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Last month, with little time to spare, the Senate reconfirmed Ben Bernanke as Chairman of the U.S. Federal Reserve. His term was set to expire just two days later. Senators where looking for a place to lay blame for our country’s current financial dilemma. Bernanke took much of their heat, even though they really wanted to point a finger at former chair Alan Greenspan.
Many argue Greenspan, who in his last four years as Fed Chairman kept rates too low and regulation too tight, led us to a housing bubble that is causing our worst financial crisis since the Depression. But Bernanke has said regulatory problems in the mortgage markets were to blame, not the Fed’s monetary policy. All this got me thinking about the bit of personal insight I have on Greenspan’s leadership.
In 2000, I was invited to a Washington D.C. dinner attended by Mr. Greenspan and hosted by Congressman Spencer Bachus. Over the course of that meal, I learned that Greenspan is a diverse man. I’ve talked before about becoming a better business leader by indulging your passion, and it seems his is two pronged: music and data.
Although his life’s work has been centered on economics, Greenspan graduated from Juilliard in his early 20s and traveled as a professional saxophonist in a jazz band prior to earning degrees in commerce and economics. He still plays the sax occasionally, in addition to the clarinet and the piano.
As for the data side of his passion, he has long studied New York Yankees statistics. Even as a boy, he could tell you the batting average of every player. This folded logically into his career. Greenspan told me that his business life could be easily described as studying data and trying to figure out how the world works.
In an MSNBC article he said, “I love facts and figures. It’s like following a detective story, piecing together what’s going on in the economy.” Now, I imagine he’s studying data and taking his time to put this crisis into some kind of fact-based, statistical perspective—solving the mystery, so to speak.
After meeting him, I don’t believe he ever allowed the seemingly endless, often excessive praise he got in the old pre-crisis days go to his head. His data-based disciplines kept him steady as reflected in this quote about his time as Fed Chairman: “I was praised for things I didn’t do and now I’m blamed for things I didn’t do.” Powerful words.
My takeaways:
- Don’t be a one-note song. Explore all your interests, both in your career and outside it.
- Find a way to relate your passion to your career. Greenspan made his life’s work from his love for interpreting data.
- Much like Greenspan’s approach to capitalism, laissez-faire leadership is often the best.
- Make glory personal, not something others ascribe to you. If your work is grounded in data, you can stand by your decision, no matter which way the wind is blowing.
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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.
You’ve heard the Three Musketeers shout it as a show of selflessness and solidarity. It’s the national motto of Switzerland. I’m proud to say it’s also a mantra of the Stewart Perry team.
When the economic downturn started affecting commercial construction, our CFO Del Allen and I were forced to take a hard look at ways to reduce cost. As a guest blogger, Del has shared a few thoughts on cutting general and administrative budgets. Even with these changes implemented, we were challenged to lower our biggest operating expense–PAYROLL. This was almost unimaginable. Every person on staff brings something unique to the table, and we wanted to do whatever it took to avoid losing any of that talent by letting someone go.
They say recessions inspire innovation, and that’s exactly the mindset we tried to embrace. We decided to set up a furlough system where everyone in the company, myself included, takes five unpaid days every two months. While this isn’t the ideal scenario, it did allow everyone to keep his or her job, health insurance, retirement plan and profit sharing. I’m pleased to say the Stewart Perry family has adapted to the lowered pay with a positive attitude. They were glad to make a joint sacrifice for the sake of the team.
You’ll remember I said this wasn’t a perfect plan. We’ve learned that less revenue is not always commensurate to less work. Many of our folks have come in on a furlough day or two because they have a passion to get the job done right. Everyone is grateful for the extra effort.
However, the benefits have far outweighed the negative aspects of furlough. I’ve seen a greater camaraderie among team members. Personally, my appreciation of our team continues to deepen. When someone isn’t here, I’m more aware of that person’s role in the overall success and seamless operation of the company. Our people are what set us apart, and trials have only made that more apparent.
As for right now, it seems our business opportunities are picking up a bit. Maybe it’s the spring. Maybe it’s a microeconomic envelope that we are in. I’m not sure, but hopefully we are rocking along the bottom, trending upward. I’ll be glad to have my entire team there with me on the other side.
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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.
I never get through all of the newspapers I wish to read each day. I bring them home and they stack up on my kitchen counter waiting to share their knowledge with me. At the first of last year, not seeing all the news and forecasts might have been good for my morale.
With so much anxiety in the market and many speculating that we were headed toward another Great Depression, I suggested my 84-year-old mother and her friends turn their televisions off. I thought that instead of listening to the negativity, they’d be better served talking with each other and being thankful to live in a U.S. where we aren’t on the brink of fighting a world war.
If you’ve ever known someone who, like my mother, was a child in the 20s and 30s, you are talking to a person whose life was forever changed and shaped by the economic climate. The Depression will always be a part of them. I tell our young people around here that while times are really tough (approaching Depression era unemployment rates in construction) we should be thankful. We didn’t go through a Depression. The first beach we saw was not Omaha Beach.
Over the holidays, I finally got to catch up on my newspapers and was pleased to notice a more positive trend. I read through eight publications and thought I would share my takeaways here:
-Christmas tree sales had their needles pointing up. To translate, it was a great year for tree sales, which is a good gauge of the strength of the holiday shopping season as well as people’s outlook and confidence.
-Federal Express, UPS and DHL all reported up ticks in their shipping—both here and globally—and they continue to be upbeat. A good sign.
-October retail sales were so-so. Momentum picked up through November and December. Internet sales are going well.
-Retailers are doing a better job of managing inventory this year. They’re walking with little more zip in their step.
-Corporate earnings are strong, but I’m wondering how long can we push down cost to earn a profit? At some point the top end needs to grow as well.
-The annualized GDP growth rate is somewhere around 3% plus for now. That’s positive.
-The Feds plan to keep the rates low for a while yet.
-Housing inventory declined in November. Annualized new home construction is around 600,000 units. We still have a ways to go, but these numbers are certainly better than the end of 2008.
-Mortgage companies are beginning to ease down payment standards, moving toward to 95% LTV. Let’s hope they never again forget to do the paperwork, including real documentation and real credit reports.
-Confidence in the housing market values is increasing market by market.
-Commercial Banks still have a ways to go with lending for commercial properties.
All things considered, it looks like we’re starting our climb out of this valley.
My New Year’s message to Mother: It is now ok to watch CNN and to read the news again. We’re not out of the woods but we’re certainly better than we were 12 months ago. Love, Your Son.
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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.
Last week we received a plaque from The Heart of America Foundation for the improvements we provided an inner city Atlanta elementary school. It’s a beautiful memento covered with pictures of students enjoying their new space. As I looked at all the smiling faces, it reminded me why we made the commitment last June.
Jim Gustafson and Patrick Davis, two of our strategic partners at Target, called to ask if we would be interested in teaming on the rebuild. I agreed, mainly because of the people who asked. When I got off the phone I started second guessing myself. With the Recession and our revenues down, what was I thinking? Fortunately, my conscience kicked in and helped me realize that it doesn’t matter. A friend asked for our partnership—they could help with supplies and we could help with the balance need—and children would benefit for years to come. We would figure out how to make it happen for these kids. Clinton Smith, who led the initiative from our end, did just that.
The library at Beecher Hills Elementary received a complete transformation including 2000 new books, updated technology and colorful interiors conducive to learning. “We know that pre-K through fifth grade is the period that sets the tone for reading,” said first-year Principal Crystal Jones. “Getting this done will go a long way toward making that happen.” Maybe the library can even provide a “tipping point” for these kids just like Malcolm Gladwell mentions in his book.
“You have not just changed the library, you have changed the lives of our children forever,” said Dr. Sharon Davis Williams, executive director of Atlanta Public Schools for southwest Atlanta schools.
I knew the children were thrilled, but looking at the pictures last week it made it all worthwhile. I called Jim and Patrick and asked them to sign us up for another school next summer. I couldn’t pass up the chance to help kids learn.
Check out more of the library renovation celebration on my flickr photostream.
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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.
As 2009 comes to a close, I have thought about what I could have done better, the mistakes I made, and the wins we achieved. To me, we always learn more from our failures than from our wins. Winning makes us think we are smarter than we might really be.
Never confuse success with a rising tide.
Two months ago, I ended an initiative I launched for our company in 2007. It will cost me somewhere in the neighborhood of $175,000—hopefully a little less depending on any residual benefits. I thought I covered all the bases, asked the right questions and set things up for success. In the end, it was a bust. Fortunately, I took action to correct things and have moved on to other trails. I must say that earlier in my business life, I didn’t have the courage to end this kind of initiative and admit I’d made a mistake. That makes failure even more costly.
The good news is that I have made some better choices during this same time to balance out the bad judgment. I still wish I had the money back, but not nearly as bad as I did from a hit in the late 80s.
That’s right. I’m a member of the Million Dollar Loss Club. That was really stupid. You know the saying, “Pride comes before the fall?” Well I certainly went with my ego on that call. I came away with firsthand evidence that age and wisdom will sometimes outperform youth and energy. With that said, I’m of the opinion that it’s not a matter of what you lose, if you can come back. The lessons taken away are more important. To grow from a negative experience, you have to be brutally honest with yourself. Otherwise, you’re at great risk of repeating the pattern.
Back when I was a member of the Million Dollar Loss Club, I was in denial. It was like gangrene. First it was in my foot; then it spread to my ankle and leg. Fortunately I had the courage (or maybe I’d be more accurate to say that others “encouraged” me) to cut the loss and save the heart and mind to fight another day. It took an enormous amount of energy to come back, but only in the face of adversity do we grow.
Because of my experience, I hope I’m mature enough to view the mistakes others make in my company as an opportunity for learning. I hope that after they admit fault and take responsibility for their own decisions, they will tell me what they learned and the “workout.” Thanks to the people around here, we will always be looking for better ways to do things. Turning mistakes into growth is just another way to improve as individuals and as a company.
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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.
As a construction company navigating our way through these hard economic times, we are devoting much time to seeking out the right opportunities. Many of us are in the same boat, looking for work that has reasonable profits. On the cost side of our operations—overhead—we’re fortunate to have a forward thinking CFO who keeps me from having to watch our backside, so to speak. I asked Del Allen, the moneyman here at Stewart Perry, to share a few things he keeps top of mind. These 5 points have saved our company, and hopefully his advice will provide good takeaways for you too.
Closely Monitor Cash – The rainy day fund we established during the “good times” we experienced at the peak of the previous economic cycle (2007 and early 2008) has come in handy now that revenues have fallen and customers are delaying payments. Staying in contact with customers reminds them we appreciate prompt payments.
Negotiate – Now is an ideal time to renew or renegotiate services (like telephone), equipment leases (like postage machines/meters) and supply purchases. Many vendors are willing to reduce prices or upgrade services.
Watch for Good Buys – Prices for electronics, computer hardware and software have moderated or even fallen. Upgrades to our network and new devices for the office or field managers can be purchased at a more reasonable cost.
Communicate Wisely and Effectively – During tough times, the CFO often becomes a bad guy with a reputation for cost cutting and belt tightening. Clear explanations of changes in policies and controls on expenditures are necessary to alleviate employee fears and resentment. Showing your team the long-term benefits of modest spending right now is imperative.
Become a Salesman – This is closely related to communications above, but includes capturing employee “buy-in” to cost saving measures and productivity improvements. When the whole organization supports management in implementing new practices, success is all but assured.
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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.
One of my most important jobs is to instill confidence in our company, especially now—to help team members feel at ease about the work portion of their lives. I recently ran across this iconic poster, “Keep calm and carry on,” and it struck a chord with me. While the original words came from the British crown more than 60 years ago, I suspect the phrase still rings true; particularly in these times when we all are experiencing financial stress at home and in the office.
For historical perspective, the phrase was coined by the British government on the eve of World War II. The king produced a series of posters with the purpose of reassuring his people. Intended for distribution only in the event of German invasion, the poster was never actually used. It was discovered after the war by the owners of Barter Books, one of the largest secondhand bookshops in Britain. Upon reproduction, the poster became a best seller with the English people. Its popularity is credited to the nameless artist who used the Crown of George VI as the only graphic device. Long after the war was won, people everywhere still find reassurance in the distinctive design and brief, but powerful message.
I’m going to have a couple of posters made for our office with those words. I hope it can serve as a simple reminder for me and my team members to think before we speak. We’re all a little more sensitive now. Because of the current pressures, a subject that wouldn’t be a big deal under normal circumstances might be more delicate. To me, when something is said out of character, the words can never be taken back or the relationship damage changed. So I’m encouraging my team to keep calm and carry on. We’ll come out of this low with a new sense of pride and resolve, and most importantly, a new respect for the folks we work with.
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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.
I’ve always been a believer in reading history, as it often repeats itself, or at least offers a case study for how to do (or not do) things. A recent trip to London seemed like a good time to pay tribute to a wise Brit, so I dropped into a local shop and purchased a small book on Winston Churchill.
As I read through Churchill’s sayings and speeches a couple of things occurred to me. First, while we are all struggling through these times, our parents and grandparents would gladly change places with us from their hard days in the Depression and a World War. Secondly, keeping the faith in our own abilities and ourselves will help get us through this rough patch. To use the wise words of Mr. Churchill, “Never, never, never give up.”
I’ve experienced hardship personally. Since leaving college, there have been two times that I’ve been financially broke. In a strange way, I’m glad I went through those periods. We learn a lot of lessons as we walk the trail. This week I was visiting a long time customer relationship in Minneapolis. During the course of conversation he said, “in life we all get educations and they all come with a price.” So wisely said. My “school of hard knocks” lessons were personally costly, but I’m convinced the trials made me a better person, someone capable of empathy.
This week I had dinner with a friend who I initially met as a business contact. Last spring, he called to let me know that he was in the same boat as millions of U.S. citizens. He had lost his job. He questioned his abilities and a lot of other things during that initial period of “why me?” but quickly recovered and reached out to friends. He did everything textbook. He got out of the house and volunteered every Saturday as a swim team coach for children with disabilities. He took business courses to better his managerial skills and most importantly, he networked and then networked some more. He refused to accept a misfortune as defeat.
Our recent dinner was celebratory. We toasted his new job as real estate director with an international Fortune 100 company. My friend had a new look. His face showed the confidence of someone who was faced with adversity, met the challege and is looking at a bright future. His new start came in our worst recession since the Depression. The best news of all…He doesn’t plan to quit his Saturday job at the swimming pool with his swim team.
My friend followed Mr. Churchill’s advice well. Never, never, never give up.
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