The Great Reset

Perhaps it is time to consider how much lemonade we can make from the enormous lemon that is our current economy. As bad as things are there are opportunities to emerge wiser and with a more sensible, sustainable future.

What have we learned? We learned that home values cannot go up indefinitely and that bubbles do burst. We learned that we cannot borrow indefinitely to finance profligate life styles. We learned that financial instruments can be made so complex that risk cannot be assessed. We learned that the financial geniuses who created and rated these instruments didn’t understand what they were doing. We learned that companies who offer credit cannot be counted on to have our best financial interests in mind. We learned that companies can be too big to fail. We learned that regulation and oversight is needed and that regulatory agencies cannot be lapdogs of those they are supposed to oversee. We learned what future energy costs look like when demand threatens to outstrip supply. We learned how quickly global demand collapses when interlinked economies suffer from poor policies.

As a country we tend to have a short memory and do not apply the lessons we’ve learned. We will emerge wiser and stronger IF: If we take responsibility for our finances and do not borrow more than we can afford; If we honestly assess what represents affordability in our own situation and ask for help as needed from someone who represents our interests; If we shun credit offered at usurious interest rates and do not finance day to day living; If we insist on regulation that protects people’s interests and that our regulatory agencies be held accountable for proper enforcement; If we invent and adopt technologies to reduce our energy consumption and create alternative energy sources; If we invest in and restructure our educational system so that the U.S. will create these breakthroughs and benefit from them economically and environmentally as they are deployed throughout the world.

If we have learned to live within our means economically and environmentally then we will emerge stronger and more secure as we will be significantly less dependent on other countries to supply our energy and finance our debt.

Who Needs Stimulus

If the economy is 80% dependent on household spending what if the government gave the money to people instead of the very banks that drove the world economy into the dirt.
About two trillion dollars ($2,000,000,000,000) have been committed to saving the economy. The March 2008 Current Population Survey shows there are about 116.5 million households. If two trillion dollars were distributed among households that would amount to $17,167 per household. For the wealthy this amounts to less than a few weeks pay but for many it represents nearly a year’s income.

What would people do with that money? Would they pay down debt (particularly credit cards) and so increase their monthly cash flow and decrease the risk of future financial difficulties? Would they spend it and create jobs? Would they save it and recapitalize banks? Distributing money to households would be efficient and not require additional bureaucracy. Of course this is simplistic and can’t happen.

Instead of propping up failed banks, whose leaders’ compensation was clearly misaligned with their business acumen, what if the government would allow CREDITWORTHY people and businesses to borrow directly from the U.S. Treasury at affordable rates? Let banks then decide if they want to engage in responsible lending or let them go bust as they cling to worthless CDOs and other failed assets of their own making.

Instead of creating impossibly complex instruments whose risk is impossible to determine, what if that energy were channeled into creating and financing new business models where risks and returns are quantifiable and advance objectives in our common interest? What if, like Tom Friedman proposes, a business was created to upgrade a home’s energy efficiency at no cost to the owner? The business would make the investment and be repaid by splitting the energy savings with the home owner. The banks, the business, the providers of the energy saving materials and appliances, the homeowner, and the environment all win and the demand creates incentives to invent more energy saving technologies which when commercialized create even more employment.

Jay’s Top 10 Rules for Consultants

Not long ago I had the opportunity to visit with college graduates just beginning a career in consulting. It was quite refreshing to see their enthusiasm, eagerness to learn, and perhaps a bit of nervousness.

They took the opportunity to ask what wisdom an "experienced" consultant could impart to them (they were very tactful). One of the questions that made the biggest impact on me was "What if I make a mistake?" I thought it was, in many ways, the most relevant and revealing question of the evening.

That got me really thinking about what advice I could give those just beginning their journey.
Below is the result of reflecting on a career spanning more than 20 years. I hope it will be useful to new and experienced consultants alike.




Jay’s Top 10 Rules for Consultants

10 - Make your manager/sponsor/person who signs your timecard look good. You will be successful only to the extent you make others successful. Make sure your manager and team get the credit. People will want to work with you again and they will remember who did the heavy lifting.

9 – Don’t’ be afraid to raise concerns or present alternatives. That is a critical part of your obligation as a consultant. It is important to be straightforward – but tactful. Don’t attack. Present alternatives in the form of a question (“Has this solution been considered…) where you proceed to outline a solution and highlight how it can address shortcomings/concerns. If you need to confront a performance problem be objective, factual, give documented examples, and don’t let emotion cloud your judgment or discussions.

8 – Remember that managers don’t create solutions to problems. They choose among alternatives created by the experts they manage. This includes you. Do not come to your manager with a problem without also having potential solutions with clearly identified advantages and disadvantages.

7 – Fit in. Make note of the dress code and blend in. The old and elitist “dress one level above your client” is sure to tag you as “the consultant” and therefore NOT a member of the team but a transient know-it-all who will be gone in a little while after costing the company a pile of money and leaving incomplete solutions in your wake for others to deal with. (Hopefully this is not the case but you can see how easily this perception can be created.)

6 – Admit mistakes immediately and without excuses. Be sure to present carefully thought out ways to remediate any damage. Make sure it is not perceived as covering your behind (to use the politically correct term).

5 – The customer is not always right. However, after having had a chance to present your alternatives and a decision is made you will give it your unequivocal support and best efforts even if you don’t agree. You are responsible for presenting convincing, tactful, fact-based alternatives (see rule 9). Your argument may be sound but there are often “other” considerations your manager must balance of which you likely will not be aware.

4 – Do not triangulate, join, or create opposing coalitions. Your objectivity and integrity are your most valuable assets as a consultant. Keep your opinions (on your customer’s business, people, politics,…) to yourself. Maintain your reputation for fairness and objectivity. Create solutions that overcome barriers and enhance collaboration (see rule 9).

3 – Reign in your (natural) tendency to judge people. Not everyone is easy to work with and they may work in ways that are “not your style”. Your do not know all the things that motivate their behavior and you will not be able to walk a mile in their shoes in order to understand. Your job is to find ways to work with the resources available to you (see rule 9 – again).

2 – Be a leader, not a boss. Remember that boss spelled backwards is double s o b.

1 – See rule number 10, then 9, then 8, then…

New Web Site went live today!

Blue Skies Unlimited’s new web site went live today . I hope you find it informative.

One of the new features is this BLOG section where I will be posting thoughts on a wide range of topics.

Your feedback on the site or any of the (future) blog postings is welcome (use the Contact Us link under the About Us menu).

Thanks for visiting!