National Therapy Session...

Abstract: We're mad as hell, no question about it. We're mad about 9-11. We're mad about the economy. Liberals are mad at conservatives for "stealing" an election. Conservatives are mad at liberals for backing a President who lied about a blow job. Unions are striking. Business is on trial. Californians recalled a Governor in favor or a Viennese weightlifter. We've gone to war against countries we didn't even know we were still mad at, in our "War Against Terrorism". And mostly, we're mad because we thought we'd all retire early in a "new economy" where the old rules would not apply.


It's Time for a Little National Therapy.

Hi there and welcome. I want you to know that coming here is the first step toward recovery. Have a seat -- lie down, if you'd like. We've only got an hour so let's not waste any time. Let's start by repeating after me: I'm really, really, really mad at just about everything in life and don't know what to do about it. Good. Recognizing and admitting the problem is the only way to begin solving it.

Do you know what I'm talking about? Or are you so angry that you no longer can even see that there's a problem?

We're pissed. As a country. We're mad at the whole world. The bubble popped and knocked us off of easy street. We went from checking the balance in our 401(k) every hour to not even wanting to open the monthly statement that comes in the mail. The "new economy" wasn't "new" at all and we were duped. People are laughing about the idiots that actually bought Pets.com -- and those idiots are "us".

Well, somebody's going to have to pay and pay dearly. We're going to legislate and regulate everything that has anything to do with business. We're going to blame everyone but ourselves. And, we're never going back into the stock market again no matter what...oh, excuse me...the DOW's at 10,000, I have to go see if my broker can get me some shares of the Google IPO.

The second greatest story ever told.

The story we were told, the one we bought into, has been told before and not so long ago. And everyone bought it last time, as well. It's the story of a new land. A land where the old rules did not apply. A land where anything is possible. A land where cab drivers can become millionaires in a matter of weeks or months. A land where dropping out of college is the right thing to do. A land where business plans written on napkins are handed tens of millions of dollars in an instant by mysterious men in white hats who roam the country looking to fund any venture. A land where the geek shall inherit the earth. A land where we would no longer feel the need to sit on a couch before buying one. A land where the "old economy's" leaders, the ones that have held us back for so long, are obsolete. A land where AOL can buy Time Warner and Yahoo! is worth more than Disney, Viacom and Fox combined. A land where we can retire at 45 without the worries that we've lived with for so long.

It really is a wonderful story. And we want to believe it's true. Who wouldn't? Human beings have been buying into similar stories for as long as human beings have existed. After all, that story is how we got here, isn't it. Weren't ours the streets paved with gold? The land of the free (white) people? The land where no one went hungry? People bought that story, too, even though it was called a "dream".

So, it happened again. We bought the "dream" that the world was about to be "new". We didn't need to know anything about the stock market to get rich playing it. The Chairman of our Federal Reserve Bank called what was happening "irrational exuberance" and it didn't bother us one bit. Until something went wrong and we're not sure what "it" was. All of a sudden we heard that the bubble had "popped". The music stopped and we found ourselves without a place to sit. It's humiliating to be the one who fails to find a seat when the music stops.

Even then we held onto our collective optimism. We'd see a recovery soon, we were told. After all, Bush is in the White House. He'll fix things, right?

Then the worst thing that ever happened, happened. And it happened on videotape over and over and over again. We were vulnerable. We weren't feeling very confident in our choices or abilities anyway, and now we had reason to be scared. Not Y2K scared, but lock your door and stay home scared.

Almost immediately, 9-11 became the cause of our economic troubles. It wasn't the $7 trillion in consumer wealth that evaporated, it was the guys who live in caves and use box-cutters to hijack airplanes that caused the problems. Let's get 'em.

And we did. We went off to Afghanistan to rearrange some rocks and make it so women there could learn to read. We were told that we had won. We had asserted our dominance and once again made the world a safer place to live.

Then we became mad at Iraq and Sadam...again. We hadn't heard from old Sadam in quite a while, but without any other country to bomb, we dusted off Iraq and focused our anger there. It felt good. Again, we were told that we were "winning" and making the world a safer place. And we became mad at France, Germany, Russia and the entire UN for not wanting to be mad with us. French Fries were replaced with Freedom Fries -- that's how mad we got.

Then Californians, feeling left out of New York's anger parade, decided that it was the Governor's fault that everything had gone wrong. A Governor that had only been re-elected 10 months earlier needed to be recalled. The state was in chaos. And a call went out for Superman, just like in the 60s television program.

The funny thing is that Superman arrived, just like on the 60s television program, only his name was "The Terminator". He had saved the world before and he would again. And Grey Davis went home to rest up for the lecture circuit and a book tour, no doubt.

For a while it looked like Enron's Ken Lay would become the nation's pariah of the month, but the news media found the details so difficult to understand and report on that they left it to the business press and went back to Sadam and the guys with towels on their heads.

Enter 2004.

Now we're told that the economy is coming back strong. The stock market is up and Sadam has been captured. Sure, the terrorism indicator is flashing orange, but that's just the realities of today's world. Nothing we can do about that. Bush is touting victory and prosperity and even the seven million people without jobs are buying in to the story. Happy days are just around the corner...aren't they?

Well, no. Not if by "happy days" you mean 1997-99. Those days are gone until someone tells us the second greatest story ever told again. And we're ready to believe it...again. There's always someone ready to tell the story, but it takes time before we're ready to buy it again.

If we want to see economic prosperity return, unemployment drop and 401(k) balances that don't cause heartburn, there's only one path to take and it's the path of American business. But, before we can be ready to get back on our capitalistic pony, we have to deal with our anger. It's just like any other relationship. You have to forgive your ex- before you can make the next relationship work.

So, let's get back to therapy for a moment. We're mad because we bet and we lost. It's over and our money's gone. Cisco is not coming back to $82 a share and AOL/Time Warner is again just called Time Warner. Amazon's still around and so is E-Bay, Yahoo! and a handful of others. But the rest are history. We gambled and we lost. So what. Yeah, maybe our broker's an ass, maybe he's a crook. But, we knew better than to trust some guy on the phone talking about giants and selling magic beans. It was our fault that we did what we did. We got greedy and screwed up. We're embarrassed at our apparent stupidity.

But, it's over. Now it's time to put the pieces back together. To make America strong again. Not through anger -- anger never leads to strength, only to fear. But, through the same means that created this great nation -- through capitalism, free markets and the business of America being business. We have to stop shooting anything that moves in the boardroom and keep a clear head about us. The guy who runs GE isn't the enemy. He wants the stock market to go up more than we do. He makes a lot more money than we do because he's smarter and more qualified than we are. It's OK, he's worked hard for decades and has sacrificed everything to get to where he is today. He's not a lottery winner, he's just a winner. When we hear that his bonus is $10 million, we should not feel badly. To the contrary. We should say: Is this a great country, or what?

Think about it honestly for a second. Are Boards of Directors really trying to shovel the company's money out the back door? Does that make any sense at all? Why would they want to do that? Because the CEO's their buddy? Because they don't care about the company on whose Board they serve? Of course not. CEOs get paid what they do because they represent "scarce talent". And if your talent is "scarce", you get paid more for it. That's true with professional athletes, movie stars, attorneys, physicians, architects and countless others. It's the wonderful thing about the free market -- it sets the prices, not companies.

Here's how the whole executive compensation thing works: Those precious few individuals qualified to run a company with thousands of employees have choices as to where they apply their experience and talents. Perhaps they've been running an airline or large division of an airline for a decade or so, but that's not their only job opportunity by any means. There's a lot of other stuff they could do. They've already made enough money to retire; they're not working just for the money anymore. Then one day, due to no fault of their own, the airline industry goes in the tank. Some religious fanatics hijack a few planes and fly them into the World Trade Center, for example. On top of that, the stock market crashes and business travel declines. Let's say that when all of that happens, the exec in question is 58 years old.

What should he or she do? That exec has about seven more years of "work" to go before retiring. Should they stay and try to turn the company around? After all, with the airline flirting with bankruptcy, there's no guarantee that our exec will make much money in those last seven years. And a headhunter is calling to offer an opportunity with a growing, successful company who was not affected by the recent events nearly as much as the airlines. The new job is offering a signing bonus, stock options and a whole basket of other incentives for our exec to make the change.

Now, you're on the Board of our hypothetical airline. What should you do? Who better to try to turn the airline around than they person who's been there for 20 years? How do you convince he or she to spend the last seven years of their career trying to bring the company back to fiscal health? Why you offer them money, of course. In fact, it's more important to offer them money at that point than when the airline was doing well. You need that executive more at that point than at any other and that exec needs his or her team, as well. At that point, even though the price of the stock is down, it is in the best interests of the shareholders to offer our exec and his or her team the money needed to keep them on board because they are the people most capable of doing the job of getting the stock price back up.

Think of it like a sports franchise. If you have a winning team, you don't necessarily have to pay for that next new superstar, but if your team is losing, you need that star in the worst way. So, you pay for the talent you need to win. Same thing.

OK, so now the country sees red every time they hear about an executive picking up a bonus check. Why? Because they no longer believe that those execs represent "scarce talent". They've come to believe that with unemployment up, there are lots of folks around qualified to turn our airline around that can be had for less. And anytime we perceive that we can get the same thing for less, we do. That's just being a good consumer.

So the question is: Are there a bunch of people hanging around that are qualified to run our airline and can be recruited for less dough? How could that be? If they're qualified to do our job, in this example, why aren't they working somewhere else? Think about our sports analogy. Is there a superstar athlete hanging around somewhere that could replace Shaq for less money? Let's see...Look what I found...A guy seven feet tall who's got game, but has been quietly bussing tables in St. Louis? You've got to be kidding, right?

The fact is that the free market takes care of all this. Talent is sought out and purchased by sports teams, companies and even the Federal Government. The bottom-line is that we as a society no longer recognize the CEOs of American business as being "scarce talent". We don't even recognize the President of the United States as being "scarce talent". These days it's common to hear even highly educated people saying that George W. isn't all that bright. Imagine, it's possible to run the country and not be "that bright".

Here's a news flash: You can like W. or you can hate him. But regardless your political leanings, rest assured that in order to run our country for one hour, you have to be brighter than all hell. Sure you're surrounded by "experts" of every variety, but if you're not bright as the dickens, you'll never understand what it is those experts are talking about. Lots of experts have lots of opinions as to how something should be handled and as President, you've got to make the call. How do you do that if you're a remedial learner? Just think about the number of issues, both domestic and international, with which our President has to contend every day. How would you like 10 minutes to prepare for a meeting with a foreign ambassador from a country called Eritrea that's been involved in a civil war for 30+ years and is requesting economic aid, among other things. Oh, and by the way, the cameras will be rolling, so if you so much as mispronounce Eritrea's capital, or the first name of the Ambassador's daughter's baby ox, you'll be chastised on CNN before the meeting has even ended. "Not that bright"? You must be nuts. Most Americans don't even fully understand most of what's published in the Wall St. Journal. Just think what our President has to "understand".

So why is it that as a society we've come to the conclusion that CEOs and our President do not represent "scarce talent"? There's a couple of reasons.

1. Familiarity Breeds...Boredom -- That's right, not necessarily contempt, but always boredom. The increased level of media attention has made us more familiar with our leaders. Jeff Bezos, CEO of Amazon.com, was Time's Man of the Year in 2000. Bill Clinton's sex drive is more well known than his economic policy. Remember, somewhere there's a guy who calls George W. "Georgie Porgie" because he or she has known him since he was six. To that person, W. isn't the President, he's a grown up Georgie Porgie. Like the man says: Show me a guy who's married to Christie Brinkley and I'll show you a guy who's tired of sleeping with her.

2. Dot-Com Days -- During dot-com days we were enthralled with stories about college drop-outs writing business plans on napkins and picking up $100 million seemingly overnight to start seemingly giant companies worth gazillions of dollars. How bright could these kids be, we reasoned. And, we were right, many of those "kids" weren't that bright and some were bright, but criminally bright. During that time, the CEOs of old brick and mortar companies seemed to have been made vulnerable by these young kids right out of school. So, how tough and bright was the old guard, we reasoned.

3. Losing Money Clouds One's Thinking -- If you're 55 and your 401(k) went from $300,000 to $30,000, it's a real problem. You're hopping mad. You're spouse is crying. Your plans have changed. Your confidence in your decision making abilities has been severely shaken. You're not at all sure what to do next. And your broker's been indicted for recommending stocks that promised nothing but a commission check. You're not thinking that clearly. If someone in the media holds a CEO up as an example of the cause of your misfortune, you say: "Guilty as charged" and the trial be damned. (For the readers from California: "Get Grey Davis. Get Grey Davis. We want Arnold! We want Arnold!")

CEO -- Heal Thyself.

If as a CEO, your shareholders do not perceive your abilities as being "scarce" and "expert", whose fault is it? If the public thinks that anyone could do your job and that your executive management team is nothing more than your fraternity house all grown-up, who's to blame?

It may have happened without you, but if you allow it to continue then the enemy is "you". It's your fault. Period. Your inability to communicate is staggering. You'll spend $100 million to tell the American consumer that your product is now lemon-scented, but not one nickel on why your team is the best and brightest available or what it is that they are up against or accomplishing. Sure, maybe that wasn't necessary a half a dozen years back, but it sure as hell is today. Assuming you don't just want to give up and write a book, or something. (Most CEOs aren't actually capable of "retiring", by the way. They haven't been working for the paycheck for years. Their work is their identity, their life. It's what makes them...them.)

The CEO's view of communications has to change, simple as that. Annual Reports are not effective communication. Neither are Quarterly Reports or Press Releases about your plans to send jobs to India. For far too many companies, the only news that is ever released is either bad news, or news of the stock price going up by 50%. Nothing in the middle. Nothing that could help anyone to understand what's really going on. Just the very good or the very bad. And then you're disappointed that the American public doesn't understand what you're up against. Why would they?

American business needs to come to terms with the information explosion that has taken place in the last several years. They need to understand that if they don't communicate their point of view, then others will communicate from theirs. And "theirs", even though not accurate, will be what our society comes to believe.