No Limits

These days financial scandals happen with increased frequency. While it is not clear what changed, the sky has once again redefined our limits.  It seems that JP Morgan Chase and CEO Jamie Dimon have a rather unique ability to turn $2 Billion into $5.8 Billion.  Good skills to have if you are the nation’s largest financial institution, right?  If you said yes, guess again because Jamie & Co. have recently disclosed that their previously-disclosed “trading mistake”, originally valued at $2B during a previous apology, is now trading just a little bit higher – right around that $5.8B mark.

JP Morgan said its internal investigation yielded results that have led its top brass to “question the integrity” of the previous $2B mistake valuation.  “Dear Shareholders:  Oops.  Please accept our updated apology and revised valuation.  Please do not let it affect your confidence in our management team.”  This language probably would not fly, but then again, these days-who knows?  .

There may be no limits to the amount of mind-numbing financial scandals that we are being conditioned to interpret, digest, and ultimately accept as some kind of “new normal”. This stuff literally runs from “trading mistakes” (code for hedging gone awry) to LIBOR-fixing at Barclays while covering just about anything and everything in between.  Nothing is sacred, and little seems safe.

Interestingly, an AP article from last week offered, “JPMorgan could not necessarily hide behind the actions of its employees.  Regulators could decide that its oversight or risk management contributed to the problematic statements.”  Seems like a good bet there.

It is somewhat paradoxical that this increasingly-no limits run of financial scandal is occurring at a time when corporate treasurers indicate that they now park more cash in bank accounts.  See AFP’s (Association for Financial Professionals) annual liquidity survey findings for details.  The next step for corporate money managers may well be to build  underground vaults within the perimeter of well-guarded corporate campuses.  It used to be that treasurers were dinged on their performance reviews for having “excess cash on hand”. Now they receive high marks for the same behaviors, now termed “effective risk mitigation”.

It’s getting hard to know who or what to trust.  Disclosures are no longer even accurate.  For the times they are a-changin’. It appears that there are no limits.

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Kickin’ It

“Hey, if you think real hard, maybe we can stop the rain!”

Woodstock 1969 (Bethel, NY)

Are you thinking that the quote doesn’t quite match the picture?  Well, it actually does.  Let’s explore the connection.  This naively hopeful thought has long-endured as a symbol of the positive thinking that got the ball rolling for an entire generation.  Today it has applicability within the more contemporary context of fixing a broken economy.  The message here is that sometimes it really is the thought that counts. Concept and activity (in some direction) can justifiably trump pinpoint execution.

Sometimes the key is just to get the ball rolling…. in some semi-logical direction.  Once the ball is moving, its energy becomes something that we can grab onto and manage.  Yes, it will come down to execution and leadership in the end.  It always does.  However, the power of positive thought should never be underestimated as a source of the collective spark and momentum necessary to solve complex problems.

Is the tide turning? 

With respect to off-shoring, we are starting to hear considerably more chatter about higher than anticipated total costs of ownership, supply chain inflexibility, and intellectual property concerns.   It seems that more people have become willing to acknowledge that the simplistic lure of lower unit costs is fool’s gold if offset by other factors that adversely impact important value propositions. This is especially true if customer service and brand loyalty are what takes a hit.  Is the tide turning?  Too soon to tell.

Increased Chatter

In some industries and industry niches, the increased chatter may be the first sign of activity in some direction.  It would be misleading to hint at a universality in these two electronics industry examples (CE Pro, Bloomberg Business Week), but they do illustrate the increased chatter. People are definitely talking.  One of the words they are increasingly using is reshoring, which would certainly be reassuring for many.  Here’s another example in an USA Today article that discusses a technology known as additive manufacturing in the form of 3-D printing that many are hopeful will find broader application and accelerate reshoring and job creation.  This is very cool stuff.

But Talk is Cheap

At some point, positive thoughts and those initial bits of energy only get us so far.  To borrow from a now-retired senior executive of a Fortune 1000 company, “Somebody’s gotta do something if we’re gonna get this cow out of the ditch.”  Activity in some direction needs to take over.  Better yet, purposeful activity in several directions needs to occur simultaneously to fix our economy. To be sure, there will be false starts and wrong turns.  This is just the way it will be and ground that must be covered on the way to finding solutions.

Coming Full Circle – Bloom & Boom

Many experts point to a massive retooling investment that America needs to make in itself.  They are not referring to molds, machinery, and fixtures, but rather to the workforce itself.   Here’s an example of one activity aimed in this direction (Wall Street Journal).  Again, it is only activity in one direction. But it is activity.  And it has a direction.  To come full circle, the activity in the WSJ article deals with retraining members of that once-idealistic generation above that wanted to stop the rain at Woodstock.  We now refer to this group as “Boomers”.

Collaborative Partnerships

Collaborative partnerships (as above) between business and education are increasingly promoting online education that is aimed at retooling US capacity by retraining Boomers to work in promising growth fields.  This emerging trend also represents a way in which higher education is attempting to solve part of its own volume issues by reaching this “new” audience again-this time at a distinctly different point in their lives.  In the case of our additive manufacturing/3-D printing example, government is stepping up to fund a $45 million project share.  These examples represent activity in some direction.  It’s a start.  Hopefully the kick-start needed to get and keep the economic ball rolling.

Photo Credit – Heinrich-Böll-Stiftung

Five-Pack

Exxon CEO’s Sustainability Set-Back

ExxonMobil CEO Rex Tillerson’s recent remarks on energy are another spill that needs to be contained. Tillerson reportedly referred to the general public as “illiterate” in science and math, called the media “lazy”, and said that advocacy groups “manufacture fear”.  Regarding climate control, he opined, “We’ll adapt. It’s an engineering problem, and there will be an engineering solution.”  As a degreed engineer, Mr. Tillerson  would (should) know (better), wouldn’t (shouldn’t) he?

No End in Sight, The Sky is the Limit

It was just a short time ago that we were talking about JP Morgan’s $2 Billion “trading error” (oops). Since that time, Jamie Dimon has made his command performance apology, and now a new scandal involving another venerable financial institution has emerged.  Yes, we have now gone from bail-outs, Ponzi schemes, and trading errors to LIBOR-manipulation.  LIBOR or the London Interbank Offered Rate is an often-used base price for corporate lending (eg. credit lines) and derivatives contracts (eg. hedging).  Barclay’s was just fined $452.5 million for its part in these shananigans.  Do financial scandals such as these now represent our “new normal”?

Baseball’s Popularity Contest

Bill Barnett’s recent Harvard Business Review post urges people to use their imaginations to clarify career choices and directions.  While no doubt great advice for many, it’s highly unlikely that Phillies catcher Carlos Ruiz went this way in landing what appears to be the perfect job for him.  “Chooch” even looks like a baseball catcher.  He’s a natural.  He adeptly blocks sliders in the dirt and produces more than his share of defensive gems. Pitchers want him behind the plate when they pitch.  Despite being the league leader in batting and perched high atop the stats race for NL catchers, Chooch finished third in the official fan all-star balloting.   Extra special congratulations go to Chooch for being named an all-star.  Chooch doesn’t say much.  He just goes about his business quietly, producing excellence.  Is this really any way to win a popularity contest?

Dash-Dot-Dash-Dot

LinkedIn confirmed that it had a security issue with about 6.5 million encrypted passwords and now faces a $5 million class action that alleges outdated security methods were employed that failed to meeting industry standards. According to the lawsuit, LinkedIn should have followed the salt-hash-salt-hash protocol.  Now we know that “salting” involves adding random characters to passwords before hashing. This alone is fascinating social commentary in terms of how digitized our worlds have become.   Are hopes of online privacy really the stuff from which pipe dreams are made?

Informationalization

Did you know  informationalization occurs when the Coors beer can mountains turn blue when the beer gets cold?  Author Thomas Redman explains this concept as making products and services more valuable to customers by incorporatng data and information.  He cites automobile GPS, baby food, and shipping containers as examples.  Redman thinks that ignoring it is dangerous but that having an informationalization strategy may yield pricing premiums.  Apple’s iPhone may be one of today’s best examples.  So, at what point does a product’s own utility begin to defy accurate naming and categorization?

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