Quote of the Day: The people on the front lines are right

"The people on the front lines are right, until proven otherwise."
--Colin Powell

Alas, all too often senior management assumes that it is right, and ignores the people who actually touch the company's customers.

A Modest Proposal to Solve Poverty: The Miserly Welfare State

In the spirit of Scott Adams, who uses his blog to offer simple solutions to the world's most intractable problems, I'd like to offer my thoughts on solving the problems of poverty and the welfare state.

On the one hand, it seems wrong for so many to live in squalor during a time of such plenty.

On the other hand, the generous European welfare state has largely failed; given the choice between hard work and no work with the same standard of living, many choose the path of least resistance.

The logical conclusion is to provide a universal safety net, but make sure that the services it provides are spartan and undesirable, so that no one is tempted to live a parasitic existence.

Here's how it might work. Let's assume that the most important thing to do is to provide food and shelter. Since McDonalds, and Taco Bell have already managed to push the price of meals down to $1 or less, we'll focus on the shelter part of the equation.

1) Set up a government program, Project Shelter, that will provide free shelter to any citizen (the issue of what to do with immigrants shall be left for another post).

2) Every citizen has the opportunity to sign up for a Project Shelter account either online or at a government office.

3) Any hotel or place of lodging can opt into being a Project Shelter provider. In addition to providing shelter, they must also provide some means of using the Internet, such as an open computer cluster.

4) Anyone with a Project Shelter account can go to any Project Shelter provider and get one free night of accomodation per day. To do so, they log into the provider's page on the Project Shelter web site (probably from the provider's computer cluster).

5) The government reimburses providers $10 for each night of shelter that they provide through this program. This is done monthly via ACH.

Let's examine why this would work.

A) Almost no new infrastructure. Rather than building government housing or using some elaborate system of subsidies, there is a single program with a reasonable cost.

B) By limiting the payment to $10 per night, it almost certainly guarantees that the accommodations will be spartan and uncomfortable. There's little incentive for folks to try to join the program unless they are truly destitute (though I can imagine this being used by road-tripping college students...who don't mind sleeping with the homeless). The same holds true for the requirement of daily logins.

C) Using a centralized Web site should limit opportunities for fraud, and make it relatively easy to investigate disputes and punish wrongdoers.

D) By simply offering reimbursement and specifying nothing else, we open up the floodgates of entrepreneurship.* Since few existing hotels will want to participate, innovative entrepreneurs will probably build Japanese-style "capsule" hotels, start marketing to homeless people, and compete to offer the best amenities they can to attract business, while still making a profit on $10/guest/day.

* Honesty compels me to point out one could imagine (as I did) that extralegal entrepreneurs might also take up the cause by purchasing accounts from the homeless in exchange for cash up front, or simply extorting them by violence. But I think that a random inspection regime for providers, and the value that a homeless person would place on nightly shelter would limit such abuses.

Even if you're unemployed and broke, this program would give you a clean, safe place to live and improve your chances of finding work. Moreover, just about anyone should be able to find some way to scrape together $2-3/day for food. And if a few hard-working entrepreneurs or aspiring artists were to use the program to quit their day jobs and take a chance on achieving their dream, I'd still consider it money well spent.

What do you think?

Cavemen and Autoworkers: Why Economics (and trade) are NOT a zero-sum game

I've got a monster essay up at AskTheHarvardMBA.com:

http://www.asktheharvardmba.com/2008/05/03/is-global-economics-a-zero-sum-game/

In it, I explain why global economics is not a zero-sum game, how cavemen can illustrate both the power of innovation and comparative advantage, and how competition from Japanese automakers is a huge net positive for America (though they did cause some collateral damage--to wit, the career of Michael Moore).

Check it out!

http://www.asktheharvardmba.com/2008/05/03/is-global-economics-a-zero-sum-game/

Quote of the Day: "If the stock is up 30% this month, please don't feel you are 30% smarter."

I'll tell people that if the stock is up 30% this month, please don't feel you are 30% smarter. Because when the stock is down 30% a month from now, it's not going to feel that good to feel 30% dumber.

--Jeff Bezos, CEO Amazon

True dat. Focus on what matters. While money is how we keep score, making boatloads of money doesn't necessarily mean you're a winner, and missing out on the big score doesn't necessarily mean you're a loser (just poor).

Whither Facebook?

Fake Steve Jobs nails it again when discussing Facebook's valuation, in light of the new finding that the Web site is largely devoted to wasting time:

"Kids, let's face it. Facebook is Webkinz for adults. Facebook is a Ponzi scheme. A handful of VCs have created the illusion of an actual market by funding apps companies and then doing deals with each other -- passing cash back and forth among to make it look as if money is being made."

Ouch.

Count me as a Facebook skeptic. I do believe that Facebook is valuable, but I'm not sure that it supports the kind of valuations it's been getting.

To me, the potential of Facebook is that it possesses information about our relationships
(the dreaded Social Graph, a term that I despise as much as the newly trendy "Loops"--sorry Dave). The problem is that Facebook's attempts to leverage that potential (Beacon anyone?) have been ham-handed at best and disastrous at worse.

The move to open up the platform was a brilliant one, but the interesting question remains, how will Facebook make money?

While the Social Graph is undoubtedly valuable, it's difficult for Facebook to claim that value. It can't charge the end users, and it's hard to build a sustainable business on charging the application providers (just imagine how successful Google would be if it charged listing fees to be included in its index, or for using its search engine).

Google gets away with its free-for-all business model because the core behavior of search captures true purchase intent. Not so for Super Fun Wall postings.

In the long term, Facebook needs to do one of two things--build or attract applications that do capture purchase intent (which can be monetized by advertising), or applications that someone will pay for.

Dave McClure argues that Facebook and other players can capture purchase intent by focusing on Social Commerce; Charlene Li believes that the answer lies in building utility apps.

Either could be true, but neither is a sure thing given Facebook's history to date. Here's hoping Fake Steve's post goes down as a "Dewey Defeats Truman" moment, rather than as a prescient vision of impending disaster.

The Persuasiveness of Imperfection: What You Can Learn from the U.S. Navy

The U.S. Navy has always been at the forefront of marketing. It's innovative use of Hollywood as a recruiting tool (Top Gun, The Hunt For Red October, Pearl Harbor) far exceeds what the other branches of the service have accomplished.

And now, the Navy has taken another pioneering step, by allow documentary filmmakers to produce a warts-and-all "reality show" about life aboard the U.S.S. Nimitz. Rather than focusing on the glam life of the fighter jocks, or following the captain around, "Carrier" looks at the lives of 15 regular crewmembers.

Nor does the documentary shy away from showing the frailties and imperfections of its characters. As the LA Times notes:

One sailor calmly tells the camera that America went to war for oil. Another, while slurring drunk and again when stone sober, is shown making racist comments. Yet another naval serviceman, who counsels crew members about sexually appropriate behavior, is caught having sex with a shipmate of a lower rank.

Later, a fighter pilot openly questions the rationale for the Iraq war and mulls over the morality of bombing the war-torn country. And finally, a range of enlisted personnel and officers plainly voice disappointment over not dropping bombs during their mission.

It's a far cry from the frantic whitewashing that civilian politicians often engage in where the military is concerned. It may even make many of the Navy's officers and supporters nervous; Admiral Gary Roughead, the CNO (Chief of Naval Operations), even emailed about 1,000 officers and some civilians to inform them about the documentary and explain why the Navy agreed to give the filmmakers complete artistic freedom.

Yet what "Carrier" demonstrates is that the Navy understands that marketing has changed, and that an authentic look at life in the Navy, imperfections and all, is more persuasive than a sanitized commercial. In today's more transparent world, the willingness to allow one's flaws and shortcomings to be broadcast to the world is a sign of strength rather than weakness. It says, "I know I'm not perfect. But if you know the truth about me, I think you'll respect me and listen to what I have to say with an open mind."

Letting "Carrier" be filmed is a difficult decision. After all, seeing certain Navy sailors show themselves to be racists and hypocrites seems like it would give the service's enemies more ammunition. But I'm glad that the Navy believes in the intelligence and perceptiveness of its intended audience (high school and college students) and in its own fundamental sense of honor and good.

Respect your audience, believe in yourself, and tell the truth. I'll let you draw your own conclusions about how these same principles might apply to everything in life from marketing your products to presidential campaigns.

I think Admiral Roughead shows an admirable grasp of this truth when he wrote:

"The snapshot is frank and may be somewhat disconcerting to some who came into the Navy some time ago. However, that said, I believe it will also resonate with a significant segment of our country."