Crash portends Doom to Bloom

Watching groups of people standing on the wings of the “Miracle on the Hudson” airplane crashed and floating on the Hudson River surrounded by an armada of air and water craft all collaborating to ensure everyone survives it occurs to me that this could well portend our future.

The pilot, Chelsey “Sully” Sullenberge, achieved the first successful water crash in aviation history. How? Why? What happened? It will be weeks before all this becomes clear yet we can already conclude something quite different has occurred. Most people on a plane with water rushing in would panic and most likely trample or hurt themselves or others scrambling to deplane. Yet these 155 people actually helped each other. One woman even did her high school cheerleader bit to calm those around her.

I was not surprised to learn how extraordinary an individual the pilot is as a person, as a leader. I think he built a team and his team responded to this challenge. The coming weeks will bring more insight and information to either support my views or not. He is a man known to be calm, intelligent and caring. He even donated his time to train dogs for the blind.

The US economy has crashed much like the airplane and is floating on a river of Federal money. Nearly two TRILLION at last count. The first stimulus package early last year of US$168 billion, AIG US $123 billion, Fannie Mae and Freddie Mac US $200 billion, the TARP funds US $700 billion including US $17 billion for the automotive industry and US $45 billion each for CitiGroup and Bank of America and the Obama stimulus plan is currently expected to be US $ 825 billion. Yes, two trillion dollars to shift doom to bloom. Bloom NOT boom because we need to first open up areas of our institutions, companies and economies before we can expect to grow them into a boom.

Today Obama became President. A community organizer who has learned how to get people to collaborate, an extraordinary leader who is also intelligent and a life-long writer, from law review editor to accomplished author three times over, a man like our pilot Sulley of amazing calm and caring. Obama grew up barely knowing his father yet shows no resentment, he faced all the challenges of all people of color yet he appears to harbors no bitterness.

Many today compare Obama to Lincoln and there is much to connect the two:  both coming from Illinois, both eloquent writers and orators, both focused on ensuring opportunities for everyone to work hard and succeed, both using government to build infrastructure, to give everyone an equal chance. Again we will need to wait and see how this comparison develops as Obama must prove himself in action over time to earn the label of being the modern day Lincoln.

My view is that Obama is a leader like our hero pilot, Sulley, a collaborative and innovative leader, again like Sulley who suggested many airline innovations, who will get us to stand on the wings of our fallen economy to stop clamoring over each other to survive but rather to help and support each other through the greatest financial crisis since the 1930s. We are being rescued by a river of money from our children’s future doled out throughout many government institutions many of which were specifically designed to deal with the very crisis we are facing. The analogy can be continued with the armada of countries who we will have to continue to count on to help us navigate through this crisis.

This armada will of course include the usual group of European and Asian friends we have had for many decades and most especially all those countries who continually purchase our debt instuments. Joining this group will be many, many more of the world’s 309 countries if you use the most expansive of definitions of the word, “country.” Why? — because we are all threatened by this global financial crisis.

Interesting that the remake of a 1954 movie, The Day the Earth Stood Still, is in the theatres. It suggests that the world will be taken away from us humans as we have no galactic right to treat it as badly as we have done. If we do not change the alien worlds around us will simply take out our species. Dramatic, yes, poignant AND again portends our future. All the world’s leaders not just those political but also all institutional and business leaders, ALL leaders are challenged today by the same relentless crisis and are leading their charges often floating on rivers of money doled out by others.

Where is the solution to all this? I believe we need to look at simple economics. People work and make money. They then spend money. If they can’t work or if they are afraid of not being able to work they stop spending money. Businesses spend money in anticipation of people spending money. When people stop spending businesses stop spending. This is the current inward feedback cycle causing economy after economy, institution after institution, individual after individual to crash, to go under and stay afloat again by money doled out from their governments, their investors or others.

Just a few decades ago employers cared deeply about their main resource — people. As we shifted from agriculture to industrial to service societies our companies depended more on information, on capital and their managements began to see people as an interchangeable and malleable resource. Each day headlines everywhere announce terminations many in the thousands of workers PER company. Wall Street has traditionally rewarded companies ridding themselves of their personnel by raising their stock prices.

Most people think of Henry Ford as an industrial genius for having created the assembly line to produce the Model T. Ford’s true genius really was in creating jobs that paid US $5 a day per worker. He enabled his workers to become his customers. Today’s managers have forgotten that their workers ARE their customers and if they are not working and even if they think they might NOT be working then they will no longer be customers. It’s just that simple. Companies create jobs which then creates customers.

The contract between company and worker has been broken. Companies need to rethink their behavior. This is especially true when the worker is not a farm hand or a factory worker but a knowledge worker or a service or experience provider. Companies need to re establish the contract with their workers and capture the collective intelligence and experience of their workers. Companies need to find ingenious ways to survive as some companies are doing like reducing hours across groups of people but everyone keeping their job, changing all kinds of policies and fostering innovation, again collaborating with their workers to innovate.

On his first day in office President Obama adjusted the salaries of all those making over US $100,000 in his administration. GM’s President reduced his salary to one dollar a year. Today 7 S&P companies announced thousands of people in their companies would be laid off — none announced their executives would adjust their salaries or otherwise contribute. Obama is leading by example.
Allan’s Take: Executives should follow his lead.

Innovation is the engine of economic growth. We Americans are known and rightfully so for our ingenuity and innovation. We are on technology curves in almost all industries ready to leap to new curves with completely new technologies. Innovation will spring up all across the US and the globe like Pegasus came down from the heavens and with every hoof innovation sprung. Allan’s Take: Innovation is what will shift doom to bloom.

We have reached the end of technology after technology. Chips for example use electrons for transferring information yet electrons today must be placed in single file in order to fit on the small sidewalks inside today’s chips. Tomorrow’s technology will be using photons for transferring information where there is no size as light is a wave. Photon chips are atready in labs being prototyped.

Is there precedent for my vision? Yes, while many reflect upon the 1930s depression era and compare it to today’s economic situation and argue if we are in or going to be in a depression. I take a completely different view. Allan’s Take: During the 1930’s there was a huge amount of innovation. Companies like IBM began the computer age, companies like RCA began the media age, and companies like GE spurred the industrial age and so on. During the depths of economic decline in the 1970s when prices dropped for two decades both Apple and Microsoft were born and launched us into the information age.

America will lead the world again in innovation and lead the world into the experience age. Companies that stage complete experiences for their customers will capture the most rewards. Companies like Disney, like McDonalds, like Wal-Mart. These companies structure their entire company around producing the best experience they can possibly provide for their customers. They provide much more than products and services. They provide memories, fun, and peace of mind.

Most Americans will be listening to President Obama  today. His inauguration speech will portend a new innovative and caring America in my view. Even 89% of those voting for McCain are expecting Obama will bring change, not small changes like different people, but real change in process, in the way business is conducted not only in Washington, D. C., not only across America, but across the globe – lifting all of us above our rivers of doled money into collaborating and innovating in a new world.

This entry was posted on Tuesday, January 20th, 2009 at 4:54 pm and is filed under Global Economics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.