Ditto: To the Class of 2012 - WSJ.com

Stephens: To the Class of 2012 - WSJ.com

Dear Class of 2012:

Allow me to be the first one not to congratulate you. Through exertions that—let's be honest—were probably less than heroic, most of you have spent the last few years getting inflated grades in useless subjects in order to obtain a debased degree. Now you're entering a lousy economy, courtesy of the very president whom you, as freshmen, voted for with such enthusiasm. Please spare us the self-pity about how tough it is to look for a job while living with your parents. They're the ones who spent a fortune on your education only to get you back— return-to-sender, forwarding address unknown.

No doubt some of you have overcome real hardships or taken real degrees. A couple of years ago I hired a summer intern from West Point. She came to the office directly from weeks of field exercises in which she kept a bulletproof vest on at all times, even while sleeping. She writes brilliantly and is as self-effacing as she is accomplished. Now she's in Afghanistan fighting the Taliban.

If you're like that intern, please feel free to feel sorry for yourself. Just remember she doesn't.

Unfortunately, dear graduates, chances are you're nothing like her. And since you're no longer children, at least officially, it's time someone tells you the facts of life. The other facts.

Fact One is that, in our "knowledge-based" economy, knowledge counts. Yet here you are, probably the least knowledgeable graduating class in history.

A few months ago, I interviewed a young man with an astonishingly high GPA from an Ivy League university and aspirations to write about Middle East politics. We got on the subject of the Suez Crisis of 1956. He was vaguely familiar with it. But he didn't know who was president of the United States in 1956. And he didn't know who succeeded that president.

Pop quiz, Class of '12: Do you?

Many of you have been reared on the cliché that the purpose of education isn't to stuff your head with facts but to teach you how to think. Wrong. I routinely interview college students, mostly from top schools, and I notice that their brains are like old maps, with lots of blank spaces for the uncharted terrain. It's not that they lack for motivation or IQ. It's that they can't connect the dots when they don't know where the dots are in the first place.

gloview0508new
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Now to Fact Two: Your competition is global. Shape up. Don't end your days like a man I met a few weeks ago in Florida, complaining that Richard Nixon had caused his New York City business to fail by opening up China.

In places like Ireland, France, India and Spain, your most talented and ambitious peers are graduating into economies even more depressed than America's. Unlike you, they probably speak several languages. They may also have a degree in a hard science or engineering—skills that transfer easily to the more remunerative jobs in investment banks or global consultancies.

I know a lot of people like this from my neighborhood in New York City, and it's a good thing they're so well-mannered because otherwise they'd be eating our lunch. But if things continue as they are, they might soon be eating yours.

Which reminds me of Fact Three: Your prospective employers can smell BS from miles away. And most of you don't even know how badly you stink.

When did puffery become the American way? Probably around the time Norman Mailer came out with "Advertisements for Myself." But at least that was in the service of provoking an establishment that liked to cultivate an ideal of emotional restraint and public reserve.

To read through your CVs, dear graduates, is to be assaulted by endless Advertisements for Myself. Here you are, 21 or 22 years old, claiming to have accomplished feats in past summer internships or at your school newspaper that would be hard to credit in a biography of Walter Lippmann or Ernie Pyle.

If you're not too bright, you may think this kind of nonsense goes undetected; if you're a little brighter, you probably figure everyone does it so you must as well.

But the best of you don't do this kind of thing at all. You have an innate sense of modesty. You're confident that your résumé needs no embellishment. You understand that less is more.

In other words, you're probably capable of thinking for yourself. And here's Fact Four: There will always be a market for people who can do that.

In every generation there's a strong tendency for everyone to think like everyone else. But your generation has an especially bad case, because your mass conformism is masked by the appearance of mass nonconformism. It's a point I learned from my West Point intern, when I asked her what it was like to lead such a uniformed existence.

Her answer stayed with me: Wearing a uniform, she said, helped her figure out what it was that really distinguished her as an individual.

Now she's a second lieutenant, leading a life of meaning and honor, figuring out how to Think Different for the sake of a cause that counts. Not many of you will be able to follow in her precise footsteps, nor do you need to do so. But if you can just manage to tone down your egos, shape up your minds, and think unfashionable thoughts, you just might be able to do something worthy with your lives. And even get a job. Good luck!

Write to bstephens@wsj.com

Stephen.Bates | +1 202 730-9760
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Peter Berkowitz: Why Colleges Don't Teach the Federalist Papers cc @jbordeaux

Peter Berkowitz: Why Colleges Don't Teach the Federalist Papers

By PETER BERKOWITZ

It would be difficult to overstate the significance of The Federalist for understanding the principles of American government and the challenges that liberal democracies confront early in the second decade of the 21st century. Yet despite the lip service they pay to liberal education, our leading universities can't be bothered to require students to study The Federalist—or, worse, they oppose such requirements on moral, political or pedagogical grounds. Small wonder it took so long for progressives to realize that arguments about the constitutionality of ObamaCare are indeed serious.

The masterpiece of American political thought originated as a series of newspaper articles published under the pseudonym Publius in New York between October 1787 and August 1788 by framers Alexander Hamilton, John Jay and James Madison. The aim was to make the case for ratification of the new constitution, which had been agreed to in September 1787 by delegates to the federal convention meeting in Philadelphia over four months of remarkable discussion, debate and deliberation about self-government.

By the end of 1788, a total of 85 essays had been gathered in two volumes under the title The Federalist. Written at a brisk clip and with the crucial vote in New York hanging in the balance, the essays formed a treatise on constitutional self-government for the ages.

The Federalist deals with the reasons for preserving the union, the inefficacy of the existing federal government under the Articles of Confederation, and the conformity of the new constitution to the principles of liberty and consent. It covers war and peace, foreign affairs, commerce, taxation, federalism and the separation of powers. It provides a detailed examination of the chief features of the legislative, executive and judicial branches. It advances its case by restatement and refutation of the leading criticisms of the new constitution. It displays a level of learning, political acumen and public-spiritedness to which contemporary scholars, journalists and politicians can but aspire. And to this day it stands as an unsurpassed source of insight into the Constitution's text, structure and purposes.

berkowitz
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The Title Page of the Federalist: a Collection of Essays circa 1787.

At Harvard, at least, all undergraduate political-science majors will receive perfunctory exposure to a few Federalist essays in a mandatory course their sophomore year. But at Yale, Princeton, Stanford and Berkeley, political-science majors can receive their degrees without encountering the single surest analysis of the problems that the Constitution was intended to solve and the manner in which it was intended to operate.

Most astonishing and most revealing is the neglect of The Federalist by graduate schools and law schools. The political science departments at Harvard, Yale, Princeton, Stanford and Berkeley—which set the tone for higher education throughout the nation and train many of the next generation's professors—do not require candidates for the Ph.D. to study The Federalist. And these universities' law schools (Princeton has no law school), which produce many of the nation's leading members of the bar and bench, do not require their students to read, let alone master, The Federalist's major ideas and main lines of thought.

Of course, The Federalist is not prohibited reading, so graduates of our leading universities might be reading it on their own. The bigger problem is that the progressive ideology that dominates our universities teaches that The Federalist, like all books written before the day before yesterday, is antiquated and irrelevant.

Particularly in the aftermath of the New Deal, according to the progressive conceit, understanding America's founding and the framing of the Constitution are as useful to dealing with contemporary challenges of government as understanding the horse-and-buggy is to dealing with contemporary challenges of transportation. Instead, meeting today's needs requires recognizing that ours is a living constitution that grows and develops with society's evolving norms and exigencies.

Then there's scientism, or enthrallment to method, which collaborates with progressive ideology to marginalize The Federalist, along with much of the best that has been thought and said in the West. Political science has corrupted a laudable commitment to the systematic study of politics by transforming it into a crusading devotion to the refinement of method for method's sake. In the misguided quest to mold political science to the shape of the natural sciences, many scholars disdainfully dismiss The Federalist—indeed, all works of ideas—as mere journalism or literary studies which, lacking scientific rigor, can't yield genuine knowledge.

And thus so many of our leading opinion formers and policy makers seem to come unhinged when they encounter constitutional arguments apparently foreign to them but well-rooted in constitutional text, structure and history. These include arguments about, say, the unitary executive; or the priority of protecting political speech of all sorts; or the imperative to articulate a principle that keeps the Constitution's commerce clause from becoming the vehicle by which a federal government—whose powers, as Madison put it in Federalist 45, are "few and defined"—is remade into one of limitless unenumerated powers.

By robbing students of the chance to acquire a truly liberal education, our universities also deprive the nation of a citizenry well-acquainted with our Constitution's enduring principles.

Mr. Berkowitz is a senior fellow at Stanford University's Hoover Institution. His latest book is "Israel and the Struggle over the International Laws of War" (Hoover Press, 2012).

Why @Verizon Doesn't Want You to Buy an iPhone $AAPL $VZN

PCMag.com
You'd think Verizon would subsidize a couple of Apple iPhone hardware and software developers to accelerate QC of the LTE iPhone.

Why Verizon Doesn't Want You to Buy an iPhone

A pretty hot story is going around, stoked by CNNMoney, that Verizon Wireless sales reps are steering customers away from Apple's iPhones in favor of 4G LTE-enabled Android devices. I absolutely believe this, Verizon's official denials notwithstanding.

This has nothing to do with the Apple/Android war. It has little to do with the huge subsidies paid on Apple products, little to do with Apple's power in the market, and little to do with how much Android manufacturers kowtow to Verizon. Maybe those are minor factors, but they aren't the primary reason.

Verizon Needs LTE Subscribers
Here's the problem: Verizon has spent millions of dollars rolling out its massive LTE network to cover 200 million people so far. You could call it billions, if you include the $5 billion spent on the C Block 700-Mhz spectrum licenses. But according to its first-quarter earnings presentation it's only been able to convert 9.1 percent of its 93 million users to LTE.

Moving over "Internet device" customers on USB modems and iPads won't help, because according to Verizon's most recent quarterly report, that's only 8 percent of the carrier's postpaid subscriber base. Verizon needs to convert smartphone users, and 72 percent of its postpaid phone sales were smartphones, according to its earnings release.

Verizon customers' data demands are growing, because more and more are choosing smartphones. But the carrier can't easily add capacity on its old 3G network. We've seen average speeds on the Verizon 3G network creeping down for a while; we got average download speeds of 1.01Mbps in our Fastest Mobile Networks 2010 feature, but the carrier dropped to 700kbps in Fastest Mobile Networks 2011.

The carrier has done a very good job of preventing network crowding from ending up with blocked calls and dropped connections, but it still has a crowded network using a base technology (EVDO) that is slower than AT&T and T-Mobile's HSPA.

The 4G LTE network, on the other hand, is blazingly fast and has tons of capacity right now. It isn't overcrowded. There's plenty of room. And every 4G phone can fall back to 3G just in case.

You Can't Move an iPhone Customer to 4G
From Verizon's position, the solution looks simple: move heavy data users in crowded urban areas from 3G to 4G as fast as possible. That would help everyone. The new 4G users get much faster connections, and the 3G users would see better speeds and network quality, too, as that network becomes less crowded.

There's only one problem. The iPhone isn't a 4G phone. And according to Verizon CFO Fran Shammo, the carrier sold more iPhones over the last quarter (3.2 million) than it did LTE devices (2.9 million). That means more than half of Verizon's smartphone buyers are crowding onto the already busy 3G network, while the 4G network has plenty of space.

So you see why Verizon has a strong reason to push buyers away from the iPhone. The iPhone is a great device. But it's making a crowded network more crowded. Until the LTE iPhone comes along, to rebalance its network, Verizon may quietly push Android phones.

For the top stories in tech, follow us on Twitter at @PCMag.

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Book Review: The Gentry Man | Off the Cuff

For the Bookshelf: The Gentry Man

Gentry Man Cover For the Bookshelf: The Gentry Man

One of the exciting side effects brought about by the sustained and evolving resurgence in menswear, elegantly executed lifestyles, and well-crafted luxury goods, is the recent release of some great new books geared toward men.

For the past several years, there has been a coffee table drought of sorts; a lack of interesting books devoted to mens style.  Alan Flusser’s contributions are de facto bibles when it comes to elegant dressage and, as he so eloquently coined it, “permanent style.”  However, few titles have been able to give him a worthwhile nudge on the bookshelf.

Things changed in 2009, when “Take Ivy” was published.  Previously beloved as a cult classic in the fashion world, the Japanese language book was republished in English.  The publisher was stunned with the intense demand once word got out.  Apparently, men were starving for quality style guides and substantive books filled with interesting, useful, historical, and practical information about how to dress, how to live, what to drink, and how to behave.

Authors obliged.  Some of the weak offerings were no more than a collection of generalizations and pictures of people on boats and sitting on tartan chairs.  Others, like the impressive “Preppy,” sought to delve deep into the fashion and philosophy of the preppy lifestyle.  “The Ivy League,” a stunning new book, which will be reviewed soon on OTC, captures both the style and culture of the Ivy League world.  It prompted a deep reflection on this editor-in-chief’s own upbringing and resulted in a major article currently undergoing final edits.  Finally, the quality of menswear books is beginning to meet demand.

the gentry man c. CoolHunting.com For the Bookshelf: The Gentry ManPerhaps the most interesting book to land on our doorstep is “The Gentry Man: A Guide for the Civilized Male.”

Gentry was a landmark magazine for men from the 1950s, which covered all aspects of gentlemanly pursuits.  It lead with a distinct worldly, intellectual approach; a cross between today’s Esquire and Monocle magazines.

From cocktails to suiting, automobiles to academic treatises.  Art, culture, and travel mingles with fashion and interior design. It was a magazine for the thinking man’s dandy. Playboy, but without the nudity.

Editor Hal Rubenstein collected some of the best articles from the magazine’s 22 issues – far too brief a run. Of course the technology is out of date and the fashions a touch stodgy, but that is beside the point.  The hefty book, 256 pages, is divided into distinct sections that take advantage of the subject matter’s depth and breadth: Style; Homes, Cars, and Travel; Food and Drink; Sports and Culture; and Art and Architecture.  Thomas Crowne likely read Gentry.

Much of the advice perfectly relevant for today, especially the underlying message of gentlemanlyness and intellectual curiosity. These are the hallmarks of a true man and this wonderful book is a guide-cum-historical reference for those seeking to put some substance behind their style.

The Gentry Man goes on sale May 8, 2012.

Stephen.Bates | +1 202 730-9760
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Brooks discusses online learning in his @nytimes piece, the Campus Tsunami

NYTimes.com

The Campus Tsunami

Online education is not new. The University of Phoenix started its online degree program in 1989. Four million college students took at least one online class during the fall of 2007.

But, over the past few months, something has changed. The elite, pace-setting universities have embraced the Internet. Not long ago, online courses were interesting experiments. Now online activity is at the core of how these schools envision their futures.

This week, Harvard and the Massachusetts Institute of Technology committed $60 million to offer free online courses from both universities. Two Stanford professors, Andrew Ng and Daphne Koller, have formed a company, Coursera, which offers interactive courses in the humanities, social sciences, mathematics and engineering. Their partners include Stanford, Michigan, Penn and Princeton. Many other elite universities, including Yale and Carnegie Mellon, are moving aggressively online. President John Hennessy of Stanford summed up the emerging view in an article by Ken Auletta in The New Yorker, “There’s a tsunami coming.”

What happened to the newspaper and magazine business is about to happen to higher education: a rescrambling around the Web.

Many of us view the coming change with trepidation. Will online learning diminish the face-to-face community that is the heart of the college experience? Will it elevate functional courses in business and marginalize subjects that are harder to digest in an online format, like philosophy? Will fast online browsing replace deep reading?

If a few star professors can lecture to millions, what happens to the rest of the faculty? Will academic standards be as rigorous? What happens to the students who don’t have enough intrinsic motivation to stay glued to their laptop hour after hour? How much communication is lost — gesture, mood, eye contact — when you are not actually in a room with a passionate teacher and students?

The doubts are justified, but there are more reasons to feel optimistic. In the first place, online learning will give millions of students access to the world’s best teachers. Already, hundreds of thousands of students have taken accounting classes from Norman Nemrow of Brigham Young University, robotics classes from Sebastian Thrun of Stanford and physics from Walter Lewin of M.I.T.

Online learning could extend the influence of American universities around the world. India alone hopes to build tens of thousands of colleges over the next decade. Curricula from American schools could permeate those institutions.

Research into online learning suggests that it is roughly as effective as classroom learning. It’s easier to tailor a learning experience to an individual student’s pace and preferences. Online learning seems especially useful in language and remedial education.

The most important and paradoxical fact shaping the future of online learning is this: A brain is not a computer. We are not blank hard drives waiting to be filled with data. People learn from people they love and remember the things that arouse emotion. If you think about how learning actually happens, you can discern many different processes. There is absorbing information. There is reflecting upon information as you reread it and think about it. There is scrambling information as you test it in discussion or try to mesh it with contradictory information. Finally there is synthesis, as you try to organize what you have learned into an argument or a paper.

Online education mostly helps students with Step 1. As Richard A. DeMillo of Georgia Tech has argued, it turns transmitting knowledge into a commodity that is cheap and globally available. But it also compels colleges to focus on the rest of the learning process, which is where the real value lies. In an online world, colleges have to think hard about how they are going to take communication, which comes over the Web, and turn it into learning, which is a complex social and emotional process.

How are they going to blend online information with face-to-face discussion, tutoring, debate, coaching, writing and projects? How are they going to build the social capital that leads to vibrant learning communities? Online education could potentially push colleges up the value chain — away from information transmission and up to higher things.

In a blended online world, a local professor could select not only the reading material, but do so from an array of different lecturers, who would provide different perspectives from around the world. The local professor would do more tutoring and conversing and less lecturing. Clayton Christensen of Harvard Business School notes it will be easier to break academic silos, combining calculus and chemistry lectures or literature and history presentations in a single course.

The early Web radically democratized culture, but now in the media and elsewhere you’re seeing a flight to quality. The best American colleges should be able to establish a magnetic authoritative presence online.

My guess is it will be easier to be a terrible university on the wide-open Web, but it will also be possible for the most committed schools and students to be better than ever.

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To Facebook, You’re Worth $80.95 writes Doug Laney from @Gartner @wsj

The CIO Report

Doug Laney

Research Vice President, Gartner

With all the hype about the imminent IPO indicating the public will value Facebook at $85 to $95 billion, it’s interesting to consider how much Facebook in turn values the public. Disclosures in the company’s S-1 filing along with data from other public sources reveals a raft of metrics about how many users, pages, “Likes,” apps, messages and other forms of activity Facebook captures about us. Applying emerging techniques that map these information-related volumetrics to Facebook’s actual financials and anticipated market valuation can help quantify the economic value of information.

The results show that you are worth about $81 to Facebook. Your friendships are worth $0.62 each, and your profile page could be valued at $1,800. The value of a business page is worth approximately $3.1 million. Put another way, Facebook’s nearly one billion users have become the largest unpaid workforce in history.

More to the point, Facebook needs a way to quantify the value of its data and the intrinsic value of its information assets. In this era of big data, represented by the opportunities of burgeoning data volume, velocity and variety, most organizations are fast becoming information-centric. All businesses generate, capture and collect data, and increasingly, most are seeking ways to monetize it. Monetizing information doesn’t necessitate selling it outright, but it does demand discipline around considering, managing, leveraging and ultimately valuing it just as any traditional asset.

The Economics of Information

The concept of information economics, or infonomics, enumerates a variety of benefits to quantifying information’s value and even goes so far as to recommend that organizations create internal supplemental balance sheets that include information portfolio valuation.  This is important to CIOs as they recognize the mission-critical importance of information to their organization, realize that information has probable future economic value even before it’s used, and seek to protect that investment based on its true worth.

Ultimately, contrasting the potential versus realized economic value of your information assets is a way to encourage, budget, and justify IT and business initiatives. Facebook’s pre-IPO disclosure gives us more than a glimpse at the invisible, but yawning, value gap that exists in most organizations and an example of a business model devised to close it.

In its financial disclosure, Facebook reported $3.71 billion in 2011 revenue on $6.6 billion in assets. How much of the reported balance sheet assets are composed of its information assets? None. Even in the midst of the information age, generally accepted accounting practices based on SEC-defined reporting standards that predate the use of information technology still generally preclude recognizing the value of information — even for information-based businesses.

As early as 2000, issues around nonreportable intangibles such as information and knowledge assets rose to the level of congressional interest. In the Hearing on Adapting a 1930s Financial Reporting Model to the 21st Century, then-Arthur Andersen partner Steve Samek testified that “our current measurement and reporting systems in the United States do not capture emerging sources of value…[and] can exacerbate business risk and stock volatility,” and because “physical assets have tended to diminish proportionately in value…the gap between market and book value…has turned into a chasm.”

The Financial Value of Facebook’s Information Assets

The value of all the information Facebook collects is in the hinterland between its reported balance sheet book value of $6.6 billion and the anticipated post-IPO market value. Facebook is a pure information-based business; it doesn’t buy, make or sell anything else. Using Facebook’s own conservative valuation of $75 billion, its information value gap is more than $68 billion.

What information has Facebook collected from you and me? Facebook reports it has 845 million Monthly Active Users (“MAUs”) as of December 2011, up from 608 million in 2010 and 360 million in 2009. Facebook claims users punch the “Like” button or post a comment 2.7 billion times per day. Estimates suggest about half of those are “Likes” and half are some form of written content. Based on Facebook’s recent trajectory, this extrapolates to 2.11 trillion pieces of monetizable content collected during the past three years. Facebook’s filing also discloses that it has 37 million pages with 10 or more “Likes,” while other sources indicate Facebook hosts nearly 22,000 business pages. Its 845 million users, each with an average of 130 friends, equates to 109 billion friendships. Facebook’s S-1 corroborates this figure as “over 100 billion friend connections.”

Dividing Facebook’s 2.11 trillion pieces of content into this market-to-book valuation differential indicates that each “Like” you click or item you post will be worth about $.03 to Facebook or its future investing public.

Because Facebook actually generated $3.7 billion on these information assets last year, the realized value of its information portfolio is only 1/20th its investor-anticipated potential. Facebook and its investors plainly expect this gap to be closed through its information monetization capabilities. Information value gaps aren’t unique to Facebook — Google and other information-centric businesses experience the same gaps.

Consider what it would cost using traditional methods to survey nearly a billion people about 2,500 of their individual interests. Certainly it would be more than $81 per person. Facebook’s clever, though hardly unique, business model enables it to avoid paying for this information. Facebook users (its exclusive content factory) spend a total of 9.7 million minutes per day on the site. Using the current U.S. federal minimum wage of $7.25 per hour, Facebook receives $1.2 million per day in free labor.

Most organizations do not benefit from a global pool of data-churning staff and a pure information-based business model. But to remain competitive, they must continually become more information-centric. This starts with CIOs considering what sources of information are available both internally and externally, envisioning how this information can be deployed in transformative ways, and valuing and managing information as an actual corporate asset.

Activity Based Costing? Controlled Costs, Delivering Savings That Stick @wsj

Delivering Savings That Stick - The CFO Report - WSJ

What is it that gives your company an edge over its competitors? Is it technology? Strategy? Market position?

Among industry-leading companies, more than 40% of executives say their key competitive advantage is their ability to keep costs low. And not just during a downturn. Companies with consistently lower costs can out-invest rivals in R&D and marketing, compete on price, and quickly shift resources to gain market share, all while maintaining strong margins.

Bain & Company
Hernan Saenz is a partner in Bain & Company’s Dallas and Mexico City offices.

Given those incentives, you’d think companies would keep costs low all the time.

Yet even when times are tough, many companies struggle to achieve the reductions they aim for. Despite the flurry of cost-cutting efforts in response to the economic downturn, a recent Bain & Company analysis reveals that nearly 60% of corporate managers who tried to shave expenses by 20% or more failed to reach their goal. And when the economic pressure to slim down eases, as it seems to be doing now, fat begins creeping back in immediately.

But some companies not only reduce costs, they keep them low over time. We analyzed the performance of 68 large U.S. public companies that announced major cost-reduction initiatives in the first quarter of 2009 and found that, a year to 24 months later, more than 20% of those companies had maintained or grown their EBIT despite revenue drops of 10% or more—a remarkable achievement.

What do these companies do that the others don’t?

First, they set spending targets based not on what they think they can achieve, but on external, market-based factors. A company facing new competition from rivals in China and other developing markets is unlikely to restore its competitive position with an arbitrary cost-reduction target of 10%.

During the market crash that began in late 2000, discount brokerage Charles Schwab, once a cost leader, realized it was being undercut by online competitors. Schwab needed to lower its price per trade significantly just to stay in the game. The company set out to determine the right price point and predict future pricing trends, then used that information as the basis for building a new cost structure.

Bain & Company
Peter Guarraia is a partner with Bain & Company in Chicago.

Leading companies also tailor cost cuts to their overall business strategy. A bank whose strategy focuses on high-touch customer service obviously has a different level of costs than a bank focused on low-price accounts and self-service. Failing to consider strategy in cost control efforts is a recipe for trouble.

Using the wrong metrics is another pitfall. For example, one Asian telecom company looked at its call center cost per call handled and the cost per visit by its field technicians. Both appeared to meet industry benchmarks. But the two units operated separately. It turned out that call center agents were controlling costs by keeping calls short—even if that meant dispatching a truck on a far more expensive service call. By integrating the call center with the field unit and giving one executive responsibility for all customer service operations, the company saved millions.

Companies that maintain a low-cost position also focus on costs that build up in the seams of the organization, where units bump up against each other and authority and incentives are often unclear. At one major energy company, we found that a startling 40% of overhead costs were in such areas. Much of the corporate IT budget, for instance, went to support business units and was charged back to the units below the profit line. Division managers were not held responsible for IT costs. The company eventually reined in this expense with an effective chargeback system and created a board of business unit heads responsible for ensuring that IT charges were competitive.

Each of these techniques is an essential element of any sustained cost transformation—the table stakes, so to speak. But to make cost-reduction efforts stick, frontline managers and employees need to buy in to the changes. Executives surveyed identified employee behavior as the single biggest obstacle to capturing lasting value from cost-reduction efforts.

If the people on the front line don’t begin to think and act differently, initial cost savings won’t last. Rather than forcing changes from the top down, successful companies recognize and address the natural anxiety that results from change and work to involve the entire organization in the effort. Before long, the company develops a new culture in which keeping costs low is a primary objective. This is the key to delivering sustained cost savings year after year.

Peter Guarraia is a partner with Bain & Company in Chicago. Hernan Saenz is a partner in Bain’s Dallas and Mexico City offices.

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President Bill Clinton reviews ‘The Passage of Power,’ Robert Caro’s New L.B.J. Book in Sunday NYT Book Review

http://www.nytimes.com/2012/05/06/books/review/the-passage-of-power-robert-ca...

Seat of Power

“The Passage of Power,” the fourth installment of Robert Caro’s brilliant series on Lyndon Johnson, spans roughly five years, beginning shortly before the 1960 presidential contest, including the Bay of Pigs, the Cuban missile crisis and other seminal events of the Kennedy years, and ending a few months after the awful afternoon in Dallas that elevated L.B.J. to the presidency.

Among the most interesting and important episodes Caro chronicles are those involving the new president’s ability to maneuver bills out of legislative committees and onto the floor of the House and Senate for a vote. One of those bills would later become the 1964 Civil Rights Act.

You don’t have to be a policy wonk to marvel at the political skill L.B.J. wielded to resuscitate a bill that seemed doomed to never get a vote on the floor of either chamber. Southern Democrats were masters at bottling up legislation they hated, particularly bills expanding civil rights for black Americans. Their skills at obstruction were so admired that the newly sworn-in Johnson was firmly counseled by an ally against using the political capital he’d inherited as a result of the assassination on such a hopeless cause.

According to Caro, Johnson responded, “Well, what the hell’s the presidency for?”

This is the question every president must ask and answer. For Lyndon Johnson in the final weeks of 1963, the presidency was for two things: passing a civil rights bill with teeth, to replace the much weaker 1957 law he’d helped to pass as Senate majority leader, and launching the War on Poverty. That neither of these causes was in fact hopeless was clear possibly only to him, as few Americans in our history have matched Johnson’s knowledge of how to move legislation, and legislators.

It’s wonderful to watch Johnson’s confidence catch fire and spread to the shellshocked survivors of the Kennedy administration as it dawned on them that the man who was once Master of the Senate would now be a chief executive with more ability to move legislation through the House and Senate than just about any other president in history. Johnson’s fire spread outward until it touched the entire country during his first State of the Union address. The words were written by Kennedy’s speechwriter Ted Sorensen, but their impact would be felt in the magic L.B.J. worked over the next seven weeks.

Exactly how L.B.J. did it was perfectly captured later by Hubert Humphrey — the man the president chose as his vote counter for the civil rights bill and his Senate proxy to carve its passage.

Humphrey said Johnson “knew just how to get to me.”

In sparkling detail, Caro shows the new president’s genius for getting to people — friends, foes and everyone in between — and how he used it to achieve his goals. We’ve all seen the iconic photos of L.B.J. leaning into a conversation, poking his thick finger into a confidant’s chest or wrapping his long arm around a shoulder. At 6 foot 4, he towered over most men, but even seated Johnson commanded from on high. Caro relates how during a conversation about civil rights, he placed Roy Wilkins and his N.A.A.C.P. entourage on one of the couches in the Oval Office, yet still towered over them as he sat up close in his rocking chair. And he didn’t need to be in the same room — he was great at manipulating, cajoling and even bullying over the phone.

He knew just how to get to you, and he was relentless in doing it.

If you were a partisan, he’d call on your patriotism; if a traditionalist, he’d make his proposal seem to be the Establishment choice. His flattery was minutely detailed, finely tuned and perfectly modulated. So was his bombast — whatever worked. L.B.J. didn’t kiss Sam Rayburn’s ring, but his lips did press against his bald head. Harry Byrd received deference and attention. When L.B.J. became president, he finally had the power to match his political skills.

The other remarkable part of this volume covers the tribulation before the triumphs: the lost campaign and the interminable years as vice president, in which L.B.J.’s skills were stymied and his power was negligible. He had little to do, less to say, and no defense against the indignities the Kennedys’ inner circle heaped on him. The Master of the Senate may have become its president, but in title only. He might have agreed with his fellow Texan John Nance Garner, F.D.R.’s vice president, who famously described the office as “not worth a bucket of warm spit.”

Caro paints a vivid picture of L.B.J.’s misery. We can feel Johnson’s ambition ebb, and believe with him that his political life was over, as he was shut out of meetings, unwelcome on Air Force One, mistrusted and despised by Robert Kennedy. While in Congress he may not have been universally admired among the Washington elite, and was even mocked by them as a bit of a rube. But he had certainly never been pitied. In the White House, he invented reasons to come to the outskirts of the Oval Office in the mornings, where he was rarely welcome, and made sure his presence was noted by Kennedy’s staff. Even if they did not respect him, he wasn’t going to let anyone forget him.

Then tragedy changed everything. Within hours of President Kennedy’s assassination, Johnson was sworn in as president, without the pomp of an inauguration, but with all the powers of the office. At first he was careful in wielding them. He didn’t move into the Oval Office for days, running the executive branch from Room 274 in the Executive Office Building. The family didn’t move into the White House residence until Dec. 7. But soon enough, it would become clear that the power Johnson had grasped for his entire life was finally his.

As Caro shows in this and his preceding volumes, power ultimately reveals character. For L.B.J., becoming president freed him to embrace parts of his past that, for political or other reasons, had remained under wraps. Suddenly there was no longer a reason to dissociate himself from the poverty and failure of his childhood. Power released the source of Johnson’s humanity.

Last year I was privileged to speak at the funeral of Sargent Shriver — a man who served L.B.J. but who in many ways was his temperamental opposite. I said then that too many of us spend too much time worrying about advancement or personal gain at the expense of effort. We might fail, but we need to get caught trying. That was Shriver’s great virtue. With Johnson’s election he actually had the chance to try and to win.

Even as Barry Goldwater was midwifing the antigovernment movement that would grow to such dominance decades later, L.B.J., Shriver and other giants of the civil rights and anti­poverty movements seemed to rise all around me as I was beginning my political involvement. They believed government had an essential part to play in expanding civil rights and reducing poverty and inequality. It soon became clear that hearts needed to be changed, along with laws. Not just Congress, but the American people themselves needed to be got to.

It was hard to do, absent a crisis like the losses of President Kennedy, Martin Luther King and Robert Kennedy. By the late 1960s, America’s increasing involvement and frustration in Vietnam, the rise of more militant civil rights leaders and riots in many cities, and the end of broad-based economic growth that had indeed “lifted all boats” in the early ’60s, made it harder and harder to win more converts to the civil rights and anti­poverty causes.

But for a few brief years, Lyndon Johnson, once a fairly conventional Southern Democrat, constrained by his constituents and his overriding hunger for power, rose above his political past and personal limitations, to embrace and promote his boyhood dreams of opportunity and equality for all Americans. After all the years of striving for power, once he had it, he said to the American people, “I’ll let you in on a secret — I mean to use it.” And use it he did to pass the Civil Rights Act, the Voting Rights Act, the open housing law, the antipoverty legislation, Medicare and Medicaid, Head Start and much more.

He knew what the presidency was for: to get to people — to members of Congress, often with tricks up his sleeve; to the American people, by wearing his heart on his sleeve.

Even when we parted company over the Vietnam War, I never hated L.B.J. the way many young people of my generation came to. I couldn’t. What he did to advance civil rights and equal opportunity was too important. I remain grateful to him. L.B.J. got to me, and after all these years, he still does. With this fascinating and meticulous account of how and why he did it, Robert Caro has once again done America a great service.

Bill Clinton was the 42nd president of the United States.

Brooks: Warfare or Courtship in 2012? - NYTimes.com

I will not engage in such partisan cheap shots, as I have a tendency to look at both sides of every issue. But I do enjoy informed discussions of opinion in a civilized manner, and we do have such a civic responsibility to engage. Lastly, as I've indicated before, I never let pesky facts get in the way of my preconceived viewpoints.

http://www.nytimes.com/2012/05/01/opinion/brooks-warfare-or-courtship-in-2012...

Warfare or Courtship in 2012?

What sort of thing is a presidential campaign?

Maybe a campaign is like a courtship. A candidate’s job is to woo the electorate, to win the people’s affection with charm, familiarity and compassion.

Maybe a campaign is like a big version of “American Idol.” It is a contest over who is the most talented. In this mode, a candidate’s job is to endear himself to the people in the audience with likability and then wow them with his gifts.

Maybe, on the other hand, hiring a president is like hiring a plumber. Voters aren’t really looking to fall in love with the guy; they just want someone who will fix the pipes. The candidate’s job is to list the three or four things he would do if elected and then to hammer home those deliverables again and again.

You could make a case that most campaigns are a little of all three, though the proportions vary from year to year. In 2008, Obama ran an uplifting campaign that was part courtship and part “American Idol.” Richard Nixon, who lacked such charm, ran workmanlike, plumber campaigns, no pun intended.

So far, though, the 2012 presidential campaign is fitting into none of these categories. It’s being organized according to a different metaphor. This year, both organizations seem to visualize the campaign as a boxing match or a gang fight. Whichever side can hit the other side harder will somehow get awarded the champion’s belt.

So far this year, both President Obama and Mitt Romney seem more passionate about denying the other side victory than about any plank in their own agendas. Both campaigns have developed contempt for their opponent, justifying their belief that everything, then, is permitted.

In both campaigns, you can see the war-room mentality developing early. Attention spans shrink to a point. Gone is much awareness of the world outside the campaign. All focus is on the news blip of the moment — answering volley for volley. If they bring a knife, you bring a gun. If they throw a bomb, you throw two.

Both sides are extraordinarily willing to flout respectability to show that they are tough enough to bare the knuckles.

In November, the Romney campaign ran a blatantly dishonest ad in which President Obama purportedly admits that if the election is fought on the economy, he will lose. The quote was a distortion, but the effectiveness of the ad was in showing Republican professionals and primary voters that Romney was going to play by gangland rules, that he was tough enough and dishonest enough to do so, too.

Last week, the Obama campaign ran a cheap-shot ad on the death of Osama bin Laden. Part of the ad was Bill Clinton effectively talking about the decision to kill the terrorist. But, in the middle, the Obama people threw in a low-minded attack on Romney. The slam made Clinton look small, it made Obama look small, it turned a moment of genuine accomplishment into a political ploy, but it did follow the rules of gangland: At every second, attack; at every opportunity, drive a shiv between the ribs.

This martial-, gangland-style of campaigning apparently makes the people in the campaigns feel hardheaded, professional and Machiavellian. But it’s not clear that it’s actually the best way to win an election. That’s because the style is based on a series of dubious assumptions: that the harshest language is the most persuasive to voters; that what feels good to you as a competitive combatant will also look most attractive to detached onlookers; that over the duration of a six-month campaign, daily combat will continue to look compelling rather than cumulatively revolting; that in a campaign dominated by “super PAC” negativity, a presidential candidate is better served by wading into the brawl rather than separating himself from it.

The campaign-as-warfare metaphor may seem sensible to those inside the hothouse. It may make sense if you think today’s swing voters hunger for more combat, more harshness and more attack.

But it’s probably bad sociology and terrible psychology, given the general disgust with conventional politics. If I were in the campaigns, I’d want to detach from the current rules of engagement and change the nature of the campaign. If I were Obama, I’d play to his personal popularity and run an “American Idol” campaign — likability, balance, safety and talent. If I were Romney, saddled with his personal diffidence, I’d run a plumber campaign — you may not love me, but here’s four things I can do for you.

These would be very different campaigns than the ones we are seeing so far: more positive psychology, less negative psychology. A few big messages about fundamental change, less obsession with the daily news cycle. More attention devoted to those turned off by politics, less to the hard-core denizens who are obsessed by it.

More Women Are Primed to Land CEO Roles - WSJ.com

WSJ.com
I think this scenario will be a very welcome blessing for both shareholders and stakeholders.  Oh, must I make such distinctions you ask?  We men are focused on short term, immediate gratification (shareholders).  I am fortunate enough to associate with some amazingly talented, visionary women in my life.  They seem to have a broader, longer term view towards value creation (BOTH shareholders AND stakeholders, and so I am pleased with this very positive development.  This should bode well for both labor (workers) and capital (shareholders).

More Women Are Primed to Land CEO Roles

By JOANN S. LUBLIN and KELLY EGGERS

Eli Meir Kaplan for The Wall Street Journal

Anne Sweeney of Disney-ABC 'is on the CEO radar of many boards,' says one succession-planning expert.

Companies are grooming more women for the corner office.

With a growing pool of highly qualified women and intensified investor pressure on boards to diversify corporate management teams, companies "are hiring more high-potential women who could be CEO," says Judith von Seldeneck, head of Diversified Search, a Philadelphia executive-recruitment firm.

The ranks of female chief executives remain thin, with women in the top spot at just 35 Fortune 1000 companies. But the pipeline is promising, says Maggie Wilderotter, CEO of Frontier Communications Corp., FTR -0.86% adding that she has noticed a number of "women in waiting" at Xerox Corp. XRX -0.64% and Procter & Gamble Co., PG -1.24% where she is a board member.

She adds that she wouldn't be surprised if the number of major-company female CEOs doubled by 2017. At her own employer, a diversified telecom firm, half of Ms. Wilderotter's six direct reports are women.

"If you want a CEO role, you have to prepare for it with a vengeance," says Denise Morrison, chief of Campbell Soup Co. CPB -0.06% and Ms. Wilderotter's sister.

Ms. Morrison says she cultivated ties with leaders of other food makers by attending food-industry events in her off hours. Joining a corporate board outside their industry also helps prepare executive women for CEO spots, she adds, as directorships can show rising talent how chief executives get things done.

The next wave of women who will command major U.S. corporations likely are senior managers today. "Some phenomenally well-qualified women" hold top operational jobs, says Ellen Kullman, CEO of DuPont Co. DD -0.48%

Nearly 73% of Fortune 500 companies now have at least one female executive officer, though women comprise just 14% of executive officers, according to Catalyst, a New York research group.

CONTENDER

In good news for the pipeline, a study conducted by McKinsey & Co. for The Wall Street Journal, to be released Monday, found that 24% of senior vice presidents at 58 big companies are now women.

A lack of profit-and-loss experience may stall some women's progress. Four of Douglas Conant's 10 direct reports were women during most of his tenure as CEO at Campbell, but Ms. Morrison, his successor, was the only such lieutenant with P&L responsibilities.

The Journal has compiled a list of 10 female executives whose operational expertise and track record make them likely picks to lead a Fortune 1000 company within five years.

The lineup was drawn from an informal Wall Street Journal poll of 15 U.S. search firms, executive coaches and women's organizations. Human Capital News, a newswire owned by market-research firm HSZ Media, also surveyed 75 human-resources executives for the Journal.

The 10 top choices received support from at least two nominating groups. One popular pick—Johnson & Johnson JNJ +0.40% executive Sherilyn McCoy—isn't included because she already has a CEO perch, taking the top job at Avon Products Inc. AVP +0.14% this month. Several others have already been wooed to be chief executives elsewhere, says Clarke Murphy, CEO of recruiters Russell Reynolds Associates Inc.

Another frequent mention who isn't on this list is Facebook Inc. executive Sheryl Sandberg, because she doesn't work for a Fortune 1000 company—yet.

Of the 10, seven already have outside directorships. And of the nine in the group who have children, many have husbands who abandoned the fast track to support their wives' careers.

Write to Joann S. Lublin at joann.lublin@wsj.com and Kelly Eggers at kelly.eggers@dowjones.com

Corrections & Amplifications
Several of the top women executives listed by The Wall Street Journal have already been wooed for CEO jobs, said Clarke Murphy, CEO of recruiters Russell Reynolds Associates Inc. An earlier version of this article incorrectly rendered Mr. Murphy's comment in the present tense, misquoting him to say several of the executives are being wooed.

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