Skip navigation

Monthly Archives: June 2011

Even Apple will be forced to adapt as its designs are copied. At 100, I.B.M. looks remarkably spry.

Consumer technologies get all the attention these days, but I.B.M. has thrived by selling to corporations and governments. Profits are strong, its portfolio of products and services looks robust, its shares are near a record high. Its stock market value passed Google’s this year. Yet, in the early 1990s, I.B.M.’s survival was at stake. It nearly ran out of money. Its mainframe business was reeling under pressure from the lower cost technology of personal computing.

“I.B.M. faced the challenge that all great companies do sooner or later – they dominate, they lose it, and then they recreate themselves or not,” says George F. Colony, the chief executive of Forrester Research, a technology and market research company .

I.B.M. moved beyond the mainframe and built a business increasingly based on software and services. And the company holds lessons for others.

Evolving beyond past success is a daunting task for all companies. But that problem is magnified in the technology arena, where companies can quickly rise to rule a market, until a technology shift opens the door to a new generation of corporate dynamos.

That is the test facing Microsoft, Google and Apple. So, what broader insights are to be drawn from the I.B.M. experience?

One central message, according to industryexperts: Don’t walk away from your past. Build on it. The crucial building blocks, they say, are skills, technology and marketing assets that can be transferred or modified to pursue new opportunities. Those are a company’s core assets, they say, far more so than any product or service.

I.B.M.’s prime assets included strong, long-term customer relationships, deep scientific and research capabilities, and an unmatched breadth of technical skills in hardware, software and services.

It is the technology surrounding the mainframe that pays off for I.B.M. today. Mainframe hardware alone accounts for less than 4 percent of its revenue. But when the software, storage and services contracts linked to mainframe computers are included, the figure rises to 25 percent – and as much as 45 percent of operating profit, estimates A. M. Sacconaghi, an analyst at Sanford C. Bernstein & Company, a global wealth management firm.

I.B.M. has refocused its research labs and sales force on services and software. From running smart-grid projects for utilities to traffic-management systems for cities, I.B.M. acts as a general contractor whose expertise spans research, software, hardware and services. These projects build on its legacy of broad technical skills and deep knowledge in fields like energy, transportation and health care.

Unlike I.B.M. in the early 1990s, Microsoft is not a company in crisis. It is growing and is immensely profitable. It has nurtured new businesses beyond its lucrative stronghold in personal computer software: the Windows operating system and its Office programs.

Today, Microsoft’s server software division is comfortably profitable, with $16 billion a year in revenue.

Its other  sizable business is its Xbox video-game console, soft¬ware and online gaming franchise. That division is an $8 billion-a-year business.

But the long-term problem for Microsoft is that more than 80 percent of its operating profit still comes from its PC software franchise, which has kept the company’s stock price stagnant for years. And the company lags in fast-growing new markets in search and online advertising, as well as smartphone and tablet software. Some big investors are uneasy – and one, David Einhorn, the hedge fund manager, in May publicly called for Microsoft’s chief executive to be replaced.

Microsoft has deep technical and research expertise. Kinect, its add-on device to the Xbox gaming console, suggests promise. It recognizes faces, gestures and voice commands.

Kinect (at $150) is for gaming, yet personal computers that can see you, hear you and respond would be a breakthrough, bringing artificial intelligence into the mainstream.

Google has the purest engineering culture among the major technology firms. And the assets most prized at the company are brains and data.

“Google is all about information – searching, discovering and sharing information more intelligently,” says Peter Sondergaard, senior vice president for research at Gartner, a technology research company.
Google sees itself as an artificialintelligence factory. Its programmers mine vast troves of Web data to deliver smarter search results and more finely directed ads. Its offerings beyond search all scoop up more data and afford potential opportunities for serving up more ads. They include online e-mail, calendars, maps, shopping, word processing and spreadsheets, as well as videos on its YouTube service and photographs on Picasa.

Google is also moving into the realm of software for devices, as more searches are being started from these mobile devices. Yet the move could also put it in a powerful position to shape the future of mobile devices, which are eclipsing PCs in computing. In smartphones, at least, Google is doing well. Android, which Google distributes free, has rapidly become the leader for smartphone operating systems, with 36 percent of the market.

Apple, meanwhile, has been unmatched in applying its core assets to new markets. Its hallmark skills are the intuitive usability of its software and the inspired design of its hardware.

Yet Apple machines are still dwarfed by those running Microsoft’s Windows. Apple’s stunning success has come in taking its skills beyond PCs with new designs in markets that it has redefined or created: digital media players (the iPod), smartphones (iPhone), tablet computers (ipad).

Yet Apple’s impressive product designs will eventually be mimicked and come under price pressure, just as LB.M.’s mainframe did, predicts Michael A. Cusumano, professor at the Sloan School of Management at the Massachusetts Institute of Technology. Apple, he suggests, can build a large business around its new iCloud online storage and syncing service.

I.B.M.’s story also holds a cautionary lesson: the danger of delay,…. David B. Yoffie of Harvard BusIness School recalls that in 1990, I.B.M. executives spoke of the need to wean the company from its dependence on mainframes and to shift to software and services.

I.B.M., he notes, didn’t pursue that strategy until after the company was in peril. “It’s really hard,” he said, “to move a company when it’s doing well and not facing a crisis.”

Steve Lohr,
The New York Times,
Toronto Star
June 26, 2011


Good genes can be a curse

There is a financial solution to the need for lifetime sustainable income

The Annuity

Plan to live to 100? There are 6,000 centenarians in Canada, projected to hit 20,000 by 2035.
But improved longevity and low investment returns pose a vexing problem for healthy people with good genes. If worried about outliving your money, consider taking out some longevity insurance, better known as annuities.
Life annuities purchased from life insurance firms provide streams of guaranteed income for as long as you live. Those in employer-provided defined benefit (DB) pensions have extensive annuity protection, as do those collect-
ing Canada Pension Plan or Old Age Security.
But if most of your wealth is exposed to stocks through defined-contribution pensions, RRSPs, TFSAs or non-registered investments, you may need some annuities or newfangled “finsurance” products finance professor Moshe Milevsky describes in How to Pensionize Your Nest Egg.

“If you have the insurance from your employment or job (e.g. DB pension), there is no need to buy more.” But those lacking such insurance or worried about longevity risk may need to at least partly annuitize.
Annuities are as old as the hills but are being rediscovered by a new generation of investors scarred by stock-market losses in 2008. The current Barron’s profiles a recent retiree, now 67, who bought annuities in 2007, in time to dodge the crash. He no longer frets about outliving his money.
Annuities are more popular in the United States because variable annuities – which add a stock-market kicker – are better and cheaper. With interest rates near historic lows, most Canadian advisors view age 67 as too young to buy life annuities. They suggest waiting until rates rise, when the interest component will be lower and the mortality premium makes up a bigger chunk of the return.

Milevsky doesn’t worry that insurance firms can foot the bill if too many reach 100 because they are also. on the other side of the bet, through life insurance. “They will perform handsomely if we all live forever.”

In The Only Guide to Alternative Investments You’ll Ever Need, Larry Swedroe rates fixed annuities as”good” but variable annuities as “flawed.” In an interview in Toronto this week, he warned you need a very long lifetime for variable annuities to pay off.

He’s keener on payout annuities or SPIAs (single premium immediate annuities), especially for those in their seventies. ”It’s the only asset class that can get you in effect equity-like returns without taking equity risk.”

Annuity critics don’t like the loss of control or the fact they leave little for heirs. But that applies only if you die young, Swedroe says. “If you live longer than you expect, You’re saving the estate’s money.”

In Canada, Some variable annuities are called segregated funds. Clay Gillespie, managing director of Vancouver’s Rogers Group Financial, prefers fixed annuities but suggests clients wait until 78 or 79 before buying.

At 60 or 65, the pickup in yield over regular bonds is only 0.5% or so. but by your late seventies mortality credits make up 80% of the return so low interest rates are less of a concern.

Michel Fortin, vice-president of Standard Life, says the lower interest rates are, the more expensive fixed annuities are, and the younger you are, the higher their cost. Most annuity buyers are between 60 and 70. The annuitization question often arises at 71, when RRSPs must be deregistered. You can also annuitize non-registered assets with tax-efficient “prescribed” annuities. Gillespie is not a fan of another type of variable annuity known as GMWB (guaranteed minimum withdrawal benefit). As structured in Canada, I don’t believe they’re the soluton:’ Gillespie says, ”but I would use them in the U.S.”

Asher Tward, vice-president of Toronto’s Tridelta Financial, says GMWB fees are “way too high” at 3% or 4%, with the funds mostly balanced or fixed incQme. With SPIAs, you know what you get and can arrange for inflation indexing or term guarantees by accepting lower payouts. He suggests investing conservatively for a few years, then laddering into annuities as interest rates start to rise.

Not all annuities provide longevity insurance. Vancouver advisor Diane McCurdy uses five-year term-certain annuities to bridge clients to retirement. Some may require just five years of income while waiting for employer or public pensions to kick in at 55, 60 or 65. By the time the term is up (terms can also be 10 or 20 years), the rest of your portfolio may have grown.

These are purchased with non-registered funds: One reason McCurdy recommends clients build up non-registered savings.
 Jonathan Chevreau
Wealthy Boomer
Financial Post
June 26, 2011
Posted by Dan Zwicker at 11
‘I never ask for Mercy’

The statement Conrad Black delivered to Judge Amy St. Eve at his resentencing hearing in Chicago on Friday June 24, 2011

On the occasion corresponding to this four years ago, the fact that the counts that had survived the trial were under appeal spoke for itself, and I didn’t think it appropriate to say much more. As we are now back, one last time, in your court, at the weary end of this very long and fiercely contested proceeding, there are a few things that I think should be said.

The prosecutors have never ceased to accuse me of being defiant of the law, of disrespecting the courts, and of being an antagonistic critic of the American justice system. Nothing could be further from the truth. I have obeyed every order of this and other courts, every requirement of the United States Probation Office, in this and other cities, and while I was its guest, every rule and regulation of the BOP, no matter how authoritarian. I have been and remain completely and unwaveringly submissive to legal authority, yours in particular.

What I have done is exercise my absolute right to legal self-defence, a right guaranteed to everyone who is drawn into the court system of this and every other civilized country. All my adult life I have been a member of the moderate section of what is commonly called the law and order community, and I shall remain in it, whatever sentence you impose on me today. I always keep a firewall between my own travails and my perception of public policy issues; otherwise I would retain no credibility as a commentator.

Your Honour, many years ago when I was a student and licensee in law in Quebec, I read a large number of cases from British and French courts, including the principle established by the eminent British jurist, Lord Denning, that “Parties coming to court must be prepared to practise what they are asking the court to approve.” The prosecutors have never ceased in this case to advocate respect for the law, and to accuse me of lacking it.

But since that is an unfounded complaint, the real source of their irritation must be that as chief defendant, I have led the destruction of most of their case, and have successfully protested my innocence of charges of which I have, in fact, been found not to have been guilty. I understand their disconcertion that of the 17 counts they originally threatened or actually launched against me, all were either not proceeded with, abandoned, rejected by the jurors or vacated by a unanimous Supreme Court of the United States. But the problem is not my lawlessness; it is the weakness of their case. I have done nothing but uphold and respect the rule of law and the system of justice, in which my faith has never flagged.

This entire prosecution and a number of civil suits as well, were based on the report of the Special Committee of the board of Hollinger International, directed by its counsel, Richard Breeden, and published in September 2004. That report accused me of having led a “$500-million corporate kleptocracy.” The non-competition payments almost entirely legitimized in this case were described as “thefts.” And the authors of the report promised to lead the company back to unheard of levels of profitability. They did but not in the direction indicated. I launched the largest libel suit in Canadian history against Breeden and the others responsible for writing and publishing this infamous report.

My libel suit, and several other lawsuits around this case, are being settled, including a sizeable payment to me on the libel claim. This is the ultimate collapse of the Breeden Special Committee report, whatever other interpretation the defendants in the case may, consistent with their notions of accuracy throughout these proceedings, seek to place on it.

The authors of the report were not prepared to defend it where they would not have an immunity for perjury as most of the government witnesses did here. Nor were they prepared to defend their selfdirected largesse of $300-million, as they drove the company into bankruptcy, taking down $2-billion of shareholder value with it.

Over 80% of that value belonged to ordinary people throughout the U.S. and Canada, the type of people Mr. Cramer spoke about at the opening of the trial when he likened us to masked and violent bank robbers who stole depositors’ money at gunpoint, because we had supposedly rifled the shareholders’ family college funds. And Breeden’s original action of January 2004, containing the false charge that I had threatened the Special Committee, repeated just last month by the government in its presentence filings on May 27, has also been abandoned.

Mark Twain famously said that “A lie gets halfway round the world before the truth gets its trousers on.” It is very late in this case, Your Honour, but the truth has almost caught up with the original allegations.

I have at times expressed concern about the ethics of some of the prosecutors in this case, Your Honour, but never of the role of prosecutors, or of the necessity to convict criminals and protect society. But I must emphasize that I consider that the prosecutors, too, are victims. If they had not believed Breeden’s lies, now effectively abandoned in the face of my libel suit, the U.S. Attorney would surely not have launched such a fantastic assault on us.

And I can assure the assistant U.S. attorney that I did not say on Canadian television that I was like the person checking his own expense account. I said that for the appellate panel that had been excoriated by Madame Justice Ginsburg on behalf of a unanimous Supreme Court, when assigned the task of assessing the gravity of its own errors, to resurrect these two counts after a gymnastic distortion, suppression and fabrication of evidence, was like someone reviewing his own expense account.

Your Honour, these are, in any case, very threadbare counts. Is it really conceivable to you that if I were inexplicably seized with the ambition to embezzle $285,000, I would have it ratified by a committee and then, after what the minutes of the meeting described as “extensive discussion,” by the whole board? I would have to have been mad.

And obstruction: It is clear from the evidence that I had nothing to do with selecting or packing the contents of the boxes, had no knowledge of any SEC interest in them after complying with five of its subpoenas, and after being assured by Mrs. Maida that it did not violate the Canadian document retention order, and checking with the acting president of the company, whose letter you have, I helped to carry out the boxes under the gaze of security cameras that I had installed. When these boxes arrived here, they were very full, so if I had taken anything out of them, why would I not have put them at any time over many weeks in my pockets or a brief case? Your Honour, again, to remove documents improperly in this way, I would have had to be barking, raving mad, and insanity is almost the only failing of which the prosecutors have not accused me.

I would like to express here my gratitude to you, Your Honour, for sending me to a prison with email access, where I was able to stay in touch with supporters and with readers of my newspaper and magazine columns. And I must also express my gratitude to the originally small but distinguished and often intellectually brave group of friends, but also of total strangers, who never believed I was guilty, when that was a less fashionable position than it has become. Their numbers grew to be an army that now includes many people in every American state and Canadian province, and region of the United Kingdom, and people in many other countries.

And my gratitude to the many friends I made, inmates and correctional personnel, at the Coleman Low Security Prison, whom I shall not forget, is beyond my ability to express today.

I am of the tradition that tends not to speak publicly of personal matters, but Your Honour, I hope it is acceptable to you if I vary that practice slightly, and briefly, in concluding, today. As you would know, or could surmise from many letters that have been sent to you qualified to comment, and as is mentioned in the presentencing submissions, I believe in the confession and repentance of misconduct and in the punishment of crime. I don’t believe in false or opportunistic confessions.

It is not the case, as has been endlessly alleged by the prosecutors, that I have no remorse. I regret that my skepticism about corporate governance zealotry, though it was objectively correct and has been demonstrated to have been so in the destruction of these companies, became so identified with the companies themselves that the shareholders all suffered from it.

I regret that I was too trusting of the honesty of one associate and the thoroughness of some others, and the buck has stopped with me. I repent those and other tactical errors and mistakes of attitude, Your Honour, and I do not resent paying for those errors, because it is right, and in any case inevitable, that people should pay for their mistakes.

I concluded many years ago in my brief stint as a candidate psychoanalyst that it is practically impossible to repress conscientious remorse. And I concluded some years later in reading some of the works of the recently beatified Cardinal Newman, that our consciences are a divine impulse speaking within us, as Newman wrote, “powerful, peremptory and definitive.” My conscience functions like that of other people, and I respond to it, if not precisely as my accusers would wish. But they are prosecutors, not custodians of the consciences of those whom they accuse.

Your Honour, please do not doubt that even though I don’t much speak of it, my family and I have suffered deeply from the onslaught of these eight years. I agree with the late pope who said “Life is cruciform.” All people suffer. It is a stern message, but need not be a grim one. We rarely know why we suffer, and only those who have faith even believe there is a reason. No one can plausibly explain in moral terms a natural disaster, or a personal tragedy. I see life as a privilege and almost all challenges as opportunities, and have always tried to take success like a gentleman, and disappointment like a man.

Whatever the reason my family and I have had to endure this ordeal, for our purposes today, in these personal questions, I only ask that you take into account the messages you have received about collateral medical problems in my family. I do not worry about myself, and I will not speak further in open court of the worries I do have for my family. But I most earnestly request, Your Honour, as someone who has shown and expressed family sensibilities several times in this case, that they too be taken into account in your sentence.

And I believe that even if a reasonable person still concludes that I am guilty of these two surviving, resurrected, counts, tortuously arrived at and threadbare though their evidentiary basis now is, that the same reasonable person would conclude that I have been adequately punished. I only ask you to recall the criterion you eloquently invoked near the end of the trial that the justice system not be brought into disrepute by an unjust sentence.

I conclude by quoting parts of a famous poem by Kipling, with which I’m sure many in the court are familiar, and which I had known too, but not as well as I knew it after it was sent to me by well-wishers from every continent except Antarctica. And to the extent I was able, I tried to keep in mind throughout these difficult years, what Kipling wrote, which was, in part and as memory serves:

If you can keep your head while all about you are losing theirs and blaming it on you, If you can trust your own counsel though all men doubt you, but make allowance for their doubting too, If you wait but are not tired of waiting, Are lied about, but don’t deal in lies, If some men hate you but you don’t stoop to hating; And don’t look too good or talk too wise; If you can talk but don’t make words your master, Can think but don’t make thoughts your aim, If you can meet with triumph and disaster, But treat both those imposters just the same.

And I address this directly to the prosecutors and some of the media:

If you can bear to hear the truths you’ve spoken, Twisted by knaves to make a trap for fools, And see the work you gave your life to broken, And stoop to fix it up with worn-out tools.

If you can make a pile of all your winnings, And risk it on a turn of pitch and toss, And lose and start again at your beginning, And never say a word about your loss.

And Kipling goes on to say that the reader will then be a man. Your Honour, when I first appeared in your court six years ago and you asked me my age, it was 61. If I’m not a man now, I never will be.

I never ask for mercy and seek no one’s sympathy. I would never, as was once needlessly feared in this court, be a fugitive from justice in this country, only a seeker of it. It is now too late to ask for justice. But with undimmed respect for this country, this court, and if I may say so, for you personally, I do ask you now to avoid injustice, which it is now in your gift alone to do. I apologize for the length of my remarks, and thank you, for hearing me out, Your Honour.

Nattional Post
June 24, 2011

Executive Summary

In the course of the next 10 years, a new generation,
Generation C—will emerge.

Born after 1990, these “digital natives,” just now beginning to attend university and enter the workforce, will transform the world as we know it.

Their interests will help drive massive change in how people around the world socialize, work, and live their passions—and in the information and communication technologies they use to do so.

Read more

The following is taken from Henry H. Tapper’s Blog

henry tapper

June 18, 2011

 Driving home from football with Olly last night – we turned on the radio -”what’s that crazy music” I mumbled to myself – “James Brown , Payback Dad – it’s 8 minutes long – do you want to buy it?”

 “How do you know that Olly?”

“I’ve got an app”

 Get home, turn on the computer – there’s a mail from my friend Matthew who’s out in San Francisco. Turns out he’s written a paper on Generation C. This is how it starts.

“In the course of the next 10 years, a new generation—Generation C—will emerge. Born after 1990, these “digital natives,” just now beginning to attend university and enter the work-force, will transform the world as we know it. Their interests will help drive massive change in how people around the world socialize, work, and live their passions—and in the information and communication technologies they use to do so.”

 Having owned digital devices all their lives, they are intimately familiar with them and use them as much as six hours a day. They all have mobile phones and constantly send text messages. More than 95 percent of them have computers, and more than half use instant messaging to communicate, have Facebook pages, and watch videos on YouTube.

If you want a copy of this paper, you can download the PDF here – Booz & Co is a management consultancy not an off licence .

 Matthew and Booz’s point is that kids like Olly will inhabit not just the real world of football and school and college and work but a “cloud world” where he and 2-300 of his associates will hang out in a state of almost constant connectivity. I say “will” though I think this has already happened for my son. He’s had an iPhone for nearly a year, he runs countless Facebook campaigns.

 As Head of the School Council he canvasses opinions on what his schoolmates want for dinner, timetable changes – even teacher performance. He can speak authoritatively on how he and his friends feel about certain songs, videos, films simply by posting a question via Facebook.

 We (I mean the HR and pension professionals who I work with) say we want to communicate with our staff – tell them stuff about pensions, get their views on HR matters, understand where we as business managers are going right or wrong. We will be competing for their interest with a whole bunch of others trying to get some space on their cloud. That’s why I think that “education” is the wrong word – we don’t educate kids like Olly, they educate themselves. All we can do is try to get the things we feel important in their line of sight. In the battle to catch their attention we need to go to school to learn about search engines and how to do this.

My reply:

 Hi Henry,

I fully agree with your observations.

I don’t know what they call the generation born in 2004 but my 7 year old grandson has me in a state of awe when I observe him manipulating 3 – 4 digital pieces of software simultaneously.

My own professional view in the field of finance of the implications of your points is this. In the delivery of complex knowledge and information in any discipline those professionals who communicate collaboratively in real time will ‘win’ i.e. gain a clear exponentially competitive advantage in their marketplace and those who do not will ‘lose’.

 The accumulation of intellectual capital within a knowledge based enterprise differs from that of one which produces disposable or replaceable commodities. To increase this form of HR capital exponentially there must be ongoing real time collaboratively genuine interactive communication in any such enterprise. The supply of such behaviour is generally inadequate, in my opinion. It requires a temperament which I refer to as that which is demonstrated by ‘net givers’ (vs. ‘net takers’.) Your blog is a great example of this attribute.

Thank you for your thoughtful articles. I would very much appreciate receiving a copy of the Booz & Co. paper.

 Kindest regards.


Daniel H. Zwicker

B.Sc. (Hons.) P. Eng. CFP CLU CH.F.C. CFSB

Certified Financial Planner

Chartered Life Underwriter

Chartered Financial Consultant

Chartered Financial Services Broker

Professional Engineers Ontario

 Investor Consultants

Capital Risk Management

Bus: 1- 416-726-2427

 Email: Linkedin:


The Canadian middle class is in crisis. Each year, its share of our national income shrinks, relative to that of the richest few. Recent reports show Canada’s wealthiest one per cent accounted for 32 per cent of all income growth between 1997 and 2007 – the most in recorded history. Thanks to skyrocketing executive compensation levels and an aggressive attack on well-paid, family-supporting jobs, the gap between the rich and the rest of us grows ever wider.

Nothing epitomizes this situation more than the recent history of Air Canada. In the last decade, Canada’s national carrier has suffered unprecedented financial turbulence, including run-ins with bankruptcy protection. According to the Canadian Auto Workers’ internal research, over the same period Air Canada’s CEO at the time, Robert Milton, pocketed $86 million – while thousands of front-line employees were forced to take cuts, to the tune of about $10,000 per year, including an erosion of real wages, lost vacation, paid lunch breaks and other benefits.

Air Canada workers made major sacrifices. The company plowed ahead with plans to do more with less. Work intensified and productivity skyrocketed. Measured in seat miles delivered per employee, labour productivity at Air Canada jumped 75 per cent. Yet many who had earned a good (albeit modest) salary saw their quality of life and working conditions decline.

This storyline has played out in too many workplaces across Canada. “Good” jobs are on the wane, in all sectors – whether in factories, service shops, office buildings, or among the professional classes. Many have come to accept the logic that jobs in the “new economy” are inherently insecure. Pension plans exist only in fairy tales, and personal sacrifice has become the new norm. We accept the mantra that the next generation of workers will be worse off, and assume they simply aren’t in a position to demand better.

This attitude must change – for everyone’s benefit. The squeezing out of Canada’s middle class has major implications for our collective prosperity. Middle-class incomes drive economic growth, pay for public services, support healthy families, and build communities. Society cannot subsist on crumbs left over by the rich. Workers cannot accept the logic that relentless cuts and constant sacrifice will bring better days ahead.

Air Canada employees have already drawn a line in the sand during their current contract talks. They’ve resolved to make up ground on lost wages. They’ve rejected a program of two-tiering, which would make second-class workers of future generations. And in a recent show of solidarity, the CAW, the Canadian Union of Public Employees, and the International Association of Machinists and Aerospace Workers (three unions representing the lion’s share of Air Canada employees) rejected a company proposal to undercut and eventually eliminate the current defined benefit pension plan. By saying “no” to these demands, Air Canada employees are facing down the corporate-led riptide that’s pushing Canada’s middle class to the brink.

With the company’s return to profitability in 2010 and a brighter future on the horizon, Air Canada’s demands for more cuts, fewer full-time jobs, and outsourcing appear baseless. It’s made worse by CEO Calin Rovinescu’s hefty 76 per cent pay hike that landed him $4.55 million in compensation last year, a defined benefit pension that would pay him $351,000 per year at age 65, and a $5 million retention bonus he would be paid just for staying on the job until March 2012. His insistence that workers accept less reeks of hypocrisy.

Not surprisingly, the frustration and anger among Air Canada employees is reaching a breaking point. Demonstrations have been taking place in communities across Canada, with impressive turnouts. CAW members recently voted 98 per cent in favour of strike action, as a last resort. They know that what’s at stake in these negotiations goes far beyond their own self-interest.

Air Canada is recognized as a world-class carrier and has received dozens of awards for quality service, largely because of its hard-working employees. It’s time they receive their fair share.

The Air Canada battle is a principled fight about fairness and justice. It’s about reclaiming workers’ rights to good jobs, as well as our collective ability to demand better from employers and government. It’s about closing that ever-widening wealth gap and strengthening the middle class, for all Canadians.

Ken Lewenza
The Mark News
Sat, 11 Jun, 2011


The genie is out of the bottle and there is no going back. Every day with every new technological evolution in mobile communication, internet availability, broadband accessibility, the speed of life seems to move incrementally into warp drive. In a paper written in 1968 by Internet pioneers J. C. R. Licklider and Bob Taylor, called “The Computer as a Communication Device.” they envisioned the time when real-time interactivity was possible.

They expected an acceleration of our abilities to innovate and work creatively. That time is now. Internet technologies have opened up new frontiers of communicative methods and techniques enabling user-generated content, creativity and shared documents resulting in an explosion of possibilities, which never existed previously.
The Relationship Economy is a knowledge-based economy without borders, where the race is between companies and locales over how to learn faster and organize more flexibly to take advantage of technology-enabled market opportunities (Kelly, 1998; Best, 2001). Within this Relationship Economy, the World Wide Web is ubiquitous. It has transformed geographically separated locales into a “global village” for information sharing, social interaction, and economic exchange.

Technology, in particular, ever-expanding digital bandwidth, has resulted in the creation of new-economy forms of intangible, knowledge-based capital, the value of which now exceeds that of the physical capital that once dominated old economies (Castells, 2000; Tapscott, et al., 2000). (1)

In a culture which some have described as information overload, it is impossible for any one of us to hold all of the relevant pieces of information in our heads at the same time. Because there is more information out there on any given topic than we can store in our heads, there is an added incentive for us to talk amongst ourselves about the media we consume. This conversation creates buzz and accelerates the circulation of media content. Consumption has become a collective process and that is what is meant by collective intelligence. None of us can know everything; each of us knows something; we can put the pieces together if we pool our resources and combine our skills…. Collective intelligence can be seen as an alternative source of media power. We are learning how to use that power through our day-to-day interactions within convergence culture.

Right now, we are mostly using collective power through our recreational life, but it has implications at all levels of our culture. Jenkins book explains the cultural shift that is occurring as consumers fight for control across disparate channels, changing the way we do business, elect our leaders, and educate our children.

To quote Victor Hugo, “You can resist an invading army, but you cannot resist an idea whose time has come.”


The medium of social networking accelerates human interaction across all divides and faster than any time in the history of mankind. These interactions are creating exchanges of thoughts, ideas and emotions. One can expect that this acceleration of exchanges will introduce new dynamics of creativity, connectivity and possibilities never before anticipated, experienced or expected.

The Relationship Economy taps into the collective ability of the human thought, emotion and spirit. These three elements of human possibility leveraged by the medium of social networking technology makes everything previously envisioned as impossible possible. The Relationship Economy provides a pathway to abundance with no boundaries, no limits and beyond today’s comprehension and definition of any other form in the history of our existence. A new era has been born, the human network and it enables individuals to maximize thoughts, emotions and the human spirit to a universe of possibilities.

Jay Deragon
The Relationship Economy

Why isn’t Wall Street in jail? Thirty-two months after the ceiling caved in on the global financial industry, triggering the worst economic crisis since the Great Depression, criminal charges have not been brought against a single financier or institution culpable in capitalism’s biggest failure since the 1930s.
Martha Stewart went to jail for obstruction of justice connected with a $45,673 (U.s.) stock sale.
Newspaper magnate Conrad Black was incarcerated for looting his firm of $6 million.Lindsay Lohan was imprisoned for violating parole on a DUI conviction.Yet not one of the Wall Street perps in the most severe economic crisis in thememory of most people alive today has been led away in an orange jumpsuitThe avarice and disregard for risk that knew no bounds among Wall Street’s top managers will cause the U.S. banking system to lose a forecast $744 billion before the crisis ends.’ Taxpayers were forced to spend $700 billion to inject capital into failing banks to prevent a total collapse of the system, and the onset of a second Great Depression, with unemployment of 25 per cent to 30 per cent compared with the current, painful enough 91 per cent million Americans and 400,000 Canadians lost their jobs in the Great Recession. An estimated 50 million American homeowners have been foreclosed upon or are cllnging to houses that continue to plummet in price, far below their mortgage value. The US. national debt has swollen by $3 trillion to stabilize the US. economy.

Shouldn’t someone go to jail for that?

After all, the last wave of white collar crime ended with prison sentences for the highest-ranking executives at Enron Corp., WorldCom Inc., Tyco International Inc” and Adelphia Communications Inc., and other miscreants.To argue, as a few brave experts have done recently, that the rampant greed and ineptitude that caused a record US. housing bubble was not criminal behaviour is to invite retorts like this one from Barry Ritholtz, the leading US. independent economics blogger:

“By that logic, O.J. didn’t kill Nicole Simpson and Ronald Goldman” Ritholtz says.

But those brave souls deserve a hearing. Their argument is persua¬sive. The crisis, financial author Roger Lowenstein wrote recently in a controversial Bloomberg Businessweek story, was caused “by a speculative bubble in mortgages, in which bankers, (mortgage) applicants, investors, and regulators were all blind to risk”And weak regulation, to my mind the leading culprit, was “a product of the discredited but entrenched thesis that markets are efficient and self-policing.”

Ifs true that in periods of irrational exuberance, financiers always have become dangerously sanguine about risk, and intensified their search for regulatory loopholes to exploit. None of which is illegal.

“One of the most galling aspects of the financial crisis is that so much of the behaviour that precipitated it was explicitly legal:’ writes Salon financial analyst Andrew Leonard (Leonard’s emphasis.) “The crooks rigged the system so that they weren’t, technically speaking, crooks!’

As to regulations and the public guardians entrusted with enforcing them, “For decades, both Republican and Democratic administrations steered financial sector policy in a deregulatory direction that all but guaranteed an eventual crash!’

In Canada’s most recent real estate bubble, which burst in the early1990s, Ottawa told Canadian lenders to rein in their lending before a growing problem with loan losses could escalate into a crisis requiring a government bailout of Bay Street.

Conversely, a US. regulatory apparatus in thrall to the “discredited” thesis that markets self-correct did not act until a crisis was underway. The US. Federal Reserve Board, the US. Securities and Exchange Commission and other supposed watchdogs read too little into warning signs of an unsustainable housing boom that were evident as early as the mid-2000s.

Armchair prosecutors who’ve lost jobs and homes or know friends and family members in dire straits are outraged at the absence of criminal charges and the banks’ use of bailout funds to pay executive bonuses and dividends while refusing to lend to job-creating enterprises.

But it must be said that putting Bernie Ebbers and Jeff Skilling behind bars didn’t prevent a far more devastating outbreak of corporate malfeasance that began in the early 2000s, just as the last bunch of corporate malefactors was being sentenced So much for the deterrent value of jail time.

What’s required, as in the aftemath of the Crash of1929, are sweeping reforms.

The dangerous US. banking debt -to-capital ratio of 30 to 1 needs be brought in line with Canada’s 18 to 1 ratio, providing a sufficient cushion for loan losses.

America needs to scrap mortgage-interest tax deductibility, a $100-billion annual middle-class tax break that spurs US. overco sumption of housing. That alon would cut the US. deficit by 7 cent a year.

The divorce of traditional commercial banking from riskier investment banking imposed by FDR in response to the Crash 1929 was followed by generati, of financial-markets stability. 1999 revocation of that law soon followed by the unp ed US. housing bubble, in which the new Wall Street “megabanks” packaged subprime, or junk. mortgages into “securitized” then sold for fat upfront fees to other banks, pension funds and university endowments worldwide.

That separation needs to be reimposed, with investment bank clients deprived of the safety net of federal deposit insurance.

Lavish Wall Street pay should be tied to prudent capital ratios to discourage high-risk behaviour. And outlandish compensation should be clawed back if profits plunge within five years of it being paid, as an incentive for careful long-term stewardship over fast buck speculation.

Finally, US. prosecutors need to redouble their efforts. US. prosecutions of corporate, securities and bank fraud actually fell last year to 39 per cent below the 2003 level.

David Olive
Toronto Star

06 11 2011


‘Knowledge transfer’ at risk as owners set to retire by 2020

Half of Canadian businesses in a recent survey do not have a succession plan, a growing problem in aging boardrooms, says the Canadian Institute of Chartered Business Valuators.

“Business owners and leaders are pulling up stakes in a Boomer-led
management exodus over the next decade,” the report says. “As many as 50% of Canada’s businesses may not be ready to cope with this massive change and associated loss of experience.”

As well, as many as 70% of business owners will be set to retire before 2020, the report says.

The CICBV surveyed more than 200 Canadian executives and business leaders over a period of several months.

“We found a lot of entrepreneurs had succession and exit plans:

Whether those would work or not was another thing,” the report says .

Recently, Tim Hortons Inc., had to payout $6.1-million in severance and consulting salary to former chief executive Don Schroeder, after the two parties tussled over a succession plan.

Mr. Schroeder abruptly left the coffee and doughnut maker at the end of May, only weeks after presiding over the company’s annual general meeting.

Part of the problem for many aging executives is that the 2008 financial crisis and resulting recession came just as they were winding down their careers, ready to shuffle off to pasture with their legacies secure.

“That puts plans on hold. They are being forced to rebuild in a business climate they may not understand, against competitors they may never see coming;’ the CICBV report says.

A chief execiltive in consumer services lamented that four of their most senior staff in one department were all over 60.

“It’s about knowledge transfer. I’m afraid to death of losing the legacy of the organization through this;’ the chief executive said.

And one chief executive of an energy company complained that many private and family businesses have gotten “spooked” and may sell before they are ready.

“They thought their cash cow would go forever – now it’s a drag on them as they try to carry on in a difficult world and even the good ones are saying: ‘I can’t take much more of this. I’d rather sell.’ ”

Eric Lam
Financial Post
June 10, 2011 



Here are some views.

An advisor posed his concerns.

A reply follows.


“Well, this is a problem that has puzzled many of us over the years and as the aging group of sales folks keeps getting older the question becomes more difficult for many of us to answer.

From my point of view I guess the mistake we may make is over estimating the value that we place on our business OR the fact that the person looking to take us out doesn’t appreciate the value of what they are getting.

I hear the numbers of 1, 2 or 3 times renewals or trailers talked about a lot and for that kind of money I almost feel I would rather let the business run off the books then give it away.

Assume I would be making $100K a year. If I would get the maximum amount of 3X that is 300K, all of which may be taxable in the year I receive it. Of course, there may be some ways to minimize that such as having a corporation receive the money but I am no tax lawyer or account so I would leave that to them. To me I am just not seeing the value in that proposition and that is why I am suggesting that it might be more financially rewarding to just let the business run off the books.

Perhaps nobody would admit they might do that but it is something I think a lot of us think about.

Of course, assuming we are insurable we could get some associates to take some life insurance out on us for far more than that and when we die, the reward would be paid out. But who might want to wait for that day. My mother will be 101 this year. Will my wife have to wait that long to receive the money? I am sure she hopes not:)!!!!

In any event, I would also be happy for some advice.

Even some of my clients who have been with me for over 30 years as asking when I am planning to pack it in, but as in my father’s case; he died with his boots on. He worked despite his illness until a month before he passed away.

If he can do it, why can’t I?

Looking forward to some interesting chat around this subject.”

Here is one advisor’s views. 
“Thank you for your very thoughtfully presented views which I share.

Here are 2 of my own for your consideration.

Firstly, how do you invite a young life insurance agent/advisor into a business for 30 – 40 years that cannot be sold for more than 1 to 3 times revenue. It takes $2,000,000 to generate $1,000,000 of income – $300,000 is absurd.

Secondly, our business is premised on trust relationships. Your longtime clients have a very personal bond with you. That bond is not simply transferable to a new successor at any price. It must be earned – over time.

In our family a young family member was groomed for succession over a 34 year period.

Our responsibility in our financial advisory role with our clients is fiduciary in nature – in my opinion.

The regulatory bodies in Canada and the US are moving in that direction.

The disconnect is that we are in a highly transactional industry controlled by ‘manufacturers’ of products. That applies to the entire spectrum of financial services – not simply the life sector.

The Enrons, Wall Street and others have highlighted the urgency of Raising The Bar from commodity sales to professional practice.

It will take time for this cultural shift to mature.

In our family’s case the senior member of our family died with his ‘boots on’ at age 92.

I have never seen this business model as professionally effective.

I hope these thoughts and views are helpful”.

Dan Zwicker