The Blog is Moving

I would like to announce that my blog is moving to the ForeRunner Corporation website. Please go to:

forerunnercorp.com

Just click on the Blog button to read the latest. I want to thank all of you reading this for your loyalty and your kind words. I hope that the new format and location allow for an even better experience.

Again, thank you.

Bill Groskopf

Dead Cat Bounce

There is a lot of cautiously good news for the energy business these days. The market is up, strongly so. While there remains plenty of bad economic news, like tulips in the spring, there are now occasional bits of good news on the economy. The price of oil, that bellweather of our industry, is over $ 60 a barrel. The tsunami like shock wave of bad news has swept over us the past 6 months, crushing everything before it. But like a shock wave, it is now past and we raise our heads out of our cellars and look around. Mirabile dictu - new projects are beginning. Today, it is easy to believe in spring.

But the question that haunts us all - Is this spring or is it Indian Summer? To use the language of the trading floor - Is this the beginning of a new bull market or is it a Dead Cat Bounce? The market uses the phrase "Dead Cat Bounce" to describe a market rally in a falling market. Metaphorically, it works off the fact that even though a cat is dead and has no life, it will still go up (bounce) somewhat if dropped far enough.

While I believe it a gruesome image, I do like the phrase. It has that combination of dissonance and vaguely scandalous thought that I strive for in my daily life. And it speaks so well to our current dilemma. Are we seeing the beginning of new and vigorous growth, or are we watching a dead cat that has fallen several hundred feet? No one knows the answer until well into the future, at which point it only allows us the pleasure of saying, "I told you so."

In the here and now however, decisions need to be made. Decisions that must be made in the fog. Decisions that can be ridiculed at some future date by those who know the outcome. The decisions that are made will affect peoples' lives. Across the country, people are struggling with this decision. Should I buy a new car, or should I keep the old one? Should we buy that bigger house our growing family needs, or do we make do for awhile yet. Do I commit our company's resources to a new capital project, or do I save my cash to buy my competitor's facilities out of bankruptcy? Our futures are being shaped by these decisions.

Notes from Dubai

I am sitting in a hotel room looking out at the tallest building in the world. It soars upward, a spare spear thrust into the sky. But it shares the window with many other skyscrapers equally picturesque. But it is the sheer number of cranes and the hazy sky that really dominate the scene. This is Dubai, crossroads of the United Arab Emirites.

Change is the key word in this part of the world. On the way from the airport to my hotel, my cab driver took the wrong turn, momentarily lost, because the road had changed since he last drove to this part of town. It seems that every road and every building is under construction.

I have come to participate in the vast surge of resources being drawn to this particular corner of the world. The strong gravitational force powered by capital spending pulls us all into its orbit. The concourse of the hotel and business meetings are a kaleidoscope of peoples and cultures. In a meeting yesterday, I met a young woman engineer from Russia. Her look was so definitively Russian, that I could imagine her as the model for one of those "Soviet Worker" posters so popular among the International Left in the 1930's. Working at the desk next to her was another young woman, veiled, in the garb of traditional muslims of the desert. I was driven back to my hotel by a young sales engineer from India. From the cynical tenor of his conversation, he must be an avid fan of the local equivalent of "Talk Radio". They all worked for an entrepreneur from Lebanon whose manic focus on business echoed the many hustling startups in our own country that have made our economy so vibrant.

The impact to the newcomer is strong. Walking into the air terminal, the sheer power of the extravaganza overpowers you. Grasping for a metaphor, it comes to me; Las Vegas on steriods. The architecture of the skyscrapers is not the sober economics driven square boxes that we have come to know in the West, but the arresting curves and cantilevers of imaginative architects given the freedom from economics to bring their fantasies to life.

And yet the next day allows one a more measured reflection. Standing in my window, I can count 31 construction cranes. If I could see in other directions, I would count equal numbers in those directions as well. Yet nearly all of them are strangely unmoving. While traffic is busy, there are no trucks to be seen. And while there are the blue coveralls of construction workers visible, their numbers are few. It appears that the real estate bubble may not be restricted to Phoenix and Las Vegas.

But the iron and steel of the energy business is outside the financial districts of Dubai. Though slower than before, the energy infrastructure of the Gulf continues to build. Even more than Houston, this is the energy center of our universe. Can we compete here? Can we play with the "big boys"? Conversations with numerous customers in the area give evidence of the opportunity. The same organizational strengths, coupled with a self effacing approach to client relations, that have allowed us to prosper in the domestic market will play well here.

And so as I return to Denver, I am struck by the opportunity here. But I am also sobered by the reality of the world outside our borders.

Value

We are a service company that provides an ill defined service. Its hard for us to even tell people what we do. Are we an engineering company or a project management company? Are we responsible for the engineering within a project or the execution of that project? Are we the Owner's consultant or his sub contractor? Are we responsible for our part of the scope or are we responsible for the scope? The answers to those questions have a big impact on us, but the answers are slippery. The answer, of course, is that we are what our Client wants us to be at any particular point in the project. And if what our client wants us to be conflicts with what the contract and payment terms negotiated by the client's purchasing group require us to be, we can only hope that the project turns out well.

But back to the question, what is our value? As a service company, that is an important question. It is the most important question; driving as it does, everything that we do. Yet again the question, what is our value? If we can't define our service, we may face some difficulty in measuring its value. We are left with the realization that our value is in the eye of the purchaser, i.e. our clients that own and operate the projects that we work on. And what is it that our purchaser sees? How does the purchaser of our services decide with whom to do business? How does he value our service? How do we compete for his business?

Those who purchase our services are virtually all engineers. They are people who deal in numbers and facts. A case for value, solidly built on numbers and facts is what engineers want to see when faced with purchasing decisions. So when an engineer from an engineering services company sells engineering services to an engineer (how much wood could a woodchuck chuck . . . .)!! What is the sales conversation? What data does an engineer use to prove to another engineer that his particular engineering services company is superior his competitors?

The sales conversation with the purchaser must be meaningful to the purchaser. What is meaningful to the purchaser? The answer always boils down to the Four Horsemen, i.e. Time, Money, Performance and Quality. Any engineer worth his salt should be able to measure time, money and performance in his sleep. Quality may present a greater challenge, but there are many standards from the API, AGA, ASTM, etal. that control quality. It might take more work, but "quality" can be measured by a determined engineer.

Since Time, Money, Performance and Quality can be measured, the naive observer would expect engineering service providers to have reams of data on their performance relative to those criteria. The naive observer would be correct if that data was an important criteria in making purchasing decisions. Since the data does not exist, the more world wise observer would deduce that data is not an important criteria in making purchasing decisions.

But logic cries out that engineers always use data to make purchasing decisions. What is wrong with the engineers that buy our services? Have they been seduced by the Dark Side of the Force, i.e. business development? They say and we believe that they buy based on hard numbers. Yet our sales literature is full of pictures and abbreviated resumes called bios, with numbers few and far between. Either we are fools or pictures are in fact something that influences our client's purchasing decisions. Neither answer is comfortable to either party in the transaction.

In the darker marches of the night, my mind conjures images of a Beauty Contest. We have replaced the Talent Competition with our resumes. Instead of the Swimsuit Competition, we parade pictures of our projects. And yet, what are we to do? For in truth, there are no numbers.

Pity the poor client. He has no reliable way to estimate what a project will cost until the engineering is done. How can he measure Money or Time? Engineering Services must be purchased and used before either Time or Money can be defined, let along measured.

Where is he to get historical numbers to base his decisions on? He can only get them from his suppliers, i.e. us, or he can use internally generated numbers. Yet both sources resemble fun house mirrors at the county fair. Our numbers are suspect for a number of reasons. One of the most important is that like Garrison Keilor's community of Lake Woebegon, the projects that we do as engineering companies are all above average. We tend not to talk about our problem children.

Even more to the point, we, both ourselves and our clients, suffer from a lack of numbers. It seems that client organizations operate on a "need to know" basis. Obviously engineering contractors are not in the "need to know" category, with the result that we hardly ever know how much it cost to build one of the projects we design. Even when we construction manage, procure and do the cost tracking for a given project, deference to the sensitivities of the construction contractor, as well as internal client stakeholders, require that much cost data is unseen by us. The common tendency to add operational costs into the capital accounts; or conversely, supplement the project budget from other accounts further clouds any project cost accounting or tracking.

As a result, both our clients and ourselves are without the historical project cost information that would allow for any kind of performance tracking or ranking. Thus, we dress up in our pictures of past projects and flash our resumes.

Buffoons or High Priests?

Well it happened last Friday. Our EPA declared that CO2 is a "dangerous pollutant". While it came as no surprise, given the political and cultural tenor of the times, it still came as a shock when announced. Something like watching a train going off the tracks; at some point it becomes inevitable and you know that it will happen, but when the crash finally comes it still stuns you.

How did we come to this? The enormity of this decision confounds the senses. Not only was CO2 declared a dangerous pollutant, but so was methane (as well as nitrous oxide and various fluorocarbons). Taken to its logical conclusion, this gives the EPA the legal authority to regulate every aspect of our lives. It not only gives the legal authority; but, in fact, mandates that it be done. It is the law and is taken seriously. Carbon dioxide (CO2) is everywhere, in enormous quantities. It is essential to life and part of everything that we do. While the action is regarded as a means to chastise the energy industry, it will be a case study for future generations on the Law of Unintended Consequences.

But to ask the question again, how did we come to this? Is our whole culture on drugs? I suspect that most of our senior policy makers were at Woodstock, but this action gives evidence that they never left. There is an Alice in Wonderland quality to this whole thing that reeks of mind altering substances. Either that or we have turned over our future to the Three Stooges.

We voted for "Change". And we got change. But what is the change that we are getting? Who is making the decisions? What is the basis of the decisions that are being made? Make no mistake. Once made these decisions will be with us for the rest of our lives and our children's lives, for good or ill. The changes themselves are so bizarre that one is left with only two choices.

If people take actions that are counter to all common sense, facts and cultural norms, our first thought is that they are in fact buffoons. US energy and environmental policy is now being made by the Three Stooges. Imagine for a moment if you will, Carol Browner as Mae West and Ken Salazar as W.C. Fields. Perhaps our Governor, Bill Ritter, might be thought of as the Masked Bandit. Then watch their last movie together, "My Little Chickadee". At least it will provide a humorous counterpoint our current situation. As funny as it is, I do not think that those driving policy today to be buffoons. They are smart and dedicated people, with a record of accomplishment that gives the lie to that pleasant fantasy.

Instead, we are left with the other option. A much more dangerous and potent possibility. That is that they are people of faith. They are true believers. People of faith see the world differently than does the common man. Their faith gives them power. Whereas a simple policy maker might be persuaded to see reason if given a luxurious suite at the Super Bowl, a person of faith sees only utopia and takes delight in scourging the weak one who might be tempted by that suite. They are blind to the simple pleasures and failings of the rest of us. People of faith have been called to make this a better world, and if it takes suffering to make it a better world, so much the better. More importantly, they are indifferent to our suffering. It seems to be a truism that people of faith often love the masses, but have no sympathy for the individual.

We are now called to worship Mother Earth, sometimes known as Mother Nature. We tend to think of her as a kind and nurturing soul, in contrast to the harsh patriarchal God of Abraham. But a wise man (Tennyson) who came before us described her true nature "Nature, red in tooth and claw". But we will learn and our priests will see that we are made to suffer, in order that we are worthy of paradise.

An earlier generation, one more familiar with societies that tried to create paradise here on earth, had a saying about the environmental movement. They said that "the green tree had red roots". They were engaged in a great struggle lasting across generations with totalitarian movements. They recognized that the environmentalists shared a history and a world view with those who had created paradise in Russia, in China, in Cuba.

Cold Harbor

As I shared some time back, our conference rooms at ForeRunner are named after historical events. I chose the names to remind me of what I felt to be important lessons. Leadership of a company, or any other group of people, is a daunting task. Since there are so many opportunities to lose one's self in the fog, I felt it necessary to remind myself of certain basic themes I felt important if I was to become the manager I wanted to be. One of those ways was to name our conference rooms as reminders of what I needed to remember.

And so we have a conference room named Cold Harbor. I admit one of the reasons for the selection is simply the name. The dissonance of the name appeals to that melancholy which is such a large part of me. But it was really the events that transpired there some 145 years ago that drew me to name it so.

Early June of 1864. US Grant, the future president of the United States has assumed supreme command of the Union Army and has been hammering Robert E. Lee's Army of Northern Virginia for a long month. Beginning at the Wilderness, and following at Spotsylvania, Yellow Tavern, North Anna and many more, the two armies have slammed into each other with a sustained fury. The Rebels, under Lee, have always been heavily outnumbered, usually by 2 or 3 to 1, but have consistently defeated Grant and his army. Grant is seeking to break through Lee's army to capture Richmond, the Confederate capital.

Grant's army has sustained heavy casualties. He has already lost nearly as many men as Lee had at the beginning of this campaign, yet the industrial might of the North continues to supply him with inexhaustible supplies of fresh men and equipment. Yet Lee and his men continue to defeat him again and again. The roads between the front and Washington DC are jammed with both ambulances hauling the wounded back and columns of fresh faced reinforcements coming down to be thrown into the meat grinder that is the front. The Northern newspapers are screaming in large headlines at the horrific losses of men and treasure. Now the maneuvering armies confront one another once more near a small town called Cold Harbor, directly north of Richmond. The Rebels get the first and dig in, throwing up walls of tree branches and earth walls.

For two days the Union Army probes the Rebel defensive line, learning just how strong this line is. In late afternoon of the second day, Grant orders a massive assault for the next morning. The men in the Union lines are no fools, even though they know this is to be a fool's errand. An atmosphere of doom pervades the Union ranks. Over the past two days they have tramped through fields containing long unburied bodies, now skeletons, dead soldiers from a battle fought here two years before, Gaines Mill. They have seen the impregnable defence lines they face.

That night, many of the Union soldiers write their names on slips of paper that they pin to the back of their uniform. This is so that they can be identified when their bodies are carried from the battlefield the next day. In fact this is the origin of the dog tags our soldiers wear today. And so the next morning, they obey their orders and move forward in their long lines. Unbelieving rebels behind their walls watch the foolish advance. The guns fire and it is soon over. Union soldiers in their thousands lie dead and wounded before the walls of the Rebel line. In a final insult, for two days Grant refuses to request a truce so that he can pick up his dead and wounded, as he does not want to admit that he has again lost the battle. The wounded moan and cry for water, often dying on the ground between the two lines during the two day wait. The dead do what comes naturally in the summer heat, contributing to the horror of the scene.

Accepting the gift of leadership entails responsibility. The decisions that managers and leaders make have consequences. But the immediate consequences of those decisions are often escaped by those that make them. As the organization becomes larger and more impersonal, this becomes more and more the case. Whereas US Grant became President of the United States, with his portrait on the $ 50 bill. It was Private John Doe who felt the fear of the march into flashing guns and the pain when that metal tore his body apart.

While it may not seem fair, it is the way of the world. Some must lead and some must follow, if we are all to prosper. Yet it behooves those who lead to respect and care for those who follow. We who lead are ever in danger of belief in our press clippings. We are ever in danger of being captured by our emotions. Leadership has consequences. If we want to be good leaders; even more importantly, if we want to be decent people, we will remember that.

An Arrogant Crow

My wife and I spent her Spring Break in Southern California. I admit I am fond of California. I wouldn't want to live there, but it is a great place to visit. Its a bit like going to the Kingdom of Oz, even though it bears more resemblance to Girls Gone Wild than Judy Garland. But it is a land that lives in the midst of fantasy; but when we look behind the curtains we don't see the kindly old Wizard, but instead the Terminator.

My wife likes to take walks and I like to be with her, so I tag along. One morning we came upon a large well fed crow drinking from a puddle alongside the sidewalk. As we walked closer and then passed this bird, it showed absolutely no fear and gave us no more than an irritable stare. Much to my wife's annoyance, I passed into silence as I pondered what I had just seen.

How far we have come. Wild creatures, once known as vermin, that show no fear of man. Crows, prairie dogs, coyotes, et al. once feared us, and with good reason. We earned our reputation that Darwinist's of an earlier generation gave us, i.e. Killer Apes. But that was before Walt Disney taught us that rodents are just like us, only cuter. And then we discovered that we are hurting Mother Earth. All 6,000,000,000,000,000,000,000 tons of her are in danger and needs saving. As I said, we have come a long way baby.

But the fact is that earlier generation named us well. We are Killer Apes. We did not build our present civilization by being nice guys. It is no accident that wild animals no longer carry off our children for an easy meal or that rodents do not carry culture destroying plagues. Of course, we have changed and aren't like that anymore.

Ok, so what is the point? The point is that the environmental movement in the United States is probably coming to a reckoning in the next few years. The charming vision we now have of Mother Earth has joined apple pie, the flag, school teachers and emergency responders as icons we all love and respect in our culture. Yet since the beginnings of Western Civilization some 3,000 years ago, we have battled nature. We have seen nature as something to be battled or used, an opponent to test our mettle against.

So far, the environmental movement has not caused Joe the Plumber any pain. But now we are at the tipping point. Carbon control legislation offers enormous costs with no gain. Saving Mother Earth is now going to cost, its going to cost a lot. A fuzzy dreamy consciousness lies at the heart of modern environmental consciousness. We believe it because it makes us feel good about ourselves, and it doesn't cost anything. We get to have our cake and eat it too.

That is probably going to change. Western Civilization has always been about bigger, better, faster, cheaper. We will be pragmatic, we always have been. But we are also pretty ruthless when it comes to improving our standard of living. Maybe that crow will show a little respect next time we meet.

Developers and Other Clients

We work for quite a number of different clients, but their projects are to a degree, very similar. We do projects of that type because we have experience and expertise in doing them. They are familiar to us. Because of that similarity, we tend to look at all of our clients as being similar as well. It is a simple thing, but perhaps not a wise thing, for us to make that assumption. Our unconscious thinking being that if the projects are similar, the clients must be similar.

It is a simple assumption, and under most circumstances, does not create problems. Similar facilities require similar engineering, after all. The degree of detail and documentation may be different, but a certain body of engineering work is necessary to allow the facility to be built. And so we persist in our naive perception of our clients.

But in fact our clients are very different. To the extent that we recognize differences, we personalize them. Both they and we are human beings, with the likes, dislikes, biases and prejudices that are common to that condition. As a result, we easily see differentiation among our clients based on their differences as people, rather than on their differences as organizations. But there are profound differences among our clients based on the type of organization that they represent. Too often we are blind or indifferent to those differences. And those differences can have a material affect, on our business, as well as on our ability to successfully execute projects.

The type of projects that we do require substantial financial commitments on the part of the client. As a result of this simple fact, our clients tend to be large publicly owned corporations. Those corporations usually have mature organizations with well developed procedures and protocols for handling the complex financial, legal and organizational issues involved in building, and more importantly operating, complex and costly facilities. To an extent, we are not even explicitly aware that these procedures and protocols exist. It is simply the environment that exists in which we do projects. It is like asking the fish about the water, and having the fish answer, "What water?"

But there are other types of client out there, and for which we work. One of these other types is what I call, the developer. Developer organizations are often just a few individuals, sometimes a single individual. Their business plan usually revolves around recognizing a business opportunity, determining the facility necessary to capture that opportunity, raising the money to build the facility and then building it. Once built and operating, it is sold to a larger organization, with the developer on to the next opportunity.

Since it is our desire to be a successful business, as well as a successful project driven engineering company, we must take into account the different imperatives that drive the developer client organization as opposed to the large corporate client organization. The first step is to recognize that we provide a different value to the developer than we do to the corporate client.

In the case of the corporate client, we provide the spectrum of resources necessary to accomplish the desired result. The mature organization of the client knows what it wants to do, how to do it and the constraints within which it will be done. That client simply needs some organization to provide those resources in an efficient and cost effective manner. The developer organization is looking for something different. They are looking for the knowledge of what needs to be done. Crudely put, the corporate client is looking for muscle, while the developer is looking for brains.

But here is the trap for us as a business. The scale of work done by the corporate client, as well as the dynamics of that organization, require that large and sophisticated outside organizations actually accomplish the work necessary to execute the project. Not only must the project be built and put into revenue generating service, but the client organization itself has a commitment to operating that project facility into the future. The operation of that asset and similar assets creates potential liability with many stakeholders. Thus the need to proceed on projects in an orderly and measured manner according to the procedures and protocols of the corporation. Thus an organization like ForeRunner employs people engaged in executing those projects for their clients in the manner expected by those clients.

In contrast, the need of a developer is for the basic design and to just get it done. Often the need for that basic design is driven by the financial organization providing funds to the developer. Professionally done high level drawings are as much a part of the business plan presented to potential financial partners as is the pro forma. Once a workable design is in place, many developers will become a DIY (Do It Yourself). Given that the goal of the developer organization is to create an asset that can then be sold, project execution is driven by expediency and short term considerations.

An interesting metaphor for the difference between developer client and corporate client might be that of auto racing. Working for the corporate client might be viewed as being in a car rally. Performance is measured by hitting all the milestones at the correct speed and time. Working for a developer client might be viewed as a drag race. Getting from start to finish is the sole criterion. The car may well be throwing parts all over the track and on fire, but crossing the finish line in the shortest time is the only thing that counts.

Thus working for developers can be a difficult game for engineering companies. Engineering companies often give away their ideas, or sell them cheaply. The idea being that they will capture the client with their ideas, but will then be able to sell the manhours necessary to execute the ideas. This strategy is a real loser for the engineering company in working with a developer. The developer is looking for the ideas, and if they can get them for free, so much the better.

Peggy Noonan and Kaitlyn Marie

I must tell you about a major change in my life and, as it happens, the subject of this post. My oldest daughter, Suzanne, has made me a grandpa. There is a new girl in my life. Her name is Kaitlyn Marie and her picture is alongside. As I am sure you will agree, she is beautiful. And as you can also see, she has a sparkling personality. 

We haven't been formally introduced, but I have fallen in love from afar. When we do meet, I know that she will immediately bewitch me. I have always been a sucker for pretty girls with flair. Just ask my wife and daughters.

Though I am new to it, I suspect that being a first time grandpa is different than being a first time dad. Having been a dad, I remember it as being very immediate. It comes like an avalanche and leaves you gasping for air. One day you are a carefree child in a man's body. The next you are an adult. The humdrum things of your life are suddenly changed beyond recognition. There is this little person that is totally dependent on you. What had been a drive to the grocery store in normal traffic and a simple suburban home yesterday, was now an environment full of danger. Drinking a few beers after work now seemed like very risky behavior in case something happened.

I am very new to the gig, but I think grandpa's have a different perspective than dad's do. I probably won't put the pacifier in boiling water when Kaitlyn drops it on the floor or the dog licks it, unless her mother is looking anyway. We did that for Kaitlyn's mom, Suzanne, who was our first. But as our family grew, we just couldn't keep that up. Which helped us learn that kids are pretty tolerant of dirt and germs.

But grandpa's worry too, just about different things. Which brings me to Peggy Noonan. Ms. Noonan, who was once Ronald Reagan's speechwriter, writes a column for the WSJ that I look forward to every week. She has a rare gift of putting into words what we, as a society, are feeling. At least those of us who are of a certain age and cultural sensibility. Last week she titled her column, "Remembering the Dawn of the Age of Abundance". Coming at the same time as Kaitlyn's birth, it affected me powerfully.  

Ms. Noonan is old enough, as am I, to remember when we didn't live in an Age of Prosperity. Back then, the nightly news carried pictures of burning US helicopters in the Iranian desert, Soviet tanks rolling unopposed through Afghani villages and lineups of blindfolded hostages in front of AK-47 wielding students. Inflation roared through our economy, we waited in lines a block long to fill up our cars with exorbitantly priced gasoline and our cities were crime infested warrens that had seen little new construction in decades. Our wise men told us that things would only get worse in the future because our culture was a failed one that would be replaced by cultures better able to cope with a world of declining resources.

Then things began changing. Slowly we dug our way out of the funk we were in. We started to believe in ourselves again. We worked, we invested, we dreamed. Once more our country became a beacon of freedom, a place where people came because they wanted a future for themselves. 

Our economy boomed because we were inventing things. We celebrated entrepreneurs like Bill Gates and Steve Jobs who were building exciting new industries. Our economy was growing in productivity by leaps and bounds. Inflation was stopped in its tracks, our cities got cleaner and safer, energy became cheap. The Soviets were chased out of Afghanistan, the Berlin Wall was pulled down and Francis Fukayama wrote an influential book about the end of history because Western Civilization had proven itself so superior that it could have no credible future competition.

But then we started to read our own press clippings. We started to live beyond our means. Yesterday's luxury item became today's necessity. We created the "aspirational consumer"; that is someone who was living beyond their means, but who hoped to someday be able to afford the lifestyle they were living today. I think we know in our gut that we will not return to that economy anytime soon. Our political class is busy enacting reforms eerily reminiscent of the late 1960's which led us into the economic horrors of the 1970's.

Kaitlyn will grow up in this future that we are now creating. Most of the news today is bad and there doesn't seem to be any bottom to the economy in sight. The danger level in the world is rising sharply as political opportunists realize that the world's policeman has gone home. Our government is out of new ideas and falling back on failed ideas from the past.

But like Ms. Noonan, I am optimistic about the future. The excess of the past years needed to come to an end. There is a lot of poison that needs to be drained from the system. We need to find our way again and will try many bad ideas until we are ready for good ideas. We will have foolish leaders until we again develop wise leaders. We will get back to basics. We will rediscover our greatness and Kaitlyn will grow up and live in a great country.

 

ForeRunner's Anniversary

Today, February 16th, is the thirteenth anniversary of ForeRunner. Like almost everything else in my life, it began with no plan or goal in mind. There was just the overpowering need to leave the now, the familiar, and just be free. Even now the memory of that wild rush of freedom that came with leaving my previous job has the power to intoxicate and enchant.

Viewed by a rational person, it was a stupid thing to do. I had a very good job with a very good organization. I had four kids, two in high school, one in junior high and a fourth in elementary school. In the coming fall, the oldest would begin college, with the thought of at least 12 years of college tuition payments following. The amazing fact was that my wife allowed me to quit. She gave up paychecks and health insurance. She much later admitted to how frightened she was. But she never let me know. So much for the myth that I have any sensitivity at all.

February 15 was the last day at my old job. February 16, a Friday, was the first day at ForeRunner. I had bought a new desk at Oak Express that was delivered to my new office that day. My new office was a 10’ by 14’, room with attached closet. But it had a window with a tree outside. While my old (bigger) office was on the 17th floor of a downtown building with multiple windows on an expansive view of the Front Range, I was very excited about this new place.

The next day, a Saturday, I built shelving for my new office out of 2x4s and plywood. It was a sight. The office building had a small landing outside its entrance. I can still remember plugging my saw in there, cutting the wood and using my DeWalt 12 volt battery screwdriver to put the pieces together. I am sure the other tenants’ in the building thought that Jedd Clampett had moved in when they saw what was going on. But they held their peace, at least that first day. It was an all day job, but Diane and the kids came over with McDonald’s for lunch. It was a great day.

Monday came and what I had done began to sink in. An office can be a lonely place. Time passes very slowly. It gives you time to think. After awhile you get tired of thinking. I used the phone to call people. I left a lot of messages. I learned a lot about receptionists and caller screening. I sent out mailers to the people I knew and the people I didn’t know. The silence was deafening.

A month passed. Then another month passed. Then four more months were gone. I had watched the leaves on that tree outside my office bud, leaf out and now in a few more weeks those leaves would be falling off. One day the phone rang and it was a client. They had a pipeline project in Texas and needed someone to help them. The downside was that I would have to work out of their office to do the job. I heard myself politely turning the job down and hanging up the phone.

For the next two weeks, I rehashed that conversation again and again. Against my taking the job was that I would have traded an executive position with a window office for a contract job in a cubicle was more than my pride could handle. Can you tell that I am status conscious? Also the job looked like it wouldn’t lead anywhere. On the other hand, our finances were in the toilet. As for going nowhere, how can you go anywhere when you don’t know where you want to go. More than once, I came within an inch of calling the client back. Calling him back and begging, if need be.

And then, miracle of miracles, the phone rang again. A large engineering company wanted to talk to me about specialized consulting on a large project they had. Actually, this sounded even worse. But it was “consulting” not “contract engineer”. Euphemisms were important. Also the thinking of the previous couple of weeks had brought home the depths of the financial hole we faced. So I went in and talked to them. If I am honest, I will say that I went eagerly.

On the Saturday over Labor Day Weekend, I sat down with three people I had never met before. They explained the project they wanted me to help them with; and amazingly, I realized it was the same project the client had talked about two weeks before. Yes, I would still have to sit in the client’s office. But my pride was beaten and I recognized that God was trying to get my attention. I accepted the humiliation of my fate.

The next few months were tough. Returning to a job level I thought left behind played on my mind. Yet those months were among the most important in my life. After doing projects as an engineering contractor for the entirety of my career, I now did a project from the perspective of an owner. It was truly an epiphany and forever changed my ideas about how projects should be done.

That project was where ForeRunner began. After a couple of months, the scale of work required more help. At a fateful lunch, Creg Hughes agreed to leave his budding career in financial services and join me. I met so many of the people, future clients, employees, competitors and friends, that were instrumental in the future of ForeRunner on that job.

From those humble beginnings, ForeRunner came to be. We have had our successes and our failures. But that first project created our foundation of respect, both for the needs of our clients and for our own people, as well as the vendors and contractors with which we work. Along with that respect, I came to understand humility, another foundation stone of our company. Humility is not something that comes easily, especially to engineers. Yet that was the genesis of the company, and being true to our beginnings requires us to remember from where we came.

CEO's - The Genie of Accountability

It won't go away, nor should it. Tens of billions of dollars were given in bonuses to employees of financial institutions that went into the tank. The suspicion is that some of those billions were taxpayer dollars. The idea is outrageous. It makes our blood hot. The very people most visibly at fault for the economic meltdown are leaving the disaster scene with bags of cash, ala Scrooge McDuck. Where is the justice?

Our collective rage is focused on the leaders of those organizations, the CEO's, rather than the employees who were given outsize bonuses as well. I feel that these leaders, these CEO's, have failed as stewards of the resources which they managed. We trusted them to use their position and their knowledge to make this a better world. We expected that they would get rich from their position, but we also expected them to care about the good of the business they managed. In this, they have failed badly. We expected them to be greedy. We did not expect them to have no shame.

Shame. What an old fashioned word. Has anyone heard it used in the last twenty years? It is so old fashioned that it is quaint. Before we all got so smart, before we all became educated and modern, the word spoke to our sense of community. It was a word that recognized we all had responsibilities and obligations to the world that we lived in. We are only human, and so will fail on a regular basis. And as we fail, we will exhibit all those traits that make us lovable, i.e. greed, as well as her sisters, lust, gluttony, laziness, anger, envy and pride. But our sense of shame drove us to say we were sorry when we failed. Sometimes it even drove us to be noble rather than self serving.

But then shame can only exist in the company of humility. Humility is another word that has fallen out of use. To be ashamed requires one to be humble, to recognize that you have let your fellows down. But I see no sign of that on the national stage that these titans of industry stride across. They are smarter than we are, they are better connected than we are and they know it. Even as they are on camera before Congress,the righteousness they feel can be seen. They know that as soon as Britney Spears or Tiger Woods make news, we will forget. Then they can return and resume their mastery.

But are CEO's so different? How many athletes on your favorite sports team have left or arrived because of a more lucrative contract? As it happens, I have been a Yankee fan all my life. I trace my love of the Yankees to growing up far out in the sticks and watching baseball on tv. It is exciting to be a fan of a team so committed to winning. But even I am uneasy about the naked power of money used by the Yankees. I watch Alex Rodriguez and the other "best in class" talent fail in October, again and again. I cannot help but compare their smooth superiority to the heart shown by Bernie Williams, Paul O'Neill and others when they did win World Series. But seeing an old scratchy news reel of Lou Gehrig's Farewell Speech makes my eyes mist up, for it shows how far we have come.

And yet it is our modern age. We are awash in consultants who tell us how to have great organizations. These business masters tell us that we must have metrics and we must have accountability to be successful. We must measure things and then hold people accountable to deliver those things that can be measured. And we follow the advice of these masters. We do measure things and we do hold people accountable. CEO's get to be where they are by consistently delivering those things that are measurable. Alex Rodriguez, A-Rod to us fans, got his $ 400 million dollar contract by consistently making and exceeding the numbers. I expect that A-Rod shows that emotionless sense of superiority because he is delivering. He is doing what he is paid to do. His numbers are fantastic.

I am reminded of the many stories about the genie who grants three wishes. You have heard them I am sure. Some wandering soul finds a lamp and rubs it. A genie appears and grants three wishes to that person. The person asks for those things we all aspire to, wealth, position, love. But each request has an unforeseen flaw that frustrates the meaning of the request. So after three failed dreams, the genie returns to the lamp, satisfied that he has been accountable. He met his metrics and granted the three wishes The wandering soul returns to his wandering, worse off than before.

We Are to be Chastised

It is a dangerous thing to be the black sheep in the family. Some members of families just don't fit in. Whether in a family or a company, there are individuals that just seem to always go their own way. There is something in their psyche that makes them contrary, needing to push away from the rhythms that most people follow. They are outriders, following their own version of the truth, their own path to the future.

Reactions to the black sheep by those safely within the flock range from bemused tolerance to avoidance to indignant confrontation; that confrontation usually being handled by those keepers of the family tradition, the elderly aunts. But that is in normal times. When disaster strikes, the gods must be appeased.

There is in the human being, and in the societies that he creates, a realization, an understanding deep in his heart, that there is a power greater than himself. Most of the time we are able to ignore this if we so choose. Going to church on Christmas or pledging solidarity when a celebrity champions the cause of world peace on an awards show allows us to keep this knowledge hidden from ourselves. But then disaster strikes. We come face to face with our own powerlessness and it scares us. And when we are frightened, we lose the civilized part of our consciousness. We fear and we will act on that fear. If disaster strikes, it must be because we have angered the gods. In common with our ancestors who gathered around smoky fires in dark caves, we look for a sacrifice that will satisfy the rage of that which is greater than us.

If the gods are angry, it must be because someone among us has angered them. Which brings us to the black sheep. The meltdown of our economy is a disaster in search of scapegoats. While bankers and financiers have come in for their share of public anger, they have not been black sheep. They have just been greedy, but we understand that, we are all familiar with greed. If that makes the gods angry, then we are all in trouble. Damp that thought before it gets too far.

But the oil and gas business is another matter. We drill into Mother Earth and scar her with our pipelines. We cause the air to be contaminated with carbon dioxide. We use chemistry, mathematics and other black arts. No one understands what we do or how we do it. And we have been making way too much money over the past couple of years. Surely we are the reason that the gods have made flipping houses unprofitable. We are the black sheep. And the others around the fire are looking at us and their hands are searching for their clubs.

Like the black sheep who have gone before us when sacrifices needed to be made, we are about to be chastised. Henry Waxman has replaced John Dingell as Chairman of the Energy Committee. Carol Browner is the "czar" for energy policy in the new administration. Stephen Chu is head of the Energy Department. Ken Salazar is head of the Interior Department. The oil and gas industry looks around for a friendly face and sees only executioners.

It is dangerous thing to be the black sheep when there is fear in the cave.

Leadership on an English Beach

It was early morning in late summer. The location was somewhere on what we now know as the Dover coast of England. As the sun came over the eastern horizon, it showed the beach and cliffs behind it in soft light and dark shadows. A stiff breeze kept the temperature brisk and the surf crashing along the flat beach.

Somewhat off the beach, caught in the surf are a number of wooden ships, keels aground but caught in the waves and rocking with them. Behind those ships and further out is what appears to be a large fleet of similar ships. Crowding the decks of the ships are closely packed men dressed in armor and carrying shields, more than a few of them retching from sea sickness.

Spread along the beach facing them is a large mass of men yelling and shaking spears at the ships out in the water. They are a motley crew with a few mounted on horses, most of the rest on foot, but no small number of them riding chariots along the flat beach. Virtually naked, their faces and bodies are painted in a brilliant cobalt blue. Their hair, dressed with a thick mixture of sand and grease, stands straight out or up in what we might think as punk styles.

The year is 55 BC and the ships are carrying Julius Caesar and two of his Gallic Legions, the VIIth and the iconic Xth. This is the largest amphibious opposed landing in Europe before the D-Day landings some 2,000 years later. This Roman army is here to begin the conquest of the land they know as Brittania. We have an eyewitness account of this scene written by Caesar himself. And as he freely admits, there is a problem.

The ships that the Romans, freshly built by Caesar, are in do not have flat bottoms so they can come up on the beach. They have keels and have run aground some distance out from the beach in deep water. To get ashore, the legionnaires have to climb down netting into 6-8 feet of water and move through that water and surf to the beach. The men probably average 5 feet in height and are weighted down with around 60 pounds of armor as well as a bulky shield. As soon as they are in the water, they are at risk of being hit by a storm of arrows and spears from the Celtic tribesmen (ancestors of today’s Irish, Scots and Welshmen) on the beach. Already there drift half submerged bodies, smudging the water a bright red, of the first wave of Romans who have tried to move onto the beach.

On board one of the ships stands Julius Caesar, prominent in the bright red cape of a Roman general. His men have stopped going over the side into the water, despite the sticks of their centurions (Lieutenants). The centurions are not trying to get the men moving all that hard, as many of the bodies in the water are fellow centurions. All have watched with dismay, the death of those few who have already gone before. Those left have lost their courage and will not go forward into what seems certain death. All eyes are now on Caesar, who seems to be fresh out of ideas. It is truly a moment of crisis, with fate in the balance.

At that moment a centurion of the Xth Legion looks over to Caesar, makes eye contact with him and then jumps over the side of the ship carrying the eagle of the legion. Nothing happens for a minute as shock grips the men watching. The eagle of the legion, made of silver and life size, was the totem and spiritual heart of the legion. Always put in the safest place on the field of battle possible, to lose the eagle was to lose honor and live in humiliation. After a moment everyone begins going over the side in a surge of men that carries the day and brings the Romans to victory on the beach.

Julius Caesar was in a position that almost every manager can empathize with. You are in a tight situation with no obvious way to get out of it. Not only that, but it is clearly your screw up that put your people in that position, and everybody knows it. To get out of this mess is going to require that some of your people, but not the manager himself, take the pain of fixing the problem, i.e. lots of OT and weekend work, angry confrontations with customers, months on a bitter construction site, etc. What do you do?

The answer that we all hope for is a volunteer that steps forward, looks around at the others and says, “Follow me”. Julius Caesar got the answer he needed on that summer morning. The Roman Senate had given him the command, but he needed his people to go above and beyond the ordinary to make him the victor on that summer morning so long ago.

As managers in today’s world of business and of projects, how do we get our people to rescue us from our mistakes? We are given our position as managers by the Company. But we will be a success because our people follow us with enthusiasm and willingness to do what it takes, including bailing us out when we get them in a tight spot.

Did We Make Money Last Year?

The end of the year is past us and a new one dawns before us. If you are in the business world, that particular time of year requires that you find out if the business made money last year. It is something everyone wants to know. Of course the owners are interested. But they come in a poor second to the people that really matter, i.e. the IRS and the banker.

You would think it pretty simple for a business to know such a basic thing. You would think so anyway. While people can usually look at their bank statement, W-2 forms and an investment or two, allowing them to make a fair guess about their own financial situation. Most businesses, including ForeRunner, are on what is known as the “Accrual” system.

Without dipping into the fantasy world of GAAP (Generally Accepted Accounting Principals) and its reversals of common sense, our biggest unknown revolves around whether certain clients will actually pay the invoice we have already counted as revenue. Our costs are real, as the people doing the work get paid every two weeks. But our revenue is only a promise by our clients to pay us. Most clients pay their bills on time, blessed be their name. Others, being held captive to the new CFO’s plan to climb the corporate ladder, practice cash management; essentially meaning that they operate by using their suppliers’ cash. After the required number of calls to Accounts Payable and the client project manager, they will pay.

But this year we have a number of clients who have been negatively impacted by the events of the past year. How is that for a euphemism? Some of our clients are short of cash. I have been there, on a much smaller scale of course, but I have been there and it is hell on earth. My heart goes out to those in that situation. But what do you do when you don't have the money to pay your bills?

Experience suggests that most clients have read Carl von Clausewitz, the great German strategist. Carl, if I may be familiar, said that the best defense is a good offense. You may have come across this insight before and used it yourself. It is a powerful strategy. Rather than a straightforward negotiation over possible discounting on past due invoices, simply declare the service provided to be faulty and/or poorly done. Simply put, the strategy calls for the client to say that "I am not paying you because you did a bad job", rather than "I am not paying you because I am short of money right now."

Of course the strategy works. Carl is still quoted 200 years after his lifetime because he knew how to play the game. The strategy recognizes the reality that an engineers work is not and can not be perfect, but that same engineer is professionally bound to a standard of perfection and is very vulnerable to anyone pointing out the dichotomy . It also provides a justification for acting in a manner that would normally make one feel badly about themselves, i.e. not paying one's bills.

The strategy works, but it has its costs. Both sides know what is really going on, at least once they disentangle themselves from the emotional stew that is created. Trust, that fragile spirit, is lost once again. In the middle of the night, once again we will come face to face with what we do and why we do it.

The next time we work together, and we will for this is a small world saturated with irony, we will bear the scars of previous disappointment. But then that is the world of most projects, hope tempered by experience.

Natural Gas and Europe

At a chance moment yesterday evening, I caught my favorite newsperson, Katie Couric, pronouncing that President Obama's term in office would be defined by his success in getting the economy back on track. As you might guess, I view the connection between the word, newsperson, and the person, Katie Couric, with a smile. She may well be right however, she has good writers after all. But I remember how George Bush's term in office would be defined by "Compassionate Conservatism".

I think that President Obama might spend much of his time in office dealing with issues outside domestic economy recovery however. The world is becoming a very scary place. Large scale economic upheaval, such as we are experiencing now, always causes political upheaval. Would Barack Obama have been elected if the Dow was still at 14,000? And we are a very stable country. As a case in point, our old friends the Russians have shut off the supply of natural gas to the Ukraine. Imagine if you will, that your supply of natural gas was cut off in the middle of the winter. Europe is a cold place in winter.

The Ukraine, a part of the Soviet Union less than 20 years ago, borders Russia and the European Community. It is trying to become a part of the European Union, with excellent prospects of that happening. That is until this summer and Russia's invasion of Georgia, a sister to the Ukraine. Now Europe, and NATO (the US), are faced with a Russia that is drawing lines in the sand. And Russia is using tanks to draw those lines.

I think that it is a cold winter indeed in Europe's capitals, especially in those rooms in which responsible adults are meeting. They know that Europe has sheltered behind the US military presence in the world while their own forces have become weak to the point of non-existence. They know that the presence of the US military has allowed them to indulge elements of their populations in "feel good" posturing about the realities of power politics. Their populations now believe in peace at any price and view their protector (the US) as the world's villain. Their populations are rapidly aging, their welfare costs rising, their economies weakening and now they are faced with an aggressive resurgent Russia. Their social fabric continues to fray under the burden of large unassimilated Muslim immigrant populations. They have no recourse but to smile and accept Russian extortion.

Yet the political unity of the European Union is weak. Under the strain of Russian aggression, what will happen? Will the French or German public see any necessity to defend Poland? What about the Ukraine? Where is NATO in all this? I don't think the US public wants to be engaged in European confrontations.

The Ukraine is dependent on Russia for energy. But the pipeline that carries Russian gas to the Ukraine also carries natural gas into Europe. It is a fact that pipelines flow in both directions. LNG landed in Europe can flow gas back into the Ukraine. It would only take some money and time to provide the Ukraine and Eastern Europe with alternative gas supplies. But doing so could incur the wrath of Russia. Those tanks again.

It will be interesting to see what happens. In the entire span of recorded history, Europe has not been a peaceful place. There is no reason to think that its future will be any different.

Monday Morning Lawyers

I am a creature of habit. There are certain parts of my life that need to be comforted by unchanging ritual. Monday morning is the most important of these. I think of it as the Monday Morning Rite. In my past, I would get very depressed on Sunday night at I contemplated the beginning of a new week of work. To make me feel better, I designed a Monday morning to look forward to; a transition from life unfettered to the discipline of work. The Monday Morning Rite for me is an early morning 7 mile run (slow jog actually), followed by a long shower; and then on to an apple fritter (world class) and coffee at the Donut Hut. For the next hour I drink coffee, nibble on the apple fritter and work on the latest NY Times Sunday Crossword. After that I go to work.

This morning the thermometer showed 9 degrees outside. I can be compulsive, but 9 degrees makes even me bow to reality. So I went to Club USA and did the elliptical machine. I hate treadmills and elliptical machines. All you can do is watch the mindless television news. But trapped in the torture machine that is the elliptical machine, I watch it. It seemed this morning that many of the commercial ads were for personal injury law firms. Everybody in Denver is familiar with the strong arm of Frank Azar, but he is not alone. Not by a long shot.

Time moves very slowly on the elliptical machine. In that interminable wait for the next tick of the clock, I had no choice but to think about lawyers. Most people are of two minds about the legal profession. On the one hand, lawyers are the butt of mean spirited jokes, and as Shakespeare among others reminds us, the source of much (all) trouble in this world. Yet from Perry Mason to LA Law to Boston Legal, lawyers are shown as noble, and even more importantly, sexy. How many times have you heard a proud parent announce their clueless college student to be in pre-law?

It has been my sad fate as a company executive to get to know a number of real lawyers. Hence the importance of the Monday Morning Rite. Despite a strong predisposition to find them as dastards, I have liked most of them. They are just ordinary people, no matter how much I want to throw stones at them. They have a job to do, mortgage payments to make and a conscience to live with. The sad fact of human existence is that underneath it all, we are just people. Hence the need for lawyers.

And that is the source of our schizophrenia. We are human beings. Which means that we screw up on a regular basis. Despite our best intentions, we hurt ourselves and others all the time. We are arrogant, lazy, greedy and envious. To make matters worse, we display a decided tendency to sanctimony. Is this not a fertile ecology for the legal profession? One might imagine the situation as a large warehouse with heaps of spilled corn on the floor, with plenty of dark corners and a warm damp atmosphere. Is it any wonder that there are rats?

And yet we aspire to be better than we are. We are heirs to a tradition that speaks of truth and justice. The Profession of Law is the embodiment of that tradition. Theirs' is the language of justice and the righting of wrongs. While we recognize the failings common to our condition, we also believe in something better. We are all faced with situations or institutions that are powerful, leaving us helpless and vulnerable before them. We need a champion that protects us from the power of the state, from the impersonal procedure bound insurance company or employer, from the implacable results of our own folly.

And so we have the personal injury law firm, the "ambulance chaser" advertising on early morning and afternoon television. My nose curls with the odor of damp moldy corn and the rustle of unseen rodents in dark corners. But I also hear the echos of Marcus Tullius Cicero, of Thomas More, of John Marshall, of Thurgood Marshall. And so while I continue to snort when I think of lawyers, I am also glad that they are there.