I’m here
today to talk about life . . . to talk about making the most of your life
in a time I call the New Normal.
The New Normal
is a time when there are four unshakable issues that each of has to deal with.
First, technology is changing just about everything. Second, globalization
is changing the nature of economic opportunity. Third, every individual is
on his or her own. We have more power than ever before, but no safety nets.
And fourth, none of us has enough time to deal with life.
Technology and
globalization are the context of the New Normal. The Power of the Individual
and Time are the keys to personal success.
Let’s start
with the context: technology and globalization. Beginning in 2001, the technology
industry entered a new era: the New Normal. Normal because we are back to
an environment where growth rates are low. Where everything takes longer than
we would like. Where more tech companies fail than succeed. Where getting
rich is neither common nor easy. Normal in the sense that the 70s and 80s
were normal. Just the opposite of the late 90s, when everything moved at Internet
speed.
The 90s weren’t
normal, but they altered our expectations. The 90s have made it much harder
for us to re-adjust to Normal.
But this is
the New Normal. New because the 90s transformed forever the role of technology
in our lives. Technology is now pervasive in the economy and in our culture.
PCs, cell phones, and the Internet are ubiquitous. Think back to 1990 …
PC penetration of households was around 15%. Cell phone penetration was in
the low single digits. And the Web was still a gleam in the eye of Tim Berners-Lee.
Today, many of us value our cell phones, PCs and Internet connection on par
with indoor plumbing.
At the end of
the day, though, it’s the New Normal because it’s here to stay.
I’m not here to tell you life will be boring. I don’t believe it
will be. I believe that great things will happen in the world of technology.
I’m not here to tell you that you’re going to be poor all your life.
Some of you will eventually be as rich as Croesus
But I am here
to tell you that the world has a new set of rules . . . and we are going to
be stuck with them for many years. My goal today is to help you be more successful.
The technology
industry is mature. Don’t hold your breath waiting for the next upcycle
. . . because we’re in it. It won’t be exciting the way the 90s
were, but there is no reason it can’t be rewarding for you.
How did we get
here? The technology bull market of the 90s didn’t happen by accident.
It happened because of two forces: Moore’s Law and the Berlin Wall. You
know what Moore’s Law did, but you may not appreciate the importance
of the Berlin Wall.
Before the Berlin
Wall came down in 1989, American companies could only sell technology products
in Western Europe, North America and parts of the Pacific Rim . . . roughly
25% of the world’s population. Every other market was inaccessible. Communist
countries for political reasons. Third world countries because they had no
money.
After the Wall
came down, we saw a transformation in the global economy. Gone was the bilateral
competition between the US and USSR. Gone were the old political barriers
to trade. Gone was foreign aid.
In the early
90s, every country in the world was forced to implement a market economy.
Faced with an imperative to attract foreign capital, emerging countries built
airports and nice hotels in their capital cities. They installed phone systems.
They bought computers. Lots of them.
When the Berlin
Wall came down, the addressable market for US technology expanded more or
less overnight to something like 80% or 90% of the world’s population.
In combination with the economic upswing of the 90s - the longest economic
expansion since the Second World War - this huge growth in addressable market
propelled the technology industry to its greatest period of success.
Over a decade,
there were three monster waves of technology adopted simultaneously by enterprises
everywhere: Windows, client/server applications, and Y2K. The industry grew
from about 6% of GDP to more than 9%, during a decade when the economy roughly
doubled in size.
Now you understand
why the bull market of the 90s was so enormous. Throughout the 90s, technology
and globalization worked hand-in-hand to transform the world economy. If you
watch Lou Dobbs on CNN, you might think that globalization is the worst thing
that ever happened to the US economy. Dobbs would like to see the US government
intervene to stop it.
Globalization
is many things - some good, some bad - but it’s not a matter of choice.
Globalization is a fact of life. It’s not going away. Our country’s
only option is to figure how to use globalization to our advantage. The political
problem with globalization is that a relatively small number of communities
bear most of the burden. Their pain is visible to all. The benefits, on the
other hand, are not so visible or politically compelling: low inflation and
lots of inexpensive new products. They benefit everyone, but not so much that
people are aware of it.
Even today,
globalization and technology remain intertwined. Together they give rise to
seven really important trends that affect us all. First, and most obvious,
is the rise of Asia. The supply side of this one is so obvious, it probably
qualifies for a “duh,” but the implications for all of us are real.
Hardware manufacturing has been migrating to Asia for fifteen years. For some
reason, the migration of technology manufacturing didn’t bother people
much. Perhaps that’s because it happened while the economy was really
strong. Those who lost jobs quickly found new ones. The migration that has
everyone atwitter is in software development. The software migration coincided
with a recession that made it hard for people to find new jobs, and for some
reason, we felt that software development was an American business.
We shouldn’t
be surprised that software jobs are moving to Asia. There is nothing new about
the migration of mature - commoditized - job categories to low cost geographies.
The key is to spend your career at companies that either benefit from this
shift, or drive it.
Another thing
worth remembering is that Asia has a demand side component, as well. We are
in year five of the Chinese Century. Ten years from now, China’s local
demand will radically alter the country’s economic policy. It will be
harder for China to export deflation when Chinese consumers demand a larger
share of production for their own use. The implications of this are very exciting
The second trend
is industry consolidation. Maturity came so quickly to the technology industry
that no one was prepared for it. Certain categories - electronic manufacturing
services, PCs, and enterprise software - have too many vendors and too much
capacity. There is opportunity in consolidation, but also risk. At a professional
level, you need to steer clear of the downside of consolidation. Remember
also that consolidation is not just an issue among larger companies. The venture
industry still suffers from excessive capital, which suggests that some excellent
opportunities will be undermined by “me too” competitors. This doesn’t
mean you should avoid start-ups. What it means is that you should understand
the risks. Far more companies will fail than succeed, so choose wisely.
The third trend
is the unending demand for new and better forms of communication. We are nowhere
near solving the puzzle in wireless, especially wireless data. The same is
true in broadband. As with everything else in the New Normal, the gigantic
opportunity in communications brings with it many challenges.
The fourth trend
is collaboration. Collaboration has been a holy grail of the enterprise software
business since the late 90s. The internet wasn’t ready then and customers
weren’t ready either. Even today, the business processes that enable
enterprises to collaborate with suppliers and customers are not standard across
companies. Until they are, collaboration will depend on custom applications.
This situation is likely to last five to ten years.
The fifth trend
is the rise of mass customization. The 90s were about one-size-fits-all solutions.
The next decade is about solutions that have lots of standard elements, but
are tailored to the customer’s specific requirements. This trend has
several consequences. Technology companies may actually have to deliver compelling
technology to sustain their profit margins . . . and enterprise software vendors
may be forced to rethink their product lines . . . and the way they sell.
The sixth trend
is the rise of the consumer. Depending on who you ask, consumers account for
somewhere between 25% and 40% of technology spending. The number today isn’t
so important. Most of the innovation in technology is in consumer categories,
so the number will go higher.
The seventh
trend is time management. The biggest opportunities will be those that leverage
people’s time. iPods allow busy people to take their music library with
them. Cell phones and wireless data products enable location independence
so that people can always communicate with family and business colleagues.
Blackberry lets business travelers get more sleep by enabling them to catch
up on email from the moment the plane lands until they get to their hotel.
I’ll talk more about time in a moment. These are the big themes.
Technology and
globalization are facts of life that ensure that no one will be able to stand
still. Not countries. Not companies. Not individuals. Countries can no longer
call the shots on their own economies. Companies cannot escape the threat
from new competitors that lurk around every corner. And individuals have figure
out how to deal with all of this without getting run over. As a result, the
New Normal is an environment of great stress.
The great challenge
for every individual is to balance family, career and personal finance with
no safety nets. It is all too easy to feel isolated . . . to feel that each
of us is alone in trying to maintain a balance. Alone in the sense of having
no safety nets. Alone because we don’t appreciate that there are millions
of other people facing the same challenges that we are. Each of us faces a
never-ending stream of decisions . . . life has come to imitate a visit to
Starbucks. At Starbucks, life can be as complicated as a half-café
mega sweet double extra grande latte . . . or as simple as a cup of coffee
The problem
is not lack of data. We’re drowning in data. The problem is not even
a lack of tools. Technology has given us an amazing array of tools to help
in our decision-making. The problem is lack of time. There doesn’t seem
to be enough time in the day to get done all things we have to get done. Worse
yet, there doesn’t seem to be enough time to change our personal business
processes to get ahead of the curve.
But don’t
despair. We may be buried with stuff to do and have too little time to get
it done, but the New Normal is a time when individuals are empowered as never
before.
I know what
you’re thinking. Downsizing has been the national pastime for five years.
Companies have been firing individuals left and right. How can I say that
individuals are empowered as never before?
Here’s
the reality. Everyone who is working today is doing more than one job. Every
time the guy in the next cubicle gets laid off, everyone who is left has more
work to do. For the past five years, it has meant longer hours for no more
pay. It seems like a lousy deal, but it’s not.
Downsizing has
been very painful for those who lost their jobs, but those who remain employed
have been empowered big time. They have more skills. They are more indispensable
. . . and as the economy improves they will have increasing leverage with
their employers.
A generation
ago, working in a corporation was like Charlie Chaplin on the production line.
We spent the whole day doing the same thing over and over. Now practically
everyone does a dozen things. Few enterprises realize it, but their business
processes are more dependent on individuals than ever. We’re all being
trained to be entrepreneurs. So if we don’t like the deal our employer
offers us, eventually we will have the option of doing our own thing.
Technology and
globalization are as much a part of the solution as they are of the problem.
Thanks to the web, we have access to information as never before. We also
have tools that enable us to expand our reach and leverage our time. Email,
cell phones and the web have enabled us all to work - and play - in any location.
eBay has made it possible for entrepreneurs to have a global footprint with
no employees.
But if you want
to leverage the power of the Individual, you have to manage your time effectively.
Most of us are faced with a huge pile of things to do and decisions to make.
More often than not, we start at the top of the pile and try to work our way
through. Wrong answer. The pile never gets smaller. Here’s the key insight:
Most of the stuff in our inbox is just not that important. The challenge is
to figure out which two or three things really matter . . . and focus your
energy on them.
At the highest
level, the most important stuff is family, career and personal finance. The
challenge is to maintain a balance among the three.
Success in the
New Normal is ALL about time management. Time is the currency of this age.
It is the key to personal happiness, professional success, and financial returns.
If you get nothing else out of our time together, I hope you gain a greater
appreciation for the strategic nature of time. Outlook and a PDA can tell
you what’s on your schedule
But they don’t help you decide what belongs on your schedule. For that
you need to be strategic.
Given the choice,
many people optimize their lives around money. I don’t want to discourage
you from trying to make more money, but I do want to persuade you that optimizing
for time a better strategy. If you get time management right, everything else
will follow, and you will make more money.
People generally
do not place enough value on their time. It drives me crazy every time I hear
about someone spending four or five hours on the web to save $25 or $50. Our
culture places huge value on financial bargains. I’m all for bargains,
but I denominate them in terms of time as well as price.
Being strategic
about time takes time, but the trade-off is incredibly favorable. The rewards
include more time, more money, and more happiness.
How do you do
this? Focus on the three Ps: Prioritize, Plan, Participate.
Let’s start
with the first P: priorities. What REALLY matters to you? We live in a world
without safety nets. You cannot expect others to look out for you, so you
have to know what you want. Whether consciously or not, you are always making
trade-offs; doing one thing instead of another. Since you are going to be
making the trade-offs anyway, you might as well do so with a plan.
First, be explicit
about your long-term priorities. Think in terms of three primary categories:
family, career, and personal finance. Look forward ten years or more. Over
the long term, what do you have to accomplish in your career to feel you have
been successful? How about with your family? Personal finance? Be realistic,
but also be careful not to aim too low. The only way you will get the career
or family you want is to go for it.
Second, be explicit
about your priorities for the next five years. Now think in terms of how you
would prioritize among the three. When you are faced with trade-offs among
family, career and personal finance, which comes first? Long term, it’s
important to meet your objectives in all three, but near term trade-offs are
not only reasonable, they may be necessary. There are NO wrong answers here,
but there are consequences.
As long as you
are comfortable with the consequences of your choices, all is good. Don’t
forget to make an explicit analysis of the value of your time. How much of
your time is available for things you really care about? For years, people
have asked how I find the time to play in a rock ‘n’ roll band,
The Flying Other Brothers. The answer is that I make time for all the things
that are important to me.
So let’s
move on the second P: plan. Once you set your priorities, you need a plan
to ensure that you get where you want to go. The New Normal is all about balancing
family, career and personal finance to make the most of your life. Most of
us focus on short-term issues. We live day-to-day, month-to-month, and year-to-year.
We put out fires at work, scramble to pay bills at home, and promise ourselves
we’ll deal with the future when it comes. Most of us tell ourselves that
we are too busy to live any other way. If you are that busy, friends, the
time has come to consider an alternative.
I am convinced
that the person with the longest time horizon generally wins. Bill Gates.
Warren Buffett. Bono. Steve Jobs - I’m thinking about the current Steve
Jobs Era, the one that produced Pixar and the new Apple. Each had a time horizon
far longer than his competitors. The longer time horizon helped them make
superior trade-offs.
There are a
million reasons not to plan today and only one reason to drop everything and
start planning now. It will make you more successful, not just at work. It
will make you more successful at home and in personal finance. The key is
to consider work, family, and personal finance as a single system.
Planning at
work starts with recognizing the difference between your job and your career.
Your job generates a W-2. Your career defines who you are. It includes your
job, plus all manner of professional activities, including continuing education.
Career development activities are generally extra-curricular. Don’t let
that stop you.
Career activities
are an investment in you. Once in a blue moon, career activities will deliver
a pop equivalent to a late-90s IPO, but more often they have no immediate
payback. Again: Don’t let that stop you.
Career development
activities broaden your skill base. They enhance your network. They make you
more valuable. They make your professional life more interesting. When it
comes to career planning, I find that the best strategy is to reverse engineer
the careers of people who have been successful in your chosen field. Thanks
to the internet, it is very straightforward to learn how the leading people
in any field got there. No matter what the field, there is likely to be a
path of least resistance. Doctors go to medical school. Professional athletes
and musicians achieve prominence at a young age. Venture capitalists have
engineering degrees, MBAs and career experience in successful technology companies
with venture backing. While it’s possible to find your own way into a
career, it is obviously much harder than the past of least resistance.
The next major
requirement in career planning is patience. More careers are wrecked by impatience
than anything else. Careers take many years to develop, yet zillions of people
get stuck in a revolving door. Hopping from job to job without making career
progress. If you don’t have the patience to let your career develop on
something that approximates a normal schedule, you should consider the possibility
that a different career might suit you better. There is nothing wrong with
a sense of urgency . . . but impatience is destructive. While I think job-hopping
is suboptimal, it works for lots of people. It’s a choice. As long as
you are willing to live with the consequences, you are free to make any choice
you like.
This brings
me to the third and final P: participation. Get in the game. Too often, we
go from day-to-day, just letting things happen. Wrong. Being passive in the
New Normal is a very risky strategy. Setting priorities and making plans is
essential, but only a start. In the New Normal you still need to play the
game of life. Don’t let others make your choices for you. After all,
you are the one who has to live with the consequences. Beware of peer pressure
and family pressure. Just because everyone around you has a certain car or
lives in a certain neighborhood doesn’t mean you have to follow suit.
Make your own choices. Pick your own spots.
The three Ps
- priorities, plans, and participation - can help you make the most of the
New Normal. Let me offer a little more advice about how to succeed in the
New Normal.
First, move
on from the 90s. No matter what anyone tells you, the 90s are gone. If you
got rich from them, more power to you. If you didn’t, I’m sorry.
But the 90s aren’t coming back. Not in tech. At least not on a time frame
that will work for any of us.
Second, work
at a company you believe in. You can build transportable skills almost anywhere.
Finding something to believe in is much harder.
Third, establish
a balance between your professional and personal lives that you can sustain
for five or ten years. In the New Normal, the guy with the longer time horizon
will win most of the time.
Fourth, remember
the three Ps: priorities, planning, and participation. They apply to every
aspect of your life: family, career, and personal finance. Lastly, remember
that life is a constant battle between fear and greed.
But there is
good news . . . which I will share with you in the form of McNamee’s
third law: Fear is transitory. Greed is permanent.
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