Making Rain

Politeness, courtesy, niceness, manners. These are qualities I find increasingly missing in sales and most other aspects of business. People increasingly just don’t see the need to bother with this stuff.

I was reminded of this as I read Peggy Noonan’s fine, zeitgeist attuned article in the WSJ last Saturday titled, “We Pay Them To Be Rude To Us“. Ms. Noonan states,  “American culture is, one way or another, business culture and our business is service. Once we were a great industrial nation. Now we are a service economy.” She says the social implications of this are making us confused and crazy. “We wear away the superego and get straight to the id, and what we see isn’t pretty.” She describes a revolution in manners. “We tore [manners] down as too fancy, or sexist, or ageist, or revealing of class biases. Just when we needed more than ever the formality and agreed-upon rules of manners to act as guard rails, we threw them aside. And now no one knows how to act anymore.”

When I was a young actor (mostly unemployed) many years ago, before I became an accidental entrepreneur, I often supported myself as a catering waiter for high-society in New York. I worked mostly for a company called Glorious Food, the most elegant caterer then around.

Glorious Food parties were run by a very traditional and exacting maître d’ named Serge. Serge was an old school martinet who was about doing everything with precise properness. Training to become a waiter for Glorious Food involved a long seminar where you were trained how to set a traditional table, fold napkins, correctly serve, etc. Basically, I thought this was a bunch of hooey.

But one day I found myself sitting next to the daunting Serge and got to talking to him about why we did all this minutia so precisely. He quite cogently explained to me that, as silly or unnecessary as it might seem to an American (slight disdain with a French accent), there were very good and practically efficacious reasons for why the dessert spoon is placed over the desert fork, or why the white and red wine and water glasses were in a specific configuration. Basically it made things easier for the server and the servee. It was not arbitrary or phony. It was well thought out and imminently practical.

There is a reason for manners and courtesy and it is not just to be nice. The purpose of manners is to give us a practical structure to deal with each other. It is not bullshit. It is the glue of civilization and the utilitarian road map for dealing in everyday business. Manners and polite address are not superficial. They are essential. The importance of plain good manners is increasingly not taught or explained with any depth. Too bad. It is an important tool increasingly missing in the modern salesman’s repertoire.

Ralph Waldo Emerson said in his essay “Behavior” from The Conduct of Life (1860), “Manners are the happy ways of doing things; each once a stroke of genius or of love, now repeated and hardened into usage.” Thanks, Ralph.

I wanted to briefly follow up last week’s ruminations on the mind altering implications of new media technologies. As I noted at the end of last week’s post (July 20), my instinct is that if you try to do everything, you do nothing. I am frequently as much of a crazed multi-tasking fool as any other executive, as I rush through the hydra-headed challenges and crises of being the CEO of my own firm Corporate Rain International. Yet this flittery, fast-paced daily race often leaves me with the breathless sense that I am missing the bigger picture, of seeing the trees but not the forest.

Russell A. Poldrack, Director of the Imaging Research Center at the University of Texas, states:

“Our research shows that multitasking can have an insidious effect on learning, changing the brain systems that are involved so that even if one can learn while multitasking, the nature of that learning is altered to be less flexible.”

Or consider the work of Dr. Patricia Greenfield, a professor of developmental psychology at UCLA. She warns in a Science article last year that our growing use of the Internet, with all its advantages of speed and accessibility, seems to be weakening our “higher order cognitive processes [including] abstract vocabulary, mindfulness, reflection, inductive problem solving, critical thinking and imagination.”

Likewise, William Powers new book, Hamlet’s Blackberry, putatively argues convincingly that the distractions of manic connectivity can lead to a lack of productivity. Though I have not yet read his book, Mr. Powers apparently warns that an excess of digital activity reduces mental life to “a blizzard of snapshots” (WSJ review-David Harsanyi-June 30, 2010).

Nicholas Carr, in The Shallows (see last week’s post), begins his excellent book with a quote from HAL, the super computer in 2001: A Space Odyssey. HAL’s mind is being slowly erased at the end of the film and HAL plaintively says, “My mind is going. I can feel it.” Carr goes on to expound, “Over the last few years, I’ve had an uncomfortable sense that someone, or something, has been tinkering with my brain, remapping the neural circuitry, reprogramming the memory….Once I was a scuba diver in a sea of words. Now I zip along the surface like a guy on a Jet Ski.” Well put.  Thank you, Nicholas.

I watched President Obama’s Oval Office speech on June 15 concerning the eternally gushing oil well in the Gulf of Mexico. And it reminded me of my long-held instinct about the importance of stillness to the salesman.

My feeling about this is a close corollary to my blogs on Silence (March 2, 2010) and Simplicity (November 24, 2009 & December 1, 2009). But the value of stillness is one more of drama than of essence.

President Obama’s speech, in addition to being vague and confusingly convoluted, was uncomfortably twitchy, physically frenetic. It was an uneasy and distracting thing for me to watch. How ’bout you?

In the Wall Street Journal of June 19, 2010 Peggy Noonan describes the speech thusly:

“Throughout the speech the president gestured showily, distractingly, with his hands. Politicians do this now because they’re told by media specialists that it helps them look natural. They don’t look natural, they look like Ann Bancroft gesticulating to Patty Duke in ‘The Miracle Worker.’”

When dealing with a catastrophe, people want assurance about the immediate crisis, not a hypothetically global analysis of the environment.  One way a good salesman–and Obama was a salesman for his administration last Wednesday evening–assures a client is by not over-doing it. A good salesman abjures excess fussiness and flummery. He gets to the point with cleanness and clarity. If you try to sell everything you sell nothing.

One technical example of this is Ms. Noonan’s apt description above of Obama’s excessive use of his hands. It seemed like every other word was emphasized with a hand chop. If every phrase is so emphasized, there is only a distracting mannerism with no meaning. It vitiates everything. More is not better.

Better is to say less and say the important things with a still simplicity, especially when trying to make your client feel secure. For the salesman it’s ideal to say what’s important and then be still.  Stillness does not mean a deenergized inertia. It means a focused, quiet, rooted presence. Effective stillness comes when you are secure. It is the ideal completion of the dramatic arc of the sale.

Mark Twain once said, “The right word may be effective, but no word was ever as effective as a rightly timed pause.” Thanks, Mark.

Here’s my general feeling about new hiring these days. No way, José. The choice for my 30 employee firm, Corporate Rain International, is to not hire now unless we absolutely have to.

Why? For me and most of my small business colleagues, clients, and friends, the present Great Recession is a stunning entrepreneurial ambush. It’s a flabbergasting rule changer and assumption challenger. However, the conventional wisdom is that we’ve now turned a corner and that the entrepreneurial class is and should be beginning to make new hires.  As I mentioned on May 18 (Chicken Little and Entrepreneurship), I remain less that sanguine about a robust recovery, with it’s concomitant implications for a hiring ramp-up.

The news is technically positive. The Wall Street Journal reported on June 4 that unemployment is down to 9.7%. Payroll giant ADP reports private sector jobs increased 55,000 last month and the number of claims for unemployment went down by 10,000. Ford and GM are rehiring some autoworkers. Payrolls climbed 431,000 and pending home sales rose 6%. White House Head Economist Christina Romer spoke on Friday of “continuing signs of labor market recovery.” But before popping the recovery champagne, I have some very cautionary thoughts.

No one likes bad news. But beneath the patina of good news mentioned above (and emphasized in government press releases) there are lots of corrosive caveats. The first of these is purely factual. How much of this employment news is really true?

John Crudele of the NY Post has been on an editorial jihad about the undependable and illusory nature of governmental employment figures for some time, pointing out that much of what is accepted as factual truth about employment, new company formation, and economic activity is really hypothetical, and often quite optimistic, guesswork. In his column of June 3, titled, “Census Workers Share Their Horror Stories”, he shares anecdotal evidence that, among other things, the Census office hiring figures may be inflated. He states, “A couple of weeks ago I found out that Census was repeatedly hiring and firing workers without any apparent reason. I questioned if this was being done to artificially boost the nation’s employment figures since the Labor Department considers it a new job created whenever someone is hired to work as little as one hour in a month. Was Census churning jobs to make the economy look healthier than it really is?” Good question, John.

But even assuming governmental figures for employment were not disingenuous, 411,000 of the recent new payroll jobs were indeed with the Census Bureau, creating very short-term governmental employment. After predictions of a 200,000 gain in private sector jobs last month, the actual figure was 41,000. That’s not good. Despite lots of governmental cheer leading and happy talk, the private sector is just not coming back.

Pardon my pessimism, friends, but I feel more strongly than ever that small business is the canary in the coal mine that presages nothing good for the US economy. President Obama seems genuinely bemused as to why we small businessmen refuse to start hiring. Hasn’t he stimulated the economy out the wazoo? Yes. Probably excessively so. But little of this largesse has been directed toward the entrepreneur.

No less than Bill Gross of PIMCO, being interviewed on Bloomberg Radio (8:45 AM-June 4), stated job growth in the private sector is moribund, and that without temporary governmental stimulus unemployment would be over 11%. Even überliberal Robert Reich wrote a cautionary op-ed in The New York Times on Wednesday, June 2 titled “Entrepreneur or Unemployed?” which challenges optimistic assumptions about supposed increased entrepreneurial activity. Reich asks, “So why all this entrepreneurship last year?…In a word [it's actually] unemployment. Booted off company payrolls, millions of Americans had no choice but to try selling themselves. Another term for ‘entrepreneur’ is ‘self-employed.” Reich reports that layoffs have surged while hiring has almost disappeared. And these are permanent job losses, replaced by labor-saving technologies, outsourcing or contract labor. He predicts a 50% likelihood we will slip back into recession.

In addition to our current entrepreneurial conundrums, there are growing long-term disincentives that militate against small business hiring.

• The major disincentive is potential large costs of tax and bureaucracy associated with the new health care legislation. But, even worse, is the uncertainty this cryptic 2,000 page monstrosity has created. What the hell is really in it? I sure don’t know. I don’t think even the people in our government know. It’s bloody scary for a businessman.

• Second, how does private business hope to compete for employees with the increasingly bloated salaries of public sector workers? Westchester County Association executive Amy Allen, in the June issue of Westchester magazine, points out that the average public sector salary in my region of New York is about 6% above the average salary in the private sector. And this is before figuring in large pensions and health care for life. According to the Cato Institute, the average federal civilian salary with benefits is $119,982 compared with $59,909 for the average private sector worker. Wow.

• Third, states like New York are near bankruptcy. To solve their financial conundrum I predict these states will fall on small business with more taxes and more red tape–like lions on a lamb. Small business is vulnerable and weak compared to big business and public sector unions. I sure hope and pray I’m wrong on this one.

My cri du coeur is that the small business issue be addressed more insistently, more forcefully by the press and media, as well as government. Pay attention to us! All is not well out here in little business land. It would be utter imprudent madness for most of us to hire and rehire employees in the present environment.

Hire more workers?  Hell no.

Chicken Little famously said, “The sky is falling!  The sky is falling!” Well, for small business it may be true.

Small business is much more troubled than is being acknowledged. Small business is also not being sufficiently covered in the national press. It is the canary in the coal mine, despite 3 1/2 quarters of continuing real growth in G.D.P.

I can tell you categorically, brothers and sisters, that small business is not recovering like the macro-economy supposedly is. While my own firm is chugging along OK, the bulk of the clientele my small company serves is other small companies, and the fear and uncertainty I encounter every day in my clients and colleague entrepreneurs is palpable. No one wants to take risk. No one wants to substantially invest in the future.

You may say I am one small business guy at a little pip-squeak company spreading counter intuitive anecdote and calumny. One of my friends calls me the “the Nouriel Roubini of small business” because of my bleak outlook. I prefer to think of myself as a cold-eyed realist. I do not enjoy writing jeremiads or screeds. Nevertheless, I fear small business is entering a permarecession. Here is why.

1.  No one wants to lend money to risk-taking entrepreneurs.  Despite the so-called rebound of the economy, entrepreneurial accommodation from banks and venture capital ain’t happenin.’

2.  Health care mandates will keep small business small and profit diminished. I don’t know a single entrepreneur–not one–who evinces a full-voice enthusiasm to expand his workforce in this environment.

3.  Federal taxes is acomin’ in. This is on two levels. The new statist fiats by Washington on health care will have to be paid for. But other increases in taxation will fall hard on small businesses and, also, individually on small businessmen. Why invest in your company? Investment is disincentivised. So entrepreneurial passion and creativity becomes muted.

4.  State taxes will also increase. A lot. This includes property, sales and income taxes, plus continuing fee augments. This is particularly true for the Greece of America called California. And, unfortunately, it will soon be true of my beloved New York (Greece, Jr.). Business, of course, will migrate to seven or eight tax friendly states that I don’t live in. (See April 13, 2010 blog, “Texas and Entrepreneurship“)

5.  Bureaucracy will increase exponentially. I can assure you small business is already groaning under the demands of governmental paperwork. I see no option but for this to augment vastly.

6.  Unemployment, now between 9.7-10%, must eventually be felt by business as loss in demand.

7.  The present “recovery” is a government financed phenomenon. Keynesian to the max. When it stops, as it inevitably must, either a double-dip recession will ensue or a Jimmy Carter, Japan-style stagflation will appear. Small business (or big business for that matter) will not be robust enough to buttress employment when government ceases goosing the public sector and union jobs. Apres moi, le deluge, mes amis. The piper will be paid.

8.  The Fed has shot its wad. It cannot save us again.

9.  Because both Republicans and Democrats lack the political will to honestly exercise fiscal sanity, a huge new tax called inflation will sooner or later monetize the debt. I guarantee it. We will not become the Weimar Republic or Zimbabwe, but it will not be good.

Oh, dear. I seem to have gone on a bit. Mercifully, I will stop. There must be an end to such mordancy. I don’t like being a small business Paul Revere of the dour. But this is my view from the street.

Our country will not recover if small business does not do better. On a positive note, I’m glad to see there was some press attention yesterday to the small business conundrum. Meredith Whitney wrote on page 21A of the Wall Street Journal (May 17, 2010) a piece titled “The Small Business Credit Crunch.”  She states, “Unless real focus is afforded to reengaging small business in this country, we will have a tragic and dangerous unemployment level for an extended period of time.” The same WSJ edition has an article on page R4 titled “Tightening the Credit Screws“, about the difficulty of small business finance. And Robert Schiller, economics professor at Yale, discussed a long-term double-dip recession scenario in the Sunday New York Times (May 16, 2010).  He states, “I use a definition of a double-dip recession that doesn’t emphasize the short term.  Instead I see it as beginning with a recession in which unemployment rises to a high level then falls at a disappointingly slow rate.“  In describing certain parallels of the present to The Great Depression, Schiller describes a “…feeling of uncertainty that discouraged entrepreneurship, lending and spending, and, most important, hiring.”

Hmm.  Sounds familiar.

There was a thoughtful essay by Peggy Noonan in the Wall Street Journal last weekend (November 14/15).  She feels that much current political rhetoric from the Obama White House is both condescending and convoluted.  She speaks to the point that the public wants direct talk.  She says, “Politicians in general no longer assume that we all operate on the same intellectual level, with roughly the same amount of common sense”. She quotes the actor Jack Webb on the old TV show Dragnet, playing Detective Joe Friday, “All we want are the facts, ma’am”. Ms. Noonan recognizes there is a strong universal longing in the current political body politic for simple talk and clear explanation.

But, for me, there is a larger lesson in Ms. Noonan’s useful essay.  And it is one that is applicable to both sales and entrepreneurship.

I am asked almost daily to strategize sales campaigns for my clients at Corporate Rain International. (My company specializes in initiating the sales process with high-level executives).  Often the biggest part of my consultative job is convincing clients to simplify their message.  More than half of the initial sales job is articulating a clear value that can solve a problem (i.e. increase profit, reduce cost, gain market share, etc.) for a potential buyer.  The complex brilliance of my clients is often of little interest to their audience.  Winnowing down a simple core value can often seem a process of almost insulting oversimplification to a client who has poured their heart and soul and essence into a product or service.  Yet it is only the final result that is the compelling factor in initiating a dialogue leading to a sale.

A buyer is interested in an end result, an outcome.  (“All we want are the facts, ma’am”).  If the result is compelling and clear, the client will then be enthused to explore the rococo details of how the sausage is made.  Otherwise — not.