Let's Get Down to Business...

Peter Drucker writes about what it takes to be an "Effective Executive"

Peter Drucker's contributions to understanding why businesses act the way they do are nearly boundless.

Well into his 90s, Professor Drucker was teaching, consulting and energized by how organizations were changing as we moved from the 20th Century "Age of Industry" to the 21st Century "Age of Knowledge and Globalization."

Business research is often criticized for being too theoretical and not having any practical usefulness.  No less vocal are critics of the "menu approach" where you're told that if you do this or act that way, you'll be wildly successful.

Professor Drucker legitimately had a foot in both camps.  His 65-year-long career in research produced a lengthy list of theoretical insights.  His practical experiences also showed him the right and wrong way to do things.

In the accompanying article, Professor Drucker outlines the things he thinks you should do in order to be "effective."  And he backs them up with some reasoning that is hard to argue against. 

I encourage you to look through the article for a idea or two that you could use in working more effectively in your team or organization.  Certainly Professor Drucker doesn't have the answer for everything, but there may be a nugget in here that will be useful for you.   

• Download what_makes_an_executive_effective_peter_drucker.doc

Are "Tough" Managers more Successful?

Defining what it takes (or what it means) to be a "good" manager flummoxes business educators and practitioners.  That's because it's a subject where "one-size-DOESN'T-fit-all!"

Teaching "soft skills" is the current rage in management education.  As you know, everything relating to teams and teamwork is at the top of the list. 

But does being a good-listener or a flexible decision-maker correlate with on-the-job success?  How do we know what it takes?

Three University of Chicago researchers recently tapped into a motherlode of real-world data that challenges a lot of contemporary management thinking.  In brief, they found that what matters is being a little "tough-minded," not soft-around-the-edges.  Sure, it helps to be respectful and a good communicator, but they found delivering results takes execution and aggressiveness.

Attached is the Wall Street Journal's story reporting on this study.  Read it and think about what it's telling you. 

Is management education getting it right?  Or are some "hard skills" a little softer than we think?  Or, and maybe here's the take-away, to be successful, do you need to have a "bag of tricks" that's full of hard, soft and "just-right" skills?

Enjoy...

• Download are_tough_ceos_most_successful.doc

Typographical Error: It's "Gen Y in the Workforce," not Workplace

There's a typographical error in the Course Syllabus.

The third case we'll be analyzing on November 19 is Gen Y in the Workforce by Tamara J. Erickson.  The syllabus mistakenly says "Workplace."

It's citation is still Harvard Business Review (February 2009), Volume 87, Issue 2, p. 43-49.

Feel the LUV: Will this be his Curtain Call?

Herb Kelleher, the legendary heart and soul of Southwest Airlines, says he's really going to stay home this time.  He's "retired" and "unretired" on a couple of earlier occasions after getting bored doing chores around the house.

This time, he says he's presided over his last Annual Meeting (actually they're "LUV Fests").  He is, after all, 77 years old and has never been bashful about living it up. 

When the history of American Business is written, Herb and Southwest will get several chapters.  Remember, they've done something no other airline has even come close to doing:  always be profitable.  And, best of all, they have fun doing it!

On this post's continuation page is the New York Times' story on Herb's curtain call.  Don't miss a word of it.  While you're reading it, watch this interview with Herb.  It will give you more insight into effective leadership than any management textbook.  Look how he blends strategic insights with real warmth and caring.  There's no one better at it.  Enjoy.

Here's the Link to One More Time with Herb. 

The Gap in GAPP: This really is a Big Deal

Our friends in the Accounting Department are up to something that everyone needs to watch and understand. 

They're throwing away the rulebook they've been using for nearly 75 years. 

Over the next 8 years, the rules that businesses use for "keeping score" (Generally Accepted Accounting Principles - GAAP) will be replaced by "International Financial Reporting Practices."

This means the numbers you're accustomed to seeing will be reporting more and different things. 

The reason for this is globalization.  GAAP is mostly used in US accounting.  Multi-national firms keep two sets of books; one based on GAAP rules and the other on how things are done in the rest of the world.

Here's an article from the Wall Street Journal that tells you more: 

Download closing_the_information_gaap.doc

As you read this, think about whether this change will produce more "useful information" that can be used to make better decisions.  Do you think today's "credit crunch" would have been avoided (or not-so-bad) if big companies had disclosed more information about their "derivatives" and "collateralized mortgage obligations?"

Do you think you'll know more if it's based on "professional judgments" (appraisals and opinions about current values) rather than historical and sometimes out-dated facts that are accurate? 

Who said accounting is dull?  Isn't this great stuff?

The President backs away from a Bad Idea

Shortly after his inauguration last winter, the President released his budget proposals.  One idea for raising revenues was repealing the tax exemption given to foreign income earned by domestic corporations but not used in their domestic operations.

One of the President's campaign themes was he would "end tax breaks for companies that ship jobs overseas." 

Something to Cheer about?

Today's headlines are proclaiming a drop in Oregon's Unemployment Rate:  September's Rate was 11.5% compared to 12.0% in August.

Are happy days here again?  Is the "Great Recession" over and a "Great Recovery" underway?

Digging into the details suggests that planning a big party might be premature.

Remember that the Unemployment Rate expresses a relationship between (1) the Size of the Unemployed Labor Force and (2) the Total Labor Force.

For the month of September, 19,668 more Oregon workers were unemployed than during August.

"What a minute!" you say, "How can the Unemployment Rate go down when the number of unemployed workers went up?" 

The answer is the size of the Labor Force during September:  it shrank by 20,115 workers compared to August.  In other words, the State's Labor Force was decreasing at a faster rate than the number of unemployed workers. 

Remember from math class how multiplying two negative numbers equals a positive number?  This is similar.  Despite the good news of a significant drop in the State's Unemployment Rate, the real story is the bad news of more workers being unemployed and even more workers packing up and leaving the state.  

Here's some of those "Green (Blue) Sprouts"

There's little good news to report from the economic front.  Now you know why it's called the "dismal science."

The Federal Reserve is reporting that Consumer Credit decreased at an annual rate of 5.75% in August.  Average interest rates for car loans at commercial banks are at a 5-year low (6.79%) but no one is borrowing.

That's the dilemma of where we're at.  The supply side of the credit market has plenty of money to lend.  But consumers aren't buying and borrowing. 

The short answer to why consumers aren't responding to these low rates is found in the unemployment numbers and the uncertainty of whether it will be a "jobless recovery."

Another perspective might be to look at how we got into this mess in the first place.  Wasn't it because everyone - businesses and consumers alike - borrowed too much and couldn't pay it back?  That's called "over-leveraging." 

But is the "best" answer to start borrowing again?  It looks like consumers are trying to reduce their debt load while our fiscal and monetary policies are encouraging them to do the opposite.  Is it realistic to expect consumers to start borrowing again and re-start the economy in the short-term but be prudent and not borrow so much in the long term?

On a happier note, the University of Oregon's Economics Department publishes monthly the "Oregon Economic Forum."  Most of the current issue's news for the state is just as depressing as the national news except for their "Index of Economic Indicators" which is their version of the weather forecast.

This index is made up of a variety of measures such as unemployment claims, payrolls, building permits and more.  After a little statistical legerdemain, it (the "Blue Line/Sprout") predicts what might be around the next economic corner.  As you see, it's heading the right direction (up) for the first time in several years.  That's no guarantee that the good times are coming back sooner than later but does confirm that the worst may be over.

A Vote in our Poll from a Big-time Banker

The Hong Kong and Shanghai Banking Company (HSBC) is one of the world's largest financial institutions.  Weighing in with over 325,000 employees worldwide and $2.5 Trillion of assets, they make things happen on a global scale.

Our poll question was put to their CEO,"What's the recovery going to look like:  a 'V,' 'U' or 'W?'"  As good business decision-makers should and must, he gives us a direct answer.  Here it is: Download HSBC Chief fears a Second Downturn.  Does he have it right?  What was your vote?  Do you want to change your vote?

Unemployment Rates: Are they the same everywhere?

The table below is from the October 2009 issue of Oregon Labor Trends.  It analyzes Oregon's Unemployment Rate for July which was 11.7%, compared to August's Rate of 12.2%.

Compare the difference between Corvallis and Bend.  Any thoughts on why "Beaver Nation" is nearly 5% lower than Bend?  Didn't HP close down its Corvallis plant? 

Study the report's second bullet point.  That's right.  Today's unemployment rate in Bismark, North Dakota is lower than Oregon's unemployment rate during the boom times of three years ago!  What's in their water!  North Dakota also has a budget surplus and is debating whether to lower its personal and business income taxes.