Rodent Regatta

I wish I could point to James Lileks’s entry for today with sympathy. I cannot. The reason has nothing to do with ”esoteric toys.” It has nothing to do with privilege. The reason I can not muster sympathy is that he simply recounts the story that every one of us faces countless times each year.

Change the sewn-on name tags on the shirts. Change the logos painted on the service vans. Change from esoteric toys to pest control, plumbing or roof repair, and you’ll get identically the same story. America is dreadfully unprepared to do business.

The only difference in James Lileks’s case is he writes so well about the fiascos.

For the past twelve years I’ve believed that corporate culture does more to set the direction of a business than the leadership of the business can ever do. Certainly, the leadership of a business can start the corporate culture, but changing cultures is very, very difficult work. There is no end to the number of fads that have been embraced with an eye toward transforming corporate culture. Most of the time such fads fail.

David Isenberg offers a glimpse into a new book called Who Really Matters. Short answer: it’s not who you think it is and it’s not what they’ve been saying all these years!

A hearty thanks to Robert Scoble for linking to Tom Peters’s views about ”offshoring.” From major surgery in Bangkok to call centers in Bangalore, jobs are being done overseas.

Add to that a comment by a Presidential adviser and economist and you get a firestorm of debate and misinformation. Notice how many times Peters uses the phrase ”long haul.” Offshoring isn’t comfortable in the short haul. It – like most change – introduces some pain into the system. Few could dispute that – in a global economy – a more cost-effective American company is a good thing. Unfortunately, we get passionate about how cost-effectiveness is gained. If it involves offshoring, we become ambivalent about the notion of return on investment.

Free markets, and particularly global free markets, will always seek out the low-cost producers for any and everything. If a Chinese programmer can do your job for one fifth the wage, that’s where programming will go. If a call center employee in India will do your job for one sixth of your annual income, that’s where those jobs will go.

Some better questions to ask are these:

• Will we do anything about our highly ”regulated” environment that prevents us from being able to live on less? I’m not suggesting lowering our standard of living, but is there financial friction in our system? Are we forcing higher wages because we have costly, over-regulated health-care? Are wages too high because of exorbitant litigation costs that are now ”built into our system?” Will those in other countries have an ”unfair” advantage because they don’t yet pay the tax rates that Americans pay?
• Can we quickly learn our role when half of the world’s population (China and India) begin to pursue the lifestyles of Americans? When those two global population centers become consumer economies, what will Americans have to offer? Will each of those places be able to produce 100% of the desired goods and services ”in country?” If not, how will we meet the demand?
• Are those in the centers for offshoring content with less? Will market economies drive them and us toward some middle ground of ”standardized” annual income? Will friction in their economic system put them at ”unfair disadvantage” as the pendulum swings back in a few years? Can we endure the short term problem of job shifts and realignment?
• What will Americans learn to do that no amount of offshoring can replace?

Since this day is about unsolicited advice, here are a few more points I’d suggest that you small business owners add to your charm school management curriculum:

• Be on time for meetings with employees and suppliers.
• All consultants are not evil or ignorant. Just because they don’t sell you a product, it doesn’t mean they offer no value to you.
• Don’t think that just because you are the third generation to own or run the family business that you are somehow smarter than everyone you talk to. You’re not!
• Get over your frustration with I.T. spending. I.T. is an important asset just like delivery vehicles, machine tools or inventory. Just because you didn’t have the foresight to start budgeting and tracking your various expenditures, it doesn’t mean they are all annoyances like unstopping the toilets! Start today and add these four accounts to your bookkeeping system:
  • I.T. capital costs
  • Software capital costs
  • Software updates and maintenance costs
  • I.T. operating expenses
• Think in terms of both capital costs being turned or depreciated on no more than a 36 to 48 month basis. Think of operating expenses for I.T. in the range of 1% to 2% of sales. That’s right; get over it!
• Then, begin thinking about every I.T. investment you make using these bullets as reminders of where the costs come from:
  • Hardware
  • Software
  • Training
  • Support
  • Maintenance
• Don’t strut around your business talking about what a crazy day it is. You built the business. Why is it crazy?

To all the entrepreneurs, small business people and interested business readers out there. Given the (sorry) state of business management software in the marketplace today, and given the lack of real business acumen on the part of many installers of business management software, let me offer these points:

• making software pay off costs more than you think it does
• you can’t afford everything you want
• projects for reworking companies around new business management software aren’t done on a fixed fee basis
• if you ran your business like a business rather than as a diversion from your hobbies, you wouldn’t face half the problems you face
• just because you own your own business, you are no better than any other person
• people who work for you as employees or advisers are not the peasants you think they are
• your real character shows, not when you’re in the pew at church, but when you’re at the conference room table in your business