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Dow Jones index at record high today: when will US economy and jobs recover?

The Dow Jones industrial crossed 14,253.77 its highest ever point and back from the dismal depths of the recession on March 9, 2009 when it had touched 6,547. Investors and particularly large investors seem to be feeling upbeat about the stock market and things do seem cheery from a macro level. The optimism driving the record high stock market includes the following factors:

• The low interest rates from the Fed have helped. 
• The housing market has improved by about 10% and sales of new homes rose by 15.6%. Sales of new homes encourage a whole lot of spending on appliances, furniture and home goods.
• Companies have become more efficient, more global and more technology oriented. The worldwide recession has got all organizations trying to do more with less. This includes a) Using technology and the Internet (including "cloud computing") as much as possible (b) Outsource goods and services globally if the total cost is lower (c) find and develop lower end of the market in the US and global emerging markets. This time the lower end offerings in the US Market finds huge numbers in growth markets like China, India so it is becoming possible to truly globalize at the market end.
• The Stock market seems to ignore the problems of the Federal budget sequester. The market believes that companies will find a way despite political gridlock.

On this rather cheerful day a sad note is that  unemployment in the US is at 12.3 million and 47 million are on food stamps. When will the US economy and jobs recover? Or the other way around- when will US jobs and the economy recover – for without jobs and income, consumer spending remains subdued.

This paradox of the stock market zooming while the economy and jobs stagnate is hard to understand. Here are some thoughts:

• Companies will hire people in the later part of 2013 and 2014. Unemployment should reduce but these are for folks with skills that are needed in the new economy.
• Old jobs like in traditional manufacturing that are outsourced are not coming back. Same with technology jobs that can be outsourced,  are not coming back as well.
• Folks displaced from the workforce during the recession can try and find skills for the US jobs of tomorrow ( e.g. healthcare) or be willing to move to manufacturing type trade skill work in the housing industry. For new houses do need plumbers, electricians and cable TV installers and this segment cannot be outsourced.

Thus, some challenges for older workers unable to re-train and younger workers who might have training that is not very relevant for the new economy. All this provided housing continues to recover and investments continue in US infrastructure to accommodate skilled manufacturing workers and the right skilled workforce becomes available. Contact StratoServe.

Could the Connecticut shootings have happened in 1790's? The technology factor

The Connecticut shootings have been heartbreaking. The question on everyone's minds is why and how to avoid recurrences. Having recently visited Philadelphia, one wonders about the Second Amendment  times of Thomas Jefferson in 1791. Could the Connecticut shootings have happened in the 1790's? Probably not, if you consider the technology factor:

• While schools existed, schools particularly for small children might not have been common. It appears that the oldest Connecticut School might have been  Hopkins founded in 1660 and that took students from grade 7. It was unlikely that 20 small children sat in a classroom in the 1790's. We have progressed in elementary education a great deal since 1791.
• The discrimination associated with mental disorders was much higher in the 1790's and would have probably isolated the killer socially. Today we have progressed a great deal in trying to integrate psychiatric patients into society.
• Video games, movies and entertainment exists today that did not in 1790's. The NRA suggests that these have an influence in promoting violent behavior. Here technology has made progress and helps entertain folks and large numbers of people do feel that they encourage violent thinking - if not actual action.
• The technology clincher is really in gun technology from the 1790's to today and what a gun owner can afford and access at a Walmart. That civilians can afford and buy machine guns legally has been made possible with the leaps that technology has taken in every industry in the last few decades. This includes the gun and arms industry which is able to produce quick firing machine guns. So instead of the Western movie cowboy being fast on the "draw" the speed can come from the weapon itself today.

Between 1790 and today lots of social change has occurred and significantly the technology of guns has substantially improved. The latter is one of the major reasons that resulted in the large number of casualties in Virginia Tech, Arizona, Colorado and now Sandy Hook, Connecticut. Among the many steps needed to curb gun violence restrictions on automatic weapons would be an important step to reconcile the spirit of the second amendment with advances in gun technology. Contact StratoServe.

Obama re-election not status quo: Dow plunges and why America will avoid the fiscal cliff

Most folks in America did not expect that the Presidential election results would be called yesterday, November 6 by the news channels just after 11 pm US Eastern time. As more results came in, President Obama seems to have won by a landslide, going by electoral votes. The re-election of President Obama, a Republican majority in Congress and a Democratic majority in the Senate is not a status quo as Alan Greenspan says. Here are some thoughts why:

• The Dow plunged today given that the stock market was expecting Governer Romney to win and the real concern over the fiscal cliff of $600 Billion of tax increases and spending cuts that the Republican Party majority Congress and the Democratic Party  President and Senate must decide on before January 1.In addition coal related stocks are down amidst fears that an Obama administration will be tough on coal seen as polluting the environment by the Obama administration. In addition the election of Elizabeth Warren as a Senator from Massachusetts is seen as Wall Street's worst nightmare. It was  Elizabeth Warren a  Harvard Law Professor who criticized Wall Street and helped set up the US Consumer Financial Protection Bureau (USCFPB) after the financial collapse of  2007.
• Just as Wall Street is re-grouping, politicians on both sides realize that the American people have spoken. They do not want time wasted and confusion on things like rolling back Obamacare ( Healthcare shares were up today)  and Americans clearly want both Republicans and Democrats to work together and find solutions. Accordingly the hardline stance of House Speaker John Boehner (Republican) and Senate Democratic Leader Harry Reid on the issue of the fiscal cliff is softening. 
• Although President Obama has won, politicians on both sides are taken aback by the clarity of purpose of the American electorate. Candidates that were perceived to understand and empathize with the plight of the average American seems to have got their vote. For example, in Connecticut after spending  about $100 million for the Senate seat,  the very competent Linda McMahon lost by a wide margin to Chris Murphy.

Economics Nobel Prize winner Amartya Sen concluded from studying the 1943 Bengal Famine and other world famines, that people died of starvation not because of lack of food but due to non-democratic regimes that had no incentive to distribute food to the needy. Thus, no famines occur in democratic societies as politicians might bicker a lot, but do pull together that deliver results to the people, lest the next elections result in payback from the electorate. Although Americans do not face food famines common in the 20th Century, they do face a famine of economic opportunity. Overcoming the fiscal cliff is just a minor roadblock  that both Republicans and Democrats will surely overcome. Contact StratoServe.

"Unwatering" New York subway tunnels within days: US Army Core of Engineers

Imagine the New York subways with 300-400 million gallons of water after Hurricane Sandy. Well, the US Army Core of Engineers "Unwatering" team  are at  New York and expect to get all this water out in a matter of days pumping through about a mile of  subway at a time. 

The Unwatering team gets its rather unusual name from its function and purpose i.e. remove water from where it is not supposed to be, like inside a subway tunnel. Apparently the more traditional "dewatering" is about removing water from a place where the water could be like a swimming pool that you might want to dewater before winter. The Unwatering team of the US Army Core of Engineers developed the unwatering expertise from the 2005 Katrina flooding in New Orleans. 

There has been speculation in 2011 about events like Hurricane Sandy becoming more common perhaps due to climate change. In any case, many more cities in the world have to contend with subways that might get flooded for one reason or another.

In 2010 -11 here are some world cities that got flooded:

• Brisbane, Australia the third largest city in Australia got flooded in January 2011 and became a ghost town.
• Bangkok, Thailand had to evacuate jailed prisoners due to flooding in October 2011. 
• Oklahoma City, USA had people on rooftops due to flash floods in June 2010.
• Dangdong, China and other parts of China had the worst floods in a decade in August 2010.
• Manila, Philippines saw typhoon and flooding in  September 2011.

Given that many city authorities across the world struggle with the dewatering problem and go out of action for weeks here may be an opportunity for the Unwatering team of the US Army Core of Engineers to help flood relief personnel in other countries with the expertise they have developed in this kind of work.While unwatering  does not seem like an innovation in the global knowledge economy,  the knowledge and expertise that the  unwatering team is developing is extremely valuable to civic authorities across the world.

For most cities of the world would take significantly more time than New York to clear water from subway tunnels. Contact StratoServe.

Hurricane Sandy: what can businesses really do?

Hurricane Sandy is arriving today at the East Coast of the US and is being hailed as a "Super Storm."  Hurricanes are a rarity in the East Coast and local and State Governments, private and public organizations are pulling out all the stops to keep people safe. Businesses have to wonder what they can do better, at least next time because it is turning out that Hurricane Irene last year was not an isolated event for the US East Coast. Here are some thoughts:

Transportation: In an unprecedented cautionary move, Connecticut has banned trucks on highways from 11 am and all non-emergency travel on highways from 1.00 pm. Better safe than sorry is the mantra of all officials across the region. The subway trains have been closed in New York and generally transportation has ground to a halt in the East Coast according to CNN. If you are in the transportation business there is nothing much you can do except share with customers you are delivering to that there will be delays. Going forward improving delivery "status" updates via digital  and social media means might at least keep everyone on the same page. Those businesses that deliver their product or travel to customers or work need to probably develop routines that can deal with several days of transport disruption. Delivery schedules could perhaps come under review as soon as this type of Caribbean hurricane is forecast which provides a week's lead time. If the processes are in place - customers can be contacted for moving up deliveries of supplies, before the storm.

Electricity: Electricity companies across the region are a beleaguered lot. Contractor crews are moving by road from Texas over 2000 miles (3200 km) away. Since everything is so dependent on electricity life comes to a complete halt as water gets into substations, trees fall on power lines and transformers burn out. Since food spoils in the refrigerator and there is no electricity for the microwave or stove, folks dash to the coffee shop who cannot offer coffee because most of their equipment is based on electricity. It's probably time for smaller restaurants to look at the cost benefit of getting generators or trying liquid petroleum gas as a standby heating source. Between internet service providers, utility companies, telephone and wireless providers there needs to be some way of providing a solution to smaller businesses to keep going as power is restored.

Property Insurance: Insurance companies and their customers need to probably explicitly deal with what is hopefully not going to repeat every year. There is a flood zone provision in most policies but insurance companies need to review their estimates of what are flood zone regions in such hurricane situations. Businesses probably should be more receptive and be willing to pay that extra premium when the insurance company clearly spells out the payment after its actuarial calculations.

Thus businesses can try and prepare better for transportation, electricity and insurance matters going forward. Meanwhile this blog wishes all its US East Coast readers safety during and after Hurricane Sandy. Contact StratoServe.

Character not personality: why 7-Habits Steven Covey is followed across the globe

7-Habits  author Steven Covey passed away yesterday and it was just  the previous week when a friend and  visiting  Indian CEO mentioned that Steven Covey's 7 Habits is a great inspiration for him. And this was before the news of Covey's passing so it led to this post about why Steven Covey's ideas resonate across countries and cultures.

"Character not personality" is why 7-Habits - Steven Covey is so popular across so many countries in the world. And this popularity is right from the sidewalk bookseller,selling copies of the "7-Habits" which is much harder that zeroing in on the CEO's of the Fortune 500.  As Steven  Covey explains in the the video, the character ethic got replaced by the personality ethic in America and appearances became more important. But personality is merely the tip of the iceberg and particularly in B2B relationships it is rather easy to find out about the "character" of the buying or selling organization. And when the underlying character of the organization and its members is not well formed and reinforced it shows in B2B relationships and leads to the common trust deficit problem.Trust deficit leads to recruiting multiple suppliers and smaller buy quantities and all kinds of defensive postures by the supplier like quicker payment terms etc.

But why should an old underlying concept like "character" so help the global popularity of  7-Habits? I guess Steven Covey identified this "Character vs Personality" base for the 7 Habits that resonates across cultures,religion and over time. Personality and appearances are important clarifies Covey. Just because it is summer you don't show up for a formal business meeting in Bermuda shorts ! However, the core character elements that follow from the mission statement ( also product innovation charter ) must receive buy-in from all organizational members. If organization members understand and champion the character principles, it is fairly easy to adjust to changes in terms of mergers. new suppliers or customers, moving across technology leaps like mobile and social media. If your core character and principles are clear and non-negotiable, you should be able to deal with whatever challenge or change comes your way.  RIP Steven  Covey. Contact StratoServe.

The Internet Cloud and Telecom angle: Global IT spending to reach $3.6 trillion

Global IT spending is to reach $3.6 trillion in 2012 up from $3.5 trillion in 2011 according to Gartner that is about a 2.86%  growth. Here are some things to consider in these numbers:

• Cloud means Internet : Following the previous post about what jobs cannot be outsourced from the USA, the cloud means that the data or material is available on the Internet via a password as in Dropbox, Carbonite and other Internet backup services. So what you put up can be worked on from India,Poland or Russia.Think about all the specific tasks you can get done at low cost from overseas. This apart from your own people being able to access a common database. Here Salesforce.com comes to mind as an example, every member of the sales team can acces the status of every sales lead no matter where they are in the world.
• IT spending is 23% of US Debt: The US Debt is estimated at $15.88  trillion  as of writing this post. Somehow trillion is a unit that reminds one of  the  US debt. Thus, IT spending in the world is over a fifth of US debt and means that global organizations, both public and private, are thinking cost and efficiencies as they spend this kind of money. All the more reason to think about the Internet and what it means for your profession.
• Telecom is $2 Trillion: A full 2/3 of the expenditures are are on telecom and services and that is great news for telecom companies.  It is likely that a lot of this money is being spent outside the US.Wireless and mobile is going to be huge, further improving communication and making the world flatter. Embracing this trend worldwide is a huge opportunity for the US entrepreneur and innovator. You can look up the time at another world location on your smart phone and can connect almost free with a partner almost anywhere in the world. In fact, Skype allows you to have video calls for free from your smart phone.

All in all an exciting forecast, full of global opportunities for US business. Contact StratoServe.

GlaxoSmithKline 3B$ fine - balancing innovation and ethical marketing

GlaxoSmithKline is to pay a 3B$ fine, the largest ever for healthcare fraud in the US. In the past, numerous big pharma companies including Abbott, Pfizer have been fined and this is something the industry seems accustomed to. It's important to understand why pharma marketing becomes unethical, if the unethical sales practices are to stop while innovation continues. Here is  how the pharma NPD (New Product Development) process plays out:

1. Drug discovery and patent - no sooner than an invention occurs patent applications are submitted. The patent is good for 20 years when competitors cannot produce the same drug.
2. Drug development, testing and FDA approval can take upto 10-12 years involving several phases including testing with animals,healthy subjects, patients etc.
3. Euphoria with FDA approval:The pharmaceutical drug development is so difficult,expensive and uncertain that it is common to find scientists who have worked 20 years and yet not seen a single product make it to market. Naturally when FDA approves a drug there is euphoria amiong shareholders and the stockmarket, expectation and hope among patients and their doctors. But by now only 8-10 years remain on the patent, by which time the pharma company must earn what it can.
4. Prescription drugs paid by insurance: Once prescribed insurance companies including Government programs like Medicare and Medicaid pay for the medicine. Generally over the counter (OTC) drugs are not covered. Between a generic and  a branded, under patent drug- patients,doctors and insurance companies prefer the less expensive generic.
5. Off Label use- expanding the  use of a drug involves using it for applications other than what it is approved for. Think of the many uses of baking soda beyond baking. Not a huge problem in medicine  if you think about using a body pain medicine for a headache and doctors do keep trying out drugs for different ailments. But this can be a big problem when a psychiatric drug for adults is used on children without FDA approval as in the GSK case. Apparently  the pressure to sell on the sales force is very high.

Beyond off label use there were numerous instances of trying to influence doctors to prescribe particular drugs through inducements such as free holidays,golf, expensive gifts etc. The sales force behavior is consistent with the pressures of pharmaceutical marketing where the pharma sales force is chasing large sales quotas against rapidly expiring patents.

Ideally pharma NPD should involve much more focus at the early stages of the NPD  process so that the FDA approvals are quicker and as off label applications become known, the FDA process to include off label use  should be made easier. The balance between high speed innovation-----> safety and efficacy by FDA-----> earning money by the company within patent periods is a tough task. Doing so is essential if innovation is to continue for big pharma. Contact StratoServe.

Mayors Innovation Challenge for US cities from NYC Mayor Bloomberg

The Mayor's Challenge for US cities from New York City Mayor Michael Bloomberg is a great idea. The rationale for the Mayors Challenge is explained in the video alongside and  details of the competition are available at the Bloomberg Philanthropies website. Mayor Bloomberg is personally funding the effort and it is available to all cities with over 30,000 population and the first prize is $5 million with four second prizes of $1 Million each.

An example of a great idea is from Chicago where there are two phone numbers. 911 for emergencies and 311 for everything else. The 311 idea has spread to 70 other cities and has greatly enhanced the effectiveness and responsiveness of the city to resident services. Details of the Chicago example are worth reading. To summarize , in Chicago, before 311 if you had a charge complaint for a cab ride, you did not know who to call in the city. By getting feedback from public the 311 service has helped prevent flooding, deal with the West Nile virus and vastly improve emergency response times.

Mayors of US cities with over 30,000 population will get an invitation to participate. By just participating, cities will start focussing on areas they can make a difference including healthcare as in the Camden experiment mentioned in an earlier post.

The reason that the Mayors Innovation Challenge  is a great idea is because this will encourage on the ground local leaders to propose and highlight innovative solutions to some of the most pressing problems in America. This decentralized grassroots approach to innovation in the public sector will work because guess what:  if say a city submits an innovative science and math popularizing program for the High School the town will talk about it, have it be the lead story on the local TV News and newspaper and make long but enthusiastic speeches at the Board of Ed meetin.g And many city leaders will facilitate Tweets and Facebook pages. Whether or not the innovation idea wins overall, it will make a difference at the originating city and to those  who learn about it -worldwide.Let's hope that every city that is eligible will apply: confirmation of interest is July 14 and submissions are September 14. Contact StratoServe.

WEF Davos : Capitalism and Democracy try to find balance through CSR

The World Economic Forum (WEF) at Davos has in past years been among the most powerful B2B, B2G and G2G networking meets in the world. More effective than the United Nations, according to some.

This year there seems to be a marked and discernible change in this gathering's tone and tenor. Leaders of both Governments and Businesses seem to realize that becoming  richer and richer is probably not enough. This realization as capitalism,democracy and affluence rises worldwide , 1 billion more global middle class by 2020 according to Muhtar Kent of Coca Cola ( see accompanying video). Here is some interesting stuff to think about from happenings at Davos in 2012:

• Just as democracy rises worldwide from Burma to the Arab world and the Euro zone mess continues, the occupy movement has showed up in igloos at Davos. They are the challenge to  the excesses of capitalism from the developed west which now has its very own bottom of the pyramid (BOP) folks who survive on food stamps and live out of a car.  The Western BOP are far  better off though, than the BOP of the world seen in aggregate, who tend to die of hunger,famine or just oppression in non-democratic societies. People would never die of famine in democracies though, as Nobel Laureate Amartya Sen pointed out. That's because, elected politicians irrespective of caste,creed or color tend to ensure that the bottom of the pyramid's life improves, because that's where the votes are!

• But it is those at the top of the pyramid like Bill Gates who realize that in a global world - the most disenfranchised protester in the most draconian of states can put out their voice on Twitter or Facebook. Thus, Bill Gates urges Governments and Corporates to step up philanthropy to the world's bottom of the pyramid.  Because doing so serves five  purposes:

1. It's good karma !
2. Your aid or philanthropy reaches more beneficiaries because of lower costs in the poorer parts of the world. More bang for the charitable buck.
3. When people have basic food,clothing and shelter they are less likely terrorist recruits and  next demand electricity,water and roads, education and health ..... and jobs.
4. With the above get better skills,earn more and generate  personal consumer demand.
5. Help the overall global economy as richer consumers. This helps sustain jobs of new kinds in the developed world.

Hopefully the 2012 World Economic Forum will see a surge in Corporate Social Responsibility (CSR) and Corporate philanthropy worldwide. Contact StratoServe.