The Rise and Fall of Finance and the End of the Society of Organizations (a little “serious reading”)

Here’s a serious reading suggestion for a snowy Sunday afternoon.  (yes – we got three inches of snow in Richardson, Texas, on a cold March 21 Sunday.  Amazing!)

Bob Morris, our fellow blogger and book reviewer extraordinaire, likes to remind that there are some great books that never make it to best-seller status, and there are some best-sellers that are not necessarily worthy of their over-hyped reputation.  I know that he is right about this, but I, like so many, become too easily enamored by the hype and buzz.  Here’s a blog post in agreement with his premise.

I apologize that I do not remember which site/blog pointed me in the direction of this article.  It is an excerpt of a book that is not a best seller, but one that I suspect would be worth a careful read.  The article is:  The Rise and Fall of Finance and the End of the Society of Organizations by Gerald F. Davis.  This article is largely based on his book Managed by the Markets: How Finance Reshaped America. Oxford, U.K.: Oxford University Press, 2009.

This is an interesting and important book to me because it deals with an issue that I am slowly becoming obsessed by, and have written about frequently on this blog:  where will the jobs be? In the article, the author includes a chart showing the decline of manufacturing jobs and the flat (almost no) growth of retail jobs.  There is also a table that shows the ten largest employers from 1960, 1980, and 2009.  It provides quite a contrast.

This is an academic article – what I call “serious reading” — the kind that requires a little undivided attention, and your thinking hat to be firmly on your head.  But I commend it to you.  I am including a few paragraphs here, but still just a teaser.

Here is the executive overview, and a few excerpts:

Executive Overview:
Large corporations were a dominant force in American society for generations through their employment practices, expansion choices, and community connections. As the United States has shifted to a postindustrial economy, however, finance has increasingly taken center stage. This article documents shifts in corporate employment, institutional investment, corporate organization, financial services, governments, and household ties to financial markets over the past three decades. I argue that all these shifts can be seen as part of an interconnected movement toward a finance-centered economy, and that the recent economic downturn can be viewed as one outcome of this broader movement.

other excerpts:
The global economic downturn that closed the first decade of the 21st century revealed the centrality of finance to American society. Problems with arcane securities traded by obscure financial institutions rapidly spun out of control, potentially putting global capitalism itself at risk. Like a loose thread that manages to unweave an entire sweater, the mortgage crisis evolved into a credit crisis and ultimately into an economic crisis that is rivaling the Great Depression of the 1930s. The economic crisis in turn has forced us to grapple with the fact that the United States is now a fully postindustrial economy. By March 2009, more Americans were unemployed than were employed in manufacturing, and all signs pointed to further displacement in the goods-producing sector.

The argument is as follows. As manufacturing employment gave way to services and the largest employers shifted from firms such as GM to those such as Wal-Mart, the nature of the employment relation changed: The long-term mutual obligations of old were replaced by expectations of more temporary attachments.

By the end of the decade, any lingering doubt about the purpose of the corporation, or its commitment to various stakeholders, had been resolved. The corporation existed to create share-holder value; other commitments were means to that end.

The argument of this paper has had many moving parts, but the underlying theme is that finance shaped the transition from an industrial to a postindustrial society in the United States over the past three decades. From a society of organizations, in which corporations were essential building blocks that shaped the daily lives of their members, we evolved into a portfolio society in which household welfare was increasingly tied to the vagaries of the financial markets.

… states are more business service providers than sovereign nations.

Business Lessons from Guy Kawasaki

Business Lessons from Guy Kawasaki (excerpted from the Corner Office Interview, NY Times)

Guy Kawasaki on one of his many adventures

Guy Kawasaki is a one-man business idea factory.  We link to his blog on our blog roll, and I follow him on Twitter, and I have presented synopses of two of his books, The Art of the Start and Reality Check (which Bob Morris called the best book he read in 2008).  Here are some excerpts from his terrific interview in the NY Times Corner Office (Note:  Bob usually posts about the pieces from the NY Times Corner Office, and will probably do so again with this one.  But I liked it so much that I decided it would be more than ok to give our readers a double dose of Kawasaki).

On the centrality and primacy of sales:

You truly have to understand how to take care of your customers.
I learned a very valuable lesson: how to sell. Sales is everything. As long as you’re making sales, you’re still in the game. That lesson has stuck with me throughout my career.

On Steve Jobs and his brilliance:

I learned from Steve that some things need to be believed to be seen. These are powerful lessons — very different from saying we just want to eke out an existence and keep our heads down.

On hiring:

The most important thing is that you hire people who complement you and are better than you in specific areas.
…make yourself dispensable — what greater accomplishment is there than the organization running well without you? It means you picked great people, prepared them and inspired them. And if executives did this, the world would be a better place.

On clear and simple, easy to understand, to the point communication:

business schools should teach students how to communicate in five-sentence e-mails and with 10-slide PowerPoint presentations. If they just taught every student that, American business would be much better off.

On work ethic:

…success in business comes from the willingness to grind it out. It’s not because of the brilliant idea. It’s because you are willing to work hard. That’s the key to success.

On execution:

The issue with consulting is that if you go straight to work for a consultant (after college graduation), you develop this perspective that the hard part is the analysis and the decision. In reality, that’s not the hard part. The hard part is implementing the decision, not making it.

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You can purchase my synopses of both The Art of the Start, with handout + audio, on our companion web site 15minutebusinessbooks.com.  The synopsis for Reality Check should be available soon.