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Bill George

Harvard Business School Professor, former Medtronic CEO

Category: Economic Crisis

Another Labor Day Passes with Little Progress on Creating Jobs

Three years ago, Labor Day 2009, I appeared on The Today Show to discuss the jobs crisis. The appearance was to promote 7 Lessons for Leading in Crisis, a book released about that time which set forth principles leaders could apply to resolving significant crises.

At the time, I argued that we were in a structural jobs crisis and that the Obama administration’s stimulus aimed at creating or “saving” public sector jobs was not effective. The impact of such policies efforts, I predicted, would expire long before jobs bounced back.

Using the “7 Lessons” as a framework, I posited that the U.S. had to “face reality” (Lesson #1) that jobs lost in 2008-09 were not coming back. We had to address the “root cause” (Lesson #3) that American labor was not cost competitive in global markets for low- and mid-scale jobs and lacked the trained workers required for high-skilled jobs.

Three years have passed and the economists still haven’t recognized the root cause.  They continue to believe (and act like) we’re in a cyclical recession. Unemployment remains stuck at 8.3% and underemployment (including part-time workers and workforce dropouts) hovers around 15%. Meanwhile, the temporary jobs created by the stimulus bill disappeared two years ago. The “saved” public service jobs are under enormous pressures from budget cuts at state and local levels shedding 700,000 jobs.  The stimulus bill just delayed the inevitable.

The New York Times published statistics last Friday showing that in this downturn five million high- and mid-wage jobs were lost, and only 1.5 million returned. In contrast, 500,000 more low-wage jobs have been added than were lost in the recession. Thus, average wages declined for those fortunate enough to have a job. Many formerly high-paid workers are now holding down two and even three jobs and still not maintaining their former level of income. But here’s the catch: 3 million high-skilled jobs are vacant with no one qualified to fill them! Clearly, this is a structural crisis.

In the past decade many traditionally high-skilled jobs have been replaced by automation. Today’s skilled jobs require more sophisticated mathematical and computer-based skills. Since we have failed to develop the skilled work force to do these jobs, they either remain unfilled or are migrating overseas. Contrast these results with the decade of the 1990s when we added 23 million jobs, business was booming, and the federal government balanced its budgets for three consecutive years.

There’s an obvious solution to this skills imbalance: government, business and labor need to collaborate to create skills-training programs and apprenticeships in collaboration with local community colleges and vocational-technical institutes. This has been done with success in eastern Michigan by the Big 3 auto producers and in Charlotte by the energy sector, and a promising initiative is underway in Minnesota.

Unfortunately, on a national basis there is little collaboration between government and business. The leaders of both sectors seem to feel they have diametrically opposed objectives. As a result, deep-seated distrust has developed over the past three years. Most regrettably, this has led to “win-lose” relationships, and contributed to the political chasm that defines today’s America.

Our predicament is in sharp contrast to Germany, where workers are doing better than ever, and unemployment is low, especially in the former West German states. In Bavaria, for example, unemployment is 2.2%.  Workers have solid incomes, good pensions, and effective health care.

What’s the difference? Ten years ago then-Prime Minister Gerhard Schroeder brought the leaders of business and labor together and challenged them to develop a plan to make Germany fully competitive in global markets for the 21st century.  Leaders of the three sectors decided to focus on ensuring a skilled, competitive work force in five major industries: machine tools, automobiles and auto parts, chemicals, electrical equipment, and construction. As the direct result of these negotiations, wages and benefits were moderated to be competitive on a world scale, inflation held to around 1%, and government deficits reduced to only 3% of GDP, compared with 7% in the U.S. This rapprochement has not only fostered Germany’s growth but led to a favorable balance of trade of $200 billion, compared with America’s negative $500 billion trade balance. Germany’s trade surplus isn’t just with the European Community; its largest positive balances are with China, India and Japan.

Could the same thing happen here if the political climate supported it? Of course it could. No country in the world can match America’s entrepreneurial drive or innovative genius. The U.S. is by far the best place in the world to start a new company, complete with the private start-up funding and infrastructure required for entrepreneurs. We tower over other countries in the growing fields of information technology, health care and energy. Yet our government constrains all three industries in obtaining visas for foreign workers, approving innovative new products, and limiting energy production.

We also need business, labor and education leaders to collaborate to train and develop the skilled workers required to compete on a global scale. That takes a “win-win” approach, something rarely observed in today’s toxic and highly partisan political arena. We cannot let political differences to continue to hold us back. Now is the time to get on with the monumental task of ensuring America’s economic competitiveness and rebuilding a jobs machine. We did it in the 1990s. What are we waiting for?

Developing Global Leaders is America’s Competitive Advantage

HBR.org published this article on why developing global leaders is America’s competitive advantage. 

By Bill George

As global companies focus their strategies on developed and emerging markets, they require substantial cadres of leaders capable of operating effectively anywhere in the world. American companies and academic institutions possess unique competitive advantages in developing these global leaders. They are remarkably open to talented people from diverse backgrounds, and are highly skilled at giving future leaders the knowledge and experience they need to lead successfully in the global economy. As American leaders work with foreign nationals, they become more open, better informed, and more effective in collaborating with people around the world. The ability to develop global leaders strengthens American companies and the U.S. economy, expands America’s global trade, and attracts foreign companies to base operations in the U.S.

Let’s examine the reasons why America possesses this important advantage:

1. America’s higher education system is a magnet for talented leaders from all over the world. The U.S. has become a Mecca for international scientists, engineers and business students — particularly those undertaking graduate studies. Since the 2008 financial collapse, a new generation of business school deans is placing increased emphasis on developing global leaders. In particular, Harvard, MIT, and Stanford have geared their programs toward global leaders: as a result, 26-38% of their graduate students are foreign nationals.

Here at Harvard Business School, Dean Nitin Nohria has revamped HBS’s MBA curriculum to emphasize practical leadership and global experiences. In January all 900 of HBS’s first-year students — 34% of whom are international students — worked in developing countries. In 2011, 71% of HBS’s new cases were written about foreign companies. HBS welcomes 6,360 foreign nationals (64% of the total) to its executive education courses each year, enriching the experiences for Americans as well. As a consequence, these foreign-born executives become more interested in doing business with American companies and many will eventually work in the U.S.

2. U.S. companies actively promote executive officers with diverse geographic and cultural backgrounds. Coca-Cola has been a pioneer in developing global leaders. It started 30 years ago with the progressive and unusual step (for that time) of shifting from local nationals as country managers to global leaders from other countries. This has enabled the company to develop exceptional global leaders. As a consequence, five of its CEOs have been non-American-born, including today’s CEO, Turkish-born Muhtar Kent. In addition, eight of its top nine line executives are from outside the U.S. Many global companies have followed Coke’s lead by appointing foreign-born CEOs and executives. For example, PepsiCo CEO Indra Nooyi was born in India, Avon’s Andrea Jung is Chinese-Canadian, and Medtronic CEO Omar Ishrak grew up in Bangladesh. UK-born George Buckley, CEO of 3M, will be succeeded by Swedish-born Inge Thulin. Half of 3M’s executive committee comes from outside America.

In contrast, the CEOs and executives of leading companies in Germany, India, Korea, Japan and China are almost all natives of their home countries. Swiss companies like Nestle, Novartis, and Credit Suisse are notable exceptions, as they have non-Swiss CEOs and a majority of non-Swiss executives.

3. American companies send their most promising leaders abroad for global leadership assignments. Major U.S. companies like Cargill, ExxonMobil, 3M, and IBM insist their line executives have numerous assignments running overseas operations to ensure they understand their global businesses. They also conduct intensive development programs for global leaders through in-house training programs. Two of the best-known programs, GE’s Crotonville and Goldman Sachs’s Pine Street, are committed to having 50% of participants from overseas entities.

4. The U.S. leverages its pool of top talent to attract research and business units. Many foreign companies are basing research centers and business units in the U.S. to take advantage of America’s talented leaders. In 2002 Novartis relocated its research headquarters from Switzerland to Boston and hired Harvard Cardiologist Mark Fishman as its leader. Nestle, Unilever, and Novartis have several business units based in the U.S. French pharmaceutical company Sanofi recently acquired Boston-based Genzyme to tap into America’s intellectual capital in biotechnology.

5. America fosters risk-taking and innovation by entrepreneurs who become global leaders.America has repeatedly demonstrated its capacity to develop entrepreneurs who start with revolutionary ideas and create global companies that dominate their markets. Intel, Microsoft, Apple, Genentech, Starbucks, Google, Cisco, Amazon, Medtronic and Facebook are some of the success stories resulting from an American culture that fosters risk-taking, openness, and innovation. Their successes globally have created enormous stakeholder value for their customers, employees, communities, and investors.

In the increasingly competitive global economy, the United States needs to take advantage of its ability to develop global leaders who are capable of addressing the complex challenges facing global institutions. Unfortunately, this unique American capability is often undermined by U.S. government policies, such as limitations on work permits for foreign graduates of American universities that force them to return to their home countries. Visa restrictions also limit U.S. companies from bringing foreign nationals to America for assignments enabling them to become global leaders. American executives, educators, and government officials need to collaborate to strengthen America’s leadership of the global economy.

Readers Respond to My Article on “German Economic Miracle”

My sincere thanks to all of you who responded to my article on “What Minnesota Can Learn from the Germany”. You offered some great insights and affirmations. Here are some of your best inputs:

“REALLY EXCELLENT….Please get this into The Times….all the media you can….and especially Obama’s office….certainly the Congress needs to see it….many thanks.”

“As a retired teacher and host of 4 exchange students from Germany, I have known that the German method of education and training students to achieve success is working far better than the American model.  I was amazed at the intelligence and skill level of each of the 4 German boys that stayed with me.  I have since visited 2 of them in their native Germany and have seen first hand how Germany has rebuilt from near total devastation just after WW2.  This country should indeed be a model for the US.” 

“Terrific article on the German education model and its effect on business.  As the first American-born in my German family (and dual citizen), I’ve often mentioned to my (American) friends that the United States’ biggest ‘mistake’ was to exclusively emphasize the merits of a proper University education, while dismissing anything else as second rate.  It is always a treat to engage with German companies and discover that everyone on the payroll seems to be pulling in the same direction; it is almost implicit in the culture that everyone has a valuable talent and skill to hone and apply for the benefit of the individual and the common good.”

“I wanted to jump up and down and yell “YES”!!! Bill George, the author, gets it!!! And, admittedly, I bragged a little to myself because – ‘tho only a ND “farm boy” – it’s what I’ve been saying for literally years.”

“Your message needs to be heard “loud and clear” all around the US – not just in MN. Our country either must learn from Germany’s example or risk sliding into second class – or worse – economic status.”

“I work with a number of job shop manufacturers who are frustrated by the lack of skilled labor for job openings that they have.  As a result, I was extremely interested in your article in the Mpls Star Tribune last Sunday.  I have attached a copy of another article from the Tribune on 10/31/2011 about a program called “Right Skills Now” that I thought you might find interesting.  As you can see in the article, there are nine positions for every graduate.  I also have met with a person with Newgate Education Center that provides tuition free automotive technical training.  I also attached some information on them as well.  They indicated that they have a 100% placement rate for their graduates. I might add, I am not affiliated with either of these programs. I just thought you might find them interesting.”

“Unfortunately, in my opinion, our education system is far too biased toward a college education even if it does not train a person make a living.  I say this as an individual with a post graduate degree. This is a natural bias of educators having college educations.  Until we dispel the notion that a person is not “successful” without a college education, as opposed to post secondary education or as you have indicated, training in a trade, I see no change forthcoming.  I believe that we need to integrate people with training in the trades (as opposed to just educators)  into our public education system to eliminate the bias.  I have clients who have tried to impress upon high school educators the viability of a career as a machinist, or machine operator with little success.  I hope your article helps move us in that direction.”

“My observations and frequent visits to Germany confirm the solid points which you registered.  They are both pointed and timely.  Interestingly, following a careful five year campaign to attract the “right” distributor for Germany, our key European target, we recently signed a distribution contract with Linde Gas.  My interactions with them and with a very close friend, CEO, and owner via his family of a Mittelstand entity at over 500,000,000 Euros all substantiate your theses. That said, Germany does not carry the socalled “minority characteristic load” that the U.S. does.  Germany has also choked off much of the immigration factor as well.  Preparing their “next generation” is where they seem to excel.  And, that seems to be at the center of your important points.” 

“Moving “College and University Four Year Degree” from its “Only Ticket to the Future” image in the public mind to a right choice for 30-40% of the population will also need to be sought.  Degradation of the quality of the products of many four year college programs is also part of the problem.”

“I salute your choice to continue to be a voice for leadership and wisdom outside “the Company Office” and hope that you are finding much purpose and fulfillment in your work at Harvard.  Reminding students and peers at a campus that keeping at least one foot on the ground as we peer at the stars is important to leadership success and personal growth success.”

“First, I want to say what a great article!  I agree with you completely.  I worked at 2 small manufacturing companies with limited resources over 18 years.  We tried to incorporate some of your ideas on a limited basis under budget constraints. The only candidate that has a clue about how to turn this country around is Jon Huntsman.  The rest of them call Europe a bunch of socialist countries.  If Germany is a socialist country, bring it on; I am all for it.”

“Thank you for your great article in today’s business section! After reading it I feel proud of having been born and raised in Germany for the first 15 years of my life and I have often wondered why I left my homeland. That was 60 years ago and I have been an American citizen for all this time but I will always be torn between the 2 countries. The thing I totally agree with you and what I have mentioned to many people here is the German apprenticeship system. Not everybody is ready for college after leaving high school and learning a trade will keep a person working for a lifetime. My mother owned a beauty shop and always had several apprentices working for her. My grandfather had a plumbing shop and as his sons grew up several became apprentices and ended up with a large company because of all the rebuilding after the war. Your article made my day!”

“That is a good and pretty accurate article about the German education system, That is what I experienced  as I went to Germany in 1961 for an apprenticeship in Munich as an auto mechanic. I stayed there, married and had a child whom I guided through the school system and everything worked great. The skill I learned in the BMW factory allowed me to introduce the autobody repair system called Paintless Dent Removal here in Minneapolis,Mn. I am still practicing this trade and enjoying it.” 

If you’d like to share your thoughts please emailing me at bill [at] bpgeorge [dot] com.

Leadership Kudos and Gaffes: European finance leaders concerted leadership has gone a long way to stabilizing the financial crisis

Leadership Kudos go to European financial leaders IMF president Christine Lagarde and EC bank president Mario Draghi for stepping up to resolve the Euro crisis, in part with IMF’s €2.2 billion loan. Their concerted leadership has gone a long way to stabilizing the financial crisis, although much more work well be required to bring the budgets and debts of member countries back to fiscal responsibility and stability.

Leadership Gaffes go to the Olympus board of directors and former CEO Michael Woodford for poor governance that led to the cover-up of $1.7 billion in losses. The details are murky but the failures of leadership are very evident. As a result of the board’s poor governance, a great company is being destroyed and customer and investor confidence is being shattered.

A Fateful Weekend for U.S. Fiscal Stability

The fate of the fiscal stability of the United States was sealed on the weekend of December 4-5, 2010. The previous Thursday President Obama received the long-awaited report of his National Commission on Fiscal Responsibility and Reform, co-chaired by Democrat Erskine Bowles and Republican Alan Simpson. The report of the commission received a favorable vote with an 11-7 majority, but fell short of the 14 votes required for a mandatory “up-or-down” vote by Congress.

The commissioners delivered a balanced report that reduced U.S. deficits by $4 trillion over ten years – $3 trillion from spending cuts and $1 trillion from revenue increases. It received favorable consideration from both Republicans and Democrats on the commission. President Obama had the perfect opportunity to restore stability to U.S. finances by endorsing the plan and sending it to Congress.

For the President it was the perfect political setup, complete with “air cover.” He appointed a bipartisan commission. It had delivered a bipartisan proposal.  Surely, he could rally the country behind it by going directly to the American people. While the deficit reduction plan would have faced opposition from the extreme right and extreme left, President Obama had the opportunity to demonstrate his leadership and garner the support of fiscal conservatives, moderates and independents around the country.

What did the President do? Nothing.

The silence from the White House was deafening.  The President ignored the commission’s report entirely. He chose the politically expedient route and, in so doing, failed to lead the country by improving its long-run fiscal  health.

Actually, what he did was worse than nothing. Over that weekend, the President negotiated with Republican congressional leaders a $4 trillion increase in the nation’s deficits over ten years ($858 billion for the first two years, with the remaining $3.2 trillion projected over the next eight years). The added deficits came from a combination of tax cuts and spending increases – just the opposite of what the Bowles-Simpson commission recommended.

This new deal was passed by Congress over the objections of Democratic congressional leaders, who felt left out in the cold. On December 18, 2010 the President signed the deal into law, thereby killing any hope of deficit reductions coming from the Bowles-Simpson recommendations.

In one weekend our nation’s leaders swung from a plan to reduce the deficit $4 trillion to actions that increased it $4 trillion – an $8 trillion unfavorable swing.  This proves the old political adage that it is easier to cut taxes and raise spending that it is to demonstrate fiscal responsibility, as long as you’ve got a plan to get out of town before the sheriff comes.

The sheriff didn’t take long to arrive. Realizing this President wasn’t prepared to take tough fiscal actions, Republican leaders next played brinksmanship with appropriations. That brought the federal government to the verge of shutting down at midnight on April 8, 2011. A last minute deal to cut the budget by $38 billion averted the shutdown. President Obama hailed the agreement as “the biggest annual spending cut in history.” Hmmm. Seems pretty paltry compared to $4 trillion over ten years.

Republican leaders, seeing blood in the water, attacked again like sharks on a rampage in August, 2011. Demanding more spending cuts with no revenue increases, Republicans held the line against raising the debt ceiling until the August 1st deadline. A last-minute compromise reflected the agreement to disagree. At the 11th hour, the President and congressional leaders passed the Budget Control Act, appointing a Congressional “super committee” with the requirement to reduce the deficit by $1.2 trillion by November 23, 2011.

Concerned by feckless political behavior, Standard & Poor’s took the historic step of reducing the U.S. sovereign debt rating from AAA to AA+. “The political brinksmanship of recent months,” the company said, “highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed.”

This paved the way for the super-committee’s failure on Monday. If committee members were ever serious about compromise, it wasn’t evident. Republicans refused to agree to any revenue increases, causing Democrats to back away from spending and entitlement cuts they had offered. Now $1.2 trillion in automatic cuts go into effect next September. Speaking on CNN, political commentator David Gergen called the move “an irresponsible, reckless gamble.”

The consequence of this gridlock? The financial troubles of the U.S. get worse, the country’s competitiveness continues to slip, and the prospect of a future deal is even further away.

And it all started with an $8 trillion reversal one weekend last December.

StarTribune: Extraordinary collaboration can rebuild Minnesota Miracle

Gov. Mark Dayton’s jobs summit last month was a remarkable example of the extraordinary collaboration taking place between business leaders and government officials to rebuild Minnesota’s jobs machine.

Historically, Minnesota has benefited from diverse industries including agriculture and food products, financial and professional services, health care, education, and high-technology manufacturing that allowed us to offset economic downturns. But after outpacing the nation for 30 years in job creation, Minnesota has fallen behind since 2003.

The 800 business and civic leaders who jammed into the ballroom at the Crowne Plaza in St. Paul engaged in serious discussions about how to stimulate job growth in Minnesota and re-create the Minnesota Miracle. This convergence of business and government leaders was a welcome contrast to the political gridlock that shut down state government in July.

At the summit the governor wasted no time in making his position clear: “It is the task of private enterprise to create jobs and wealth,” he said. “The government’s role is to create the environment and rules that make that possible.” Dayton put substance behind his pledge, announcing a $100 million fund for small business loans, distributed through 300 Minnesota community banks.

These efforts are none too soon. Alarmed by declining job trends, a group of leading CEOs and civic leaders formed the Itasca Jobs Task Force in 2009. Chaired by Ken Powell of General Mills and Marilyn Carlson Nelson of Carlson Companies, their 2010 report highlighted three strategic initiatives to improve the region’s competitiveness:

•Address the cost of doing business.

•Develop a vision, strategy, and approach for regional economic development.

•Enhance entrepreneurship and innovation.

To implement the report’s recommendations, Itasca formed a team of 60 participants, chaired by HealthPartners CEO Mary Brainerd. “For us, this is the most important thing we have been part of,” Brainerd said. “The commitment to a thriving community is really extraordinary.”

In addition, the Minnesota Business Partnership, which includes the heads of 150 local companies, formed three task forces of its own under the leadership of Ecolab CEO Doug Baker Jr. The partnership made concrete recommendations to the governor and Legislature regarding fiscal policy, health care, and education.

Also last month, 12 large companies joined with local municipalities to launch Greater MSP, with Baker as its chairman. A $2 million budget was established, with 70 percent from the 12 companies and the remainder from government units. Its mission is to recruit out-of-state and international companies to locate in Minnesota and to encourage local companies to expand locally. Michael Langley was hired as executive director, coming from Pittsburgh, where he led a comparable initiative.

These remarkable efforts are a testament to the quality of Minnesota’s leaders. Our state is blessed to be home to 20 Fortune 500 companies led by progressive leaders who understand that Minnesota’s quality of life and a well-educated workforce are essential to their success — and necessary to offset negatives like high taxes, high cost of living and weather.

Historically, Minnesota’s strength has been the quality of its workforce. Thanks to efforts put in place 50 years ago, the Twin Cities leads the nation with 93 percent of citizens holding high school diplomas, and is third in bachelor’s or graduate degrees with 37 percent. Ecolab’s Baker notes, “Ultimately, the education and skills of the workforce are MSP’s competitive advantages.”

But this advantage appears to be at risk. The Itasca report forecast a gap by 2030 of 322,000 skilled workers that could constrain the region’s growth. Bush Foundation President Peter Hutchinson notes that these other efforts will be in vain unless the region has the right workforce. He favors investments in infrastructure, K-12 schools, and higher education.

“It’s a painful reality that many of the 215,000 Minnesotans without jobs don’t have the education needed for the new economy,” said Steven Rosenstone, the new chancellor of Minnesota State Colleges and Universities (MnSCU). “By 2018, 78 percent of Minnesota’s jobs will require postsecondary education.”

Minnesota has its challenges. But given the remarkably committed leaders we have today, I feel confident that these new initiatives will bear fruit and create the second Minnesota Miracle.

 


Originially posted: StarTribune
November 19, 2011

Leadership Kudos and Gaffes: Erskine Bowles and Alan Simpson faced a crisis head on

Leadership Kudos this week go to Erskine Bowles and Alan Simpson, co-chairs of President Obama’s Deficit Reduction Commission. Last December they proposed a $4 trillion reduction in U.S. deficits over ten years with a balanced plan of spending and entitlement cuts, and revenue increases. Although the commission passed the plan with an 11-7 vote, it was not enough for a mandatory Congressional vote.  The thoughtful plan was ignored by President Obama and Congressional leaders in both parties. A great tragedy that led to the historic downgrading of U.S. sovereign credit ratings this past summer.

Leadership Gaffes go to Congressional Super-Committee for failing to come to a compromise agreement to reduce U.S. deficit by $1.2 trillion, setting the stage for automatic across-the-board cuts to go into effect. Confidence in Congress has dropped to 9%, and deservedly so. Congressional leaders continue to put party politics ahead of the needs of the country, as our financial state erodes and we lose competitiveness to many other countries. When will our politicians wake up and put their country first?

Leadership Kudos and Gaffes: Groupon goes from innovative start-up to successful IPO

Leadership Kudos for the week go to Andrew Mason, CEO of Groupon, for leading his creative web-based company to a successful initial public offering whose value results from a unique marketing and promotional idea.  After much controversy over the summer months, Groupon’s IPO came to market during a turbulent period for stocks. Priced at $20.00 per share, Groupon rose almost immediately by 31% to $26 per share. After five trading days, it sustained most but not all of its increased value, closing last week at $24.25, a 21% increase above its initial offering. Throughout this period Mason has been steady and committed to moving his young company ahead.

Leadership Gaffes go to Silvio Berlusconi, the now deposed leader of Italy, who finally stepped down officially as prime minister over this past weekend. Berlusconi’s flagrant mismanagement of Italy’s finances has brought the country to the brink of bankruptcy. He served three times as prime minister, dating back to 1994, yet today is one of the world’s richest people with nearly $8 in net worth. Berlusconi’s ethics are highly questionable, as he continues to favor his own enterprises to the detriment of his country. His successor, Mario Monti, is a man of the highest integrity, economic understanding, and the character to lead Italy through the current crisis.

Don’t Just Search for a Job: Create Your Own

It’s no secret that Americans are frustrated with the lack of job opportunities available. 

As the unemployment rate held strong in September at 9.1% and 26 million Americans (16.5% of the workforce) were still unable to find full-time jobs, it is becoming increasingly clear that the economy is in “a jobless stagnation.” In reality, the bulk of those 26 million people aren’t going to find regular fulltime jobs for many years.

There are constant news stories profiling young professionals who have college degrees in hand but nowhere to put those years of education into practice. Of the graduates from last June’s college classes who were fortunate to find work, fewer than half of them found jobs requiring a college degree.

The new generation of 20 something’s is taking matters into its own hands.  Facing this situation, more and more people are creating their own jobs as independent contractors and entrepreneurs. The Bureau of Labor Statistics estimates that unemployed job creators will account for 40% of all jobs by 2030.

Members of the Millennial generation know how to build their careers – and their lives – by designing their own work, often electronically, from their homes. Inc. magazine released its annual survey of top entrepreneurs under the age of 30 for 2011.  These young business men and women exemplify the young professionals who are choosing to take their careers into their own hands, instead of waiting around in a bleak job environment.  

Take, for example, Drew Houston, who founded his company Dropbox in 2007. Dropbox is a cloud-based file-syncing service that allows users to access their digital files from nearly any computer or mobile device. Houston started writing code for the program when he mistakenly left his USB drive at home and could not access the files he needed.  

Jessica Mah is a serial entrepreneur who founded three start-ups by the age of 19. Mah had been using Mint.com for a few years and became frustrated the site did not provide an applicable function for her small businesses. As a result, inDinero was contrived. inDinero is a business helping other small businesses grow and track their progress through the accounting services that can oftentimes be wildly inconvenient. Mah and her co-founder Andy Su built the prototype for inDinero and launched the company in 2009.

While still a college student at the University of Seattle, Brayden Olson founded Novel, Inc., a creative game company focusing on simulations for corporations to develop and assess people. Olsen lived at home with his parents to save money and accelerated his education to graduate in three years. At age twenty, he decided to focus his full attention on building Novel. He was fortunate to attract $500,000 in venture capital funds to enable him to attract a quality team around him that could develop the complex software required for Novel’s games. His first products will enter test markets early next year.

Young entrepreneurs also have time to experiment with ideas and keep learning.  Zach Clayton started a subscription-based media company while still in college at the University of North Carolina.  That business idea didn’t take off, but it inspired him to start another one, which did.  After graduating from Harvard Business School in 2009, Zach started business#3: Three Ships Media.  The company helps its clients acquire new customers through digital media and social media channels.  Without raising venture capital, he’s profitably grown Three Ships into a multi-million dollar business.  (Note: I have used Zach’s services for Website creation and social media research).

Other former job seekers are creating work as creative strategy consultants, dog walkers for dual career families, home office managers, and personal IT consultants.

This economy requires a new class of technology-enabled businesses. The United States needs innovation, human capital investments, and research and development to build those businesses.  Most importantly, it needs the entrepreneurs to get them started.  The new generation has the potential to create entirely new services that will rebuild a vital economy, but one that looks entirely different from the last ten years.

My advice to job seekers is to stop shooting resumes and emails off to everyone you know in hopes of landing a regular job. The odds are that it wouldn’t use your full abilities, nor stoke your passions. Instead, think hard about what you love to and what you are really good at. Then seize the initiative and create your own job.

The advice of Steve Jobs, who dropped out of college and founded Apple at age 21, should resonate with you: “Your time is limited, so don’t waste it living someone else’s life.  Don’t let the noise of others’ opinions drown out your own inner voice. Have the courage to follow your heart and intuition.”

Leadership Kudos and Gaffes: Tenacity and courage from Merkel and Sarkozy

Leadership Kudos for the week go to Germany Chancellor Angela Merkel and French President Nicholas Sarkozy. Their tenacity and political courage enabled them to forge a deal to prevent the pending default in Greece and requiring the bankers to take a reduction of 50 percent in the value of their bonds. This was not an easy sell politically in either country, but they both recognized the importance of the Euro and keeping a single trading group in Europe. Only time will tell whether Europe’s other high-debt nations like Spain, Italy and Portugal will move aggressively to get their economies in order and reduce their debt, but Merkel and Sarkozy have sent an important signal of what is required to save the Euro.

Leadership Gaffes go to MF Global and CEO Jon Corzine for taking the firm into bankruptcy by betting $6.3 billion on the sovereign debt of Italy and Spain, refusing to listen to colleagues who pleaded with him to reduce the risk, and declaring “our positions have relatively little underlying principal risk.” In this volatile era solid risk management, adaptability to changing markets, and high levels of liquidity are essential for survival.