JACK MIXNER STRATEGY

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When I was growing up, we used to take road trips in the family Pontiac. I remember sitting in the back seat, stiffling, hungry, and ready to be there, asking into the front seat, "Are we there yet?" And I remember the response. Early on it was a wry smile and no comment. Later on into the trip, say, two days later, the response came a little more quickly, "Stop asking!" And that's what I feel like right now. Actually, I have two questions to ask: "Are we there yet?" and "When we get there, will things be different from what I remember?" The market has rebounded nicely. Actually, we have a long way to go, but at least it doesn't look like things are going to go down that much farther, if any. We just finished four weeks that summed to a gain in the stock market, the first in a while.

So, are we there yet? Will things be different when we arrive? Some say consumers are more frugal (Kliner, 1). Some companies are making "gutsy bets on new strategies" (Weber, 37). There will be "more startups, fewer giants, and infinite opportunity" (Anderson, 99). That's what they say.

We're just going to have to wait and see. In the interim, make sure you have the right people on your team, join with them to make a plan and implement your plan. Now.

Anderson, Chris. The New New Economy. Wired. June 2009. 99.

Kleiner, Art. How Real Is the New Normal? strategy+business. Summer 2009. 1.

Weber, Joseph. Hunting for Growth. BusinessWeek. 22 June 2009. 37.

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Growing up, my family had a record player. You could carry it around, as it had a handle on the outside of the case and the arm could be clipped down. Everything was one piece. Then we got a new record-player. It was in a cabinet of something like mahogany. It weighted a ton, but it had better speakers and a better turn-table. It was great until our deaf cleaning-lady turned up the volume so high that she blew out the speakers. If you played it quietly, you never knew it was broken, something that was just fine with my father. When I got my first stereo things were different. I got the speakers from one manufacturer, the amplifier from another, and the turntable from yet another. When I put it all together, it had great fidelity (it was stereo, after all) and it was a lot harder to blow out the speakers (not to worry, we still managed to blow out one of them). It was a modular system in which the pieces added up to a better total unit that a system made all by one manufacturer. My first computer was the same way. I bought an IBM PC (couldn't go wrong, right?) added floppy disk drives, a printer, a memory card, and a graphics card and I was ready to go. That worked pretty well, except it sure cost a lot. My next five or six PCs were off the shelf - the manufacturer put it together and I bought it as I had to keep up with technology. The costs fell with each successive machine. Cars have never really been modular in quite a while. Yes, during the sixties, we added performance parts and stereos all the time, but as I have gotten older, all that just hasn't been important. Too, the manufacturers increased quality significantly, so I went along with whatever they were selling, basically.

Mann's article shook me up a bit because it reminded how much more I like my modular stereo and my modular computer, and, yes, hopefully my modular car. Today you can't really get a modular car, but that may change. Detroit, with the ultimate reorganization that is happening today, won't be able to spend the big dollars to create the cars of the future. Each system - the propulsion system, the breaking system, the batteries, the communication systems, etc. - will need to come from a different manufacturer. They envision just snapping things together, testing it for safety, and delivering it to me. Well, that doesn't go far enough for me. I want to buy the braking system myself, along with the engine, and suspension and windows etc. and have it put together to my specifications. I'll want simple, cheap, and economical. You might want sleek, fast, cool, with money as no object. But we both, I predict, will want to specify what goes into the car - ourselves, just like when we bought our first stereos or our first computers. That's my prediction. Now we get to wait and see how it turns out. Things are going to change, that's for sure. Get ready. Smaller, inventive manufacturers are going to shake things up, and we all should benefit. Some risk will be there as smaller firms are more likely to fail and not support their products, but that is part of the price we will pay for getting the cars that do what each of us wants. That's what I think, anyway. I'm hoping for the time when I can snap together the car I want, maintain and repair it easily, and then rebuild it or recycle it easily. We'll see.

Mann, Charles C. Detroit. The New New Economy. Wired. June 2009. 101.

Posted by jackmixner at 05:15 PM | Permalink

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We've been enamored of Jim Collins books for some time, as they give solid advice that is actionable. His new book, How the Mighty Fall,  at first blush seems like just another book to extent the line of hits. Haven't read it yet, so we'll see. He does reinterate some things we've seen before, like how to get the right people in the right seats (Collins, 38): Choose people that fit the company's core values; don't tightly manage them; the right people realize they don't have jobs, they have responsibilities; the right people fulfill their commitments; the right people are passionalte about the company and its work; the right people display window and mirror maturity (if it is going well, it's the team; if it's not going well, it's their responsibility). We all know that when you watch a company for a long time, decline is inevitable. Collins is trying to figure out why, and, then, prescribe what to do about it. It seems that the prescription isn't what matters, it's the realization that something can be done. The real task is doing it, especially in the instance when things seem like they are going just fine. About three years ago we began working with a Fortune 500 home builder. Their plans included growth with nary a mention of the possibility that the market could turn against them. We pointed out that their growth plans (they envisioned growth of one hundred per cent a year) weren't realistic in a cyclic business. When we asked to see their lay-off plans, they thought we were nuts. Well, someone got that on wrong. And that's the point. Hubris born of success isn't a good determinate of future success. In fact, according to Collins, it is the first signal of decline. He got that one right, for sure.

Collins, Jim. How the Mighty Fall and Why Some Companies Never Give In. BusinessWeek. 25 May 2009. 27.

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Singapore sees signs that things are turning around. Here's a simple list of activities they are supporting to support GDP (Einhorn):

1. $14 billion "resilience package"
2. Corporate tax cuts
3. Subsidies to companies that don't lay off workers
4. 90% refunds for employee training
5. Three new universities, on of which is linked to MIT
6. Nissan and Renault will test electric cars in Singapore
7. $300 million loan to Micron Technology to upgrade
8. Encouraging international Big Pharma to locate research centers in its biotech park.

The results? They believe the recession may be easing in Singapore.

Einhorn, Bruce. Singapore Stirs but exports are falling. BusinessWeek. 8 June 2009. 38.

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The Table of Contents to Branson's book says it all (Branson):

1. Just Do It!
2. Have Fun!
3. Be Bold
4. Challenge Yourself
5. Stand On Your Own Feet
6. Live the Moment
7. Value Family and Friends
8. Have Respect
9. Do Some Good

Not a bad list. The interesting part is that following the list - and only the list - made Branson a billionaire. 

Branson, Richard. Screw It, Let's Do It. Lessons in Life. Virgin Books. 2006.

Posted by jackmixner at 03:23 PM | Permalink

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First, three definitions and processes to lay out the playing field:

Extremism.     Extremism is a term used to describe the actions or ideologies of individuals or groups outside the perceived political center of a society; or otherwise claimed to violate common moral standards. The term is invariably, or almost invariably, used pejoratively. Extremism is usually contrasted with moderation, and extremists with moderates.  (Wikipedia, extremism).

People first.     The executives who ignited the transformation from good to great did not first figure out where to drive the bus and then get people to take it there. No, they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it (Collins, 41).

Checks and balances from extremism.     ...take a fresh look at other institutions that either promote or combat self-insulation. ... require bipartisan membership. ...confront conspiracy theories with ... credible counter-arguments. In the private sector, economic disasters, for individuals and large groups, are often a product of conversations among like-minded people, in which some investment or project seems to be a sure winner (Cass, 158-159).

Let's assume we accept the notion that a dictatorial leadership that decides the direction of a company isn't likely to get the results it needs. Collins suggests getting the right people on board first and moving the wrong people on to greener pastures. A tendency, if you don't think about what you are doing, is to hire people who think like you do. Not a good idea. Lincoln hired his, basically, enemies to join his Cabinet. Obama is doing the same thing, or so it appears. They are fostering dissent in order to make sure decisions are based not upon groups composed of similar individuals (extremists, for whatever ideology, if you think about it) but on groups of dissimilar individuals who argue disparate points of view before any agreement is reached. That's your task. Hire individuals who think independently. Then craft your strategy. Don't dictate it. Consider the extreme views as part of the process. The decision you finally reach is stronger as a result.

Collins, Jim. Good to Great. Harper Business. 2001. 

Sunstein, Cass R. Going to Extremes. How Like Minds Unite and Divide. Oxford University Press. 2009.

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I grew up in New Jersey. Not the New Jersey you are thinking about with the belching pollution from the refineries along the New Jersey Turnpike. No, I grew up in the country of North Jersey, just below the Kittatenny Ridge. We liked to go up on the Appalachian Trail on Sundays to hike along in solitude. We knew to be careful where we walked, however. The woods were full of old stone walls and foundations that could be unsafe to the uninitiated. Even more unsafe were all the old, abandoned wells that spotted the back country. You didn't want to fall in an abandoned well, especially if you were all by yourself. The New Jersey I grew in looked like it was all original growth that had been there forever. Actually, that wasn't the case. New Jersey had been fully populated during Colonial times, the hills denuded, and farms created even on the steeper slopes. The industry of the times, the farms didn't retreat until the 1830s and 40s. Sullivan (Sullivan, 125) makes the case that the population of the east evacuated because of economic conditions. The completion of the Erie Canal and the beginning of the railroad era allowed for farming in the "Northwest," in the valleys of western New York and Ohio and their environs. The land was cheaper, flatter, less rocky, and more fertile. Crops were more profitable, and, because of the new railroads and canals, cheap to bring to market. This disrupted the farming communities along the East Coast. Greeley's classic "Go West young man" wasn't really a romantic call to wander. Rather, it was a wholly realistic call to survive starvation; you couldn't make a living in the east. You had to go west to find your fortune. It wasn't a cool thing to do, it was survival (Sullivan, 128). The Grapes of Wrath was about the Depression. Thoreau's writings about Walden were about the depression of 1837. He hoped to survive not by the materialism of industrial farming and manufacturing communities but were a call to survive using a simpler life style like that that had existed before the failure of eastern communities. The interesting parallels between the depressions of the 1930s and the 1830s and 40s point to solutions for today. While we probably won't end up calling our time a depression (I'm hearing Great Recession ocsasionally) the suggestions for success make sense. Thoreau actually was an industrialist himself. His family manufactured pencils and were widely recognized for their quality. He innovated, especially during the period when German imports largely supplanted American pencil manufacturers and ended up abandoning pencils for graphite manufacturing. His powdered lead became a staple of a new industry that used lead in a mechanical process that was a precursor to Xerox processes a century later.

Sullivan, Robert. The Thoreau You Didn't Know. What the Prophet of Environmentalis Really Meant. Collins. 2009.

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Apologia. Today the term "apologist" is colloquially applied in a general manner to include groups and individuals systematically promoting causes, justifying orthodoxies, or denying certain events, even of crimes. Apologists have been characterized as being deceptive, or "whitewashing" their cause, primarily through omission of negative facts (selective perception) and exaggeration of positive ones, techniques of classical rhetoric. When used in this context, the term generally has a pejorative meaning (Wikipedia).

That word pejorative at the end the definition says it all. Holstein's book is an apologia about Wagoner's management of General Motors. Dumped as CEO as part of the bail-out process leading up to the recent bankruptcy, the book makes a case that he was the right man for the job and should have been allowed to finish the task of righting the GM ship. Well, it took to long, Mr. Wagoner. It was in fact time to move on to new management. From a strategic point of view, Wagoner had one neat win, the OnStar system. GM broke company rules big time early in the creation of the system. The strategy wasn't dictated in advance; it was allowed to become apparent over time. They didn't spend a lot of money; the initial investment for the alpha system they bought from General Magic was $15 million. The strategy for OnStar wasn't an automotive strategy; it mimicked the electronics world more closely with its continual improvement and continued innovation. Customers had complained about any remote control of their auto; OnStar began that control in a benign way that customers didn't complain about. It saved lives, after all (Holstein, 157-168). Benighted by Clayton Christensen in a Harvard case study, the OnStar success is a good example of a disruptive strategy that worked (Holstein, 169). The keys to a good strategy? Initial management wasn't told what to do; they figured it out as they went along. It wasn't top-down at all. Secondly, Wagoner ran interference between the traditionalists at GM and the new technologists. Finally, and maybe most importantly, OnStar stood alone. It wasn't assigned to any division. Yes, Cadillac was the first installation. However, over time, OnStar was rolled into most of the autos at GM. Wagoner proved he was a good manager when he championed a new technology. It was his championing old technology, namely, the "way things are done at GM" that proved his ultimate downfall.

Holstein, William J. Why GM Matters. Inside the Race to Transform an American Icon. Walker & Company. 2009.

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For George Shultz, Secretary of State in 1987, globalism was a theme he returned to over and over again during interactions with Congress and, as important, the Soviet Union (Mann, 241). His definition? Shultz talked about "the information revolution, the impact of ever-faster computers and telecommunications, the speed with which money and capital flowed from one country to another, and the way which manufacturing could be transferred around the world" (Mann, 242). This would be really cool if Shultz was trying to impress CEOs in Silicon Valley, or, say, Hong Kong or Shanghai. He wasn't. Shultz's target was the Soviet Union, and, more specifically, Michael Gorbachev and his ministers (Mann, 243). The point of all the dialog was the interesting part. Based on research and discussions started by Theodore Levitt at Harvard, whose article The Globalization of Markets dated to 1983, Shultz was pointing out that international societies would have to adjust to a changing reality. Democracies would have a hard time. But, and this is the interesting part, Communist governments and closed societies would no longer be able to control what their citizens saw or heard (Mann, 243). It doesn't take a stretch of the imagination to realize where the revolutions in Eastern Europe came from. Global information was having a political effect later to be equaled - or actually surpassed if that is possible - by the economic effect. An aide to Shultz, Richard D. Kauzlarich, copied a telling sentence from a shipping label into a State Department memo (Mann, 243): "Made in Singapore, Taiwan, Mauritius, Thailand, Indonesia, Mexico, Philippines. The exact country of origin is unknown." In 1987, no one realized the impact of these discussions except, tellingly, Gorbachev, Shultz, and Reagan who was trying to "spook the Soviet leadership" (Mann, 244). If we fast-forward from 1987 to today, we find a similar message directed not at the Russians, but at the United States, and from the Chinese, not the Russians. The US dollar continues to dominate international exchange. The Chinese want to change that (LeVine). This feeds two questions: Do the Chinese concerns mean much to a world marketplace dominated by the dollar? and If so, what is the implication for the long-term health of the US economy? Globalization was a strength of the US in 1987. It still is a strength of the US in 2009. The tough part? Leveraging that strength in a difficult economic environment. How we respond dictates in large part our future vitality.

LeVine, Steve and Dexter Roberts. China's Doubts About the Dollar. BusinessWeek. 8 June 2009. 24.

Mann, James. The Rebellion of Ronald Reagan. A History of the Cold War. Viking. 2009.

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