If only those two in the four-memeber-management-team at TooMuddy Technology understand and accept this... then no problem at all in this small firm. Anyway this picture shows the solid solution to the problem at TooMuddy Tech.
Friday, December 18, 2009
Solid solution to...
If only those two in the four-memeber-management-team at TooMuddy Technology understand and accept this... then no problem at all in this small firm. Anyway this picture shows the solid solution to the problem at TooMuddy Tech.
Friday, September 25, 2009
10 Fatal Career Moves
It takes anywhere from three to 15 months to find the right job -- yet just days or weeks to lose it. Here are 10 traits that are career poison:1. Possessing Poor People Skills
A little likeability can go a long way. Studies by both the Harvard Business Review and Fast Company magazine show that people consistently and overwhelmingly prefer to work with likeable, less-skilled co-workers than with highly competent jerks. Researchers found that if employees are disliked, it's almost irrelevant whether they're good at what they do, because other workers will avoid them.
2. Not Being a Team Player
No one feels comfortable around a prima donna. And organizations have ways of dealing with employees who subvert the team. Just ask Philadelphia Eagles Wide Receiver Terrell Owens, who was suspended for the 2005 season after repeatedly clashing and taking public shots at his teammates and management. Show you're a team player by making your boss look like a star and demonstrating that you've got the greater good of the organization at heart.
3. Missing Deadlines
If the deadline is Wednesday, first thing Thursday won't cut it. Organizations need people they can depend on. Missing deadlines is not only unprofessional; it can play havoc with others' schedules and make your boss look bad. When making commitments, it's best to under-promise and over-deliver. Then, pull an all-nighter if you have to. It's that important.
4. Conducting Personal Business on Company Time
The company e-mail and phone systems are for company business. Keep personal phone calls brief and few -- and never take a call that will require a box of tissues to get through. Also, never type anything in an e-mail that you don't want read by your boss; many systems save deleted messages to a master file. And we can't tell you how many poor souls have gotten fired for hitting the "Reply All" button and disseminating off-color jokes -- or worse yet -- rants about their boss for all to see.
5. Isolating Yourself
Don't isolate yourself. Develop and use relationships with others in your company and profession. Those who network effectively have an inside track on resources and information and can more quickly cut through organizational politics. Research shows effective networkers tend to serve on more successful teams, get better performance reviews, receive more promotions and be more highly compensated.
6. Starting an Office Romance
Unless you're in separate locations, office romances are a bad idea. If you become involved with your boss, your accomplishments and promotions will be suspect; if you date a subordinate, you leave yourself open to charges of sexual harassment. And if it ends badly, you're at risk of everyone knowing about it and witnessing the unpleasantness.
7. Fearing Risk or Failure
If you don't believe in yourself, no one else will. Have a can-do attitude and take risks. Instead of saying, "I've never done that," say, "I'll learn how." Don't be afraid to fail or make mistakes. If you do mess up, admit it and move on. Above all, find the learning opportunities in every situation. Remember, over time, risk-aversion can be more hazardous to your career than error.
8. Having No Goals
Failure doesn't lie in not reaching your goal, but in not having a goal to reach. Set objectives and plan your daily activities around achieving them. Eighty percent of your effectiveness comes from 20 percent of your activities. Manage your priorities and focus on those tasks that support your goals.
9. Neglecting Your Image
Fair or not, appearance counts. People draw all kinds of conclusions from the way you present yourself. So don't come to work poorly groomed or in inappropriate attire. Be honest, use proper grammar and avoid slang and expletives. You want to project an image of competence, character and commitment.
10. Being Indiscreet
Cubicles, hallways, elevators, bathrooms -- even commuter trains -- are not your private domain. Be careful where you hold conversations and what you say to whom. Don't tell off-color jokes, reveal company secrets, gossip about co-workers or espouse your views on race, religion or the boss' personality. Because while there is such a thing as free speech, it's not so free if it costs you your job!
By Kate Lorenz, CareerBuilder.com Editor
Kate Lorenz is the article and advice editor for CareerBuilder.com. She researches and writes about job search strategy, career management, hiring trends and workplace issues.
Saturday, September 19, 2009
Golden Rules for Career Success
1. Keep track of what you do; someone is sure to ask.2. Never bring your boss a problem without some solution.
3. You are getting paid to think, not to whine.
4. Long hours don't mean anything; results count, not effort.
5. Write down ideas; they get lost, like good pens.
6. Always arrive at work 30 minutes before your boss.
7. Help other people network for jobs. You never know when your turn will come.
8. Don't take days off sick-unless you are.
9. Assume no one can/will keep a secret.
10. Know when you do your best-morning, night, under pressure, relaxed; schedule and prioritize your work accordingly.
11. Treat everyone who works in the organization with respect and dignity, whether it be the cleaner or the managing director. Don't ever be patronizing.
12. Never appear stressed in front of a client, a customer or your boss.
13. Take a deep breath and ask yourself: In the course of human events, how important is this?
14. If you get the entrepreneurial urge, visit someone who has his own business. It may cure you.
15. Acknowledging someone else's contribution will repay you doubly.
16. Career planning is an oxymoron. The most exciting opportunities tend to be unplanned.
17. Always choose to do what you'll remember ten years from now.
18. The size of your office is not as important as the size of your pay cheque.
19. Understand what finished work looks like and deliver your work only when it nis finished.
20. The person who spends all of his or her time is not hard-working; he or she is boring.
21. Know how to write business letters-including thank-you notes as well as proposals.
22. Never confuse a memo with reality. Most memos from the top are political fantasy..
23. Eliminate guilt. Don't fiddle expenses, taxes or benefits, and don't cheat colleagues.
24. Reorganizations mean that someone will lose his or her job.
25. Get on the committee that will make the recommendations.
26. Job security does not exist.
27. Go to the company Christmas party..
28. Don't get drunk at the company Christmas party.
29. Avoid working at weekends. Work longer during the week if you have to. Moreover, don't stay late in night, it doesn't creates impression rather shows lack in your productivity.
30. The most successful people in business are interesting.
31. Sometimes you'll be on a winning streak and everything will click; take maximum advantage.
32. When the opposite is true, hold steady and wait it out.
33. Never in your life say, "It's not my job."
34. Be loyal to your career, your interests and yourself.
35. Understand the skills and abilities that set you apart. Use them whenever you have an opportunity.
36. People remember the end of the project. As they say in boxing, "Always finish stronger than you start."
Friday, August 28, 2009
How LinkedIn's founder got started
Reid Hoffman talks about his path from academia to social media. (Fortune Magazine)
-- My dad wouldn't let me have a computer because he didn't think it was relevant. I was in college before I actually got one. I think if he knew then what he knows now, I would have had one much earlier.
But I've always had an interest in how we improve people's ecosystems -- whether it's civics or education or economics. When I was an undergrad at Stanford, I thought the way to do that was to be an academic. Then I saw that wasn't the right way, because you become a scholar and publish in an area where only, like, 50 people will read it.
Find ways to reach people.
How do you change lives for millions of people? At Oxford [as a graduate student in philosophy] I decided software entrepreneurship was the way. I came back to Silicon Valley and worked for Apple and then Fujitsu before starting Socialnet, an early social-networking site. After a while I didn't agree with the direction it was going, so I talked to Peter [Thiel, co-founder of PayPal], whom I knew from Stanford. He said, "Come join us. Help us at PayPal."
Improve users' lives.
What I realized before PayPal was sold was that there was going to be a confluence of two forces. One was how the world of work is changing -- every individual is now somewhat entrepreneurial. They're getting the next gig themselves. The other was the Internet, which could empower all these individuals to establish profiles online so that people can find them. You'd be able to use your network to get access to people to better chart your path.
I started LinkedIn because changing people's professional lives is a massive transformation. In 2003 we got financing from Sequoia Capital, and we started to get more and more people into our service. Everyone began to realize the value. That's when I was, like, "This could work."
Secrets of my success
• It's okay to be brief
When people ask me about work/life balance, I just laugh. But I try to be time-efficient by scheduling meetings in appropriate increments --15 minutes or less sometimes. I've also tried to build a culture that understands writing brief e-mails is not emotional coldness.
• Be willing to change course
Entrepreneurs tend to believe, "I've got my idea, I'll go until I die." But I advise them to take seriously the questions about whether their [business] plan is irredeemably flawed and whether they need to change what they're doing. Be diligent about failing fast so that you don't spend five years doing something that's just going to fail.
• Don't be a perfectionist
I frequently tell Internet entrepreneurs, "If you're not somewhat embarrassed by your 1.0 product launch, then you've released too late." There's value in launching early, getting engaged with customers, and learning from them. That can direct your progress.
From http://money.cnn.com/2009/08/24/technology/linkedin_reid_hoffman.fortune/index.htm?postversion=2009082505
-- My dad wouldn't let me have a computer because he didn't think it was relevant. I was in college before I actually got one. I think if he knew then what he knows now, I would have had one much earlier.
But I've always had an interest in how we improve people's ecosystems -- whether it's civics or education or economics. When I was an undergrad at Stanford, I thought the way to do that was to be an academic. Then I saw that wasn't the right way, because you become a scholar and publish in an area where only, like, 50 people will read it.
Find ways to reach people.
How do you change lives for millions of people? At Oxford [as a graduate student in philosophy] I decided software entrepreneurship was the way. I came back to Silicon Valley and worked for Apple and then Fujitsu before starting Socialnet, an early social-networking site. After a while I didn't agree with the direction it was going, so I talked to Peter [Thiel, co-founder of PayPal], whom I knew from Stanford. He said, "Come join us. Help us at PayPal."
Improve users' lives.
What I realized before PayPal was sold was that there was going to be a confluence of two forces. One was how the world of work is changing -- every individual is now somewhat entrepreneurial. They're getting the next gig themselves. The other was the Internet, which could empower all these individuals to establish profiles online so that people can find them. You'd be able to use your network to get access to people to better chart your path.
I started LinkedIn because changing people's professional lives is a massive transformation. In 2003 we got financing from Sequoia Capital, and we started to get more and more people into our service. Everyone began to realize the value. That's when I was, like, "This could work."
Secrets of my success
• It's okay to be brief
When people ask me about work/life balance, I just laugh. But I try to be time-efficient by scheduling meetings in appropriate increments --15 minutes or less sometimes. I've also tried to build a culture that understands writing brief e-mails is not emotional coldness.
• Be willing to change course
Entrepreneurs tend to believe, "I've got my idea, I'll go until I die." But I advise them to take seriously the questions about whether their [business] plan is irredeemably flawed and whether they need to change what they're doing. Be diligent about failing fast so that you don't spend five years doing something that's just going to fail.
• Don't be a perfectionist
I frequently tell Internet entrepreneurs, "If you're not somewhat embarrassed by your 1.0 product launch, then you've released too late." There's value in launching early, getting engaged with customers, and learning from them. That can direct your progress.
From http://money.cnn.com/2009/08/24/technology/linkedin_reid_hoffman.fortune/index.htm?postversion=2009082505
Monday, August 24, 2009
Reader's Digest declares bankruptcy
Unsexy and unsuccessfulFrom The Economist print edition 20 Aug 2009
How a once-mighty publisher fell, and why it may rise again
A FEW years ago it was feared that the investors scooping up one media company after another and loading them with debt would ruin their purchases. As it turns out, some have also ruined themselves. On August 17th the Reader’s Digest Association, publisher of America’s most widely read magazine, said it would seek bankruptcy protection to restructure $2.2 billion in debt. The consortium that bought the company two years ago, led by Ripplewood Holdings, a private-equity firm, would lose its investment under the plan. The future of Reader’s Digest, by contrast, looks brighter.
These days Reader’s Digest is a global business: it generates less than half of its revenue in America. Most of its money comes from direct marketing (that is, junk mail) and sales of things as varied as wine, vitamins and books. It also runs Allrecipes.com, a popular website. But the corporate brand is built on the magazine, and the company has not been helped by its epic decline.
Reader’s Digest began in the 1920s by summarising books and “articles of lasting interest” from other publications. Gradually it acquired its own editorial voice, and with it a somewhat stodgy image. The magazine emphasised homespun values and leaned to the right—Richard Nixon and Ronald Reagan were fans. In the 1970s it sold as many as 18m copies a month. The Wall Street Journal described it as the greatest publishing success since the Bible.
Yet cracks were appearing. The magazine came to depend on competitions and sweepstakes, particularly to lure younger subscribers. Forced out of that business by public and legal pressure, Reader’s Digest attempted to reinvent itself as a celebrity-heavy lifestyle magazine. Despite heroic (and expensive) efforts to keep up the numbers, circulation has fallen relentlessly. It now stands at 8.2m in America—not many more than Better Homes and Gardens.
These days Reader’s Digest is aiming for a circulation of about 5.5m, having dropped the notion of being all things to all readers. Instead it will emphasise the heartland values of family and practicality. Other initiatives point in a similar direction. In 2006 the firm successfully launched a magazine featuring Rachael Ray, a cheerful and uncomplicated television cook. Earlier this year it formed a publishing alliance with Rick Warren, an evangelical pastor whose book, “The Purpose-Driven Life”, has a more plausible claim to be the greatest publishing success since the Bible. Mr Warren is conservative but pointedly non-political.
This is wise. There are a lot of people in the heartland, and not just in America. Reader’s Digest’s talent for distilling complex arguments ought to be more valuable in an era of information overload. In the past year Every Day with Rachael Ray and the American edition of Reader’s Digest have lost less than a tenth of their advertising pages, according to Mediaweek—far less than the competition. If it can escape that troublesome debt, the least sexy of publishing companies ought to be around for a while yet.
Sunday, August 2, 2009
Boiling the Frog
Is America on its way to becoming a boiled frog?I’m referring, of course, to the proverbial frog that, placed in a pot of cold water that is gradually heated, never realizes the danger it’s in and is boiled alive. Real frogs will, in fact, jump out of the pot — but never mind. The hypothetical boiled frog is a useful metaphor for a very real problem: the difficulty of responding to disasters that creep up on you a bit at a time.
And creeping disasters are what we mostly face these days.
I started thinking about boiled frogs recently as I watched the depressing state of debate over both economic and environmental policy. These are both areas in which there is a substantial lag before policy actions have their full effect — a year or more in the case of the economy, decades in the case of the planet — yet in which it’s very hard to get people to do what it takes to head off a catastrophe foretold.
And right now, both the economic and the environmental frogs are sitting still while the water gets hotter.
Start with economics: last winter the economy was in acute crisis, with a replay of the Great Depression seeming all too possible. And there was a fairly strong policy response in the form of the Obama stimulus plan, even if that plan wasn’t as strong as some of us thought it should have been.
At this point, however, the acute crisis has given way to a much more insidious threat. Most economic forecasters now expect gross domestic product to start growing soon, if it hasn’t already. But all the signs point to a “jobless recovery”: on average, forecasters surveyed by The Wall Street Journal believe that the unemployment rate will keep rising into next year, and that it will be as high at the end of 2010 as it is now.
Now, it’s bad enough to be jobless for a few weeks; it’s much worse being unemployed for months or years. Yet that’s exactly what will happen to millions of Americans if the average forecast is right — which means that many of the unemployed will lose their savings, their homes and more.
To head off this outcome — and remember, this isn’t what economic Cassandras are saying; it’s the forecasting consensus — we’d need to get another round of fiscal stimulus under way very soon. But neither Congress nor, alas, the Obama administration is showing any inclination to act. Now that the free fall is over, all sense of urgency seems to have vanished.
This will probably change once the reality of the jobless recovery becomes all too apparent. But by then it will be too late to avoid a slow-motion human and social disaster.
Still, the boiled-frog problem on the economy is nothing compared with the problem of getting action on climate change.
Put it this way: if the consensus of the economic experts is grim, the consensus of the climate experts is utterly terrifying. At this point, the central forecast of leading climate models — not the worst-case scenario but the most likely outcome — is utter catastrophe, a rise in temperatures that will totally disrupt life as we know it, if we continue along our present path. How to head off that catastrophe should be the dominant policy issue of our time.
But it isn’t, because climate change is a creeping threat rather than an attention-grabbing crisis. The full dimensions of the catastrophe won’t be apparent for decades, perhaps generations. In fact, it will probably be many years before the upward trend in temperatures is so obvious to casual observers that it silences the skeptics. Unfortunately, if we wait to act until the climate crisis is that obvious, catastrophe will already have become inevitable.
And while a major environmental bill has passed the House, which was an amazing and inspiring political achievement, the bill fell well short of what the planet really needs — and despite this faces steep odds in the Senate.
What makes the apparent paralysis of policy especially alarming is that so little is happening when the political situation seems, on the surface, to be so favorable to action.
After all, supply-siders and climate-change-deniers no longer control the White House and key Congressional committees. Democrats have a popular president to lead them, a large majority in the House of Representatives and 60 votes in the Senate. And this isn’t the old Democratic majority, which was an awkward coalition between Northern liberals and Southern conservatives; this is, by historical standards, a relatively solid progressive bloc.
And let’s be clear: both the president and the party’s Congressional leadership understand the economic and environmental issues perfectly well. So if we can’t get action to head off disaster now, what would it take?
I don't know the answer. And that's why I keep thinking about boiling frogs.
Mind your manners
The Cost of Bad Behaviour
How incivility is damaging your business and what to do about it
By Christine Pearson and Christine Porath
How incivility is damaging your business and what to do about it
By Christine Pearson and Christine Porath
It’s a mean old world. Cynicism and disrespect characterise public debate. Old-fashioned courtesies are seen as just that. The meek do not inherit the earth – they get crushed in the stampede being led by the aggressively ambitious.
Is any of this surprising? People are worried about their jobs and economic livelihoods. In their anxiety, many will look after number one. Is this really such a problem?
The authors of this new book say that it is. Christine Pearson, a professor at the Thunderbird School of Global Management in Arizona, and Christine Porath, assistant professor at the Marshall School of Business in California, have been studying the impact of bad behaviour for more than a decade.
Their conclusion? Incivility, as they label it, is doing untold commercial damage to many businesses. It is not just that life would be nicer if everybody were nicer. Businesses would be more successful, too.
What is incivility? It is, according to this book, “the exchange of seemingly inconsequential, inconsiderate words and deeds that violate conventional norms of workplace conduct”. That casts the net pretty wide. Indeed, a list of examples of incivility printed at the start of the book appears to locate this argument in rather banal territory.
“Acting irritated when someone asks a favour” is one of them. So are “spreading rumours about colleagues”, “failing to return phone calls or respond to e-mails” and “leaving a mess for others to clean up”. If this is incivility, there are a lot of uncivil workplaces out there.
But, bit by bit, the authors make a strong case that cumulative rudeness or unpleasantness, whatever you call it, does damage the bottom line and should not be tolerated.
Why is there more incivility than in the past? Partly it reflects social change, and the more abrasive, less automatically deferential relationships people often have with each other today. But there are economic factors at work here as well.
Less permanent working arrangements undermine stability. “Skilled employees ... build their own career paths and establish their relationships with employers on their own terms. One consequence is that employees have become more accustomed to getting what they want and more uncivil when they don’t,” the authors say. “When workplace relationships become transactional rather than loyalty based, civility can seem like a giant waste of time.”
But how do the authors know that incivility has a financial impact? Because they have actually tried to cost it. Once you start to consider the consequences, the hidden costs become more apparent. The commitment of those on the receiving end of unpleasantness diminishes. They spend more time worrying. They reduce the time they spend at work. They criticise their employer to their friends and family. They try less hard. They look for other jobs. And sometimes they leave, taking their experience and contacts with them.
“Unhappy flight attendants told us that they spent their flight time sitting in the back of the plane reading magazines, and disgruntled ramp workers recalled how they disappeared to sleep in the maintenance shack until the next plane arrived,” Profs Pearson and Porath say. It is obvious how this sort of staff dissatisfaction, brought about by incivility, can undermine customer service and the performance of a business.
Do any companies have a better story to tell? Cisco is the first organisation the authors know of to have introduced a formal training programme based on civility. Managers at Starbucks are encouraged to monitor staff behaviour and report anything that is in conflict with the company’s founding principles.
If this reviewer can enter an uncivil note, the book is a bit short of ideas on what the victims of unpleasantness should do about it. They argue against fighting back in kind. But their other suggestions – including, simply, “leave” – are a little underwhelming. There is also little acknowledgement of the fact that some workplaces, and some businesses, seem to survive and even thrive in an atmosphere of incivility.
But these are relatively minor criticisms. The big point of this book is valid. Rudeness may be slowly killing your business. It is time to stamp it out.
From Financial Times July 29 2009
Thursday, April 23, 2009
Recession Food - takeaway
Britain's biggest pizza delivery chain, Domino's Pizza said first quarter like-for-like sales rose 9.3% as recession hit consumers continued to order in to save money instead of dining out. The chain also has 49 stores in Ireland.Domino's said sales in its 501 established stores were up but fell below the 12.4% growth rate it delivered in the first quarter of 2008 because of this year's late Easter.
'Our underlying trading during the period continued to show good growth. We are pleased with our current performance and trading continues to progress in line with expectations,' CEO Chris Moore said.
Analysts, on average, expect the company to report a pretax profit of £26m for 2009.
The company, which operates from 563 shops and delivers to some 3 million homes annually, said it had opened 10 new stores since the beginning of the year and plans to open a further 50 outlets in 2009.
The company, which operates from 563 shops and delivers to some 3 million homes annually, said it had opened 10 new stores since the beginning of the year and plans to open a further 50 outlets in 2009.
Wednesday, April 1, 2009
Saturday, February 28, 2009
Why Are Large Companies Losing More Jobs Than Small Ones?
If it feels like big companies are doing more than their fair share of letting employees go these days, that's not just because mass layoffs at blue chip firms are the ones that make headlines. New research suggests that in times of recession, large employers disproportionately lose workers, while small companies, as a group, fare better. "It's definitely the case that large firms are downsizing much faster in recessions," says Giuseppe Moscarini, an economist at Yale University who conducted the research with Fabien Postel-Vinay of the University of Bristol.
The two economists looked at companies with fewer than 50 employees, and those with more than 1,000, going back to the 1970s—a period that spanned four business cycles. They found that the bigger firms, after adjusting for their larger share of the workforce, account for a greater slice of job destruction during and after recessions—whether through layoffs or simply not hiring workers they would have otherwise. Immediately coming out of a recession, smaller companies were an unusually important source of new job growth, but once economic expansion really took hold, large companies resumed the role of job-creator, added proportionately more positions late in the business cycle.
Those findings match up with what the Society for Human Resource Management has been observing in its monthly survey of members. In the last three months of 2008, 27% of small firms (fewer than 100 employees) reported decreasing total head count, while 45% of large companies (500 or more workers) did. That trend was due to continue into this year, with 11% of small companies anticipating decreasing staff by the end of March, but 34% of large companies planning such a change.
What might be behind that? Could it be that large companies—more likely publicly traded—are quicker to bow to the pressure of profit-seeking shareholders? Or that big companies are more likely to be in certain industries (such as manufacturing) that get hit harder in recessions.
Moscarini and Postel-Vinay have another theory. After observing the same broad trend within different industries and states, and even overseas in countries like Denmark and Brazil, they postulate that small companies hire disproportionately more early on in an economic recovery because it's easy for these firms to find good workers while unemployment is still high—and easy for workers to come across small companies since there are so many of them. Once the economy is chugging along at full-steam and the labor market is tight, larger companies regain the advantage, since they're likely able to offer more money—and poach from smaller outfits.
But that shift back to large companies as the major force behind jobs generation can take years. The lesson for the short-term seems to be that small companies are a better bet for work. Just be careful of applying the trend to any specific firm. Small companies on average may not be shedding as many jobs as large ones, but smaller companies are by their very nature volatile—looking at aggregate numbers hides all the instances of companies growing insanely quickly or imploding into nothingness. It's still the case that most people work for large companies: 45% at firms with more than 500 workers, compared to 30% at those with fewer than 50. Getting a job at a big company is still, statistically, your best bet. But so is losing it.
http://www.time.com/time/business/article/0,8599,1882300,00.html
The two economists looked at companies with fewer than 50 employees, and those with more than 1,000, going back to the 1970s—a period that spanned four business cycles. They found that the bigger firms, after adjusting for their larger share of the workforce, account for a greater slice of job destruction during and after recessions—whether through layoffs or simply not hiring workers they would have otherwise. Immediately coming out of a recession, smaller companies were an unusually important source of new job growth, but once economic expansion really took hold, large companies resumed the role of job-creator, added proportionately more positions late in the business cycle.
Those findings match up with what the Society for Human Resource Management has been observing in its monthly survey of members. In the last three months of 2008, 27% of small firms (fewer than 100 employees) reported decreasing total head count, while 45% of large companies (500 or more workers) did. That trend was due to continue into this year, with 11% of small companies anticipating decreasing staff by the end of March, but 34% of large companies planning such a change.
What might be behind that? Could it be that large companies—more likely publicly traded—are quicker to bow to the pressure of profit-seeking shareholders? Or that big companies are more likely to be in certain industries (such as manufacturing) that get hit harder in recessions.
Moscarini and Postel-Vinay have another theory. After observing the same broad trend within different industries and states, and even overseas in countries like Denmark and Brazil, they postulate that small companies hire disproportionately more early on in an economic recovery because it's easy for these firms to find good workers while unemployment is still high—and easy for workers to come across small companies since there are so many of them. Once the economy is chugging along at full-steam and the labor market is tight, larger companies regain the advantage, since they're likely able to offer more money—and poach from smaller outfits.
But that shift back to large companies as the major force behind jobs generation can take years. The lesson for the short-term seems to be that small companies are a better bet for work. Just be careful of applying the trend to any specific firm. Small companies on average may not be shedding as many jobs as large ones, but smaller companies are by their very nature volatile—looking at aggregate numbers hides all the instances of companies growing insanely quickly or imploding into nothingness. It's still the case that most people work for large companies: 45% at firms with more than 500 workers, compared to 30% at those with fewer than 50. Getting a job at a big company is still, statistically, your best bet. But so is losing it.
http://www.time.com/time/business/article/0,8599,1882300,00.html
Sunday, February 22, 2009
How to know when the economy is turning up?
Found this article at TIMES. There are nine signs (economy indicators) to tell us when the economy is turning up...
1. Home sales
2. Jobs
3. Car sales
4. Retail sales
5. Interest rates spreads
6. The Pasta Indicator
7. The Cardboard Indicator
8. Sweet-Talking Bill Collectors
9. Movie Madness
Details see article link
http://www.time.com/time/specials/packages/article/0,28804,1876737_1876735_1876702,00.html
1. Home sales
2. Jobs
3. Car sales
4. Retail sales
5. Interest rates spreads
6. The Pasta Indicator
7. The Cardboard Indicator
8. Sweet-Talking Bill Collectors
9. Movie Madness
Details see article link
http://www.time.com/time/specials/packages/article/0,28804,1876737_1876735_1876702,00.html
My least sympathy goes to...
Bank executives testify during the House Financial Services oversight hearing of the Troubled Assets Relief Program (TARP).http://www.time.com/time/magazine/article/0,9171,1880637,00.html
Friday, January 30, 2009
The credit crunch according to Soros
By Chrystia FreelandPublished: January 30 2009 Financial Times
On Friday, August 17 2007, 21 of Wall Street’s most influential investors met for lunch at George Soros’s Southampton estate on the eastern end of Long Island. The first tremors of what would become the global credit crunch had rippled out a week or so earlier, when the French bank BNP Paribas froze withdrawals from three of its funds, and in response, central bankers made a huge injection of liquidity into the money markets in an effort to keep the world’s banks lending to one another.
Although it was a sultry summer Friday, as the group dined on striped bass, fruit salad and cookies, the tone was serious and rather formal. Soros’s guests included Julian Robertson, founder of the Tiger Management hedge fund; Donald Marron, the former chief executive of PaineWebber and now boss of Lightyear Capital; James Chanos, president of Kynikos Associates, a hedge fund that specialised in shorting stocks; and Byron Wien, chief investment strategist at Pequot Capital and the convener of the annual gathering – known to its participants as the Benchmark Lunch.
The discussion focused on a single question: was a recession looming? We all know the answer today, but the consensus that overcast afternoon was different. In a memo written after the lunch, Wien, a longtime friend of Soros’s, wrote: “The conclusion was that we were probably in an economic slowdown and a correction in the market, but we were not about to begin a recession or a bear market.” Only two men dissented. One of those was Soros, who finished the meal convinced that the global financial crisis he had been predicting – prematurely – for years had finally begun.
His conclusion had immediate consequences. Six years earlier, following the departure of Stan Druckenmiller from Quantum Funds, Soros’s hedge fund, Soros converted the operation into a “less aggressively managed vehicle” and renamed it an “endowment fund”, which farmed most of its money out to external managers. Now Soros realised he had to get back into the game. “I did not want to see my accumulated wealth be severely impaired,” he said, during a two-hour conversation this winter in the conference room of his midtown Manhattan offices. “So I came back and set up a macro-account within which I counterbalanced what I thought was the exposure of the firm.”
Soros complained that his years of less active involvement at Quantum meant he didn’t have the kind of “detailed knowledge of particular companies I used to have, so I’m not in a position to pick stocks”. Moreover, “even many of the macro instruments that have been recently invented were unfamiliar to me”. Even so, Quantum achieved a 32 per cent return in 2007, making the then 77-year-old the second-highest paid hedge fund manager in the world, according to Institutional Investor’s Alpha magazine. He ended 2008, a year that saw global destruction of wealth on the most colossal scale since the second world war, with two out of three hedge funds losing money, up almost 10 per cent.
Soros’s main goal was to preserve his fortune. But, as has been the case throughout his career, his timing and financial acumen enhanced his credibility as a thinker, and never more so than in 2008. In May and June, after more than two decades of writing, he hit bestseller lists in the US and in the UK with his ninth book, The New Paradigm for Financial Markets. In October, he received an invitation to testify before Congress about the financial crisis. In November, Barack Obama, whom he had long backed for the presidency, defeated John McCain.
“In the twilight of his life, he’s achieved the recognition he has always wanted,” Wien said. “Everything is going for him. He’s healthy, his candidate won, his business is on a solid footing.”
. . .
Many comparisons have been drawn between 2008 and earlier periods of turmoil, but the historical moment with most personal resonance for Soros is not one of the conventional choices. The parallel he sees is with 1944, when, as a 13-year-old Jewish boy in Nazi-occupied Budapest, he eluded the Holocaust.
Soros credits his beloved father, Tivadar, with teaching him how to respond to “far from equilibrium situations”. Captured by the Russians in the first world war, Tivadar was imprisoned in Siberia. He engineered his own escape and return home through a Russia convulsed by the Bolshevik revolution. That sojourn stripped him of his youthful ambition and left him wanting “nothing more from life than to enjoy it”. Yet on March 19 1944, the day the Germans occupied Hungary, the 50-year-old sprang into action, rescuing his immediate family and many others by arranging false identities for them.
Before the invasion, George was still enough of a child, his father thought, to need a bit of parental coddling. Yet the teenager who spent the war living apart from his parents under a false name found the danger exhilarating. “It was high adventure,” Soros wrote, “like living through Raiders of the Lost Ark.” And as the latest financial crisis gathered momentum, he admitted to the same thrill. “I think the same thing applies again. I feel the same kind of stimulation as I felt then,” he told me.
Part of the stimulation is intellectual. Soros’s experiences in 1944 laid the groundwork for the conceptual framework he would spend the rest of his life elaborating and which, he believes, has found its validation in the events of 2008. His core idea is “reflexivity”, which he defines as a “two-way feedback loop, between the participants’ views and the actual state of affairs. People base their decisions not on the actual situation that confronts them, but on their perception or interpretation of the situation. Their decisions make an impact on the situation and changes in the situation are liable to change their perceptions.”
It is, at its root, a case for frequent re-examination of one’s assumptions about the world and for a readiness to spot and exploit moments of cataclysmic change – those times when our perceptions of events and events themselves are likely to interact most fiercely. It is also at odds with the rational expectations economic school, which has been the prevailing orthodoxy in recent decades. That approach assumed that economic players – from people buying homes to bankers buying subprime mortgages for their portfolios – were rational actors making, in aggregate, the best choices for themselves and that free markets were effective mechanisms for balancing supply and demand, setting prices correctly and tending towards equilibrium.
The rational expectations theory has taken a beating over the past 18 months: its intellectual nadir was probably October 23 2008, when Alan Greenspan, the former Federal Reserve chairman, admitted to Congress that there was “a flaw in the model”. Soros argues that the “market fundamentalism” of Greenspan and his ilk, especially their assumption that “financial markets are self-correcting”, was an important cause of the current crisis. It befuddled policy-makers and was the intellectual basis for the “various synthetic instruments and valuation models” which contributed mightily to the crash.
By contrast, Soros sees the current crisis as a real-life illustration of reflexivity. Markets did not reflect an objective “truth”. Rather, the beliefs of market participants – that house prices would always rise, that an arcane financial instrument based on a subprime mortgage really could merit a triple-A rating – created a new reality. Ultimately, that “super-bubble” was unsustainable, hence the credit crunch of 2007 and the recession and financial crisis of 2008 and beyond.
As an investor and as a thinker, Soros has always thrived in times of upheaval. But he has also remained something of an outsider. He recalls how he “discovered loneliness” when he arrived to study at the London School of Economics in 1947. Later on, as he worked his way up from being a journeyman arbitrage trader in London and then New York, to running one of the world’s most successful hedge funds, Soros remained, in the words of one private equity acquaintance, a bit of “an oddball”, both on Wall Street and in the academic world. He is frequently described as “charming”, yet few see the fit, tanned, twice-divorced billionaire as an emotional confidant. “If I had an idea about India-Pakistan, I would talk to him about it,” Wien said. “If I were having a problem in my marriage, I don’t think I would go and talk to George about it.”
Strobe Talbott, now the president of the Brookings Institute and a former deputy secretary of state, said: “He likes to think of himself as an outsider who can come in from time to time, including to the Oval Office, where I took him on a couple of occasions. But simply hobnobbing with the powerful isn’t important.”
That lack of clubbiness, and the associated trait of iconoclasm, may explain why, for all his worldly success, Soros has had a rather mixed public reputation. His speculative plays, which have often targeted currencies, have earned him the wrath of political leaders around the world. The ambitious, global reach of his richly funded Open Society foundation has prompted some critics to accuse him of suffering from a Messiah complex. He was so effectively demonised by the US right earlier this decade that he kept fairly quiet about his support of Obama, lest the association hurt his candidate. Probably most painfully, his forays into economics and philosophy often have met with considerable scepticism, especially from academia.
The one time and place where he instantly became a highly regarded insider was in the former Soviet Union and its satellites, at the moment the Berlin Wall came down. More completely and more swiftly than any other foreigner, Soros grasped and embraced the systemic transformation that was unfolding, and was rewarded with influence and respect. The question for Soros today is whether, as the west undergoes its own once-in-a-century systemic shock, this arch-outsider will finally find himself in the mainstream in the society which has been his main home for more than half a century.
. . .
Soros’s most famous – or infamous – speculative play as an investor was his bet against sterling in 1992, a wager which won him more than $1bn and earned him the epithet from the British press of “the man who broke the Bank of England”. That bet also turns out to be a perfect illustration of the specific talent which his past and present fund managers agree has been central to his investing success.
Soros’s best-known investment was not, in actual fact, his own idea. According to both Soros and Druckenmiller, who was managing Quantum at the time, it was Druckenmiller who came up with the plan to short the pound. But when Druckenmiller went through his rationale with Soros, in one of their twice- or thrice-daily conversations, Soros told his protégé to be bolder: “I said, ‘Go for the jugular!’.” Druckenmiller duly raised their stake – Quantum and several related funds wagered nearly $10bn, according to interviews Soros gave afterwards – and Soros earned both a fortune and an international reputation.
Druckenmiller, who spent 12 years at Quantum, says that conversation exemplifies Soros’s singular financial gift: “He’s extremely good at using the balance sheet – probably the best ever. He is able to use leverage when he likes it, but he is also able to walk away. He has no emotional attachment to a position. I think that is an unusual characteristic in our industry.”
Chanos agrees: “One thing that I’ve both wrestled with and admired, that [Soros] conquered many years ago, is the ability to go from long to short, the ability to turn on a dime when confronted with the evidence. Emotionally, that is really hard.”
Soros denies any great degree of emotional self-control. “That’s not true, that’s not true,” he told me, shaking his head and smiling. “I am very emotional. I am as moody as the market, so I’m basically a manic depressive personality.” (His market-linked moodiness extends to psychosomatic ailments, especially backaches, which he treats as valuable investment tips.)
Instead, Soros attributes his effectiveness as an investor to his philosophical views about the contingent nature of human knowledge: “I think that my conceptual framework, which basically emphasises the importance of misconceptions, makes me extremely critical of my own decisions … I know that I am bound to be wrong, and therefore am more likely to correct my own mistakes.”
Soros’s radar for revolution is the second key to his investing style. He looks for “game-changing moments, not incremental ones”, according to Sebastian Mallaby, the Washington Post columnist and author who is writing a history of hedge funds. As examples, Mallaby cites Quantum’s shorting of the pound and Soros’s 1985 “Plaza Accord” bet that the dollar would fall against the yen – his two most famous currency trades – as well as a lesser-known 1973 bet that, as a consequence of the Arab-Israeli war, defence stocks would soar. “It’s not that reflexivity tells you what to do, but it tells you to be on the look-out for turn-around situations,” Mallaby said. “It’s an attitude of mind.”
Some Soros-watchers intimate that his vast network of international contacts might be an important source of his market prescience. But it was in the one part of the world where Soros really did have an inside track – the former Soviet bloc – that he made his most disastrous deal. In Russia, as in much of the former Soviet Union, he was intensely engaged with the country’s political and economic transformation. In June 1997, as the Kremlin struggled to pay overdue wages, Soros extended a bridge loan to the Russian government, acting as a one-man International Monetary Fund.
He came to believe in Russia’s commitment to reforms, and to see himself as an insider – two convictions that were his financial undoing. He invested $980m with a consortium of oligarchs who acquired a 25 per cent stake in Svyazinvest, the national telecoms company, deciding to participate because “I thought that this is the transition from robber capitalism to legitimate capitalism”. But instead, the Svyazinvest privatisation turned out to be the moment when the oligarchs redirected their energies from fleecing the state to fleecing one another. Soros, as an outsider, was an obvious casualty. “Never have I been screwed so much since Russia. For them, they get a satisfaction out of doing it.
“It was the biggest mistake of my investment career. I was deceived by my own hope.” In his most recent book he dismisses Russia with a single sentence, further diminished by parenthesis: “(I don’t discuss Russia, because I don’t want to invest there.)”
. . .
On a chilly Monday night in December, Soros took the hour-long drive from Manhattan to the Bruce Museum in Greenwich, Connecticut. He was due to speak at a benefit for the Scholar Rescue Fund, a programme he has partly financed and which, since 2002, has provided safe havens for 266 persecuted academics from 40 countries. After his talk (on the global financial crisis, of course), Soros filed out of the auditorium chatting with Stanley Bergman, a founding partner of the law firm that had sponsored the evening.
“You like the game?” Soros asked his host with a smile.
“Yes,” the white-haired Bergman replied.
Then, in a flash of the competitive spirit that makes Soros an avid skier and player of tennis and chess, Soros asked: “And how old are you?”
“75.”
“I’m 78,” Soros replied. “But what’s the use of good health if it doesn’t buy you money?” The vigorous septuagenarians flashed each other a complicit smile.
According to Wien, Soros likes the game, too: “George loves to be able to show from time to time that he can do it.” But while he loves to play, he is disdainful of a life lived purely to accumulate more chips. His epiphany came in 1981, when he had to scramble to raise money to pay for an investment in bonds. “I thought I would have a heart attack,” he told me. “And then I realised that to die just for the sake of getting rich, I would be a loser.”
For Soros, the solution was philanthropy. “To do something really that would make a significant difference to the world, that would be worth dying for,” he said. “The Foundation enabled me to get out of myself and to somehow be concerned with other people than myself.” Soros’s fortune has given his causes enormous firepower: according to Aryeh Neier, the human rights activist who has been running the Open Society Foundation since 1993, its budget was $550m in 2008 and will increase to $600m this year. By his own calculation, Soros has donated a total of more than $5bn to his causes, primarily directing his giving through his foundation.
“No philanthropist in the second half of the 20th century has done better in deploying resources strategically to change the world,” Larry Summers, the newly appointed head of Barack Obama’s National Economic Council, told me in a conversation early last autumn. Talbott compares Soros’s impact to that of a sovereign nation. In the 1990s, says Talbott, “when I got word that George Soros wanted to talk, I would drop everything and treat him pretty much like a visiting head of state. He was literally putting more money into some of the former colonies of the former Soviet empire than the US government, so that merited treating him as someone with a very high impact.”
Soros’s philanthropic lieutenants report an approach remarkably similar to the investing style observed by his fund managers: he knows how to make big, original bets, and he isn’t afraid to cut his losses when a project isn’t working out. Anders Aslund, an economist who has studied Russia and Ukraine and who has worked with Soros on various projects, believes his philanthropic style “is very much formed by the money markets, which are always changing. He assumes any idea he has now will be wrong in a few years. He is always asking himself, when he has a wonderful project going, ‘When should I stop this project?’.”
Soros’s war chest, and his determination to deploy it beyond the usual blue-chip charities of hospitals, universities, museums or even poverty in Africa, had long made him an occasionally controversial figure outside the US. He was among the western culprits accused by the Kremlin of inciting Ukraine’s 2004 Orange Revolution; his foundation’s offices have been raided in Russia and he was forced to close them down in authoritarian Uzbekistan.
America, it turns out, can also be sensitive to plutocrats using their wealth to address socially contentious subjects. In recent years, his foundation became more active in the US, taking on issues including drug policy. His engagement became more intense during the George W. Bush presidency, when Soros decided that the open society he had worked to foster in repressive regimes abroad was imperilled in his adopted home.
Some admired his chutzpah. The famously independent-minded Paul Volcker, who was appointed to lead the Fed by Jimmy Carter and reappointed by Ronald Reagan, said: “The drug thing is a perfect example that he doesn’t adopt a conventional view. I think drug policy needs a new look and he’s been one of the people who say that.”
Soros’s money has been crucial in enabling him to voice maverick views: “That’s what led me to oppose Bush very publicly, because I was in a position that I could afford to do it,” he said. But he also believes his fortune and the automatic credibility it gives him in America has drawn the fire of conservative pundits such as Fox’s Bill O’Reilly and extremist pamphleteer Lyndon LaRouche. “Given the excessive esteem in which people who make money are held in America, I had to be demonised,” he said.
Their attacks worked. So much so that last year, as the Obama bandwagon gained speed and American financiers, along with much of the rest of the country, clamoured to jump on, his earliest heavyweight Wall Street backer kept a low profile. “Obama seeks to be a unifier,” Soros said. “And I have been a divisive figure because I’ve been demonised by the right. I thought my vocal support for him would not necessarily benefit him.”
. . .
At around 1.00am on November 5 2008, Soros sat on a peach-coloured sofa in his elegant Fifth Avenue apartment, with Queen Noor of Jordan to his left and Steve Clemons, of the New America think-tank, perched on the edge of a chair to his right. Around them milled a crowd of eclectic and jubilant guests, many still teary-eyed from Obama’s Grant Park victory speech, which had been broadcast on four flat-screen television sets in the apartment. Like most Soros soirées, the gathering included more artists and statesmen than Masters of the Universe: Michèle Pierre-Louis, the prime minister of Haiti and former head of her country’s Soros foundation; former World Bank chief James Wolfensohn; Volcker; and twentysomething Kwasi Asare, a hip-hop music promoter, were among the visitors.
Soros drank an espresso and, a few minutes later, a final champagne toast with the last of his guests. Alexander, his 23-year-old son, perched on the arm of his chair and ruffled his father’s hair in farewell. Everyone else took that as a signal to depart, too. Soros was in a mellow, triumphant mood that night – and with good reason. He had spotted Obama early on. His ubiquitous political consigliere, Michael Vachon, still has among his papers a rumpled itinerary from a trip he and Soros took to Chicago in February 2004. In the upper right-hand corner of the page, Vachon had scrawled, “Barack guy”. The Senate candidate had been keen to meet Soros and called the pair repeatedly during their visit. But it was a packed schedule and Soros could only offer a 7.30am breakfast slot at the Four Seasons.
Soros left that meal “very impressed”, a view that was confirmed when he read Obama’s autobiography and deemed him “a real person of substance”. A few months later, on June 7, Soros hosted a packed fundraiser for Obama’s Senate campaign at his upper east side home. Soros and his family contributed roughly $80,000, then the legal maximum.
Obama was impressing a lot of people at that time. But once it became clear that Hillary Clinton would be in the presidential race, nearly all of the established New York Democrats, particularly the older Wall Street crowd, lined up behind their local Senator and her machine, driven by a combination of loyalty and calculation. Dominique Strauss-Kahn, now the head of the IMF and then a possible French presidential candidate, said Soros told him in 2006 he was supporting “this young guy, Barack Obama. He was the first one to tell me this and he was right.” On January 16 2007, the day Obama formed a presidential exploratory committee, Soros contributed to his campaign and officially offered his backing. Before doing so, Soros called Hillary Clinton to let her know. “I look forward to your support in the general election,” she told him.
His decision to back Obama was consistent with his life-long affinity for moments of radical change. “I felt that America had gone so far off base that there was a need for discontinuity,” he said. As in the markets, Soros’s political bet on systemic transformation – his support for Obama, but also his early opposition to the war in Iraq and the “war on terror” – has come good.
For Soros, one happy consequence of now being in tune with the zeitgeist is that he is being taken seriously as a thinker on American public policy issues, particularly to do with the financial crisis. When he, along with the other four highest-earning hedge fund managers, testified before Congress in November, he was treated with respect and even deference – not the prevailing attitude towards billionaire financiers at the moment. Before Soros had even taken his coat off, he was greeted in the corridors by Democratic New York Congresswoman Carolyn Maloney. “Give him a nice office,” she told a staffer who was looking for a place where Soros could wait before his testimony. “He creates a lot of jobs in my district and supports a lot of good people.” After the hearing, a lawmaker and a staffer both approached Soros and asked him to autograph their copies of his book.
. . .
Being listened to on Capitol Hill, and by global policymakers more generally, is important to Soros. But what matters to him most of all – more than money, more than the political and social accomplishments of his foundation – is leaving an enduring intellectual legacy. He describes reflexivity as “my main interest”. Even as Soros met with increasing financial and public success through his fund and his foundation, he was deeply frustrated by his failure to be accepted as a serious thinker. He titled one chapter in his latest book “Autobiography of a Failed Philosopher”, and once delivered a lecture at the University of Vienna called “A Failed Philosopher Tries Again”. As a young man, he wanted to become an academic, but “my grades were not good enough”.
He writes that his first book, The Alchemy of Finance, was “dismissed by many critics as the self-indulgence of a successful speculator”. That reaction still prevails in some circles. Paul Krugman, the Nobel prize-winning economist, devotes half a chapter to Soros in his latest book, characterising him as “perhaps the most famous speculator of all times”. He also raises an eyebrow at Soros’s intellectual “ambitions”, tartly observing that he “would like the world to take his philosophical pronouncements as seriously as it takes his financial acumen”.
Another barrier to academic respectability is Soros’s self-confessed “phobia” of formal mathematics: “I understand mathematical concepts but I’m afraid of mathematical symbols, because you can easily get lost in them.” That fear proved no impediment to success in the quantitative world of finance, but it has hurt Soros’s street cred in economics departments. “Among academics, he suffers from the additional liability of not expressing it in the language of mathematics that has become fashionable,” Joe Stiglitz, another Nobel prize-winning economist, said. But Stiglitz believes his friend’s writing has become more current, partly thanks to the financial crisis: “By those economists interested in ideas, I think his work is taken seriously as an idea that informs their thinking.”
In the view of Larry Summers: “Reflexivity as an idea is right and important and closely related to various streams of existing thought in the social sciences. But no one has deployed a philosophical concept as effectively as George has, first to make money and then to change the world.”
Paul Volcker delivered a similar verdict: “I think he has a valid insight which is not always expressed as clearly by him as I might like.” Overall, he said, Soros is “an imaginative and provocative thinker … he’s got some brilliant ideas about how markets function or dysfunction.”
This is as close to mainstream intellectual acceptance as Soros has come in his two decades of writing and more than five decades since he gave up on academia. It feels like a breakthrough. When I asked him if he would still describe himself as a failed philosopher, he said no: “I think that I am actually succeeding as a philosopher.” For him, that is “obviously” the most important human accomplishment.
“I think it has to do with the human condition,” he said. “The fact that we are mortal and we would like to be immortal. The closest thing you can come to that is by creating something that lives beyond you. Wealth could be one of those things, but evidence shows that it doesn’t survive too many generations. However, if you can have an artistic or philosophical or scientific creation that withstands the test of time, then you have come as close to it as possible.”
Chrystia Freeland is the FT’s US managing editor from George Soros’s e-book update to The New Paradigm for Financial Markets – The credit crisis of 2008 and what it means
Although it was a sultry summer Friday, as the group dined on striped bass, fruit salad and cookies, the tone was serious and rather formal. Soros’s guests included Julian Robertson, founder of the Tiger Management hedge fund; Donald Marron, the former chief executive of PaineWebber and now boss of Lightyear Capital; James Chanos, president of Kynikos Associates, a hedge fund that specialised in shorting stocks; and Byron Wien, chief investment strategist at Pequot Capital and the convener of the annual gathering – known to its participants as the Benchmark Lunch.
The discussion focused on a single question: was a recession looming? We all know the answer today, but the consensus that overcast afternoon was different. In a memo written after the lunch, Wien, a longtime friend of Soros’s, wrote: “The conclusion was that we were probably in an economic slowdown and a correction in the market, but we were not about to begin a recession or a bear market.” Only two men dissented. One of those was Soros, who finished the meal convinced that the global financial crisis he had been predicting – prematurely – for years had finally begun.
His conclusion had immediate consequences. Six years earlier, following the departure of Stan Druckenmiller from Quantum Funds, Soros’s hedge fund, Soros converted the operation into a “less aggressively managed vehicle” and renamed it an “endowment fund”, which farmed most of its money out to external managers. Now Soros realised he had to get back into the game. “I did not want to see my accumulated wealth be severely impaired,” he said, during a two-hour conversation this winter in the conference room of his midtown Manhattan offices. “So I came back and set up a macro-account within which I counterbalanced what I thought was the exposure of the firm.”
Soros complained that his years of less active involvement at Quantum meant he didn’t have the kind of “detailed knowledge of particular companies I used to have, so I’m not in a position to pick stocks”. Moreover, “even many of the macro instruments that have been recently invented were unfamiliar to me”. Even so, Quantum achieved a 32 per cent return in 2007, making the then 77-year-old the second-highest paid hedge fund manager in the world, according to Institutional Investor’s Alpha magazine. He ended 2008, a year that saw global destruction of wealth on the most colossal scale since the second world war, with two out of three hedge funds losing money, up almost 10 per cent.
Soros’s main goal was to preserve his fortune. But, as has been the case throughout his career, his timing and financial acumen enhanced his credibility as a thinker, and never more so than in 2008. In May and June, after more than two decades of writing, he hit bestseller lists in the US and in the UK with his ninth book, The New Paradigm for Financial Markets. In October, he received an invitation to testify before Congress about the financial crisis. In November, Barack Obama, whom he had long backed for the presidency, defeated John McCain.
“In the twilight of his life, he’s achieved the recognition he has always wanted,” Wien said. “Everything is going for him. He’s healthy, his candidate won, his business is on a solid footing.”
. . .
Many comparisons have been drawn between 2008 and earlier periods of turmoil, but the historical moment with most personal resonance for Soros is not one of the conventional choices. The parallel he sees is with 1944, when, as a 13-year-old Jewish boy in Nazi-occupied Budapest, he eluded the Holocaust.
Soros credits his beloved father, Tivadar, with teaching him how to respond to “far from equilibrium situations”. Captured by the Russians in the first world war, Tivadar was imprisoned in Siberia. He engineered his own escape and return home through a Russia convulsed by the Bolshevik revolution. That sojourn stripped him of his youthful ambition and left him wanting “nothing more from life than to enjoy it”. Yet on March 19 1944, the day the Germans occupied Hungary, the 50-year-old sprang into action, rescuing his immediate family and many others by arranging false identities for them.
Before the invasion, George was still enough of a child, his father thought, to need a bit of parental coddling. Yet the teenager who spent the war living apart from his parents under a false name found the danger exhilarating. “It was high adventure,” Soros wrote, “like living through Raiders of the Lost Ark.” And as the latest financial crisis gathered momentum, he admitted to the same thrill. “I think the same thing applies again. I feel the same kind of stimulation as I felt then,” he told me.
Part of the stimulation is intellectual. Soros’s experiences in 1944 laid the groundwork for the conceptual framework he would spend the rest of his life elaborating and which, he believes, has found its validation in the events of 2008. His core idea is “reflexivity”, which he defines as a “two-way feedback loop, between the participants’ views and the actual state of affairs. People base their decisions not on the actual situation that confronts them, but on their perception or interpretation of the situation. Their decisions make an impact on the situation and changes in the situation are liable to change their perceptions.”
It is, at its root, a case for frequent re-examination of one’s assumptions about the world and for a readiness to spot and exploit moments of cataclysmic change – those times when our perceptions of events and events themselves are likely to interact most fiercely. It is also at odds with the rational expectations economic school, which has been the prevailing orthodoxy in recent decades. That approach assumed that economic players – from people buying homes to bankers buying subprime mortgages for their portfolios – were rational actors making, in aggregate, the best choices for themselves and that free markets were effective mechanisms for balancing supply and demand, setting prices correctly and tending towards equilibrium.
The rational expectations theory has taken a beating over the past 18 months: its intellectual nadir was probably October 23 2008, when Alan Greenspan, the former Federal Reserve chairman, admitted to Congress that there was “a flaw in the model”. Soros argues that the “market fundamentalism” of Greenspan and his ilk, especially their assumption that “financial markets are self-correcting”, was an important cause of the current crisis. It befuddled policy-makers and was the intellectual basis for the “various synthetic instruments and valuation models” which contributed mightily to the crash.
By contrast, Soros sees the current crisis as a real-life illustration of reflexivity. Markets did not reflect an objective “truth”. Rather, the beliefs of market participants – that house prices would always rise, that an arcane financial instrument based on a subprime mortgage really could merit a triple-A rating – created a new reality. Ultimately, that “super-bubble” was unsustainable, hence the credit crunch of 2007 and the recession and financial crisis of 2008 and beyond.
As an investor and as a thinker, Soros has always thrived in times of upheaval. But he has also remained something of an outsider. He recalls how he “discovered loneliness” when he arrived to study at the London School of Economics in 1947. Later on, as he worked his way up from being a journeyman arbitrage trader in London and then New York, to running one of the world’s most successful hedge funds, Soros remained, in the words of one private equity acquaintance, a bit of “an oddball”, both on Wall Street and in the academic world. He is frequently described as “charming”, yet few see the fit, tanned, twice-divorced billionaire as an emotional confidant. “If I had an idea about India-Pakistan, I would talk to him about it,” Wien said. “If I were having a problem in my marriage, I don’t think I would go and talk to George about it.”
Strobe Talbott, now the president of the Brookings Institute and a former deputy secretary of state, said: “He likes to think of himself as an outsider who can come in from time to time, including to the Oval Office, where I took him on a couple of occasions. But simply hobnobbing with the powerful isn’t important.”
That lack of clubbiness, and the associated trait of iconoclasm, may explain why, for all his worldly success, Soros has had a rather mixed public reputation. His speculative plays, which have often targeted currencies, have earned him the wrath of political leaders around the world. The ambitious, global reach of his richly funded Open Society foundation has prompted some critics to accuse him of suffering from a Messiah complex. He was so effectively demonised by the US right earlier this decade that he kept fairly quiet about his support of Obama, lest the association hurt his candidate. Probably most painfully, his forays into economics and philosophy often have met with considerable scepticism, especially from academia.
The one time and place where he instantly became a highly regarded insider was in the former Soviet Union and its satellites, at the moment the Berlin Wall came down. More completely and more swiftly than any other foreigner, Soros grasped and embraced the systemic transformation that was unfolding, and was rewarded with influence and respect. The question for Soros today is whether, as the west undergoes its own once-in-a-century systemic shock, this arch-outsider will finally find himself in the mainstream in the society which has been his main home for more than half a century.
. . .
Soros’s most famous – or infamous – speculative play as an investor was his bet against sterling in 1992, a wager which won him more than $1bn and earned him the epithet from the British press of “the man who broke the Bank of England”. That bet also turns out to be a perfect illustration of the specific talent which his past and present fund managers agree has been central to his investing success.
Soros’s best-known investment was not, in actual fact, his own idea. According to both Soros and Druckenmiller, who was managing Quantum at the time, it was Druckenmiller who came up with the plan to short the pound. But when Druckenmiller went through his rationale with Soros, in one of their twice- or thrice-daily conversations, Soros told his protégé to be bolder: “I said, ‘Go for the jugular!’.” Druckenmiller duly raised their stake – Quantum and several related funds wagered nearly $10bn, according to interviews Soros gave afterwards – and Soros earned both a fortune and an international reputation.
Druckenmiller, who spent 12 years at Quantum, says that conversation exemplifies Soros’s singular financial gift: “He’s extremely good at using the balance sheet – probably the best ever. He is able to use leverage when he likes it, but he is also able to walk away. He has no emotional attachment to a position. I think that is an unusual characteristic in our industry.”
Chanos agrees: “One thing that I’ve both wrestled with and admired, that [Soros] conquered many years ago, is the ability to go from long to short, the ability to turn on a dime when confronted with the evidence. Emotionally, that is really hard.”
Soros denies any great degree of emotional self-control. “That’s not true, that’s not true,” he told me, shaking his head and smiling. “I am very emotional. I am as moody as the market, so I’m basically a manic depressive personality.” (His market-linked moodiness extends to psychosomatic ailments, especially backaches, which he treats as valuable investment tips.)
Instead, Soros attributes his effectiveness as an investor to his philosophical views about the contingent nature of human knowledge: “I think that my conceptual framework, which basically emphasises the importance of misconceptions, makes me extremely critical of my own decisions … I know that I am bound to be wrong, and therefore am more likely to correct my own mistakes.”
Soros’s radar for revolution is the second key to his investing style. He looks for “game-changing moments, not incremental ones”, according to Sebastian Mallaby, the Washington Post columnist and author who is writing a history of hedge funds. As examples, Mallaby cites Quantum’s shorting of the pound and Soros’s 1985 “Plaza Accord” bet that the dollar would fall against the yen – his two most famous currency trades – as well as a lesser-known 1973 bet that, as a consequence of the Arab-Israeli war, defence stocks would soar. “It’s not that reflexivity tells you what to do, but it tells you to be on the look-out for turn-around situations,” Mallaby said. “It’s an attitude of mind.”
Some Soros-watchers intimate that his vast network of international contacts might be an important source of his market prescience. But it was in the one part of the world where Soros really did have an inside track – the former Soviet bloc – that he made his most disastrous deal. In Russia, as in much of the former Soviet Union, he was intensely engaged with the country’s political and economic transformation. In June 1997, as the Kremlin struggled to pay overdue wages, Soros extended a bridge loan to the Russian government, acting as a one-man International Monetary Fund.
He came to believe in Russia’s commitment to reforms, and to see himself as an insider – two convictions that were his financial undoing. He invested $980m with a consortium of oligarchs who acquired a 25 per cent stake in Svyazinvest, the national telecoms company, deciding to participate because “I thought that this is the transition from robber capitalism to legitimate capitalism”. But instead, the Svyazinvest privatisation turned out to be the moment when the oligarchs redirected their energies from fleecing the state to fleecing one another. Soros, as an outsider, was an obvious casualty. “Never have I been screwed so much since Russia. For them, they get a satisfaction out of doing it.
“It was the biggest mistake of my investment career. I was deceived by my own hope.” In his most recent book he dismisses Russia with a single sentence, further diminished by parenthesis: “(I don’t discuss Russia, because I don’t want to invest there.)”
. . .
On a chilly Monday night in December, Soros took the hour-long drive from Manhattan to the Bruce Museum in Greenwich, Connecticut. He was due to speak at a benefit for the Scholar Rescue Fund, a programme he has partly financed and which, since 2002, has provided safe havens for 266 persecuted academics from 40 countries. After his talk (on the global financial crisis, of course), Soros filed out of the auditorium chatting with Stanley Bergman, a founding partner of the law firm that had sponsored the evening.
“You like the game?” Soros asked his host with a smile.
“Yes,” the white-haired Bergman replied.
Then, in a flash of the competitive spirit that makes Soros an avid skier and player of tennis and chess, Soros asked: “And how old are you?”
“75.”
“I’m 78,” Soros replied. “But what’s the use of good health if it doesn’t buy you money?” The vigorous septuagenarians flashed each other a complicit smile.
According to Wien, Soros likes the game, too: “George loves to be able to show from time to time that he can do it.” But while he loves to play, he is disdainful of a life lived purely to accumulate more chips. His epiphany came in 1981, when he had to scramble to raise money to pay for an investment in bonds. “I thought I would have a heart attack,” he told me. “And then I realised that to die just for the sake of getting rich, I would be a loser.”
For Soros, the solution was philanthropy. “To do something really that would make a significant difference to the world, that would be worth dying for,” he said. “The Foundation enabled me to get out of myself and to somehow be concerned with other people than myself.” Soros’s fortune has given his causes enormous firepower: according to Aryeh Neier, the human rights activist who has been running the Open Society Foundation since 1993, its budget was $550m in 2008 and will increase to $600m this year. By his own calculation, Soros has donated a total of more than $5bn to his causes, primarily directing his giving through his foundation.
“No philanthropist in the second half of the 20th century has done better in deploying resources strategically to change the world,” Larry Summers, the newly appointed head of Barack Obama’s National Economic Council, told me in a conversation early last autumn. Talbott compares Soros’s impact to that of a sovereign nation. In the 1990s, says Talbott, “when I got word that George Soros wanted to talk, I would drop everything and treat him pretty much like a visiting head of state. He was literally putting more money into some of the former colonies of the former Soviet empire than the US government, so that merited treating him as someone with a very high impact.”
Soros’s philanthropic lieutenants report an approach remarkably similar to the investing style observed by his fund managers: he knows how to make big, original bets, and he isn’t afraid to cut his losses when a project isn’t working out. Anders Aslund, an economist who has studied Russia and Ukraine and who has worked with Soros on various projects, believes his philanthropic style “is very much formed by the money markets, which are always changing. He assumes any idea he has now will be wrong in a few years. He is always asking himself, when he has a wonderful project going, ‘When should I stop this project?’.”
Soros’s war chest, and his determination to deploy it beyond the usual blue-chip charities of hospitals, universities, museums or even poverty in Africa, had long made him an occasionally controversial figure outside the US. He was among the western culprits accused by the Kremlin of inciting Ukraine’s 2004 Orange Revolution; his foundation’s offices have been raided in Russia and he was forced to close them down in authoritarian Uzbekistan.
America, it turns out, can also be sensitive to plutocrats using their wealth to address socially contentious subjects. In recent years, his foundation became more active in the US, taking on issues including drug policy. His engagement became more intense during the George W. Bush presidency, when Soros decided that the open society he had worked to foster in repressive regimes abroad was imperilled in his adopted home.
Some admired his chutzpah. The famously independent-minded Paul Volcker, who was appointed to lead the Fed by Jimmy Carter and reappointed by Ronald Reagan, said: “The drug thing is a perfect example that he doesn’t adopt a conventional view. I think drug policy needs a new look and he’s been one of the people who say that.”
Soros’s money has been crucial in enabling him to voice maverick views: “That’s what led me to oppose Bush very publicly, because I was in a position that I could afford to do it,” he said. But he also believes his fortune and the automatic credibility it gives him in America has drawn the fire of conservative pundits such as Fox’s Bill O’Reilly and extremist pamphleteer Lyndon LaRouche. “Given the excessive esteem in which people who make money are held in America, I had to be demonised,” he said.
Their attacks worked. So much so that last year, as the Obama bandwagon gained speed and American financiers, along with much of the rest of the country, clamoured to jump on, his earliest heavyweight Wall Street backer kept a low profile. “Obama seeks to be a unifier,” Soros said. “And I have been a divisive figure because I’ve been demonised by the right. I thought my vocal support for him would not necessarily benefit him.”
. . .
At around 1.00am on November 5 2008, Soros sat on a peach-coloured sofa in his elegant Fifth Avenue apartment, with Queen Noor of Jordan to his left and Steve Clemons, of the New America think-tank, perched on the edge of a chair to his right. Around them milled a crowd of eclectic and jubilant guests, many still teary-eyed from Obama’s Grant Park victory speech, which had been broadcast on four flat-screen television sets in the apartment. Like most Soros soirées, the gathering included more artists and statesmen than Masters of the Universe: Michèle Pierre-Louis, the prime minister of Haiti and former head of her country’s Soros foundation; former World Bank chief James Wolfensohn; Volcker; and twentysomething Kwasi Asare, a hip-hop music promoter, were among the visitors.
Soros drank an espresso and, a few minutes later, a final champagne toast with the last of his guests. Alexander, his 23-year-old son, perched on the arm of his chair and ruffled his father’s hair in farewell. Everyone else took that as a signal to depart, too. Soros was in a mellow, triumphant mood that night – and with good reason. He had spotted Obama early on. His ubiquitous political consigliere, Michael Vachon, still has among his papers a rumpled itinerary from a trip he and Soros took to Chicago in February 2004. In the upper right-hand corner of the page, Vachon had scrawled, “Barack guy”. The Senate candidate had been keen to meet Soros and called the pair repeatedly during their visit. But it was a packed schedule and Soros could only offer a 7.30am breakfast slot at the Four Seasons.
Soros left that meal “very impressed”, a view that was confirmed when he read Obama’s autobiography and deemed him “a real person of substance”. A few months later, on June 7, Soros hosted a packed fundraiser for Obama’s Senate campaign at his upper east side home. Soros and his family contributed roughly $80,000, then the legal maximum.
Obama was impressing a lot of people at that time. But once it became clear that Hillary Clinton would be in the presidential race, nearly all of the established New York Democrats, particularly the older Wall Street crowd, lined up behind their local Senator and her machine, driven by a combination of loyalty and calculation. Dominique Strauss-Kahn, now the head of the IMF and then a possible French presidential candidate, said Soros told him in 2006 he was supporting “this young guy, Barack Obama. He was the first one to tell me this and he was right.” On January 16 2007, the day Obama formed a presidential exploratory committee, Soros contributed to his campaign and officially offered his backing. Before doing so, Soros called Hillary Clinton to let her know. “I look forward to your support in the general election,” she told him.
His decision to back Obama was consistent with his life-long affinity for moments of radical change. “I felt that America had gone so far off base that there was a need for discontinuity,” he said. As in the markets, Soros’s political bet on systemic transformation – his support for Obama, but also his early opposition to the war in Iraq and the “war on terror” – has come good.
For Soros, one happy consequence of now being in tune with the zeitgeist is that he is being taken seriously as a thinker on American public policy issues, particularly to do with the financial crisis. When he, along with the other four highest-earning hedge fund managers, testified before Congress in November, he was treated with respect and even deference – not the prevailing attitude towards billionaire financiers at the moment. Before Soros had even taken his coat off, he was greeted in the corridors by Democratic New York Congresswoman Carolyn Maloney. “Give him a nice office,” she told a staffer who was looking for a place where Soros could wait before his testimony. “He creates a lot of jobs in my district and supports a lot of good people.” After the hearing, a lawmaker and a staffer both approached Soros and asked him to autograph their copies of his book.
. . .
Being listened to on Capitol Hill, and by global policymakers more generally, is important to Soros. But what matters to him most of all – more than money, more than the political and social accomplishments of his foundation – is leaving an enduring intellectual legacy. He describes reflexivity as “my main interest”. Even as Soros met with increasing financial and public success through his fund and his foundation, he was deeply frustrated by his failure to be accepted as a serious thinker. He titled one chapter in his latest book “Autobiography of a Failed Philosopher”, and once delivered a lecture at the University of Vienna called “A Failed Philosopher Tries Again”. As a young man, he wanted to become an academic, but “my grades were not good enough”.
He writes that his first book, The Alchemy of Finance, was “dismissed by many critics as the self-indulgence of a successful speculator”. That reaction still prevails in some circles. Paul Krugman, the Nobel prize-winning economist, devotes half a chapter to Soros in his latest book, characterising him as “perhaps the most famous speculator of all times”. He also raises an eyebrow at Soros’s intellectual “ambitions”, tartly observing that he “would like the world to take his philosophical pronouncements as seriously as it takes his financial acumen”.
Another barrier to academic respectability is Soros’s self-confessed “phobia” of formal mathematics: “I understand mathematical concepts but I’m afraid of mathematical symbols, because you can easily get lost in them.” That fear proved no impediment to success in the quantitative world of finance, but it has hurt Soros’s street cred in economics departments. “Among academics, he suffers from the additional liability of not expressing it in the language of mathematics that has become fashionable,” Joe Stiglitz, another Nobel prize-winning economist, said. But Stiglitz believes his friend’s writing has become more current, partly thanks to the financial crisis: “By those economists interested in ideas, I think his work is taken seriously as an idea that informs their thinking.”
In the view of Larry Summers: “Reflexivity as an idea is right and important and closely related to various streams of existing thought in the social sciences. But no one has deployed a philosophical concept as effectively as George has, first to make money and then to change the world.”
Paul Volcker delivered a similar verdict: “I think he has a valid insight which is not always expressed as clearly by him as I might like.” Overall, he said, Soros is “an imaginative and provocative thinker … he’s got some brilliant ideas about how markets function or dysfunction.”
This is as close to mainstream intellectual acceptance as Soros has come in his two decades of writing and more than five decades since he gave up on academia. It feels like a breakthrough. When I asked him if he would still describe himself as a failed philosopher, he said no: “I think that I am actually succeeding as a philosopher.” For him, that is “obviously” the most important human accomplishment.
“I think it has to do with the human condition,” he said. “The fact that we are mortal and we would like to be immortal. The closest thing you can come to that is by creating something that lives beyond you. Wealth could be one of those things, but evidence shows that it doesn’t survive too many generations. However, if you can have an artistic or philosophical or scientific creation that withstands the test of time, then you have come as close to it as possible.”
Chrystia Freeland is the FT’s US managing editor from George Soros’s e-book update to The New Paradigm for Financial Markets – The credit crisis of 2008 and what it means
Sunday, January 11, 2009
Status Check for 2009: Is Your Job Safe?
I read this from FT.com Tom Peters blog Sunday Edition 11 Jan 09
dispatches from the new world of work
Status Check for 2009: Is Your Job Safe?
As we approach the new year, there is a big uncertainty looming everywhere. For a large majority of people, the uncertainty is about their job. Is it safe? In other words, will they have a job or not?
I think the real question should be "Is someone really employable in the new economy or not?" but that's a topic for another discussion.
This is a quick exercise to do a status check on the "safety" of your job. The questionnaire is in no way complete. The focus is to make you think beyond the "job responsibilities" outlined in your offer letter.
Note: Not all questions are relevant for people at all levels.
1. Is your job core to what the company stands for?
When there is a crisis, an organization tends to drop non-core and adjacent activities. The approach will be to play to their strengths to survive and thrive. If your job does not contribute to the strengths of the organization, you have to quickly re-invent yourself so that it does align with the company core purpose. If what you bring aligns with the strengths of the company, the follow-up question is "how much capacity are you adding to the company?"
2. What will the company/department lose by eliminating your job?
Please note that the question is not, "What will the company gain by keeping you in that job?"
During a crisis, avoiding threats (rather than going after opportunities) will take center stage. If there is no significant threat, there is no big safety net for the job. Even when you are in a strategic R&D project, look at what this R&D project will mean to the company. If you are not happy with the answer, it's time to re-think, re-invent, and re-act.
3. Who is borrowing the brand power?
Is your department proud of you because of your personal brand? OR
Are you proud of the brand of your department?
The answer should ideally be: Both
4. What is the assessment of your "value" in the eyes of the stakeholders?
If the answer is vague, such as "A lot" or "Significant," you have to re-visit the topic. Can you quantify your value in some measure, and is that value justifiable?
5. Is your job "offshorable?"
If your job can be moved offshore, then chances are it will be—in some form or fashion. In other words, you have to question yourself about whether you are doing commodity work. If you are doing work that a machine can do or someone in another country can do for a smaller fee, the chances of those moves may be very high. The thing is that you may not have control of your job if you are engaged in commodity work.
6. Do you care as if it's your own?
If you don't care about your product as if it's your own, you can't expect the company to do that (about you) either. When you care as if it's your own, the passion is clear. Passionate people win—all the time. In troubled times, an organization needs passionate people to keep the place alive. And, the thing about passion and caring is that you can't fake them.
7. Can you handle office politics well? (N.B. This is toughest point for me)
OK, you may not like office politics, but if you are working in an office, you better learn to deal with it. All else being equal, someone who knows how to deal with office politics will always come out a winner.
8. What is the cost of maintaining you?
There is the cost that you can measure (money, overhead, etc.) and there is the cost that is "real"—which includes, but is not limited to, the emotional cost of dealing with you everyday. For example, if you like to whine a lot, you increase your cost of maintenance. In troubled times, if your real cost to the company is significantly higher than the measurable costs, you are in trouble.
9. Are you likeable?
Unless you work for NASA, you don't have to be a rocket scientist. In tough times (and probably all times) a combination of 7 out of 10 on skills and 9 out of 10 on attitude is preferred to the other way around. If you are not likeable, it will hurt you in ways you would never imagine. People don't always make rational decisions, but they will definitely rationalize it after they have made the decision. So, people may not dismiss you because you are not likeable, but they will find a way to justify why they dismiss you beyond the likeability factor.
[Thanks to Cool Friend Raj Setty for providing us all with these questions for self-examination. Raj works with entrepreneurs to bring ideas to life and spread their adoption. You can learn more about him at http://www.rajeshsetty.com/ or follow him on his blog, Life Beyond Code, or on Twitter @UpbeatNow.]
dispatches from the new world of work
Status Check for 2009: Is Your Job Safe?
As we approach the new year, there is a big uncertainty looming everywhere. For a large majority of people, the uncertainty is about their job. Is it safe? In other words, will they have a job or not?
I think the real question should be "Is someone really employable in the new economy or not?" but that's a topic for another discussion.
This is a quick exercise to do a status check on the "safety" of your job. The questionnaire is in no way complete. The focus is to make you think beyond the "job responsibilities" outlined in your offer letter.
Note: Not all questions are relevant for people at all levels.
1. Is your job core to what the company stands for?
When there is a crisis, an organization tends to drop non-core and adjacent activities. The approach will be to play to their strengths to survive and thrive. If your job does not contribute to the strengths of the organization, you have to quickly re-invent yourself so that it does align with the company core purpose. If what you bring aligns with the strengths of the company, the follow-up question is "how much capacity are you adding to the company?"
2. What will the company/department lose by eliminating your job?
Please note that the question is not, "What will the company gain by keeping you in that job?"
During a crisis, avoiding threats (rather than going after opportunities) will take center stage. If there is no significant threat, there is no big safety net for the job. Even when you are in a strategic R&D project, look at what this R&D project will mean to the company. If you are not happy with the answer, it's time to re-think, re-invent, and re-act.
3. Who is borrowing the brand power?
Is your department proud of you because of your personal brand? OR
Are you proud of the brand of your department?
The answer should ideally be: Both
4. What is the assessment of your "value" in the eyes of the stakeholders?
If the answer is vague, such as "A lot" or "Significant," you have to re-visit the topic. Can you quantify your value in some measure, and is that value justifiable?
5. Is your job "offshorable?"
If your job can be moved offshore, then chances are it will be—in some form or fashion. In other words, you have to question yourself about whether you are doing commodity work. If you are doing work that a machine can do or someone in another country can do for a smaller fee, the chances of those moves may be very high. The thing is that you may not have control of your job if you are engaged in commodity work.
6. Do you care as if it's your own?
If you don't care about your product as if it's your own, you can't expect the company to do that (about you) either. When you care as if it's your own, the passion is clear. Passionate people win—all the time. In troubled times, an organization needs passionate people to keep the place alive. And, the thing about passion and caring is that you can't fake them.
7. Can you handle office politics well? (N.B. This is toughest point for me)
OK, you may not like office politics, but if you are working in an office, you better learn to deal with it. All else being equal, someone who knows how to deal with office politics will always come out a winner.
8. What is the cost of maintaining you?
There is the cost that you can measure (money, overhead, etc.) and there is the cost that is "real"—which includes, but is not limited to, the emotional cost of dealing with you everyday. For example, if you like to whine a lot, you increase your cost of maintenance. In troubled times, if your real cost to the company is significantly higher than the measurable costs, you are in trouble.
9. Are you likeable?
Unless you work for NASA, you don't have to be a rocket scientist. In tough times (and probably all times) a combination of 7 out of 10 on skills and 9 out of 10 on attitude is preferred to the other way around. If you are not likeable, it will hurt you in ways you would never imagine. People don't always make rational decisions, but they will definitely rationalize it after they have made the decision. So, people may not dismiss you because you are not likeable, but they will find a way to justify why they dismiss you beyond the likeability factor.
[Thanks to Cool Friend Raj Setty for providing us all with these questions for self-examination. Raj works with entrepreneurs to bring ideas to life and spread their adoption. You can learn more about him at http://www.rajeshsetty.com/ or follow him on his blog, Life Beyond Code, or on Twitter @UpbeatNow.]
Monday, January 5, 2009
Optimism is the cure for the downturn
- Viewpoint By Sir David Tang EntrepreneurPessimism is the most serious cause for the global economic tsunami.
There is an ocean of people who are now feeling so depressed that not only have they become resigned to the fact that they are in deep trouble, but they have told everybody else that they are also in deep trouble.
Pessimism has an uncanny knack of being self-fulfilling.
No wonder almost every single quoted share in the world has gone down significantly, mostly by half, if not much more.
Even the most solid companies, such as HSBC, which has no real exposure; or BP, which has significant oil reserves; or a company like Dell, which has an enormous amount of cash - the shares of these companies have traded down considerably.
That is the barometer of our general pessimism.
Big collapses
The present condition has also been a wake-up call for those who have lost sight of understanding the businesses in which they invest.
Before now, there were far too many people out there trying to profit from the shuffling of papers and commodities and derivatives and options and hedging: really sophisticated instruments - but all too clever by half.
It just goes to show that having all these smart theories and ingenious ideas is no substitute for a solid business sense based on the fundamentals of supply and demand, with particular reference to the efficiency of the workforce; all those basic components that people such as Warren Buffett emphasise and are often ridiculed for.
Let this depressing climate also be a reminder that if you grow big, you can collapse big. The higher you climb the harder you fall.
Think small
In this mania for globalisation, it might not necessarily be good to be absolutely massive.
Just look at some of the banks and car manufacturers - they are huge, and they are in huge trouble.
What we all need to do is to sit down and calm down and go back to basics.
And most important of all, shed our sense of pessimism.
It is only with a sense of optimism, preferably accompanied by a sense of energy and laughter, that we will be able to pick ourselves up from a broken Humpty Dumpty.
In particular, governments must immediately instigate infrastructure projects to increase employment, and they must force banks, particularly those that they have rescued, to lend to small businesses.
Without a general sense of gainful employment, from which the ordinary people at large can grow optimistic, we run a huge danger of increasing unemployment.
But we cannot be complacent.
We must stem growing unemployment and promote maximum employment.
Jobs measure feelings more accurately than the Richter scale measures earthquakes.
There is an ocean of people who are now feeling so depressed that not only have they become resigned to the fact that they are in deep trouble, but they have told everybody else that they are also in deep trouble.
Pessimism has an uncanny knack of being self-fulfilling.
No wonder almost every single quoted share in the world has gone down significantly, mostly by half, if not much more.
Even the most solid companies, such as HSBC, which has no real exposure; or BP, which has significant oil reserves; or a company like Dell, which has an enormous amount of cash - the shares of these companies have traded down considerably.
That is the barometer of our general pessimism.
Big collapses
The present condition has also been a wake-up call for those who have lost sight of understanding the businesses in which they invest.
Before now, there were far too many people out there trying to profit from the shuffling of papers and commodities and derivatives and options and hedging: really sophisticated instruments - but all too clever by half.
It just goes to show that having all these smart theories and ingenious ideas is no substitute for a solid business sense based on the fundamentals of supply and demand, with particular reference to the efficiency of the workforce; all those basic components that people such as Warren Buffett emphasise and are often ridiculed for.
Let this depressing climate also be a reminder that if you grow big, you can collapse big. The higher you climb the harder you fall.
Think small
In this mania for globalisation, it might not necessarily be good to be absolutely massive.
Just look at some of the banks and car manufacturers - they are huge, and they are in huge trouble.
What we all need to do is to sit down and calm down and go back to basics.
And most important of all, shed our sense of pessimism.
It is only with a sense of optimism, preferably accompanied by a sense of energy and laughter, that we will be able to pick ourselves up from a broken Humpty Dumpty.
In particular, governments must immediately instigate infrastructure projects to increase employment, and they must force banks, particularly those that they have rescued, to lend to small businesses.
Without a general sense of gainful employment, from which the ordinary people at large can grow optimistic, we run a huge danger of increasing unemployment.
But we cannot be complacent.
We must stem growing unemployment and promote maximum employment.
Jobs measure feelings more accurately than the Richter scale measures earthquakes.
Sir David Tang is the Hong Kong-born, English-educated entrepreneur who founded the clothing chain Shanghai Tang
Story from BBC NEWS:http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7785564.stmPublished: 2008/12/31 16:04:53 GMT
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