Finding Innovation in the Flattened Organization - Chris Ernst - The Conversation - Harvard Business Review, By Chris Ernst

Finding Innovation in the Flattened Organization - Chris Ernst - The Conversation - Harvard Business Review

Finding Innovation in the Flattened Organization

10:08 AM Friday January 28, 2011
by Chris Ernst | Comments (2)

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I always thought that senior executives led most effectively by managing vertically. That is, they spent the majority of their time working upward with their Board of Directors and downward with direct reports. But then the world, in Thomas Friedman's words, "flattened out." Markets became more interconnected, global competition grew, demographics shifted and communication tools improved. Boundaries that impeded good results in the old world posed even bigger problems in a world complicated by differences in culture, geography, function, and varied stakeholder concerns. Like you, I witnessed these changes with eyes wide open, but also wondered if the tight grip on leading vertically — via the traditional tools of hierarchy, power, and authority — would still be the chosen path for senior executives.

Other researchers and I asked that very question, and many others, of senior executives in major global companies — and we got a big surprise. Of the five major boundaries we identified through our research — vertical, horizontal, demographic, geographic, and stakeholder — these executives, by an astounding 71 percent, ranked horizontal boundaries as their biggest challenge for leading in a flat world. And, even more surprising, they relegated the importance of managing vertical boundaries to dead last at a mere 7 percent. Turf battles, the intransigence of silos, navigating the organizational matrix, front and back office barriers — in other words, working across barriers of function and expertise rather than above or below them — were the issues keeping them up at night most. During a merger, in coordinating disparate functions, in integrating a foreign division, a conversation across the fence was more effective than a "do it or else" series of commands to subordinates. "Silo busting" had become crucial for success.

What was going on here? We asked another question that provides an important clue: "What were the top ten trends that will impact organizational strategy over the next five years?" By a whopping 92 percent, senior executives said it was the drive for innovation. The link here is clear — integrating expertise and experience across functions is a powerful route to innovation.

Leading across functions, however, is hard work. Consider the experience of a top executive of a government R&D agency: "My organization consists of 8 functional units and 7 laboratories, in which more and more of our problems require interdisciplinary solutions. Unfortunately, each lab has its own management culture, and this causes real challenges in partnering. I have a mandate to attack this challenge." For this executive, spanning boundaries can create breakthrough ideas. Successful innovation demands effective collaboration and intense interaction between the organization and its stakeholders, and across internal boundaries of level, function, demography, and location. Such interactions can be a catalyst for leveraging different knowledge bases, beyond what any one leader, group, or organization can achieve alone.

While 86 percent of the senior executives in our research said that it is extremely important that they collaborate across boundaries, only 7 percent said that they did it effectively. So, the next time you experience a corporate merger, an alliance with a foreign company, or any other situation in which you need to develop relationships across functions, units, and disciplines while counteracting conflicting loyalties, try these tips.

• Invite leaders from other units to your team meetings so they can discuss how each unit can help the other to solve pressing organizational problems.
• Set up some comfortable chairs and a whiteboard in the connector wing between two departments to encourage informal, collaborative conversations across functions.
• Following an organizational merger, get people from the same functions in the two organizations together. Have them craft a compelling mission about a new business opportunity that everyone can rally behind.
• When divisions are in conflict over an issue, help them articulate the source of their differences and then explore ways to creatively reconcile them for the overall good of the organization.
• Host "alternative future" conversations. Invite anyone in the organization to attend; provide no agenda other than to imagine the ideal, transformed organization 5 years from now. The more boundary spanning leaders it has, the stronger it will be.

Chris Ernst is a senior faculty member in the Center for Creative Leadership's Organizational Leadership Practice and co-author of the new book Boundary Spanning Leadership: Six Practices for Solving Problems, Driving Innovation, and Transforming Organizations

Umair Haque on the Tech Industry’s “thin Value Problem” - NYTimes.com

Umair Haque on the Tech Industry’s “thin Value Problem” - NYTimes.com

Umair Haque on the Tech Industry’s “thin Value Problem”

By CIARA BYRNE of VentureBeat

Published: January 27, 2011

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Umair Haque thinks that Silicon Valley in a competency trap. “The things that made it successful yesterday are exactly the things that prevent it from becoming successful tomorrow”.

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Haque just published a book called the “The New Capitalist Manifesto: Driving a Disruptively Better Business” in which he sets out his ideas on how capitalism, and companies, need to change in order to create true prosperity in the 21st century. I talked to him about the book and how it applies to the tech industry.

According to Haque, the tech industry has a “thin value problem”. He defines “thick value” as value which isauthentic, in that it is not created at someone else’s expense but creates value for others, meaningful in that it matters in human terms and sustainable by not being bubble-driven or built on the destruction of resources. Think Etsyrather than Gap or Innocent Drinks rather than Coca Cola.

Thin value transfers economic value from one party to another rather than genuinely creating it. If you sell a widget that costs $8 to a customer for $10, then you have made a profit of $2. But if the losses to others, like society or the environment, are worth more than $2, then you have failed to create any authentic value. Haque wants companies to have “a philosophy, a way to express how you will create value for people, as opposed to extract value from them” rather than just a strategy for grabbing market share.

Haque is convinced that companies can only succeed in the 21st century if they create thick value. “Yesterday’s institutions are not good enough. We have to innovate” he says. We don’t create new software on 1980s computers so why does every new startup still use business practices created for the industrial age? The book claims to be a sort of manual on how companies can innovate as institutions in order to create thick value. He also gives examples of companies already starting to do this including behemoths like Walmart, Nike, Apple and Google. Walmart, for example, has spent 5 years developing asustainability index which will be used by its 100,000 suppliers. The data will be stored in an open database available to other companies. Haque calls this a big institutional innovation.

The book argues that companies need to create value cycles where everything is re-used, rather traditional linear value chains which are destructive and wasteful. This can also lower business costs since by renewing resources you make them cheaper. Think of the way we replace our mobile phones every year or two using up limited supplies of rare metals in the process. Another aspect of the value cycle is only utilizing resources when customers request them, e.g. by making goods on demand like Threadless does as opposed to Gap selling off piles on unwanted clothes in the January sales.

Haque told me that tech companies are “doing very badly in terms of value cycles, doing very badly in terms of philosophies that create enduring value and shifting from goods to betters (products that make us lastingly better off). What is startling to me is that more tech companies don’t use technology for meaningful purposes.” According to him, many of Silicon’s Valley’s most talked-about companies like Groupon are “industrial age companies in disguise”. While it’s easy to see how a company like Groupon is successful in a recession, he contends that ultimately it gives people “the same old stuff cheaper” and that’s not good enough to be considered authentic value.

Another idea in the book is that of completing markets, rather than merely competing in existing ones, by serving needs which were never or barely met before. Haque gives the example of the Nintendo Wii which instantly made gaming attractive to girls and grandparents. In Haque’s opinion the venture capital industry focuses too much on competing in the same markets rather than completing markets. Often this doesn’t involve cutting edge technology, as was demonstrated by the Wii or Tata’s low cost car for emerging markets, the Nano.

I suggested to Haque that one reason that more tech companies don’t create thick value is that it’s much more difficult to measure than mere profit and loss. In the book, he says that a product is only really making a difference is it’s tangibly improving people’s physical, mental or social well-being or improving their lives economically in an enduring way. Haque thinks that part of the innovation required is to come up with ways of measuring whether you are making a difference. Social enterprise is already coming up with new metrics for this. India just announced a new green GDP measure while the UK is establishing a quality of life index.

I asked Haque what advice he would give to a tech entrepreneur who wants to make a difference. He says that entrepreneurs need to stop looking at themselves as technologists rather than institutional innovators. “Strive for a bigger purpose. Take on society’s big problems in the knowledge that is where the greatest returns are likely to be in the future. Have a global focus as opposed to US focus. Look at opportunities coming from the least fortunate people in the world.”

Maybe one problem with all of this is that the companies Haque holds up as succeeding in some aspects of his prescription, e.g. Apple for creating a new market via apps, fail badly in others. Look at the built-in obsolescence of Apple’s gadgets or the working conditions of the people who make all those iPhones. But maybe it’s better to be virtuous in one way rather than none at all.

Haque’s final word is that business as usual is not an option. “One choice you have is to refuel the engine. The other choice you have is to rebuild the engine. What the state of the global economy suggests is that refueling the engine is not working”.

Tree of Failure - David Brooks NYTimes.com

Tree of Failure - NYTimes.com

President Obama gave a wonderful speech in Tucson on Wednesday night. He didn’t try to explain the rampage that occurred there. Instead, he used the occasion as a national Sabbath — as a chance to step out of the torrent of events and reflect. He did it with an uplifting spirit. He not only expressed the country’s sense of loss but also celebrated the lives of the victims and the possibility for renewal.

Josh Haner/The New York Times

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Of course, even a great speech won’t usher in a period of civility. Speeches about civility will be taken to heart most by those people whose good character renders them unnecessary. Meanwhile, those who are inclined to intellectual thuggery and partisan one-sidedness will temporarily resolve to do better but then slip back to old habits the next time their pride feels threatened.

Civility is a tree with deep roots, and without the roots, it can’t last. So what are those roots? They are failure, sin, weakness and ignorance.

Every sensible person involved in politics and public life knows that their work is laced with failure. Every column, every speech, every piece of legislation and every executive decision has its own humiliating shortcomings. There are always arguments you should have made better, implications you should have anticipated, other points of view you should have taken on board.

Moreover, even if you are at your best, your efforts will still be laced with failure. The truth is fragmentary and it’s impossible to capture all of it. There are competing goods that can never be fully reconciled. The world is more complicated than any human intelligence can comprehend.

But every sensible person in public life also feels redeemed by others. You may write a mediocre column or make a mediocre speech or propose a mediocre piece of legislation, but others argue with you, correct you and introduce elements you never thought of. Each of these efforts may also be flawed, but together, if the system is working well, they move things gradually forward.

Each individual step may be imbalanced, but in succession they make the social organism better.

As a result, every sensible person feels a sense of gratitude for this process. We all get to live lives better than we deserve because our individual shortcomings are transmuted into communal improvement. We find meaning — and can only find meaning — in the role we play in that larger social enterprise.

So this is where civility comes from — from a sense of personal modesty and from the ensuing gratitude for the political process. Civility is the natural state for people who know how limited their own individual powers are and know, too, that they need the conversation. They are useless without the conversation.

The problem is that over the past 40 years or so we have gone from a culture that reminds people of their own limitations to a culture that encourages people to think highly of themselves. The nation’s founders had a modest but realistic opinion of themselves and of the voters. They erected all sorts of institutional and social restraints to protect Americans from themselves. They admired George Washington because of the way he kept himself in check.

But over the past few decades, people have lost a sense of their own sinfulness. Children are raised amid a chorus of applause. Politics has become less about institutional restraint and more about giving voters whatever they want at that second. Joe DiMaggio didn’t ostentatiously admire his own home runs, but now athletes routinely celebrate themselves as part of the self-branding process.

So, of course, you get narcissists who believe they or members of their party possess direct access to the truth. Of course you get people who prefer monologue to dialogue. Of course you get people who detest politics because it frustrates their ability to get 100 percent of what they want. Of course you get people who gravitate toward the like-minded and loathe their political opponents. They feel no need for balance and correction.

Beneath all the other things that have contributed to polarization and the loss of civility, the most important is this: The roots of modesty have been carved away.

President Obama’s speech in Tucson was a good step, but there will have to be a bipartisan project like comprehensive tax reform to get people conversing again. Most of all, there will have to be a return to modesty.

In a famous passage, Reinhold Niebuhr put it best: “Nothing that is worth doing can be achieved in our lifetime; therefore, we must be saved by hope. ... Nothing we do, however virtuous, can be accomplished alone; therefore, we are saved by love. No virtuous act is quite as virtuous from the standpoint of our friend or foe as it is from our standpoint. Therefore, we must be saved by the final form of love, which is forgiveness.”

Enough Is Enough - Tony Schwartz - Harvard Business Review

Enough Is Enough - Tony Schwartz - Harvard Business Review

Five years ago in The New York Times Magazine, the philosopher Peter Singer wrote the most important article I've ever read. It was called "What Should a Billionaire Give — and What Should You?"

What I remember best is the haunting hypothetical question Singer posed: If you were to pass a shallow pond in which a child was drowning, would you feel compelled to save the child, even if it meant getting your clothes wet or being late to wherever you were headed? Plainly the answer is yes.

Singer then made this argument: If we feel an obligation to save a child when the cost to ourselves is minimal inconvenience, we ought to feel the same obligation to save a child who is dying ten miles, a thousand miles, or 5000 miles from our home.

I was reminded of this scenario on vacation last week when I visited a harbor filled with megayachts — at least one of them 300 feet long. Subsequently, I learned that the boat cost $200 million to build, $5 million a year to maintain and that its owner spends less than 10 days a year on board.

I felt slightly sickened.

In the days since, I've been thinking about how little real value that yacht provides, even to its owner, and how much impact the $200 million in construction costs, and the $5 million a year in upkeep, could have on the lives of tens of thousands of needy people.

As Singer points out in his article, sixteen thousand children around the world die every day from diseases related to hunger. Ten million people a year die from poverty related causes. More than a billion of our fellow human beings subsist on the equivalent of less than $1 a day.

The widening gap between the haves and the have-nots in today's world is breathtaking.
Some 400 people on the Forbes list of richest Americans have a net worth in excess of $1 billion. At least seven hedge fund managers earned more than $1 billion just in 2009. Unfathomably, and unfairly, they paid less than half the marginal income tax rate on their earnings that most of the rest of us do, for no rational or justifiable reason.

Spare me the argument that if they earned it, they have every right to keep it.

They didn't earn it themselves, no matter what their initial circumstances. They earned it with the help and support of many people along the way, including the kindness of strangers. In many cases, they earned it on the backs of others who barely earned anything,or they simply inherited it. Either way, their extraordinary good fortune was hardly just a function of their intrinsic skill or talent or their hard work.

As Singer quoted Warren Buffett, the most successful investor of our time: "If you stick me down in the middle of Bangladesh or Peru, you'll find out how much this talent is going to produce in the wrong kind of soil."

At The Energy Project, we spend a lot of time talking with leaders about the energy they stand to derive from defining missions larger than themselves — ones that serve a greater good. And we talk, too, about how energizing it is for people to work for such a leader.

In 2000, the United Nations Millennium Summit set a series of ambitious development goals for 2015, among them reducing by half the number of people living in extreme poverty, suffering from hunger and lacking access to clean drinking water. Five years later, a task force led by economist Jeffrey Sachs estimated that the cost of meeting these goals would be an additional $121 billion in 2006, rising to $189 billion in 2015.

Buffett, to his credit, has pledged to give away more than 99 percent of his huge fortune. He and Bill Gates have also recruited nearly 60 other billionaires to give away at least half of their fortunes.

That's a very positive start, but why should this practice be limited to billionaires?

Singer used 2004 tax figures to compute that if the top .01 percent of taxpayers in the United States — approximately 14,000 people at the time — were to give away one third of their pre-tax income, that would generate more than $60 billion each year.

Even then, these 14,000 people would retain an average of $10 million a year in income. Can any reasonable case be made that any of them would be less comfortable, happy or economically secure with that sum?

If, in addition, the top 0.1 per cent of taxpayers in the United States — another 130,000 people — were to give away 25 percent of their pre-tax income every year, that would generate another $65 billion.

Add to that the remaining 1 percent or so of taxpayers, and ask them to contribute 15 percent of their income — or even 10 per cent. That's another million people or so, and the total yield would be between $50 and $75 billion.

That's a total of at least $175 billion a year — enough to meet the UN goals and save millions of lives.

We can justify, rationalize, and pontificate about individual freedom all we want, but in the process we're sticking our heads in the sand. Millions of people are suffering and dying unnecessarily every day. We have the collective means to do something about it with minimal personal sacrifice.

Enough is enough. It's time to step up.

On average, Americans who earn $25,000 a year or less contribute 4.2 percent of their income to charitable causes. Those with incomes above $100,000 contribute just 2.7 percent. My New Year's resolution is to contribute at least 10 per cent of my income every year going forward. What are you willing to do?

Attention Restoration Theory Taps Nature's Medicine | Smart Journalism. Real Solutions. Miller-McCune. By John McKinney

Attention Restoration Theory Taps Nature's Medicine | Smart Journalism. Real Solutions. Miller-McCune.

A long line of the world’s thinkers — from Immanuel Kant to William James to Deepak Chopra — have recommended we take walks in nature to relieve stress and refocus our thoughts. And nature writers — from Henry David Thoreau to John Muir to Edward Abbey — have extolled the restorative benefits of nature. “Everybody,” Muir said, “needs beauty as well as bread, places to play in and pray in, where nature may heal and give strength to body and soul.”

Turns out they were ahead of their time. “Attention Restoration Theory” or ART, which posits that a walk in the woods helps refocus the mind and revive the spirit, has been a growing field of research for the past 20 years. New studies are quantifying the restorative powers of nature and suggesting how the restorative process works.

“In the late 1980s, I discovered that ‘favorite places’ could be a good window [measurable unit of analysis] into how humans use their environment to restore themselves,” states psychologist Kalevi Korpelawith Finland’s University of Tampere.

Korpela’s most recent study questioned some 1,273 city dwellers of Helsinki and Tampere, aged 15 to 75 about the restorative experiences of their “favorite” places. Residents identified their favorite restorative places and what they perceived as the health benefits of visiting them.

The self-rated restorative benefits gained by venturing into the woods and along natural shorelines — “an early-morning walk is a blessing for the whole day,” as Thoreau said — were judged as significantly stronger than ventures to other favorite places in the city, including developed parklands. The results revealed links between the need for restoration (relief from worries and stress about money, jobs and the hectic pace of modern life) and the use of favorite places — what the social scientists call “environmental self-regulation strategies” — to achieve restorative benefits.

The more worries (particularly about work and money) an individual had, the higher the typical level of restoration experience, and the more reported benefits gained from getting out into nature. Unfortunately, those with many worries had a low rate of nature trips and consequently received a lower level of restorative benefits.

“This inconsistency surprised us,” Korpela says.

As social scientists explain it, nature engages your attention in relaxed fashion — leaves rustling, patterns of clouds, sunsets, a bird, the shape of an old tree. Nature captures our attention in subtle, bottom-up ways and allows our top-down attention abilities a chance to regenerate. Attention, therefore, is “restored” by exposure to natural environments.

But the artificial world, like a downtown city, demands active attention to avoid getting hit by cars, negotiate lights and intersections and navigate around others on the sidewalk. At the same time, city walkers are bombarded by advertisements, traffic and noise. The high-demand attention required when negotiating crowded city streets offers no rest for the weary mind; in fact, it’s similar to the intellectual requirements demanded of office workers or of college students.

Nature’s value in the recovery from illness has been quantified repeatedly. Studies have shown that post-surgery patients resting in rooms overlooking trees recovered better and faster than those in rooms with a view only of a brick wall. Another study demonstrated that women with breast cancer who walked in a park, watched birds or tended gardens recovered more quickly and were in better spirits than those with little or no contact with the natural world.

The cognitive benefits of nature — even if it’s just a hint of nature like a poster or a potted plant — are many and have been tallied by a number of recent studies. University of Michigan researchers Marc Berman, John Jonides and Stephen Kaplan wanted to quantify the effects of ART. Students were given long tests of sequences of numbers to repeat in reverse then sent on walks — half the study participants on a nature walk and half on a city walk. Upon re-testing, the nature walkers’ scores improved significantly while the city walkers’ did not. The experiment was repeated so that each student walked in nature and in the city, and everyone’s score was better after the nature walk.

Researcher Gary Felsten wanted to know the most restorative locations for study breaks and decided to ask students at the University of Chicago, a venue both academically intense and far removed from nature. Felsten took pictures of various lounge areas overlooking urban scenes and other buildings, others looking out on restful natural scenes. For some windowless lounges, he used computer software to place murals of natural scenes onto their empty walls.

Students were asked to rate the lounges for “a sense of being away” and other qualities considered by ART as “restorative.” Students rated the lounges with both artificial and real views of nature as more restorative than views of the city.

Researchers around the world have shown that windows looking out on nature scenes deliver significant restorative results and are now inquiring about the possible benefits of “virtual” nature. Can technology in the form of nature scenes on a high-definition plasma screen provide a restorative “nature fix?” Researchers from the University of Washington’s Human Interaction With Nature and Technological Systems Lab got mixed results from two studies: One study showed plasma nature windows providing low-level restorative benefits, another study showed them no more restorative than a blank wall.

One result of all of this research is that recognition of nature’s mental and physical health value is now part of public health discussions. And ART research has helped legitimatize eco-psychology, long stereotyped as New Age philosophy and now seen as grounded in science and statistics.

If further research shows that people deprived of nature will display behaviors characteristic of fatigued attention and irritability, how should office buildings be designed? Schools? Neighborhoods?

Korpela sees the need for more studies about the use and effectiveness of natural and other favorite places in helping people regulate and reduce the stresses of everyday life.

“How do people use different kinds of places to ameliorate stress, reflect on personal matters, to regain and reflect on their identity?”

Korpela believes the restorative value of nature can be taught to today’s stressed-out city dwellers. Under his direction, what is likely “the world’s first forest trail with psychological signposts enhancing the restorative experience” was constructed recently near Ikaalinen Spa, one of Finland’s largest. Hikers meander through diverse scenery and get trailside signpost instructions aimed at increasing the restorative experience: inducing reflection, relaxation and improving their moods.

Researchers will continue to quantify the amount and kind of nature we need to restore our spirits and regain our mental acuity. In the meantime, it appears Thoreau was right: “We can never have enough of nature.”

The Journey Through Adolescence 704.2

The Journey Through Adolescence 704.2: "

One of the toughest jobs in the world is being a teenager. Everything's in transition. Everything's intense – even apathy.

Kids on the brink of adulthood have to cope with inconsistencies and conflicts. The desire to be different clashes with the need to fit in. The desire to be independent collides with the aversion to self-reliance and personal responsibility.

Here are five ways to improve your journey through adolescence:



1. Be yourself. Mindless conformity is a prison. Express yourself authentically and don’t be afraid to stand out. But don’t dress or behave in extreme ways just to be different or to prove you can. You don’t need orange hair, a nose ring, or tattoos to be special. It’s more important to be respected than noticed.

2. Don’t expect too much or settle for too little. Don’t expect anyone else to make you happy, but don’t allow others to treat you badly. Hang out with people who bring out the best in you, and be the kind of person who brings out the best in others.

3. Responsibility is a privilege, not a penalty. Dependability and self-reliance are your tickets to freedom and independence. Don’t waste energy resisting what you have to do. Instead, win others’ trust by doing what you should do.



4. Think ahead. Every act has a consequence. The choices you make today will shape tomorrow. Pleasure lasts for a moment, but happiness lasts much longer. Just because it feels good doesn't make it good.



5. Take charge of your life. Your life is your ship, so be the captain, not a passenger. Figure out what needs to be done to improve your life, and then make it happen. Your attitudes are more important than your aptitudes. You can’t control what happens to you, but you can control what happens in you. Don’t whine, win.

This is Michael Josephson reminding you that character counts.

____

Click here to listen to audio versions of this and other commentaries. You can also subscribe to my weekly newsletter, which always has links to audio versions of my commentaries.

"

The Achievement Test - NYTimes.com, by David Brooks

The Achievement Test - NYTimes.com

Unless something big and unexpected happens, 2011 will be consumed by a debate over the size of government. Republicans will launch a critique of big government as part of their effort to cut spending. Democrats will surge to the barricades to defend federal programs.

Josh Haner/The New York Times

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This debate will be contentious, but I hope it’s not rude to mention that it will be largely beside the point. National destinies are not shaped by what percentage of G.D.P. federal spending consumes. They are shaped by the character and behavior of citizens. The crucial issue is not whether the federal government takes up 19 percent or 23 percent of national income. The crucial question is: How does government influence how people live?

There have been cases when big government has encouraged virtuous behavior (in the U.S. during World War II), and cases when big government has encouraged self-indulgence and irresponsibility (modern Greece). There have been cases when small government was accompanied by enterprise and development, and cases when small government has led to lawlessness, corruption and distrust.

The size of government doesn’t tell you what you need to know; the social and moral content of government action does. The budgeteers and the technicians may not like it, but it’s the values inculcated by policies that matter most.

The best way to measure government is not by volume, but by what you might call the Achievement Test. Does a given policy arouse energy, foster skills, spur social mobility and help people transform their lives? Over the years, America has benefited from policies that passed this test, like the Homestead Act and the G.I. Bill. Occasionally, the U.S. government has initiated programs that failed it. The welfare policies of the 1960s gave people money without asking for work and personal responsibility in return, and these had to be replaced. The welfare reforms of the 1990s involved big and intrusive government, but they did the job because they were in line with American values, linking effort to reward.

Over the past few decades, Americans have waged political war as if all that matters is the amount of money going into federal coffers. The fights have been about “cutting government” or “raising revenue.” But amid this season of distraction the entire society suffered a loss of values and almost nobody noticed until it was too late. Both business and government started favoring consumption and short-term comfort and neglecting investment and long-term growth.

This hasn’t been a case of government corrupting capitalism or vice versa. The two have worked hand-in-hand. The government has erected a welfare state that, as Matthew Continetti of The Weekly Standard has pointed out, spends vast amounts on consumption (Medicare, Medicaid, Social Security, interest on the debt) and much less on investment (education, research, infrastructure), while pushing the costs on future generations. Meanwhile, the private sector has encouraged a huge increase in personal debt to fuel a consumption bubble. The geniuses flock to finance, not industry.

If we’re going to reverse this tide, it might be useful to put the Achievement Test back at the center of politics. This would help focus the national mind on the fundamental challenge: moving from a consumption-dominated economy oriented around satisfying immediate needs toward a more balanced investment and consumption economy. It might also cut through the gridlocked trench warfare between big-government liberals and small-government conservatives.

Reframing the argument around achievement wouldn’t end partisan division. Democrats and Republicans differ on what makes an economy productive. But it would allow for horse-trading.

As part of the budget process, Republicans could champion the things they believe will enhance productivity and mobility. Many of these will mean making sure people have the incentives to take risks and the freedom to adjust to foreign competition: a flatter, simpler tax code with lower corporate rates, a smaller debt burden, predictable regulations, affordable entitlements.

Democrats could champion the things they believe will enhance productivity and mobility. Many of these will mean making sure everybody has the tools to compete: early childhood education, infrastructure programs to create jobs, immigration policies that recruit talent, incentives for energy innovation.

The two agendas sit in tension, but they are not contradictory. The exciting thing about this moment is that everything is on the table. Thousands of policy proposals are floating around, thanks to the various deficit commissions and policy entrepreneurs. As the parties argue about the debt limit and the rest, it should be possible to take items from both and ram them into a package that cuts consumption spending in order to make investment spending more affordable.

How big will the resulting government be? That is a secondary issue. If a policy enhances achievement, we should be for that thing. If it displaces investment, we should be skeptical of it. Quality, not quantity, matters most.

Michael Josephson Commentary: Sailing the Seven C's of Character @ http://goo.gl/hw3oH

Michael Josephson Commentary: Sailing the Seven C's of Character 703.5

Sailing the Seven C's of Character 703.5

As you consider your goals for 2011 I want to suggest a C voyage to work on your character.

No, you’re not too old and I don’t mean to imply you’re a bad person. Surely by now many of you have heard my mantra: You don’t have to be sick to get better. Besides, we all know it's a lot easier to make a good person better than to make a bad person good.

Remember, the struggle to be a person of character takes place on the level of daily choices at home and at work. People of exceptional character stand out from the crowd because they develop the discernment and moral strength to know and do the right thing in circumstances that might overwhelm or confuse others.

Here are the Seven C’s of Character: Conscience, Caring, Consideration, Confidence, Competence, Control, and Courage.

1st: Nurture and honor your personal Conscience. This is a precious internal moral compass that helps you maintain your integrity.

2nd: Show people you Care; demonstrate a genuine unselfish concern for the well-being of others, be empathetic, charitable, and above all, kind.

3rd: Be Considerate; think about the way your actions will affect others, and know that you are responsible for the consequences of all you say and do.

4th: Be Confident that you are good enough, valuable enough, and strong enough to withstand potential consequences of principled conduct, including the loss of money, jobs, and even friends.

5th: Develop moral Competence; learn to make and implement good decisions that are ethical and effective and get the best possible result out of every choice.

6th: Control your emotions; distinguish between what you want and what you need; beware of impulses and urges that can cause you to compromise ethical principles; don't settle for pleasure, go for happiness.

7th: Have the Courage to do the right thing even if it might cost more than you want to pay.

Every one of these elements can be a challenge on any particular day. The point, and I hope your goal for 2011, is to self-consciously sail these Seven C's because CHARACTER COUNTS.