Replace Fiscal Cliff with an Organizational Mirror

For everyone who ever voted for a politician promising to make government run more like a business, congratulations your dream has been realized by the post-election theatrics shoved under the "Fiscal Cliff" catchphrase. Perhaps this public display of dysfunction and lack of courageous vision will scare companies straight away from the type of behaviors that have plagued US corporations for decades.

The post-fiscal cliff headlines range from predicting the emergency deal will help the housing recovery to uncertainty about how it will impact alternative minimum tax to "Nothing Really Has Been Fixed." Just as it happens too frequently in business, your bias and rooting interest matters more than best outcomes. The public posturing that brought the US government to near crisis ended not with meaningful compromise but with partial selling out by all to meet a deadline. Because DC's deal was reached by selling out it allows both sides of the argument to second guess the other should anything go wrong.  Second guessing has become one of the most practiced of all corporate behaviors which is why so few tough decisions ever get executed.

Unless participants recognize the whole of any institution is greater than even its most significant sums not only will they shy away from tough decisions they can't even reach compromise because doing so minimizes a constituent (be that constituent a business unit or a political party).  Without embracing the risk that accompanies every big decision participants can only revert to small thinking and smaller actions--the enemy of progress.  When humility is replaced by the masquerade of pretending to be the smartest or most in-control guy in the room, participants can only talk at one another, rather than listening to and working with peers. Elected officials guiding their every action by polls and the next campaign are as destructive as managers calculating their every move to earn a bonus or promotion are to any business.

More often than not I'm brought in to companies to solve these problems which is done through a simple process: change the person or change the person.  

What I can't yet figure out is: Why do we keep electing politicians who embody the very worst of Corporate America's characteristics?

The Consequences of a No-Sacrifices-Environment

Several recent news reports caught my eye, not as individual stories but as closely connected pieces of the same continuum:

1. Adam Davidson's November 20th "Skills Don't Pay theBills" piece in the NY Times Magazine highlighting the fact that despite high unemployment rates and advanced jobs training programs nearly 80 percent of manufacturers have jobs they can’t fill.
2. The tragic factory fire in Bangladesh that killed 112 workers, earning on average $43 per week apiece, and the leading consumer brands the garment factory was producing for.
3. Mixed reports on 2012 holiday season retail sales, where the one accepted fact seems to be deep discounting is the only true stimulus for making the cash registers ring, following a 0.2% decline in October consumer spending.
4. The Bureau of Economic Analysis' report showing record profits for US corporations in the 3rd quarter 2012.
5. Around the clock coverage of the looming fiscal cliff that pretty much says nothing because it sure doesn't seem as if there's been any progress in DC.

Business' truest measurement is profitability and if Q3 2012 produced record profits then executive management is doing its job, superbly.  In part we can attribute the nearly $72 billion increase in 3rd quarter profits to greater cost-efficiencies, but top-line revenue growth certainly had significant impact. But where cost management and sales/marketing might once have been opposing forces, the trends further convince me the lines between revenue generation and cost controls have not only blurred they have merged.

If consumers now value every product and service as little more than a commodity then companies have no option but to meet this demand by so reducing costs they can profit by winning the discount game.  Labor usually represents a substantial business cost and it is little wonder that manufacturers are finding it difficult to hire trained workers if they are paying less than a McDonald's shift manager earns, as Adam Davidson reported.  I have nothing but contempt for modern day sweatshops like the Bangladeshi factory, but racing to the bottom is inevitable when any industry is caught in commodity hell.

It's very easy to blame business and "heartless executives", and whenever there's an easy answer for anything I grow suspicious. Consider this:

The consumer is really the most accountable participant in this vicious cycle by making price the single largest success factor! The same person who laments stagnant wages, off-shoring and the overall shaky economy demands prices that are sure to perpetuate these conditions. 

Politicians are usually the best reflection of the era they serve in. As the Obama administration and congress continues its food fight over the massive problems we will face at midnight December 31st they seem no closer to resolving anything because they, too, want easy answers with no sacrifice on the most complex issues.