Is Stimulus the Right Response to Global Slowdowns?

The world economy is at risk of recession. According to the OECD growth in the G7 is slowing and without immediate action it is difficult to move from the low growth stages back to prosperity. "Economic derailment" is seen as just around the corner unless nations act now. Their recommendation is to provide costly economic stimulus to turn the tide but may not be using the right tools.

Is stimulus the right approach?

IMF indicates rising risks to global economy putting European nations, and the world at large, in a slower growth mode. Problems in the U.S. are related to age-related spending and infrastructure needs. Direct stimulus is seen as one of the only tools to improve the economy.

The problem is that stimulus is a short-term growth strategy that comes with long term costs. As stimulus improves economic activity it also erodes the natural competitive nature of firms to adjust to new market realities. The stimulus becomes a focal point for short-term corporate investment but doesn't necessarily return the investment money to tax payers or improve market fundamentals.

Is there a long-term cost to stimulus?

A few years down the road we are in the same, or worse, position as now because we only received short-term gains with lots of debt.

The pathological need to spend and incur debt is what got us in this situation in the first place. Europe is known for taking on large liabilities making business prohibitive resulting in pushing investors into foreign markets where costs and barriers are lower. The U.S.must avoid this path as costs rises and infrastructure weakens.

Is there stimulus with long-term benefits?

Improving infrastructure focuses on fundamental aspects of the economy in a way that reduces the overall costs of conducting business. Investing in infrastructure works like a stimulus in the sense that it improves short-term business associated with construction but also has the ability to improve upon the economy as a whole. As the cost business transactions (moving and buying goods) decrease economic activity increases.

Infrastructure also impacts multiple industries equally. Consider the implementation of fiber optic cables in a city. It would impact all of the businesses, governments, colleges, and households that connect to it. Information speeds and reduces the costs of transactions thereby improving development opportunities. The same idea applies to roads, airports, docks, and utilities.

Why we waste money on low return projects?

Politics influences how we spend and where we spend taxpayer money. Businesses socialize with and seek to influence where money is spent. In many cases it is put back into political supporter coffins and have little or no benefit for the American population. Ensuring money is spent for maximum return on those areas that have the greatest impact. This means making decisions based on data, science and logic over the need to make decisions for friends and political maneuvering.


Fell free to share with appropriate attribution. Dr. Murad Abel http://www.academic-capital.net

Minimizing Firm Transaction Cost

Ronald Coase in his landmark 1937 paper The Nature of the Firm believed that all businesses are defined by their transactions. According to his Theory of the Firm people form and establish businesses because they can build and create products cheaper than contracting out the work or doing so on the open market. Firms become a way of reducing transaction costs and improving production capacity.

Firms are tightly bound networks of internal transactions. The size of the firm can be determined by how many transactions exist within the confines of the firm. As firms get large they also become more inefficient because the transaction costs rise making creation more advantageous in other entities.

Transaction costs are associated with 1. Search and information, 2. Bargaining and decision costs, and 3. Policing and enforcement costs.

Firms are at their essence long-term contracts that form when short-term contracts are no longer advantageous. As "Islands of consciousness" the transaction costs within tightly connected firms make them more efficient when compared to outside its walls. As long as it is more advantageous for entrepreneurs to create products and services from inside the firm it will continue to grow.

Coase believed that without understanding transaction costs it is impossible to create sound economic policies. High level overviews of the economy are great but without understanding the inner workings of how information, goods, and services move it is impossible to set policy in a way that improves business fundamentals. Policy often misses the mark because it doesn't integrate into the daily micro actions of the firm.

Consider a policy that helps support a budding industry a nation needs to compete internationally. The policy doesn't consider the lost revenue of inter and intra-firm transactions that make it possible for those firms to compete. It may be more beneficial to develop policies that help firms improve their internal operational transactions and work within clusters to ensure maximum development based on their natural capacities emerges.

I view the internal workings of firms as one tight layer of efficient transactions that rest on industry knowledge. Firms exist together in clusters because they share the same needs for resources and intellectual capital. The stronger and longer the firms exist in a cluster the more efficient the cluster becomes as entrepreneurs seek to modify their environment to create more profits. Hubs are a collection of clusters that share similarities in knowledge and environment whereby advancement in one industry lends to the advancement in another (i.e. telecommunications and Navy). 

Coase, R. (1937) The nature of the firm. Economica, 4 (16).

Fell free to share with appropriate attribution. Dr. Murad Abel http://www.academic-capital.net 

Are Leaderless Organizations Coming Soon?

Wouldn't it be great if you didn't  have a boss? Maybe not a boss in the entire workplace! Leaderless organizations are making that possible by offering communal based work for highly skilled and self-motivated professionals. Instead of the rigid hierarchy that slows down production and increases transaction costs a flatter and more employee centered approach is used where management is taken over by panels and teams.

Leaderless organizations are more common in industries that require lots of innovation and change to keep up with the market. Highly skilled professionals that have a sense of self-direction are likely to fit well within they structures framework. As the trend to push flatter and more virtual takes shape the need for a traditional boss lessens.

Self-Directed Workforce

The self-directed workforce operates from a communal perspective that each person has value within the organization and must contribute based on their unique function. There is organizational structure and expectations but there isn't heavy layers of management-in some cases there may be no layers of management. It is a system that is designed like a cell where all parts must work together for survival.

Self-directed doesn't mean there is no direction it means that the sole direction is based on the organizational objectives and the specific functions of people within the company. Once the overriding goals of the organization are developed it is then up to each member to align their activities through their daily work functions. No one needs to force these goals as they are universally accepted.

Decentralized Workplace

Decentralized workplaces are based on collaboration. People believe they are part of a bigger function and are professional enough to self-direct their daily work. They don't need a boss telling them what to do everyday or strict oversight. Their internal motivation and commitment to their field and their organization keeps them on track.

Traditional functions of management such as hiring, firing, compensation, and discipline become the domain of mutual consensus. Members decide these issues in collaboration that lowers the bias that a single manager may have. The company makes employment decisions and workplace decisions based on the needs of the organization and the functional capacity of their positions.

Strong Social Expectations

Social expectations help provide direction even when there isn't a manager available to give them. It can be argued the social expectations are even more important than other types of expectations due to the powerful influence rejection can have. These expectations are group based and are reinforced informally and formally.

In order for social expectations to have power they will need to have symbols and values that support strong performance. This occurs when the organization and work groups create an identity of what they believe as codified in stories, culture, history, symbols, and challenges. Each person shares a level of cognition with others in the workplace.

Be a Transformational Sales Leader!

Transformational Leadership in a Changing World

Today’s business environment requires sales leaders to not shy away from change but rather to embrace it and to become champions of change.  Turbulent change is all around us. It is caused by forces such as technology, the economy, globalization, innovation and more. These forces drive change and push sales managers to adjust, adapt and plan strategically. Sales Managers are constantly innovating to increase sales and to increase sales, improve profit and connect with people. Sales Managers and their teams continue to think creatively and plan to overcome challenges and create positive outcomes.  

Motivating Sales People   

Most models to motivate a sales person are designed to increase the sales person’s motivation. In theory, these models are an exchange process. They are designed to increase effort and improve performance. It is a transactional leadership approach and financial rewards, recognition, and a sense of accomplishment are linked to greater performance. Sales quotas are set that are specific, measurable, attainable, relevant and time bound - the process begins. Sales meetings are also an important motivational tool as are meeting and talking with marketing personnel and top management. 

Leadership Activities Influence Positive Outcomes
     

Leadership styles and choices do matter and make a difference. John Maxwell, leadership expert and bestselling author, says leadership is influence. He tells us that great leaders inspire their followers to have confidence in themselves. Reilly, Minnick and Baack in their book, The Five Functions of Management, tell us that in a business context, leadership consists of all the activities undertaken to help people achieve the highest level of performance. They point out that effective leaders influence behaviors in positive ways and that ineffective leaders also influence behaviors, but do not achieve desired results. 

Conceptualize and Apply Transformational Leadership  

In addition to the motivational models and leadership styles designed to motivate and lead salespeople, how can a sales manager further influence a sales person’s motivation? The answer is simple: practice and master transformational leadership. 

Transformational leadership is a leadership style that compliments transactional leadership. Transformational leaders have a unique ability to reach their people by creating new visions, strategies and structure which help create needed results. By being a positive role model, transformational leaders talk the walk and walk the talk. They realize that their teams are watching more how they walk the talk versus how they talk it. They understand that the men and women reflect the tempo and tone of the leader.  

Transformational leaders provide idealized influence, inspirational motivation, intellectual stimulation and individualized consideration. They model the way. They inspire a shared vision, challenge the process, and look for ways to improve, enable others to act.  They encourage the heart. 

Transformational leadership is a style that can be used in a changing and challenging business climate. When an organization is going through change, it is a style that adds value to employees, departments, and customers.    

Be a Transformational Sales Manager

Simply by having an understanding of transformational leadership, conceptualizing the theory and applying it, sales managers can learn and practice transformational leadership. They can hone their skills with practice. Sales managers can still keep their measures and metrics used in their management process to monitor performance and trends, but now they can focus on the elements of transformational leadership to build people further. Sales managers can make an impact simply by understanding the importance of being a positive role model and source of inspiration to their teams. By caring and providing individualized consideration, sales managers can further connect with their people and teams and help move them forward. 
 

Transformational leaders are self-aware and self- managed. They have excellent social, emotional and cultural intelligence. They provide encouragement when needed and are optimistic about the future. Being optimistic does not mean they are not objective; it simply means they prefer to take a positive outlook on present and future situations and events. They are resilient. They understand that our minds can be either a barrier or bridge to the future. Being resilient is a great trait for transformational leaders. Here is a great site to learn more about resiliency: http://www.resiliencycenter.com/articles/5levels.shtml

Sales managers, grow, serve and be a positive role model for your teams. Be a transformational leader. Work to understand the context and culture in every leadership situation and then execute and lead with transformational leadership. Watch your teams respond and move forward with increased motivation and effort. This will all lead to greater performance and job satisfaction. Transformational leadership reinforces their motivation. 

Bill Davis, MA, CM

Faculty – Forbes School of Business at Ashford University

                                                                   Author/Educator/Consultant/Speaker

My articles cover topics on management, leadership, business, marketing, professional selling, organizational change, motivation, adult learning and development and personal and professional career success.  

How to Make Headway in Your Career?

Careers are built over a lifetime. Some look back over their careers and feel like they have accomplished many things while others look back and feel they were just supporting themselves without accomplishing much. To gain the successful career and achieve what you want it you can no longer afford be directionless. Give up short-term strategies and focus on what works for you.

Define what You Want to Achieve

People in life should have something they want to accomplish beyond just eating and watching tv. Some of the happiest people in life have a purpose and a direction. They hope to contribute to society in some way that can help both themselves and others. Knowing what that is can act like a guide for your day-to-day business.

Knowing what you truly want to accomplish isn't about defining an objective based on tv, friends, family, or your social networks. It is about finding a personal sense of expression in the world and going after what is important to you. You must know yourself before you know what to accomplish.

Know Your Strengths and Weaknesses

To find the best way to achieve your goals you will need to know your strengths and weaknesses. Some are great at managing lots of projects while others are better at working alone. Strengths could be creativity while weaknesses could lay in details. The strengths and weaknesses are unique to each individual.

Determine Your Most Effective Strategy

Some people might try and get as much done as others because they are work horses. Others go into the details and find things others were too lazy to look at. Still others might be creative and use that creativity to find a new way of looking at things. Knowing yourself and your strengths will help you determine which strategy is most likely likely to lead to success in a way that fits your personality.

Fell free to share with appropriate attribution. Dr. Murad Abel http://www.academic-capital.net 

Save Time and Be Successful

Time is limited. We have only so many seconds, hours, and days to spend. Before we know it we look back and realize that we have wasted lots of time. Time that could be used to be productive and time that could be used for important products. Defining what is most important to you and aligning more of your time to those activities is beneficial for being productive and maximizing enjoyment in your life.

 If you think about the amount of time we spend in activities we don't enjoy or that are not necessary we might be astounded. On any given day we are driven by our habits to complete certain rituals and actions we believe are important but ultimately make little difference in the quality of our lives or career aspirations. Aligning our activities to our dreams can make a big difference in our achievement.

 Know what You Want to Accomplish

This is a big issue for a huge percentage of society. Lots of people move through life without real goals or ambitions. They take each day as they can which is great but then fail to find a greater meaning and purpose in their lives. Unless you have some goals you want to achieve you will forever be stuck in the wasted time trap where activities are lack direction.

Review Your Time

Just because you are busy doesn't mean you are wasting your time. Work, family, and extra curricular activities all have their place in creating balance. Yet understanding which activities are contributing the most and which are not is important. Sometimes we are busy to be busy and one activity in that arena is fine for our needs. Getting a good grasp on your time and where you spend it is important for mastering it.

Remove the Waste

Get rid of the activities and wasted time that doesn't contribute to your life. If cleaning your house is slowing you down hire someone to come in once a week, if laundry is too much consider dropping off your clothing, or if others demands are too much consider saying "no". You only have one life to live so ensure that you are spending the time you want as wisely as you can.

Realign Your Time

Now that you understand where you waste your time and removed those activities that are not beneficial you will need to realign your time in a way that leads to greater accomplishment. If you need to accomplish some big project or enjoy some activity schedule more time with these events. The more you can adjust the more goals you will accomplish.

Enjoy Your Time

If you don't enjoy your time you won't be consistent. Make sure that the time you are spending is very enjoyable and has meaning to you. Someday you will look back at all that time you spent and how you spent it better have some value for you or you will regret it. Success and happiness can come together.

Developing Gifted Scientists Through Student Exploration

A great mind is a terrible thing to waste. Thousands of gifted people fall through the educational cracks and do not contribute fully to the world in which we exist. Future scientists and great discoveries are left unpackaged and unturned because we have failed to foster their minds in a way that breaks the mold of our defunct education system. To be a great nation and support the spreading of our way of life means we need to ensure the best and brightest come forward to take their rightful place as contributors to society.

 Our gifted are not the ones you think they are. They are the hidden nuggets among the masses that are unchallenged, engaging in esoteric pursuits, contemplating the meaning of life, and developing in a way that many do not understand. They are not the most socially connected, the best looking, the richest or even the one's who get the best grades. They are the unknown .01 percent of society that are pushed aside in a the stream of self-focus.

This problem of pushing aside those with the most potential has been going on for a long time. According to John Stuart Mill, society often buries their geniuses under dogmatic pathology. "The amount of eccentricity in a society has generally been proportional to the amount of genius, mental vigor, and moral courage it contained. That so few now dare to be eccentric marks the chief danger of the time."

Highly intelligent people are unique because they view the world through a different lens. They gaze deeply into things out of curiosity, might have more refined nervous systems that retain more information, and act in ways outside of the norm. They are qualitatively and quantitatively different which makes them eccentric to many who do not hold the same capacities and traits that force them to see the world in a different way.

Giftedness is associated with a person's intelligence and innate ability to learn, develop and understand. They may be a genius in one or more areas as their minds develop and integrate information. According to Gardner in his book "Frames of Mind" (1983) there are seven, updated to nine, distinct types of intelligence. Areas where genius may succeed in logic, linguistic, visual-spatial, musical, kinaesthetic, interperspersonal and intrapersonal. They may also develop global and naturalistic mindsets that understand the bigger systems and the nature of things.

One might be a great dancer and another a skilled scientist; some might be both. There could be some who excel in multiple areas and are capable of pushing the envelop. Succeeding in these areas means the gifted person must be exposed to new opportunities. A "hit or miss" opportunity arises where innate skill matches some activity in their environment and they begin on the path of interest and development. Some skills may never develop because of a lack of exposure.

When the environment matches skills gifted individuals excel in higher order thinking skills. These skills are related to logical, critical, and creative thinking (Demirel et. al. 1998). This means that they can use solid logic to think through information, critically analyze that information in a way that offers new insight and are creative enough to develop new ways of doing things. In essence, they are the innovative and strategic thinkers we want them to be.

Modern curriculum seeks to pour knowledge in a linear fashion into student's minds. This is great for basic working knowledge for positions that rely on repetitive work but is not the best manner for discovering new ideas or seeing the deeper meaning of things. Gifted students want to create as many neural connections to the information as possible by touching and manipulating objects to understand their fundamentals.

The more connections they create the better and in more depth they understand a subject. Eventually, the dept of their knowledge leads to new insight and discovery that can be reapplied to create new meaning that society can use to advance in development. Enhancing gifted education requires changing the basic make-up of how curriculum is developed.

Instead of teaching in a linear fashion the student should be able to explore all sides of a topic by integrating information up and down and horizontally. They should be able to explore in all directions until they come to a satisfactory understanding of the issue. They may then move onto parallel branches of knowledge that add to their overall understanding.

Creating stronger scientists requires a more exploratory approach to education. The student becomes the master of their own education while the professor encourages and guides them to deeper understandings. The professor helps with the thought processes while the student picks the topics based on personal interest. The guide and the guided will eventually lead to a path of development where scientific exploration contributes to discovery.

Gifted students need enhancement to ensure they use their unique gifts to the fullest potential possible. One of developing scientists is to help them explore their interests but the other part is to help them understand their uniqueness to ensure they have the confidence to continue to try out new ideas. The student's psychological development is directly rated to their scientific mastery and career confidence.

Demirel, O., et. al. etc...(1998) İlköğretimde çoklu zekâ kuramının uygulanması [Applications of multiple intelligence theory in elementary grades]. VII. Ulusal Eğitim Bilimleri Kongresi, SelçukÜniversitesi Eğitim Fakültesi, Cilt I, 531-546.

Gardner, H. (1983), Frames of mind: The theory of multiple intelligences. New York: Basic Books.