Keeping it simple

Don’t Just Read the Front Page

Leaders, both in business and in government, must read beyond the front pages. For whatever reason, if the news is good, it seems to be buried in the middle pages. Lead articles from the front page of our local pager talk topics like: Home foreclosure, higher rates of high school drop outs, Stuck State Legislatures and Ca.'s Budget. What I find frustrating is the when the news is good, it is buried. Take for instance the rate of GNP growth for the current quarter. It came in at an annually adjusted rate of 3.3%; where the last 3 prior quarters were: .07%, 1.07% and 1.68%. I am very excited to see such strong growth. The last quarter was almost double the 12/07 quarter. Look at the US dollar against most of the major foreign currencies, it too is rising. Look at some of the rates for home sales in the northern California area; they are starting to trend upwards.

It may be likely that the 9/30/08 quarterly GNP numbers are still trending upwards. I believe that it is time to start gearing up our marketing machines to look for increased sales. Local growth in the US fuels my business and most likely fuels your business. Waiting on the side lines to see if this trend continues is one strategy which I don't think makes sense. The impact of whoever is elected in November will clearly not have an impact on our economy for well beyond mid 2009.

Planning is a key aspect for handling future growth. Do you have the right people in your organization? Are all functional departments in your company prepared for a new growth cycle? Are you clear on your core competencies as a company? Do you have the right systems (i.e. software and procedural systems) for the next growth cycle? If not, why not?

Good luck making it all happen.

Jeff Cozens

Slipping, sliding, beeping and hidden

My sense is that our local economy is definitely slipping and sliding.  Let’s look at our local economy.  With gas prices hitting record levels, we don’t need to be experts that consumers are going to cut back on travel.    Expect more downward pressures on tourism.   Yesterday our state government declared an “official” drought condition with about 75% normal rain and snow fall for the season, but fails to demand any cut back in use of water.  The election this past week had anemic voter turnout of less than 15%.  We are starting to see businesses shed thousands of jobs, as announced today with two airlines announcing layoffs of over 5000 jobs. Where is the leadership from our government?  Let’s get back to reality and demand that our government leaders do more than sit on their hands.   Let’s start by asking for what can we do to increase the supply side of these equations.  If we need more jobs, what can government legislatures do to promote growth in business, which leads to more jobs.  If we need more electricity, why not create incentives to build more nuclear electrical plants.  If we need more water, why not create incentives to built facilities to reclaim sea water as drinking water?  Now you may not like the particulars of my suggested actions, but instead of just complaining about no nuclear, or no water desalination plants in my neighborhood, what is it that we can do to start creating solutions?  I believe we can create change to demand that our leaders start taking action.   

In a way we are all like sail boats.  Either the winds or the tides are going to move us.  Currently as we are in the slip and slide mode, we are more like the becalmed boat who is driven more by the tides.  If we want to start gaining movement, let’s hoist our sails and start moving forward.  We may have to tack as we move forward to reach our desired destination; but if we are moving, we will have much better control over where we are going.  So let’s get moving!

Conflicting views -- but basically lack of trust

In today’s Wall Street Journal I read an editorial by Lee Gomes called ‘The real world needs “net” taxes’.   The premise of this article was that it is time to rethink charging sales taxes on internet goods.   Basically since most internet stores sell into areas where the business has no nexus, there is no sales tax charge by the business but the onus in on the buyer to self claim the sales tax.  Unfortunately, most buyers don’t pay their sales taxes.   I was originally leaning towards favoring this argument.  In my state, California, we have major revenue shortfalls (literally billions are spent more than collected in the current year). 

I guess my real issue is once the government has the moneys will I agree with how the funds are spent.  I feel like my state legislators have deceived us.  It seems like we are constantly asked to vote for approving money for things like: road improvements, parks, police and fire staffing, which are all good causes.  My sense is that once the money gets approved and into the general funds, that the intended original use of the funds gets superseded by some other area.    I specifically remember voting to self tax ourselves in our county, Santa Clara County, for road improvements.  Somehow the amount of money collected on these taxes does not seem be coming 100% back to the people who paid for the tax.  Similarly we are self taxing ourselves with a local sales tax for our county, Santa Clara County, which is approximately 0.5%.  Yet our county government is struggling with financial cutbacks due to lack of funds.

Is it possible that the problem we have with tax revenues is that whatever is collected is always spent, and setting funds aside for reserves is a lost discipline?   I think that for a specific period of time, (say 5 years), we should require that the all state and local governments only can spend what they collect.  If the spending exceeds revenues, then cuts in staffing in the government automatically kicks in. (i.e. staffing of our legislators, state workers, county and city employees); then maybe people would spend our tax revenues wiser.    In science, there is a principle called the Oppenheimer affect, which loosely stated is: the observation of a task will always impact the performance of this task.    Maybe if government employees saw that there job was dependent on not overspending, then we would see more fiscally responsible acts. 

Once we see responsible actions by our government officials, and then let’s talk about tax increases, including taxes on “internet “sales.  But until we have trust back in our government proper handling of taxes collected, I vote: no new taxes.

Gridlock in our California State Legislation:

In 2003 and 2006 state elections, here in California, less than 1% of incumbents lost their elected seats in our state legislature.   With such entrenchment of incumbents it is no wonder that we are constantly in gridlock for resolving real issues.  As a taxpayer and voter, I am really frustrated at our state government.  Our state spending exceeds its income by billions of dollars, the potholes in our highway system are getting bigger and deeper every month, our high schools are struggling with high dropout rates; and our colleges are pricing tuition through the roofs.    The list of problems just seems to go on endlessly.  Unfortunately, creativity is not coming forth by our leaders in the legislative branches; or at least real change.

I was excited this past weekend when reading a Wall Street editorial by Stephan Moore.  His article, “Mississippi Tort Reform Triumph”, told the story about their state legislation taking on this problem:  “We were America’s No 1 judicial hellhole for jackpot jury verdicts”.  No wonder for years Mississippi was seeing businesses leave by the droves as well as people leaving.  These two statistics are related.   In 2003, a new governor and a courageous legislature decided to address tort reform.   There were a series of laws passed which basically created dollar limits for jury awards.   Almost overnight the economic health of that state started turning around.  Businesses were thriving, doctors were seeing mal practice insurance policies going down, and new businesses were starting to migrate to Mississippi.   In four years over new 60000 jobs were added; not bad when you realize total employment is just over 1.3 million.  That’s almost a 5% growth. 

Our state must take a hard look at the reasons it is stagnating.   I strongly believe our entrenched legislature with its ability to draft voting district boundaries is one key explanation. 

What thoughts do you see that need to be addressed to reverse improve the business climate. What should our legislatures and voters be doing to break the gridlock and get things moving?  My mind is swimming with ideas, and I look forward to sharing them with you.  I also look forward to your thoughts.

What Numbers do I believe in?????

I just finished reading the morning newspaper, and now how have a lump in my stomach.  What numbers do I believe?   I honestly believe we have been so many of our institutions, our newspapers, our government, our political poles, our educators have taken to re-writing the truth to tell slant it for their benefit.

The political poles have been so misleading over the past few elections, its like why clutter your mind reading them. The potical poles are slanted to get a desired end result, and the end vote result looks nothing like the forcast presented.    In another section of the newspaper, there was an article by an LA times reporter that talked about need to standardize reporting methodology of graduation rates for high school students.  (How difficult can this be???).  The newspapers take such a bias in how they report with misleading headlines on articles that thinly disguise the real “editorialize” viewpoint of the author.  Read a quote from a government official about the health or sickness of our national economy and you get nothing but political double talk.

The result is confusion, anxiety, and lack of clarity; which is why, in my opinion that we are in for a side wards drifting in the local and national economy; probably for several years.  Throw in the Presidential election this year and ouch. Who’s going to make decisions about moving forward in all this confusion? 

We have become so politically correct that honesty has lost it dominant role for clear thinkers.   Let’s return to the basics of demanding facts, making decision on facts and get the craziness of a bias set of self serving individuals, government officials, and writers who are creating FUDD (Fear, Uncertainty, Doubt, and Disinformation).   Bring honesty back to all we do, say, and think!

What some positive news about Silicon Valley

In the last few days, the editors in our local newspapers had to address some good news.  Great quarterly results by some big guys (Google, IBM, Intel).  So unusual because it seems like only bad news has been written about so long, here in the Silicon Valley.   The tech sector/software section, which got creamed in the Dot com bust some 6 years ago, seems to be doing actually pretty good.   

Reading and breathing bad news about the financial sectors, the banking and mortgage industries has been downright depressing.    Wouldn't it be a great way to celebrate spring's arrival by thinking and writing about some positive thoughts and trends..... Well, thank you for the good news of 4/14 -4/19, except for the always frustrating day of 4/15 or tax day.

Whose watching out for small to medium size businesses?

I can read the Mercury News or the SF Chronicle, but it seems that they only talk about the Big Boys.  What about all the rest of the businesses who aren't big.  We represent an often silent and unheard voice.  I think it is because we are just wearing too many hats.... doing too many things, and trying to be quick and nimble to find and keep our market niches.   Hopefully we can share a few thoughts which can make a big difference in your own businesses here in Silicon Valley ....  At least that's my goal