Monday, February 9, 2009

Discussion(s) of the Week - Today's Economy and Tomorrow's Economy

Since last fall, the world has been going through various stages of reality checks, depending on your industry or specific company. Whether you were Leiman Bros, or Chrysler, or IBM or Mom & Pop's local diner, the reality of the new economy has hit you in some form or fashion. That reality seemed to be in full effect in class this weekend. Classmates are starting to loose jobs, have plants closed, laying off more people than expected, closing more stores. There was clearly a new level of stress and frustration on their faces this weekend. And as positive as we're all trying to be, I believe it's going to get considerably worse. Worse throughout 2009. Worse continuing into 2010.

I heard a conversation asking the over/under on how many people in class would still be employed at the end of the program. This wasn't a joke.

I heard conversations where people were asking what their management was forecasting for a recovery timeline. None of the people mentioned 2009. At least one mentioned 2011.

There were a few conversations this weekend (some hallway, some classroom) that were very interesting to me (WARNING: If you're looking for sunshine, stop reading now):

1 - For an administration that hit almost entirely home runs during the campaign, there have been a lot of foul balls and missed swings during this first month. But this conversation is not about bashing the new administration, since they walked into a tremendous mess that isn't a short-term fix. The real discussion was about whether or not people believe that these stimulus plans truly address real problems.  For example, if no floor is reached on the price of toxic CDOs, then how are the banks ever going to reach a level where their holding ratios allow them to lend?  Neither TARP nor the proposed Stimulus package seem to address this.  Fred Wilson makes some interesting points today about why this probably shouldn't be a solution the government tries to address my itself.  And how do they expect infrastructure improvements (ie. roads) to create a short-term impact?  Those projects take 5-10yrs, are notoriously over-budget and late.  And where are we going to find all the workers?  In case they haven't noticed, America has become a knowledge worker economy.  

2 - In our OpsMgmt course, we get a daily dose of how America has lost it's way in manufacturing.  One of the questions that is always asked is, "How would you fix this situation?".  In talking to classmate Ric Freeman, we asked ourselves if we had a magic bullet to "fix it", if we'd have the people to drive the fixes.  We've gone at least one generation with American kids not seeing manufacturing (or certain aspects of engineering) as an exciting field of work. They've seen their uncles or fathers lose jobs from that segment, or seen jobs shipped overseas.  So we asked ourselves, what would it take to create that new interest for American students and future generations?  What if the Obama administration decided that there would be one US Automotive company, with the goal to not only create world-class vehicles, but also serve as a beacon for future manufacturing and engineering students?  Would this help?  Would it even be possible considering current wage expectations or forces or competition? This is a difficult problem to comprehend a solution for.  

3 -  During the ITMgm't course, we looked at Merrill Lynch's eTrading platform from 1998 and the challenges they faced with their Financial Consultants (FC) as they moved to electronic trading and the potential changes to fee structures for the FCs.  As we looked at ways to communicate these changes to FCs, and integrate that with the strategy towards online services, someone suggested that maybe the FCs would be willing to take a pay cut to help the overall strength of the firm going forward.  Hmmm...socialism for capitalists?  Interesting.  I bring this up for two reasons:
a - My classmate works in an environment where loyalty to the company is very strong, and this wouldn't be a completely unusual request to workers.  
b - Based on the recent number of layoffs across all industries, I wonder if we're going to have a generation (or multiple generations) of people that have absolutely no trust in their employers and how this will effect managers ability to motivate teamwork in workers.