Uncertainty of Economic Growth Remains

by Steve McKee

The National Federation of Independent Business (NFIB) says that small business optimism grew slightly in January. Slightly. The NFIB Optimism Index currently sits at 89.3, ten points below where it was prior to the recession.

Commenting on the index, Lawrence Mishel, president of the Economic Policy Institute, said:


"To absorb the over 15 million officially unemployed workers in this country... job openings and hirings must rebound dramatically. This report offers no indication that this is happening."


The NFIB's report is consistent with Decision Analyst's January Economic Index, a survey of several thousand households based on nine different economic measurements. The index remained unchanged for the third month in a row, stuck at 94, well below the 110 which signals an economic expansion. This index tends to lead the U.S. economy by up to a year, suggesting the economy will remain sluggish throughout 2010.

That's what the CEO of Unilever, one of the world's largest consumer product companies, is preparing for. Speaking of the economy, Paul Polman says:


"It's not going to just drastically change in the next 12 to 24 months. We will be in for a long and slow recovery, and that's what we're planning our business on."


Policy makers continue to point the finger at the difficulty of securing business credit. But the indexes above suggest the bigger problem is simply a lack of revenue growth, meaning employers simply don't need to hire. That sentiment is borne out by the fact that fewer than one in ten owners surveyed by the NFIB added employees in January, while more than twice as many cut jobs.

Businesses don't want to borrow money as long as economic uncertainty remains high. What we most need now is normalcy, not big ideas. Let's hope the politicians are paying attention.


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Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Being Too Innovative Might Get You Fired

by Rocco Tarasi

A North Carolina principal was terminated for approving an "innovative" fundraising idea proposed to her by the parent advisory council. Their idea was to allow students to make a $20 donation to the school's new technology fund in return for 20 "points" that could be added to two of their exams (10 points per exam). For example, if a student scored a 68 on an exam they could add 10 points to make it a 78. After enough parents complained the school district stepped in, stopped the program, and terminated the principal (though they characterize it as "voluntary").

Maybe you like this particular idea, or maybe you don't. Either way, what I took away from this story is how difficult it can be for people to accept new ideas and thinking outside the box - especially when it comes to education, which seems to defy all natural laws of disruption and innovation. As different writes and readers have pointed out about this story, 20 points isn't going to make any significant difference in a person's overall grade. And does anyone really think this will encourage a student to slack in their studies simply because they can add 10 points to an exam?

But the quote from the article that shocked me the most was the following:


Teachers giving extra test credit to students who bring in classroom supplies is a longstanding practice at some schools.


The article didn't clarify that this particular school had this "extra credits for supplies" program, or which schools did. But there is ZERO difference between a $20 donation for extra credit and bringing in school supplies for extra credit, and if this is a "longstanding practice" then maybe it shouldn't cost someone their job.

The state's department of education officer said that "paying for grades teaches children the wrong lesson." I think that is a convenient excuse, and in fact you can choose to look at it the opposite way: if a student was given the choice of spending $20 of their own money on extra credits or on a new Transformers DVD movie, which would they choose? Perhaps that decision could itself be a valuable lesson.

The state also said that it would be unfair to students whose parents couldn't pay. This may be a more valid argument, but this could be easily solved by offering alternatives to the $20 donation, such as volunteer work that would require some effort or work from the students instead.

It's sad to see someone lose their job when they're taking the initiative to innovate, but mix an uber-sensitive society with an uber-political organization like a school board and the result shouldn't surprise anyone.

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Rocco Tarasi was an accountant, investment banker, and CFO before becoming a technology entrepreneur. He writes about innovation at www.InnovationMinute.com with a focus on "everyday" innovations in business models, sales strategies, products and services.