Monday, April 26, 2010

The Unintended Consequences of Volcanic Ash

This morning as I drove to work the weatherperson announced that New England was likely to feel the impact this summer from the volcanic ash spewing from Iceland’s completely unpronounceable volcano, Eyjafjallajokull.

We've been lucky thus far, with prevailing winds keeping our airspace clear and clean.

But, if the weatherperson is to be believed, we could lose as much as two degrees from our average temperatures this summer.  If that means 88 instead of 90, I’m all for it, but there have been plenty of New England summers where the loss of two degrees was enough to throw us back into an ice age.

This isn’t the first time we’ve had such a disruption, and it’s hardly the worst we’ve seen.  In 1815, Tambora (in Indonesia), a volcano roughly 10,000 times more powerful than Eyjafjallajokull, sent 400 million tons of gas and dust circling the globe.  The result in 1816 was “the year without a summer.”  Snow fell in New England in June, July and August, leading to widespread crop failure in many parts of the region and throughout North America and Europe.

This past weekend the Wall Street Journal did a great comparison of past eruptions, courtesy of James P. Sterba.

But here’s where the story gets even more interesting.  The farmers of New England, especially northern New England, had been slowly moving West over the decades prior to 1816 as they discovered just how impossible it was to eek out a living in the cool, rocky soil of places like New Hampshire and Vermont.  In fact, the snowy summer of 1816 brought about by Tambora was the straw that broke the potatoes’ backs, so to speak, causing New England farm families to head west in droves.

Indeed, more than a few concluded that this bizarre summer was a precursor to Judgment Day and the millennium.

One hardscrabble Vermont farming family heading west--worth more than a passing nod--was the Smiths.  Mr. Smith picked up and moved to Palmyra, New York, where farming proved to be just as difficult.  By 1825, he, his wife and their eight children had lost their farm to foreclosure.

Pressed to feed his family, Mr. Smith and his son, Joseph Jr., earned money by finding the location of possible buried treasure for neighboring farmers—a claim prompted by the existence of Mound Builders in prehistoric New York.  In this line of work Joseph Jr. employed a “seerstone,” a kind of folk magic common among early nineteenth-century New Englanders.

After visits by an angel named Moroni (who, like Tambora, delivered warnings of the Second Coming) beginning in 1823, and news in America that Jean-Francois Champollon was deciphering the Rosetta Stone in Europe, Joseph unburied golden plates in 1827 which were inscribed in a lost scripture called Reformed Egyptian.  Transcribed and brought to a publisher in Rochester, New York, this would become The Book of Mormon and Joseph Smith the founder of the Church of Jesus Christ of Ladder-day Saints.

As Daniel Walker Howe said so well, The Book of Mormon should rank among one of the great achievements in American literature if 1) those who read and love it would attribute the authorship to Joseph Smith, which they will not, or 2) those who ridicule it would actually read it.

Today, Mormonism is the fastest growing faith group in American history.

Unintended consequences galore: no Tambora, no “year without summer,” no move of a destitute farming family from Vermont, no discovery of golden plates in New York, no Book of Mormon, no Mormonism.

What, then, do you suppose the eruption of Eyjafjallajokull, still unprounceable and 10,000 times less powerful than Tambora, might bring for unintended consequences?  A two-degree cooler summer?A day trip to the Berkshires? No Apology

Mitt Romney?

Wednesday, April 21, 2010

New Orleans: A Hopeful Pictorial

We had the chance last week to bike-ride in Faubourg Marigny, Faubourg Treme, and the Ninth Ward, a journey through post-Katrina New Orleans very different from what tourists typically see in the French Quarter.  Friends asked, "Is the city recovering?"  My best answer is, "Depends on where you are looking."

There are still plenty of abandoned houses with the "FEMA X" painted on their fronts, indicating the residence had been checked for survivors by the National Guard or the local Fire or Police departments.  The upper portion of the "X" includes the date (usually a few weeks after the storm), to the left the Guard unit acronym, and at the bottom the number of deceased found in the home.  A "NE" meant no entry was required.  Many times a cat or dog was listed as deceased.

Some of the symbols became famous, including the one that inspired Chris Rose of the Times-Picayune to write 1 Dead in Attic.  Other "X's" have been altered with time, including some with the words "Merry" on top and "mas" on the bottom, converting a sign of misery and loss into one of joy at the holidays.

At the same time, there were a number of houses that had been restored and repainted in bright, New Orleans colors--a sign that residents had returned to reclaim their homes.  As our local guide told stories of survival and renewal, he suggested, "Instead of thinking of New Orleans as the poorest large Southern city in the United States, you might think of it instead as the richest large Northern city in the Caribbean."

With that in mind, I offer a brief and hopeful post-Katrina, New Orleans pictorial:

I end with a landmark (and landmark paint job!), Ernie K-Doe's:

Thursday, April 15, 2010

Fun with Numbers: The Last of the Baby Boomers

There are certain awards that would be a pleasure to win, like an Olympic medal, the Pulitzer Prize, or a Nobel Prize. 

Likewise, there are certain awards that a person of good sense might naturally shy away from, including Class Clown, a Darwin Award, and a “Pig Book” award.

And then there are some awards which one would accept with a degree of ambivalence, like “Miss Congeniality” at the Miss America pageant.

And the Oldest American.

Mary Josephine Ray, born on May 17, 1895, died on March 8, 2010 in New Hampshire at 114 years of age.  She held the distinction as the second oldest living human (about a week younger than a woman in Japan), and the oldest living person in the United States.  She survived her husband by 40 years and had five great-great grandchildren.

Upon Mary’s death, the mantle for oldest living American went to Neva Morris, also 114, of Ames, Iowa.   While the Gerontology Research Group says there are only 75 people over 110 (“supercentenarians”) alive worldwide, there happen to be 941 centenarians in Iowa alone.  Neva—and here’s where the ambivalent part of the award comes in—died on April 7, passing on the crown, and passing on gently herself, after only a month.  The oldest living American is now spry, 113-year-old Eunice Sanborn of Jacksonville, Texas.

If these three women had been born consecutively instead of contemporaneously, their combined lives would stretch back to 1669, over a century before America became a country.  That sort of math makes the country feel very, very young. 

One of my brothers was born in 1959.  Years ago he shook the hand of a man who said to him: “You have now shaken the hand of a man who has shaken the hand of a man who shook hands with Abraham Lincoln.”  That’s fewer degrees of separation than to Kevin Bacon. 

In demographic terms, Mary, Neva and Eunice are all members of (what Strauss and Howe call) the “Lost Generation,” born 1883-1900.  They had, generationally-speaking,  a rowdy childhood followed by a life cycle divided in thirds by two world wars.  Members of the Lost Generation included F. Scott Fitzgerald, the Marx Brothers, George Gershwin, Babe Ruth and Ernest Hemingway.  Their grandparents were from the Gilded Generation and their grandchildren were Boomers.  If the last of their generation lives 114 years, they’ll all be gone by 2015.

Now, let’s say a combination of better living and better medicine allow Baby Boomers to live a few more years than the 114 that seems to be the limit of modern longevity.  So, the last of the Baby Boomers lives to be, say, 118.  (It’s possible I’ve got this wrong, that medicine is a step-function that will push us from 114 to 150 and pass everything in between.)  But, if you accept the 118, and the last Baby Boomer was born in 1960, that means my generation is going to be around until 2078.

Think about that, Gen X and Gen Y and Gen Millennium and future Gen iPad and Gen Globally Warmed.  You’re going to have to put up with all our good advice about how to run the world for another 68 years.

A while back I came across the “Extinction Timeline” which hypothesized the end of many things you and I might otherwise assume to be fixed.  (It comes with a caveat that it not be taken too seriously.)  For instance, petrol engines are gone around 2038 (makes sense), but a “good night’s sleep,” “wallets,” “peace and quiet” and the British royalty are also all gone by 2040.  The “family room” is extinct by 2045, Google by 2049 and “Physical Pain and Uglyness” by 2054.

It's nice to know the Boomers will at least be beautiful for their last 20 years on earth, even if they can’t Google anything.  I'm also sorry to say to the rest of you that "automobile turn signals" are not on the list of things that will be extinct; that means, by 2050, there are going to be millions of us Boomers driving with our right blinker on, intending to turn left. 

But wait: the timeline predicts that “Death” will be extinct by about 2060.  The youngest Boomers won’t even be 100 by then.  

Yahoo!  That means we’re not going anywhere.

Excuse me; I’ve gotta make some plans.

Saturday, April 10, 2010

A Blast From the Past (It’s the People, Stupid)

The first class we took in business school having to do with people management was called Organizational Behavior.  It was a required course in the first-year curriculum, but one that seemed trivial after a hard day of Marketing, Operations Research, and Finance cases.  After all, we were much more concerned about learning how to break bottlenecks on the assembly line, launch new products and compare net present values.  The “soft side” of business was easy. 

I’ve mentioned before the little pep-talk we received from our professor on the first day of “OB” informing us that this was going to be one of the most important courses we ever took.  He said, and I’m paraphrasing roughly, “Anyone can learn to discount cash flows.  Not everyone can manage or lead people.  You might want to pay attention.”

We laughed. We scoffed.

Funny thing:  The other day I was sitting in a meeting with some venture capitalists when one of them remarked, “You know, we have all these great companies with all of this really cool technology, and we spend almost all of our time talking about people.”

He was not laughing.  His partners did not scoff. 

In fact, his comment rocketed me to that day almost 30 years ago.  Maybe we really did need to pay attention in OB.  Turns out you put a few hundred million dollars to work in a bunch of technology markets and all you really have to count on is people. 

I’ve been leafing through The Essential Drucker again and am always amazed at how early and clearly Peter understood how business worked.  “Management is about human beings,” he wrote.  “Its task is to make people capable of joint performance, to make their strengths effective and their weaknesses irrelevant.”

It’s the way, I’ve mentioned before, that Duke Ellington arranged music for his band; if the trumpet player could hit the high notes, the trumpet player inevitably got arrangements that had lots of high notes.

Would we could do that for everyone.

What’s ironic, of course, is that in our desire to improve the art and science of Management we’ve created all kinds of sham distinctions.  So, boring old Management turns out to be different than flashy new Entrepreneurship, both of which are different than heroic Leadership.   

Thinkers like Drucker aren’t having any of it.  Making a distinction between Management and Entrepreneurship, Drucker wrote, is like saying “that the fingering hand and the bow hand of the violinist are ‘adversaries.’”   The lack of entrepreneurial thinking, he reminded us, is the single largest reason for the decline of existing organizations, while the inability to manage is the single largest reason for the failure of new ventures.

Some recent and reasoned thinking on the issue appeared last month in strategy + business as well.  McGill Professor Henry Mintzberg, known for his close study of the working lives of executives, says that the most effective companies are those where leaders have created a sense of community.   

This is accomplished, Mintzberg says, by people capable of managing and leading.  “Would you like to work for a manager who doesn’t lead?  That can be terribly discouraging.  What about a leader who doesn’t manage?  That can be awfully disengaging.”

“We have had more than enough of detached, heroic leadership,” Mintzberg believes.  “It is time for more engaged management, embedded in “communityship.”

I might say it a different way: There should be signs hanging over our great technology communities, and maybe over each of our companies’ front doors, that remind us (no matter how cool the technology or healthy the Net Present Value):  “It’s The People, Stupid.”    

Saturday, April 3, 2010

The Two Shoe Salesmen (The Rest of the Story)

One of the most famous motivational stories on the entrepreneurial circuit is that of the two salesmen from competing companies who are sent to a foreign country to assess the market for shoes.

Salesman One scouts around for a few days and then heads for the telegraph office to contact company headquarters.  He writes:  "Research complete.  Unmitigated disaster.  Nobody here wears shoes."

Likewise, Salesman Two does his research and heads for the same telegraph office.  Once there, he composes the following: "Research complete.  Glorious opportunity!  Nobody here wears shoes!"  

The point, of course, is that Salesman Two is the real entrepreneur, the person who sees opportunity where others do not.  It's a story designed to motivate us all to see potential, take risks, and to turn obstacles into opportunities.

The question is: Should we bite?  Does fate reward the visionary risk-taker?

Late last year, a librarian at the British Museum discovered a short manuscript in a long-forgotten file.  It turns out that the story of the two shoe salesman was more than myth. 

The Rest of the Story

Last week I had a chance to read a copy of the manuscript sent me by a friend who works at the Museum.  Here is "the rest of" this classic story, captured by the daughter of one of the salesmen and paraphrased by yours truly.  (For privacy and clarity's sake, I've stuck with the designations "One" and "Two.")  Here's my take:
Salesman One returned on the next steamer to London.  He was an aggressive young man who, by all accounts, had saved the company from a disastrous venture in a terrible market.  His reward was to oversee the newly-formed sales territory in France, a large territory that included Paris.  Sober, realistic Salesman One went on to build a wonderful, booming business in ladies’ dress shoes.  He became wealthy and comfortable, mentoring dozens of young executives.  A fixture on the Parisian social circuit, he met and married a French heiress.  Though wealthy enough to have retired then, he never lost his love of selling shoes, only concluding his career well into his 70s shortly after the start of WWII. 
Salesman Two built an office and warehouse in that far off land, ordered a boatload of shoes from his home office, and trained a team of hard-charging local salesmen.  He estimated the sale of 2,000 pairs of shoes in his first year of business.  The home office was ecstatic that they had such an aggressive and far-seeing entrepreneur on their team.
The end of the first year came and Salesman Two and his team had sold less than 100 pairs of shoes.  The home office ordered expense cuts and threatened to abandon the market.  The local staff, always behind budget, was anxious and depressed by the periodic firingsAggressive, optimistic Salesman Two could but conclude one thing: He had made a serious mistake.  This was, indeed, the worst market in the world for shoes.
Wait--isn't this supposed to be a story about hope and seeing the possible and being entrepreneurial?  This sounds way too much like real entrepreneurial life.  What happened?

Since the time of these two salesmen, of course, we have learned two important things about successful entrepreneurs: They innovate, and they persevere.  Perseverance is often thought to be the single trait that most often leads to success.  But it cuts both ways.

Here is my take on the rest of the story:
Salesman Two had not met his first year forecast, but, after a year of intensive marketing, he knew more about the market than any person alive.  He knew, for example, that some of his potential buyers liked the idea of protecting their feet but felt hot and silly in shoes.  So he imported a small number of sandals to test.
Salesman Two had also concluded that some significant part of his market would likely never wear shoes, at least in his lifetime.  But they all still hurt their feet occasionally on rocks and debris.  So, he found a lotion made by a German firm that, applied to the soles, soothed and toughened them up.  He imported cases of it.
Finally, Salesman Two discovered that most everyone, shoes or not, walked long distances during the day.  All got hot and many got sunburned.  So, he imported a line of wide-brimmed straw hats and walking sticks. 
Meanwhile, he continued to send encouraging messages to the home office, never giving up, and managed to secure funds to continue.
The hats were an immediate sensation.  The sandals did less well, but gained a niche following.  So, too, the walking sticks.  Salesman Two could not keep enough of the lotion in stock.  In year 2, he sold 225 pairs of shoes—still a small number, but better than his volume in year one. 
Year 2 was breakeven, thanks to aggressive cost cutting.  Year 3 got better.  After seven long years of hard work, trial and error, sleepless nights, staff turnover and one ulcer, Salesman Two purchased the local business from his company--which never sold many shoes in the market and had come to consider him something of a backwater distraction.  He had an asset that, at least on paper, could make him comfortable though far from a millionaire.  He thought from time to time about what he had given up to take on this venture but, being an optimist, didn't dwell on what might have been.  
Now, this isn't such an awful motivational story, right?  It isn't quite what we might have expected, though--not the tale of a visionary entrepreneur who invents a new market and goes on to riches and fame.

But there's another lesson.  Salesman One--who appeared woefully shortsighted in the original story--spent a career expanding his product into new geographies, launching new styles, and developing new market niches.  From well within the confines of his large, stable company, he was every bit an entrepreneur.

Which reminds us that entrepreneurial myths are just that, frothy stuff for motivational lectures and pop business books but rarely grounded in reality.  Not that lightning does strike occasionally.  We're just better off not making the outlier an instruction manual or a motivational speech.  At the very least, when an entrepreneurial story comes along that's just too visionary and wonderful to be true, we might check around for the long-lost (or well hid) manuscript that explains the rest of the story.