From the site The Coming Jobs War:
What everyone in the world wants is a good job.
Today, this statement makes vivid sense.
In a provocative book for business and government leaders, Gallup Chairman Jim Clifton describes how this undeniable fact will affect all leadership decisions as countries wage war to produce the best jobs.
Under Clifton's leadership, Gallup has expanded from to a worldwide organization with 40 offices in 30 countries and regions.
Clifton is also the creator of The Gallup Path, a metric-based economic model that establishes the linkages among human nature in the workplace, customer engagement, and business outcomes. This model is used in performance management systems in more than 500 companies worldwide.
Mr. Clifton joined the show recently to talk about the book, his book, and what it means for us. You can listen here.
You can read Part One of our conversation here.
So, in some respects the coming jobs war is the coming small business war.
Yes.
The country where small business can survive and thrive is the country that wins the coming jobs war.
If that war started today, and in some respects it already has, what country would win?
Well, I’m very very optimistic. I am very confident that the US will get back on track. We are so far off track right now.
China has a big advantage now because Deng Xiaoping and whoever else is running it now has done a great job of creating some kind of market-based communism. They’ve done a far better job than India or Brasil; they’re really booming. So, people are putting their bets on that horse. China has huge, huge, barriers coming up that they have to get through.
I think that the US, a lot of it has to do with the feeling of freedom. You have to have a feeling of great independence before people will start these companies. We’re losing a little bit of that just because of the economic situation, a lot of the policies. There’s a wet-blanket over small and medium-sized businesses because they have lost their confidence. Boy, when you lose your confidence, the turtle puts its head back in the shell, and nothing’s going to cause that head to come back out until they have confidence in the future of economics in their country.
But I think we will win the coming jobs war. But, we are, you have to have a lot of optimism to believe America is going to come back because the numbers are not good.
Now, as dire as you write, and your research shows and other studies show as well...we, here in the US, have been here before. Describe that time.
Yes. I turned 60 here in August. And it was about 35 years ago and I was watching TV and they had liberal and conservative economists on. And they all talked about how America’s GDP would fall to 3rd in the GDP race.
Now, remember that GDP is just everything. They give you money to afford militaries and all kinds of development and equity and things. But, anyway, because of Japan’s superior production thing and Germany’s, we would fall to 3rd in 30 years. Our demise was, this is “deja vu all over again” as Yogi Berra said.
And, so, they said that Japan would be at about $5 trillion right now and Germany would be at about $4 or $4.5 trillion; they would have overtaken us. They hit Japan and Germany accurately. But we bowed clear up to $15 trillion. We had, we outperformed expectations by $10 trillion which is really one of the great moments in the evolution of humankind. They don’t really write books about it or anything; I don’t understand why.
So, yeah, we’ve been right here before. Everybody counting us out. And, so, yeah that that history can give us confidence.
What's the potential secret weapon in this coming jobs war?
Well, I think there are a couple of secret weapons.
Secret weapons are unusual entrepreneurs. They can be any age. But, they’re probably created differently. They have an unusual amount of optimism and determination. They were blessed with that. And the secret weapon is to find as many of those as we can and we get mentors around them, development around them, good bankers around them and make sure that they grow. That’s one secret weapon.
Another secret weapon the US has is that we tend to attract the best talent in the world. If you look at the really colossal technology built in the last 10 years, where the genesis of that is San Francisco. Another guy and I counted back and there’s only about 1000 people that made that whole miracle come about out there and that’s even stretching it.
If you look at who the people were, more than half of them weren’t Americans; or they weren’t before. And most of the 600 were Indians. What happens for most reasons is the US is a beacon for entrepreneurs and innovators from the world. That’s been, that’s probably the secret weapon over the last 30 years and we rose up.
If that was a football game then we won 80 to nothing.
But, it probably was because we attracted unusually talented people from around the world to the US. And especially to San Francisco, NY, Boston, Austin. But, those secret weapons in this war are people and they are unusually talented and gifted entrepreneurs.
We’ve been trying to study this and it’s really hard to study. It looks to us, it’s kinda like a LeBron James in basketball, he’s not that good of an example anymore. Michael Jordan. For these rare entrepreneurs, it looks to us like it’s 3 in a thousand.
You know, it’s always interesting to me that if you have 1000 kids in an auditorium...high school kids or college graduates, you can bring in an educational psychologist and they can perfectly rank them in order by IQ. Somebody’s smartest, somebody’s dumbest. They can rank them in perfect order. But, if you say:
“Hey, would you rank and order them by their ability, their talents, as entrepreneurs. “
Then it’s a great big argument. Someone will say it’s untrainable and someone will say it’s as easy to change as changing your oil. But we gotta get better at figuring out who these stars are.
Let’s talk a little bit more about the solution. You write that the spawning ground for this next and necessary wave of innovative, entrepreneurial, breakthroughs will be a combination of three forces. What are they? Which one is the most important?
Well, one really important thing and I hope this makes as much sense to everybody out there as it does to me; I just don’t know. But these forces lie within cities, not nationally. If you look at where the variation is in GDP growth and success is in this country. Like unemployment and GDP growth, the variation among cities is just huge.
And so, if you take, take Detroit. Detroit was one of the world’s greatest cities 40 years ago. It might have been the highest per capita income 40 years ago. Huge center of all kinds of arts, sciences, music, not just Motown. It was the best city in the world. Now, it’s turned into the city from hell.
As rugged as that city is, let me look out to San Francisco and the Valley, Silicon Valley and San Jose and all that. The variation is unbelievable. Look at Austin, Texas and Albany, New York. Those are kind of twin cities. Big states, no strategic location at all, no seaports, no beautiful weather, no beaches, no nothing. And Albany is a troubled city. And Austin just doesn’t stop growing.
Out there where you are, Zane, if you look at Sioux City and Sioux Falls. Those are like twin cities separated at birth. Researchers love that. Sioux City is struggling. I mean casinos and slaughter houses and whatever, that just hasn’t worked. But up the river in Sioux Falls, the town even has about the same name. That’s like a little Austin, Texas up there. Big breakthroughs in healthcare and things are popping.
One of the most important pieces is cities have to take responsibility for GDP growth. They shouldn’t look to Washington.
The next thing is, when you follow these great inventions back, boy so many of them have roots back to universities. All of these cities have universities. That’s sort of the petri dish. You have professors and students, there. But, you have bank presidents coming over and the local CEOs. The 2nd is universities.
The 3rd one is these great American cities, all of them have what I call ‘shadow governments’ and ‘local tribal chiefs’. They’re not the mayor. They are the legacy wealth city fathers and mothers. If they’re not involved, your city tanks. They’ve gotta look and say:
“It’s up to us.”
The local tribal chiefs, those men and women, typically have a lot of financial resources. They have networks to other players. There’s usually more talents rolling around in that than city councils and state governments, with all due respects. It’s really up to them. I would say that’s the 3rd one.
So, the top 100 cities, I would say the local universities and then the 10 -20-30, depends upon the size of the city, of the local chieftains, sorta behind the scenes and make things happen. Those are good people. And boy do they care a lot about their cities.
I think the fix to America lies city by city, not national solutions, democrats and republicans.
That’s a long answer. But that’s what our research shows.
It’s a long answer and it’s a great answer. Thank you so much.
You also talk about Super Mentors. And I loved your first example. That was your dad. Would you share that story of your dad, as all dads should be, as a super mentor?
Well, he was teaching at the University of Nebraska and he was doing research. He had a tweed coat and soft rubber shoes as professors tend to do, professor glasses. But what he’d done is he’d made a discovery about selecting talent and he could select ROTC students and predict which ones would be good team leaders. You know, future generals and those that couldn’t lead, they were too individualist. That was an assignment and he really loved doing it.
But the Chancellor of the university, his name was Cliff Hardin, he was a huge hero was watching his work. He said to him:
“Could you select salesmen and sales managers?”
And my dad said:
“Well, I guess I could.”
And the Chancellor said:
“Well, if you could then you could start a company.”
And Dad, I always asked him what was the thing that was the trigger. It said it was the Chancellor, a very powerful person in his life saying:
“You could start a company.”
Excellent. He went on to start a very successful company.
Yes, he did.
Let’s talk about innovation and entrepreneurship. You wrote what for me was a psychic head butt. You wrote that Innovation is not rare in America; neither is creativity.
Now, if innovation is not rare then why are we declining in global rankings for innovation?
Well, if you look at global innovation, you can find them in the annual almanac. If you look at them over the last 200 years, America gets half of all the global innovations. Maybe, it’s 1/3. We’ve done real well with that.
But you have to remember that’s probably what helped us build 25% market share for all business in the world. We’re obviously way better in the world in innovation.
What is causing us to decline in global rankings for innovation?
Well, there’s a couple of things.
The rankings for global innovations? I don’t believe in them. Because I don’t really count innovation as innovation until it has a customer standing next to it. And so, there’s all kinds of rankings for innovation. I was just quoting where we get 20-30% of them.
I’m talking about inventions like the telephone, the airplane, the transistor, the satellite; those kinds of things. So, we still lead the world in innovation where it actually has a business around it and customers.
So, that leads us to my next question. I agree that innovation is in abundance here in the US. But, what’s missing from companies in our economy to take advantage of this innovation?
I think that we have the cart before the horse on this innovation. And I’m sure that this is right. We keep pushing all of our chips into innovation.
“Oh my gosh. We don’t have enough jobs. Push more to innovation. Push more to innovation!”
Has anybody ever considered that we might have an oversupply of innovation and an undersupply of entrepreneurship? That’s my point.
If you’re having an innovation, let’s say you’ve invented some incredibly imaginative fantastic thing. So you don’t have any entrepreneurial talent or so you need somebody like Bob or Sally to come over and make a business model and imagine a customer. So, even if you have a great invention, it is a long way from being a company.
I’ve been CEO for Gallup for 23 years and I can tell you I always have more innovations swirling around, big ideas, in the company, than we can ever deal with. People come in and say:
“Hey, why don’t we do this?”
It is a great idea, I’ll tell them. There’s no question. But who’s going to make it work? Who has the determination? There’s going to be times when it will crash and the entrepreneur will keep thinking through that. Entrepreneurs tend to be open-field runners, not planners. You know they can make it up on the fly. They’re probably wired differently.
What we should probably do is rather than look for more entrepreneurs and business models is spend billions and billions on innovation. Innovation has no value at all without a customer standing next to it.
Where do we create more entrepreneurs?
I don’t think we have a national excitement about them.
You know I was down in Texas at dinner. And I’ll make this short. I was sitting with a very sophisticated guy, our CFO and he was talking about a football player he thought would play for the Dallas Cowboys and his upper body strength and his 40-yard speed. It was getting kind of annoying because we wanted to talk about making an acquisition. I could tell it was a really unusual player.
He was talking about a guy that was in 7th grade. Because down in Texas they are so excited about finding a good quarterback, the whole place is hunting for them.
But imagine if we looked for entrepreneurs the way they hunt for quarterbacks. You know in Canada, they can spot the hockey players, the high potentials when they are 7 years old.
Entrepreneurs start so early. They’ll start mowing yards and another yard. Pretty soon, in the modern world they’ll start figuring out how to sell things over the internet.
The trick has got to be that somebody has got to be excited finding them. They also oughta have more or equal status as finding a good quarterback or a good point guard.
That’s such a great example. I’m a big fan of college basketball. I follow all the recruiting. I’m thinking what if there was a whole recruiting program and a website that tracked entrepreneurs that tracked them from high school through college.
What you just said, if we could pull that off, build it systematically, I think that what the US... if we could make the development of entrepreneurs as systematic as we do football or as we do just regular intellectual growth. We can really spot, even in poor communities, those people who test well and how they’ll end up in University of Chicago or Yale or Stanford or whatever.
If we had that same kind of a thing for entrepreneurs; so, it’s intentional.
What we have now with the development of athletes and intellectual strengths is intentional but entrepreneurship is not.
It’s all a matter of intention.
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Part Three of this conversation will be published Friday, September 30.
