There's Something Wrong with the Old School

by Administrator 2. December 2008 14:22

The Terski got me into Seth Godin maybe a month ago.  Good stuff.  Marketing and Excellence in Business are becoming increasingly relevant to those who wish to get beyond Code Monkey status.  Not that there's anything wrong with being a code monkey.

While discussing one of Seth's recent posts with a co-worker, he made the simple observation that

"There's something wrong with the old school."

There's something wrong with the old school.  No shit.  He was talking about the music industry.  The auto manufacturers come to mind too.  So does the entire Real Estate industry.  So do a lot of things.

It should be pretty obvious to any reader that I'm in favor of laissez faire capitalism, and yet for a while I've been meaning to write something on what is wrong with business in America right now.  No, it's not greed.  It's not that there's not enough regulation.  It's not that there's not enough skilled workers in America.

Our corporate culture is in some ways broken.  I think there is a lack of vision, an out of touch quality, a laziness and a weakness in the leadership of many of America's big businesses.  In the past 20 years, more and more of us look at Dilbert and our first reaction is not to laugh, but to see reflections of our own work day in the pointy haired boss.

Out of Touch to the point of insanity

I'm still driving my Subaru WRX that I got in 2001.  It's a great car.  By the end of 2002, Subaru was importing around 10,000 of these per year.  This car is very Japanese, it's a 2.0 liter turbo-charged all wheel drive four door that's fun to drive and practical enough for me; I get around 27mpg.  Detroit's answer to the WRX and to the Lancer Evolution and the other cars that followed was more or less that Americans don't want cars like this.  Americans want Corvettes and Mustangs and SUVs.  Yet, the WRX, the WRX STi, the Lancer Evolution, the Nissan GT-R, and others show that Americans clearly do want cars like this.  The Ironic Icing on the Cake of Incompetency is that if you look at the overseas offerings from companies like Ford you'll find (wait for it) things like an all wheel drive turbo-charged car that sure looks fun to drive.

Instead of thinking and doing, Detroit spends their time and money lobbying the government to take choices away from you, to making sure the law protects them from having to change with the times and with consumers' wants.  Our engineers and workers are great, our leadership is killing us.

The music industry couldn't be more out of touch.  I don't think I even need to expand this point?

Status Quo vs. Innovation

As Seth pointed out in the already referenced story, a business with a strong brand will ultimately find itself with two choices.  It can use this brand to build the Next Big Thing or it can do its best to keep the Next Big Thing from happening.  Think about how hard the Music and Movie "content" industry has fought digital distribution.  Their price for losing this battle is that Apple Computers, of all people, is considered by many insiders to be "calling the shots in the music industry".

My favorite example in this realm is the Real Estate industry.  If you've ever bought or sold a house you probably have a vague notion that there is this thing called an MLS (Multiple Listing System) and this group called the National Association of Realtors.  Getting your home on the MLS means that if there's a buyer for your home, they'll find it.  You pay a 6% commission for this service.  Some brokers will work harder than others to sell your house, but you're really paying a fee to get into the MLS. 

From my point of view, the National Association of Realtors has spent most of their time in the past 20 years protecting this 6% commission model under the ostensible banner of "protecting consumers".  They even got laws passed in some states making it a legal fact that brokers had to charge a 6% commission.  Then Buyers Agents came along, representing the home buyer in this important transaction and they wanted part of the commission.  Then The Internet came along and companies sprang up who would charge a much smaller fee (less than $1,000) to get your home into the MLS (the most valuable thing a seller can do) but leaving you to do the work of actually showing your house to sellers.  The NAR and many local MLS franchises went to work outlawing the operations of these companies in order to protect the Old Guard and had a degree of success until the DOJ got involved. 

The net worth of most Americans is tied up in the value of their homes.  Suppose you have no debts and no assets but you managed to put 20% down on a $300,000 home.  Your net worth would be $60,000.  Commission on selling the home would be $18,000, or nearly a third of your net worth.  Despite how infrequently you sell your home, why would you want to give a significant portion of your net worth to brokers if there's a good alternative?

The Realtors had a captive and grateful audience.  They could have become the Internet Real Estate solution for brokers.  Instead, they tried to stuff the genie back into the bottle, they tried to hinder the online business models of their members in order to protect the status quo.  Brokers instead had to go outside the MLS, they had to pay technology companies to build their websites, to build the systems they use to communicate with their buyers and sellers, the systems that show homes on Google Base and other content aggregators.  The MLSs left this money on the table, and now they've lost it forever and they can expect to see themselves slowly decline in relevance.

Culture of Fear and Stagnation

There is an underlying current of fear and stagnation in many American businesses, especially the larger ones.  Managers and executives do not take risks.  They don't learn new things.  They spend their days solidifying their own power.  They have to force their employees to be at their desks between 8am and 4pm rather than advocate virtual offices because otherwise they'd have no idea how much work their employees were doing!  Your manager probably does not reward risk taking because their manager probably does not reward their risk taking and all the way up to the top.

Chances are your manager has been in his or her job longer than you, and they've got a career path to protect.  How much of the upper management at your company has been there longer than five years?  Longer than ten?  Is the company you work for providing incentive for and rewarding good behavior or are they rewarding people who Do Their Time and erect walls around their Empire?  When was the last time you saw an announcement go out in your company saying "Damon took a risk and he failed, but ultimately it was a good risk that could have payed off big for this firm" ?  You've probably never heard that at work.  You've probably at some time worked for a business that claims to to desire one kind of behavior but clearly rewards the opposite.

If your manager is new, are they shaking things up, bringing in new ideas and processes?  Or are they tripping over themselves in their hurry to appease the old guard?  How many of the policies you're supposed to be following at work are there because your manager/company is a afraid of being spied on, afraid of competition, afraid of being sued, afraid of having to change.

Does your manager reward smart risk?  Do they do the right thing even if it means putting their empire at risk?  Do they trust you to do your job once you've proven trust-worthy?  Do they try to give you what you need to be successful?  Be sure to tell them you notice.

What's the Answer?

None of this is to say that young people have all the answers, that "thinking outside the box" is always what's called for, or that all of our corporate leadership are frightened little empire builders.  My own manager is almost too future-looking sometimes.

Companies and individuals, big and small, are shaking things up.  Apple is forcing the music industry to change.  Tesla Motors is close to proving Detroit wrong.  Southwest is growing while other airlines flounder.  Despite ever-increasing regulation and taxes, America is still the most free nation in the world and that means opportunity.  What can you do?

  • Don't do business with dinosaurs if you can help it.  Don't reward bad behavior.  When something new comes along that shows that someone "gets it", do business with them instead if you can. 
  • Don't break the law or act unethically.  On some level, I think we all know that intellectual property is still property.  It costs millions of dollars to make a movie, so don't pirate them.  When breaking the law is your protest, the response is all too often more laws and less freedom.
  • Don't work for dinosaurs.  This might be the hardest one to follow, and will in fact not be a real option to many of us.  Still, if you're a top performer, chances are you can work elsewhere even in the worst economy.  Work for someone who gets it, or start your own business.
  • Encourage those who show good leadership when you see it in action.  Some Project Managers are only able to walk around and ask you what the percent complete on a task is.  When you encounter the ones who are really providing guidance and removing barriers so the project gets done make sure they know you get it.

Shake things up.  Do better.  Succeed.  There's something wrong with the old school.

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Comments (3) -

Paul Driver
Paul Driver
12/2/2008 6:39:45 PM #

I think this happens to any successful society.  It ossifies into hegemony, and of its very nature stifles innovation.  It is not that we cannot prevent this from happening, but inertia is most definitely against us.  It's not just a problem with individual businesses, but with our culture in some ways.

Shaking up the status quo is hard, but almost always necessary.

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Jim
Jim
12/2/2008 8:40:33 PM #

Excellent post.

If you haven't already, check out Goldratt's Theory of Constraints, introduced in the book _The Goal_.

Reply

Elmo
Elmo
12/5/2008 1:57:49 PM #

hehe heeeeeeee what's my ip?

Reply

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Damon Payne is a Microsoft MVP specializing in Smart Client solution architecture. 

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