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You Can't Become Rich In Your Pocket Until You Become Rich In Your Mind | ||||
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As investors we are passing through a trying incubation interval and a gut-wrenching overthrow of an old dominant investment systemTHE REACTIVES AND THE NINETEENTH-CENTURY INCUBATION INTERVAL, 1870-1896 One of the most famous reactives to represent the nineteenth-century incubational interval was John D. Rockefeller. He was born in 1839. In 1870 he created the alliances that were to become Standard Oil. Strauss and Howe described reactives as practical, cynical, playing-towin types. Any biography of Rockefeller will reveal that he fit that profile perfectly. Gustavus Swift was born in 1839 and left his family farm to become a butcher. Cattle buying used to be part of a butcher s job, and Swift excelled at it. By 1875 his reactive personality had him succeeding as the owner of a cattle-buying firm in the then-ruthlessly competitive city of Chicago. He conceived the idea of shipping dressed beef in refrigerated railroad cars and the mass marketing of meat was born. The mass marketing of general merchandise was developed and pioneered during the nineteenth-century incubation interval by Marshall Field, born in 1835. In typical reactive fashion, many other future business leaders rose from low- and middle-class backgrounds to become industrial icons. Andrew Carnegie, Rockefeller, and Jay Gould applied their competitive, risk-taking natures to break out of any strictures imposed by social class. Cautious and cunning, they built their own institutions to protect their wealth and power. To retain control over their empires as they aged, the reactives used a militaristic business model where there was no doubt about who was in charge. The industrialists imprinted that legacy, born of insecurity, on the companies of the twentieth-century investment system, and it remains a marker that distinguishes those companies from the new investment culture. Chains of command, pecking orders, low tolerance for individuality, and the rewarding of rank and power over competence are holdovers from the Dows dominance. Like much useless detritus, we have lived with it so long that we have forgotten where it came from and what purpose it originally served. THE IDEALISTS AND THE TWENTIETH-CENTURY INCUBATION INTERVAL, 1970-1993 One of the most famous idealists to represent the twentieth-century incubation interval is Bill Gates. Born in 1955, he left Harvard and founded Microsoft in 1975. Gates is often compared to Rockefeller in terms of extraordinary business success, but Gatess style is indicative of the difference between the two dominant investment systems that these two business leaders helped to create. One cannot imagine Rockefeller describing the benefits of his products in terms like this: A digital nervous system . . . [is] distinguished . . . by the accuracy, immediacy, and richness of the information it brings to knowledge workers and the insight and collaboration made possible by the information.14 Insight and collaboration are not often mentioned in biographical material as being high on Rockefeller s list of business objectives. Another idealist/boomer is Tim Berners-Lee. He graduated from Oxford University in 1976. During the incubation interval he created the first workable hyperlink system for the Internet. This innovation makes the new realize, capitalize, customize business model possible. The idealist/boomer Steve Jobs was born in 1955. He joined Atari in 1974 to design video games in the first years of the incubation interval and then, of course, founded Apple Computer. Strauss and Howe explain that as adults, the idealist generational types gradually reshape institutions around new values.15 It is easy to see that during the incubation interval, idealists created and supported the kinds of innovations that could provide the framework for these new values. In a farsighted article published by Good Housekeeping in the economically bleak year of 1989, the editors had this to say about what kinds of values the idealist/boomer generation would bring to the table: New Traditionalists lead an unstoppable environmental juggernaut that will change and inspire corporate America, and let us all live healthier, more decent lives and make people look for what is real, what is honest, what is quality, what is valued, what is important.16 Mix in some less attractive traits attributable to the maturing idealist/boomer willful, domineering, arrogant add creativity and individualism, and you have the profile of the dominant investment system in which we will be living from now on. It is true that we are drawing sharp distinctions where in reality there are blurry lines, but it is not hard to see that the atmosphere of the realize, capitalize, customize investment system, created by the idealists, already feels very different. The presidents, CEOs, chairmen of the boards, and chief financial officers of the Digital Dow2 companies we have spoken with do not en sconce themselves in ivory towers. They return phone calls, work alongside their employees, and put in long hours. They believe in treating their employees well, not because they have to, but because they want to. The result is a highly creative and motivated workforce. They believe in partnerships with their customers rather than adversarial relationships in which winning the upper hand is most important. The defining characteristic of Digital Dow2 companies is their in sight. How did Les Muma imagine in the 1970s that Fiserv would become indispensable to twenty-first century commerce? How do Les Muma, Ed Labry, David Halbert, Richard Haddrill, Jim Sinegal, Jack London, and Jim Madden see beyond the pressure of next quarter s earnings report to find how they can enrich not only their companies but also the entire American culture? The energy that comes from vision is what sets the new investment culture apart and will make it more productive and profitable than any we have experienced so far. We can speculate that the linear, civic generations do not have the vision, and the conforming adaptive generations are too accepting of tradition, to initiate a new investment culture. But their important contribution comes later. It is the adaptives and the civics who staunchly defend and maintain the institutions created by the idealists and the reactives. Each generational type serves a purpose during the life of a dominant investment system and lends its character to it. Now that we know that the dominant investment system of the Dow was created by a generation of reactive types, it is easy to see why, as adults, they would strive for the security that wealth and power provide. In the words of Strauss and Howe, they had parents who exposed their children to the real-world anxieties and dangers . . . within a self-absorbed adult society.17 It is no surprise that this generational types entrepreneurs built large fortress-like companies around themselves. They had parents who raised them with little sense of mission or direction which as adults encouraged conformism.18 It is no wonder that this group invented massmarketing The investment system set up by the nineteenth-century reactives was followed by the adaptives who, once the ball is handed off to them, excel at carrying it. George Eastman, born in 1854, and Thomas Edison, born in 1847, were typical adaptives. They would not initiate economic or social change, but they were men of genius whose successful companies were built on the models created by the reactives before them. The civics were there to defend and support the institutions that evolved. If the next generation of civics produces individuals of the same caliber as the last generation of civics (John Kenneth Galbraith, William Westmoreland, Joe DiMaggio, Robert McNamara), our new investment culture has a long and secure future. Imagine building the perfect wealth-creating machine, one that would last long enough for our childrens children and their children to benefit. Because such a thing has never existed before, the most creative and visionary individuals should be selected to design and engineer its architecture. Next, enterprising entrepreneurs should be found who excel in getting the most mileage possible out of a new opportunity and whose practical natures will ensure that kinks get worked out and opportunities are exploited. Its success may inflame rivals by upsetting the global balance of wealth and power so that another group of courageous individuals, inspired by the benefits they have enjoyed through the efforts of the other two, will step in to defend it. After the dust settles, a loyal group is needed to maintain and enhance its systems When we poke our heads out of the forest long enough to see the trees, we find ourselves right now in the midst of just such a perfect wealth-creating machine. It was designed and built by the idealist/ boomers during the incubation interval. Ambitious and entrepreneurial reactives are giving it momentum. Very young civics are standing in the wings to defend it from inevitable aggression foreign and domestic and they will be followed by adaptives who believe, as todays adaptives do about the old wealth-creating machine, that this is the way things are supposed to be done. As investors we are passing through a trying incubation interval and a gut-wrenching overthrow of an old dominant investment system. All the while we have been carried along by a current of humanity to a juncture where things have finally fallen into place. Not only do we deserve to be here, but we can also point to the cycles of history We explained in Chapter 2 that the end of the acceleration phase for the dominant investment system of the Dow ended in 1929. We projected that the acceleration phase of our new dominant investment system represented by NASDAQ or Digital Dow2 stocks would end about 2011. There are 82 years between 1929 and 2011. To paraphrase Strauss and Howe, we may not be able to predict every rogue wave, but the historic perspective will keep us from running aground. Today the danger of grounding stems not from destruction of our assets, but rather from missing the opportunities of a lifetime while our heads are fearfully buried in the sand. |
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