No, not yet ... please

For all of you who haven't quite caught on yet: no, today is not the First Day of Christmas. For that, you have to wait another 12 days. You're going to have to be patient. If you're wondering what I'm talking about, go here and find out. If you're disappointed, well, sorry, somebody had to tell you sometime.

What's often fascinated me the most about this joyous season of the year is that there are many, many businesses that generate 75% or more of their revenues during these few weeks. What do they do the rest of the year? If they're in retail, do they just wait around for customers who never come, paying rent on space they're not really using, paying employees who aren't really doing anything? I'd be the last person to fire the people. I think these companies should continue to pay the employees, close down the store, and re-open when it's worth it. And are there still factories cranking out stuff year round even though they're only going to unload it at the very end of the year? How inefficient is that? What kind of bonuses do those CEOs get?

Are you starting to get the hint that maybe -- just maybe -- some of the stuff we do -- and place so much value on -- are simply, well, nonsensical?

We're strange creatures, we human beings. Recently, I (re-)read a quote from Charles Darwin: "It is not the strongest or most intelligent who will survive but those who can best manage change." Personally, I think he's right on this one. And then I see us buzzing around in our pre-Christmas frenzy, doing the same things as the year before, causing the same problems as the year before, buying the same junk as the year before, giving it to the same people as the year before, or, if I'm a business, finally greeting those same customers as the year before, or receiving the same orders as the year before, and counting my money as the year before, and I start wondering what it means if Chuck was right. If he is, we're doomed.

OK, I'll admit it: I think we're doomed anyway, and it's not Christmas all by itself that is going to be our undoing. No, it's deeper than that. Christmas is just one of the many examples of how human beings do the same thing over and over again but expect different results. That, according to Einstein -- no intellectual slacker -- is the definition of insanity.

As far as I'm concerned, Christmas is as good a reason as any to be jolly. Fa-la-la-la-la-la-la, but watching the scene play out, I have to admit that I do wonder a bit about our sanity. There's a big difference between feeling merry and simply being out there where the busses don't run.

Turning the tanker

At a recent project meeting, we had a presentation on what things looked like employment-wise in the high-tech sector. Yes, there were the usual sad statistics about how few young people were looking for jobs in technology and engineering, and how difficult it was to get kids interestend in math and science. That's nothing new. What was sort of new -- at least in a way -- was the presenter's plea for a broader-based education. It seems one of the most common complaints of employers is that their new-hires are seriously lacking in interpersonal skills. In other words, they know very little about anything other than what they know technically, and they have as good as no idea about how to get along, let alone work, with others. Isn't that surprising? I thought so.

OK, I'm not surprised like "yikes! where did that come from?" No, in light of the persistent pleas for employability somebody apparently overlooked the fact that understanding other people and communicating clearly and effectively are just as essential in the workplace as knowing what you are doing on the job. The question that popped into my mind, of course, was why were these skills no longer part of the curriculum.

When I went to school (granted quite some time ago), those were precisely the things our English (or fill-in-you-own-native-language) instruction. We read stories that were about how people did or didn't get along, about what made life worth living and we learned (or at least our teachers tried to teach us) how to form a coherent thought in a sentence and to take just a little bit of pride in being able to spell correctly.

The last thing I want to do is turn back the clock, but I do think it's time we re-thought some of the things we have decided aren't so important in the meantime. To many, art, literature, and music may have seemed like a waste of time, but they were anything but. We saw that there were multiple ways of expression, that words, pictures and tones could stir feelings ... right, feelings. Not just sensibilities that are too easily offended, but feelings that we had ourselves and that others had as well. We at least had the chance to learn that others weren't really all that different from us.

Even in that hard, cold world of work and business, it would seem that there is recognition that we really can't just make everything about money.

Public trust

As is so often the case in modern life, we seem to be faced with something of a predicament, if not a dilemma. How much government do we need? What kind of government should we have? How free may we allow markets to be? Which has priority: the common or private good? I'm not saying the answers to these questions are easy, far from it. What I am saying is that I don't think we think enough, nor seriously enough about the answers. Many appear to have ready answers on their lips, but does what they have to say reduce or increase the difficulties with the predicament.

We're back to where we have been many times before: Do we live in an economy based on sound social principles? Do we live in a society based on sound economic principles? Or, perhaps just a little more bluntly: do we live in a society or an economy? I realize that the industrialized West, in the USA, first and foremost, society has been traded in for just an economy, and a relatively poor one at that. Privatization, de-regulation, reduction of social spending, and unrestrained markets is what the people clamor for ... or have I only been able to hear part of the yelling. I suppose so. Being as far away as I am, I can really only hear who is shouting the loudest and that's what I'm hearing. Here in Europe, the most recent elections -- in France, Greece, and two of the Länder in Germany have made clear statements that the people want more of their society back. Granted, it's not all as simple as that, but it's really not all that complicated either.

We -- and by that I mean all of us, every single one of us -- must decide what is important to us. We have to decide whether we want to have a society or not? If we decide we want one, we then need to decide what kind: tyrannical, authoritarian, democratic, free, social ... should it be a community or just a collection of individuals, every person for him or herself. These are very, very fundamental questions, but they are questions that each of us is called upon to have an answer to. And, oh, by the way, it isn't that you just have an answer, you need to know why your answer is your answer, you have to be able to justify to others the advantages of your own view. In case you are wondering how far this need go, that, too, is simple: you should be able to make clear to anyone that how you think is how absolutely every human being on the planet should think. If it's good enough for you, it has to be good enough for anybody. If it isn't, it's just another lousy -- and I do mean lousy -- opinion.

And, yes, I believe everyone is entitled to their opinions, regardless of how lousy they are. But no one should expect that I honor or have much respect for the lousy ones. If you aren't willing to put any effort into having it, why should I put any effort into dealing with it, let alone respect it?

Much Ado About Nothing

I have to take a break from the public/private thread ... just for today, and in reality, it's not all that far off target. Three days ago Facebook went "public". I'm not exactly sure what that means, really. It's a private company that is now held by different private persons (but not very different from who was holding it before). According to reports, there are now a good number of tens-millionaires that there weren't before. And yes, there are a number of newly minted paper-billionaires in the crowd as well, but I'm not sure what is "public" about that. Talking about the stock market and public makes about as much sense as talking about the public in relation to the Freemasons. But that doesn't stop us from getting excited, does it?

So what actually happened on Thursday? Well, take away the hype and the private fortunes and what's left? Right. Nothing. I didn't feel the earth miss a beat in its rotation. The Messiah didn't arrive. Cancer wasn't cured and neither was AIDS. And for those of you who think the stock market has something to do with the economy as a whole or its "health", well, I suppose you just have to go on living your illusion. Facebook -- at the moment -- is the most highly "valued" company in the world. And the only question that comes to my mind is "so?" Oh, don't get me wrong. There are no sour grapes here. Whether Mr. Zuckerberg is a pauper or billionaire makes no difference to me. Money is money and you're either beholden to it or your not. It doesn't make people people. Too often, it turns them into un-people, so let's hope this fate doesn't befall Mr. Z.

No, I'm just surprised by all the airtime such a non-event gets. Facebook is an advertising platform (when seen as a business, which it really is). Whether people can get in touch with old friends or post silly pictures of themselves or out themselves in ways they never would in person doesn't really matter. People are that way, and just being able to accumulate a good number of them in one place is attractive go advertisers. OK, some, like GM, got tired of no return on investment and pulled out. That Facebook generates only about one-seventh of the revenues of Goldman-Sachs (another peach of a company, considering how much public money went into them), it's now twice as "valuable". I think it's time we started reconsidering what we really mean when we use certain words. So, what is it that they really do as a business. It would seem very little.

And that's where this is all going to end, I'm sure. If the banks hadn't jumped in to the tune of about $300 million on that first day, the stock price would have closed lower than it started ... oh, by the way, that's considered a bust on Wall Street. What some people won't do to keep the illusion going. And, in the end, who's going to end up paying for all of this? You guessed it, the public. That's what going public is apparently all about.

Precarious privatization

The conflict of interests spoken of last time dealt specifically with education, but that is not the only area in which we should be a bit more cautious. I realize there are many out there who are strong advocates of free markets, but they've really got no support to fall back on. Not every area of human endeavor is a market, nor should it be. And, there are some things that may look like markets but aren't.

Now, for all of you who now want to start beating me over the head with Adam Smith, I would ask that you at least read him before you use him as a weapon. The good scholar (a moral philosopher, no less, whose Wealth of Nations is hardly comprehensible without first understanding his Theory of Moral Sentiments and I'm guessing only a handful of people alive today have ever read that). Mr. Smith may have been skeptical about too much government, but he was a strong advocate of government in that it should oversee and take care of those areas which would not naturally profit a private individual. Government, in Smith's eyes was there to provide a justice system, enforce contracts, grant intellectual property rights, but also to provide public goods such as infrastructure (roads, bridges, transportation means, national defense, and one would suspect utilities). He supported public education and religious institutions because he believed they provided a general benefit to society, and most strikingly, he advocated protecting infant industries and regulating banking.

In other words, the "patron saint" of the free market was only in favor of those areas of endeavor that lent themselves to being regulated by the laws of supply and demand. He suspected that if left to their own devices, business would collude to the disadvantage of customers, therefore oversight was necessary. He was also in favor of several forms of taxation, such as taxes on rents, and was a very strong advocate of progressive tax rates: those who earn the most should contribute the most to the common good. For Smith this is common sense; for his so-called followers ... well, most of them ignore in him what they don't want to see.

What we learn from Mr. Smith, then, is that anything that has to do with the common good, with providing benefits to everyone, not just a privileged few, should include government involvement. The government also has a right and a duty to tax so that the common good may be assured. The solution to too much government spending is more discipline, to be sure, but it is not to turn over public trust to the private sector. Even Adam Smith knew that too much money in too few hands did too little good to too many people.

Collusion or conspiracy

Employability is actually just the tip of an unintended iceberg. When we start worrying too much about whether our graduates can get jobs, we miss the point of education. Instead, by looking almost exclusively at the needs of industry (however you may define that) we naturally start asking what it is that this industry really wants as far as qualified workers. It's a reasonable, but dangerous question.

Quality has long been defined as the fulfilling of requirements; high quality the fulfilling of expectations as well. By stressing the need to know industry's needs, companies start getting involved -- deeply involved -- in schools. They start exercising influence on the schooling process and consequently -- and perhaps inadvertently (I wouldn't want to accuse anyone unjustly) -- they drive education out of the schools. There is simply no room left for it. Two questions immediately arise: do they know what they want? And, what are they willing to do to get it?

To be perfectly honest, I'm not sure they know what they want. I've been in enough meetings and at enough conferences on the subject to know that their requirements are anything but clearly defined and articulated: students should be "skilled", be capable of "teamwork", they should have sound math knowledge (in engineering related disciplines), they should be able to communicate. That all sounds very nice, but what does it mean? It sounds a lot like the three R's (reading writing, 'rithmetic) to me. Isn't that what we have been doing all along? Apparently not, so what's the consequence?

As sports is the first and easiest ways into education institutions of all varieties, we've seen it already. They come bearing gifts: stadiums, sponsorships, specific equipment or facilities. And what they bring along with these are commercial interests, consumerism, advertising, and, of course, guilt: what often looks like a donation is really a down payment.

I'm not saying that legitimate business doesn't have its own interests, nor that these interests are bad. What I am saying, however, is that these interests are private interests, not public interests. We have long passed the time when we erroneously believed that what is good for GM is good for the country. We should have learned that private interests in public education is really a conflict of interests.

The tyranny of employability

Having made a distinction between education and schooling, at least in general terms, it seems reasonable to take a closer look at what that means across a broader front. Although I enjoy a good conspiracy theory as much as the next person, I'm not too inclined to take many of them too seriously, but I am sensitive, I believe, to subtle changes in attitude that, once they spread, appear to the casual observer that they were somehow planned or are part of a larger scheme.

In many of the projects in which I am involved, one word keeps reappearing which is giving me some pause for concern. The word? "Employability". At first glance, it seems relatively harmless. The idea behind it is simply to provide those seeking employment those, more or less, specific skills and capabilities that will enhance their chances of landing a job. Noble, right? I mean, who doesn't want to help people get into gainful employment? I do. (And, just to be clear on the issue: there is really no reason why everyone doesn't have a job -- and a meaningful one at that -- but at the moment, that's not how the deck is stacked, but more on that another time.) I'm sure you do, too. So what's the problem?

As with so many well meaning, well intended initiatives, this one has all the potential to become our latest Frankenstein. Why? The reason is just as simple: it's too limited a concept. If person A needs skills X, Y, and Z, and I train him (or her) to obtain those skills, what happens when technology or processes or the situation changes and those skills are no longer required? They would have to be retrained. But, in the meantime, chances are very good that they will be out of work again, because why should a business keep someone around who doesn't have the right skills? Exactly. In other words, by pursuing a strict policy of employability, we are actually condemning a large segment of our population to irregular cycles of employment and unemployment, of being in demand and of being in the way. Is that what we really want?

We moderns pride ourselves in living in such a dynamic and fast-changing world. The pace of life hasn't slowed down and it doesn't seem it's going to soon. But not everyone takes part in that world. Some are simply victims of it. Since we've got schooling down and have turned our backs on education, we are creating that very class of people who will never be a part of the world we claim to love so much. It's not their fault that they are improperly prepared, for it is our own policies that condemn us.

We need to seriously rethink our attitudes toward something as common and necessary as education. I don't think we can afford not to. And, the sooner we do it, the better for all of us.

Labor-saving

When I was growing up, I was continually fascinated by all the labor-saving devices and gadgets coming out: new vacuum cleaners, electric can-openers, snazzy mops ... you know, that kind of thing. It was only later that I realized that all of these were being made for my mom and housework, and I never really got it, because she never had a moment to herself. How did that work?

We've never really gotten out of that mode ... at least as far as the propagation of the idea is concerned. It used to be household gadgets, now its robots and automated production, and the like. Somebody decided bigger is better and we've upped the ante considerably. Let's face it, robots are more efficient, they don't complain, they don't get sick, they are willing, compliant ... well, slaves, actually, but they do cost a bit to get, but they're apparently worth the effort and investment. There's money to be made with labor-saving devices.

The money saved isn't because the things we then get to buy are cheaper. I don't know many people just socking away their paychecks because of how low the prices are on everything. In fact, there are a lot of people ... too many, in my book ... not socking anything away at all because they spend most of their time looking for a new sock. Theirs is getting a bit threadbare, if you get my drift. It turns out that the labor that was saved, was theirs.

Corporations are people?

Two recent events got me thinking about the corporations-are-people ruling that have made it clear, just how sad that decision was. It is an excellent of example of simply not thinking a thought through to the end. The first event was a sign held up at a recent Occupy Wall Street protest in New York, which read, "I'll believe corporations are people when Texas executes one." The second was a statement Marianne Williamson made in her talk to the Occupy Wall Streeters in Berkeley, that "Corporations can't be people, they don't have souls." While each of these statements certainly have their merits, it would be too easy for my atheist friends to discount Ms Williamson's statement, so I thought it would be worthwhile to revisit the issue in a more mundane way. After all, the only word that springs to my mind when I hear the corporations-are-people phrase is "absurd." Here's why.

We can argue about whether people, that is, human beings have souls. That's fine. However, regardless of how one thinks about that, I would suggest we all agree that you can't be just part of a person, or part-person. That is the essence of what we call "discrimination". You can lose a limb or just have your appendix taken out, and you are still a person. You can have a birth defect or suffer a debilitating injury, and you are still a person. The whole part-of-a-person argument was actually put to rest when the 14th Amendment finally overcame that ridiculous idea that blacks were only 3/5 people. (In other words, this isn't the first time we've had to face absurdity head on.)

The consequence of this thought is that corporations can't, then, just have some rights and not others. If you are a person, you enjoy all the rights that other persons have, not just the freedom of speech in certain instances, like elections. This is what our first protester was getting at. Now, I'm no advocate of the death penalty, but I have nothing in principle against jail, so why can't corporations be sent to jail? It's simple enough: corporations can't act on their own, but their boards of directors, first and foremost, and their owners (read: shareholders) can, and do. If the corporation does something illegal, then, as was the case leading up to the recent financial crisis, then we know who should stand trial and if convicted go to jail. These two groups represent the head and heart of the corporation. You shouldn't have to go looking for some individual within the organization who should be punished for wrongdoing, the corporation did the wrong-doing, and that is who needs to answer for their actions. That's what it would mean for corporations to be people.

These days we like to pick and choose, to pick what's best for us and just ignore the rest. If "the markets" are comprised of "investors", as the name implies, they have a vested interest in the actions of the corporation. As many like to point out, they are the corporation. And their interest cannot be only to derive benefits and not have to face the consequences of unpleasant or even illegal decisions. Yes, I know, when you think about the sheer numbers of people that would have to be incarcerated the mind begins to boggle, so to save ourselves from this ridiculous fate, we need to let the people in the judicial old-folks home in DC know that they haven't thought their thought through to the end.

Money 101

Recently, I've been giving business and financial institutions a bit of a hard time, so it only seems fair to add a little perspective to the discussion. Though to many it seems that business is only about money, it is nevertheless worth asking ourselves what is the real role of money in business.

Perhaps an analogy can help. Strategy is not just a business concept, it is an everyday concept as well. Strategy, in a certain sense, is the answer to the simple question we have all been asked: "What do you want to be when you grow up?" Each of us makes decisions early in life that determine the course of actions leading us into certain fields and careers. Any life counsellor will tell you that the person who is following their heart (doing what they like) is the happier and more productive person. We look to the future, fix our eyes on a goal, and then continuously work towards it. That is thinking and acting strategically. The only real obstacle to it all though is staying alive. Life is, after all, an exceedingly risky undertaking.

In the business world, staying alive is objective #1 ... not strategy #1. Staying alive is the objective, being something when we grow up is the strategy. In addition to shelter and clothing, we all have to eat, that is, we need food to survive. In the industrialized world, many people used to grow their own, but the specialization of labour has removed most of us from food-production, so we must go elsewhere to get our food. Businesses, in a very strong sense, mirror their creators. What is it, then, that any business needs to stay alive, to live to fight another day in the sometimes dog-eat-dog of global commerce? Yes, money.

There we have our analogy: money is to business as food is to people. Today, we have become divorced from our sources of food; we do not always eat what is good for us. Many people are overweight, others are starving. Certain things are in abundance in some areas, non-existent in others. In the western world, a certain knowledge of nutrition, then, is a good thing. What to eat, how much to eat at what time of day or in which season, different ways of preparing food that make it more digestible and useful to our bodies are all good things to know. Those who inform themselves and act accordingly tend to lead longer, healthier, and, in the end, happier lives. Similarly, in business, setting reasonable profit margins, building reserves (retained earnings), maintaining a "healthy" level of debt, and making acceptable, suitable, and feasible investments are ways toward a longer, healthier business life.

Finance, that is, knowing how to deal with money in the context of business, is not what business is all about. Business is about producing the better product, providing the better service and fulfilling market needs. To do this, however, we need to understand finance so that we can lead the kind of business life that enables us to be whatever it is we want to be when we grow up.

Stock market 101b

As I mentioned yesterday, businesses have three options to generate extra cash, the third of which is issuing stock. We also saw that a stock issue can be private, but such offerings can also be public. These are the infamous (if at times not notorious) IPOs or "initial public offerings" that get lots of media coverage if they are big enough. In this case, the company decides to sell shares of ownership to the public, in the hopes that the demand for the new stock will raise the share price and thereby generate more cash.

On the other hand, such offerings can also be public. These are the infamous (if at times not notorious) IPOs or "initial public offerings" that get lots of media coverage if they are big enough. In this case, the company decides to sell shares of ownership to the public, in the hopes that the demand for the new stock will raise the share price and thereby generate more cash.

A few years ago, a German low-cost airline went "public" and sold €1,000,000,000 worth of stock on the first day! Not bad, eh? But this is where the "stealing" comes in. They didn't take all that cash home with them. After paying fees and premiums and costs for staging the sale, they had a mere €400,000,000 to take home. I don't think it is out of line to wonder why the people who put on a sale earn more than the folks for whom the sale takes place, but that's another story.

What's worth noting, though, is that this is a one-time deal. Once those shares are in the public domain (on the stock market), they can be bought and sold and speculated with and the issuing company receives no money whatsoever when these shares change hands. If I buy some stock at the beginning, then the company takes home some of that money. If I sell them to my friend Tom a week later, I get money from Tom, but I don't have to give anything to the issuing company. They don't own those shares anymore: I did, and now Tom does.

This is the point, unfortunately, that most people miss. The issue company only has so much to do with its stock as it is concerned to keep its value reasonably high, but this is more for image than financial reasons. People who buy and sell stock do so to make money. Anyone who "plays the market", as it is most accurately described, buys stock in the hopes that the price with rise so that they can sell it later for a profit. In other words, the company should do well enough that the share price rises so they can make money. Since the issuing company's only obligation is to increase it's share price so that others can generate income, it is not truly accurate to call the stock buyers "investors". They aren't investing in the company, they are investing in themselves. Technically, the shareholders are "owners" but for the most part they are only concerned about the share price, not the working conditions, the employees, the customers, or the products or services themselves … or only insofar as these things have a positive influence on the share price.

The stock market, then, is really more like a casino than an investment, as one chief financial officer told me. What amazes me the most, though, is the amount of media coverage this particular casino gets. Fluctuations in the stock market are more often than not market players' emotional reactions to all kinds of events, but not really a sound indication of the health of the economy. I don't think it's ever a good idea to take your temperature in a casino.

Stock market 101a

In the world of business, there are three ways for an organization to generate extra cash. Extra? Yes, that is, money that is not generated through regular operations. Money the organization wants to invest. We all know that it is wiser to save up for a large purchase before buying it, but in the go-go-go, consumer-driven world today, we too often resort to credit to satisfy our impulses. Some things, like a home, of course, are really too significant a purchase to save up for, but cars and stereos and smart phones and refridgerators are in fact manageable.

The savings of business are called retained earnings, and sometimes these reserves are not enough to finance the next step forward for a business, so they have to get the money elsewhere. The three avenues open to them are, as in everyday life, to beg, borrow or steal. Really? Let me explain what I mean.

Let's start with borrowing since it is the most familiar to most of us. You go to a bank (usually) or other financial institution (could be a credit union, or Aunt Marge) and you negotiate a sum to be paid back over a specified period of time, and at a certain rate of interest. The riskier the bank feels this lending is, the higher the interest rate you end up paying. (It was once rating agencies which made such decisions, but they managed to tarnish their own reputations lately.)

The second way is to beg. Actually, the organization itself offers promisory notes (in everyday speak: IOUs) called bonds. The organization is, within certain limits of course, free to say when and how the bonds will be paid out, but there are several agreed on standards. Perhaps the most commonly known type of bond is the savings bond. When you buy a bond today for $37.00, in seven years the government promises to pay you back $50. The organization is basically saying, "trust me", and if you do, you can lend it money.

Whimsical as I am, I listed "stealing" as the third way, but that's obviously not 100% accurate. The third way of generating cash is to issue shares of stock. These shares represent ownership, so the percentage of shares you hold determines your "share" of the business. Such an issuing can be private, that is, you offer a part of your business to someone else and you negotiate between yourselves how many shares and what they are worth. We don't often hear about these kinds of transactions in the news.

So now we have the basics and we can get to the fun part tomorrow.

Business 101b

Turning one's thinking around isn't really as difficult as most would make it out to be. You simply need to take a step back, move slightly to the side, and then take a new look at the old idea. Failing that, sometimes a gentle nudge from without can help. Let's see:

Peter Drucker, the grandfather of American business theory, maintained that the purpose of a business (organization) is to satisfy needs in markets. I know that last word is a red flag for some, but let's keep it simple: by market I mean any "place" (real or virtual) where value is exchanged. This can be a swap meet, a flea market, an online bartering site or a commercial or industrial trade sector, or more.

In a world as complex as ours is today, this definition of purpose easily accommodates both for-profit and not-for-profit organizations. If there is a need for, say, computers and you have a business than makes them, then you are satisfying that need. If there is a need for charitable assistance for homeless people, then if you organize to do that, you are satisfying that need. If there is a need for government oversight in some area of the economy, then that agency, by performing its function, satisfies a need. Now that everyone is accounted for, we can move on to more meaningful topics like strategy, operational efficiency, environmental effectiveness or anything else that might help us get more out of what we do ... and by "more", I certainly don't mean just money.

Profit is money, so if the primary purpose of business is profit maximization, then you are trying to maximize your money. It follows, however, that if this is your first purpose, any other purpose you have can be, at best, second or lower. And it is here that too many businesses become disingenuous and start losing credibility in many people's eyes ... and rightfully so. You can claim that "product quality" or "customer satisfaction" or "the health of the patient" is paramount, but if you believe the mantra, you are not telling the truth. Profit maximization means nothing less than money first, and everything else comes after that. The order in which they come is really not all that important, for what's important is money. Naturally this does not and cannot work for not-for-profit organizations, but over the long-term it's not good for for-profit businesses either. At some point the customer starts asking him or herself what their getting for their money. Theirs is less; the businesses is more.

I would be the last person to maintain that money isn't important. Just because it isn't the absolute top priority doesn't mean it has no priority at all or that we shouldn't care about it. Quite the contrary. It is essential for businesses to strive for sustainability, to ensure their long-term existence, not just for their owners, but for the employees, their families, the community and any other stakeholder in the business. In order to do this, it is absolutely necessary to take in more than you spend. This is just commonsense housekeeping. Making profit the measure of success, though, defeats this purpose because the needs that should be satsified by organizations become relegated to second-class status, then ignored, then forgotten.

We need a new measure of success, but we won't be able to find one till we are ready to give up on ideas that have proved themselves wrong. Profit-maximization is one of them. It's time to give another idea a chance.

Business 101a

The more things change, the more they stay the same. I earned my MBA a quarter of a century ago, and I spent the last twelve years tutoring on an internationally recognized MBA program, and I can assure you, not much has changed. In my day, the MBA mantra was simple: the purpose of business is the maximization of profit. But is that really the purpose of business?

To some it is. I'd be the last person to say it wasn't so. But just because we think something is a certain way, it doesn't mean that's the best way to look at it. Truth be told, that mantra is actually a formula for failure, and that is precisely what the lastest financial crisis has shown us. We don't have to learn from our mistakes, I suppose (though I'd prefer we would), but it would be worthwhile thinking about just why it failed.

I don't like talking about businesses as if they were all one and the same thing (and regardless of what the Supreme Court thinks, they are not "people" ... an incorporated organization is technically a juridical person, meaning that in terms of the law it is in some limited ways like a person, but that does not make it a person any more than if I act like the boss that this means I actually am the boss). It is much easier, and cleaner, to think of businesses as "organizations", that is, a collection of individuals who have associated themselves with one another to do something that none of them could do on his or her own. In financial terms, though, it is possible to distinguish between two primary types of organizations: those that generate a profit (for-profit organizations) and those that don't (non- or not-for-profit organizations). These latter types of organizations can take on different forms from government departments and agencies to charities and more.

It is quite obvious that the MBA mantra doesn't -- and cannot -- apply to not-for-profit organizations. Though the MBA mantra is still being preached (with unwavering fervor), but the number of students from not-for-profit organizations seeking a graduate business degree has been increasing dramatically and steadily for the last 10 years. One has to do a lot of mental gymnastics to contort oneself enough to bring all of this together in such a way that it makes sense. Besides, it all can be so much simpler. We humans have a knack for simply getting things backwards, so perhaps it is time to simply turn our thinking around. It might take a bit of effort, but it really shouldn't hurt.

What's it worth?

Recently I was kicking around some ideas with my daughter who is working on her literature dissertation on the 'lost generation'. One of the topics we were wrestling with was what does or does not belong to the field of literary inquiry or literary scholarship. A day or so later I found myself trying to help my nephew with an assignment from his undergraduate micro-economics course and was vainly coming to terms with the real purpose of the exercise. It was after this that I realized that in both cases, the actual subject of the discussion was the same: what does it mean?

Meaning is one of those words that is some people use too much and others too rarely. For some, it is an ambiguous, not-very-helpful category. For others it is the central issue in their lives. That's quite a range to cover, that's for sure, and is so often the case, the truth most likely lies somewhere in-between.

One point that came up in the literature discussion is that the discipline itself is not really concerned with whether the world is a better place or whether we, as individuals, are any smarter as a result of our pursuing it. Why an author writes something -- so the theory goes -- is irrelevant. All we have is the text in its historical context and we have to deal with what we find. The only meaning worth anything is the textual meaning, that is, the meaning we find in the words as they are strung together in that particular place at that particular time, and perhaps under those particular conditions. It is, let us say, a rather focused view of meaning.

In the economics discussion, it became clear that my nephew isn't studying business and economics so that the world will become a better place. In fact, it became clear to me that the search for and discovery of the so-called 'laws' of economic activity do not concern themselves for any given state of the world. We only have the slope of a given curve, that occurs at a particular place at a particular time, and under a certain set of conditions. The question of meaning ... what does that mean? ... is never even asked.

The philosopher Günther Anders once noted, ""Human beings are ashamed to have been born instead of made." It would seem that literary theorists and economists are ashamed to be only scholars, not scientists. The analogy is not as far-fetched as one might think. Science, in the sense of counting, measuring, and standardizing, but also in the sense of discovering, researching, and studying has become the non plus ultra of intellectual striving. Only what can be counted counts, is the watchword of the day. We find this approach at the heart of most academic disciplines these days, from astrophysics to accounting (whereby I am still having trouble conceiving of accounting as an academic discipline, but that's another story). The human and social sciences have made themselves no exception. They wanted to be sciences, too. The English language, however, keeps them out, for we have taken the word 'science' from its original meaning in Latin and made it into something that it isn't: a way of life. Science, as a term, derives from the Latin sciro, 'I know'. Yes, we've turned a way of knowing into a way of life. The only problem is, what do we know any more?

What we know ... and if you don't believe me, just ask those bright young guys who own Google ... is merely information. We have tons and tons of information, but do we have any knowledge? I can't help but think of Eliot's "Where is the wisdom we have lost in knowledge?/Where is the knowledge we have lost in information?" (from The Rock, 1934) T.S. was onto something there. (Well, actually, he was on to much, much more, for the line preceding those two is "Where is the Life we have lost in living?", and that puts it all into a much more existential context, but that, too, is a matter for another time). Information is just information. May 8 is just May 8, no more, no less. Even May 8, 1945 is just another day that slipped by in history unless I know (and here is where we come closer to the issue) that it was on that particular day that Germany surrendered ending World War II in Europe. It's still not knowledge, it's just a fact, but it is a piece of knowledge when we use it to make clear to another that terror and fascism of one type was bid halt by its successor. We need to think about what we mean when we use the term 'knowledge'. After all, it is more than just information, it is information in service of a purpose greater than itself.

That terror and fascism were bid halt is obviously a good thing. The part of that sentence about its successor will make some readers uneasy. And that's the very reason that it was added. This isn't a test, don't get me wrong, but while most of us agree on the first part of the statement, there are more than just a few who would accept the second part. Why is that? To me, it is clear: because it expresses a value that some folks may or may not agree is truly a value. The implication in the sentence is that that which followed wasn't all that much better than what came before. How could I possibly compare democracy with fascism? Well, I'm not really. When we consider that fascism is a type of economic organization, then its successor, that is, the system which we chose to replace it was either communism in the East bloc or capitalism in the West. The fact that those eastern economies called themselves democratic this or that has nothing to do with ignorance on their part, rather ignorance on ours, in the West. Democracy can be defined in any number of ways. There is no one, accepted, valid definition of what the term may mean. There are variations on the others (fascism, capitalism and communism), to be sure, but the span of variation is much smaller.

My point is that it is only now that we find ourselves in the sphere of 'knowledge'. Up until now, everything was just information, and it was all stuff that is more or less 'who cares'. The Soviet Union was communist. The United States was capitalist. The fascists had been defeated so we imposed our respective form of economic organization upon the losers (capitalism in West Germany, and communism in East Germany). That is as far as information gets us. The real question is, however, what difference does it make. In reality, not very much at all. For what we have are merely facts. Pure, simple, objective, indisputable, non-arguable facts. When we move to the next level, if you will, to knowledge, we start entering the realm of meaning, the realm where subtle, but important differences are important. Some think communism was a good thing. Some think capitalism is the best thing. In both cases, however, it is a value (judgment) that we have placed upon the fact that makes all the difference. In other words, when it comes to knowledge, values matter.

And here we have the rub. Knowledge is never value-free. Facts are. Knowledge isn't. What makes the difference is the values we associate with what we know. And that brings us full circle to science once again. Science and our modern worldview would like us to think that things are just the way they are, but for all the objectivity that science would like to impose (and other disciplines would like to embrace) in the end, it just isn't there, for science's own view of its non-valueness is, at bottom, just another value. We can't escape values. That things should have not meaning other than their own description is a value. Not wanting to deal with the messiness and fuzziness that values bring with them is something science would like to avoid. It doesn't like it, it avoids it, it thinks it just complicates things ... there are so many ways to describe it ... but in the end, they are just values.

Science, in its desire to free itself of values has really only driven out the Devil with Beelzebub. Their view of the world has brought us a heap of information. There's no question about that at all. But it cannot be the final arbiter of things, for to say it should or it shouldn't requires that one have values. To determine what is preferable or not preferable, what we desire or what we abhor, what is good or what is bad requires us to have values. Describing the world in such an objective way is perhaps value-free, but in the end, it is really just of no value at all: it is worthless.

Innocuous?

Words are anything but innocuous. They are perhaps one of the most powerful tools we have. They are deceiving, though, because their power is so subtle. Magicians know of their power, but magicians are not given much credit these days, but ignoring words is a rather futile strategy. It can give us a break for a while, but it can never solve the problem. You see, 'ignoring' and 'ignorance' stem from the same root. They have more in common that we might like to admit.

I just read a tweet and a blog from two intelligent, thinking individuals who were amazed -- at least that's the impression they made -- that a for-profit educational institution put profits before students. Really? How amazing is that? The name says it all: for-profit. The raison d'etre of the organization is profit, not education.

Oddly enough I've had personal experience with one of the instituions that this group manages. When I got my own MBA, the mantra being chanted was 'the purpose of business is the maximization of profits'. This was, by the way, the same mantra that was being chanted in every for- and not-for-profit of higher (so-called) education all across the land. I have a nephew who's now studying (undergraduate) business administration at a respected German university, and his profs are instilling the same mantra in him. It's time to wake up folks: it's all about the money. If profits and money were only a business problem, I don't think I'd mind all that much. My friend Julius (Caesar) used to remind me of an old saying in his day: caveat emptor (let the buyer beware). This isn't anything new. And, if you stop to think about it, individuals who's highest ideal has been money have been cutting corners, stretching the truth, outright tricking and deceiving their customers since long before Julius' day as well. In fact, long before Julius a wise man once noted that the love of money is the root of all evil. That was a very wise man.

No, my problem, if you will, is that we have taken the vocabulary over into other areas of life where it has little, if any, business at all (if you'll excuse the pun). Areas like education, for example: Why do students have to buy in to the curriculum? What does ownership of learning really mean? Since when should learning be considered an investment? And these are just a couple of the most obvious.

Part of this shift in usage, of course, is directly related to the fact that we have turned our society into an economy. Social notions, like community, welfare, and public, have all taken on negative connotations. We just don't like them very much any more. We prefer words of power (just like magicians): economic words.

These aren't just words. Words quite often stand for ideas and for ideals. People are willing to die for ideals ... not for words, mind you, but the ideals that those words come to represent. This is a normal, natural process, and because it is so, we should be a bit more careful when engaging in it. We should say what we mean, but more importantly, we should mean what we say.