Bob MacDonald on Business

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Trump Has the Wrong Idea, But the Right Approach

July 26th, 2015 · Business Management

Shaking up the establishment in order to bring about needed change requires more than shrill, self-serving screeching

Think what you will of Donald Trump (and I don’t think much of him), you do have to give him credit for being an out-and-out marketing genius—especially at marketing himself as a stand-alone brand. One of the TV talking heads said it best, “Donald Trump’s job is to be Donald Trump.” As supercilious as Trump’s campaign for president may be, it would be a mistake to compare his real goal with those proffered by the current gaggle of candidates seeking to make a serious effort to be elected president.

With a couple of minor exceptions, those in the pack of Republican candidates are running within the constraints and rules of the establishment; hoping the establishment will push them to the top.Trump-2
Trump is alone in challenging and running against the establishment to achieve his goal. But Donald Trump is not running to be president; he is running to be Donald Trump. Despite that shallow objective, those who seek success by bucking the establishment as agents of change can learn a great deal by observing and yes, emulating some of Trump’s strategies and techniques.

Paths to Success

Understand there are two broad approaches that can be followed in the search for success. One way is to play by the rules of the established system, seeking not to challenge or change it, but to advance oneself by working for the system. The other way to be successful is to effectively challenge the status quo of the establishment in order to change it, so that the system will work for you.

For those who choose to seek success by working within the establishment all that is required is to work hard, follow the rules instituted by others, kiss some ass, keep your head down, go along to get along and wait your turn. Of course, there are risks in this strategy: your success may never materialize. No matter how well you play the establishment card or follow the rules, others will ultimately control your success.

Those who strive for success by becoming a change-agent have to understand that their road will be far bumpier. Challenging the status quo and endeavoring to bring about change will cause those who support the establishment to fight tooth and nail to preserve it. If not ignored or ostracized, the change-agent is vilified, denigrated and disparaged by those who have tied their future to the past. However, there are two benefits for those who endure this storm of resistance in order to follow the path of change to success: success can come quicker and it is determined by the effectiveness of the effort to introduce change, not by the beliefs or decisions of others.

Mapping out Change

Trump definitely sees challenging the establishment as the path to success in his presidential campaign. He clearly recognizes there is no hope for him to be successful playing by the rules of the establishment. He knows that the only way for him to stand out from the mob of minions running for president is not only to challenge the system, but to turn it on its ear. We know Trump is not seriously running for president (He’s not is he?), but his actions – the establishment calls them “frantic antics” – come very close to what is needed to implement real change.

Here’s a checklist to be followed if you want to become a successful change agent.

  • The attack on the status quo must be based on a valid and verifiable weakness that has gone undetected or ignored by the establishment. In short, the criticism of the system and the need for change must be true, because if not, it can be easily discounted and ignored. But if what the change-agent is saying about the establishment is true, then the defenders of the status quo are put in a position of attacking the change-agent, not because what they are saying is wrong, but because they are wrong for saying it. That defense will always fail.
  • Those seeking to be change-agents must have standing within the system. Someone from outside the system can easily be brushed-off and discounted as uninformed. However, when the one challenging the establishment has bona fides as a member of the establishment, it is difficult for the defenders to discount the credibility of the one seeking change.
  • The change-agent must offer a constructive, viable alternative to cure the exposed weakness in the status quo. Anyone can throw out vituperative attacks against a calcified establishment, but for a change-agent to be successful they must present a clear alternative to the status quo that will not only correct the problem, but make the system better.
  • The change-agent must have fortitude, focus and determination to fight through the slings and arrows of those wedded to the establishment and against change. They must be serious about the change they seek. Even with truth, standing and creative workable new ideas, change does not come easily. The last line of defense for the establishment is that if they can’t outwit the change-agent, they may be able to out wait them; in the hope that they will give up and go away.

And Back to the Donald

When the antics of Trump are measured against the four elements necessary to achieve success as a change-agent it is easy to see how, by following a number of these points, he has been successful in his limited objective – creating publicity for Donald Trump. Do you think there would have been anywhere near the level of publicity and media coverage Trump has received if he had joined with the other 15 or so candidates following the established way to run for president?

During the announcement of his candidacy he focused directly on a problem that has vexed the establishment for decades – illegal immigration. The truth in his statement was not that there is anFinalTrumpillegal immigration problem – everyone knew that – but that the establishment had not effectively addressed the problem. But the bombastic nature of his attacks allowed the candidates of the establishment to attack Trump, rather than have to respond to the real problem of immigration.

Evidenced by the blanket media coverage of his announcement, it was clear that Trump had standing to launch his attack on the establishment. While not an establishment politician, Trump is certainly a self-made celebrity and a successful, wealthy businessman. He was just not some guy coming in off the street to attack the establishment, and this forced the establishment candidates off their message, because they had to respond to Trump and his standing.

Trump has offered an alternative to the problem of illegal immigration, but the “solution” proposed is unworkable and boils down to only doing more of what has been done. It does not address the core issues of the problem and would not make the system better. Failing to offer a viable alternative to a problem simply gives the defenders of the establishment the ammunition to attack the would-be change-agent.

Finally, Trump shows no interest in the staying power needed to see change implemented and success achieved. He has offered no long-term strategy or organization to bring about change and has hinted that if the establishment does not agree with him he will just walk away. This simply encourages the establishment to hang on to the status quo and wait for the change-agent to give in.

In the end, you have to give Trump his due. His objective is not really to change the system and become president, but to use the weaknesses and failings of the establishment to promote the Trump brand. He is perceptive enough to understand what it takes to rile-up the establishment and cause it to lash out in defense of the status quo. In doing so it simply gives credibility to Trump and provides him the platform to market his product – Donald Trump. It is too bad that Trump is unwilling to use his understanding of what it takes to be a change-agent to actually bring about real change, instead of squandering it to further inflate his narcissistic ego.

(Donald Trump is not the best example of a positive change-agent, but the path to success as a change-agent is important and can be very constructive, both for the system and the one implementing change. Because of that, next week the blog will continue the discussion with positive examples of change that leads to success.) 
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Resurrecting The Middle Class Would Give New Life To America

July 19th, 2015 · Business Management

There’s been a lot of finger-pointing and talk about the decline of the American middle class, but politicians show little will to take action.

It has only taken about 40 years, but our politicians have finally come to recognize the long-term challenges to American economic vitality that will be caused by the decline in, if not the elimination of, the American middle class. Not that they have shown any signs of possessing the MiddleClasscreativity, courage or will to do anything about the issue, but at least they are doing what they do best: giving lip-service to a problem.

For 200 years the celebrated promise for Americans – what made America great – was the promise of upward mobility. Unlike citizens of other countries who were locked into a rigid caste system with no hope of escape, Americans (at least the free, white male ones) were assured that if they worked hard and persevered, they would be rewarded with upward financial and social movement. Each generation had the opportunity and promise to rise higher than the last. And it was this prospect of doing better that fueled the American economic engine; at least that was the case until about 40 years ago.

Beginning in the 1970s a number of factors coalesced to break the promise of upward mobility for the middle class.

  • One dynamic was the emergence of what was called economic globalization. That meant American workers had to compete against workers in other, less developed countries, who often were paid far less for far more work.
  • Economic and tax policies of the government began to favor corporate rights over individual rights and policies that gave preference to capital (owners) over labor (workers) were implemented.
  • There was pushback against labor unions that had been overreaching in their demands.

There were other factors as well, but the reality is that pressures on the middle class have not only reduced the opportunity “to get ahead,” but have worked to push the middle class into downward mobility and greatly increase the disparity between the wealthy and all others. Every one of the 50 states witnessed  its share of middle-class families shrink during the past decade while those in the top 1 percent captured all the income gains. It was sinful to allow this to happen, but it is a crime that our political leaders are doing nothing to resurrect the opportunity for the middle class, other than to talk about it and point fingers at each other.

Giving New Life to Upward Mobility for the Middle Class Calls by Understanding and Responding to the New Economic Reality of Capitalism

It is difficult enough for politicians to deal with realities as they know them, but it is virtually impossible for them to respond with constructive action when the old realities are changing. In such a conundrum, politicians only fully understand the blame game that accuses others for problems caused by a changing reality. (Or even their own inaction.) Worse, they confuse reality with truth, and they are two decidedly different things.

Reality is the imagery of an accepted belief at a point in time that is based on the experience and knowledge available. But unlike truth, reality is subject to change. Reality is not rigid; it evolves with increased knowledge, perspective and experience. For example, there was a time when “reality” declared that the sun and all other planets revolved around the earth; and a time when the earth was flat. Institutions and beliefs firmly tethered to the realities of the past become an anachronism in the world of new realities that ultimately will destroy their very purpose and existence. The bottom line is painfully obvious:

Today’s political leaders are trapped in the imagery of capitalism as it was in the past and this prevents them from creating a new type of capitalism needed to meet new realities.

Needed: A New Definition of Capitalism and a Capitalist

The theory of capitalism is based on the simple idea of risk and reward. Capitalism offers individuals – capitalists – the freedom to risk their personal capital in an enterprise with the understanding that failure of the enterprise will mean loss of their capital, while success of the enterprise will translate into a significant return on the capital invested. Capitalism comes down to being willing to put “skin in the game.” The great historical capitalists of America – Rockefeller, Ford, Carnegie and Harriman along with multitudes of others – all accepted the risk of investing their personal capital.

The early capitalists arrived on the scene when America needed the infusion of vast amounts of capitalism-2capital to build the infrastructure – factories, transportation, steel and energy – required to lay the foundation for economic growth. These great entrepreneurs truly had their own “skin in the game” and it showed in the results they achieved. Of course they were lavishly rewarded for the risks and efforts they took, but they earned and deserved it.

Today, there is a new reality for capitalism and the concept of being a capitalist. If this new reality is accepted and encouraged by our leaders, it can resurrect the cherished idea of upward mobility for the middle class, while stimulating a vibrant new American economy.

Creating the Reality of Participatory Capitalism

In the old reality of capitalism large amounts of cash capital was contributed by the few and the rewards were limited to the few. The economy of today and tomorrow still demands investment, but what it needs is recognition of a new type of capital to fund success. It is not the type of capital necessary to build a railroad but rather the type of capital that built Facebook, Twitter, Google and Instagram. The new reality of capital comes in the form of education, experience, creativity, innovation and technology. This new type of capital is not a bastion of the few, but is controlled by and can only be invested in a business by the well-educated, thinking and creative employees of today. They should no longer be thought of as cogs, but as capitalists, because their talent is invested in the business and they are key to its success.

Restoring the American Dream of Upward Mobility

The path to reviving the middle class is to consider and treat today’s well-educated, thinking Ladder-Headeremployees as capitalists not captives. In the same way that the Rockefellers of yesterday were not willing to risk their capital without the promise of potential reward, the employees of today will not risk their capital – their education, experience, creative brilliance and loyalty – unless they have the promise of potential reward beyond the simple quid pro quo of an obligatory paycheck. And if they are given this opportunity the rewards for all can be immense.

The new reality of capitalism should be defined as: Those who have the ability to add value to an enterprise and do so are allowed to share in the value their invested capital creates. It is what could be called participatory capitalism that is open to all, not just a few. Participatory capitalism allows all employees to invest their personal capital in the enterprise in exchange for the potential to receive a return on that capital.

Implementing Participatory Capitalism

The government could use the same economic policies and tax incentives that triggered the decline of the middle class to resurrect the middle class. The government could offer an incentive for a company to distribute 25 percent of its gross profits to all employees by not taxing the profits distributed and in fact offering a tax credit for that amount.

One-half of the distribution to employees could be paid as a “dividend” on their investment; the other half of the distribution could be placed in a 401K type of trust – tax free for employees – and available for distribution at retirement (helping to solve another pressing problem). The end result is that employees – when treated as “investors” in the company – and the company are in positions of parallel. What is good for the company is good for the employees. The more “capital” they invest in the company, the better chance they have to receive a return on that capital. Of course some will argue this approach is not capitalism but socialism and that profits will be reduced. They will be wrong. If capitalism is good for the few, it will be even better for the many. Participatory capitalism will focus everyone on a single goal that will create higher profits and greater reward.

Others will suggest this approach is nothing more than Pollyanna that would destroy capitalism, but the reality is that today’s form of Corporate Capitalism is destroying capitalism. Under this corrupted form of capitalism the basic elements of free-market and private ownership remain, but the system is dominated by hierarchical, highly-bureaucratic corporations and obscenely wealthy individuals fixated on narrow self-interest for profits with little or no concern for the best interests of the nation and society; let alone the survival of the middle class. Allowed to proceed uninterrupted this constricted capitalism will lead (if it has not already) to an oligarchy of wealth.

What will save the middle class and capitalism itself is to recognize the lost truth of capitalism and return to the fundamental premise that offers reward for those who have the capital – in any form — to invest in the enterprise. This approach gives everyone the chance to have “skin in the game.” And this creates the incentive to work and to add value. It is what true capitalists do. Participatory capitalism will achieve that and bring with it a rebirth of a new upwardly mobile middle class. If this happens, as in the past, America will be better for it.

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Consistency is to Leadership What Rebar is to Concrete

July 12th, 2015 · Business Management, Effective Leadership

In times of tension and stress – which will always come – the consistency of the leader will determine the strength of leadership.

Concrete is the most popular building material used by man. It is extremely strong from a compression standpoint. That means that concrete can’t easily be squeezed out of shape and it bears heavy loads well. But when it comes to meeting tension pressure that requires stiffness and rigidity, it tends to be weak and needs the insertion of reinforcing steel bars (rebar) to maintain its durability and strength as a building block.

Leadership is much the same. The mantel of leadership brings with it a certain natural compression of power. Those in positions of leadership are granted structural authority to make decisions and determine actions. And that works well so long as there is no tension or stress in the process of leading. But in the real world there is tension and stress that always weakens leadership that is based only on structural authority.

The Rebar For Leadership

Just as with concrete there is a form of rebar that can be added to leadership that strengthens it in any environment. This rebar for leadership is consistency. It is consistency in philosophy, principles Consistencyand actions. Leadership is strengthened when the leader communicates a clear philosophy that is never altered. Leadership is reinforced when the leader espouses fundamental principles of engagement that are adhered to without equivocation. Leadership is fortified when the leader consistently takes actions that are in harmony with a stated philosophy and set of principles.

You probably know from experience that the worse type of boss or leader is the one who is inconsistent. It is difficult to put it on the line for a leader when you don’t know what they stand for or where you stand with them. How frustrating is it to work for a boss who has a reputation for saying one thing but doing another? How do you feel about a leader who treats people and issues one way one day and another way another day? How much confidence can you have in a boss who has a history of being influenced by the last person in their office?

When you come right down to it, followers value consistency in their leaders more than anything else. Consistency is the basis upon which a leader can build trust and it is trust that strengthens leadership because it encourages followers to follow. On the other hand, consistency does not mean the leader must be a “good guy” or always easy to deal with. But it does mean that to be consistent a leader can’t be open and inclusive one day and a demanding tyrant the next day. People can learn to deal with and follow a “bad boss” just so long as he or she is consistently bad.

Lack of Consistency Shows a Lack of Leadership Ability

The best real-life laboratory for studying the impact for a lack of consistent leadership is the political world. Nothing opens up a politician to derision more than a lack of consistency. Critics know that voters yearn for consistency in their leaders, so they pounce on any inconsistency as a sign of weakness and loss of credibility.

Perhaps you remember the famous John Kerry quote in the 2004 presidential election against George Bush. Kerry said, “I was for the Iraq war before I was against it.” This apparent indecisiveness and inconsistency made Kerry look like a weak leader and this perceived unpredictability was constantly used against him in the campaign.

Then there was the famous George H. W. Bush quote given during his acceptance speech at the 1988 Republican Convention. Bush said, “Read my lips. No new taxes.” Four years later, after agreeing to Aristotleraise taxes during his first term, that quote was used by the Clinton forces to portray Bush as a weak and inconsistent leader.” Of course we could go on and on with examples of inconsistencies that have come back to damage politicians, but that is just the reality of politics. In the real world inconsistent leadership can be even more damaging. Likewise, exhibiting consistent leadership always strengthens the leader; greatly enhancing effectiveness and the chance for success.

Benefits Gained From Practicing Consistent Leadership

  • Consistency allows a leader to build credibility with followers. When followers come to trust that what the leader says, it is what the leader will do it allows them to move forward with confidence on the leader’s directives. They don’t have to waste time worrying about whether the leader will change their mind or direction.
  • Consistency allows the leader to reinforce their vision and objectives of the organization. When the vision remains constant and the objectives unvarying, followers clearly understand the decisions made and will be comfortable working toward their implementation.
  • A leader must establish a consistent set standards of performance and accountability for themselves and others. How can a leader hope to enforce accountability — something critical to success – if the standards for performance are unknown or inconsistent?
  • Consistent, transparent and open communication from a leader enhances cooperation in the entire organization that strengthens the power of the leader. When leaders fail to consistently communicate the followers are left in the dark. And when followers are in the dark about the objectives, decisions and actions of the leader they can only be herded, not led.
  • Consistent leadership above all builds trust in the leader and it is trust that gives the leader power.

In the end, effective, powerful leadership simply comes down to consistently being the same leader today that you were yesterday and will be tomorrow. When followers can rely on that type of consistent leadership – good or bad – they will follow and the leader will be consistently successful.

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