Category Archives: Going Independent

Here you find our best thinking on the whole question of starting up your own venture, or making the career decision to become a freelancer, contactor, or consultant

Three articles, our children, and food for thought

 

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.

A riddle with a twist

What costs $24,000 or more; takes 4 years to deliver; can’t be insured; has no cash surrender value; can’t be returned or exchanged; comes with no performance commitments and is covered by the two-word guarantee: caveat emptor?

An undergraduate degree.

Such is the mystique surrounding universities that otherwise perfectly rational human beings line up like lemmings to press hard-earned money into the palms of people who work in registrars’ and admissions offices. This in spite of media coverage of the plight of university graduates who’ve watched employers devalue and demean their diplomas and the four years of work that went into earning them by offering unpaid internships, short term employment contracts or permanent part-time engagements. No benefits, no stability, no prospects. The labour market in Canada and elsewhere is awash in undergraduates and post-graduates who are free to sell their services at whatever severely depressed prices the market dictates, or run the risk of earning next to nothing or nothing at all.

Employers are playing the game according to the rules of supply and demand in pursuit of profit and positive return on investment. The question is, by what rules are parents playing that we’ve arrived at this point? How much damage is inadequate decision making going to do to the financial future of our children and, quite possibly, the country, before we accept that we’re in a buyer’s market for certain kinds of education. The university degree is a commodity and it’s in oversupply in certain disciplines. Every new diploma in those disciplines that hits the street and has no takers drives down its own value and the value of diplomas like it.

Parents who choose to sleepwalk through these economic times when it comes to choosing post-secondary education are bringing about precisely the outcome they spent so much money trying to avoid. Absolute trust in the inevitability of work for all bearers of all university diplomas is out of place in 2015.

Management training: Keeping it on the company campus and How to join the 1%are two articles from The Economist that show just how quickly some in the business community adapt to new ideas. And if those ideas don’t pan out, there are always new ones waiting in the wings.

I’m a firm believer in the need for healthy, affordable universities. My children and their spouses are now established undergraduates and post-graduates. Where else are the people we’re going to need to get on with the rest of our life going to come from if not from universities, community colleges and technical schools? I’m not just talking about medical and other professional people. I’m talking about people who’ll come up with better ideas than the ones we have now about climate change, air pollution, land use, R & D, manufacturing, natural resource extraction, inadequate transit and drought in key food-producing regions of the world, just to name a few.

Those temp jobs that always seemed to be there for anyone who needed a little spare cash every now and then have morphed into the new normal for 50% of working people of all ages, yourself included, dear reader. And not only in Canada.

Head-in-the-sand attitudes, not mass hypnosis, are responsible for the outbreak of PEV (precarious employment virus), aided and abetted by vote-buying tax breaks paid for with taxpayer dollars that were supposed to generate work for Canadians but instead have accumulated to the tune of over C$500 billion in dead money according to former Bank of Canada and now Bank of England governor Mark Carney:

“Bank of Canada Governor Mark Carney has taken a rare swing at corporate Canada, accusing companies of sitting on huge piles of “dead money” that should be invested productively or returned to investors. ‘Statistics Canada numbers show Canadian non-financial corporations with a cash hoard of $526-billion at the end of the first quarter of 2012, an increase of 43 per cent since the recession ended in 2009.’”

Universities cater to the demands, not the needs, of the students who make up the bulk of their clientele. What students need is a strategy to deal with employers who won’t offer full-time employment. One way to deal with them is to not plan to work for them. Would you approve a mortgage or car loan for someone who can only find part-time work? Wouldn’t it be ironic if we reverted from being a cashless society to a cash-only society? As PEV continues to spread and economics forces more and more families to consider options other than university, employers will have to raise salaries, train, and revert to the full-time employment model to attract the talent they need. But that won’t happen overnight, if it happens at all.

A review of the literature dating back to the early 2000s will show that many universities are struggling to cope with reduced government funding, declining enrollment and the impact of technology. You might want to read what James Duderstadt, President Emeritus of the University of Michigan, had to say about the subject in the ‘Emory Report dated March 20, 2000.

The era of ‘you pay your money and you take your chances’ is drawing to a close. Forty million Americans owe US$1.2 trillion in student debt. Seven million have already defaulted on those loans. Many of them haven’t or won’t complete their programmes. Still, universities have no incentive to scale back their student intake based on the demands of the economy when they can collect 100% of their ‘fee’ from each graduate they produce regardless of whether that graduate finds work or not. It’s that intake that attracts government funding. Why does the buying public accept that?

According to The Guardian, the Bank of England believes that contract work is here to stay. Parents and their children may not agree with that assessment, but due diligence demands that, at the very least, they take all reasonable steps to assess its implications.

If you have questions, PDD has answers. I invite your inquiries and your comments.

Sincerely,

F. Neil Morris
President & Founder
Personal Due Diligence

+1 (905) 273 9880

Back to the Future: some land, a horse and a plow

The twenty IBM sales recruits sporting three-piece, dark blue suits with sincere tie, long-sleeved-button-down-collar white shirt and wingtip shoes (brogues) had just learned that we had left the letters on the nameplates in front of us undisturbed for three days, two days longer than normal. Bob Oliver from L.A. became Bobo Liver. Boys will be boys.

IBM 403

The “big blue machine in the corner”

The morning’s delivery of doughnuts and various and sundry hot and cold beverages from the nearby bakery in Princeton, New Jersey was sitting on the “big blue machine in the corner”, an IBM 80-column-card-based 403. We were about to learn how the company’s compensation plan worked.

After what was left of the day’s doughnuts had been cleared away, our instructor asked each of us what kind of car we were driving. Anything less than a Mercedes-Benz would have to be upgraded. Keeping up our car payments would be the incentive to exceed quota. But he assured us that with time, we’d be earning more than enough to make the Benz affordable.

None of us bought the Benz, but the message stuck. They wanted us to stay, they wanted us to perform and they wanted us to succeed. That was in 1968: what a difference almost 50 years has made.

The 2015 that Robert Zemeckis envisioned in the 1989 sci-fi movie Back to the Future Part II makes no mention of precarious employment nor of the corporate victory over labour. Neither did IBM in the late 1960s because, back then, no one saw it coming. But it’s here now and it’s impacting on developed and developing countries as this is being written. You can read about the consequences to date in the PEPSO report entitled It’s More than Poverty.

As in most crises or gathering crises of this kind, there’s much discussion about research into the problem, but very little about action. People are at risk and are suffering now. We’re especially concerned about whether parents are factoring this new reality into their plans to invest in post-secondary education for their children, or ignoring it.

As parents in our own right, the position of the Personal Due Diligence Project is that parents must be strategic and pre-emptive in how they approach preparing their children to support themselves. We’ve already begun a survey of parental attitudes about higher education and the extent of their understanding of the implications of just-in-time work.

Not every employer subscribes to this madness. There will be no winners as a result of precarious employment. Driving down the buying power of working people will drive down the demand for the goods and services their employers provide. A farmer looking for ways of conserving money in hard times hit on the idea of cutting back on the quantity of oats he fed to the horse that pulled his wagon. On the day he reduced the quantity to zero, the horse died of starvation.

No one involved with the Personal Due Diligence Project is a Luddite. Far from it. But what we do understand is that machines crave nothing, demand nothing and buy nothing.

As for our governments and business leaders, it wouldn’t surprise us if some bright young bureaucrat came up with the idea of granting unemployed and underemployed Canadians title to 10 acres of land, a horse, some oats and a plow.

Neil Morris
Founder & President
The Personal Due Diligence Project

From industrial to post-industrial: What does it all mean?

Graduating from university has traditionally been synonymous with the good life and financial security. In some cases, it still is. But not for graduates with degrees for which there is no demand. Work was supposed to be plentiful, not precarious. Yet here we are. The world has changed and we have to rethink how our children are going to earn a living and what kind of education they’re going to need. We have to talk to them about higher education, about how the cost is rising, and about how it wasn’t supposed to be this way.

Economies and societies evolve from industrial to post-industrial. That’s what’s been happening to us for the last 35 years. Wikipedia defines a post-industrial economy as: “A period of growth within an industrialized economy or nation in which the relative importance of manufacturing [shrinks] and that of services, information, and research grows. Such economies are often marked by:

“The industry aspect of a post-industrial economy is sent into less developed nations which manufacture what is needed at lower costs (see outsourcing). This occurrence is typical of nations that industrialized in the past such as the United States and most Western European countries.”

Akio Morita, the better known of SONY’s two co-founders, recognized the signs that North America’s economy was in transition in the mid-1980s. When he died in 1999, The New York Times published an account of his life that described when the transition began:

“In the 1980’s, when Japan seemed on top of the world, Mr. Morita was among the most vocal of the Japanese executives in criticizing American business and hailing the success of the Japanese model. He said American managers were financial paper shufflers who ‘can see only 10 minutes ahead’ and were not interested in building for the long term. And he said that because American companies were losing interest in manufacturing, the United States was abandoning its status as an industrial power.’ Those factors, he said, and not trade barriers, were the reason for America’s trade deficit with Japan.

“’There are few things in the United States that Japanese want to buy, but there are a lot of things in Japan that Americans want to buy,’” he wrote in 1989. “’This is at the root of the trade imbalance. The problem arises in that American politicians fail to understand this simple fact.’”

We’ve learned, some of us more painfully than others, that Morita was right. As went manufacturing, so went the economy. But manufacturing has been going elsewhere for the last 35 years and most people who have jobs appear not to have noticed. They’re convinced that a return to the good old days is just around the corner and they’re educating their children accordingly.

Even if they were right—and they’re not—graduates have discovered that the jobs “in their chosen field” that were supposed to pay off their student loans aren’t there any more. That’s something they and their parents should have known before they wrote the cheques or negotiated the loans.

Some of those graduates live in the U.S. and owe US$1.2 trillion. Their Canadian cousins owe between C$25 billion and C$50 billion.

Morita’s pronouncements were behind my founding Personal Due Diligence, or PDD. If the implications were going to impact on my two children, they were going to impact on other people’s children, too. PDD is sharing with parents and their children one-on-one the lessons of the last 35 years and helping them apply those lessons to choosing higher education. The seven planks in our platform are:

  • Researching and monitoring Canada’s economy
  • Researching and monitoring the global economy
  • Researching and monitoring the labour market
  • Acquiring and analyzing deep market intelligence
  • Identifying and analyzing industry trends
  • Quantifying and projecting precarious employment
  • Business case preparation to support a Plan A and Plan B scenario

An article entitled ‘The New Debate Over The Very Rich’ appeared in the June 29, 1992, issue of FORTUNE. It said in part: “Between 1980 and 1990, FORTUNE 500 companies shed 3.4 million jobs, but companies with fewer than 500 employees created more than 13 million.”

The Canada-U.S. free trade agreement (FTA) came into force in 1989. My multinational IT executive search clients were already responding. The consequences figured in our family’s discussions about university.

Canada now has 12 free trade partners. That number will grow to 21 when current negotiations conclude. There will be concessions, compromises, headcount reductions, restructuring, outsourcing and offshoring as employers adjust to their new normal. Please see the Foreign Affairs, Trade and Development Canada website for further information.

Retailing higher education — yours

Raphael’s painting of the School of Athens captures the essence of what some people would like to think university still is: scholars deeply engrossed in thought, debate and dialogue.


Raphael: The  School of Athens. "Sanzio 01" by Raphael - Stitched together from vatican.va. Licensed under Public domain via Wikimedia Commons - http://commons.wikimedia.org/wiki/File:Sanzio_01.jpg#mediaviewer/File:Sanzio_01.jpg

Raphael: The School of Athens. “Sanzio 01” by Raphael – Stitched together from vatican.va. Licensed under Public domain via Wikimedia Commons


Most people tend to think of it the way the U.S. Department of Labor and Wikipedia see it…


Earnings and unemployment


Is it any wonder that parents insist on spending money on higher education at any cost? Why wouldn’t they? But there’s a fly in the ointment. Actually, it’s more like sand in the crankcase and sugar in the gas tank: the charts apply only to people who have jobs.


US_household_wealth_by_education


 

Here are two stories. Both are true.


Story 1

The instructor walked to the front of the room, a small lecture theatre, really. The floor swept gently upward from the podium. Instead of individual seats, each of the 4 tiers featured 2 very long desks separated by an aisle with 6 seats per desk. The 20 of us who made up this particular sales class would spend the next 6 weeks together.

The lecture theatre was one of 2 on the ground floor of a 3-storey building in Princeton, New Jersey. IBM rented the ground floor and the subfloor where the demonstration and presentation rooms were located. Parents and children who rode the elevator up to “3” were there to see the dentist whose building this was.

The class consisted of 17 Americans and 3 Canadians. One of the Americans was Rob M., a former U.S. NAVY fighter pilot from Texas, and he looked the part. That included the naval aviator sunglasses: government issue and very macho. You couldn’t buy them anywhere. We learned the expression “cool your jets” from him. Three of the others and I were newly minted university grads. The rest had fulltime working credentials.

Al E. was the instructor. Football player type. He was wearing a dark blue, 3-piece suit, starched white shirt, “sincere” tie and wing tip shoes otherwise known as brogues or sodbusters. It was clear from the way the rest of us were dressed that we were with Al.

Al led off with a question: “How many of you would rather not be called salesmen?”

My hand and several others went up. Our reasons for raising them were very similar: sales people were smooth-talking glad-handers with loud ties, expense accounts, slacks and houndstooth sports jackets. At IBM, selling was and still is a profession, consultative selling to be precise. At the end of our 6 weeks, we all understood why. No gimmicks, no glad-handing, no back slapping, no smooth talking. Just hard work with emphasis on understanding what the customer needed, lots of emphasis. And on being able to communicate how we were going to use IBM products to address them.

Contrary to popular belief, IBM sales reps did sweat. More than most as it turns out. No more raised hands.

The predicament in which many of the graduates with one or more degrees and no work to show for it find themselves is very reminiscent of the lessons that came out of that IBM sales school. Our business cards were like university diplomas. We were proud to carry them and we were proud to present them. But there were other people out there with business cards and they were good. It’s just that customers expected something extra and better from the ladies and the gentlemen in dark blue suits.

There’s a name for that: value added. It’s what differentiated IBM from the competition.

Universities don’t offer courses in professional, consultative selling. Maybe they should for a modest fee before parents and students commit to 4 or more years. But that’s not going to happen because universities are businesses. First they sell the seats. Then they sell the education wholesale. Graduates have always had to find ways to sell it retail. What makes the job that much more challenging is that, in the eyes of customers, all degrees from the same university are the same and they stay that way until the graduate demonstrates otherwise.

Story 2

I recently attended at a meeting in which an employee with 25 years service with a consumer packaged goods manufacturer was released because the local function the employee headed up was being outsourced and off-shored. The employer explained that they were late moving in this direction vis-à-vis their competitors.

We recalled how Canada Post had been one of the first major corporations in the country to jettison its IT function in the 1990s. In Canada, Data Crown and CSG were laying the groundwork for that decision and others like it. The rationale was that the corporation wasn’t in the computer business: it was in the business of moving mail.

This is the part where the consequences of not understanding the needs of the customer kick in. You’ll see it in these CBC stories: Canadian job skills mismatch: truth or science fiction? Unemployment dips to 7%, most new jobs are part time. Where Canada’s job vacancies are—and aren’t. Loonie tumbles amid huge miss in jobs data, expectations, geopolitical worries. Then there’s Frazier Fathers with his undergraduate degree, two master’s degrees and unemployed in Windsor, Ontario.

Employment and Social Development Canada’s Canadian Occupational Projection System (COPS) predicts that growth in industrial GDP [will] improve in the primary and manufacturing sectors between now and 2020, driven mainly by foreign demand. This should come as welcome news for anyone who plans to graduate with a postsecondary education before the end of the decade.

The free trade agreements into which Canada is entering—including the Canada EU Trade Agreement (CETA), details of which will be released shortly—will change customer behaviour. How will they change employment prospects? What is it going to take to win?

In my 7 years with IBM, I saw “THINK” and “There’s never enough time to do the job right, but there’s always enough time to do the job over” in close proximity to each other more than once. It’s not so easy to do the job over when your first degree involves stocking up on education nobody wants to buy.

If the education system were more about education and less about politics, it would be providing up-to-the-minute information on which to base decisions about advanced schooling. The media are much better at it. So is the price they charge.

Rob Kelly defines gap analysis as “a strategic planning tool to help you understand where you are, where you want to be and how you’re going to get there.” High school graduates must understand that where they and their parents might want them to be and where they may have to be could be two very different places.

The day newly minted graduates receive their diploma is the day they become unemployment statistics—unless they have a job to step into. We have enough statistics. Most of them have dollar signs in front of them: $1.2 trillion owing in student loans in the U.S.; $25 billion to $50 billion in Canada. At least 7 million U.S. students have defaulted on their loan payments at least once.

We need as many gainfully employed graduates as we can produce. For their sake and for the sake of the country.

 

 

 

Risk is free, risk-free costs

Enough said.