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Posts Tagged ‘business’

I hereby confess to you all:  I hate those “How Am I Driving?” bumper stickers that you see on so many commercial vehicles.

IMG_3030The point of the bumper sticker, evidently, is to indicate that the company that owns the truck or van deeply cares about the views of the other poor unfortunates on the highway and will take stern action if it receives complaints about reckless or otherwise crappy driving by its employees.  (The alternative explanation — that the drivers themselves are incredibly needy people who crave constant reinforcement from complete strangers about their driving abilities — is too disturbing to contemplate.)

Was there ever an emptier effort by a business to establish a positive civic profile?  Has anyone ever actually called the number shown?  I’ve got to believe you get a recording and a confusing set of different push-button options — if the number is even a real number in the first place.

Are you supposed to call while you are driving, or are you supposed to somehow jot down the phone number while you are driving, as well as the number of the particular vehicle, and then call later?  Either way, the bumper stickers seem designed to hinder highway safety, rather than promote it.  And, even worse, isn’t it awfully presumptuous for the business owner to think that I’ll waste my precious time giving them feedback on their employees?  Who in the world would care so little about the value of their free time that they would spend it calling a number to tell some flunky about about somebody else’s driving?

If a company wants to be a good member of the community, let them treat their customers fairly, pay their employees a reasonable wage, and support civic institutions.  They shouldn’t try to skate by with some meaningless bumper sticker.

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By the year after next, don’t expect to see a daily newspaper hitting your doorstep each morning — according to the Nieman Journalism Lab, that is.

The Nieman Journalism Lab looks to future trends in journalism.  Last month, it predicted that the seven-day print newspaper is doomed.  It forecasts that newspapers increasingly will focus on digital publication and that by 2015 less than half of current newspapers will follow the seven-day, home delivery model.  Instead, print newspapers will be reduced to a two or three times a week vestigial option, offered as part of a much broader set of services and benefits available to “members.”

And rather than those irritating paywalls, the digital membership model would be like membership in your local public TV station,  giving you complete access and providing discounts and other benefits (presumably not just the tote bags and coffee mugs you see on every PBS fundraiser, either).  The membership model would allow the newspaper to act as a kind of mini-Google, collecting information about the news stories you access and then delivering targeted advertising based upon your reading pattern — advertising that retailers presumably would pay a premium for, because it is more likely to find a receptive audience than the tire ad on page C-7 of the sports section of your daily newspaper.

The most interesting prediction is that newspapers will focus less on news and more on “jobs to be done.”  The jobs would include reporting news, but also assisting members in making connections to services and groups in their communities, giving recommendations and answering questions, and helping members meet the right people in the right settings.  It sounds something like a combination of Emily’s List and Dear Abby.

I agree that the daily printed newspaper model cannot survive forever; it’s simply too slow, and expensive, to compete with digital delivery of the news.  Readership and ad revenues are ever-declining, too.  I’m a bit skeptical, however, that daily newspapers can successfully morph into quasi-social networking sites and then hold their own in that area, where there also is a lot of competition.  What newspapers do, better than anyone else, is find and report hard news — not opinion, nor advice, but actual facts about events and issues that should be of concern to members of their communities.  If newspapers move away from that area of strength to some more amorphous, soft-side model, they may be losing their identities and digging their own graves.

Is there still a market for hard news — without tote bags, membership benefits, and social networking gloss?  We’ll find out over the next few years.

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We often hear politicians, of both parties, talk about trying to run the government “like a business.”  Of course, the government isn’t a business, and it inevitably doesn’t run like a business — even when it is performing a business-like function.

The latest example of this reality is the news that Amtrak is selling food and beverages to its passengers at a loss.  In the last decade, Amtrak’s food and beverage cars have lost $833 million.  $833 million!  How did that happen?  Because Amtrak is selling food and beverage items for less than it costs to supply them.  According to the linked article, every cheeseburger costs Amtrak $16.15, yet Amtrak charges its customers only $9.50.  Every can of soda costs Amtrak $3.40, and Amtrak charges its passengers only $2.  The fact that each can of soda costs Amtrak $3.40 tells you something about Amtrak’s uncompetitive cost structure, given that any American can buy an individual can of soda — to say nothing of the per-can cost of a twelve-pack — for much less than that.

Of course, no business could remain in operation if it racked up $833 million in losses over ten years and regularly sold goods for much less than it costs to provide them.  The fact that Amtrak has done so for a decade just confirms that bureaucrats don’t think or behave like businessmen and aren’t subject to the same competitive pressures that cause companies like Wal-Mart to constantly search for ways to bring goods to market for the lowest possible price.

People of different views may disagree about whether we should subsidize Amtrak fares in order to support mass transit.  Does anyone, however, really think it is appropriate that taxpayers also subsidize the cheeseburgers and sodas that the Amtrak passengers consume on their already subsidized journeys?

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SpaceX’s Dragon capsule has successfully rendevoused with the International Space Station and has been snagged by the space station’s robot arm.

The Dragon capsule therefore becomes the first privately owned space vehicle to reach the ISS.  This morning the astronauts on the space station opened the capsule and entered it, conducted a quick inspection and found no sign of any problems with the interior, and indeed reported that the capsule had that familiar “new car smell.”  So far, SpaceX’s Falcon rocket and its Dragon capsule have performed flawlessly — reaching orbit, conducting the maneuvering tests that showed that the capsule could safely be brought near the ISS, and then ultimately delivering the payload.

We now have a private company with the technology and human know-how to put a vehicle into space and haul cargo to an orbiting destination.  The Dragon’s successful delivery is a huge step forward toward increased exploration and development of space, in an era where commercial entities will bear an increasingly significant part of the cost — and, not incidentally, will look to reap profit from their investments.  With SpaceX leading the way, other companies will not be far behind.

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Recently Kish asked me to stop by the dry cleaners to pick up some clothing.  “Just go to the drive-thru window,” she added helpfully.

Eh?  A drive-thru dry cleaners?  Intrigued, I drove to the side of the dry cleaner shop, where there was an open door rather than a drive-thru window.  I summoned the clerk, gave her our name, and then watched for minutes as she moved the moving hanger line around for several loops, looking for our clothing.  It was vaguely embarrassing to see into the rear of the store as she searched, like looking through an open door into a stranger’s kitchen and seeing them eating at their table.  After she found our clothing, the clerk came back over to the open door and handed me the hangers.

At that point I realized that the drive-thru concept really didn’t work.  Unlike a bag of burgers or a Coke, clothes on hangers aren’t easily passed through the driver’s side window.  You have to wrangle the hangers through, dragging the clothes against the side of the car.  And once they are inside, what do you do?  Leave them bunched up in your lap?  Toss them into the passenger seat?  From a sitting position in the driver’s seat, only a contortionist could reach around and hang them on the hooks above the back seat windows.  So, I had to open the door, clumsily get out with the clothes — which, of course, defeats the entire purpose of a drive-thru — and hang them properly.  The lady watched my fumbling performance, probably chuckling inwardly at a show she’s seen over and over again.

Are Americans really so lazy that we demand that a drive-thru option be available for every imaginable consumer business?  Here are two simple rules that should be applied to determine whether a drive-thru concept is well-suited to the business.  First, does the business sell a product that can be delivered comfortably through a driver’s side window?  Second, can a reasonably coordinated driver do something with the product without ruining it?

I’m hoping these two simple rules prevent doomed yet irritating business ideas like drive-thru haircuts, drive-thru tailors, and drive-thru wedding cake bakeries.

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A group called Transparency International publishes the Bribe Payers Index, which purports to rank companies from 28 different exporting countries based on their likelihood to engage in bribery as part of their business practices. The 2011 version of the Bribe Payers Index concludes that Russian and Chinese companies are most likely to pay bribes, whereas Swiss and Dutch firms are least likely to grease a few palms.

How in the world does Transparency International get the data on which it bases its rankings?  It is based on survey results where business executives were asked “How often do firms headquartered in [insert country here] engage in bribery in this country?” and could give responses ranging from “never” to “always.”  In short, the survey simply tabulates the perceptions of businessmen who presumably have either been successfully bribed or otherwise are aware of bribery attempts.  The reliability of the results therefore is beyond reproach.

How does America fare?  It turns out that American companies put the U.S. in the middle of the pack, ranking as 10th least likely to slip prospective customers a few bucks to close a big sale. Drat!   Just another example of America’s loss of competitiveness in the global marketplace.

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Another piece of modern public art that I really like is Free Stamp, a large painted steel and aluminum sculpture by Claes Oldenburg and Coosje Van Bruggen.  For years, Free Stamp has graced a small park along East Ninth Street in Cleveland, just south of the expressway that separates the Rock and Roll Hall of Fame and Museum from the rest of downtown.

Why do I like Free Stamp?  Because this is a whimsical sculpture that will inevitably grow more interesting as time goes by.  When the sculpture was created, paper was the preferred medium of business, and ink pads and stamps that said things like “Paid” and “Handle with Care” were used routinely.  Of course, in the business world you wouldn’t need a stamp that said “Free,” so the sculpture was a bit of a joke.  But now, as paper has gone the way of the Dodo and electronic transmissions are in vogue, I doubt that any business buys or even uses stamps anymore.  And that is what will make this sculpture even more interesting in years to come.  What will people who grow up in the age of email and the cloud, and in the ages of even more advanced communications forms to come, think when they see this giant sculpture, and will they even dimly understand what it is supposed to be?

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The modern world is a pretty amazing place.  Yesterday morning I went to soggy Port Columbus, checked in, and boarded a Continental flight.  Three hours or so later I was in sunny and warm Houston, Texas, in a conference room on the 41st floor of a downtown office building, looking at the view shown above.  A few meetings, a conference room lunch of shrimp etouffee and red beans and rice, and a few phone calls later and I was back in a cab, zipping by in the taxi lane to George Bush International Airport.  A few hours after that, I arrived in cold and snowy Columbus, getting home at a little after 9 p.m.

A few airports visited, two thousand air miles traveled, latitudes and longitudes spanned, enormous weather systems leaped, cultural divides crossed — and all in the space of a few hours.  We tend to take these kinds of trips for granted, but perhaps we shouldn’t.  It really is a pretty amazing thing.

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The Marketplace radio program recently carried an interesting interview with the CEO of PepsiCo, Indra Nooyi, about redefining the role of the CEO.  She believes that a “maniacal focus on the shareholders” led to the financial crisis, and that now CEOs should focus on the “stakeholder” rather than the shareholder.  The “stakeholder” concept is a bit ill-defined; it is “multifaceted, has different interests, represents different constituencies.”  Nooyi also contends that corporations should redefine their profit and loss performance to reflect “revenue, less costs of good sold, less costs to society — and that’s your real profit.”  At one point in the interview, Nooyi said “a lot of the CEOs I interface with have real desire to do good for society, have a real desire to make change that’s positive, want to help governments address issues.”

I’m a bit skeptical of the “stakeholder” approach.  For starters, I disagree with the notion that a “maniacal focus on shareholders” caused the financial crisis.  Instead, I think the breakdown occurred, at least in part, because Boards of Directors weren’t really paying attention and approved compensation packages that gave CEOs economic incentives to favor exceptionally risky, but in the short term lucrative, transactions over long-term investment and sustainable growth.  I therefore question a model where CEOs are given some vaguely defined charter to try to do good for society.  Who knows what they might decide, and why should corporate money be used for anything other than developing and marketing better products, increasing market share, and increasing profits to the benefit of shareholders?  If American companies don’t focus on their business they are going to get their clocks cleaned by foreign competitors who are ruthlessly focused on the bottom line.  I also think that people who are upset with the Supreme Court’s recent campaign finance decision would be uncomfortable with Nooyi’s formulation.  If corporations are expected to advance social causes as part of their charter, they will have even more incentive to participate in political campaigns. Why should we encourage such behavior?

I think the better course is to adhere to the “maximizing shareholder value” model, which at least provides a measurable basis for evaluating CEO performance.  That model, however, also requires Boards of Directors to actually play a significant role in supervising the activities of the corporation, to insist that management focus on business issues, and to develop CEO compensation packages that assess value after an extended period — say three to five years — so as to discourage short-term conduct that causes long-term problems.

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India not only is balking at agreeing to limitations on carbon emissions, it also apparently is challenging the science underlying global warming theories. This development is noteworthy, because if India and the other growing economic powers — China, Brazil, and Indonesia — refuse to participate in some kind of binding worldwide effort to reduce our carbon footprint, it puts the United States in a terrible predicament.

Efforts to reduce carbon emissions involve both a scientific component and a geopolitical one. As I have written before, I am skeptical of the science underlying global warming and its heavy reliance on computer modeling. In any case, the geopolitical component is at least as important as the scientic. I do not mean to downplay the significance of getting agreement from countries like Germany and Japan on capping and eventually reducing their emissions, but at least part of that reduction will be achieved by the ongoing general population decline in those countries. Japan’s population, for example, is projected to decline from 128 million in 2008 to 95 million in 2050. Germany’s population is forecast to fall from 82 million in 2008 to 71 million in 2050. If a country is going to experience significant reductions in the number of people who drive cars, it is necessarily going to reduce its carbon emissions, without making any lifestyle sacrifices or handicapping its industry with regulations that raise costs and therefore prices.

What about China, India, Brazil, and Indonesia? According to the U.S. Census Bureau, those four countries and the United States are the five most populous countries in the world. And, unlike Japan and Germany, the populations in those countries are growing rapidly. India, which had about 1.1 billion people in 2008, is expected to become the most populous country in the world by 2050, with 1.7 billion carbon-consuming and carbon-emitting individuals. During that same time period, China’s population is projected to grow from 1.3 billion to 1.4 billion, Indonesia’s population is expected to grow from 240 million to 343 million, and Brazil’s population is forecast to grow from 195 million to 259 million. The population of the United States, on the other hand, is projected to grow from 304 million in 2008 to 438 million in 2050.

If countries like India and China refuse to agree to reducing greenhouse gases because they don’t want to saddle their growing economies with the costs that would accompany that effort, the impact of those decisions would obliterate any carbon emissions reductions achieved in Germany and Japan. Obviously, if any significant percentage of the 600 million new Indian citizens uses electricity generated by coal-fired power plants, wears clothing produced in smoke-belching factories, or drives a car powered by fossil fuels, the impact on India’s carbon footprint will be tremendous.

What does this mean for America? Perhaps it means that we should not charge blindly ahead with legislation designed to force our industry to comply with difficult regulations that can only increase the costs of the goods they produce and try to sell in the global marketplace. Our businesses already have to comply with significant wage and hour, safety, and environmental regulations that are not found in other countries. If we add carbon emission regulations that are rejected by other economies, the only immediate impact will be to make our companies even less competitive with those in India, China, and elsewhere. In an era of significant global economic challenges, taking unilateral action that cripples our industries and makes them less capable of employing Americans seems ill-advised — indeed, almost suicidal.

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This article reports that one of our elected Representatives has introduced legislation requiring that every American company with more than 100 employees (later to apply to companies with more than 50 employees) to provide first one week, and later two weeks, of paid vacation to every employee who has worked at the company for a year. The purported theory is that more vacation will stimulate the economy by causing fewer sick days, better productivity, and happier employees.

Of course, there is a big gap between a bill and a law, and I hope that Congress decides it has better things to do than saddling American businesses with still more benefit obligations in a time of economic recession. It’s interesting that the article notes that America is “dead last” among 21 industrial companies when it comes to providing paid vacation, and falls well behind France, which mandates that employers provide 30 paid days of vacation each year. When will Congress understand that the competition is not about which country can force businesses to provide the most benefits, but rather which country can best encourage businesses to grow and provide jobs? I don’t think we want to be France, with its static economy and institutionalized unemployment and lifetime jobs and periodic labor strikes. In any case, American companies typically aren’t competing with French companies, but companies from China, and Korea, and India, and Brazil. How much paid vacation do you suppose those countries require local businesses to provide?

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