Friday, December 11, 2009

Hounding Dead People the Brinks Way

My mother died in her home at the age of 91 last January. According to her death certificate, the primary cause of death was dementia.

I recently found out that she signed a contract with Brinks Home Security many years ago that automatically renews each year. The specific service they were charging for was remote home monitoring - which I find interesting because no alarm system at her home was connected to the phone system - which means for many years there was no way for them to have been monitoring it.

A few months ago, they sent a renewal notice which reached my brother, several months after he'd contacted them to say my mother had died (which to me would suggest that she probably wouldn't pay any new charges into the future). Her credit card was no longer valid so they were looking for a new number. He didn't respond to them - he'd already told them she was gone and there was no need for their services, and that's when they renewed the service automatically and then started sending collection notices.

I've just spent the morning trying to reach a real person at Brinks in order to get the situation dealt with amicably. After going through phone tree systems that had no option pertaining to this situation (all the focus is on trying to sell someone a new system), I got hold of Tyra in Customer Loyalty. After I gave her the account number and passed the "security ID" question (not surprisingly, my mother used the family dog's name), she said that indeed my brother had contacted them last April to say my mother was dead. But now the only thing that would cancel the contract was for me to send a copy of my mother's death certificate, my driver's license, and all the documentation regarding her estate into a Customer Care Department. I said that there was no way I was going to send a copy of my license or any other important documents into a corporate bureacracy when all I'm trying to get them to do is quit hounding a dead woman for services that are no longer being provided and haven't been provided for years. I did offer to send Tyra or any specifically named person a scanned copy of the death certificate by email, and then follow up as appropriate. It soon became clear that Tyra couldn't help me and didn't seem to know any actual person who could.

After thanking her and hanging up politely, I decided to check into the Brinks web site a little more. Brinks - which now carries the Broadview Security name - says on their site that they have a strong commitment to "Creating Customers for Life." Through their investor-relations pages, I see that they're especially proud of just how effective their subscription programs are. Apparently, it's good business to sign up customers once and then keep charging them - through dementia, death, and beyond. Perhaps not surprisingly given that policy, their revenues for the quarter ended September 30 were up by more than 6% over the previous year.

If Brinks wants to continue to hound my mother for a service that hasn't been used for years, they're welcome to do that. If she were alive, I suspect she would find it interesting and perhaps a little amusing. Meanwhile, I would suggest that the attorney general for Oregon (where my mother lived), Washington (where I live) and many other states might want to start looking into how such contracts and payment systems affect elderly people who might have once signed up for a security or home monitoring service, but no longer need it and don't know how to make it go away. Let me know if you need any help.

Monday, November 30, 2009

Tensions and Law Enforcement

My heart goes out to the families of the police officers who were gunned down Sunday morning in Lakewood, Washington, not far from where I live. It was a terrible crime and many lives will never be the same. I feel for the officers' colleagues, especially knowing that they suffer the burden of having to be professional and reassure their own loved ones - all the while mourning for close friends and knowing that for a twist of fate, it could have been any one of them.

Many years ago, my summer job involved working dispatch during the night shift in a national park. I was the last person to talk to a patrol officer before a car stop - which also meant I was the first person to talk to the officer after a stop was made. It was a time when databases were not connected and the law enforcement officers were often seasonal rangers like myself with limited training.

Every stop was potentially life threatening. We never knew whether a car stop would involve a drunk, belligerent driver, an apologetic tourist with family in tow, or someone or something more sinister. I worked alone in a dark administration building, and felt the tension intensely. If an officer took more time than I thought they should, I could feel my heart race and I was always grateful when he or she would get on the radio and calmly communicate that the stop was done and had been routine.

Once, on a shift I happened not to be working, a car exploded just after the patrol officer had radioed in to say she was going to make a stop, and we later found out the driver had accidentally blown himself up while trying to throw a grenade out the car. That driver turned out to be on the FBI Most Wanted List and the officer involved was someone I'd come to know as a friend. I don't know how long it took her to get over it, but it's always stayed with me.

Another time I was alone and in uniform when I ran into a group of armed gun enthusiasts in the back country. Carrying guns like that in a national park was clearly illegal - and I was not an armed officer - so I assessed the situation and for whatever reason let them pass without saying a word.

Now, whenever people casually criticize police officers or belittle the pressure or tension they feel, my own gut starts to get tight. I've become the sort of person who feels it's always my job to put law enforcement at ease which sometimes means doing the dog submission equivalent of rolling over and baring my belly. A few years ago, when I was crossing over from Canada into the US and the Customs officer asked if I had anything to declare, I cried out "We've got bacon" as though it were a capital crime. It wasn't even on the list of restricted products.

Of course some people have their own strong reactions to law enforcement for entirely different reasons. In the late 80s when I worked for Microsoft as a product manager, one of my colleagues was black, and he would tell me stories about how often he was stopped because he was young and black and drove an expensive Porsche and was therefore subject to what he described as the ever present offense of "driving while black."

I also know from experience that just being out of sorts can raise suspicions and make everybody tense. Once, when I was catching a flight unexpectedly from Seattle to Nevada, I was put through intense security. The security officers pulled me aside because I was acting stangely - I was sweaty, pale, and could barely pull together a coherent sentence. I'd just found out my sister was dying and I was still in shock as I traveled down to see her for the last time. None of their questions addressed my situation and I couldn't say anything without bursting into tears, so I watched somewhat dazed as they went through everything in my bag and everything on my person. They were clearly puzzled, but couldn't find anything specific and my paperwork seemed to be in order. After what felt like an endless search, they sent me on my way. As I ran to catch my flight, I muttered a tearful thank you and I knew I'd left them wondering if there was something else they should have probed.

We''ve come a long way since the days when I worked at Crater Lake and my friend from the Word product marketing team was pulled over several times a year for merely driving an expensive car while audaciously young and black. Databases are connected, law officers have better training and people everywhere are more sensitive to issues of prejudice in matters of race and authority. Nevertheless, the system and we are still imperfect, and as I write this, the police nearby are in an intense search for the person they believe murdered four of their own.

A terrible crime has been committed, people are grieving, and a suspect is on the loose. Because we're human and fallible, all of us have a duty and responsibility to do what we can to help ease the tensions that accompany such an extraordinary situation.

Sunday, November 1, 2009

Innovation: Competition and Collaboration in the Innovation Race

TechFlash ran my post on Competition and Collaboration as a guest column back in September. You can read it here.

Monday, September 14, 2009

A Top 10 List for My Unemployed, Underemployed, and Soon-to-be Graduating Nieces and Nephews

For a long time, I've wanted to share some hopefully sage advice about what I've learned after almost three decades in the work world. And I suppose no time feels more opportune than when so many of you are unemployed or underemployed in an economy that's getting tougher and more competitive all the time.

A lot of you have told me that when it comes to work, I'm the "cool" aunt. I suspect a lot of that actually has to do with your Uncle Mike. After all, it really helps in the "coolness" factor to have an aunt who's married to and worked with the guy who started a game company that delivered a title which rocketed to #1 in the world. I suppose it also also helps that I can answer yes to the question "Did you really get to work with Bill Gates?"

Many of you have asked me directly for work-related counsel; several of you have not. I'm not going to discriminate. This Top 10 list is to all of you.

Here goes:

1) Work to become the story you want to tell. All of us have the chance to shape our lives into a narrative that we can feel proud of. Ideally, you will all lead interesting lives that blend family, friendship, work, and community in ways that make you and others around you proud. If you're not, know that you alone hold the power to change the narrative for your own life.

2) Become a Net Contributor. On any job, always bring an attitute of "what can I do to add value to the business?" Then do it - without worrying about whether you're going to get direct praise and/or rewards immediately. The people who think of themselves as net contributors often seem showered in lucky breaks in the work world. There's a correlation.

3) Remember that your reputation follows you everywhere. The people you meet now might end up playing an important role for you many years or even decades ahead. If you don't think you're the type of person that other people will speak highly of and want to work with again, than figure out what changes you need to make now to become that person.

4) Be curious and keep learning. In the age of globalization and the Internet, you have access to the best minds and the best thinking on any range of topics. Find something that stimulates you and follow the path to keep learning and find out more until you become an expert - at which point, hopefully, you'll have gained an understanding of how fun it is to have some in-depth knowledge and an even greater appreciation for how much more there is to learn. All of which can easily become an attitude and a mindset that will make you much more valuable no matter what you do.

5) Have empathy for anyone who might consider hiring you. This means you need to understand things from their perspective. When you're applying or interviewing for a new job, keep in mind that the people who make hiring decisions have two big things on their mind: 1) Is this person going to add more value than anyone else I might hire; and 2) How do I know that hiring this person isn't going to be a mistake and a problem down the road.

When I first started in the work world, I didn't know what it was like to sit on the other side of the hiring desk interviewing streams of candidates. The secret is they want you to be a great candidate because they've got a job to fill and typically a lot of other things to do with their time. The sooner they find the right person, the better off they are.

I've made many hiring decisions where I knew the decision would have a profound impact on someone else's life. The candidates who stood out for me (many of whom got job offers) had two things in common: a) a track record that showed they loved working hard and delivering results; and 2) the ability to make me feel comfortable that any hiring risk (and there always is) was absolutely worth it.

Make sure that before you go to an interview you know how you're going to handle those two issues.

6) Understand that the best contacts are the ones you make for yourself. The whole notion that you have to have the right contacts starting out is simply false. Everyone who comes to know you as a good, hard worker is a potential contact. Over time, the number of the people who can vouch for you should long as you're thinking, "How can I be a contributor who always does more than I'm expected to do?"

7) Don't ask for an informational interview without understanding that it is an interview. You might not be interviewing for a specific job, but you are interviewing for the chance to demonstrate that you're the type of person who should be given access to whatever networks that person has. I learned this early in my career when I was woefully unprepared for an informational interview. I was left almost in tears when the person turned it into a rigorous interview and I came up short. The interviewer closed the session by giving me valuable advice that has always stayed with me: In the work world, you are constantly being evaluated. If you go to an informational interview with the idea that you want the person on the other end to help you, you have to demonstrate from the outset why and how you are worthy of that help.

8) Figure out how you can get the experience you need to compete for the job you want - even if you have to work at no or reduced pay for a time to do it. (This is a good reason to not take on heavy personal or financial obligations too early.) When I was working summers during college as a waitress at Crater Lake Lodge, I decided I'd rather be a ranger, so I volunteered in my limited off-time for whatever job the Park Service wanted done. The Chief Ranger noticed my initiative, and ended up being a friend and mentor who helped me get into the Park Service as a seasonal ranger (complete with Smokey the Bear hat). It's still the coolest summer job anyone I've ever known had.

Years later, after I was at Microsoft, I wanted to switch from being an editor to being a product manager -- which involves managing all aspects of marketing for a product. It was a very sought after job. Since no one had made that transition before, I found a way to do product management work in my "spare" time for eight months in order to become a better candidate. And I took classes at night to fill in some gaps in my knowledge. No one suggested I work two jobs or even go back to school - I just knew that's what it would take to get the job against all the Harvard and Stanford 4.0 MBAs I was competing against.

9) Be flexible in finding ways to make money from something you love. When I graduated with a journalism degree, the country was in a deep recession and it seemed no one was hiring new journalism graduates. I knew I loved writing so I figured out who was paying for writers and editors and found a way in - even though I had to work on subjects that I sometimes had no interest in. (I still remember the agony of editing a several-hundred page manual on "Women's Tailored Clothing.") I still write everyday as part of my work and love it - even though colleagues don't think of me as a "writer" - which is great, because that's not what I'm paid to do.

10) Do something good for the world beyond your job. Volunteer. Get involved in your community. Become an activist for causes you care about. Your good works might not lead you to a new, more interesting job in the near term, but they will help you become the type of person that others want to work with and be around over the longer term. And that's a key part of what it takes to have a successful career.

Tuesday, August 18, 2009

Innovation - The Lessons of Bob

I worked on Microsoft Bob.

Confession moment...I usually think twice before telling people that. Is there any other tech product that has generated more *unintended* laughter? In the right context, just saying the word "Bob" is a punchline. If you doubt this, take another look at the video Microsoft released on "Bill's Last Day."

I managed communications for Microsoft's consumer division during the era that produced Bob. I lived Bob in a way few people do. A few of my best friends worked on Bob. My husband was a key developer on Bob and the lead developer for the never-released Bob 2.0. Bob was part of our lives.

Some people may remember that Bob was featured on the front page of USA Today and on launch day was the opening segment for the CBS Evening News - back in an era when network news programs attracted a huge audience. I was introduced to Steven Spielberg as the person behind Bob's PR.

I was also the one who sent Bill Gates email at the height of the positive Bob-mania that said we were likely to face a horrible backlash. Tech influentials had started telling me that they were going to bury Bob. They not only didn't like it, they were somehow angry that it had even been developed. It was personal.

And that's exactly what happened. Bob got killed. But first, it was ridiculed and stomped.

For Microsoft, it was a costly mistake. For the people who worked on it, Bob taught many lessons. Lessons that came into play for subsequent products that made a big impact, both at Microsoft and beyond.

How many people know that the lead developer for Bob 2.0 was also the co-founder of Valve and the development lead for Half-Life, which became an industry phenomenon, winning more than 50 Game of the Year awards and selling more than 10 million copies? Or that Darrin Massena - development lead for Bob 1.0, most recently named Technical Innovator of the Year here in Washington State - and Valve co-founder Mike Harrington are the co-founders and partners behind Picnik - which is now the world's leading online photo editor, attracting almost 40 million visits a month and a million unique users a day.

In an innovation context, Bob had many lessons.

Here are a few:

1) Never underdeliver against expectations. Because of the initial hype around Bob, expectations were huge. The first version of Bob was a friendly product that in user tests got good reviews from the intended audience - novice users - but in order to meet expectations, Bob was going to have to be a life-changing experience - and it wasn't.

2) Consumers don't care about strategy. Corporate customers do because if they're investing big dollars over many years in a product, they want to know that it will continue to evolve in ways that are beneficial to the organization. In the corporate market, selling a vision is huge. By contrast, selling a vision to consumers is pointless. The key question they want answered is, "Does it make my life better today?" (BTW, I suspect Bob 3.0 had potential to be great.)

3) A small marketing budget can work wonders. One of the reasons people jumped on Bob was the perceived huge marketing budget. The reality is that the budget for promoting Bob was actually tiny compared to other products I worked on at Microsoft. Because it was so tiny, we felt we had to do out-of-the-box things - like supply napkins on all the flights heading into Vegas during the CES announcement of Bob. The napkins didn't cost much, but boy, people thought if we were buying napkins, it must mean we'd already spent a huge amount of money elsewhere. (We hadn't.)

4) If you start to get feedback from customers that your product is anything but great, don't forget that you only get one chance to make a first impression. The first version of Half-Life never saw the light of day because user testing showed it wasn't fun enough. And this was after that first version had already won the "Action Game of the Year" honors at E3. Making the decision to start over was hugely expensive, and something Valve's publisher completely disagreed with - which meant that all of the funding had to be done privately - which meant the Valve co-founders, including my husband but especially Gabe Newell, got to write huge personal checks.

5) Don't be afraid to take risks. Bob was a risk. People often criticize Bill Gates as someone who didn't take risks. But these people are wrong. Bill was always a risk taker. He supported Bob in part I think because he wanted to support people who were willing to take risks. The Bob team was full of innovators and risk takers, and to Bill's credit, he was very supportive of them as individuals even after Bob hit the wall. (Most famously, Bill married Melinda, who at one time managed the Bob team. At the time, Bill joked that he did so because he liked Bob so well.)

6) Place bets on smart people who push the envelope. Bob was in many ways a bet placed on people. When I worked there - 87-98, Microsoft took many risks on people in ways that were pretty wonderful. One of my favorites along this line is the developer who took charge of the Microsoft Word business without any previous business experience - because Bill Gates thought he was a smart guy who could do it. Chris Peters later led the Office business to huge success and to my mind, was Microsoft's most talented business leader of the era. If you're not willing to risk a Bob, you're probably not willing to hire a Chris Peters either.

(The same people within the consumer division who bought off on Bob - including Melinda - also bought off on Expedia, despite the fact that practically no one on that team had any travel experience. That ended up being a good decision worth more than a billion dollars.)

7) Never forget the crucial role influentials play. In the case of Bob, many of the "end users" for Bob loved it. (I saw the feedback.) But the influentials of that era - in that case, the core tech people - hated it. For whatever product you're releasing, consider the crucial role of influentials even if they're not your target audience.

In the case of Picnik, two important sets of influentials were professional designers and photographers - including the people who are willing to shell out huge amounts of money for Adobe Photoshop. Picnik reached out directly to those people - not to convince them that Picnik was for them, but to encourage them to consider that it might be the best type of product for people who didn't want to take on the learning curve or high cost of Photoshop. Picnik ended up winning many design awards - including ID Magazine's highest honor for an interactive product.

8) If it doesn't work the first time, be open to the idea that it might work down the line. I think Microsoft made the right decision in giving up on Bob during development of the second version. But I also love the fact that Billg was willing to keep trying. Microsoft could easily have funded Bob 2.0, and even a Bob 3.0. It even started down this path, but made a course correction when it became clear the obstacles to Bob's ever being a market success were too big. (Note that Microsoft had backed previous products that were not market successes at the outset- Word 5.0 on the PC was pretty ridiculous from a user interface standpoint and a market penetration standpoint- but all of the learnings that went into that product helped Word become a much bigger success years later.}

9) Don't be afraid to poke fun at yourself. I love that Bill Gates pokes fun at Bob - and that my husband Mike still enjoys wearing his Bob t-shirt. Life is too short to not have fun.

Monday, June 15, 2009

Why My Dying Sister Needed Less Health Care

My older sister had gold plated health care in the last year of her life. She died in March 2006 at age 56, having been diagnosed with Stage IV melanoma the previous May. Because my sister had retired from Reno's city government with full health benefits, any expense was subject to approval by the same people who likely were covered under the same system. No way would they would turn down any potentally beneficial treatment they might someday themselves want.

While the clamor now is to get more health care for more people, my sister's case illustrates what can go wrong when there are no brakes on health care expenses.

From the start, my sister's case was dire. During a self-exam, she noticed a suspicious lesion on the top of her head, which she reported to her skin doctor. A biopsy was done almost immediately, just before my sister came to a celebration of my mother's 89th birthday.

She got the phone call from her dermatologist while still in my mother's Portland house: "Come home - come by my office, don't stop to unpack."

The initial prognosis was grim - metastasized melanoma. My sister Fran was divorced with young adult children so she asked that our other sister Barbara and I oversee her health care. Fran's Reno-based doctor immediately said she was out of her depth and that we should consult specialists.

We went to San Francisco and met with a group of experts there who poked and prodded, then met for a few hours, and gave us the word that same day. Stage IV melanoma, no primary site found. By this time, small cancerous dots had started to appear all over Fran's body. To the doctors, it was fascinating. They were intrigued and recommended treatment in the Bay area.

We found out more about the treatment, which basically involved bringing my sister to the brink of death under controlled conditions in an ICU ward, with the hope that her immune system would kick in to fight back the cancer. Since my other sister and I are Seattle based, we asked if the treatment could be done in our city, where we could better look after Fran.

The chances of success were estimated at 7-15%. I couldn't find any instance of where someone whose cancer had spread as far and fast as my sister's had had a favorable result. There were world-class melanoma experts in the Seattle area, and they agreed to take on my sister's case.

From the start, I told Fran that I would advocate on her behalf and ultimately do what she wanted me to do. Because our father also had severe melanoma in his 50s (and then lived into his 90s), the type of cancer wasn't a surprise. Among all of my dad's kids (8 total), Fran was the one determined to get as much sun as she liked. She also smoked, hated to exercise, and loved fatty foods. And she wanted a doctor to cure her. She also specifically didn't want to do any research on her condition herself.

At all times, we asked the doctors involved to make decisions and recommendations based on what was appropriate for my sister, not for the purposes of research to better understand melanoma. Fran was hospitalized twice for a week to undergo the procedures that would bring her to the brink of death, each stay in a special intensive care ward. The treatment was grueling, but my sister hung on. Ultimately, the treatment was stopped because my sister's naturally low blood pressure sank too far. For a very brief period of time, the lesions' growth appeared to stall.
Almost immediately, though, the lesions contined to spread, and I got an email while traveling on business that they had spread into her brain.

When we met with the doctor a couple of days later, I asked him in Fran's presence to tell us how long she likely had to live. He turned to her, and asked "Do you want to hear this?" to which she said an emphatic "Yes." He then said that based on what he'd seen in other patients, my sister had no more than four months to live. Then he recommended that Fran see another set of doctors specifically about the lesions in her head. She would wear a metal head brace, with screws into her scalp, in order to stay immobilized while they lasered the lesions down to size.

I questioned the doctor about whether the new recommendation made sense given that the cancer was aggressively spreading everywhere else. From a commonsense perspective, I was trying to figure out if death by brain lesion was worse than death through some other type of lesion. The doctor recommended it, and Fran wanted to do anything the doctor said might help, so we went ahead. All the time, I was wondering why we should pursue this treatment, when nothing suggested it would actually prolong her life in a meaningful way.

When we went in for the laser brain surgery, Fran had an entire team of health care specialists assigned very specifically to her with no other laser patients in sight. Meanwhile, the waiting room at Harborview Hospital was filled to overflowing with patients seeking care for more mundane concerns. I asked what the cost was for the treatment Fran was getting on that particular day, and was told that it was in five figures. They treated her beautifully...imagine the nicest, least crowded dentist's office you've ever seen. The staff invited her back - and said they could continue treating her brain lesions for as long as she wanted. Apparently, as a result of their effort four of the seven lesions were now smaller. This seemed like a huge victory for them - and apparently, was in line with their expectations. My sister's forehead was still bleeding from where they'd anchored the gear onto her head and I was left wondering why anyone thought this was a good idea.

I suggested that my sister go home, enjoy the holidays with her three young adult children - one of whom is severely disabled, and we could reassess. By early January, the cancer was continuing to spread aggressively. We made plans to have everyone in the family visit Fran in late January down in Reno. We had a lovely time toasting Fran at an Irish pub in the midst of her friends and family. (True Irish will drink for any occasion). Her hair was thinner, but otherwise she looked like our Fran. At the party, her dermatologist pulled Barbara and me aside, and said that Fran should immediately be under hospice care.

Barbara visited Fran a couple of weeks later, and told me to get there as soon as I could. I was working full-time in a demanding job, but immediately asked for a week off. Fran went downhill fast - I talked to her briefly, just after she collapsed on the day before I was to fly down. We each said I love you, and I said I'd be down later that day. Her last words to me were "it's happening so fast." By the time I got there later that night, Fran was uncommunicative. For the next six days, I stayed with her 23-7 (my husband flew down with me, stayed in a hotel room, and would take me out to breakfast each day). The hospice people were wonderful and on the seventh day, Frannie died.

What went right and wrong in Fran's care that carries a broader implications for health care reform now being discussed?

1) From the outset, Fran's case was likely too far advanced for anyone to cure. In years since, I've done a lot of research. No one with a case as broadly metastacized as Fran has ever been cured. That seems like an important piece of data, one that none of us in the family could have known, but that the experts should have.

2) The brain lesion surgery was a farce. The doctors there were only concerned about her head. The fact that she might die on the table from where the melanoma was attacking other organs held no interest for them. It was just bizarre to be around doctors who could so clearly treat a "head" with no concern, or even interest in the body that supported it. At tens of thousands a pop.

3) No one in the entire process was looking out for "the system." And by that, I mean, looking out for whether the dollars being spent for my sister's care should be traded off against other health care needs. I get the sense that if we'd asked for it, Fran could have shown up daily to get her brain lesions lasered. I actually got marketing materials in the mail from the hospital asking us to recommend the brain lesion treatment to other "friends."

4) Doctors are ill equipped to tell patients when they should stop seeking treatment. The reason I asked the doctor point-blank how long my sister had to live is because she needed to get her affairs in order for the benefit of her disabled son. Without the grim news, I know she wouldn't have done it. I could feel the doctors' discomfort with such a direct question. Knowing that time was so short also enabled the rest of our family to rally and gather together to say goodbye while Fran could still enjoy it. (And she did!)

5) The hospice people are wonderful. They did a beautiful, even loving job of taking care of Fran, and answering questions about the dying process.

I loved my sister. But she also got too much of the wrong type of care in her final year of life. Ultimately, it would have made more sense for her to have less intensive physical care, and more help dealing with the anxieties that surround the dying process. A huge aspect of this is cultural - few people are given the message that it's OK not to fight. More recently, when following the journals of friends facing terminal illness, I start to get angry with the people who insist that it's every patient's responsibility to "fight back." Sometimes, the kindler, gentler, more humane option is to acknowledge that death is coming and surround one's self with family and friends to enjoy the time that's left.

The doctors who treated my sister were all nice individuals. But they and doctors like them are going to bankrupt our system by enabling and encouraging people with no reasonable hope for a cure or even for reasonable extension of life under quality circumstances to pursue hugely expensive treaments. When someone is facing a terminal illness, someone has to ask: "Does this treatment make sense given the success rates we've seen in other patients?" We've forced the insurance companies into that role because no one else in the medical community will do it.

When someone doesn't ask the tough questions, the patient doesn't necessarily get better care. Sometimes they just get hugely expensive care with the same dismal end result. (By the way, I have yet to refer any friends for brain lesion surgery.)

Friday, March 20, 2009

Why Confiscating the Bonuses is Fair

The 90% tax on bonuses paid out by companies that are on life support due to government intervention is imminently fair.

But once again, special interest groups are trying to convince legislators that the tax is unfair, and sets a bad precedent, and everyone would understand why this is bad policy if only Congress really understood "the way business works."

Well, the way business should work is that businesspeople should figure out how to build sustainable businesses and should get rid of any incentive schemes that encourage people to work against the long-term best interests of the company.

Early in my career, I benefitted from stock options that were paid out over a multi-year period. The value of the stock was directly tied to how well the company was doing overall. It really dawned on me how effective this compensation system was when an employee sent email to his work friends boasting about how much he'd spent on a business dinner the previous evening. People were aghast, and the mail got forwarded around. A common theme was "How dare you boast about spending OUR money?" Everyone in the company who had stock options felt like they were owners of the company. That affected everything, including hiring decisions. After all, it's a lot different if you're hiring people with someone else's money; when it's your money, and you're going to be sharing it (the net effect of hiring people who also get stock options), you tend to be more thoughtful.

Since I frequently managed multi-million dollar budgets and hired agencies at that company, I was often "courted" with gifts - things like courtside seats to pro sports games. Only once did I take tickets - for a set of great seats to a Rolling Stones concert. That experience made me uncomfortable because, although I convinced myself I would never make a business decision based on such gifts, I could see how easy it would be to become seduced by such experiences. (The irony was that everyone around me with great seats to that concert looked like a corporate type - and though the Rolling Stones did a great job, the crowd experience felt completely sanitized and somehow unfulfilling.)

After that, I accepted only the occasional Christmas basket, which I always shared with everyone on the floor. Later, the company adopted an official policy, essentially banning gifts of any value.

The ban on gifts was put into place to keep employees from making decisions that worked against the best interests of the company. If you're hiring an ad agency or PR firm, you should be hiring them because they can do the best job for the company, not because you control the type of purse strings that tend to attact lavish gifts.

Later, when I joined my husband to build a startup, we decided upfront that we needed for everyone to feel like owners. So while the founding partners put up the upfront cash and took the earliest risks, employees who joined later earned a piece of the company. And when my husband and I later sold our interest, we sold a good chunk of it back to the company over a multi-year period, knowing that we were only going to get paid if the company continued to do well.

So when I hear about employees at AIG and Merrill Lynch getting huge bonuses just before or even after their companies are getting huge bailouts from the government, my blood boils. As a taxpayer, that's MY money. And I don't care what type of business you're in or whether your part of the business made money and did all the right things but your colleagues down the hall or in a completely separate part of the world made all the bad decisions, YOU WORKED FOR THE SAME COMPANY AND THE COMPANY FAILED. And the fact that you and your bosses can't seem to fathom that because the company failed, you shouldn't be paid ANY bonus is just beyond comprehension. When a company fails, no bonuses should be paid. And since you people can't seem to figure that out, Congress must step in.

I know how business works. I'm comfortable that I'm not missing key facts on how compensation should be structured. Members of Congress shouldn't be distracted or deluded by so-called experts who say that taxing these bonuses is somehow bad policy. It's atrocious policy, but because the underlying acts are even more atrocious, it needs to be done.

Monday, March 9, 2009

Pensions - Past Their Prime

One thing that should be a clear to everyone tracking the current financial crisis is the new pension reality: Pensions as currently structured are completely unworkable in a global economy that is powered by the private sector.

This applies both to government pensions and benefits and to private sector pensions.

The current debate about what to do with the UAW contracts with Ford and GM is one part of a much bigger problem that has to do with human nature and the way our economic system works.

Whenever possible, people will tend to make decisions that are beneficial over the short-term rather than face up to unpleasant long-term realities. Auto executives, their management teams, and investors (which fittingly enough includes lots of pension funds) basically gave an IOU on pensions and retiree health care benefits in order to get labor to sign contracts in the near-term that would be beneficial to the bottom line. No one was really thinking about the consequences years out. The UAW and the companies were equally complicit and the federal government turned a blind eye when it should have stepped in more aggressively with appropriate rules and regulations.

The truth is that there isn't a person smart enough on this planet to accurately forecast retirement obligations given the uncertainty that exists around future health care costs, future competition, long-term investment returns, and future regulatory requirements. People who pretend that they can are simply passing the IOU to future generations to figure out.

No one in a global economic system can be guaranteed a specific return. What companies, governments, employees and labor unions can do is work toward agreement on retirement benefits that will be funded while the obligation is being created and then work together cooperatively to see that those funds are managed well. For most workers, barring on-the-job death or disability, the obligation should be funded completely while the employee is actively employed and then managed conservatively with the goal of matching inflation. This applies both to all funds that will be disbursed during retirement - including social security, Medicare, and any other retirement funds.

In the case of the UAW and the car companies, contracts they signed years ago should have required full funding of all future obligations. If the funding was to be invested in the stock market, it should have been explicitly stated that it was subject to the vagaries of the stock market. If it were to be invested solely in "safe" securities, like US Treasuries, it should have been explicitly stated that it was subject to the vagaries of inflation. Instead, it was invested in the future success of the companies themselves - and the companies have failed. Now that they have, the UAW and the companies are looking to the government to bail them out, which goes beyond what we have expected of government to this point and which simply shifts the burden from one group (the autoworkers and retirees) to all of us (taxpayers).

To do other than fund obligations fully at the time they're incurred is to tax future generations in a way that is immoral and should be illegal. When someone is dead, we don't allow that person's creditors to go after the deceased's children. Yet we seem perfectly willing to let mass obligations pass on to future generations of workers, investors, and taxpayers.

We need a new system for funding and managing retirement obligations - one that recognizes that we all have a responsibility to plan for and fund retirement during our working years and that we should all be working together toward a financial system where investors who want low risk/low valatility returns over the long term have options that make sense.

What this means is that whether you work for a private company or for a government agency, your pay stub should reflect the full cost of whatever obligations are being incurred on your behalf. Understanding those full costs is the only hope companies, investors and governments - and the people who rely on them - have for making smart decisions that will bring long term benefit.