business news in context, analysis with attitude

The other day we ran an Eye-Opening email from an MNB reader in which he talked about how AI is transforming the ophthalmologist business, and how young people need to be preparing for a new reality.

I commented:

There’s no question that AI is a threat. But we know it is coming, which means that we have the ability to prepare … and for our children to prepare by developing new skills and new attitudes toward their lives and careers.

People have a choice. Shape the future, or be shaped by it.

One MNB reader thought I was being overly simplistic:

Saying this economy is all about “choice” is like using the “Buggy Whip” example as an analogy to explain away what’s going on.  It does not fully reflect today’s economy.  The attitude that “this has always been the way of the world” and “people just have to take personal responsibility” is simply ignoring the fact that not everyone has the ability or is in a situation to take the necessary steps to advance in this brave new world.

My great grandfathers and uncles were in the various “transportation” industries in the buggy whip era:  Cartwrights, Wheelwrights and Blacksmiths.  No Buggy Whip manufacturers, I admit.  But, there was room for all of these skills in the automotive industry as those trades became obsolete.  Cars still needed a “cart” and wheels and there was plenty of metalwork and finer detail work to be done.

Yes, some retraining was required.  But, NONE of them had to go out and get an advanced degree.  Possibly, they would not have had the ability to do so.  Given that an IQ of 100 is the average, that means 50% of our population may not have the aptitude.  I’m guessing my family tree had at least a few branches that would have lost out if higher education was mandated.

And, then there is the issue of the resources needed to go off and get that necessary education or training.  That receptionist, is s/he being paid enough to have the savings to go back to college for four years?  Any other “adult” responsibilities that might make it a bit difficult to work (somewhere), go to school and—oh, I don’t know—take care of children or elderly parents?  So, make that a six year transition . . . and then find work.  Oh yeah.  Receptionists should be rushing out to become optometrists.  And, if they don’t?  Well, too bad. I guess they just didn’t have the initiative to take action.

Moreover, what about the optometrist? During my last eye exam, a “tech” used all sorts of gadgets to vet my prescription, check for glaucoma and evaluate my peripheral vision.   A tech-only situation would likely lower the cost of the exam and it might take less time.  I’ll just find an “eye doctor” when something goes wrong.   So, all you receptionists, forget about becoming an optometrist.  Put (most of) them out of business by becoming a tech!  The optometrist should have been getting another degree to design or program all of those gadgets by now, anyway.  I mean, why spend time on all those pesky medical journals and conferences to learn the latest in identifying and treating eye disease.  Come on!  This is a dying profession.  There will be AI to take care of all that.  Get on to your next career.  Optometry/Engineering; potato/potahto.  It will be a breeze.

Yet, I agree “choice” is the operative word. But, it’s not about “their” choices.  It’s about “our” choices that concerns me.  Those of us who have the “choice” might want to reconsider if continuously searching for the cheapest or fastest way around things—often at a “human” cost—is the best choice.  We also have to choose what we will  do if the worst case scenario does play out.  What if we get to a point when there is no place for some people to shift, due to physiological and/or situational circumstances?  Not because of a lack of initiative, laziness or any other “personal flaw”  that are too often used to label those who are not making it in this economy.  What will we chose to do then?

Don’t think that’s important?  Then, don’t whine when you become one of “them.”  Optometry isn’t the only profession with plenty of AI and gadgets that could put the associated practitioners out of business.  But, feel free to believe, “I’ll always find some other place to go.”  That’s your choice.

We took note the other day of a Washington Post story about how “median household income rose to $59,039 in 2016, a 3.2 percent increase from the previous year and the second consecutive year of healthy gains, the Census Bureau reported Tuesday. The nation’s poverty rate fell to 12.7 percent, returning nearly to what it was in 2007 before a financial crisis and deep recession walloped workers in ways that were still felt years later.” But, “inequality remains high, with the top fifth of earners taking home more than half of all overall income, a record. And yawning racial disparities remain, with the median African American household earning only $39,490, compared with more than $65,000 for whites and over $81,000 for Asians.”

I commented:

I continue to believe that the inequality factor in all this is the faulty foundation that makes all the gains we make - no matter who is responsible (or in office when they happen, which is not the same thing, no matter what party you are in) - problematic.

This prompted one MNB reader to write:

If we've seen the median income increase and the poverty rate decrease why does it matter if inequality has increased as well?

Overall, doesn't that mean the overall standard of living is increasing and isn't that a good thing? Isn't it more important that we can have a US specific poverty rate that reflects an overall higher standard of living than we've had in the past?

Yes, the recession has has taken a lot of time to overcome but in the medium and long term we have seen an overwhelming increase in the purchasing power and quality of life of Americans across all income strata.

If anything, shouldn't we care more about the changes between income levels (there is work to be done here but this does not nullify the above)?

If you're simply arguing for an ideal (maybe a perfect world would have incredible growth that benefits everyone at the same time) how do you propose we get there? We've seen the free market and liberalization of markets constantly yield the best results across the world. Why argue in a counterfactual and not embrace the methods that seem to work? Of course, I'm assuming you favor a more involved government to address the inequality (this is based on my interpretation of your past commentary).

I recognize some of the above statements are broad but they're in response to broad commentary and I believe they generally hold true.

All fair points, though I would not necessarily argue that more government intervention is the best way to go. I’d rather private enterprise focus on addressing the inequality and helping the people who have less achieve more.

I’m not suggesting that an increase in the median income and a decrease in the poverty level are bad. Far from it. But I do think than inequality matters, because inequality breeds cultural and societal discontent. The poverty level may be going down, but the distance between people who have a lot and the people who have little is growing … and I just don’t think that’s healthy.

Am I arguing for an ideal? Sure … but what’s the point of arguing for anything less?

I’m with Robert Kennedy, who once said:

The gross national product does not allow for the health of our children, the quality of their education or the joy of their play.  It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.

It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.

And it can tell us everything about America except why we are proud that we are Americans.

He didn’t say that as long as more people have more, and fewer people have less, we’ve achieved the American dream.

The other day, in the context of a story about Walmart’s decision to streamline its UYS organization, I commented:

I … found myself thinking about my old friend Glen Terbeek, who has forgotten more about the food and retailing business than I’ll ever know. Glen used to talk about how companies can actually be more effective by driving down the decision-making process to more granular levels. If Walmart has some 4,000 stores in the US, for example, he would argue that it ought to be broken down into pods of 10 or 15 or 20 that can be more responsive to local market needs.

I guess the question I have is whether streamlining and simplifying is the same as centralization … and if so, does it really serve the goal of making a company more nimble and responsive?

One MNB reader reacted:

Your friend Glen could not be more correct, smaller is always more nimble in most business. To add, WM has built one of a very few relatively nimble businesses on a centralized platform, one store at a time from their founding. I would still consider them pretty nimble for their size even today, now they want to be more nimble in there centralized platform. What allows them to work on becoming more nimble is they are not changing their centralized model to become nimble they are adjusting within the model. So after this news from WM, how many retailers will start slashing and burning there businesses to cut cost? If WM does it we should too!

Like sheep many respected grocery retailers in the last 15 years have attempted to go centralized walking away from there successful division models…why, because most retailers think that WM is the gold standard on the way to operate. One footnote, consultants have sure become rich delivering the WM model to entrepreneurial multi division chains as their saving grace. The lessen not learned has been that it has not worked successfully in the long term for any grocer. Can anyone name one grocery chain that has successfully converted from entrepreneurial divisions to centralization, Albertsons, Safeway, Winn Dixie and to a degree Kroger, the dramatic shift in culture simply catches up! When will they learn or will they?

So back to nimble, it rarely exist if your too big, the local connection erodes because one size fits all and local entrepreneurial spirit erodes in centralizing divisions. Lastly, the old successful culture pulls in to many directions. It could take generations to change, but who has time?

So, be aware of what is happening in your business, connect with the consumer and employees, give the right products at a value and make sure the product is available.

The WM’s and Amazons are the lion, for example chains like Kroger needs to know where the lion is and what he is doing, but they don’t need to out run the lion they need to out run all the other competitors!

On the subject of the West Coast-based startup that is rolling out a five-foot-wide high tech vending machine with a limited range of nonperishable items and calling it Bodega, which offended some folks who think of the bodega as an urban retail store format usually are owned by immigrant families, MNB reader Ron Rash wrote:

Speaking for myself, if calling their new machine “Bodega” is misappropriating, then there are about a zillion cafes with serious issues. Culturally, being offensive is a different story, and I would need to think about that one for a while.

More importantly, I can’t see myself buying non-perishable items from the Bodega box, carting them back to my apartment, and then going to the local bodega/convenience store for the fresh stuff.

KC's View: