Category Archives: Institutional

Are we seeing the start of a democratic revolution?

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Mobile-Revolution-300x300

I’ve been on assignment in the USA for the last year; and want it or not, I’ve been an innocent bystander to the American election. What a show! The interesting thing is, very few people actually believed Donald Trump would make it this far. He seems to have caught a lot of people by surprise; why is he so popular? Deepak Chopra offered an interesting perspective on this the other night in an interview. He believes that Trump represents the “collective shadow” of the American people. He went on to explain that we all have a dark side. That side of us may be bigoted, racist, misogynistic, ageist, or even angry; we generally suppress our shadow in our day-to-day interactions for we have learned that it is improper or not politically correct; and so we tend to hide it. What Trump does through his speeches and is appeal to our dark side, our shadow, and speak out the things many think but our uncomfortable advocating. It is an interesting thought and I’m sure there is some truth to it but I also believe there is more to this story.

Over the last 40 years, the incomes (in real terms) of the American middle class have been declining. Recent articles by the Pew research center support this. Politicians seem to be more interested in lining their own pockets than looking out for the good of their constituents, and once upon a time there was at least some level of bi-partisanship when it came to big issues. In fact a 2015 survey shows a broad distrust in government. Journalism used to be a noble profession, journalist kept politicians and big corporations in check. But with the downfall of newsprint, news organizations are too dependent on advertisers to be controversial. Besides, the election cycle is a bonanza for them; the closer the race the more money is spent on advertising. Last summer NPR predicted that the 2016 election campaign will see roughly 4.4 billion$ spent on advertising. People are just simply dissatisfied and fed up.

Europeans are not much better, they are witnessing wave after wave of immigrants settling in their countries but never really assimilating, and therefore feel threatened. The EU bureaucrats keep coming up with new rules that infringe on people’s traditions and way of living, farmers can’t slaughter their own animals even though it may be for private consumption. The small guys are being pushed out to ensure the big corporations can get a bigger share. In fact Europeans are even worst off because the people dreaming up all the new regulations are not even elected officials! The elected members of the European council don’t have much influence over what goes on in Brussels. That is left to the European commission who’s task, amongst others, is to manage the 23 000 European civil servants.

I believe we are entering an age where people are expressing their dissatisfaction through their votes, a democratic revolution. This is the movement that gave us the Brexit and will probably give us Donald Trump as the next president of the USA.

Could trust become the new currency of the century?

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trust

Turn on your TV or open a newspaper and you are bombarded by messages. Every one fighting for your attention and hard earned money. There used to be something called journalistic ethic, papers of records or a trusted face on the nightly news. But with the advent of advertorials and the repeal of the Smith Mundt act, in the USA, it’s becoming harder to sift the seeds from the chaff. There are enough examples of political corruption and dubious laws that work in favor of large corporations rather than the public at large that most people don’t trust their politicians anymore. Even doctors and health care in general have eroded the trust of the public; we are told to get flu shots only to end up with the flu and be told that the shot is ineffective this year but that we can fight the flu by buying so extra medicine, really?
In the mean time geopolitical games are being acted out and we are fed false or incomplete information about what is really happening. Take the example of Ukraine: we are led to believe that evil Russia is trying to destabilize it; when in essence it is the western expansion of NATO that has destabilized the region. And now with the appointments of “instantly naturalized foreigner” as finance minister in the new Ukrainian government, it has become quite clear the west is behind the movement. Oh yes, there was also that infamous phone call conversation from the US state departments own Victoria Nuland where is clearly states her views on the EU and who is behind the whole Maidan revolution. Who can you trust nowadays?

This is why I believe that trust, in your person, in your product, in what you or your company says has the potential of becoming the true currency of the 21st century.

It’s not the guns, stupid!

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The debate is on. Following the Newtown massacre the never-ending discussion about gun laws vs. the “right to bear arm” rages on.  The NRA predictably proclaimed that what is actually needed are arm guards in every school, because: “The only thing that can stop a bad guy with a gun is a good guy with a gun”.

Whilst it is not too difficult to come to that conclusion, you may remember my first blog on the subject where I laid out the arguments for it, I’m afraid the establishment maybe completely missing the point. Of course there will always be a relationship between the number of guns and the number of fatalities from guns.  Nowhere on earth are there more guns per capita than in the USA. In fact other nations, with a relatively high number of guns per capita, say Finland, do not proportionally have the same number of gun related death (much lower).  So where can the difference came from?

I have been pondering that question for a while without really coming up with anything specific; there are just too many factors.  That is until this week.

Because I was a good boy last year, Santa brought me an ipod for Christmas. Lately I’ve been driving to Germany and from where I live it’s about a 1000km journey. It takes me about 10 hours to make the trip. Ten hours that are not very productive, that is until I found out about podcast. Wow! There is just so much to choose from, comedians, talk shows on just about every subject you can think of and interviews with world leaders and shapers; I even found French Canadian radio and must admit that I relish in listening to my mother tongue once in a while. Needless to say the 10-hour trip now goes by much faster, at least perceptively, when you are engaged and listening to in a good debate.  As you can imagine there is also a lot of crap on offer, so I have been trying different content.  One of the ones I like is called “what’s wrong with Kris and Steve”. It is a podcast from a radio station in Arizona that talks about mental diseases and conditions.  That is where I learned about the mental health care system in the USA, or perhaps it would better to say the lack of one. As Kris explained the story, dating back to the 50’s where people were simply locked up, or as she put it “Warehoused”; to the abuse and the scandals that triggered the dismantling of the entire system, it quickly became obvious that the real problem in the USA is not guns, but mentally ill people with guns!  Each time there is a massacre we learn that the killer was deranged or had mental conditions.

It would seem that in the USA, if you have mental health issues or conditions, and you are not employed, and therefore don’t have any health care (which for this category of people is the vast majority) then you have nowhere to turn to.  That is to say, there are millions of mentally ill people freely roaming the streets. The ones that get too violent with inevitably end up in jail, the others well they’re on their own; or in the case of the Newtown killer live with someone who has guns.

I bet you the Finns don’t let their mentally ill people run around freely!

Well of course they don’t they are Scandinavians, home to some of the most moderns socialist democracies on the planet!  They have a good healthcare system. In fact during the last European survey in 2000, the healthcare system in Finland was rated as good. ([1]Finland had the highest number of people satisfied with their hospital care system in the EU: 88% of Finnish respondents were satisfied compared with the EU average of 41.3%). It is true that the Finns pay a lot more taxes  – max rate of 30% on earned income+ 2.12% social security insurance + 18.3% Pension + 3.2% unemployment insurance; capital gains and dividends are taxed at max 32% – Ouch, I guess peace of mind has it’s price! Nevertheless you will be surprised to learn that Finland is ranked higher than USA when it comes to GDP per capita! That’s right, the average Finn is richer than the average American.

The USA has some of the most brilliant medical minds in the world, some of the best medical hospitals and research facilities and yet it fails to provide basic access to health care to millions of Americans. Nearly 50% of Americans voted for Romney, the guy that promised to repeal president Obama’s health care plan.  I’m sorry but if universal Healthcare can prevent just one more massacre, call me crazy, but I think it’s worth it.

Too expensive you say! Maybe not, take for example the Cuban Health Care system.  Being isolated from Western interest and other Healthcare oriented companies, the average Cuban boast a higher life expectancy than the average American. According to the World Health organization 2012 Statistical report, the USA spends 7 960$ per capita on Healthcare whilst Cuba spends 672$ per Capita, yet in the USA not everyone is covered. For the lack of resources, that has plague the Cuban system since the beginning, they have done remarkably well. Their focus on preventive measures and basic hygiene may seem obvious and antiquated but it has helped them achieve a higher life expectancy at a fraction of the cost. I am sure there are things to learn & practices to copy; which together could save trillions of $ over the next generation.

I’m not saying the US should go social democrat like the Finns, or emulate the healthcare system in Cuba, that would be pushing this a bit too far. But keeping an open mind I’m sure there are things to learn. And besides, you can’t argue against the logic of looking after mentally ill people; if the Cubans can look after their own mentally ill, then why not the Americans. No matter what the cost, if we can minimize the risk of another tragedy, by helping sick people, it’s got to be worth it; not to speak of the moral issue surrounding the discrimination of the mentally ill.

The next hurdle is this misconception about Government. Many Americans see government as a bad thing. Government just gets in the way, the less intervention the better. Americans don’t seem to realize that government is the only thing that seeks to protect the good of the many as it is in fact the representation of its citizens. Government should protect the interest of its citizens. Here is a simple example. Mayor Bloomberg of New York past a law banning the sales of soft drinks in large containers. The logic being that people drink too much soft drinks and it has become a health issue, so to protect it’s citizens the government of New York city has passed this law.   Whether you agree with the law, or not, is not the point.  It is the intent that is important.   Outsourcing government services may look good on the books, but people often overlook one thing, purpose. The problem with privatization and reducing government is that they don’t share the same interest and objectives. Companies are driven by profits and government strives to protect and serve their citizens. One of the major problems in US and its politics is that companies, as legal entities, enjoy similar rights as citizens. Yet companies wield much more influence (through lobbying and money) on elected officials than the average citizen can.  Some of the lobbying is so entrenched in politics that it is the often the victim sarcastic humor and sporadic scandals, like the sugar lobby. It’s hard to avoid “conflicts of interest” when your “friends” finance your campaign and essentially keeps you in office.  So yes there certainly are some services the government can outsource to private companies, but let’s stay true to our objectives when we decide to do so.  We cannot expect bankers to regulate themselves nor should we let Pharmaceutical companies and health insurance companies run the healthcare system.  Did you know that some health insurance companies spend more money on personnel to process, examine, and fine ways to deny you your claim than they do on actual healthcare? Talk about a waste of money!

Clearly, changing the focus of the debate from gun ownership, to the root cause of the problem, treating the mentally ill, would seem like the right course of action.

Zabok, HR – 3rd February 2013

[1] Wikipedia

Austerity vs. Prosperity

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Ok, I got distracted by the election and was so flabbergasted by what I was hearing in the media that I was too emotionally charged to be writing anything.  Now the election is over and we are back to square one, yes Obama has been re-elected but the status quo in the House of Representatives and the senate has not really changed the divisive political mood; not to mention long list of other threats menacing us, Greece and the rest of Europe have not resolved their debt problem and the US is heading for the fiscal cliff, let’s just hope this is not a remake of Thelma & Louise.

Consequently, there is a lot of talk about austerity in Europe at the moment, and in some cases it makes good sense but people tend to forget that austerity is by design a constricting measure for the economy. One of the things I have learned during my consulting career is that unintended consequences can sometimes undermine the very effort to fix a problem.  This is where “system dynamics” and causal loops diagram can be useful to explore and express the dynamics at play in a given situation. To help explain what happens with austerity, I have developed the following model. The model is quite rudimentary and as it was created in Insight Maker, it is available to anyone to expand on, improve or correct what is already there. (so if you have any input to making my model better, please update it yourself or let me know). You will notice that austerity has the potential to be a severe vicious cycle depending on how it is applied.

Quite frankly I don’t believe Greece will ever be able to repay it’s debt, especially not by cutting spending alone. The current depressive cycle the country is one is only exacerbating the problem. In fact just like in the US, the debt problem needs to be a balance approach of revenue generation (ie Tax reforms) and spending reforms. Let’s face it the tax system in Greece is a disaster, and this is nothing new. The Greek politicians have kick the tax reform “can” so far down the road that the “can” is falling apart in pieces and there is nothing left to kick.

But, whatever gets done on taxes, it will have to be attractive. Greece needs urgently to get its population back to work, so creating private sector jobs has to be a priority.

The other side of the coin is spending. You may have picked up that I just the term spending reform rather than spending cuts. That is because I believe there is a fundamental difference and that one is sustainable and the other isn’t.  Spending cuts equal less services or investment in the future, and as you have seen in the model they constrict the economy. Spending reforms reviewing what you spend money on and what you get in return.  There are some great success stories of how one man was able to transform the purchasing process within government, under President Clinton, there by savings 100’s millions $ in the process. My experience tells me there are still billions $ if not 100’s billions in inefficiencies within government processes, in six sigma we call this the hidden factory. In fact perhaps the best way to think about this is the illustration with the iceberg.

The estimated cost of poor quality, expressed as % of turnover

The estimated cost of poor quality, expressed as % of turnover

The sad part, and often overlooked, is that the majority of these inefficiencies are known or have even been documented. The organization, in our case government, is just not capable to foster the kind of organizational maturity that would allow such opportunities to be addressed. And although the government may be often ranked at the bottom of the scale when it come to “appeal”, there are only a few organizations, world wide, that have the necessary transparency and values to motivate their workforce to truly strive for perfection and continuous improvement. Look at it this way:  how many people do you know trust their boss and organization so much that he would be willing to tell his boos how o make his own job redundant; because he would know that was the best way to demonstrate his value & commitment to the organization?

Ok some of you may have some Japanese friends where something like this is more likely to take place, precisely because they have developed mature organization where the workforce feels stronger together than the sum of the individuals, creating a strong identity! Identity is one of the magic ingredients that separate “groups” from “teams”. But wait a minute we are talking about government here, not Google! Looking for saving opportunities in government processes should be like looking for eggs in a henhouse. There may not be an egg under each hen but you pretty certain you will find some eggs.

As I mentioned above the first step of sliming down government were initiated under Clinton, and a lot of services and processes have been out sourced. In fact the Bush administration conveniently rode that wave when the same trimming down effort and clarification of “core competences” was applied to the military and the military contractor industry was created, suspiciously creating huge profits for companies like Blackwater & Halliburton in the process.  This is also the message Obama is trying to tell the American people when he says that some things are best done together. He has put a canvas that has some broad strokes on it but the question remains whether the other politicians will be willing to shape the landscape and add the color. Nevertheless the road to sustainable prosperity would clearly be smoother with a reinvigorated workforce of loyal civil servants that pride themselves on their work and looks after the governments interest as if the were his own.  Seeding the seeds for continuous improvement in government could be a low cost endeavor with immense potential returns.

Zabok, HR – 14th November 2012

The working class vs. the investment class

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The recent divulging of Mitt Romney’s tax returns has put the 99% vs. 1% discussion into perspective. Although it is astonishing to see a guy talk about people who “don’t work” when he himself does not really work, I have come to expect anything coming from the republicans. If we set aside the elderlies and the veterans, whom everyone can agree have already done their fair share of work, we are left with the people that taxes through their payroll (people holding jobs) and the people the people that pay taxes on the revenues from their wealth (investments class) and by definition the don’t hold jobs and don’t work, at least not 9:00 to 5:00. Well I guess to say that they don’t work is not really fair, they work at maximizing the returns on their investments as to accumulate more wealth and, theoretically at least, create new jobs. The only difference here is that this kind of work is taxed at a lower rate.

This reminded me of something, in his book “Rich dad, poor dad’ Robert T.Kiyosaki talks about his experience as a young boy who grew up with two father figures. When discussing as a boy what to do with one’s life, each one had a different message for him. His highly educated, but poor, dad would say: “go to school get good grades, and then find a safe secure job”; whilst his rich, but uneducated, dad would say ”go to school, graduate, build businesses and become a successful investor”.  Two different mind sets that lead to two different results; one where you work for your money and the other where your money works for you.

At the heart of this dilemma lies risk & responsibilities, how they are perceived, how they are weighed and managed. Never mind the fact that job security is a thing of the past, risk averse people will then to look for a jobs a it will provide a sense of security, they do their work within an agreed timeframe and they get a paycheck, they don’t have to worry about anything else. The business owner or self-employed person needs to constantly be thinking about, at least maintaining if not growing their business or practice and revenues. Along with that comes all the administration work and looking after employees. So as you can see the rewards are potentially higher but there are a lot of other things to manage and be responsible for, in other words, a lot of work. Obviously if you have enough money working for you, then you hire people to take care of all that work for you.  Which brings us back to the original point that the investment class does not work for a living. Would they work then they would have pay taxes like the rest of us.

Then there is this “taxofobia”.  As is paying taxes should be a thing to avoid most. Ok, I agree no one wants to give their hard earned money, whether it is through years of patience and careful investments or a 40-hour week of brute force and sweat.  On the other hand we enjoy living in a society and communities where: we feel safe;  if we should fall ill, we can be certain someone will take care of us; we don’t have to miles to the nearest well to get glass of water; etc. So you can see there are lots of benefits to organizing ourselves and creating structures and organizations that can provide theses services to the community and population. That is what government does.

It is interesting to observe the evolution of the role of government in the Republican speech over the last 50 years. They appear to have swung completely off the chart. Under Nixon, government still had a role, some may even argue that his vision of government is what help bring him down, today the rhetoric has moved the masses to believe that government equals socialism. Any redistribution of income is bad. During the past Busch presidency, what was once considered a “holy cow” of government functions, the military has begun to get outsourced, with companies like Blackwater and Haliburton, to name a few, raking in huge profits in the process. Here is another example; this week kids in Kansas grab the media attention with a YouTube video parody of the song -we are young- titled “we are hungry”. The action was a protest against the new school lunch initiative that promotes a healthier diet, fruits and vegetables. This was picked up by the “rightist” media and blown into a debate about how the government is trying to tell kids what to eat! Considering that the USA has the highest child obesity rate in the world, that is actually a good idea.  Sadly this the number news channel in the US.  By exploiting sound bits, twisting or hiding facts or just plain lying, they constantly generate a kind of fog around the real issues and brainwash their viewers with their message, keeping everyone ignorant in the process. Ironically, I must say, it was refreshing to see Bill Clinton, at 66 years old, try to make a case with facts and numbers in his speech at the Democratic conventions a few weeks ago. Unfortunately he only represents one side of the divide.

When the pie is growing the 1% vs. 99% discussion is not so sensitive. The 99% get the 99% of the growth, each a tiny bit, and are satisfied with having the opportunity to dream about making the 1% on day. When the pie is shrinking the 99% have a lot more to lose and suffer a lot more. If growth is not restored to keep it in equilibrium, the pain builds up like pressure and can lead to explosions and revolutions.

Instead of hiding his income, Mitt Romney would have been better off showing his tax returns early on and explaining this difference in tax rate and tax class, creating a reason to celebrate his success. Encouraging more people to aspiring to belong to the investment class is not a bad thing; it’s the American dream!

Zabok, HR – 3rd October 2012

Your time has come

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The company had been experiencing difficulties. After years of changes in it’s sales engine it was not getting traction in the market and as a result was not growing. Well there were some good explanations: the 2008 Financial Crisis, the Euro debt crisis, industry cycles etc. However things started to go astray long before that. People familiar with the company will tell you the company reached its peak shortly following the management buy out.   Which of course one could say was good for the management behind the buy out and potentially bad for the banks and investors, at the time.  Of course that is easy to say now, with hindsight we know there were changes in leadership and management. We also know we lost talent along the way and all too often theses talented people in turn set up their own competitive business or strengthen the racks of the competitors.

What is interesting is the dynamics of the decline. A classic tale of austerity!   As the company fails to meet expectations year after year, the investors get more and more worried so they get more and more involved, over time filling key positions with trusted people, who don’t necessarily have experience in the business.  These people then take decisions without the full understanding of what makes the company successful. So we start with the classic track: Expenses need to be reduced.

As the one big-ticket item, management first delays the annual regional meeting and celebration (European Company Meeting). The event is a celebration for all the hard work and success stories we individually, or at least as project team, experience on projects. It is also often the only opportunity many people will have to meet there colleagues from other offices and build their networks. Above all it is an opportunity to share and bond together, thereby releasing and incredible amount of energy that always lasts until the early hours of the morning. At first it is just a 6 months delay, then slowly but surely it becomes an, “every two year event” and finally becoming and exception. Unfortunately it is people that make up the assets of the company and thinning out the so-called “ECM” may seem like a wise thing to do, unfortunately it undermines the very fabric of the company.

Of course the annual party is not the only expense that is cut back. Since operations make up 90% (or at least it should) of the workforce it was decided that “Non billable expenses” are to be eliminated in operations. The logic being that operations people work on projects where clients pay the operational expenses. This policy was effective in two ways: it reduced expenses and thwarted all other operational activities that one couldn’t morally expense their clients.   Training some became the next victim of eliminating non-billable expenses. During it’s peak the company invested a lot in training, in fact I was personally involved in upgrading our training initiative, taking the ownership for the “Operational Fundamentals” course in 2005 and delivering the course 9 times to roughly 200 new starters until 2009, when training was sacrificed altogether.

But in the end these cuts are not enough, now the company has started cutting personnel.  The company is downsizing and to be sure it has the biggest impact on its payroll, it is the people with the highest salaries who are targeted first, never mind that they have the most experience and knowledge.  That’s how I got my notice the other day, yep after years of dedication I had finally become a number on a piece of paper, someone who was perceived as “non value add”.  At first I was shocked, but then, thinking all this through, I realized that my time had come.

If the management did not see the need to keep me around then why would I want to stick around? It is kind of paradoxical that the company that preached “linking the top floor with the shop floor” has itself become so disconnected.  Quite frankly I’m happy I got laid off, because it’s no fun to work where you don’t feel appreciated.   So “adios” old job! And hello new opportunities!

To stay true to my motto of  “ helping people”, I have decided to share my experiences, ways and methods, to look at, and deal with change, both personally and organizationally.  You see I have learned that change does not have to be painful and it does not have to be hard. After all, the essence of our being, the cells that make up our bodies, are constantly changing. And just as a year is made up of changing seasons, our lifetimes on earth are made up of different chapters.  Evolution is change!  Yes learning something new does require more mental effort, but it can also be rewarding so whenever you are faced with a life changing event don’t be afraid. Just because it “looks like” you have been dealt a lousy hand, does not mean you are out of the game. Who knows if “what looks like a lousy hand” turns out to be the best hand at the table?  You have to make the best out of what you have, and as Marcus Buckingham and Curt Coffman have wonderfully captured in their book “first Break all the rules”, stop focusing on trying to repair yourself and start focusing on what you are good at (what you enjoy doing) because that is what you will excel at.  Getting laid off is kind of like coming to a “ T ” intersection in life. You can turn right or left, you just can’t go straight! It provides an opportunity to truly assess ones life and take a different turn. Many people are not given that opportunity and continue doing a less than satisfying job until the day they retire. Why? Because they themselves are afraid of changing, they are reasonably comfortable with what they have.

So just like Greece, the company is stuck in a negative dynamic current, brought on by austerity. The mismanagement of the past has to be paid by the citizens / employees of today. Unfortunately focusing on reducing expenses and costs does not help generate more revenue. The glass is always half full or half empty depending, which way you look at it.  Picking your way to look at it will decide, like the intersection in the road, where you end up.

Zabok, HR – 28th May 2012