Creative Class

Dr. Doom, Nouriel Roubini says the worst is not over: A real financial panic is coming, and governments will be forced to shut down the financial markets for a week or more as the economic crisis deepens.

“We’ve reached a situation of sheer panic … There will be massive dumping of assets … hundreds of hedge funds are going to go bust … Systemic risk has become bigger and bigger … don’t be surprised if policy makers need to close down markets for a week or two in coming days.”

Uh-oh. He’s been a lot more right than wrong.

New technologies have been the main catalyst for workplace changes since 2005. Demographic change (including a talent crunch) and the rise of the knowledge economy are also key components but it was not until mobile technology became powerful that major changes became more commonplace.

Technology enables workplaces to be flexible and workers to be mobile. Demographic change and the rise of the creative economy makes this desirable as maximizing the productivity and creative process of every worker is essential – even or especially during economic slow down.

The International Association of Administrative Professionals offers tips that actually apply to almost anyone working in a creative of knowledge-based industry today. Everyone needs to understand the technologies in the office, the tools and information available on the Internet, and how to harness all of this.

Their tips on Staying Ahead in a Changing Workplace:

1. Become a computer software expert. Demonstrate your mastery of “office suite” software packages which typically include word processing, spreadsheet, database, presentations, and scheduling software. Learn to navigate the Internet, and gather information via the World Wide Web to further your organization’s goals and to serve customers’ needs. Become a “Web Master” or a Web content provider for your employer.

2. Actively pursue continuing education. Attend business-related workshops and seminars or pursue a college degree program. Polish your written and verbal communications skills.

3. Learn how to plan conferences and meetings. Make the meetings well organized and user friendly through good room and site selection, meeting arrangements, and audio-visuals. Understand audio- and video-conferencing. Become adept at presentation software such as Microsoft’s PowerPoint.

4. Be a good teacher and leader. Many administrative professionals are training and supervising other staff. IAAP offers many opportunities to practice organizational leadership roles.

5. Become a communications hub for your workplace. Clients and vendors often judge the character of a business by the quality and efficiency of its administrative support staff. Customer service skills are critically important. Interpersonal skills (tact, diplomacy, negotiation) are also essential.

6. Be an adept organizer and “Information Manager.” Utilize computerized data as well as paper office records to provide information needed by managers. Today’s administrative staff increasingly conduct research and help manage projects from conception to completion.

7. Get involved in selecting and maintaining office equipment. Stay abreast of the types of available office equipment and what is most suited to your organization. Seek out appropriate vendors. Learn to oversee equipment purchases, evaluate office supply needs, and schedule maintenance.

No, not the baseball teams! Which is the better city?

In a light-hearted nine-inning match-up, I compare the two cities head-to-head in the categories we normally use to rank places for quality of life. The categories include such areas as climate, crime, economy, and housing.

Which wins?  Gritty Philadelphia or sun-splashed Tampa Bay?

After nine hard-fought innings, the winner is crowned in the World Series of Cities.

This graphic from Michael Mandel’s BusinessWeek essay tells a most interesting story. U.S. economic growth over the past decade has been premised not on underlying productivity growth but on consumption, much of it fueled by the hyped-up real estate sector and construction and reliant on debt. While official numbers peg U.S. growth over the past decade at roughly a 2.7 percent annual clip, factoring some $3 trillion in excess borrowing and consumption into the picture, Mandel calculates, reduces that to a more anemic 1.3 percent rate.

Some time ago, savvy urbanists like Paul Gottlieb argued that a growing number of U.S. regions had created a fiction of growth by building new homes, malls, and industrial parks in their sprawling suburbs, even when they were not creating jobs or adding people.

Two sides of the very same coin – don’t you think?

Former Treasury Secretary John Snow told Congress the U.S. went “too far”‘ encouraging American home-ownership, saying that: “In retrospect, the bipartisan consensus to promote housing went too far.” As Bloomberg reports, Snow oversaw the “ownership society” where home-ownership rates hit an all-time high of 69.2 percent. He, like former Fed chief Alan Greenspan, now says they are “shocked” by the rapid meltdown of the financial sector.

One piece of the problem was granting mortgages to gullible or desperate people who truly wanted to buy a better home for themselves and their family. But a huge piece that continues to go under-recognized was the the incredible amount of real estate speculation undertaken by small scale investors, real estate agents and developers, and “regular Joes” trying to make a quick buck by flipping real estate.

David Leonhart is absolutely right. While bailing out U.S. homeowners strikes the right chord politically, it is fraught with all sorts of problems.

There are two separate groups of people who are at risk of foreclosure, and they often get muddled in any discussion of the housing crisis. The first group is made up of people who, for whatever reason, will not be able to make their monthly payments. Some took out mortgages with initial monthly payments that they couldn’t afford. Others took out adjustable-rate mortgages whose monthly payments have ballooned to an unaffordable level. Still others have lost their jobs. …

The second group is quite different. It is made up of people who are at risk of foreclosure not because they won’t be able to keep up with their monthly payments — but because they may decide they don’t want to continue making them. These are the homeowners who are “under water,” which is to say their houses have lost so much value that they’re now worth less than the underlying mortgage. Homeowners with an underwater mortgage face a choice. Many will stay put and keep making their monthly payments … Others, though, are going to look at their home purely in economic terms and see an investment that may never pay off. Some of them will choose to walk away …

The problem with this approach — and it’s the heart of the problem with any big-time homeowner rescue — is probably obvious. As soon as the government announces that it will help everyone at risk of foreclosure, a lot of people are suddenly going to decide they’re at risk of foreclosure.

Homeowners who are under water will have an incentive to think of their homes in cold economic terms and threaten to walk away, while those who can just barely afford their monthly payments will have reason to slide into delinquency. Multiply 19 million mortgages by a couple of hundred thousand dollars, and the government could be left with $4 trillion in obligations.

Yep. Not just struggling homeowners, but people who speculated on Miami or Scottsdale or Las Vegas real estate will now be in for a bailout. Plus, the economy will never correct itself if the government keeps artificially propping up real estate assets.

When I tell friends in Europe or Canada that Americans can simply walk away from mortgages, they are in shock. One key reform has to be to make U.S. mortgages a permanent, binding contract that can’t be walked away from.

As originally published in BusinessWeek, this is the second installment in a series about improving corporate decision-making. Part 1.

Are numerous levels of middle managers and even front-line employees simply “implementing” reflexively, like an arm told by the brain to pick up a salt shaker? When a leader at corporate headquarters formulates a decision to “win on the basis of superior customer service,” do each of the division presidents open up the comprehensive “how to win on the basis of superior customer service” manual and simply, mindlessly start “implementing” steps one through 10,000 as a choiceless doer? No, if he was only good at reading manuals and mindlessly following instructions, he would never have made it to division president.

In fact, his job is to take the relatively abstract decision mandated by the corporate office and make a set of decisions within his division consistent with that corporate decision. Lo and behold, he, too, is a brain, not simply arms and legs.

And is his EVP of service operations just arms and legs, a choiceless doer? No, she is not. She needs to take the division president’s decisions and make choices on a consistent and reinforcing basis. So where are the arms and legs? Where are the employees that are mere choiceless doers?

Stay tuned for the conclusion of this article in next week’s post.

Another bad day yesterday for the stock markets with the Dow falling to its lowest point since 2003. With bad economic news accumulating, expect further weakening and the stock market slipping still further.

Even though Obama has surrounded himself with advisers like Paul Volcker and Warren Buffet, among others, the very fact of the election and the three-month transition will surely fuel greater instability, especially if it appears that Paulson et al are lame ducks, on their way out.

This introduces a most interesting political-economic dynamic. To allay any residual fears, should Obama issue a major statement on his plan for the economy? Should he announce his core economic team? Should he lay out details of how his team will work with current team to ensure an orderly transition? How long can this wait?

From time to time (more often in this current financial crisis), I wonder if living in the center of a mega-region in the urban core is worth it. Traffic everywhere, expensive real estate, long lines for everything from a sandwich at Potbelly’s to checking out at a supermarket. It seems to wear me out every few months.

Over the past 12 years I have lived in D.C. (twice), London, San Francisco, and Chicago. All incredible places and strong creative class centers but, as I have experienced, not always easy places to live. I cannot be alone can I? Is Scranton, PA my “Green Acres“?

The WSJ had a nice piece by Kevin Helliker over the weekend on Scranton, PA’s revival; including increasing population and improving quality of life. From the piece:

But life in Scranton is more nuanced than the cliché of a once-powerful industrial center in decline. The population here is growing for the first time in 60 years, following a decades-long exodus that halved the city to barely 70,000 people. Its architecturally distinctive downtown, long vacant, is undergoing a dramatic renovation. And tourism is spiking, thanks in no small part to “The Office,” NBC’s hit show about the Scranton branch of Dunder Mifflin, a fictional New York-based paper company. The century-old “Electric City” sign – dark for decades – shines again above the town square.

There’s a distinctly white-collar movement behind Scranton’s comeback. A return of college-educated natives from cities like New York and Philadelphia is fueling a population rise and a civic makeover. Bringing them back are the very small-town qualities many once wanted to escape: the likelihood of meeting acquaintances and relatives on the streets. The embrace here of modest ambition. The deeply held belief – only heightened by ridicule from the outside world – that Scranton matters.

For six decades Scranton lost an average of a thousand residents a year, many bound for college. The return of even a fraction of them – along with their families – could confer substantial economic benefits. “There was a diaspora of Scrantonians, and now we’re inviting them back,” says the Chamber’s Mr. Burke. The group has a campaign called Rediscovering Scranton, which includes a Web site with testimonials from returning natives.

A population rise of about 3,000 in the last two years, to about 75,000, has given hope that the long exodus is over. School enrollment is up to 10,000 from 8,500 seven years ago. And downtown is buzzing with the sounds of construction. A Radisson hotel is in the city’s old train station. Other recently vacant buildings now house advertising agencies, architectural firms and financial offices, many started by professionals who have returned.

Precisely how many natives have heeded the call isn’t known. But many returnees seem to orbit in a large circle of other returnees, as the case of Ms. Dempsey illustrates. At her firm she employs an architect who moved back to Scranton from New York City, and a designer who moved here with his boyfriend – a Scranton native who has started a wine bar in town. One of Ms. Dempsey’s siblings, a fashion designer, quit a job at Burberry Group PLC in New York City to join a Scranton-area technology firm, while a brother-in-law left a Wall Street investment bank for a Scranton software startup.

I have never been to Scranton and don’t know if I would like Scrantonians (Helliker mentions “returnee sorting” in the pulled quote above), but the pace of life and the size as presented in the article sounds very appealing after 12 years near the center of global mega-regions. Anybody else up for moving to Scranton?

Night owls of the worlds unite: The most creative time of day is actually at night – 10:04 p.m. to be exact, according to a survey of 1,426 people (h/t: Kevin Stolarick). The least creative time is 4:33 p.m. And yes, taking a shower actually helps, the survey found.