E-Global Solutions: 2012

Monday, July 16, 2012

Integrity,Wall Street and US Debt!

It is without a doubt the single most important loss ever posted by a company:Almost 6 billion dollars (and counting)... yet no real answers about how this really happened. JP Morgan's CEO Jamie Dimon claims he did not know or was not aware of the specific rules that were broken. He didn't know if they were simply not followed or non-existent. Regardless, he had no choice but to assume full responsibility. Mr. Dimon, considered one of the most brilliant and influential financial gurus of our time, has not faced any wrongdoing or suffered any consequences (other than appearing/testifying a couple of times to government committees). The DOJ however, seems to continue working on this case. Is this company becoming too big to monitor? too big to oversee? Too big to fail?

Pointing to the CEO of any "public entities debacles" is the right thing to do, particularly in these day an age when we all immediately turn to identify the guilty person(s) involved and everyone is "guilty until proven innocent"via internet, 24/7 news (breaking or not), Facebook, Twitter, etc. (all in less than 1 minute (although typing 140 characters or less, which in reality could take less than 30 seconds - including misspellings! is certainly routine these days). Having said that, are these losses only Mr. Dimo's fault? Is there any integrity left in the markets and investment circles? Are the employees and managers -whom really were disrupting all rules for their "own benefit(s)" acting selfishly?- or is it too naive, assuming Mr. Dimon's expertise in these matters, that these individuals were just really following their bosses orders? I couldn't agree more with the concept that if you want to gamble with your own monies...go right ahead... but gambling with other people's monies, particularly with Government insured deposits held by banks- is and should be penalized as criminal. Financial institutions are supposed to TRADE. That's why they called it trading! What JPM did was really...betting. Pure and simple. For it not to be penalized is just wrong!

To most people, the solution to a debt crisis is very simple: get rid of debt! The U.S. debt is up to $ 15.9 trillion which is 102% over GDP. When debt grows 21% per year and GDP grows by 1.1% is simply unsustainable. As we know, from history, excessive debt causes Governments to devaluate their currencies. A thousand years ago it meant adding lead to gold. Two hundred and fifty years ago, it meant printing more paper money. Today, it means one guy in a Federal office typing zeros on a laptop and 'selling' it to another Government. The reason why we don't have inflation (in spite of stimulus) is because money isn't moving. Banks don't want to lend money because they can get it FREE from the Government. This vicious circle must end: Less spending leads to less making, which leads to less spending...
Obviously, at some point, the velocity of money must go UP and with upcoming elections perhaps not until November. The only sector where there might be some opportunity until then is on precious metals markets. Silver in particular. The downside is $ 21; the upside is $ 47. Check it out today, see how the trend is going and ACT.

Joe Velarde

Managing Director
eglobal.joe.velarde@gmail.com

E-global Solutions. 2012.

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Friday, May 4, 2012

Leadership

We all get frustrated when things don’t go our way but -with the premise that the world is probably going to get more unpredictable than less- our ways of thinking (that have gotten us where we are) will be even more insufficient going forward. We need a “new way of thinking”. One that complements NOT replaces the way we were taught to reason.Starting well before we enter school, we were all taught what can best be described as prediction reasoning. It is a pattern of thinking and acting based on the assumption that the future is going to behave in a way similar to the present and the immediate past.

Leonard Schlesinger, in his wonderful book: JUST START, states that “treating an uncertain world as if it were predictable only gets you into trouble”. But if you can’t predict the future (and increasingly you can’t) ACTION and inspiring others trumps everything else.

Connect and collaborate, don't command and control

The days of leading companies via a one-way conversation are over. Power has shifted and our leadership must shift with it. The old system of "command and control" to exert power over people is fast being replaced by "connect and collaborate" -- to generate power through people. Leaders and managers cannot just impose their will.

Inspire, don't only motivate or coerce

There are three ways to get people to do things: coercion, motivation or inspiration. Leaders need to focus more on inspiration and less on coercion and motivation, since external rewards and carrots and sticks have limitations (particularly in hard times when there are fewer carrots to go round). Business today faces an inspiration deficit as demonstrated recently by "The How Report," an independent study that the company LRN conducted with the Boston Research Group and Research Data Technology.

The report found that CEOs are six times more likely than "average workers" to believe they work in a company where people are inspired. Employees said they were primarily coerced (84%) or motivated (12%) by carrots and sticks at work rather than inspired by values and a commitment to a mission and purpose (4%).
Yet the study reveals that companies that do inspire their people through values significantly outperform those who don't. These companies experience higher levels of innovation, employee loyalty, and customer satisfaction, and lower levels of misconduct, employee fear of speaking up, and retaliation.

Behavior as offense, not defense

The most successful sports coaches have shown that behavior is no longer a defensive tactic. Instead, behavior is now an offensive strategy that inspirational leaders need to deploy all over the pitch to create the conditions that result in the game being won, not just being played. There are simply too many shots on goal for them to block in our radically interconnected world. The best defense is to keep the ball.

Behavior has become a powerful source of excellence and competitive advantage. Bosses can no longer get away with telling subordinates, "Just get it done -- I don't care how." Today's successful leaders are those who flip the switch and replace task-based jobs (which are about what people must do) with values-based missions (how we get things done).

Recognize and reward for "how" and not "what"

Leaders and managers should go out of their way to recognize employees for how they do what they do, not for what they do or how much they get done. This could consist of starting their next meeting not by asking "What is on the agenda?" but "How are we going to connect and collaborate to make a difference?"

Or it could be emphasizing a principled decision that a colleague has made for their company in the interests of long-term sustainability at the expense of short-term expediency. Today's most successful leaders realize the need to relinquish traditional modes of control and set an example to their employees for how they lead, speak and manage performance.

Hire for character, not just skill

"Who" is an anagram of "how" and in a world where "how" matters more than ever, it takes "who" to do "how."
The Greek philosopher Heraclitus said, "Character is fate" and it is the responsibility of leaders to enlist employees who can contribute their full character and creativity to perform their best work and whose reason and purpose for going to work every day extends beyond their paycheck.

By inspiring their employees to pursue a higher, more meaningful purpose and achieve real sustainable value, leaders can achieve significance, not just long-term success.

China’s most famous philosopher, Confucius, said over 2,000 years ago: "The journey of a thousand miles begins with a single step." The leaders who commit their companies to go on a journey to find new ways to innovate in "how" will be those whose organizations thrive, not just survive.

Joe Velarde
Managing Director
eglobal.joe.velarde@gmail.com

E-global Solutions. 2011.

Monday, February 20, 2012

The effect of collections for Big and Small companies

Lately, we have been preoccupied with Greece, Italy, Spain and Portugal collections as the financial crisis continues to develop around European and Middle East countries.
While investigating the status of current collections and day sales outstanding (DSO) indicators of the big Pharmaceutical and Medical related industries for companies like Merck, J&J, Medtronic, Boston Scientific, St Jude and Abbot Labs(to name a few) we found that the problem might be a little heavier than expected. This must be causing lots of headaches among CEO's and CFO's of these entities trying to minimize their exposure. In the blog sphere there is very little information to ascertain whether DSO's are rampantly increasing or not. Most likely their impact is embedded within the overall numbers. These entities are so invested in above areas that we find it difficult to believe that the posted numbers are correctly showing reality. Merck states 63 DSO's, Abbot claims 65, Boston 61, Medtronic 84, J&J 62 and St. Jude 91 days. If Greece is not paying, Italy takes about 500+days to collect, Spain is in crisis and Portugal is being voiced as the next one to tumble (not to mention France) is it possible that someone is fuzzing with the numbers?
When you add international sanctions (in the case of Iran) where payment alternatives are hard to find the conclusion is even darker on actual DSO's. How do this companies manage to stay current in these territories?
Different alternatives for big pharmaceutical and medical companies to collect monies owed are simply not possible anymore. Who is financing and at what cost are the DSO's maintained? if larger corporations are struggling to collect, imagine what small companies must be going through. Addressing these issues immediately- as cash inflows aren't coming as they used to- is a MUST for all companies regardless of size. If you are interested in additional information, please let me know.

Joe Velarde
Managing Director
eglobal.joe.velarde@gmail.com

E-global Solutions. 2011.