BarrieBergman

Interesting Times

If I were running a company today, the company would be doing great and expanding like crazy.  In the interest rate environment we find ourselves in, it’s almost impossible to do poorly.  I would be borrowing as much as I could from any bank, that would lend it to the business, and expanding as fast as we could go.

I always pushed hard for growth, when the economy was at its worst.  Most people stopped growing and sat on the sidelines, but I felt the time to expand was when others backed off.  It was easier.  It takes cajones to do this, particularly because banks hate it.  But, if the organization is good enough, the style really works. 

Banks, which are run by people who can’t make it in real business, always believe in going with the trend, while I believe in going counter-trend.  Running counter-cycle is the best way to make money that I know, but it’s hard to swim upstream, when everyone thinks you’re crazy.

As the economy gets better and companies make more and more money, the Stock Market is going to go up.  My fearless prediction for this year is somewhere in the 10-15% range.  I also believe that Congress will begin to act more responsibly and start to limit spending.

I’m an eternal optimist, so don’t base any investment strategies on anything I say, but if you do and you make any money, I would love a piece of the action.  If you lose money, call Newt Gingrich.  He told you the world was coming to an end.

Aggression in a Counter-Cycle Economy

A few months ago I had planned to write about being aggressive in a counter-cycle economy.  When I was in the retail business, I was very pro-active with opening new stores because the real estate was easier and cheaper to acquire.  Many of our competitors would draw back, so it left the market open.

Bankers hated this.  They were convinced that the way it is today is the way it will always be.  Actually, it’s the exact opposite.  Nothing is constant, but change.

When I was originally going to write this, the stock market had gone down, over reacting to some bad news.  It was also obvious that Europe was not going to fall apart, and there was not going to be a double dip recession.

OK.   I know . . . woulda-coulda-shoulda.  It’s great to be a Monday morning quarterback in retrospect.  However for those with a strong stomach, there is one glaring counter-cycle market that is still available – the housing market.

Investing in residential homes today is pretty gutsy stuff.  I think it’s a good long term investment.  There is still a lot of bad news and hand wringing, but I think most Americans consider it their birthright to own a single family home.  This is not the case world wide, but as long as we believe it, the politicians will try to make it a reality.  We’re presently building a spec house to sell.  Barrie’s folly?  Time will tell.

By the way, Donald Trump has announced a new line of crystal to go with his Trump Home collection, Trump Neckties, Trump Dress Shirts, and Trump Cuff Links.  Can the Apocalypse be far away?

Worrying is a Waste of the Imagination

I’ve always thought that the only important things are my health and the health of my friends and loved ones.  Everything else is just window dressing.

That said, don’t fret; don’t worry.  Too much wallowing can put you in a tailspin to the point that you’re immobile and unable to recognize an opportunity, when it comes along.

Here is what you can do:  First evaluate your situation:  Are you going to lose your job?  Are you going to have to change jobs and/or relocate?  Are you about to be passed over for a salary increase or a promotion?  Identify the fear that’s causing you anxiety.
 
Next evaluate your choices:  You know what they are for your particular situation.  Just right them down and include the pros and cons of each choice.

Then make a decision and ride it out.  Once you’ve decided, be aware of the distractions and manage them by staying focused on what you want to do.  “No decision” is a decision.  If that works for you, have at it.

In the words of the great philosopher, Alfred E. Neuman, “What?  Me Worry?”

Organizational Inertia Stifles Innovation

Organizational inertia occurs when a culture of fear permeates a business and people are afraid to make decisions. At its very worst people are afraid to do anything at all. Individuals begin to adopt a survival attitude, believing that the way to keep their job is to never take a chance, to never do anything outside the norm.

 

When an organization creates an environment of fear, you can take very capable, creative people and turn them into ineffective paper pushers. They come to believe the worst thing they can do is to make a decision. They don’t want to risk being responsible for a project that could fail.

 

People want to achieve. They want to act on creative ideas and make things happen, but you have to let them make mistakes. Intelligent people will learn from the experience and not make the same mistake again. If you’re going to cut somebody’s head off the first time they make an error, they aren’t going to take risks. They’ll stop trying, they’ll never learn and they’ll never innovate.

 

If you graph it, most organizations make progress by fits and starts. Over time, the graph will show a steady upward trend. The fits and starts represent a learning curve. In a culture of fear that graph will flat-line in a hurry. I believe most competent people will make the right decision 90% of the time. When you empower people to act, most of the time, they’ll get it right. Unfortunately in this country, the larger the company, the greater the bureaucracy. People become set in their ways, and innovation stops happening because bureaucratic organizations reward the status quo.

 

Look at the car manufacturers in Detroit. Twenty years ago, all the Big Three cars started to look alike. It bored the American public and consumers started to buy foreign cars that were cheaper and got better gas mileage. As foreign car designs became more innovative, there were fewer Americans willing to buy from Detroit.

 

Organizational inertia in some arenas is met with swift repercussions; you don’t have the luxury of a decade or two to figure things out. The high tech industry is all about innovation, change and risk-taking. In this business if you snooze you lose. When Steve Jobs left Apple, we watched the company vegetate. When he came back, the company came alive. There is a spirit of innovation at Apple. It starts with Steve and permeates the organization. When Steve is around, people are energized. He turned the faucet back on.

 

You don’t get that kind of dramatic innovation without somebody at the top saying it’s okay to fail. If the person at the top is only worried about next quarter’s earnings per share, innovation isn’t going to happen. CEOs become afraid of their boards and afraid of their own shareholders if, God forbid, their profits go down for a quarter. You’ve got to be willing to take chances and risk making some big mistakes, if you are going to win big.