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| Volume 8, Issue 13 |
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In This Issue:
 Greenspan concedes error on regulation
How to avoid [your company] becoming a failure statistic
Consumers feel the next crisis: It’s credit cards
 What the financial crisis means for [financing your business]
The [bonus] that stops giving
How I did it: Tony Hsieh, CEO, Zappos.com
 Five myths about the election and the stock market
Financial crisis: Communicating with employees
 Managing the star performer no one wants to work with
 20 'silver bullet' interview questions that ID great job applicants
 How CEOs can sweeten their marketing
 The seven things that surprise new CEOs
 Recession hits the country club
 Is your office making you sick?
Europe to U.S.: You messed up the rescue, too
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Greenspan concedes error on regulation
For years, a Congressional hearing with Alan Greenspan was a marquee event.
Lawmakers doted on him as an economic sage. Markets jumped up or down depending on what he said. Politicians in both parties wanted the maestro on their side. But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting
power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending. “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of
shocked disbelief,” he told the House Committee on Oversight and Government Reform. Now 82, Mr. Greenspan came in for one of the harshest grillings of his life...
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How to avoid [your company] becoming a failure statistic
Times are tough. And while there is no definitive checklist governing what entrepreneurs should guard against, there do seem to be some commonalities.
Several are well known, like the risks of being undercapitalized, having poor financial controls, hiring badly and refusing to delegate. But other problems may have escaped your attention. POGO WAS RIGHT “Businesses perish in untimely ways, many of which are largely out of an entrepreneur’s control: There’s too much competition. The
public is no longer interested in your product or service,” writes Geoff Williams in Entrepreneur. Or you could be a victim of bad luck, he says. “But sometimes, the painful reality is that...
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Consumers feel the next crisis: It’s credit cards
First came the mortgage crisis. Now comes the credit card crisis.
After years of flooding Americans with credit card offers and sky-high credit lines, lenders are sharply curtailing both, just as an eroding economy squeezes consumers. The pullback is affecting even creditworthy consumers and threatens an already beleaguered banking industry with another wave of heavy losses after an era in which
it reaped near record gains from the business of easy credit that it helped create. Lenders wrote off an estimated $21 billion in bad credit card loans in the first half of 2008 as more borrowers defaulted on their payments. With companies laying off tens of thousands of workers, the industry stands to lose...
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What the financial crisis means for [financing your business]
The rules of small-business banking have changed, and that's bad news for the economy. But there are ways to cope, and there may even be a silver lining.
Now that we have been through Armageddon on Wall Street, the question is: What effect is all this turmoil going to have on the rest of us -- specifically, those of us who depend on bank loans to finance our companies' growth? My crystal ball is broken at the moment, but I do have some experience in these matters. It seems pretty clear that
we are heading back to the time when banks preferred to lend money to those who didn't need it and it took a good deal of ingenuity to get any loan at all. Listen, small-business banking goes in cycles. Even before the latest meltdown, it was clear that we had moved from one cycle to another. Already, I had begun to feel nostalgic
for the good old days. Not so long ago, you could still get what bankers affectionately referred to -- in private -- as an "air-ball loan." That was a loan based not so much on your assets but almost entirely on your relationship and history with the bank. Yes, the bank would glance at your company's earnings and cash flow,
just to be sure you could make your payments and weren't about to go bankrupt, but the relationship mattered most. And the terms were terrific. If you were financing your receivables through a bank, the monitoring was extremely light. Often, it was just a matter of...
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The [bonus] that stops giving
Dealing with an empty bonus pool.
By all accounts, TGaS Advisors is having a banner year. The East Norriton, Pennsylvania, company, which consults for the pharmaceutical industry, is on track to reach more than $5 million in sales in 2008, up from $3 million in 2007. Five new employees have joined the company, bringing its head count to 23, and it made the 2008 Inc. 500 with a three-year growth rate of 1,380 percent. But things don't look quite
so good to founder and managing partner Stephen Gerard, who expected revenue to reach $6 million. Now Gerard has the unhappy chore of telling his employees that they may not be getting their bonuses this year. "We're prospering, but not to the extent we thought," says Gerard. "It's hard: How do you go from one meeting where we're saying,
'Hey, we made the Inc. 500' to the next where we're telling them, 'We missed our goals, so you are all getting goose eggs'?" As the end of the year approaches, and the bad economic news shows no signs of slowing, many business owners find themselves in a similar predicament...
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How I did it: Tony Hsieh, CEO, Zappos.com
As told to Max Chafkin
Industry: Retail
2006 Inc. 500 Ranking: 79
Three-Year Growth: 948%
In 1998, 24-year-old Tony Hsieh sold his company, Internet advertiser LinkExchange, to Microsoft for $265 million. A year later, he met an even younger entrepreneur, Nick Swinmurn, who had an idea no investor would touch: selling shoes on the Internet. But Hsieh (pronounced shay) was intrigued and invested $500,000 in ShoeSite.com (they soon
changed the name to Zappos, after zapatos, which is Spanish for "shoes"). Within six months, he and Swinmurn were running the show together. Early this year, Swinmurn moved on, leaving Hsieh at the helm of a company that had sales of $252 million in 2005...
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Five myths about the election and the stock market
With the Obama-McCain contest nearing the finish line, BusinessWeek debunks some Wall Street notions about bulls, bears, elephants, and donkeys.
For the first time in 76 years, a financial crisis is occurring at the same time as a Presidential election. Based on recent polls, the coincidence seems to have boosted the chances that Illinois Senator Barack Obama, the Democratic nominee, will defeat Republican Arizona Senator John McCain on Nov. 4. The financial crisis has affected
the Presidential race, but how is the election affecting the financial markets? Pundits offer endless theories on that question, and their answers are often suspiciously similar to their political views. Thus, right-leaning market experts insist Obama's tax proposals would be disastrous for investors. More liberal Obama supporters insist
the market will celebrate if he is given the job of leading the world out of the financial crisis. Some of these claims are impossible to prove or disprove. But there are some myths about the election and the stock market that need clearing up...
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Financial crisis: Communicating with employees
Send e-mails, have meetings, walk the halls: Keeping your workforce informed is essential to morale and productivity.
When New York's Twin Towers came down on September 11, I was hosting a show for a now-defunct national television network based in San Francisco. What happened over the following days and weeks convinced me to devote my career to the study of leadership communications. Actually, it's what didn't happen that struck me. Senior leaders at
the network didn't communicate internally regarding the crisis and what it would mean for the company and our jobs: no e-mails, no announcements, no staff meetings, nothing. Rumors ran rampant, and to this day I know of some former colleagues who lost so much respect for their supervisors that they would never think of working for them
again. So while I was disappointed, I wasn't surprised to see a new national survey of 514 workers showing that most are not receiving information from senior leadership regarding the impact of the financial crisis...
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Managing the star performer no one wants to work with
Behold the star performers! Able to surpass goals without breaking a sweat, quick to grasp new organizational missions, brighter than 90 percent of their colleagues, these special employees are technically superior to, well, even their superiors.
But like most superheroes, star performers may have a dark side. What if the best, fastest employee has a few quirks that set the rest of the team on edge? Is it worth poisoning a culture to retain an employee whose behavior isn't consistent with the organization's values? And if a star performer is truly outperforming his or her
peers, how can the talent manager justify redirecting his or her behavior? Tiziana Casciaro and Miguel Sousa Lobo - authors of the Harvard Business School study "Competent Jerks, Lovable Fools, and the Formation of Social Networks" - said people who like each other typically share similar values and ways of thinking, making it
difficult to generate fresh ideas. Further, most individuals avoid skilled but unpleasant colleagues, leaving competent jerks' expertise untapped. The authors contend most employees would rather work with someone less competent because that person may be more pleasant, more open to other's ideas and more willing to share
their own. They may even be perceived as more trustworthy. Talent leaders might consider the following tips to help solve star-performer issues:...
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How CEOs can sweeten their marketing
How CEOs can Sweeten their Marketing.
As I have said many times…it’s about customers ! Today there is more information about customers than ever before, and more being generated every minute. And, there are many ways to motivate them all the way from simply putting your logo or marketing message on m&m’s and packaging them in a variety of creative ways, to more effective loyalty
programs, to really analyzing all the data you have and is now available on your customers. Twenty-five years ago a firms assets were in machinery and equipment, estimated to be about 85% with only 15% in intangible forms of knowledgeware. However, today according to the Brookings Institute that mix of tangible to intangible assets
is exactly reversed. The marriage of the internet with mobile telephony now allows for a powerful one-to-one channel direct to your customers. Advances in information technology gives you the ability to use data on your customers transactions to
motivate them in ways never before possible. A new technique with global implications is called “crowd sourcing”...
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The seven things that surprise new CEOs
Editor's Note: By significantly expanding our understanding of the dynamics of competition, Michael E. Porter's Harvard Business Review article "How Competitive Forces Shape Strategy" launched a business management revolution among academics and practitioners when it was published in 1979.
In the just released On Competition, Porter collects his most influential articles from HBR, and adds new work on health care, philanthropy, social responsibility, and leadership. This excerpt, coauthored with Harvard Business School professors Jay W. Lorsch and Nitin Nohria, looks at common surprises faced by new CEOs...
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Recession hits the country club
As golf courses around the country succumb to debt, one Florida neighborhood is battling to keep its club alive.
Three weeks ago, several hundred residents of Bonita Springs, Fla., received letters containing a word that no homeowner wants to see: foreclosure. But the property in danger didn't belong to them. Florida developer Ronto Group informed the residents that Palmira Golf Club - the gated community's crown jewel - was shuttering due to the
company's inability to pay its lenders. "We were blindsided," said Ron Saul, a Palmira member and local realtor. Residents watched as the club's employees walk out with boxes. Gone were the club's services, membership fees worth tens of thousands of dollars, and, in the eyes of some residents, the value of their multi-million dollar
homes. "You have to think about how you might feel if you just watched $95,000 (the cost of a golf membership at Palmira) go into a black financial hole," wrote one resident, who asked to remain anonymous, in an e-mail to Fortune. "This may be the
land of titanium drivers and $20,000 barbecue grills, but there's a limit." Palmira's downfall came as...
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Is your office making you sick?
If you're a member of the workforce, chances are you're doing everything possible to hold on to your job. That includes coming in early, working late, logging in on weekends and neglecting the gym.
While this may make your boss happy, your body is most likely crying foul. Despite a noticeable shift toward promoting healthy workplaces--many offices provide employees with a gourmet cafeteria and an array of wellness services including health risk assessments, telephone and Web-based consultations--your job can still make you sick,
now moreso than ever. From uncomfortable workspaces to poor air quality to depression-inducing stress, there are plenty of opportunities to come home feeling worse than when you left in the morning...
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Europe to U.S.: You messed up the rescue, too
The plans for a massive bank bailout by European governments differ strikingly from the U.S. approach.
First you mess up the world's financial system. Then you blow the rescue of it. Now let's show you how to do it properly. That, in a nutshell, is the less-than-flattering message European governments are sending to the U.S. as they mount their own gigantic bank bailout. The plans, announced Monday after two weeks of dithering, involve
Britain, Germany, France and some others recapitalizing national banks that require help, and providing state guarantees and other measures to kick-start the stalled credit market. The details are strikingly different from the U.S. approach adopted by U.S. Treasury Secretary Hank Paulson and the Federal Reserve Board. And there's a big
reason for that: The Europeans think Paulson got it badly wrong, and have watched aghast as he failed to restore confidence in the world's financial system. In particular, they now think - and are openly saying - that it was a huge mistake to...
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