One of the chapters was written around the inherent strengths of people.  He argues that management often tries to improve on a persons weaknesses instead of improve on their strengths and forgiving their weaknesses.  I have always approached my personality in this way because I’ve wanted to become a well rounded individual. 

For instance, I am not outgoing by any means and I’ve put a lot of effort into becoming more this way.  I have succeeded in becoming proficient and confident in 1v1 situations with people, but still fail miserably in group settings.  This is a weakness I’ve been very cognizant of and have read books, and practiced speaking techniques in order to increase my amiability around people.

What Drucker points out though, is the diminishing returns effect.  In many cases in the world, there is a dimished return compared to the effort put in to accomplish the return.  For instance, in weightlifting, when first starting out the trainee will accelerate very quickly through the weights lifted because the natural adaptation of the body to the exercise at first if very high.  These are called beginner gains.  At some point these gains will plateau and the trainee will have to increase their work ethic 2-3 times more just to see minimal gains in strength.  In weightlifting, this is because the body has to start producing muscle in order to lift more, while at the beginning of the program the body was able to lift weight more based around learning the technique and learning how to use the muscles in a cooperative manner.

The point being, once a certain level is achieved, there is a dimished return effect to follow.  Peter Drucker applies this to people and their strengths.  The main difference between working on a weakness and working on a strength is that a weakness is something we are not good at, while a strength we are.  Naturally some things come to us more easily than others.  You might be talented at art, while I am athletic and coordinated.  I’m good with numbers but you may not be.  etc etc. 

Since working on a strength coordinates with our inherent personalities, talents and abilities, we will be able to see large returns from the time we put in.  Huge leaps and bounds can be made.  However, if we’re focusing on our weaknesses, then the opposite is true.  We will have to put in a huge amount of time and effort just to see a normal improvement in the skill because it is not natural to us.  It does not come easy, it is not within our nature to do it.

Peter Drucker suggests managing for strengths.  If someone is bad at a certain skill, find someone who is good at that skill and move the work to them.  Divide up projects into tasks which can utilize different team members at different times for maximizing the skillset of the team.

When it comes time for a review it is important to note the employees strengths and focus on these rather than noting their weaknesses and asking them to improve on those.  The employee could spend the next year trying to improve one weakness when he could have been focusing on a strength and made a breakthrough improvement there.

Lastly, we should focus our careers into areas that utilize more of our strengths instead of trying to bring up our weaknesses so that we will fit into a position better.  Peter Drucker often told people that he had no business experience at all and never managed anybody and yet he is more often than not described as the father of modern management techniques.  He’s written 39 books on the topic and many of the latest management books on the market find their ideas rooted back to Druckers work.  The truth is though that Drucker knew he had a strength in writing and he went with it.  His analytical nature, his ability to think critically about concepts and ideas and his ability to think creatively were his enablers.  Many people refer to him as a management guru, when he first and foremost was a writer.  Management juts happened to be what he wrote about.

I’m looking forward to going through the “Strengths Finder 2.0″ book and test released last year.  My wife has the book, but apparently there is a sort of monopoly on the code required to access the online test which you can only take once.  What a stupid idea if you ask me.  Are we out to kill trees here by requiring people to purchase the book just to take the test?  Got something against people that are thrifty and check the book out from the library?

I recently had a look at the new Fortune 500 list for 2009.  Low and behold, there is GM in the top ten, taking the #6 spot to be exact.  Last year GM posted annual gross revenues of $149 billion according to the Fortune 500.  In the seventh spot was Ford at roughly $ 146 billion.  I find this astounding because I keep hearing over and over how they are bleeding money at the seams!  I can’t imagine how a company can make almost 150 billion over the course of the year and still end up losing 30 billion.  Simplistically thinking, this would mean GM would have to post revenues of $180-200 billion just to break even.  In fact, just three years ago, in 2006, GM recorded its record year at $206 billion dollars and was actually able to turn a small profit.

What this means is simple: GM’s operating costs are too high.  If you’ve read anything in the news these days you’ve probably already heard this.  The health care costs the company is paying out is essentially driving the company into the ground.  GM is paying for the people sitting at home playing parcheesi and every current employee is working to support 2 retired employees.  The operating model is too expensive to sustain!  You might be thinking to yourself…well why do they keep doing this?  The problem is, management worked out a deal with these workers long ago, and cannot turn around and start doing something else.  They are simply stuck.

The other thing GM probably did, was spend this money when they had it, instead of choosing to invest it into a fund that would be available to pay health care costs for people retiring.  When it comes to pensions and retirement costs, it would make sense to set some money aside every year from wages so that it would be available when the time came.  Whether GM had this type of thinking or now, here we are with the situation where the health care costs are draining the company of profits.

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Thinking farther than 10 minutes down the road…

This brings me to my first point about the management at GM; they do not plan for the future.  In fact, right now they can’t even see past the next day because they don’t have any money.  Long before we got to this point though, management was failing to look ahead and realize what might happen when their pensioned workers started retiring.  Typically a large company will have a group managing a huge amount of investments.  One of the responsibilities might be to manage the investment fund for the pension plans and medical packages given to retirees.  Ooops, I think we might have either under-estimated the need or maybe even spent all that money a long time ago.  Akio Morita, founder of Sony once gave a speech entitled, “Ten Minutes vs Ten Years”.  He argued that many US companies only plan 10 minutes ahead of them, compared to Japanese companies that plan 10 years out at a time.  In this respect, the US companies will eventually falter and GM is a great example of this principle.

In our own lives as Americans I see this principle happening also.  Especially when considering debt, Americans have become infatuated with the concern that they must have something now whether or not they can pay for it at all.  This can be called the “convenience factor”.  Its convenient to charge things to credit because you can start using the item right away.  In the old days (like maybe 1950′s?), there was a plan called lay-away.  If you could not pay for something, you would ask the company to put it on lay-away for you.  Over time, you could make payments against the cost of the item and once your payments equaled the total cost of the item you could come pick it up and it was yours to keep.  Now days you simply open up a Home Depot account, or Circuit City account, or Best Buy, or Nordstrom or Macy’s and wherever you’re at and purchase on credit.  This is the get it now mentality, the fact that all we can think about is 10 minutes down the road.  I need it, I want it, I’ll just charge it. 

Unfortunately though, the people who developed the credit system were way too smart and crafty.  In fact, its down right insulting sometimes.  Credit has become more of a trap than anything.  I was recently posting in a discussion forum about the lack of personal finance education within our school system.  While I was in High School I learned numerous things, some of which I’ve forgotten and others which haven’t exactly been very useful, however, something that I could use every day in my life I was never taught and that is personal finance.  Today, you cannot do anything without money, and yet nobody has every taught me it, not even in my undergraduate studies.  Much the same as everything else, if you don’t have money for college you can always take out loans.  Credit is costly and it is interesting to me that the bailout is following along the same lines as the rest of us.  Instantly, billions of dollars are produced and transfered to GM.

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Accumulation of stuff in an effort to get big…

GM is a great example of being too big.  America is obsessed with moving money around.  Merger, merger, merger it doesn’t change the fact that your business model doesn’t work.  GM houses 8 different makes of cars: Buick, Cadillac, Chevrolet, GMC, Hummer, Pontiac, SAAB and Saturn.  Have you ever stopped to think about this though.  GM makes so many different cars that it is competing against itself.  How many sedans do they produce within the same price gap?  OK, well I went to their site and was going to count them but then I realized that there were 101 different cars and trucks to cycle through and I decided to save my index finger muscles for some other task (trying to think farther than 10 minutes ahead of time here).  The point is, they have many, many cars that are essentially the same and yet compete with each other.  You might think nothing of this…because whether a consumer buys a Buick or Chevrolet makes no difference because the money is coming to GM.  The problem is GM is operating under a business model that is unprofitable.  Whether its a Buick, Chevy, Pontiac, Hummer, SAAB, etc, doesn’t matter because GM will lose money on it because of their business model.  Their business model should not be, purchase other companies and bring them under the GM banner.  Their business model should be aimed at making money.

I have a sneaky suspicion that GM is operating under an average cost accounting system (aka standard cost accounting) and does not know which of their cars are in fact profitable and which aren’t.  This makes for a very slippy slope when trying to discover how to become profitable again.  Now the government has their hands in the mess and is suggesting they cut Pontiac and reduce their product lines down, focusing on fuel efficient vehicles.  What if Pontiac is the only make of car that is making money though?  What if the non-fuel efficient trucks and SUVs are actually turning a fine profit for GM?  Without a better accounting system in place, like allocated cost accounting, GM has no clue which cars make money and which don’t.  For that matter, neither does the Government.

As GM has increased in size by adding more and more car companies under its belt, so have Americans become infatuated with accumulating stuff.  What happens to all this stuff?  It gets stored in the garage!  “Over the last two decades the average garage size has almost doubled and over the last decade we have seen a 60 percent increase in three car garages.”[1] In addition to the expansion of garages, many people don’t even have enough room to park their cars in their garages.  This is a lot of stuff.  The funny thing though, is that Americans generally don’t use their stuff because we’re too busy.  It is almost like they just want to have it for peace of mind, even though it ends up being stored in the attic and never used for years.  After enough accumulation, enough is enough and we start throwing garage sales to get rid of our stuff!  The reality is that we don’t need as much stuff as we have.  GM doesn’t need as many car lines as it has.  There is something in us that wants to grow bigger and bigger, get more and more, but all this stuff causes us to become overwhelmed and accumulate debt.  Too much stuff often leads to more money out of our pockets as we try and get rid of it by taking it to the dump!  From a financial standpoint, its crazy, especially if that stuff was purchased on credit and is not paid for yet.  We are then paying money for things sitting in a landfill.

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Change starts with YOU!

I believe that we’re in need of a shift of mind.  We need to abandon the credit card model and swallow our pride when it comes to purchasing so many things.  We don’t need to “keep up with the Jones’s”, especially if those purchases are put on credit.  GM has showed us that poor planning for the future can lead to no future.  In our own personal lives we must realize the importance of investing, so that we can have a fruitful future.  Investing is not only a monetary thing, but also should be investing in ourselves.  This means furthering our education, learning new skills that may develop into alternative careers for the future, being passionate about something, monitoring and improving health, and maintaining and increasing social and professional networks.  Live within your means.

What I think is possibly more scary than GM though, is the fact that our government exhibits these same characteristics.  How are these bailouts going to affect the country in 10 years, 20 years, or 30 years?  What are the effects of the growing national debt for future generations?  What are the effects of the growing national trade deficit in 10 years?  Why does the government insist on growing the national budget to insane sizes, while still spending more than they earn?  Things to think about.

1.) ”Garage Organization – Americans Lead the World in Accumulation of Stuff“, Viewed 05/05/09

Generation Y is entering the workforce and in many cases it has not been pretty.  My generation represents 70 million workers, an amount nearly as large as the Baby Boomer generation.[1]  Whats so different about us?  I believe GenY is changing the American Dream.  People used to say, “have a great idea, build a company, get rich” was the American dream.  In fact, this is one reason why there is a huge draw to our society.  It doesn’t matter if you grow up in a slum, you still have the same opportunity to get rich as everyone else.  GenY is here to tell you now its different.  The new American dream is not about money, its about knowledge, and not just any knowledge, but knowledge of things we’re passionate about.  GenY is more interested in self-actualization and personal growth through learning.  Sure, we want to make money, but it more important for us to be learning. 

This means that GenY no longer looks at a job as a career path but rather a job has become a way to improve on a skill the person feels is valuable or simply feels interested in.  GenY truly believes that if they aren’t interested in what they and doing, then there is no reason to do it.  The hardest thing for a person of this generation to do is to get a job, with all their hopes and aspirations and then find themselves doing busy work for a manger or older coworker.  This is completely demoralizing to the person because it hinders their new American Dream! 

I was chatting with a friend of mine and he said he just got promoted to Engineer status.  He’s a CE and had passed his PE test a few months back.  This is what he said to me, “i am getting promoted to ‘civil engineer’ and one of the things my boss wants me to be better at is “Less desirable project execution and eagerness to take those responsibilities”.  You see, when a boring project comes across the radar, he doesn’t get excited about it.  Why would he though, he’s a GenYer.  If the project doesn’t align with his interests, there is not reason to do it.  Every moment spent doing something that is of little interest causes Us to ask ourselves, why am I doing this!  Continuing with the work goes against every bone in our bodies!

One of the bashes against GenY is our high level of attricion.  I think this is because business does not understand our new American Dream.  What motivates us is meaningful work, being part of the team, being allowed to learn new skills and increase on ones we already have.  What demotivates us is when we’re told to put our time in to move up, we’re given tasks that we don’t understand the reason for doing them, we’re forced into using antiquated technology and looked down upon for continuing to maintain our social networks online during the workday.  After 6-12 months of this culture, we simply split to greener pastures.  The problem is that often times the new job is just the same old gig.  What looked like it would be different on the outside, turns out to be the same once on the inside.  The only difference is this time, we’re getting paid a little bit better and so we might stick around a little bit longer.

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I would encourage you to embrace the new American Dream that generation Y is presenting for us all.  It does not mean we will not be as profitible in business, or be able to continue in America’s innovative and inventive traditions.  GenY will perhaps contribute the most of any generation to this pursuit, but it will do so by following each of our individual passions and quests for knowledge in those areas.  The only thing missing right now, is the link that will bring the 70 million person workforce together with businesses that align with each individual persons goals.

1.)  Generation Y: They’ve arrived at work with a new attitude, http://www.usatoday.com/money/workplace/2005-11-06-gen-y_x.htm, Viewed 05/01/09

Weimaraners are the types of dogs that are prone to bloat.  Having corn and wheat products in the dog food they eat can contribute to bloatedness.  In order to keep him healthy we purchase Canidae dog food.  It has a very high protein content, is all natural, and is fit for human consumption.  I haven’t tried it yet but might if this economy hits us even harder.  Up until this point though, our 40lb bag would sit in the closet, and we’d have to roll it shut after every feeding.  In some cases, this led to a big mess because typically the opening will start deteriorating and long tears will stream down the sides leaking kibble. 

But now the bag has velcro!  There is a flap perforated at one side of the bag.  When the bag arrives at its resting place you simply pull up on this flap, and it reseals itself with a velcro strip when you’re done feeding.  Its genius.  I am very delighted with the flap!  How easy is it then to delight a customer with innovative ideas!

What is innovation? 

The transistor radio was invented by Herbert Mataré and Heinrich Welker.[1]  However, the radio was not popularized by any company until Sony released their personal version in 1957.[1]  For this reason, many people think that it was Sony that invented the radio, but this is not true.  Sony took the radio and doused it with innovation, and remolded into a product that took off.  Up until Sony’s enter into the market, the transistor radio was viewed as something a family only had one of.  Partly this was because it was expensive, some $350 when considering inflation to todays standards.  Therefore, a family viewed it as something they would gather around and listen to.  It was a group activity.

When Sony introduced the personal radio prices had dropped considerably.  The old radios used expensive, large vacuum tubes as the amplifier elements while Sony used small transistors.  It marketed their radio by saying, “Why listen to what everyone else wants to listen to.  With our radio you can listen to whatever you want”!  It was a huge hit and Sony took off around the product.

I often thought that innovation was in fact invention but that is not the case.  Innovation is taking something that we’re already doing and doing it in a different way.  Its solving a problem nobody knows we have.  Once something is innovated, people often will stand around and say to themselves, “WOW, that makes so much sense”!

Dictionary.com’s definition of Innovation is this:

1. The act of introducing something new.
2. Something newly introduced.

W. Edwards Deming has this to say about Innovation:

     “Innovation comes from the producer — not from the customer.”

“Nobody ever asked for the lightbulb.”

What is meant by these words is that a company cannot depend on its annual questionaires for future product enhancements.  The customers will only tell you what you already want to know.  Take the lightbulb for instance.  At the time people were using lanterns for light sources.  A questionaire might reveal that customers want a longer running lantern, something less bulky and more portable, etc.  “Nobody ever asked for the lightbulb”.  Although the lightbulb, solves all the requests of the customers, and also solves problems they never thought they had nobody actually would ever have thought to ask for it from Edison.

When you think about innovation, think about this: what does it solve that I never thought was a problem before.  Cell phones are certainly an innovative product, at least in their early stages.  They solved the problem of missing calls because you weren’t by the home phone.  They solved the problem of being stranded on the roadside with a broken down car.  They solved many problems, that we never thought we had!  At the time, we just assumed the answering machine was good enough to catch our calls, and we’d get back to people whenever we got home.  If we were stranded on the side of the road, we’d just wait for a police man or friendly person to take us to the nearest gas station to phone for help.  It was an accepted practice, that now looks almost crazy and foreign!

The dog food bag helps me solve the problem of always having to wrinkle up the bag after feeding, slowly wearing it down and eventually seeing splits down the sides as it wears.  Now I can flip the lip, and velcro it back down when I’m done.  Innovation.

1.)  Innovation, http://en.wikipedia.org/wiki/Innovation, Viewed 04/30/09