The impertinence of the usurpers

A system of personal ownership of production means, commonly called capitalism, is a very effective one. Initiatives usually become reality, once a source of financing is found. Countries’ economies under these circumstances grow quickly, poverty diminishes, a big part of the population feels their lives enhanced. The ugly side of this system is that much too often people with low character attributes take advantage over the rest, the honest, law abiding and decent majority. Using the loopholes, tricks and power plays, they become rich and a powerful, leaving the rest puzzled why they have to tolerate that.

Another system tested the last century is called the socialist, where the means of production belong to the state. This system is not effective. It does not generate much growth. However, it ensures, more or less, the equality among people, a social good cherished by many. The ugly side of this system is that much too often people with low character attributes take advantage over the rest, the honest, law abiding and decent majority. Using the loopholes, tricks and power plays, they become rich and a powerful, leaving the rest puzzled why they have to tolerate that.

Now imagine a transition from one system to the other. When the direction is going from capitalism to socialism they call that revolution. In Venezuela, where I lived many years, the leaders say they are in a revolution. Guess what kind of people is taking advantage now there?

Or take the transition to the other direction, from socialism to capitalism. They call this the turnaround. This has occurred since two decades in East Europe, as here in Romania, where I happen to live now. And who is pushing themselves to the places where the big cakes are? Mostly, the same people that did so in the former socialist system, people that were criticized for a lack of humanity, decency and respect to their fellow beings. Formerly, their lifestyle was hidden, but during socialism there were enough leftovers from the previous prewar capitalistic season, so they took possession of that to live a pretty good life. Now, there is a difference. Now they show to everybody what they have: their villa, their luxury cars, their watches and jewelry. And that they do not need to care about others.

A little boy from a lower income family was invited with his mother to a friend’s house in a nice neighborhood. He was told to bring his bicycle. He parked it, while saying hello to his friend’s parents, at playing ground behind a sidewalk. A lady from a nearby house lost control of her big last model luxury SUV while turning it, went backwards crossing the footpath, into the playground and finally over the boy’s bike. Luckily no kid was hurt. However, the bike was completely destroyed. She impolitely blamed everything on the kid and, asked by the mother if she would take her responsibility for the damage, she said no and went away. The mother did not want to embarrass the family she was visiting, and took the sad kid and his now unusable bike home.

This is an everyday story in this country. People that have much more than they really need are not even willing to help to remedy a little bit the pain they have inflicted on someone that does not have that much. And this is a reason many countries stagnate – and may look from revolution to turnaround to revolution to turnaround, without addressing the real problem: the care and respect we all have to and can show for each other.

The particular story here had a good ending. The bike got fixed. Some friends, also not so rich ones, put their working skills and the necessary money together to give to the bike its previous shape. But this result is, unfortunately, the exception. Usually the decent people, the big majority of Romanians around me, have to suffer the impertinence of the usurpers.

Should you really treat employees as grownups?

I translate the beginning part of an article from "Sein", an inspiring German print and online media:

"Managers from everywhere look amazed at the Brazilian Company Semco, a very broad-based service company, which operates in fields ranging from industrial equipment up to post solutions in various fields: What happens there contradicts everything they believe in. The 3000 people of the staff select their superiors; determine their own working hours; also their own salaries. There are no business plans, no HR department, and almost no hierarchy. All profits are divided by vote, the salaries and all business books are visible for all, but the email is strictly private and everyone decides on his own how much money to spend for a business trip or a computer.

What may sound for today's human resource managers as an anarchic nightmare is actually a success story. Since the company’s owner, Ricardo Semler, introduced this changes, profits rose from 35 million to 220 million dollars. And not just the numbers indicate Semler right, but also the staff: The staff turnover rate at Semco is below one percent.

The recipe is simple: Treat your employees like adults, then they behave that way. The more freedom you give them, the more productive, happier and innovative they are. A company consists of adult and equal human beings, not labor. Everyone has the right to express themselves freely and to find a healthy balance between work and private life. Contrary to present ideas on the topic, pressure and stress make people not productive, but quite simply broken. The company ultimately loses, as well as their people do.”

(If you understand German, it may be worthwhile to read to complete article. You find it here: http://www.sein.de/gesellschaft/neue-wirtschaft/2010/die-befreiung-der-arbeit-das-7-tage-wochenende.html . There is also a lot of English literature available; I recommend specially the books Ricardo Semler himself wrote).

When I put this link on Twitter, by brother Bruno answered soon:

"20 Years ago I read the book ‘The Semco System’ of Ricardo Semler with admiration, and today wonder why this is still not applied in all places where possible.”

Bruno is orchestra conductor and has had, according to what he tells, similar experiences within the music world, as I have had in the little less contemplative environment of the automotive trade. I shall now briefly answer his question with the conclusions I attained during many years of pondering this issues.

If we look at animals living in groups, whether they are chickens, baboons and wolves, we find there pyramidal hierarchies, status, pecking orders – the same we do in our Dow Jones companies and opera houses. Everyone fights to keep his position or to get higher, following the rule “be nice upwards and step on the ones below”. According to some researchers, even hormonal changes occur on the leading alpha animals, so that they respond disproportionately snappy to those who dispute their role.

Strict hierarchy and clear division of labor – the ones above think, the ones below execute - is apparently a law of nature.

But just this very nature has granted us a special right: Besides the usual instincts and hormones for behavior steering we got in the toolbox for our life a particularly high developed front cortex, with which we can, in a relatively sober way, think through controversial things. For example, we are able to consider whether the traditional patterns of collaboration are still purposeful in our present society and, if not, start to ponder more effective strategies.

Larger companies have long found out that for this action is required. For more than three decades, the candidates for a higher management position will be asked to attain some management training courses where this is explained in detail before they will get higher ordinations. However, you do not find in practice so much of what the theory teaches so diligently.

It takes a lot of time, patience and determination, but also a good deal of power to actually achieve changes here, and even in small doses, on little step at a time. As you can read in his interesting books, Ricardo Semler accomplished with Semco only gradually the improvements, to finally arrive at what the company is today. On the way they made many mistakes, they often followed for long false leads. And, most important, he had what many others do not have in an organization: the power, because he was the owner, receiving the company very young when his father died.

Semco is by far not the only enterprise that had success with such a change in labor conditions. However, until now, only few have been so consistent in doing so. Another example of how the employee including management attitude gives strong pushes for improvement and profits in a medium-sized industrial company, describes very merry Detlef Lohmann in the German book  “Und Mittags gehe ich heim”.  ("At noon I go home - the completely different way to lead a company to success." See also the German article here: http://www.brandeins.de/archiv/2012/das-gute-leben/der-beta-chef.html). His company, Allsafe Jungfalk, would not have been able to survive in a high labor cost environment like Germany without gradually developing into an organization with stripped-down hierarchy. I am convinced that throughout the world there are many more organizations on this path.

However, there is no general recipe. Going here by the manual, if there is any, would only go wrong. The ideal form of organization is determined by the tasks to be fulfilled and the people involved. The world is full of colors and shapes! But even in situations in which strict limits are set within the organization, anyone who has to manage employees can, for example, do the following:

• Let his people decide without interfering. Many roads lead to Rome, not just the one of the boss.
• Teach his people to take responsibility. Give them the responsibility.
• Do not withdraw this responsibility when something goes wrong.
• Build the organization around the people - instead of cramping people in the boxes of a preconceived organization chart.
• Let his people determine the working hours, as long as the job allows this. If the responsibility question was handled properly, then this will always work for the benefit of the company. An owl works not so well in the morning, an early bird starts to yawn at the early afternoon.
• Respect people, making sure that everyone does the same.
• Give trust in advance. This attitude is usually respected by most people, their pride and personal honor will very seldom allow them to misuse it.
• Open the information flow to everybody. In most cases, secrets are kid stuff.
• Eliminate forms, regulations, fixed procedures everywhere, when they are not really necessary. Most rules and regulations are unnecessary. Let everyone use common sense. Everybody has it.
• Help all to heed the affairs of the client as if it were their own.
• Keep the doors of the office are always open. Everyone should be able to come in without being asked.
• Take look at everyone, at least once a day and preferably at the people workplace. Remain friendly and courteous. Praise clearly what is to be commended.
• The rigid hierarchies are not just there because some power-hungry leaders hold it for the best. They exist also because subordinates prefer to play the subordinate, leaving responsibility and decision-taking to the alpha animal. This later one should never accept that some task delegated returns in a hidden form, so that the real responsible does, at the end, not decide. Do not accept a template for a decision without the choice being done by the responsible previously.
• People get tasks assigned for which they are good. People get training in the fields they excel. It is easier and more efficient to make the good better than the weak. It usually does not help anyone to be send to learn something in an area in which he is not very good at.
• Tasks with their associated responsibility are assigned, not positions. No written job descriptions.
• People set their goals. They should include always a date, in which the goal should be achieved. If there is a team working on something, only one (only one!) person gets the responsibility assigned. Nobody can follow effectively more than 5 goals at a time.
• Better to have few good people than many weak.
• No critic of others is permitted. Critical opinion about another should preferably be handled in a face to face conversation without any other person present. If there is no agreement, the superior or another colleague that both trust should be present.
• Engage early and vigorously in conflicts between peers. Best with all involved in the room. Again, do not allow criticism of the other, but accept a problem description. In most cases, the situation is cleared after a debate. However, peer conflicts will usually continue to fester, because rivalry is a hard thing to tackle. If the hierarchical thinking is on demise, these conflicts disappear faster. The biggest leadership error is to foment such conflicts, saying something like "let us see who the better one is." This usually becomes expensive.
• Ensure and look for loyalty. But not against a person but against the company.

I have applied these little "tricks" always successfully for the organizations I was in charge of, even under very difficult circumstances, like in underdeveloped countries. I got people assigned to me with the description of "lazy workers", "prone to thieving" or, more simply, "stupid". Actually they turned out to be very effective professionals, once treated as they deserve. The most important yardstick of economic success in my industry, revenue and income, always rose remarkably fast and high in those companies. "Lucky", was certified to me. I do not believe this, as a permanent luck stream does not exist. However, it was not my merit. It was the merit of the employees that, after internalizing the new rules, started to work very effectively and with full dedication to do what most humans want to achieve in their lives: Having success in their work, being appreciated and receiving respect and gratitude for it.

Of course, in a big corporation, you may walk on thin ice with such a program. You may easily slip, break in or even collapse and be drowned. Unconventional measures, opposed to normal intuition, will seldom be understood by the supervisors. They might not wait until success shows up, but send you as crazy revolutionary to the desert.

Anyway, I observe everywhere a lot is changing; things are going slowly in this direction. Nowadays, very seldom pure Taylorism for work structuring is really successful. This way of organizing common tasks is no longer appropriate or effective. Increasingly, expertise is shared; bosses become coaches; people define in flexible ways what to do and how to do it; they work in groups on specific tasks; they motivate themselves with the work they are doing. Things are getting better, companies earn more money, people like their jobs. In some decades, brother, you will find many Semcos, I bet.

Isabel Allende: 'Forever a foreigner' - The Frost Interview - Al Jazeera English

Really worth viewing. Isabel Allende is not only a successful writer, but also an outstanding person. You will be amazed by this talk with Sir David Frost.

To see the original site, click here: 
Isabel Allende: 'Forever a foreigner' - The Frost Interview - Al Jazeera English

Avaaz, is this your right track?

I had signed some petitions of Avaaz that I considered worth caring for. This days Avaaz sent me an email I do not agree with. Instead signing, I answered with this text (in German). As a letter like mine may prove futile, I publish the English translation here.

Dear Alex Wilks, Jeremy, Christopher, Marie, Ian, David, Paul, Ricken and the whole Avaaz team,

Your organization sends me emails asking to sign petitions and donate money. I usually like your commitment when it comes to helping people in need or to protect nature.

However, I am afraid to admit, your last email does not seem to stand up for the right thing. Therefore, I will take the liberty to respond to it in a similar polemical way as you approach the issue. It seems that at least we both agree on this: sometimes a bold statement stimulates deeper thinking.

You write about the huge tax loophole that swallows 1 trillion euros annually because global companies and rich people move their profits and wealth to tax havens. If these lost taxes would be paid, you write, poverty would be eradicated, every child could have a school place, and green investment could be doubled throughout the world.

In fact, 1 trillion, which is a 1 followed by 12 zeros, is a large number. With so many euros you could do much good. The question that remains unanswered is, who? Who is to do so much good? Our governments, which are collecting the taxes?

The global annual tax revenue is about ten times bigger as the figure you mentioned that disappears in loopholes. And what do the governments of the world with this much money? Eliminate poverty? Provide for every child a school place? Double investments to preserve the environment? I respect your immense trust in the people that run our states, but no government administration or authority is really doing that with their present tax revenues.

To believe that these people will do much better if you increase by 10% the tax revenues is nothing but daring wishful thinking. Would it not be more realistic to expect that the same calamity we already have will continue, just only on a higher level?

The most unpleasant corollary would be, I am sad to say, that there would be a few wars more around. From old times, the main motive for starting a war has been money. If more of that becomes available, more wars are likely to happen. For two reasons: First, some would like to steal the money the others suddenly have and, second, there would be more means to finance warfare.

The next sad consequence would be that more money would end in corrupt politicians’ pockets. Unfortunately, when the fiscal officers attain more revenue, this is presently the expected outcome for most countries of the world.

In the few remaining countries, the matter would not be much better. Probably politicians would use the extra money to win the next election. Or they would feed their usually overinflated sense of ego. Rulers are only humans. And humans reason like this: First, it’s about me. Then I consider my relatives. Thereafter I have to take into account my friends. With this I am busy enough. The rest? You cannot care for everybody, can you?

Maybe it works in Switzerland, where no one knows who is governing. And sure, there are a few exceptions among the politicians, such as Nelson Mandela or the kind President José Mujica in Uruguay, who both continue to live as humble as ever. To those it would make sense to give the additional tax revenues. The others, I suspect, would quickly spend the money in white elephants and pathetic welfare gifts that help nobody.

The worst of all effects, however, is that improved revenue increases creditworthiness. Governments would absorb more debt; the financial gaps most of them already have would become even greater.

Look at today’s Venezuela as an example of what I am saying. Due to the rise in oil prices, the country had many years of state revenue on a scale that far exceeds the economic power of the former European Marshall Plan after the Second World War. The Venezuelan Government got probably more than 1.5 trillion euros. And what happened to all the money? Some of that went to social issues for the benefit of poor people. However, this was at most a single-digit percentage of the total available amount. The rest was squandered, stolen or provided to neighboring dictators - to ail their mismanaged economies and prolong their stay in power. And the result is that Venezuela has now a debt as high as never before and a shattered economy. People stand in line to get staples or simple hygiene products. The party is over; the misery shows its ugly face again.

And what has Apple done, the company that you denounce? Or Google? These evil organizations, which reduce their costs by taking advantage of tax loopholes that politicians either devised or overlooked? While this happened in Venezuela as described above; or while at the same span of time a U.S. President invaded Iraq and then, after 150,000 or more people died, his successor withdraws again the troops; or in the years self-seeking politicians disintegrated more and more the European Union; in the same years all this happened, Apple launched the iPhone, the iPad and a computer system that brought benefit and real joy to many people. The Apple devices are not cheap, but what I spent for them was only a fraction of the taxes I had to pay. I will be sincere: The money I paid to Apple has given me much, much more happiness and sense of having done something right than what the so much bigger tax payment has.

Or what so say about Google, the wicked octopus, which also avoided honorary tax payments by applying existing rules to its benefit? I can find on the Internet any information and answer I need, thanks to Google, without paying anything for it. Twenty years ago I would not have believed that such a thing is even possible. I have also a Google email account; it costs me nothing. I use a blog from Google. Free. I can look at any address in the world in stunning aerial photographs on Google Earth. Free. Family videos uploaded to YouTube connect my far-flung kin. Free. Well, some publicity appears on the screen, and my data is collected. The advertising does not bother me, in any case less than the self-congratulatory chatter of politicians on the television news, for which I am also forced to pay fees. Regarding my data hoarded, I am of the opinion that it is better stored at Google than at any state institution. Because Google may have indeed more power than it really needs, but it certainly will not knock at my door in the middle of the night to take me away because I do not use agreeable information. 

You also reach your target audience with emails. Thanks to a system that no state institution of this world would ever have been able to set up. Imagine you would still depend on the old postal system instead of the postage free emails. You would have to buy stamps, envelopes, stick one with the other and write the address. You see now that these global companies really do many useful things for us, the public? Not to mention the initiatives of the Bill and Melinda Gates Foundation, which has already achieved more good in developing countries than all the official development assistance before.

Dear Avaaz team, you support the wrong. Governments have still far too much power and do not need your help or my donation. Rather than continue to tighten the screws to control the taxpayers, they should rather simplify and unify their tax systems. But as the current situation strengthens their power, any appeal in this sense will fizzle out into the void.

Here is an idea: Why do you not set up a petition for a company that would build roads here, from where I write? Entirely free for the taxpayer; founded with advertising? Every hundred yards a Coca-Cola logo in asphalt would be allowed; and we finally would have a usable road network in Romania.

Money clumps

We are told that in socialism all were, more or less, equally poor. However, shortly after the iron wall’s fall, the oligarch appeared in the former countries of the soviet block. People with nearly obscene fortunes, a very small minority between many that were now really becoming poor.

Flashback: Our little plane was preparing for landing. Below I saw the grey, dessert like earth suddenly turning green. Palms, gardens, straight street design, beautiful houses, golf courses: Palm Spring.

With a few hundred fellow dealers, we had been invited to a magnificent meeting. It seemed that the whole beautiful resort hotel was booked only for us, as I saw all other guests with the same kind of name plates around their neck as we had received. Our particularity: We were four Germans, all others Americans.

For the evening the program announced a first gathering. We met in a huge hall, displaying all the known gambling sets you may have seen in a casino. Each one of us received a little cloth bag containing gaming chips, which were decorated with the companies logo on and summed up to 100 points. The croupiers invited us politely to test our luck. A host explained that the chips were not to be changed to real dollars (which then, by the way, still had certain value), but could be used for an auction of some prices in two hours time.

A big blue curtain opened and the prices to be bidden for appeared. A pink old-timer Cadillac. Wow! A Harley-Davison. Also several consolation prices.

This waked up our usually sleepy capitalistic genes. We wanted the car! At least the bike. Our collectively minded European background let us put the starting capital into one venture, administered by the only woman of us four, betting on her innate intuition. Now we had already 400 token, with which alone we felt sure to beat the rather individualistic Americans around us. Our controller started to calculate in which kind of games and playing strategies our chances were highest. A winning team!

Soon we saw the first losers with empty bags looking how we first maintained our capital and eventually increased it. When the bid started, we had nearly doubled what we received at the beginning. Confidently we looked forward to the auction.

First little things found their new owners. I wondered that somebody would spent 1,200 for a rather scruffy scarf. With great fanfare the two vehicles went to auction. The motorcycle went for over 40,000 and the Cadillac for more than 70,000. What a disappointment. How could this guys have made this huge amount in only two hours? And we hat only a bag with a few now useless chips.

After working now for many years in Eastern Europe, I have good explanations about what happened in Palm Spring and why here, in the former socialist countries, a few could make so much money, hopping in a short time to the sunny side of capitalism.

Money clumps. The same as matter, of which only few chunks float in a rather empty universe, there are these rare elementary particles that produce the money gravitation. Very seldom somebody comes across the Higgs Boson for money, may it be of luck, cheekiness or, in some cases, persistent hard work. For the rest of us wealth remains a shiny object we sometimes can distinguish far away in the firmament.

Romanian’s next elite

If you prefer to experience a broad band of emotions, from dreamingly wonderful to terribly disgusting, all packed into a short span of time, Romania is your place. No lukewarm feelings here. In a second, you may like something, to immediately be confronted with something else you dislike deeply; you jump constantly from love to hate and back again. After working here for more than a decade, that is my brief conclusion.

I also see this accentuation of the extremes with the human beings: I have to deal with geniuses and perfect idiots. Like you have to elsewhere. Problem for Romania are only two issues that differentiate the country notably from the rest: First, the geniuses are really, really smart; contrasting sharply from the idiots, who are real, real fools. Second, the first have almost no power and the later too much of it.

There are plenty of good historical reasons to explain this outcome. The inhabitants of this region were pushed around by any empire you may have heard about, with the exception, so far, of the Chinese. The Romans looked for their good wines and beautiful women. The Ottomans wanted to squeeze taxes out of everybody. The Austrians installed without clemency their rule of bureaucracy. The Czars and their proletarian heirs put their iron fists on them. Fact is nevertheless, nobody really succeeded. The smart local ones were too clever to cooperate with the invading powers, so they led the other ones take care of these collaborative tasks. However, these later ones were simply too obtuse to really get something done. Good strategy, I have to admit.

Now, for the first time in many, many centuries, the Romanian themselves wanted to become part of a bigger power. They asked for EU membership. The EU never had any secret plan to take over here, all the contrary, I am afraid. Reluctantly they put a big number of requirements to be met, expecting Romanians to withdraw from their joining plan. Nevertheless, Romania diligently obliged to all and every stipulation. They became members in 2007.

This, I have witnessed, increased their general happiness and self esteem quite a bit, but a stubborn leftover from the former tactic still needs to be addressed: The fools continue with too much power, and although their strategic service for their country is not required anymore, they do not seem to want to give it up. This, of course, creates one or another problem. To be more precise, it does not create so many problems as it impedes good things to happen.

Even so, there is hope: The upcoming generation. You will find a huge number of highly qualified, hardworking, well behaving and trustworthy young professionals here. It is a pleasure to work with them, to enjoy their friendship and company. Eventually, for the better of their country, they will be in charge.

Will they? Sometimes I doubt. When I see young men, driving their papa’s SUV, passing expressly quick through a muddy puddle to mess up the bystanders. When I see the same kind of persons overtaking a waiting car line and, should a car come from the front, pushing aggressively into the queue to the right, just to make clear they are somebody important, who does not need to show any respect to others.

Some years ago, I had to attend a group of foreign investors that came to Bucharest to examine on the spot if their decision to build here an important production plant really made sense. For dinner, I selected a stylish restaurant in a former private Art Deco house in the Cotroceni quarter. Ambient and food were exquisite. The waiter, a little bit mannered, but giving professional character of his own to the evening, came to our table and asked politely if I could move my car. I wondered why, as it was correctly parked in a public street. A fashionable dressed young man spoke harsh to me; “You are parking in front of my house. I have to park my car there, so move yours.”

After analyzing in my troubled mind who was right here, I finally decided not to argue. It may have been a public place, but I did not want to find there, at the end of the dinner, a scratched car. So I went out and moved it a little further. However, the positive spirit with which the dinner had started, was gone.

Eventually, the investors build their plant in a neighboring country; with better manners, I presume.

Capable Romanians, take over! Do not stay apart, do not emigrate. You can change your country for the better. You should become the elite that guides this country to the future. You may not own the press, the broadcasting channels or find much tribune there, but you have the tools and you know very well how to use them - Internet, blogging, Twitter - with which you can join enough force to impose your decency over any bullying misbehavior.

Manager Types

 After having dealt during some decades with the most different kind of people, my simple structured mind came out, I found out some time ago, with only a few labels, which it quickly attaches to the people in front of me. Once this is done, I automatically switch into a specific behavioral pattern that would help me, in most of the cases, to achieve my goals.

This is particularly true in my business activities, in which I have to deal mainly with the specimen called manager.

"Aha," my mind might say, "a policeman. Why is he leading the sales department? Why do they not promote him as delivery entrance guard?" Or it asks: "I wonder how this number crunching monkey became the public relation manager here."

This is exactly the problem with the organizations. They really seem to have good people, but they put them in the wrong places. The entrepreneur type is working in the archive. The down to earth businessman is cleaning the toilets. And so on. You could so easily improve organizations by making only some personnel swaps. The only problem group that would always remain, even after a deep position optimization, are the managers of the politician type. People that go around talking, commenting and trying to become popular or noticed for the next promotion. They do not work, unless it is to improve their golf handicaps. They belong only to one place, really: To the top of the pyramid. But this is a small spot and there are too many of them.