My father taught first year business economics, among other things.  As a result I was exposed to some great explanations about the economy as a young boy.

It was not until I was much older that I really appreciated my dad’s simple grounded explanations of what can be quite complex topics.  They set a foundation which has served me well through my adult years.

Among other things, I learned why stealing a ten cent chocolate bar from the local drug store hurt the economy.  Understanding the economic basis of theft, not just the moral imperative is quite a powerful lesson.   More on this in a future post but today I am going to focus on and my personal favorite, “The shoemaker’s story”

What is it?

The basic principle behind economic cycles can be easily understood through the shoemakers story.

The shoemaker made a variety of shoes in his factory.  Over time, with consideration to the quality, workmanship and styling of his shoes, people with money to spend and desire to buy sales increase.   As the demand goes up the shoe maker hires more workers for his factory and pays them from the increasing revenue of his ongoing shoe sales.  In turn the new employees  now have more money to spend so among other things they buy more shoes.  As they buy more shoes the shoemaker hires more workers as his sales continue to climb and in turn the new workers buy more shoes and so on.  During this period prices often rise with the increased demand. More people are employed making shoes, so more people can afford to buy more shoes.   This is the inflationary upward cycle.

Now unfortunately our shoemaker (paying close attention to trends) has most of his stock in red shoes.  This is unfortunate because the government is changing and the new ruler hates the color red.  Sales drop.  So our friend the shoemaker has no choice and lays off a worker.  This worker is now buying less shoes, so shoes sales continues to drop, and the shoemakers lays off more workers who in turn buy less shoes and so on.  This is the downward cycle, typically a recession.

What’s the point?

This is somewhat of a simplification of how modern economies rise and fall, and certainly there are many factors influencing the rise and and fall of the economic cycles (far beyond a liking for red shoes or not).   However, my dad’s simple tale of the shoemaker does set a context and helps to understand the basic principles and logic behind our national economic cycles.

These ideas can be used as building blocks to other concepts (which I will explore in future posts) like government management of the economy (probably an oxymoron at best) or why and how of inflation/ deflation, supply and demand influences and other cool topics.

In the early 1970’s I worked for Canadian Pacific Ltd.  This was a monolithic company that started as a private Canadian railroad company and then branched out into shipping (freighters), trucking, hotels, forestry products, air transport, mining and probably a few others.  Today all the pieces have been sold to various other companies and the railroad is all that remains.   In the 1970’s though they were a very large and successful conglomerate.  This of course is before it became popular for Corporations to go “back to their roots”

The Background

My job was a porter on the passenger train that went from Vancouver to Montreal every day.  That is one train left Vancouver and one left Montreal every day.  It took the train about 6 days to cross the country.  I traveled from  Vancouver to Winnipeg and back, a two and a half day journey each way.  The work schedule was 6 days on (3 out and 3 back, with an overnight in Winnipeg) and then 4 days off.  We were paid for 20 hours days (hey your porter is almost always on duty) so it was not bad money wise.

I don’t recall how many times I did the round trip but more than 10 for sure.  It’s a funny thing how hindsight works.  I was traveling frequently relaxing long trips through what could arguably be classified as some of the most beautiful natural scenery in the world.  Had I understood then what I know now,  I would have appreciated it much more, much more than viewing it just as a high paying job (I might have paid them).

The Story

From those years, a few stories stand out in my mind and over time I will probably share more of those but today’s interesting story is how a conglomerate like CP could stretch their muscles in those days.

On our way into Calgary news arrived of a derail in the Rockies east of Banff.   Our train was not going through.  CP brought buses (from the companies bus line) to the train station in Calgary and bused us to the Calgary airport where we took a CP Air jet to Kamloops (porters and passengers).  We were bused (via CP’s busline) to the Kamloops train station.  The porter crew and the passengers going west of Kamloops picked up the westbound train there, those whose original destination had been between Banff and Kamloops got the east bound train.   Hey if you can do it why not.

Progress

Of course today, all has changed.  Via rail runs the passenger train from Vancouver to Montreal (via Jasper not Banff) and it is not daily (evry 2nd day in the summer though) and a private company called the Rocky Mountaineer  runs a train from Vancouver to Calgary (as a tourist experience).   There is no cross country passenger train on the CP tracks any more (a pity).

There are other private train companies taking advantage of the rails in the Rockies, for example one that runs a half day train from Jasper to Dunster through the Yellow Head pass (and then buses you back) on the Jasper to Prince George part of the CN line.

I once attended a town hall at the Bank of Montreal hosted by the CEO at the time, Tony Comper.

The gist of the presentation was how to reconcile what appeared on the surface to be competing Corporate priorities – grow revenue/ reduce expenses.  I mean you have to spend money to make money after all.

The point Mr Comper focused on was the need to focus on the holistic result (the ultimate goal).  In this case improved profitability.    If you have greater revenue produced at a lower cost it does not take a rocket scientist to determine profit will increase.

The real question here is finding the balance between increasing revenue and reducing cost such that as you succeed at one objective, it  feeds and supports the achievement of the other.  If this works both ways think of the momentum created.

Today’s musing is not about business success, the BMO example is just to frame the concept, which is in fact generic and can apply to any objective whether personal or business.

Like my blog of a few days ago on the art of war, this one on “balance your way to success” is just about ideas that can make your life easier and better.

What is it?

Balance as  a behavioral concept is not about compromise.  Nor is it “I can live with that”.   To successfully use this technique you must think in terms of “win/win”  (I can’t take credit for that concept by the way as it is firmly embedded in the Harvard Technique for Negotiation).

The key to this practice is to be clear on the goal.  In fact “focus on the goal”  Which of course means you have to have a very clear understanding of what it is.

Next determine what the objectives are to achieve the goals.

And finally optimize how the objectives are achieved so they complement each other (win/win), in essence the success of one feeds off the success of the other.  The process will naturally result in balanced objectives.

How about an example?

In this example the goal is to be more relaxed.

One objective is to achieve greater success at your employment; to receive more praise, feel less stress; be confident and comfortable in your long term prospects.

Another objective is to work less, shorter hours, experience more free time and not think about or focus on stressful things (veg out!)

On the surface these are competing objectives.  In fact working  working more efficiently with a greater focus and higher quality should lead to shorter hours and less thinking about work in down time.  Don’t think of the way to  achieve the first objective as working harder (longer) but rather use the time allocated to your employers wishes more effectively.  If you do this praise and success will come your and more free time too.

What’s my point?

This is pretty simple.  Think about what the goal is and what are the associated objectives to best achieve it before leaping in to solve for goal success.  Think it through.  To use a tired but accurate old phrase when it comes to achieving your goals work smarter not harder.  Think about it!