new new e c o n o m y the
the n e w
new economy
tim mceachern & chris o’brien
A M E R I C A N M A N A G E M E N T A S S O C I AT I O N
N e w Yo r k A t l a n t a B r u s s e l s B u e n o s A i r e s C h i c a g o L o n d o n M e x i c o C i t y S a n F r a n c i s c o S h a n g h a i To k y o To r o n t o W a s h i n g t o n , D . C .
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© 2002 Tim McEachern and Chris O’Brien. All rights reserved. Printed in the United States of America. This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019. Printing number 10 9 8 7 6 5 4 3 2 1
from tim: to my loving wife andrea. in my heart i’m truly happy that you’ll never read more than the dedication page. to willy, frieda, emma and jack. by the time you are all old enough to read this, you will be able to understand that this book was really just a cry for help. daddy’s all better now. from chris: to my loving wife kristin, and that’s no joke. from both of us: to neil . . . cheers!
C O N T E N T S
ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIII DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XV PROLOGUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1 THERE ARE NO ATHEISTS IN THE NEW NEW ECONOMY . . . 3 2 FOUNDATIONS OF THE NEW NEW ECONOMY . . . . . . . . . . . 9 History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Value Tied to Land and God . . . . . . . . . . . . . . . . . . . . . . . . . . 12 The Theory of Value and a Self-Regulating Market . . . . . . . . 14 The Rise of Communism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Modern Macroeconomics and the Keynesian Revolution . . . . 18 A Battle of Ideologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Current Thinking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Adam Smith: Excerpts from Lost Chapters of The Wealth of Nations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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contents
The Econos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 F. A. Hayek—Poet Economist . . . . . . . . . . . . . . . . . . . . . . . . . 30 Entrepreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Industry Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3 STRATEGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Speed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Future Streams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Innovation and Your Workforce . . . . . . . . . . . . . . . . . . . . . . . . 48 Luck and the New New Economy . . . . . . . . . . . . . . . . . . . . . . 52
4 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Placebo Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Solow’s Paradox: An Analytical View of Information Technology Spending and Productivity in the New New Economy . . . . . . . . . . . . . . . . 65 What’s Missing in Solow’s Paradox, Besides a Centerfold?. . . . 66 Industry Quiz on Management . . . . . . . . . . . . . . . . . . . . . . . . 69 The New New Interview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Buzzsaw “Mike” Hargrove: Portrait of a New New Economy CEO. . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Management Lessons from Dwight . . . . . . . . . . . . . . . . . . . . . 77
5 A CASE STUDY IN ADAPTING TO SUCCESSION CRISIS . . 79 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 The Transition to a New Management Team. . . . . . . . . . . . . . 82 LennyLand: A New Way of Management . . . . . . . . . . . . . . . . 86 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
contents
Industry Quiz on Succession Planning . . . . . . . . . . . . . . . . . . . 97
6 MARKETING AND SALES . . . . . . . . . . . . . . . . . . . . . . . . 99 Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Modern Demographics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 18-29 Year-Olds: Blood, Credit Cards, and the High Seas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 30-39 Year-Olds: It’s the True Greatest Generation, Stupid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 40-55 Year-Olds: The Baby Boomers . . . . . . . . . . . . . . . . . . . 113 65+ Year-Olds: Accessing the Bitterness . . . . . . . . . . . . . . . . . 114 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Advertising Industry Example . . . . . . . . . . . . . . . . . . . . . . . . 121 Industry Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Product Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Product Placement Industry Example . . . . . . . . . . . . . . . . . . 122 The Changing Face of Retail: The Rise of the Super-Mall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Interview with an Old Person. . . . . . . . . . . . . . . . . . . . . . . . . 127 Knowing Your Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Knowing Your Customer Industry Example . . . . . . . . . . . . . . 131
7 TOTAL QUALITY AVOIDANCE . . . . . . . . . . . . . . . . . . . . 133 Eliminating Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Quality Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Industry Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Mr. Quality Man . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 Quality and the Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
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The Language of Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 Quality Industry Example. . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 Quality by Accident . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 Creating a Formal Dress Policy . . . . . . . . . . . . . . . . . . . . . . . 143 Quality Industry Example. . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 80/20 Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 Implementing a Quality-Free Workplace . . . . . . . . . . . . . . . . 146 The Obligatory “Sports Provides Lessons for Business” Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Badminton Digression . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
8 FINANCE AND CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . 153 Going Private . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Venture Capitalists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 Interview with a Venture Capitalist . . . . . . . . . . . . . . . . . . . . 158 Global Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 Rules for Leap-Frogging the First World Into the New New Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 Industry Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 6 Little Moves That Will Drive Your Company Wild in Bed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 New New Quiz: Can You and Your Recent Acquisition Survive a Long-Distance Relationship? . . . . . . . . . . . . . . . . 170 The Perfect Colors for a More Attractive Acquisition . . . . . . 172
9 TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Emerging Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 Ten Other Emerging Technological Fields. . . . . . . . . . . . . . . 177 Managing Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
contents
Computing Power, Speed, and Moore’s Law . . . . . . . . . . . . . 181 Getting Around Moore’s Law. . . . . . . . . . . . . . . . . . . . . . . . . 182 Industry Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
10 THE HUMAN FACTOR . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Women in the New New Economy . . . . . . . . . . . . . . . . . . . . 189 The New New Economy Woman. . . . . . . . . . . . . . . . . . . . . 192 Industry Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 The War on Talent: How the Civil War Taught Us Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 The Codependent Employee: Leadership Lessons from Abraham Lincoln . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 Industry Example: The Codependent Employee . . . . . . . . . . 201 Unions and Labor Issues in the New New Economy. . . . . . . 201 Office Staff in the New New Economy . . . . . . . . . . . . . . . . . 202 Industry Quiz: Telecommuting. . . . . . . . . . . . . . . . . . . . . . . . 203
11 CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 The Modern Trichotomy: Using What Is Around You, Using Yourself, and Using Others . . . . . . . . . . . . . . . . . . . . 207 APPENDIX A : FINAL THOUGHTS . . . . . . . . . . . . . . . . . . . . . . . . 211 APPENDIX B : APOLOGY LIST . . . . . . . . . . . . . . . . . . . . . . . . . . 215 APPENDIX C : INTERVIEW WITH A NEW NEW ECONOMY EDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 APPENDIX D : LEGAL DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . 221 ABOUT THE AUTHORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
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AC K N OW L E D G M E N T S
We would like to thank the following people for helping to make this book possible: Our wives and children, whose plights can be surmised just by reading any chapter in this book. Our siblings and friends, who reviewed numerous pieces we wrote and gave us constructive criticism, which we neither requested nor paid the least attention to. Our editor, Neil, who raised our confidence level by telling us our stuff was “just brilliant,” until we realized that he was sweet talking other authors at the same time with the same flattery.1 The teachers of our children, who we wish would stop looking at us that way. Our lawyers, who will become staples in our lives in the coming months as we learn the intricacies of defamation law together. Cindy O’Brien (no relation to either author), who found our demographics chapter when we thought it was lost for good, and taught us that its okay for men to cry. George Stephanopolos, who was 1. Neil, we feel so...so used.
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acknowledgments
the best man at Chris’s wedding and has been there for him during all the highs and lows of writing this book. And finally, we would like to thank each other, without whom neither of us would be possible.
D I S C L A I M E R1
This book is satire, pure and simple. It is written in a superior, all-knowing tone, the persona of which the authors take on to further the satire and poke gentle fun at ourselves. The authors don’t really think they know everything, or even much of anything, and they are both very nice guys. If you ever met them, you would be sure to agree. Everything in this book is a joke and should be taken as such. With that in mind please be advised that: If you find something that you think is a blatant, outright lie, it is probably because it is a blatant, outright lie. If you’ve found a quote that seems like the attributed person could never have said something like that, it’s because we either made the quote up or intentionally miscredited it. 1. Read it and weep.
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disclaimer
If you find a historical, factual, mathematical, economic, scientific, or grammatical error, please don’t write to us sounding all superior, because we made the mistake on purpose. If you think that, to the extent anything can be discerned from this book that could be interpreted as an actual “opinion” in the real world, please understand that any such view of the “authors” does not reflect the opinion of their employers, employees, AMACOM, the authors’ families and friends or clients, any governmental entity,2 and most likely, any other rational person who walks among humans in the light of day. If, by chance, you are truly offended, please see the apologies page, Appendix B. If you are wondering what kind of editors could have ever made two such obviously brilliant writers of comedic verse waste their preciously limited time writing a useless disclaimer that in all likelihood won’t stop a single lawsuit against them, please see Appendix C. If you are the object of our ridicule and think that you may have actually been slandered or liabled against, please see Appendix D. This book was written in the name of humor, and if writing this book is a crime, well then you can lock us up and throw away the key. In a figurative sense.
2. Like the State of New York, for instance.
P R O L O G U E
prologue? we have no prologue.
C H A P T E R
1
there are no a t h e i s t s in the new n e w economy we would like to say that we have stood on the shoulders of giants. alas, we cannot. before us, there were no giants . . . only little men. we are the giants. — the authors
*
REMEMBER WHEN
*
*
Steven Spielberg made that movie
Poltergeist, about the family who moved into a house built on top of an old Indian graveyard? Remember how the realtor said not to worry because there wasn’t an old Indian burial ground or any decommissioned nuclear submarines buried anyplace close, so it wasn’t like Love Canal or anything? And the family thought they were safe? Then all of the sudden these radioactive flies start swarming around the windows and the TV started sucking up all those kids? And remember how the desperate family prayed to God for help but God wouldn’t help them because He is a vengeful God? Remember how scared you were? As in the movie Poltergeist, the New New Economy has been building itself on the graveyards and lost souls wrought by each of the economies that have come before it. Michael Lewis’s senseless ramblings notwithstanding, the “New
5
6
the new new economy
Economy” is dead and buried.1 Now, you might think, having established the Poltergeist metaphor, the evil spirit represents the bases, principles, and fundamentals of the previous economy. Indeed, one might think that the Poltergeist here is the sum of all the immutable laws, the monetary policies, and the management principles that form everything that, in a sense, both supports as well as inescapably haunts us today. No, the Poltergeist here isn’t any of those things, for the long established tenets of those days really are dead and buried. The New New Economy IS the Poltergeist. Lessons from the New New Economy: A salesman in the New New Economy walks up to a kid and a dog sitting on some steps. He says to the kid, “Hey, kid . . . does your dog bite?” The kid says, “No, my dog doesn’t bite.” And the guy goes to pet the dog. The dog bites him. The stunned salesman says, “Hey, kid, I thought you said your dog doesn’t bite.” The kid replies, “I lied.” The previous economies, like previous scary movies, had their critics. We are the Visionaries of this coming age and in the New New Economy, it’s the Visionaries that get to be the critics. As the cliché goes, “They don’t build statues to critics, because no one likes a critic.”2 In addition, Visionaries also get to be pathfinders. We have written this book to provide a 1. By the way, we answer a lot of things in this book, but we cannot answer how Michael Lewis ever got to marry Tabitha Soren. 2. No one likes editors either.
there are no atheists in the new new economy
detailed roadmap for navigating your way through the “New New” Indian burial ground.3 As a roadmap, this book must be followed explicitly; to veer from it is to do so at your own peril. Pick and choose only what advice you wish to take and all we can say is that it is your funeral. Don’t call us if you leave the path we have anointed when walking through the graveyard and the zombies start swarming to eat your flesh. You can read all the “highly effective” books you want and look for all “the cheese” that you have room to store, but if you don’t read this book and do everything we say, you will be screwed. If you take only one thing away from this book, let it be this: Other authors tell you what they think you should do; we tell you what you should do.4 At this point, you are probably wondering: Who are these guys? Look, you are off the roadmap already. Don’t worry about who we are. The New New Economy is not about who we are. That we are the highly regarded big thinkers is all you need to know. No, this is about you and your company and what will happen if you don’t do what we say when the Poltergeists come. So stop thinking and start doing. There is a lot to take in. As you will see, the New New Economy is big and complex. It is incredibly hard for most people to fathom. It’s like the principle in quantum physics 3. We also think that you will realize that this book will end the silly “no statues to critics” hang-up. 4. The authors and publisher hereby disclaim any and all claims arising from any advice or guidelines presented in this book, either prescriptive or proscriptive. You really need to take a little responsibility for yourself once in a while. Maybe if you spent a little less time reading management books, your marriage wouldn’t be such a shambles.
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the new new economy
that dictates that a neutrino can be in two states of being at the same time. This is hard to understand. We understand it, but we don’t expect you to understand it.5 That is why we are the perfect people to write this book and explain to you how things work.6
chapter summary 1.
There is no substitute for hard work, regardless of which “Economy” you’re in.
2.
Dogs bite.
3.
People lie.
5. See, e.g., Spectrographic Analysis of Neutrino Function and Changing States Of Neutrino Dynamics, Tim McEachern and Chris O’Brien, Vogue, August 16, 1994. 6. If you are in a bookstore now and deciding whether to buy this book, take note that you have probably already read an entire chapter. And soiled it with your sticky bun laden fingers. Now you HAVE TO buy the book. You may now think of us as purveyors of shameless trickery, but the New New Economy demands nothing less.
C H A P T E R
2
foundations of the n e w n e w e c o n o m y it’s hardly an exaggeration to refer to the twentieth century as the hayek century. — f. a. hayek
*
*
*
history THE“ECONOMY,”
in the most general sense of the word, is based
on the concept of “Value.” The first economies that arose during feudal times based Value on land ownership and the succession process of land ownership. The Industrial Age economies were based on amassing capital and the means of production. The New Economy shifted the basis of value to people and their ideas, giving rise to the notion of Intellectual Capital. These economies share a single trait, once thought to be an immutable law of economics. These economies had a basis for value and that basis was something measurable and concrete. Even an economy based on Intellect is still based on something.
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the new new economy
The New New Economy will have none of that. No, this economy will be based on things less tangent and more tangential. Think of the aftermath following the French Revolution. Heads rolled, women knitted, and blood ran the streets red. The French did not (and do not) base their actions on “value tied to the concrete.” They are above such things. The French base their actions on petty spite, bitter resentment, and a need for violent, just retribution. “Vengeance is mine, in the New New Economy,” sayeth the average Frenchman, and he knows of which he speaks. Are these things tangible? No, but they are things upon which the French have built a vibrant economy. For those of you still with us, congratulations. Your first hurdle has been jumped. You know that the New New Economy is—fundamentally—about ideas. However, one cannot begin to look at what comes next without first understanding what has come before it. Therefore, we begin with a brief review of the entire body of study that we call “Economics.”
value tied to land and god Prior to the 1700s, Value was primarily determined by the amount of land that you owned. During the reign of Louis XV, French Physiocrat François Quesnay, in his famous Tableau Economique,1 espoused a philosophy that the world was governed by a set of natural laws and that all wealth was derived from God. However, as Quesey, a landowner himself, explained, “God is, as it turns out, not here right now, so He has asked us to watch 1. Which translates to “A Table—The Story of a Young Swedish Woman’s Journey of Self Discovery In An All Girls School”
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foundations of the new new economy
over all the land and wealth for the time being in his absence. Oh . . . and he specifically asked that you serfs work the land because he knows how good you all are at it.” This philosophy, along with the French’s general disdain for all things not French, led to numerous bloody wars, including the American, French, Spanish, Russian, and Industrial revolutions, World Wars I and II, the entire 1982
?
Know u o Y d i D
F rog is one of many
derogatory terms for a frenchman.
ABC Fall lineup,2 and on a personal note, the excessive property tax on my house. And the French wonder why the world hates them so much. The key aspect to understand about the land/God theory is that it really was just filler. Ultimately, it meant that 2 percent of the population controlled and owned 97 percent of everything.3 The Value-tied-to-land-and-God theory could just as easily have been called the “pumpkin pie theory” or the “yeah, whatever theory” because the rich people possessed so much and had so much power. In fact, it didn’t matter that they even had a theory, since your average Lord High King had plenty of armored goons to enforce his will on a desperate population.4 It would be as if in today’s world, a certain operating system dominated the software market and its Lord High Creator had a 2. Excluding, of course, Joanie Loves Chachi. We put down a lot of things, but we will NOT put down Willie Ames. 3. The missing 1 percent was Native Americans, who are not covered in this book due to lack of space and other constraints. 4. The authors like to imagine themselves as a Lord High King with a bunch of armored goons to do their bidding. If that ever happens, a lot of people had better watch out.
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the new new economy
stranglehold on 95 percent of the OS market and whatever he said was law. Fortunately, we have managed to crawl our way out of feudal times, and we do not have to live in such a situation today.
the theory of value and a self-regulating market Prior to the European social upheavals in the late 1700s, it was generally believed that Value was proportional to land ownership. The more land you owned, the more wealth you had and the more vulnerable you were to Robin Hood. However, with the overthrow of the Kings of Europe, despite their successful HBO special, England’s very own economist Adam Smith proposed a new theory of Value. In his The Nature and Causes of the Wealth of Nations,5 Smith stated that the Labor that went into creating the good could determine the Value of goods.6 The theory underlying The Wealth of Nations is simple: The economy is composed of numerous small markets. The markets themselves are actually manifestations of the will of people and monied entities pursuing their own self-interest by spending their money where they desire. The consuming entities thus buy what they want and organize into purchasing collectives that seek to try to buy more for less. In its purest form, then, the economy is like a giant Sam’s Club or B.J.’s. “You can buy whatever you want at affordable prices, as long as you have an I.D. card,” was the last line Smith wrote in his book. However, it would be centuries before that would become the literal truth. 5. Long since out of print. 6. Although he misspelled it Labour.
foundations of the new new economy
Recently uncovered facts about Adam Smith have shed some light on an otherwise undistinguished economics career. It seems that Adam largely stole his ideas from his brother Fred Smith. Fred was an Oxford Don and conceived his radical and revolutionary ideas over foosball in a local pub. He jotted his theories on cocktail napkins and drink towels and quickly sent them off to his publisher. Indeed, Fred used to joke that it was Adam’s adolescent “preoccupations” that provided the inspiration for the “Invisible Hand.” Shortly after sending off his writings, Fred, whose tastes in personal pleasures ran toward the eccentric, died during a tragic cockfighting accident off the coast of Bilboa. Adam, sensing opportunity, quickly called Fred’s publisher, placing his name on Fred’s work, by using a flimsy excuse and a 5-pound note.7 Adam, never completely able to explain Fred’s death or any details regarding “his theories,” generally shrugged off inquisitors with lines like, “You’d never understand it anyway . . . all very left-brain stuff, don’t you know.”
the rise of communism If there is anything that the rise and subsequent fall of Socialism and Communism has taught us, it is that Karl Marx was a hack. Spend any time in the London haunts from whence Marx’s manifesto emerged and you will no doubt hear numerous Karl Marx stories. Most revolve around telling friends in private that the only thing Communism would be good for was the possibility of free drinks. Marx himself never expected that his theories would be published, much less adopted. As he put it, “ But being 7. Publishers came cheap in those days . . .
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the new new economy
a social philosopher is such a chick magnet.” Were it not for his popular German TV game show, “Das Kapital? Mein Kapital!” he would probably be unremembered all together. Often broke and deeply in debt, Marx later sold his pipe organ to pay off tax collectors. “Well . . . I guess this puts an end to the Baroque era,” Marx lamented, before being dragged off by the Gestapo, tortured, and shot. Vladimir Lenin soon emerged and would often say, “To each, according to his means, pally.” Which apparently generated howls of laughter among self-impressed European existentialists, until Lenin had them dragged off by the Gestapo, tortured, and shot. Lenin had a deep and profound effect on history and set events in motion that led to global economic transformation and the deaths of millions of souls. He was also very difficult to like. First of all, he had a HUGE martyr complex. For instance, he was fond of saying, “If Marx hadn’t existed, I would have had to have created him.” “Do you know why?” he would continue. “Because I have to do every damn thing in this revolution. I’m not kidding. I have 82 million things to do, and who would have had to create this guy? That’s right . . . me, pally. Christ . . . why am I beating my head against a wall for you people?” Besides Lenin’s irritability, there were, of course, other underlying causes for the rise in Communism and its domination of half the globe’s geopolitics for the next century. But mostly it was due to Lenin’s irritability. Lenin did understand and functionally articulate that the means of production would never be ceded to the workers without violent struggle. “This isn’t going to be settled over a few beers and a game of air hockey, pally. This is going to be big.” Whenever he said things like this, he would point his
foundations of the new new economy
finger in people’s faces like a jerk. “If you subscribe to the Great Man Theory of History, i.e., that historical events are essentially driven by a handful of brilliant and charismatic leaders, then Lenin is at the top of that list. But man, was this guy a jerk,” notes Dartmouth Professor Ron Hardin. “If he hadn’t been an international revolutionary fomenting historical change, he would have probably been a gym teacher.” As he offered it, Lenin’s Communism was not really a difficult concept in theory. Basically, it holds that you and your coworkers should kill your boss and then run things. In practice, however, the boss had no interest in being killed and had no desire to let his employees run things. While, contrary to Lenin’s prognostication, some of these disputes between labor and management were settled over a few beers and a game of air hockey, it was more often the case that violence resulted. All of these brawls collectively became the Russian Revolution. The Russian Revolution was fought for years, but it finally ended in a huge battle which you can read about in Leo Tolstoy’s books War and Peace, Kill or Be Killed, Kill and Kill Again, and Dr. Zhivago.8 Lenin died shortly thereafter. He left a will in which he left his vast fortune to the Mormons, probably just to spite his family and friends.9 “You know what?” he said to his best friend, Leon Trotsky, while he was on his death bed, “I’m leaving it aaallll to the Mormons. You, pally, can take a hike.” 8. People always say they mean to read War and Peace, but they never get around to it. We say that the reason people don’t read War and Peace is because its in Russian and a lot of the letters look backwards. There are enough books to read without backwards letters, so we recommend: Just see the movie. Which is what we plan to do. Someday. When we get around to it. 9. Which was hard to read because the letters looked backwards.
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the new new economy
Despite Lenin’s death, socialism had gained a foothold, however; the stage was now set for a competition of ideologies that would affect literally hundreds of people—and nearly end civilization itself. But first, we have to talk about Keynes.
modern macroeconomics and the keynesian revolution The great worldwide depression in the 1930s caused most Economists to flee into hiding, fearing for their professional reputations, and in many cases their lives.10 What became obvious is that while many of the neoclassical economic ideas worked to explain parts of any given country’s economics, what was needed was an overarching theory that explained how these parts worked together at the macro level. It was also universally understood that what most economists really wanted to do was direct. John Maynard Keynes, son of Lothor and raised by wolves, developed this overreaching and overrated theory in his masterwork, The General Theory of Employment, Interest, and Money (which we do not pretend to know much about, since most of the people we know are not employed, are not interesting, and have no money). Much of The General Theory is unintelligible gibberish, and only the most self-deluded of Economists even pretend to understand it. Perhaps Keynes’s greatest contribution was his work in defining the role of government in the shaping of a national economy. His theories were central in shaping the “Camelot” years of the Taft administration. Indeed, Keynes advocated many ideas 10. Particularly in the Balkans.
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19
that directly refuted Smith’s “Invisible Hand,” including government-subsidized work projects, the Boxer Rebellion, the “Domino Theory,” the Commonwealth of Massachusetts, and Dick Cavett. Keynes basically believed that governmental intervention could shape economic events and influence market forces. Keynes saw Smith’s theory—that markets could conduit all human behavior
i t was also univer-
into
sally understood that what most economists really wanted to do was direct.
a
rational
and
predictable
paradigm—as simplistic. Keynes theorized that there was no better way to cause the economy to progress in a way
that benefits society than through governmental incentive and coercion. This often meant the imposition of taxes to promote certain behavior. The man was an insane genius, but not for his theories (now widely discredited by lots of smart people.) He was a great salesman for his theories. In fact, he had managed to parlay his influence in an astounding way. He managed to talk the U.S. government into believing that since he had formulated the basic theory of the government’s role in the economy, he was entitled to a royalty for every tax levied against every person in the country. This really added up during the high tax rate years of the Second World War. “Economics is an imperfect science,” he would confide to his friends, “but this deal I have with the taxes is pretty damn close to perfect.” Criticized by more conservative contemporaries as “stepping a little outside the boundaries of Economics,” Keynes’s theories inspired student led death squads to institute a reign
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of terror on American college campuses resulting in the re-education of Economics majors, business majors, physics professors and those seeking a masters degree in the supposed “Fine Arts”. This explains the 1980’s glut of ill qualified education majors and the current state of the American educational system. All of this, of course, stopped during the Reagan years.11 Several of Keynes’s lesser-known works actually had a greater impact on mid twentieth-century economics than his General Theory of Employment, Interest, and Money. His Bucks, Bucks, and More Big Bucks, written for his junior thesis at Swarthmore, detailed the rise of the multinational corporation and how someday he hoped to be a senior marketing executive at one. “Ode to the Governor of Alabama’s Daughter” professed his love for the executive branch, a two-party system, and, of course, longlegged, well-endowed blondes. At about this time, the Economics Department at the University of Chicago began to produce leading conservative thinkers who dismissed much of the role of government intervention. T HE C HICAGO S CHOOL
The Chicago School theory of the economy had its root in the early days of World War II. However, it is a little known fact that its true origin lies in the Manhattan Project. Originally, the quest for a nuclear device was divided into three project sites, before being centralized in New Mexico. One of these sites was the basement of the University of Chicago, which started by producing and experimenting with heavy water. 11. Except for the death squads.
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Heavy water is a type of water that is extracted from Strontium 90 and is called heavy water because it has a lot more
?
calories than regular water. Also, it
Know u o Y d i D
glows. Before figuring out that heavy water could be used to make atomic bombs, scientists at the University of Chicago tried to grow things with it. What they produced, by early 1942, was a glowing green watermelon.
C hicago, aka
the windy city, is america’s northernmost settlement.
People who tried to eat the watermelon died instantly, so some muckety-muck in the Pentagon decided it would make a good weapon. At first, they tried to mail the watermelon to Hitler, hoping he would eat it. Unfortunately, the watermelons kept getting smooshed in the mail.12 In early 1943, a flight of bombers dropped watermelons on German troops, causing little damage. President Roosevelt canceled the program when he realized it was an extremely silly idea. In signing the Executive Order, Roosevelt was heard to say, “Some of my generals really need to get a grip.” Meanwhile, back in Chicago, in the floors above the Heavy Water Unit, the Army was looking to the economists to come up with an economic theory to beat the Nazis. “If we are going to have victory over these countries, we are going to have to have a dynamic new economic theory. What have you got 12. Furthermore, the address put on the boxes of watermelons just said: Hitler Third Reich Berlin, Germany This invariably meant the package would not get to where it was supposed to go because of Germany’s strict wartime zip code system.
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for us?” barked Brigadier General Leslie Groves, to a group of the University of Chicago’s best and brightest. A young Arthur Laffer spoke up: “Have you seen our watermelons? They say if Hitler eats one . . .” “Son, I’m not talking about the watermelons. I’m talking about economics.” General Groves interrupted. After an uncomfortable silence followed, finally the General said, “Look. I’ll give you Pinocchios four years to come up with a plan or you’ll all be sent to the Russian Front.” They broke up into four groups. In 1946, the Marshall Plan was ready to reconstruct Europe. The country looked to the University of Chicago to see what they could implement overseas to aid the helpless foreigners. The winning theory was what became known as the classic Chicago Theory. It essentially relies on an increased role of Central Banks to regulate monetary policy by keeping currencies strong and inflationary pressures low. It promotes the idea that the market ultimately provides the greatest incentives for business, and that by limiting the role of outside influence, the markets will correct themselves and provide prosperity for all. The theory that came in a close second was Measured Incrementalism, based on a competing notion that, conceptually, there were areas where government intervention could be used on a case-by-case basis, while still allowing market forces to play out in others. The third theory was Keynesism. This one impressed a lot of people and was actually in the running to be the selected plan until someone realized that John Maynard Keynes had already invented that, making the guys who came up with that theory nothing but big fat cheaters.13 13. They were sent to the Russian Front.
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23
The fourth unselected alternative was extremely convoluted, and until the government comes clean with all it knows about the Roswell Incident, is not subject to analysis.14
a battle of ideologies True, head-to-head competition between economic ideologies would not reach a boil until right after the Second World War. An Iron Curtain would descend over much of what is now Europe and the big game was on. It was Freedom and the free market versus central planning and oppression. Western technology produced video games, huge crop yields, walks on the moon,
T o speak of economics
chip shots on the moon, Keith Moon,
today is to speak of bedlam—and we don’t mean the good kind.
and vodka. All the Soviet Bloc produced was vodka. The Soviets made
better vodka than we did, but other than that, they couldn’t do much else. As a result, in 1989, the Berlin Airlift finally ended and the real moneymaking of the Free World could begin in earnest. The march toward an information economy was now underway. The eighties and nineties were very prosperous years. It was easy to make a great deal of money in a short time, and it’s generally accepted now that any poor soul who didn’t is a pathetic fool deserving of your pity. Credit and venture capital were easy to obtain, unemployment was low, and everything was cheap. Anyone could get a job anywhere, for any wage, making millions of dollars, and retire in luxury at the age of 35. There really was 14. Crop Circles, Area 52, and the Chicago School of Economics, Michael Lewis and Tabitha Soren, ANVIL Books, 1999.
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no dominant economic theory to define this era, because everyone was too rich and deliriously happy to care. There was enough money to eradicate poverty and give everyone a shiny new flying car, with leftovers.
current thinking You would guess that with roughly a thousand years of modern thinking on the subject, economics would be all pretty well figured out by now. You would think that we would live in a world of plenty where everyone would enjoy the fruits of their economic labor by the pool. You would, at the very least, think that all the economists might need to do is tie up a couple of loose ends and move on to subjects more worthy of their attention. (Like, do we have to hate Andie McDowell just because she’s beautiful?) In fact, the promulgation of the aforementioned theories and the dozens of lesser views that infest the study of economics and business theory have left us farther from a consensus than Smith or Keynes or Marx or Andie McDowell ever dreamed. To speak of economics today is to speak of bedlam—and we don’t mean the good kind. Few can make sense of what is going on now or how to explain it, and even fewer can tell you what to expect in the coming years. Instead, we have been left the important job of explaining the New New Economy. And by we, we mean us, the authors, not our generation. Although it might as well be our generation, since we have to do pretty much everything else around here. So while whole gaggles of economists prance about in ill-fitted hair pieces to old Ray Davies tunes, smoking God knows what
foundations of the new new economy
and arguing over who’s turn it is to pick up the tab, we, the authors, will snatch the torch from those too besotted by their own reflection in the mirror to guide society through the fog. Come, give us your hand and tarry no longer. It is time to get (or stay) rich.
adam smith: excerpts from lost chapters of the wealth of nations Adam Smith’s theories are accepted with varying degrees today, but they are nonetheless very influential to scions of modern economic thought. The book The Wealth of Nations, before it was released, was somewhat longer than the version we read today. We have researched Smith’s works fully, and we are privileged to offer some of the portions of his book which were taken out in the editing process.15 We think that they offer some insight into Adam’s Smith’s theories and Adam Smith, the Man. O N B EING J UDGMENTAL
Some of the edited text shows that Smith was not above being judgmental and petty, and may have suffered from a bout of unrequited love:16 Labour is often static, but if it is too much so, then it produces no wealth. The woman who is my neighbor, for example, never leaves her home. Men 15. These are portions that were edited out, but you see it’s not always like that. No, sometimes editors believe so strongly in their authors that they will go to the mat for their authors’ right to express their ideas and give them the opportunity to be as creative as they can be . . . or so we hear such editors exist. If you want to know the name of some editors who are definitely NOT like that, send us a SASE. 16. It is true that Da Nile is more than just a river.
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the new new economy
stop by all the time. What does she do? She creates no wealth, unless by one’s definition of wealth, you include being a harlot, which I do not. O N THE N EW N EW E CONOMY
For a time, Adam Smith was a frequent companion of his contemporary Nostradamus, who clearly influenced Smith into his own prognostications: The economic ways of nation states will no doubt expand to the point where something else—no one knows what such a thing is now or cannot predict it—will come. Perhaps a way of producing goods or selling them in greater quantities, or fabricating them more effectively. And after that, there is no way to tell what would come next. Perhaps there will be nothing to exchange but knowledge. Whatever be the subject of the method of transfer in that time, that day shall be known as doomsday. And it shall be the scariest thing in the world.17 O N THE N ATURE OF H OW T HINGS W ORK
Smith was bitter about toiling in obscurity and had some choice words for his fellow writers of the time: The methods of nations will accrue more benefits to those who make the most effective use of capital and labour. And so, also, with the merchants and others of power. But in the end, it is not what 17. Eventually, Smith became estranged from Nostradamus, as he got tired of the way he would always say, “Yeah . . . ya know, I knew you were gonna do that.. .”
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you know, but who you know. For instance, I would be much much bigger if my Dad was someone important. Remember . . . Machiavelli didn’t have that best-seller last year because he actually had anything to say. O N U NLEARNED P URSUITS
Pitching. It’s all about pitching. When, oh when, will they learn? You can have the best fielding and hitting in the world, and it matters not. O N T HINGS H E R EFUSED TO TALK A BOUT
I shall never speak of these two subjects that are each of interest to much of the learned class. The first is religion. That I do not speak of religion is because I wish not to be burned as a heretic, like my cousin Geoffrey.18 The second subject I refrain to speak of is politics, because it reminds me much of pig racing which I neither countenance nor support . . . O N S TUFF
And sometimes, Smith just kind of phoned it in: Wealth, I suppose, is the amassing of what capital produces. You can spend wealth on anything you like, provided the seller is not “out of stock.” 18. He refers to Geoffrey Smith (1459-1502), who, we must say in defense of the angry mobs who burned him, bragged to anyone who would listen that he had made a covenant with the devil and was more than glad to rub people’s nose in it. On his last day of life, a drunken Geoffrey barked, “ I am rich because I made a pact in blood. You losers can stay poor and plague-ridden for all I care!” Apparently, this was the straw that broke the camel’s back and gave the Prince of Darkness an early return on his investment.
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the new new economy
Then, you may have to come back later to the seller. Yes . . . come back. Some other time. Or something. Just do whatever it is you are going to do. I’m sure nothing I say will stop you.
the econos In the summer of 1969, a small group of neoclassical economists gathered in Hamburg, Germany, to meet, drink together, and discuss the important economic matters of the day. The most important and influential of these early meetings were often held in a dank, dark underground bar called the Ratskeller. Five of these economists stood out head and shoulders above the rest. Most people, hearing their ideas for the first time, were floored. Luckily for these five, an economics professor from Cambridge named Brian Epstein happened upon them one night and quickly gave them internships. Dr. Epstein changed their haircuts, put them in don’s robes and mortarboards, and named them The Econos. Infighting over the best way to utilize the stored value of machinery in production equations led to the eventual replacement of Pete, the infamous 5th Econo, for the more “professional” Econo, F.A. Hayek. This new arrangement led to their first published work, Meet the Econos. Meet the Econos quickly rose on the best-seller charts, thanks in part to their hit chapter “I Wanna Value Land.” The Econos’ lectures became overcrowded free-for-alls full of teenage girls dying to catch a glimpse of Schlumberger, the sexy Econo. A quick string of subsequent best-selling theories, including “Hard Day’s Work— The Value of Labor” and “GDP!”—with its catchy phrase, “Won’t you G . . . D . . . P . . . GDP . . . wooooo”—created a
foundations of the new new economy
MEET THE
figure 2–1
ECONOS!
the econos’ first book
swirl of enthusiasm for the Econos that the financial press dubbed “Economania.” A tour of American college campuses began with the now-legendary appearance on the Ed Sullivan Show. The Sullivan Show was the highest-rated televised appearance ever for a group of economists, despite the fact that the Econos were cut short because Señor Wences ran a bit long. However, the American tour caused a great deal of strain within the group. Indeed, their lecture at Shea Stadium would be their last public appearance in America.
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Returning to London, Schlumberger fell madly in love with Yoko Ono. Yoko and the rest of the Econos got along fabulously. Despite what has been published in recent years, none of the surviving Econos ever once blamed her in any way, shape, or form for their break-up. “Yoko was great, really. Homecooked meals every night, TV in bed, like a mother figure really,” said Hayek. And yet, the tide had turned. Increasingly more interested in pursuing their own individual agendas, the Econos began to drift apart. Even forming their own publishing enterprise, Pomegranate House, could not stop the slide toward a break-up. Their rooftop lecture, which stopped traffic in downtown London and was eventually broken up by jackbooted bobbies, would be their last joint lecture. On May 17, 1971, the Econos made a public statement that they were no longer a group. While each Econo published numerous individual books and lectures, none ever was deemed as complete as when they worked together during that brief, glorious period. “We was bigger than God there for a while,” said Schlumberger in a controversial interview. “Now I can barely get by on the residuals from the books.”
f. a. hayek—poet economist It’s an old story. The economy is riding high, but eventually the party goes on too long, and we all know what happens when the party goes on too long: The cops come. And like a party, lots of things happen: Some people get arrested. Some people overdose on something. Some people get off scot-free with nothing but
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31
memories of a good time. Some people get in a big fight with their girlfriend because they talked to some other girl too long. One thing is certain: By the time all this happens, everything is a wreck and someone is in trouble. In the post-boom economy, that someone is you. But the question is how does all this boil down in the big picture? Economics is not an exact science; in fact, it is not even a science. Nor is it an art. It is probably best described as a game. That is why we have Monopoly. Conversely, if economics were not a game, you could not have Monopoly. You also couldn’t have polo, because polo costs a lot of money to play and they won’t let you substitute a big dog for a polo pony. If you take only one thing away from this book, let it be that. Like any game, true comprehension lies with understanding the rules, and on a macro level, the rules are hard. But with every new economy has come more insight into what causes each expansion and contraction. As we continue the journey into an information-based economy from an industrial one, it becomes clear that we must replace some of our older assumptions with newer ones.
Austrian economics became more than a theory about money and goods and services. for hayek, austrian economics was clearly a cry for help.
Nonetheless, some principles are so classic and immutable, their relevance stands the test of time regardless of how dramatic the changes are in the way we evaluate the economy. In fact, there are some schools of thought that, although criticized at their infancy, are bolstered and rein-
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forced as the business cycle meanders its way through our lives, tossing aside the innocent and leaving a wake of misery and broken hearts, like Nicole Kidman did in that one movie.19 No theories have been as closely reexamined in that vein as have the works of the “Austrian Economics” proponents. Chief among these thinkers was F. A. Hayek, who offered a template for examining the business cycle that rings truer with the passing of each year. For many, Hayek’s works have supplanted
now? K u o Y d Di
Keynesianism, particularly for explaining the boom years of the nineties and the state of things afterwards. Hayek’s law, in a nutshell, states that the economy takes a
A ustrians invented
longer time to recover after an unsustain-
mr. potato head.
able boom than previously measured. If the basis for an expansion during the good
times is essentially an artificial one, then there is less of a foundation upon which to shift the focus of an economy. Frenzied investment in exceptionally speculative projects (i.e., dot-com companies) results in a misallocation of resources. The effect is best summarized graphically. Business cycles were once seen as a U or V shaped curve, representing prosperity to recession (or depression) and back to prosperity again. Conceptually, there was almost a symmetry to it. Hayek’s view posits a rapid decline in all the leading indicators, and then a sustained period of virtual cessation of growth. This, visually, is an L-Curve, and the next decade might just show that the Hayek 19. With that guy . . . oh, what’s his name?
Growth Indicators
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L U V
Growth Indicators
Time in Years
Growth Indicators
Time in Years
Time in Years
figure 2–2
hayek’s L-curve, a conceptual breakthrough
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view of long-term decline and stagnation is what we have to expect. From a historical perspective, then, the Austrian school is being vindicated, and Hayek is shown to have been a man of vision and forethought whose ideas deserve the renaissance they have enjoyed. We agree with this. We would be fools not to. But we also agree that Hayek had issues.20 Economics is not a science, it’s an art, and Hayek suffered for his art. We are not psychiatrists in the literal sense of the word, but we have spent time around them. So we are qualified to peer into this man’s psyche, and we are disturbed by what we have seen. Any assessment of Hayek’s work requires one to ask the question: Why “L”? When Milton Friedman or Adam Smith or John Kenneth Galbraith delves into comparative economics, they see three graphs of recovery patterns in a post-growth business cycle. These men see only figures and cold statistics. Hayek saw something different. To Hayek, it was all about the “L” with the “U” and the “V”—LUV. Austrian Economics became more than a theory about money and goods and services. For Hayek, Austrian Economics was clearly a cry for help. His theory was more than about avoiding a depression, it was about avoiding his depression. Here was a man that could read the economy like a book but was unable to look inside and read the book of Hayek. The book about himself. The completion of his seminal work The Road to Serfdom left Hayek in a state of melancholy. Unable to concentrate on the weighty matters of economics, his friend and contemporary Ernest Hemmingway suggested free verse and poetry as a cure 20. “Hayek: Genius Whackjob - About to Go MENTAL!!!!!!” Reader’s Digest, May 1931.
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for the blues. A glimpse into Hayek’s poetry reveals the simmering cauldron of true Austrian angst: Springtime comes, Wintertime leaves, The winter has tried my soul, It was a winter of discontent, After a rather dreary fall, The seasons change, The seasons turn, And in my heart, I feel to yearn, I feel the burn. I love I love I love, I need I need I need, I want I want I want, Help me, Helllllllllpppppp meeeeeeeeeee. Rose of red, Violet of blue, Limburger cheese, Sits in my stew, Cheesy cheesy stew. Why so much pain?21 The real question is not whether Hayek’s love poem was good or bad; the question is why could the man not stick to what he knew best? 21. From The Complete Guide to Hayek’s Love Poems, 7th edition, Harper Collins
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F. A. Hayek, the brilliant and lonely prince of the economists. A man capable of such great compassion, warmth and heart. A man searching for one, simple, single thing. Did his inner turmoil fuel his brilliance in economics? Or did it hinder him from even greater achievements? His life, so short, mowed down by a bus in his prime. The light that burns twice as bright burns half as long. So it was with Hayek. Why so much pain? Indeed.
entrepreneurship Entrepreneurs are a vital part of the nation’s quest for prosperity and certainly the catalyst for much of the innovation that gives us such a high standard of living as a nation. They take the chances and blaze the trails to make new products and provide new services to markets we never knew existed. They are the risk takers that keep the economy going. They are arrogant, but they are the lifeblood of the economy. We don’t mind it when they take up two spaces with their Ferrari.22 But what of the entrepreneur in the New New Economy? This is the penultimate question to ask in view of a simple fact: There are only two good ideas left. Every major study has shown this to be the case.23 The sad fact is that we are, at the risk of 22. You on the other hand, are just asking to be keyed when you do it with your 2000 Honda . . . get us? 23. “Good Idea Reserves Dwindling,” Harvard Business Review, Michael Mayron, December 1999; “Experts Believe Between One and Two Good Ideas Left at Most,” Dean Aboud, Journal of Business, August, 2001; “The End of History—This Time, I’m Serious: What Having Only Two Good Ideas Left Means to Civilization,” Francis Fukayama, Journal of World Events, March, 2000; “Boy Who Looks Like a Bat Thinks There Are Only Two Good Ideas Left,” National Enquirer, September 19, 2001.
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600
Millions in Euros
500
400
300
200
100
0 1
2
3
4
5
6
7
8
Number of New Ideas figure 2–3
cost effectiveness of new ideas
oversimplifying, almost out of good ideas. It is the curse of progress. Don’t let the anthropologists fool you; Cavemen had it great, at least when it came to entrepreneurship. There was everything left to come up with. You could tie two sticks together and be the first one to do it and make a lot of money. Everyone would think you were a genius. There was nowhere to go but up. As of today, we have discovered, invented, created, jury-rigged, and engineered just about everything there is to be found. There are only two good ideas left, and there is no real cost-effective way to find out what those are. This, of course, does not obviate the need for entrepreneurs. But the question thus arises: are you of the entrepreneurial sort? And also, can you build a better mousetrap? Not really, that was
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built long ago. You are looking for a needle in a haystack.24 Besides, entrepreneurs are idea men. You sir, are no idea man, no matter how you may fancy yourself. Oh, you are all ready to work hard; then someone reminds you that something good is on TV . . . like a “Facts of Life” marathon. Then there’s nooo getting work done that day. And so goes your pathetic sedentary life. Oh, you may have great ideas, but yours are not one of the two. So find pleasure in other pursuits. Try writing a business book. Heck, anyone can do that.
*
*
INDUSTRY QUIZ
*
*
Q: He has an idea for a new cheap and convenient Joe is a foreigner. He doesn’t speak much English.
device that will instantly translate any language into idiomatic English and vice versa. He comes to Bob for financing. Should Bob invest in Joe’s idea?
A: need for such a device. People of other lands can be This is actually a trick question. There is actually no
made to understand what you are saying if you just raise your voice. So the moral of the story is: When you see Joe, make sure you talk loud. He’ll get the picture.
24. The authors thought chocolate chip toothpaste was one of the two ideas left, but radioactivity levels of a prototype tube full of it exceeded FDA standards considerably. Now at this point, you are probably asking, “Why not just label it cheesefood?” Well, we tried that and it didn’t work.
C H A P T E R
3
s t r a t e g y the heads, you’re looking at the heads. i, uh, sometimes he goes too far, you know, uh, he’s the first one to admit it. — dennis hopper, apocalypse now
*
*
*
competitiveness DENNIS HOPPER KNEW
what all good businessmen in the New
New Economy know: Fear drives away competition. So, spike a bunch of severed heads on sticks and put them where people can see. The competition will be saying to themselves, “I should give up or it will be my noggin on a pole of its own.”1 Life is short, they have families and mortgages and friends. They can’t afford to die right now. A few years from now, when their sad lives have devolved into alcoholic depression, maybe. But now, now they want to live. This, by the way, is not a metaphor. In the New New Economy, you really need to buy up some machetes and sticks to lop off the heads of your competitors. 1. For more insight on this, read Everything I Know About Business I Learned from Mom, Larry Ellison, Macmillian, 1998.
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6 hrs
Days Before This Book Hits the Shelves
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90
200
340
Don’t Care
Care a Little
Sweaty Palms (Despite legal dept’s assurances)
Mother OF GOD! Please Don’t Sue Us… We Have Families
How Much We Hope Larry Ellison Doesn’t Sue Us figure 3–1
fear drives away competitors
industry example Bob and Joe own competing companies. They manufacture pointy sticks to put heads on. Bob and Joe are making out like bandits in the New New Economy.2
speed D ECENTRALIZING D ECISION M AKING : AWAY FROM THE P YRAMID
At the heart of changing your management structure is the idea that it is time to rethink your current decision-making model. If speed is the currency of the New New Economy, then rapid decision-making is the grease that oils that currency. The pyramid is 2. Bob is a hypothetical character. Joe is a thinly veiled reference to Larry Ellison.
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43
an Old Economy concept. What is required now is a means for dispersing power to the people who work face to face with the little people. That is, if the decision affects someone’s department, they should be empowered to make meaningful subdecisions. Well, within reason. What is needed then, is something that encourages independence but stops short of degenerating into a bawdy free-for-all. The new “anarcho-corporatism” requires confidence in your people. It demands your trust insofar as you will be putting matters into their hands and authority in their laps. It further allows you to bring the blame game to a previously unknown level when things go wrong. “Bad stuff” used to roll down hill. Now, bad stuff starts down there, and trying to roll it back up to you will be a task of Sisyphusian magnitude. This is not to say that actual authority will be wrested from your management team. Dissolving the pyramid does not mean that oversight is abandoned. To maintain control surreptitiously, spies will be needed. They should be recruited from both within your ranks and without. No one informant should know any other, and there should be great redundancy in their reporting to you. There are no trust-
R emember: these peo-
ple are not going to just fire themselves.
worthy people in the New New Economy. If your employees are making decisions, you must know about them instantly. If that’s not possible, then you must sabotage them at every turn in case the decisions they are making are bad ones. Similarly, even if you are uncomfortable with having these minions of yours do your bidding outside your presence, establish some overt controls. Make certain that before your
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employees do anything with this new-found power, they have plenty of paperwork to put it on record. We suggest that mission plans for all decisions be filled out in triplicate, and that supervisors know and approve any such actions. Meetings should also be held by anyone tangentially affected by or associated with the decision and veto authority given to the appropriate managers. Any lag time this creates will be more than made up for by your peace of mind that things are being done properly. Introducing the delegation concept will be a challenge at first. People often resist taking responsibility, especially for the wages you are probably paying. It’s most likely best to post a memorandum about the new policy over a lunch break or on a holiday and be “unavailable” when people try contacting you with questions when they come back to work. After all, this delegation is an excellent tool, but no one is saying it should have to bring you a bunch of headaches from the rabble. However you do it, have a coherent strategy and avoid fads or gimmicks to entertain your people or make it a fun place to work. Casual Fridays, or “letting loose a bunch of monkeys with sticks,” as one writer has suggested, could do that, but it won’t make your labor force any more productive.3 There are reliable ways to introduce personal authority to employees. Here are some suggested methods: 1.
Take Charge at the Lower Level. Hire Amazon queens to run things on your production floor, for instance. Who would give guff to an Amazon queen?
2.
Challenge Your Employees. The Chinese character for crisis is a combination of the signs for danger and
3. Make Your Company a Great Place to Work, Fred Smith, Big Business Books, 2001, p.82.
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opportunity. Make them think fast. GM, for example, has taken to sporadically dropping hives of bees on their production floors to encourage quick decision-making among its people. 3.
Try the Military Method. Pump your workforce secretly full of hallucinogens like LSD.
4.
Make Them Rich. Give each employee a cool million. As F. Scott Fitzgerald said: “The rich are different than you.”4 The rich make important decisions all the time. Use their new-found affluence for the good of your own company.
5.
Be Creative. Let loose a bunch of monkeys with sticks in your offices and see what develops.5
6.
Get a New Spouse. This isn’t really applicable to divesting your company of restrictive authority structures. It’s just that we know (and we think, deep down, you do too) that the old ball-and-chain is dragging you down and everyone else is just too polite to tell you.
7.
Adopt New Authority Titles. Change everyone’s title to “gunfighter.” Everyone knows gunfighters always have to think fast.
8.
Keep a Safe Workplace. If you have hazardous waste piled up by the water cooler, make sure you label it, and if it’s
4. Lifestyles of the Rich and Famous—Who Are Not You, F. Scott Fitzgerald, Penquin Press, 1934. 5. Ibid.
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cost-effective, maybe even move it. People who drink hazardous waste have trouble making up their minds. Shake Things Up. Every so often, purge the ranks of lower
9.
management, and don’t be afraid to be rough. Remember: these people are not going to just fire themselves. Be Blunt. If they can’t find the ability within themselves to
10.
make the necessary decisions, just tell them to “buck up sport and get to it.” If they continue to pester you for help with mundane issues, say, “What do I look like? Some kind of monkey with a stick?”6 11.
To Thine Own Self Be True. The Bard was right then, and his advice is just as right now.
future streams One of the aspects in vast economic change has been the prevalence of companies to fail during transition periods. An exhaustive survey of all the companies in the world shows that very very few have been in business longer than seven years. In fact, most businesses in the survey only lasted three weeks, on average. Some lasted less than a day. Most businesses that last such brief periods often point to outside influences, lack of direction, or Yoko Ono as the reason for their demise. Be that as it may, some businesses seem to last for generations, demonstrating the ability to take economic adversity and turn it into profit. These companies have built the capabilities to tap into what we call future streams. 6. Ibid.
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Future streams come about when a company undertakes a radical look at its current business opportunities, its past business opportunities, and the growth that may be presented by future opportunities. The process is undertaken in a methodical and systematic fashion; charts and graphs are made, and lots of jaunty little sailor caps are passed out. A big meeting is called. Lots of last minute things happen. Phone calls go unanswered. Flights are delayed or missed, and some guy always shows up without his luggage. Do not be alarmed; it is all the price of change. The first step in developing a formal Future Stream program is to build a time machine. After that, everything falls neatly into place. STEPS TO ACHIEVING FUTURE STREAMING 1.
Build a time machine.
2.
Have everything else fall neatly into place.
Using a time machine involves certain risks and presents certain opportunities that are unique to traveling through time. For instance, one has to be incredibly careful not to kill one’s parents, thereby obliterating oneself from the future. Do not be tempted to change history either. Remember that Star Trek episode where Kirk and Spock have a chance to save the woman Kirk loves,7 but in doing so they alter the future so that the Nazis win the Second World War? You DO NOT want that to happen.8 So what do you do when you build a time machine? That is the question in the New New Economy. 7. Played wonderfully by fellow author Joan Collins.
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innovation and your workforce Where to begin? Its hard to imagine that before the nineties, and the advent of “computers,” practically every piece of information a company needed was stored in huge vaults filled with handwritten data on index cards. The IBM 360, as we all know, changed that. As many observed, it was a fitting compliment to the American ingenuity it took to win the Gulf War that the IBM 360 came out the same year.9 But if the New Economy was about computer technology, the New New Economy will be about whatever is next. It will be about anticipating needs of customers that they don’t even know they have yet. You must be like a psychic who knows Y ou must be like a
psychic who knows the future.
the future. You have to be able to delve deep into your customers’ minds, assess their needs, and be out before they know you were there and without leav-
ing any clues that you were there. So, to succeed, you have to be fleet of foot, like a psychic cat burglar. If your company cannot be a psychic cat burglar, then get out of the way and let all the other companies that are psychic cat burglars do their stuff. Once you’ve foreseen the needs of your customers, get a good night’s sleep, because in the morning, you start the innovation process. 8. Unless, of course, you are a German Nazi. Then go right ahead. Deutschland Deutschland Uber Alles! 9. “Gulf Heroes Return Home to Find New “Computers,” But Is the End of the Index Card Near?” New York Times, March 23, 1991.
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N OW I M UST I NNOVATE
As we have said elsewhere, most of the great original ideas have been done. You cannot expect to build a new type of mousetrap, but you can make an old one better. It may not kill more mice, but it might do it quicker, or it might prolong their suffering, if that’s your goal.10 The New New Economy is about building on the work that has come before you. It’s also about persevering. The original IBM 350 computer was a stupendous failure. It couldn’t do simple arithmetic and spewed toxic gasses that, more often than not, left their users with debilitating memory problems. But people at IBM didn’t give up; they went back to the drawing board. “There is no ‘Monkey Business’ in International Business Machines” became the company motto at the time. They burned the midnight oil and worked ever harder. People were spurred on to success and glory, eventually reaping the rewards of hard work and dedicated service and winning the company’s loyalty.11 Success meant one thing: innovating. I A M AN I NNOVATING A RMY OF O NE
However, as we state elsewhere in these pages, the focus of getting organizations to accomplish more is shifting from the group to the individual. This will carry over to the area of innovation as well. Finding the best new way to do something won’t come from a groupthink process. The new mantra will be: “All of you may be smarter than one of you, but I’m the 10. Sicko. 11. Until the vast majority were laid off in the company’s massive downsizing during the early to mid-1990s.
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smartest of all.” There will be an unprecedented egress from the hive mentality that has held sway over the corporate culture for the last half century, and in no area is this more true than in the domain of thinking up new ways to do things. There is ample historical precedent for this. Einstein did not need a committee to build the atom bomb.12 Vanderbilt built an intercontinental railroad with nothing more than a dream and 50,000 ginned-up lackeys.13 When it comes to the idea process, the one is better than the many. Also, start each day by asking yourself a simple question: “Did I change?” If you didn’t, you might want to make a quick trip home, especially if “no” is the answer for the third or fourth straight day. And DO NOT think that just splashing on some cologne is “close enough.” A GENDIZING I NNOVATION
Most managers take innovation, and their wives, for granted. Innovation is not something that comes along with a 2 x 4 and whacks you up-side-the-head. That’s what your wife is for. No, innovation needs structure. Innovation needs an agenda. Innovation needs some wine and candlelight and maybe some Hank Williams Sr. on the hi-fi. Innovation is usually left off the corporate agenda. The next time it is your turn to set the agenda, include innovation. 12. The Making of the Bomb . . . in Einstien’s Basement: How a Smart Guy with an Idea Ended the War Single-Handedly, Steven Ambrose, Mercury Books, 1989. 13. We know how that sounds but trust us, when your labor force consists of ginned up lackeys, you might as well be working alone.
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figures 3–2 picture of corporate agenda without and with innovation on it.
R ULES FOR S UCCESSFULLY A GENDIZING I NNOVATION
Innovation comes from places you least expect. When was the last time you cleaned out your desk? Maybe there is some innovation way back in the corner . . . you know . . . where that candy bar melted last July and that you keep pretending will just go away. Maybe innovation is right behind you and if you turn around fast enough, you’ll see it. Whoops. Too slow. Innovation is fleet of foot. I NNOVATION R EQUIRES R ECOGNITION
It is all too easy to overlook the role of recognizing the innovators in the company. People have an innate desire to be recognized. That’s why they wear badges with their names on them. You cannot ignore a person and expect them to innovate. If they did, who would know? Not you, that’s for sure. Work on your people skills.
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I NNOVATION AT THE E DGE
There is usually lots of innovation happening at the edges of your company, beyond the reach of the typical bureaucracy. Often this innovation is a direct result of the lack of bureaucracy, by people who just need to get a task accomplished. Often these E instein did not need
a committee to build the atom bomb.
people have to make do without the resources that may be available in other parts of the company. Huge, potentially business-changing applications are taking
place. Big, money-saving process improvements. Amazing new ideas for products. But don’t sweat it. Most of these ideas can be passed off as “kooky” or “weird,” and the people can be easily ostracized, because after all, they work “in that other department, where they do things weird.”
luck and the new new economy T HE R OLE OF L UCK
You want to control your company’s course in the New New Economy, don’t you? That’s a nice thought, but it is not viable. The factors discussed in this, and for that matter, any business book, must be seen in context. What context? The context that very little, even under the best of circumstances, is within your control. Instead, luck rules your fate. There is simply no substitute for luck. It is what drives business. It controls your life, your company, and the economy. In the New New Economy, only the lucky will survive. There is only so much you can do no matter how hard you work. You can be a warrior and fight like a gladiator in the arena
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of business. You can slay lions and other gladiators and Christians to the roar of the crowds, propelling your business to the top. But then one lousy spectator throws a brick at your head the day you left your helmet home, and it’s all over. You never saw it coming. Welcome to the New New Economy. Thomas Jefferson observed: “Luck is a funny thing. I find that the harder I work, the more luck I have.” What you probably didn’t know was that Tom’s father was loaded. Thomas Jefferson already had the tough part licked when he said that, in that he was born rich. Well you know what, Tom? I find that the richer my Dad is, the luckier I get too.14
figure 3–3
all aboard the luck train!!
You play little role in deciding your fate, and this applies to your business as well. Don’t ask for whom the bell tolls. The gods toll it for whomever they want. Asking stupid questions like that will just anger the gods, and that won’t do you any good. If you take anything from this book, let it be that. You’re helpless and there’s hardly anything you can do, so send your people 14. After this book, we are going to write another book called What a Nincompoop Thomas Jefferson Was.
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home for the day because there’s news coming and its bad. The news is: You are screwed unless you can catch a break. You are dependent on luck, and you can’t just direct it towards you. M AKING L UCK PAY FOR Y OUR C OMPANY
All of this is not to say that you can’t direct luck toward you, however. To begin with, in more and more states, you can actually buy luck in the form of “luck futures.” Luck futures are very complex, and a whole book on the subject alone could run hundreds of pages. In sum, it utilizes a small black ball that spins around on a wheel that has 38 numbered slots. Eventually, the ball comes to rest on one of these slots. The job of the investor is to correctly predict the slot on which the ball will land. By predicting the correct number, the investing entity earns a return on the investment. As with any investment, the size of the return depends upon the amount initially invested. We predict that luck futures are the next hot thing in the commodity market and will make or lose fortunes for numerous companies. We think this is an especially good opportunity for concerns such as trusts and pension funds as well to expand. I T ’ S N OT Y OUR FAULT : L UCK AND G ENES
The significance of luck cannot be understated. It underscores that whatever happens, it’s usually not your fault. But even if some decision or action can be attributed to you, it’s probably due to bad genes. Studies have begun to show that the most successful executives are better than you-and we-are, genetically. Well, better than you anyway. They get things done and beat the luck factor more often than the average executive because they
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won the genetics lottery. You can drink all the protein shakes and self-administer all the gene therapy you want and it won’t matter a bit. Mother Nature has used her best little DNA cells on the other guy. The positive aspect, then, is the accountability factor. The modern manager must know how to use his inferior breeding to his advantage.15 He must make up for, with his avarice and stupidity, what he lacks in luck. He must draw on his inner loserhood. By this, we do not mean his droll blue collar-isms and love of Pabst Blue Ribbon beer. And his affinity for the Home Shopping Network and the occasional knife fight, while potentially useful, will not be what saves him in the modern business world. Cheating at cards. That’s what will save him. People with bad genes are usually good at this.
15. This applies to his horrid upbringing as well. Social mobility has become such that they are letting anyone into the executive suites these days. But then, you already knew that.
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C H A P T E R
4
m a n a g e m e n t i’m so scared about what comes next that i can’t get out of bed in the morning. — john naisbitt, futurist and author of megatrends 2000
*
*
*
placebo management THE THEORY
that one’s mind can “triumph over matter” has
long been the cornerstone of placebos. That is, as medical science tells us, the thought process can manifest itself to the point where a person can convince himself that he is affected by a “cure” that is, in reality, nothing more than a fake. Double-blind studies, for instance, may give half of a group actual medicine and the other half a sugar pill. People in the latter category may actually believe themselves cured. These people are known clinically as “big fat suckers.” They act as a control group from which researchers can measure the progress of those they have, in playing the role of God, actually deigned to give real medicine to during the study.1 A similar methodology has been applied to working environments as well. A noted study in the 1920s and 1930s demonstrated 1. Doctors actually do stuff like that. We don’t make all this stuff up.
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the Hawthorne Effect, as it is termed. The original study was directed at finding what level of workplace lighting produced the greatest productivity among workers.2 Researchers were surprised to find that production increased no matter what the lighting levels were, simply because the supervisors became
Did
w? You Kno
more involved with the workers and “cared” about how they were. No one cared about this. Indeed, you no doubt wonder: Why would they care about such
T hat doctors in
a thing? The point is, the workers thought
the netherlands actually murder people?
that management did, and convinced themselves to work harder based on a fiction. The New New Economy demands
more of everything, especially production. So the modern manager will have to maximize the fictions upon which production can be based. T OWARD A “S MARTER ” W ORKFORCE
Placebo Management is based upon an intricate set of fictions. It requires such things as Placebo Teams. These are small, welltrained groups of employees who are loyal and know how to perform discreetly. Their role is described below. Placebo Management is well suited for providing a company with something that is crucial in the New New Economy: a well-educated workforce. While most of your labor is hardly what you can term well-educated at anything besides spousal 2. By the way, this is an actual study, so you can now place this book in the nonfiction category, pay for it out of your expense account, and deduct it. See how we take care of our readers? You’re welcome.
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abuse and filing fraudulent workers compensation claims, you can still convince them otherwise. Over the course of several months, Placebo Teams can enter their cubicles at night or when workers are away. They hang diplomas from imaginary schools. These diplomas are for degrees that the employees did not get, nor were ever conceivably capable of getting, short of their imaginary rich father paying for an imaginary building on the imaginary grounds. As a follow-up, members of your Placebo Teams should periodically congratulate the worker on his newfound education. Thereafter, the benefits begin to accrue. As anyone who has known a person who was an English major at Wellesley, or who has a J.D. from just about anywhere, people with important sounding degrees see themselves as far more intelligent than they usually are in real life. Nonetheless, this does not stop many of them from obtaining success and riches based solely on the confidence that stems from that self-delusion. Your employees will be no different. As they begin to think that they are inured with fancy book-learnin’, they will attempt things that they previously thought beyond their feeble abilities. They will perform more self-assuredly. Faux knowledge will make them more productive as they become more proud of themselves. Mr. G.E.D is now Dr. G.E.D, and, by gum, he does understand that filtering process or data retrieval sequence with which he used to have such a hard time. Admittedly, there are potential problems of the sort that always arise with mass campaigns to deceive people. Most of them will gladly accept their newly awarded academic achievements. However, those who refuse to “get it” despite the best
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efforts of your Placebo Teams should be let go. This is because these people are of the “whistle-blower” variety anyway. The last thing you need is a bunch of Karen Silkwoods snooping around and getting all judgmental. Actually, the biggest problem is containing the “know-it-all effect,” as we call it. Sooner or later, the more fundamentally obnoxious employees may decide to form a Mensa chapter. Detection is easy: Mensa members take it upon themselves to remind people of their membership usually within the first five minutes of every conversation.3 Second, they can usually be discerned by appearance. There are no good-looking members of Mensa, and very few thin ones.4 We are not in favor of Mensa-busting per se, but we do not see how their existence can be condoned by your company if it is to remain viable. We have found that the best way to undermine Mensians is to drive them insane on an individual basis. Give them a dose of their own medicine: condescension. Give them the simplest jobs and heap praise upon them like they are clinically imbecilic drones. Act surprised at how well they have performed their jobs, whether it’s changing the tank on the water cooler or bringing a box of documents to the third floor conference room. They will be desperate to tell you how their superior intellects can master much more complex assignments, but have none of it. Slowly, the frustration of the few will spread throughout the collective. Great care must be taken when subverting and ostracizing the Mensians. Remember, the days of Carnegie-style Mensa-busting are over, and probably illegal. 3. And what’s more, they think the other person cares. 4. We know Gina Davis and Sharon Stone say they are members of Mensa, but we do not believe them.
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Instead, you must beat them at their own game. Turn loose your newly minted “MBAs” and “PhDs” to give them a dose of their own medicine. This not only discourages future Mensa organizers but also drives the current ones insane. Don’t worry about negative publicity. Just build a library or two for posterity and everyone will remember you as a benefactor. A P LACEBO PAYROLL
Placebo Management can also be used to take care of liabilities like payroll. Quite simply, this means convincing workers they have been paid, when they actually have not. The Finns have a saying: “If you repeat a lie enough, people will begin to believe that it is true.”5 And so it goes with paying your workers. This is not merely saying, “The check is in the mail.” This is telling them that “You have been paid, and we are not going to pay you twice for the same week. We are your employers . . . not some chumps who are going to pay you twice.” Have members of your Placebo Team then reinforce this by repeatedly telling the employee that each was there when he got his paycheck. If this sounds like a tough sell, think it through. Remember, under Placebo Theory, people in double-blind studies have convinced themselves they were cured of cancer. Convincing them they were paid when they were not should be a piece of cake. L ET ’ S D O THE T IME WARP, A GAIN
Now that your workers are “smarter” and “paid,” it’s time to make them productive . . . for real. The newest concept takes time management to a new level. It involves adjusting the rhythm 5. The Finns are a weird people, with clammy hands, who roll around in the snow and bark like seals. Lying is the least of their problems.
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of the workplace. As a prerequisite, first make certain that your employees have set quotas for their output. If you have done away with them, then it’s time to reinstate quotas. Establish and enforce them regardless of what a worker’s job actually is. If they work on the assembly line, have them make x number of widgets. If they work in the cafeteria, they must make y number of meals. If they work in HR, they must fire z amount of people. Or hire them. Or whatever it is they do there. The point is, everyone must have demonstrable goals and quotas. Then, institute what we call the Almost Time to Go (ATTG) theory of management. Working closely with your Placebo Teams, formulate a method for creating an environment where workers are constantly of the belief that it is 4:55 p.m. Always, from the moment they walk through the door in the “morning” until it really is 4:55 p.m., they must be under the impression that they have only five minutes left to get everything finished. This will create a constant, nonstop sense of urgency that will keep your workers humming ceaselessly all day. Coffee breaks and lunchtime will become a thing of the past, as employees scramble to finish their quotas by quitting time. There’s no time to stop, even for a bathroom break, when there is so much left to do in so little time. We are not suggesting that an “educated” workforce like yours will be able to carry this off easily. And actually, we have no real suggestions on how to pull ATTG off in practice.6 Maybe fooling around with the clocks will do it. But work with your Placebo Teams and demand a plan. That’s what you’re paying them to do. 6. After all, we like to think of ourselves as idea men. You know?
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C ONCLUSION
If there is one drug you cannot overdose on, it’s definitely a placebo. There are also few diseases that a placebo cannot cure if it’s taken by a sick person who—and this is the important part—has the right positive mental attitude. That’s what your company will need to acquire. Get it and your employees will become addicted to placebos. You, on the other hand, will become addicted to success!
solow’s paradox: an analytical view of information technology spending and productivity in the new new economy T HE N OT S O W ONDERFUL “D R .” S OLOW
In 1987, “Dr.” Robert M. Solow, Professor of Emeritus at the Massachusetts Institute of Technology, posited on the effects of information technology spending on the productivity of the overall economy of a nation. He opined, “You can see the computer age everywhere these days, except in the productivity statistics.”
We look at ourselves
“Dr.” Solow’s theory is that increased
and we don’t see productivity.
spending by corporations on comput-
ers, networking, and other areas of information technology has no direct correlative effect on the bottom-line profits of an individual business. In other words, spending on information technology to improve a worker’s overall output per hour had no real measurable effect on the total amount of work accomplished. In short, “Dr.” Solow believes that computers do not make us more productive. This is commonly known as Solow’s Paradox.
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We clearly think that “Dr.” Solow is a caring, compassionate, clear-thinking man on many issues. His thoughts and theories have deeply affected the thinking of his many students and Academia on a number of important issues. He is well liked and many girls want to marry him. But the man is clearly
now? K u o Y Did
out of his league in the field of Economics. Has anyone checked to see whether “Dr.” Solow’s Nobel Prize is real? Who knows, maybe he “fought in
T HE NOBEL PRIZE FOR BALLOON ANIMALS WAS DISCONTINUED IN 1956!
Viet Nam” too. And if, indeed, he was awarded a not-pretend Nobel Prize, then this is the true paradox. While accepted unquestioningly by
academics thought to be at the forefront of “economic theory,” Solow’s Paradox seeks to undermine the very investment necessary to create and sustain the New New Economy.
what’s missing in solow’s paradox, besides a centerfold? Psychologists often state such things as, “People who do not know how to create new things are compelled to tear down the good works of others to make themselves feel special.”8 If there were a Nobel Prize for this kind of behavior, he would have won that one too. Solow’s Paradox ignores accepted and fundamental tenants of Capitalism. It subverts the notions on which the pillars of 7. A Peek Inside the Strange and Tormented and Not So Wonderful Mind of “Dr.” Solow, “Dr.” Richard Lucas, Michigan State University Press, 2001
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modern business are based. In fact, Solow’s Paradox is just a retread of the same old dreck foisted upon us by the Trilateral Commission during the recession in the late 1970s.9 There are numerous benefits often neglected by economists like “Dr.” Solow, when measuring spending on the information technology that makes up our computer age. If “Dr.” Solow can claim to see the whole vast woodland of the “computer age” so clearly, why can’t he see the trees of which this forest is made? His attack on the computer age is an attack leveled directly at the heart of you and me. The computer age, which “Dr.” Solow seeks to tear asunder, is not simply his to deny, to ridicule, to criticize at his whim and whimsy for his own personal advancement. It is not another one of his “play things.” To win his Nobel, he has assailed the very thing that we hold most noble.10 The computer age is woven into the very fabric of the cloth of who we are. It is not only part of us, it is what makes us a people. A people good and true. The computer age is not some vague economic dream, “Dr.” Solow, respite in your towers of ivory. It is not some cold, soulless academic flotsam, adrift in a sea of jetsam. Information technology is given the acronym IT for a reason. The rest of the civilized world has already realized what our dear “Dr.” has failed to grasp. IT is it. T HE R EAL C OMPUTER A GE I S U S
“Dr.” Solow looks at us and bases his ideas about productivity on money. People like him always do. We look at ourselves and we don’t see productivity. 9. sans killer bees 10. And slept with God knows who . . .
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The language of the economist falls dumb on the deaf ears of hardworking Joes, the housewives, and the Boy Scouts troops. Like the oral tradition of the African Bantu, information technology binds us as a people and is passed through the generations. Before we allow the “Dr.” Solows of this world to revise our cultural selfesteem with his paradoxes, let us remind him—no, let us remind ourselves—of that which in the computer age we hold so dear. It is in the smile of a little child taking summer’s first lick of ice cream. It is in the chambered round of a brave American soldier, defending her great shores from enemies both foreign and domestic. It is in the tear shed by that noble Indian guy who they threw garbage at in that old Nokia commercial. It is found in the intimacy of a tender embrace between a man and his roommate. It is in the vote we cast each Fall for the white middle-class 40-something lawyer. Or the other party’s white middleclass 40-something lawyer. It is in the payment we make each April to allow government to better serve its people. These things cannot be captured in the cold calculus of “the productivity statistic.” These things cannot be measured in the measuring machines. These things are not ours to count; they are ours to count on.
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The cost of “Dr.” Solow’s productivity? About $200 billion. The cost of a new, cutting-edge computer? About $800. The cost of an ice cold Coke in the New New Economy? About $1.25. We’ll take that Coke and a good old computer age clambake on the beach over “Dr.” Solow’s beloved productivity anytime.11 T HINGS T HAT THE D IABOLICAL “D R .” S OLOW H ATES B ECAUSE T HEY A REN ’ T P RODUCTIVE 1.
The American flag.
2.
Puppies and kittens.
3.
Your daughter’s wedding day.
4.
Daisies and buttercups.
5.
Lying in a hammock with a cold glass of lemonade on a warm summer’s afternoon, day dreaming while looking at the clouds,12 to the scent of a freshly mown lawn.
6.
Grandma’s blackberry jam.
7.
Grandma . . . Your Grandma! Who bakes your favorite cookies . . . and makes that great blackberry jam.
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INDUSTRY QUIZ ON MANAGEMENT
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Q: company, when suddenly a fiasco erupts. All manner Joe is a company president. He is busy managing his
of confusion breaks out, and there is no one on his management team he can turn to to help straighten things out, because the other managers have the day off and are all at 11. The cost of walking away from a well set-up joke? Priceless . . . 12. Hey, that one looks like a horse!
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home baking pies. Should he step in and seize the reins to prevent the tumult from continuing?
A: good men like Joe to do nothing. He should step in
Yes, he should. All that chaos needs to thrive is for
before the turmoil turns positively riotous. He should start by sending all of his employees back to their desk this minute.
the new new interview In the spring of 2001, HandMeld, a wireless developer of enterprise-level financial applications, raised over $150 million in what was called “the first truly successful initial public offering (IPO) of the New New Economy.”13 CEO Patrick Greenwell explained to us the things that make HandMeld a New New Economy company and why he believes HandMeld is positioned to provide lasting, long-term value. AUTHOR: Can you describe some of the things that make your
company a New New Economy company, as opposed to a New Economy company or an Old Economy company? GREENWELL:
What I think separates our company is really
the approach that we apply toward moving forward in business. We like to think that we’re tapping groupwide competence toward a harmonized, logic-based series of solutions for the marketspace. AUTHOR: What differentiates your lifetime, focused solutions
from your competition? 13. “HandMeld, A New, New Company for a New, New Economy” Business Week, Jan 3, 2002.
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GREENWELL:
We are extremely, and that might be too soft a
word, proactive in a digital relational scenario. Much more so than any New Economy or Old Economy company could ever be. AUTHOR:
Why is that?
GREENWELL:
First, New Economy and Old Economy com-
panies are weighed down by a failure to capture virtual, synergistic opportunity. Secondly, they lack our tactical, enterprise mindset. AUTHOR:
HandMeld’s IPO, can you describe why it was so,
so successful? GREENWELL:
One analyst said something to me during our
second day of trading: “Patrick, you totally solved the problem-bound, short-term-oriented infrastructure engineering and now the market is responding.” AUTHOR:
You seem depressed, is everything alright?
GREENWELL:
I find people tedious. You go now.
buzzsaw “mike” hargrove: portrait of a new new economy ceo Ever since the mid-eighties, companies have sought ways to increase their bottom line by trying radical strategies to cut costs. Frequently, this has meant mass pink slips for the unfortunate many, a practice that has spread from manufacturing to just about every other industry. It is no longer considered particularly
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innovative to lay off large numbers of employees to benefit the bottom line in an ever-competitive business world. Commentators may well lament the human cost of such measures, but the inescapable fact is that it is now the norm. Since it is true that shedding people is now standard operating procedure, it behooves us to look at a practitioner who has become renowned for this approach: CEO Buzzsaw “Mike” Hargrove. Few executives exemplify this ruthless, bottom-line-oriented aspect of the New New Economy as does “Mike” Hargrove. Hargrove has refined the slashing paradigm to an art. Despite his relative youth and meteoric rise at an early age, he became sought-after by ailing companies looking for a drastic tonic to cure what ails them: unprofitability. He first rose to prominence in the late 1970s, when at 26, he was running the consumer electronics division of Thelcon Electronics. He became adept at keeping this, the only profitable division of the company, in the black by instituting mass firings. Within the division, he made it clear that he was not engaged in a popularity contest. “I’m not Rita Moreno, and I’m not going to sing just to make you all love me like Rita Moreno and be your buddy. Okay? If you want a friend, get a dog or buy a ticket to see Rita Moreno. I’m here to do a job,” he was fond of saying.14 Boards of directors that brought him in did love him, though. With each new assignment, his quest for an ever-leaner workforce caused him to cut more and more people. His companies always respond by becoming profitable. “I’m doing what I love,” 14. This is what he told his kids when he put them to bed at night. You can only imagine how he was to his staff. In any event, it is safe to say that he was rarely mistaken for Rita Moreno. However, we cannot say that he was never mistaken for former Golden Girl Bea Arthur.
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he candidly told one reporter about his tenure at Consolidated Rubber, “If I could lay off some of these people twice, I would.”15 His stint at Consolidated Rubber was followed by three years at the helm of Fordex, a defense contractor hit hard by the end of the Cold War. There, he not only fired people, he cut their severance benefits. One thousand line workers whose jobs were slashed left with only a six-pack of juice boxes. In the mid-nineties, while at Parente Manufacturing, he not only denied severance packages but also refused to pay 1,200 employees for their last two weeks of work. He claimed this was set off for administrative expenses incurred in the layoff process. “It is beyond my control,” he told angry union leaders. “If I didn’t have to lay them off, I wouldn’t have to keep their money. These people may not realize it, but they’re lucky I didn’t charge them more. Don’t you people know how business works?”16 Union leaders at Parente saw the situation differently, claiming that a reign of terror was instituted shortly after Hargrove was hired. “He was brutal, absolutely brutal. He started by just firing a few people with questionable productivity. Then after only a week on the job, he began roaming the halls, firing anyone he saw. Sometimes they weren’t even employees,” recalls Travis Carpenter, the former Parente CFO who was ousted by Hargrove. “I once saw him convince a UPS guy that he was laid off and not to even think about asking for a reference, and then, you know, the guy started crying. This UPS guy was just delivering a package, for cryin’ out loud.” Carpenter remembers, 15. “New CEO Buzzsaw Hargrove to 950 Consolidated Rubber Workers: ‘Don’t Let the Door Hit Ya’ Where the Good Lord Split Ya’!” BusinessWeek, August 29, 1988. 16. “Buzzsaw Hargrove: A New Company, A New Hairdo, and New Love,” People, November 3, 1994.
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“It was really harsh. We . . . the accounting department I mean . . . we just hid in the closet watching. We felt so helpless, but there was nothing we could do. I really am a pathetic coward. I I f I could lay off
some of these people twice, I would.
guess I’ve always been afraid of everything. And as long as I am telling you this, I think I am also confused sexually.” Nonetheless, Parente grew to unprecedented profits
only a year after Hargrove began as CEO. Hargrove’s next assignment, however, would become his most controversial. In the fall of 2000, Buzzsaw “Mike” was lured away from Parente by the board of Sunbright Appliances, Inc., in a widely publicized attempt to bring the venerable manufacturer back from near bankruptcy. The company’s principal facility was located in Decatur, Illinois, where it employed 4,600 people. Not a single one of those 4,600 could ever have been prepared for what came next. On November 4, 2000, Hargrove announced at a press conference that he was cutting every single employee from the workforce of Sunbright. Stunned observers heard Hargrove announce that he would personally assume every job and responsibility of each of Sunbright’s 4,600 employees, and vowed to do it better. “Look, and I mean no offense to the people who worked all those years at the company, but this isn’t rocket science. We are . . . well . . . I mean I am, just going to be making toasters and stuff.” The next day, every single employee received a dismissal letter, memorable for the line that said, “Quite frankly, an untrained monkey with a stick could do any one of your jobs.” Hargrove immediately began moves to bring the company into the black.
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Whether Hargrove is up to the tasks remains to be seen but reactions have ranged from amazement to contempt. “Look,” says one former foreman, “you fire everyone in a company, 4,600 people. Then you claim you can do every job that they did, even better. All by yourself. You are going to inspire some strong emotions.” Another former employee has mixed feelings: “The thing in the letter, about how we were all like untrained monkeys and anyone could do our jobs . . . that was way out of line. I figure I can use a stick as well as any monkey I’ve ever seen. But this guy really is unbelievable. He gets up at 4 a.m., spends all morning processing orders, then spends afternoons on the production line. With, like, no help. Then he spends all evening in product development and then does the books till past midnight and then sleeps a couple of hours and then does it all over again. Who knows,” the ex-employee admits, “maybe he was right abut the monkey thing . . . now that I think of it.” It is true that costs at Sunbright are dramatically diminished. Not only are there no salaries or benefits to pay anymore, there are other savings such as significantly lower costs for maintenance (no one to clean up after), networking (no one to send email to), and security (no one to arrest). Not everyone agrees that Hargrove’s moves have all been successful. “To say that these products are no longer well-engineered or even work consistently would be an understatement,” says consumer product safety advocate Keith Belsom. “Since last fall, we have seen supposedly brand new toasters come out of their boxes held together by duct tape. We have seen microwave ovens that emit more heat outside than inside. That concept sounds fine, but people who have used them as space heaters are unaware that
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being unprotected from those microwaves will fuse your internal organs together.17 I saw pictures of a family from Oregon that used one for a few months and, well . . . my God . . . it was just gruesome. That man is the reason for my nightmares.” The U.S. Government has taken notice as well, drawn to recent reported instances where the Sunbright Electric Can Opener has repeatedly emitted dangerous toxic gases. Notes one investigating official: “We have people who went to open a can of tuna fish and see this green gas come out. The next thing they know their houses are quarantined, their kids have been taken away for “testing,” and their organs have started to fuse.” If these events are disturbing to Sunbright’s board, its members are not showing it. The board has been, so far, very supportive of Hargrove’s approach. In fact, in the late summer of 2001, the board approved a plan by Hargrove to purchase every business within a 10-mile radius of Sunbright’s offices and production facilities. “The idea, as ‘Mike’ presented it to us,” says boardmember Frank Neuwerth, “is to buy all of these other, local businesses . . . you know, retail stores, gas stations, professional offices, everything, and then fire every employee in those local businesses as well. “Mike” feels that this will really send the message that the time to be lean and cut costs is here to stay. I don’t think we (the board) can argue with that.” This “salt the earth” layoff strategy is the next logical step for companies that wish to stay profitable in the New New Economy. If you take nothing else away from this book, let it be that. You need to be prepared to fire 99 percent of your workforce and start doing the job right. You might not have some fancy 17. “From Organs to Organ in Oregon,” Texas Monthly, May 2001.
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nickname, but don’t worry, because your shareholders will be calling you the guy who made them rich!
management lessons from dwight Listen, there is no courage, or any extra courage that I know of, to find out the right thing to do. Now, it is not only necessary to do the right thing, but to do it in the right way, and the only problem you have is what is the right thing to do and what is the right way to do it. That is the problem. But this economy of ours is not so simple that it obeys the opinion of bias or the pronouncements of any particular individual, even to the President. This is an economy that is made up of 173 million people, and it reflects their desires, they’re ready to buy, they’re ready to spend, it is a thing that is too complex and too big to be affected adversely or advantageously just by a few words or any particular—say a little this and that, or even a panacea so alleged. —Dwight David Eisenhower (1890–1969)
Ike had it right. It really does not matter what you do or how you do it. It does not matter who you are or who you are with. So, like John Naisbitt, we’re just going to go back to bed.
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C H A P T E R
5
c a s e study a d a p t i n g to succession crisis a in
it’s the economy, stupid. why can’t you just write about the damn economy? — neil, our editor
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introduction What follows is a case study of Centricorp (NASDAQ: CENTRI), chronicling its dramatic upheaval as a direct result from pursuing a strategy of management change in its transition to becoming a New New Economy company. In the spring of 1998, Centricorp was an established, wellrun manufacturing concern that had its roots in the steel fabrication industry. Decades of visionary leadership had led to a controlled process of systematic management transitions. Centricorp stayed ahead of the manufacturing curve in the early 1970s by realizing that its core competency would soon be undermined by foreign steel competitors. They adapted by redirecting their focus on light metal construction materials. Though criticized as being shortsighted at the time,1 by the 1. “Steel Industry Perplexed as Centricorp Refocuses—If It’s Not Broken, . . .” J. Smythe, J., The Wall Street Journal, January 3, 1971. 81
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mid-1980s Centricorp became a model for companies seeking to stay ahead of the competition. Centricorp’s management did this by recognizing (1) the shift in its core competency from manufacturing to service and (2) its ability to quickly assess which markets could be accessed the quickest and easiest for the highest levels of profit. The company enjoyed a two-decade-long stretch of increased profitability by growing steadily and quietly. By 1998, Centricorp had combined its acquisitions and streamlined its operations into six business units, employed 16,000 people, and had a market capitalization of approximately $1.45 billion, making it 465th on the Fortune 500 list, with all of it’s revenues still tied to the light steel industry. Unfortunately, that same year saw the unexpected death of Centricorp’s CEO, and the architect of its success, Mertram Snyder.2 No one was quite ready for what followed.
the transition to a new management team Problems arose from succession issues that developed, but not in the traditional manner. CEO Snyder and the board had begun the transition plan but were far from completing it, as Snyder was still seven years from Centricorp’s mandatory retirement age of 65.3 From the outset, there was no real serious dispute 2. His wife Rose thinks it was bad clams at Moose’s Chowder House. Everyone else thinks it was Rose who henpecked the poor man to death. No one ever did an autopsy. But this is neither here nor there. 3. An insider was quoted as saying, “Mertram was only 58, but the way Rose treated him must have added ten years to his life easy.” But again, this is neither here nor there.
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among board members that a new CEO would have to come from outside the company. Korn/Ferry, the highly regarded international management recruitment firm, was engaged, and an extensive campaign was begun to bring in a seasoned industry executive to build on the successes of the past twenty years. The push to speed up diversification remained a central goal as well. They sought a veteran with extensive merger and acquisition experience in the construction products field to provide the guidance the company would need to keep its growth uninterrupted. Former LectecCom Industries chief L. Enton Drake was selected, and an arrangement was made for his employment—with a significant compensation package. The final drafts of the employment contracts were checked to the finest minutiae with regard to financial and power-sharing terms. Unfortunately, on the final, company-signed and notarized contract, someone managed to misspell “L. Enton Drake” as “Lenny Drake.” The problem was compounded when a secretarial temp made a transposition error in the zip code. The papers were sent not to L. Enton Drake, 15 Main Street, Abbington, PA, 11456, but to one Lenny Drake, 15 Main Street, South Philadelphia, 11465. Lenny received the papers in September of 1998. Unbeknownst to even his family and closest friends, Lenny Drake had, by an amazing coincidence, been thinking of leaving his job as an assistant floor manager at his then-employer, Bed, Bath and Beyond. Using his experience in selling bathware, Lenny had been thinking about opening his own sponge store, or something . . . he wasn’t sure yet what it would be. The papers
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arrived one afternoon at his door. Lenny saw this as a sign from God and the answer to his prayers. Lenny Drake looked over the documents and quickly sent them back signed and notarized, flush with joy that someone else finally believed in his abilities. Centricorp, on receipt of the signed employment contract, began its preparation for an orderly transition, still unaware of the errors that had been made. On October 1, 1998, Lenny Drake contacted Centricorp’s board asking, “When does I start, and do you guys have a cafeteria or do I bring my own lunch?” “At first, we were amused with what we thought was L. Enton Drake’s sharp sense of humor,” according to Human Resource Director Mary Lodge. Amusement turned to confusion when L. Enton Drake contacted the board on October 2 asking the status of the documents. In the weeks ahead, it began to dawn on all involved that a terrible mistake had been made. Unfortunately for Centricorp, this was not an easy mistake to undo. In fact, to their horror, through a fluke of Pennsylvania law, the agreements Lenny signed were ironclad. The first reaction was to assign blame for the mistake. “Look,” noted Centricorp’s counsel Carl James, of Michaels and Reed, “this was during that whole Mark Maguire and Sammy Sosa thing. There were a lot of distractions. You had to be there. We missed one little name spelling. Sue us.”4 One would think, however, that this should not have been a problem, as the board of directors should have discerned the error when the memoranda of agreement were submitted for approval, even if the lawyers had all missed it. Well, one would be wrong. “I have no 4. Actually, a $300 million malpractice suit is pending in the Federal Court, Southern District of New York, at the time of this writing.
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comment,” Said Centricorp board member and general counsel David Boothe. “But if I did, it would be to say that I had thought that (fellow board member) Miriam (Ford) was going to check the names. I had important things to do. It was her turn to check names. So sue me.”5 Wherever the blame lay, the company was now beset with a problem it could not have foreseen. It was now contractually bound to employ a new and untested CEO of a multinational Fortune 500 conglomerate poised for growth in a mercurial and fastpaced economy . . . and that CEO was most likely a dullard, a buffoon, and a simpleton. What options did the board have then other than to channel the whole sorry state of affairs into a wacky sitcom?6 Indeed, conceptually, there were two issues here. The first and most obvious one was the simple management problem: The company went from having a CEO with an MBA to a CEO with a GED.7 Contractually, L. Enton Drake8 had negotiated rather broad powers for himself, not subject to the tight control of the board of directors. He was able to negotiate this because the board had historically deferred to the CEO. If, under the terms of his contract, L. Enton Drake was going to have all that power, then Lenny was going to have all that power. (And let’s 5. Shareholders v. Ford, et al, a $500 million derivative suit has been filed against the board of directors. Moreover, in a recent coverage determination, the Supreme Court of Pennsylvania has held that Centicorp’s Director’s D&O policy does not apply when they do something “ . . . so godawful stupid, like missing something that a trained monkey could have seen, for Godsakes.” See United Insurance v. Booth et al, 356 Pa2nd 234 (2001). 6. And don’t get any notions about stealing this idea. If we ever do a sitcom, it’s going to be about this, and if you are a TV guy who can give us a development deal, call us. We’re in the book. 7. His possession of a GED was never confirmed. 8. Who is suing, by the way.
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be clear, Lenny had some rather unconventional ideas from the get-go.) Second, there was a genuine problem of a potential loss of confidence in the company by Wall Street, large institutional investors, and even Centricorp’s own employees. Spin control of T he company went
from having a ceo with an mba to a ceo with a ged.
the situation became crucial. How would the public perceive the head of a billiondollar corporation who’s first act was to hang a ten-foot banner across his office door reading “The Head Cheese?”
At the end of the day, Centicorp’s options were two. Centricorp could cut Lenny loose, but would be forced to pay a huge penalty under the employment contract. It was the kind of golden parachute that could put the company in the red for at least the next two years and, what’s more, stall any real shortterm growth plans. Or, Centricorp could keep Lenny Drake on, watch him closely, give him projects to keep him occupied, put a positive spin on anything he does, and “pray to the Baby Jesus, brother.” Tragically, Centricorp chose the latter option.
lennyland: a new way of management Lenny’s ascension to the top ranks of corporate executive power was volatile from the start. Mitchell Anders is a construction products industry analyst with Bear Stearns who has watched this case.” Oh, lordy. Where to begin when describing this train wreck?” he observed. “His first action was to fire dozens of ‘stuffed shirts,’ as he called them. Mind you, the company’s annual report had called these same people ‘experienced and capable’ senior executives and managers in operations, manufacturing,
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finance . . . you name it. These were the people that made the company run. Anyway, most of them are suing now.” Lenny made it clear from the beginning that if this company was going to function well, it couldn’t have a bunch of people who “think they are better than me and everybody else” moping around “telling everyone what to do.” He stated in a company-wide memorandum that the mission of Centricorp was to “make and sell a lot of stuff” and that high morale was important to that end. Nineteen years in the sponge business taught me a thing or two, and one of those things is, if you don’t have morale, you can’t make stuff for selling to peeple (sic).” Lenny was quick to fill the now-depleted ranks with designated replacements who he felt were more suitable “to the tasks we face at hand.” “Old managers are like fish and visiting relatives,” he was fond of saying, “They both rot from the head down.” In practice, this management change meant employing his family and his drinking buddies. Lenny was quick to defend his management team choices to amazed stockholders and an increasingly stunned business press: “My decision to replace Mr. (Matthew) Ames as Chief Financial Official (sic) with Vito Bellefiore comes after much thinking and thoughtfulness,” he stated in a press release the day he began as CEO. “Vito is very, very good with numbers.” A subsequent investigation revealed that in actuality, Mr. Bellefiore, known as “Squiggles” Bellefiore to his associates, had for years run numbers in South Philadelphia before opening a pool hall in the mid-1980s. His accounting qualifications are still a mystery.9 9. “Centricorp’s CEO Drake: Crazy Like a Fox?” BusinessWeek, November, 19, 1998.
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The press had yet to pick up on the problem of the madcap CEO mixup.10 Centricorp’s history of quiet growth and flying under the radar would buy it time in the beginning, before the press began to look seriously into Lenny’s actions. True to plan, the board of directors backed Lenny unanimously in public. “While the mass firings may seem a little rash, we were aware from the beginning that Mr. Drake had intended to introduce new blood into management,” said board member Ford. “While his choices may seem a little unconventional, it’s important to have fresh perspectives in different areas as we begin our diversification phase.” Reacting to claims that at least 50 percent of his new hires had criminal records, mostly for petty theft and crimes of moral turpitude, Ms. Ford told one interviewer, “Look, let he who is without sin cast that first stone. We all live in glass houses, right? I know I do. The board wholeheartedly approved of this long-planned, systematic reevaluation of our senior management. Stop with all the questions. What is this . . . Russia?”11 Employment restructuring was only the beginning of Lenny’s stamp on the company. The new CEO’s strategy was proactive but simple: Become a global player quickly. “A big company has to get big fast by spreadin’ out fast, like a fox,” Lenny announced. “Big Like a Fox” became the company’s new motto. To Lenny, this meant establishing offices everywhere. In the first sixteen days of Lenny’s tenure, Centricorp went from having a presence in only the United States and Canada to 135 nations around the world. The decision to 10. Remember . . . it’s OUR idea . . . 11.”Centricorp: Acting Kind of Screwy Lately, You Know?” Barrons, October 23, 1998.
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operate in a country was often predicated on the most fleeting premise. In one case, after watching a documentary on Africa, Lenny decided that the time was right to corner the blender market in Upper Volta. Centricorp set up an office staffed with a dozen people in Upper Volta the next day. Only then Lenny realized that his company did not make blenders. Not to be dissuaded by this “detail,” as Lenny referred to it, he set out to acquire a “blender-making company.” Circumventing the normal acquisition process, Lenny personally set out to call various blender manufacturers, simply asking, “How much you want for your company?” Norstrum Housewares, the first company Lenny called, submitted a price for its Salt Lake City factory. Without counterbidding, contacting any other blender companies, or even checking Norstrum Housewares current price per share, Lenny bought Norstrum at what was later assessed to be at least quadruple the company’s actual value. Analyst Mitchell Anders explains what happened next: So they take this blender factory in Utah and ship it to Upper Volta. They do it in this record time and at an unfathomable cost. It gets there, and Mr. Drake finally reads a memo that had been on his desk from the start that says that less than 2 percent of the country even has electricity. “He thought that the whole Volta thing in the country’s name meant that there were volts, or something like electricity, that could be ‘mined there,’” says one of his staff. So without hesitating, he has his finance department work night and day to find
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a power generation company to buy. After three days, they find that there is a small power company for sale in Venezuela. Intent on believing that the country’s name held some actual significance, coupled with his poor grasp, of geography mired the company in more problems. It was Lenny’s assumption that shipping costs can’t be too bad, because for some reason, he thinks that “all those V countries are right next to each other.” Good money was thrown after bad when Centricorp FedExed the entire power plant to Upper Volta. Putting the mishaps in perspective, board member Richard Kuo defended the idea at the time, noting, “The bottom line is, we have not only cornered a market, we have invented one. No one was thinking ‘Blenders in Upper Volta’ as a concept before. Now the phrase is on everyone’s lips.”12 Now that Upper Volta was awash in blenders, Lenny’s next idea was to ship hundreds of cases of margarita mix. “This will show Warren Buffett where the real Margaritaville is,” he proclaimed at the time, apparently confusing the prominent financier with goodtime singer Jimmy Buffet. “His plan,” says an insider, “was to turn the country from Upper Volta to what he called “Party Volta.” But this time Lenny forgot the tequila, so thousands of natives were drinking all this sticky sweet lime mixer. It was pretty gross.” Eventually, tequila found its way to Upper Volta, and in the end, despite the rampant disease, blight, malnutrition, and drought, a potable source of decent margaritas was made available to the native population. Board of directors member Kuo observed then, “For years, a sustainable model for relief to coun12. “Now It’s Blenders in Upper Volta—How Far Into Madness Will Centricorp Continue to Descend?” Wall Street Journal, December 14, 1998; “Blenders in Upper Volta Make Centricorp Laughing Stock,” Forbes, December 14,1998.
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tries like Upper Volta was thought unattainable. Now, this is a country of blenders, and every day it’s Cinco de Mayo.” One World Bank development officer agreed: “Look . . . the place is still a hole, but I have to admit, thanks to Lenny, at least you can get a King Hell margarita.” Many have questioned whether it was worth the cost. Bear Stearns analyst Anders says: “When all was said and done, this project cost about $88 million to provide blenders and electricity to people, 98 percent of whom have no money and no infrastructure. That’s a hell of an investment for no return, and the fact that some natives have cocktails now is no solace to the shareholders. In any event, the whole matter has been placed in suit.” Similar projects began to raise questions, such as when Lenny decided it was time to enter the real estate development business. Lenny, an amateur spelunker, had a rather novel take on where the best places for development lie. In early 1999, ground was broken in Newman, Florida, for what was believed to be one of the largest man-made caves ever built. The project was based on Lenny’s belief that since natural underground structures like Carlsbad Caverns were wildly popular with tourists, why not construct a place for people to live underground all year. Time-shares, condominiums, and even a massive underground golf course were built as more than 30 million square feet of soil was removed from beneath the northern Florida town. Lenny fervently believed that if Centricorp didn’t build this cave, another company would. Problems beset the project from the start. Centicorp hired engineers, who advised the company from the beginning that constructing a mammoth cave in sandy soil was not technically
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feasible. Lenny fired any engineer who told him what he didn’t want to hear: That it would never work. Every engineer told him what a ninth grade earth science student already knew— sand isn’t very sturdy. The project went forward regardless, with millions of dollars in structural supports needed. “In the end, the thing just looked like a big ugly underground warehouse. And then the other problems started,” observed Mr. Anders. “There were bats. Millions of them. You build a cave, you get bats. Now they have to remove millions of fruit bats, which my people tell me can’t be done. In the end, you can only bend the laws of business so much: Caves mean bats.” The people over Centricorp Hollows, as the community was named, raised problems as well. “I got people living under me now,” complained 68-year-old retiree Mike Chenowith. “I came to Florida to die in peace. The last thing Sadie and I wanted was to live above a bunch of mole people. That’s why we left North Dakota in the first place.” The board, however, continued to toe the line and present a united front. Board member Miriam Ford explained, “People love the idea. I’ve visited caves, but I never had the option of living in one. Thanks to Lenny, people can do that now.” Bear Stearns analyst Anders disagrees: “Who wants to live in a cave? I wouldn’t. And playing golf is damned near impossible. You have to walk around with those miner’s headlamps.” To date, 80 percent of the properties remain unsold. Undaunted, board members like Ms. Ford defend the idea: “I know that if I want a tee time on a Saturday morning, I go to Centricorp Hollows and it’s waiting for me. We’re trying to lure some of the bigger PGA events here now, and I think
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we’ll be successful.”13 The project is now the subject of countless lawsuits in the Florida and federal courts. Lenny next began to diversify the corporation into prescription drugs and pharmaceuticals. His concept combined the idea of taking medication with an internal timing mechanism. “The idea of a time-released capsule has been around for a while now,” says one insider, formerly part of the nowdefunct pharmaceutical division, “but Lenny’s idea . . . well . . . this involved inserting an alarm clock into a pill. The idea was that the pill would ring, and then you would know to take it.” The prototype wound up being very large and unwieldy. This was because the pill employed an alarm clock using outdated spring technology. “It was like one of those big alarm clocks from the 1930s you see in old movies. So the person had to remember to wind them every few hours. Problem was, the older folks in our studies would forget to wind their pills and take them at the wrong time. Plus, the pills wound up being huge. And the clock part didn’t dissolve in people’s stomachs. It was really a disaster.” recalls the former employee. Moreover, Centicorp conducted its own in-house trials, unsupervised by any outside entity. The employee remembers, “Lenny insisted we don’t bother with FDA approval. He would always say, ‘It’s easier to ask forgiveness than get permission, and that’s definitely the case with the government.’ That meant FDA approval for drugs as well. Well, it all lead to a zillion lawsuits, which are in the courts now.” 13. PGA officials informed us that all such offers have been rejected. In fact, as PGA spokesman Ted Rogers pointed out, most professional golfers are not acclimated to playing in cramped quarters and are terrified of bats.
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By this point, board members began to alter their spin strategy as the press began to publicly question Lenny’s actions. In early April, 2000, as the stock price of the company began to collapse and earnings reports were showing increasing losses, an emergency board meeting was held to devise a strategy to extricate Centricorp from its obligations to Lenny. Lenny was ensconced in trying to develop Neon Schnapps, a glow-in-thedark liqueur, and was not invited to attend. Even the most optimistic executives and board members were at their wits end. Lenny had an extremely short attention span and flitted from costly debacle to costly debacle. In fact, the straw that broke the camel’s back had come but a few weeks before. One afternoon in mid-March, Lenny read some of the theories of “Dr.” Robert Solow. “Dr.” Solow has posited that the Information Age has not increased worker productivity at all in the last few decades and that there is no evidence that the advances of the last few years have helped business. Ironically, the company had, several weeks beforehand, completed a complete upgrade of its IT systems by IBM.14 Lenny called for a management meeting and showed the Solow article to his staff and department heads. He made it clear that he thought Solow “was a real smart guy who thought like (he) did” and this would form the basis for his decision for the 14. This was one of the few conventional major decisions carried through with at that time, and was done only after the remainder of the company’s original management team convinced Lenny that any upgrade work would be done at night. Lenny made it clear that he did not like people making a lot of noise in the offices while he was “thinking up new ideas to make us all rich.” Of course, the resulting night work resulted in staggering overtime costs, extensive implementation delays, and several lawsuits.
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immediate removal of all of the offices’ automation, with the exception of elevators, lights, and coffee machines. He personally contacted IBM and instructed them to remove all of their systems and that if they had any questions they could “call ‘Dr.’ Solow.” IBM removed the millions of dollars worth of information systems from Centricorp’s plants, warehouses, and offices that it had just finished installing. The day after, however, Lenny was dismayed to find that he could not get a simple letter written to a corndog factory in Wisconsin he was set on purchasing. By 1:00 p.m. that day, IBM returned, putting back in systems they had just taken out, at a cost of millions of dollars. When he saw the final bill, Lenny insisted that Centricorp would never pay for the reinstallation. As he remarked to the press at the time, “They have to be kidding. There’s nothing here now that wasn’t here three days ago. IBM has to be kidding me here. I’m not paying these jackasses one dime more.”15 Said one insider, “In response, IBM comes in and hauls it all away again. Eventually, after four months and an additional $100 million, all the IT stuff is all back in again, but there’s a new problem. During one of the reinstallations, Lenny noticed an aquarium in the lobby was missing. Lenny swears IBM took it, because, you know, there was a lot of bad blood at this point. IBM says it doesn’t know what Lenny is talking about and issues a statement saying that it didn’t take Centricorp’s stupid aquarium and if Lenny wants to make a big issue out of it, they will just come back and take their IT system and this time it will be for good. Anyway, its all part of some big lawsuit now.” 15. “No, You’re Not on Candid Camera: Lenny Drake Really Runs Centricorp This Way,” BusinessWeek, March 3, 2000.
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The board of directors decided to undertake a radical strategy to somehow remove from Lenny and his team the reins of Centricorp. Outside counsel, working strictly and confidentially for the board, was retained. Knowing that the employment contract was unassailable, Watts, Watts & Markum assembled a team of twelve lawyers. Their job was to review the myriad of Lenny’s actions as CEO to find a basis for invoking a termination clause, thus avoiding Centricorp’s obligation to pay out Lenny’s golden parachute. The team spent a combined 3,600 hours over a period of fifteen days exhaustively researching all of Centricorp’s contracts, board minutes, telephone logs, and other related documents. At long last, a intricately complex legal argument was crafted that Watts, Watts & Markum believed would stand up to the scrutiny of the courts. The board then began the task of secretly gathering shareholder support. On May 1, 2000, the Centricorp board of directors, with full backing by the majority of Centricorp shareholders, called an emergency executive board meeting with the intent of informing Lenny Drake of his instant termination. “You could have cut the tension in that room with a knife,” according to Board member Ford, “Then Lenny walks in, pours everyone this glass of some liquid that’s glowing like hellfire and says, ‘Folks, I don’t know how to tell you this, ‘cause of how much you’ve come to depend on me, but I got some bad news. I really hate to do this to you, I know you’ve come to think of me as some kind of father figure, but there comes a time when a parent has to toss the bird from the nest. It’s time for Lenny to start thinking about Lenny. So me and Vito are taking the schnapps idea and goin’ it alone.’ The only thing that
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broke us out of our stunned silence was Lenny asking, ‘Now, what did you people want to talk to me about?’”
conclusion In the wake of Lenny Drake’s departure, Centricorp has spent the last year and half divesting itself of the 5,798 acquisitions made during the Drake tenure and fending off the numerous lawsuits. Experts predict that Centricorp will not return to profitability until late in the decade, if at all. In the few short months since its introduction, “Lenny and Vito’s Glow-in-the-Dark Schnapps” has become the dominant brand of all global liqeur sales. At the time of this writing, Lenny’s personal net worth exceeds Centricorp’s total market capitalization by a factor of 4.
* * INDUSTRY QUIZ ON SUCCESSION PLANNING * *
Q: ident of the business. He has seven helpers of equal
Joe is a shepherd with a herd of sheep. He is pres-
stature and seniority. Joe dies suddenly. His succession system requires the surviving helpers to vote amongst themselves for a new president. Did Joe plan properly for succession?
A: business needed someone with vision and compeNo. He should have just designated a successor. The
tence. Here, Bob was elected president because he wooed the rest of the helpers by buying them Rueben sandwiches and milkshakes. Upon taking the reins of control, he bought a corporate jet—hardly a practical implement
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in the herder’s line of business. And you can imagine the mayhem every time they tried to herd 200 bleating sheep onto a Gulfstream II. Eventually, the Federal Aviation Administration obtained an injunction to shut the business down because of livestock overcrowding prohibitions on luxury jets. It is safe to assume that this is not a fate for his company that Joe had ever envisioned in his succession planning.
C H A P T E R
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and
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the only things worth advertising are cigarettes and coke. so smoke up. — leo burnett
*
*
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demographics THE EARLY ROMANS understood
two things very well. The sec-
ond thing was, don’t turn your back on your friends.1 The first: To be a bloodthirsty conquering army, you have to divide your enemy into statistical groupings with quantifiable like attributes. The Romans included personal traits like age, income, race, religion, and lifestyle affiliations (hobbies, sports, etc.). The Romans further grouped prospective conquerees into geographic categories by zip code, area code, or lands held by the tribe. After correlating data via complex algorithms, the Roman Army would march off, sure in the knowledge of who they faced and what those people’s buying habits would be once conquered. Roman demographers were excellent at predicting which nomadic tribes would be most responsive to wholesale slaughter and the purchase of Roman goods. For instance, by corre1. Et tu Caligula?
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lating age, the ability to forge iron, and slaves per household as an average of total slaves, then searching within a 100-mile geographic radius, the Roman Army not only conquered the neighboring Goths, within a week they established the first Gothic ski resorts in the Alps. Weekend ski packages proved immensely popular among the Goths, a fact that Roman demographers had already predicted. The Romans didn’t always hit the mark. They had a chance to be in on the ground floor of the whole Christianity craze, but through a database error wound up turning Jesus into a martyr. A recently unearthed letter from Brutus Augustus to Pontius Pilot authorizing the crucifixion gives us a glimpse into the Roman thought process: “Don’t worry about the martyrdom thing. Everyone hates a martyr.” This is true in the general case, but unfortunately for the Romans, everybody loves Jesus.2 The company in the NNE will not survive without a keen grasp of how demographics must be applied to know the difference between making a martyr that everyone hates and making the next Jesus.
modern demographics The company in the New New Economy will not survive without a keen grasp of which demographic groups are the most receptive to its products. Markets must expand. What was true in all the other economies, good or bad, through the years, is just as true today: Pigeonhole your customers into rigid, often arbitrary classifications based especially on age. 2. Except the Jews . . . but that’s for our next book, Why Have the Jews Forsaken Jesus?, AMACO, 2003.
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A Snazzy Drive That’s Fun to Eat
The OreoCar! figure 6–1
There is no substitute for knowing demographic trends. Prior to demographic studies, selling was done pell-mell to whoever came along. Witness General Motors’ marketing of the OreoCar. GM predicated the auto on the fact that people loved Oreo cookies. It was also known that Oreo cookies were bought almost exclusively by the elderly. Without doing extensive studies, GM designed, produced, and advertised the GM Oreo, which looked like an Oreo cookie on wheels. Despite magnificent performance ratings, and a chassis that
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caused even the most savvy autophiles to do double takes,3 few were sold. The problem: The OreoCar was, in the end, still a car. Further studies would have shown that the elderly are afraid of new technology, which they feel is wrong and Biblically forbidden. Cars are, to their thinking, the devil’s work, and thus, the target demo of older people would not accept cars in any form. To this day, years later, automobile manufacturers eschew building cars that look like any cookie. As a further result, in no small part due to the OreoCar debacle, marketing by age and income groups has become something of a science. What follows is a primer of the shape of demographics to come in the coming years.
18—29 year-olds: blood, credit cards, and the high seas The demographic holy grail over the last three decades has been youth. 18-29 year-olds, in particular, have been the predominant force in marketing in just about every conceivable form of media. Infatuation with this group has been a misguided farce from the beginning of modern marketing theory. We are loathe to come across as bitter, frustrated thirty-somethings increasingly devoid of the ability to see reality except through the prism of our anger at the fact we have squandered our own best years. However, it must be said: The damn kids today are no good. 18-29 year-olds are targeted because of their cognitive inability to separate what they truly need from what they think they 3. “Is That an Oreo . . . or a CAR?: Marketers Hail Cookie Vehicle As Next Big Thing,” Auto Week, December 12, 1971.
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need. Their minds are malleable and open to whatever company makes their wares the prettiest. They are like crows, attracted to useless baubles and the shinier those baubles are, the more they want them. These are the shallow ones. Their aspirations are to be models, actors, writers, and supermodels, and eventually, all want to direct someday. From this, we have to keep a nation going? It is enough to make one shudder. In the New New Economy, however, the youth marketing paradigm will shift dramatically. Already, companies have awoken to the fact that this group is hardly worthy of the attention bestowed on it. And no wonder. 18-29 year-olds are the least productive, lazi-
W e are loathe to come
est, dumbest, most unhygienic collec-
across as bitter, frustrated thirtysomethings increasingly devoid of the ability to see reality except through the prism of our anger at the fact we have squandered our own best years.
tion of dilettantes since the generations of twits that ran off to France in the 1920s and Spain in the 1930s. They are our greatest national liability. They swarm among us in ever greater numbers, suckling at the teat of a depleted economy, which survives not because of them, but in spite of them. While this
has been the case historically on various occasions, it has never been more true than at the dawn of the New New Economy. The average 18-29 year-old today is jobless. The male, if he lives outside of his mom and step-dad’s house, is crashing at his girlfriend’s apartment.4 He cannot hold a job, but rest assured, because he always “ . . . has something big in the works.” The average female is either hopelessly addicted to diet pills or really, 4. And, ya know, like don’t even get him started on his step-dad.
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really needs to be. She spends her days fighting with her children and asking the psychic on the phone when she’s “ . . . going to meet a rich dude.” They don’t drive new automobiles because they have long records of felony convictions for things like murder and polygamy, so they cannot have drivers’ licenses. Their primary form of entertainment, besides eleven hours of television a day? The WWF and scratch-off lottery tickets. Their choice of soft drink? Why, a refreshing Coke of course. (No one said these people don’t have exquisite taste when it comes to their selection of beverage!) Their favorite foods? Pork rinds and biscotti.5 Their biggest purchases are hydrochloric acid (to obscure the features of the people they kill), tango lessons, and boob jobs. These are the coveted consumers? Somewhere along the way, we have talked ourselves into the notion that their respective mean incomes of $23 a week (and that includes food stamps) is a vast sum because it is “disposable.” Unfortunately, the competitiveness of the New New Economy means that a business cannot totally ignore this demographic. “Indeed . . .” you might observe, “who can ignore this group of mostly hardcore drug users, who spend their nights hot rodding around in their cowboy boots, playing their rap music.” But there are economic considerations as well here. Some will have dollars. It is a known fact that most 18-29 year-olds will simply steal what they want.6 However, we cannot ignore the fact that they will, on certain occasions, steal money.7 And that money will have to be spent somewhere. The businessman will 5. The biscotti thing threw us for a loop. We still don’t understand that one. 6. 2000 Census: Youths, Jobs, and Lives of Crime. 7. Often off the cadavers of their latest victims.
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still have to know how to access this market. But what are the new rules regarding the youth demographic in the New New Economy, and how will it affect our way of doing business? To begin with, it is a fact that most 18-29 year-olds are either involved with or will be involved with the penal system at some point. This is irrefutable.8 Whether we can blame this on rap music, which we almost certainly can, is beside the point. The key is what will the young, jobless 24 year-old buy with the money from welfare (if he’s on the street) or from making license plates (if he’s on ice)? Well, the youth culture is a gun culture. If a businessman wants to sell widgets to young people, he should try to imagine his customer as a Blood or a Crip, or in more affluent communities, as one of the Menendez brothers. Finance will also be affected. Banks will have to stop extending credit as the bankruptcy rate spirals upwards.9 In fact, we would suggest that banks stop extending credit to everyone. But that is for another book. Financial institutions are waking up with a hangover from years of extending credit to people who have no business having it: young people. We are loathe to make a cliché about spending “like a drunken sailor,” but if the shoe fits . . . Especially the sailor part. After all, this is a generation that went off to sea, thinking that the romance of Moby Dick would be there to greet them. Alas, there was no great white whale. That is probably what makes this such a bitter group. 8. “Damn Kids,” Time, August 21, 2001, p. 34. 9. We have already begun to see this. Congress has joined with the credit industry to enact sweeping new consumer bankruptcy reform legislation with real teeth. In fact, the federal budget now allocates for the construction of Debtors’ Prisons to be placed on malaria-ridden, snake-infested islands. Some supporters think this is kind of a cool idea. Other experts have condemned it. As one critic has complained: “It’s a travesty. We are now building Debtor’s Prisons for 18-29 year olds just being born.”
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Disillusioned youth, returning from the ocean, with nothing to show for it but a sad story and a jaunty little sailing cap. Who, we suppose then, are we to judge? Wouldn’t you too turn to a life of crime and a mountain of debt in the wake of such malaise? If you take anything from having read this book, understand that the sea, the cursed sea, is to blame for this lost generation. And our growing credit crisis. And, technically, most hurricanes.10 There is one other reason to continue to keep some focus on this group—their growing numbers. 18-29 year-olds are living longer than ever, thanks to medical technology. There are currently 54 million Americans in this demographic. Every year, another 7 million people join the ranks of this group. By our calculations, that means in 20 years, there will be 194 million 1829 year-olds in the United States. Take a second and let that sink in. From a resources perspective, this has some ominous implications. Where will we put them all? But that’s for the pointy heads at the Think Tanks to deal with. Even the meager sum of money this growing group has, by their sheer numbers, adds up to enormous collective buying power. Certainly, there is something to be said for all these awful people buying things as a huge group. In the New New Economy, the idea will be convincing them to make purchases this way. If each member of a bunch of 18-29 year-olds pitches in $10, say, to buy your product, and there are ten of them, that’s $100 in your pocket. Nice change. Will they start to fight about who gets to use it when they get home? Sure they will. But that’s not your problem; it’s their problem. See how this works? 10. Understanding the Weather, Bill Skutch, Ph.D., Random House, 1987.
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THE MYTH OF THE YOUTH DEMOGRAPHIC
While hailed as the ultimate target demographic, a hard look shows that 18-29 year-olds are far more trouble than they are worth. While we don’t advocate shunning them completely, they are of much less value than conventional wisdom has told us in recent years. While they may have “disposable” money, it is usually a paltry amount. In addition, the members of this demographic have very little ambition. To the extent that they have aspirations, they are usually wicked, and little good can come of their corrupt plans. Here are some examples: * A member of the 18-29 year-old demographic assassinated Archduke Franz Ferdinand in 1914, causing the First World War, and ultimately, a worldwide influenza epidemic that, all- told, killed tens of millions of people. * An 18-29 year-old wrote the screenplay for Castaway. * 18-29 year-olds fight most of our wars. Think of what a happy place the world would be if they would just stop and there would be no more war. * Most of the people in this age group have no idea at all of just what “too little, too late” means. In the end, that’s all you really get from them.11 11. This is also why these people are such a huge disappointment to everyone who has ever tried to love them.
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* Most of the bodies put into the mortar of the foundation of the Great Wall of China were of 1829 year-olds. This was because the Confucian elders, who were very wise, knew that that was all they were good for mostly.
This group rarely assumes positions of responsibility and leadership. How many 18-29 year-old Presidents have there been? If you want to know more about young Americans, look no further than that David Bowie song. Try singing it on Kareoke night. People will hate you and throw garbage at you. If you take nothing else away from this book, let it be that.
30—39 year-olds: it’s the true greatest generation, stupid When we look at what comes after what the ill-begotten youth of America has wrought, we come to a point where demographics takes an interesting turn. As worthless and broke as the teens and twentysomethings are, the next group is a study in contrast. The consumers and, more precisely, producers, born primarily in the 1960s are truly the embodiment of virtue and economic viability. They are sophisticated, talented, hardworking, and most importantly: monied. They are the essence of the American dream, in that they have built this country through toil and sweat. Their temperance, good judgment, and virtue are now rewarded, and indeed, the whole country has benefited from their labor. There would be no
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New New Economy if it were not for their vision and struggle. These men and women . . . these grand, beautiful men and women . . . who have steered us into prosperity and peace, shall be the stuff of tale, monument, and song in years hence. Posterity will shed a tear as it recalls what these magnificent people have fought and sacrificed for so that all could enjoy the fruits of the land. “Yes,” will say the lucky few, “I knew them. Those glorious ones who took a small nation and made it a great one. I knew the 30-39 year-old demographic, and I saw with my own eyes the grandeur and splendor that was the beginning of the New New Economy, as I drank my refreshing ice cold Coca-Cola.”12 If you are one to suffer fools gladly, you might have heard that there is another generation that calls itself the “greatest” one. One famous chronicler has even written several best-sellers about these faux great ones. We will not be the ones to quibble with this. In fact, we are the first ones to congratulate those in their seventies and eighties for their accomplishments. We are quick to thank them for all they did through the years.13 Let us now get back to reality. What of this true greatest generation? Marketing to this group presents its challenges in the New New Economy. They have the money and the inclination to use it, but what do they want and need? To begin with, unlike the other demographics, this crew is not getting any dumber. Don’t try your usual flim-flam to court them. They 12. Which we have no doubt will be around for centuries to come! 13. Although, if you take a hard look on the map, you do have to wonder how it took them five years to beat two countries the size of Oregon. What were they doing that whole time?
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figure 6–2
yummmmmmmm!
will see right through you, mister. Also, this is hands-down the best-looking demographic. The men are especially handsome. (And not in a girlish, pretty boy way. In a rugged, Mel Gibson kind of way.) Expensive clothing? Their visual stunningness allows them to make anything, even off-the-rack clothes, look good. Sell them rule books? Don’t bother: This group writes its own rules. “Hey, then,” the businessman of the New New Economy may ask, “what do I sell them?” Well, first of all, hey is for horses. This demo is a daring group who will try new and exotic things. They will play a lot of polo, so sell them polo horses. If they don’t buy that, kill the horses and sell them horsemeat.14 14. “Horsemeat: It’s Not Just for Belgians Anymore!” Gourmet Magazine, May 3, 2000.
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They are also glamorous. When they smoke, they do it with style and grace. Sell them fashionably long cigarette holders and they will be yours. They are also kindhearted and charitable. They are on track to solve most of society’s ills. They only await the retirement and dying off of the complacent baby boomers to seize the highest levels of power. When that day comes, profound problems will be solved, disease will be cured, and we will be rid of the homeless.15 Until then, they will jet around the world helping people with missionary zeal. What do jetters need? Parachutes, oxygen, and magazines to read during their mercy flights. The trick for a company is to ask itself: What do the good people want? How can we cater to the generation that is already morally superior to all that has come before it, and yet will accomplish so much more? In fact, setting aside the profit motive for a while, the better question may actually be: What do we owe this group, as Americans and citizens of the world? Satisfy this query and you will have done what is right.
40—55 year-olds: the baby boomers This useless group of draft-dodging has-beens is fast becoming a bunch of drunks. Sell them booze and those little cocktail wieners and be done with it. These people are jaw-droppingly self-aggrandizing and stupefyingly self-absorbed. Our only hope is that the media will finally catch onto this. 15. Better that you don’t know how the “ No More Homeless Plan” is shaping up for now.
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65+ year-olds: accessing the bitterness Much has been written about how to access this demographic. Senior citizens are, after all, the largest growing demographic. To begin with, popular myths must be cast aside if we are going to get to the truth. This is an affluent group. There are no elderly in poverty. Although this group represents less than a third of the U.S population, it controls a whopping 70 percent of the net worth of U.S. households. A recent study by Packaged Facts shows that its aggregate after-tax income in 1998 was $994 billion.16 These stubborn old mules have been hoarding money for years. They have made a solemn vow with themselves not to part with their money. Identifying this crowd is easy. They and their families have lived through war and depression and they don’t trust anyone, and they really don’t trust your company or any of the overpriced junk it makes. And their assets are very liquid. This is because of all the things they don’t trust, they especially don’t trust banks.17 For many, the depression was a life-shaping experience. During those hard times, banks employed millions of young people who would labor in their money vaults for sixteen hours a day for Confederate scrip. Most of that money turned out to be worthless. This demographic still has vivid memories of their families making a run on the neighborhood bank trying to cash the worthless “currency.” They remember as their father 16. American Demographics, MarketingClick.com, December 1998. (This is actually real.) 17. Statistics actually show one exception to this. This demographic group does trust the Bailey Building & Loan. However, since most of this group does not live in Bedford Falls, most money belonging to the elderly can still be reliably found in their mattresses or under the a protruding loose brick by the stairs in the cellar.
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and older brothers would sit on the bank’s steps, with the “Out to Lunch Back in 5 Minute” signs on the doors. “Those silly dupes might as well still be sitting there, waiting to cash their money” the modern senior citizen cynically says to himself. While the creation of the Federal Deposit Insurance Corporation (FDIC), with its outlawing of Confederate money, has made this scenario impossible today, the scars still exist for this resentful dying mob. A generation has been imbued with a hard-core skepticism that is not easy to penetrate. While the painful memories of economic hard times and lost wars are the stuff of their youth, their adulthood has treated them little better. If most old people are embittered, they have every right to be. Life has passed most of them by. They know this. What’s more, their twilight years offer no real hope of happiness. This has not been totally lost on business. For instance, most marketing to the 65+ year-old demographic is seen every night at 6:30. Advertising time on the nightly news is coveted by businesses that sell primarily to older people. It is the purveyors of crèmes, ointments, tonics, and liniments that have found a home on these broadcasts. The world is a horrible place and the news gives them the world. When the news gives today’s grisly headlines to them, it merely reinforces what they already know. It is a way for them to say, “See . . . I told you . . . it never stops,” before they pick up their newspapers to search for typographical errors that will become the stuff of acerbic letters to the editor. Nonetheless, this has largely been an untapped market. Experts say that this group stands to bequeath $10 trillion to their repulsive boomer children. The key in the New New
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Economy is to access this group fast and get their money before the heirs do. You have to be in and out quick, because some of these people do retain a middling ability to reason. This can be done mostly by cultivating and playing to their bitterness, although their ignorance, bigotry, paranoia, and universal ill health are also ripe for exploitation. Where, for instance, do we look for them, other than in front of their TVs watching the news? Where do the bitter retired people go while the rest of us (particularly the 30-39 year-old demographic) actually work? The elderly are far more like ants than they are willing to admit. They congregate together, especially where there are free things to be had. They huddle together and complain about everything, never actually listening to one another. Why do they huddle? Well, evolutionary psychologists now tell us that until modern times, old people stuck together for protection against wolves.18 Whether they realize it or not, the fear of wolves is your ticket in. Whatever you sell, couch it in terms of wolf-protection. Whatever unconscious motivations they may have, old people know that the weather hasn’t been the same since we went to the moon. In fact, old people talk about the weather. A lot. Remember when Mark Twain said that people always talk about the weather, but no one ever does anything about it? People missed his point: He was referring to old people. He was complaining about how old people always talk about the damn weather. The smart company knows what Twain knew: Tell them your company protects them from the weather and 18. Evolutionary Geriatric Psychology: Darwin and the Wolves, Richard Lucas, Ph.D., University of Illinois Press, 1999.
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the moon and you will have a customer for the rest of their waning lives. Feeblemindedness is another area in which to maximize. There is the time-tested technique for selling things to people who don’t need them because their brains are not functioning properly. Along the same lines, however, is another method that is useful. Entice them through a reward system to buy your product. Instead of green stamps or whatever, offer to tell them where their keys are if they buy from you. In addition, though most old folk are rich, many are thoroughly demented. They will tell you long stories about things, real or imagined, that happened long ago. Many will also tell you that they were once famous. Most of this type will think that they were Napoleon. One other method is to exploit their false sense of nostalgia. Offer lines of products that are “unchanged” since this group was a child. Mention the fact that these items have remained essentially the same since 1919 . . . in every sense. Remember, in their day, there was no FDA, or Consumer Product Safety Commission, or anything remotely akin to what we refer to as “standards” today. Market flour “with beetle eggs.” If you sell meat, recall that we learned in Upton Sinclair’s The Jungle that most processed ham in olden days was actually only 18 percent meat per se.19 If you are a major seller of automobile tires, you emphasize the fact that your product utilizes the same safety standards as it did 80 years ago, and . . . well . . . in some cases you wouldn’t even be lying. The goal is to stress that there was a period when things were much simpler. You want to remind them of a period when corporations had no qualms about hurt19. And never you mind where the “meat” came from.
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ing and poisoning their customers without actually reminding them that corporations back then had no qualms about hurting and poisoning their customers. In any event, while accessing this group will be hard, it will pay for itself in spades. These people have money to spend, if only after its been pried from their cold, soulless hands. Don’t let your company be left behind.
INCOME AND MARKETING
Age is seen as a major factor in marketing, but what about income? Finding a group’s income can reflect their likes, dislikes, hobbies, professions, and other aspects of their lifestyle. Most important, it tells you about the potential discretional income of your target group. Remember why Willie Sutton robbed banks? That’s right, because he was a thief and a cold-blooded killer. And if Willie Sutton had access to today’s demographic information as it relates to income, he’d still be a miserable thief and a cold-blooded killer. Because people don’t change. And that is the point of income-focused demographics. Oh, they will tell you they will change. They will go to their meetings and their rehab, and they’ll be fine for a few weeks. They will come home full of promise and remorse and you’ll forgive them. But eventually they go right back to being thieves and cold-blooded killers. And in the end, that’s what demographics is all about. It’s a world of thieves and coldblooded killers and all we can do is live in it.
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advertising G ETTING A P ITCHMAN
The New New Economy will mean new rules for advertising as well. There is no substitute for advertising your wares to many people through mass communication. The days of the traveling salesman promising the world in speeches through a bullhorn from the back of a truck and going from town to town are over, AMWAY notwithstanding. Advertising continues to reach new levels of sophistication, and it’s no longer good enough to be just louder or more repetitive to get attention. You need a pitchman. You must find a person to speak for you whom everyone likes, finds credible, and trusts. When William Shatner started shilling for Priceline.com, all the rules changed. Here was an actual celebrity, adored and respected by millions, putting his own credibility on the line to endorse a product. Advertisers watched as people who don’t even like Star Trek or
R emember why willie
cartoons were flocking to Priceline.com
sutton robbed banks? that’s right: because he was a thief and a cold-blooded killer. it’s a world of thieves and cold-blooded killers and all we can do is live in it.
to buy whatever it was Priceline.com sold. The business world realized that consumers were doing this not because Priceline had anything worth buying to sell, but rather that this guy who played an alien for three years on television was telling them to do it. Certainly celebrity
endorsements had occurred before. But no one, for instance, really believed that Perry Como used Brylcreem. They just listened to the commercials because they loved his melodies. That “little dab’ll do ya” jingle was fine, but Perry Como couldn’t pull
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off the sale with sincerity. That’s why Brylcreem went belly-up. Shatner makes us believe, and Priceline lives. C REATING B UZZ
Thus, a new paradigm was born that would become a fixture in the New New Economy: using glamorous Hollywood to create the all-important “buzz.” Making a marketable brand name through buzz, or “hype” (short for “hyper”) is the next step in marketing evolution. Produce buzz and they will visit your Web site and buy your product. Buzz is important because it sells things that people otherwise would not buy. An early example of buzz might put this into perspective. In 1802, the United States imposed the Alien and Sedition Act. This basically said that if anyone criticized the government in any way, they would be imprisoned indefinitely. The President knew this would be a hard sell, but he came up with an idea. For weeks before the law was enacted, he brought out billboard and newspaper ads that said “A&S Is Coming.” People had no idea what this was, but as time went by, they became more curious. For a while, they forgot about their short life expectancy and miserable disease-ridden lives of indentured servitude because the promise of something better was in the works. After a couple of months, “A & S” was all anyone could think about. Clubs were formed to encourage it, people were saving money to buy it, and artists were painting pictures of what it might look like. By the time the act was enacted and proclaimed as the law of the land, everyone wanted to be a part of it. Newspaper editors, enemy sympathizers, and dissenters of every stripe, who would have been calling the ACLU or going underground or waving
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copies of the Bill of Rights not two months before, now LOVED this thing that would send them to jail. Why? Because the buzz made them feel special. You too must make people feel special if you want to sell them your product.
advertising industry example Bob’s company makes widgets. Bob hires Nicole Kidman to say she uses Bob’s Widgets. Guys think that if they use Bob’s Widgets, she will like them because she likes Bob’s Widgets too and maybe they’ll get to sleep with her. Nicole gets paid, Bob sells his widgets, and the guys who buy them get to live in Dreamland, U.S.A.20 Everyone wins.
*
*
INDUSTRY QUIZ
*
*
Q: angry ad agency proposes a commercial with a
You have a denture cream company. Your hip, young,
celebrity endorser. It is suggested that gangster rapper “Hood AK” be used as your pitchman when he is released next month from Riker’s Island. Do you hire him?
A: graphic groups, and his stage/screen presence and No. Hood’s credibility and fame transcend demo-
charisma make for a winning endorsement combination. However, Hood’s posse is bad news. The extra security that you will need for your commercial shoot will cost your company an arm and a leg. Then you’ll become irritable and just take it out on your poor, overworked secretaries. Then you’ll wonder why you go through so many 20. Idiots.
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assistants and realize that the problem is not them, it is you. You are a busy person. You don’t need to get bogged down in all that soul-searching. Stick with Florence Henderson. And ask her to leave her posse at home.
product placement Traditionally, products like Coke have been placed innocuously in movies and television shows. You may see a main character holding a bottle of Coke, perhaps standing next to a Coke vending machine, carrying on a conversation with other characters beneath a Coke sign, or even wearing Coke-related clothing and merchandise. In the New New Economy products like Coke will find expanded placement opportunities in other medias and mediums. For example, you may see newspaper articles talking about the health benefits of a product like Coke. You may see non-Coke advertising with celebrity models holding cans or bottles of Coke. You may send a greeting card with a Coke-related joke or theme. Fictional characters in best-selling novels will drink a Coke. Authors on book tours or giving interviews will never been seen out of arm’s reach of an always refreshing Coke-a-Cola.
product placement industry example Bob asks Joe what a refreshing alternative to coffee might be for them to enjoy during their morning break. Joe suggests an ice cold, always refreshing Coke-a-Cola.21 Together they sing, “I’d like to teach the world to sing, in perfect harmony. I’d like to buy the world a Coke and keep it company.” 21. Good choice Joe!
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the changing face of retail: the rise of the super-mall The age of the mall arrived in the 1970s and 1980s. Giant retail complexes changed how we lived and shopped. As downtowns withered, malls provided a convenient hub of large and small businesses that fulfilled just about every need we had. In the 1990s, larger malls with the best magnet stores and the largest number of attractions predominated. Communities today have seen a sort of centralization where the big get bigger. The huge Mall of America in Minnesota was once an oddity to be gawked at like a freak. Today, there is hardly a metropolitan area with more than 50,000 people that doesn’t have one or two single giant malls, complete with festive amusement parks and the lovable carnies who run them. And now we stand on the threshold of a newer and even more advanced generation of malls: the Super-Mall. Developers are sinking hundreds of millions of dollars into this next level of shopping. The mall once thrilled us with her convenience, and the giant mall enraptured us with her size. The Super-Mall will go much further, because it will literally float out to sea. The Super-Malls now under construction are set to completely replace the giant malls, and virtually every other form of store for that matter. Already, experts predict that these behemoths will perform the role of everything from the tiny convenience store to the Wal-Mart type discount operation by possessing the one feature those do not have: nautical mobility.22 22. “The Rise of the Supermall,” The Wall Street Journal, March 5, 1998; “The Rise of the SuperMall,” BusinessWeek, June 29, 200; “The Rise of the Supermall,” Tiger Beat, May, 2000.
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“Our grandchildren will never know the experience of landbased shopping that we take for granted today,” notes George Faris, a mall development consultant with HHS Enterprises. “All of their shopping, every bit of it, will take place at sea. They will probably have to laugh as they picture us old-timers going down to the corner store for ice cream. Everything they want will be right there for them—in a huge boat. Relatively, we live in primitive times. I’m sorry . . . your average 7/11 store may be able to do a lot of things; floating off to sea for long periods is not one of them.” Indeed, industry giants are already lining up to be part of the oceangoing shift in retail. Kmart predicts that the trend will affect sales dramatically if it doesn’t act fast. One insider there observed: “We are realizing that ten years from now, consumers will be going to these water-borne Super-Malls for just about everything. To be honest, we don’t blame them. If I can buy a lawnmower or hammer on a giant, oceangoing vessel, versus my local Kmart, I’m probably going to the giant, oceangoing vessel. Who wouldn’t?” Municipalities favor the idea too. City planners rejoice at the concept that with all the stores in America permanently out at sea, new space is available for homes, parks, schools, and just plain elbow room. At this point, allow us, the authors, to play devil’s advocate. Contrary to the universal praise this idea has received in the business press, we do feel the need to call attention to some problems that we foresee here. To begin with, there are problems inherent in any venture that makes people go to sea for extended lengths of time. Remember, these are not pleasure cruises; they are just big malls on the water. They are intended
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to travel the sea lanes for indefinite lengths of times, perhaps years, with whoever is on board at the time of departure. As one designer described it, “We hit the ports of call very briefly . . . minutes in fact . . . to pick up customers. Then it’s off to sea for who knows how long. We have a lot of geography to cover. If you are stuck on board, that’s it, you are here for the duration.” None of the dozens of Super-Malls being designed today make any provision for berthing anyone, let alone thousands of people for weeks on end. A teenager going to one of these malls for a pair of jeans will be separated from her parents and school, often for months. Employers will lose their employees indefinitely as well. Older people also make up a large part of the customer base for malls. They may also be discouraged. This is because the mall will require a certain number of sailors to run her. Historically, sailors have been disproportionately homosexual compared to the rest of the population. Old people have a much lower tolerance for having homosexuals around than young people and may decide to stay at home. There are also legal problems. For the 1 percent of the time they are at port, traditional Law of the Malls governs within the 12 mile U.S. jurisdiction. But once they are out in the ocean, the Law of the Sea may or may not apply. And whose laws? King Poseidon or King Neptune? Maritime law professor Mike Jarvis of UC Hastings Law School notes: “I have researched this thoroughly. As I understand it, there is nothing to stop a mall manager from making himself a Lord High Admiral of the Seas once they have left our waters. Once that happens, you could have some idiot with no more than an associate’s degree in absolute
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control of thousands of tired, hungry people who just want to go home.” And what about insurance? It is hard enough to get affordable coverage for sailing to the end of the world and falling off. A vast fleet of Super-Malls with no particular destination will not find access to this kind of protection any easier to acquire in the coming years. The tight consolidation of so many stores in one place has some disadvantages in and of itself. While a mall the size of several city blocks makes for an impressive extension of economic influence around the world, this also makes her vulnerable. The availability of cheap, nuclear-tipped missiles to countries like Iraq and Nova Scotia make these shopping paradises potential sitting ducks. Though proponents will tell you that these voyages will cut down considerably on the 10 to 15 percent shoplifting losses suffered by retail businesses each year, what they fail to raise is the issue of all the pirates who will be drawn to the ships and will take the place of sticky-fingered kids. And while pirates, thanks to their colorful garb and eye patches, are easy to spot, they are also more quick-tempered and violent than traditional shoplifters. That presents a brand new type of security issue. There are myriad other potential problems. What if they stick the Orange Julius Store by the engine room? No one will want to go down there with all the oil and grime. How will people get their Orange Juliuses? Moreover, no matter where it is placed, the Food Court raises another specter. Her wafting smells will almost certainly attract wandering sea monsters. And even if the sea monsters don’t come, seagulls certainly will. Malls always have a lot of beauty parlors. Women who come out of the salons will have their nice new hairdos crapped on by all the seagulls.
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Finally, there is the simple issue of geography. Super-Malls are designed only for access to deep-water ports of call. Towns and cities in places like Kansas and Missouri will be quick to rid themselves of businesses, like everywhere else, but they are located far from where the Super-Malls are going to be. We foresee that these shoppers will find themselves out of luck. This portends further decline of the Midwest, as people are unable to go thousands of miles easily to get to the Super-Malls, like people near the coasts. We are confident that these are solvable problems. In fact, we concede that the idea of the Super-Mall as described above is too good an idea not to do. We simply would point out that taking all of America’s businesses en masse and sending them on endless voyages is not quite as easy as it might appear at first glance.
interview with an old person We recently found a member of the elderly population willing to speak out as a voice for his generation, to explain what it means to be old. AUTHOR:
How old are you?
OLD PERSON:
I’m 87 years old. My wife was 84 when she
passed away. AUTHOR:
Well, you certainly have lived through a lot.
OLD PERSON: AUTHOR:
long life?
Yes. Yes I have.
What were some of the highlights of your very
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Well, I was a little boy during the Great
OLD PERSON:
Depression. AUTHOR:
What was that like for you? Your family must
have been very affected? OLD PERSON:
Well, not really. We were living in
California at the time and my father owned a rather large farm, so we lived off the land for the most part and sold produce, so we got by rather nicely, all things considered. AUTHOR:
How about the war? Were you in World War II?
OLD PERSON: AUTHOR:
I did serve in World War II, yes.
And did you see much action? What was that
like? OLD PERSON:
No, I didn’t see any action for the most
part. I was a cook. AUTHOR:
In what theater?
OLD PERSON:
No theater really. I was stationed at Fort
Pendleton. Mostly fed the recruits and the staff sergeants. AUTHOR:
Bet you peeled a lot of potatoes.
OLD PERSON:
No, not really. I did trim the fat off meat
though. Sergeants in those days liked their steaks pretty lean. AUTHOR:
Healthcare must be a big concern now that
you’re older.
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OLD PERSON:
No, not really. My health is quite good and
my family all lived well into their nineties, sharp as tacks. AUTHOR:
You must miss your wife.
OLD PERSON: AUTHOR:
Yes.
What do you do now to keep yourself active and
busy? What sorts of things do you like? OLD PERSON:
I play a little golf, some poker with my bud-
dies, go for walks, that sort of thing. I like pie and an occasional candy. AUTHOR:
So, what else do you like?
OLD PERSON: AUTHOR:
I like my nieces.
Oh, that’s so sweet. Do they visit often?
OLD PERSON:
No, I don’t think you understand. I like my
nieces.
knowing your customers No matter what you produce or what service you provide, you have to know your customers. They are the ones who pay the money to get the goods and services you provide. If you provide your goods and services to people who are not “customers,” you will not accomplish much of anything and you run the serious risk of walking away from the transaction looking like a damn fool. This is what the New New Economy is all about.
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The more you know your customers, the better the chance of your being able to provide him or it exactly what they want. Obviously, if you are a big company, you cannot know each and every customer personally. Nevertheless, a comprehensive business plan involves knowing customers no matter how large the institution is. Do you think the CEO of General Motors knows all his customers personally? Of course not. GM has hundreds of customers. He can’t know everyone, so he does general marketing surveys to find out what people in general need. (That’s where the “General” part of General Motors originated.) When he finishes those surveys, he picks up the phone in his office and calls down to the guys on the assembly line and tells them, “Boys, the people want red cars. Make us up a batch of red cars.” (This is, of course, a simplistic D o you think the ceo of general motors knows all his customers personally? of course not. gm has hundreds of customers.
example to illustrate a point. The cars could, for example, be any one of a number of colors and in some cases, he might order a batch of trucks instead.) GM is thus responsive to the needs of customers in a way that other companies, still mired in the New Economy, are not. Like GM’s
slogan says: “When General Motors talks, people listen...but General Motors listens back.” Indeed, that rather succinctly describes the difference between companies on the leading edge of the New New Economy and those that are not. If Toyota and DeLorean and Kia are going to ever sell cars in this country in the New New Economy, they are going to have to listen to their customers. They need to remember that God gave them only
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one mouth and two ears for a reason: Because He giveth and taketh away customers. If you take only one thing away from this book, let it be that.
knowing your customer industry example Bob’s company produces books about ethics. He has decided to sell them to personal injury lawyers. Does Bob know his customers? We think you know where we are going with this one.
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C H A P T E R
7
total quality a v o i d a n c e tell quality that i will not drink with it. — ernest hemmingway
*
*
*
eliminating quality ONE OF THE PROBLEM AREAS
that business in the New New
Economy will have to deal with is the overabundance of Quality, Quality Training, Total Quality Management, and things of that ilk. If you avoid Quality, you do not have to spend precious time and resources managing it. This may sound counterintuitive, given the last three decades of preaching the Quality mantra, but it takes bold and visionary men to buck the trend. Guys like Martin Luther, for instance, invented a whole new religion, not by conforming to old ideas but by coming up with a plan so different, so innovative, so downright crazy, it had to work. We are men cut from the same cloth. Consider these our 95 Theses against the practice of Quality.1 1. We don’t actually have 95 Theses here, but keep in mind, Martin Luther really didn’t either. Numbers 45-76 were repeats of earlier theses, just worded a little differently. And about a dozen were more like helpful household hints than religious proclamations. See, “Don’t Cry Over Spilled Wine: That Dress Can Be Saved! and Other Reasons I’m a Protestant,” Martin Luther, Wurtzberg, Germany, 1612. 135
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* Quality is like an anthill. Ants toil their whole lives, working for scraps and the chance to maybe someday mate with the Queen.
☞
Z E R O Q UA L I T Y T I P I n the midst of yet
another quality management circle meeting, close your eyes and imagine yourself on a small island where all you have to eat is coconuts. now imagine yourself as the coconut.
Like that’s going happen. There are millions of ants in one of these anthills and the Queen is going to pick you? Right . . . and we’re going to make it with Nicole Kidman.2
Remember, there’s only one Queen and only one Nicole Kidman. If you take nothing else away from this book, let it be that. * Quality is a leech sucking the lifeblood out of you, your co-workers, your company, your friends, and the New New Economy. Which is why the Koreans and the Soviet Union are gearing up to kick our butts. * Quality is a Grimm’s fairy tale, where all the nice children get eaten by witches. Everyone dies gruesome and horrible deaths, and there is no happy ending.3 * Quality needs a sound thrashing now and again. Spare the rod and spoil the child. Remember, this is going to hurt you more than it’s going to hurt Quality. 2. Nicole Kidman appears really, really naked in Eyes Wide Shut. 3. Germans . . .
total quality avoidance
* Quality comes in like a lion and goes out like a lamb. * Quality is a crutch. Not a rubber crutch either. If it was a rubber crutch, it would be funny, and Quality is anything but that. Quality is a crutch for people who do not have the courage to look their customers straight in the eye and say, “caveat emptor, babe.”4 * Quality is for people without courage. It’s for the “play it safe” types all obsessed with so-called “repeat business.” Let the bridges of quality burn. That might seem a bit harsh, but we’ve always found it easier to burn bridges than to build them.
*
*
QUALITY QUIZ
*
*
Q: can make it with Nicole Kidman or obsess about You’re at work when a situation comes up where you
Quality. What would you do?
A: Make it with Nicole Kidman.
5
* Quality is the planter’s wart to a whole generation of corporate foot soldiers. Planter’s warts hurt, and sometimes they have to be surgically removed because they’ve become the size of small dogs. You ever try to 4. Caveat emptor = let the buyer beware. This saying was really hip to use in Roman times and was considered very funny. But we guess you had to be there. And you can’t be there. Unless you have a time machine. 5. Idiot.
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Numbers higher than 3 . . .
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3
Quality Sex
1
2
Sex
0
138
Per hour
Quality
figure 7–2
time spent thinking
walk with a small dog in your shoe? Yap yap yap, but don’t get me started. * Quality affects profits inversely. The more you have of it, the less you profit, both personally and as a corporation. Over 63 percent of CEOs in a recent survey mentioned Quality as a factor driving to greater profits.6 In 2000, over half of those who had taken the survey found themselves unemployed as a result.7 * Quality can’t compete with sex. The average person thinks about sex every seven minutes. The average 6. From “If It Ain’t Broke, Don’t Fix It; If It Is Broke, Still Don’t Fix It,” Quality Avoidance Monthly, June 2000. 7. Of doing quality stuff, not from taking the survey.
total quality avoidance
person thinks about quality never. You really think people care more about Quality than sex? What planet do you live on? * Quality is everywhere. Quality this, quality that. Blah blah blah blah blah.8 We would refer to this as the broken record of Quality, but a whole generation of today’s youth has no idea what a record is. They use CDs.
industry example Bob works for your company. He speaks often of the need for quality. Bob is like a broken record.
8. Blah blah blah blah blah, 2/e, Simon & Schuster, New York, 1995. Used with permission.
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9
mr. quality man To help us illustrate just how stupid Quality can sound, we would like to introduce you to our little Quality friend, Mr. Quality Man. Mr. Quality
☞
Q U A L I T Y w hen
T I P
asked, your plan for implementing quality improvement should begin with the phrase, “first, we get a time machine . . .”
Man is fictional (like the Pillsbury Doughboy, that peglegged guy in Moby Dick, or Vidal Sassoon), but his ideas are nonfictional (like Al Gore or Al’s father
Gore
Vidal
or
Gore’s father Vidal Sassoon). Mr. Quality Man is well steeped in the business virtues of all the latest quality management principles. Mr. Quality Man smokes a pipe. 9. See what this quality stuff leads to? Anarchy . . . pure and simple.
total quality avoidance
M R . Q UALITY M AN S AYS . . . MR. QUALITY MAN SAYS:
You should listen to your cus-
tomers. They add valuable insight to better your products and improve your services, and you can increase shareholder value by incorporating them in the Quality Cycle. Remember the old maxim, The Customer Is Always Right! ZERO QUALITY DICTATES:
Go into your nearest mall.
Look around at all the fat people in their cheap shoes pushing shopping carts. This is Mr. and Mrs. Joe Sixpack. They are your customers. Good lord. Do you really want any of these people making any decisions that have any bearing on your business? In fact, do you even want to be around these people to begin with?
quality and the law Lawyers are always telling companies that if they take too much quality out of their products, they will get sued by some guy.10 Lawyers always tell you what to do. We don’t know about you, but that is not what we pay them for. Now, you may believe that the lawyers your company hires are there to help you, but if you believe that, you also probably believe in Santa Claus, that we put a man on the moon, and that someday you’ll make it with Nicole Kidman. Lawyers also will tell you that lawsuits will not go away just because you ignore them. In fact, it is our experience that 10. Quality is a jealous mistress.
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anything will go away if you ignore it long enough. Here are two examples; 1.
Lawsuits
2.
Uranus
See? Lawsuits top the list. Now you know what to tell the lawyers.
the language of quality Quality Avoidance is not a management fad; it is a paradigm with which to reengineer your management infrastructure. To prove your immersion in the finer points of QA and to further confuse your co-workers, fling around the following acronyms, buzzwords, slogans, and bumper sticker sayings with abandon: Take Your Stinking Paws off Me, You Damn Dirty Quality! Care enough not to care about quality. Zero Quality—More Rock, Less Talk. “Quality nevermore . . . Quality nevermore . . .” quoth the Raven. Join the ZQ Team. There is no I in Qualitylessness. Lifting the fog of quality requires heavy lifting and a steady hand. Sigma Six—Sigma Five done one better!
total quality avoidance
Quality Free Is Me! Quality Schmality Bality Doo.
quality industry example Bob owns a tuna factory. He puts up a sign that says, “Employees are not our most valuable resource. Tuna is.”
quality by accident You might think that before any serious Quality Reduction can take place, you need to draw out a detailed implementation schedule, create Gantt charts, assign roles, and allocate resources. You might also think that you need Venn diagrams and some fancy new clothes because you’re the King of Siam. In fact, Quality Reduction is as easy as tying a rabid dog to the main receptionist’s desk. No one, but no one, gets anything done with pets around.
creating a formal dress policy A formal dress policy (FDP), strictly enforced, is guaranteed to drive out your best, most qualified people.11 Time that would otherwise be productively spent can now be used for useless changes of clothing throughout the day. Women will no doubt be offended at having to wear evening gowns with long trains while trying to sit at cramped workstations. Assure them that it makes them look pretty and feminine, but remind them that you still take their work seriously. Tell the men that they look like James Bond. 11. To really drive these employees insane, include a formal dining policy in the lunchroom, penalizing workers for misusing the sauce spoon or the marrow fork.
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When some guy says, “I’ll have my vodka martini shaken, not stirred,” laugh and pretend that you’ve never heard that one before. Then give him a raise and increase his responsibility tenfold, because this man has no concept of quality. He’s a keeper. M R . Q UALITY M AN S AYS . . . MR. QUALITY MAN SAYS:
Monitor customer service calls
to ensure a high level of quality assurance. The collection and analysis of customer data is an invaluable way to maintain lifelong relationships with customers. ZQM DICTATES:
Forget listening to a customer prattle on
about how this doesn’t work and that’s broken and how they’ll never do business with your company again. Instead, monitor your employees’ phone calls for juicy tidbits about their personal lives. Then play the best ones over the loudspeaker.
quality industry example Bob owns a clock company. Joe owns a school. One day, Joe’s clocks break and Joe tries to buy some new clocks from Bob. Joe’s students hate being ruled by the clock and their precious childhood is at stake. Joe’s students know that accurate timekeeping is just the beginning of their descent into the hell of the rat race. See how dangerous Quality can be?
80/20 rules The 80/20 Rule is an old business maxim, applied liberally to numerous typical business situations. For example, it is often said that 80 percent of your profits come from 20 percent of
total quality avoidance
your customers, or that 80 percent of your problems come from 20 percent of your products. In the world of Qualitylessness, the 80/20 Rule takes on new and unexpected meanings. Rethinking the old 80 percent of your profit comes from 20 percent of your customers allows you to systematically eliminate 80 percent of your customers. You can easily do this over the phone. Use phrases like, “You, sir, are no longer our customer.” Once you have winnowed out the deadbeat 80 percent, apply the rule again to your remaining 20 percent. Remember, it’s a rule, so it has to be right and needs to be followed blindly. You will know you are successful when you have reduced customer count to one really, really rich customer. M R . Q UALITY M AN S AYS . . . MR. QUALITY MAN SAYS:
To derive the maximum Total
Quality Value of a product or service, divide the square root of the Return on Manufacturing Sales (derived by subtracting the Total Cost of Sales from the Total Cost of Manufacturing minus Overhead) by the Cost of Human Capital (Total Period Wages minus Taxes and Benefits), multiplied by the Present Value Cost of Long-Term Capital (at an assumed interest rate derived from a moving average of a 10-year floating interest rate pegged to operating companies’ local currency). Use this number to index the present rate of inflation against the present Cost of Quality and multiply by 100 to reach a Total Quality Percentage. Use this number in evaluating the Total Quality Value. Operations yielding a percentage greater
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than 100 have achieved positive Quality outcomes. The formula looks like this: <
> ZQ DICTATES:
It is easy to get stuck on a formula, but the
great men in history didn’t need a bunch of formulas telling them what to do. You can bet that the only formula Alexander the Great was stuck on when he conquered the Alps and the Thoracians was KICK BUTT.
implementing a quality-free workplace Turning off the spigot of quality is no easy task. Here are three tried and true methods for creating a quality-free workplace. 1.
Hiring Quality-free people is hard. When interviewing job applicants, shift uncomfortably and avoid looking at them when they talk about their previous work experience. If they ask if there is a problem look at your watch and say, “It’s just that you look like my ex-wife . . . ”
2.
When your supervisor calls a staff meeting to discuss new quality initiatives, show up in a fake mustache and affect a slightly foreign accent. The idea here is to shift the conversation away from Quality. When people ask you why you’re doing it, look down and say, “It’s just that you all look so much like my ex-wife . . . ”
3.
Being Quality-free means keeping your workers off balance. Learning how to fake epilepsy is invaluable. When
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you come out of “a seizure,” turn to the first person you see and say, “My God . . . you’re my ex-wife!”
the obligatory “sports provides lessons for business” section Comparing sports and business has, like poetry, gone from being high-brow art to low-brow, churn ‘em out pulp fiction. An endless stream of meaningless titles with obscure antecedents from even more obscure “sports” figures feeds an increasingly hungry Sports Metaphor Book Industrial Complex. Our recent survey found over 75 such books, including Football Is Like Business and Tennis Is Also Like Business and Soccer Is Like Business Too . . . but Slower and More Boring.12 In fact, business is business and sports are sports, and never the twain shall meet. This might lead one to conclude that indeed, it is poetry that
?
Know u o Y d i D
p oets often moonlight
writing metaphors to earn extra money!
ought to be providing the metaphors for business, what with poetry being in the actual metaphor-providing business. However, since very few poets get the “big bucks” (and when was the last time you saw a poetry slam on ESPN?) no one takes them seriously anymore. The poet George Will, in his best-selling book Men at Work, The Craft of Baseball,13 penned that “Americans love a lot of things,14 12. And publishers wonder why they’re in such financial trouble. 13. Men at Work: The Craft of Baseball, George Will, Harperperennial Library, 1991. 14. Including Coke and Nicole Kidman.
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but most of all, they love badminton.” For the average “shuttlecocker,” as those in the know about badminton call themselves, the parallels between shuttlecocking, life, and business are all too readily apparent for people desperate to turn anything sports-related into a metaphor.
B A D M I N TO N
Badminton also develops character, because it takes a great deal of courage to play. For example, we recently overheard this conversation between men at a cocktail party: GUY AT COCKTAIL PARTY #1:
When I was in high
school, I was on the football team. GUY AT COCKTAIL PARTY #2:
I was on the badminton
team. GUY AT COCKTAIL PARTY #1 AND EVERYONE WITHIN EARSHOT:
HA HA HA HA HA.
L ESSON N UMBER O NE
Badminton is often referred to as the “fastest of all games,” requiring participants to be exceptionally agile and fleet of foot. Speed, whether in a well-placed spike or in a straining sprint across the court, is the one inescapable essential element of the game. Which leads us to our first lesson: Speed is the most important thing. Remember the words of the poet Henry David Thoreau in On Walden Pond, “It is not whether you win or lose as long as you do it quickly.”
total quality avoidance
L ESSON N UMBER T WO
The poet Emily Dickinson once said, “There is no I in team.” Well, there is no I in shuttlecock either. We tried substituting an I in shuttlecock for another vowel and came out with a word that, unlike shuttlecock, was not ambiguous in its profaneness.15 There are twenty-six letters in the English language and only four in team and only nine unique letters in shuttlecock. That leaves lots of letters out of lots of words. Therefore, lesson number two is: Increase your vocabulary, but start by learning all your letters. People in management are expected to know all their letters. We shouldn’t have to tell you this, but here we are. L ESSON N UMBER T HREE
The serve in badminton is the crux of the win. Whether it is deep, high, and to the opponent’s backhand or hard and straight at their head, a people in management are expected opportunity to score an ace or to know all their set up a smashing spike at the letters. we shouldn’t net. Which leads us to lesson have to tell you this, number three: Good service but here we are. good serve gives you the best
always wins. Part of the reason
the poetry industry never took off in this country wasn’t because they didn’t have a good product. It was because 15. This last sentence is a lot like Doonesbury. You read it a couple of times and you still don’t quite get it . . . but you laugh because everyone else does. Hell, we don’t get it either.
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the service was so lousy. If you have to wait an hour for a poem and then you get a rude teenager who only gives you half the poetry you ordered and flubs the whole iambic pentameter thing, you are not going to go back. If poetry had been run like Wal-Mart, today we would all be speaking in rhymes.
L ESSON N UMBER F OUR
Winning in business is usually defined by the bottom line. You make money or you don’t. Your market share grows or it doesn’t. You can attract talented management or you can’t. Your share price rises or it doesn’t. You’ve either done your homework and paid off the right government officials to look the other way or you haven’t. Badminton, on the other hand, is much more complex. Over a series of volleys, play can change drastically, leads shift like sand, both Read more vampire
drama and tension build to a
books. if you forget to do this, use one of those little yellow post-it notes and it will help you remember.
crescendo. In the end, yes, there is a winner and a loser, but both combatants emerge from the match with their lives forever inexplicably and irreversibly changed. While on
the other hand, business is really no big deal. Lesson number four is: If you take nothing else away from this book, let it be that.
total quality avoidance
L ESSON N UMBER F IVE
Badminton is often played without line judges. In fact, there is very little judging in badminton. This is because badminton players know the Biblical stricture: “Judge not, lest ye be judged.” That makes for good poetry, but it begs the question of whether badminton will last. Poetry didn’t last. The question is: Will your business? Have you planned for the future? We hope so: There’s a New New Economy coming, and anyone caught playing badminton instead of running their business is going to be judged “out of luck.” L ESSON N UMBER S IX
Always listen to your coach. That’s what the best players in badminton always say and you can bet the ones who do are the big winners. In business, it’s important to listen to all of your coaches. Listen to your lawyer, your staff, your consultants, your cousins . . . everyone. Just don’t you ever, ever, ever turn your back on a single one of them. Julius Caesar said it in poetry 10,000 years ago, and we couldn’t agree more: “I wish I hadn’t turned my back on anyone.” His last words were: “And you should learn from this, Brutus.” And lesson number six is that you should learn from this too. L ESSON N UMBER S EVEN
Understand the down side of the game. If it were perfect, they would call it “goodminton.”16 In that vein, you should understand that business has its dark side too, or 16. You laugh, but it’s true.
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else it would be called . . . something . . . not business though . . . although we are not sure what. The point is, you should read a lot of vampire books to help you get into the mindset of evil. In fact, that is lesson number seven: Read more vampire books. If you forget to do this, use one of those little yellow Post-It notes and it will help you remember. L ESSON N UMBER E IGHT
Lesson eight is hard to explain. We heard it from this excellent badminton player who was also a multimillionaire venture capitalist. So in theory, it is the kind of sports/business metaphor thing that is perfect for this list, but it was long and convoluted and he was kind of slurring his words and you kind of had to be there when he told us.
C H A P T E R
finance
and
8
capital
investors need more than a good return. remember to hug them every day and the dividends of love will never stop. — j.p. morgan
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going private JUST AS THE NEW ECONOMY
was about going public, the New
New Economy is about going private. Privacy has, in fact, become the most important concern to Fortune 500 companies that inhabit a high-profile world you and I can hardly imagine. IPOs, mergers, and bankruptcies are all fair game for the hounding financial press. The “fifth estate” has turned these rich companies into the inhabitants of goldplated birdcages called luxury suites. The pressures of 24-hour financial television channels, numerous business magazines, and salacious gossip hounds who call themselves financial reporters have fueled an insatiable public demand for even the most outrageous corporate details and rumors. Tensions have only gathered momentum, as inevitable conflicts with the press cause once traditional blue-chip bastions of staid corporate culture to become withdrawn, rude, and even violent.
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People were shocked several years ago when, during a management shakeup, General Mills made an obscene gesture to a WSJ photographer, and then punched a reporter from the Financial Times who asked about next quarter’s projected earnings. Witnesses say that if accounting firm KPMG hadn’t been there to cool things down by taking the venerable food company aside, it could have been much worse. Matters were settled out of court, with both the Journal and the Times receiving an undisclosed sum. Fortune 1000 companies have been increasingly steadfast in defending their privacy. “The press is at fault here,” noted one international conglomerate that refused to be named for this book, “They forget that we are people too . . . in a ‘corporate fiction’ kind of way.” There is no doubt that companies are receiving more tabloid scrutiny than ever. Mergers, for instance, once treated as solemn occasions are now media circuses, complete with photographers in trees and low-flying helicopters. Increasingly, the announcements of corporate acquisitions are withheld from even the participants until after the deals have been consummated. “This wreaks havoc on our due diligence process,” said one insider. “But with CNBC going through our dumpsters, what are we supposed to do?” The Exxon/Mobil merger is often seen as the most blatant example. Barrons offered thousands of dollars to obtain photos from the closing. Barrons—and others—also use the increasingly common tactic of paying off low-level merger and acquisition lawyers to infiltrate meetings to get the best gossip.
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Companies complain that the financial press cares more about rumors than the truth. “As soon as we start to get know another company, we tell them right away that it doesn’t matter what we actually do, Fortune will have us merging. This is before we’ve even looked at each other’s books. It really takes a lot out of you,” said the source. Break-ups attract as much attention. One company that has gone through a number of messy dissolutions observed: “I couldn’t bear to watch the ATT breakup. BusinessWeek was camped out in front of its headquarters for a month. ATT cried itself to sleep every night for weeks during the worst of it. And the media always tried to insinuate that there was a third company involved . . .” Many companies bemoan the fact that the press never really gives them a chance “to mourn.” “The worst part is when they bring other corporate holdings in on the gossip. Say what you will about me, but leave my subsidiaries out of it. You get all kinds of public speculation about what happened, but they weren’t there. They don’t know. They don’t know that maybe it’s just best for the shareholders that everyone go their separate ways.” The spotlight has forced a lot of companies into getting away from it all. Moving corporate headquarters to secluded exotic locales is a growing phenomenon. Places like the Greek Islands offer companies a chance to stay sane but still stay connected with their customers. “I think our markets understand that we need our space,” the source noted. For instance, GM just unveiled its new economy car line not to the press, but to
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friends and family, on a secluded Caribbean island. Dealers weren’t even aware of the new GM “Go-er” until they arrived on the lots. Observers say that this will get worse before it gets better. “They have to realize that there is a line between our public and private corporate entities,” said one company. “Until then, drink Coke.”
venture capitalists Entrepreneurs need money. Venture capitalists have money. So why don’t entrepreneurs just kill the venture capitalists and take their money? Indeed, why not?
interview with a venture capitalist Fred Bankman is a leading venture capitalist and a partner with the investment firm of Reed and Smith Investments LLC, located on Sand Hill Road in Silicon Valley. Our interview was conducted in his office. AUTHOR:
So tell us about the changes you foresee in your
business in the New New Economy. BANKMAN:
We’re seeing a huge upswing in the number
and quality of the start-ups seeking funding these days. Ten years ago, we would look at maybe 1,000 companies in a year and fund about five. Now we’re seeing 1,000 business plans a week and funding around 25 percent of those.
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AUTHOR:
What is your own background? How did it get
you to what you are doing? BANKMAN:
I have a BA in economics from Yale and an
MBA from Stanford. I started at Reed and Smith in their M&A department, then moved over to investment banking. I did that for ten years, then came here, where I do nothing but VC work, concentrating mainly on the Internet and software sectors. AUTHOR:
Do you belong to the National Geographic
Society? BANKMAN: AUTHOR:
But I imagine many of your colleagues do?
BANKMAN: AUTHOR:
I’m not really sure . . .
So tell us about your adventures.
BANKMAN: AUTHOR:
Umm . . . no.
My what? My adventures?
The rivers you have swum, the mountains you
have climbed, the lions you have killed . . . yes . . . tell us about the lions you have killed! BANKMAN: AUTHOR:
Is that, like, a metaphor for something?
Ah, but you are modest sir. Surely you have
killed a lion. BANKMAN:
Killed a lion?
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AUTHOR:
Ah . . . I see . . . I should use your lingo: Have
you ever slain a lion, I believe you fellows say? BANKMAN:
Look, I’ve never slain a lion. I have never slain
anything. What’s with you? AUTHOR:
Well, what about a wildebeest?
BANKMAN: AUTHOR:
No. I haven’t killed a goddamn wildebeest.
Forded the Amazon? Explored the rain forest?
Climbed K2? BANKMAN: AUTHOR:
Look. I don’t know what you are talking about.
Well, have you ever had your way with a native
girl in the jungle during their fertility rights on your adventures? BANKMAN: AUTHOR:
You sir, must be a homosexual.
BANKMAN: AUTHOR:
No! No . . . I . . .
What? No! I am married with kids!
Have you had any homosexual adventures, then,
that you can tell us about? BANKMAN:
No! I . . . ooooooh . . . I see . . . You guys are
mixing me up with an adventure capitalist . . . and those guys are all a bunch of queers. I am a VENTURE capitalist. And I’m straight, Mac. AUTHOR:
Ah.. a venture capitalist. Tell us, have you been
with many women?
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BANKMAN: AUTHOR:
No, no . . . tell us.
BANKMAN: AUTHOR:
I don’t want to brag.
Is that recorder off?
Yes. It’s off.
BANKMAN:
Well, this one time . . . when I was venture
capitalizing, I was smooching up this girl . . . AUTHOR:
I’ll bet she was really a man.
BANKMAN:
Yeah . . . she might have been.
global capital The New New Economy will integrate nations and cultures like no other economy in history. But the level of competition will be unprecedented as well. The fight for new business will be one of the main points of contention for countries. Advances in technology will allow companies to locate virtually anywhere, so countries will begin to adopt new marketing campaigns designed to bring these “borderless” global players within their national boundaries. Since all countries will eventually build the same economic infrastructures, no one country will have a unique economic advantage over another. Third World countries will correctly identify this transition as a chance to leapfrog over years of economic deprivation, jumping into the next economy while their once First World neighbors stare on in idle complacence.
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These Third World countries will have a host of economic hurdles over which to jump (not the least of which are issuing and sustaining a viable currency, political stability, reliable power, phone service, and a couple of W ait a minute. i’m in
Cirrus ATMs). But as with the busi-
the wrong joke.
nesses of the New New Economy, preference will be given to countries with
“good looks and a nice demeanor” rather than to countries that actually provide functioning infrastructure. Indeed, rather than spending billions to add 3G networks and server farms, countries need only follow our rules to join in the New New Extravaganza.
rules for leap-frogging the first world into the new new economy F IRST R ULE : C HANGE Y OUR C OUNTRY ’ S N AME 1.
Go for something that makes you part of the “global family.” For example, to distinguish itself from it’s Middle Eastern peers, Kazakhstan has become Kazakhstanley. “We are now the world’s brother-in-law,” according to Prime Minister Vladimire Plotchkin.
2.
Pick a name that reflects your country’s strength. Trinidad, which had trouble competing for the lucrative Caribbean tourist trade, changed its name from the “Isle of Doctor Moreau” to the “Isle Where There’s Plenty of Dope and Gambling but No Taxes or Money-Laundering Laws.” It also helped that they got rid of all the cannibals.
finance and capital
3.
Showcase your country’s natural beauty. Bangladesh, the poster country for international relief efforts, has recently recast itself as “The Land O’ Plenty!” A new flag features an overflowing basket of market fruits and vegetables, fish jumping from flowing streams, and tweed-clad fly fishermen smoking pipes in the beautiful Bangladesh sunshine.
4.
Invent a new tag line. China, for instance, in a recent ad campaign changed it’s tag line from “Where the Hard Line Rules” to “A Softer Kind of Communism”.
5.
“North Dakota may become available.” Recently, the state of North Dakota has begun to explore the option of a name change for the aforementioned reasons, although a new name for it is up for debate. (May we suggest South Saskatchewan?). If that change happens, it means that your country is now free to use the name North Dakota. We don’t want to tell whole countries what to do, but if we were, say, Laos, or British Guyana, we would jump on this chance to become the New North Dakota.
S ECOND R ULE : S PEAK E NGLISH
Otherwise, no one will know what the hell you’re talking about. T HIRD R ULE : L OWER TAXES AND C HEAP L ABOR A REN ’ T THE O NLY WAYS TO ATTRACT C APITAL 1.
Capital abhors a vacuum. Experts disagree as to whether that means capital is going to stay away from your country, or if capital will rush in to fill the void. And did you hear the
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one about the traveling vacuum cleaner salesman? It goes something like this: A travelling vacuum cleaner salesman is going through the country when his car breaks down. He goes to a nearby farmhouse and asks to use the phone. The farmer tells him, “We ain’t got a phone, but I’m headin’ into town tomorrow an’ you kin spend the night here. O’ course, you’ll have to sleep in the same bed as my three sons . . .” And the vacuum cleaner salesman says, “Wait a minute. I’m in the wrong joke.” 2.
Privatization of traditionally governmental entities often works. It is certainly attractive to multinationals fearing overly active governments and, at worst, the spectre of expropriation. The reasons why could fill a book. And since we’re on the topic of privatization . . . Q.
Knock, knock.
A.
Who’s there?
Q.
Privatize.
A.
Privatize who?
Q.
Privatize are watching you!
3. A
smaller country can attract capital through simple proxim-
ity to a larger trading partner. Few Americans know that
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Canada is our largest trading partner. Which reminds us of a good joke; Q.
How many Canadians does it take to screw in a light bulb?
A.
Twelve. Four to form a Parliamentary study committee to decide how to solve the problem, one Francophone to complain that we didn’t translate this joke into French, one Native Canadian to protest that the interests of Native Canadians have been overlooked, one woman from the National Action Committee on the Status of Women to say that women have been underrepresented in the process, one to go over the border to the Niagara Falls Factory Outlet Mall and buy a new bulb and not pay duty on it on the way back, one to actually screw it in, one to collect taxes on the whole procedure so the government can afford it, one to buy a case of Molson for everybody to drink, and one to drop the puck.
Capital is attracted to countries that guarantee basic freedoms, like speech, travel and religion. This, along with a strong rule of law, allows the formation of business at all levels. And speaking of religion, did you hear the one about the priest? A doctor, a lawyer, and a priest are friends with a very wealthy man who is sick and knows he is going to die soon. He tells them that his dying wish is to take his money with him. He will give $2 million
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to each of them, and they are to put the money into his grave before they bury him. Well, the time comes and the man passes away. At his funeral, each man throws a large envelope into the dead man’s grave. Afterward, they all have a drink together and the doctor tells the others: “I have to admit, I couldn’t do it. I took half the money and donated it to a children’s hospital. I couldn’t bear to see so much money wasted.” After hearing this, the priest is relieved and says: “I feel a lot better. I too had second thoughts, and I tossed in an empty envelope. I couldn’t throw away so much money when it would be so helpful to the church.” After hearing this, the lawyer turns to the other two and tells them: “I’m disgusted with both of you. Our friend trusted us with his dying wish and you two betrayed that trust. I, on the other hand, wrote him a check for the full amount.” F OURTH R ULE : T HERE I S N O S UBSTITUTE FOR AN E DUCATED P OPULACE
There are basic skills that the citizens of every country must possess to rise to the level of a modern economy. Here is what the people must learn: 1.
Teach them English. Otherwise no one will know what the hell they’re talking about.
finance and capital
2.
Teach them gym. Dodgeball weeds out the nancy-boys.
3.
Teach them to pursue individual interests. Like AV clubs . . . which are NOT for loser geeks.
4.
Teach them to tell time. You don’t want them to be late for the New New Economy.
5.
Teach them manners. Like how not to put their feet up on the table. What’s the matter . . . was your country raised in a barn?
6.
Teach them driver’s education. Once an adequate road structure is in place, people (and goods) will have to travel places. We have noticed that a lot of times you can’t get a driver’s license without taking driver’s education. A country full of cars and roads, but no one can drive because no one could get their driver’s license because no one took driver’s ed? That’s no way to be.
7.
Teach them tolerance. Every joke we submitted for this one was rejected by the publisher as “too controversial,” which we think is a hoot coming from a company that has published books by Michael Milken, John Rocker, and Patty Hearst.
F IFTH R ULE : A C OUNTRY S HOULD P LAY U P I TS S TRENGTHS
For certain smaller countries, it is best to focus on what you are best at doing. Expanding into new fields is vital, but so is staying true to your roots and holding valuable niches. Portugal’s
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economy, for example, has been heavily reliant on cork harvesting, sardine fishing, and olive growing businesses. It is highly advisable not to change so dramatically that the foundations of those steadfast money-earners would be underI n fact, we would
beg denmark not to stop producing abundant amounts of pornography.
mined. Likewise, we would advise Denmark not to stop producing abundant amounts of pornography. In fact, we would beg Denmark not to stop producing abundant amounts of pornography. Actually, if any country takes
anything away from this book, let it be Denmark and a solemn promise by it not to stop producing abundant amounts of pornography. R ULE S IX : A L EAN C OUNTRY I S A R ICH C OUNTRY
People think the United States has always had fifty states. In actuality, the number of states has fluctuated. The U.S. has an Article IV, Section 5 of the Constitution, from which up-andcoming nations could learn much. Commonly known as the “Deadbeat Clause,” or the “Tough-Love Provision,” by Constitutional scholars, it states: Any State that shall consistently take in more than it shall produce for the benefit of the Nation, or shall otherwise be deemed by a majority of the Senate and two-thirds or more of the House of Representatives as more damned Trouble than It shall be worth, shall be ejected from the Union and held otherwise accountable for its Debts.
finance and capital
This provision has been invoked on numerous occasions to attempt to expel ne’er-do-well states, both successfully (the former State of Quebec) and unsuccessfully (Delaware). Countries aspiring to affluence and stability have to be able to kick out the regions that are the scamps and rapscallions, no matter how unthinkable that may be or how charming, cute, or handsome they are. Be strong. In the end, you’ll be a better nation.
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INDUSTRY QUIZ
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Q: country. He has been told to find ways to attract
Joe is the development minister of a medium-size
multinational corporations in order to give the country higher employment levels and a substantive tax base. To do that, he decides to come up with a new motto for the country to encourage people to invest there. He fondly recalls a movie from his childhood about dinosaurs and cavemen called The Land That Time Forgot. He wants to use that title as a slogan for his nation, hoping to bring people warm feeling of nostalgia for their childhood as well so that they will be inclined to invest there. Should he use it?
A: hear that slogan, they will think mostly about the No. People love dinosaurs. However, when people
cavemen. People hate cavemen. With the exception of the recently built BMW plant in South Carolina, multinational corporations will not be inclined to build facilities in places with primitive people who can barely communicate without grunts and who savagely beat each other with clubs.
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6 little moves that will drive your company wild in bed When it comes to driving your company wild, and we mean WILD, in bed, there’s some tried-and-true, head-turning, heartracing, action-grabbing, lust-making maneuvers that your company has been SECRETLY PRAYING THAT YOU’LL TRY! Marketspeak to Me: Rationally benchmark value-added
1.
rate of return me on! 2.
Pump Up Your “Balance Sheet:” 6 little words: Lip Gloss, Lip Gloss, Lip Gloss!
3.
Watch the Bottom Line: Sometimes it’s fun to watch . . . sometimes you can even cut costs!
4.
Unleash “New Products:” Turn tonight into a whole new ballgame by bringing out a line of merchandise certain to “fly off the shelves.”
5.
Do It Outside: Become financially transparent and he’ll be saying, “10-Q, 10-Q, 10-Q.”1
6.
Something about a G Spot: There’s always one about a
G spot . . .
new new quiz:
can you and your recent acquisition survive a long-distance relationship? Which best characterizes your relationship? a.
We are both equally committed to making this work, whatever it takes.
1. Try saying it fast in case you missed that one . . .
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b.
I’m more committed, but I think I can change him.
c.
We often fight about who’s paying the phone bills.
d.
He’s more invested in this than me. I’ve already started looking around for some local action.
When you raise a “divisive” issue, his board usually responds by: a.
Reacting in a typical, well-thought-out manner.
b.
Wanting to “talk” it to death.
c.
Getting annoyed for bringing “it” up.
d.
Storming from the room, slamming the car door on his way to the local bar, coming home really late and really drunk and reeking of perfume.
What role do shared finances play in the relationship? a.
We are completely and totally merged.
b.
We keep separate accounts but consolidate financials at the end of the month.
c.
Our systems are still being integrated.
d.
Frankly, I wouldn’t trust him with a dime.
A’s equal 1 point; B’s equal 2; C’s equal 3; D’s equal 4. If your score is between: 1.
4 and 6. You’ll be okay, but remember that it’s hard work and you need to keep the lines of communication open.
2.
7 and 10. You need counseling to make this work. Seek an independent auditor or a neutral investment banker. Follow their advice, no matter how hard it might seem.
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3.
10 and over. You’re relationship is screwed. Totally and completely screwed. Hopeless. Get out before it gets worse. Pack up. Run.
the perfect colors for a more attractive acquisition The secret to looking your absolute sexy best isn’t a pared down financial statement or a supershort audit. Sometimes a simple change in your corporate colors can turn you from a B-list alsoran to an A-list target. You do this by determining if you are a Fire, Water, Earth, or Sky. Each of these natural elements contains the keys to your company’s inner beauty. * Fire companies have strong balance sheets and full-figured physical assets. They look best in reds. * Water companies reach across many markets, like the oceans from which they draw their “capital.” Try a deep blue. * Earth companies are deep and intense, with lots of depth in marketing. Try browns or blacks to accentuate your eyes. * If your company tends to miss its earnings marks, you are probably a Sky. Skies are full of clouds, and clouds look best in whites and grays.
C H A P T E R
9
t e c h n o l o g y technology doesn’t grow on trees. at least not up here in schenectady. — thomas edison
*
*
*
emerging technologies THE DEEP AND FAR-REACHING
transformations of past eco-
nomic revolutions have brought changes that span across economic boundaries. The Agrarian and Industrial revolutions were vehicles for providing profound change in all socioeconomic classes. To date, the effects of the Information Age have reverberated primarily in the upper and upper-middle classes. This has translated into a condition where, many felt, the gap between rich and poor would widen. The stratification engendered by the existence of two types of basic classes, the info haves and the info have-nots, would potentially presage widescale disenfranchisement of a whole segment of the population. Just as democratic institutions and increased opportunity performed the organic role of stopgap to widespread disaffection by the lower classes accelerated to critical mass, the NNE will host another development that will no doubt serve as a
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great equalizer: astrology. For generations, accurate astrological forecasting has been available only to the very rich. The wealthy have used horoscopes to their advantage, not just to obtain wealth, but to keep it. “Show me the man who can afford a quality horoscope, and I will show you a dynasty,” said noted historian Michael Lambert.1 The ability to arise each day and know what the future holds, along with bribes to lady luck, has kept the great wealth of the world where it is. But astrology will no longer remain a tool of the already affluent. Advances in computer power have already produced giant leaps in personal star chart forecasting. What was previously a science is now becoming an exact science. Computers can tell us within 84 percent, on average, whether this will be a fouror a five-star day. Complex programs, combined with superfast processors, can determine with precision whether tomorrow is a good day to finish a project, or to look for love in a place we wouldn’t expect it. We are within a few years of almost metaphysical certitude about whether its a good time to lay low because our sign is in the fourth house, or to just go ahead and buy those shoes we’ve had our eyes on. In the past, only the jet set had access to this kind of daily, practical advice. The widespread access of computer astrology brings new hope to anyone who previously left his existence to fate. No more will the entrepreneur stumble through the dark, not knowing which opportunities to seize and which bills to pay. Astrology is a magnificently powerful force. It has great potential. The question is, will it make society more level? Or will it level society? You decide. 1. T. J. Hooker—The Complete Episode Guide, page 56, Michael Lambert, Harvard University Press, 1987.
technology
ten other emerging technological fields 1.
Reinventing the Wheel. Why hasn’t someone gotten around to doing this again? Everything else has been renovated, reevaluated, or revamped. This million-yearold concept is ripe for an overhaul. Business shouldn’t be so complacent. And it shouldn’t be afraid to play rough if need be. Remember: The tree of liberty must be watered with the blood of patriots and tyrants from time to time. People who oppose such a commonsense idea are clearly “the tyrants” in this game.
2.
Robotics. “Domo Origami, Mr. Roboto”. That’s what Styx said. Styx was wrong about a lot of things, but they were right about that.2 Did you see the screen adaptation of
the
book
The
Bridges
of
Madison
County,
by
Robert
James Waller? It was written, produced, and directed mostly by robots. Already, the
figure 9–1
robots are among us. 3.
person. . . or robot?
Funnyland. This is a virtual place where people will go with other people, where they will laugh and laugh. Oh, but this time they will laugh with you.
2. The Advent of Japanese Robotics, Styx, 1981.
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4.
Cloning. We’re against it. We have seen enough twoheaded ducks to last a lifetime.
5.
Biotechnology. Experts believe that we are close to cracking the size inhibitor gene, which will allow all of us to grow to the 70 feet that nature originally intended for us. Thus, we will roam the earth casting boulders and vanquishing foes. The downside will, of course, be the emergence of a single eye on everyone’s forehead that will replace the two we have now, significantly limiting depth perception. However, this will be more than compensated for by the eye’s ability to emit a ray beam.
6.
Medical Technology. Perhaps no other areas will see developments as dramatic as this in the coming years. Breakthroughs are already setting the stage for vaccines for Senioritis, Spring Fever, and Acquired Immune Deficiency Syndrome.
7.
Neural Networking. At some point in the New New Economy, the number of Internet connections will reach the 100 trillion mark, which is roughly the amount of synaptic connections in the human brain. This may well give rise to a nonhuman, sentient being. Who’s going to buy it shoes? Not us pal.
8.
Nonotechnology. The rise of nanotechnology has actually obscured the advent of another equally important technology: nonotechnology.3 This will be a prohibitive
3. This will mainly apply to people named Nanette.
technology
technology and it may seem negative to us at first. But while it may say no no no, its eyes will say yes yes yes. 9.
Hover Technology. For years, the promise of a real hover car has been “just a few years away.” In the New New Economy however, hover technology will finally turn into hover reality. We will finally begin the shift to a society that is not of the Earth but above the Earth. People will use their hover-shoes to climb their hoverstairs to get to their hover-refrigerators. They will rest at night in their hover-beds, covered by their hoverblankets, wondering how it was that things came to be so f#*@%ed up.
managing information To operate in the stock market in this age, you need information. A stock price, for example, should be the sum of all relevant knowledge about a company and what it is doing. Juggling the relevant with the irrelevant is fun to watch, but it’s nothing you yourself want to do if you can avoid it. Thus, the looming problem is an excess of information. It is a force that builds in momentum against an equally tenacious pressure: the aforementioned need for speed. You have more information than ever to review, and you have less time to do it in. Oh wait, here comes a bunch more information. Oh no, you just lost some more time when you thought to yourself, “Here comes a bunch more information.” And so on. The forces are out of control and are hurtling toward each other like two huge meteors in one of
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those big meteor movies. They are going to crash. But this time, it’s not the meteors at stake, it’s the planet . . . Planet Business. And that’s the planet where you live. Getting the information is not difficult in and of itself. Information is only good if it becomes knowledge. To stay ahead in the market, however, you will need to manage information more efficiently. Computers are great and they can do a lot, but the one thing they cannot do is be efficient. Computers cannot analyze the information. They cannot
?
Know u o Y d i D
T oday, mules import
store the information. They cannot move the knowledge. And what of its care? Who will keep an eye on it while you are away? Who will wash the information when it is
narcotics in balloons dirty, or give it a drink when it is thirsty? inside their stomachs! Who will console it when it cries? And what about you? Who will fan you with a palm frond, and feed you dates and grapes from the vine? For all that, you need good old cheap labor. We suggest that the time has come for the resurgence of the mule. The mule, or info-mule, in this case, is capable of 18-hour days filled with backbreaking labor. Mules did a great job on the railroads. We heard our grandparents complain about a lot of things from the old days, but mules were not one of them. Why did we stop using them? What was the matter with us? They worked hard and cheap and fast. The silly strawhats that people put on them were distracting, but today they would be functional. The hats would be excellent shields against microwaves, which did not exist 100 years ago. See? Mules were ahead of their time!
technology
computing power, speed, and moore’s law Gordon Moore, founder of Intel, coined his now infamous “Moore’s Law,” which, loosely stated, says that, “Facts are stubborn things. That’s why I hate them with a passion. Oh, and chip
figure 9–2
moore’s law
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speed will double about every 18 months. But it’s the fact thing that sticks in my craw.”4 Moore was a miserable bastard, but he was right. Facts are stubborn things. But Historians often fail
to mention his less famous “moore’s pickup line,” which states, “moore is better.” most women found him revolting.
the fact is, chips ARE getting faster. They’re getting smaller too. So fast and so small that many in the scientific community think that we are close to reaching the physical limitations of etching silicon. This means that eventually the rate at which chip speed doubles will
be reduced and that the doubling of chip speeds, using current technologies, has a definite, physical limit. We could not agree more with the scientific community on this, based on our understanding of the principles of particle physics and the current state of nanotechnology, and the fact that Moore hasn’t invited us over to dinner since the “swimming pool incident.” Indeed, Moore himself predicts an end to his law in 2007. However, his reasoning for the end to Moore’s Law is based more on his personal interpretation of the Book of Revelations than on scientific fact.5
getting around moore’s law We think that the basic problem associated with doubling chip speed centers on the interaction of electrons based on their proximity in increasingly smaller and smaller chips. Once chips are reduced to a certain size, the normally predictive nature of electrons 4. Historians often fail to mention his less famous “Moore’s Pickup Line,” which states, “Moore is better.” Most women found him revolting. 5. This is also why Moore has invested a considerable portion of his vast fortune into hording gold and spam.
Chip Speed
technology
0
16
36
54
72
90
108
RAPTURE
Months figure 9–3
the end of moore’s law
changes and their properties become unstable. Certain molecules clump together, posing manufacturing problems. At small scale, the paths of electrons collide and they may jump unpredictably. This instability presents a seemingly insurmountable wall to further chip speed doubling at current rates with current technologies. Part of the problem lies within the culture of the scientific community. Often, scientists singlemindedly follow paths with blinders on. Dr. Lemming One, Ph.D., says, “Make it small!” Dr. Lemming Two, Ph.D., says, “Make it smaller!” And so on and so on and so on. As you can see, Lemmings are stubborn things. Trying to get the blinders off a Lemming is no easy task. Moore’s Law proves this every day. If you take anything away from this book, let it be that.
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Dr. Lemming One, Ph.D. Brains and beauty? She’s got both!
Dr. Lemming Two, Ph.D.
figure 9–4
You don’t have to have to be a lemming with a Ph.D.6 to see where we’re going with this. But scientists, they poo poo every idea that isn’t theirs. They sit with their namby pamby arms across their chest and pout until you see things their way. Well, nuts to you scientist guys, because to us, the nonscientists, the answer is as patently obvious as cheese: Make chips bigger. You know what you want? You want bigger chips. You want more power in a car, do you make it smaller? No! You make it bigger. That’s why you don’t enter a Yugo in the annual demolition derby. You enter a Jimmy, or a Suburban.7 6. The authors also think this would also make a cool name for a band. Feel free to use it. 7. But not the wife’s Taurus . . . big mistake.
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You want to make a big movie? Not without big stars like Nicole Kidman you don’t. You want to have a big barbeque? You get a whole pig and you cook it with lots of fire for lots of people, or you don’t do it all. You want to hit a golf ball on the moon? You need a big rocket, or you stay home and cry about what could have been. The way we see it, a chip needs room to think, but it still needs to be somewhat practical. So we’re thinking maybe a chip the size of your head would work out very nicely indeed. It would be plenty power-
You want to hit a golf
ful and you could still carry it around in a
ball on the moon? you need a big rocket . . .
bowling ball bag. Any bigger would be a
waste. A chip that big would solve all sorts of big problems. These aren’t problems that you and I have to worry too much about, thank heavens. That’s what the big chips are for.
*
*
INDUSTRY QUIZ
*
*
Q: them smaller and smaller all the time. They are very Joe owns a silicon chip factory. He is always making
little chips. Bob also owns a chip factory. He makes them big. One is as big as a bowling ball. If they compete for a vendor’s contract, who will win?
A: And everyone will know what he is talking about. Joe Bob wins. Bob can tell the vendor, “Bigger is better.”
says, “If you drop one of my chips on your foot, it won’t hurt!” But that’s not such a big deal. In the New New Economy, everyone wears steel-toed boots. Besides, Joe’s chips are so small, everyone is always losing them.
C H A P T E R
the
10
human factor employees and money are a lot alike. once they are spent, they are of no use to you and best forgotten. — andrew carnegie
*
*
*
women in the new new economy THE ROLE OF WOMEN
will expand during the New New
Economy, like in no previous era in history.1 Inroads and gains made by pioneering business women over the last few decades will open the floodgates of real, meaningful, and profitable opportunities. Talent will be rewarded regardless of gender and the boardrooms and executive suites will swell with the ranks of sisterhood.2 This rise up the corporate ladder will require women to adapt to changes in corporate culture while at the same time causing that corporate culture to adapt to them. “Women in the New New Economy will need to be bold, audacious, and courageous,” according to one woman we know. This will present women with challenges and new sets of problems. 1. Except during the reign of the Amazons. 2. The guy on TV just gave us the forecast, and honey, it’s going to be raining women.
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Greater roles within the corporation will entail greater responsibility. Shifting power structures and interpersonal dynamics have to be balanced with the ascendancy of women both as individuals and on
☞
TIP FOR NEW ECON WOMEN N ot as pretty as you
want to be? think that’s a problem? try being hooked on pills. see how pretty you are then.
a group level. Unique tests await women as they continue to throw off stereotypical notions of gender roles. In the quest for business equality, woman will need to balance per-
sonal desires with the corporate desires demanded by higherups. Personal lives will need to be placed on a back burner. Families, once the only domain of women, will undergo radical and dynamic changes as more and more women rise higher up the working ranks. Business travel will require longer stints away from home or
☞
TIP FOR NEW ECON WOMEN F eeling trapped like
a bug under the glass ceiling? ever try to evade a police helicopter? Well, a mr. george orwell had a few things to say about that.
changes in travel plans to accommodate
children.
Child-friendly workplaces will be established until school
schedules
are
brought more in-line with workplace demands. High quality daycare will become
mandatory as women managers demand access to their newborns and toddlers. Well-paid female executives will be confronted on the money management level as well. Mutual funds, options,
the human factor
futures, puts, and calls will become financial instruments specifically tailored and
marketed
to
the
female executive. Investment criteria will include
☞
191
TIP FOR NEW ECON WOMEN W orried
about the effects of too much daycare on your kids? how about which neighbor is home with your husband?
social causes and medical research that women care deeply about. The financial press will devote more coverage to women investments as well. At the university level, fund-raisers will begin courting women to provide specific funding for women-related campus events and to provide endowments and endowed chairs. Women will be forced to make more decisions
☞
TIP FOR NEW ECON WOMEN Not sure which
investments to make? hello? someone more “well endowed” than you is home with your husband!
and make them faster, with less information than they might be comfortable with, at least during the transition phase. Once workplace equality is reached, women will begin to exert a more “female-oriented” approach to business. Primarily based on more interpersonal workings and dealings with business leaders, this more feminine approach will lead to increased profits and a more enduring business model than in any other, more male-dominated era.
☞
TIP FOR NEW ECON WOMEN I n the end? who
cares, you’re all just going to do what you want anyway.
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the new new economy woman We give you our own list of the 16 Hallmarks of New New Economy Women as our own guide to success for ladies who want to get ahead but still keep their femininity: 1.
New New Economy women aren’t weepy. They know that
all the crying in the world won’t give you more bandwidth. 2.
New New Economy women are janes-of-all-trades, masters of none . . . Or is that mistresses of none? Well, we’re not sure which it is, but if it is “mistress” of all trades, you better not go around calling yourself that. People will think you are a home wrecker.
3.
New New Economy women are confident and self-assured, and they say what they think. For example, Katherine Hepburn was this way when she started out as an actress and soon she was Queen of Hollywood. Wouldn’t you like to be Queen of the New New Economy?
4.
New New Economy women are hard workers and don’t give up. Although if 5 o’clock rolls around and the project isn’t done, hey, it’s not done. The company isn’t going to go under. This is because New New Economy women know when enough is enough.
5.
New New Economy woman is innovative and trusts her instincts. She listens to her voice of intuition and it guides her. So do the other voices in her head. But
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193
don’t worry . . . the medicine makes all those other voices go away. 6.
New New Economy women are tough managers, but they are not bullies. They tell it straight, but they don’t put anyone down or make them feel bad. This means they are afraid to fire people, but we think that is good. Firing people makes for negative energy, and who wants to go to work with all that negative energy in the air?
7.
New New Economy women are accountable. They take the blame for
T hey know that all
their mistakes and learn from them.
the crying in the world won’t give you more bandwidth.
Mostly, they learn that one single mistake can kill their career. It’s a hard lesson to learn, but that’s okay. These are hard women. 8.
New New Economy women are realists. Most of them understand better than anyone that soap opera characters are not real. Although, goodness knows, their busy lives sure FEEL like a soap opera at times!!!
9.
New New Economy women see barriers for what they are: Things that let them enjoy where they ARE that keep them from getting big ideas and that will just disappoint them in the end.
10.
New New Economy women understand that above all else, authors have needs.
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11.
New New Economy women are humble. They find ways to convey to others their own superiority without making people feel bad about themselves. That they leave to their personal assistants.
12.
New New Economy women know that their competitors are not their coworkers. Their competitors are their business’s competitors. And the wives of the men they work with.
13.
New New Economy women objectively analyze data and evaluate the best ways to be effective. They realize that for most of them, this means just staying out of the way.
14.
New New Economy women know that self-esteem is key, and this means not stopping until you find a man to give you some.
15.
New New Economy women see every challenge as an opportunity, every obstacle a chance to overcome, every setback a new beginning, every difficulty another chance to be perky, vibrant, and cute.
16.
New New Economy women, especially our wives and friends and coworkers, have really, REALLY good senses of humor and know that sometimes we just like to make big ha ha funny jokes.3
3. Okay . . . we’ll just shut up now . . .
the human factor
*
*
INDUSTRY QUIZ
*
*
Q: Your sales force has had an abysmal quarter. They You are the head sales manager of a large company.
have lost interest in selling and would rather play golf. They disappear for hours at a time each day. You confront them. They taunt you that if you feel so strongly, “You should do something about it, Pinocchio.” What do you do?
A: spray some sense into them like they did to Charlton
In the Old Economy, you would grab a fire hose and
Heston in The Planet of the Apes. Then, you would fire anyone still conscious enough to beg forgiveness. You cannot do that, however, and we don’t suggest you do anything like that. Liability restrictions do not make this possible anymore. Besides, you have to remember that there are more of them than there are of you. Don’t be a hero . . . okay? Call the cops and let them deal with it. If that doesn’t work, fake your own death and start a new life somewhere else. Maybe with years of hard work, you can regain some of your dignity.
the war on talent: how the civil war taught us management Within the context of economic history, the “worker” or “employee” has either been treated as an expendable commodity (as during the Industrial Revolution), as an inevitable crisis to be endured (as during the postwar years), or as a valuable asset capable of being exploited into providing a meaningful contri-
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bution to the bottom line (the Internet boom comes to mind here). Whatever the viewpoint, the historical facts remain, it is not who you are stuck with, it is what you do with them that makes or breaks your company. The New Economy focused on creating pools of “talented” young people. Full of boundless energy, intelligence, and enthusiasm, these focused young folk would finally complete the revolution and completely change the world. Old Economy business would be stood on its head and spun around until it became so dizzy it fell flat on its proverbial face. To put this into a more historical perspective, think of the New Economy as the South in the Civil War. A bunch of syphilitic, semiliterate “gentlemen,” with varying degrees of cash and prodigious gambling debts4 setting out to fight a War of Honor against the mighty Blue Army of the North.5 In the early days of the War, the South seemed unbeatable, winning victory after victory. They, after all, had the “best and brightest” generals, troops that were devoted to their leaders, and most importantly, faith that they were doing the “right thing.” The North, on the other hand, had hordes of immigrants impressed to fight and compensated them with only “a mug o’ rum and a free shirt,”6 the capacity to manufacture the “tools of war,” and while not necessarily the “best and brightest,”7 4. Remember, this is an analogy, and this line should in no way be construed to mean that we are portraying people like Jim Clark, John Doerr, Mary Meeker, etc., in an unfavorable light. We have checked these people out and none of them actually “own” slaves—in the traditional sense. 5. Is it just coincidence that Microsoft’s official color is blue, and that geographically their corporate headquarters is North of Silicon Valley? 6. Thanks for the Shirt, Colonel, but When Do We Get Pants? An Immigrant Rifleman’s Story at Antietam, Paddy O’Dwyer, Mercury Historical Books, 1878. 7. By this we in no way mean Jack Welch.
the human factor
the North did manage to hold the high ground at Gettysburg and, ultimately, win the war by simply grinding out endless battles of attrition. At this point, you are no doubt wondering how to relate the carnage of America’s bloodiest war to your human resources department. Well, the real lessons are to be found in the wisdom and failings of the war’s leaders. It may have taken Ulysses S. Grant to provide the catalyst to create momentum for the Union Army, but his predecessor’s disasters are equally instructive. General Ambrose Burnside, for instance, lost several key battles because he was not focused on the task before him. Burnside, like too many managers today, was simply not around enough to run things. He ran a kitchen remodeling business at the same desperate time as the War. You cannot lead men into a terrific, frantic battle while you are picking out tile samples. You are not going to out-strategize the other side if you are color-coordinating drapes for a breakfast nook. Burnside would be absent for days at a time, only to return to the Army of the North to find his men square dancing instead of fighting the rebels. Like Burnside, you should not ignore your people at work. If there is one thing that you should take away from this book, it’s that if you do not focus, your employees will square dance your company into defeat, and ultimately, an awful, humiliating Chapter 7 bankruptcy. Take it from us, if you think people ignore you at social functions now, see how much they like you after filing for bankruptcy. A second lesson is just as important. The Civil War showed that if you are too exacting, it can be detrimental as well. Discipline on the troops during the War was draconian.
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Men could be shot for the slightest infraction or prank.8 A soldier who wore white after Labor Day could find himself hung by an overly fashion-obsessed commanding officer. These types of arbitrary management techniques wrecked morale. As a manager of people, you must understand that you cannot simply slap employees around with impunity. Those days are over and this is not 1863 and W e, the authors,
you are not General George McClellan.
are not the smartest writers in the world. in fact, we are probably not even the smartest writers in the country.
Instead, you must be a gentle-but-firm authority figure. Remember, most of your employees didn’t have a father around when they were growing up. As a manager, you must pattern yourself on a Mike Brady or Robert Young TV kind
of character, not some insane masochist antebellum warlord general. It’s bad enough that your family takes your abuse on account of the fact that you feel that you were never worthy of love. No need to perpetuate the issues of your youth on your employees.
the codependent employee: leadership lessons from abraham lincoln It is said that at the height of the Civil War, President Abraham Lincoln was meeting with Congressmen who insisted that the President fire General Ulysses S. Grant for his habitual drunkenness. 8. Although, lets face it, anyone who did the bunny ears thing to the walking wounded when Matthew Brady was taking pictures kind of brought it on himself.
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Rather than heeding their complaints, Lincoln said that he would instead find out what Grant was drinking and send a case of it to each of his other generals. The lesson here is plain and just as applicable today. Lincoln knew the value of finding good people and giving them what they wanted. Especially good drunk people. That is the reason Lincoln’s face is on that $5 bill in your pocket, and your face is most definitely not on any bill of tender. Why? Because you have not lived up to Abe Lincoln’s high expectations. But more to the point, Lincoln was inventing a management technique more valuable than merely getting his employees liquored up: He invented codependence. The manager in the New New Economy knows that he must seek out the character flaws of his employees and exploit them. Company-sponsored rehab programs and 12-step methods went out with the New Economy. The successful manager now knows that as soon as these ingrates are clean and sober, they will be job-hopping faster than a fast pig. The employee and all that money you spent on him will be gone, and you will be the
U L Y S S E S S . G R A N T’S C O N F E D E R A T E K I L L I N’ APPLE MARTINI RECIPE
1 granny smith apple 4 oz. apple pucker (or apple schnapps) 4 oz. vodka (premium brands preferred, but hell, they’re all potatoes…) take granny smith apple, dice and mash in mortar/pestle (do NOT use a blender for this). add remaining ingredients to icefilled cocktail shaker. shake, strain into martini glasses. garnish with apple wedge. enjoy!
one who needs a bunch of drinks. Lincoln knew that creating the perfect codependent employee was not an easy task, but that it would have many benefits. His
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visionary techniques shaped not only his army but also his times.9 Lincoln taught us that these employees, while not always reliable in the classic sense, are predictable. And a predictable employee is pliable and easily manipulated. The codependent employee is more apt to borrow money. If he owes you, you’ll own him. And a little usurious interest never hurt the bottom line, right?10 There is also the morale factor to consider. There is, after all, nothing funnier than a drunk. Is there anything happier than a happy drunk? They live in a hazy world where everyone’s beautiful and everyone’s a buddy for life, man. Spotting and recruiting drunks is simple in the NNE. First, if their name begins with an “O” or a “Mc,” creating codependency is as easy as giving them a job.11 Second, when you are in a group of people, spot the loner in the crowd. But be careful, you are running a business, not a post office.12 Gutters on Skid Row are also good places to look. They are also full of Bschool drunks. (Well, state university B-schools anyway . . .) In any event, do what it takes to find, recruit, and keep drunks and dope addicts in your employ. Lincoln taught us this if nothing else. As he said in his memoirs: “I can attribute my postPresidential business success to the hiring and keeping of drunks (and morphine addicts). They have been the lifeblood of all my companies.” 13 Cheers, Abe! 9. This was how Lincoln and his men won the Revolutionary War. Were it not for that, we’d all be speaking English today. 10. You didn’t hear that from us. 11. Editor’s note: If the job in any way involves writing, make sure you get a manuscript before you give them an advance check. For example, this book was originally entitled The New Economy, to have been published in Spring 1994. 12. Also, make sure they’re not three-name psychos; like Bret Easton Ellis or John Quincy Adams. 13. What I Did After the War, Abraham Lincoln, 1889.
the human factor
industry example: the codependent employee Joe hires Bob to be an employee. Bob keeps showing up for work very drunk. Bob vomits and vomits and vomits. Joe laughs: “You could probably fill a swimming pool with all that vomit!”
unions and labor issues in the new new economy You knew it was inevitable. Hardly a management book has been written in the last few years that does not reference it. Indeed, it is a topic that runs through every business-oriented best-seller like a coalescing thread, whether implied in subtext or as a fullblown allegory. It has become the backdrop for so much of what we have come to take for granted in management theory and practice as to become indispensable. It is, of course, the bathhouse scene between Tony Curtis and Lawrence Olivier in the great film Spartacus. We, the authors, are not the smartest writers in the world. In fact, we are probably not even the smartest writers in the country. But we know that you, the reader, would not be able to fully accept this book without its reference. Its ubiquitous use in so many recent business tomes requires an acknowledgment on our part.14 Moreover, our editor insisted that any book we write make mention of “the scene,” as he refers to it.15 We set out to give the 14. Who Stole My Spartacus?; 7 Highly Effective Habits of Spartacus; and Spartacus, Straight from the Gut, to name but a few. 15. In fact, we are hard put to recall any conversation, either professional or social, where our editor did not make a reference to the bathhouse scene.
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people what they want, and above all else, apparently the bathhouse scene in Spartacus is what you all want. So here goes. Spartacus, a poorly paid Roman slave, was full of grievances toward his employers. So were about 200,000 of his slave/coemployees. He led a slave revolt. That is what happens when (1) you treat your workers badly and (2) you let the organizing thing get way out of hand. You wind up in a hot tub with a guy who looks a lot like Tony Curtis.
office staff in the new new economy In the New New Economy, machines will circumvent the need for most male secretarial staff. In an environment where voice recognition software is utilized, there are fewer tasks for the male secretaries who traditionally fill office support roles. Much of the work formerly done by male secretaries is supplanted more and more by technology. This, of course, removes the human element that some believe should be part of the work experience. Many of the male secretary’s old duties will be consolidated or reassigned to machines. Your male secretary will no longer be there to transcribe your tapes. Sophisticated printing setups will remove much of the copying work. Voice mail means that he is not there to answer your calls. Or remind you of your lunch dates. Or give you a hard time about your sloppy writing. Or make accusations that you went over the line in some of your totally innocent comments about how nice his hair looks. Or there to tell you he saw a lawyer and threaten to bring a pesky lawsuit and, you know, it’s not like he is the one with the wife and three kids and
the human factor
a career on the line. No sir, not him, not Mr. Male Secretary. So it’s goodbye, male secretary. Nice knowing you!
*
*
INDUSTRY QUIZ: TELECOMMUTING
*
*
Q: Jane will telecommute from home. Jane’s home has
Joe wants to implement a policy where his employee
a computer and all the other devices necessary for conducting business in the modern world. Her house also has several televisions, many Harlequin Romance novels, bonbons, and a playful cat named Mr. Bonkers. What should Joe do?
A: are gearing up to kick our butts in a battle of cheap
Joe might as well let her telecommute. The Chinese
labor and sneakiness we can never hope to match in the end. Might as well let Jane have her fun while we wait for our collective demise and inevitable servitude to our Asian masters. Besides, this will finally stop Jane from pilfering all those office supplies she thinks you don’t know she takes and hocks on eBay.
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C H A P T E R
11
conclusions any idiot can write about the economy, but my cadillac is one smooth ride. — henry ford
*
*
*
the modern trichotomy: using what is around you, using yourself, and using others U SING W HAT I S A ROUND Y OU REMEMBER
when Steven Spielberg made that movie Apocalypse
Now, and when Marlin Brando was cornered in that bar by a murderous subordinate played by Martin Sheen and you think that there is no way Brando is going to get out of this one? Remember how Brando then takes a bottle and breaks it on the bar and cuts up Martin Sheen? And then later he uses the same bottle to cut up that cow at the feast the villagers throw in his honor? Marlin Brando may be an overweight, overpaid, overadulated, self-involved windbag with a murderer for a son, but as he showed us in Apocalypse Now, he’s resourceful. If you learn anything from this book, learn this: When you are confronted by the business equivalent of a murderous
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subordinate,1 reach for the metaphorical bottle. Only this time use it as a weapon, not a crutch. U SING Y OURSELF
Winning in the New New Economy is about realizing that you are your own best asset. Winning is about what you are going to do with yourself and how you are going to use what you have. You need to focus to accomplish this. Think of winning in the New New Economy as crafting a winning strategy when playing a game of cards: You have to play with what you have. If you have not done this, then you need to lock yourself in your office and not emerge until you figure out how to use yourself by playing with what you have.2 U SING O THERS
Throughout this book we have tried to provide concrete examples on how best to exploit others for your personal gain. We have shown you how to exploit them based on their lack of knowledge, age, income, race, religion, looks, class, rank and status within the company, their psychological dependencies, substance-abuse problems—in short, everything that makes a person a person. In so many words, we have implored you to grind your people down, wear them out, and make it clear that their existence is for your personal gain and yours alone. We have done this under the guise of dispensing sound business advice and thoughtful 1. Or in the case of Larry Ellison, an actual murderous subordinate . . . or murderous ex-wife. 2. Talk about self-discipline. We waited until the end of the whole book to make a joke like that.
conclusions
commentary on the state of the body economic. Indeed, if you have followed that advice, if you have remained true to the tenants of the New New Economy, you are undoubtedly the richest man in town. You are also a soulless monster incapable of human compassion and empathy on any level. This book was just a joke. We were only kidding. It’s a send-up. A goof. A satire. You know . . . HA HA funny, not weird funny. We started out talking about poltergeists and soulless monsters, and lo and behold, you have become one. You will have to deal with all the bedlam that you have wrought. We and AMACOM are going to get sued for a lot of things in this book, but you can’t sue US simply because YOU are a soulless monster.
THE END
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A P P E N D I X
A
final thoughts * You know, we’ve always found this whole economy thing a bit overrated. Really, if you think about it, the buying and selling of goods in a free exchange, with full pricing information and without government intervention. Ya . . . well, thanks, but we’ll wait for the movie. * And speaking of movies, we have a few great ideas for some, so if you’re some big shot Hollywood production type who can make things happen, you know, a real rainmaker, as the saying goes, drop a note. Okay? * If this book ever gets turned into a movie, and by all rights, it really should, it would be a good movie. It’s quite funny after all. Much funnier than lots of that other crap that Hollywood is putting out nowadays. In any 211
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appendix a
event, Tim wants to be played by Chris Elliott, mostly because when Tim was in college, he had a beard and was slightly balding and people used to think he “was that guy on Letterman . . . you know . . . the guy under the stairs . . .”; and Tim really thinks Cabin Boy is highly underrated. Chris wants to be played by Brad Pitt, whom he’s always thought of as a friend. * Perhaps the best thing to come of both the New New Economy and our erstwhile capturing of its zeitgeist is the secure knowledge that when, again, it becomes necessary for us, the authors, to unleash our massive intellects on whatever important subject that we decide worthy of our precious time and effort, there will finally be a pair of giant’s shoulders to stand on . . . our own. * Even if this book sells only a few copies, we will consider it a success if it is nominated for a prestigious Newberry Award. We love the prestigious Newberry Award. Henry David Thorough spoke of “drinking in the tonic of the wilderness.” We would be pleased to drink in the tonic of the Newberry Award. With it, we would have a ringing endorsement to sell this as a textbook to 6th–8th graders. We would be in a position to teach your children, as we have taught you, the reader. Also, it would assuage our consciences in a karmic way, because we have completely ignored our children during the months it took to write this book.
appendix a
* Even if this book sells only a few copies, we will consider it a success if it is selected for the Oprah Book Club. We love the Oprah Book Club. Shakespeare once said, “Eat, drink, and be merry.” We would certainly love to eat, drink, and be merry with Oprah, if she would have us. With her selection, we would be able to sell millions of books to soccer moms. Also, it would assuage our consciences in a karmic way, because we have completely ignored our wives, who are soccer moms, for the many months it took us to write this. * Actually, we are pretty sure that this book will sell more than a few copies. When we originally put excerpts of this book on the Web, we received overwhelmingly positive feedback. This has raised our level of anticipation and our real and sincere hopes that this book will be a smash best-seller. Indeed, if that does occur and we are propelled into the ranks of literary acclaim, then we suppose that we will be indebted to you, the readers, in some small way. We would like to say that your hollow adulation makes us somehow feel fulfilled, but to do so would be dishonest. In fact, it is the critics that we feel the most empathy with, and it is THEIR approval that we seek. It is the adoration of the critics that makes us feel whole. People, those who receive bad reviews no doubt, often say: “They don’t build statues of critics.” Perhaps not,1 but the reason probably has more to do with those people’s own avoidance of the truth and their 1. Or at least not yet.
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appendix a
own self-loathing. Well, that is not us. We will leave the loathing of ourselves to others. And through it all, we shall look to the critics for guidance. We trust that they will rise to the challenge.
A P P E N D I X
B
apology list We apologize for any slight, real or imagined, to the following: Women and other people of gender People of color Larry Ellison (Come on, Larry, we’re pretty sure no one thinks you put heads on sticks.) The family of Dwight D. Eisenhower Legos Gordon Moore (Please let us swim in your pool . . .) General Motors The WWF The psychiatric profession 215
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appendix b
Members of the Nobel Committee “Honest” Abe Lincoln Ulysses S. Grant Jesus and other Christians The Bloods The Crips The Menendez Brothers The Jews Michael Lewis and family (Tabitha . . . what can we do to make it better? Call us . . .) Styx Robert James Waller Clint Eastwood Coke and other Coca-Cola Company products Homosexuals of either gender Amazons, Communists, and the Amazon Bookstore “Dr.” Robert Solow and the Massachusetts Institute of Technology The following faiths: Catholicism, Judaism, Islam, Hinduism, and everybody else
appendix b
Atheists John Naisbitt (now go back to bed, you nutcake) Nicole Kidman (Nicole . . . what can we do to make it better? Call us . . .”) Our families . . . who we never got to see grow up, because we were too busy writing this book Dennis Hopper Economists Wellesley College The family of Brigadier General Leslie Groves Geena Davis Sharon Stone The hardworking people of Great Britian, Ireland, Italy, Burkino Faso (formerly Upper Volta), The Benelux Region,
Venezuela,
Pennsylvania,
North
Dakota,
Bangladesh, and the Confederate States of America Francis Ford Coppola (Francis . . . what can we do to make it better? Call us . . .) The editors, staff, and other authors of AMACOM (now do we get our advance?)
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C
interview with a new new economy editor It is hard to say what drives an editor in the New New Economy to take a chance and actually try to define what comes next. It is actually much easier to define what a New New Economy editor drives, and as you may have already guessed, it’s not a Ferrari. Not even a BMW. Think late model. Think compact. Think Kia. AUTHOR:
What made you think that a book on the New New
Economy was necessary? NNE EDITOR:
Well, during the 1980s we missed the PC boom,
and during the 1990s we missed the Internet boom. We missed the M&A boom, the IPO boom, the globalization movement; consolidations in virtually every major industry passed us by so that the books we were publishing were hopelessly out of date long before they ever hit the shelves. AUTHOR:
So you guys are sort of AMACOM lately.
NNE EDITOR:
Very funny.
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appendix c
AUTHOR:
And this New New Economy book was somehow sup-
posed to fill that role? NNE EDITOR: AUTHOR:
Well, as it was originally pitched by the authors, yes.
What happened?
NNE EDITOR:
It became clear, after seeing the first chapters, that
we were nowhere close to getting what we hoped for. AUTHOR:
So why not pull the plug?
NNE EDITOR:
We’re not very effective managers. We tend to mull
things over for a very long time before coming to any sort of decision, right or wrong. And the advance check had already cleared. AUTHOR:
And what you end up with . . .
NNE EDITOR: AUTHOR:
Is a book like this. Yes . . . we know.
What sorts of actions can you take, now that the book
has been published? NNE EDITOR:
Well, the lawyers are determining what recourse
we have. But they’ve been so tied up in fending off the lawsuits caused by the book that frankly, it will be years before we can define any type of legal strategy against the authors. AUTHOR:
What about on a personal level?
NNE EDITOR:
I don’t particularly like those two, if that’s what
you mean. AUTHOR:
No, we meant what have you been doing on a per-
sonal level. NNE EDITOR: AUTHOR:
Sending out résumés. Lots and lots of résumés.
Any luck?
NNE EDITOR:
What do you think?
A P P E N D I X
D
legal disclaimer So. You’ve read the book. Chances are that you are angry. In fact, you may be thinking that you might want to sue us. For instance, you may be one of the plethora of people we may have poked fun at, or a member of an organization we may have rubbed the wrong way. With that in mind, we refer to two old acquaintances: The United State Supreme Court and Hustler magazine. Specifically, we refer to Hustler Magazine v. Falwell, 485 US 46 (1988). Under that case, parody isn’t just protected, it’s really, really protected . . . like unanimously protected. Nine justices to zero justices protected. And the piece in that case was very offensive (and as we recall, not the least bit funny, but we wouldn’t know . . . we only read those magazines for the pictures.) So if you are a famous person with an axe to grind, just move along. Our legal advice to you is: You can’t sue us.
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You may also recall that we took some liberties with certain historical figures. Well, we have looked into this, and if you are a deceased person who wants to sue us, you are out of luck. Dead people can’t sue for defamation. So don’t look at us as your lottery ticket to riches, dead people. You won’t find it here. Finally, some of you may be angry because you want to have the last hour or so of your life back after wasting your time with this book. Perhaps you did not find that all your business problems were solved quickly and painlessly as you might have expected. On that count, we are sympathetic. We would like to do anything in our power to redress your complaints. In fact, don’t even worry about contacting us. We will come to you. Shortly. Just sit tight.
ABOUT
THE
AU T H O R S
To learn the latest stuff about the New New Economy, book the authors for a speaking gig; hire them to write your next speech, screenplay, off-off broadway show, cantankerous letter to the editor, personal essay on what it’s like to be a woman, or witty, yet heart-felt thank you notes; visit the “Official Website of the New New Economy.” www.thenne.com
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