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Good Reads Magazine Harvard Business Review, "The Surprising Economics of a 'People Business'" by Felix Barber and Rainer Strack. June 2005 Edition Do you work in a people business? If so, are you valuing your most important assets the right way? Not the typical capital-intensive items but your most important ones: people? Writers Felix Barber and Rainer Strack make a strong case for a new way of thinking about companies that have a large percentage of their profit and loss statement tied up in human resources. Thet argue that when it comes to these types of businesses you have to modify the traditional managerial accounting concepts to properly value and make decisions about the enterprise's actions. The notion is that you cannot necessarily run a company with large sums feeding a capital asset structure the same way you would a people-intensive capital structure. The authors also offer up a quantitative approach on how to best measure productivity in this kind of environment. HBR Reprint R0506D. www.harvardbusinessonline.com Books "How Full Is Your Bucket: Positive Strategies for Work and Life" by Tom Rath and Donald O. Clifton, Gallup Press. Looking for a secret weapon to increase productivity, morale and great performance at the workplace? Authors Tom Rath and Donald O. Clifton write a wonderfully crisp and thought-provoking book on the emerging discipline known as Positive Psychology. In many circles, Clifton is considered to be the grandfather of the movement. At its core is the basic premise that you get more out of people by positively calling out what they did well rather than pointing out where they failed. The book has several examples and some very handy guidelines to help put the theory into practice with landscape-changing results, say the authors.

Journal Jots

Curious business briefs.

Bill Gates, Rock Star

Bill Gates, the world's wealthiest person, was cheered like a rock star at the London Live 8 concert to pressure the leaders of industrialized nations to help eradicate poverty in Africa.

Irish musician and activist Bob Geldof, who 20 years ago at Live Aid famously asked the crowds to "give us your f***** money" to feed famine victims, introduced Gates on the Hyde Park stage, calling him "one of our biggest supporters." Gates and his wife have contributed billions toward poverty and disease reduction.

"We can do this, and when we do it will be the best thing that humanity has ever done," Gates said.

This time the concert wasn't about raising money, but raising awareness -- asking music fans to pressure heads of G-8 nations meeting July 6-8 in Gleneagles, Scotland, to increase aid and debt relief to Africa and also rewrite trade rules.

There were shows July 2 in all the G8 countries --the United States, Britain, France, Germany, Italy, Canada, Japan and Russia-- as well as in South Africa.

'I believe that if you show people the problems and you show them the solutions, they will be moved to act,' Gates said.

Former IRS Agent Acquitted on False Tax Return Charges

The acquittal of a former Internal Revenue Service investigator on charges of helping to prepare false tax returns was seen by many as a setback to the federal government's campaign against income tax protestors, according to the New York Times.

Joseph Banister, of San Jose, Ca., has become a leader among protestors of the U.S. income tax. Banister, 42, quit the IRS in 1999 after giving his bosses a 95-page document questioning the legality of the income tax law. He has since become a lecturer and expert witness on the tax protest circuit.

A U.S. District Court jury in Sacramento found Banister not guilty on criminal charges.

The case revolved around tax returns that Banister, a certified public accountant, prepared for the owner of a small California aviation company. The client said he owed no taxes and sought a refund for taxes he'd paid in previous years. The business owner, who also did not withhold taxes from worker paychecks, was convicted of tax fraud in January and sentenced to six years in prison.

Banister's lawyers said that as a CPA, his only duty was to prepare a return that reflected the tax positions of his clients and to disclose them to the I.R.S.

IRS Investigating Possible Privacy Breach

The Internal Revenue Service is investigating whether unauthorized people gained access to sensitive taxpayer and bank account information but has not found any privacy breaches, Reuters reported.

The U.S. tax agency --whose databases include suspicious activity reports from banks about possible terrorist or criminal transactions --launched the probe after the Government Accountability Office said in April that the IRS "routinely permitted excessive access" to the computer files.

The GAO team was able to tap into the data without authorization and gleaned information such as bank account holders' names, Social Security numbers and transaction values.

"There is no evidence that anyone who was not authorized accessed the data outside the GAO," Reuters was told by Sheri James, a spokeswoman for the Treasury's Financial Crimes Enforcement Network, which was working with the IRS to address the concerns of the GAO, the investigative arm of Congress.

The network is responsible for administering the Bank Secrecy Act, under which banks must file suspicious activity reports on transactions they believe could be linked to money laundering or terrorism financing. The IRS stores that data for the network.

Unauthorized access to the information held by the IRS raises concerns about the privacy rights and civil liberties of banking clients and taxpayers.

Milberg Weiss Implicated in Kickback Case

A California man been charged with taking at least $2.4 million in illegal payments to act as a plaintiff in dozens of corporate class-action lawsuits filed by a major securities law firm, according to Reuters.

Although the indictment against former California entertainment lawyer Seymour Lazar names only "a New York law firm" as the source of the alleged kickbacks, the cases listed in the indictment were filed by Milberg Weiss Bershad & Schulman, according to Reuters. The company has confirmed it was subpoenaed, according to The Guardian newspaper.

The indictment by a federal grand jury in Los Angeles describes a scenario in which Lazar or one of his family members agreed to serve as lead plaintiff for a share of the attorney fees. Lazar appeared in suits against companies including Genentech, Hertz Rent-a-Car, Denny's, British Petroleum and United Airlines, Reuters reported.

The 1995 Private Securities Litigation Reform Act limits plaintiffs to no more than five class actions in three years. Milberg Weiss once dominated class-action law in the United States, accounting for more than half of such suits filed.

"Prince of Piracy" Convicted

A federal jury convicted a Hollywood man of copyright infringement for sneaking camcorders into preview screenings of "8 Mile," "Anger Management" and "The Core," the Associated Press reported.

Johnny Ray Gasca, 35, was also convicted of using a fake Social Security number and of an escape charge for fleeing his attorney's custody last year while awaiting the trial. He was arrested in April in a Florida motel room.

Gasca faces up to 35 years in federal prison but a much lighter sentence is expected. Gasca was the first person to be charged in a federal crackdown on video piracy. He represented himself during a weeklong trial, saying he didn't intend to profit from his actions. He said evidence was embellished to make him appear to be a "prince of piracy."

Federal prosecutors showed the jury Gasca's diary, in which he wrote that he earned up to $4,000 a week by attending the screenings. Prosecutors alleged he sold the films through small video stores or on the street.

Just to show you how pervasive bootlegging is, while traveling in Spain recently, we witnessed the piracy's long reach. During dinner at a very modest seafood restaurant in Barcelona, no less than four times did four different people come in hawking their DVD wares -- movies, TV shows, many of them copies of first-run movies yet to be released.

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Making Profits

The Latest in Business News

Made in China!

About a year ago I asked a good colleague of mine, a very learned professor of German history, about the war in Iraq. I asked, “What’s the war there really about?”

He said, “Three letters: O-I-L.” He went on to add that the emergence of the middle class in China would create a tremendous demand for oil. “Cars, goods, services,” he said, they all need oil to help them move around. He said that when you think about how easily we can get into a car, go run our errands, eat, see a movie, go on vacation, it’s all made possible by the three letter word. “Don’t you think the Chinese want the same thing?” he asked. I thought at the time that the learned professor might be right but I didn’t see all the signs yet. I DO NOW.

The recent move by the China National Offshore Oil Corp., of which more than 70% is owned by the Chinese government, to buy Unocal Crop. here in the United States, has quickly turned the political spotlight from things like Iraq and privatized Social Security to that emerging economic and political power called China. Some members of Congress see the bid to buy the El Segundo, California-based Unocal, the No. 8 U.S. oil company, as nothing less than a national security crisis.

The U.S. House of Representatives cited national-security concerns as it voted 398-15 on June 30 to demand that President George W. Bush review CNOC’s $18.5-billion unsolicited bid, which topped a $16 billion-plus cash and stock offer that Unocal had accepted from Chevron Corp.

''The U.S. should be shoring up our reserves, not divesting them to global competitors seeking to fuel their own tremendous economic growth," U.S. Rep. Richard Pombo, a California Republican who is chairman of the House Resources Committee, was quoted in the Boston Globe. Chevron, which is lobbying heavily for its own interests in this deal, is in Pombo’s district.

CNOC’s bid “threatens the national security of this country by holding out the prospect that every drop of oil, every unit of natural gas produced by that company could end up being shipped to China,” U.S. Rep. Robert Ney, an Ohio Republican, was quoted by Bloomberg News from debate on the House floor.

President Bush said early in July that it was best to let an official U.S. review of the Chinese bid for run its course. 'There is a process that our government uses to analyze such purchases,” President Bush said early this month when asked about the bid while he was in Gleneagles, Scotland, for the G8 summit. “It's best I allow this process to move forward without comment,” he said, according to Reuters.

For its part, China's foreign ministry has called on Congress to "correct its mistaken ways of politicizing economic and trade issues."

Many a businessperson will tell you to just let the business stuff take care of itself. The market will find the equilibrium, even in a global chess game such as this. The opponents fear China controlling too large a portion of the world’s oil and using that as a political weapon over the United States.

The fact of the matter is that China has a whole lot of U.S. dollars. Ever stop to think about how much of what we consume here in the United States comes from China?

Last year, China's largest computer company bought IBM's Personal Computer business. Last month, a Chinese appliance maker showed interest in buying U.S. rival Maytag.

Did anyone on Capitol Hill say a thing? Did anyone fear that the Chinese would withhold sales of laptops or washing machines to America? If anything the transaction helped to further secure China’s place in the Global Village of trade as an able and capable manager of enterprises supplying technical goods in an ever competitive marketplace.

So, why would we deny them the ability to make a profit by helping to supply the world with its energy needs? Back in the day when oil emerged as the economical fuel of choice, the oil in the Ottoman Empire captured Europe’s interests. After World War I the area was carved up, and the political maneuvering for the sake of the dismembered empire’s oil continues today.

“I do not care under what system we keep the oil,” British Foreign Secretary Arthur Balfour declared in 1918. “But I am quite clear it is all-important for us that this oil should be available.”

There’s now talk that if a deal is cut for the Chinese to buy Unocal, the deal will have a few political cutouts of its own. Apparently a couple of scenarios show only portions of Unocal being sold to the Chinese, but with the U.S or some U.S. company keeping some strategic portions.

Many a conflict has started as a result of some trade dispute. Take our own Revolutionary War. It wasn't so much about our various freedoms as it was about the ability to conduct free trade among the colonies without imposition of a British tax. Remember the Boston Tea Party? The idea of a trade war with China sounds ridiculous given how much of their Made In China products make their way to the U.S., doesn't it? Then why would we deny them the ability to participate in buying a U.S. oil company?

The China oil situation may hold its own crude lesson for us about history and economics:

1. Let markets manage themselves.

2. History repeats Itself.

Let’s hope the lessons of the past have been learned to make better decisions for the future.

Six Sigma Solutions

The Velocity of Business

When talking to executives about solving business challenges, I often like to ask the rhetorical question, “What does this do to the velocity of business?” It is usually within the context of how business challenges impact your ability to conduct business with customers in a quick, fluid manner. When the challenges are met well, it accelerates your business.

After one recent presentation, the communications person for a large multi-billion dollar hi-tech firm asked me, “Tell me more about this concept of the velocity of business. What does it mean? Do you have any examples of it?” I had to stop and think. The use of the phrase had become so common to me that I really had to think about breaking it down in terms that are more practical than theoretical.

At its core, the velocity of business has three broad variables. The first is the idea that a marketplace has a given amount of demand. That demand is made up of the inherent need for a particular product or service a business or enterprise can supply to a customer or set of customers.

Another variable is the ability for a business or enterprise to not only make but also supply a product or service to the customer in exactly the way that customer expects.

Finally, you have the last variable, the one for which we are solving, the velocity.

Now, let’s dig a little deeper into each. First, Demand. It is based on the idea that a customer needs a product or service. That need, when you deconstruct it, may have the following elements:

A Shortcoming

The client has a problem, inability, performance issue that dramatically impacts what they do or the ability to delivery a good or service to someone else.

Perception

The client has the belief, understanding, or just irrational desire (perhaps based on competitors or others gravitating to the solutions to that perceived need) for the good or product.

Now the supply side:

Ability to make and provide the good or service

An enterprise has the resources and know-how to make a product or service at a particular price.

Ability to delver on customer expectation

The enterprise has the ability to capture customers’ expectations and readily integrate into its process to deliver the customer that product or service able to meet these requirements.

Ability to do the two not only quickly but effortlessly

The enterprise has the ability to complete on these two variables in a timely manner and in a way that makes it easy for the customer to do business with the enterprise. Think of your own purchase experiences. Some are so effortless it’s as if money instantly flies out of your pocket and a product or service is magically delivered to your hands.

The idea is that when you put these ingredients together, they start working with an additive impact, the sum is greater than the individual parts. They feed each other, reinforce each other, accelerate each other, and start to create a shift in the supply-demand curve.

Next month, we take the velocity of business model and demonstrate its effect using some classic microeconomic tools.

JASEC Business Consulting can help you find profitable opportunities in your business. Call for a free one-hour consultation to see how our exclusive Customer First program can help you accelerate the Velocity of your Business.

What's the Point?

This month we introduce another in an occasional series of features that help our readers understand how those who run today's newsrooms think.

Taking a page from the old Point-Counterpoint Saturday Night Live sketch made famous by Dan Akroyd and Jane Curtin, award winning reporter and editor Bob Baker and award winning broadcast journalist Ernie Arboles take on an issue and ask, What's the Point?

This month, we look inside the beltway and some views around the political landscape of the news cycle.

BOB:

Ernie, it did my heart good a few weeks ago when President Bush's closest political adviser, Karl Rove, said in a speech at a college in Maryland that journalists see too many stories in adversarial terms. He said he doesn't agree with the conservatives’ nearly religious belief that journalists are naturally liberal and biased. This, I thought, was how the world really works, and thanks to Rove for being sophisticated enough to proclaim it.

ERNIE:

Well, it all depends on which media. It used to be that media meant left-wing, liberal press and that unless a Democrat slept in the White House, all interactions would be adversarial. But now, you have this thing called Fox News, which has gained enormous ratings and popularity. In effect, you have an emerging media that's quite right-wing and conservative in its approach and in its audience. So, I'm not quite sure what Rove is referring to. When you think about the Reagan White house, you could argue periods of adversarial conduct, but in the end Ronald Reagan always knew where his bread was buttered and went there first.

BOB:

Ernie, what Rove said transcended that. He was complaining that the media, thanks to the rise of cable and the 24-hour news cycle, is so desperate for material that it creates winners and losers where there are none. But let's stick with that word "adversarial," because it is a better barometer of the "bias" notion. My point: Whether a reporter is personally liberal or conservative – and it's no secret that the majority of us are liberal, including me – what drives a reporter primarily is not bias, but his or her belief that journalism has a constitutionally authorized role to temper and test and question the policies of government. You are, without any credentials, to be sure, a self-authorized adversary. It is your job to press against sources of power, against sources of conventional wisdom, to stir things up – even in a war – to keep institutions honest. This is why Bill Clinton and George Bush both believe they got worse treatment from the media than the other guy.

ERNIE:

Bob, I feel compelled to respond on two points. First, the news cycle: the monster is here to stay. Couple that with the proliferation of, not only liberal, but also conservative news outlets, and you have an insatiable hunger for news. The irony of it all is that you'd think this news cycle would truly drive what you call the "constitutionally authorized role to temper and test and question the policies of government.” I would agree with your premise if only more journalists, regardless of political bias, would ask those testing questions. The overwhelming glut of news outlets pretty much stick to the common fare. We just survived the Jackson trial. What new scandal will rivet the beast's attention now? Let me put it another way. How much questioning is the Fourth Estate doing about our role in Iraq? What’s behind the move inside the beltway to thwart a Chinese oil company’s interest in buying an American oil company? And fundamentally, where are the questions that will help the American people connect the dots between the two?

JASEC Consulting can help you keep your credibility intact and make your point to the media. Contact us today to find out more about our Media Boot Camp training program and our crisis media consulting.

Media Boot Camp

Talking Points

If a reporter came up to you today, unannounced, with a set of questions, what would you do? Would you immediately answer the questions? Would you make something up? Would you say, “No comment?” And if you were pressed for any kind of comment, would you have the right response to give without looking like you are hiding something? Media-savvy managers need to do their homework before they get that microphone or camera thrust in their face. Here are some key points and examples to keep in mind that may help you craft your instant message to the media.

Rule #1: Never say, “No Comment.”

The quickest way to lose friends and not influence people is to use those two magic words. Remember that the media is a relationship-based business. And yes, it, can be your friend. It can also be your enemy. The quickest way make enemies of media representatives is to violate their trust. And just like hiding something from a friend, hiding something from the press usually ends up making things much worse in the end. Does “I did not have sexual relations with that woman . . . ” ring a bell?

The best policy is to be clear and up front. If, for example, you know the answer to the question, what’s wrong with, “That’s a great question. I’d really like to double check my facts to make sure I’m giving you the best information.” Or, if the situation is fluid: “Thanks for your question. As you know this is a very dynamic situation. The latest information I have may be dated. I’d really like to check with my staff, double the facts and figures and report back to you as soon as possible. Would that be okay with you?”

If you deconstruct the statements, there are a couple of things at play. First, addressing the questioner is handled in as personable a way as possible. Giving a compliment at the start helps to diffuse a sometimes tense situation, but it must given genuinely. Remember the relationship is about trust. That’s what you are trying to establish. Second, you are communicating what you need to supply their need. Lastly and perhaps even most importantly, you are buying yourself time to prepare a better-articulated response that can help to deliver points you’d like to get across.

Rule # 2. Take a breath, pause, then take one more breath before answering.

Blurting something out can cause two problems. First, it could create the impression that you did not actually listen to the question. Second, it could also telegraph that you are hiding something.

Pausing and breathing helps you to stop and listen to the question, but it also shows that you are stopping and listening to the question. It also shows that you are taking a moment to consider your response. It is harder to cast stones upon someone when they are doing what you asked of them.

Rule #3 Prepare now

Don’t wait until it’s too late. First, take a few minutes to actually write out what kind of questions a reporter is likely to ask you and formulate a set of answers. You may want to think about having a set of response for the following:

1. Your latest sales figures.

2. Your latest cost figures

3. Emerging trends or challenges in your industry

4. A volatile left-field question

Be sure to rehearse the response in the following two ways:

1. Stand before a mirrors or use a videotape camera to critique your response.

2. Use a voice recorder of some kind to rehearse and listen to the “sound bites” you are giving.

Essentially, your responses should have a Wow and a How. The Wow factor of your response: “We are really excited about the sales figures for the fourth quarter.” Your response should also explain the How of the Wow: “We capitalized on some key challenges a group of clients had and we were able to leverage what we learned to produce more sales.” This helps listeners to not only understand what you are telling them, but how they should react to it.

JASEC Consulting can help tailor your media message to deliver on the Wow and How of your business. Contact JASEC today for a free initial consultation.