A Hare Away From Success.

Remember the tale of the tortoise and the hare? The story of today’s economy seems reminiscent. And since the story of the tortoise and the hare offers a moral, it’s worth looking at our economic tragedy through that lens to ensure our leaders learn from our losses rather than finance a sequel with the same failed theme.

What am I talking about? Well as a kid growing up on the border, my father used to tell me the story of the tortoise and the hare in Spanish. The timeless tale translates across languages and cultures, just like our current economic saga. I have often applied the moral of the story in my own life, focusing on long-term goals and working methodically towards them at great short-term sacrifice. As an entrepreneur and small-business owner, I have found that playing the role of the tortoise is the only way to sustain success, accomplish goals, and grow value. And one of the key problems I see underlying our financial tumult in America and across other developed nations is that our cultures seem to have forgotten the failure of the hare.

The hare was fast and focused on its ability to exceed expectations and the results of others over the short term. Moving in quick bursts, the hare could post big gains and then rest on his laurels, not concerning himself about the big picture or the long haul. Today, this is the mindset of publicly-traded Corporate America and the US Congress. As we all know, elected officials begin worrying about the next election the moment they get in office. Usually, their constituents will evaluate them on the pork they deliver in the next year or two rather than on the long-term issues and challenges they may be working to solve up in Washington. Likewise, working with publicly traded corporations over the years, I have seen an increasing trend towards management working towards monthly, quarterly and annual goals without much regard for long-term sustainability. Often the long-term benefits to their company, customers, shareholders and brands are sacrificed to hit certain short-term targets. Why? Well CEOs and executives typically enjoy large bonuses tied to meeting goals set forth on a quarterly or annual basis. Managers and executives see their evaluations, pay increases and promotions tied to meeting such goals. Since most people don’t stay with a company more than a handful of years, they prioritize meeting these short-term objectives over the longevity of the company, much less lofty goals tied to reversing climate change and achieving energy independence. Finally, corporations are obsessed with short-term measurement of Return on Investment, but often there are things you can’t measure in the short-term but rather only over long periods of time, and the returns come not only in immediate increases in sales or profits but rather in building brand value, enduring customer loyalty, and financial – as well as environmental – viability.

The financial and automotive industries are both examples of hares in the race towards success. They have focused on short-term accomplishments, moved fast to realize fleeting gains, and stumbled in the long run. They were overconfident and inconsistent. The systems their leaders and management work in created moral hazards that encouraged this behavior. And now they – and we – are paying the price for this shared myopia.

Before we commit to more bailouts, we need to ensure that if we help these companies we also encourage them – no force them – to be more like tortoises and less like hares. It’s the only way to ensure that we as a country stay on course towards victory in terms of financial stability, manufacturing competitiveness, energy independence and environmentally-friendly fuels and vehicles. These are goals achieved not overnight, but over time, just as the centuries-long race for global leadership is one designed not for the hare, but for the tortoise. In today’s atmosphere of “faster is better,” sound-bite politics, instant messaging and multitasking, being the hare may come more naturally and seem more sexy. But when we think of the choices we face, we should harken back to our bedtime story days and draw on lessons learned then and now. Which one should we be as a nation? The tortoise wins every time.



Bailing is Failing.

Uncle Sam’s phone is ringing off the hook these days with friends and relatives desperate to be bailed out.

It used to be the only time I heard about someone being bailed out it was a crazy cousin that refused to grow up, getting in trouble with the law again.

Today, those seeking bailouts have gone blue chip: AIG, banks galore, and now GM with Ford soon to follow. As billions flow into these megacorporations with bloated budgets, overly compensated executives, bad assets, nearsighted investments, scarred pasts and uncertain futures, the politicians and moguls wring their hands, exhorting there’s no other choice. They say if these giants are allowed to face the consequences of their actions, millions more will pay the price. Sounds like financial fearmongering to me.

It seems like we’re paying the price anyway. Except by bailing out one failed corporation after another, we are also extending a failed policy of zero accountability in our nation. When a distant cousin needs to get bailed out, he will usually have to stand for trial. He may have to do some hard time or community service. And he’ll definitely have to hang his head lower than usual at the next family reunion. But what about these corporate behemoths roving the halls of Washington with their hands outstretched before heading back to their limos and private jets? What will their comeuppance be and when will it be served? And if we keep bailing them out, what message are we sending to all businesses and entrepreneurs? That it’s okay to not prepare for the future and suddenly find yourself with endless square miles of parking lots littered with new cars no one wants to buy or drive? That it’s all right to create complicated financial instruments nobody understands and get rich gambling on them only to walk away scot-free when your luck sours? I’m sorry, but bailing these folks out is as risky as putting good money down on springing that wily cousin out in hopes he’ll suddenly have an epiphany, reform and become a Boy Scout.

Risk is a concept everyone should focus on as we hear the growing chorus of desperation. As an entrepreneur, I’ve grown a thriving multimillion-dollar company over 13 years. But the banks have always seen me and my company as too risky to lend money too. Maybe it was the late payments on my Harvard student loans, the lack of sufficient collateral, or the unpredictability of my industry. Faced with a lack of options, I did what all successful entrepreneurs figure out how to do: survived without the safety net of endless lines of credit, creating a business lean and profitable enough to weather challenging times and finance its own growth. Novel concepts for highly compensated Fortune 500 executives with their sky-high bonuses tagged to short-term performance goals and their golden parachutes rigged for when the plane crashes over the long haul. Frankly, as a taxpayer it’s my turn to tell the banks and giants, they’re simply not a good risk.

In real life, a bailout is a short-term solution that hinges on accountability and risk. If the suspect is too risky, he’s held without bail. In the end, the alleged criminal must face the judge and jury. The bail money is returned to the bondsman minus a fee. And the suspect is either found guilty and convicted or acquitted. But the problem with the scenario our country is facing is we’re only talking about bailouts, not long-term solutions, and accountability has taken a recess. What if AIG is guilty of doing bad business? What if GM deserves to go broke because it didn’t evolve? What if banks shouldn’t lend money they don’t have? Accountability has long been lacking in our nation, from our politics to our economy. This November America sent a message that brought accountability to the failed policies of the Republican administration. Now it’s time to send a strong message to Corporate America too. Face the consequences of your actions. Join the rest of us – entrepreneurs, homeowners with piling mortgage and credit cards bills, plummeting credit scores and faster falling credit limits – in feeling the pressure of having to figure a way out of your mess back to productivity, competitiveness and profitability.

It’s time to stop bailing, roll up our sleeves, and do what we do best when we’re hungry, lean and have our backs against the wall: innovate, achieve, progress. Do or die. Create a new tomorrow free from the burdens of dinosaurs and charlatans but rather driven by visionary, forward-thinking businesspeople willing to not only take risks but also be accountable for both the rewards and setbacks that come with the territory.

I say we start using a corporate Caller ID mechanism for this bailout hysteria and filter these leeches out just like we do those crazy cousins. Need a bailout again? Sorry, not home, I’m out working for a living because there’s no one waiting to catch me when I fall.