Corporatism vs. America

America used to be the land where the people ruled and where governement represented the people. At least that was the idea behind its founding.

The truth now is that through less regulation and more political "buyoffs", America is now the land where corporate interests rule and government represents corporate interests. The battle of Republican and Democrat is largely for show, it's TV fodder. Corporations own both parties.

The proof is in the pudding. The stimulus package, that propped up corporations "too big to fail" under the premise that failure to do so would plunge the nation into chaos as disruptive as the Great Depression, came with almost no restrictions or accountability to prevent a similar emergency again. In other words, it was a carte blance payoff to corporations at the expense of the taxpayers. In fact, this recession (plus the stimulus) is the best thing big corporate America could have asked for. They are able to shed jobs, put downward pressure on wages, raise productivity, erase dirty assets and raise profits and corporate suite pay. What's not to like?

While the chaos of a complete financial collapse would indeed have been chaotic and created an upheaval across almost all sectors. It would have been the necessary "correction" that would have accomplished what no stimulus package could.

Corporate America's stranglehood on our government would have been broken because many of these companies would have failed and gone extinct. This would have allowed government to once again represent the people. Without corporate payoffs, representatives would be dependent on their constituents for funds and thus accountable to them.

It would also have opened opportunities for new businesses to replace these big behemoths with more responsive, nimble and sound practices. This is where the stimulus money could have been spent to foster the growth of these replacement businesses. It would also have fostered immediate "new" industries such as green energy to relieve our oil dependence quicker, new infrastructure businesses, new communication businesses, a new nimble auto industry that can truly compete globally, a new built from the ground up insurance industry, and a new financial sector making money the old fashioned way (loans and savings to finance the new businesses) instead of esoteric and risky financial "tools" and mortgages would have been restructured for long term stability and income for the new banks.

The upheaval would have been tremendous. Unemployment would have soared. Money would have dried up for a while (again, this is where the stimulus would've performed better), and the nation would have certainly suffered. But...

The much needed correction would have leveled the playing field for business and allowed innovation to take hold (small companies are inherently more innovative than large corporations) to build up the future of American business. The stimulus money would have gone to the restructuring of American business rather than maintaining the status quo. The road would be long and hard but it would be faster given that the govt would intervene immediately (unlike during the Great Depression) and it would not have been compounded by ecological disaster (as in the Great Depression). In other words, the Depression that could've been would not have been as bad as the Great Depression.

A clean slate is easier to build upon than the current wretched slate and we would have been alot better off in the long run. Instead the playing field for business has not been leveled, none of these "new" businesses has made any inroads, money is not loosening up, credit costs are soaring, housing mortgages are still the knife at our throats, corporate protections are still in place, and accountability is still elusive. As it is, our lumbering corporations maintain their stranglehold on our government and foreign corporations (with their own state support) are better positioned to take advantage of the new global environment than American business is (think BRIC) and American consumers have no leverage.

Yes, corporatism won again despite being the ones who took us to the brink and they're making a lot of money, the rest of us aren't.

Back to Basics: Rising Above the Clutter and Staying There

A few weeks ago I had the honor and privilege of guest lecturing an M.B.A. marketing management class at the University of Rochester, Simon School of Business. Professor Nelson, a brilliant expert in the marketing field, kindly invited me to speak earlier this year, and presenting to his students energized me in many ways. Standing in the very room where I was once the note and exam taker fulfilled the deep need to give back. And, after thirty minutes of discussion, I raised the following topic: "What does it mean to be a corporation during a recession?"

The bright students and I discussed people's rituals and how savvy firms today will figure out ways to market products to consumers - products that will enable end-users to continue to behave in manners that are familiar to them, but in more cost-friendly options. Examples include home hair color kits, DVD movie nights and pot-luck dinners. In each option, people still get to participate in events and behaviors that matter to them most - beauty, entertainment and connection.

In recent months, manufacturers are not the only ones targeting the individuals that, ultimately, are responsible for making nervous shareholders happy. Savvy retailers, anticipating conservative shopping patterns, currently offer layaway. The rules of layaway are basic: find an item you love, take it to the service desk, pay what you can for it and once you have paid it in full, it is yours to keep - no credit cards needed. Think of it as a savings account specific for stuff. The question is, with many retailers moving to a Scan Based Trading (consignment) model, during layaway, who really owns the inventory? This must make auditors cringe more than the account receivables on expired gift cards or travel sites that enable transactions, but don't really provide independent services.

Back in the early 90's, while earning my B.A. at DePaul and working full time managing Claire's Stores in Chicago, times were tough. Not as tough and uncertain as today, but, still tough. Every morning, when opening the store and getting it ready for the customers, our district manager Andrea Pape would make the morning chain call. Andrea would call one store manager, provide a list of daily reminders on what will make a difference at the cash register, and that manager would then need to relay the information to the next store manager in the district.

Some of Andrea's reminders included:

• Is the store immaculate? Are the lights working?
  
• Is the store staged for sales? Are all the fixtures, shelves and pegs filled with product, with nothing in the stock room?
• Is the staff wearing its best smile, greeting and helping every customer that walks through the door?
• No one is allowed behind the register counter unless ringing up sales. All sales require a thank you.
  
• Are toys refreshed with new batteries and demonstrated to children and adults?
  
• Is the cash wrap filled with impulse items to drive a bigger transaction?
• Store gate does not go down until the very last customer has left the premises.

At the time, these reminders seemed silly, almost a common sense sanity check. However, looking back now, these Back to Basics worked. They drove sales and kept the shareholders happy.

Of course, the early 90's hadn't yet experienced the inundation of miles, points and other loyalty programs that seduce good citizens into irrational decisions.

Two years ago, due to the business needs of various job positions and other fantastic opportunities, I earned elite status with my airline. And for the next twenty-four months, I perpetuated the status by using a credit card to purchase even more tickets, justifying the trips with accrued credit card points and more miles, all in an effort to stand in a shorter security line at the airport. Earlier this year, it finally hit me: I was flying more just to fly more. And my airline, as many others, no longer has the expedited security line at all times and locations. Perhaps too cost prohibitive to have two agents checking tickets? Perhaps a trade-off to reverse the decision to stop granting a minimum 500 miles per trip (vs. actual miles traveled)? Regardless, the points and miles no longer seem all that seductive, and the recent investment in a house over-rode the need to book another overseas flight.

And speaking of transportation, currently, at this moment, as gas prices continue to fall and no one is reporting on why, six months ago, they rose to nearly triple the price they are at today, people have stopped flying, reduced driving and re-budget every fiscal decision, large and small. The typically cyclical economy patiently waits for the Next Big Thing. Perhaps the new president will encourage confidence - not a spending spike - but statistically significant economic investment - in manufacturing, in services and, most importantly, in entrepreneurial follow-through. In the holy trinity of decision rights, performance measures and rewards, millionaire CEO bailout sends a message of irreversible and irresponsible planning. When Cortez sank his ships, he made it clear that going back was not an option.

At times likes this, pure fiscal Darwinism has to tango with social responsibility. Profit-optimizing capitalists need to court the giving spirits and together generate a new rent-collecting business model, one that will reposition and reconfirm the country as the innovation champion. As my Strategy Professor Matteson once said, "You have to rise above the clutter."

So now the question is, which retailers and manufacturers have the common sense to keep the entire value chain happy? The answer lies in three additional questions:

• Which rituals remain holy?
  
• What behaviors no longer matter?
• What new needs are about to surface? (Think Wayne Gretzky's skating to where the puck is heading vs. where it already was.)
  

A savvy corporation during a recession has to stage itself for register rings. A profitable firm in today's economy may not even, yet, exist. Even Darwin would find that exciting.