What is "The Economy"?

More than a decade ago I sat in a data center staring at a screen containing backup logs for a major agency of a state government. The logs made it clear that backups had been failing for months. My job was to find out what happened. I'm just built to get to the bottom of things, and part of my skill is to take apart the complex, interconnected pieces and find the simple parts. It makes it easier to figure out what happened.

Recently, I've done this with "The Economy."

People, especially experts and those who want to sound knowledgeable, talk about "The Economy" like it's an entity unto itself. Like it has a mind of its own, and it will head in various directions based on select, complex ideas like GDP, trade, and unemployment rates.

But, it's not. "The Economy" is nothing but a set of metrics (values of measurements) that communicate various historical truths (since most measures are 3-12 months ago). Economists, politicians, and pundits all use the numbers to beat up their opponents and to bolster their own theories, with all sides claiming proof for their viewpoints. And it's all mostly a great big show.

"The Economy" is nothing more or less than the collected decisions of human beings, including those responsible for making decision for corporations and governments. People decide to buy, save, or invest. As a result, funds become available as revenue, for loans, or in exchange for equity. The cumulative impact of these decisions results in the measures that become the economic metrics.

Underneath it all, however, are these decisions. They are made in an effort to keep a job, to profit, to look good, or to benefit one's own financial position. Sometimes, the decisions are speculative in the hopes of creating a large, fast gain. Other times, they are extremely conservative in an effort to avoid any risk or any possible loss.

But all of these are the decisions made by individuals and (sometimes) multiple individuals as part of a collective.

That's all "The Economy" is, though. It's the consequences of financial decisions of collections of people: cities, counties, states, countries, and the world.

When people stop spending and/or investing, we have a recession or depression. When business managers stop hiring, joblessness goes up. And so on.

We are a society that attempts to avoid the consequences of our actions. We want to believe that our intentions drive the consequences. They don't. The only thing that drives consequences is the natural laws that apply and the decisions that others make.

You can't escape consequences forever.

Getting It

To design something really well, you have to get it. You have to really grok what it’s all about. It takes a passionate commitment to really thoroughly understand something, chew it up, not just quickly swallow it. Most people don’t take the time to do that. Steve Jobs

When I read that quote on Quoth Steve today, I thought about this series on Apple's recent announcements and the ongoing discovery that many in the industry are communicating as the Apple WWDC continues this week. It underscores a key differentiator between Apple and most of the rest of the technology industry. In doing so, it also illustrates why so many in the technology press are fundamentally confused about both why Apple does what it does and why people buy Apple products.

Back when Japanese cars first began to gain a real foothold in the US, there was a similar dichotomy: Japanese cars had virtually no "options," while US cars were effectively custom built for each customer from an extensive list of options. Since I grew up in Michigan, the capital of the car industry in the US, I remember the derisive laughter about the limited options, the lack of this or that feature, and the expectation that the Japanese manufacturers would have to abandon the US or offer a better Chinese menu.

In retrospect, all of those observations and expectations were completely wrong. It turns out that the consumers appreciated the simplicity of getting a car without having to decide what to get on it -- and without having to wait for it to be built to their specifications. In fact, I lost out on a Pontiac Trans Am when my order turned out to have a very limited edition engine and the dealer decided he could get more for it from someone else, even though I had ordered it and waited for months.

1986 Trans Am

Today in technology, we have a similar situation: Apple is working on design in a way that Jobs thought about it. Most companies don't. Most put in a faster processor, more memory, more pixels, and expect those changes to compel purchases. Even customization is touted as a primary desire for consumers when that's not the case for many who just want to purchase a system that is ready to go, isn't bloated with a lot of distracting extras, and is designed in a way that allows it to disappear with use.

How do you want the products you purchase to be designed?

The Next Technology Shift

Apple's WWDC announcement usher in a new era of integrated mobile and desktop computing poised to change the way people interact with their technology. Again.

On Monday, Apple announced the new versions of their two operating systems: OS X 10.10 Yosemite for Macs and iOS 8 for iOS devices (iPads, iPhones, and iPod Touch). There were a number of interesting components to the upgrades, and I have installed Yosemite on one of my Macs to begin testing and exploring a bit, but the real shift is in the integration of the two worlds. While this is only a first step, consider two aspects of the new awareness:

  • Your Mac will know when your iOS device is near, and will allow you to transparently continue on one something you started on the other. Start an email on your iPhone, finish it on your Mac. Start writing a document on your Mac, finish while on the go on your iPad.
  • Your Mac becomes an extension of your iPhone, allowing you to make and receive phone calls and text messages (SMS) directly on your Mac via your iPhone, even if it's charging elsewhere in the house (I'll leave mine up in my bedroom where it gets decent cellular signal!).

Now, add to that updates to iOS like:

  • Family sharing, allowing up to 6 family members to share purchases, location, and iCloud data like reminders and calendars simply and transparently,
  • Health, to integrate all of the great health monitoring and management that is now available,
  • HomeKit, allowing developers to create integrated apps and hardware for keeping your house safe and automated to do what you want it to do.

When I look at this set of new capabilities, I see an incredible opportunity for Apple as a company, and those who align squarely with these new initiative and build hardware and software that aligns to it, and even for individuals to navigate a new career.

Apple introduced an entirely new programming languages called Swift that is designed with mobility, touch, and common development of iOS and Mac apps as core architectural points.

If technology is your business or career, pay attention and strongly consider a shift in how you're doing what you're doing.

If you are a user of technology, be prepared to shift away from thinking about your various devices as individual points of interaction to a world where they are each simply windows into your information that have different characteristics, strengths, and weaknesses.

How to Succeed, Part 2

In the first installment in this series, I mentioned the first law of success in Zig Ziglar's terms: "You can get anything you want out of life if you just help enough other people get what they want." As you dissect that concept, you will begin to see how powerful it is. The value you generate to others will determine what you receive in life. There is a value that you generate for one person which is multiplied by the number of people you find who want it. As you grow the per-person value, your reward grows. As you expand the number of people, it also grows. While outlining this law in his famous record "The Strangest Secret," Earl Nightingale articulated it in this way:

Your success will always be measured by the quality and quantity of service you render. Most people will tell you that they want to make money, without understanding this law. The only people who make money work in a mint. The rest of us must earn money. This is what causes those who keep looking for something for nothing, or a free ride, to fail in life. Success is not the result of making money; earning money is the result of success — and success is in direct proportion to our service.

Most people have this law backwards. It's like the man who stands in front of the stove and says to it: "Give me heat and then I'll add the wood." How many men and women do you know, or do you suppose there are today, who take the same attitude toward life? There are millions.

We've got to put the fuel in before we can expect heat. Likewise, we've got to be of service first before we can expect money. Don't concern yourself with the money. Be of service ... build ... work ... dream ... create! Do this and you'll find there is no limit to the prosperity and abundance that will come to you.

Apply this rule today and you will begin to see a change for the better.

Rule 2 will become present in your life very quickly, then. In fact, it has been often on my mind this week and has come up in multiple conversations. Here's the story of one of them:

I met with a good friend for lunch this Wednesday. He's an Elder in our church, and I have served with him on the board of directors for a local non-profit. He is a wise and successful man. We met to talk business, challenges for some of the people we know, and the influence of spiritual truths on our lives. During our conversation, we shared our thoughts on helping two of the men we know. These men have been challenged in the job market that has emerged during this time of economic uncertainty, but they have given up. Their wives are working, but they are not. The stress on their marriages have them both on the rocks. Unless something changes, it's likely that we will see both of their marriages rendered asunder, kids damaged, and souls devastated.

All because they have been broken against the rocks of the second law.

Ironically, during the conversations with my wise friend, we talked about his response to the economic conditions. His story was much like my other wise friends, and went something like this: "When the economy changed, on of my primary sources of income stopped. Suddenly. Overnight, services that had been providing 30-50% of our income dried up. I had to find ways to replace it. I went back to school. Renewed my license to broker loans, and added that to my services."

Do you see the difference?

During the second world war, Viktor Frankl was taken prisoner first to the Theresienstadt concentration camp and later to Auschwitz. During his time in the camps, he came to a profound understanding of the strength of human consciousness in the face of difficulty and suffering. It was he who said, "Each man is questioned by life; and he can only answer to life by answering for his own life; to life he can only respond by being responsible."

And it was he who first pointed out, "Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom."

"...our power to choose our response." This concept is pregnant with potency. So many avoid this truth and hide from their responsibility by pretending that their lives are not their own; that somehow the faceless "others" dictate the direction of their lives. They seem themselves as powerless to make their own choices. Yet these thoughts are all lies... and they lead only to pain, suffering, and failure.

It is you who chooses. They are your choices. No one controls you, although many will work to influence you using a broad range of tools from their words to their threats and from there to the exercise of authority. Ultimately, though, as Frankl so thoroughly proves in his seminal work, "Man's Search for Meaning," it is up to you what you do and no one else is responsible, accountable, or capable of living your life or making your choices.

Recently, my friend and mentor Matt Furey has expressed this truth in this way: "You are not to blame for everything in your life—but you are responsible for how you think and feel about everything in your life."

This is the second law of success.

How to Succeed, Part 1

I read it again today. While sitting in my kitchen reading my daily dose of news, I once again read about how evil the wealthy are, how they don't deserve what they have, and how they "aren't paying their fair share." All untrue.

We certainly do need leaders, but since our current crop of political parasites do not have the fortitude to lead, it will fall to us to lead ourselves.

First, it's absolutely critical to understand the truth about money and wealth. It's the starting point. Without that understanding and mindset, nothing else will matter.

To explain, let me take you back a few weeks to a hotel conference room in Clearwater Beach, Florida. It was a Sunday afternoon. We were nearing the conclusion of a solid three days of coaching and instruction when my friend Everte Farnell stepped to the front of the room. He held us spellbound with his wealth secrets from the ancient wisdom he has been studying (more on that in the future on these pages), with one package of insights so clean and important that I will share some of it with you now.

First, it's useful to know that during these sessions I had experienced some intense one-on-one coaching in front of the room. So, during his talk, Everte looked directly at me and challenged my thinking. Then, he said something very important to the entire room: "We live in a cultural lie. Our culture is egalitarian. The lie is that everyone is the same, so if someone is more successful than someone else, it must be because they have lied, cheated, and stolen. It's not true! Everyone is not the same. Some are smarter, more skilled, and more valuable as a result. Believing otherwise will keep you in bondage for the rest of your life."

Can you see how easy it is to buy into the lie that everyone is the same? Of course, we are all human beings and we have inherent value as people, but that does not mean that what we have to offer others is the same as anyone else.

For example, is Steve Jobs more valuable to Apple than Gil Amelio? Of course! Amelio nearly killed Apple, while Jobs has brought it back and into a dominant role in the marketplace. Amelio is a very talented individual, but wasn't the answer for Apple. Jobs is much more valuable in that role.

The same is true of you. You offer unique and valuable skills and abilities. What are they? How can you tell?

This is the first secret. It's difficult for some people to accept. Regardless, it's true. Here it is:

Your financial value is exactly what another is willing to pay you for what you offer times the number of people you can find to pay.

There is no other measure of financial value.

The first secret of success is this (as put by Zig Ziglar so many times): "You can get anything you want out of life if you just help enough other people get what they want."

What can you help other people get that they want? The more valuable it is to them and the more people you find who want it, the more you will earn.

You really can get anything you want out of life if you just help enough other people get what they want.

Will you?

Of Course It's a "Jobless Recovery"

As I sat in my family room here in Boulder, Colorado a few days ago thinking about the utter ignorance of the people who are making laws in this country, I began writing this post. Then, this morning, I read this excellent piece in the Wall Street Journal: "Why I'm Not Hiring" by Michael P. Fleisher outlines the reality of the situation that the ignorant, poll-driven politicians have created. Subtitled, "When you add it all up, it costs $74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits." the piece demonstrates why the "recovery" is "jobless:" The government is doing almost everything in its power to make it painful to hire, and is simultaneously making it clear that it will very likely get more difficult to hold on to existing employees by increasing fees, taxes, and other mandatory payments for having an employee.

In short, the politicians have killed any hope of new jobs.

And why wouldn't they? They don't understand business. They don't see how many flows in business, or understand forecasting, revenue, cash flow, or managing to a budget. After all, when they want more money, they simply pass a law to get it.

Of course, those laws never actually work they way that they had planned, since money naturally moves away from areas that are taxed. That's why no one is hiring.

So, in short, the very structures that the government is putting in place has killed the employment marketplace. It will not improve until there is some assurance that the idiots in Washington, D.C. won't make yet more changes on a whim and a prayer. And that's not going to happen until there is a change of thinking in those circles.

You cannot vilify business and those wealthy enough to run businesses without also decimating the job market. Yet, that's exactly what they are doing in D.C.

Update: So what can be done?

It's actually quite simple: lower the burden on those who do the employing, and make the costs of hiring and maintaining employees predictable.

How is that done?

That's also simple: reduce taxes and fees on employers and employees and create laws and policies that make those reductions predictable, giving 12 months' notice for any increases. When increases can happen at any time, business owners and leaders must maintain additional reserves to cover unexpected costs dictated by the whims of government.

For some real research into what happens when these kinds of approaches are followed, look at The Historical Lessons of Lower Tax Rates, the Joint Economic Committee report on the Reagan tax cuts, and Wikipedia's explanation of the Laffer Curve for some insights into how complex the interconnections are. Regardless of this theoretic conversation, predictability is the key to business management, and the lack of predictability is a primary issue impacting the "Jobless Recovery" that we're now seeing.

Second update: I am clearly not alone in my thinking on this. For another, there is Michael Schrage's perspective on his Harvard Business Review blog article "The Hireless Recovery" (my thanks to my good friend Stephanie George for pointing me to this article!).

How Do You Judge Your Worth?

First, by the gift the Creator gave me in breath this morning. I am worthy of His care and His love. That is enough. But there is more...

Second, by the knowledge that I am unique in all history. There never has been nor will there ever be another just like me. As a result of the rule of rarity, that makes me priceless. Finding the path to the exercise of that value is a lifelong journey, but that does not diminish the truth that I am of exceptional worth.

Third, by those who have chosen to love me, starting with my amazing bride who has put up with my vagaries for more than 26 years. My kids, who love me even in their teen years. And the friends and mentors who have been so generous with me.

Lastly, by the value I am able to bring to others through who I am and what I know and do. Being valuable and generous in the eyes of others is a reminder of my worth. When I am not there, there are things that won't (or can't!) happen.

What about you?

The Secret to 21st Century Capitalism

Last week I sat reading an email from one of the mailing lists that I receive. Some Internet friends and I have shared our lives on this list for well over a decade. From life and death to kids with croup, we've laughed and cried together. Maybe I'll tell you more about the group one of these days, but for now, I'd like to let you in our conversation from last week: the changing face of business. My friend Cindy Collins-Smith, the editor of Customer Relationship Management magazine who has had the opportunity to edit thought leaders such as Don Peppers/Martha Rogers, Chip Bell and Pete Blackshaw, among others, put it very well and succinctly:

Loyalty, not individual sales, is what will sustain [businesses] over the long term. [The] idea of maximizing profit at every point of contact is 20th century capitalism, not 21st. Successful 21st century capitalists will be looking for ways to build relationships with customers (audiences) over time, not just looking for immediate, short term profits.

This is a fundamental paradigm shift, and many businesses are missing it. In fact, many people are doing their level best to pretend that nothing has changed; that we'll go back to the way things were. Nothing could be farther from the truth.

Twenty years ago, very few people had heard of the Internet. Today, it is a staple of every day life from the streets of Manhattan to the mud walkways of Kigali, Rwanda. The world is smaller and more interconnected than ever before, and the process is accelerating. How will you respond to this brave new world? How you respond will determine the degree of your success.

Ten years ago, most businesses poo-pooed the Web. They didn't see the value or the importance. While they were busy holding on to the past, visionary entrepreneurs like my friend and coach Matt Furey were creating Internet empires that would generate millions of dollars in sustainable revenue.

Today, we find ourselves at another juncture very similar to those turning points. Business is once again driven by relationships as it was a century ago. Now, though, those relationships are with like-minded people anywhere in the world. And today, the most powerful technology drivers are the social media sites like Twitter, Facebook, YouTube, and others.

Social media really is the wild west, though. Even those of us who have been involved in various social media for many years (for me, it started over 25 years ago!) are finding it work to stay on top of the ebbs and flows. Yet this is what you as a business leader need to do to remain competitive and to catch this wave. So get on it!

If you want some help, get it from someone who focuses on business first, not the latest gadgets and "cool sites." A number of experienced business people have done just that and so I am working with them to build social media into their overall business strategy. It's your turn.

To YOUR success, ssh, your Geek Whisperer

PS Because my work with my clients is so hands-on, I can only take 3 more clients for the Social Media QuickStart program. Jump on it now!

What Have You Done for Me... Lately?

This is a tough one... As I sat in my family room this morning, dwelling on the beauty of spring in Colorado, breathing in the delicious morning air, I couldn't escape the thought that has been pressing on me for two weeks or more: What have you done for me... lately?

Perhaps you've heard this said by a colleague bitter at the turn of event at work. They've worked hard and delivered some great value for the company in the past, but that doesn't seem to matter. Now it's all about, "What have you done for me... lately?"

Perhaps you've even felt this way. I know that I have.

Let's turn it around for a minute to see whether or not it makes sense...

Imagine that you have a problem with an appliance -- say your washing machine. A helpful repairman comes to your home and does an excellent job fixing it. You are grateful, and pay him whatever the fee was. All went well.

However, six months later, he shows up on your doorstep. "Remember when I fixed your washing machine?" he asks. "I've run into a bit of a lull and need some more to make my bills. So, would you please pay me?" Are you eager to pay him more? Do you feel like you owe him more?

Of course not! He hasn't done anything for you... lately.

It's no different when the roles are reversed.

The key is to understand your Master Equation, and to make sure that you're adding value to your side of that equation every day. As Carl Hubbell said, " A fellow doesn't last long on what he has done. He's got to keep on delivering as he goes along."

What are you delivering today that is of outstanding value?

To YOUR success, ssh

PS My coaching students get personal feedback on both creating and communicating value. I may have a couple of slots opening. If you're interested, just send me a comment.

How to Fix the Recession

Before you get the wrong impression and before I go any further, let me just say that I love London. My wife Terry and I are enjoying our time here immensely as we celebrate our 25th wedding anniversary here, but, just like in the States, they just don't get it. Today, the famously blunt British press was all over the Prime Minister (PM), his cabinet, and the Members of Parliament (MPs). Seems that many of the government's so-called servants have been busy ringing up tabs at taxpayer expense, many of which the press and constituents find wrong -- especially, as the press like to point out, during a recession.

I'll talk more about that later this week, but for now I want to focus in on a statement that was repeated multiple times this morning: It seems that the opposition is convinced that PM Gordon Brown can't "fix the recession" and his few remaining supporters are convinced that he's the right man for that job.

Irrelevant and misleading commentary. It's CRAZY!

For anyone to claim that government has a way to "fix" anything is the height of both stupidity and conceit. They have no such power, and, in fact, are finding their power more reduced by the day.

The good news for you, though, is that it doesn't matter which is true. There IS a way to fix the recession.

How?

You do it.

That's right, YOU.

It's really not hard to understand. It just takes some work. Here's the secret: produce a product or service that enough other people value enough to make it profitable for you. Then, sell enough of the product or service to earn as much as you would like.

And yes, it really IS that simple. That's how it all works.

So ignore the press. In fact, kill your TV and stop your newspaper subscription. As CNN found when they interviewed me, I get my news from Twitter and Facebook! Just dump the rest of that stuff. It's a waste of your time and bombards you with so much negative energy that it takes hours to recover.

What will you produce that others will want?

To YOUR success, ssh

PS Yes, this works even if you have a job. More on that tomorrow.

Your Master Equation

It was 15 years ago that the process began for me. I was sitting in my manager's office at IBM, getting yet another positive performance appraisal. After 11 years with IBM, I had matriculated to a senior technical position, was well-respected around the world by my colleagues, and had helped create a business that would one day rescue IBM. But, my manager was talking about my value, and what she said shocked me. She said, "Steve, I don't understand why you're still here. I don't want to lose you, but I can't give you the raise you deserve. You could make two or three times what you're making here if you were out there. Why are you still here?" It was an interesting question, and one that propelled me onto a path I'm still following to this day. Before I started on that road, though, I had to figure out my master equation.

First, though, remember my post about how the economy really works? In it, I described how value is the key ingredient for determining your success in life and how other people see you. The key to really understanding your value and the amount of value you have to generate is your master equation. And after that meeting, I had to figure out mine.

Here is how I did it:

First, I determined what I wanted to earn in order to maintain our commitments and our basic wants, including all of the costs for benefits that I had taken for granted at IBM like health insurance, computers, office space, and anything else that I would require to run my business. This was a number similar to what IBM called the "burdened cost" of an employee (salary, benefits, and the facilities and equipment required). If you are an employee, it's the cost of having you as an employee to your employer.

Second, with that number, I worked the equations.

For purposes of illustration, let's say that I decided that I would need $150,000 per year to make it all work. That's the amount above the costs for any products that I would sell. That is what I would need to make a business work. The equation answers this question:

How many customers do I need at what profit per purchase to earn this amount?

Using our nice round number, I would need to sell 150,000 people my product or service at a $1 profit each.

Or, I would need to sell 75,000 people my product or service at a $2 profit.

Or, I could sell one person at a $150,000 profit.

Or anything in-between.

Those numbers give you the minimum value that you must add in order for your customers to be willing to pay your price. Your sales job gets easier if you add substantially more value. With my coaching clients, we work on finding ways to add ten time the value so that their customers see that it's obviously in their best interest to buy from them at those prices.

What about you?

Work these equations for yourself. Are you worth substantially more than your employer or customers are paying for you? The more valuable you are, the more obvious it is that it is in their best interest for your customers (or your employer) to continue working with you.

Those who are most valuable have the greatest chance for success. Every day, you can determine your value, and then you can drop back and look at a broader view to see how you are delivering value to those around you.

It gets really interesting when you realize that value isn't just about money.

Let me know the thoughts that this brings up for you. And...

Let's go! ssh

PS I did just get a new shipment of the Mastering Life book, so I can make a limited number available personally autographed. Visit my book page to check it out and order while I still have some.