Episode Transcript
[00:00:00] Good morning, everyone. I know you like hearing from me when I'm on the road.
[00:00:05] And this week I'm in Dubai, believe it or not. Then I'm going to be in Switzerland, then I'm going to be in Barcelona. And so I'm getting the European perspectives on the election. Last week and every couple of years, I think it's time to talk a tiny bit about politics and what we can learn from the political world in our businesses.
[00:00:26] And the message in this election, the blue wave is what I would call the people always win in the end. Because what we basically witnessed was a roughly 10 year attempt by Trump and many of his cohorts to manipulate or lead or take over the United States government in a way that benefited them and the wealthy and the business interests and the people that were a part of his MAGA team. And ignore the working population of the country, whether they be immigrants, frontline workers, staff in companies, professionals, whatever. And because of the way the United States is organized, when a leader can effectively convince a certain number of small states to vote for them, the popular vote, which is usually about even between the two candidates, sways towards one candidate or the other. But over that period of time, as many of you know, here in the US or there in the US we had a massive amount of unrest, immigration enforcement with anger and violence, inflation, huge amounts of corruption. In fact, I think corruption has been legitimized in the United States. 90% of the people who voted this last week voted against corruption. That is the number one issue now. And massive amounts of debt fueled by AI, of course, and lots of kind of high level messaging about demonizing immigrants, demonizing minorities, demonizing people of different genders, and of course demonizing DEI in general, demonizing higher education and just anger.
[00:02:20] And it's been very difficult for many of us to deal with, to listen to, to say nothing of live with. And then of course, part of this was the disintegration of our global alliances with Mexico, with Canada, with Europe, with NATO, with the countries that we love and many of us came from. And despite the political power that was centralized and the money, the $500 million by Elon Musk and AIPAC and others, the government is completely changed to a new breed of leaders. Completely I've never seen since the 70s, and I wasn't very old in the 70s, the entire government flipped the way it has now. Putting aside what the Democrat leadership is going to do, which is a question to be answered later, what this teaches us is something that's really a good message for you as a leader, and that is that the people, the citizens, the workers, the employees, the staff will eventually win. Now, I don't mean there's a war going on or even a game, but in every company I've ever met, you can see evidence of poor leadership or poor strategy or exploitation when you talk to employees. This is all written about and described in great detail in my book Irresistible. And it is also discussed in in the modern era in our new book Superpowered, that people, individuals have enormous amounts of power, autonomy, energy, creativity, capability, ambition, in the right conditions. And essentially what happened in the government in the US this last week or two is that all of that power was harnessed to go back to a more rational, caring, loving support of the country.
[00:04:13] And the government's very complex and there's all sorts of strange artifacts that get in the way, but that is what happens in a business.
[00:04:21] And you know, even if you are a conservative, and you know, I'm actually a conservative myself, I just happen to vote Democratic a lot, but I would like to vote for a conservative if I could find one I liked. The benefits will be great to all of us, especially to us in the business community. And here's why.
[00:04:39] And I wrote an article on this in Substack, if you want to read it. First of all, businesses thrive on stability.
[00:04:47] If we don't know what's about to happen, we can't plan, we can't grow, we can't thrive. We have had nothing but havoc for the last two years. Weird tariffs, weird shifts on immigration, violence, demonizing partners, inflation wars, multiple wars, corruption, not knowing who's in charge, people having to fly to Washington to meet with the president in order to get anything done. Very dysfunctional activities that slow down businesses strategies. Now, some companies have done fine. Some of the tech companies, for example, have done fine partnering with the federal government. Elon Musk, of course, has become essentially a big government contractor. But that has been very hard on many businesses.
[00:05:31] And I think even though the economy in the US grew by 2.5% or so and the unemployment rate is now 4.1%, things are going fine from a macroeconomic standpoint. From a microeconomic standpoint, it's been a disaster.
[00:05:44] Employees are not keeping up with their wages. The average homeowner in the United states is the first time home buyer is now over the age of 40. It used to be 25, nobody can afford a house. 60 to 70% of Americans consume 20% of consumer goods. The top 20% of Americans consume almost half of all consumer goods and then we won't even talk about the top 1%.
[00:06:10] And it's great for the luxury market, luxury cars, luxury goods, luxury plane flights and so forth. But the rest of the market has been very difficult on companies and we have seen a lot of retailers and other businesses struggle because of this, to say nothing of the just general uncertainty in the business climate. The second thing that's happened is because of the lack of fiscal management of the government itself, the war, the huge tax cuts and the massive debt, interest rates have reached a 25 or 30 year high. Long term rates, not just short term, but long term rates. And the debt that has been taken out for data centers, which is in the realm of a trillion, maybe more, some people say it's going to be 10 trillion by the time we're done, has forced interest rates up, which means people can't buy houses, they can't refinance their mortgages, they can't buy cars because the interest rates are too high on the leases or the payments. So you know, that's been negative.
[00:07:08] And then the lack of acceptance of diversity and the radical approach to immigration has reduced the size of our workforce here to the degree that it's not expected to grow much at all for the next 10 years.
[00:07:22] Which means there's labor shortages. That's why the unemployment rate is so low. The economy's grown reasonably well, but not that much faster than ever before. But the number of people working has gone down. And the younger population, people under the age of 30 or in their mid to low 20s, are so fed up that they're a very big voting bloc now. And some of them got elected to Congress, actually are so frustrated with their ability to keep up with the standard of living, they're not sure they want to work.
[00:07:52] I talked to my daughter the other day about some of her friends in San Francisco who have had such a hard time finding a reasonably well paying job to keep up with the rents that they're just turning into influencers and exercise coaches and whatever they can do that's not healthy for the country, especially if you're in a small town and you don't have that kind of opportunity. And then there's the whole issue of trust.
[00:08:18] And I have watched this so vividly over the last two or three decades. And I go back to my early days as a professional getting out of College in the 70s. When I went to college, we trusted the government, we trusted the administration, we trusted the Supreme Court, we trusted the companies we went to work for. In fact, we at that point in the country's history, our careers were tied to our companies. We didn't jump around the way we do now.
[00:08:48] And it was very unusual for CEOs to have huge ethical issues surface. We didn't have social media. So there was a lot more hiding it when it did happen.
[00:08:58] And now if you look at the trust data from Edelman, the country doesn't trust anybody. We don't trust the US Government, we don't trust the Supreme Court, and we don't trust our corporations. Now, for a business, that's an opportunity because if you're a good, trusted leader and you can fend off whatever government intervention might be taking place or just deal with it, you can really attract employees. And that's why people aren't changing jobs, because when they find an employer they like, they're worried about leaving. Oh, by the way, I left out another big point, which is this business of job loss from AI. I am so sick of this. Every single day I see some article by some reporter on, on why jobs are being eliminated by AI. It's not happening. Don't believe it. It's not true. Under the covers of every one of those stories, whether it be Microsoft or whoever, there's something else going on. They're just becoming more efficient as a business. It's not AI. AI is reducing the number of tactical, operational, routine jobs in companies. And there's a very small number of jobs that are 100% in that category. It's less than 15% of the workforce. 78% of the workforce in the US is frontline, which means they're dealing with patients, customers, truck drivers, operators, waiters, waitresses, nurses, teachers, firemen, policemen. Those jobs are all going to be enhanced by AI and you really need to read our book, Super Powered. I realized how valuable this book is going to be because it paints a perfectly realistic picture as to where we are. We started writing the book last year and it's come out at exactly the right time.
[00:10:40] So that's another reason why the blue wave will hopefully improve the operations of our companies, because we'll have less, frankly, fear about losing jobs. Because as I've talked about before, the employee engagement rate aggregate from Gallup is at a 15 year low.
[00:10:59] And then there's one more big thing I just have to talk through for you guys, and I've written about this in the past because I've been doing these articles for a long time. If you choose to work in the business world, you don't have to. You can be a teacher, you can work as a nurse, you can work as a construction person, you can be a creative person. But if you do choose to work in the business community, running a business or starting a business, or as an employee in a company and so forth, you're part of an institution.
[00:11:27] And every group of people in any company, small, medium or large, become an institution. You have a culture, you have a mission, you have a purpose, you have relationships, you have infrastructure, you have competitors, you have threats, you have opportunities, decisions to make, investments to make, financial issues to deal with. Just like the country is an institution. And at a country level, we call it politics. And you can get a PhD in Political Science and you can study the history of it.
[00:11:56] But basically what politics is about is managing stakeholders, managing the multitudes of needs of a variety of individuals. Well, that's also what happens in a company. Now, in a company, there's more of a top down strategy architecture where the CEO and the CFO tend to make a lot of decisions that people cannot undermine or sometimes don't even know. And that puts a huge amount of pressure on the CEO. And really successful CEOs are not just very smart, hardworking, ambitious, creative people with lots and lots of skills, but they also listen a lot and they pick up signals from all over the market. From employees, from customers, from competitors, from analysts, from stakeholders, from the culture at large. And so as a CEO, you, or as a leader or a manager, you have a certain role in absorbing that information and deciding what to do about it. Now, the lower you are in the organization, the less autonomy you tend to have. But you'd be surprised, somebody working in a Starbucks has a lot of autonomy about how they treat and act and behave and listen to the people around them. So you have this opportunity regardless of where you are. And if you're an individual contributor, you also have it because you're in project teams and you're running projects, sometimes, things like that. So what I've learned over the years, many, many, many years of watching this political business stuff go back and forth is that citizenship matters. You are a citizen in this institution. You are a citizen in the institution of your company. You are a citizen in the institution of your city. You're a citizen in the institution of your country and the world. And you know, you may hate the government or the mayor or the president or whoever it is that is getting you riled up, but you as an individual have a responsibility. And when you, you can read what the word citizenship means, I've written about it before, you have a responsibility to others besides yourself. Certainly your family, of course, is a big part of your role too. And as a good citizen, quote unquote, you should be thinking about these issues I mentioned earlier and for leaders, CEOs and others. Shareholders are not the only stakeholders you have. And Paul Krugman wrote about this this week.
[00:14:19] There's been lots and lots of discussion of capitalism and Milton Friedman, all the books that I had to read when I was in business school. That's not really the way it works. You don't only work for your shareholders because the shareholders can sell their stock in an instant. They really aren't loyal owners, they're investors. And investors are some of the greediest people in the world. They only want to make money for their stakeholders or themselves.
[00:14:46] So you can't consider your investors as your primary stakeholders because they're very fleeting. They could sell your stock, they could sell your company and just move on. And they may be investing in a lot of other things and you may be a very small part of their portfolio, regardless of how much or little they have. So who do you listen to? You listen to your customers, of course, and you listen to your employees. And as I like to describe it, employees are the only stakeholders you have who have voted to do business with you, with their lives. Investors can sell their stock. Customers can switch off your product very easily. Business partners can form other alliances. But employees come to work every day and put their energies and lifetime into your company, your job, your operations. And in exchange for that, they expect you to do some things for them. And when that deal, it's often called, is done well, you end up with a well of enormously engaged, excited, ambitious, hardworking, flexible people in your company. And if there's a pandemic or a fire or a downturn or any problem, and you've been taking care of the people, they will take care of you. That's been shown over and over and over again. And if you over hire and you have unrealistic expectations and you don't clarify what people are responsible for and you have crummy managers, that's your fault. It's not their fault. And don't demonize the employees when they don't feel that they're productive because it's not clear what they should do or a product failed and you didn't redeploy them or reskill them, or you didn't skill them in general for the job, or you hired them for the wrong job, that's your responsibility.
[00:16:37] So this citizenship idea is the best word I'VE ever found that describes the way businesses exist in society.
[00:16:46] And I do believe that the reason we have businesses is not just to make money and grow the gdp, but that's the most efficient way to run a society. You go to government, you go to countries like Russia where it's corrupt and the standards of living are much, much lower than they are here. The quality of products and services is much, much lower than they are here because they don't have this internal citizenship motivation.
[00:17:13] And I think what happened on Tuesday last week is the citizens sent all of us, particularly government leaders, a reminder as to what the citizenship role is. Now I know full well that there's bias and prejudice all over the place. Donald Trump has done a good job of demonizing a lot of people for a lot of things. And we can argue about MAGA versus Blue versus Red and segment people into states. That's not good citizenship either, because we're all human beings. We all live as part of the human family in the world together. I think the reason there's a lot of pushback on people like Elon Musk and Tech Bros. Or whatever you want to call them, CEOs, it's not because they aren't reasonable human beings. I'm sure if you met them up face to face, you would probably find they're pretty normal. But they're not acting in this manner. And it's simply because they don't think about the world the way I'm describing. And I'm not the only person talking about this stuff. There's a lot of people that don't feel the way I feel. There's a lot of people that feel that this is a, an upper out, win or lose battle for career, life, job, money, success. And there is a certain war like attitude that takes place in business. I had eight years at a company that was at battle with a bigger company. We had war games and war metaphors all the time. We ended up losing that war because we didn't think about our customers and our employees. We kept thinking about our competitors. By the way, that's another big lesson in citizenship. You don't become a good business or organization by focusing on your competitors. You have to watch them, but ignore them and focus on the customers and the market and the opportunities and the technologies in front of you. And if you do that, your competitors will have plenty of problems of their own to deal with.
[00:19:00] Which is another lesson for people in politics. There's no point demonizing Canada or whoever. Rather we should just be running our country.
[00:19:09] Well, and that will take care of itself.
[00:19:12] So I felt it was useful to get this off my chest, particularly now. I will not talk about politics very much. I don't think it's really relevant to what I do or what you guys expect out of me. But it comes up a lot, especially in the context of things like DEI and fairness and pay equity. And I'm going to spend some time on pay equity issues next year because with AI taking over so many jobs, the traditional banded salary models that we've had in the past are going to have to be completely re engineered and we're going to have to be more diverse because some of our employees are going to be bots and you can't be biased against them because they don't care. So I hope you guys appreciate a little bit of high level thinking here and I have a huge announcement to tell you about this week, something we've been working on for a long time. But I won't let the cat out of the bag yet. Okay, have a great week and I'll talk to you guys in another couple of days. Bye.
