Friday, October 30, 2009

Ideas: The New Widget

"As much as three-quarters of the value of publicly traded companies in America comes from intangible assets, up from around 40% in the early 1980's." (The Economist, October 2005)

It's striking. Yes, the Industrial Age is long gone and Information Age well-established, so it shouldn't really come as a surprise. But it does. In stark terms, the data tells us: Ideas drive the economy.

Think about that for second.

Doesn't it just seem too easy, not at all concrete? "Ideas drive the economy." Aren't we taught to believe that the harder something is, the more valuable? Shaping a piece of metal with our bare hands, then using it to build a car, all with Grade-A elbow grease - that's hard, that's valuable. Right?

Well, no, not according to reality.

It's going to be difficult to grasp. And it will be disruptive. It already has been. It likely will continue to be. We're not dealing with tangibles like we used to. Our traditional sense of measurement is becoming more outdated and irrelevant. Even worse, we don't know, or even have, an agreed-upon alternative measure of value.

We do know however that, whether we're ready for it or not, the intangibles are driving businesses and economies forward. Those who figure out a way to measure the intangibles, channel them, and develop them, will win.

What do you think? Some might argue that it takes exponentially more people to implement an idea than it does to come up with one, thereby discrediting the notion of this post - that ideas reign supreme. Join the conversation. Comment below. Or write us at (We'll post a synthesis of the debate, once critical mass is reached.)

Tuesday, October 27, 2009

Clinton, Obama, Afghanistan: A Thought Experiment

With Obama’s decision on Afghanistan imminent and Bill Clinton’s World Business Forum speech still resonant, we thought we’d do something of a thought experiment on leadership and decision-making.

What counsel might Clinton give President Obama on Afghanistan? Specifically, how would Clinton break down the current conundrum, and what advice on leadership and decision-making would he offer?

“Should we escalate in Afghanistan? I have three answers: Yes. No. Maybe.

September 11 has taught us that an unstable Afghanistan is a direct threat to the American people. That’s what makes this so different from Vietnam. Leaving the country will afford Al-Qaeda the same terrorist haven they enjoyed on September 10... and this time without as much resistance from a Northern Alliance.

Victory depends on commitment, and you don’t have it from the American people. Not even from your own Vice President. Americans want jobs, not increasing bloodshed abroad. Escalation without commitment will lead to another Vietnam.

The Afghan people will support that group which cares for their children. Currently, they’re supporting the Taliban, but mostly out of fear. If we helped the Afghans build a sustainable country that was safer and more prosperous for their children, the Taliban wouldn’t have a chance.

The Afghan government is corrupt. We can build schools and train laborers, but buildings and skills will be gone or devalued once we leave, unless the Afghan government is there to support them. It’s unclear whether they have the will, or even the capability, to do that.

Pakistan is unstable; it’s also a crucial partner for success in Afghanistan. If they continue to assist the Afghan Taliban as a way to counterbalance India’s influence, or if a coup replaces the current regime with a much more hostile one, then we’ll have no chance of containing the Taliban along the porous Afghanistan-Pakistan border. Pakistan could be our biggest wild card. Their support is and will be paramount.

Leadership and Decision-making
The considerations are many, related, and complex. Regardless of what you decide, make sure you:
- Have a vision of where you want to go
- Lay out a strategy on how to get there
- Develop specific actions to implement the strategy
And underscore these things with an understanding of not just policy but also of people.

Some of the most difficult decisions I ever made as president were not necessarily the least popular – the unpopular decisions were sometimes easy because I knew what the right answer was – no, the difficult decisions were the ones for which I couldn’t know the right answer… those 10% of presidential decisions that can’t come from policy reports or staff recommendations, but rather must come from intuition. You have to listen and feel your way to the answer. If that happens, the best you can do is level with the people and say that if you’re not right you’ll change.

A great leader is a great decision-maker. You have one hell of a decision to make.”

Sunday, October 25, 2009

Bill Clinton and the World

Bill Clinton gave us a treat at this year's World Business Forum: his framework of the world.

Unlike other speakers at this year’s Forum, Clinton did not use a teleprompter or projected slides. And his paper notes? Apparently just for show – he rarely looked at them. This was the stuff of Bill Clinton legend – speaking off-the-cuff about complex issues in understandable terms. Unfortunately, Clinton fell short of legend this time inside Radio City Music Hall in New York; he meandered and had difficulty staying on point. But his content – why we should care about AIDS in Africa, bombings in the Middle East, and climate change – was no less compelling.

Clinton’s worldview starts with the premise of globalization – although he prefers to use the word “interdependence.” While Clinton rejects the idea that interdependence leads to peace and security outright (See The Complete Idiot's Guide to World War I), he believes it’s possible, if we address three persistent global challenges: inequality, instability, and unsustainability.

Challenge #1: Inequality. “The world is too unequal.” One billion people live on less than $1/day; Half the world population lives on less than $2/day. While people in the developed world live a long time, a quarter of the world still dies from either AIDS, malaria, or bad water (80% of them are children aged five or younger). If global warming proceeds at its current rate, water will become even more scarce, and the developing worlds’ problems aggravated.

“We can be made more secure by eliminating inequality,” Clinton said, citing “10-20 countries in eastern and southern Africa… many of them Muslim… who love the US.” This, at a time when the US has lost significant credibility elsewhere in the world. In these countries, many of which Clinton has visited, nobody has been thinking about Al Qaeda. Why? Because “we have cared whether their kids live or die.”

The lesson is simple and powerful. Focus on the basics and see positive results. In this case, the more we care, the more secure we are.

Challenge #2: Instability. “The world is too unstable.” What seems real one day is gone the next – money, health, security.

In cases, small and large, that span the globe, wealth has diminished like at no other time and to such a degree, since the Great Depression. A local police station in England had to fold because their pension investments in Iceland vanished in the country’s bankruptcy. China, in a short period of time, went from having plenty of cash ($2 trillion in reserves) to not enough (post-crisis they “had nobody to sell to”).

In a more interdependent world, a virus in one part of the world can cause more than just isolated deaths, but also widespread panic and disruption. Swine flu has wreaked havoc in both real and perceived terms. It’s closed down school districts in the US, halted the tourism industry in Mexico, and taken the lives of many. The world is, for lack of a better term, freaking out about it. And with every new report of another well-known person contracting it (e.g., President of Costa Rica and Colombia, Tony Blair’s wife, Harry Smith of the CBS Early Show, Landon Donovan of the US National soccer team), the threat feels more real and the worry continues to worsen.

Terrorist organizations remain a major destabilizing force internationally. Post-9/11, they have managed to hit Madrid, London, Bali, and Bombay, not to mention the countless spots in the war-torn regions of the Middle East and Central Asia. At the same time, as counterintuitive as it seems, “we’re more secure because everyone’s working together.” Without collaboration in the intelligence and law-enforcement communities – that is, positive interdependence – several calamities might have occurred: Al-Qaeda in the Balkans, the millennium attack out of LAX, hi-jacked plane(s) from Indonesia to the US, Holland and Lincoln tunnel bombs in New York.

Across the various sources of global instability, the way to address it is the same. The more vigilant and cooperative we are, the more secure we become.

Challenge #3: Unsustainability. “The world is too unsustainable” because of climate change. 95% of “serious scientists” believe that if we don’t cut CO2 or methane, then temperatures will increase, oceans will rise, and 100 million people in coastal regions will become climate change refugees by 2050, having been forced to uproot by Mother Nature and settle elsewhere. In Australia, Conservatives and Liberals are debating, not about whether the problem is real, but rather how to best solve it… everyone agrees it’s a problem.

Clinton also focused on sustainability in the US. He painted a rather dire portrait of where the country is headed if income continues to decline, college costs continue to outpace income growth, and healthcare continues to cost more while covering less (and also outpacing income growth). He cited the need for a new source of jobs every eight years to remain competitive. Solving climate change, Clinton believes, is the way to do that (e.g., “green” jobs and projects). He’s not shy about the size and difficulty of the task at hand, saying that if done right, it “would be the greatest thing since we mobilized for WWII.”

In the challenge of unsustainability lies a significant opportunity for positive change. The country or company or individual willing to invest in it, could save the world’s future, if not own it.

The world in which we now live is vastly different than the one in which Clinton took office. Then, in 1992, there were only 50 websites worldwide. Today, more than 50 new websites were created during Clinton’s speech at the Forum alone. Our world is much more connected. What we do affects others more so now than ever before. The more we understand that, the more willing and able we are to address the challenges of global interdependence… and experience the peace and security associated with it.

Tuesday, October 20, 2009

Chester Elton: A Carrot a Day...

We recently sat down with Chester Elton, best-selling author of The Carrot Principle and sought-after international speaker. As one of the world’s leading experts in employee engagement, he’s just as excitable in conversation as he is on stage. Beyond his stage presence though is his story.

Chester is a faithful man. He believes in something bigger than himself and in the service of and for others. Faith, whether religious or not, has become an emerging theme in the success stories we’ve followed thus far. It makes sense when you think about it. Faith is the glue that bridges today's unknown to tomorrow's success.

He’s also family-oriented – another recurring theme. He considers himself “madly in love” with his wife and his boys “exceptional.” His parents were together for 65 years. In fact, he considers them his "first managers." In short, he comes from good family stock.

Chester keeps a detailed journal, so we know (or at least surmise) that he has healthy self-awareness... and discipline. And what does he use to write in those journals? Fountain pens – limited edition and rare. Why? They force him to think when he writes.

Of service, he says, “A life of service is a life well-spent." He even goes further to say, “Learn to serve people. When you do, it’s good for business (too).”

As for luck, he likes to quote Larry Bird, who said “The more I practice, the luckier I get” after having made a game winning shot from the floor, on his back, in a consequential playoff game. Chester does believe that hard work breeds luck.

When it comes to failure, Chester exposes his Canadian roots with a ski analogy: “If you’re not falling, you’re not skiing.” Chester's personal run-in with failure came in Hartford, CT where he worked in TV ad sales and where he “failed pretty spectacularly." Ultimately, he grew stronger as a people leader and is now a renowned expert of it and best-selling author because of it.

As his mom always told him, “It doesn’t matter how you start; it matters how you finish.”

Find out more about Chester and his success story in our audio interview...

Sunday, October 18, 2009

World Business Forum: Lessons Learned

What an experience to blog from the 2009 World Business Forum at Radio City Music Hall in New York City (see official Bloggers Hub in photo at right) to bring you insights from the world's foremost thought-shapers and opinion-makers. From Bill Clinton to Pat Lencioni, from George Lucas to T. Boone Pickens, there was no shortage of unique insight or rich perspective. From their powerful speeches and personal stories emerged four main themes.

1. Fail to succeed. Failure is a must-stop on the road to success. Several of this year's speakers failed at or quit something before finding their path and reaching the heights of their success.
  • T. Boone Pickens quit his job at a petroleum company at 26 years old. He ultimately started his own, shaping not just the oil industry but the concept of "corporate raider."
  • George Lucas was "up to no good" racing cars, before pioneering filmmaking magic.
  • Bill George left a potential (and much coveted) CEO position at Honeywell to run a much smaller (and at the time, much less proven) company in Medtronics. He eventually became a storied corporate executive, Harvard Business professor, and renowned leadership expert.
  • David Rubenstein quit his job as a lawyer in his late 20's without resistance from his bosses. He also failed in the Carter administration where he was responsible for fighting inflation and "got it down to 19%." All before starting one of the world's most successful and influential (if not controversial) private equity firms.
  • Pat Lencioni felt like he failed at Bain & Company for not being a numbers guy. It's that experience which led him to pursue organizational management and become one of the world's leading experts of it.

Failing and quitting - two things we're taught at an early age to avoid - were not only good, but necessary for these industry titans to, in fact, become industry titans.

2. Be human. Aligning what we do to who we are is critical. How we work must better reflect who we are as human beings - more emotion and creativity, less reason and structure.

  • Gary Hamel believes we're in the midst of a revolution in corporate management and leadership because corporations aren't human. They're not as adaptive or creative or engaging as we are, as people. They have to be to survive.
  • Kevin Roberts thinks emotion is actually more important than reason, particularly with customers. Reason leads to conclusion, but emotion leads to action.
  • George Lucas believes art - to be true art - is about emotional connection; It's about telling a story in a meaningful way. The same can be said of business, specifically the thing at its very core: persuasion. There's no such thing as persuasion if not for telling a story in a meaningful way.
  • Pat Lencioni believes that the emotional intelligence of an organization is its true competitive advantage. So many companies focus too much on how "Smart" they are and much too little on how "Healthy" they are.

The challenge here is how: How do we become more human as professionals, as leaders? As Jim Estill put it - he's a blogging colleague from the Forum, former CEO, and current Board member of RIM (the maker of the Blackberry) - "Leadership is messy." We want to know it in rational terms but we can't because it's not. Realizing that is the first step.

3. Challenge short-termism. We all know that taking the long term view trumps the short-term one. In fact, this year's World Business Forum opened with a Hollywood-style short film containing sage advice from proven leaders about taking the long-term view. But how do we do it in today's 24/7 world? It boils down to one thing: Leadership. Specifically, three key ingredients: Courage, Faith, and Commitment.

Take the case of Bill George, whose remarks opened this year's World Business Forum. When he was CEO of Medtronics, he did not shy away from telling his investors that if they were looking for a quick buck, they could invest elsewhere.

  • Courage. He had the courage to take the long-view, sacrificing potential short-term wins for long-term payout.
  • Faith. He had the faith to believe that, in the end, long-termism would win.
  • Commitment. He had the commitment to stick with it, even, when competitors with the short-term view might have appeared to be fairing better than his own company.

Ultimately, Bill's leadership paid off. In 10 years with Medtronics, he took the company's market value from $1B to $60B. It's no wonder his book, True North, about authentic leadership, is a critically acclaimed best-seller.

4. Do One Thing. In a more interconnected world, the little things we do have an even bigger impact. Several headliners at the Forum captured the spirit of this concept.

  • Kevin Roberts started the "Do One Thing" (D.O.T.) campaign at Saatchi & Saatchi where he has challenged employees to commit to doing one thing to positively impact their environment.
  • Jeffrey Sachs called for global scale cooperation for our global scale problems, particularly in finance. Because one thing that a banker in New York City does can collapse entire economies (see Iceland), oversight needs to be broadscale and shared.
  • Bill Clinton spoke at length about "shared costs and shared benefits" in an increasingly interdependent world: "No matter how constrained we are, we all have a role to play." He drove the point home with a story about a young man in Haiti who secured excess sawdust and paper from community businesses to make cooking brickettes. In doing so, he was able to sell them at just 1 cent a piece, down from 5 cents a piece. This young man - in collaboration with others - reduced the cooking bill for many by 80%. In a country where the average income is about $1/day, that makes a huge difference.

In the fabric of this year's World Business Forum lie true success secrets... personally, professionally, and as a global community: Be human. Take the long view. Embrace failure. Do one thing.

If we can do that, we can change the world.

Thursday, October 15, 2009

Gary Hamel: Management Revolution

Gary Hamel, “the world’s most influential business thinker” (Wall Street Journal) and author of best-selling book The Future of Management, had something mind-blowing to share at this year’s World Business Forum: we are in the middle of a once-in-a-century management revolution. It sounds like hyperbole, but take heed. His ideas and his examples were compelling. They also challenged us.

Hamel likened our time to that of Frederick Taylor’s, about a hundred years ago, when in 1912, his idea about something called “scientific management” – the model for today’s corporation – was so advanced, so controversial that he was called into Congress to testify. He called for a “mental revolution” among “workmen… and… management” for scientific management to take hold. He gave life to concepts like efficiency and productivity and standardization.

Our modern-day Frederick Taylor, Gary Hamel, tells us that Taylor’s revolution has plateaued and we're ready for another. Hamel’s premise is rooted in employee engagement. No more than 20% of people are engaged at work, which means there’s a lot of latent productivity and untapped innovation in the workforce – in other words, there’s room to get a lot more out of employees. And corporations today – how they’re organized and what they value – will not do it. A revolution is required.

But why must corporations revolutionize to survive? And more importantly, how can they do it?


Corporations aren’t human. And they must be to survive.

Diligence, obedience, and structure will no longer be cornerstone principles of the corporation; Passion, creativity, and innovation will be. Why is Hamel so sure? “... because the upcoming generation will accept no less.” These are young people who grew up in the meritorious world of the internet, not the authoritarian world of the corporation. They derive power from and give power to others based on content, not title. They are creative and passionate. They are the drivers of the participation economy that Kevin Roberts, of Saatchi & Saatchi, spoke of earlier at the Forum. They don’t respond to marketing but movements, not to information but inspiration. They will not put up with only 20% engagement in the workplace.

To engage and retain this next generation, the corporation will have to fundamentally morph the way they manage them.


W.L. Gore is a good place to start. The company that brought us GORE-TEX is living proof of what the next-era corporation will look and feel like. No titles. No rules. No assignments.

Sound like a slacker’s paradise? It’s not. This company, started by a DuPont engineer, recognizes over $2 billion in annual sales and has not one quarterly loss in the last 30+ years. They have found a way to create entrepreneurs and collaborators in the workplace.

Here’s how they do it:

1. No titles. Nobody has titles at Gore. When Hamel was on-site, and noticed that nobody had titles on their business cards, he asked a Gore employee, “How do you know who’s leader?” The response: “Well, if you call a meeting and people show up, that’s a good sign.”

2. No rules. There are no rules at Gore. Take for example their travel and expense policy – there isn't one. Employees can travel when they want, however they want, for as long as they want, expensing whatever they want – all on the company’s dime. How can this system work? The company simply posts travel expenses online, where everyone can see. If everyone were to see that you ordered the $1,000 bottle of wine, perhaps you’d be more inclined to buy the $20 one.

At Gore, there’s just one guideline: No “waterline issues.” No employee should take a risk that would sink the company, punch a hole in the bottom of the company’s proverbial hull, nothing that would damage its reputation or get it into legal trouble or ruin the brand. In meetings, it’s not uncommon to hear Gore employees asking each other, “Is there a ‘waterline issue’ here?” (Hamel implored us to imagine what the world would be like if the financial services industry asked the same question before the economic crisis.)

3. No assignments. Nobody at Gore tells employees what to do. They choose what they work on and who they work with. All commitments are voluntary. How do they manage this apparent free-for-all? Peer ratings. An employee rates 20 peers and 20 peers rate that employee – ranked 1 through 20. The rankings are used to determine salary.

The Challenge

It works for W. L. Gore, but how does it, or will it, work elsewhere? Such is the challenge of Hamel’s insight. While he gets us thinking (even excited) about the management revolution, he doesn’t provide all the answers (nor does he have them). What he does provide is advice on how to get there:

A. Challenge dogma. Basic assumptions in modern day management – authority trickles down, change starts at the top, senior executives set strategy, takes crisis to provoke change, freedom and discipline are trade-offs – are false. Unlearn the old; discover the new. Many innovators, including Bill Gore (founder of W. L. Gore), never went to business schools.

B. Explore the fringe. The future always starts there. Tattoos, as a small but telling example, started with sailors and bikers. Now, young women have them as body art. What will become trendy or mainstream tomorrow is at the fringe right now.

C. Experiment. “We need to be revolutionary but nobody is going let you do that,” so today’s managers must be simultaneously revolutionary and evolutionary – How? Experimentation. It’s bounded in time and risk, but allows exploration and discovery. Successful managers should ask themselves, “Am I putting a portfolio of risky projects together?”

D. Recognize natural leaders. Leaders in tomorrow’s corporation will be chosen for fairing well on new types of questions: Whose responses are rated most helpful? Who contributes the most to online forums? Whose advice is sought most often? Who responds most promptly to requests? Who is generating the most external buzz?

Hamel closed with his thesis: “Isn’t it weird that corporations are less human than us, less adaptable, less engaging, less interesting, less creative? (It’s because we apply this arcane) technology of management from 100 years ago – Management 1.0. You cannot create a company for the future unless it’s made for the human being.”

Go make it happen.

Tuesday, October 13, 2009

T. Boone Pickens: Economics is Boring

“You know what an economist is, don’t you? An economist is someone who didn’t have the personality to be a CPA.” T. Boone Pickens, clearly known more for his folksy charm than intellectual prowess, took pleasure in poking fun at economists at the World Business Forum last week. Perhaps that explains why The Popped Kernel, in our last two posts, uncharacteristically made no effort to personalize economists Paul Krugman and Jeffrey Sachs.

(Updated below on 11/10/09)
As posted in the comments below, we learned more from and about T. Boone than just his teasing humor.

He quit his job at 26 yrs old with no alternate plan. After complaining about his job, his wife told him to leave it. The day he did, he came home early to his wife asking, "Why are you home so early?" He said, "I quit today." His wife shot back, "Why'd you do that?"

He believes the U.S. should be awarded oil contracts in Iraq, not China (as has been done). His argument is simple: Americans lost over 4,000 lives in Iraq, not China.

He's an environmentalist, albeit not admittedly. While he did acknowledge a friendship with Al Gore rooted in the cause, his driving force is rooted more in national security - to reduce (if not eliminate) America's dependence on oil from hostile regimes. He started the Pickens Plan to influence a fundamental shift in US energy policy - source power from natural gas and renewable energy, not oil. He happens to be heavily invested in natural gas and increasingly in renewable energy.

He believes he's more powerful today than ever before, not because of his wealth but his following (driven primarily online). 1.6 million people have signed onto his Pickens Plan. As he put it, with money he could see anybody in Congress but nothing would happen; with money and 1.6 million supporters he can see anybody on the Hill and now he's a force to be reckoned with. Members of Congress now ask him if he can mobilize his "army."

You may be wondering what the heck that "T" stands for. Well, wonder no more. It stands for... wait for it ... Thomas.

And remember those Swift Boat ads? The ones that "swift boated" the Kerry presidential campaign in 2004 (and augmented the American political vernacular in the process)? T. Boone funded them.

T. Boone Pickens is a complex man. It's difficult to label him, but if anything could describe him, perhaps it's quite simply "self-interested."

What do you think? Are you a fan of T. Boone? The man? The plan? Let us know. Comment below. Or write us at

Jeffrey Sachs: Political Perspective from an Economist

Jeffrey Sachs, Economics professor at Columbia University has made a name for himself as a prognosticator and translator of the very thing that has captured America’s attention for over a year: the economy. But it wasn’t his economic perspective that surprised us last Tuesday at the World Business Forum – it was his clear and direct indictment of money in politics that did.

Sachs went so far as to describe the US as fascist. Without actually using the “F” word, he declared that until the US government stops making law (or lack thereof) at the behest and on behalf of corporations in the financial services and healthcare industries, we won’t be living in the democracy we think we do.

For a well-respected, widely accepted, and quite influential economist to go into the lion’s den and poke it in the eye, things must have gotten – and must still be – pretty bad.

Specific highlights include:
The market for mortgage-backed securities on Wall Street went from $0 to $62 trillion in less than a decade. That’s roughly the size of the entire world economy – and no part of that market was regulated.

Both the Clinton and Bush administrations, as well as the Fed, kept regulators out of that market. Insurance giants like AIG made matters worse when they started insuring these investments against default, with no capital backing. They didn’t need to because regulators weren’t telling them to. Jeffrey called it “pure irresponsibility.”

Here's what the “pure irresponsibility” looked like (in everyday terms): A company like AIG told investors, “Give me $2, and in exchange, if you’re $100 mortgage-backed security defaults or is deemed worthless, we’ll give you that $100.” AIG did this with effectively no money in their bank account (i.e., no capital backing) to actually pay the $100. When mortgage-back securities were deemed worthless because nobody knew which ones contained toxic sub-prime mortgages, investors who purchased them started defaulting on their $100 and went to AIG for their lost money. But AIG didn’t have the money. So Joe Blow taxpayer had to pay. While illegal in other contexts, this activity wasn’t illegal here because there was no regulation.

Sachs rhetorically asked the audience “Why do you think regulators were kept out (of it)?” then turned his speech into surprising territory by answering, “This is about money and power.”

Making a broader point about money in politics now, he brought healthcare into the conversation. “Why do you think we’re no longer talking about The Public Option in the Healthcare debate…. Let me tell you: it wasn’t the townhalls over the summer…. Debates in public are sadly a side show. The real issues are being decided in the back rooms where campaign contributions and vesting interests and lobbying will set parameters on healthcare and the financial system.”

“We do not have a basic change of money in politics yet.” Sachs was clearly calling for one.

Sunday, October 11, 2009

Paul Krugman: Recovery Will Last Long Time

Paul Krugman is a brilliant man with thought-provoking approaches to economic questions; he wouldn’t be a leading New York Times columnist (or Princeton University professor) if he wasn’t. On Wednesday at the World Business Forum, he discussed world trade. Not the sexiest topic, but for a winner of the Nobel Prize in Economics, not a problem either. Some of his more poignant points included comparisons to the Great Depression and predictions on economic recovery:

Great Depression vs. Now. Much has been made of today's economic crisis relative to the Great Depression. Krugman appears to agree with the emerging consensus - that the Great Depression was worse - but that didn't stop him from making comparisons ... or even calling out what was worse about today's crisis vs. Roosevelt's.

1. Run on banks in 2008. What happened during the economic crisis of 2008 was the same as the run on banks in the 1930’s. While mobs didn’t gather outside banks in 2008, they did gather online in the electronic marketplace (to pull their money out of the system) – and with much greater fervor.

2. World trade (or not). World trade has declined more precipitously in this economic crisis than it did at this stage of the Great Depression. Enough said.

Recovery to last long time. Forecasts generally assume economies recover in 5 years – there’s no reason to believe that will be the case this time around. We could be in recovery for much longer. “This looks to be a long siege” for three reasons:

1. No trade surplus. When countries suffer recession from financial crisis, they come out of it by moving into a trade surplus with other countries. The effects of this economic crisis are so widespread and profound that the whole world is in deficit – if the world is in deficit, then it’s that much more difficult for individual countries to get to a surplus.

2. No transportation technology. Steam-engine boats. Containerization of shipping. Airplanes. They all revolutionized transportation, significantly reducing time and cost. Now, there does not appear to be anything like that on the horizon.

3. Higher transportation costs. The cost to transport goods between countries – whether by land or sea or air – will increase as (a) oil prices rise and (b) green policies take effect, taxing emissions of transportation even further.

This last point, we found tremendously telling. Here is a leading Liberal economist making a practical argument against green policies. It became even clearer to us that the depth and intensity of our current economic crisis has affected much more than just world trade.

Thursday, October 8, 2009

George Lucas: Rebel, Innovator, Philanthropist

Film great George Lucas closed out the first day of the World Business Forum on Tuesday to an attentive crowd. We learned that his path to filmmaking was accidental and that from the beginning, he was driven by passion not money. He revealed a number of other interesting tidbits, including his take on Hollywood and friendship with Steve Jobs.

Highlights from the conversation with George:

-Accidental filmmaker. After crashing a car at 17 and getting seriously injured, George opted out of car-racing and went to community college. He wanted to be an illustrator. His dad said no - Lucas, the elder, wasn't about to pay for his son to be an artist. Disillusioned and a bit lost, George said yes to a friend who wanted to ride up to a college together to take an entrance exam. George ended up getting in. He thought it was photography school, but when he showed up, he realized it was cinema school. He didn’t know what cinematography really was. His first class was animation, and his very first assignment became an international sensation at film festivals. We all know what happened from there.

-Success and passion. George believes that “success follows passion, not the other way around.” His story evinces his mantra. When making Star Wars, he negotiated a 40% royalty from the studio. This was unheard of at the time. It ended up being a move worth hundreds of millions of dollars to George, but he didn’t do it for money (nobody knew it would make money). He did it to maintain control of “his” movie, to make it the way he intended. He was passionate about the film and had a vision. He wanted to maintain both. With 40% of the rights, he could.

-Hollywood. In a brief exchange about Hollywood, George was very refreshingly clear – he hates it. He believes that for every honest filmmaker trying to get a story out, there are a hundred Hollywood execs ready to tear it down. But channeling Yoda, George was quick to quip, “Be careful what you hate, for you may become it.”

-Good friend. “Steve jobs is a friend of mine…. He knows what he’s doing…. He’s not into buying companies or synergistic this or that. (He’s all about what I do) – ‘Here’s a good idea, let’s do this.’ ”

-Respected peer. “Peter Jackson is genius…. He did something with Lord of Rings that I didn’t think was possible…. The story was so long and complicated.... I didn’t know how the studios would allow it.”

-Likes and dislikes. What George does most and what he loves most are almost in reverse order: … does most (in order): Writing, Buinsess, Edit, Direct, Camera … loves most (in order): Edit, Camera/Direct, Writing, Business

-Family business. George’s dad owned a small office supplies business. He wanted George to take it over. George said no - he vowed never to go into business.

-Education. George started the George Lucas Education Foundation which aims to influence how students learn, using a variety of techniques including digital media.

-Writing. “Scripts are not about writing. It’s about telling a story.” Perhaps that’s what explains the discrepancy between his panning critics and his wooing audiences. And separately (but related), George still writes longhand. Of it, he says, “I’m not very technical, believe it or not.”

-Delegation. George finds it difficult to delegate the writing of scripts to others. In fact, he can't. The times he's tried in the past, he's ended up discarding others' work for his own. "Others can write (but) I'm the only one who knows the story."

-Art. Art is not literal, it’s about emotional connection... a way of telling stories in a meaningful way. And to create art, there’s a huge amount of technological advancement involved… whether it’s evolving from early SciFi effects to CGI or figuring out how to paint a masterpiece on the ceiling of the Sistine Chapel in the early 1500’s.

-Destiny. Originally, George wanted to do documentary films. But he ended up in feature films. George believes – with striking genuineness – that even if he’d become an illustrator after community college, he would have ended up where he has. With this, and equally as striking, George implies that not only are fate and destiny real, but that his passion drove him there. The force is strong with him.

Kevin Roberts: It's about Emotion, not Reason

Krass in style and powerful in message, Kevin Roberts, CEO of the one of the world’s leading creative organization, Saatchi & Saatchi, took the stage at the World Business Forum at Radio City Music Hall in New York on Tuesday, dawned in all-black, traditional zen garb with a keen interest for The Rockettes and a strong Scottish-versioned New Zealand accent. Needless to say, he made an impression. I can’t explain it very well. But that’s exactly the point of his presentation. He’s in the business of eliciting an emotional response from us in a way beneficial to his clients (e.g., Procter & Gamble, Toyota, General Mills, Visa to name a few). Say what you will about his style and his purpose, but his talk at the Forum was entertaining, edgy, and most importantly thought-provoking, with frequent use of his firm’s ads to make his point.

One ad was an affected amateur style video. The scene: Balcony view of modern-day Liverpool train station in England. People rushing to their trains, meeting loved ones, or simply lost. Hundreds of them. Suddenly, music blasts over the loud speaker. Good music. Confusion ensues. A few people stop what they’re doing and dance – clearly professional dancers, young hipster types. Many others are confounded. As the music continues, more dancers – likely professional still. As time passes and the music mix varies, even more dancers – but this time, innocent by-standers moved enough to join in. The crowd grows. As the songs change, more and more people join in… even the ones who are on their phones in disbelief, watching, mouth agape. Grandmas, dads, singles. Black, white, brown. It’s incredibly engaging. And you can’t explain why at this point even you are caught up in the moment, dare we say, emotional. Everyone in the train station is now dancing. Incredible. You are emotional and vulnerable - ripe for impression. Then, the company logo flashes on the screen: T-Mobile. The connection to T-Mobile doesn't make sense to us, rational sense anyway. Perhaps it’s about human connection and using T-Mobile to share in life’s random moments. Perhaps it’s simply a brilliant idea executed flawlessly to engage the viral generation. Either way, it touched us - and got over 10 million hits online in just three days.

I will always remember this ad. I might not switch my telecom provider, so perhaps the genius of it is misapplied. But what’s clear is that we are moving into what Kevin calls a participation economy which is driven by inspiration, unlike today’s attention economy which is driven by information. Heading into tomorrow, it’s not about marketing but a movement. Kevin explains that while reason and rationale lead to conclusion, emotion leads to action. In fact, he shared this insight as pretext for his seven ways to win in this new world we’re entering, a world in which companies and entrepreneurs need to drive “loyalty beyond reason.”

Here are Roberts’ gems, in his fragmented staccato style:
1. Face the truth. World is ugly now. Need to get along with less. Consumer research is worthless because consumer is in a different place. Deliver priceless value, not just price. “What are you giving me that’s emotionally priceless?” Purpose-inspired, benefit-driven brand.
2. Reframe beliefs about value. “When you buy a prius… it’s not about better MPG or reliability… you’re making the world a better place!”
3. Measure only what matters. Advertising – only two questions matter: “Do I want to see it again?” and more importantly, “Do I want to share it?” Don’t sell by yell. “Consumer is not a moron, she’s my wife.” Consumer has become the biggest medium.
4. Participation vs. Attention economy. Consumers are now their own medium, they’re their own creator. 14-17 yr-olds call themselves “Creatives”… they’re creating their own medium, their own world. Today, we’re in attention economy – it’s about information. Return on investment. Tomorrow, we’re in participation economy – it’s about inspiration. Return on involvement. Not through marketing, but movement. Not a brand, but a lovemark. Not price, but priceless value.
5. Let emotion rip. Rationale leads to conculsion. Emotion leads to action. We’re in the business of action.
6. Brands vs. Lovemarks. Brands are owned by companies; Lovemarks are owned by people. Brands built on respect; Lovemarks built on respect and love. Brand – for a reason. Lovemarks – beyond reason. Lovemarks drive loyalty beyond reason. Make brand irresistible, not irreplaceable (everything now is irreplaceable). Brands are about performance, reputation, trust. Lovemarks are about mystery, sensuality, intimacy.
7. Be true blue. Blue oceans, blue skies, be sustainable. Role of business is to make world a better place for everyone. Move from green to blue. Green is about fear; Blue is about optimism. Green is about “what is there to be done?” Blue is about “What can I do?” DOT – do one thing.

Roberts closed with another ad, perhaps the 7th or 8th of his presentation. The ad was for a New Zealand telecom company, but don’t let that off-put you, it was moving. Home video of son and dad over the past 30-40 years – first steps, fishing triumphs – grainy colored moments frozen to black-and-white stills marking the passing decades. Fine skin to wrinkles and white hair. Slow motion in parts, pleasant music throughout, strong bond clear. The last image goes up, full of color but also despair. It’s just the son, all grown up, standing on the front lawn. Sun is up but head is down. What’s missing – rather, who’s missing – is palpable. The music stops. On the screen appears: “Keep in touch.”

With an audience moved, Roberts closed his time with just one more line, “When this is done, don’t call your office, call your dad.”

Wednesday, October 7, 2009

David Rubenstein: Investments and Life Lessons

David Rubenstein, Co-founder and Managing Director of The Carlyle Group, was incredibly informative if not a bit robotic here at the World Business Forum. We forgive his fast-paced monotone for the gems of information and insight he provided. Before we go into what he said, let us give you a better sense of The Carlyle Group, so you understand the weight of his words.

Today, The Carlyle Group is one of the largest private equity firms in the world. The group has about $100B under management. They’ve experienced a 33% annual return on their investments since inception, which is simply jaw-dropping (if you invested just $1,000 thirty years ago, you would have $4 million today). The firm is one of the most influential (very much behind-the-scenes) forces in the world of business and politics. They’re not market leaders, they’re market movers.

Here’s where David would invest right now:
a. Distressed investments… beaten down companies… likely turnarounds
b. Industries with support of US government
c. Energy – traditional and alternative energy
d. Healthcare – “Boomers will spare no expense for fake hips.” Healthcare will continue to grow more than its fair share, as a percentage of GDP.
e. Natural resources – oil and water… water in particular
f. Emerging markets – China, Brazil, India, … “If you don’t think of China all the time, you’re not living in the real business world.”
Of course, not all companies in these areas will represent good investments, but as a core principle, David believes in focusing investments in high growth areas and avoiding even normal levels of leverage (particularly now).

He also shared his career learnings, many of which surprised us because of how human they are:
Persist. Don’t take no for answer. Keep pushing. Take entrepreneurial risk. If you don’t, you’ll sit at your desk for 20 years.
Persuade. Improve your skills of persuasion.
Partner. You can’t build a business by yourself, so find a partner (or several) whom you can trust.
Passion. If you don’t love what you’re doing, do something else, your wasting your time and your career. You’re good at what you love. You’re not good at what you don’t.
Think about activity, not money. Money will flow.
Think like a leader, not a follower. If you think like follower, you will be a follower. If you think like a leader, you’ll be a leader. In related advice, Rubenstein implores you to think like an owner, not an employee. It has been the most important quality he’s learned in all his experience.
Luck. Everyone makes their own.
Deathbed. You never say “I wish I worked harder,” on your deathbed. You say, “I wish I could have given more to my family, to my community.” He urged the audience to “Give back to your community. Don’t just think about your business career.”

It’s worth noting that David had failed three times in his career before striking it out on his own and becoming a huge success. This is a recurring theme among the industry luminaries at this year’s World Business Forum. The Popped Kernel does not believe it’s a coincidence and plans to write more on it – and other broad themes of the Forum – in the coming days.

Bill George: A Lesson in Authentic Leadership

Bill George, former CEO of Medtronics, current Harvard professor and best-selling author of the game-changing leadership book True North: Discover Your Authentic Leadership, was the opening speaker at the World Business Forum. His style, while reserve, exudes experience and drips professorial. He shared a number of stories with the 4,000+-strong crowd here at the Forum, highlighting signs of authentic and lasting leadership – CEO accountability in the cases of Mattel and JetBlue, Bold decision-making at Goldman Sachs before the Great Recession. But what struck us most came at the end of his speech. It wasn’t about case studies of respected companies or the company boards on which he sits. He shared his personal story with an unusual, and much appreciated, amount of vulnerability.

Bill taught us a lesson about ego and how he overcame his to become a leading expert and thought-shaper on leadership. He told us about being “The Number Two” at Honeywell, in line to become CEO of one of the world’s largest and most respected companies. Bill had been at Honeywell for 10 years. He was trying to impress his colleagues and his board. He wanted them to choose him as the next CEO. But something didn’t feel right. He even wore cuff links (which he didn’t like). He would talk to his wife about it at home. A relatively small biotech company, Medtronics, approached him several times to run their company, but they were too small. He kept saying no. His ego wanted to run a large company.

Finally he met with Medtronics. He was surprised by his reaction. He felt at home and loved the mission of their work. He left Honeywell to lead Medtronics, taking the $1B company to $60B in market value in 10 years. Now, he’s on the board – or has been on the board – of several corporate stalwarts (Goldman Sachs, Exxon Mobil, Target, Novartis) and is an international powerhouse in the field of leadership.

It’s unclear whether Bill made the move to Medtronics because he wasn’t going to make CEO at Honeywell or because Medtronics just felt like a better fit for him. But we do know that he shared with us a piece of his personal story that not many CEOs would have shared. And more importantly, his story proves that when you leave that which doesn’t feel right for something that does, good things will happen. It all comes back to passion. Follow it... by definition, it’s right.

Tuesday, October 6, 2009

World Business Forum: Starting with a Bang

It’s lunch time right now at the 6th Annual World Business Forum. Titans of industry are dining. Some internalizing the morning talks; others right back to the pre-Forum grind. There are a number of highlights from this morning’s session – which we’ll write about in forthcoming entries – but first, context.

The Forum opened with a bang. After the lights dimmed in the main hall of Radio City Music Hall, a booming Hollywood-style short dramatically shot up on screen. The film ranged from alarming to uplifting. It began with a stark image of space to a doomsday score. A slathering of headlines from one year ago filled the screen. The clippings morphed quickly into a large ball, a planet, then froze for an instant. The music too. Nothing. Then, just as dramatically, hope filled the auditorium with a charge of instrumentals and images of great leaders espousing the timeless values of leadership, decision-making, the long-term view. As the music crescendo-ed, so too did the wisdom and stature of the leaders. It ended simply and directly with a narrator's voice, “We want (you) to start growing again.”

The message at this year’s World Business Forum is clear: The storm is over. As we get up, dust ourselves off, and look around, there’s devastation. But there’s also opportunity… opportunity to learn, move on, and apply. The possibility that it may be harder to do than surviving the storm itself is real, but it does not minimize the magnitude or value of that opportunity. Perhaps it makes meeting the challenge that much sweeter.

Saturday, October 3, 2009

Patrick Lencioni: Let Passion be Your Guide

Patrick "Pat" Lencioni, author of best-selling book The Five Dysfunctions of a Team and founder of organizational management consultancy The Table Group, embodies what The Popped Kernel is all about - follow your passion, even in the face of risk, to reach your full potential. We interviewed him recently to understand who he really is and what's behind his success. Here are a few takeaways from our conversation (we plan to post the audio interview soon).

Pat is a faithful family man. He makes it very clear that family comes first. Knowing his priorities early on allowed him to set up his company and manage his time in a way that affords him both professional success and personal fulfillment.

He insists that his success - or at least the degree to which he's realized it - was not planned, but simply a side effect of doing what he loves. He genuinely believes that if you do what you're passionate about, then everything else will fall into place (and then some). His experience has proven it.

He remembers facing several risks as he contemplated jumping from secure corporate gig to starting his own firm - his savings, his reputation, the careers of four founding employees. With knowledge of the risks, strong faith, and lots of support from his wife, he said no to two corporate job offers - one from Steve Jobs and the other from Eric Schmidt (now CEO of Google) - in favor of opening his own firm. He started very small, remained positive in outlook, and focused his energy on simply making it work.

When making the jump to do your own thing, Pat's view bucks conventional wisdom. He does not believe that it makes sense to pursue your passion part-time to test the waters, while maintaining your corporate gig. Rather, if you're passionate about something, let that passion work to your advantage. Don't hold it back.

Pat's view of failure is real and comforting - don't fear it, embrace it. It will help you find your path. For Pat, that failure happened early in his career at Bain & Company when he realized number crunching wasn't for him. That realization led to an interest and pursuit of organizational management. Today, he is one of the most widely recognized forces in the field of organizational management.

Pat is living proof that if you follow your passion, then good things will happen.

Check out the audio interview here:

Friday, October 2, 2009


Welcome to The Popped Kernel.

Here you will find success secrets of industry luminaries. From business and politics to arts and entertainment, The Popped Kernel aims to bring you the inspiring stories you don't know behind the people you do. We hope that you find in them the motivation to follow your passion and make a real difference.

And what better way to launch The Popped Kernel than covering the World Business Forum in New York City, Oct 6 & 7, 2009. Headliners of past World Business Forums have included Richard Branson, Alan Greenspan, Colin Powell, Jim Collins, Rudy Giuliani, Muhammad Yunus, Tony Blair, and Jack Welch. This year, headliners include Bill Clinton, George Lucas, and Patrick Lencioni. Visit us here for live updates and incisive interviews.

For a preview of what you can expect, come back tomorrow. We will post highlights from our recent interview with Patrick Lencioni, best-selling author of The Five Dysfunctions of a Team and "A Top Ten Guru You Should Know" according to Fortune magazine. He turned down offers from Steve Jobs and Eric Schmidt to pursue his passion and reach the pinnacle of success. Find out the secret ingredients that got him there.

Are you ready to pop?

World Business Forum - Taste it here: