Comments

"government over-regulation.?"
Huh?
You seem to have forgotten what a lack of gov't regulation has brought on.

"George's point was that the greatest retailers (judged by the standards of their industry, which are the only ones that matter) are actually the independents."

Do you remember what it was like shopping in an independent electronics store? Maybe it a regional thing,
but before places like Best Buy, buyibg electronics was as much fun as looking for a used car.
Remember home improvement stores before home depot?
I'm just flat out tired of the "Small is better", "Big is bad".
I'm also tired of cries of protectionism from people who have absolutely nothing to loose from jobs moving over seas -

China has the most polluted river in the world.
You dump on unions - I don't think unions had much to do with almost destroying the world economy.
Did this e-mail somehow fall back into the 1980's?
Your arguments seem to be grounded in that decade.
We need to make the stuff sold in the retail outlets.
At least some of it.

"Because big companies are bad at it."
Bad at what? The chips that Wosniak used to make the first apples were a product of a big company. Its true the big company missed its potential, but without the big company, those chips would not have been there for Wosniak. And the guts of the Ipod depend on research IBM did. The big vs small argument is flat out stupid. We need both. Its as dumb as big govt vs no goverment. (By the way, from what I've seen in the past decade, Big Government beats No Government - )
Its a blend and a balance. And from I've read, balance is not something Tom thinks very highly of.

"As for the Retail Superstars and the Small Giants, they have a different role to play that is every bit as important as "making things."

Of course we need retail but I don't see a problem with retail. They are many great retail storse all over the place. What is actually a challenge is to find a lousy one.
What we don't do is make things. If you are right that the rebirth of US manufacturing is just around the corner, great.

"See Sarbanes-Oxley, and then ask yourself why there were no IPOs in 2008"

Ask yourself why we have Sarbanes-Oxley. Here's what wiki says about it
"The bill was enacted as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of affected companies collapsed, shook public confidence in the nation's securities markets."

Posted by zorro at January 6, 2010 5:48 PM

So, what does it take to have the rebirth of American manufacturing right around the corner? Practically and statistically, how necessary (required/needed vs. desired)/are the off-shore manufactured products vs. capacity/capability (still) existing in the USA? Resilience and sustainability, as well as economic sanity, may require dropping a lot of the unnecessary products we buy that are manufactured abroad, e.g., McDonald's Happy Meal toys, rock band T-shirts, packaging materials needed only for trans-oceanic shipment, a choice of 100's of athletic shoes manufactured in China & Vietnam, products made with great environmental consequences abroad and not needed here anyway, on and on. Who orders/ships/markets/profits from this "stuff"? Big or small?

Let's not regain product manufacturing share, when it happens, by returning to making stuff we don't really need or want. Then work on the next layer.

Wasn't every "giant" birthed as a small "start-up"?

Posted by Randy Bosch at January 6, 2010 6:27 PM

Guys,
Spirited dialogue! Nice to see everyone's back from the holidays. Tom's books are about innovation and doing things, right, now, fast and he doesn't take sides on the big and small issue that I can tell. My concern on this is that we have institutionalized "big" by shutting down the financial markets for all but a small few. VC's are a mess and their exits are 95% M&A, so no great new companies are being built here in the US to challenge the big ones competitively. That leaves the opportunity open to China and the other BRICs to build the next great companies. Our entrepreneurs either drink the build and flip kool aid of the VCs or start a bagel store, not much in the middle and it isn't that they don't have the big ideas you're looking for.
Last comment on regulation. Sarbanes didn't prevent Madoff and Stanford et al. While the SEC is harassing little public companies they look the other way with the big guys. You should be pissed about the cost and no results, that's something Tom would rail about.
I am one of those entrepreneurs building an early stage super tech company. The environment here is stupid for this but so am I. We'll do it anyway because it's what we do here in the US.
Cheers,
Tom

Posted by Tom Marsh at January 6, 2010 6:57 PM

"In the excellent companies, small in almost every case is beautiful." Tom Peters

Where did I get the idea Tom has a bias
for the small?

Posted by zorro at January 6, 2010 7:57 PM

Seeing Bo's comment reminded of the great Marshall Mcluhan cameo in Annie Hall. Great to see the author chime in. I don't agree with everything that Bo suggests, for instance I detect a bit of anti union, but I sure love that he was moved to respond. Thanks. (for clarity's sake, I always liked what Peter Drucker said.."I never met a union that the company didn't deserve." And I would say it is BIG unions that are the problem. I actually believe we will see a large rise in unionism, but I will believe it will come from small "start up" guilds, not the UAW, AFSCME, or NEA. And I suspect they will represent knowledge workers more than manufacturing.) And that's my small thought on a big topic.

Posted by mike Neiss at January 6, 2010 8:53 PM

This is great! I love it. Zorro doesn't know what the hell he/she is talking about, but it's great to have the debate. Mike, yes, I completely agree with you. Unions are absolutely necessary as a counter-weight against truly bad employers, of which--unfortunately--there are quite a few. I agree that BIG unions are the problem, as well as unions like the UAW, AFSCME, and NEA that block innovation and progress. I'm sure that--if I were employed by a crummy employer--I'd be organizing a union myself. A lot of companies do, in fact, deserve the unions they get. My problem is with the unions that target the BEST employers (like Whole Foods) or that manage to survive because they sup at the public trough and therefore have polltical clout. The NEA in particular should be ashamed of the role it has played in retarding the advancement of education in poor communities, especially amonmg African-Americans. .Zorro's comments are really not worth spending a lot of time responding to, since he/she is constantly replying to points that weren't ever made. I never said that big was bad or smaller was better. I don't believe that at all. If he/she is sick of it, then he/she is sick of something he/she has been concluding from something that wasn't ever said. As for whether or not big companies are good at innovation, just ask THEM why they're snapping up thousands of start-ups these days. And really,do we need to rely on Wiki as an authority for why Sarbanes-Oxley was passed? I know why it was passed. It was a typical over-reaction to egregious behavior on the part of people who deserve to be prosecuted and thrown in jail--as, indeed, they were.. But why punish the whole economy for the sins of the bad guys? If some people rob banks, should we all be prevented from using banks in the future? This it nitwit thinking, and if it prevails, we are all going to suffer greatly as a result--especially the people who Zorro thinks he/she is championing,

Posted by BoBurlingham at January 7, 2010 12:27 AM

P.S. I'm probably being too vituperative here, and I apologize for that, particularly to Zorro. I suspect that we all want the same things for our country and our fellow citizens. I do get frustrated, however, over the common (and prevailing) wisdom that I think contradicts the reality that I see. If I overstate the case from time to time, please forgive me.

Posted by BoBurlingham at January 7, 2010 12:55 AM

"Did you miss the 1980s and 1990's?"

Was this also the time of the technology boom and bust? Was this also the time of the beginning of the mass exodus of American jobs? Was this also the time that executives got paid big and "innovation" produced financial engineering--a bogus kind of production--that reached a peak in the last decade? Was this the time where bonuses for executives mattered most and hidden via globalization glories? Selling out the American worker was secondary and even producing shareholder value despite of what was being preached prominent. Consider GE’s constant drop in value over the last decade. Are small companies on the stock exchange? No sense negating large companies. They’re not going anywhere. In fact, most are getting even bigger. Consider Wall Street banks that are even now much bigger to fail.

Was this the time that service was hyped to a new level and manufacturing became the lesser of the two? Both are needed and where products are manufactured does matter. It’s employment. Bo’s notion of what is coming in the form of innovations that will lessen China’s influence on manufacturing alone and not legislation seems unrealistic, but what do I know—really? I’m sure Bo will say, "Not much." What is for certain is that China holds our debt and seems to dictate our policy to a certain extent. Do you think that “small” issue will go unnoticed regardless of our innovations that will “deprive China of its cheap labor advantage?” By the way, will machines manufacture goods en masse that are shipped to retail stores? What will then happen to the other 50 percent? What we could count on with a more solid manufacturing base was that the jobs were real and the products too—none of this financial engineering dominated BS.

Entrepreneurialism isn’t for everybody. Of the 50 percent stat given, how many of these are one or two employee-ran businesses or sole proprietorships? What of the other 50%? That’s half the population, eh? Was this the time where “talk” as Zorro often bemoans became even cheaper and a sense of cool consulting dominated the business landscape while production waned? (Tom excluded. I asked in the other post where were the products coming from in these great small retail businesses.) Was this the time of unfair trade legislation? Was this the time that both Democrats and Republicans sold the American people out for executives who funded their careers? Wasn’t Sarbanes-Oxley a direct response, perhaps too restrictive, to the decades of unfair trade policies that largely existed in the 80’s, 90’s and thereafter, not to mention the companies that had no innovation, save financial engineering which was a massive scam? Just because it may not have been the best does not mean that we should not work to get it right. While small is indeed beautiful, it is the big companies that initiate legislation for good and ill. (Do small businesses get any respect? Perhaps this is precisely the point of the books mentioned, the focus on small business—that is. Thanks for that!) But grand is also beautiful. Consider the universe with all of its intricate vast beauty.

Mr. Burlingham – I suspect you are one of Tom’s friends and perhaps your coming out of the blocks so negatively because someone differs in opinion with you does not bode well for the old guys. I have not read anything that you have ever written but I have appreciated a post that Tom wrote of you here. I also suspect that you will call my comments above nonsense or that you will put yourself out there like the older authority, negating the points of others and bashing Wikipedia which Tom tried unsuccessfully according to a recent tweet to donate $250 dollars. Age or experience does not always teach wisdom or understanding. Personally, I think that Zorro made some astute points above and the fact that you have a difference of opinion does not make his points useless. Sorry you feel so put out in even responding to them. Are you a consultant? Do your clients ask questions so put you out? Some may think that the points that you have written above to be useless, age and experience aside.

I know that Cathy has set the scene up "Swashbuckling: Bo and Zorro" but was it necessary for you to respond in such a negative belittling way? I thought that you made some good points in your initial post. I also thought that there were some good points in this one, not that you care in the very least. But the tone of this latest post does not make me want to read anything that you have written, even if it useful. One other thought, inquisitive and intelligent minds generally respond, both specifically and generally, why did you feel the need to knock Zorro’s expansive thoughts which are all reflective of the glories of globalization gone amiss? So what if he didn’t respond directly to all of your comments which? Also, did you respond so aggressively because of the title- "Swashbuckling: Bo and Zorro?" Did that get your juices up? I guess age and experience should teach some things such as being ginned up.

By the way, Zorro, is not a friend and I do not have any contact with him whatsoever outside of this blog and my own. I suspect that your friend, Tom, has a mind of his own, even if he agrees with your take on China. By the way, the issue of globalization seems by far more complex and ominous than you have written of here. While protectionism is not a necessarily negative--I’m sure you would protect your home in case of intruders even if you left the door open--globalization as I have written in another post reaches far beyond retail to not only an unfair advantage, but to US foreign policy, perhaps even our cowboy save the world mentality while the likes of China collect the spoils and mine. As we argue about democracy and freedom, communist China is positioned to kick our A$$.

You will excuse me if I didn’t stick to script in any of my comments here and address your points verbatim as you might have liked.

Posted by Judith Ellis at January 7, 2010 1:23 AM

A comment. Bo talks of, "...effective business systems and management, which is an area in which the Chinese stink."

As a generalisation, yes. But generalisations are dangerous. And let's not forget that Chinese themselves are well aware of this problem and will work quickly to catch up and try to leapfrog the West.

Posted by Mark JF at January 7, 2010 4:43 AM

Sorry for the negativity, Judith. The 50% figure refers to companies with 20 to 500 employees. If you add in the smaller companies, the figure goes up to about 80%. Companies with more than 5,000 employees employ 2.2% of the workforce, and yet that is where all of the government support and media attention goes. I guess that's the source of my frustration, and--I suspect--Tom's as well. Media and academia focus single-mindedly on companies that actually represent a very small part of the economy. As a result, people (including government officials) get a very distorted picture of the economy, and that has profound effects on policy. Out of sheer ignorance, Congress winds up passing laws that have huge unintended consequences. Sarbanes-Oxley is just one example. I remember a story I once heard from Sen. Bob Bennett of Utah, who himself is a former Inc. 500 CEO. He was talking about the effects of a change in tax policy on the entrepreneurial sector and noted that the vast majority of those companies are S corporations. Afterwards, he had a line of Senators asking him what an S corporation is. That is scary. If you care about the future competitiveness of the U.S. economy--and I know that you and Zorro do--you should be as worried as Tom and I are about such ignorance in high places with regard to the most dynamic and innovative sector of our economy. The United States used to be the unchallenged world leader in entrepreneurship. I'm not sure that's true anymore. India and China are overtaking us--if they haven't already overtaken us--and that does not bode well for our future.
Which brings me back to the original subject: George Whalin's excellent book. Aside from its enormous take-home value for entrepreneurs (whether or not they're in retail), the book sheds light on companies that rarely if ever garner much attention in the media, and sheds a little more light on what makes small- to midsized companies tick.

Posted by BoBurlingham at January 7, 2010 11:59 AM

Where was George Whalen's book paper made, printed, etc.?
Whose economy gets the take-home value of its creation (hopefully, ours)?

Posted by Randy Bosch at January 7, 2010 12:07 PM

"Where was George Whalen's book paper made, printed, etc.?
Whose economy gets the take-home value of its creation (hopefully, ours)?"

Great - we have a paper industry while the Chinese
implement the worlds fastest train.

Posted by zorro at January 7, 2010 1:29 PM

viagra sales

Bo – Thank you for your comment. It's appreciated. I especially appreciated the clarification of the 50% breakdown. I'll do a little research. And I'll order Small Giants and Retail Superstars.

Regarding ignorance in high places, just imagine if Sarah Palin would have been in office. No, scrap that please; it's a dreadful thought indeed. I was annoyed and ashamed watching Nassim Nicholas Taleb before Congress. He was speaking very plainly and logically about monetary policy and the markets, but many seemed to be clueless. Congressman Alan Grayson, the showboater, was actually the most astute representative on this finance committee. By the way, I was personally ecstatic to see that Senator Dodd will be retiring. Here's to hoping that many more, both Democrats and Republicans, will soon follow suit.

Love the name, Bo. It reminds me of our beloved Michigan head coach of many years, Bo Schembechler. Saw the videos on your site and they're great. I love Zingerman's. Having spent 6 years on the Michigan campus doing a couple of degrees, Zingerman's was a favorite spot. I live outside of Detroit and we still go back on the weekends. Great food and pleasant service! Tom mentioned Frankenmuth in his post. It's a place where we went regularly when I was a kid. I haven't been in a while since I've been back in Michigan. I will make a plan to visit this year. It's magical!

Thanks, again.

Posted by Judith Ellis at January 7, 2010 4:28 PM

Here is an excellent article, "Contrarian Investor See Economic Crash in China", about famed contrarian investor James S. Chanos in the NYT. Nassim Nicholas Taleb is also a contrarian investor. I would like to get his thoughts thoughts on China and Mr. Chanos. By the way, Nassim has just written a great article:

THE DEGRADATION OF PREDICTABILITY — AND KNOWLEDGE

"I used to think that the problem of information is that it turns homo sapiens into fools — we gain disproportionately in confidence, particularly in domains where information is wrapped in a high degree of noise (say, epidemiology, genetics, economics, etc.). So we end up thinking that we know more than we do, which, in economic life, causes foolish risk taking. When I started trading, I went on a news diet and I saw things with more clarity. I also saw how people built too many theories based on sterile news, the fooled by randomness effect. But things are a lot worse. Now I think that, in addition, the supply and spread of information turns the world into Extremistan (a world I describe as one in which random variables are dominated by extremes, with Black Swans playing a large role in them). The Internet, by spreading information, causes an increase in interdependence, the exacerbation of fads (bestsellers like Harry Potter and runs on the banks become planetary). Such world is more "complex", more moody, much less predictable. canadian health care pharmacy viagra

"So consider the explosive situation: more information (particularly thanks to the Internet) causes more confidence and illusions of knowledge while degrading predictability.

"Look at this current economic crisis that started in 2008: there are about a million persons on the planet who identify themselves in the field of economics. Yet just a handful realized the possibility and depth of what could have taken place and protected themselves from the consequences. At no time in the history of mankind have we lived under so much ignorance (easily measured in terms of forecast errors) coupled with so much intellectual hubris. At no point have we had central bankers missing elementary risk metrics, like debt levels, that even the Babylonians understood well.

"I recently talked to a scholar of rare wisdom and erudition, Jon Elster, who upon exploring themes from social science, integrates insights from all authors in the corpus of the past 2500 years, from Cicero and Seneca, to Montaigne and Proust. He showed me how Seneca had a very sophisticated understanding of loss aversion. I felt guilty for the time I spent on the Internet. Upon getting home I found in my mail a volume of posthumous essays by bishop Pierre-Daniel Huet called Huetiana, put together by his admirers c. 1722. It is so saddening to realize that, being born close to four centuries after Huet, and having done most of my reading with material written after his death, I am not much more advanced in wisdom than he was — moderns at the upper end are no wiser than their equivalent among the ancients; if anything, much less refined.

"So I am now on an Internet diet, in order to understand the world a bit better — and make another bet on horrendous mistakes by economic policy makers. I am not entirely deprived of the Internet; this is just a severe diet, with strict rationing. True, technologies are the greatest things in the world, but they have way too monstrous side effects — and ones rarely seen ahead of time. And since spending time in the silence of my library, with little informational pollution, I can feel harmony with my genes; I feel I am growing again."

erik - Nassim would be an excellent "Cool Friend!"

Posted by Judith Ellis at January 10, 2010 12:15 PM

"The chips that Wosniak used to make the first apples were a product of a big company."

What big company are you referring to? The Apple I used a Mostek CPU...Mostek was founded in 1969, and it's revenue in 1978 was $134 million. Not trivial, but not exactly IBM or GE, either.

If you want to make an argument about the importance of large vs small companies, this is probably not the best example to use.

Posted by david foster at January 11, 2010 7:28 PM

David - I never really thought that this was an argument of large versus small but the beauty and necessity of of small. At least, this is the idea prevalent in Tom's writing. Even in large companies he talks about smaller groups to spark innovation and effective teams.

Within a culture that obsesses on bigness, it is good to recognize small businesses that also play necessary roles. They need highlighting too as policy usually stems around larger companies for both good and ill.

I appreciate your comment which essential asks what is big.

Posted by Judith Ellis at January 11, 2010 8:05 PM

buy viagra online 25mg

the point is integrated circuits cheap enough to be a consumer item became that way through the big government space program military. The price of integrated circuits may never have reached a consumer level price without big government funding. The computer itself is a product of defense funding.
This gets lost in all the mythology surrounding the development of the personal computer. Its always presented as a story about smallness and individuals. We know all about Jobs and Wozniac, but how many people know who invented the integrated circuit? True, the fact that these chips were full blown computers was lost on the big guys - that is an important point - - but the internet itself is a product of 'big' and so is the integrated circuit - and that part of the story is left out most of the time. Much of the products we call high tech exist because of the money the government dumped into science after WWII. Big government succeeded big time - and I think we ignore that today for political reasons.
We over emphasize individual achievement - in the current atmosphere, there is not a need to emphasize individuality - the society as a whole gets it. What we are are absolutely terrible as is coming together to solve large problems - we no longer act as a nation. This will be a big disadvantage as China gets up to speed on how to incentivize individual achievement - and they will, because they are not ideological - they are pragmatic - and we are becoming more and more ideological.

where to order viagra Posted by zorro at January 11, 2010 10:49 PM

Heres what Tom Friedman has to say about China

“One-party autocracy certainly has its drawbacks,” writes Thomas Friedman. “But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century.”

Posted by zorro at January 11, 2010 11:00 PM

Zorro - Good comments above, all. Early yesterday morning a friend sent me this "very sobering" article as she defined it, "An Uneasy Feeling" by Bob Herbert of the NYT. The whole column is worth reading. You can read it here if you haven't already. Here are some relevant paragraphs to this discussion:

"What's needed are big new innovative efforts to fashion an economy that creates jobs for all who want and need to work. Just getting us back in fits and starts over the next few years to where we were when the recession began should not be acceptable to anyone. We should be moving now to invest aggressively in a new, greener economy, leading the world in the development of alternative fuels, advanced transportation networks and the effort to restrain the poisoning of the planet. We should be developing an industrial policy that emphasizes the need for America to regain its MANUFACTURING MOJO, as tough as that might seem, and we need to rebuild our infrastructure."

I thought of you Zorro when I read this regarding the deficit and taxes:

"The fault lies everywhere. The president, the Congress, the news media and the public are all to blame. Shared sacrifice is not part of anyone's program. Politicians can't seem to tell the difference between wasteful spending and investments in a more sustainable future. Any talk of raising taxes is considered blasphemous, but there is a constant din of empty yapping about controlling budget deficits."

Posted by Judith Ellis at January 12, 2010 11:34 AM