Will we have a V, U, or L future? Since the 2008 deep recession, we’ve had an upward movement of Gross Domestic Product and other measures of economic well-being. Growing income inequality and too-low wages were notable criticisms. But even these issues were being addressed. After all, there is no better anti-poverty program than a strong economy. Then came the COVID-19 pandemic. A business owner friend said it’s like a boxing match Round One when the first punch is a bout-ending knockout. He has never seen such a sudden downturn in his many years as a business-to-business CEO and owner. What will our national growth rate look like in the months and years ahead? There are three potential outcomes for the nation, a V-pattern (rapid recovery to pre-pandemic levels), U-pattern (slump followed by recovery), or an L-pattern (the economy stays depressed for years…
5 ways to keep your brand relevant
Your business can do many vital things well. High customer satisfaction ratings. High quality at a competitive price point. Great customer experience. But if you become irrelevant to the tastes, interests, and requirements of customers, all that “right stuff” won’t matter. Therefore you must understand where markets are headed, not just what’s relevant today. Let’s think about some current trends and imagine their impact by flashing forward 30 years when the last year of the baby boomer cohort (those born in 1964) turns 96. Will gas-powered cars be relevant? Family farms (sadly)? Long-haul truck drivers? Landline phones? Printed newspapers? Going to a doctor’s office for a simple exam? Single-use plastics outside medical markets? Leaders managing brands do the work of future forecasting because they want to evolve their offering to remain relevant. When leaders fail to do so, their brand (and often company)…
Why changing healthcare policy is so messy: Part One
The market mechanism is a remarkable process. Buyers and sellers exchange money in an open system that produces prices and production levels to equate supply and demand. (Also known as Keynes’ invisible hand, the market mechanism is an alternative to central planning.) Chinese leaders added the market mechanism to its communist political system, and economic growth skyrocketed. In theory, the market mechanism leads to an ideal allocation of goods, services and workers’ efforts for society. In practice, ideal output misses the mark when prices fail to reflect societal benefits and costs, consumers are not well-informed, or monopolistic-like power exists. One area where the market mechanism often fails is healthcare. A healthy population benefits everyone, from employers in need of a productive workforce to the government (and taxpayers) who cover the costs of the social safety net to each of us as individuals…
Facts, false facts, or both?
As the clock turns from 11:59:59 PM to 12:00:00 AM, we pass from one date to another. Two sides of midnight, as I like to say. The two times have different spaces on a calendar, but they are almost precisely the same time. I’ve been thinking a lot about two sides of the same thing as I listen to the debate around impeachment and share notes with my friend Jonathan Barry, a brilliant Republican. He regularly has a different reaction than my own to an op-ed column about impeachment. “Uneducated,” “hypnotized by Fox News,” “ignorant,” and other words Democrats use to dismiss Republicans cannot be used with Jonathan (or many other Republican friends and colleagues). Both the GOP and the Democrats have said in public, “The facts speak for themselves.” Yet both sides have reached very different conclusions. How do our political…
Trust makes the world go round
“Love makes the world go ’round,” according to the famous saying. But, in reality, it’s trust that makes the world go round, trust that is at the center of so many points of human interaction. Currency. We use the dollar because we trust the US government stands behind it. Without that trust, we’d be stuck in a barter system with a much lower standard of living. Our currency used to be backed by gold. We trusted our government enough that it removed the gold standard, opening opportunities for even more commerce. The dollar is the world’s trade currency because there is more trust in the US central banks than others. Business partnerships. Sure, contracts, long and short, codify the agreement. But ultimately, contracts are built on trust. Each party trusts that the other will try to fulfill its commitments or, there would be…
Leadership is a responsibility, not a right to do wrong.
Men. If you are paid multiple millions of dollars a year, you should be able to control your dick. Period. This blog is not a morality tale, at least with regards to personal sexual or marital morality. Instead, it is a tale about a CEO who was indifferent to the potential risks that his sexual and emotional behavior posed to others. I am writing to express anger at leaders who think they are above the law, be it the real law or a workplace code-of-conduct. Former McDonald’s CEO Stephen Easterbrook left his role after the company’s Board of Directors learned of Easterbrook’s consensual relationship with a staff member. In exchange for leaving, he is getting six months of severance and favorable treatment on options. Easterbrook is divorced. We do not know the marital status or reporting relationship of the staff member. Those facts…
Getting the right thing right
My check—in at the Marriott (now Marriott Bonvoy) went quickly. The women at the desk were friendly and the lobby, as for all Marriott hotels, attractive. I had ten minutes to find the elevator, locate my room, change quickly, and meet my board colleague to discuss the management team’s proposed 2020 plan. Simple. Nevertheless, I was ten minutes late. Opening the door to my assigned room, I was surprised to see breath mints on the first cabinet top I encountered, my go—to place to keep my keys in any hotel. “Nice add, Marriott,” I thought at first. Then I saw a coat draped over a chair, an open suitcase on the floor, and a bathroom that looked, shall we say, used? The room’s guest (the appropriate one, not me with an identical key) was gone. Lucky for her, I am not a thief. Lucky…
Must we always value innovations financially?
Imagine for a moment that your college senior is a computer science wiz at MIT and is currently deciding between three job offers. The first is Facebook. The second is a leading video gaming company. The final one is less familiar – a start-up in Seattle. It’s called Convoy. The company reduces the percent of time trucks spend on the road with an empty load. Which job would you want your child to take? I know, “Whatever makes my child happy,” is the emotionally correct answer. “What are the career trajectories?” is another question that you might suggest your child explore. Listen for a second to your inner voice, and ask your child to do the same. Where do you think he or she would make the most difference to the world? Markets value current and future financial returns. By building a social media…
A prominent group of CEOs just signed up for a much harder job
The Business Roundtable includes CEOs from some of the most recognizable large companies in the US, such as Chase, GM, Johnson & Johnson, and Apple. Think of it as the bluest chips of the Blue Chip listings. Collectively these companies employ over 15 million people, buy almost half a trillion dollars annually from small and medium-sized businesses, and donate eight billion dollars to charities. Frankly, if politicians followed their advice, we’d have a lot more innovation and infrastructure in our nation. At long last, the Business Roundtable CEOs have outlined – in a policy position – a radical change in the stated intent of a corporation and its leadership. The new direction: that the purpose of a corporation is not to maximize shareholder return but rather to pursue a fundamental commitment to all stakeholders. The stated policy places employees, suppliers, and communities…
Lessons from a retail chain winner and loser
It was the best of times for Best Buy and the worst of times for Toys “R” Us in the news this week. Years ago, analysts expected Best Buy to go the way of Borders, a bookseller disrupted by Amazon’s online magic. Instead, Best Buy has held up well against Amazon. It not only avoided the fate of electronics chains that did go bankrupt (e.g., Radio Shack and Circuit City) it’s a stock we all should have purchased. Toys “R” Us, on the other hand, announced its bankruptcy this week. Economists love natural experiments, and the Best Buy versus Toys “R” Us comparison offers one for retail markets. Why did Best Buy succeed where Toys “R” Us failed? What lessons can we glean? The key takeaway: You cannot beat Amazon at its own retail game. You must win at a different game. Toys…