Category Archives: Applications to career management

University, crops and separating the wheat from the chaff

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“The literature clearly demonstrates that postsecondary graduates tend to fare better in terms of labour force participation, unemployment, and earnings than do people with less education.”

The Cumulative Earnings of Postsecondary Graduates Over 20 Years: Results by Field of Study
— Statistics Canada

“Gigs move the risk away from organizations and on to the individual. This is in stark contrast to the secure 9-to-5 corporate arrangement that workers demanded and received in the mid-20th century. The latter is becoming more and more of a spectre as cost-cutting, off-shoring and salary-pruning continue to erode economic security for the average person. It’s easy to argue that ‘developing one’s own brand’ is becoming more important as we move further into this new century.”

How The Gig Economy Is Reshaping Careers For The Next Generation
— Forbes, Feb. 15, 2019

If a family has second thoughts about the house it just bought, it can sell it, usually at a profit. If its new SUV turns out to be a lemon, it can be used as a trade on another one or sold at a modest loss. A university degree, on the other hand, can’t be sold. It can’t be returned for a refund and it does not guarantee an income.

It has to be worked the way farmers work their fields until the crop is harvested and a buyer found, and that assumes a favourable growing season and an equally favourable market. Graduates have no “crop” to sell until four years after they “plant” it at the earliest. If they plant the wrong “crop” and can’t sell it because of poor market conditions, they’ll have to settle for something less than work “in their chosen field”.

Borrowing money to finance an education can saddle a graduate with student debt for years. This is the point where you’ll want to research student debt in the U.S. and elsewhere, starting below.

There are 28,000 universities in the world. By 2025, enrollment in them will reach 262 million. Each of those students will be looking for a permanent, 40-hour-a-week job, benefits, a pension and the relationship that spawned them that was over 100 years in the making. It was supposed to have been carved in stone. But the C-Suite would rather hire technology and software than people.

That thinking will impact on up to 43% of all jobs, professions included. Many employers are hiring for the duration of specific projects only. When projects end, contractors leave. That’s what the gig economy and precarious employment look like. Parents I speak to say they’ve heard of neither and have no idea what they are. Universities do, and they’re resorting to similar tactics.

What will your strategy be for dealing with the state of the world’s economy and those 262 million students? Where will employers be shopping for the graduates they’ll need? How will the two groups relate to one another when your children enter the labour market once they graduate?

In 2012, as many as 300,000 graduates with one or more degrees experienced both. They were working as unpaid interns because they couldn’t find work in their chosen fields. They couldn’t find anyone who would pay for the education they were trying to sell. Unpaid internships have since been banned by law, but they persist. What’s on your child’s list of chosen fields? Why is it there?

I founded Personal Due Diligence (PDD) in 1976 so that my children would have a resource to help them understand what university education as a commodity looks like and how that would determine what the labour market would have in store for them before they made any commitments. See “What Jobs Are Affected By AI?” (Brookings Institution, Nov. 2019) and “The Ultimate Backup Drive” (Bloomberg Businessweek, Nov. 18, 2019).

In “The World-Shaking News That You’re Missing” (Nov. 26, 2019), Thomas L. Friedman wrote: “I still believe that the most open systems win — they get all the signals of change first, they attract the most high-I.Q. risk-takers/innovators and they enrich and are enriched by the most global flows of talent, ideas and capital.“

This is some of what you’ll find when you do due diligence on this subject:

Universities are paid to open the eyes of their graduates. Employers separate the wheat from the chaff based on what graduates look at and what they see that others don’t. If money’s no object, none of this matters. If it is, it does.

Personal Due Diligence sees things that others don’t. Bring us your questions and your concerns about what you just read and we’ll talk.

Sincerely,

F. Neil Morris
President
PERSONAL DUE DILIGENCE

info@personalduediligence.ca

Writing, reading and the lay of the land

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“The greatest benefit of writing is that it provides the tool by which society can record information consistently and in greater detail, something that could not be achieved as well previously by spoken word. Writing allows societies to transmit information and to share knowledge.”

Wikipedia, History of Writing

In the 5000 years since mankind invented writing (somewhere between 3400 and 3300 BC), we’ve learned how to store, sift through and find patterns in the 2.5 quintillion bytes of new data we generate about ourselves every 24 hours. The World Economic Forum’s (WEF) most recent report How much data is generated each day? focused on three key areas: Mastering the Fourth Industrial Revolution, Solving the problems of the Global Commons, and Addressing global security issues.

Our children are going to inherit this planet, or one that will closely resemble it. The better we prepare them for the transition, the better the odds that they’ll experience job security, a good life and the means to continue feeding, clothing and sheltering themselves.

“As assumptions about growth models are overturned, the international balance of power continues to fray, and scientific and technological breakthroughs promise to transform economies and societies, the unique platform provided by the Forum helps leaders from all walks [of] life to prepare for exponentially disruptive change.”

World Economic Forum: How much data is generated each day?

The 7.7 billion of us on planet Earth are in the midst of unprecedented change. We’ve built our civilization based on higher education courtesy of the world’s 28,077 universities. Our children’s way of life will depend on how wisely they choose and apply that education, and that they bear in mind that its value will lie in the eye of the employer.

By 2025, enrollment in those universities will stand at 262 million. When they graduate, those students will discover redefined employee/employer relationships and academic credentials that will be more valued in certain circumstances than in others. This is already happening against a backdrop of a buyer’s market for knowledge and intellect.

These examples of what that world is up to were published between June 5th and June 7th, 2019. Each comes with its own set of upstream and downstream implications.

Bloomberg Businessweek’s The Wealth Detective Who Finds the Hidden Money of the Super Rich (May 23, 2019) is a different but revealing insight into the workings of that world. So is the 2019 FORTUNE 500 ranking of America’s biggest corporations.

We’re a stone’s throw from starting the process of settling the Moon and Mars (NASA and Wikipedia respectively). On Earth or off, our children will be shaping and living with the consequences. It’s why we’ll continue to send them to school. Their ability to earn a living will depend on it.

We’re not in Kansas anymore. It won’t be long before some of us add, ” … or on Earth, for that matter.”

Sincerely,

Neil Morris

What would my grandfather say?

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That 28,077 universities are operating around the world speaks to how society has benefitted from them for over 4000 years. We continue to put our money into our belief that universities progress and contribute to our children’s future wellbeing. We go so far as to make sacrifices and incur debt so that our children might attend. So do grandparents.

But progress comes at a price. The new displaces the old, how we work and at what is transformed or replaced, there are winners and there are losers. The process never stops: if it did, I wouldn’t have been able to write this and you wouldn’t be reading it.

Technology is progress and we have to equip our children to adapt to it because we can’t stop it. Choosing the right education for the times will be a critical component of the choices we make, if we’re to believe what The New York Times published in ‘The Hidden Automation Agenda of the Davos Elite’ (please see below). Management plans to accelerate the automation that began in earnest on the shop floor and has now spread to offices and white-collar jobs that were once considered untouchable. The process dates from when the world’s first commercial computer was installed in the U.S. in 1951, and we’re living with the results.

Not all jobs being done by humans will be eliminated. Many are being upgraded and call for leading edge education and training and new ones are being created. But it will have to be the right education. The old ways are disappearing and jobs along with them. That could impact on 40% of all jobs within the next 15 years. In 15 years of working in transition counselling, I met face-to-face with 2133 people where they worked who were displaced because they couldn’t or wouldn’t adapt.

My grandfather’s generation lived through the Great Depression, World War II and Korea. It used its survival instincts to make it through. He would have argued that conditioning our children to expect that a good job will be waiting for them once they graduate has dulled those instincts. He would have likened higher education to fishing tackle. It isn’t the rod that catches the fish, it’s the fisherman. Choose the wrong bait, cast or troll in the wrong part of the lake at the wrong time of day and there’ll be no fish to fry come evening.

The worldwide pool of students from which employers will draw graduates will reach 262 million by 2025. Those who dangle the right degree in front of the right employer in the right place at the right time and persevere will land a job.

But are we teaching our children how to fish or how to read the lay of the land? In ‘The Prosperity Initiative’ (1991), the Government of Canada warned that:

“Canadians are asking what the future holds for themselves and their families. In a profoundly changing world, they know that traditional strategies are no longer enough to provide economic security and prosperity, and protect our environment. New approaches are needed to meet the challenges that confront us—challenges that threaten our ability to generate new jobs, our standard of living, and our social programs.”

It went on to say that we’d have to extend basic education from 13 years to 17 years by the year 2000 to cope with the world we’d be living in. In 2012, twenty years after that caveat and notwithstanding their degrees, as many as 300,000 graduates were working as unpaid interns in this country because “they couldn’t find work in their chosen field.” Despite the number of options open to them and the amount of time they had to weigh them, how did they manage to misread the labour market as badly as they did? What should they have known? Where should they have learned it? What had become of their survival instincts?

What follows is a snapshot of the lay of the land:

So is this from ‘Private education, A class apart’ (The Economist, Apr. 13th-19th):

“IF SPENDING IS a measure of what matters, then the people of the developing world place a high value on brains. While private spending on education has not budged in real terms in the rich world in the past ten years, in China and India it has more than doubled. The Chinese now spend 5% of household income on education and the Indians 4%, compared with 2.5% for the Americans and 1% for the Europeans. As a result, private schooling, tuition, vocational and tertiary education are booming in developing countries.”

Forbes reports that in the U.S., students are carrying US$1.5 trillion in outstanding loans. They and others describe the situation as a crisis. Bloomberg News reports that consumer insolvencies in Canada have risen to an 8-year high. This may not be the best time to invest in the wrong education.

This is the hand we’ve been dealt, and we’re not in Kansas anymore. Employers are building 21st century, Fourth Industrial Revolution workforces, not 20th century workforces.

There are life-altering decisions to be made. To help parents work their way through them is why Personal Due Diligence exists. Your first conversation with us will cost you nothing. Not calling could cost a great deal more.

That’s what my grandfather would have said.

The World Economic Forum, higher education and outcomes for our children

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The World Economic Forum “engages the foremost political, business and other leaders of society to shape global, regional and industry agendas.” Its 2019 Annual Meeting took place in Davos from Jan. 22nd through Jan. 25th.

The WEF is to the world of business what Paris and Milan are to the world of fashion: not everything they present on the runway will appeal to everyone, but it will give us food for thought.

Our children should be thinking about it if they plan to spend 4 years and $46,764 CDN on a basic bachelor’s degree ($87,164 CDN with residence) so that they can compete successfully for work against graduates of the 28,077 universities in operation around the world today. There will be 262 million students enrolled in those universities by 2025.

Nor should we forget that there are over 7.7 billion of us on the planet and that not all great ideas come from university graduates. (Google “successful business people who didn’t graduate from university”.)

On Jan. 25th, The New York Times published ‘The Hidden Automation Agenda of the Davos Elite’ in which it said, “They’ll never admit it in public, but many of your bosses want machines to replace you as soon as possible.” That’s food for thought.

Lives are built on steady incomes. Bosses who plan to replace people with robots threaten those lives, and that threat isn’t confined to soon-to-be graduates. What qualifications will be in demand when our children graduate? How strong will that demand be? Where in the world will it be? How long will it last?

Do parents understand that only certain university degrees will qualify a graduate to compete for a position, but none guarantee that a position will be offered?

Education is serious business, serious enough that what organizations like the WEF publish should be considered carefully because of its long-term implications. Especially now given how the world is changing and how it will continue to change.

Most of what those organizations publish is free. But it’s not enough that it be free: it must also be correct and relevant because of what’s riding on it.

Showing parents and their children how to identify, access and interpret that information is why Personal Due Diligence exists.

F. Neil Morris
President & Founder
PERSONAL DUE DILIGENCE

info@personalduediligence.ca

The labour market: grizzlies and streams where the salmon run

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Just when we thought it was safe to think of the workplace as a stable, predictable environment in which to earn a living and build a life, job security is slipping into reverse. Precarious (irregular) employment is becoming more common, governments are working at increasing the minimum wage and employers are still ‘hiring’ young people but not paying them because, those employers claim, they’re volunteers. The law now takes a dim view of such practices.

Deloitte (‘Six trends to watch in alternative work’), RBC Royal Bank (‘Predicting Tomorrow’s Workforce: More ‘bots, More Skills, More Anxiety’) and McKinsey Global Institute (‘What the future of work will mean for jobs, skills, and wages’) tell us that technology and higher education will figure prominently in the future of work. But when the rubber meets the road, neither comes with a guarantee of employment, lifelong or ottherwise. The 40-hour workweeks and permanent jobs with benefits and pensions we’ve always wanted for our children are at risk of becoming an endangered species.

(To read about a real-world application of what you just read, please visit ‘GM Gets Ready for a Post-Car Future‘, FORTUNE 500, June 1, 2018, for a description of how and why GM CEO Mary Barra is changing the environment and culture at the 110-year-old automaker.)

Parchment isn’t delivering financial security and above average lifetime earnings the way it used to when the world was a more flexible and accommodating place. Demand for university graduates has never been stronger and more students are enrolling because of it. There are now so many degrees on the street that our children have to navigate buyers’ markets for talent, just-in-time work-forces and environments that reward employers for dragging out the hiring process. By 2025, enrollment at the world’s 26,368 universities will stand at 260 million. More graduates, more competition for work.

There are more different kinds of work to apply for and more new places in which to find it than at any other time in history. But résumé screening statistics show that only 10 job applicants in 100 understand what the labour market is and what makes it tick well enough to motivate prospective employers to call them in for an interview. They also show that only one of those 10 applicants will be offered a job. What they don’t tell us is how the work is going to be structured, how much it will pay, how long it will last and how employees and employers are going to relate to one another.

Our education system isn’t producing graduates who can make the connection between what they learn in school, labour markets, how employers determine what a degree is worth, and going for the brass ring. Every one of the 7.3 billion people on the planet wants their shot at that brass ring.

The National Geographic TV series One Strange Rock aired an episode entitled Survival on April 10th. It showed what survival is in a way that only National Geographic can. BBC Earth is doing the same. Human beings created the technology and shaped the attitudes that define the environments in which we live and and work. Our kids are going to support themselves in those environments.

Grizzlies pluck migrating salmon out of the air as they swim upstream to spawn. The streams are the labour market, the salmon are employment opportunities. Grizzlies know what salmon are, in what streams they’ll be running and how to catch them. We have to teach our children how to find the streams where the salmon run. Whether they’ll choose to fish when they get there and how well they’ll fish will be up to them. 

The world as Deloitte, RBC and McKinsey see it has implications for our children. They’ll have to learn about those implications at our knee because they won’t be learning about them anywhere else.

I teach parents and their young people how to connect school, labour markets, how employers determine what a degree is worth, and going for the brass ring. It’s a skill they’re going to need for the rest of their lives. Grizzlies already know that.

Neil Morris
President
Personal Due Diligence

Everything old is new again, but with a twist

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Twenty-five years ago, people in the know predicted that we would work at five different careers before we retired. They were short on specifics, but their model left no doubt that people would have to re-educate themselves to qualify for those new careers. They didn’t mention the part about bills to pay and mouths to feed.

The future they predicted is here, but with a twist. Twenty-five years ago, university was a lot more affordable than it is now. Incomes were more predictable and more secure. So were pensions.

The mounting cost of sending children to university is becoming more and more painful for more and more families. Which makes RBC Future Launch’s candor so refreshing and so necessary:

“Canada’s youth are set up to fail in the new economy. In fact, today’s generation is at risk of ending up poorer than their parents.1 Failing to close the gap in unemployment rates between Canadian youth and people of prime-working age would mean missing out on a nearly $30B lift to our economy.2 Young people deserve a chance, and that’s why we created Future Launch. If youth fail, we all fail.

 “In the coming decade, half of all jobs will be disrupted by technology and automation. Some will change dramatically. Others will disappear completely, replaced by jobs that are yet to be invented. We are living through an era of radical change, with the latest advancements in artificial intelligence and automation transforming the way we work, even in unexpected fields such as law and customer service.”

What RBC proposes is commendable. But its target market is university students and graduates who’ve already put their money down. Many of them may already have limited their employment and career options. They invested in a future relationship with an employer in a context called the labour market inside another context called an economy. They understood little or nothing about either.

What they chose to study was up to them. What the labour market and the economy will have to say about that will be up to someone else. We don’t teach our children that. RBC is proposing a cure to a problem that already exists. Kudos to them. But we need something concrete to prevent the problem in the first place. Personal Due Diligence is that something.

We’re told that the more graduates we produce, the more graduates we’re going to need. But parents and their children need to know where the jobs will be before their first tuition cheque comes due. Our governments are showing no signs of preparing lists with timetables of occupations that have been earmarked for disruption or obsolescence, let alone notes about how it’s going to happen and when. That’s something families will have to do on their own because once size does not fit all.

While we’re at it, we may want to pay special attention to what it’s costing financially, physically and emotionally to send our children there. ‘Hunger And Homelessness Are Widespread Among College Students, Study Finds’ is the title of a National Public Radio report about a survey done by Temple University in Philadelphia and the Wisconsin HOPE Lab in Madison.

We can’t hope our way to a solution. We have to build one. In an address on September 3, 2008, former New York Mayor Rudy Giuliani said, “Change is not a destination, just as hope is not a strategy.”

On January 23, 2009, CBS NEWS posted an open letter to President Barack Obama from Dr. Benjamin Ola Akande. Dr. Akande is an economist, scholar and Dean of the Business School at Webster University in St. Louis, Missouri. The title of his letter was ‘Hope Is Not A Strategy.’ You can find the full text by clicking here. This is an excerpt:

“Yet, the fact remains that hope will not reduce housing foreclosures. Hope does not stop a recession. Hope cannot create jobs. Hope will not prevent catastrophic failures of banks. Hope is not a strategy.”

Our youth must win so that we all can win. That’s why Personal Due Diligence exists.

Neil Morris
Founder & President
Personal Due Diligence

+1 905.273.9880
info@personalduediligence.ca

Three articles, our children, and food for thought

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A recent Bloomberg Businessweek article entitled, Is Your Job About To Disappear?: Quick Take, said this:

“Throughout much of the developed world, gainful employment is seen as almost a fundamental right. But what if, in the not-too-distant future, there won’t be enough jobs to go around? That’s what some economists think will happen as robots and artificial intelligence increasingly become capable of performing human tasks. Of course, past technological upheavals created more jobs than they destroyed. But some labor experts argue that this time could be different: Technology is replacing human brains as well as brawn.”

In his review of “The Golden Passport” in the April 10th New York Times, Andrew Ross Sorkin wrote, “The book is a richly reported indictment of the [Harvard Business School] as a leading reason that corporate America is disdained by much of the country … Citing a report from the Aspen Institute, [the book’s author Duff] McDonald explains that “when students enter business school, they believe that the purpose of a corporation is to produce goods and services for the benefit of society. When they graduate,” he continued, “they believe that it is to maximize shareholder value.”

The Real Threat of Artificial Intelligence appeared on the Opinion page of the New York Times Sunday Review dated June 24, 2017. It was written by Kai-Fu Lee, chairman and chief executive of Sinovation Ventures, a venture capital firm, and the president of its Artificial Intelligence Institute.

Clearly the debate is heating up. At some point, someone or a group of someones will decide the winner, if there is a winner. Others will hand down a verdict on whether or not the Harvard Business School should take the credit or the blame for how enthusiastically business has embraced technology.

Families about to engage with their children in discussions about post-secondary education might want to answer these questions: Will there be 40-hour-a-week jobs with benefits and retirement pensions? Where? What kinds of jobs will they be? What education will it take to qualify for them? It’s a start.

Riding madly off in all directions

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If there are days when it feels like the world is riding madly off in all directions, it probably is. Change is the culprit and it’s never happened this fast or in so many places at the same time. Nothing in our experience has equipped us to deal with it.

Parents who are sending their children to university in the current economic and technological climate expect that when their children graduate, the jobs they’ll be applying for will be as traditional and as plentiful as they were in their parents’ day. They may be in for a surprise.

Employment relationships aren’t what they used to be. Corporate tastes in university degrees have changed. We have to factor that into how we think about the role higher education is going to play in the life of our children and what their options are going to be. Change is a fact of life for real companies and organizations with real names. Our kids need to know which companies and organizations they are or are likely to be.

We also have to bear in mind that the cost of tuition has risen 40% in the last 10 years. That will continue. Over 50% of all jobs are now precarious. Over half of those jobs will be automated in the next 10 years. That, too, will continue.

The links in what follows will take you to articles and reports about the current environment and how it will impact on your young people and those of people you know. They feature GE’s Jeff Immelt (#4), MIT’s Erik Brynjolfsson (#12), McGill’s Suzanne Fortier (#12) and Google’s Sergey Brin (#16), among others.

  1. September 1969 — The first node of ARPANET installed at UCLA
  2. August 12, 1981 — IBM introduces its first personal computer
  3. July 15, 2014 — “Apple and IBM Forge Global Partnership to Transform Enterprise Mobility”
  4. August 4, 2016 — LinkedIn interview with GE CEO Jeff Immelt: “Culture is not just apps. It’s a combination of people and technology. If you are joining the company in your 20s, unlike when I joined, you’re going to learn to code. It doesn’t matter whether you are in sales, finance or operations. You may not end up being a programmer, but you will know how to code. We are also changing the plumbing inside the company to connect everyone and make the culture change possible. This is existential and we’re committed to this.”
  5. September 2016 — Deloitte survey “Transitioning to the Future of Work and the Workplace, Embracing Digital Culture, Tools, and Approaches”
  6. October 22, 2016 — Finance Minister Bill Morneau offered this advice at a Liberal Party gathering in Niagara-On-The-Lake: “Get used to the ‘job churn’ of short-term employment and career changes.”
  7. December 17, 2016 — Morneau’s advisory council on economic growth predicts that: “Fully half of all jobs will be automated during the next decade, making massive retraining a social and economic necessity.”
  8. January 14, 2017 — “Innovation key to achieving Trudeau’s resourcefulness.’” In order to move Canada’s reputation away from resources to resourcefulness, PM must break the mould of linear thinking.
  9. January 12, 2017 — World Economic Forum report: “The jobless world and its discontents, How can we prepare for a future where drones, 3D printing and automation replace jobs?”
  10. January 14, 2017 — The Economist: “Lifelong learning, How to survive in the age of automation” (Cover story and Special Report)”
  11. January 16, 2017 — “As Robots Take Jobs, Europeans Mull Free Money for Al
  12. January 19, 2017 — Davos 2017 – Issue Briefing: Jobs and the Fourth Industrial Revolution
  13. February 2017 — Maclean’s print edition: “When robots steal your job”, The real driver behind re-shoring is automation. Robotic jobs, not human ones, are coming back.
  14. February 2017 — Automa-nation: Will robots take your job? A new report suggests 42% of the Canadian job market is at risk.
  15. January 17, 2017 — IBM THINK Blog, IBM Cognitive Principles
  16. January 19, 2017 — World Economic Forum, Davos 2017: Google’s Sergey Brin on AI

We’re told that we’re in the midst of the Fourth Industrial Revolution. We may not know how the story ends, be we do know that it will probably involve some form of advanced education. Our children have to be prepared.

 

 

Customers First, Investors Last: What were they thinking?

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For years now, my colleagues and I here at BoardBench, have been saying that Wall Street has it backwards.  In the boardroom, directors have been fed, with a very large spoon, the mantra that they are beholden to the shareholder, that their purpose is to “maximize shareholder value.”  If you asked a large group of directors if this is true, you’d see a lot of bobbleheads in the room.  Many believe this is a legal requirement and in line with good business sense and good corporate governance.  Unfortunately, the concept of “shareholder primacy” is a relatively recent phenomenon.  It is also simplistic (shareholders’ wants are not homogeneous), has no legal basis anywhere (go ahead, try to prove me wrong), and, as many are now pointing out, usually damaging to companies, and the economy as a whole.

What we believe is real, and will eventually be proven again as real to the Street, is that customers, and employees are the two key drivers of corporate success.  When I say “again” I’m referring to Peter Drucker’s famous quote from decades ago: “the purpose of a business is to create and keep customers.”  So many seem to have forgotten this, or have never even heard of it.

But the basic premise is this: if you take care of your customers, and have great employees who are well supported and appreciated for being curious and excited about what they do such that they will ensure that customers love the products and services that the company offers, the company and shareholders will reap the rewards, too.  Of course other things come into play, like managing R&D investments (with the customer in mind), operations, and supporting a corporate culture that has strong values and morals.  The basic premise may be slightly oversimplified, but it applies, and should resonate with the board.

It appears that I’m finally not standing alone on this either.  In a recent interview, Jack Ma, the world’s newest CEO darling, made two bold public statements.  He basically shunned the current thinking of the Street by stating, on national TV, that “our customers come first, our employees second, and our shareholders third.”   He continued: “We aim to be larger than Wal-Mart by 2016, or sooner.”  If – no, when – Jack succeeds, and executes flawlessly on his statement, that customers and employees take a front seat over shareholders/investors, then he’s got an excellent chance of passing Wal-Mart as the world’s largest retailer.  Note, Wal-Mart just slapped some of its employees, who have the most direct relationship with their customers, by cutting their insurance benefits. This was probably done to cut costs, but it will probably also have a long-term impact on their customer relationships, too. But, I digress.

It seems that too many directors, CEOs, and business leaders, have become obsessed with what Wall Street, its analysts, and shareholders think.  Many have learned to play these groups exceptionally well, too. Countless analysts and shareholders have been taken in by companies’ projections, quarterly earnings estimates, and highly creative financial management and reporting.  Don’t get me wrong, the importance of the exchanges and the markets cannot be downplayed, but a balance is needed.  Focusing on Main Street is just as important, if not more so.

If you follow Main Street, you know about big box discount stores. Costco Wholesale Club, founded by Jim Sinegal and Jeffrey Brotman, believe in serving the customer first, and that if employees are treated properly, they will work with, and treat the customer well too.  Jim, the public face, is a “hands on guy” who is known for visiting each individual Costco store.  Jim is also outspoken about his views on Wall Street.  He’s been known to say that he puts his customers and employee needs above “pleasing shareholders.”  This philosophy must be working: Costco’s five year return is +116.73%.  If you bought the stock earlier, your return would be closer to 354%.

American Express is another company known for taking good care of its customer/members.  Personally I’ve been a fan of the company’s customer service representatives over the years, and tell them that every time I’ve called for help.  Don’t get me wrong, working at this company must be tough: when I was younger, AmEx employees were nicknamed The Dragons.  Perhaps because they were seehat2.jpgn as willing to fight for the company and their customers nearly to the end.  By the way, if you invested in American Express five years ago, your return on investment would be up 149.46%.

If you’ve worked with the general retail public, as I did during my college years, then you know just how tough this can be.  Sadly, not everyone who enters a store, calls a helpline, or dines in a restaurant is a kind and thoughtful customer.  Amazon deals with all sorts of customers from nearly every continent in the world, and I’m sure they have some interesting stories to share.  However, the company is noted for being one of the best customer service organizations in the world.  Amazon has more than one customer base, as many do: retail members, and consumers.  Jeff Bezos clearly divided the customer’s connection to Amazon into two categories: the experience and the service.  At this level, he notes that customer service is part of the full customer experience.  If it’s unpleasant, it’s a negative customer experience.  He supports the idea that a positive customer experience creates greater loyalty with Amazon.  If you’ve ever dealt with an Amazon Customer Service rep, you know that they work quickly to resolve your issue, they get the job done for you, and you are nearly always satisfied and left feeling good about your relationship with Amazon.  And, if you invested in Amazon five year ago, your return on investment is now up 236.64%.

While it’s much more pleasant to focus on the “good guys,” there are dark clouds.  Some companies are noted for their poor customer service.  Some survive because there are few alternatives: think of phone companies and cable providers, and some you can name on your own (take a look at their five-year ROIs).  However, when it comes to poor customer experience these days, I think sadly of that American icon Sears.  Whenever I bring them up these days, all I hear is: “Oh my gosh, I could tell you about the time when…”  Sears is a sad story101.jpg about the decline of a once great and loved retail giant.  Many years ago, the Sears catalog used to be called a “wish book.”  Families would anxiously wait for it to arrive in the mail.  It was nearly 5 inches thick. Moms, dads, sisters, and brothers would argue over whose turn it was to browse through and select from among the items they wanted for birthdays, holidays, special occasions and more.  Some people even bought their homes out of the Sears catalog.  But, it has lost its way, and it’s touch with its customers and has already begun its drop down that magical slide once pictured in its own catalog.  The entire company and its hopes for the future look pretty dismal: sell off of units and real estate, store closings, etc.  Sadly, if you invested in Sear’s five years ago, your return on investment would be -58.50% and it’s still falling today.

To sum up and put things into even sharper perspective, I recently spoke with the General Counsel of one of the largest, most recognized corporations in the world.  He told me, succinctly, that the biggest problem with their board is that not one director had any understanding of who their customers were and are or what they want.  I can also assume that they don’t understand their employees either.  So I will watch how this company slides in the next few years (Note: their record has been negative for some time), and report back with an update, unless, that is, they somehow figure it out and turn it around.

Do you need to focus on board improvement: composition, strategy, direction, execution, oversight?  Boards are our specialty. Give us a call.

Nancy May