Different Experiences in the Public and Private Sectors

Over the course of the last few months, I’ve had three organizations/businesses bother me in connection with one product sold by one company that we’ll call Round Pals. I found their intersection to be particularly interesting.

Private Company 1

The first organization was a competitor that we’ll call Big Guys. Big Guys wrote a cease and desist letter to Round Pals for using an image online that legally belonged to Big Guys. The cease and desist letter was very well-worded, firm but polite and said, “We would never intentionally infringe on the copyrighted materials of other companies and we believe that Round Pals wouldn’t either, which is why we know that, having brought this infringement to your attention, you will stop using our intellectual property.”

Round Pals immediately stopped using the material and wrote to tell Big Guys exactly that. All was professional and cordial. No harm. No foul.

Private Company 2

The second company was the manufacturer of a major product sold by Round Pals; we’ll call this manufacturer Safe Co. In trying to negotiate for a better price on Safe Co.’s product, based on purchases of the exact same Safe Co.-manufactured product elsewhere, Safe Co. became concerned.

As it turned out, Safe Co. was not selling the product for what Round Pals was getting it for elsewhere, and Safe Co. wasn’t sure how Round Pals was finding the product for so little. However, Safe Co. handled its concern and correspondence in a professional way, despite believing that this, being a safety product, was a major issue. We all really appreciated the way that Safe Co. (so far – the issue remains unresolved) has handled this issue.

Government Agency

And then there was the government agency. Boy was the government agency and its representatives horrible.

They threatened, they intimidated, they bullied, they badgered.

They were rude. They were manipulative. They were unkind. They were unprofessional.

I’d say I’ve never seen anything like it, but as a turnaround professional, I see this all the time.

It was terrible dealing with this government agency because they didn’t care about time or money wasted – they just cared about ticking things off their check lists and moving on. But only moving on between the hours of 8 a.m. and 4 p.m. In the intervening hours they couldn’t care less.

We repeatedly asked this government agency for documented proof of our errors and supposed wrong-doing. We asked to see the regulations. But they had none. Indeed, they misquoted their own documents and regulations, and sent us a 160+ page document about something other than what we were talking about and doing when we asked for clarification on our alleged error.

It was borderline pathetic.

The Moral of the Story

I’ve said it before and I’ll say it again and again and again. We have got to run government more like a business.

There are plenty of problems with the private sector, yes, but when I have private sector problems, I mostly find myself working in professional environments with mutual respect for time, money and energy. We also usually come to fair and amicable solutions to our problems. Not everyone ends up happy all the time or with what they want (often times this isn’t the case), but it’s amazing how different the approach and attitudes can be. Not always, but frequently enough that I found these three instances all revolving around one product a particularly illustrative case.

Do you have any examples that run notably in favor of or counter to my point?

Avoid America’s Bankruptcy by Bringing a Turnaround Guy to Washington and Treating the Country Like a Business

This article was published in its original form in the Atlanta Business Chronicle here.

The United States is a capitalistic society, so I often wonder why the government isn’t run like a business. We had a surplus 12 years ago, but now our debt is astronomical: nearly 14 and a half trillion dollars. This isn’t a political issue. It’s a business one – or at least it should be.

When a business finds itself in this much debt relative to its capacity to repay, the bank, Board of Directors or shareholders say, “No more!” and send in a turnaround professional. We are the shareholders, and it’s time to send a turnaround guy to D.C.

When my clients have problems with cash flow they don’t print money. They raise money, close plants, layoff people or cut spending; they tighten their belts to survive.

Despite insurmountable debt, the U.S. government isn’t doing those things. Businesses with negative cash flow would have been bought, liquidated, merged or otherwise gone at this point, and I don’t want to see us become like Greece or Iceland in five years. Worse still, I don’t want to be a part of the United States of China, since in the business world a company with increasing debt is subject to acquisition or dissolution by a larger and wealthier business.

I always say that 100% of spreadsheets and projections don’t work because the assumptions are wrong, yet people rarely revisit and alter the assumptions regularly to produce more positive results. Even today, the Office of Management and Budget, which hasn’t made an accurate P&L projection in years, thinks that our revenue is going to increase by x if we do a, b and c. But x is an assumption that’s based on the unlikely actualization of a, b and c, possible only if we overcome party politics. And as the deficit skyrockets, the assumptions are increasingly wrong and the parties are increasingly polarized.

The only way we’re going to resolve our financial crisis is by treating the government like a business.

As we repeatedly hear, a balanced budget is the first step. The second step, however, is a repayment plan of our foreign debt. Next, raise taxes. No one likes tax increases – especially me – but it’s part of the solution.

The corporate amnesty program allowed businesses to return profits from foreign soil to the U.S. at lower tax rates, which created more jobs in America. This was a wonderful and creative idea, but it equates to peeing in an ocean: it doesn’t change the levels. While thousands of these ideas will amount to an aggregated long-tail effect, we need to begin with more drastic measures.

Turnaround 101 dictates that we start by slashing all spending by at least 15%. We must tell every division, department and agency that it needs to cut its cash needs – no exceptions. The pain will be shared across the whole country as it would be across an entire business. This kind of mandatory budget cut provides time to fine tune operational requirements based on the improved results.

Before you ask, this 15% cut would affect entitlements, social security, health care, the military, and education – everything.

It’s easy to buck and cry, What about the children? Shouldn’t they be exempt from budgetary cuts? What about the sick and the poor? What about defense?

Here’s what I ask every department at a business: “Do you want your company to survive until tomorrow or do you want to quibble about who’s more deserving of money that doesn’t exist? I don’t care how you do it. Just do it.”

Internal politics kill companies in the private sector because politics and business don’t mix. Similarly, politics has no place in America’s budgetary discussions, and our issues must be addressed by those who can truly set aside political or personal biases and run this country like a turnaround professional in the private sector.

As a turnaround guy, I act like an ER doctor; my first step is to stabilize the patient and prevent shock. As a country, we’re already in shock. Nobody wants to lose an arm or a leg, but if there’s only enough blood for the torso and the leg is gangrenous, you better believe I’ll lop it off to save the body. In five years, the prosthetic surgeon can make us pretty again. I’m in a unique business, but it’s the business of making sure we’re still alive in 2025 with or without a leg.

In addition to the 15% cut, we must freeze all raises and expansions. That means no more foreign aid increases (also subject to the 15% cut), and we put a reasonable mandatory repayment plan in place for foreign aid. We can’t continue to write off receivables and survive. It doesn’t work that way in business, and it can’t work that way in government.

This also means no cost of living increases for government employees, social security beneficiaries and pensioners. In addition, congressmen can enjoy normal health care services – not VIP lifetime benefits for two years of service.

Unfortunately, tenured positions can’t be affected, but we can stop giving tenure. All rules for entitlements (e.g. pensions) must be reviewed. The private sector has largely eliminated pensions because it can’t afford them, and government needs to do the same. In capitalism when you can’t afford something you stop doing it.

I don’t have every last answer for how to save the trillions we need, but by making – and enforcing – these tough moves we can save America from bankruptcy, collapse and ruin. We must empower people to save money, and punish them for spending it needlessly in order to get a line item the following year.

Legislators keep asking that we have faith. Our economic stability has been built on faith: full faith and credit in the U.S. We can’t retain faith after twelve years of increasing debt. We need to deal with hard facts and run America like a business. Business is not about faith. It’s about trusting what works, and what works in business is what I know. Treat America like a business, and we’ll all live to buy another day.

I’m the Turnaround Authority and my bags are packed. Washington D.C., please call!