Service Sector Slows

The pace of growth in the U.S. service sector slowed more than expected in January, as employment and new orders dropped. The Institute for Supply Management's services index dropped to 56.8 in January from 61.0 in December, well below Wall Street's median forecast for a decline to 59.5. A number above 50 indicates growth in the sector.

The services sector makes up about 80 percent of U.S. economy activity, including businesses like restaurants, hotels, hair salons, banks and airlines. The survey's prices-paid index was unchanged at 67.2 compared with December, while the jobs component dropped to 51.1 from 56.9, and new orders fell to 58.0 from 62.2.

Wal-Mart Effect: America Going to Hell in a "Shopping Cart"

Wal-Mart is a business with 1.6 million employees in the United States alone. It does more business than Target, Sears, Kmart, J.C. Penney, Safeway, and Kroger combined. And more than half of all Americans live within 5 miles of a Wal-Mart store. David Gardner talks about the big, big business of Wal-Mart with Charles Fishman, author of The Wal-Mart Effect: How the World's Most Powerful Company Really Works - and How It's Transforming the American Economy.

Listen to the NPR interview.

Home-Shoring

Many American companies are facing public and government criticism over the practice of "off-shoring" -- moving jobs to foreign countries where labor costs are much cheaper. Now some of those companies, such as upstart discount airliner JetBlue, are trying out "home shoring," where call center staffers in the United States can work from home.

Listen to the NPR video on the subject.

Telegram Quietly Vanishes

The era of the telegram, an icon of communication dating back 150 years, came to a quiet end last week. Western Union says it delivered its final telegram on Friday, February 3, 2006.

Read more here.

Standard Oil Company of Ohio: Mostly Gone But Not Forgotten

John D. Rockefeller's Standard Oil Trust is one of the most famous industrial organizations ever. The Trust controlled a lion's share of the production, transport, refining, and marketing of petroleum products in the United States and many other countries. Originally, this was an attempt to make money on the home lighting market which was converting from whale oil to kerosene.

The emergence of the automobile and its thirst for the formerly near worthless refining by-product called gasoline brought dizzying wealth to this industrial group. The 1911 decision to break up the Trust had the result of making the seperate pieces more valubale than the whole was, and stock prices rose sharply.

The break up of Standard Oil mirrors a more modern monopoly breakup - AT&T - The Bell System. Both developed a ubiquitous brand names: Bell for telephone service, Standard for oil. Like the "Baby Bells", many of the "Baby Standards" kept the old company name as they went into business for themselves. Unlike the various Bell companies, they were restricted from using Standard name in each other's territory, and defended the exclusive territorial rights to the name vigorously. Both the Bell companies and the Standards rose again to dominate the market, becoming more valuable than the original parent.

More Standard Oil Companies were created as some successor organizations declined to use the venerable Standard name in favor of pre-trust identities and the other Standards expanded into those marketing areas. As national advertising and travel blossomed, the various Standards ended up in competition, often adopting the names of smaller oil companies they purchased. The goal of this site is to track the history of the Baby Standards, discovering what became of the Rockefeller petroleum giant.

Read more here.

TRW: Mostly Gone, But Not Forgotten

TRW: PIONEERING TECHNOLOGY & INNOVATIONS SINCE 1900
By Davis Dyer

Preface

PART ONE SUPPLIER, 19OO-1938

1. House of Technology
2. Cap Screws, Poppet Valves, and a Cast of
Characters, 1900-1916
3. Peaks and Valleys, 1916-1933
4. Fred Crawford's Company, 1933-1938

PART TWO SUPPLIER AND CONTRACTOR, 1939-1965

5. Transformation, 1939-1945
6. Taking the Next Step, 1945-1953
7. Rocket Science, 1953-1957
8. The Making of a Merger, 1953-1958
9. From Two Companies to One, 1958-1965

PART THREE DIVERSIFIED CORPORATION, 1965-1996

10. A New Kind of Corporation, 1965-1969
11. Testing Time, 1970-1974
12. New Directions, 1975-1979
13. From Policy to Strategy, 1980-1985
14. Refocus and Renewal, 1986-1996

Epilogue: The Next Era

Appendix: TRW Inc.--Principal Acquisitions and Mergers, Joint Ventures, and Divestitures, 1959-1996

Source: Winthrop Library

Future of Japanese Business Hinges on Innovation and Management Reform

Japan's style of innovation failed it in software and biotechnology in the 1990s. It might work better in robotics, aerospace and other burgeoning technologies, says a recent Economist article on the future of Japanese business.

Japan's lack of success is not for want of trying. The country continues to lead the world in research and development, investing 3.2% of its GDP in R&D, compared with 2.6% in America and 2% in the European Union. Moreover, unlike western countries, where government and university labs generate lots of breakthroughs, Japan performs more of its R&D in big companies. An official at the once-mighty ministry of economy, trade and industry complains that METI's entire R&D budget is no bigger than that of Toyota. That is one reason why so many Japanese firms are near the top of the global tables for technology patents.

Instead, the country's failure has much to do with its method of management and organization. This won extravagant praise in the 1980s, when western writers and businessmen flocked to Japan for answers, and when the “lean” production manufacturing techniques pioneered by the likes of Toyota changed the world. The Japanese way of running companies has since fallen out of fashion, however. And although Japanese managers are slowly getting a little younger and nimbler, partly in imitation of American norms, the leisurely pace of business reform seems no match for the rapid rate of change in cutting-edge industries. Japan also suffers from a stifling environment for technology start-ups and a rigidly bureaucratic university research system that is poorly connected to the private sector.

Read more here.

Improved Japanese Economy

Japanese unemployment fell markedly last month, providing further evidence of the country's continuing economic turnaround. The jobless rate fell to 4.4% in December, from 4.6% the previous month, as the total number of unemployed dropped by 50,000 to 2.6 million.

Seasonally adjusted unemployment averaged 4.4% last year, significantly lower than the 4.7% recorded in 2004.

Rising consumer spending and industrial output have boosted Japan's economy.

Read more here.

Foreign Direct Investment in Japan

Junichiro Koizumi, Japan's prime minister, dropped a pledge to quadruple foreign direct investment into Japan by 2011 from his annual policy speech last month to avoid being too closely associated with the politically sensitive topic of aggressive merger and acquisition activity.

His speech was originally written to say that his government would aim to increase FDI to Y26,400bn ($225bn) by promoting the acquisition of Japanese businesses. But the pledge was omitted after the scandal over aggressive takeover tactics used by Livedoor, the internet company.

It is a setback for efforts by foreign business groups, along with reform-minded Japanese politicians and bureaucrats, to promote foreign investment at a time when rival Asian countries such as China and India are attracting record FDI flows.

Read more here.

Economic Development: Tell the Kids

If you were asked to give a presentation about economic development to a 7th grade class at a local school, what ten key points would you make?

If this question was asked during the presentation, how would you answer it: "As a 7th grader, why is economic development important to me and my family?"

If you haven't made such a presentation, perhaps you should think about it.

How to Get New Ideas Adopted

"Innovation— any new idea—by definition will not be accepted at first. It takes repeated attempts, endless demonstrations, monotonous rehearsals before innovation can be accepted and internalized by an organization. This requires courageous patience."

— Warren Bennis

Fear as a Source of Creativity

"The things we fear most in organizations—fluctuations, disturbances, imbalances—are the primary sources of creativity."

— Margaret J. Wheatley

Let Go of What Doesn't Work Any Longer

"It's easy to come up with new ideas; the hard part is letting go of what worked for you two years ago, but will soon be out of date."

— Roger von Oech

Jettison the Rules

M. A. Rosanoff: "Mr. Edison, please tell me what laboratory rules you want me to observe."Edison: "There ain't no rules around here. We're trying to accomplish somep'n!"

— Thomas Edison

Don's Recipe for "Conscious" Leadership

Following my speech, I had several engaging conversations with folks at the IEDC Leadership Summit last week. Many of these dialogues centered on the "personal side" of leadership, or what I call "self-leadership," or leading your life in a conscious, caring, and meaningful way. I was asked to share what I do to strengthen my own self-leadership.

There are two aspects to my daily regime: 1) cultivating self-awareness, being in the now, and harmonizing my mind, body, and spirit; and 2) setting myself aside and being present for others. Here are ten things I try to do every day to lead my life in a more "conscious" way:

1. Meditate for 30 minutes each day. (Early morning works best for me.)
2. Exercise for one hour each day. (Usually 30 minutes of some type of cardio, 15 minutes of weight training, and 15 minutes of tai chi/yoga.)
3. Practice positive affirmation and cultivating feelings of well-being. My Conscious Living Journal website provides a daily vehicle for this. (10 minutes).
4. Read on a daily basis. Because of my graduate training in Consciousness Studies, I am reading many books on spirituality, philosophy, psychology, and consciousness studies. (1 to 2 hours daily.) Many people will find this difficult because of the time commitment.
5. Practice unconditional giving (love, caring, help, support) to my family and friends. (I try to do something specific for someone everyday. It can be a small thing that demonstrates my caring and love for others. (15 minutes daily)
6. Practice unconditional giving to those needing help with economic development. I have regular contact with economic developers going through a career transition, students exploring opportunities in economic development, and other people who contact me through my Economic Development Futures Journal website and newsletter. (15 minutes daily)
7. Acknowledge Nature's power and beauty each day. (Can be as simple as watching the birds at our feeders or gazing upon the beauty of my wife Mary's flower gardens.)
8. Give thanks for my clients, business partners, and others I encounter in my economic development work.
9. Remind myself every day that "leadership" is about serving others in a conscious, collaborative, and meaningful way. Set the right example and others will follow (not me necessarily, but their own true nature).
10. Do my best to bring both my mind and heart to the work I do every day. Work on feeling something about the work I do and the people I serve.

A few people asked me: "How do find the time to do these things?" My answer is that I make the time because these things are important to making me a better person. I do these things because they make a real difference in my life and they pay real dividends in my work and other aspects of my life. For those who need a business answer, the return on investment (ROI) is huge!

Contact Don Iannone by email: dtia@don-iannone.com or by phone at: 440.449.0753.

No More Supermen/Superwomen

"No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organized in such a way as to be able to get along under a leadership composed of average human beings."

— Peter Drucker

Wanna Be a Leader? Start by Leading Yourself!

"Control is not leadership; management is not leadership; leadership is leadership. If you seek to lead, invest at least 50% of your time in leading yourself—your own purpose, ethics, principles, motivation, conduct. Invest at least 20% leading those with authority over you and 15% leading your peers."

— Dee Hock
Founder and CEO Emeritus, Visa

Lao-tsu on Leadership

"To lead people, walk beside them ... As for the best leaders, the people do not notice their existence. The next best, the people honor and praise. The next, the people fear; and the next, the people hate ... When the best leader's work is done the people say, 'We did it ourselves!"

— Lao-tsu

Higher Education in Pennsylvania: A Competitive Asset for Communities

You may find a recent analysis of the impact of higher education on Pennsylvania's economy to be of interest.

Ranking near the top of the nation on many measures of higher education, Pennsylvania's plethora of public and private colleges, universities, and vocational schools represent a major economic asset to the Commonwealth. Already there are many partnerships between these institutions and their host communities, which are mostly located in the state's metropolitan and older jurisdictions. However, as a whole, Pennsylvania's higher education assets remain underleveraged.

This paper surveys Pennsylvania's higher education landscape and its economic impact, proposing a number of policy approaches to boost town and gown collaboration—especially on community revitalization—for the mutual benefit of both institutions and communities and, ultimately, the state.

Download the report here.

Brookings Expert Lambasts Federal Role in Economic Development

Brookings Institution policy expert Bruce Katz finds the federal government culpable for the declining competitiveness of U.S. manufacturing, especially in states like Michigan. Click here to read the article. Here are the highpoints of Katz's analysis:

The federal government helped to create today's globally competitive economy by relaxing trade restrictions through agreements such as NAFTA, while doing little to help manufacturers retain and upgrade their U.S. plants, help workers adjust to the demands of the new economy or update the ways we provide for health and retirement security.

Simply put, the federal government failed to help retain high-wage, high-productivity manufacturing.

And the global trade agreements have failed to include meaningful, enforceable labor or environmental standards.

The federal government also could have put more pressure on countries such as China to stop keeping their currencies at artificially low values.

Even if federal policymakers had thought it a good idea to give away America's competitive advantage in high-end manufacturing, they could at least have helped laid-off workers adjust to the new economy. But here, too, they failed.

Federal spending on employment and training for dislocated workers was $1.5 billion in fiscal 2005, less than 4% of the amount spent on federal highway aid. At the height of the last economic boom, in fiscal 2000, when the unemployment rate was lower than today, the federal government spent nearly $1.6 billion on dislocated worker assistance.

Federal income-support and retraining for workers who have been laid off because of trade are inadequate. The Trade Adjustment Assistance program provides retraining assistance and a year and a half of income support to some trade-displaced workers.

But it is difficult to access, provides no health insurance assistance and is available only to workers laid off because of imports, not to those laid off because production was relocated abroad.

What is your reaction to this analysis?

ED Futures Newsletter, January 28, 2006

Dear ED Futures Subscriber:

Most noteworthy from this week's postings to the ED Futures Journal is the keynote speech I delivered at the International Economic Development Council (IEDC) Leadership Summit on January 23, 2006 in St. Petersburg, Florida. You can download a PDF copy of my speech, which is based on my new book, Creating Leadership Advantage for Economic Development. Note: the book will be available at the end of April. Stay tuned. I would be very interested in your comments on the speech. The speech was very well-received, which is hopefully a positive indication of how the book will be received. Email Don Iannone here.

Here are links to some interesting articles posted to the ED Futures website this week.

Automotive Scenarios from an Economic Development Standpoint

Toyota to Up U.S. Production

DaimlerChrysler Plans Major Job Cuts

Ford to Cut 30,000 Jobs

Target Industry: Government Contracting

Target Industry: Iron and Steel

New State Economic Climate Rankings Released

Alabama Sees Good Economic Gains

New Jersey Makes Gains as Biotech Center

Industry Profile: Motion Pictures

As always, we look forward to your comments and questions.

Best wishes,

Don Iannone
Publisher
Email: dtia@don-iannone.com
Tel: 440.449.0753