Real job creation - should be required reading from Andy Grove

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This article - "How to Make an American Job" should be required reading for everyone concerned about the state of our industrial commons.  And many are (see this terrific post and related Harvard Business Review article by Gary Pisano).  The line that most caught my attention from Grove's piece was this:

"You could say, as many do, that shipping jobs overseas is no big deal because the high-value work -- and much of the profits -- remain in the U.S. That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work -- and masses of unemployed? "

Grove's solutions include applying a tax on foreign labor and applying the funds raised to create grants for companies to scale their operations up in the United States.  In addition, providing selective support to high-promise areas that right now suffer from under-investment. 

This is a classic problem of the "commons" - the longstanding realization that if everyone does what is good for themselves alone, the net result is bad for the greater good.  It's a pattern that played out in Jared Diamond's epic Guns, Germs and Steel in which civilizations literally ate through their stock of large animals.  It requires real leadership and only government can provide the mitigating power to force people to do things that are not in their indiviudal short-term interest but in which society has a vital stake.  So rather than slavishly believing that free markets will cure everything, why not take a page or two from the example of Asian countries or even Germany and re-commit to making things again?

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Brilliant reflections on skunkworks

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Ah, skunkworks.  Those small, agile units beloved of large organizations looking for the Next New Idea.  I've written about them in the past - and outlined some of the pitfalls of setting them up and expecting great things to happen without having some way of re-integrating them back to the core business.

 

I ran across this really interesting blog post this morning that adds a lot of rich texture to the subject of skunkworks and pulls together some really interesting examples.  For instance, I didn't know that the originator of "let a thousand flowers bloom" idea was Chairman Mao!  Definitely worth a look. 

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Eroding advantage at Motorola

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My colleague Alex van Putten was kind enough to forward along this interesting image from a report written by the Silicon Alley Insider.  It visually depicts the fast erosion of Motorola's competitiveness in the phone market, with Apple outselling it by number of phones for the second quarter in a row.  The article makes interesting reading as well.

 

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Brilliant observation on managing a crisis

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The BP Oil spill is only one of a multitude of crises that leaders encounter on a regular basis.  I had this in mind when I ran across this quote from Patrick Lagadec's most insightful book Preventing Chaos in a Crisis.  He makes the following observation:

“…the ability to deal with a crisis situation is largely dependent on the structures that have been developed before chaos arrives.  The event can in some ways be considered as an abrupt and brutal audit:  at a moment’s notice, everything that was left unprepared becomes a complex problem, and every weakness comes rushing to the forefront.”

What a fantastic thing to bear in mind as we are tempted to deal with the 'day to day', forget to make investments in things like awareness and safety and think it is someone else's job to point out the evidence that things are running off the rails.

 

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The tax man wants me to send Staples a 1099??? An exercise in absurdity

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You know those moments when you read something in the paper, convince yourself that you must have misunderstood and go back to see what the article really said?  Well, I just had one of those moments while reading yesterday's Wall Street Journal. 

An article entitled Why the Self-Employed Might Owe OfficeMax a 1099 reports on collateral damage from health care reform.  Apparently, to pay for some of its costs, lawmakers have vowed to close an estimated $300 billion 'tax gap' by requiring everyone who does more than $600 worth of business with a vendor in a year to file a 1099 form stating how much they paid the vendor.  This is the case whether it's Larry's Plumbing in to address your leaky flipper valves or a huge company like Staples or OfficeMax.  What nobody is talking about is that the burden doesn't just fall on filers for the over-$600 purchases. To actually comply with this provision, a small business person, charity, church or sole proprietary would have to track every purchase just to see whether they crossed the $600 threshold over the course of the year or not.  The record keeping burden is hard to fathom.

So are the unintended consequences.  As the article points out, it  will create incentives for small business owners to split up their purchases among different vendors so that they don't cross the $600 line.  It will create incentives for vendors to set up different billing entities so that people can continue to do business with them without having to file.  And it certainly creates a massive new bureaucracy to receive, check and account for all that information.  Plus, I can promise you the information is bound to be inconsistent and erratic.  I've been receiving 1099's for years for my independent speaking and consulting work, and I can tell you that companies are totally inconsistent in how they file.  Some include travel, some don't.  Some include goods (like books) while some don't.  Some report for the calendar year, some for the fiscal year. Some report only payments made and not yet billed, while others report everything billed in a year whether or not they have cut the check.  It's a nightmare, but manageable since we're not talking about big numbers.  But once you start getting into the hundreds or even thousands of transactions, the mind boggles.

Oh, and if the vendor doesn't give you their tax ID number, you're supposed to withhold federal taxes on their behalf and send it off to the IRS!  Unbelievable. 

Before implementing something as bone-headed as this, here is a perfect opportunity to get some actual evidence of its efficacy.  Try it on a small scale and see whether the costs are worth the gains.  See if the gains occur at all - my guess is that people who have been skillfully avoiding taxes under the old regime will continue to be equally creative under the new one. The ones who will suffer - as always - are the ones who are going to try to do their best to comply.   

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