I recently listened to a commentator on Public Radio who briefly explained why the worldwide financial market was so strongly feeling the reverberations of America’s failing housing market. Considering that I have the business acumen of a 6-year-old running a lemonade stand, his explanation was refreshingly simplistic but comprehensive enough in its concept for me to understand.
It reminded me of the character Venus Flytrap, late night DJ for the 1970’s TV show, WKRP in Cincinnati, who correlated the construct of an atom to how street gangs divided territory (a concept so simple that it got my daughter through her first weeks of chemistry!). My father became an 8th grade social studies teacher for 25 years after a 26-year career as an officer in the Air Force and brought refreshing innovation to the teaching methods of the 1970’s. He taught concepts. He could have cared less if you knew the dates when Thomas Paine’s “Common Sense” was published. He wanted you to understand how the publication affected the War of Independence, how it affected the people, how it affected the Continental Congress, and how it affected the development of a Federalist Government. As his daughter, I have always learned by concept rather than rote, so beyond the biggies, don’t ask me for dates.
Getting back to my Public Radio lesson, the expert explained banking. Bank A provides many mortgages to consumers, many at very low interest rates (Sub Prime). When Bank A requires quick funds, it borrows from Bank B using those mortgages as collateral. Bank B, looking at the overall market that shows falling prices and slowing sales, begins to wonder if Bank A’s collateral is actually worth what Bank A says it is. Bank B backs off from lending to Bank A. Bank A finds itself with less cash than they had projected and therefore cannot lend out that cash. Bank A loses money from its loss of ‘sales’; Bank B loses money from the loss of interest it would have gotten from Bank A. Like a rolling snowball, it just gets bigger. Evidently, this simplistic equation relates also to countries, some of which are poor investments but continued to receive substantial loans at Sub Prime rates. The concept remains the same. When a large enough group of small credit holders fails to maintain their credit, it disrupts not only the banks that hold that credit, but the bank’s credit as well.
I have been editing several business book summaries on this site and while the editing was primarily for grammar and structure, the reader in me actually absorbed at least some of the material. Initially, I was somewhat stupidly floored by the sheer volume of business books being published. After all, the concepts of business are pretty clear—find a good idea, find people who want to buy it, keep working on getting those people to buy. As I have delved further into the world of business books, while I find that the basic concept is always a foundation, I’ve learned that business is a constantly evolving organism.
Henry Ford’s concept of the assembly line is still the foundation of manufacturing although it has exponentially evolved through innovation and technology. Marketing, which is a creative art, has not only moved with the times, but influenced the times. It is still, however, founded in the concept of ‘sell the product’. Leadership qualities, explained, expounded, described, and taught in many books, are still based on the basic, profound concepts of whom and what a leader is.
What brings this all together? The foundations of business are constant—make a profit. Why write a book about how to make a profit?—because the conditions of the marketplace are continually changing and while the foundation is firm, the methods, the circumstances, the examples, the situations are constantly in flux. Reading My Forty Years with Ford written by Charles E. Sorensen and published in 1956 will not help the American automotive industry survive in the 21st century. It will be the teachings of the present innovators who have built upon his foundation that will carry the industry into the future. It is the teachings of these people that will bring the world into the future.
If ever there was a child prodogy it was Pete Maravich. Pete was driven to become basketball’s greated player. He was driven both internally and by his basketball father Press Maravich. The point I wanted to note here was that Pete, like other child prodogies–Tiger Woods comes to mind, or Kobe Bryant–had a mental grip on the game that gave him a psycholical edge over his competitors. Confidence comes from setting goals and achieving them, and from having the skills necessary to complete and win. Each goal that is set and acheived adds more confidence. Pete would practice for endless hours running drills, scrimmaging college players on his father’s team, while still in high shool, shooting free throws, dribbling, and shooting. Pete had been doing this his entire life and Pete possessed supreme confidence when it came to the world of basketball. If he could compete with college players he certainly wasn’t going to have problems competeing with his peers in high school. This confidence came from living and beathing the game for so many years as a child star. His entire life he’d been told Pete, you’re going to be the best player that ever played. As you skills in any field improve so will your confidence and Pete had all the skills. I think this is true of any person in any field. The more time and effort you put in–the more confience and elevated performance you’ll experience in that field.