YOU may wonder whether you should blog. Stop wondering. You’re either on the Internet or you’re with the trolls. Here are the steps:
#WINNING
TODAY MAY 1st 2011 (US time) the news of Osama bin Laden’s death circled the globe. According to the New York Times, Bin Laden was shot in the head when he resisted capture and his body was later buried at sea. And there was much rejoicing!
Bin Laden’s death is a popular outcome for the US and its allies because it is seen as justice for the 2,752 victims of the September 11 attacks and the end of a decade long manhunt for the world’s most notorious terrorist. At the same time, it is worth remembering that the total cost of Bush’s “war on terror” has now risen to more than US$1.2 trillion. Even after adjusting for inflation, that’s more than four times what America spent fighting World War I. The cost appears even higher when you factor in the more than 5,000 US casualties and countless other deaths that have resulted from the fighting. Meanwhile, the war on terror continues undeterred, with no clearly defined enemy and no hope of achieving decisive victory. The US federal government deficit for 2011 is expected to top $1.27 trillion.
So how does this relate to consulting?
As a consultant, you are not paid to win a popularity contest. Popular means saying what your client wants to hear, telling a story that makes the majority of directors happy, or providing a flashy power-point presentation. Instead, you are paid to provide insightful recommendations that can be actioned to achieve clearly defined outcomes which will generate value for the client. The outcomes are worthwhile only if the pay-off exceeds the cost spent in terms of time, money and effort.
Popular is not the same as worthwhile.
Subtitle: The battle between John Maynard Keynes and F.A. Hayek
DURING THE global financial crisis, we were told by governments that the best way to fix the world economy was to increase spending. This sounds simple enough given that increased government spending and lower interest rates can be used to boost output, but it is only a partial truth.
John Maynard Keynes is the poster boy for governments everywhere because he prescribes a simple medicine for broken economies, more spending. The story runs like this: in uncertain economic times people save more money which makes sense for each person individually but leads to reduced spending overall and therefore lower firm revenues and lower economic growth. The only way out of this unhealthy spiral of saving is for the government to step up to the plate and increase the circular flow of money by spending on public works, digging ditches, war, fixing broken windows, or pretty much anything.
F.A. Hayek is the voice of reason who provides us with the other side of the story. Increased government spending (and quantitative easing) is not the solution to the problem and may actually make things worse because it continues to reward the malinvestments made during the boom years. The argument is that governments should play a limited role because propping up poor businesses and investments is not the best way to encourage strong and sustainable economic growth.
As you can guess, Hayek is not popular among the fat cats in public office because allowing businesses to fail during hard economic times will most likely lead to a sharp increase in unemployment (albeit temporary) and this will be very politically unpopular.
We should ask ourselves though, do we actually believe in the capitalist system? And if we do, what is the legitimate role of government in that system?
IN THE English-speaking world, we have issues when it comes to relationships. There is only one word for friend, which begs the question: “are you a friend, or aren’t you?” Facebook has helped us go some way towards solving this problem by providing a new class of friend, you can now have “real life friends” and “Facebook friends”. In addition to Facebook friends we now also have “LinkedIn contacts”, which are apparently more valuable than Facebook friends (and that’s why we don’t show them our stupid drunken photos).
In a fast-moving world it would be helpful to understand more clearly the relationship dynamic that we have with people and the quality of those relationships.
Here is a first attempt to segment those relationships in a meaningful way (slightly tongue in cheek).
THE advent of blogging during the late 1990s significantly lowered the barriers to entry in the publishing industry. Any person with a computer, a blogger account and a half baked idea could get into the industry, and they did. To shake things up further, the advent of blogging reduced the cost of distribution and the price of consuming content to zero. In 2010, eBook sales almost doubled and now make up more than 9% of total consumer book sales.
Despite these significant changes to the industry and a decade of warnings from visionaries like Seth Godin, the publishing industry has been far too slow to respond. The cost structure for physical book publishing is under big pressure, and the following cost breakdown shows where the cracks have appeared:
Cost of Physical Book Publishing:
Author gets 15%
Publisher gets 35%
Distributor gets 10%
Retailers get 40%
Earlier this year a number of major brick and mortar book stores closed their doors. In the US, Borders Group filed for Chapter 11 bankruptcy protection in New York. In Australia, REDGroup Retail, the owner of the Australian book chains Borders and Angus & Robertson, was forced into voluntary administration.
And this is not the end of the story. US based Barnes & Noble and Australian based Dymocks have their heads on the chopping block and are likely to suffer a similar fate, unless significant changes can be made to their respective business models (hint: get out of the bricks and mortar book business while you still can).
If you have any thoughts on how this train wreck waiting to happen will play out, please comment below.