My Plan for Growing the Economy

My Plan for Growing the Economy

The American economy needs to grow again. Not the 1.5 – 2.0 percent growth we have seen over the past months. We need real growth in the 3.5 – 4.0 percent range. That is the only way to put millions of people back to work; advance our quality of life; and have any reasonable shot at getting our debt under control.

I published a series of four blogs about how to grow again in September 2011. You can read the complete series here. This week’s blog is a summary of those thoughts. Consider it my 4 Step Plan for Growth.

  1. Restore trust
  2. Create incentives for people to excel
  3. Raise the talent level
  4. Restore confidence

Step I: Start With Trust.

Growth requires investment, and that requires confidence. You can’t cut your way to sustainable growth.

The U.S. economy is in a self-fulfilling death spiral propelled by mistrust. When trust is absent, people naturally protect their immediate self-interest. This will occur even if it leads to their long-term individual and collective undoing.

Several factors must be in place for an economy to grow:

    • Confidence that the future brings opportunity from consumers, business owners, and governments
    • An educated and available talent pool that can do the jobs that are needed
    • A predictable, consistent set of regulations under which companies are encouraged to grow
    • Reliable infrastructure to meet the needs of those who depend on it
    • Available capital to fund expansion

The necesary ingredient for each of these is trust. We’re not talking about character. The mistrust that handcuffs us is driven by a lack of competence, consistency, communication and most important, courage.

Ultimately, trust and growth are driven by leadership that sees and advances toward a positive future.

It’s time for business owners and managers to stop playing defense. The one thing you can control in business is what you do. Be prudent, but realize that the great companies of tomorrow will be those that show courage today. Create an environment that attracts and retains top talent who appreciate the opportunity to contribute.

Individuals must take responsibility for developing and sustaining skills that makes them employable. There are vacant jobs out there. You can, at the very least, increase your employment options. Once you do that, start investing in the future.

And if you are an elected official reading this, you don’t have to do it all. You really don’t have to do much at all. Just be consistent; show that you can play nice in the sandbox with your opponents; and make it easier for those who want to create and fill jobs.

The only way to break the self-fulfilling death spiral is for someone to show some courage. Will it be you?

Step II: Show Me the Incentive

“People do things for their own reasons, not for our reasons.” – William Marston

Businesses want to grow. Entrepreneurs want to start new businesses. Workers want to do a good job, get ahead, and live their version of the American Dream

Why should they bother?

Behavior that is encouraged and rewarded is repeated. So let’s create the incentive for growth.

    • Government at every level must create incentives and remove barriers for businesses and individuals to grow if it wants to sustain and improve services. Regulation is sometimes necessary to protect the public’s interest, and it creates friction in the marketplace through increased costs. Every policy and regulation must be evaluated on one simple criterion: How can we protect the public interest while encouraging growth?
    •  Every business needs to re-focus on what it takes to grow. Perpetual cost cutting to maintain profits at the exclusion of growth is a guaranteed path to obscurity or worse. What are you doing to kill the incentive to grow? One place to start looking is the practicing of capping commissions. And, what are you doing to incent sustainable growth?
    • Every individual must grow – at least some – to maintain relevance in their current job. And if you really want to increase your value in the marketplace, there is no better way than to grow your knowledge and skills. We are all paid based on the size, complexity, and value of the problems we solve. Staying the same and refusing to grow is an invitation to be replaced. What is your incentive to grow?

Step III: Raise the Talent Level

Your value in the marketplace is in direct proportion to the importance and complexity of the problems you can solve and solutions you can provide to your customers. Put another way, you can’t earn a brain surgeon’s salary with a talent level that qualifies you to be a convenience store clerk.

This principle applies to organizations and economies, too. The global marketplace is dictating the price it is willing to pay for the talent we provide.

It pains me to say this, but there is no reason to pay more for the goods and services produced in this country compared to similar goods and services produced in other countries that pay their workers less money. As a result, wages are stagnant. When wages are stagnant, growth is stagnant.

The decline of talent (knowledge and skills) that allow us to differentiate ourselves has diminished over the past two decades. The Organization for Economic Cooperation & Development ranks students worldwide in the critical skills of math, science, and reading. In 2010, the U.S. ranked twenty-fifth in math, seventeenth in science, and fourteenth in reading. China ranked number one in all three categories. Hong Kong ranked second in reading and science and third in math. In South Korea, ninety-three percent of high school students graduate on time. In the United States, the number is seventy-five percent.

The easy answer is to throw more money at the public education system. As in most cases, easy isn’t the same as best. According to the National Center for Education Statistics, expenditures per student grew by 32 percent from 1994 to 2008. The problem with public education will not be solved by the traditional solution of throwing more money at the challenge

There are those who blame the teachers. There are bad teachers in every district, but they are in the minority. The vast majority of teachers want to do a great job. They need the time, tools, and support to do so.

There are those who blame the teacher unions. Every organization, public and private, gets the relationship with their workers and unions that they deserve. Wages, benefits, and working conditions are negotiated. There are unions that create barriers. On the other hand, why is no one asking who created the environment where educators feel so undervalued that must engage in adversary behavior to the detriment of student education?

The public education system is only as effective as the expectations of local communities and the quality of the leaders they put in place to guide their districts. The local school board sets the policy; hires the superintendent; and determines how money will be spent. We have to demand better performance from them.

Let’s Get Personal about Talent

Transforming the public education system is a long-term solution. That doesn’t help someone who needs or wants to earn more today.

Blaming technology and globalization won’t change anything. Passing protectionist laws might have a limited impact in specific situations, but that will not have a significant impact.

The only thing you can control is the value you bring to the marketplace. You must continually grow your knowledge and skills. Your personal economy will grow when the importance and complexity of the problems you can solve and solutions you can provide increase.

Step IV: Try Some Confidence

Lack of confidence changes behavior. Confident consumers spend more money because they believe the future will be positive. Confident sales people make more sales because they trust their ability and the value of their product. Confident companies invest in innovation, talent development, and new equipment because they believe that they will be rewarded for their investment.

What does a lack of confidence look like? Just look around.

Hiring is not where anyone wants it to be. Spending growth is anemic. Words like malaise and funk are used to describe the mood of individuals, companies, and the country. Consumer Confidence statistics support the reality that we have lost our swagger.

Who’s Responsible for Confidence?

Building and sustaining confidence is a function of leadership – personal, organizational, and institutional.

It doesn’t matter if you are leading a country, a company, a team, a family, or just yourself. There are things you can do to build your personal confidence and that of those you lead. Here are five ideas for generating the confidence you need to grow and achieve results:

  1. Look the part. My college tennis coach drilled a saying into us every day: “If you look sharp, you feel sharp. If you feel sharp, you play sharp. And if you play sharp, you are sharp.” If you lead an organization, don’t allow the facilities to go unattended. If you lead a team, maintain the look and feel of success in your meetings. If you are an individual, don’t spend every day in your bathrobe and PJ’s. Put yourself in the best position to perform your best.
  2. Change your language. Words matter and self-talk changes the way you perform. I get it if you aren’t comfortable with a daily mantra. At least focus on the desired positive outcome rather than the potential risk of failure. Performance moves toward the mind’s most dominant thought so put yourself in the best position for success.
  3. Set specific goals; create plans to achieve them; and measure success. Bold, specific goals that generate enthusiasm have a profound ability to inspire confidence and action. President John F. Kennedy galvanized the United States with his statement that “this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth.” Compare that to the general goal of creating more jobs or generating more sales. Specificity breeds focus, and focus creates the opportunity for confidence.
  4. Constantly upgrade you knowledge and skills. Imagine waking up tomorrow knowing that there was no need for your job. How would that make you feel? Now imagine an entire company realizing that its product or service is irrelevant. Multiply that by an entire industry. Finally, multiply that by ten percent of the entire country. That is what is happening in the United States today. The failure to invest in continuous education sets us on a path toward a perpetual lack of confidence fed by the despair of irrelevance.
  5. Celebrate successes – both large and small. At its core, confidence is the trust in one’s ability to be in control of their destiny. We should celebrate and learn from our successes – regardless of their size – just as we should acknowledge and learn from our shortcomings. A total focus on the negative creates feelings of helplessness. Celebrating success inspires confidence in the potential for the future.

A “Morning Again” Moment

President Ronald Reagan’s 1984 “Morning in America” campaign commercial marked a re-birth of confidence in a country that had suffered for too long under the malaise of mediocrity. It changed the language. It celebrated our successes, and it reinforced that the United States still knew how to succeed. (http://www.youtube.com/watch?v=EU-IBF8nwSY)

It is time for that message again in our country, our companies, and our individual lives. We can’t stop with a commercial, however. We have to support the vision with specific goals and measures. We must prepare for it with new knowledge and skills, and we must celebrate successes rather than failure.

The U.S. Presidential election will occur in a matter of days. Each candidate has their elaborate plan for growing the U.S. economy. Both work in theory. And, neither works unless we regain trust; create incentives; grow our talent; and restore our confidence.

I won’t pretend to tell you how to vote. I will ask that you carefully consider the candidate that will help us grow again as you make this important choice.

About the Author:

Randy Pennington
Randy Pennington is an award-winning author and a leading authority on helping organizations deliver positive results in a world of accelerating change. To learn more or to hire Randy for your next meeting, visit www.penningtongroup.com or call 972-980-9857.