Implications of a Realistic View of China's Poverty

China's political stability may be more fragile than thought. The country faces huge domestic challenges -- an aging population lacking any form of social security, wholesale problems in the financial system that dwarf those revealed in the U.S. sub-prime loan mess and the breakdown of its health system. These problems are as big as ever, but China has fewer resources to meet them than we thought.

And there is the environment. With poor air quality, acute water shortages, massive pollution in major watersheds and many other environmental problems, China needs to make enormous investments in the environment to avoid major disasters. Globally, it will be much harder to get China -- and India -- to make any sacrifices to address problems such as global warming.

For Americans, the new numbers from the World Bank bring good news and bad. On the plus side, U.S. leadership in the global system seems more secure and more likely to endure through the next generation. On the other hand, the world we are called on to lead is poorer and more troubled than we anticipated.

China is Smaller Than We Thought

The most important story to come out of Washington recently had nothing to do with the endless presidential campaign. And although the media largely ignored it, the story changes the world.

The story's unlikely source was the staid World Bank, which published updated statistics on the economic output of 146 countries. China's economy, said the bank, is smaller than it thought.

About 40% smaller.

China, it turns out, isn't a $10-trillion economy on the brink of catching up with the United States. It is a $6-trillion economy, less than half our size. For the foreseeable future, China will have far less money to spend on its military and will face much deeper social and economic problems at home than experts previously believed.

Education is Big Business in China

Here is an amazing success story (so far).

And there is room for many more schools like the SIAS International University in Henan, China.

Nine years ago, Chen launched SIAS International University with less than $2 million, 250 students and a healthy dose of gumption. Today, the school has more than 16,000 students and nearly 50 buildings -- including a Roman amphitheater, French and Italian restaurants and an administration hall with a domed Capitol-like facade on one side and a Forbidden City tableau on the other. A swimming stadium, with an Olympic-size pool, is rising amid lotus and wheat fields.

The school's faculty of about 700 includes 119 foreign instructors, mainly from the U.S. They teach English, history and literature and help students with debate club, cheerleading and marching band -- things unheard of in this country.

"When I left, China was rationing," he said. "Now, it has an abundance of tall buildings and everything. But it doesn't matter how much China grows, it is still lacking in education."

Beijing Transformation

Some nice reflections from this LA Times writer on the transformation Beijing has undergone over the past ten years. From my experience, it is hard for a westerner to comprehend the pace and scale of change in China. It is so unlike anything our societies have experienced or are capable of.

I found Beijing far more electrifying than Paris, unrecognizable from the city I had visited 10 years ago....The truth is this: There was the polluted, awkward, unfriendly Beijing I visited 10 years ago, and there is Beijing now, physically and psychologically transformed.

My International City

In LA, 53% of people speak a language other than English at home.

The data are part of a census report on social, economic and housing characteristics in the U.S. Nationwide, almost 20% of people over age 5 spoke a language other than English at home in 2006.

Some smaller Southern California communities recorded even higher percentages than Los Angeles, including East L.A. (91%), El Monte (83%), Santa Ana (83%), Alhambra (71%), Oxnard (67%), Garden Grove (67%) and Glendale (64%). The statewide percentage of 43% is up slightly from data from a few years ago.

It's about the gambling

Interesting statistic about the differences between the American and Chinese gambling public. While Macau recently passed Las Vegas in producing more gambling revenue, Las Vegas has over 7 TIMES as many hotel rooms, and is probably better know as an entertainment capitol these days than just as a gambling destination.

As the Chinese grow in affluence, will their appetite for the whole entertainment menu grow to outstrip their hunger for gambling?

Macao last year overtook Las Vegas in total gambling revenue, thanks to China's economic rise and passionate bettors like Wu. But although money from gambling makes up virtually all of Macao's tourist-related revenue, it makes up about half for Vegas, which has more than 130,000 hotel rooms versus about 17,000 in Macao.

Trees and Global Warming

One environmentalist argues that a key to fighting global warming is to use more wood products, stimulating the planting of more new trees. He says that young trees absorb more carbon dioxide than old trees.

To address climate change, we must use more wood, not less. Using wood sends a signal to the marketplace to grow more trees and to produce more wood. That means we can then use less concrete, steel and plastic -- heavy carbon emitters through their production. Trees are the only abundant, biodegradable and renewable global resource.

China's Problems are Our Problems

What is happening on the other side of the world will one day affect our side of the world. A long and detailed article in the NY Times.

But just as the speed and scale of China’s rise as an economic power have no clear parallel in history, so its pollution problem has shattered all precedents. Environmental degradation is now so severe, with such stark domestic and international repercussions, that pollution poses not only a major long-term burden on the Chinese public but also an acute political challenge to the ruling Communist Party. And it is not clear that China can rein in its own economic juggernaut.

Public health is reeling. Pollution has made cancer China’s leading cause of death, the Ministry of Health says. Ambient air pollution alone is blamed for hundreds of thousands of deaths each year. Nearly 500 million people lack access to safe drinking water.

Chinese cities often seem wrapped in a toxic gray shroud. Only 1 percent of the country’s 560 million city dwellers breathe air considered safe by the European Union....

Environmental woes that might be considered catastrophic in some countries can seem commonplace in China: industrial cities where people rarely see the sun; children killed or sickened by lead poisoning or other types of local pollution; a coastline so swamped by algal red tides that large sections of the ocean no longer sustain marine life.

China is choking on its own success. The economy is on a historic run, posting a succession of double-digit growth rates. But the growth derives, now more than at any time in the recent past, from a staggering expansion of heavy industry and urbanization that requires colossal inputs of energy, almost all from coal, the most readily available, and dirtiest, source.

Interpreting the Middle East

Some interesting observations in this LA Times opinion piece on the clashing worldviews when interpreting the conflicts in the Middle East. I agree with this quote: "ideology cannot be defeated by concessions."

...the Mideast's central conflict is not territorial but ideological. And ideology cannot be defeated by concessions.

Emissaries also still believe that "the Occupation" blocks agreement between Israelis and Palestinians. In the West, the term usually means the territories Israel conquered in the Six-Day War in 1967....

Instead, the heart of the problem is that many Palestinians -- Fatah and Hamas, in particular -- and even some Israeli Arabs use "Occupation" to refer to all Israel.

Ah, The Benefits of Central Planning

This article in the LA Times points out some of the cultural differences between American and Chinese societies, as well as some of the related political differences. Interesting observations.

It sounds good to me to not have to deal with hearings, environmental impact reports, high-priced labor, etc. Maybe LA would have a modern airport if we lived in that kind of environment! BUT, Americans would not give up their right to "participation," even with the accompanying lack of progress.

Primary factors I see in the Chinese ability to make fast and huge changes are:
1. The people's acquiescence to government action because of their belief that the relative good for society outweighs the personal cost they have to bear for progress. A supporting factor for this, but not the dominant factor that Americans would like to think it is, is their lack of recourse. Americans do not understand this profound difference in worldview and values.
2. The minimal cost of labor, which I would guess is roughly $5/day compared to probably $100/day in the US.
3. The lack of checks and balances in their top-down system, which ensures expedient action for decisions made by the leaders.

China seems little hindered by the pressures that plague transit projects in the West.

Financial woes sandbagged New York's Second Avenue subway for about 80 years until ground was broken this spring. L.A.'s subway system, whose westward march was halted at Western Avenue in 1996, has been constricted by environmental, political and financial pressures.

In China, labor is cheap, the land belongs to the government, air pollution is the primary environmental concern, and political pressure moves largely in one direction -- from the Communist Party leadership on down.

"If the government wants to do something, even if the conditions are not ready for it, it will be done," said Zheng Shiling, an influential Chinese architect who teaches at Tongji University in Shanghai.

Realistic Figures for China's Growth

A respected economist points out in this NY Times article how China's growth figures are wildly exaggerated. The point is not to discount China's growth, but to realize that even at a relatively fast pace, it will take a century to catch up with the US economy.

Using those numbers as a guide, if we consider China’s actual electrical use, which is relatively easy to measure, and do a little math, we come up with this estimate: The G.D.P. in China has been growing somewhere between 4.5 percent (using the average for a rapidly growing country) to 6 percent a year (using the highest rate for Japan), not at the 10 percent rate claimed in official statistics.

The official statistic for China’s overall growth rate is best regarded as an approximate growth rate of the economy of its cities.

The Value of Constraints

An eloquent and positive observation on creatively overcoming obstacles by a software developer, when commenting on efforts to get around manufacturers' limitations:

"It's about embracing constraints," said Chris Messina, 26, an entrepreneur from San Francisco and one of the event's organizers. "These constraints aren't holding us back. They are giving us focus."

Looking for more focus in your life? Pay attention to the walls you are bumping up against!

China's Emissions Growth

A new report says that China has already surpassed the US as the world's largest emitter of greenhouse gases. On a per capita basis, however, Chinese people only account for 1/8th as much as their western counterparts.

It's interesting to me that in an article like this, the environmentalist response is that yes, Beijing has to do more to curtail emissions, but "responsibility also lies in Washington and Brussels and Tokyo..." I don't think you'd ever hear a criticism of American government policy include a disclaimer that you'd also have to consider Caracas and Teheran and Pyongyang culpable.

Still, it makes you wonder if there is more that western foreign policy could do to help China manage their growth more responsibly. For example, could the US offer aid to China to pay the difference between what it costs them to build two coal-powered energy plants a week and the cost of building nuclear plants instead? Wouldn't that kind of aid go a long way in building friendlier relations and help the environment at the same time?

Here are a few more amazing stats about China's growth from the article:

"China's emissions have outpaced predictions because the economy has grown faster than expected. With construction booming, China produces an estimated 44% of the world's cement, Olivier said. And with its factories' fuel needs rising, China has been completing construction of coal-fired power plants at a rate of about two a week.

"In the next eight years, the International Energy Agency estimates, China will build as many power plants as exist today in all of the European Union countries. Birol said the West needs to find incentives to help China invest in cleaner forms of energy than coal, because when coal plants come on line, they generally last decades."

Internet growth stats

From John C Dvorak. Amazing!

"It's actually the astonishing overall growth of the Internet that is amazing. In 1990, the total U.S. backbone throughput of the Internet was 1 terabyte, and in 1991 it doubled to 2TB. Throughput continued to double until 1996, when it jumped to 1,500TB. After that huge jump, it returned to doubling, reaching 80,000 to 140,000TB in 2002.

"This ridiculous growth rate has continued as more and more services are added to the burden. The jump in 1996 is attributable to the one-two punch of the universal popularization of the Web and the introduction of the MP3 standard and subsequent music file sharing.

"More recently, the emergence of inane video clips (YouTube and the rest) as universal entertainment has continued to slam the Net with overhead, as has large video file sharing via BitTorrent and other systems.

"Then VoIP came along, and IPTV is next. All the while, e-mail numbers are in the trillions of messages, and spam has never been more plentiful and bloated. Add blogging, vlogging, and twittering and it just gets worse.

"According to some expensive studies, the growth rate has begun to slow down to something like 50 percent per year. But that's growth on top of huge numbers. Petabytes."

Growing Power Crunch

Where will the world's power come from? And won't the growing production and consumption of the huge rapidly developing nations overwhelm the efforts of currently "developed nations" at ecological responsibility?

From the NYT:

"In part because of these limitations, Indians are, for now, relatively conservative consumers of energy: about 600 units per capita per year, or one-fifth that of a typical American. But that will certainly increase as Indian desires reach those of the wealthy Western countries.

"A recent report by McKinsey Global Institute frothily predicted a fourfold increase in consumer spending by 2025, vaulting India, as it said, “into the premier league among the world’s consumer markets.” McKinsey forecast that India would surpass Germany as the fifth-largest market in the world.

"Driven by the increasing need for power, India has stepped up generation in recent years at the pace of about 6 percent a year. It is a pittance compared with what neighboring China adds on each year and in any case insufficient to keep up with India’s galloping demand.

"The government has promised electric connections for all — which means access to the grid, not round-the-clock power — by 2009. That is a target that does not seem plausible at current rates of power generation.

"The development of power plants, meanwhile, is constrained by a lack of access to land, fuel and water, all of which a power plant needs in large quantities. The power grid remains weak.

"What the state cannot provide efficiently, many take for themselves. The World Bank estimates that at least $4 billion in electricity is unaccounted for each year — that is to say, stolen. Transparency International estimated in 2005 that Indians paid $480 million in bribes to put in new connections or correct bills.

"The country’s energy needs are one of the government’s main arguments for a nuclear deal with the United States, which would allow India to buy reactors and fuel from the world market.

"But even if the deal goes through, it would lift nuclear power, which provides 3 percent of India’s energy, to no more than 9 percent, said Leena Srivastava, executive director of the Energy and Resources Institute, a private research group.

"Similarly, in the coming years, alternative sources of energy, like wind, are expected to double, but to no more than about 8 percent of supply.

"Coal will continue to dominate power generation, and already more than a third of India’s coal plants do not meet national emissions standards."

Catching Confucius

This from the LA Times. Those familiar with China have been aware of the spiritual interest and opportunity for Confucianism as well as other spiritual movements for many years. This one combines the endorsement of the government with good marketing.

Since the publication of her enormously popular book on the teachings of Confucius late last year, Yu Dan has been racing from college lectures to book signings, TV appearances and speaking engagements. The public can't seem to get enough of this overnight sensation who has turned dusty old Confucian teachings into a Chinese version of "Chicken Soup for the Soul."

"I never expected this," the smartly dressed 42-year-old said in a hurried interview from the back of the black Audi taking her to the airport. "In the 21st century, our value system is changing; people are faced with a lot of confusion and choices. The classics are not just fossils. They are a value system that can help us find answers to modern-day problems."

For more than 2,500 years, the Confucian doctrines of filial piety, moral righteousness and hierarchical relationships were the guiding principles of life and government in China and most of East Asia. Then the Communists came to power and Chairman Mao declared Confucianism counterrevolutionary and his Red Guards ransacked temples dedicated to the philosopher.

Today, China is charging ahead with dizzying economic growth and breathtaking social change. But many believe the world's most populous nation has lost its moral and spiritual anchor. Enter the wisdom of Kong Fuzi, or Master Kong, as Confucius is known in China — interpreted by a woman.

"I'm amazed," said Hong Huang, a cultural commentator and publisher of fashion magazines in Beijing. "Her success has a lot to do with the fact that modern China has an identity crisis and spiritual crisis. The only value system we have today is money. Everybody is looking for the Chinese meaning of life."

Cyber Crowd Control

Here's a report of users coercing a website into altering its policy. Where will this lead?

"'Social media is something of a Pandora's box,' said Internet analyst Greg Sterling of Sterling Market Intelligence. 'Communities create deeper engagement, word of mouth and viral promotion of your content. That's how sites like MySpace and YouTube got to be so popular. The other side of that is that it's often hard to police communities. You have to be willing to tolerate certain things you wouldn't tolerate from your own employees.'"

Look to Youth

There's a huge need for developing business leaders with practical experience and good education. While China's universities have grown rapidly, business schools lag behind, mostly because of a lack of qualified teachers. Business training is a great field for development, as noted in this LA Times article.

...MBA[s]... are highly sought after in China, whose scorching growth has left companies scrambling to fill management positions. Foreign firms complain of high turnover and poaching wars in their executive suites.

"China has a real leadership development crisis right now, mostly because of the unique circumstances of the Cultural Revolution," said Doug Guthrie, a China business expert at New York University.

Guthrie was referring to the period from 1966 to 1976, when Communist leader Mao Tse-tung closed the universities and sent the country's brightest young people to the countryside to be "reeducated." Instead of managing companies, these now 50- and 60-year-olds are toiling in factories and driving taxis.

When Rafael Pastor, chief executive of Vistage International Inc., an organization of CEOs, interviewed people to run his new office in Shanghai, he was shocked at their youth. His top candidate for the managing director's job is 39 years old.

"He's great," said Pastor, a former investment banker and executive at News Corp. "But he's only got as much experience as a 39-year-old person can have. There's no way I can find a more seasoned person."

In an effort to close this experience gap, Chinese universities such as Tsinghua are reaching out to U.S. institutions such as MIT's Sloan School of Management and USC's Marshall School of Business for help establishing programs to teach China's first generation of professionally trained business leaders. Universities have formed transpacific partnerships, sharing professors, students and curriculum.

That infusion of foreign assistance has helped boost the number of Chinese MBA programs from nine in 1991 to more than 100 today. In 2004, China graduated about 10,000 MBAs, compared with 139,000 such degrees in the U.S.

But Chinese universities, like the companies they are serving, can't expand fast enough because of a shortage of teachers, Pastor said.

The Much Exaggerated Death of Europe

Philip Jenkins takes a less pessimistic view of Europe's future than many current observers.

Here's a lengthy report on his new book God’s Continent: Christianity, Islam, and Europe’s Religious Crisis by Richard John Neuhaus in First Things Journal.

“Nobody can deny,” writes Jenkins, “that European nations in coming decades will have to take account of aspects of Muslim culture, or rather of the north African and Asian cultures brought by Muslim immigrants; but that is quite different from envisioning wholesale Islamization. . . . Yet matters are not so terrifying [as many contend]. While sections of European Islam in recent years have acquired a strongly militant and politicized character, we have to understand this as a response to temporary circumstances; moreover, hard-line [Islamic] approaches still command only minority support. In the longer term, the underlying pressures making for accommodation and tolerance will prove hard to resist.”

It's About Excellence

TOKYO (AP) — Toyota Motor sold more cars and trucks worldwide than General Motors in the first three months of 2007, marking the first time that Toyota has outsold GM.

Most auto analysts have predicted that Toyota will surpass GM this year as the world's largest automaker — a position the Detroit behemoth has held for 76 years. Toyota's global sales for the January-March quarter rose 9% to a record 2.35 million. GM reported last week that its global sales rose 3% to 2.26 million vehicles.

Toyota has steadily gained on GM in past few years, aided by a shift in the U.S. market away from SUVs and toward more fuel-efficient vehicles.

Toyota's U.S. sales, led by the Camry and Corolla, rose more than 12% last year and sales are increasing at a double-digit rate again this year. In March, Toyota's share of the U.S. market climbed to 16%, behind GM's 22% and Ford Motor's 17%.

In 2006, Toyota's global production surged 10% to 9.018 million vehicles, while GM and its group automakers produced 9.180 million vehicles worldwide — a gap of about 162,000.

It's no time to start popping the champagne, however, because overtaking GM is not Toyota's first priority, said Paul Nolasco, a spokesman for Toyota.

"Our goal has never been to sell the most cars in the world," Nolasco said. "We simply want to be the best in quality. After that, sales will take care of themselves."

Indeed, it is Toyota's reputation for quality and fuel efficiency that has lifted its global sales, including the popular Camry, Corolla and Prius gasoline-and-electric hybrid.

Beijing's War of Words

This story warms the heart of any English-speaking foreigner who has lived in China. From Singapore's Today newspaper:

A campaign to correct the notoriously goofy English translations on city signs in time for next year's Olympics could mean the end for the misnomers that have confused and amused visitors for years.

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Officials are taking aim at menu items such as "Fried Crap" and "Acid Food", and slippery-when-wet signs that read: "To take notice of safe: The slippery are very crafty".

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The campaign began last year to avoid causing confusion and possible offence when visitors from around the world descend on a city that has for years featured a "Racist Park" dedicated to ethnic minorities.

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But to some, the "pubic toilets" and "harsh browns" will be missed.

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"It's too bad. They give the city a little more character," said Mr Ian McCulloch, a Briton who studies Chinese at a local university.

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"It's almost worth a walk down the street just for that."

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Officials have launched several parallel campaigns — some aim to discourage spitting and queue-jumping while others encourage smiling and other civilities — in a bid to soften a city that has its share of rough edges.

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But the authorities have pushed the language effort as much as any other, sending out camera-wielding inspectors to comb the streets in search of offenders like "Deformed Men" on handicapped restroom stalls, and "liquor heads" seen on signs banning public drinking.

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Did You Know?

Here's a presentation that will really get you thinking. We all know technology is changing rapidly, but this will shock you when you think about what it will mean for us in 15 years...

"I remixed content from David Warlick, Thomas Friedman, Ian Jukes, Ray Kurzweil and others, added some music, and came up with the following presentation."

You have to go to the website and download both the powerpoint and mp3 files to then view it on your computer.

More Asian Exports Coming Your Way

"Only a decade ago did scientists in the University of California's Pacific Rim Aerosol Network help discover that the pollution crossing the Pacific from Asia was worse than suspected, with millions of tons of previously undetected contaminants carried on the wind.

In fact, on any spring or summer day, almost a third of the air high over Los Angeles, San Francisco and other California cities can be traced directly to Asia, researchers said.

'More stuff starting up over there means more stuff ending up over here,' said UC Davis atmospheric scientist Steven Cliff.

Usually, dust and industrial pollutants take from five days to two weeks to cross the Pacific to California."

Internet Boom in China Is Built on Virtual Fun

Interesting observations in this New York Times article about the different users and usages of the internet in China versus the US:

"Another distinguishing feature is the youthful face of China’s online community. In the United States, roughly 70 percent of Internet users are over the age of 30; in China, it is the other way around — 70 percent of users here are under 30, according to the investment bank Morgan Stanley.

Because few people in China have credit cards or trust the Internet for financial transactions, e-commerce is emerging slowly. But instant messaging and game-playing are major obsessions, now central to Chinese culture. So is social networking, a natural fit in a country full of young people without siblings. Tencent combines aspects of the social networking site MySpace, the video sharing site YouTube and the online virtual world of Second Life.

“They have what I call the largest virtual park in China,” said Richard Ji, an analyst at Morgan Stanley. “And in China, the No. 1 priority for Internet users is entertainment; in the U.S., it’s information. That’s why Google is dominant in the U.S., but Tencent rules China.”"

Management is All About Talent Coaching!

From Tom Peters' blog, echoing management principles Marcus Buckingham has written:

"Earlier this month I had a bit of a rant about 'Servant Leadership.' The gist of it was: Military Officers and Business Leaders have the same role ... to ensure that all members of the value-creating community are the best they can be. That's an enabling service worth paying for. Today, as a leader, you serve those who choose to bring their talent to you/your organisation. They decide if you are doing a good job or not. They decide if you are worth your management package. They choose to stay or go. They determine if you/the company will succeed or not. Control ... forget it!

Some of my clients/colleagues over here think I've gone soft. Quite the contrary, actually. I think servant leadership is much harder than command & control/micromanagement/authoritarianism. Why bother taking the harder route? Here's the disquieting logic—if you think I'm wrong, please tell me:

Traditional Command & Control logic is based on the world as it used to be, rational, predictable, and stable. A world where well-defined processes produced predictably good results, and refining processes produced better results. It was a world where there was little scope for discretionary human value added to the execution of process. As a consequence, engaging people was unnecessary in a management culture conceived in the blast furnaces and assembly lines of the 19th Century. Unfortunately, relative to the social and technological changes in the last century, little has changed in management culture.

Future winners are turning the old logic on its head by making the value creators the heroes. (Think sports teams!) The future losers are those companies where doing well is about getting out of a customer value creation role and into management.

I'd propose that our role as managers is to ensure that each member of our value creating (read org successes ensuring) community is contributing to the maximum of their potential. If we are doing anything other than that, we should STOP IT NOW or fire ourselves for dereliction of duty. We are no longer process policemen but talent coaches. It's 100% a trust thing. We're in BIG trouble.

8 Basics of Excellence

On the 25th anniversary of his revolutionary book, Tom Peters reminds us of the eight basics of excellence. Though embraced in principle by many, they are still rare to find in practice. This year I want to rededicate myself to building a "people-obsessed" organization.

1. A Bias for Action. Call it 'implementation.' Call it 'execution.' It's the heart of both those key ideas. Too much talk, too little do. Problem-opportunity #1, 1982. Problem-opportunity #1, 2007. And a beast as one grows—and acquires.

2. Close to the Customer. Call it 'loyalty' or 'customer intimacy' or (God help us) 'customer-centric organization.' Though I'd move it down to #3 today (people #2), it's as fresh as ever and honored in the breach—again, particularly as giantism emerges. Come hell and/or high water, get close-as-hell to that customer, listen to that customer, and love up that customer for all you're worth.

3. Autonomy and Entrepreneurship. This was, more or less, our innovation piece. Let 1,000 flowers bloom—and then turn it over to Darwin. No autonomy, no accountability; no autonomy, no insane investment in new stuff.

4. Productivity Through People. Obvious—1982. Obvious—2007. But truly 'people-obsessed companies' ('talent-obsessed' today) are still rare as can be—we keep trotting out GE's people development process for a reason—we can't think of anyone else among the giants.

5. Hands On, Value-Driven. MBWA/Managing By Wandering Around (circa 1982 and HP). MBWA today!! Absent then. Absent now. Run a place by values-first leadership? Then. Now. Rare.

6. Stick to the Knitting. Misunderstood in '82. We bought Richard Rumelt's (UCLA) act—and I still do. He called the winning approach 'related diversification.' It ain't about sticking with a pat hand, however 'excellent' today—it is about hanging in with stuff you understand. Still a good idea—just ask the private equity boys (and girls), circa 2006.

7. Simple Form, Lean Staff. We pleaded for this in 1982, but we were not aggressive enough. And, of course, there were no Internet-run companies and no outsourcing. Still, the basic idea is fresh as a daisy—and rare as apple blossoms in January in Boston. (Whoops.)

8. Simultaneous Loose-Tight Properties. Confusing to some, gospel to a few (Bob Stone—the exec in charge of re-inventing government in the 90s, who accomplished a helluva lot more than most people realize). Idea: Stick with a few key values ... then let her rip! ("Change anything not 'below the waterline'" was the way W.L. Gore founder Bill Gore put it to us—and it's still working for his firm today. (Or I hope it is—I'm depending on GORE-TEX® when I go hiking in New Zealand at the end of this month.)

Of course there are a jillion ways to say any of these—but their simplicity was the trick. I could as easily give a speech covering these exact ideas with these exact words today as 25 years ago. For instance, when I recently learned that Starbucks founder Howard Schultz visits 25 stores per week and that former Goldman Sachs boss Hank Paulson used to call 70 clients right after New Year's just to "check in," I said—"MBWA then for the best, MBWA now for the best." (Hint: I will be giving some speeches this year with the so-called "eight basics" as my exact outline. Sure my increasingly noisy "women's stuff" will be fit into "close to the customer" and "productivity through people," but the basic outline will be familiar.)