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DealBook: Nomura’s Failed Global Ambitions

August 31, 2012 by Leave a Comment

A branch of Nomura Securities in Tokyo.Kiyoshi Ota/Bloomberg NewsA branch of Nomura Securities in Tokyo.

With Nomura announcing $1 billion in cost cuts on Friday, the Japanese firm formally and concretely revealed a retreat from the role it once sought at a global financial player.

Much of the shrinking will take place in Nomura’s wholesale operations, a spokesman told Bloomberg News. That’s precisely the area where the firm’s former chief executive, Kenichi Watanabe, had hoped to grow one of Japan’s most prominent securities firms.

Much like another international bank, Barclays of Britain, Nomura had hoped to use the remains of Lehman Brothers as the underpinning for a transformation from regional player to worldwide heavyweight. The Japanese firm, already a big player in its home market, bought Lehman’s international businesses and its 8,000 staff members after the American brokerage firm filed for bankruptcy in September 2008.

Nomura turned to Jasjit Bhattal, a former Lehman executive known as Jesse, to essentially take charge of the wholesale division. And a longtime colleague, Glenn Schiffman, was appointed as the firm’s head of investment banking for the Americas.

Other Lehman holdovers were also given top positions in the newly prominent division.

The transformation wasn’t necessarily easy, as hard-charging Lehman veterans ran into the more traditionally conservative ways of Nomura. The wholesale operations quickly started to fray. Christian Meissner, a high-ranking Lehman executive who helped broker the takeover of the bankrupt firm’s international division, decamped in 2010 to Bank of America Merrill Lynch.

Unlike Barclays, the Japanese firm found international growth a difficult task. Despite the addition of a well-established international banking operation, Nomura stayed mostly flat in various investment banking league tables.

It hasn’t risen higher than 10th in Thomson Reuters‘ ranking of deal advisers since 2002 or ninth in global equity capital markets issues. For global debt offerings, the firm rose no higher than 14th since the Lehman deal, after having once reached 13th, in 2002.

Mr. Bhattal retired from Nomura in January after less than a year in the position. By that point, the firm had already reported a $591 million loss for the three months that ended Sept. 30, its first quarterly loss in more than two years.

Soon afterward, Mr. Schiffman departed, resurfacing at the Raine Group, a boutique investment bank.

The final blow for Nomura’s dreams of global expansion may well have been the resignation of Mr. Watanabe last month, after having been engulfed by an insider trading scandal. Some critics laid the blame for the mess — in which employees tipped off favored clients ahead of securities offerings — on the Lehman transaction, though the firm had been embroiled by criminal acts in the 1990s.

Mr. Watanabe’s successor, Koji Nagai, has spent most of his career focused on Nomura’s domestic operations. While Mr. Nagai plans to continue building some international businesses like mergers advisory, according to Bloomberg, he has made clear what his strategy is.

“I want to make a new business strategy from the past,” he said at a news conference last month, adding that he wants to bring Nomura’s footprint “to an appropriate size.”

Nomura’s global mergers advisory rankings


Nomura’s global equity capital rankings


Nomura’s global debt capital rankings

Article source: http://dealbook.nytimes.com/2012/08/31/nomuras-failed-global-ambitions/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

DealBook: Can Square Remain Hip?

August 31, 2012 by Leave a Comment

Square Register uses the company's reader and an app to turn an iPad into a credit card register.Square Register uses the company’s reader and an app to turn an iPad into a credit card register.

It’s not exactly a hip question right now. But what exactly is Square?

Excitement is building around the payments company, which is led by Jack Dorsey, Twitter’s co-founder. It’s close to raising $200 million of new capital, and Starbucks said in early August that it was going to use Square’s technology.

Disappointed by Facebook and Groupon, technology industry watchers at least have hope for Square. It’s easy to see how nifty card readers and other innovations can make payments much easier for small businesses and their customers. Meanwhile, the Starbucks deal raises the prospect that other large retailers may partner with Square.

But it may too early to anoint Square as the firm that will lead us into a cashless society. The main issue with Square is that it’s not yet clear what it wants to be.

Yes, on the surface, it’s a company that provides payments to hardware and software to merchants. But it may struggle to achieve burgeoning profits from the payments fees paid by merchants, according to an analysis of the economics of those payments.

Square is almost certainly working to develop a much bigger revenue source. The success of that will likely determine the success or failure of Square.

As innovative as Square is, it cannot easily get around the established fixed costs charged by the payments industry, which comprises processing companies, banks and firms like Visa and MasterCard.

Square charges merchants 2.75 percent of the amount transacted when a card is swiped, or $275 a month. That’s at the low end of the fee scale. But it may also be too low for Square to a profit on payments below $10, which are a big part of Square’s business.

Nebo Djurdjevic, chief executive of Cardis International, shows why. He simply calculates the money Square would take in with a 2.75 percent fee on a transaction and then compares that with the money it would have to pay out in fees to credit card companies and processors. (As a note, Cardis has its own product, which aims to cut the costs of smaller credit card payments.)

On a $5 transaction, Square would get 2.75 percent of $5, or 14 cents. But, citing public fee data, Mr. Djurdjevic calculates that, with a premium Visa card, Square would have to pay out 27 cents in fees. The theoretical loss to Square would therefore be 13 cents. The loss may be lower on other types of cards, according to Mr. Djurdjevic, who nevertheless thinks the Starbucks deal is a positive development for Square.

Square declined to comment on Mr. Djurdjevic’s numbers and their significance for Square’s business model.

The challenging economics won’t be a surprise to Square watchers. Enthusiasts may argue – correctly – that Square will make money on each payment that is over $10. And if Square gets picked up by larger retailers, larger payments may make up a large share of its business. Square may even have software that allows it to reduce slightly the amount it has to pay to card operators.

So what will the big, alternative revenue source be? Recent investors in Square must see one, given that the company now has an estimated valuation of $3.25 billion.

The company probably wants to take all the payment data and use it to help merchants with their marketing. Square might, say, take a cut of any business generated from that marketing. In other words, it may aim to be a more sophisticated version of Groupon. Square’s fans may say that, with a wealth of payments data, the company can do better than Groupon.

The more merchants that use Square’s payments system, the more data it will have. And with its low fees, Square may well draw in large numbers of merchants.

But as Mr. Djurdjevic’s numbers show, those low fees can also generate losses. And it’s not like other companies are standing still. For instance, PayPal and Discover recently announced that PayPal customers will next year be able to use the service in stores, not just online.

In all, it’s too early to tell whether Square is leading us, or itself, into a cashless future.

Article source: http://dealbook.nytimes.com/2012/08/31/can-square-remain-hip/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

BUSINESS: Business Day Live | August 31, 2012

August 31, 2012 by Leave a Comment

August 31, 2012

By Mac William Bishop, Nadia Sussman, Pedro Rosado and Channon Hodge

Article source: http://video.nytimes.com/video/2012/08/31/business/100000001753159/business-day-live-august-31-2012.html?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

Bits Blog: Reviewing the Review Story

August 31, 2012 by Leave a Comment

There was a large and energetic reaction to last Sunday’s article about a service that allowed writers to commission five-star reviews of their books. Some readers were shocked that the world of online reviews was pervaded by fakery and insincerity. “Sure puts a damper on online shopping,” wrote one. Said another: “This practice is the review equivalent of doping.” But just as with sports doping, others were not surprised and said it would be impossible to eradicate.

Log-rolling, of course, has been going on forever. Anthony Trollope’s 1875 satire, “The Way We Live Now,” opens with Lady Carbury soliciting a boost for her new efforts: “I have taken care that you shall have the early sheets of my two new volumes to-morrow, or Saturday at latest, so that you may, if so minded, give a poor struggler like myself a lift in your next week’s paper. Do give a poor struggler a lift. You and I have so much in common, and I have ventured to flatter myself that we are really friends!”

If you’re not sucking up like Lady Carbury, a reader named Porter suggested, you are just not trying:

“As a writer (under another name) I have many other writer/friends who ask me to post reviews on Amazon and Good Reads ALL the time. I know they expect a 5 star review. Of course, they are sending emails out to all 1,500 or 15,000 of their facebook friends or people in their address books at the same time. They would be fools not to. Nobody wants to cross anybody else, in hopes of good reviews when their own books hit the store, virtual or otherwise … Over the years I have seen mediocre books become hot sellers because the writers are dogged marketers, and not shy about asking for reviews (or booking themselves readings). Great or nearly-great books have languished.”

Many readers wondered what Amazon’s responsibility was. Shouldn’t the retailer “be spending more effort and money to fix this?” one reader asked. “They make a profit off these reviews so I would think they have some responsibility to make sure they are honest, or at least flag the most egregiously dishonest reviews. It would be *very* easy for them to write a computer program to do this.”

I’ve tried to talk to Amazon about this, but in general it is unwilling to discuss — well, just about anything, in my experience. An executive there briefly dismissed the problem, telling me that it would be easy to fake one or two reviews but when an item had hundreds, you could trust that the reaction was authentic. Then I wrote about a case for the Kindle Fire where the manufacturer was secretly refunding the price if readers wrote a favorable review. Just about every review of that case was fake, and there were hundreds.

On the basis of that story and others, I got a lot of messages from Amazon customers about suspicious review activity. Amazon, it seems, is not overly interested in policing its own site. Authors buying book reviews to establish their credibility is one thing; manufacturers trying to juice sales of their new products is much worse.

There’s a larger point here. Technology companies visibly improve people’s lives and sometimes talk about their higher purpose (think Google’s “Don’t be evil” motto) but in the end they are profit-seeking corporations. Amazon may in some ways be replacing the public library, but unlike the libraries of yore, it is not a public service. It exists to sell things.

So what, in the end, can readers of reader-generated reviews implicitly trust? Very little, I’d suggest, except of course for the critiques at leasthelpful.com, which bills itself as “daily dispatches from the Internet’s worst reviewers.” These notices, most of which seem to have been posted on Amazon, are usually completely bananas but clearly from the heart. Here are two reviews reprinted verbatim:

From a review of “Lord of the Flies”: “The whole plot of the story is the same as ‘Lost’ so that is kind of cool.” But not cool enough: “My little tip to the auther is never write another book. I would rather read cifford the dog.”

And here’s an unusual take on the child’s tale, “There Was an Old Lady Who Swallowed a Fly” “I read this book and I became sick. What could a child possibly learn from a book like this? With the last sentence being, shes dead of course! This should be taken off the market and the auther penalized.”

Article source: http://bits.blogs.nytimes.com/2012/08/31/reviewing-the-reviewers-story/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

Bucks Blog: Friday Reading: To Brief the Teacher, or Hold Your Tongue?

August 31, 2012 by Leave a Comment

August 31

Friday Reading: To Brief the Teacher, or Hold Your Tongue?

When to brief the teacher about your child and when to hold your tongue, be cautious with free software, a chance to paint where Georgia O’Keeffe did and other consumer-focused news from The New York Times.

Article source: http://bucks.blogs.nytimes.com/2012/08/31/friday-reading-to-brief-the-teacher-or-hold-your-tongue/?partner=rss&emc=rss

Filed Under: Your Money Tagged With: ,

Bucks Blog: Ways to Make Life Joyful

August 31, 2012 by Leave a Comment

Paul Sullivan writes in his Wealth Matters column this week about a pursuit mainly for the wealthy — yachting.

While the market for yachts weakened significantly in the wake of the financial crisis, prices seem to have bottomed out and demand is rising again, Mr. Sullivan writes. Still, maintaining a yacht and paying for fuel remain expensive — a fact acknowledged by two owners Mr. Sullivan spoke to.

But both offered similar reasons for owning a yacht — the joy it adds to their lives.

While most of us could only dream of such an indulgence, there are many other ways to make life joyful, and they cost far less. We’ll name a few — a day trip to the ocean, a week away from the office, a roller coaster ride, a meal meant to linger over. But we’d like to hear your suggestions.

Article source: http://bucks.blogs.nytimes.com/2012/08/31/ways-to-make-life-joyful/?partner=rss&emc=rss

Filed Under: Your Money Tagged With: , ,

Economix Blog: A Critique of Fed Policy

August 31, 2012 by Leave a Comment

Many economists regard asset purchases as the most powerful tool the Federal Reserve could use to stimulate the economy. But Michael Woodford, an economics professor at Columbia University, argued Friday that a second option would actually be much more effective – both because it would have significant economic benefits, and because the benefits of asset purchases are significantly overstated.

The option favored by Professor Woodford is a modified version of the Fed’s statement that it intends to keep interest rates near zero until late 2014. In a paper presented at the annual monetary policy conference in Jackson Hole, Wyo., he said that the Fed should instead declare its intention to hold down interest rates until the economy meets certain benchmarks, like a specified increase in economic output. In other words, to increase growth now, the Fed must promise to tolerate higher inflation later.

The Fed’s chairman, Ben S. Bernanke, has repeatedly resisted similar ideas, but in a separate speech at the conference earlier on Friday, he appeared to suggest a greater receptivity.

The core of Professor Woodford’s argument is that changes in Fed policy can happen for two reasons: either its economic outlook changes, or the Fed decides to change the way that it responds to a given economic outlook – in other words, a change in strategy, or in circumstances.

The Fed has described its forecasts as reflecting a change in circumstances, not strategy. It has said that it is simply describing the way that it is most likely to act if the economy slogs along at the pace it presently predicts.

Professor Woodford writes that this is at best ineffective and potentially even damaging. It can be described as an effort to push down interest rates by convincing investors that the economy will remain weaker for longer than they had previously believed. But investors may not regard the Fed as having better information about the economic future. And if they do take it seriously, the implications are negative: The situation is worse than they thought, while the planned response is unchanged.

“Forward guidance of this kind would have a perverse effect, and be worse that not commenting on the outlook for future interest rates at all,” he said.

What can work, he writes, is promising to behave differently. In the current situation, where the Fed would push rates below zero if it could, he argues that the proper response is to promise that it will refrain from raising interest rates above zero as quickly as circumstances would otherwise warrant.

“One wants people to understand,” Professor Woodford writes, “that the central bank’s policy will be history-dependent in a particular way — it will behave differently than it usually would, under the conditions prevailing later, simply because of the binding constraint in the past.”

Charles Evans, president of the Federal Reserve Bank of Chicago, has embraced a version of this approach, arguing that the Fed should maintain interest rates near zero until the unemployment rate falls below 7 percent or the rate of inflation rises above 3 percent. Professor Woodford says this would be an “important improvement,” but he prefers a different approach, tying Fed policy instead to a minimum rate of growth in the nominal gross domestic product (N.G.D.P.), meaning economic growth plus inflation.

Christina D. Romer, former chairwoman of President Obama’s Council of Economic Advisers, has explained the virtues of N.G.D.P. targeting.

Mr. Bernanke has generally resisted proposals for the Fed to shift its policy framework – and he has specifically branded as “reckless” ideas that would raise the Fed’s inflation target, like N.G.D.P. targeting.

But he has also said that in periods of high unemployment the Fed sometimes should move more slowly to restrain rising inflation, and in his speech Friday he appeared to underscore that the Fed, at least in part, is trying to tell markets it plans to move more slowly.

He began with his usual description of the Fed’s policy forecast as consistent with its standard decision-making framework. But he added that “a number of considerations also argue for planning to keep rates low for a longer time than implied by policy rules developed during more normal periods.”

Mr. Bernanke then made the further claim that the Fed was already sending this signal to markets, and that it was being received.

He noted in particular that a regular survey of economic forecasters has documented a steady drop in their estimate of how low unemployment must fall before the Fed’s policy-making group, the Federal Open Market Committee, begins to withdraw its stimulus.

The evidence, he said, “appears to reflect a growing appreciation of how forceful the F.O.M.C. intends to be in supporting a sustainable recovery.”

Article source: http://economix.blogs.nytimes.com/2012/08/31/a-critique-of-fed-policy/?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Today’s Economist: Uwe E. Reinhardt: From Physician Glut to Physician Shortage

August 31, 2012 by Leave a Comment

DESCRIPTION

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

In my most recent post, I made light of the argument that the Affordable Care Act would lead to a major shortage of physicians in this country. I was unpersuaded in part because the newly insured are likely to present only a marginal added demand for physician services. More important, I am not sure what we mean by “physician shortage.”

Today’s Economist

Perspectives from expert contributors.

Forecasters looking at the health work force have never reached a consensus on the ideal physician-population ratio for this country.

Indeed, widespread worries over a looming physician shortage are a relatively new phenomenon. They come at the time when experts are also lamenting an “epidemic of overtreatment” of patients, said to cost America $210 billion a year.

Throughout the 1980s, however, and until the late 1990s, the dominant narrative among experts on the American health work force was that, with the exception of primary care physicians, the United States faced a large overall future physician surplus. There were only a few demurrals from that dominant narrative.

The problem is that forecasting the future supply of and demand for any type of health professional is a highly complex and nuanced enterprise with wide margins of error (see, for example, Figures 9-1 and 9-6 in my 1991 paper).

Crucial in such forecasts is the assumption one makes about the average annual physician productivity in future years. That variable depends chiefly on two factors: the number of hours per year that physicians typically devote to patient care, and the degree to which physicians delegate to others tasks for which an M.D. degree is not required – for example, administrative tasks to clerks or business managers and certain medical tasks to physician assistants or nurse practitioners trained to perform tasks now performed by physicians.

How crucial that assumption is can be inferred from a once highly influential paper written in 1994 by Jonathan Weiner, a Johns Hopkins University health services researcher. In that study, Professor Weiner sought to estimate the impact of the then-impending Clinton health reform on the country’s future work force situation.

Professor Weiner noted that, in 1992, well-managed, clinically integrated, staff- or group-model health maintenance organizations that were compensated by prepaid capitation (an annual lump-sum fee per patient) required an average of only about 120 or so physicians per 100,000 enrollees, while the overall ratio of patient-care physician per 100,000 population in the United States was as high as 180 (about 220 in 2011; see Table 2 in this publication).

It appeared that the H.M.O. had pushed task delegation to nonphysician personnel further than had the rest of the health system. Furthermore, H.M.O.’s freed clinicians substantially from many administrative chores that physicians elsewhere must perform. Such H.M.O.’s, incidentally, would be the ideal form of the accountable care organizations called for in the Affordable Care Act of 2010.

Assuming, when he made the forecast in 1994, that as a result of the Clinton health reform some 40 to 60 percent of the United States population would be enrolled in such H.M.O.’s by 2000, Professor Weiner projected that the demand for and supply of primary care physicians would be more or less in balance in 2000, but that the supply of specialists would exceed the demand for them by more than 60 percent (a projected surplus of 165,000 physicians).

This prospect – widely accepted at the time — subsequently led the prestigious Council of Graduate Medical Education to recommend in its report of 1996 that “that the number of physicians entering residency be reduced from 140 percent to 110 percent of the number of graduates of allopathic and osteopathic medical schools in the United States in 1993.”

And why were health policy makers and work force specialists so worried at the time about an impending physician surplus? Did not standard economic theory predict that an imminent surplus would drastically drive down physician fees – particularly specialists’ fees — and thus make health care more affordable and accessible?

The problem is that this theory has found little empirical support in the data, in part because third-party payment intervenes. Furthermore, there has always been a strong belief, especially among policy makers, that modern medical practice, when coupled with third-party payment, is subject to an analogue of Parkinson’s Law. It is named after the British historian Cyril Northcote Parkinson (1909-93), who promulgated the law more or less in jest in 1955, then with regard to the British civil service.

According to Parkinson’s Law, “work will expand to fill the time available for its completion.” In medicine, its manifestation is feared to be the overtreatment of patients – sometimes harmful – even though individual physicians may sincerely believe that more care implies superior quality of treatment.

As the late economist Eli Ginzberg, an early pioneer in work force studies, noted as early as 1966: “Physicians are in a position to create their own demand.” He added that the effective use of physician manpower “depends in the first instance on a taut supply of physicians.”

Academic economists since that time have tied themselves into analytic knots over whether or not Ginzberg was right, in exercises reminiscent of medieval scholasticism. At the theoretical level, their models are mathematically elegant but lack predictive power. The data available at the empirical level does not allow economists to distinguish between health care actively demanded by patients and health care passively accepted on the doctor’s recommendation, nor between services prescribed by doctors in good conscience and those rendered mainly to shore up doctors’ incomes.

As on so many other areas of the real world, the views of economists on this matter cancel one another out.

Policy makers in the real world, however, seem to have no doubt that Parkinson’s Law applies to medical practice, as well. Consequently, they prefer paying physicians by annual capitation or bundled payments instead of “inflationary” fee-for-service, and they often seek to impose global budgets on physicians.

If Eli Ginzberg was right – and often he was – the suspected physician shortage now imputed by critics of the Affordable Care Act may actually drive our health system into more efficient medical practice. Step No. 1 in that direction, of course, would be to lighten the enormous administrative load now heaped by our health insurance system onto physicians devoted to rendering patient care.

Article source: http://economix.blogs.nytimes.com/2012/08/31/from-physician-glut-to-physician-shortage/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

Bits Blog: Reviewing the Reviewers’ Story

August 31, 2012 by Leave a Comment

There was a large and energetic reaction to last Sunday’s article about a service that allowed writers to commission five-star reviews of their books. Some readers were shocked that the world of online reviews was pervaded by fakery and insincerity. “Sure puts a damper on online shopping,” wrote one. Said another: “This practice is the review equivalent of doping.” But just as with sports doping, others were not surprised and said it would be impossible to eradicate.

Log-rolling, of course, has been going on forever. Anthony Trollope’s 1875 satire, “The Way We Live Now,” opens with Lady Carbury soliciting a boost for her new efforts: “I have taken care that you shall have the early sheets of my two new volumes to-morrow, or Saturday at latest, so that you may, if so minded, give a poor struggler like myself a lift in your next week’s paper. Do give a poor struggler a lift. You and I have so much in common, and I have ventured to flatter myself that we are really friends!”

If you’re not sucking up like Lady Carbury, a reader named Porter suggested, you are just not trying:

“As a writer (under another name) I have many other writer/friends who ask me to post reviews on Amazon and Good Reads ALL the time. I know they expect a 5 star review. Of course, they are sending emails out to all 1,500 or 15,000 of their facebook friends or people in their address books at the same time. They would be fools not to. Nobody wants to cross anybody else, in hopes of good reviews when their own books hit the store, virtual or otherwise … Over the years I have seen mediocre books become hot sellers because the writers are dogged marketers, and not shy about asking for reviews (or booking themselves readings). Great or nearly-great books have languished.”

Many readers wondered what Amazon’s responsibility was. Shouldn’t the retailer “be spending more effort and money to fix this?” one reader asked. “They make a profit off these reviews so I would think they have some responsibility to make sure they are honest, or at least flag the most egregiously dishonest reviews. It would be *very* easy for them to write a computer program to do this.”

I’ve tried to talk to Amazon about this, but in general it is unwilling to discuss — well, just about anything, in my experience. An executive there briefly dismissed the problem, telling me that it would be easy to fake one or two reviews but when an item had hundreds, you could trust that the reaction was authentic. Then I wrote about a case for the Kindle Fire where the manufacturer was secretly refunding the price if readers wrote a favorable review. Just about every review of that case was fake, and there were hundreds.

On the basis of that story and others, I got a lot of messages from Amazon customers about suspicious review activity. Amazon, it seems, is not overly interested in policing its own site. Authors buying book reviews to establish their credibility is one thing; manufacturers trying to juice sales of their new products is much worse.

There’s a larger point here. Technology companies visibly improve people’s lives and sometimes talk about their higher purpose (think Google’s “Don’t be evil” motto) but in the end they are profit-seeking corporations. Amazon may in some ways be replacing the public library, but unlike the libraries of yore, it is not a public service. It exists to sell things.

So what, in the end, can readers of reader-generated reviews implicitly trust? Very little, I’d suggest, except of course for the critiques at leasthelpful.com, which bills itself as “daily dispatches from the Internet’s worst reviewers.” These notices, most of which seem to have been posted on Amazon, are usually completely bananas but clearly from the heart. Here are two reviews reprinted verbatim:

From a review of “Lord of the Flies”: “The whole plot of the story is the same as ‘Lost’ so that is kind of cool.” But not cool enough: “My little tip to the auther is never write another book. I would rather read cifford the dog.”

And here’s an unusual take on the child’s tale, “There Was an Old Lady Who Swallowed a Fly” “I read this book and I became sick. What could a child possibly learn from a book like this? With the last sentence being, shes dead of course! This should be taken off the market and the auther penalized.”

Article source: http://bits.blogs.nytimes.com/2012/08/31/reviewing-the-reviewers-story/?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

You’re the Boss: The One Task I Can’t Seem to Delegate

August 31, 2012 by Leave a Comment

Thinking Entrepreneur

An owner’s dispatches from the front lines.

The other day, three yearly license plate renewal stickers arrived in the mail for three of my company vehicles. This meant someone would have to put the stickers on and replace the registration card in each of the cars. Normally, that someone would be me. While I have become quite adept at delegating almost everything else, the combination of vehicles and stickers has long been a surprising source of grief, education and humor for me. I have given speeches about my failures to manage this process.

It started about 25 years ago. I had been in business almost 10 years, and I was trying my best to master the art and discipline of delegation (I had read a business book or two). Back then, in Chicago, car owners needed to buy a new vehicle sticker and attach it to the windshield every Jan. 1. I decided that this was a task that could easily be delegated, so I handed a razor blade to one of my employees and asked him to do the honors. Convinced that I was on my way to management enlightenment, I moved on to more important matters.

But when I got in my car that night, I was surprised to find that the sticker had been placed halfway up the windshield instead of in the lower right corner, where it would be out of the line of sight. I had to live with it there for a year — a constant reminder of my poor delegation skills — because getting the sticker off is next to impossible.

By the time that year had passed, I owned a car and a van, so there were now two stickers that needed attention on Jan. 1. Should I handle it myself? No! I had learned a lot about leadership in the past year. Specifically, I had learned that you have to delegate and give instructions. “Put the sticker two inches from the bottom and two inches from the side,” I directed as I handed the razor blade to my trusted accomplice.

Thirty minutes later, he came back. “Are you done?” I asked.

“Yes,” he said. But it was a hesitant yes, and I could tell there was more. “What do you mean, yes?” I asked, mimicking the hesitant tone.

Well, the stickers were on, he said, but he couldn’t find the razor blade. What? You mean it might be floating around in my car or the delivery van? He shrugged. We never did find it.

Year 3: Would I give up and do it myself? No! I am a manager. Again, I had learned more over the previous year. Delegate. Give instructions. And follow up! Besides, the temperature was near zero, which is another strong motivation to delegate.

“Here is the first sticker,” I said. “Put it two inches from the side and bottom. Don’t lose the razor blade! When you finish the van, come back to me and I will give you the sticker for my car.”

Ten minutes later he returned. Victory! In fact, he had managed to get the sticker off in one full piece, something I have never been able to do. The right guy with the right instructions; I was becoming some kind of guru of delegation. I gave him the second sticker for my car. I moved on to more important things, the whole purpose of delegation.

Half an hour went by, and I realized that he had not come back for a final victory lap. I started to go toward the door, when I saw him coming out of the bathroom. He looked as sick as a frat boy the morning after a night of drinking.

“Did you get the sticker on?” I asked.

“No.” It was a weak no, almost an “I am about to cry” no.

“Why not?” I asked.

“I broke the windshield,” he said. “I used a blow-torch to get the sticker off, and the windshield exploded.”

Years 4 through 25, I put all of the vehicle and license plate stickers on all 11 of my cars, trucks, and vans myself. I enjoy it. It doesn’t take long, I get to make sure the registration and insurance cards are all in order, and I do it with pride. I am a picture framer at heart. I make sure that all of the stickers are straight and in the right place. I clean the glass professionally. And I don’t break the windshields. Luckily, Chicago has changed the replacement date from Jan. 1 to July 1 (maybe the city administrators felt sorry for me). Which gets me back to what happened the other day when the three new license plate stickers arrived.

I had these three stickers in front of me. Two of the vehicles were out on deliveries, but one was sitting in my parking lot. My assistant drives this vehicle, and I asked her for the keys, so that I could get into the glove box to change the registration card. “I can do it,” she said. “The plate has one of those plastic shields on it, and you have to take it off with a screwdriver.” And then she looked at me with a look that only someone who has worked with you for 20 years would give you, a look that says, “Get over it. Really. This is not brain surgery. I can do it.” But? But? I stood there for 20 seconds thinking. And then I broke. After all of these years — and probably 300 stickers — I decided to believe again. I gave her the sticker and I went home. What could go wrong?

The next morning, I pulled into the parking lot. I walked past her car, and there it was. The renewal sticker was on the plate — but in the top left corner (see photo above). The little indentation for the sticker is in the top right corner, along with five years of half-peeled-off stickers. NOOOOOOOOOOO! What had I done? I walked into the office and looked at her the way you look at your dog after he eats your favorite shoe.

“I know!” she said. “I was changing it this morning, and George” — our delivery and installation guy, who has been with us 17 years — “walks up and says, ‘Let me do that.’ I was scraping off the old stickers and he grabs the new sticker off the ground and says, ‘You can put it on either side.’ And before I can react, he slaps it on!”

Of course, the card clearly says to put the new sticker over the old sticker, and since these stickers are not intended to be removed, I’m going to be looking at this for the next year. And that is my sad, tortured story of failed delegation. Now, let me assure you, again, that I have successfully delegated far more difficult tasks. And I’m sure I could delegate this one, too, if I really wanted to. The truth is, I’ve come to enjoy handling this myself.

So, I have two questions: What lesson do you think I should take from all of this? And am I alone in this — or is there anything you do that you know you could or should delegate, but you choose not to because: a) it’s just easier to do it yourself, b) it’s too easy for someone else to mess it up or c) you have some other anal-retentive reason.

Jay Goltz owns five small businesses in Chicago.

Article source: http://boss.blogs.nytimes.com/2012/08/14/the-one-task-i-cant-seem-to-delegate/?partner=rss&emc=rss

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