harder psychologically. Even if that means "doing better" than 99.96% of the rest!

That explains IMO why the average firm has trouble being global or even European instead of competing nationally or locally.

It is easier to feel and to tell to your investors, employees, market etc that you are No1 or even 30th in country X than 29433 globally

That is partly why globalisation and European integration have relatively few fans.

To export products and services to a "foreign" market you have to ....

To export products and services to a "foreign" market you have to understand, research, be interested in that market or produce a product or service that your native/local market likes and be lucky that other markets "like" it too! Or be R&D driven & hope.

A company that does not "care" what people think about its products or services be unsuccessful in either foreign or "native" market(s

It can get "lucky" if its in a by nature or geography "captive" or oligopolistic market. Or someone grants it monopoly rights to a market.

Work for companies that produce products or services you like. Produce products and services for "people"/markets you like. Biz is not chore

Proximity to a foreign market is a competitiveness factor. Either geographical or "mental" proximity or both.

Is business (including exporting) about beating your competitors or about capturing the hearts and minds of potential consumers?

The mantra of top business schools has been the latter, for years now!

Yet how many CEOs and biz owners feel that way?

In effect, products and services must create "mental monopolies" in consumer minds!! Be considered :"the only one". Much like dating!!!!

Next Tuesday is Valentine's Day. But every day's Valentine's Day IRL! How many people think your product(s)/service(s) are "unique" to them?

How many people or companies think your products/services are unique in satisfying a certain need or want they have?

Or are you relying on old style mass media ad blitz to convince people that your product or service is something they "really" need or want?

Producing and delivering a product or a service is a creative, artistic, non chore like process! Or should be.

2012: A reminder to European leaders and policy makers (countries and EU)

What European companies need is a single market, single currency & a single political entity in Europe, especially the SMEs (the real economy).

The effect of US and European polynomy on growth and jobs

US & European polynomy (ie too many laws, regulations and red tape) has suffocated the real economy and especially the micros & SMEs.

Unless fixed, don't expect growth & jobs in the US & EU

Competition, pricing, inflation, interest rates and the EU SIngle Market

In business school I was taught that when a company is thinking of a new product or service, it must estimate costs, then research what the market is willing to pay, if larger, price at max. But many companies use a costs + % profit expectation = price system.

In Economics I learned that prices go up when companies see more demand and decide easier to raise price than expand capacity. Of course, in Services expanding capacity is ceteris paribus and in theory easier/cheaper than in Manufacturing.

In practice market structure (and enforcement or lack thereof, of competition law) plays key role in pricing decisions and in inflation. I suspect that is one of the reasons the Euro interest rate set by ECB is 1.5% in order to curb inflation compared eg to USA (0-0.25%): Less competitive markets than eg the US ones. That merely what I suspect. . As well as more regulations that tie the hands of business to adjust to the ups and downs. And of course a very imperfect 19 year old EU single market!

I even recall some analyses ib the last 2-3 years that said that EU single market works better outside the Eurozone than inside! Makes one wonder!

The American Dream: Employee, Corporate Executive or Entrepreneur?

I just read an August 8 article titled "The End of Jobs in America" in PlanetPOV.com. I recommend reading it.

Among other things, the article quotes a U.S. Commerce Department stat according to which "U.S. multinational corporations, which employ a fifth of all American workers, cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million. In contrast, in the 1990s, they added 4.4 million jobs in the U.S. and 2.7 million abroad".

Now, before I proceed to my comments, here is a prediction re jobs in America: See Table 1. in BOL's ((US) Bureau of Labor Statistics) "Occupations with the fastest growth in the Occupational Outlook Handbook, 2010-11: Overview of the 2008-18 Projections"

Note that occupations ranked No3 and 4 (in the Top 20) in predicted growth rate are:

At No. 3: Home health aides with an expected +50% growth 2008-2018 translating into 460,900 new (extra jobs) in 2018 compared to 2008 with a median 2008 annual salary of just USD 20,460 and short-term on-the-job training as an education/training requirement.

At No. 4: Personal and home care aides, with +46% translating into +375,800 jobs at mdian 2008 USD 19,180 (also "short-term on-the-job" education/training requirement).

These two occupations, which are valuable to Society (in my personal experience and view), no mistake about that, but alas fall into a wider low skill - low pay category that according to other predictions I have read in recent years constitute the bulk of new jobs expected in the US!

Noe that in 2008, about 1.74 million people occupied jobs of the above 2 types and another 847000 expected ti by 2018.

The list of largest % growth does include college degree or graduate degree requiring and medium and high pay occupations, but the volumes of these occupations are relatively low. Indicative: None of the 18 other in this list is expected to create more than 200,000 jobs by 2018. Only 3 had a 2008 median annual salary of more than USD 80k and none over 100k.

See also:

My May 26, 2009 post "On jobs and creating jobs: If you cannot find a job, create your own company?"

Thus, here are my comments:

The so called American Dream was not a dream of being a career employee or even a high flying corporate executive. It was of working hard upon arrival in the US (washing dishes, etc), often an employee but eventually starting your own company, ie being an entrepreneur.

There is a lot of fuzz as to what a multinational (or global or international or ....) company is. Does it really have a "nationality"? I mean, it has to have its global HQs in some country, but a real multinational is it a "national" of that country?

IMO, a genuine "multinational", not! It has to have a citizenship (aka HQs) in one country (there is no "global company statute" (yet at least) and I am not sure what happened to an old proposal for a "European company statute" that was caught in the EU's legislative pipeline for ages in the 80s and 90s). But its shareholders are from all over the world, the shares can be traded in many stock markets around the world, its board can include nationals from all over the world, so why would one expect that the mere HQ location of a multinational in the US (one of its states) or the UK etc makes it a "US or UK multinational" ie a contradiction in terms?

These days, having a multinational have its HQs in your country may give you the advantage of being able to tax a portion of its global income (via transfer pricing via HQ fees charged to its subsidiaries around the world, licensing and royalties etc) but a multinational to be a multinational has to spread its production and its employment around the world. It is an integral part of what makes it a "multinational". Otherwise, it is merely an American or British etc company with international sales! In other words, a bid difference from a multinational.

Thus the key statistic is how many Americans are employed in corporations that export (thus provide the US with revenue in addition to jobs).

So the US Dept of Commerce stats above simply reflect a transition of US corporations with international sales to multinational ones!

The bulk of US jobs should be expected and encouraged to come from companies that are dynamic, provide meaningful employment thus salary and, why not, are competitive by spreading their sales around the markets of the world. Multinationals will provide some jobs, but where and of what type, that is a matter of their multinational/global shareholders, board, stakeholders to decide or be concerned. No country owns a multinational corporation, many can benefit from its existence in different ways, but no "national allegiance" should be, rationally expected.

That is what makes the BOL predictions re occupations more relevant and puzzling.

PS 1. As I have argued in other posts (and tweets) the best way for the US and the EU to regain manufacturing in large numbers is via leaving the WTO. The EU and the US were losing manufacturing to the East before China joined the WTO (December 2001) but since it did, they kissed manufacturing capacity and jobs goodbye! Can green tech and emission trading schemes help them regain it? IMO, no.

Strategy: The relevant market(s)

Originally written: 11/2001
Updated: 15/8/2011

1) National/Niche:
Are some national markets too small for niche orientated strategies?

2) National/Mass:
What are the key corporate/business competences for succeeding in the mass market of a small as opposed to the key corporate/business competences for succeeding in the mass market of large country/economy?

Yet:

3) Existential:

Do the above questions make sense when there is "free" (near) global (WTO rules based) trade for most goods? When there is a single market exists in the EU for almost 20 years now?

(A: In spite of the above, a national market is still a national market, and in some cases a local market is still a local market, ie "native" companies still have concrete/real "advantages" over "alien" ones).

4) National champions playing in the EUropean or the world league:
How are the key corporate/business competences for succeeding as in a national mass market relevant to those needed for succeeding in a wider regional, European or global mass market? To what extent and under what conditions are they compatible? And vice-versa.

There are no golden rules in Strategy and in Management

There are no golden rules in Strategy and Management

Originally written: December 2001 (in Greek)
words: 616

One could argue that business is like a chessboard, on which each "player" has its own "army". But the analogy with chess might lose its relevance in markets where the opponent (whose movements the player is expected to foresee) is not one not even a few.

The number of "players" (firms) in each market ("game") clearly affects the type of game. Maybe business is more like an "arena" in which many 'gladiators' compete against each other under the gaze of "referees”, and the audience (customers, analysts, investors, etc.). Let us adopt this metaphor for the purposes of this analysis.

In relation to the recent past, in the modern business "arena" the battles have more and more fronts, the weapons are more and more complex, the role of "referees" is getting smaller. New “gladiators” enter the game from all over the world.

Other gladiators are limited to one of the corners of the arena (ie local or regional markets), others move across the field. In parallel arenas, there are other industry/sectoral "battles" and moves from arena to arena (or the simultaneous presence) is allowed by the game.

In these "multi-fronts" conditions, strategy is particularly important.

Policies or actions such as cutting costs, or general measures to improve productivity are not "strategic." Neither is planning per se.

Corporate strategy is a broad and very demanding exercise. Even fundamental business questions should come under review, including:

• What are (as a company) my skills (core competencies);
• What is my market or markets (market definition)?
• What is the product or my products and what is/are not (my products)?

Are strategies, tactics or procedures in Marketing, Sales, Communication, Finance, Human Resources, Production and Logistics, IT, etc. compatible with (or serving) the overall corporate strategy?

What is the rate of change of the parameters in the external environment of my company and what is the impact on strategy?

Strategy is no simple process anyway. But especially nowadays, it must combine intensive analysis with creative thinking.

We must be mindful of the external environment and the internal situation. .

Eg a strategy that is perfectly suited for a competitor is not necessarily appropriate for one's own company. The reasons may be many. The main one is that the strategy should among other things also fit the capabilities (competencies) of the company that will follow this strategy!

Undoubtedly, in the context of a strategy new competencies can be developed or acquired from the market.

This is obvious in the context of a dynamic (rather than static) strategy. But that does not mean that these new competencies are compatible with new strategy.

Matching conditions (opportunities and threats) of the environment with corporate competencies and weaknesses is a delicate process.

But the strategy, much like management, is both science and art. As an art, it requires creativity, especially in times like this.

Eg whether a trend in the environment is a threat or an opportunity depends on one's perspective. In the conception process of a new strategy, nothing should be a given. Ultimately it all depends on creativity and a thorough analysis and of the external as well as intra-company environment.

It is worth noting (though obvious) that no company is identical to the next (neither is any person).

So what can be achieved does not depend only on the characteristics and abilities of the company but conditions in its environment. No factor or parameter is the critical (decisive) one.

This is probably the magic (beauty) of business and entrepreneurship: At the end of the day, there are no limits to the available strategic options! That is why both rational analysis and creativity are needed.

The sensitive warrior

There are 30" left in the game. The opponents are leading. The team is determined to win. Armed with years of training and experience, loyalty to the team and to the home crowd, and a lot of "HR Capital", they know they can do it. They are true warriors.

Salvaging all their strength, they go for the "extra yard". They win because they want to win more badly than the opponents.

They are now given the trophy under the cheering of the enormous crowd. They are the champions. They are winners, and to the winners the "spoils".


For many, business was and still is like "war". Just like football, just like "love". They do business, they play football, they treat the opposite sex as a battle.

To win, they study the opponents, they get motivated, they fight, they beat them. They treat the market just like they would treat the target territory. Fight and conquer.

In human relationships, this kind of "lover" has long gone out of "fashion". Nowadays it is the sensitive "lover" who builds relationships, who is chosen, isn't he.

He does not worry about beating any opponents. He focuses on understanding the opposite sex, feeling the emotions of the persons he is interested in.

Isn't the same principle applicable to business today?

Does
a) the competition matter, or
b) feeling the 'clients', building relationships with them? Keeping them (the target market) happy. Understanding and satisfying their needs and wants.

Some would agree with (b).

Others claim that this is nice in theory, but beating the competitors, the other "suitors", does matter too.

It is a matter of balance between the two, hence the need for a "sensitive warrior"?


Written: 2003

Profit is like sex, the more ....

Business: Profit is like sex.
The more one fixates on it, the less likely one is to get it!

National business champions: Beyond the myth

Business Policy:
Do "national champions" do better in foreign markets than other companies? IMO, no.
National champions tend to become complacent.

SME survival in the global era: The bookstore around the corner

The bookstore around the corner
Written: June 14, 2001

In the movie "You got mail", Kathlin Kelly, owner of a traditional, small and corner bookstore in a neighborhood of New York (Kelly is played by actress Meg Ryan), is one day suddenly faced with a huge "megabooktore", part of the super-chain "Fox Bookstores", which occupies the entire block opposite her store.

"What can I do," asks desperately in an e-mail to an anonymous online friend, who happens to be her own competitor, son of the founder of "Fox Bookstores" (played by Tom Hanks).

The question of the heroine is the classic question of the traditional small firm that is faced with a corporate "Goliath". But globalization makes this question evem more relevant for a growing number of businesses, while more and more companies that considered themselves a "Goliath" in their local market are now "Davids" faced with a regional or global "Goliath". Thus who is a "Fox Bookstores" and who a "Kathleen Kelly" is something relative these days!

In the film, Fox relies on cues from another famous movie, the "Godfather" to advise Kathleen Kelly. "Take them to the mattress" he suggests, without knowing that he is giving advice to a competitor.

"Take the weapons of your opponent and use them against him" is a solution proposed by the character played by Gene Hackman in the movie "Public Enemy".

However, fortunately for entrepreneurs everywhere, aside from Hollywood films, there is a special area in Business Administration, Strategy, that studies the ways a company can compete.

Strategy remains a relatively neglected area for many businesses, not just small.

But more and more companies of all sizes, note that in an ever-freer competitive environment, Strategy is not an elitist process and intangible plan inside only the mind of SME owner, but a regular business process with a specific (and written) product that can be communicated and shared across the enterprise.

Strategy also has its own methodology and expertise, and various "schools" of thought. It can also benefit from external consultants as well as the "strategic thinking" and "training" of managerial staff.

But for many companies, takig advantage of the strategic thinking of the staff remains am unclear perspective. Especially when the executives, including senior ones, are consumed 100% by daily executive chores.

For many small businesses, such as the bookstore of Kathleen Kelly, the introduction of a culture for strategy has as a prerequisite the introduction of a culture of Marketing, Sales, Financial Management, Information, etc. to the employees, but mainly to the entrepreneur who started it all based on a vision, an idea or an "art".

This adjustment not only for workers and "the staff", but mostly of the owner's own business philosophy is a crucial tool for 'survival' in the era of globalization and is essential for the competitiveness of a small economy (eg Portugal, Greece, Ireland, etc). The cultural change is ultimately the first, but absolutely necessary step. From this change come a real human resources strategy, the development of human capital, etc. From companies that do not rely on armies of expendable "soldiers" and headquarters of elite "officers" or "queens" attached to the boss, but a flexible backbone of "horses" and "towers".

It is no coincidence that there is a rising number of executives with experience who actually evaluate their prospective new employer and who are not driven primarily by the prospective employer's size or name but the culture of the boss and the company, often placing a low priority on some traditional symbols of "corporate status" (car, etc.) even earnings.

How many countries committed "economic suicide"

Many countries suffocated their own productive forces in their economy via red tape etc thus paving the way for imports to come in and rule!

Consider: What are the real causes - factors that turned eg the US & the UK from net mega exporters to net mega importers in only a few decades?

In many countries it started making much more sense to import than to produce (due to red tape and other conditions) = "economic suicide"

Release real growth and real jobs from the chains of over-regulation and red tape!

It seems that the key skills for success in business etc today are not biz studies or motivation/inspiration but legal ones.

Why?

Due to over-legislation & red tape!

Stop "killing" personal & business creativity via over-regulation, over-legislation & the resulting red tape monster (national and cross border). This IMO applies to most areas of economic activity (excludes the Finance sector though). In other words, regulate Finance more, radically deregulate real business, for "healthy"/viable real growth and jobs!

Because the "governing dynamic" is: Whatever you decide to do, red tape wlll eventually catch up with you!

How many jobs in EUrope are created and maintained by red tape? How much growth and real jobs do they prevent from happening?

A large part of legal frameworks for business in European & other countries were created in the industrial era, based on an implicit belief that business (big industry with its high start-up and fixed costs) was a big bad wolf! In the Services era this is even more irrelevant & job desructive than ever!

Entry to markets, economic activities & professions, either national or cross-border suffocate real growth and real jobs or the real economy.

The roots:

In older days, markets, industries & professions were protected via over-regulation, red tape & other barrriers. The system kind of worked, then, providing "stability" (and sclerosis) for companies, professionals & workers. But with freedom of trade etc, the system has IMO collapsed and mobility (across sectors, professions and borders) for companies, professionals and workers is still fenced, hence systemic instability and lack of real growth and jobs at various national (eg USA), regional (eg Europe) and global levels.