Think Forward

Paul Newman's Model as a solution to rebuild the economy

In light of Paul Newman's passing this week and the economic woes I want to highlight a way that Paul Newman's mission in business.

The media keeps talking about the "greed" of these industries causing their downfall.   Of course that played a role but I personally feel the private sector has lost some of the fundamental values and philosophies that made them successful in the first place.   18th Century economist and philosopher Adam Smith in his great book "Wealth of Nations" underscored the importance of business' realizing their place which is to exist for the common good where profit is the means not the motive.   His understanding was that the profit a company made was its reward for contributing well to the common good.    

Paul Newman understood this with his food company Newman's Own.    100% of the profits of his company went to many causes as well as his foundation which provided camps for children with serious illness.   His philosophy was that his business did not exist to deepen his pockets or the pockets of greedy executives put it existed solely to fund the efforts that benefit the common good.   Paul Newman understood Adam Smith's philosophy for the way capitalism should work.  

As we look now to begin rebuilding our economy I believe we should use Paul Newman as an example of how the private sector should operate.   By looking for ways business contribute to the common good and operate with value and integrity.   Business exists for the common good to create jobs and sustainable environments for families and all of those a business touches in its supply chain and beyond.  

I find it increasingly difficult in this day and age to find companies that I can support or get behind that I feel cling to my values.   Newmans Own was one of those companies that should be a model for the private sector.    I encourage us to look at his legacy of holistic generosity and when we do consumers will reward those companies accordingly.

The Economic Woes and the Technology Industry

CNET today ran an article today on this subject highlighting why the tech industry should be concerned about these economic times.   http://news.cnet.com/8301-1001_3-10057190-92.html?tag=newsLeadStoriesArea.0

I wanted to respond to this but also recommend reading our president Tim's article that ran in PC Magazine http://www.pcmag.com/article2/0,2817,2331231,00.asp.   Tim has been in the PC industry since the early 80's and brings a good perspective.

I think in times like these looking at history is important for us to make good decisions about the future.   Every major industry in our country had a growth boom or a small bubble that gets burst.    This was first explained to me by Brian Halla of National Semiconductor after the dot-com bust.   His point was that if you look at history big industries like railroad and auto went through similar cycles.   Ones where a early bubble gets burst but historically those small bubbles were followed, not immediately, by bell curve growth cycles much larger then the first bubble.   The reason for this is because of the bursting of the first bubble or growth stage costs of goods for that market come down drasically.     In the early boom of the railroad a ton of innovation happened in infrastructure.   Which is what was left after the first bust including the costs of goods for that industry dropped drastically.   Entrepreneurs who couldn't get in before now could afford to experiement.   In fact the refrigerated or cooled railroad car didn't get developed until the second boom and let to the meat packing industry.  This was possible becasue of the first bubble's affect on prices.   

In each and every boom and initial bust we were left with infrastructure.   The tech boom left us with lower costs of silicon and components which led to more experiementation and innovation.   We were also left with fiber and broadband wires that set the stage for the current global broadband growth we are currently seeing.   

The real question with this bust is what infastrucutre are we left with, in this case it is houses and housing infrastrcuture.   The result will be lower cost of housing potentially making it possible for more folks to own homes and potentially lower costs to build homes.   Assuming the credit crisis gets resolved and people can actually get loans of course.      If history is true then we should still expect, all though it may be delayed, a continuing growth cycle in the technology industry and again at some point in time, all though hopefully regulated better, better growth in the housing industry.