In December, I suffered what turned out to be a minor injury. During an exercise with one of my volunteer groups, I was doing a training exercise that involved falling and allowing the members of the group to catch you. I had not (in hindsight!) fully trained my group, and when I was falling, I ended up falling into the hands of a single individual. He did his best to catch me, but was unable to do so (not his fault!), and as I fell I struck his knee with my throat.

That blow took my breath away, and made my voice increasingly hoarse. Since I only have one airway, I thought perhaps it would be best to get it checked out to make sure it wouldn’t swell shut during the night J. My local urgent care clinic looked briefly, and immediately referred me to a nearby emergency room, as they didn’t have the tools to check it out. The emergency room (where I went post-haste) was excellent – conducted a brief triage (but got no real information from the original clinic), assigned me to a bed in the ER, got me seen by a doc pretty quickly, and then scheduled for a CT scan. There was a PC in the room that the nurses, the phlebotomist (who inserted an IV line in my hand) and others used to record what had happened with me thus far.

When the doc came through (pretty quickly, I thought), he brought a scribe with him. Turned out she was a local college student, studying to be a nurse. Her task was to enter data on my case on behalf of the doctor – a nice compromise which allowed the doctor to focus on me and my case, and not pay attention to a laptop. I suspected that it made the doc’s time much more efficient.

Then things got interesting. They took me away to run a CT scan on my throat, and brought in a throat specialist to run a scope in and look at my vocal chords (the structure most likely to have been damaged). The CT scan was delivered electronically to my records, so the throat guy could review it. He arrived very promptly (all things considered, since they brought him in from home on a Sunday night), checked things out, and prescribed a medication to be given intravenously (good thing I had that IV in already).

Some time later, the original ER doc came by to check in on me. In the pre-digital era, that would have involved him looking at my paper chart to see what had happened with all of his orders, and what the other doc had found. But not this time! Turned out that he asked me for a recap of events – had I seen the throat specialist? What did he say? What did he prescribe?

Now I suspect that if I had been unconscious or less than fully functional, he might not have used that approach. But it struck me as odd, and perhaps indicative of an issue in the ER. Perhaps the process for the ER doc to access and review records online is cumbersome? Perhaps there’s not an easy way for the doc to review patient info while retaining the efficiency he got while using his scribe to record information?

And that, of course, led to questions. What could be done differently? Is there some way, other than a laptop, that an ER doc could use to efficiently access patient information? Was he trusting my report of the information to be complete and correct, or did he go back and review the actual records later? (I assume he did, but have no way of knowing for sure.) In a more holistic way, could the original clinic have put information online in a medical record that could have been accessed by the ER doc directly, to reduce the friction in getting me into the ER system?

Have you ever experienced medical care in a digital records (paperless) environment? Have you seen anomalies that surprised you? Have you seen the benefits of those online records? I’m interested in your experiences!

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Well, here goes. Novel had good radio publicity and endorsement of a talk-radio technology guru, and an endorsement from a family member who’d used them for years. So I called them to start the process – so far, so good. Got the modem in the mail a couple of days later – all still good. But then the fun begins. In short, after several hours on the phone with their tech support, who all seemed to honestly care and to sincerely try to help, NO ONE got it right until it was too late. Here are the details:

Novel’s web site, during the signup process, said very clearly “do not contact your current Internet Provider until your new service is working. Then you can call and cancel.” So I followed that rule, read the rest of the instructions with the modem (which said that service would be activated by midnight the night that it arrived), hooked everything up, and waited patiently.

But it didn’t work after midnight, so I called tech support. After politely going through the list of things they always want you to do (check the power, look at the lights, check to see if it’s plugged in to the DSL filter properly, …), I escalated to second-level support. Four calls and 2 hours on the phone w/ Tech Support yielded several claims that “we can’t share the line with your current provider” and “did you call them to turn their DSL service off?”

Of course, I didn’t make that call, since the instructions on the Novel signup page said not to, that Novel would do it.

On the near-final call to a third-level support person, Novel said that the old provider would have to come out to my home to do something in order to make it work. Novel tech support said the night before that Novel had not yet called the old provider to make this change; it appeared someone had dropped the ball. Then the message changed – I would have to call the old provider to turn off my Internet service.

Just when you think it can’t get weirder, it does …

Given all the trauma so far, I asked what, specifically, I should ask the old provider to do. Novel’s third-level support person asked me if I had my phone service with the same company. Since I did, he said, I’d have to ask them to turn off both phone and Internet service, wait for Novel to get Internet working, and then call the old provider to get my phone turned back on.

Conveniently, while I was on the verge of totally losing my temper, the line to Novel’s tech support dropped. They called back 30 minutes (!) later, but by that time I’d already called my old provider to ask them to send a new modem and turn things back on.

And then it gets weirder still!

The old provider says: “We’re sorry, but Novel called us on your behalf a few days ago to cancel your Internet service, so we have to start from scratch. It’ll take a few days, but we’ll open a new Internet contract for you.” Conveniently, this meant that I was treated by the old provider as a new customer, so I got both pricing and speed competitive with what Novel had promised.

Total time on the phone so far: Approximately 6 hours, AFTER the stated activation time provided by Novel.

While all this was going on, I found a tech support forum for all sorts of DSL providers. There, I happened across a direct access path to the general manager of Novel’s operations, so I dropped him a note with a more raw version of what’s above. He promptly connected me with the guy who turned out to be the last US-based tech support person for Novel – we’ll call him “Fred”. Fred clearly understood what had happened, called me on the phone to apologize, tried to make things right technically, and appreciated my sharing my insights with him.

Then we get to the financials! After trying four different methods (all recommended by Novel’s customer service staff) to cancel my relationship, they finally agreed to do so, but they couldn’t refund any of my money, and were going to charge me to restock the modem. Several laps around the stupid loop there led me back to the general manager, who assured me he’d take care of it, and, indeed, he did – Novel made my accounts whole, though they didn’t compensate me for the 6 hours of phone time, the cost to return the modem, or the cost to my mental health!

Now this isn’t a rant about offshoring – far to the contrary. Even as I was obviously frustrated, the folks I talked with clearly were sincere about trying to help, and never lost their cool. But they were also clearly new to their roles, and neither trained nor experienced with the products they were implementing, nor did they have a system that enabled them to see what was going on with my issues.

No one ever said “I see you just talked to Bob, and we’ll pick up where he left off.” Every call started with the first steps: Is the modem plugged in? What do the lights look like? Turn the modem off and back on again … This indicated to me that they had no continuity of service records, or didn’t know how to use them successfully. This problem could happen no matter whether the service operation is inside the company, or if it’s outsourced inside or outside the US.

Why am I writing about this? It’s a bit of a cautionary tale – good recommendations have to be current as well! My friends who recommended it: a) had implemented before the service and support were outsourced, b) almost never called tech support, and c) had started with this service, and weren’t trying to convert. So I was trying a scenario that was unproven, and perhaps had just been broken by their outsourcing moves.

I wish Novel all the best in resolving their issues – if they don’t, it’ll kill the company, and deservedly so!

Thoughts? Have you run into situations like this? I’d be curious to hear about it (without company names, please!)

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by Bill Watkins

We think bank charge off data are important, because banks can’t really participate in a vigorous recovery when charge offs are high:  Their capital is under pressure.  They are under regulatory pressure.  They are spending huge amounts of time managing existing assets instead of lending.

When banks don’t lend, small business doesn’t grow.  This is a problem because small business creates most new jobs.  Small business has other problems growing, but that’s another topic.

So, what has happened to the charge offs since 2008 Q4?

They kept rising, and almost reached $60 billion in late 2009.  Since then they have been falling, slowly, very slowly.  Finally, last quarter (2011 Q1) they finally fell almost $10 billion, falling below $40 billion for the first time since 2008’s fourth quarter.  This is good news, but they need to fall even more.  They need to be close to $10 billion before we can declare the financial sector fully recovered.

In the meantime, more and more banks are resuming lending.  Standards are tighter than pre-recession, and many borrower’s are still over leveraged, but movement is in the right direction.

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The “capacity” to grow is within each and every human.  We actually seek growth and indeed cannot help growth in many areas.  People grow older, wiser, and sometimes a bit more cynical thinking they’ve seen all the things they can in this world.  We simply grow.  Solid leaders who realize that organizations must also have the ability to grow, realize this and also realize that getting new ideas and fresh people is healthy for the organization.  These solid leaders realize that people want to grow and that remaining stationary for long will result in a truncated future for the organization.  Our world simply moves too fast to remain stagnant. 

The role of leaders is to lead people while managers manage “things.”  You can certainly have good leadership skills and be an excellent manager and be an excellent leader with a solid tool box of management skills.  Its when these two functions of leaders become imbalanced that you’ll have problems.  From a managerial perspective, stability is desirable so that we can predict future needs.  When you have wildly fluctuating demand for a product its difficult to ascertain what the requirements for raw materials will be.  If you “predict” wrong, you’ll either have too much money wrapped up in unused raw materials or not have enough raw materials and a competitor can step in and take over the gap.  Conversely, leaders are mandated with change.  We need change in order for the organization to move forward, explore new markets, experiment with new products and services, and provide higher quality performance for their customers.  So if a manager is striving for stability and a leader strives for change, how do we reconcile this mismatch?

The answer is people.  We must engage our people in the process.  One of the key elements in Deming’s Fourteen points (2000) was “The Transformation is Everyone’s Job.”  It’s not the responsibility of leadership to mandate change, it is the responsibility of leadership to LEAD change.  This means empowerment and engagement of the mental, emotional, and committed resources that our people in our organizations have. They are the capacity builders.  Give them the power to help you build the capacity and you’ll simply be amazed at the new capacity and fulfillment of the “capacity building” strategy.

Deming, W. (2000). Out of the Crisis. MIT Press, Cambridge, MA

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In some way, we are all leaders to someone.  The trick is to identify those leadership qualities we want to develop within ourselves, and eliminate the habits that are unproductive and demotivating so we can become the best version of ourselves and inspirations to others.  The most important first step in truly becoming an Artful Leader is to understand our own leadership style.  Each leadership style has its strengths and weaknesses, not only for ourselves, but also for those we lead.

Think back to the first leader, boss, or mentor you remember who inspired you.  What was the one thing you remember most about that individual’s style that motivated you to do the best you could?  Now think about your own leadership style.  Are there elements of your style that you can tie back to what you learned from that first leader?  The first leader I actively recall admiring had many wonderful qualities.  However, the one that pops immediately to mind was how easy she was to talk to.  She didn’t offer unsolicited advice.  She simply listened and would ask questions to help provoke me to my next thought or action.  The lesson I learned from her was that sometimes a good leader needs only to be the shepherd who gently nudges the flock in the right direction.

We are all works in progress.  Every interaction and relationship provides us with opportunities to learn new lessons.  Whether we use those experiences to grow or not is entirely up to us—sometimes we grow without even realizing it.

C. Beatrice

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by Bill Watkins

Forecasting is a challenge in rapidly changing times, and these are very rapidly changing times. At the beginning of the year, it would have been unbelievable if someone had said that Mubarak would be deposed, we would be in a war in Libya, and there would be general uprisings throughout the Middle East, and all in the first quarter. But all this and more happened. Certainly Japan’s earthquake, tsunami, and near nuclear meltdown were unpredictable.

Because of the uncertainty, it seems particularly important that we provide our assumptions to forecast users. First though, you should know that we have included the impacts of the of Japan’s tragedy as best we can. We assume that their exports to the United States will fall only minimally, while their imports will increase. We also take the aggressive assumption that they will complete rebuilding in only eight years, increasing world gross product and demand for United States exports.

There are other issues with Japan that we cannot model. Because of our integrated world economy and just-in-time inventory management, Japan’s manufacturers may be suppliers of critical components of products that are ultimately produced almost anywhere. To the extent that rolling blackouts and other infrastructure issues interrupt Japan’s manufacturers’ ability to promptly deliver critical goods, worldwide production could be hurt. It is impossible to know exactly how important this is, but we believe it will be small relative to world output.

High oil prices pose the most real and immediate risk to United States economic growth, but forecasting political changes in the Middle East is impossible. But of course, oil prices have huge economic impacts. While it seems to be general consensus that the Great Recession’s proximate cause was financial in nature, Jim Hamilton at UC San Diego provides very compelling evidence that high oil prices were a significant contributor.

For our baseline forecast, we assume that world oil prices do not exceed $120 barrel. We also provide an alternative scenario where prices reach $150 per barrel. This scenario generates another recession. The recession appears to be moderate, but we must remember that this is a change in output from a low base. Our unemployment is still very high. The higher oil prices go, and the faster they rise, the worse the recession. Certainly, the forecasts of potential oil prices go much higher than $150 a barrel. Our scenario is thus only suggestive of the economic impacts of general Middle East turmoil.

United States and world financial institutions are still not recovered from the crisis of September 2008, which implies a susceptibility to new financial shocks. For our forecast, we assume no new significant financial shocks. However, the possibility of new financial shocks cannot be ignored. The possibility of some sort of Eurozone crisis arising from the sovereign debt issues of several European countries is relatively high. It is our opinion that the Eurozone is too large to be a single currency. Ultimately, it must break up. How the breakup is accomplished will have major economic consequences.

Problems in United States’ municipal markets could also provide a problem for our already-weakened financial sector. States and local governments are facing very serious financial challenges, and it appears that citizens are unwilling to increase taxes sufficiently to solve those challenges. Unfortunately as we have seen in Wisconsin and elsewhere, the other option, shrinking government, is a very challenging business.

These sorts of risks have been with us for some time, and we have previously provided scenarios of a new financial crisis. Suffice it to say, that a new financial crisis would cause another serious recession.

After having assumed away, justifiably we think, the most frightening options, we still come up with a soft forecast. It is better than we’ve seen over the past few years, but this recovery is far less robust than most, held back as it is by still-weak financial institutions and real estate markets.

We expect United States economic growth to be positive, but annualized quarterly economic growth rates (GDP) will likely remain well below three percent throughout most of 2011.

We expect job growth will be even weaker, with barely-above-one-percent annualized growth rates. This rate is insufficient to significantly reduce unemployment rates, if labor force participation rates remain unchanged.

However, we’ve seen steadily declining labor force participation, to the lowest level in decades, for several quarters. This is a result of the discouraged worker problem. Millions of Americans have been out of work for extended periods. Eventually, many of these workers just give up and leave the workforce. Those who do not give up face increasingly difficult challenges in finding a job, as human capital deteriorates of becomes obsolete.

Productivity growth continues to impress. In recession or not, United States productivity has shown remarkable strength. The trend has been strong enough to outweigh the cyclical impact for each of the past two recessions.

Productivity growth has been cited by some as a reason for our high unemployment. This cannot be true. The history of the world since the industrial revolution has been one of increasing productivity and increasing jobs. Rather, weakness in jobs is a result of a weak small business sector (see the Economic Activity essay) and structural changes. Some industries face real challenges filling open positions, while millions are unemployed or underemployed. Medical care has continually seen job gains, while millions of construction workers have been displaced. It takes time to turn a construction worker into a healthcare worker.

All this is to say that it looks like the recovery will continue to be soft and fragile. We expect to see job growth, welcome job growth after years of decline, but many challenges remain.

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Last year about this time there was all sorts of talk about green shoots and economic recovery.  We were vocal in cautioning that the shoots were ephemeral and would evaporate with the end of incentive programs and census hiring.  We were right, as job growth turned negative in the 2010’s second quarter.

Now, there is renewed enthusiasm about economic recovery, partially fueled by last month’s jobs data and the over 3 percent 2010 Q4 GDP annual growth rate.  We believe that this years enthusiasm is on far firmer ground that last year’s.  Our economy is much stronger than it was a year ago.

Still, our economy is not as strong as we’d like.  Job growth is soft for a recovery, and unemployment remains very high.  Businesses and consumers are still over-leveraged.  Our financial system is not fully recovered.  Residential and commercial real estate markets continue to be weak, with high foreclosures, high delinquencies, slow sales, soft prices, low lease rates, and high vacancies.

An economy as weak as ours will not cope well with any new shocks, and potential shocks are popping up everywhere.  The potential for a rapid oil price increase is just the most obvious.  Sovereign debt challenges in Europe, Japan, several U.S. states, and even at the Federal level also present obvious risks.

While we still believe that an agonizingly slow recovery is the most likely outcome, the possibility of another downturn is distressingly likely.

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In the context of Chinese president Hu Jintao’s recent visit to the US, there have been nervous reports about Chinese companies taking over US businesses. And indeed, there have been some well-publicized cases – Chinese consumer electronics producer Haier’s early Greenfield investment in 2002, or the more recent Beijing Automotive Industry Company’s (BAIC) acquisition of General Motors’ Saab division, Beijing West Industries’ purchase of Michigan-based automotive supplier Delphi Corporation, or numerous smaller investments in US companies by China Investment Corporation (CIC).

Obviously there’s enough activity to make The Economist cry out that China’s buying the world and to ask the question what it is like to be ‘eaten by the dragon’ (The Economist, November 13th, 2010). Relax, knowledge of foreign languages is always a good thing, but it isn’t time yet that we all learn Mandarin. Why? Let’s take a closer look at the data: Out of the total book value of foreign direct investors’ equity in US companies in 2009 (it’ll take a while until we have 2010 data) of US$ 2,319.6 billion, China’s share is still insignificant. The largest investing countries are still based in the Western Hemisphere – the United Kingdom (19.6%), the Netherlands (10.3%), Canada (9.7%), Germany (9.4%), Switzerland (8.2%), and France (8.2%).

The only exception, of course, is Japan which holds about 11.4 % of the total foreign direct investment in the United States. In a July 2010 report by the Bureau of Economic Analysis (BEA), China isn’t even mentioned – and that’s for a good reason: China’s total assets in the US are about a 300 times smaller than those of Japan. Even small countries’ foreign direct investments in the United States such as Austria or Panama are larger than China’s. Of course, there’s no question that Chinese investment in the US is growing fast and may soon outgrow the “Other” category on the BEA pie charts, but it’s still to early to panic. And even if China held a lot more assets in the United States, it probably would not mean the end of the world just like Japanese investment in the United States hasn’t.

The world is flat, and an increased involvement of China in US companies may be a source of (desperately needed) capital, (desparately needed) new energy and motivation, learning, and global stability.

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