The Rear View Mirror

The present is subject to the interpretation from the future. What you experience today may not be accurately viewed tomorrow.

I keep having a mental disconnect. A couple of years ago we viewed ourselves as a wealthy nation of opportunities. Today we hear over and over about the poverty of this nation and what we cannot afford. I suspect the truth is something that we as a nation will never acknowledge. It will be an observation in the future forced upon us by others.

I believe that the state of the nation’s wealth was known in the 1970s. President Jimmy Carter tried to tell us. Just like the Soviet Union, the Cold War expenditures had destroyed the viability of the nation. The psyche in America was a toss up, even in the early 1980s, who would triumph, the Soviet Union or America? Movies like “Red Dawn” reflected the beliefs of the times. There was even a made for television movie of America breaking up into several countries like the Soviet republics did later.

President Reagan came in with a message of everything can be great. But great for whom? A smaller economic pie meant everyone was not going to get a piece. The Reagan Administration moved to take the union’s piece of the pie. They curtailed the economic equalitarian power of unions. They helped foster a schism between the blue collar employees and the emerging knowledge worker class. Greater portions of the pie started accelerating to the wealthy. We see the result today. Effectively 1% of the people control 90% of the wealth of the nation. The unions are not an awesome political power on the national scene.

Successive Administrations and politicians used marketing to mass the national financial situation. The economic bubbles were euphoric distractions. As time went on, more and more people started to feel their piece of the pie was disappearing. The 2008 financial emergency dispelled the smoke. The clarity reveled a king, in the form of the nation, with no clothes.

Even now there is no accurate accounting of how much of the GDP was spent on the Cold War. Nor is there a realistic accounting on expenditures today while still in a Cold War posture.

America is headed for a breakup like the Soviet Union. The Sovereign Nation of Texas anyone?

Which Model?

Here is something they either ignored or glossed over in your MBA program.

American businesses use an “economic” business model. It attempts to deliver profits to investors on steroids. For the American financial community this is “the only” business model. It differs from the more traditional business model of “sustainability”.

The “economic” business model focuses purely on profits. It has no allegiance to the underlying business.  Layoffs, mergers, sales and even bankruptcy are tools in play to create a constant growth in profits . Once the profit stream dries up they walk away from the wreckage. An analogy of  the “economic” business model is throwing the baby out with the bath water, if there are greater profits in the reality TV rights of this one time action.

The “sustainability” business model is based on growing the underlying business. This model embraces employee retention, training, and welfare as a critical stakeholder in the business. As opposed to employees being merely a liability to avoid in the “economic model”. The businesses using the “sustainability” business model operate on the assumption their core business is the road to success. Their product or service quality and perception with customers is the key.

There are two approaches to the offerings under the “sustainability” business model. First is acquiring larger market share growing the product [as opposed to mergers and acquisitions]. The second is in securing a niche with a significantly better product offering. 

Often tech firms today start out with a “sustainability” business model [other types of companies also might start this way]. The current darling according to Forbes Magazine, that also uses this model, is the company “DropBox”. Wall Street is eagerly waiting the company to offer an IPO and move over to the “economic business” model. Businesses today ultimately metamorphose from a “sustainability” model to an economic model (purely about the money), like “FaceBook”. They become the prizes of Wall Street. Sometimes the change from a “sustainability” to an “economic” model can have a detrimental affect on profits. This has resulted in the recent Netflix plunge.

Which world would you rather live and work, a “sustainability” or “economic” environment?