Is Mr. Paulson too late?

 

            Yesterday first time I noticed US treasury secretary Mr. Paulson started talking about helping consumers and trouble homeowners. Do former CEO of Golman Sachs and supporter of so-called ‘free market’ economy know consumer is important element of economy? Consumer is building block of this economy. This is the consumer who promptly wakes up in the morning, works hard and feeds family. This consumer if ‘atom’ of this economy; this economy is built on millions of atoms ‘consumers’. Not all of these consumers have investment in stock market nor majority of them have 401K accounts. But this ‘consumer’ was ignored, focus was given to stock market and efforts were seen to secure foreign investment in stock market.

 

            Today ‘consumer’ is dead. Money stops flowing in ecosystem of this economy. You do not have to wait for report to come showing banks tighten lending policies, banks stopped lending to consumers… You need to be in mall, in wal-mart, in offices, in restaurants, at gas stations to see how consumer is suffering what is its pain. You need to pass by through towns to see forecloses happening in communities, you need to feel what you feel when you vacant your home with heavy heart …

 

            Too late to rescues … regulators were waited too long to watch economy get recovered, expecting consumer to suffer and stand again to keep life going. Yes, this time consumer will stand up again but with different vision and mission. New born consumer will stop using credit cards and unnecessary spending, will refuse to borrow money from financial institutes, will not invest in stock market to pay for huge CEOs compensation and fund manager’s expensive mortgages, will try to increase savings and refuse to gamble in stock market. Will be happy to get small amount of 401K returns with peace of mind.

 

            There is enough of free market and capitalism. Henceforth consumes will drive market not bankers and traders.

 

Microsoft Yahoo merger good for tech sector?

 

 

            There is lot of buzz around Microsoft and Yahoo merger. Microsoft has clearly denied possibility of taking over Yahoo Inc. Any one who is using Microsoft products and watching Microsoft’s business will agree that Yahoo will loose its characteristics if Microsoft takes its business over.

           

            There is couple of things to consider about Microsoft. First of all Microsoft is still struggling with its online search engine msn.com. Microsoft seriously lacks expertise in search area.  Second point to consider, possibility of success merger and keeping Yahoo in business after merger. Looking at past, Microsoft failed to keep hotmail brand name in emai business and could not give head to head competition with gmail. Chances that Microsoft-Yahoo merger a success is close to impossible. Most software companies like Microsoft lack proven management skills to make such acquisition success. Next, Microsoft- Yahoo merger, in fact will benefit Goggle as possibility of retaining Yahoo employees is going to be big challenge. Which in turn will affect Microsoft negatively.

 

            Therefore, there are serious practical reasons why Microsoft denying Yahoo acquit ion. It is not only matter of existence of Yahoo but also posses serious concerns to Microsoft existence.

 

 

 

 

 

 

 

 

 

City of Toledo and $700 billion bailout plan

 

This is story about the city of Toledo in state of Ohio. In around 1980s, city of Toledo started offering incentives and concessions to attract new businesses as well as to existing business to stay around area. These incentives were ranging from funding these businesses to exceptional tax breaks. In couple of years city has attracted many known industries such as General Motors and Chrysler. When state of Ohio authorized an Enterprise Zone program to create industrial base, city of Toledo was ahead to take advantage. The main goal was to create more new jobs and prosper.

However, in next couple of decades, study found out that new jobs were not created as expected, new jobs were moved to different locations, jobs were outsourced and companies failed to keep their promises. Companies took advantage of tax breaks but failed to create new employment. The government spent over $280 million dollars to bring and keep new Chrysler plant in Toledo; in reality it caused more job losses than creating new jobs.

Study found out that there was no monitoring mechanism setup to monitor how these companies were using incentives and whether they are being appropriately utilized. Companies were not accounted for their promises. Tax breaks were gone to hundreds of companies that closed or reduced their facilities. There was no accounting for how public money was spent.

 

Today we have similar situation. In today’s economical crisis, we as people of this democratic country represent the city of Toledo. We have public bail out money $700 billion dollars approved by congress on behave of tax payers. Auto makers and various other well know companies of this so called ‘Capitalist’ system are coming forward to ask for help to keep their businesses running and hence to keep jobs for thousands of workers. Toledo (here we people) has second and probably last chance. If we want to help these industries to keep our jobs and keeps economy flowing, we have to get answer for some basics questions.  Are we going to have monitoring mechanism this time? Who is going to monitor this mechanism? Who is going to review their business plan (may be industry experts)? What if they do not use people’s money as promised, what will be penalty? Who is going to take personally responsibility? …

 

Toledo has money to fund but still fighting for survival … dark side of ‘Capitalism’.

 

 

Leadership and fellow-ship

            All-important social accomplishment requires complex group effort and, therefore, leadership and follower ship. Leader-follower relationship is two way, leader as well as followers have great capacity to influence the relationship. Just as a leader is accountable for the actions and performance of followers, so followers are accountable for their leaders. Followers support leaders when necessary and help them correct their actions, just as leaders must support followers and help them to correct their actions. This is partnership and both sides must be proactive. Organizations are successful or not partly on the basis of how well their leaders lead, but also in great part on the basis of how well their followers follow. Courageous followers help leaders stay on track and manage their decision-making processes in the right direction. Responsible and effective followers have a critical role in maintaining the desired partnering dynamics. In his book (The Courageous Follower, 2003) Ira Chaleff points out that the old paradigm of the leader/follower is based on power. The leader has traditionally had the power to reward and promote, this has led to a relationship in which the follower avoids jeopardizing their chances of obtaining these rewards. Hence, the follower tends to do what the leader wants and, just as important, not offend or create a negative impression of them. A relationship based on this kind of power does not serve the organization, it shuts down the open flow of communication and candor a leader needs to order to optimize their effectiveness. Chaleff sees a very different kind of relationship between leader and follower.  He suggests a relationship where the leader and follower have equal power but different roles that orbit around support and fulfillment of the organizations’ purpose.   When both the leader and follower are focused on the common purpose a new relationship between them arises. This new relationship is candid, respectful, supportive and challenging.  It is a relationship that honors open communication, honesty and trust from both parties. According to Chaleff, there are three things we need to understand in order to fully assume responsibility as followers: understand out power, appreciate the value of the leader and work towards minimizing the pitfalls of power.

When we think about leadership, we tend to focus almost entirely on the leader. Yet without followers, there is no leader. Leadership is participatory: leaders and followers exist in a mutually beneficial relationship where each adds to the effectiveness of the other. Key to this process is listening, because leadership is as much about listening as it is about talking, or perhaps more so. From the beginning, a leader must be informed by the followers’ values, beliefs, and aspirations, the followers’ identity. The commitment gap people frequently experience, the difference between what the leader desires and what the followers actually do, can often be traced back to not aligning the elements of leaders’ and followers’ identities—who they think they are—to find common ground on which to function and grow. It is the quality of the relationship of leaders and followers, all the way up and down the organization chart, that makes or breaks organizations.

Leadership is one of the most widely talked about subject and is most elusive and puzzling. Leadership is a complex phenomenon involving the leader, the followers, and the situation. In general there are individuals who exhibits leadership qualities and there are people who do not.  People who are effective in the leader role have the vision to set goals and strategies, the interpersonal skills to achieve consensus, the verbal capacity to communicate enthusiasm to large and diverse groups of individuals, the organization talent to coordinate disparate efforts. Some people posses inbuilt personality traits like self-determinant, honest, strong desire to achieve goal, devotion and sacrifice. However, there are exceptions, some theorist believes each individual has built-in qualities to make difference and hence influence people around them. Their leadership qualities can be seen by their actions, reactions on situations they manage and support from their followers. However, some people do exhibits their leadership qualities under some circumstances. For example, Mahatma Gandhi was an ordinary person, he faced same realities youth of his age faced at that time, but he evolved as a charismatic leader who stood against British rule to give independence to his country. His thinking, initiatives, selfishness, care about people and honest actions made him a leader.

There are personalities, which are of ‘leader type’ (effective leaders), and there is not ‘leader type’ (poor leaders). Effective leaders are good communicators, especially in providing vision and purposes that are consistent with follower goals, values, dreams and myths. Effective leaders are socio-centric, physically strong, humanistic, approachable, visible, patient, decisive, and open-minded. They maintain high standards of dignity and integrity. Good leaders create a sense of trustworthiness as perceived by their followers.  They do this by being consistent, honest, and dependable. They are good role models, coaches, mentors and teachers. Effective leaders establish a strong participative management culture. They are technically competent but possess important interpersonal skills such as assertion, empathy and negotiation ability. Good leaders show “value focused leadership.” They have a set of purposes and ethics that guide their behavior and decision-making. Control theory suggests that effective leadership is goal-directed with synergy created by the alignment of group members on these goals and priorities. “Value focused leadership” requires that leaders help create “value” for both workers and customers.

Non-effective leaders fail to give clear direction, mission and purpose to the followers or organization. They fail to create cohesion and commitment by neglecting to give support and encouragement to followers. They neglect to energize followers and obtain their dedication and loyalty by providing consistent reward and recognition.  They fail to listen to followers and empower them to take a full, participative role in all-important decisions. When followers do offer suggestions these suggestions are ignored.  Poor leaders tend to tolerate incompetence, a fact that de-motivates followers who are trying hard to get work done.  Poor leaders fail to develop and support a “culture of quality.” Poorly led organizations have a scarcity of clear, consistent goals and when they do have goals they do not have benchmarks or outcomes measures with which to evaluate them. In poorly led organizations there is a paucity of effective communication and true consultation in the organization. Leaders usually find someone to take the blame for a negative event. They spend a great deal of time protecting themselves and their positions and neglect the overall welfare of the organization. The poorly led organization shows shoddy ethics. In the poorly led organization there is a great resistance to change, innovation, and new ways to integrate the various parts of the organization.