Category Archives: Business and Economics

Wal-Mart Employees In Cages!

(Originally posted on 2008-02-08 as /archives/137)

101 Dalmations Halloween Costume
101 Dalmations Halloween Costume

Only kidding!  I used to sit on the other side of this contraption.  It’s part of a 101 Dalmatians Halloween Costume, that someone thought was a good idea, but I thought, “It looks like they have those poor office workers working in cages.”

A lot of what you probably think about Wal-Mart is wrong.

My “quotes” (below) are paraphrases of things that I have heard or read recently.

“Those Walton Family members made [insert number here] dollars and they are not giving anything back.”

You see Wal-Mart people giving back to society a lot in Northwest Arkansas.

“But they give nothing back to my state.  All of that money goes out-of-state, and none of it comes back.  There is this guy named [insert name here] that goes around and talks about this.  He holds up a [insert brand name here] sweater and says, ‘This sweater has $0.75 of labor, and $1.00 of materials, and Wal-Mart sells it for $20.00.'”

I don’t know what Wal-Mart’s markup currently is, and if I did, then I couldn’t tell you.  Let me say this though: back when I was training to be an Ames manager (My training store’s picture is on Wikipedia!) I was taught that discount department stores typically shoot for 10% markup in aggregate, and that large chain grocery stores typically shoot for 3% markup in aggregate.  You can bet that Wal-Mart is shooting for the lowest number possible.  The above sweater example isn’t close to either of those numbers.  Also, materials and labor aren’t the only costs of doing business, but all of any given retailer’s costs of doing business are typically covered by a small margin.

“But Wal-Mart is making all those products.  I know, because you can see their name on them in the store.”

They buy the products from all of the same vendors that every other company does.  Each mature industry typically only has a few big players.  That’s where Wal-Mart gets the products from: mature companies in mature industries.  The folks that work in the Wal-Mart distribution centers could probably tell you who those companies are if they weren’t so loyal, and/or didn’t all sign non-disclosure agreements.  And no, store-brand products aren’t lower quality.  It’s not like factory foremen are running around saying, “We gotta do a worse job on this batch of soap: it’s going in a store-brand box!  Do worse work!”

Another aspect of “they buy the products from all of the same vendors that every other company does” is that Wal-Mart is the wrong target for your anger about how things are made.  If you don’t buy a given company’s product at Wal-Mart, then you will probably end up buying it somewhere else, because there are very few large companies in any mature industry.

“But Wal-Mart uses price pressure to force those companies to lower their quality!”

Price pressure begins when a product becomes commoditized.  This happens with, or without, Wal-Mart.  That’s why XBOX 360 games have almost the same exact price at every retailer.  Xbox 360 games are not a commodity.  Yes, I know that Microsoft sets the price of Xbox 360 games, but that just proves my point.

“But companies like Wal-Mart have made it so that manufacturing is moving overseas.”

Wal-Mart cannot have stores overseas, but refuse to purchase products oversea, and yes, Wal-Mart does have stores in China, Mexico, and many other countries.

Besides: manufacturing is not all moving overseas.  In 2005 the U.S.’ share of global manufacturing was still 21.1%.  That’s right: more than 1/5 of manufacturing revenues world-wide go to the U.S.A.  How much does China manufacture?  8%  (source: FP Quiz, Foreign Policy Magazine September/October 2007)

As a matter of fact our trade deficit shrunk by $100 Billion over the past year.  That means that US exports are increasing dramatically relative to imports.

But what about all of those closed textile mills in North Carolina?

The jobs are somewhere else in the U. S. of A.  Obviously: that’s no comfort to the folks that want to stay in their current hometowns.

To be continued: next I will talk about the stock market and how the money made there has nothing to do with any company’s markup: they are two separate and distinct things.

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Negative Ads Do Not Work!

(Originally published on 2008-10-30 as /archives/1147)

I suspect the real reason that negative ads are made is because the people who pay for the ads are negative.

None of the opinions below are those of my past-or-present employers. I have worked with members of the advertising community outside of the two marketing firms that I have worked-for, and I have learned by observing those experienced people.

People belief that advertisers know how to subconsciously control our buying habits, but the truth is this: they know far more about selling advertising services.

  1. The advertiser learns what the client wants through a creative process that includes iterating over design elements until they have an ad that fits the client’s sensibilities. This process is basically the same for all of the great firms, although they each have a registered-trade-or-service-marked name for that process, and they each claim that their process is special and unique. The firms that don’t know what they are doing? They have registered-service-marks for non-existent processes, and they depend on being lucky when they propose a new ad:
  2. The advertiser then produces an ad to fits the client’s sensibilities, wants, and desires. These sensibilities, wants, and desires were learned in step (1).
  3. The ad is presented to consumers.
  4. The firm collects statistics.
  5. The firm communicates those statistics in a way that says, “Yes, Mr. Client. You were correct. This ad that we made to-fit-your-sensibilities was very effective at selling your product!” Please note: these sensibilities are not necessarily those of the company that sells the product: they are those of the most influential individual that regularly met with the advertising firm.
  6. The firm then asks: “May we work together some more in the future?”

Man, if I were a magician I would be kicked-out of the guild for revealing my tricks.

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Build a Wall? Part Uno

(Originally posted on 2017-01-18.)

Politics is a football game, where winning is everything, and there are no stable values. What about the religious right? In the south, they used to vote for Democrats. What about free market capitalism?

By Michael Vadon [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
The GOP was free-market right up until this election. Now there are Republicans that say, “We want protectionist economic policies. Build a wall!”

Protectionist economic policies will increase the cost of every item that comes from Mexico and China. (Whether that increase takes money away from the manufacturer, the import company, or the end-consumer, depends on the elasticity-of-demand.) Every person’s dollar will buy less, and Americans will be that much poorer, but the next president will still be able to afford a $650 iPhone.

People said that your future president was lying about getting Mexico to pay for the wall, but he actually did mention tariffs during the campaign.

Here’s the thing about tariffs: if you raise the price of imports, then people will buy them from some other place, and then the tariffs won’t generate money to build the wall. In that case, you won’t have a wall, and you won’t have inexpensive goods either.

Mexico and China are in an industrial revolution. At the end of an industrial revolution, you end up with a large middle class. Large middle-class people generally want the option of desk jobs. The USA is in between industrial revolutions.

But there’s a completely different way of looking at trade deficits, and it’s simply this: the trade imbalance just means that the US dollar buys more, and that means that people in the US, on average, are better off, than people in other countries, and USA-first people like trump shouldn’t want to mess with that.

Me? I think that people are people, and I don’t care whether they live in China, the USA, or most other places, but that’s a “Paul opinion”. It’s not liberal, and it’s not conservative.


By Crossswords (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons


Cumulative current account balance per capita 1980–2008 based on International Monetary Fund data. Emilfaro [Public domain], via Wikimedia Commons

The two charts above show that the USA currently has the greatest trade imbalance, while simultaneously making more protectionist policies. Here are a few possible explanations:


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The Real "An Inconvenient Truth"

(The top part was originally posted on Dec 21, 2007 as /archives/131, and the lower part was originally posted on Jan 7, 2009 as /archives/1939)

 

I don’t know how many times I see green=biodiesel. No it does not. Perfect combustion produces C02 and H2O. Bio diesel is very inefficient, but even at its most efficient, it would be adding more CO2.

CO2 is required by the photosynthesis process. Breathing and burning put more CO2 in the air, plants take the carbon out of the air, and return the Oxygen to the air. Burning is done to provide things to animals. Both processes that add CO2 (burning and breathing) are done by, and for, animals. The only natural process that removes carbon is done by plants (animals get the carbon by eating the plants). If you assume that global warming is real, then the only logical conclusion is too many animals, not enough plants.

The real cause of rising CO2 levels?  Population growth.  Not even Al Gore is willing to talk about that, but that’s what it is.  Al Gore showed us those sharply-rising graphs in An Inconvenient Truth, he even showed the corresponding population growth graph, but he didn’t suggest that we lower the population.

We need less people:

  • Let’s say you lower your CO2 production by 50%, but you also have children, (“All right: you lower your CO2 production by 50%, but you also have children.”) and your children have children, and so on.  So, you divided your CO2 production in half but you potentially are responsible for creating 100 times (or… pick a number) that amount of CO2, because you created descendants, that created descendants, and so on, and they all use energy.
  • Why aren’t folks talking about this?  …because it means telling people not to have babies, and people will not stop having babies.
  • Read Maybe One.

Plants breath CO2: yes, that “evil” carbon footprint is potentially good for plants. The natural carbon-sequestration solution isn’t all of this sci-fi, it is more plants, but more plants means less room for other things that people want.   Raising livestock uses more energy than raising plant-produce.  If we raise less livestock and more plant-produce, then the plants will be sequestering CO2, and less energy will be wasted creating food.

I love electric cars, and I would really like an electric motorcycle. I have been replacing our crazy Lutron switches (these things give new meaning to the words “poor user interface“) with ones that are compatible with CFLs, and using the CFLs.  I would rather get electricity from wind, solar, and hydro.

Carbon dioxide is not toxic though.  It’s a natural part of our world that is absolutely essential for life on earth. No CO2 means no plants.  No plants means we all die.  Admittedly too much of anything can be bad for you, but I don’t want to hear about my “carbon footprint” from people that aren’t willing to do what’s necessary to change their own.


 

Many people think that ethanol is OK, because the CO2 that gets put back into the atmosphere was removed from the atmosphere, so there is no net gain, but that is true for ALL fuels.  ALL CO2 came from the atmosphere.  Besides, it takes more than one gallon of oil to create the nitrogen based fertilizer needed to create less than one gallon of ethanol, let alone the energy used to transport it, process it, etc.   …and ethanol has a lower energy content than gasoline.

I love properly designed electric vehicles.  Powerful electric motors move diesel trains, so they can sure move an automobile, or a motorcycle, but electric vehicles are still much more expensive than gasoline-powered vehicles.

Who killed the electric car? You don’t need a movie to answer that question. The batteries would have cost more than a new car to replace, yet needed to be replaced too often. Did the movie mention that? No? (I actually got to see GM’s electric car, the EV1,  before it was unveiled. I worked at the GM Powertrain Engineering Center in Warren MI.)

I like wind farms, and solar, and geothermal, but technology is not enough.

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How Enterprise Software Is Sold, and Delivered, Today

(Originally posted on 2008-11-23 as /archives/1557)

Computer systems: By Agiorgio (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons
I see-and-read way too many presentations that both start with doom-and-gloom, and then overstate the case that the author wants to make. This seems to be the only way that software consultants know how to begin a presentation: “Information is getting harder and harder to manage.” No its not. “Software is getting harder and harder to write.” No its not. “The sky is falling!” Actually, no its not.

“Our software will help you manage your Enterprise.”

Or your software will cause headaches and heartaches for countless people.

Your future client will read reports by an “independent” technology research firm. Then she will hire a consultant, and ask that consultant to write an evaluation of all of the available enterprise software applications for a given need. (Here is what Doug Savage has to say about this. Cluck, Cluck, Bawk!)

The consultant will produce a large report that says exactly what the independent technology and research firms say, in spite of the fact that neither said consultant, nor any employee of the research firms have any practical experience with the enterprise software in question.

Here is why:

  1. There are only a couple of large independent technology research firms. They don’t have the resources to become experts with every product, so they do their research by meeting with the vendors and viewing their presentations.
  2. This gives the product vendors incredible leverage. That’s why you can look at the descriptions of three completely different products where one started as a document repository, another started as a code versioning system, and another started as a Web UI toolkit. These products’ architectures have little in common, yet they are all called Enterprise Content Management Systems, and they all have the same listed features. Those feature lists are written to satisfy the independent technology research firms’ evaluations, and really tell you little about a given products’ actual capabilities.
  3. CIOs and other executives subscibe to, and read, those independent technology research firms’ evaluations.
  4. Then those executives hire the consultants. They ask for the consultants evaluations, but they really are looking to validate what they already believe. Consultants quickly figure this out after hearing “But [Insert-Name-Here] Research said” a couple of times. The consultants learn to mimic what the independent technology research firms say, in spite of the fact that the original research is based on little more than writers watching PowerPoint presentations.
  • Here is a universal piece of advice: never buy anything unless you get to prototype with it before you write a check.

Your future client will then ask the consultant to write a request for proposal (RFP) to send out for bids. That consultant will write the RFP in such a way that only his company can fill all of the “requirements” in time.

You will charge your client $1.5 Million. You will first ask for more, and after weeks of negotiations you will convince your client that you can go no lower than 1.5 Million, and that nobody gets your software for less, meanwhile all of your clients are actually paying 1.5 Million, plus training, plus development, plus support, plus travel, and the pluses just keep on coming.

  • I worked with one product at three different companies. Each of the company’s managers told me something like, “They normally charge X, but we got them down to 1.5 Million instead, because they really want our business. They won’t do that for anyone else.” Oh. Really.

Your client will spend many times the expected amount on employees and consultants. These people’s job will be to manage the mess that you create, and you client will have to live with that mess, lest she admit that she wasted millions on your “Enterprise” software.

You will convince your client that the mess was actually caused by her incompetent employees, in spite of the fact that her employees are actually proud, hardworking, well trained, and intelligent. You will then provide high-priced consultants to replace your client’s employees.

  • What else can they do? In some cases the enterprise software vendor’s management team is in survival mode, and will continue passing-the-blame-to-their-customer until they have a mature product.
  • In some cases, they may truly not know that their product doesn’t work, because the support team is filtering-out the bad news. This happens when you measure support success by how quickly problems get solved. The tickets get closed quickly, but the root problems rarely get solved, because that takes too long.
  • Either way the vendor has no incentive to admit that their software is actually not stable.
  • I once worked for a consultancy that was helping an energy company implement a new content management system (CMS), and the CMS vendor’s chief technologist simply repeated, “You have the DTD. That’s all you need” over-and-over again in front of the client. What we were asking for was the proprietary query language’s (non-SQL) documentation. Imagine if you had to learn a language with nothing but a description of the noun-verb-noun syntax. No dictionary. No thesaurus. No books. No teacher. No examples. Nothing. That product was not ready to be sold, and the chief technologist was able to seed doubts about us  simply by saying, “You have the DTD. That’s all you need” over-and-over again. That product was highly recommended by the two large independent technology and research firms.

Your client will put up with this “gladly”, because how else is she going to explain why she wasted so much money on your “Enterprise” software, when there was actually something better out there for free such as:

If you are going to write enterprise software, then start out by solving the hard problems, because the easy problems are already easy. I don’t know how many vendors told me, “We can do session management!” So? Anyone that knows what a Static Class and a Hashtable is can write a session manager in an afternoon. “Our sessions can survive a reboot!” OK, anyone that knows what a Static Class is, and also knows how to embed a relational database can create a session manager with sessions that survive a reboot. Solve the hard problems for me.

Before “SOA” made integration “easy” it was “N-tiered”, before that it was “RAD”, before that it was “CORBA”, before that it was “OOP”, before that it was “SQL”. Then there were all of the “Managements”: “Document Management”, “Content Management”, “Service Management”, etc. Obviously a couple of these technologies matured to the point where they helped enormously, and others didn’t. Either way integration will never be easy.

Project management, and software engineering are incredibly difficult, and that’s what makes this work interesting. If it were easy, then there would be no way to get me sitting in front of a computer screen for so long. Doing this stuff well is a true reward.

I have been meaning to write this essay for years, but I never bothered, because I didn’t believe that anyone would read it; it would be lost in a sea of more exciting tech news. The truth is that it caused a spike-in-viewing during what is traditionally a slow-day here.

Then there is the worry that a potential employer would see this world-view as negative.

Ironically it was an anthropologist’s (Dr. Michael Wesch) video that inspired me to finally write the essay. To see many of the real advances in the Web-realm presented in a few minutes, made clear many of the non-advances. The video’s name: “Web 2.0 … The Machine is Us/ing Us” sounds provocative, but the video looks optimistic to me. I suspect that different people see a completely different message in this video depending on their background, and that’s cool too.

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Find Your Next Job Online: Even In A Recession

(Originally posted on Apr 20, 2009 as /archives/2531)

I had this experience back during the dot-bomb bust. Obviously I need to paraphrase here, because this conversation happened long ago.

By Tulane Public Relations (Career Day Uploaded by AlbertHerring) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
Recruiter:

“How are you doing your online job search?”

I then describe how I search for positions via friends, Monster, etc.

Recruiter:

“That will never work. Those ‘known’ positions potentially have hundreds of applicants. It doesn’t matter how good you are. There are just too many other applicants.

Here is how I find potential applicants. One of my clients contacts me directly to fill a position. These are typically not positions that are widely advertised. My client wants to interview a small number of highly qualified people. I go to one of these Web sites (she then shows me Monster).

Then I search on the keywords that are in the job description, the potential applicant’s location, etc. Then I contact the folks on the first page. I am almost always able to fill the position for someone near the top of my search results.

So, the most effective way for you to find a position is to be on that first page. You don’t look for positions, because too many other people are applying for those very same positions. You simply position yourself so that I can find you.

See this? The results near the top were edited recently. Make a resume. Put it on here.

Put all the technologies that you know on it, and update it every single day, even if you simply add a space somewhere. Editing it every day puts it near the top of the search results. This advice will help other recruiters find you. In the meantime I will see if any of my clients need you now.”

Needless to say, this turned everything upside down. My job wasn’t to look for a job. My job was to market myself.


The advice above eventually generated many leads over the next ten years: long after I stopped updating my resume online. So this plan did work.

That said, you never know where your next offer will come from. I met a Walmart recruiter at a Diversity Job Fair during the dot-bomb implosion.

The Dallas Metro area lost over 78,000 IT and Telecom jobs during the 12 month period prior. Many of those folks were at this job fair.

There were two extremely out-the-door lines to the only two tech companies present, and a lot of empty booths for non-tech companies.

One of the tech companies was interested in applicants with flight simulator engineering experience. The other said, “Go to our Web site. We are not taking resumes.” O… K… I was near the start of the line, so I let others know what I learned, and I heard a lot of, “Thanks, now I don’t have to waste anymore time here” in response.

So, I introduced myself to a Walmart recruiter at her empty booth, because why not? She took one look at me and said, “I am not recruiting computer programmers. I am recruiting night stockers in Dallas for the holiday season.” I reply with, “That’s OK I was a Night Stocker at Ames Department Stores. I like retail, and I like stocking shelves. Also, I would like to move to Bentonville Arkansas to be a computer programmer.” She took my resume, told me that she would bring it home, and give it to a tech recruiter. That led to the highest paid position that I have held.

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