The stories reminded me that, for the last 21 years of my Pitney Bowes career, I dealt continuously with the encroachment of state capitalism in the postal sector.  In the late 1980’s and throughout the 1990’s, we successfully fought a series of battles with the U.S. Postal Service to keep it from becoming another entity with all the powers and privileges of the federal government, but with none of the regulatory constraints associated with federal government agencies.  Several senior postal officials aspired to create a power base similar to many government-owned entities, such as the Tennessee Valley Authority (which Marvin Runyon, the Postmaster General from 1992 to 1998, had led) or the New York-New Jersey Port Authority.

Fortunately, we defeated efforts by the Postal Service to regulate the mailing industry and compete unfairly with it at the same time.  The Postal Service leadership teams succeeding Runyon and members of his senior team generally tried to operate within the boundaries set by Congress. We had a very collaborative, and mutually respectful, relationship with the Postal Service during most of my tenure as CEO.

The story was very different outside the United States.  While we had similarly respectful and collaborative relationships with the postal officials in the UK, Canada, Spain, Denmark, and Norway, we had a variety of challenges with postal authorities in many other countries.

We saw three distinct challenges:

• Some postal operators, which had appeared to become privatized, acted in very anti-competitive ways in their own nations, and also secured rights and privileges from their national governments that stacked the deck against partners and competitors.  The most extreme example was Germany, during the leadership of Deutsche Post by Klaus Zumwinkel, who resigned in early 2008 for reasons unrelated to his work-related performance.  Throughout Zumwinkel’s 18-year tenure as CEO, Deutsche Post acquired companies all over the world, including a disastrous acquisition of Airborne, a major package shipper, and the worldwide operations of DHL.

In Germany, where Deutsche Post realized most of its profits, postal rates were exceptionally high (well above $.60 per piece), service was not exceptional, but competition was ruthlessly suppressed.  At the end of 2007, a few weeks before Germany had committed to open its market to full competition from within the EU, Zumwinkel successfully prevailed on German legislators to pass a law that created a minimum wage for postal sector employees only, a wage pegged at Deutsche Post’s minimum pay grade.  The immediate result was to destroy its two largest mailing competitors, since neither could secure labor cost advantages over Deutsche Post.

In Italy, Poste Italiane took advantage of complex and onerous labor laws to fend off competition, since these laws made part-time and temporary workers prohibitively expensive.

• In many countries, postal operators expanded into businesses in which the marketplace was amply served by the private sector, but in which the postal operators would immediately have a competitive advantage, because of the implicit protection from national governments.  Australia, Belgium, Ireland, China and New Zealand all started retail banks.  Japan had always had a sizable postal banking system which paid almost no interest to depositors, but which became a huge source of loans to projects favored by politicians.  Prime Minister Koizumi staked his political career on an initiative to privatize the Japan Post, not because there was ferocious opposition to privatizing the mail or package business, but because the heavy governmental control of the flow of bank loans would be jeopardized. He barely avoided receiving a vote of no confidence because his initiative upset the way government favors had been delivered for generations.

Postal operators have played heavily in the money transfer business (competing with Western Union), in retail government services, in the sale of greeting cards and stationery, and in the sale of gift items often transmitted through the mail.  Postal operators like Australia, China, Finland, and Sweden moved seamlessly into mail services businesses. In countries with a strong tradition of state capitalism, these postal operators were able to operate freely in more businesses in which they competed unfairly with the private sector.

• The postal operators often carried mandates and missions inconsistent with a business focused on cost-effective customer service.  France and Canada were prime examples of this problem, as were Japan, Spain, and Portugal. In these countries, postal operators were saddled with explicit and implicit requirements that they keep a minimum number of people employed, even if the demands of the business would not justify such employment.  For Pitney Bowes, the government employment mandates made many of our productivity enhancement tools unusable by these postal operators.  They could not improve their productivity, even if they wanted to, because they were fulfilling social mandates.  Postal ratepayers paid more, in the form of a disguised tax, to create a welfare system for workers who probably could not have secured employment at comparable wage and salary rates.

I was able to experience the ugly underside of state capitalism for over two decades.  It made me realize that the United States should think long and hard about migrating down the path these other countries have followed.  It also is a cautionary tale for large multinational corporations that aspire to compete fairly in major markets in which one or more of the competitors are state-owned or state-controlled enterprises, or in which the state considers a particular industry strategically important.

Employees who do not have high levels of education and technical skill will be continually insecure and will be displaced if they are not continually keeping ahead of the marketplace.  The most painful point the reporter makes is that anyone who starts his or her work career with major family or other responsibilities will have difficulty keeping current with the skills needed.  Maddie Parlier is 22 years old, has completed high school, but has not gone beyond it, is a single mother, and has no spare time or money to take courses and upgrade her skills.  She will be vulnerable to a future replacement by technology.

The problem with the increasing inequality of outcomes in our society in a time of global competition, continuous price pressure, and technology advancement is that continuous education and skill development are more important than ever.  However, achieving this goal is particularly difficult for those individuals who enter the workforce with the handicap of obligations that make continuous learning extremely difficult.

The story about Maddie Parlier begs two questions:

• Why did a woman who is obviously smart and a hard worker not continue her education beyond high school?
• How does someone like Parlier, with time-consuming family responsibilities, find the time to continue to upgrade her knowledge and skills outside of work hours?

When we consider these questions, we are inevitably led to a different way of defining the problem than is customarily used in analyses like these.

Why individuals like Maddie Parlier do not continue in school

My dad, who died in 2001, was a very intelligent person, with great wisdom and insight, and a continuous learner as an adult, but he dropped out of school after the 9^th grade.  My mom, also a person of great intelligence who was a continuous reader and learner all her adult life, dropped out of school after the 11^th grade during the early part of the Depression.  Why?

For them, going to school was an unpleasant and unproductive experience.  The classrooms experience did not engage either of my parents sufficiently to keep them in school, so they dropped out at the earliest possible opportunity.  While it is easy to say that we need better teachers and schools, the bigger problem is that schools do not teach people how to learn.  The educational paradigm is fundamentally flawed. Educators make the judgment that individuals have varying learning abilities, and assume that some people will learn, and others will fail to learn.

I can relate to my parents’ experience by what happened with subjects in which I did not do exceptionally well, like biology, chemistry and physics.

These subjects were taught in a standardized way.  I did not master them, but got good, although not exceptional, grades by sheer hard work and will power.  However, as an adult, I saw their value, and became genuinely excited to learn about the underlying principles of each subject. My daughter even gave me a brief chemistry tutorial on equation balancing recently.

Every one of us gets interested in a subject for different reasons, and we learn in different ways.  I think metaphorically and structurally, and recall information most effectively when I can engage multiple senses in learning the subject.

People have told me I have a photographic memory.  That is not true. I have a photographic memory on certain selective categories of information, but have a below-average memory on others.  My wife can remember the location of a house by a visual map of the color and style of the house and the houses around it.  She remembers foods she ate at a restaurant decades ago, and can even discern differences in the taste of an item from what she ate years ago. I cannot remember what I ate last Saturday night at the local tapas restaurant.

Why do I learn and retain information?

• The subject matter has to be important enough to want to retain it.  I tune out on information that will not matter to me, or that does not strike me as interesting.
• I take copious notes.  Contrary to popular belief, I do not file the notes, but review them once and discard them.
• When I take notes, my handwriting is highly legible, so that I can re-read what I have written.
• If a particular note is important, I underline it.  If it is exceptionally important, I place an asterisk next to it.
• After taking the notes, I re-read them, and I recite what I have written, so that I can hear from what I have written, in addition to seeing it.
• If the notetaking on a subject reveals a particular way of organizing and structuring the information, I create a visual structuring on the page of the notebook, either in the form of a graph, a flow diagram, or a chart.

The more of these tasks I perform, the more likely it is that I will remember what I have written.

My mother used to joke that the reason she dropped out of school was because she was required to do a paper on Sir Walter Scott’s Ivanhoe in her final semester as a junior in high school. I am sure that no one engaged with my mother in a way that helped her find meaning in the assignment.

Rather than trying to shoehorn every student into a one-size-fits-all educational system, let’s try to figure out the different ways in which to engage increasingly diverse populations in the art and the technique of learning.  The goal is “learning,” not “education.”

How do people with overwhelmingly complex lives carve out time for continuous learning, particularly of highly technical subjects?

How does someone like Maddie Parlier possibly carve out time to upgrade her skills?

• We have to create learning processes that provide more flexible self-learning opportunities.  It would be unfair to expect Parlier to attend a classroom course outside work hours, given her single-parent responsibilities, but she can learn online or in other ways.  If there are fees for such courses, she should be reimbursed under a company’s educational assistance program, just as she would if she were attending a class.  We need to make continuous learning as convenient and cost-free as possible.
• We have to teach people how to use small blocks of time as effectively as possible. A single mother holding down a job does not have big blocks of time for learning.  She might get a series of 5-minute blocks of spare time. We need to figure out how she can use them for learning exercises.
• We have to teach people how to multi-task more.

Alternative learning methodologies

Learning can happen anywhere, any time.  I love the text-to-speech feature of my Kindle, especially when I am in my car and can have the experience of listening to an audio book, even if it is in a computer-generated voice. I learn from online demonstrations of subjects.  I also have found that certain TV programs have presented subjects with far more impact than I have ever learned them in a classroom. My friends showed me about the many free tutorials on YouTube. I have even learned from a casual face-to-face encounter, such as a cooking demonstration at a supermarket or a restaurant.  We should test individuals to determine how they learn best, and should draw from their insights and experience, even at an early age, to figure out what is most likely to excite them. Courses should be created in ways that enable them to be delivered remotely and in a multiple ways.

What always amazes me about learning is what we discover about how people of all ages engage with the world.  Some people learn through video games and master complex subjects.  Others gain a great deal of insights from friends, work colleagues, peers, and even online communities.  Even today, I find that my best learning about potential applications for my I-Phone comes from other users.  One of my nephews told me about a new application called Soundhound, which enables my phone to pick up music sounds in a public place and identify the song and the artist.

In essence, everyone can learn, and we should figure out how to make that learning process happen.

How does learning fit into a busy schedule?

It is easy to criticize people who do not take time to improve their skills.  However, in the real world, people have multiple jobs, are juggling time-consuming family responsibilities, and often have challenging commutes to and from work.  Moreover, many jobs are physically and mentally draining. For many people, the ability to take time to learn simply does not appear to be there.  How can we help people carve out the time to learn?

• We need to show people how to simplify their lives, reduce the wear-and-tear of daily activity, and create learning time.  Too many people drive to work alone every day.  Even when public transportation is unavailable, there are many underutilized carpooling, vanpooling, and ride-matching services available to people.  I gained an extra 90 minutes a day of reading time when I commuted by train between New York and Connecticut. When shuttle services between the train station and the office were unavailable, many people gave me rides to and from the train, and I learned a great deal from them.
• Buying hot, healthy pre-prepared food virtually eliminates cooking time, and frees up time for other activities.
• If I were a young parent today, I would be looking for tools to order groceries, clothing, supplies, hardware and other items online for home delivery to save on shopping time.

If large blocks of time cannot be created, then we have to coach people how to use smaller time blocks more effectively.  I always felt that one of my advantages over other people was the use of 1-5 minute time blocks.  When I watch live television, I put the set on mute during commercials, set an alarm for 3 minutes, and do something productive. More and more, I record programs to reduce the watching time from the original running time by fast-forwarding through commercials. I recapture that time for other purposes.

How do I use 5-minute drives to and from the coffee shop? I turn my Kindle into an audio book and listen to a few pages while driving.  The Kindle also can be read outside while I am walking and even while I am waiting in line at the grocery store or some other retail outlet.  I have done a lot of reading in the security lines at airports, while I watch other people stare into space.  I also remember doing work during the many times I waited with my children at the pediatrician’s offices as they were growing up.  I took my own materials, rather than relying on what the doctor’s office had available.

Everyone has spare time. The only question is how to take advantage of it.

We need to teach people how to multi-task more.

When my children were young, I used to take them to the local doughnut shop, get a cup of coffee, browse the newspaper, and talk with them.  It was a great bonding experience for us, and I typically read to them and talked about whatever I was doing.  I also used to take them to museums on Saturdays and Sundays and learn as they were learning.

Today, the shoe is on the other foot.  When I am with my adult children, I ask them about what they are learning, what books they are reading, what movies or videos they have seen, and what places they would like to visit, and why.  My daughter is great in the sciences, so she continually directs me to good resources.

Also, as I noted above, we have a lot of waiting time in our lives that can be usefully deployed. Today, many people use their cell phones to talk or do text messages while they are waiting for someone, but it is easy to convert some of that time to learning time.

We have to change the paradigm from schooling to learning.  We have to change the paradigm from learning as a highly standardized activity to a highly customized one. We have to change the paradigm from learning as a process that takes place within specific certified courses to one that can occur anywhere.  I have no problem with testing people to see what they have learned, and rewarding them for having achieved a certain level of competence, but we need to make it as easy for them as possible.

This skill and knowledge gap is solvable. We can help the Maddie Parliers of the world compete in the global economy and support their families.

There were several noteworthy insights from the program:

• The German and Central European film-makers were incredibly innovative, and they sparked the development of many features of American cinema that changed the films Americans saw, especially after World War II, when the industry was free to resume its normal kind of film-making.  Most noteworthy was the development of the “film noir” style of movie.  “Film noir” was a genre of film that usually was done in black-and-white, as opposed to color, presentation.  It was set in harsh urban settings, was a type of drama and action film, and often involved criminals or gangsters.  Films like The Asphalt Jungle, Dark Passage (which starred Humphrey Bogart and Lauren Bacall), and even On the Waterfront could be considered “film noir” movies.
• The filmmakers who emigrated from Germany and Central Europe created funds to help others trapped back in Europe come to the United States.  They not only sent money back to people trying to escape from Nazi-occupied countries, but helped them with contacts and created the equivalent of an “underground railroad” to enable people to get help crossing borders, hiding inside Nazi-occupied countries, and eventually finding their way to friendly countries.  Germany and the countries it occupied saw a huge drain on their artistic talent, but it would not have been as big of a drain as it turned out to be, had not American-based exiles provided a considerable amount of financial support.

As an aside, we underestimate the importance of support from abroad in almost every attempt to rebel against totalitarian governments.  I saw this in the early 1980’s when I walked by the Holy Name Church in the South End of Stamford, Connecticut, a Polish church that was clearly soliciting money from both parishioners and members of the public to support the Solidarity movement in Poland.

• The exiles from Germany and Central Europe brought a particular passion to their roles in certain kinds of films.  Perhaps the most insightful part of the documentary was the presentation of different scenes in Casablanca, and the description of the actor or actress in that scene who had emigrated from Germany or another Nazi-occupied country and their passion for portraying the European experience.  The saddest ironies in films like Casablanca  were that the Nazi characters were often portrayed by Jewish actors, such as Richard Ryen, a German who played Major Strasser’s Nazi aide Captain Heintz, in Casablanca.

The Casablanca stories were inspiring and tragic.  Madeleine LeBeau, who played Yvonne, the lover spurned by Rick, fled France, along with her Jewish actor husband Marcel Dalio, who played the croupier.  They had a very circuitous route to America, having to get to Portugal, to Mexico, and to Canada, before having the opportunity to enter the United States.  S.K. Sakall, who played Carl, the waiter, fled Hungary and lost three of his sisters in concentration camps.

However difficult our lives are in America or in other parts of the world, we should remember that there are individuals today who are living far away from where they started or would like to be living.  Moreover, most of us are not living in a war zone, and we have far more creature comforts than people living middle or even upper middle class lives had 1-2 generations ago.  As I write this, I am sitting in a very comfortable Starbucks restaurant in Darien, Connecticut, and enjoying a great morning cup of coffee (I usually go to another coffee shop, but it is New Year’s Day and nothing much is open here.)

The other lesson I took from this documentary is that we should reconsider our ridiculously restrictive immigration policies.  We should be able to distinguish between criminals and terrorists, whom we do not want to admit to America, and those with great skills and capabilities, who will enrich our country and create opportunities for many Americans lacking those opportunities today.  That is the argument persuasively made in the book Borderless Economics: Chinese Sea Turtles, Indian Fridges and the New Fruits of Global Capitalism by Robert Guest.

Finally, we should recognize that an untapped source of support for people in developing economies is the direct transfer of money from individual to individual.  The major, centralized government programs, or even the programs developed by not-for-profit organizations often have too much waste, too many centrally-imposed conditions, and too many intermediaries to be as effective as direct money transfers.  Let’s encourage more efficient money transfer from rich to poor than we do today.

Most of all, as we look ahead to what is often an uncertain and somewhat frightening future, we should take stock of how blessed we are, and how grateful we should be, for those who fought for our freedom generation after generation.

On the morning of September 11, 2001, I was in Pitney Bowes Stamford Main Plant building, having a difficult meeting with a group of factory employees, explaining why we needed to outsource much of the low-end product then manufactured in that facility.

I received a call a little bit after 9 am from Karen Garrison, then President of Pitney Bowes Management Services, who had seen the video footage of an airplane crashing into the first of the World Trade Center buildings.  I immediately began to return to the World Headquarters, a few blocks away. During my brief trip back to the Headquarters, an airplane crashed into the second World Trade Center building, One World Trade Center.

As I tried to absorb what had happened, I reflected on the fact that my wife Joyce had worked at One World Trade Center when we first lived in New York City in 1981 and 1982, and that I had been in the building many times over the years to visit customers.  By 10 am that morning, we had set up a command center in our boardroom, from which I ran the company for two weeks after that.  I left the boardroom many times, to address groups of employees both in the Headquarters and in other buildings, and to visit our New York offices.

Pitney Bowes lost four employees, all members of the Pitney Bowes Management Services team, all of who were serving clients on the upper floors of One World Trade Center.  All four employees were initially directed to leave the building, but returned back to their work areas between the times the first and second buildings were hit.  They felt a need to be with their customers and to do the work assigned to them.  They paid with their lives.  One of them, David Vargas, left two teenage children behind, and I met with his widow and the children at the memorial service that took place several days later.

It was the best and worst of times.  We had profound problems comforting those grieving about the loss of loved ones.  Dr. Brent Pawlecki, then our Associate Medical Director, took the initiative to create a compassion center at our Midtown New York offices and staff it for several weeks to comfort not only our employees, who had lost colleagues, but their families and our customers, who had also lost colleagues.  His efforts were recognized and celebrated in an NBC special report a few days after 9/11.

We also had to locate our missing employees, which was more difficult than it first appeared, because many did not have cell phones or dedicated land lines, and lived in remote parts of New York and its suburbs. The surest sign that the four employees lost their lives occurred when they failed to come in on Friday, September 14, to collect their paychecks.  One of our top-rated sales professionals was scheduled to visit a client on an upper floor of one of the buildings, and we feared that he had lost his life when we did not hear from him later that day.  We were relieved when his manager found him at home the next day.  He had cancelled the appointment the morning of September 11 because of a dental emergency.

We had challenges getting remote employees paid all over the country, because the airplanes that normally transported their checks were unable to fly to their destinations between September 11 and 17. We knew that many of our employees lived from paycheck to paycheck, so getting them paid on them was critical. We had employees stranded all over the world who could not get back to the United States, and some who drove from as far away as San Diego within the United States to return to their homes in Connecticut.

We had to deal with the abject fear our employees felt about the future, to enable us to keep doing our business.  We came through all of this stronger, more united, and more confident of our ability to cope with crises, which turned out to be important, given the fact that the anthrax bioterrorism crisis hit us a few weeks later and preoccupied us during October and early November, 2001.

Several permanent changes happened to our business and our industry as a result of both 9/11 and the anthrax crisis that followed it:

• We communicated more frequently and in more depth with employees, because we learned about the value of frequent communications as a result of the daily voicemails we released during these crises.  We created a weekly Power Talk process in early 2002. Through it, we delivered a 4-minute message on a subject of interest every week.  Initially, I delivered every message, but over the years, we had different executives deliver messages of broad importance to the company.  Emails are very powerful communications tools as well, so we took the same message and emailed it simultaneously to employees on our email system.  We never forgot that our intensive communications processes helped us weather what could have been a devastating set of crises.
• We developed a sophisticated crisis management capability to deal not only with terrorist events and reputational risk issues like anthrax, but also with hurricanes, floods, earthquakes, and other natural disasters.  That capability was tested and improved upon many times, with such events as the 2003 Northeastern U.S. power outage, the 2004 Tsunami, and, obviously, the most challenging event, Hurricane Katrina in 2005.
• We had created a charitable foundation to provide temporary assistance for employees devastated by Hurricane Andrew in 1993.  We replenished that Foundation’s assets, which came in very handy in 2005, when we had to help dozens of employees affected by Hurricane Katrina.
• We recognized that, in times of disaster, traditional communication channels break down rapidly.  Landlines become harder to use, especially toll-free lines; cell phone systems become unusable; Internet service via email becomes harder to us.  Face-to-face communications become more difficult. We even experimented with walkie-talkies in offices likely to have hurricane-driven evacuations.  We also found that a toll-free number got overloaded, so we offered an additional toll line for employees to get through to us.
• As mailing industry leaders, the CEOs of the major companies came together in the Fall of 2001 to request that Congress assist the Postal Service because of the huge losses it experienced both during the aftermath of 9/11 and the anthrax crisis.  The unified industry became a significant advocacy force for comprehensive postal reform that occurred five years later.
• The Postal Service had used commercial aircraft to deliver mail long distances.  When commercial air travel was suspended for six days, the Postal Service decided to enter into a partnership with FedEx to have FedEx use its planes to do long haul mail transport, which was more reliable and secure. The partnership became a model for other partnership relationships into which the Postal Service entered over the past decade, and which helped it immensely.
• Pitney Bowes and other companies started to enhance their risk management processes to address a broader range of risks and opportunities.  We became far more systematic in assessing reputational, political and environmental risks.

Most of all, 9/11 was a time in which everyone pulled together and got out of their siloes and parochial views of the world.  They thought of themselves in terms of what was needed to achieve the greater good. They rose to the highest levels of compassion and love.

We need to find a way to recreate that feeling without another tragedy like 9/11.

Sometimes, the influence of bad human decision making on the scope of a disaster is obvious: Hurricane Katrina would not have been anything more than just another bad Gulf Coast hurricane, had the levees protecting big portions of New Orleans not failed to protect the city against water damage.  The levees were not built to protect against Category 4 or 5 hurricanes, so a disaster of the type that happened was inevitable and experts were not surprised when it happened.  Experts warned of this kind of problem, but were ignored year after year. Nevertheless, most of the time, we forget the degree to which we can anticipate disasters and minimize their impact.

In 1991, after Hurricane Bob, which hit Long Island, the Eastern Connecticut coast, and Cape Cod very hard, the homeowners association of which I was a board member could not initially secure a renewal of our property and casualty insurance policy from any carrier.  National media carried stories about horrific beach erosion in the 4-mile stretch of beach, beginning half a mile west of us.  The beach and the houses on it had been completely washed away by both the hurricane and a nor’easter that followed it a few weeks later.  The media story was that nature was getting more ferocious over time, and people had to stop building homes on the beach.

While it may be good public policy to provide better beach access for all residents of a beachfront community and for visitors, and to reduce the building of private homes on the beach, the story was wrong.  The beach erosion was not a result of nature’s fury, but of a misguided decision by the Suffolk County New York Supervisor some years before to refuse to pay the County’s share of a project to extend protective beach barriers for the last 4 miles of the barrier island.  The 4-mile stretch bore all the force of the ocean tides, instead of having it spread over the entire island.  Ferocious winds and tides destroyed the beach, but it was vulnerable to destruction, because of human error, a decision to leave the beach unprotected.

Similarly, power outages and flooding are usually a result of a number of human decisions.  In many communities, utilities are not permitted by homeowners to trim branches from trees on an appropriate schedule, with the result that those branches break off during storm, hit overhead power lines, and cut the lines.  Street flooding is usually a result of poor drainage from inadequately built or maintained roads.  Basement flooding is often the result of building codes that do not require adequate soil fill under the foundation of a house or other kind of building.  We discovered this when our basement flooded many times in the last decade, because our builder cut corners in having only four inches of soil fill, when best practice indicated that 12 inches of fill was the minimum desirable.  Trees are often uprooted and destroy or damage whatever they fall on because poor soil drainage erodes the soil that holds roots in place.

In the storm’s aftermath, we are seeing the consequences of decades of underinvestment in our commuter rail systems.  The commuter railroads were not  able to resume service as rapidly as the New York subways because they have suffered far more preventable damage.

Wind damage results from structures that are not built to withstand winds above a certain level of intensity, and items inadequately secured to the ground or not stored properly in anticipation of a storm become projectiles that destroy everything in their path. In the spring of 1979, Chicago experienced a freak 70-mile per hour windstorm one afternoon, with the result that a thick wooden restaurant sign hanging by two chains to the restaurant’s patio came loose and killed a pedestrian.

The 1906 San Francisco earthquake caused most of its fatalities because the fire department had not properly secured its water lines, so it was unable to get water out to extinguish some of the fires.  Similarly, communities often fail to think through how they will get rescue vehicles to stranded residents, which created many issues in the Gulf Coast areas after Hurricane Katrina.

We are better at responding to disasters today because of the intense focus on what went wrong with Hurricane Katrina, but the problems with our infrastructure and the underinvestment in rebuilding, maintaining, and renovating roads, bridges, tunnels, and buildings will continue to make the impact of natural disasters far worse than they need to be.

We need better ways to hold elected officials accountable for decisions they make that put us at risk, not immediately, but over time.  Since we do not know when “natural disasters” will hit, it is tempting to defer maintenance, repair, and renovation that will secure our facilities from damage, but insurance companies, bond rating agencies, and watchdogs acting on behalf of voters should do a better job warning us.  As citizens, we need to send strong messages to elected officials that using their office to redistribute wealth and income from taxpaying citizens to favored constituents, instead of using taxes to maintain and strengthen the assets for which they are responsible is wrong.

Unlike Walt Mossberg, whom I quoted the other day, or the many other commentators who celebrated Jobs’ successes, Schulz focused on the fact that Jobs had many major failures along the way, including the Apple I computer, the Lisa computer and the NeXt computer.  He was asked to leave Apple in 1985 and did not return until 1997.  Steven Jobs failed repeatedly and publicly, and he paid in the short run.  However, today, the Apple employees and shareholders are more secure and richer than they ever could have imagined.  He invested repeatedly for the longer term.

That article and the reflections on Steven Jobs’ failures caused me to think about other transformative individuals are their repeated failures, as well as the many failures that have occurred in my life.  Two individuals who have talked, present and past, about their failures were Thomas Edison and J.K. Rowling, the author of the Harry Potter novels.  Edison celebrated his unsuccessful attempts to solve problems through innovation because, as he said, he learned what did not work and it helped him figure out better what did.

More interesting than Edison has been the life story of J.K. Rowling, who, after college, failed at marriage and an early attempt at writing before she finally began to succeed in her late 20’s with the Harry Potter novels.  Rowling gave a commencement speech at Harvard in 2008 at which she spoke about the many benefits of failure, among them, the focus it gave future efforts, the self-confidence and inner security it generated, the wisdom it helped her developed, and the fact that it helped her separate real from “fair weather” friends.

As I have gone on many journeys in my life, I have had both mistakes and colossal failures.  I failed at my first two jobs out of law school, both with reputable law firms.  I made mistakes along the way as a business executive.  I made investment decisions that failed.  Since retirement, I have had many failed attempts to raise money for both Dossia and my film From the Rough, and, although I am more confident about success in both cases, I have actually been propelled forward by the failures.

Each failure requires careful study to understand its lessons.  Oddly enough, my failure to secure traditional major studio financing for the film has taught me that the film very likely has a large underserved market that the traditional studios have ignored, the market for films directed at women and people of color.  The film The Help appears to be supporting my assumption that there is a market for intelligent content directed at audiences Hollywood has left behind.

I have been told that I was stupid and naïve by people experienced in the market spaces in which I initially failed, only to find that I was getting that feedback more because I threatened an established order than that my initiatives were flawed.  My health care vision has been proven right over the last 20 years, despite the fact that I was not taken seriously by industry experts when I first articulated it 20 years ago.

My unsuccessful attempts to accomplish something had the effect Rowling discussed in her commencement speech:

• They increased my determination and will to succeed;
• They helped me sort out real friends from pretenders;
• They helped me seek out help and build support systems I would not have needed if I succeeded immediately; and
• They helped me focus my life on what mattered most.

What particularly resonated with me about Rowling’s remarks was her comment about those who refuse to take the risks of failure.  She referred to them as the “willfully unimaginative.”  She said that they become imprisoned in a psychological world in which their fears and even their nightmares get more frequent and more intense, because they get more removed from the messy real world in which failure is an everyday occurrence.

As I call on large corporations today for Dossia, I see these people every day.  I see them also in government and even sometimes in the not-for-profit sector.  They experience huge stress and expend significant energy worrying about low probability events.  In so doing, they increase the odds that something very bad will eventually happen to their organization, and, perhaps, to them.  When someone worries about low probability risks and tries to avoid them, they usually take their eye off the ball relative to higher probability risks and end up not being able to avoid them.

It’s sad, but I see large corporations inadvertently engender risk-averse behaviors by stupidly conceived downsizings and restructurings.  They announce a big layoff, take a long time to execute on it, and make everyone progressively more insecure, not just during the period of the layoff, but well beyond it.  Survivors learn the wrong lesson from avoiding a layoff.  They become more cautious and put their organizations at much longer-term risk.

I spent a lot of time talking about failures when I led Pitney Bowes, and getting people comfortable with the idea that, if they failed, it would not be the end of the world.  I met with many people we had asked to leave the company, and I deliberately told them that there was life after Pitney Bowes.  I shared my experience with failing at two successive law firm jobs, and being asked to leave the second firm.

This is a time unlike any in my lifetime, although every time period looks more stable and placid in hindsight than it was when people were living through it.  The good news about a turbulent time is that failures happen more often to more people, and there is less of a stigma attached to failure.  Individuals can experiment more, fail faster and more often, and find the right future path sooner and more painlessly than they could at a time when everyone is expected to succeed and failure stands out more.

We should be celebrating the intelligent and determined unsuccessful efforts of people, perhaps as much as we celebrate successes.  That is why, while I commented on Steven Jobs success a few days ago, I want to make sure that I give equal time to his failures.

Today, I have an I-Mac desktop computer, as does my wife, a MacBook Air laptop, as do my sons and my daughter, an I-Phone, as does my wife, and an I-Pod, as do every member of my family.  My wife even has an I-Pad, so she can read her emails more easily.

I prepared this blog, along with most others, on my MacBook Air, which is my work computer, since I take it everywhere.  It holds my PowerPoint presentations as well, and my Kindle software that enables me to read books anywhere I take my computer.

There are many things about the Apple technologies I do not like. There is an excessive drain on the batteries for the phone and the laptop.  The address books and calendars among my laptop, desktop, and I-Phone, do not properly synchronize, in spite of what Apple has advertised. The touch screen on the I-Phone is unresponsive, when I am hot and sweaty on a hot, sunny day.

Nevertheless, Apple Computer, under Steven Jobs, has profoundly changed many lives, including mine, for the better, as Mossberg has pointed out.  The I-Pod was the first Apple product I acquired.  It amazes me to this day that I can have the equivalent of five old-time jukeboxes worth of music of my choice anywhere I take this tiny I-Pod, and that I can dock it in a little holder at home and have it play anywhere in the house.  Jobs revolutionized music by enabling people to get individual songs of their choice from an online retail store legally, without buying albums and without having to search several retail outlets.  The old 45 records are the closest comparison to the I-Pod, since one could buy his or her favorite song individually, but even there, the purchaser also had to buy a song on the flip side of the record, and had to shop at retail stores to get the records.

The MacBook Air is a lightweight device of excellent quality, but, more importantly, it is supported by an excellent service organization that, for a flat annual fee, is able to deliver great telephone and in-store support with scheduled appointments or emergency support.  The Apple service capability, more than the quality of the computers and software, is what caused me to switch from a PC to a MacBook when I left Pitney Bowes.

The I-Phone has changed my life in many ways.  The instant access to e-mails, to a full address book, and to a calendar enable me to do business anywhere. The location service software has enabled me to find my way around places when walking, as well as driving, because of its GPS features.  It has replaced my clock radio and the hotel wake-up call as my alarm clock.  It has also become my camera and my snapshot album. It enables me to keep track of major news and sports items, and to look up information anywhere I can get on the Internet.  It will become extremely important as a repository for health records once clinicians, hospitals, and labs become as automated as pharmacies.

When I was in a rural part of Italy this summer in which my cell phone service and my Internet coverage was spotty, I was reminded of how we now take for granted relative to Jobs’ contribution to our lives. As I see stories about the uprisings in the Arab countries and in other parts of the world, I became even more appreciative of the degree to which the handheld devices Jobs invented put so much power in the hands of individuals that he has changed political systems and how people get elected and govern.

There are only a few people who leave that kind of imprint during their lives.  It is unfortunate that his health does not enable him to continue as CEO, but I hope that he finds the energy to keep contributing to our society and transforming it for the better.

I had previously understood the excessive licensing requirements states impose on professions that can be available to people without 4-year college degrees. For example, I learned this past year that, in Connecticut, a person aspiring to cut hair at a beauty salon must take a course costing $20,000 for one year and pass a licensing exam.  While requiring barbers and beauticians to be licensed is a reasonable exercise of state regulation, because of the degree to which a beautician is handling and applying dangerous chemicals to their customers’ hair, scalp and face, I believe that there has to be a lower-cost way of preparing and qualifying individuals for this profession.

I thought the Connecticut example was extreme. I was wrong.  According to Mellor and Carpenter, whereas only 5% of all workers required government licenses to pursue their chosen occupation in the 1950’s, that figure is 33% today, according to University of Minnesota Professor Morris Kleiner.  Governments can justify licensing requirements for any job, based on the theory that consumers can get defrauded by someone pretending to have the ability to do a job, when he or she is not qualified.

However, there has to be a line drawn between jobs and professions that, if not regulated, create a serious risk to health and safety, and those that simply create a risk of claims of inadequate performance. For example, why would Florida, Nevada, Louisiana, and Washington, DC regulate interior designers?  There is no obvious health or safety risk to someone doing a bad interior design job.  In fact, given my wife’s and my experience with several interior designers, some of our worst experiences were with highly credentialed designers.  Interior design is a profession that depends on skills that are highly unlikely to be tested and measured through a credentialing process or improved through a mandated education or training system.  The best members of that profession have the ability to listen actively to clients and make recommendations that match client needs and preferences, soft skills that almost never emphasized in a training or education program.

In fact, as a general rule, education, training, and licensing requirements are generally inappropriate for professions that depend heavily on so-called “soft” skills, that is, interpersonal skills that heavily depend on the personal chemistry between the person practicing the profession and the people they serve.  For example, North Carolina regulates community association managers, a job that depends heavily on the ability of a manager to balance the needs of a diverse set of community stakeholders and to manage conflict.  Such a skill can be improved to some degree by courses in conflict management and negotiation, but the most effective community association managers are those with the predisposition to manage conflict in a constructive way.

For those professions or jobs that benefit from licensing, the question then becomes: how much regulation is needed and for what purposes?  If we go back to the 19^th century, the legal profession was one in which lawyers were trained through apprenticeships.  The advantage of an apprentice process is that it allowed an individual to get a foothold in the profession, to make a living, and to improve his or her skills over time to be ready to take on higher-value tasks when ready.  In virtually every profession, the licensed professional performs a mix of high and low skill tasks.

For example, when I started in legal practice in 1974, attorneys performed many tasks which, today, are performed by paralegals or even clerks or administrative assistants.  I was fortunate to be spared the drudgery of proofreading lengthy documents, a task that required someone of single-minded focus on document accuracy, as opposed to someone of exceptional skill and training.  Firms deployed attorneys for these tasks because they could get clients to pay for them, not because attorneys were needed.

Today, given the high and growing unemployment rate, we do not have the luxury of leaving these protectionist regulations untouched.  States need to be pressed to revisit every licensing requirement for every job and to modify, or even eliminate, these licensing requirements.

Why have these licensing requirements persisted in the face of common sense analyses that suggest that they should be eliminated or modified?  Licensing requirements create special interest groups of those who get the licenses and are overpaid for their work because of the artificial entry barriers those licensing requirements create.  Each of the special interest groups is organized, powerful, and single-minded, whereas those excluded from the profession are unorganized, lacking in power, and often not as committed to overcoming the entry barriers the government has created.

Our elected officials need the moral courage to take on every one of these special interests to create middle class jobs that are readily available for many people currently unemployed.  Moreover, we would probably find that, as more people enter these professions, the public would pay less for goods and services which carry artificially high prices because of the excessive labor costs built into them.

Whether he made a values-based judgment that he had simply received a windfall and did not deserve to profit simply from being in the right place at the right time, or whether he believed that he would receive more long-term economic benefit from giving up the ball does not matter: he did an admirable thing.

Everyone’s behaviors are on a continuum from being totally generous of spirit to others to being totally mercenary and interested only in helping oneself.  To be generous of spirit does not mean that one withdraws from the capitalist system, lives like Mother Teresa or Paul John Paul II, and deny or give away everything material.  A person whom I consider an example of practicing behaviors that are generous of spirit, and whom I have always admired, and got to meet by serving briefly on a board of directors with him, is Neil Armstrong, the astronaut who was the first person to walk on the moon.

His behavior that I would consider exceptionally generous of spirit is his refusal to engage in any behavior in which he personally profited from his status as the first person to walk on the moon.  He could have made millions of dollars in commercial endorsements from his lasting fame and celebrity, but he steadfastly declined every opportunity to do so. He has lived a successful life and is a wealthy person, but he recognized that many people contributed to his accomplishment as an astronaut and that he should not draw a disproportionate benefit from it.

I have aspired to be more like Neil Armstrong in not trying to extract maximum economic benefit everywhere I could.  I have given free advice to many people for which they would have paid thousands, or even tens of thousands, of dollars, or arranged introductions that have resulted in financial success for others without receiving any short-term economic benefit, even when I was not financially secure earlier in my life.  I did well financially, although I could have done better.  I never once negotiated my own compensation package, even when others around me negotiated theirs.

I have met many people who have given generously of their time, their insight, and even their services and not asked for anything in return in the short run.  I have also worked with people whom I know could have driven harder bargains with their employers.  I admire athletes like Hall-of-Fame baseball player Tony Gwynn, who stayed in San Diego and made far less money than he could have made with many other teams.  I also admire teachers who have stayed in seniority-based public education compensation systems and foregone great opportunities to make far more money in corporate training and education positions.

At the same time, I have experienced extreme distaste and stress by encountering people who think of the world as a place in which they have to extract compensation for every deed with economic value and have to extract as much as the market will allow them to extract.  People who expected to be compensated for everything they did were very common in New York.  Many jobs only made economic sense if the jobholder could get tipped consistently.  However, there was a broader philosophy that no one ever did anything for others without getting paid for it, and closely related to the fact that everything could and should be compensated was a philosophy that everything was for sale.

I remember the scene in the 1991 film Goodfellas, in which the protagonist Henry Hill takes his future wife on a date to the Copacabana.  From his car to his front-row table, he passes many hotel and restaurant workers and hands out money to every one of them.  The front-row table clearly would not have been available to anyone else.  It was moved into place and set up especially for Hill and his date.  That scene was director Martin Scorsese’s depiction of a culture in which everything was for sale and that such a culture was so ingrained that it was a regular part of everyone’s daily routine.

In 1980, the 12-year-old son of one of our neighbors regularly cut our lawn.  He was receiving what we thought was a fair price for his services.  He tried to double his price, and when we asked why, he said that his parents told him to see how much he could get from us.  He was told that if we objected, he could negotiate downward, but that he should try to maximize his short-term return.  We never employed him again, and I sent him a note telling him why.

What the Christian Lopez story reminded my wife and me about ourselves was that we are people who believe strongly that our capitalist system works best when people give value without expecting to be paid top dollar immediately for everything they do.  George Gilder, an American writer, philosopher, and Republican activist, wrote a powerful book in 1981 entitled Wealth and Poverty, in which, among other things, he described capitalism by saying that it “begins with giving.”  What Gilder meant was that capitalism, by its nature, requires one or more individuals to expend capital at a point in time and to provide goods and services for which he or she will get rewarded at a later point in time.  Capitalism requires an act of faith that investment will yield later reward.

To the degree that everything someone does requires immediate reward, the capitalist system collapses.  Such a system usually does not enable the granting of credit, except in a very close circle of family and friends.  Credit given to people one does not know is essential to the optimal growth of an economy.

Unfortunately, America has moved progressively toward a country in which there is more and more distrust, and more of an expectation of immediate gratification and maximum economic reward.  Some of this is a result of an increasingly mercenary society.  Some of it is the result of people being influenced by others to become more mercenary than they would be on their own.  Sadly, some people have become more mercenary as they have become more financially desperate.

I was saddened by the experience with the 12-year-old boy. He seemed liked an enterprising young person who could have been generous of spirit, but whose mind had been poisoned by his parents, with whom we ultimately had a dispute on unrelated matters.  I do not know what effect, if any, our refusal to continue to do business with him had on his values, but I suspect that his parents probably found a way to deflect the blame for that situation on to us.

It is reassuring that there are people like Christian Lopez in the world.  He did the right thing.  He may, or may not, ever receive economic benefit comparable to what he gave up. However, if he lives the rest of his life with values consistent with those that led him to make the quick decision to return the ball to the guy who truly created the potential for its economic value, Derek Jeter, he will live a far more satisfying life, and he might even be more financially successful than he otherwise would have been.

Here’s to you, Christian Lopez!!!

When governments, private insurers, and self-insured health plans try to drive drug prices down and, specifically, to convert patients from using generic drugs instead of branded drugs, there is a limit in terms of cost-saving opportunities available, without putting patients at risk.  To push cost savings beyond that point inevitably raises a huge risk of acquiring generic drugs priced at a level that does not optimize patient safety.

We cannot solve our health care cost crisis entirely primarily by driving prices down for drugs, supplies, devices, and medical services.  We have to reduce unnecessary usage of the health care system, and to drive the healthier behaviors that are the most sustainable way of reducing health care system usage.

Publicly held businesses and governments under stress for excessive costs often have the tendency to flex their muscles in procurement processes to demonstrate their ability to save money.  The unit cost savings are visible, the savings opportunities are often immediate, and the purchasers can present themselves as fiscally responsible.  Moreover, it is far more comfortable for payers to beat up on suppliers through the procurement process than to deal with the messy questions associated with inappropriate usage of the health care system, or driving people to engage in healthier behaviors.

There are two things wrong with relying on procurement strategies as the primary cost reduction tool:

• Unless there are tight controls on what is purchased, cost reductions are often covered by sellers cutting corners in what they are providing, or reserving the right to charge for what had been given away.  Government contractors have mastered the process of low-balling initial contract price offers, and then making huge profits from “extras” which are inevitably required by the government at a later time.  The so-called savings are phony; they are merely costs that are deferred to a later time and are often higher than a more comprehensive competitive bid.
• The sellers who agree to accept lower prices and try to honor them according to their terms often find themselves unable to perform profitably.  Over time, the pool of sellers willing to bid on business that is consistently likely to be unprofitable shrinks.  Eventually, the purchaser has no competitive options.

In the pharmaceuticals context, the corner cutting can be fatal to patients, as was the case with heparin.  Although I obviously cannot know what happened in every health plan procurement negotiation, I would not be surprised that purchasers which drove a hard bargain on pricing for generic drugs created an environment in which the supply chain functions of pharmaceutical manufacturers attempted to acquire ingredients for the drug at a price that could not be supported with the extra cost of a tightly controlled supply system.

There are no “magic bullet” ways to take drug prices down beyond a certain point.  Major drug manufacturers are administratively inefficient; they spend excessively on marketing and sales; and they may still have less efficient research and development processes.  However, beyond a certain point, cost cutting will cause people in their organization to take actions that put processes at risk.

Employees of pharmaceutical companies are not excessively evil or reckless compared to other businesses or governments; this is true of every large organization.  Employees under severe pressure anywhere to cut costs make stupid and reckless decisions to keep their jobs.  They particularly cut costs in areas in which the consequences are less visible or more likely to appear at a later time, especially if they can transfer the risk to someone else.  They are unlikely to go after the most sustainable cost reductions, which involve messy structural reform of their organizations.

In the health care marketplace, this was illustrated particularly with the Johnson & Johnson manufacturing safety problem in the last few years.  Much of the publicity about that case demonstrated that the root cause was a culture that, over time, became excessively focused on cost cutting at the risk of patient safety.

Relative to other areas of health care, the same principle applies: there is no free lunch when costs are cut excessively in the procurement space.  One major firm was very happy with the fact that its insurance plan administrator significantly reduced the payments due to physicians, hospitals, and other healthcare providers. The plan administrator secured a very good long-term contract because it presented itself as having a better ability than other administrators to negotiate prices with providers.

Unfortunately for the Company, the consequence of this hardball negotiation process was that many providers left the network and stopped treating patients with whom they had long-term relationships.  As a result, the Company lost in two ways:

• Some patients stayed with these providers, who were now out of the network and were charging much higher prices.  Even with lower reimbursement percentages for out-of-network care, the Company still paid more.  Out-of-network costs shot up.
• Some patients changed providers, received disruptive and suboptimal care, and were very unhappy with the Company for causing this to happen.

As a CEO, I was never comfortable with strategies based predominantly on procurement-based price reductions.  They tended to work for 2-3 years, and then fell apart.  The better strategy was to work with vendor-partners to get better products and services through sustainable cost reductions.  For example, I always liked solutions in which parts were re-engineered or packaging was reduced, or a less expensive, but equally reliable, way to ship the product was found.  These kinds of cost reductions were more challenging, but they worked.  Cost reductions based solely on price concessions struck me as a very lazy way to reduce costs.  I supported them, but, to a limited degree and for a limited period of time.

Ultimately, the challenges of reducing health care costs will require us to make deep and broad structural changes on how we live our lives, and allocate societal resources.  The move from branded to generic drugs is a small step in health care cost reduction, but, like every other, it has limited value and has to be managed with great care.