The Bain "Expert Generalist" Model and the Increasing Value of a Liberal Arts Degree...

With all the talk of automation and AI changing the nature of jobs in the future, one question we should all be asking (especially those of us with kids) is "what degrees, education and skills are going to have the most impact in the future?"

Mark Cuban has an opinion - he thinks some of the degrees we're most focused on now are going to fade in importance and liberal arts - yes, liberal arts - is going to make a comeback.  Here's an excerpt of what he said in a Liberal artsrecent interview via Business Insider:

I personally think there's going to be a greater demand in 10 years for liberal arts majors than there were for programming majors and maybe even engineering, because when the data is all being spit out for you, options are being spit out for you, you need a different perspective in order to have a different view of the data. And so having someone who is more of a freer thinker.

Cuban's forecast of the skills needed to succeed in the future echoes that of computer science and higher education experts who believe people with "soft skills," like adaptability and communication, will have the advantage in an automated workforce.

Cuban highlighted English, philosophy, and foreign language majors as just some of the majors that will do well in the future job market.

"The nature of jobs is changing," Cuban said.

If you've followed the breaking news out of Cuban's Dallas Mavericks organization, you can insert witty joke on the most important training for future professional workers <here>.  Regardless of Cuban's recent troubles, his thoughts on the future of the workplace is interesting.

Cuban's thoughts made me think more about the Bain "Expert Generalist" model.  Here's a taste of that model:

Orit Gadiesh, the Bain & Co. chairman who coined the term, describes expert-generalism as “the ability and curiosity to master and collect expertise in many different disciplines.”

Research shows EG’s have:

Hmm, sounds like the world could use a few more EG’s.

More from LongNow.org:

From his perspective as a psychology researcher, Philip Tetlock watched political advisors on the left and the right make bizarre rationalizations about their wrong predictions at the time of the rise of Gorbachev in the 1980s and the eventual collapse of the Soviet Union. (Liberals were sure that Reagan was a dangerous idiot; conservatives were sure that the USSR was permanent.) The whole exercise struck Tetlock as what used to be called an “outcome-irrelevant learning structure.” No feedback, no correction.

Tetlock’s summary: “Partisans across the opinion spectrum are vulnerable to occasional bouts of ideologically induced insanity.” He determined to figure out a way to keep score on expert political forecasts, even though it is a notoriously subjective domain (compared to, say, medical advice), and “there are no control groups in history.”

So Tetlock took advantage of getting tenure to start a long-term research project now 18 years old to examine in detail the outcomes of expert political forecasts about international affairs. He studied the aggregate accuracy of 284 experts making 28,000 forecasts, looking for pattern in their comparative success rates. Most of the findings were negative— conservatives did no better or worse than liberals; optimists did no better or worse than pessimists. Only one pattern emerged consistently.

“How you think matters more than what you think.”

It’s a matter of judgement style, first expressed by the ancient Greek warrior poet Archilochus: “The fox knows many things; the hedgehog one great thing.” The idea was later expanded by essayist Isaiah Berlin. In Tetlock’s interpretation, Hedgehogs have one grand theory (Marxist, Libertarian, whatever) which they are happy to extend into many domains, relishing its parsimony, and expressing their views with great confidence. Foxes, on the other hand are skeptical about grand theories, diffident in their forecasts, and ready to adjust their ideas based on actual events.

I've always been a fan of the HR Generalist - the HR professional (manager, director and VP level) that is responsible for all of the areas of HR.  A lot of the research today is telling us that the need for deep specialization is going to fade in a world of automation and that the generalist - regardless of profession - is going to be on the rise.

The real question is - are you willing to bet your kid's future and have him/her get a liberal arts degree?

Wow.  I don't know about that.  I just don't know.


Your City or County Probably Doesn't Break Even On Amazon Distribution Center Jobs...

With all the talk about Amazons's 2nd Headquarters campaign and where that project will land, it seems appropriate to examine the economic impact of the less lofty Amazon distribution center.  These smaller projects from Amazon are often highly contested, with counties and cities fighting to offer the best incentive package to land the included jobs as part of an economic development initiative.

A new study of publicly available data by the left-leaning Economic Policy Institute has found that when Amazon opens a new warehouse, the county where it is located does not see an increase in employment during the Amazonfollowing two-year period. Warehouse jobs do increase by about 30%, but the county's overall employment stays steady.  More detail below:

Amazon has opened fulfillment centers in 25 states, often courting state or local tax incentives to build them. The study suggests that these localities are not getting a return on that investment, one of the study's authors, Ben Zipperer

In fact, the study found that if anything, employment actually decreases two years after Amazon opens a fulfillment center in a county, though not to a statistically significant degree.

EPI used data from the Bureau of Labor Statistics that included warehousing employment figures in 1,161 counties around the US. That includes 54 Amazon warehouses in 34 counties, accounting for about 75% of all Amazon fulfillment centers.

The study also found that average warehouse wages, based on total wages, do not increase when Amazon opens a warehouse in a county. That could be because Amazon hires a mix of part-time or hourly and salaried employees, keeping overall wages down. A separate study released in January found that 700 Amazon employees in Ohio — about 10% of Amazon's workforce in the state — drew benefits from foot stamps.

As you would expect, Amazon disputed the findings of the EPI study in a statement:

In addition to the 200,000 Amazon employees in the US, we know from 2016 data, which is more current than the EPI data, Amazon's investments led to the creation of 200,000 additional non-Amazon jobs, ranging from construction jobs to healthcare industry positions. In fact, over the last five years, counties that have received Amazon investment have seen the unemployment rate drop by 4.8 percentage points on average, and in some areas, the rate has been lower than the state average.

The study, Amazon said, focused on a "misleading" section of time (2001 to 2015) that included both the recession and a time when Amazon was not building warehouses at the clip it is now.

Is anyone really surprised that counties and cities may overpay for an Amazon Distribution Center project?  You're damned if you do and damned if you don't.  Fail to secure the project and be positioned as the county commissioner who never brought a name project to your county.  Overpay, and wait for it - no one with the exception of the academics - really evaluates whether the project paid off or not.

Amazon continues to win.  Government officials in charge of economic development and job growth, take heed...

 


HR CAPITALIST DEFINITIONS: "Edge City" (with notes on Amazon Moving to ATL)...

With all the competition for Amazon's second headquarters (dubbed HQ2) and with Atlanta (home of Kinetix, the company I own part of) being in the mix, I thought I'd share one of my favorite books of all time and give you a Capitalist definition while we are at it.

Edge City is the term.  I picked up the book by the same name over 20 years ago at a bookstore when heading to the beach for a vacation.  The book became one of my all time ATLfavorites, and the definition changed how I viewed the business world forever.  Here's a description of the term, as well as details about the concept.  Take a look and we'll talk about Atlanta/Amazon after the jump.

"Edge city" is an American term for a concentration of business, shopping, and entertainment outside a traditional downtown (or central business district) in what had previously been a residential or rural area. The term was popularized by the 1991 book Edge City: Life on the New Frontier by Joel Garreau, who established its current meaning while working as a reporter for the Washington Post. Garreau argues that the edge city has become the standard form of urban growth worldwide, representing a 20th-century urban form unlike that of the 19th-century central downtown. Other terms for these areas include suburban activity centers, megacenters, and suburban business districts.

In 1991, Garreau established five rules for a place to be considered an edge city:

  • Has five million or more square feet (465,000 m²) of leasable office space.
  • Has 600,000 square feet (56,000 m²) or more of leasable retail space.
  • Has more jobs than bedrooms.
  • Is perceived by the population as one place.
  • Was nothing like a "city" as recently as 30 years ago. Then it was just bedrooms, if not cow pastures."

Most edge cities develop at or near existing or planned freeway intersections, and are especially likely to develop near major airports. They rarely include heavy industry. They often are not separate legal entities but are governed as part of surrounding counties (this is more often the case in the East than in the Midwest, South, or West). They are numerous—almost 200 in the United States, compared to 45 downtowns of comparable size—and are large geographically because they are built at automobile scale.

The book is organized by chapters that dig into various Edge Cities in America, including Tyson's Corner, Houston's Galleria area and more.  Because the book came out in 1991 - you can preview the whole book on Amazon (irony) without buying.

What's the big deal about Edge Cities for HR?  The biggest impact they have is what I call "recruiting center of gravity" - my term, not in the book.

Commute preferences change in metro areas as Edge Cities come online and continue to grow.  In Atlanta - home of Kinetix - Edge Cities like Buckhead, Perimeter and Galleria have pushed the employment center of gravity north, to the point where a study I did in 2009 showed that the location preferred by the greatest number of candidates across Atlanta was the Perimeter, located at 12 o'clock on I-285, the perimeter loop that surrounds downtown Atlanta.

But back to Amazon.  You might expect that given the northbound trend of Edge Cities in Atlanta, Amazon would be looking for a location in the north suburbs.  You'd be wrong, primarily because the airport is south of downtown.  As a result, the patch of land proposed for Amazon is connected to downtown near the old Georgia Dome location in an area called The Gulch.

Edge Cities apply to everyone but Amazon - because 50,000 jobs has its own gravity that transcends the Edge City formula.

Quick math - if the average office space formula calls for 170 feet of office space per employee/worker, the HQ2 project would stand at 8.5 million feet of leasable/owned real estate to support 50,000 employees.

You know - the equivalent of 14 Edge Cities described by Garreau.

As they said in Jaws - we're going to need a bigger boat.


Bitcoin 401K Rollovers - What the #### Could Go Wrong?

This appeared in my gmail as a paid ad today (Email subscribers, click through to see the poison below):

Bitcoin_11

I'm not a financial advisor.  There's probably money to be made in Bitcoin, although the SEC has issued investor warnings.

The vast, vast majority of your employees aren't qualified to evaluate Bitcoin as an investment option.  When ads like this pop up, I'm assuming they aren't offering Bitcoin as a speculative 5% of someone's portfolio - I'm assuming they want to cram all 100% of that rollover in Bitcoin for various reasons that have to do with money.

Many of your employees have 401ks parked with a previous employer.  25% know about Bitcoin and are interested in the hype.  1/5 of those would consider this ad.

It's worth you getting in front of this with a HR comms piece -  to let people know that ads are rolling encouraging 401k rollovers straight into Bitcoin and there's some danger via the SEC.  

Respect the game.

 


All Economic Development Related to Jobs Is Not Created Equal...

Let's talk economic development today.  We're trained to believe that in America, any economic development opportunity that brings thousands of jobs to a local community - especially in the rust belt or the rural midwest - would be welcomed by all in that community.

That's wrong.  Whether you understand that or not probably depends on whether you have smelled a big, corporate chicken/hog farm before.

Here's some background - On Sept. 5, executives from Tyson Foods Inc., the nation’s largest meat processor, traveled to the east Kansas town of Tonganoxie with what they figured would be welcome news for the locals. Joined by Governor Sam Brownback and other political leaders, Doug Ramsey, Tyson’s group president for poultry, unveiled plans to build a huge chicken complex outside of town. The $320 million project, Tyson’s first new plant in 20 years, would be home to a hatchery, feed mill, and processing plant—employing about 1,600 workers to package 1.25 million birds a week.

Great news, right?

Wrong.  The citizens didn't want anything to do with the plant.  All you have to do is look at the numbers to understand why, provided here by BusinessWeek:

Tyson’s foray serves as a blueprint for how not to build a new chicken plant. First, the company may have overestimated how badly the jobs were needed. Members of the opposition say most residents are employed in nearby Topeka, Kansas City, and Lawrence, leaving few locals who’d want meatpacking jobs. Median annual household income in Leavenworth County is $63,726, $11,521 more than for the state of Kansas and $9,837 greater than the national median. The median wage of workers who cut or trim poultry, meat, or fish is $11.77 an hour for an annual income of about $24,490, according to May 2016 government data.

A quick look at the map below tells you all you need to know.  That standard of living comes from the aforementioned proximity to Lawerence (rock chalk), Kansas City and Topeka.  Here's your map:

Kansas

To be sure, immigration and the prospect of a sudden influx of workers into a community -  to take the jobs others don't want - plays a part too.  

If you go read the story, it's a good case study of a company like Tyson AND the local government assuming the community would be in support of the economic development provided, only to be surprised.

From a workforce planning perspective, it's a good reminder for companies to find the sweet spot of a community that will embrace the flavor of jobs you're providing when launching a new plant.  That sweet spot can be defined as enough labor at the right price point to sustain the model.  Always harder than it looks, especially when the product is chicken processing plants.

While I'm talking about small town America, check out this BW article about small towns relying on Dollar General as their economic hub.  The town featured - Decatur, Arkansas - would LOVE to have that chicken plant. But alas, they're two small.   

The right place for economic development involving chicken processing plants?  Somewhere between Decatur and Tonganoxie, as it turns out.

 


Tesla: Now the Most Interesting Workplace Culture in The World...

Forget Google, Apple and if you're into pain, Uber.

Tesla is now the most interesting workplace culture in the world.  Here's 4 reasons why, my friends:

1--For starters, they've got a founder who is brilliant and unreasonable all at the same time. 

You've heard of Elon Musk, so he really doesn't need an introduction.  From a unauthorized biography I just read on him....

"When Musk came into the meeting room where I'd been waiting, I noted how impressive it was for so many people to be at work on a Saturday.  Must saw the sitaution in a different light, complaining that fewer and fewer people had been working weekends of late, 'We've grown f***ing soft", Musk replied, 
'I was just going to send out an email - we're f***ing soft'"

Founders.  Always a fun time.  There's 100 examples of this stuff in the book.

2--Tesla's under immense pressure to get production of it's newest car model, the Model 3, up to scale. And they are behind.  More from Bloomberg:

"Tesla said it built just 260 Model 3 sedans during the third quarter, less than a fifth of its 1,500-unit forecast. The company has offered scant detail about the problems it’s having producing the car. The vehicle’s entry price starts at $35,000, roughly half the cost of Tesla’s least-expensive Model S sedan.

A delayed ramp-up risks the ire of some of the almost half million reservation holders who started paying $1,000 deposits early last year." 

3--Tesla's at the intersection of manufacturing and automation with the ramp up of the Model 3 - here's an Instagram post shared by Musk late last week to respond to people reporting that there was limited automation at this point on the Model 3 line (email subscribers click through if you don't see the post below.  It's good):

4--Embedded in the founder driven culture is... wait for it.... people being fired after lackluster performance reviews!  And the company is saying that's the reason!  More from Bloomberg:

Tesla Inc. has fired an undetermined number of employees following a series of performance evaluations after the company significantly boosted its workforce with the purchase of solar panel maker SolarCity Corp.

 The departures are part of an annual review, the Palo Alto, California-based company said in an email, without providing a number of people affected. The maker of the Model S this week dismissed between 400 and 700 employees, including engineers, managers and factory workers, the San Jose Mercury News reported on Oct. 13, citing unidentified current and former workers.
 
“As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures,” the company said in the statement. “Tesla is continuing to grow and hire new employees around the world.”
 
An interesting founder still running things.  Big innovation.  Production delays.  Saying you're trimming the bottom performers aka Jack Welch and stacked ranking.
 
Tesla is the most interesting workplace culture in America right now.  It's not even close.

BOOM: Amazon Announces Intent to Build Second HQ in a City Outside of Seattle...

 

Damn!

Amazon announced on Thursday that it is planning to open another headquarters called Amazon HQ2 in US city TBD.

Amazon HQ2 will cost $5 billion and eventually house up to 50,000 Amazon staff, Amazon said in a press release.

Amazon said it wants HQ2 to be in a metropolitan area with a "stable and business friendly environment" and more than 1 million people. The company also wants HQ2 to be within 45 minutes of an international airport and in a location where there is potential to attract strong technical talent.

Amazon is inviting city representatives and those working for regional economic development organizations to submit a proposal if they want to host Amazon's second headquarters.

To me, the obvious choice is the ATL.  But I'm biased because that's my second home.  

I'll leave you with this - if you have any doubt of the economic impact of the Amazon HQ2, take a look at the numbers in the chart below related to their presence in Seattle.  This is a much/much/much bigger deal from an economic standpoint that a city landing a sports team.  It's probably the biggest economic development event that will happen in America in the next century.  (email subscribers click through if you don't see the chart below)

Let's go ATL.  Click on the chart below to blow it up and be amazed...

 

Amazon impact

 


UW Study On $15 Minimum Wage Bad News For Liberals...

Minimum wage

If there's anything that will get a healthy dinner conversation going (or get people fighting), it's the idea of the $15 minimum wage.  A better wage for core entry-level workers is hard to argue against as a reasonable person.  I want it to be true as a moderate, but my business focus always makes me wonder - is it actually a good idea?

This is the problem being a moderate.  I'll get 5-7 emails from each side on this post just crushing me for even daring to be in the middle.  Only the polar extremes get the oxygen and attention these days.

Fortunately, there's some research pouring in on the minimum wage that seems to be based on reality, not theory.  

More from the Washington Post

There’s bad news from Seattle for advocates of a $15-an-hour minimum wage law. Turns out the measure’s costs to the city’s low-wage workers have outweighed benefits by 3 to 1, according to a new city-commissioned study by University of Washington researchers. The average low-wage worker has lost $125 a month because of the higher-wage decree, the study found — even before it is fully phased in.

David Autor, a leading labor economist at MIT, told The Post the study seemed “very credible” and suggested that it might have enough “statistical power” to “change minds” in the perennial argument over the minimum wage.

Autor was wrong — not about the study’s credibility, but about its potential for moving people off their “priors.” The Seattle study met a furious counterattack from proponents of a $15 minimum. Defenders of the law came armed with a much rosier assessment of its impact by economists at a pro-labor University of California at Berkeley think tank, produced a few days before the more skeptical one came out.

It seems that Seattle’s mayor, a big advocate of the $15 minimum, had gotten a heads-up on the impending negative study and asked the Berkeley group to weigh in. Seattle Weekly called it “an object lesson in how quickly data can get weaponized in political debates like Seattle’s minimum wage fight.”

Woof.  Go dig in if you dare, but the UW study found that businesses react to the $15 wage by contracting total work hours, which results in low-wage workers in the area losing $125 per month due to the law.  That's interesting.  But if you go look at the Berkley study, you'll see the opposite.

If you really want to geek out, see this article at 538.  It talks about limitations of both studies.

My gut tells me this.  Businesses probably will restrict total hours to low-wage workers when minimum wage hikes hit because the margins for success are so thin.  The left and anyone else can shake their fist and wax poetic about evil owners trying to stay cost-neutral on labor expense.

But the critics don't risk their capital or their livelihood.  Add more labor costs to any business with limited margins and one of two things is going to happen - prices are getting raised or labor cost is getting scrutiny.  Prices are hard to raise from a competitive perspective.

I believe the UW study.  Sucks to be an owner when laws get passed by people who don't have to live with the consequences.  


FOXCONN & APPLE - Will The Suicide Nets Be Shipped to Wisconsin?

Did you hear the news?  Apple, through it's partner FoxConn, is bringing some of it's manufacturing to the US.  Click here to get the whole story.

Is that a good thing?  Of course it is.  The Trump administration is going to shout it from the rooftops - WE BROUGHT MANUFACTURING BACK TO AMERICA, PEOPLE!!!

For those of you that hate Trump, this has to be painful.  For politics in Wisconsin, it's going to be a visible reminder that pays dividends in 2020 - Trump won Wisconsin by a narrow margin of 47.2% to 46.5% for Hillary Clinton, thanks to overwhelming and underestimated support from working-class whites, making him the first Republican candidate to carry the state since Ronald Reagan in 1984.

You think commercials with a new Apple factory as the reminder aren't going to run on the hour in Wisconsin in 2020?  Don't be a rookie - OF COURSE THEY ARE.  Which means Wisconsin is likely done for the GOP in 2020. Suicide nets

Next stop with visible manufacturing jobs - at any incentive cost - Ohio, followed by Pennsylvania.

What type of jobs are going to be in this factory?  Pretty good ones - early reports are that Foxconn will invest $10 billion to build the massive display panel plant in Wisconsin that could employ up to 13,000 workers.  It will start with 3,000 workers making an average of $53,900 a year plus benefits.

But before my GOP and neutral Trump friends (I don't know any people who say they are pro-Trump these days) celebrate too much, put it all in perspective.  The iPhone factories aren't coming to the USA - you know why?

Because that stuff is sold en masse.  Phones are something everyone buys, and if you jack up the labor cost embedded in the phone, Americans will squawk.

Tim Cook and Apple did the smart thing by forcing Foxconn to build the factory they're going to build - the Wisconsin plant is going to make liquid crystal display panels used in computer screens, televisions and the dashboards of cars.  Less price sensitivity than the highly visible smartphone.

Advantage GOP.  I'm guessing at average pay of $53,000, the American Foxconn plant won't have suicide nets to catch workers intending to commit suicide by jumping from a building to allow their families to collect life insurance - because they've done the math and determined that's better for everyone, including themselves.  Click here for that full post on Foxconn I did in the past.  Picture of those nets to the right of this post.

Things that make you go hmmmm.

 

 

 


White People and College Admissions - It's Complicated...

Of course, I kid with that title - you know that, right?

But I have to tell you, there's stuff going on with white people and college admissions that, given the fact I have a rising junior who I expect will go to college, I should be interested in. Lottery_1

It all revolves around who gets the offer - which seems talent-related (as is education as a whole) so I'm covering it here.

There's two flavors going on with white people and college admissions.  Allow me to break down what I see:

1--The first flavor is white people without stellar GPAs, test scores, etc. not being able to get into universities that were once thought to be a given.  In Georgia, the state used lottery money to guarantee a form of college scholarship for the masses (read more on the Hope Scholarship by clicking on the link).  One result of more people having the means to attend college was that some affluent families no longer had the ability to get a middling-performing son or daughter into the University of Georgia, because now everyone could afford it.  Interesting, right?  

2--The second - and more problematic - flavor of white people and college admissions is that many families have kids with great GPAs and test scores, but a) due to universities seeking to become more diverse, some high achieving white kids can't get in, and b) if they do, there's no financial aid available on merit (Georgia notwithstanding) due to what the family earns.  

I don't understand all the issues yet, but a year or so ago I read a great post by my friend Tim Sackett who went on a parent rant and penned a gem of a post.  Here's taste, you should go read it all:

"My middle son is about to make his college choice. He’s got some great schools that have accepted him. He has some great ones that did not. His dream school was Duke. He also really liked Northwestern, Dartmouth, and UCLA. He has a 4.05 GPA on a 4.0 scale (honors classes give you additional GPA) and a 31 on his ACT (97th percentile of all kids taking this test).  He had the grades and test scores to get into all of those schools.

What he didn’t have was something else.

What is the something else?

He didn’t come for a poor family. He didn’t come from a rich family. He wasn’t a minority. He doesn’t have some supernatural skill, like shooting a basketball. He isn’t in a wheelchair. He isn’t from another country.

He’s just this normal Midwestern kid from a middle-class family who is a super involved student-athlete, student government officer, award-winning chamber choir member, teaches swimming lessons to children, etc., etc., etc.

What is the other something else, from a financial perspective?

He got into Boston College, another dream school for him, and one that wanted him to come and continue his swim career at the Division 1 level. BC also costs $68,000 per year.

Colleges and U.S. Federal Government hate kids who come from families that do the right thing.  What’s the “right thing”?  He comes from a family that pays their mortgage, saved some money for his tuition and put money away for retirement.

Because he comes from a family that made good decisions, Boston College, and the Federal Government thought it was a good idea for him to pay $68,000 per year to attend their fine university."

I liked the initial comments coming from both sides in reaction to Tim's post that I subscribed to the comments.  Every week, like clockwork, I get a gift - someone else has posted a comment with a hot take on the situation Tim identified.

With a rising junior starting to look at colleges, I just became interested in this talent issue.  I'm sure I'll be back to write about what I see.  Buckle up - I'll be back next spring with a hot take of my own.