As global competition heats up and drives the economy, it touches many businesses and industries. A World without a Safety Net is a hands-on guide to the tough new world of business performance. Author Frederick W. Croft, an expert who has built value for private equity buyers and major corporations, provides options for managing more effectively in a global world. He examines global competition-what companies are doing and how they are doing it. As managers cope with the permanent changes in management performance resulting from the economic crisis; the failure of the financial engineering approaches that drove share value in the past two decades; and the end of cheap capital, they must build value or they'll fail. Croft, a restructuring expert, shows managers how to create value through three essential disciplines: managing information, managing execution, and managing decision-making. With straight talk, specific tools, real-world practices and the experiences of U.S. and multinational companies, A World without a Safety Net equips managers to work more effectively and keep businesses alive and thriving in the unforgiving world of the post-crisis economy.

A WORLD WITHOUT A SAFETY NET

Walking the Tightrope to Business PerformanceBy Frederick W. Croft

iUniverse, Inc.

Copyright © 2009 Frederick W. Croft
All right reserved.
ISBN: 978-1-4401-5526-0

Contents

Introduction In which the author discusses intent of the project and its value to a business reader who's involved in line management or has a financial state in the results of a company's line management................................................................................................................................................................................................................................................................................................xiWhy Read This Book?..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................xiWho Should Read It?..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................xiiiWho Am I?....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................xiiiLanguage And Reality.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................xivOne: After the Fall A section where we examine some of the structural changes in the economy and in the business environment after the Great World-wide Meltdown............................................................................................................................................................................................................................................................................................................................................1Some Things To Think About...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................2OMIGOD!......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................10Two: Reality and Hallucination in Modern Business In which we look at some of the problems built into the way we commonly look at business, and consider what they mean to a line manager working to create value...........................................................................................................................................................................................................................................................................................13A Simple Test................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................13What Is To Be Done?..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................15The Specialist Problem.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................17The "Whole Problem" Problem..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................19So Where's Our Mid-Sized Company Executive?..................................................................................................................................................................................................................................................................................................................................................................................................................................................................20environment which aren't useful to line managers.............................................................................................................................................................................................................................................................................................................................................................................................................................................................21There's No Such Thing As A National Company..................................................................................................................................................................................................................................................................................................................................................................................................................................................................21There's No "Force of History"................................................................................................................................................................................................................................................................................................................................................................................................................................................................................23Nations Can't Help Their Citizens Compete....................................................................................................................................................................................................................................................................................................................................................................................................................................................................24"Cool" Isn't A Cool Strategy.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................25Companies Can't Stay Static..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................26Business Can't Be Totally Regulated..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................26How Do These Concepts Help Us Manage?........................................................................................................................................................................................................................................................................................................................................................................................................................................................................27Four: Why Can't I be Certain? In which we look at the dangers of certainty and assumptions of precision in business, both in terms of fundamental math and in the accounting tools which drive most business decisions......................................................................................................................................................................................................................................................................................29We Have Nothing To Fear But Fear Itself......................................................................................................................................................................................................................................................................................................................................................................................................................................................................30Defining Things..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................31KING'S X.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................36"Ultimate Truth" Addiction...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................40Let's Get Negative!..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................40Why Are Accountants Saying Those Terrible Things About Themselves?...........................................................................................................................................................................................................................................................................................................................................................................................................................................41GAAP Or Gap?.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................42Adventures In Recent GAAP Financials.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................43Accounting Principles - Or Rituals?..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................44What's Stored In That Inventory?.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................46Depreciation.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................47Is IFRS The Answer?..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................48Does Expert Certification Work?..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................49Societe Generale.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................50What Are Alternatives?.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................54What's A Line Manager Supposed To Do?........................................................................................................................................................................................................................................................................................................................................................................................................................................................................55Five: Without A Net A look at some common ideas that consistently cause business failure, and consideration of three tools - information analysis, execution management, and decision-making skills - which consistently bring business success.............................................................................................................................................................................................................................................................57You're Responsible...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................57Stop Doing Dumb Stuff........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................58Fixing The Bad News..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................61IEDs And Other Explosive (Business) Devices..................................................................................................................................................................................................................................................................................................................................................................................................................................................................64Information Starts With Definition...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................69Verifying Information........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................70Information Theory...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................71Structured Information.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................72Structured Information Environments..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................75Creating Structured Information..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................76Focus: Key Factors In Evaluating Business Performance........................................................................................................................................................................................................................................................................................................................................................................................................................................................78How Does This Work In A Business Environment?................................................................................................................................................................................................................................................................................................................................................................................................................................................................80Structured Information: NOPAT, EVA And Beyond................................................................................................................................................................................................................................................................................................................................................................................................................................................................80Dynamic Costing..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................82Absorption Cost Methods and Operations Management............................................................................................................................................................................................................................................................................................................................................................................................................................................................82Why Did Activity-Based Costing Fail?.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................84Why Will Dynamic Costing Work Where ABC Won't?...............................................................................................................................................................................................................................................................................................................................................................................................................................................................86What's The Result?...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................88Fixed vs. Variable...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................92Return on Investment And Hurdle Rates........................................................................................................................................................................................................................................................................................................................................................................................................................................................................94Is This Just About Finance?..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................95Marketing Data...............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................95Operations Information.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................99Information Hoarding.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................100Whose Information Is It, Anyway?.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................100Seven: Execution: Do It Yourself An examination of how to move from information to effective action, considering how to identify what's effective and the use of two commonly-used methods to achieve continuous improvement: Six Sigma and Lean (Toyota Manufacturing System)..............................................................................................................................................................................................................................103Know Thyself.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................103The Evolving Organization....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................104Continuous Quality Improvement...............................................................................................................................................................................................................................................................................................................................................................................................................................................................................106Six Sigma....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................110Managing Variation Is A Statistical Process..................................................................................................................................................................................................................................................................................................................................................................................................................................................................117DMAIC........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................117Managing Variation is an Executive and Shareholder Commitment................................................................................................................................................................................................................................................................................................................................................................................................................................................123Managing Variation is a Communications Process...............................................................................................................................................................................................................................................................................................................................................................................................................................................................124What In The World Ever Happened to Six Sigma?................................................................................................................................................................................................................................................................................................................................................................................................................................................................127The Bottom Line..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................128Lean (Toyota Manufacturing System)...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................129Waste........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................129The Eight Wastes.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................1326S Methods...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................138Effective Effort.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................139What Can You Expect From Lean?...............................................................................................................................................................................................................................................................................................................................................................................................................................................................................142Eight: Just Do It In which we examine Agile Operations, Distributed Fabrication, and other methods addressing the problem of management being in one location while goods are being put together on another continent by people speaking a different language..............................................................................................................................................................................................................................................143Why Do We Still Have Problems Managing Process?..............................................................................................................................................................................................................................................................................................................................................................................................................................................................143What's The New Game Plan?....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................145Agile Operations.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................146Break It Up:.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................147Mix It Up:...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................152Talk It Up:..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................155Set Up The Circuit Breakers:.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................158Know Where You Are:..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................163Nine: Decision Tools A look at scoring systems, game theory, value matrices and other methods of comparing the risk-adjusted value produced by one scenario to alternatives, and their use in making the best decision (not the simplest one)...............................................................................................................................................................................................................................................................165What Does Effective Decision-Making Look Like?...............................................................................................................................................................................................................................................................................................................................................................................................................................................................166Problem Focus................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................168Weighting....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................170KPIs.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................170Balanced Scorecard...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................173How Well Does This Work?.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................175What Should I Be Weighting?..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................176Volatility And Yield.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................182Making Trade-Off Decisions...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................187What The *@&%#!!! Are We Doing Here?.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................188Game Theory 101..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................189How Does Game Theory Work, Anyway?...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................191The Kidnap Game..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................192Input And Game Theory........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................197How Do We Make This Work In Real Life?.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................199Timing And Risk..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................207Past Performance Is No Guarantee Of Future Results...........................................................................................................................................................................................................................................................................................................................................................................................................................................................208Ten: Exit, Pursued by a Bear In which we consider how the change agent can stay alive through the restructuring process in a business that hates change and wants him deader than the proverbial doornail...................................................................................................................................................................................................................................................................................................209Armed Resistance (And Its Removal)...........................................................................................................................................................................................................................................................................................................................................................................................................................................................................214Implementing Transformation..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................216Follow The Leader............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................216Step One: Rally The Top......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................217Step Two: Selecting A Team Leader............................................................................................................................................................................................................................................................................................................................................................................................................................................................................220Step Three: Keeping It Casual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................222The Last Word................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................226

Chapter One

AFTER THE FALL

A funny thing happened after the Great Subprime Meltdown. Everything changed. And I'm not the only person who thinks this, either. "Staying rich in this future world will require strategies that reflect this altered vision of [lower] global economic growth and delevered financial markets", notes PIMCO's Bill Gross in his May 2009 newsletter. "The world, in my opinion, is changing and is shifting away from the financial types to producers of real goods, and this is going to last for several decades" agrees former Quantum Fund principal Jim Rogers on his blog, before suggesting that ex-investment bankers may want to consider new careers as farmers and taxi drivers. Hong Kong-based fund manager Marc Faber suspects that the only areas where the United States has competitive advantage are "beer and prostitutes".

All right, then!

If you're a line manager in a mid-sized business, you're working through a funny time in financial history. The rule book's in the trash; the experts are in the penalty box, and it's quite likely that you're wondering "What the $*&%!!! do I do next?" There are few certainties left to us, but I'll give you a few observations that may prove useful.

SOME THINGS TO THINK ABOUT

1. The Era of Cheap Money is Over: The U.S. has, for good or ill, piled on a mountain of new debt to bail out assorted investment firms that couldn't invest, auto companies that couldn't sell cars, insurers who couldn't manage risk, state programs that didn't want to shut down and various other good and worthy recipients. It's done this at the same time that my occasional clients the Peoples' Republic of China are expressing concern over the impact of inflation on the dollar and cutting deals that will allow them to use their own currency in deals with Brazil, Russia and Japan rather than rely on the old and outmoded international reserve currency, the dollar. It's probable that this will lower the demand for new U.S. debt issues, which increases the probability that the U.S. will run the presses and the ugly specter of inflation will stalk the land. What does this mean for the mid-sized company executive? It means you'll pay more for the money you borrow. It means that tactic that worked with 5% interest won't work with 10%. It means that you'll need to generate more of your working cash flow from internal operations, or you'll face return on investment problems, disgruntled shareholders, and general bad times.

2. Global Competition isn't Going Away: Global trade isn't about industry.

It's about gadgets and home furnishings and Harry Potter and Parisian dance tracks and Dyson vacuum cleaners. It's about medical transcription done in India, and software coding in Islamabad. It's "Slumdog Millionaire" instead of Hollywood. Some "Big Four" accounting firms have their clients' financial statements assembled in Manila. Major insurance carriers settle claims in Dublin. Paralegal work is routinely e-mailed back and forth with Bangalore, and the world's largest and highest-quality cardiac center is now in Karnataka. International trade used to be limited by the factors of transportation cost and shipping time. Air freight and low cost container shipments have changed all of that for physical objects. But most of us don't work with physical objects; we work in service and intangibles industries. For these categories, the Internet brings the whole world into the same room at the speed of light (or somewhat less, if your ISP is like mine ...) The great barriers of time and transport vanish into air, and being the friendly local tradesman doesn't mean so much to your cost-conscious customers. Products aren't necessarily the product of one company or one country these days: it's quite simple for a local marketer with a good idea and some connections to link up with foreign manufacturers, development resources - whatever they need. So don't think of your competition as the Chinese: think of it as your uncle Louie the Sales Guy down the street, PLUS IBM and all of its resources, plus some guy with a math PhD in a garage in Vientiane whose monthly income is slightly less than a single topping Dominos pizza, all attempting to undercut you with higher-quality products, better sales pitches and lower costs of capital. Facing this aggressive, adaptive competition, it's increasingly necessary for producers to move fast enough to access consumer desires before they've moved on to something else. In the ever-applicable words of Diamond David Lee Roth, product lifecycles (like rock stardom) can be described as "here today, gone later today." Useful working life (over which you recoup your invested capital and maybe even a bit of profit) is often measured in weeks. What's a mid-sized company executive supposed to do about this? They're management, so they're supposed to manage. They need to build efficiency and quality (which are two sides of the same coin) to a point where they're world-class competitive.

3. Labor Cost Makes a Profound Difference: We in the U.S. choose to have minimum wages. We choose to have fringe benefits and unemployment coverage and OSHA. We did a project for a private equity firm about a year ago. The equity firm owned an auto aftermarket company that manufactured goods in three plants: one in the U.S., one in Tijuana, and one in Guangzhou, PRC. We analyzed loaded labor costs for the three plants as part of our work, and the differences in labor costs show the magnitude of the labor issue for manufacturers: U.S. $25.50 per hour Tijuana $ 5.50 per hour Guangzhou $ 1.50 per hour The reminbi (the PRC currency) has gone up a bit since then, but the effective labor cost per hour still is below $1.70 per hour. A firm using U.S. labor has a fifteen-to-one labor cost hurdle to overcome if it's facing competitors who manufacture in the PRC. US workers may be better than the ones in Guangzhou - but are they fifteen times better? (For what it's worth, the Guangzhou plant in our study had lower scrap and rework rates than the other facilities ...) U.S. customers may not pay more for a "Made in USA" label. If they're forced to pay equivalent prices by a tariff or import barrier, aren't the majority of Americans (i.e., the consumers who don't work in auto manufacturing facilities) suffering by being forced to subsidize uncompetitive workers through overpriced goods? And might they not express their annoyance politically? There are a lot more Wal-Mart shoppers than there are U.S. factory workers ... Customers aren't the only folks weighing their options. There are several billion people who don't live in the United States, but would like to make progress toward U.S. living standards. One way that they can do this is taking jobs that U.S. citizens aren't willing to do. For most of the world, OSHA and unemployment coverages are luxuries that they'll do without - they're happy to get more than the dollar a day that the locals will pay them. Ah, you say that the PRC has plant closures and job losses now that we've had the Great Worldwide Meltdown and the world economy's feeling our pain. True enough. Do you think that will make the Chinese LESS hungry? Will all the Indians and Vietnamese who've seen their glimpse of the Gold Mountain say "The U.S. consumer's got less money, so we'll just forget it and head back to the rice paddy"? Or will they say "We can go lower on labor cost than our competitors, and we'll fight for whatever market survives"? And labor costs aren't simply a function of labor. They're a trade-off. Example: auto parks. A few years ago, these were the domain of energetic young fellows who rushed about acting as valets, taking your car and getting it for you when you were ready to leave, and collecting whatever fees the parking facility charged you. That's not happening any more - now you press the button for a parking ticket, and feed it into the electronic payment module when you're ready to leave so the barrier will go up and you can leave the structure. Not a valet in sight; you end up talking by phone if the payment module screws up. This wasn't the result of a neutron bomb targeting valets. Asian valets aren't undercutting the local boys, either. It's the natural end point for a system where people will pay limited amounts for their ability to park a car - or for anything else that they want. They'll go for automation if they can't get cheap labor. Back to the viewpoint of our mid-sized company manager. What he takes away from this is that good intentions lose when they fight it out with markets. Efficiency is a requirement, not a choice. If you're not efficient, the Wal-Mart customers of the world - i.e., the vast majority - will buy from someone who is.

4. The greener the U.S., the bigger problem for many U.S. industries: This one's a conundrum for me, personally - I'm a significant shareholder in an environmentally-driven enterprise, and I believe we have to address the real national security, quality of life and sustainability concerns which drive the movement toward eco-sensitive products. Green industry has been promoted as the savior of the American economy. Maybe. We in the United States don't want to live next door to toxic metal tailings, carcinogenic dye dumps or many of the more colorful aspects of Third World manufacturing hot spots. Since I don't make a living off of that stuff, I'm all in favor of a hard-core Green position that preserves my nice little suburban neighborhood. But we've exported the U.S. consumer electronics manufacturing industry, in part, because it involves a lot of weird metal tailings and acids (circuit board manufacture), lead (CRT screens) and other fun stuff. No more Zenith televisions or RCA radios. Industrial paint shops for anything from furniture to custom cars are becoming difficult to create or maintain in this country because of environmental and OSHA requirements. The same thing's true for batteries and power train products. And then there's research and development. It's no accident that the industrial parks around Shanghai are studded with bio-research and drug development facilities. The PRC does have drug and consumer neutraceutical products legislation, but it's not anywhere near as overwhelming as the FDA in this country. We've made a choice. Since I'm not too interested in growing another head from exposure to the output of the bio-dump down the street, I'm on board with this cultural decision. But, with this same decision, we've also elected to export drug and new products development to parts of the world where they aren't quite as fastidious. We need to develop other goods and services to sell them that will pick up the slack. Where does this put our mid-sized company line executive? It probably puts him in the "deeply confused" column. On one hand, the Boone Pickens argument ("We're sending a trillion dollars a year to people who don't like us") has national security implications: can the U.S. afford to have its energy needs driven by the same folks who fund Al Quaeda? On the other hand, betting that the U.S. economy can be driven by a Green Renaissance - when we're competing with areas such as the U.K. and the PRC who have, in many areas, more experience and a deeper skill base than we do - seems risky. Again, we come back to the need for companies to be world-class competitive, to be able to slug it out and win business, whether it's in the U.S. or elsewhere.

5. The Rate of Change: The global economy is more fragile, less stable, and more subject to change than it's ever been. When Best Buy's got permanent sourcing people in Shanghai and my local print shop uses Alibaba, local competition is world competition. There's also the "interconnected network" problem, which suggests that China's problems are ours - and vice versa - in a multinational economy. The actual interconnected network problem (which was recently researched by someone named Felix Reed-Tsochas at Oxford) found that, while network clusters are very resilient when the network is expanding, the network becomes very dependent on its primary relationships when it contracts, making the shrinking network far more fragile. The implications, in a world where the PRC has now started its own half-trillion dollar internal bailout even when it's sitting on the world's largest foreign currency slush fund, emphasize that there's no one big enough or well-funded enough to step away from the global economy. The shot heard round the world was the one through the head of every one of the world's economies the minute one of them has a problem.

OMIGOD!

Is U.S. business completely screwed? Nope. We have the ability to compete and win in corporate competition.

In spite of Bollywood and all those effete French auteurs, Hollywood rules the motion picture universe. California rules the product design universe, with IDEO and Astro and BMW Designworks. On the fashion front, established US lines including Ralph Lauren and DKNY and young brands such as Sean John, Ed Hardy, Juicy and American Apparel compete quite effectively with foreign labels. Just look at the shops in Shanghai and see how much Asian fashion is driven by U.S. firms: you'll see more Nike logos and Kobe jerseys than you'll find in Los Angeles. Recorded music is dead as the pyramids, but U.S. acts from Madonna to Justin Timberlake to Black Eyed Peas still pull top numbers in the live performance world.

The Internet is dominated by Google, by Facebook, by eBay, by MySpace, YouTube - all U.S. companies. Microsoft and Oracle dominate software. American firms are still major forces in aerospace, even after decades of European subsidies for Airbus. Emerging technologies from nanotech to open source software ventures are U.S. dominated. Seven out of the ten largest private equity operations in the world are U.S. companies. Mattel remains a top toy manufacturer. WalMart and McDonalds are showing foreign retailers how it's done by taking profits from Asian and European customers and sending them back here to America.

Global competition is working out just fine for many U.S. companies. How do they do it? What are they doing that you're not?

Those are questions we're going to examine. Some of that examination will come through practices and experiences of successful U.S./global multinational companies. Some of it will come from specific situations I've encountered in several decades of helping clients who faced global competition and global markets issues adapt to them and resolve problems. All of it will provide line managers in mid-sized companies with some options for managing more effectively in a competitive world.

Chapter Two

REALITY AND HALLUCINATION IN MODERN BUSINESS

Business as usual, as we've seen from the issues in the last chapter, is business headed for liquidation. If your business is going to live long and prosper, you want business that's NOT usual. You want business that's expanding and increasing gross margin and making your customers faint with desire.

This will require us to, as the old Apple ads urged us, think different. Thinking different is a skill that grows with practice.

One moment. Since we're going to be looking at various strategies, let's start thinking different by administering a vision test for spotting them. An intellectual vision test; one which evaluates your response to unexpected variations on standard themes. A test that goes like this:

A SIMPLE TEST

At last! After all those years of sixty hour workweeks, pissed-off spouses and clawing your way up the corporate ladder, you get your shot at your own personal Horatio Alger story. The top job: CEO for a little regional logistics company, an air freighting operation in an emerging Asian market. This could be IT, the moment you've worked for over your entire career.

(Continues...)

Excerpted from A WORLD WITHOUT A SAFETY NETby Frederick W. Croft Copyright © 2009 by Frederick W. Croft. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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