We should remember what it felt like one year ago, as the ability to recall it emotionally will pass and it is an emotional memory as much as anything else. It was a moment rare in a democracy's history. The feeling was palpable--to supporters and opponents alike--that something important had happened. America had elected, the young candidate promised, a transformational president. And wrapped in a campaign that had produced the biggest influx of new voters and small-dollar contributions in a generation, the claim seemed credible, almost intoxicating, and just in time."Meet the new boss, same as the old boss"....
Yet a year into the presidency of Barack Obama, it is already clear that this administration is an opportunity missed. Not because it is too conservative. Not because it is too liberal. But because it is too conventional. Obama has given up the rhetoric of his early campaign--a campaign that promised to "challenge the broken system in Washington" and to "fundamentally change the way Washington works." Indeed, "fundamental change" is no longer even a hint.
Instead, we are now seeing the consequences of a decision made at the most vulnerable point of Obama's campaign--just when it seemed that he might really have beaten the party's presumed nominee. For at that moment, Obama handed the architecture of his new administration over to a team that thought what America needed most was another Bill Clinton. A team chosen by the brother of one of DC's most powerful lobbyists, and a White House headed by the quintessential DC politician. A team that could envision nothing more than the ordinary politics of Washington--the kind of politics Obama had called "small." A team whose imagination--politically--is tiny.
These tiny minds--brilliant though they may be in the conventional game of DC--have given up what distinguished Obama's extraordinary campaign. Not the promise of healthcare reform or global warming legislation--Hillary Clinton had embraced both of those ideas, and every other substantive proposal that Obama advanced. Instead, the passion that Obama inspired grew from the recognition that something fundamental had gone wrong in the way our government functions, and his commitment to reform it.
For Obama once spoke for the anger that has now boiled over in even the blue state Massachusetts--that our government is corrupt; that fundamental change is needed. As he told us, both parties had allowed "lobbyists and campaign contributions to rig the system." And "unless we're willing to challenge [that] broken system...nothing else is going to change." "The reason" Obama said he was "running for president [was] to challenge that system." For "if we're not willing to take up that fight, then real change--change that will make a lasting difference in the lives of ordinary Americans--will keep getting blocked by the defenders of the status quo."
The door of a dry-cleaner-size storefront in an industrial park in Wareham, Massachusetts, an hour south of Boston, might not look like a portal to the future of American manufacturing, but it is. This is the headquarters of Local Motors, the first open source car company to reach production. Step inside and the office reveals itself as a mind-blowing example of the power of micro-factories.
In June, Local Motors will officially release the Rally Fighter, a $50,000 off-road (but street-legal) racer. The design was crowdsourced, as was the selection of mostly off-the-shelf components, and the final assembly will be done by the customers themselves in local assembly centers as part of a “build experience.” Several more designs are in the pipeline, and the company says it can take a new vehicle from sketch to market in 18 months, about the time it takes Detroit to change the specs on some door trim. Each design is released under a share-friendly Creative Commons license, and customers are encouraged to enhance the designs and produce their own components that they can sell to their peers.
The Rally Fighter was prototyped in the workshop at the back of the Wareham office, but manufacturing muscle also came from Factory Five Racing, a kit-car company and Local Motors investor located just down the road. Of course, the kit-car business has been around for decades, standing as a proof of concept for how small manufacturing can work in the car industry. Kit cars combine hand-welded steel tube chassis and fiberglass bodies with stock engines and accessories. Amateurs assemble the cars at their homes, which exempts the vehicles from many regulatory restrictions (similar to home-built experimental aircraft). Factory Five has sold about 8,000 kits to date.
If the bond vigilantes are ready to ride again, there should be little doubt who will be leading the charge.
Bond guru Bill Gross at Pimco in Newport Beach this week has ramped up his warnings to the Obama administration and the Federal Reserve about the perils of unfettered government borrowing.
In an interview in Time magazine on Tuesday, Gross suggested that Pimco, which manages nearly $1 trillion in mostly fixed-income assets, now feels more comfortable owning German government debt than U.S. Treasury debt:
"There are a number of reasons to have doubts about Treasuries, not just because of America's sovereign risk but also from the standpoint of an over-owned currency [the dollar]. . . . At Pimco we would probably try and substitute for our Treasuries with sovereign bonds of potentially higher quality. Germany looks interesting to us. Germany has problems, but it's in a much better budget situation than the U.S. because of a constitutional amendment three months ago that forces a balanced budget in four years."
Every few years a man, or a woman, whose name is often familiar to few beyond the circle of their family and friends, is ambling through a more or less anonymous life when they find themselves ambushed by history. For many of these people, their life changes forever. Frequently, tragically, it ends; leaving behind an image that haunts the world long after they themselves have gone.Certainly a superior choice to the Political Class bank's CEO: Goldman's Lloyd Blankein.
Neda Soltan was such a person, a young beautiful woman who had studied philosophy, was now an aspiring singer, who found herself abruptly catapulted from the crowds of Tehran to become the face of protest against Iran’s repressive rulers; a symbol of rebellion against the fraudulent election that had just returned Mahmoud Ahmedinejad to power.
Like the nameless student who taunted that tank in Tiananmen Square, like Jan Palach, the Czech student who died after setting himself alight in Wenceslas Square in January 1969 to protest against the Soviet-led invasion of Czechoslovakia, Neda Soltan became the icon for the mutiny against Iran’s brutish regime as images of her face, and amateur footage of her murder by a sniper from the pro-government Basij militia, sprinted around the world. Like the photograph taken in South Vietnam of a bewildered young girl, the victim of a napalm attack, running naked down a road; and like the images of those skin-and-bones internees, standing semi-naked in the prison camp run by Bosnian Serb forces in Omarska in 1992, their ribs as prominent as xylophone keys, the image of Neda Soltan lying bleeding on a Tehran street has become the shorthand for the horrors of a conflict. With their beseeching eyes such images become, as the war photographer Don McCullin has pointed out, our modern versions of religious icons.
The expenses racked up by U.S. lawmakers traveling here for a conference last month included one for the "control room."
Besides rooms for sleeping, the 12 members of the House of Representatives rented their hotel's fireplace-equipped presidential suite and two adjacent rooms. The hotel cleared out the beds and in their place set up a bar, a snack room and office space. The three extra rooms -- stocked with liquor, Coors beer, chips and salsa, sandwiches, Mrs. Fields cookies and York Peppermint Patties -- cost a total of about $1,500 a night. They were rented for five nights.
While in Scotland, the House members toured historic buildings. Some shopped for Scotch whisky and visited the hotel spa. They capped the trip with a dinner at one of the region's finest restaurants, paid for by the legislators, who got $118 daily stipends for meals and incidentals.
Eleven of the 12 legislators then left the five-day conference two days early.
The tour provides a glimpse of the mixture of business and pleasure involved in legislators' overseas trips, which are growing in number and mostly financed by the taxpayer. Lawmakers travel with military liaisons who carry luggage, help them through customs, escort them on sightseeing trips and stock their hotel rooms with food and liquor. Typically, spouses come along, flying free on jets operated by the Air Force. Legislative aides come too. On the ground, all travel in chauffeured vehicles.
As US President Barack Obama glided through China, a chorus erupted in New York and Washington: the problem with the global economy is China's exchange-rate policy, and Obama's No 1 job is to slay it. It's sad that these people actually believe what they are saying: the same "logic" got the world into the current mess. In the feverish hallucination of salvation, they think that moving China's currency policy would right all wrongs.
The US Federal Reserve is the biggest currency manipulator in the world. Not only does it keep the short-term interest rate at zero through its vast purchase programme for mortgage-backed securities, it also keeps credit spreads and bond yields artificially low. Its manipulation stops money, bond and credit markets from pricing either the Fed's policy or the US economic plight. All the firepower is packed into the currency market, giving speculators a sure bet on a weaker dollar and everything else rising. Here comes the biggest carry trade ever: the Fed is promising no downside for shorting the dollar.
The US Treasury writes an annual report, judging if other countries are manipulating their exchange rates. It should look in the mirror. Even though the Fed is not directly intervening in the currency market per se, its manipulation is equivalent to pushing down the dollar by non-market means.
As US President Barack Obama glided through China, a chorus erupted in New York and Washington: the problem with the global economy is China's exchange-rate policy, and Obama's No 1 job is to slay it. It's sad that these people actually believe what they are saying: the same "logic" got the world into the current mess. In the feverish hallucination of salvation, they think that moving China's currency policy would right all wrongs.
The US Federal Reserve is the biggest currency manipulator in the world. Not only does it keep the short-term interest rate at zero through its vast purchase programme for mortgage-backed securities, it also keeps credit spreads and bond yields artificially low. Its manipulation stops money, bond and credit markets from pricing either the Fed's policy or the US economic plight. All the firepower is packed into the currency market, giving speculators a sure bet on a weaker dollar and everything else rising. Here comes the biggest carry trade ever: the Fed is promising no downside for shorting the dollar.
The US Treasury writes an annual report, judging if other countries are manipulating their exchange rates. It should look in the mirror. Even though the Fed is not directly intervening in the currency market per se, its manipulation is equivalent to pushing down the dollar by non-market means.
The scene is Detroit, a training room at the headquarters of one of the three great US car companies. A group of corporate vice-presidents is attending a course being given by a distinguished management thinker.
“What you are telling us is great,” the VPs say, “but you are talking to the wrong level. You should be speaking to the next tier up.” The next week, working with more senior managers, he hears the same thing. “This is great, but you are talking to the wrong level. You should be speaking with the chief executive.”
The week after that, our thinker finally gets in to see the boss. “This is great,” the CEO says, “but you should be speaking with my subordinates – I’d need their support in order to do it.”
This is a true story, as told by Russ Ackoff, the management thinker in question, who died a few days ago, aged 90. Two key Ackoffian ideas emerge from this tale. First, do not wait for others in the business to start changing things. Go and do it yourself. But second, and more important: never forget that everyone in the business is interconnected, that they are all operating as part of a system, that tinkering with one part of the company is never really enough, and may even make things worse. You need to see the business as a whole, as a complete system, if you want to make lasting improvements to it.
A few weeks ago, shortly after Goldman Sachs reported its latest blowout quarter, the firm’s chief executive, Lloyd Blankfein, spoke at a Fortune magazine breakfast.
In normal times, Mr. Blankfein might have been forgiven for bragging a bit about the just-reported quarter — over $3 billion in profit on $12 billion in revenue. It had generated some $6 billion just in one division: fixed income. It had more than $160 billion in cash or cash equivalents on its balance sheet. And of course it had long since repaid, with interest, the $10 billion it had accepted from the Treasury Department during the darkest days of the crisis.
But of course those weren’t the numbers the media and the public had focused on in the wake of Goldman’s earnings. Instead, people were fixated on the $5.3 billion the firm had set aside for its executives’ year-end bonuses. Added to first and second quarter set-asides of $4.6 billion and $6.6 billion, the firm had put aside $16 billion so far this year for employee bonuses. Nearly 50 percent of the firm’s revenue was going toward compensation. And there was still one more quarter to go!
Was it fair, commentators kept asking, that barely a year after the taxpayers had essentially saved the financial system, this firm that took government capital should now be paying multimillion-dollar bonuses? Was it right? Which, not surprisingly, is what Fortune’s managing editor, Andrew Serwer, asked Mr. Blankfein within minutes of taking the stage.
In private, Goldman executives are scornful of the sentiment behind this question. Their view, in essence, is that they should be applauded for being able to pay such big bonuses, because it means their business is successful. People who want them to pay less, they believe, want them to fail.
But Mr. Blankfein, a charming, funny man who has been Goldman’s boss since 2006, is far too smart to say that out loud. Nonetheless, what he did say was revealing. Treasury’s original decision to use the Troubled Asset Relief Program to shore up the banks’ capital, Mr. Blankfein said, “was a sensible thing to do at the time.”
I don’t mean to slight Michael Jackson’s once-formidable talent, nor do I dismiss his troubled personal life. But have we become so frivolous as a nation that any entertainer’s tragic and untimely death warranted more news coverage — day after day after day — than the real issues that will confront each of us now and in the all-too-near future? Apparently so. Most of us know more about the last two days of Jackson’s life than we know about the negotiations in which Washington forced GM and Chrysler into bankruptcy. You certainly know more about Jackson’s death that the names on the list of the 25 individuals who destroyed the world’s financial system. Of course, none of the 25 has died; they still work at the same jobs.
Let Them Eat Cowboys?
Not to be overly dramatic, but this should remind any thinking person of the declining days of the Roman Empire. Its citizens refused to deal with the decay and legitimate problems of their cities and empire, instead demanding more and more coliseums be built for their personal entertainment.
Well, we do have a new billion-dollar stadium for the Cowboys. And it has certainly received far more press coverage than the recently passed House Bill that proponents claim will save the planet from global warming. Yes, forces are gathering to reverse our 100-year history of citizens’ free travel to work and for leisure – and of that freedom’s benefits to our economy.
Long before the current financial crisis, nearly two years ago, a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us.
That warning from Moody’s focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we’re in even worse shape now, and there are signs that confidence in America’s ability to control its finances is eroding.
Prices have risen on credit default insurance on US government bonds, meaning it costs investors more to protect their investment in Treasury bonds against default than before the crisis hit. It even, briefly, cost more to buy protection on US government debt than on debt issued by McDonald’s. Another warning sign has come from across the Pacific, where the Chinese premier and the head of the People’s Bank of China have expressed concern about America’s longer-term credit worthiness and the value of the dollar.
The US, despite the downturn, has the resources, expertise and resilience to restore its economy and meet its obligations. Moreover, many of the trillions of dollars recently funnelled into the financial system will hopefully rescue it and stimulate our economy.
That is why it was all the more bewildering to have Sen. Dodd come to the gymnasium of the Cornwall Consolidated School on a beautiful spring afternoon for two hours and somehow manage not to utter a single word about the controversies surrounding his role as chairman of the Senate Banking Committee.
These are not exactly state secrets. There was the widely reported sweetheart or VIP mortgage loan from Countrywide Financial to the senator as well as the six-figure campaign contributions from the American Insurance Group whose executives, according to language Sen. Dodd wrote into a bailout bill, were entitled to large bonuses paid for with our tax dollars.
The organizer and moderator of Saturday's forum, Harriet Dorsen, a member of the local Democratic Party committee, told the Lakeville Journal newspaper last week, "I think there are going to be a lot of tough questions."
There weren't. They were all softballs. Instead of the usual give and take, with citizens speaking their minds, all the questions had to be written out in advance on index cards and then submitted to the moderators. A contingent from the Lakeville Journal (including my wife, Cynthia, who is the newspaper's executive editor) was on hand, armed with probing questions.
“It was the sixth such attack this week and one of 66 this year by Somali pirates, a collection of shrewd businessmen and daring opportunists who have pulled off a series of spectacular seizures using high- and low-tech gear, from satellite phones and rocket-propelled grenades to battered wooden skiffs and rickety ladders,” the Washington Post reported today about the attack on a U.S.-operated container ship. “In the past year, their booty has included the MV Faina, a Ukrainian ship loaded with tanks and antiaircraft guns, and the MV Sirius Star, a 300,000-ton, 1,000-foot-long Saudi oil tanker that is the largest ship to be seized in history.”
For months, a former senior CIA officer has been telling me that pirate activity off Somalia was a problem that needed to be aggressively dealt with. By chance, I had a meeting with him yesterday as the Maersk Alabama hijacking was unfolding. Here’s what he had to say (he updated his remarks today):
The American response to date has been incredibly naïve and woefully ineffective. Now, predictably, you have an American taken hostage. All of which should have been prevented. You’ve got a failed state in Somalia and pirates operating in an area of ocean that is larger than the state of Texas but we’ve been trying to deal with this from the ocean side, by sending the navy and with a limited application of technology, such as satellites and drones. We can’t afford to patrol that big a piece of the ocean; it’s too expensive to leave a naval task force out there.
One unhappy hallmark of the Great Recession is a dramatic spike in financial distress. Moody's predicts that the default rate on corporate debt--which helps foretell bankruptcies--will be three times higher this year than in 2008. Home foreclosures are already at record highs, and going higher. Defaults on credit cards and other consumer debt will crest right behind mortgages.
The Obama administration is on the case, bailing out banks and homeowners and aiding dozens of industries either directly, through a financial-rescue scheme that could top $2 trillion, or indirectly, through the $787 billion stimulus bill. Automakers, furniture companies, real estate developers, and even porn magnates have their hands out.
[See a tally of the bailout efforts so far.]
Those efforts ought to help soften a sharp recession. But the unprecedented aid to the private sector may also unleash new problems, the way antibiotics have generated stronger strains of bacteria. "There's something fundamental about the need for failure," says Syd Finkelstein, a professor at Dartmouth's Tuck School of Business and author of Think Again: Why Good Leaders Make Bad Decisions and How to Keep It From Happening to You. "We're tinkering with the genetic DNA of a capitalist society."
The reports on the evidence given by the Vice Chairman of the Federal Reserve Board, Don Kohn, to the Senate Banking Committee about the Fed's role in the government's rescue of AIG, have left me speechless and weak with rage. AIG wrote CDS, that is, it sold credit default swaps that provided the buyer of the CDS (including some of the world's largest banks) with insurance against default on bonds and other credit instruments they held. Of course the insurance was only as good as the creditworthiness of the party writing the CDS. When it was uncovered during the late summer of 2008, that AIG had nurtured a little rogue, unregulated investment banking unit in its bosom, and that the level of the credit risk it had insured was well beyond its means, the AIG counterparties, that is, the buyers of the CDS, were caught with their pants down.
Instead of saying, "how sad, too bad" to these counterparties, the Fed decided (in the words of the Wall Street Journal), to unwind ".. some AIG contracts that were weighing down the insurance giant by paying off the trading partners at the full value they expected to realize in the long term, even though short-term values had tumbled."
An LSE colleague has shown me an earlier report in the Wall Street Journal (in December 2008), citing a confidential document and people familiar with the matter, which estimated that about $19 billion of the payouts went to two dozen counterparties between the government bailout of AIG in mid-September and early November 2008. According to this Wall Street Journal report, nearly three-quarters was reported to have gone to a group of banks, including Société Générale SA ($4.8 billion), Goldman Sachs Group ($2.9 billion), Deutsche Bank AG ($2.9 billion), Credit Agricole SA's Calyon investment-banking unit ($1.8 billion), and Merrill Lynch & Co. ($1.3 billion). With the US government (Fed, FDIC and Treasury) now at risk for about $160 bn in AIG, a mere $19 bn may seem like small beer. But it is outrageous. It is unfair, deeply distortionary and unnecessary for the maintenance of financial stability.
Don Kohn ackowledged that the aid contributed to "moral hazard" - incentives for future reckless lending by AIG's counterparties - it "will reduce their incentive to be careful in the future." But, here as in all instances were the weak-kneed guardians of the common wealth (or what's left of it) cave in to the special pleadings of the captains of finance, this bail-out of the undeserving was painted as the unavoidable price of maintaining, defending or restoring financial stability. What would have happened if the Fed had decided to leave the AIG counterparties with their near-worthless CDS protection?
The organised lobbying bulldozer of Wall Street sweeps the floor with the US tax payer anytime. The modalities of the bailout by the Fed of the AIG counterparties is a textbook example of the logic of collective action at work. It is scandalous: unfair, inefficient, expensive and unnecessary.
Toyota Motor Corp.'s incoming president, Akio Toyoda, has a sobering message for the giant company founded by his grandfather: It has gotten too fancy for its own good.
On Monday, three top executives who helped lead Toyota the past four years -- including Mitsuo Kinoshita, one of the primary architects of the company's global expansion -- announced their retirement. The departures clear the way for Mr. Toyoda's planned makeover of the world's biggest auto maker.
He is expected to focus, most of all, on abandoning kakushin, or "revolutionary change," current president Katsuaki Watanabe's term for changing the way Toyota designed its cars and factories. It spawned technological advances, but led to cars that were often costlier to produce.
The 52-year-old Mr. Toyoda is also working to fix a pricing strategy that put the company at odds with some U.S. dealers, who felt its cars were getting too expensive, according to people familiar with the situation.
To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital--to decide who should get it and who should not. Believe me when I tell you that I hadn't the first clue.I'd never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous--which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people's money, would be expelled from finance.
When I sat down to write my account of the experience in 1989--Liar's Poker, it was called--it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future.
A few years ago, senior officials at the Bank for International Settlements started ringing alarm bells about the scale of leverage that was quietly building up in the financial system. Back then, though, it was fantastically hard to get American policymakers - let alone bankers - to listen.In the go-go days of the credit bubble, Washington policymakers blithely assumed that the Western financial system had plenty of capital to cope with any potential risks. Consequently, as one former BIS official admits: "Worrying about leverage wasn't fashionable at all - no one wanted to hear."
Fast-forward a couple of years and, my, how those Western financiers are having to eat humble pie (even to the point of accepting a helping hand from the once-ailing Japanese). After all, the events of the past year have now made it patently - horrifically - obvious that the Western banking system has become dangerously undercapitalised in recent years, to the point where even the Federal Reserve is having to shore up its defences.
Moreover, it is now also clear that Western policymakers are belatedly trying to correct this state of affairs. The days when high leverage, mega bonuses and wacky instruments were equated with financial virility have gone; instead a more humble, back-to-basics and slim-line approach is what investors are demanding. Thus, deleveraging is now all the rage - in whatever form it might take.
Roger O'Neill video takes a look at the Crave Brothers use of methane - from their cow poop - to power the farm and 120 neighboring homes. The farm includes a cheese factory.
French President Nicholas Sarkozy [8.5MB mp3 Audio File]:
From the very beginning, the American dream meant proving to all mankind that freedom, justice, human rights and democracy were no utopia but were rather the most realistic policy there is and the most likely to improve the fate of each and every person.C-SPAN Video.America did not tell the millions of men and women who came from every country in the world and who--with their hands, their intelligence and their heart--built the greatest nation in the world: "Come, and everything will be given to you." She said: "Come, and the only limits to what you'll be able to achieve will be your own courage and your own talent." America embodies this extraordinary ability to grant each and every person a second chance.
Here, both the humblest and most illustrious citizens alike know that nothing is owed to them and that everything has to be earned. That's what constitutes the moral value of America. America did not teach men the idea of freedom; she taught them how to practice it. And she fought for this freedom whenever she felt it to be threatened somewhere in the world. It was by watching America grow that men and women understood that freedom was possible.
What made America great was her ability to transform her own dream into hope for all mankind.
Airlines are getting serious about saying they’re sorry.Fascinating look at Southwest Airlines' culture. I hope they fly into Madison soon.
After a spate of nightmarish service disruptions, American Airlines, JetBlue Airways and others are sending out more apologies, hoping to head off customer complaints and quell talk of new consumer-protection regulations from Congress.
But no airline accepts blame quite like Southwest Airlines, which employs Fred Taylor Jr. in a job that could be called chief apology officer.
His formal title is senior manager of proactive customer communications. But Mr. Taylor — 37, rail thin and mildly compulsive, by his own admission — spends his 12-hour work days finding out how Southwest disappointed its customers and then firing off homespun letters of apology.
Ryan peddled the cards until he got the camera. Forty-nine years later, the big picture hasn't changed much. He's still fighting and selling relentlessly.
"You've got to sell," he said, "because a lot of times you're a perfect stranger trying to convince somebody to do something they might not want to do. If I wasn't a coach, I'd probably be a salesman. I've got to have that competition."
Now Ryan sells Badger basketball - to recruits, to his players, to boosters, to the media, to the nation. With that slick exterior abetted by street smarts, he has transformed Wisconsin, once an off-the-rack program, into one of the hottest items on college basketball's shelf.
an a former copy machine repairman who happens to be friends with Bill Gates reinvigorate the general aviation industry by adopting the low-cost, mass production model used for personal computers? The world is about to find out.
Not long ago, it appeared the answer was a resounding "no." Eclipse Aviation founder Vern Raburn gathered his team on a dismal Saturday morning in November 2002 to figure out whether the company had a future. Raburn, a pioneer in the personal computer revolution, was aiming to develop a six-seat jet that would sell for less than $1 million, bringing jet ownership within reach of thousands of new customers. But his penchant for risk had put Eclipse in big trouble.
The Albuquerque company, with funding support from NASA, had bet big on the development of an advanced, radically cheaper turbine engine. The technology wasn't panning out in time, however, and there was no Plan B. Investors, lured by Raburn's earlier successes at Microsoft, Lotus and Symantec, were running out of patience. Eclipse had two options: stick with the balky engine and pray for a miracle, or delay launch of the aircraft by several years and try to hang on while it found a new engine.
Just dropping a bunch of new personal computers on workers' desks is unlikely to contribute to productivity. A company has to rethink how business processes are handled to get significant cost savings.
As the Stanford economic historian Paul A. David has pointed out, the productivity effects from the electric motor did not really show up until Henry Ford and other industrialists figured out how to use it effectively to create the assembly line. The same is true for computers: just as the early industrialists had to learn how to use manufacturing technology to optimize the flow of materials on the factory floor, companies today must learn how to use information technology to optimize the flow of information in their organizations.
My good friend Bill Steinberg has published, via business partner Mark Baker a very useful look at the leadership vacuum that is the Katrina Response:
so for the mayor, the governor, the president and how many of the president’s men, those so-called law-makers on the hill, what goes around, comes around, we’re still left with the same unanswered question, how could you be so ___ stupid? all will ask ‘what happened?’ only so long as it takes them to find out who’s to blame – then they’re done learning anything from it that will give us a different outcome the next time it happens. and, as someone once said, doing the same things but expecting a different outcome is the definition of insanity. welcome to ‘one flew over the cuckoo’s nest.’ keep everyone sick, it’s easier to get them to do what you want them to do that way.