General Motors stumbles on

It seems that General Mostors is incapable of seeing the obvious. I have no doubt that top management is made up of intelligent, well-trained and involved people. Yet no one seems to be capable of making the kinds of changes needed to save the company. Both Crysler and Nissan were saved by the introduction of interesting, innovative card. General Motors does not seem to be able to do this. While it is clear that "badge engineering" - putting different brands on the same product has harmed GM and led to the demise of Oldsmobile, no one seems to have leaned the lesson. So they may as well just take a short-cut and shut down Saturn right now. It seems that the next generation of Saturn cars will be simply rebadged versions of other GM cars. Thus will GM destroy the one car brand which has a distinctive image and very loyal purchasers.

Where lives amaze us

I have always found the point at which biography, memoir and obituary intersect to be a fascinating one. While biography should be scholarly and accurate, memoir is allowed to be subjective and incomplete. Obituary however, is the journalistic take on each, with a focus on brevity. Some of the most fascinating obituaries are not of the rich and famous, who are so well covered during their lifetimes, but of people who led relatively obscure, though purpose-filled lives. The quiet man at the end of the road Charles Shepens, who invented amazing surgical techniques, diagnostic instruments, saved hundreds of lives in the Second world war, and personally risked his life on many occasions, yet told no one about it, until it was discovered only a short time before his death. How about the artist Joash Woodrow, working on his own all his life, whose works were discovered as they were about to be destroyed and he was to be placed in a nursing home. The discovery led to many exhibitions, but his mind had detreriorated too far for him to appreciate it.

Obituaries, particularly of seemingly ordinary people help us to realize that ordinary people can be quite extraordinary. This can give us a new appreciation of friends and neighbors.

How to deal with Immigration

This is a major issue these days, and one to which there seems to be no simple solution. There is a conflict between two apparently irreconcilable objectives. On the one hand, the US (and we see the same in Western Europe and even wealthy Middle Eastern countries) need more skills and labor. There is little debate about the need to import doctors, engineers and scientists, although there may be arguments about the specific number. There is more discussion about importing low-cost labor.

The USA has a particularly challenging dilemma in that it was created by immigration, yet needs to manage it. Firstly, let us understand that even the Berlin Wall, with barbed wire, searchlights, mined strips and watchtowers with machine guns, could not completely stop people crossing it. It was also much, much shorter than the US-Mexican border. We will never completely be able to stop people crossing who are desperate enough.

Furthermore, the US cannot afford to have billions of people feeling resentful about what may be seen as a dog in the manger attitude. So the US needs to manage the immigration flow much better than it does. For example, let us take a look at US expats living in other countries, and there are many. Most are temporary, but some are permanent. Obtaining visas and work permits for most western countries is fairly straightforward and fast. The US makes it more complex, slow and seemingly random. Once you have a temporary work visa, such as an H1-B, which may take 8-9 months, life is still not simple. Your freedom of movement in and out of the US may be restricted. If you have to leave the US (even for a family emergency), you will have to get your visa re-stamped in the country of original application, and it may take months to get an appointment for this! As has been said, the US needs to make the fence high, but the gate wide. Clearly when people say that illegal immigrants are mostly law-abiding people, they are not. They have broken the law. However, they mostly wish to be law-abiding, and they should have the opportunity.
We need a system which allows in, as fast and simply as possible, those who have needed skills and work ethics. We have to make sure that we do not bring in so many that we depress salaries and wages for people in the US. We have to discourage people without those qualifications, while giving them hope if they have to stay in their own countries, and a clear path to follow should they wish to continue to pursue the dream of moving to America.

ENRON and the South Sea Bubble

We are so poor at learning. In the book "Extraordinary Popular Delusions & the Madness of Crowds," Charles Mckay provided a rivetting history of how people are taken in by the promise of wealth, however ludicrous it may be. In 1624, tulips were being sold in Holland for more than gold. In the early 1700s a group of merchants formed the South Seas Trading Company, which originally simply purchased some debt from the British Government to be repaid at 6% interest. However, on this solid foundation, they proposed to make money by trading in South Anerican gold and the stock soared. Now no-one read the fine print, which said that King Philip of Spain would only let one ship a year set sail. As the stock soared, many other companies were formed to take advantage of the capital in the market. Sadly, on one day in September, 1720, no one wanted to buy. So the cries of "sell, sell!" grew louder and many wealthy people lost all, as well as many poorer ones.

So there have been many other financial bubbles. In the 1920's it was Florida land, in the 1990s it was the Internet and ENRON. The continued belief that it is possible to make extraordinary financial returns with no risk is amazing. How could sensible people believe that Webvan could make enormous returns in a very low margin industry with huge investment in warehouses and truck makes the mind boggle. But not only did experienced business people talk about a "new financial model," in which profit was not important, but many of them continued to prosper afterwards. While ENRON was a high-profile failure, many others occurred at the same time. Empty shells of buildings which used to house huge companies joined the ghosts of the offices of the South Sea Company.

The one thing of which we can be sure is that there will be many more.

CEOs would work as hard for one tenth the pay

According to a study last year by Carola Frydman, a doctoral candidate at Harvard, and Raven E. Saks, an economist at the Federal Reserve, the average top executive's salary was 170 times the average workers in 2004. This is up from 68 times in 1940. a few companies, such as Costco limit the CEO's pay to a modest multiple of the average worker's but most have no limits. We see CEOs "double dipping" by getting guaranteed severance packages, multiple years credit for each year's service towards a pension, and "consulting contracts" for doing no work at all.

This is one of the issues which most Americans agree on. As the multiple continues to grow without any controls, there is likely to be a backlash of some size.

Ultimately, as companies have become larger and more complex, the demands on the CEO have become greater, but the CEO has less impact on the company. The CEO does not even know most of what happens in the company, and since he or she relies on information channeled up, much of it is wrong or incomplete. so ironically, as CEOs are being paid more, even the wonderful ones, and there are some, are hadicapped.

We could also conclude that a CEO would work at least as hard for 17 times the average worker's pay - perhaps even harder since it would not be as easy to earn enough to retire on in a few years alone!

How naive can you get?

Today we see that the big news is that Lucent is merging with Alcatel, and Pat Russo of Alcatel is going to run the show from Paris. I wonder if she really belives that. When Mercedes-Benz bought Chrysler, it was trumpeted as a "merger of equals" - until Chrysler hit a wall, and Daimler moved a management team from Germany to take it over. When US West "merged" with Continental Cablevision, that was also supposed to be a "merger of equals." But one fine day, the folks from Denver ousted Amos Hostetter, Chairman, even though he was the biggest single shareholder in the merged company.

I will confidently predict that Pat Russo's position will be seen to be a smokescreen and in less time than expected, she will be replaced by an Alcatel person.

Any time there is a merger, there is a winner and a loser. Occasionally, it is not as expected, but it is usually predictable. The management of Gillette will soon learn how well they can succeed in the Procter & Gamble culture. So for all those involved in a merger, take the money and run!