Empirical Rationalism and Other Oxymora
Economics
Friday Fun: The Truth About What Motivates Us
Aug 7th
Amazing video animation of a Dan Pink talk. According to Dan, engagement is about autonomy, mastery and purpose…
(Note: posted the wrong video earlier – sorry about that).
A Hireless Recovery?
Jul 31st
Michael Schrage on HBR.org (commenting on an NYTimes article) argues “U”, “L”, “V”… it dosen’t matter the shape of the recession — this is not a “jobless” recovery, it is a “hireless” recovery. Instead of asking “where all the jobs have gone”, a better question might be “where did all the employers go?”
Executives and entrepreneurs aren’t asking “Who should we hire?” They’re asking, “Why should we hire?” World-class firms are still looking for world-class people. But when world-class people aren’t what’s needed, world-class firms will consider world-class alternatives. Most people looking for a job today aren’t competing against each other. They’re competing against alternative ways to getting that job done.
He rightly suggests that this is a structural, not a cyclical shift. Necessity is the mother of invention — as the recession lingers, companies are becoming more efficient at finding alternate methods of value creation and, as a result, these jobs are not likely to come back anytime soon..
For most organizations, people are a means and medium to an end. They’re not hiring employees, they’re hiring value creation. If they can get that value — or most of it — from contingency workers, outsourcing, automation, innovative processes or capital investment, why wouldn’t they? If tweaking a process or program empowers three people to do the work of five, then tweakonomics is the way to go.
Along these lines, Robert Reich on Business Insider talks about “The Great Decoupling of Corporate Profits from Jobs”.
Second-quarter earnings reports are coming in, and they’re making Wall Street smile. Corporate profits are up. And big American companies are sitting on a gigantic pile of money. The 500 largest non-financial firms held almost a trillion dollars in the second quarter, and that money pile is growing larger this quarter. Profits that plummeted in the recession have bounced back. Big businesses have recovered almost 90 percent of what they lost.
He suggests that hiring is not happening for three reasons: 1) profits are coming from overseas operations (so that is where investments are going) 2) companies are investing in labor saving technologies and 3) companies are using their money to pay dividends and buy back stock. According to Reich, this leaves us with huge paradox:
Big American companies may never rehire large numbers of workers. And they won’t even begin to think about hiring until they know American consumers will buy their products. The problem is, American consumers won’t start buying against until they know they have reliable paychecks.
So where does this leave the American worker, particularly the unemployed? What opportunities are out there for progressive companies?
Lingering Consequences of Bad Choices
Aug 5th
There is fascinating article in yesterday’s Washington Post by Paul Schwartzman that chronicles the choices one family has to make as they face economic hardship. The article evokes a range of emotions from sympathy (doting father, bad luck, articulate family) to outrage (spending unemployment money on gambling, beer and cigarettes). I found that the most interesting thing about this situation was the compounding nature of (bad) choices made long ago. One choice or decision led to another with compounding consequences; once you head off a path, it is increasingly difficult to correct course.
Stephen Dubner posted some interesting commentary on the article — the comments are telling insight into the polarization of American views on the economic crisis.
Technology Investments in 2009: 3 Ways to Achieve More With Less
Mar 12th
Posted on CRM Buyer (read full story here)
03/12/09 4:00 AM PT
The economy has forced countless businesses to restructure, rethink strategies and reprioritize initiatives. Don’t let a short-term, survival mindset cloud the long-term focus — there are opportunities here. Aggressively negotiate SaaS contracts, keep an eye out for bargains, and don’t underestimate the value of CRM, BI and ERP technologies.
As economic conditions worsen and we struggle to make sense of the new realities of business, it has become a cliché to say that we need to “do more with less;” after the second, third or fourth round of layoffs, less is, in fact, less.
The new challenge for managers is to figure out where and how to apply limited resources and budgets to actually achieve more, not do more, with fewer resources. Over the past six months, many organizations have understandably cut costs out of the business and reprioritized initiatives. With a reactionary and short-term focus, many organizations have not yet fully grasped the mid-to-long term implications of their defensive and, in many cases, survival-oriented strategies.
Cuts Are Coming
In a recent survey of over 1,500 organizations conducted by the Aberdeen Group, 57 percent of respondents decreased (41 percent) or froze (16 percent) their budgets in the fourth quarter of 2008. Furthermore, nearly half (45 percent) of those surveyed had already reduced their 2009 revenue plan. As a result of economic conditions, the majority of the respondents were also planning further budget cuts (58 percent), and four in 10 (42 percent) planned on cutting discretionary spending (such as marketing), headcount reductions (39 percent) and / or travel restrictions (37 percent). Clearly, there is much uncertainty right now with regard to 2009 strategic plans. In general, many organizations have already reduced spending, headcount and capital investments, yet many are planning to do the same if not more in the coming year.
When asked about the impact that current economic conditions had on the 2009 growth strategy, 38 percent of surveyed organizations indicated that they were going to “stay the course,” 37 percent were planning for expansion, and only 18 percent were planning on contracting (8 percent didn’t know). While only 30 percent of respondents indicated, with certainty, that economic conditions have not impacted the timing of major initiatives, half of the respondents in the recent Aberdeen study had already delayed major initiatives (22 percent by more than six months) and a further 20 percent were “not sure” what was happening with their initiatives. That said, nearly a third of the surveyed organizations (30 percent) planned to increase their technology budget in 2009, and 27 percent indicated that they would add headcount in 2009.
Three Ways to Achieve More With Less
While thinking that you can expand or “stay the course” without incremental investment may be delusional thinking, there are opportunities for organizations to achieve more with less by leveraging their current infrastructure, renegotiating Software-as-a-Service (SaaS) / service contracts, or delaying the start of initiatives until at least Q3 2009.
- Leverage Your Current Infrastructure. When respondents were asked to think about the past two years and evaluate the top two software technologies that had the most pronounced effect on their organization’s success, CRM (32 percent) placed in the top three most often, followed closely by ERP (enterprise resource planning) at 31 percent; and business intelligence (BI) was chosen as a top-three technology by 25 percent of respondents. When asked which technology will have the greatest impact over the next two to five years, BI was rated No. 1, followed by “enterprise application enhancements / extensions.” Furthermore, with 20 percent of respondents indicating it as a top priority, “enterprise application upgrades” was the highest rated software-related technology investment for 2009. The interest in BI and extending the current infrastructure is hardly surprising. For a project to get the green-light in this environment, it should be well-defined, limited in scope and have a short-window return on investment.
- Renegotiate SaaS Contracts. More than a quarter of respondents (29 percent) are already planning to renegotiate supplier relationships as a direct response to current economic conditions. SaaS applications have grown steadily over the past couple of years based on a value proposition of low up-front investment and well-defined “land and expand” departmental implementation strategy on the part of many vendors. Although having annuity revenue is enviable for any vendor in this market, widespread layoffs and hiring freezes will inevitably put pressure on some of the smaller SaaS vendors as contracts come up for renewal and renegotiation — that is, fewer employees at end-user organizations means fewer seats for SaaS vendors. In they haven’t already, current and prospective users of SaaS solutions should recognize this opportunity and aggressively negotiate based on the new economic realities when renewing or signing first-time contracts.
- Wait for the Best Deal. Like many organizations, software vendors were not immune to the cuts in spending on marketing and lead generation in Q4 of 2008. With a typical nine to 12 months sales cycle for enterprise software, this means that vendor pipelines will really begin to thin out starting in Q3 of 2009. Furthermore, organizations with a strong professional services bench may be in the position to further reduce day rates rather than reduce headcount. These conditions give organizations that are inclined to move ahead with projects unprecedented negotiation power when evaluating and negotiating with short-listed vendors.
A little too much perspective?…
Jan 19th
I was a having a conversation today with a co-worker today about politics, the economy, the state of the world, etc… In 2002, the infant mortality rate in the US was 7 per 1000 live births; in 1933, it was 58.1. In 1915, the maternal mortality rate rate was above 600 for every 100,000 births — now it is in the single digits. In 1970, about 36% of the world population couldn’t read; in 2015, the illiteracy rate is projected to to be ~15%.
Is the drop in your bank statement or the prospect of losing your job even close to the reality losing a child (or multiple children)? Or losing your wife in childbirth? Or not being able to read? In the span of human history, the last 100 years (much less the last four months) have been an insect bite — truly inconsequential. Yet, as individuals, we tend to dwell on the here and now. We forget that collectively we’ve made huge strides in a short time.
Yes, the economy is bad. Yes, these are some of the toughest business conditions that many of us have seen. However, we need a little perspective here. We all need to remember what really matters and put that in perspective.
Just a few thoughts as we wrap up MLK day.
