Thor's Hammer

Wastebook 2011

From:Financial Scandal Fans Never Had It So Good: Jonathan Weil. Bloomberg http://www.bloomberg.com/news/2011-11-10/financial-scandal-fans-never-had-it-so-good-commentary-by-jonathan-weil.html

So many large companies have blown up after getting the all-clear from a Big Four accounting firm that many people regard auditor opinion letters as a joke. The client pays the auditor, after all. (Gee, no conflict there!) Regulators for decades have tried figuring out ways to dance around this fundamental flaw in the industry’s business model, by passing all sorts of rules requiring that auditors be “independent,” as foolish as that notion might seem at times. New waves of accounting scandals keep coming anyway.

Yet the next logical step -- stripping the accounting profession of its golden goose by making outside audits voluntary for public companies rather than mandatory -- always has seemed like a horrible idea, because it practically would be an invitation for more frauds. Nor is there much appetite to have third parties, such as national governments, pay for companies’ audits. The results probably wouldn’t be any better.

The public views an audit differently than the CPA profession. Increased occurrences of fraud after receiving clean audit opinions will strengthen the case for more scrutiny or revision of auditing practices.

Once you have been fortunate enough to catch a fish the next step is to remove the hook (and hopefully release the fish.) Sometimes removing the hook is a very simple process and takes no time at all. Other times the hook may be deep in the mouth of the fish. It may be necessary to use a hook remover as pictured above or a similar tool such as a pliers. There are times when the hook is so embedded that you may use other creative techniques. 1) depending on the fish size and the size of the lure, you may just cut the line and leave a small lure inside the fish. 2) You may push the lure out through the gills and then cut the line. This may cause the least amount of tension and damage on the fish.


In business, we overuse terms such as "out of the box" thinking. However, we need to apply creativity to typical business solutions to find viable answers. Just as removing a hook by pushing it our through the gills, there may be business solutions that don't appear so obvious.

© 2011 Jim Lindell, Thorsten Consulting Group, Inc. - Thor's Hammer Blog

If people concentrated on the really important things in life, there'd be a shortage of fishing poles.
Doug Larson

One of the best tools to teach principles to others is through the use of simple stories. Our greatest religious leaders have conveyed concepts of heaven, debt, forgiveness, etc. via everyday examples. This too, is the basis of this new blog category.

Why do people fish? Is it enjoyment? Is it for peace and solitude? Is it to make money? Is it to put food on the table? The insight as to why a person invests their time translates into the eventual outcome of the fishing trip. For example, someone that is interested in peace and solitude may care less if they catch any fish. Someone that needs to feed their family is much more determined to catch fish and indifferent to the "peace and solitude." The practical lesson is that a fisherman must know why they are fishing. A different reason for fishing will lead to a different approach and most likely a different level of success.

The same concept applies to all businesses. Why are you in business? Is it to feed your family? Is it to acquire wealth? Is it a way to invest your time? A business leader must have a vision for the business. This vision also impacts the effort, the investment and most likely the eventual success or failure of the business.

This concept also applies to an employee in the same manner. Why does an employee invest their time with a specific employer? Is it for wages? Is it for future advancement? Is it to obtain knowledge, etc? You can be sure that the employee's vision will translate into different levels of performance as well as different career paths.

Therefore our first lesson from fishing is "Have a worthwhile Vision!"

© 2011 Jim Lindell - Thorsten Consulting Group, Inc. - Thor's Hammer

The way that we interact with one another continues to evolve. We are also at the point that technology is so intertwined with our individual self that we have emotional problems when we are disconnected from the modern daily tools of cell phones, internet, e-mail, etc.

Consider the following from Intersperience's recent press release:

Intersperience research highlights people’s emotional dependency on technology

• 53% of Brits feel ‘upset’ when deprived of internet connection
• 40% of people surveyed feel ‘lonely’ when not able to go online
• Challenge of 24 hours without digital devices described as ‘nightmare’

London, UK, July 22 - A new study into the impact of online and digital technology on people’s lives in the UK found that more than half of the people surveyed felt ‘upset’ at the prospect of being deprived of an internet connection even for a short time.

The extent of people’s ‘digital dependency’ in their everyday lives was revealed by international consumer research specialist Intersperience in a new project entitled ‘Digital Selves.’The project, which surveyed a nationally representative sample of more than 1,000 individuals from age 18 to over 65s, questioned people about their 'digital lives' including their attitudes and use of the internet, smartphones and other connected devices.

The project also involved qualitative research, including challenging participants to get through one full day without using technology. Giving up technology was considered by some to be as hard as quitting smoking or drinking, while one survey participant described it as “like having my hand chopped off” and another called it “My biggest nightmare.”

A significant number of people ‘cheated’ by switching on the television or radio as they did not regard them as ‘technology.’ Others agreed to the challenge but turned their mobile phones to silent, regarding being completely disconnected even for one day as “inconceivable.”

Many participants found it extremely hard to resist the temptation to go online, especially those for whom online communication represents a large part of their social interaction. A total of 40% of people felt ‘lonely’ when not engaging in activities such as social networking, emails, texting or watching their favourite television channels.

Younger people, who tend to be heavier users of social media and text messaging, found giving up technology the most difficult while older people (over-40s) generally coped more easily when cut off from digital connections. Only a minority of those surveyed reacted positively to the prospect of being without an internet connection, with 23% saying they would feel “free.”

Paul Hudson, Chief Executive of Intersperience said: “ Online and digital technology is increasingly pervasive. Our ‘Digital Selves’ research shows how just dominant a role it now assumes, influencing our friendships, the way we communicate, the fabric of our family life, our work lives, our purchasing habits and our dealings with organisations.”

He added: “ We have gathered clear evidence that the UK has fully entered the Digital Age. The resulting stepchange in the way we engage with technology has occurred faster than many of us had anticipated. This has profound implications for society both from a personal and commercial perspective. We are about to embark on a new study looking exclusively at digital engagement in Under-18s which we expect to highlight even more radical developments in the behaviour and attitudes of children and teenagers.”

It is estimated that the consumer is responsible for 70% of our national economy. If the consumer is not spending, recovery remains a distant goal. In Friday's NY Times, they published the embedded image. Note how the declines of consumer spending during each of the recessionary periods. The most current recession (which I would argue that we are still in) is the deepest decline in consumer spending. Our country will remain in the doldrums until this changes. Jim Lindell, Thorsten Consulting Group, Inc.

The State Investigator's report is out and should be read by those interested in Ethical case studies. The implications for us are numerous:

How employees react to measures and goals

How employees give in to peer pressure

How bosses abuse their power

How outsiders (parents) were willing to tolerate unethical behavior if it made their children appear more successful

How brave employees (teachers) stood up against unethical behavior

From the CL Atlanta website:
State investigators on Tuesday released the findings of a probe into the Atlanta Public Schools test-cheating scandal that tarnished the system's once-stellar reputation. Led by former Attorney General Mike Bowers and former DeKalb County District Attorney Bob Wilson, the investigative team interviewed more than 2,000 people and reviewed more than 800,000 documents. Investigators identified 178 principal and teachers who they say were involved in cheating. (Source: http://clatl.com/freshloaf/archives/2011/07/06/atlanta-schools-cheating-investigation-full-report) Note: you can obtain the full report in 3 pdf files from this location as well.

It is important to note in Vol 3 that the investigators highlighted why cheating occurred. They identified 3 primary conditions that led to widespread cheating on the 2009 CRCT (competency tests):

The targets set by the district were often unrealistic, especially given their cumulative effect over the years. Additionally, the administration put unreasonable pressure on teachers and principals to achieve targets;

A culture of fear, intimidation and retaliation spread throughout the district; and,

Dr. Hall and her administration emphasized test results and public praise to the exclusion of integrity and ethics.

"When will we ever learn, When will we ever..... learn" from "Where have all the flowers gone"

© 2011 - Jim Lindell - Thorsten Consulting Group, Inc.

I just stumbled upon (stumbleupon.com) a great website www.mindmeister.com. This site allows free (also subscription) on-line and collaborative mindmap creation. Following is their public map of Dale Carnegie's "How to Win Friends and Influence People."

If you haven't tried stumble upon, I highly recommend it.

This chart shows an alarming trend where the overall participation of the civilian workforce is declining. Fewer people employed yields lower income, lower consumer spending, lower payroll and income tax generation. In short, this graph depicts that the consumer's power to spend is dampened. To successfully move out of the recession (I have never accepted the premise that we have been in a recovery), we need job growth / increased workforce participation.

Copyright 2011 - Jim Lindell

As Einstein stated, "Insanity: doing the same thing over and over again and expecting different results." Our current budget deficits malaise continues with similar types of solutions:

1) Philadelphia Mayor Michael Nutter is proposing a tax on soda and other sugary drinks as he and City Council continue trying to help bail out the cash-starved Philadelphia school district. (source:http://philadelphia.cbslocal.com/2011/06/02/philadelphia-residents-split-on-issue-of-soda-tax/)
2) O’Hare May Get Slot Machines as Illinois Lawmakers Allows Chicago Gambling (source:http://www.bloomberg.com/news/2011-06-01/o-hare-may-get-slot-machines-as-illinois-lawmakers-allows-chicago-gambling.html)
3) Obama administration floats draft plan to tax cars by the mile (source:http://thehill.com/blogs/floor-action/house/159397-obama-floats-plan-to-tax-cars-by-the-mile)

The process of raising new tax revenue will not end well. We will see increased taxation on any item that is consumed. In addition we will legalize practices that have been scorned in the past just to tax other sources of revenue.

Our deficit problems are not a revenue issue. Find the individuals or corporations that are not paying their required taxes and deal with them. Attempting to raise revenue by creating new taxes is the wrong direction. CUT GOVERNMENT COSTS. Adopt lean infrastructures. Make all government employees subject to the same health care, pension and benefits that the taxpayer has. Eliminate the special treatment for elected congressional leaders.

Copyright 2011 - Jim Lindell

In my 3/15 post I commented on the decline in Newspaper Ads - http://thorstenconsulting.com/serendipity/index.php?/archives/161-Newspaper-Ads-Sag-Industrial-Production-Shows-Bleak-Trend.html

This morning the SFGATE chronicled the continuing decline in Newspaper Ads bit.ly/lKDsur

Circulation fell at most of the largest U.S. newspapers compared with a year ago, despite new rules that give publishers more flexibility to boost their totals.

The figures released Tuesday, for the six months ending in March, mark the first time that newspapers have calculated circulation under the looser guidelines from the Audit Bureau of Circulations.

Among other things, the changes allow publishers to include free copies given to newspaper employees and local schools; before copies had to be bought to be counted. The changes also make it easier for newspapers to lump separate editions under different titles into one total.

Newspaper circulation has been falling as readers shift from the printed newspaper to free websites and mobile services. The electronic alternatives have become even more tempting as newspapers charge more for their print editions. Some of the falling circulation stemmed from publishers' decisions to shrink their delivery areas to save money.

Circulation is important because it affects advertising rates. Print advertising has long been the main source of revenue for newspapers, but it has been falling because of the uncertain economy and a shift by advertisers to free and cheaper options on the Internet.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/05/03/state/n163417D52.DTL#ixzz1LO3YRYjy

Companies wonder which type of improvement program is the best for them to implement. The important consideration is the identification of the company culture. An informal culture will best be suited for informal improvement processes. This type of organization will often change priorities based on the "opportunity du jour". The informal culture will falter if it has to follow too many rules or regulations. The more formal culture that understands the value of policy and procedure is best suited for full implementation of a quality program or a complete lean implementation. They will have the persistence built into the culture to "stay the path" when other opportunities, alternatives, or problems detract from the improvement process. Regardless of the path chosen, all organizations must remove non-value adding processes. Organizations must continue to relentlessly remove costs from their infrastructure.

Copyright 2011 - Jim Lindell www.thorstenconsulting.com

Kimberly-Clark Posts Softer 1Q Profit, Will Raise Prices (Source: http://fxn.ws/ez8Q70) FOXBusiness By Matt Egan Published April 25, 2011

CHICAGO – Kimberly-Clark (KMB) suffered a steeper-than-expected 8.9% slide in first-quarter profits as the maker of Kleenex tissues grappled with higher prices.
“We continue to execute our global business plan strategies in a difficult environment,” CEO Thomas Falk said in a statement.
Kimberly-Clark announced plans to raise prices in a “number” of its businesses, including North American consumer products.
“The rapid run-up in commodity costs has influenced our near-term profitability, so we are taking aggressive actions in response to the cost environment,” Falk said.
In light of the higher prices, Kimberly-Clark lowered its 2011 non-GAAP EPS forecast to $4.80 to $5.05, compared with $4.90 to $5.05 previously. Yet the company now sees full-year sales rising 4% to 6%, up from 3% to 4% previously. Organic sales are expected to rise 2% to 4%.
Shareholders punished Kimberly-Clark for the earnings miss and new guidance, sending the stock down 3.1% to $64.00 ahead of Monday’s open. The company’s shares finished last week up nearly 5% on the year.

Read more: http://www.foxbusiness.com/industries/2011/04/25/kimberly-clark-posts-lower-profit-says-raise-prices/#ixzz1KXjPHFVH

Thor's Hammer Note: Inflationary pressures continue to build throughout the economy. The thought of inflation was laughed at a couple of years ago and now it is impossible to read current news articles without noting some reference to the inflation spectre. Expect continued price increases in all of our daily expenses. Also expect to see confusion on the part of politicians as they struggle with an issue that they have contributed to. We are in trouble folks ...
© 2011 - Jim Lindell

From Finance.yahoo.com http://yhoo.it/dE3QNd
Newspaper ads sag to a 25-year low in 2010.
Newspaper advertising falls to lowest level since 1985 despite gradual easing of 4-year slump

SAN FRANCISCO (AP) -- Newspaper advertising in the U.S. has sunk to a 25-year low as marketing budgets followed readers to the Internet, where advertising is far cheaper than what publishers have been able to command in print.

Advertisers spent $25.8 billion on newspapers' print and digital editions last year, according to figures released Tuesday by the Newspaper Association of America. That's the lowest amount since 1985 when total newspaper advertising stood at $25.2 billion.

After adjusting for inflation, newspaper advertising now stands at about the same level as nearly 50 years ago. In 1962, newspaper advertising totaled $3.7 billion, which translates to about $26 billion today.

Author's Note: Many times the public stories of a changing industry can be easily seen in the underlying data. The data for the chart comes from the Federal Reserve. Note how each of the years are a continuous decline. Also note that 2011 starts off lower than the preceding years on the chart. This chart shows no sign of changing course. The Newspaper industry is in dire straits.

© 2011 Jim Lindell - Thorsten Consulting Group, Inc.

http://www.bloomberg.com/news/2011-03-10/americans-in-poll-show-little-confidence-with-plurality-perceiving-decline.html
From Bloomberg – Selzer and Co. conducted a poll in March of 2011. “There seems to be something of a disconnect between what people are feeling and what people are doing,” says J. Ann Selzer.

The gloomy outlook contradicts economic data showing the economy on the mend, and responses that question if the recession truly ended in June 2009.

1 American in 7 has faith a lasting economic recovery has taken hold and a plurality say they are personally worse off than they were two years ago.

Almost half of the respondents believe the U.S. is in a “fragile” rebound and could fall back into recession.

More than a third of the country believes the U.S. never emerged from recession.

Sixty-three percent of Americans say the nation is on the wrong track, which was the lowest in the national mood in the one and a half years the Bloomberg poll has been conducted.

Almost half of poll respondents say they are personally worse off than they were two years ago, when the country was losing 796,000 jobs a month and the economy was shrinking at a 4.9 percent annual rate. The stock market hit its post-financial crisis low two years ago yesterday.

While the 8.9 percent unemployment rate in February is the lowest in 22 months, American workers have been slow to make up lost ground. Only 1.3 million U.S. jobs have been regained of the more than 8.7 million lost since January 2008.

Bloomberg reporters on this story: Mike Dorning; Jonathan D. Salant