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Bill George

Harvard Business School Professor, former Medtronic CEO

America’s Hidden Asset: Leadership of Global Capitalism

For the past seven years America´s political leaders have been trumpeting the spread of American-style democracy, with decidedly mixed results. Developing countries aren´t eager for America to impose its form of democracy on their fledgling – and often fragile – governments. In fact, many of them resent America´s attempt to tell them how to run their governments, especially when threats of “regime change” are not-so-subtlety mentioned.

It is American-style capitalism – not democracy – that is spreading like wildfire around the globe.

Every government leader and business executive I have met in developing countries is eager for one thing: American-style capitalism to build their economies, create jobs and wealth for their people, and bring their countries fully into the global trading network. From Kazakhstan to the United Arab Emirates to Vietnam, people are hungry for capitalism. They want to study it in the U.S., learn how to create local capital markets, acquire American technology and know-how, and build up companies that can export their goods around the world, especially to the U.S.

But most of all they want America´s hidden asset: global capitalism leadership.

Let me emphasize that this is not the old-style business leadership of the 20th century which thought U.S.-based companies had superior products and management processes and could simply export them to the less sophisticated markets around the world, eager for American goods and know-how. That day passed by twenty years ago.

In recent years America´s new competitive advantage has emerged: the ability to train and develop global leaders, capable of leading global organizations. These new leaders, who are mostly in their thirties and forties, have lived all over the world and are as comfortable doing business in the Ukraine or Indonesia as they are in Des Moines, perhaps more so. Many of them have attended America´s best graduate business schools, where they interact with a vast array of foreign nationals and newly immigrated Americans with similar leadership abilities and like ambitions.

Attending my class at Harvard Business School, my wife remarked, “I feel like I am in the United Nations.” In fact, more than one-third of Harvard´s MBAs at HBS and two-thirds of participants in its executive programs come from outside the U.S. to learn the latest leadership approaches in global business. These percentages do not include the substantial number of newly-immigrated Americans from all over the world attending these programs.

This new generation of American business leaders – as well as foreign nationals trained in America´s leading academic institutions – is very different than the previous generation: they are authentic leaders – collaborative, not imperial, in their relationships. They genuinely respect and appreciate the comparative advantages that people of other nations bring to their global companies, from manufacturing skills to ingenuity. Most importantly, they know how to bring together and motivate people of very different backgrounds to build high performing organizations.

America´s competitive advantage is seen most vividly in financial markets, where governments and business people around the world are eager to have America´s investment banks help them restructure their financial institutions and industrial companies to become competitive in global markets. Serving on the board of Goldman Sachs, I have had the opportunity to witness first-hand just how important this leadership is to countries like China, Saudi Arabia and the United Arab Emirates. In building financial institutions in these countries, America is developing the relationships with business leaders that will sustain this competitive advantage in global leadership for the next several decades.

For all the xenophobia about immigration and widespread panic over outsourcing, the reality is that America is the world´s melting pot. We are more accepting of people of diverse national origins and ethnic backgrounds than any country on earth. Progressive business leaders like IBM´s Sam Palmisano, Andrea Jung of Avon Products, GE´s Jeff Immelt, and PepsiCo´s Indra Nooyi recognize that diversity is not a challenge to be overcome, but a source of sustainable competitive advantage.

Whatever issues diversity may create – both real and perceived – America´s hidden competitive advantage is the ability of our leaders to operate effectively in integrated global organizations and to deploy the principles of capitalism throughout the world.

Our political leaders would be well advised to recognize this strength and use it to build America´s relationships with countries around the world, while helping them build their economies through capitalism, irrespective of their form of government.

PBS Nightly Business Report Commentary #2: Wall Street Versus Main Street

For the past decade we´ve had a big problem in the corporate world, but no one will name it. The problem is that many leaders believe they are more responsible to Wall Street than they are to Main Street. But it’s Main Street where the customers live and where the money is made.

The only way to create long-term value for shareholders is to create superior value for your customers. That comes from motivating your employees to create great products and superior customer service. That´s why companies like Target, Johnson & Johnson, and PepsiCo have been so successful in sustaining their growth.

But companies whose primary focus is on Wall Street, and meeting its short-term goals, are never going to create long-term value. Wall Street may focus on quarterly earnings, but it still takes five years or more to discover a drug, design a semiconductor, or create a breakthrough like the i-pod.

You simply can´t do it overnight. If you don´t stay focused on your True North, you´ll get buffeted by the winds of change, and wind up capitulating to playing the short-term game. At Medtronic, it took a decade to create breakthrough products that restore millions of people to health, but that´s how we created $60 billion in shareholder value- not by responding to Wall Street.

Unfortunately, many corporate leaders don´t have the patience or the vision to do that. They bow to Wall Street, keep shifting strategies, and wind up destroying their value.

Authentic leaders stay focused on creating great value for Main Street customers. And that´s how they create long-term shareholder value. Authentic leaders who focus on Main Street will out-compete every time those who only worship Wall Street.

I’m Bill George.

PBS Nightly Business Report Commentary #1: The Need for Authentic True North Leaders

Bill George is a commentator and contributor to PBS Nightly Business Review. This blog entry is a copy of his first commentary which aired on June 28.

For the past five years we’ve been facing a crisis in corporate leadership. The Gallup poll says only 22 percent of the American people trust their leaders. That’s not just a problem, that’s a formula for disaster, because our entire system of capitalism is built on trust.

Many leaders have breeched the trust given them when they were chosen to lead our great companies. It turns out these leaders are primarily interested in taking as much as they can out of the company – money, fame, power and glory. Instead of takers, we need givers whose goal is to serve all their constituencies: their customers, employees, and shareholders.

All too often boards of directors choose the wrong leaders to run our corporations. They select them more for their charisma than their character, for their style rather than their substance, and for their image rather than their integrity. Well, if we choose people for charisma, why are we surprised when we don’t get character?

Boards need to stop searching for corporate saviors from outside the company, and get back to developing leaders within their companies – leaders that have the character, substance, and integrity to build companies for the long term. We need authentic leaders who can empower people throughout the organization to step up and lead, and who are committed to serving all their constituencies.Only when we have authentic leaders will we be able to regain the trust of the American people, as well as the trust of customers, employees, and shareholders – and only then can companies create long-term, sustainable value.

The Triumph of Competence over Charisma

Despite all of the failures at the top of companies in recent years – or perhaps because of them – we are finally moving into an era of competent leaders, favoring them over charismatic leaders.

The appointment of the highly competent Bob Zoellick to replace the charismatic Paul Wolfowitz as president of the World Bank is just the latest such move. Zoellick is highly respected by finance ministers and bankers around the world and will be quickly confirmed. He was passed over two years ago for the ideological Wolfowitz who didn´t take long to alienate the bank´s staff as well as financial leaders around the world with his focus on ideology rather than performance. Look for Zoellick to turn that around quickly and to rebuild the trust in the institution. Unlike Wolfowitz, who placed his own interests ahead of the institution he was elected to lead, Zoellick has always been a builder of competent institutions who gets things done.

Zoellick´s selection has echoes of the replacement of Dick Grasso, the charismatic leader of the New York Stock Exchange by the very competent John Thain. The NYSE has flourished under Thain´s leadership, as he has quietly led it into the era of electronic trading and global trading.

It is ironic that several of the most competent leaders of today were initially passed over by their boards who gave preference to charismatic leaders instead. When these charismatic leaders got their companies in trouble, the boards turned to these competent leaders to bail the company out. Just look at the enormous success these leaders have achieved:

o A.G. Lafley at Procter & Gamble was passed over for the charismatic Dirk Jager. In less than two years Jager´s abrasiveness and abandonment of long-held P&G values led to a revolt of its management and his replacement with Lafley. Lafley has rebuilt the trust in P&G while quietly transforming the company into a global powerhouse in consumer goods.

  • Anne Mulcahy at Xerox was also passed over for IBM star Rick Thoman, who led the company to the brink of bankruptcy in just thirteen months. Mulcahy avoided bankruptcy and rebuilt Xerox by focusing on its core products, new technologies, and customer service while reducing the company´s debt by 60 percent.
  • Andrea Jung of Avon was also passed over by the appointment of a board member who came from Duracell, the battery company. In just twenty months the Avon board recognized its mistake and replaced him with Jung. Jung quickly changed the company´s mission to “the empowerment of women” and built her organization from 1.5 million to 5.5 million people, the largest in the world.
  • The board of Hewlett-Packard recruited the highly charismatic Carly Fiorina as its CEO. Fiorina hit the top of Fortune´s “Most Powerful Women” lists several times, just as the company´s performance was tanking and its organization imploding. To replace Fiorina, the H-P board recruited Mark Hurd, another highly competent, but not charismatic, leader. In less than two years, Hurd has put H-P back on track, as it regains lost market leadership and its original culture.

Some of today´s top leaders were simply recognized for their competence – and have demonstrated it time and again, while building great organizations capable of sustaining growth:

  • Steve Reinemund led PepsiCo to great heights for six years before deciding to focus on his family and teenage twins.
  • Bob Ulrich took over the reins of Target from a failing leader a dozen years ago and has quietly transformed the company into the retail powerhouse with its great values for consumers with fashion-forward merchandise.
  • Doug Conant has transformed Campbell´s Soup into a growth company once again by developing competent, authentic leaders throughout his organization.

There are many more examples of competent leaders who are emerging as the giants of the 21st century: Dick Kovacevich of Wells Fargo, Jeff Immelt of GE, Rex Tillerson of ExxonMobil, Sam Palmisano of IBM, Ken Lewis of Bank of America, Lloyd Blankfein of Goldman Sachs, John Mack of Morgan Stanley, Ken Chenault of American Express, and Dan Vasella of Novartis. All of them give priority to building leadership in the marketplace and authentic leadership in their organizations over publicity for themselves. They all have well controlled egos and are focused entirely on building great organizations.

Isn´t it time for corporate boards to abandon the needless search for charismatic leaders and simply promote the competent, authentic leaders right in front of them? These new leaders may not impress Wall Street by hyping the company´s stock, but in the long-run they will create far greater shareholder value by building authentic growth organizations that stay focused on their True North.

Where Have All the Leaders Gone?

Paul Wolfowitz, Alberto Gonzales, Joseph Nacchio of Qwest, Heinrich von Pierer of Siemens, . . . What do they have in common?

A failure to accept the responsibilities of leadership.

No one seems to be willing to take responsibility for leading anymore. Either they “don´t know,” “can´t recall,” or “were just following their lawyer´s advice.” These leaders are either asleep, incompetent, not telling the truth about their actions, or simply unwilling to be responsible leaders.

What ever happened to leading with honor and accepting full responsibility for leadership? It brings to mind the title of the introduction to my first book, Authentic Leadership, “Where Have All the Leaders Gone?” – that is also the title of Lee Iacocca´s new book.

Let´s look at what these leaders have done or said and explore the common threads:

Paul Wolfowitz:
Wolfowitz directed the World Bank to pay after-tax compensation at the State Department for his “friend” Shaha Riza which exceeded the amount paid to Secretary of State Condoleezza Rice, and refused to own up to it. In so doing, he has besmirched the values of the office he is sworn to uphold, and completely undermined the credibility of his “anti-corruption” campaign. In working behind the scenes to hang onto his job, he risks cutting so many deals that he will render the power of his office useless.

Why doesn´t Wolfowitz resign with honor?

Alberto Gonzales:
Under oath before the Senate Committee, Gonzales testified time after time that he “could not recall” being involved with the decisions to eliminate the nine prosecuting attorneys and replace them with Bush loyalists. Couldn´t recall? Where was he on such an important decision? Either he failed to do his job, or he had a convenient memory lapse. In hanging onto his job, he damages the credibility of the Attorney General, and brings dishonor to the President.

Why doesn´t Gonzales resign with honor?

Joseph Nacchio of Qwest:
Last Thursday Joseph Nacchio, the former CEO of Qwest, was convicted on nineteen counts of insider trading for selling his Qwest stock just before it collapsed, at the same time he was giving shareholders rosy predictions about earnings growth. Nacchio led Qwest´s hostile takeover of U.S. West, a regional Bell operating company, drove its stock price to $60/share by initiating dramatic cuts in its service levels, and then sold his stock while the stock price declined all the way to $1.07 per share when the telecommunications bubble burst.

Shortly thereafter, he was replaced as CEO by the Qwest board of directors. Now it seems our legal system has judged him accordingly.

Heinrich von Pierer of Siemens:
As CEO and now chairman of Siemens during the 1990s, Heinrich von Pierer was one of Germany´s most respected business executives. He resigned last week to remove himself as a focal point of criticism of the firm for its alleged $500 millions in illegal payments by its communications division. While von Pierer claimed no knowledge of the payments, one has to wonder how engaged he was in the business if he did not know, or why he had not put in an effective audit system that would reveal the payments.

To his credit, von Pierer did the honorable thing and resigned.

 

All of these cases lead the general public to the conclusion that leaders can no longer be trusted. This is a very dangerous conclusion because the very nature of leadership requires that leaders maintain the trust and confidence of their constituencies.

 

The problem is not that leaders cannot be trusted. Rather, we are choosing the wrong people to lead. We should choose responsible leaders who are well grounded in their values and place the interests of their institutions and their constituencies ahead of their own. We don´t need leaders of public or private institutions that are known for their charisma, their style or their image. We need leaders known for their character, their substance, and their integrity. We need leaders who have demonstrated throughout their lives the capacity to lead in a responsible manner, especially under pressure – and when they fail in their responsibilities, to resign with honor.

Are CEOs Overpaid?

Not if they create great value for their shareholders. Here´s why:

The controversy over CEO pay will continue to heat up as corporations announce their CEO´s pay according to the new transparency tables mandated by the SEC. That´s a good thing. But we need to distinguish between CEOs who create value for their shareholders over the long-term and those who destroy it.

What really upsets me is the number of CEOs who destroy shareholder value and walk away with tens or even hundreds of millions of dollars for failing. Remember Bob Nardelli´s $210 million payout for his failures at Home Depot? Today´s poster child for an overpaid CEO is John Antioco, who presided over Blockbuster Videos´ loss of market share to Net Flix and led his company into the red during his ten-year tenure. Why did the board sit idly by as Antioco´s failure to lead destroyed 75% of the company´s shareholder value over the past five years?

It took the election of a dissident shareholder by the name of Carl Icahn to get the board to act. And now they have acted responsibly in using “negative discretion” to reduce Antioco´s contractual termination pay from $21 million to $8 million. My question is this, why did the board fail to act until pressured by Icahn? Why did Antioco have a contract that guaranteed him termination payments in the first place? I have served on the boards of some of America´s leading companies, and none of their CEOs, myself included, have contracts. They serve at the pleasure of the board, which in turn is elected by the shareholders to protect their interests, not those of the management.

Contracts for CEOs are the root cause for the inequities in executive compensation, precisely because they are designed to protect the CEO in case of failure. Of all people in the organization, the CEO should be the most at risk when the company fails to perform and the best rewarded when it succeeds, not the reverse that we have seen in recent months. First-line employees at Blockbuster and other companies have no contracts guaranteeing their jobs or their pay, so why should the CEO?

Some will argue that boards recruiting CEOs from outside the company have to guarantee their pay with a contract. That problem just highlights the real cause of the problem: when the board has to look outside its ranks for a new leader, it has failed in its responsibility to provide adequate succession for management. In other words, the board has failed to do its most important job in ensuring the company´s continuity of leadership.

In sharp contrast to Blockbuster´s failed CEO, look at these two examples from today´s news:

  • Delta Airlines CEO Gerry Grinstein, who shepherded the company through its reorganization to come out of bankruptcy, will not receive any severance, incentive payments or stock when he retires and a new CEO is chosen.
  • Ken Lewis, chair and CEO of Bank of America, one of America´s largest banks, received $23 million in compensation last year, only $1.5 million of it in salary. Too much? I would argue not, because he and his organization have performed so well for their shareholders. During the last five years B of A´s shareholders have been handsomely rewarded as its returns have been 2.5 times greater than the Dow Jones Industrial Average. Lewis exercises his stock option gains not to maximize his gains, but on a pre-programmed earnings basis.

The time is long overdue for corporate boards to “pay for performance,” not for failure. For increasing long-term shareholder value, not destroying. And for building succession into the ranks of management to ensure leadership continuity.

I welcome your comments and feedback to these ideas.

True North and Valentine’s Day

It is just four weeks and a day until the official launch of True North, and the excitement of our team as well as my own excitement about the launch is growing rapidly.

(For those of you who would like the first copies off the press, I suggest you pre-order True North at a handsome discount from www.amazon.com or www.barnesandnobel.com. We guarantee that you will have your copy prior to the March 15 launch date.)

Why did I write True North (with wonderful help from Peter Sims)?

After I wrote Authentic Leadership, many leaders asked me, “How can I become an authentic leader?” Admittedly, I never answered that question, as one critical reviewer pointed out. Jim Collins, in his best-selling Harvard Business Review article on Good to Great rhetorically asks a similar question, “How can you become a Level 5 leader? The answer is, we do not know.”

Over one thousand studies done in the last fifty years have failed to produce verifiable answers to that question. My colleagues at Harvard Business School encouraged me to find out the key characteristics, skills, competencies, and styles of authentic leaders that made them so successful.

With the assistance of my colleagues Diana Mayer and Peter Sims, I set out to find out. In the space of just six months we interviewed 125 authentic leaders from business and non-profit organizations, ranging in age from 23 to 93, about how they developed as leaders. These in-person interviews lasted an average of seventy-five minutes, resulting in 3,000 pages of transcripts. All in all, it represents the largest, in-depth study ever conducted on how leaders develop.

The results were striking. These 125 leaders did not identify any characteristics or competencies that made them successful. Instead, they talked about their life stories and the people and the transformative events (which we call “crucibles”) that enabled them to find their passions and the purpose of their leadership and to lead authentically. They shared their motivations, the ways their values were tested, and the many things they did to sustain their leadership, in spite of the pressures and seductions they faced in their leadership roles.

Most importantly, they talked about their “True North,” which many described as their inner compasses that enabled them to stay true to who they are and to their deepest beliefs when faced with the enormous pressures and seductions they faced in their leadership roles. That´s why we decided to title the book, True North, and to use the metaphor as a compass to guide you on your leadership path.

In True North we share well over one hundred stories told to us by these authentic leaders – some short and some quite extensive – that capture the essence of how you can discover your authentic leadership. And we include a series of exercises that I have used in my course at HBS, “Authentic Leadership Development,” to give you the tools to guide you on your way.

A warning: there are no quick fixes here, no easy answers. (If you want easy answers, pick up a book of fables at the airport the next time you are taking a flight. By the time you arrive, you will feel a lot better, but you won´t know any more about how to become an authentic leader.)

Becoming an authentic leader takes a lot of work on your part because ultimately you are responsible for developing yourself as a leader. Mentors, courses, and books like True North can serve as a guide, but there is no way to get there other than taking responsibility for developing yourself. But doing so is a heck of a lot more rewarding.

I hope you will go on-line and pre-order True North, and then send me your reactions and your stories to this website. I will take the best of them and use them in the many speeches and media appearances coming up as a way of illustrating your True North – without violating your confidentiality.

Good reading!

‘The Takers’ Part II – The Executive Compensation Uproar

Two weeks ago President Bush had the audacity to say that executive compensation should be based on “pay for performance” and long-term incentives. As reported by the media present at this event, the business executives in his largely Republican audience sat in stunned silence. No one spoke in support of his proposal.

As often as I disagree with the President in matters of foreign affairs and government budgets, I think he is right on the money here. Who can argue with “pay for performance”? Only the “takers,” I guess. Why didn´t the business community rise up in support of the President on this point? Were we too focused on getting whatever we could take from the system?

The President was simply stating a basic principle of capitalism: those of us engaging in capitalistic businesses get rewarded for creating value. In my experience, those capitalists that create long-term value for their organizations and their shareholders claim the greatest gains. Think of Bill Gates, Warren Buffett, the late David Packard, Michael Dell, and Oprah Winfrey.

Are we so enamored with people like Bob Nardelli, Bill McGuire, Donald Trump, Marc Rich, and Michael Milken and their enormous wealth that we are prepared to abandon even the most basic principles of capitalism? If we are, I predict that capitalism is doomed. We will have regressed to Russian-style capitalism: take all you get for yourself legally, and then take whatever else you can get illegally, and ship your spoils out of the country. Be sure to keep your passport with you and your private jet available at all times so you can get out of the country before the law catches up with you, as it did with Jeff Skilling, Bernie Ebbers, Dennis Koslowski, Richard Shrushy and their compatriots.

It´s about time the rest of us who care about the future of capitalism speak out on behalf of “pay for performance” and not leave the President standing alone.

Let me know your views on these thoughts.

P.S. If I have offended any of you who are “takers,” please look in the mirror before responding.

Takers and Givers

Today I am initiating the True North Blog as a vehicle to engage leaders interested in their development and all those who are interested in seeing better leaders throughout organizations. I welcome your inputs, challenges, inspirations, and critiques of these ideas, all with the intent of having “honest conversations,” something that is too often missing in businesses and non-profit organizations.

Back in 2003, the year after I retired as chairman of Medtronic, I wrote Authentic Leadership for two reasons: first of all, I was disgusted with the many business and non-profit leaders in my generation who were focused on “taking” rather than “giving.” Far too many leaders – not just who wound up in jail – took advantage of their power and position to reap personal benefits rather than building their companies and creating lasting value.

Cheered on by Wall Street and the neo-classical economists, they focused on maximizing shareholder value in the short-term, even if they wound up destroying it in the long-term. American icons like AT&T, Sears, General Motors, and K-Mart went into a long-term state of decline or ceased to exist, at least in recognizable form.

My second reason was to share with a wide range of leaders the insights I had gleaned from thirty-five years in the business world, and to encourage the new generations of leaders to become better leaders than my generation was.

After studying hundreds of business leaders – and personally knowing many times more – I have decided that you can divide them basically into two categories: “takers” and “givers.” The “takers” are out for themselves. They want you to support them in maximizing what they get, while you and your teammates get the crumbs left over. They want to get whatever they can, regardless of whether they perform as leaders and create lasting value.

The “givers” recognize they were chosen to lead for the purpose of serving others: their customers, their employees, their investors, and all those citizens that have a stake in the success of the organizations they lead. If you work for a “giver,” you will find that he or she is interested in your success, your ability to help fulfill the organization´s mission, and your development as an empowered leader. I call the givers authentic leaders because they are genuine people, true to themselves, who understand the purpose of their leadership, practice their values consistently, lead with their hearts, build enduring relationships, and have the personal self-discipline to produce sustainable results.

Of course, the “givers” reap big rewards as well, usually over a long period of time. Their rewards come because they have created value for others – customers, employees and shareholders. I believe their rewards are fully deserved, even when the accumulated financial gains appear quite large to the average person. The people on their teams can accept this because they too are handsomely rewarded over the long-term.

I confess that I was a large beneficiary of this approach. When I joined Medtronic the market value of its stock was $1.1 billion. It wound up at $60 billion. My original 25,000 shares of stock options split six times, giving me sixty-four times as many shares. We ensured that all Medtronic employees became shareholders as well, and they too reaped the benefits.

But the greatest benefit of all to my fellow employees and me was the intrinsic satisfaction of seeing how Medtronic products helped restored millions of people to full life and health. When I joined the company in 1989, around 300,000 new people were being restored every year. These days that number has grown to more than 8 million new people each year. That´s our real reward!

Please send me your reactions to these notions of “takers” and “givers.”

Why The 10,000 Point Dow Doesn’t Matter

The Dow is at 10,000.  Reporters glow.  Retirees relax.  Investors sigh: “Whew, we’ve made it.”

They’re wrong.  This purported milestone isn’t a victory.  It’s nonsense. 

The market is the wrong place to look when measuring the health of our economy.  The collective wisdom of mutual fund analysts was wrong in 1999, wrong in 2006, and it’s wrong right now. 

The best investor in the United States basically ignores Wall Street.  Warren Buffett has billions he could trade in and out of stocks.  Thousands of analysts would clamor to give him hot tips.  But Buffett ignores it all.  Serene, he sits in his office, reading annual reports, newspapers, and thinking about opportunities for growth.  He isn’t drinking champagne tonight.  And you shouldn’t be either.

We are far from out of the woods.  Large companies are still laying off employees.  When we cross the 10% unemployment line, consumer spending (now down to 70% of GDP) may contract even further.  It should probably should.  Consumer spending in the UK is 65% and in China it’s only 40%. 

Haven’t we learned something from this crisis??  Wall Street sold the world worthless securities, trillions of dollars of wealth evaporated, and now Wall Street is cheering this “new” bull market.  Now the bulls say it’s all okay again?! 

What you’re watching now is a bull market on government spending.  What you should be watching is the real report card: 

  • Inflation: There is $50T in unfunded liabilities on the country’s balance sheet.  If the USA played by corporate America’s accounting rules, we’d be bankrupt.  The laws of gravity still apply.  We will experience significant inflation within 3 years. 
  • Job Growth: Since the start of the recession in December 2007, we’ve lost 7.6 million jobs.  Millions more have stopped looking for work.  The analysts keep saying this downward trend will stop.  But it hasn’t.
  • Innovation: The credit contraction makes it harder for entrepreneurs and small businesses to invest in growth.  This segment of the economy is where a rebound will start.  Don’t watch the Dow, watch small business credit (contracting) and patents filed (contracting).
  • Education:  The important word is “Gross Domestic Product” is product.  We must have highly skilled knowledge workers to compete against other economic innovators.  A third of high school students aren’t graduating.  This is the HR pipeline??

Yes, we have stepped back from the abyss.  But some very smart people thought the same thing in 1932.  Then 1933 happened.  Not so fast, Wall Street…

This battle is far from over.  Let’s dig deep, focus on the long haul, and make the substantive policy and business improvements the economy needs to really rebuild.  Then, the Dow will take care of itself.