We live in a time of unprecedented change. Rapid advances in technology and the ravaging effects of a deteriorating economy only seem to accelerate it.

There is no denying that things are tough right now. But, as I’ve told a number of media outlets in the past month, business still goes on. The U.S. economy may not be growing, but it isn’t disappearing either. Despite almost daily news headlines announcing the latest downsizing or layoff, the reality is that the vast majority of the American workforce is still employed.

What’s different is that we are out of our comfort zone. We’ve taken a dive into the deep end of the economic pool, the water is cold and it is not comfortable.

As a result we’re experiencing stress in our professional lives, our personal lives, our economy, and our political system. Many of the things we took for granted - a stable economy, a steadily rising stock market, low prices, and a booming job market - are now heading in a new direction.

But compared to other times in the history of the United States things are not as bad as they seem. Think back to the Great Depression, World Wars I and II. Most of us have jobs, food, careers, education, and many opportunities. For those less fortunate, there are more safety nets and assistance programs than ever before.

There is a time for all things and this series of layoffs, downsizing, and economic recalibration is as necessary a part of the business cycle as are the seasons to nature.

Change can be a messy, painful, and tiring process but the good news is it almost always leads to something better. The changes that will follow this recessionary period will bring renewal and energy to our professional and personal lives. I cannot offer much insight about how your organization is faring or how it should deal with change, but I can offer you some tips about coping with your own change process.

Unwanted change causes defined behavioral patterns. Psychologists who have studied and documented the change process describe four distinctive phases we have to pass through to complete a change cycle.

Phase 1 - Denial

Many of us saw signs of the looming recession but denied it. We saw an ever-increasing housing market and wondered how long it could possibly last. Then we saw job openings decrease and heard the rumors about how sales were down. The normal reaction is to discount those stories…out of sight, out of mind!

While many of us know intellectually that some of these things are necessary and even useful, we don’t want to accept the change they bring with them. Whether thinking about our careers, jobs, or the economy there is no more denying that the changes have come and are real and permanent. Some tips to help get past denial:

• Do some research, and make decisions based on data and facts about whether the things you are seeing are real, useful, and whether they need to be acted on.
• Don’t put your head in the sand and naively hope things will just get better by themselves. They won’t. Your actions are the only things that will make things better or worse - nothing else.

Phase 2 - Resistance

Sometimes even when we have the information we need, we still resist. We refuse to go along with the new program or we complain loudly about its shortfalls. We argue about what has happened, why it happened, and we dig in our heels in a feeble attempt to hang on to the past. It is very difficult to accept change and overcome our dislikes and lack of comfort with the new order. Some tips to help get past resistance:

• Take small “baby” steps that will get you moving towards accepting the change, whatever it is. Try one new idea, tool or process and keep at it for a while.
• Network with others and see how they are managing to cope. Not everything you learn is going to be helpful, but many small things can make a significant difference to your outlook.

Phase 3 - Exploration

Very few people are able to jump into new situations without any concern or hesitation. Most of us tend to be overly cautious and adverse to any changes. You know you are entering this stage of the change process when you begin to embrace small changes without thinking about them.

Exploration is the phase when you begin to survey the landscape and explore the opportunities. You may try and discard many approaches - and that’s perfectly okay to do. In fact, it’s the right way to make change happen. Not everything is going to be successful or right for your situation. Some tips to get past exploration:

• Look for the good things that result from change. Note them, embrace them, get others to see the good in them too.
• Read more industry publications. Talk to more people. Begin to look for the positive, find the opportunities in your market space. Consider how you might capitalize on them.
• Think of positive ways to incorporate new applications or tools into your routine on a regular basis. That makes the changes less dramatic and gives you time to learn how to use them well.

Phase 4 - Commitment

Eventually we begin to see the new reality as normal. At some point we will have a hard time even remembering the “good old days.” Over time we feel more comfortable with the situation. Some tips on getting to commitment:

• Continue to embrace change, experiment and try new things.
• Continuously scan the environment for changes, trends, new products and solutions. Make action plans for how you’ll adapt, adopt, and embrace them.

We are living in a time of tremendous opportunity - it is just disguised as tumultuous change. If we can learn to be a little more comfortable with uncertainty, be open to thinking differently and adopting a broader perspective, we can not only positively influence changes in our work environment but, more importantly, in our selves.

The interesting thing about this discussion is that management consulting is all about change. Consultants are often viewed as change agents. Companies bring in consulting firms like M Squared Consulting to create change or solve problems related to changing market forces.

This recession will pass and business will pick up again without warning. Strategic organizations - those that have weathered the storm and embraced the resulting changes - will be ready to capitalize on the opportunities before them. We’re here to help.

Last month we were reminded in dramatic fashion about the value of professional experience and expertise. The real-life example was U.S. Airways flight number 1549 piloted by Captain Chesley B. Sullenberger, III.

After experiencing bird strikes in both engines he expertly glided the crippled airliner to a water landing in the Hudson River. While the 150 plus passengers were shaken up and wet, they all survived with only a few minor injuries.

Aviation experts all agree that the successful landing was a rarity. It was the first time in 50 years that a major aircraft crash-landed in the water - and every passenger on board made it out alive. Captain Sullenberger successfully executed one of the most technically challenging maneuvers, landing a jetliner, with no power, on water. There was absolutely no margin for error.

“I was sure I could do it,” Sullenberger said to Katie Couric in an interview. (See complete 60 Minutes here.) When he said he had to “force himself to use his training to force calm on the situation” Katie asked, “Was that a hard thing to do?” He replied, “No, it just took some concentration.”

In true hero fashion, before “Sully” exited the plane he walked the aisle of the sinking jet twice to make sure no passengers or crew remained.

It was truly a remarkable feat by an accomplished pilot.

There are many interesting parallels to the business world. I believe Sullenberger deserves notoriety not just for his flying skills but for what a seasoned, tenured, professional can bring to an organization.

In this time of economic turmoil and downsizing many companies don’t fully realize the enormous value that is locked up within their most senior-ranking employees. It is a mistake to just look at salary savings alone when reducing headcount. In many cases the older workers are the storehouse of institutional knowledge. When the economy recovers and the Baby Boomer generation again thinks of retirement, this dynamic will become even more acute.

Another parallel is the management consulting profession. Companies typically hire consultancies to solve problems. Their expectation is that the consultants have the knowledge and experience to help. At M Squared Consulting our tagline is “targeted expertise, driving results.” This symbolizes our value proposition, and is truly represented by the high caliber consultants we deploy on engagements. The average M Squared consultant has over 15 years of professional experience. To say they have “been there and done that” is an understatement.

Our consultants are seasoned professionals who have elected to practice consulting as a career. Like Captain Sullenberger, their tenure, seniority, and decades of experience have polished, honed, sharpened, and perfected their business performance. It is a win-win deal. The consultants benefit because they get to do the work they love for interesting clients. Clients benefit because of our consultants’ ability to identify and solve challenging problems, and deliver bottom-line results.

Last month noted futurist Dr. James Canton issued his forecast of the top 10 global business trends for 2009. These trends and predictions are designed to give people and business a heads-up on what might happen next in the economy, technology and society.

A word of caution is in order: Like all predictions by futurists, this list should be consumed with some level of scrutiny. Whether they are completely right, or totally wrong, they are some thought provoking ideas.

Dr. Canton identifies the coming year’s top global trends as follows:

1. Managing Complexity - This year, more than ever, the top skill that everyone will need is managing complexity. The complexity of dealing with immense and fast changes, the economic crisis, the job market, global competition and new technologies will require a high level of complexity management. Survival may well be dependent on how good a Complexity Manager you are.

2. High Agility Enterprise - Fast to change. Anticipating what’s next. Exceeding expectations. New innovations to serve customers, find profit, accelerate transactions, release creativity and empower employees and customers will transform business in 2009. Innovations like customer care portals, Wikis, Mashups, Predictive Analytics, Social Networking, Web 2.0 processes and products will drive competitive advantage this year. Business agility will be propelled by elegant, integrative Clouds, adaptive and innovative business IT processes. This is the year to migrate to more web-centric business transformation.

3. Global Connectivity - Information will find you. The pervasive mobile Internet is coming in 2009 and will connect everyone in business, customers-everywhere, and all the time, across borders, supply chains and industries. Entirely new business models, supply chains, customer care networks, markets and industries will be born from this always-on global connectivity. New business models that deliver real-time value, all the time anywhere and everywhere, will redefine markets-get ready now for this shift.

4. Blended Reality - The convergence of TV, computer, Net, wireless, telephony across interactive fast real-time broadband networks with GPS information will become a Blended Reality lifestyle in 2009. Rich media interactivity, real-time messaging, rich media and virtual worlds are coming. This lifestyle cuts across geography, markets and cultures. Blended Reality is the new global lifestyle and demographic that will emerge.

5. Navigating the New Risk Landscape - Get ready for a new level of scrutiny and regulation. In the Post-Economic Meltdown era every business and everyone will need a new strategy to deal with navigating risk and opportunity this year. It will change everything and touch everyone in 2009. Dealing with the aftershocks to the economic meltdown, which started in 2008, will be top of mind for every business and individual. Smarter moves and greater risk management will be prudent advice for this coming year. Navigating the new risks, new challenges and new threats will be key. We will look differently at risk-even missing some opportunities. Understanding how to navigate the changes and challenges of the new risk landscape will be essential this year.

6. Personalized Medicine - People are living longer and spending more to enhance their cognitive, emotional and physical performance. Radical new choices are coming that will challenge our values and laws. From prevention, to mapping your personal genome, to life-extension, longevity medicine is coming fast. This global marketplace will be the largest in the 21st century, driven by the Baby Boomer’s wealth and biotech’s future innovations in stem cells, synthetic biology, and cloning that will transform health care making it boldly predictive and personalized.

7. The MegaCity Consumer - From China to India, to Latin America and the EU, there is a new consumer demographic that is emerging driven by massive urban migration. They live in megacities, are highly mobile and are transnational. The MegaCity Consumers are the new middle class, tech savvy, highly mobile and entrepreneurial. They are driving up demand for products and services that could reach over 120 countries, generating billions by 2035. This new global middle class is being born and they want the prosperity and quality of life that is defined by the consumer marketplace.

8. Beware Dark Networks - Security will be an increased risk factor for business in 2009 given the vulnerability of computer networks that increasingly connect us all. From hackers to identity thieves, to terrorists and criminals, the future is bright for the Dark Networks. Business needs to invest in deeper innovations in security and take it to the next level. More sophisticated and complex fraud, theft and terror attacks will threaten modern society, so be prepared and invest now in prevention.

9. Green & Clean Sustainability - Billions will be invested in alternative energy, clean tech and climate change in 2009. The Obama administration will embrace the sustainability trend. We will capitalize on cleaning up the planet, reducing foreign oil dependence and reducing global warming. Customers are going green. Consumers will want increased corporate accountability in protecting and saving the environment. Smart companies will now leverage Green & Clean policies, products and services-and be held accountable if they are not.

10. Strategic Vision: Future Readiness - Most businesses are not ready for the future. Witness the economic beating of this past year. Each business needs to develop a predictive awareness-a sensing capability of what is next. Developing a capacity to see what’s next and prepare by monitoring trends, developing business foresight with an eye towards the longer more strategic view will be essential to success in 2009. New profit opportunities will come from those companies that see the future first and become Future-Ready-anticipating, adapting and evolving before the competition.

While individual components of these predictions can be argued, the overall theme of “change” is undeniable and inevitable. As I look at M Squared Consulting, a big part of our value proposition to clients is in both creating and managing change. Our expert consultants help clients develop robust strategies to address mission-critical issues, then we provide the targeted expertise to help execute the resulting plans.

There has been a rapid growth in the number of “green collar” jobs in the state of California over the past few years. According to a new report from Mountain View, Calif.-based Collaborative Economics, between 2005 and 2007 alone, employment in the sector increased 10 percent to about 105,000. To put that in context, during this same time period the overall workforce grew about one percent statewide.

This shift is significant for the state as a whole and Silicon Valley in particular. In Silicon Valley many formidable cleantech companies have taken root alongside the old guard technology companies. The region has always been a hub for computing technology but only recently emerged as a leader in the green economy.

The wave was kicked off in 2004, when then-California Treasurer Phil Angelides pushed the state’s large public pensions (CalPERS and CalSTRS) to commit $1.5 million to a “Green Wave” program. The initiative included investments into venture capital firms that backed clean technology companies. The trend reached a crescendo in 2007, when green evangelist Al Gore decided to join the prestigious Valley venture firm Kleiner Perkins Caufield & Byers to help on clean technology investments. Many cleantech startups have rushed to set up shop nearby and other VC firms have also dedicated substantial resources to cleantech initiatives.

According to the latest MoneyTree Report, compiled by PricewaterhouseCoopers and the National Venture Capital Association, venture capital investments plummeted during the final three months of 2008: VCs invested $5.4 billion in 818 deals, down 26 percent from the $7.3 billion Q3, and the lowest dollar amount invested since the first three months of 2005. Overall, the report shows $28.3 billion invested in 3,808 deals during the past year, making 2008 the first time venture investments have fallen year-to-year since 2003. But there was a substanital silver lining in cleantech - if you look at all of 2008, cleantech investments actually rose a whopping 52 percent from the year before. The sector accounted for seven of the year’s 10 largest deals.

A few other interesting findings:

• More than $3 billion in venture money was invested in California cleantech companies in 2008 - representing over 57 percent of all U.S. investment in the sector.
• California has produced the highest number of patents (607) in the solar, wind and battery industries.
• Energy productivity (the total GDP produced per unit of energy) is 68 percent higher in California than the rest of the country. California generates $2.17 in GDP for every 10,000 BTU of energy it uses. Contrast that with the $1.29 for every 10,000 BTU for the whole U.S.
• More than 100,000 vehicles registered in California are hybrids or run entirely on electricity or natural gas. To hit the point home, more than 20 percent of all hybrids in the country were registered in the San Francisco Bay Area, Los Angeles and Sacramento.

These trends will only continue during the Obama Administration. The President has already endorsed the state’s stringent vehicle emissions standards. This clear support from Washington, and the likely investment of substantial “stimulus” money in cleantech, could go a long way toward fostering further growth in electric car development, solar and wind technologies, and other innovations to limit emissions and energy use.

In addition to specialized technical talent, many of the emerging companies in cleantech have needs for traditional business expertise in functional areas like marketing, human resources, finance, and operations. At M Squared Consulting, our Energy and Technology practice areas are ready to assist clients by deploying expert consultants on engagements to deliver results. Our unique talent-on-demand business model lends itself to the way Silicon Valley, and fast growing companies, work.

With the November 2008 release of its proposed roadmap for US domestic public companies to use International Financial Reporting Standards (IFRS), the US Securities & Exchange Commission (SEC) effectively ensured that the US path to IFRS will remain in the headlines throughout 2009.

Comments on the proposed roadmap are due in mid-February, and the number of commentators is expected to exceed almost any other proposal released by the SEC. The comment letters will likely fuel the debate over whether and how the final roadmap should be implemented, leading right up to the issuance of the final roadmap, which is now unlikely to occur until late 2009.

The SEC strategically did not set a definitive date for moving the United States to IFRS in the proposed roadmap. Instead, they established a number of milestones for moving to IFRS, and committed to revisiting in 2011 the question of mandatory IFRS adoption. They will assess in 2011 whether sufficient progress has been made toward those milestones.

Some of the more significant milestones include:

• Achieving sufficient improvements to IFRS.
• Enhancing the independence, accountability and funding of the IASB and its Trustee Organization.
• Achieving sufficient progress on the taxonomy for XBRL compatibility.
• Realizing sufficient improvement in IFRS education and training in the US.

The SEC also plans to study the consistency with which IFRS is applied globally, believing that consistent application of IFRS as issued by the IASB is critical prior to moving the US to IFRS.

The proposed roadmap suggests that a reasonable timeline for moving the largest US public companies to IFRS is 2014, with mid-size and smaller public companies moving in 2015 and 2016, respectively. First-time adopters would be required to file three years of IFRS financial statements (with two comparative years), consistent with current SEC requirements.

Included in the proposed roadmap is a proposed rule that would allow companies meeting certain eligibility criteria to adopt IFRS as early as 2009. To qualify, companies would have to be in industries where, globally, IFRS is used more than any other accounting framework. These companies would also have to fall within the largest 20 companies in their industry, as measured by market capitalization. Finally, any eligible company wishing to adopt early would need to obtain a letter of no objection from the SEC.

The SEC is also asking respondents for views on two transition alternatives by filers that elect early IFRS adoption. First, filers would provide a one-time reconciliation of US GAAP to IFRS in accordance with normal IFRS 1 transition requirements. Under an alternative, filers would have to provide an annual unaudited supplemental reconciliation from IFRS to US GAAP covering the three-year filing period.

Implications of the proposed roadmap

In the absence of a firm decision to move forward with IFRS until at least 2011, the restrictive eligibility requirements and the potentially onerous reconciliation requirements for companies who decide to convert to IFRS early are likely to dissuade virtually all US companies from early adoption. Some US companies may even put the topic of IFRS on the back burner for now. However, strategic, forward-thinking companies are expected to continue planning for IFRS adoption.

Although the path ahead for IFRS in the US is not yet clearly defined, the end-game is virtually certain: all signs point to the eventual use of IFRS by all US companies. To develop a thoughtful and strategic approach, companies should begin to learn more about IFRS and how it may impact them. Specifically, companies would benefit from performing a preliminary study now to identify business-, accounting-, investor-, systems-, controls- and workforce-related issues that could arise during an IFRS conversion. Companies should also identify key IFRS conversion considerations and incorporate them into business planning to ensure they are considered as a business changes occur over the next few years.

Management must prioritize the investment of resources and capital, especially in these difficult financial times. While a comprehensive IFRS transition program may be farther off, there are certain areas of focus that can provide benefit now. Companies should consider the most significant IFRS conversion activities, as identified in a preliminary study, and make an investment only to the extent that company or industry-specific circumstances warrant it.

Multinational companies should also consider the impact of IFRS on foreign subsidiaries and understand where the company already uses IFRS or could use IFRS in the near future, and ensure the US parent maintains control of IFRS decisions across the business.

The road ahead

Given the scrutiny around accounting and its role in the global credit crisis, it is not surprising that the SEC has chosen a cautious, measured approach to laying out the path forward for a US move to IFRS. However, the credit crisis also clearly demonstrates the interconnected nature of the global financial markets and further demonstrates the need for a single set of high-quality accounting standards.

A combination of factors will influence the direction the SEC takes related to IFRS over the next 12 months - the development of new accounting standards by both the FASB and IASB, the political implications of the new Obama administration, the comments received from constituents on the proposed roadmap, and even the level of vigor with which the EU continues to support the IASB, to name a few. Companies will need to stay tuned and monitor the timing and tenor of the developments in order to plan appropriately.

Effective knowledge transfer and retention will prove to be a vital core competency for companies as their Baby Boomer employees retire.

Among some HR practitioners it is an open question as to whether the eminent retirement of the Baby Boomer generation will lead to a massive labor shortage in the U.S. or if there will instead be a skills shortage and increased unemployment as organizations offshore jobs in search of cheaper skilled workers.

According to the U.S. Bureau of Labor Statistics, the overall labor force will grow 12 percent by 2012. But the percentage of workers aged 55 and older will increase by 49.3 percent over the same period. More than a quarter of the current working U.S. population will reach retirement age by 2010. Although the economic recession will likely delay the decision to retire for many, there is no question that they will retire at some point.

But despite these statistics and the exodus of skills and experience that the retirement of these aging workers will bring with it, many HR professionals in the U.S. question whether this really will result in a labor shortage.

According to the “Future of the U.S. Labor Pool Survey Report” from the Society for Human Resource Management (SHRM), only a quarter of HR professionals believe that the flood of retiring Baby Boomers will be a problem to their organizations, and 43 percent only believe that it has ‘the potential’ to become a problem.

These survey results are alarming, for there is no question that the upcoming demographic shift will present major workforce challenges to U.S. companies.

According to SHRM President, Susan R. Meisinger, “We know there will be millions of Baby Boomers retiring and that some workers now entering the workforce lack core competencies. These are serious HR and workforce issues that could undermine the nation’s global competitiveness. And HR must determine how to meet these challenges,” she said.

Offshoring has been touted as the solution to our domestic talent shortage. The SHRM report suggests that while almost no organizations have made plans to move, 17 percent have outsourced or offshored jobs, with another 17 percent planning to do so in the near future. But the long term viability of this strategy is less clear: wage normalization is happening across the globe, talent flight, and increasing instability and safety concerns in many popular outsourcing locations (like India) are causing companies to re-evaluate.

Other HR professionals see the lack of core competencies from employees now entering the workforce as the key challenge to the future of the workforce. About half of respondents said they are seeing new workers entering the workforce lacking overall professionalism, written communication skills, analytical skills, or business knowledge. A lack of core competencies poses a serious challenge to HR professionals because this issue is closely tied to public and higher education, and HR may be constrained in its ability to address the problem.

Perhaps the biggest issue, according to research conducted by Accenture, is that many U.S. organizations are failing to capture critical knowledge and experience from their older employees who are approaching retirement and few seem able to transfer this valuable knowledge to newer employees.

The survey of more than 500 full-time U.S. workers between 40 and 50 years of age found that nearly half (45 percent) of employers have no formal workforce planning processes and/or tools in place to capture their workplace knowledge. Moreover, a quarter of those surveyed said that their employers will let them retire without any formal transfer of knowledge.

Only one in five said they anticipated an intensive process of knowledge transfer prior to their leaving, while fewer than one in three (28 percent) said they expected to undertake a formal process lasting one or two weeks. For a further 16 percent, the extent of the transfer process would be some form of informal discussion with others in the organization prior to their retirement.

If they don’t act soon, organizations will face a major exodus of institutional knowledge, as their most experienced employees leave the workforce. Companies must undertake workforce development and training initiatives to capture their knowledge and minimize its loss.

As Debra Cohen, Chief Knowledge Officer of SHRM, pointed out: “When the talent and knowledge of retiring workers walks out the door, every organization needs to make sure they have others ready to fill the gaps.”

The research also revealed that few companies take advantage of the experience and expertise of their retired workforce. Only a third of respondents said that their companies ever hire retired employees as contractors so those former employees could come back to the workplace and transfer their knowledge and skills to their replacements.

Companies should take three critical steps to meet the challenge of transferring knowledge from retiring employees:

• First, they must understand the extent of the problem, including the knowledge and skills at risk, and their organization’s ability to tackle it.
• Second, they must develop a strategy to capture and transfer knowledge and core skills from retiring employees and to identify, attract and retain new workers with critical skills.
• Finally, they must manage and measure the progress of the entire effort. The bottom line is that leaders in this arena know that capturing critical workforce knowledge and skills can’t be left to chance.

M Squared Consulting’s core competency is helping our clients when they’re facing critical gaps in knowledge, experience, or bandwidth. Our ability to bring in targeted experts and focus them on delivering engagement results is unparalleled. Part of our process is to ensure complete knowledge transfer at the end of every engagement. Our sister company - Collabrus - also offers clients an innovative solution called the Retiree Re-engagement Program. This tailored approach can simplify the process if you bring back retirees to transfer knowledge, mentor, or train current employees while mitigating independent contractor and worker misclassification risks.

With California facing a $42 billion deficit in the current economic downturn, a gloomy Governor Arnold Schwarzenegger has warned that the Golden State is on the brink of insolvency.

According to government statisticians over the past year more people have left California than any other U.S. state. No doubt many leave because they are disenchanted with snarled traffic, scarce jobs, expensive housing, and some of the highest taxes in the nation. Add to that the prospect of still higher taxes and fewer public services, and it would appear that normally optimistic Californians have little to celebrate.

But despite these negative sentiments, many experts now say the most populous state in the U.S. (and the world’s eighth-largest economy if it were a country) is extremely well positioned to rise again. In fact, the financial crisis could spur major changes in the state economy that will pay huge dividends in the long term.

How?

Well, California is blessed with abundant natural resources, large ports and access to the Pacific Rim, a large and relatively young work force, a strong entrepreneurial culture, and a huge technology industry. Once we get past the Great Recession of 2008/09 all these factors become significant assets for California’s future.

“The prophets of doom and gloom are just not looking at the reality of California,” said Jerry Nickelsburg, senior economist at the UCLA Anderson Forecast.

“The government has created kind of a mess and that’s a problem to be solved, but the negatives are actually fairly small. I think you can expect a lot of good out of California,” he said.

We must remove the rock upon our chest

The typically positive Governor Schwarzenegger recently made headlines when, instead of delivering his usual cheery “state of the state” speech, he issued a bleak message about California’s roughly $1.5 trillion economy.

“California is in a state of emergency,” said the Governor. “Addressing this emergency is the first and greatest thing we must do for the people. The $42 billion deficit is a rock upon our chest and we cannot breathe until we get it off.”

At the heart of California’s problems, economists say, is the government’s heavy reliance on personal income taxes as a funding source. This produces wild swings in revenue as State coffers overflow in good years and then dry up in leaner times.

A big reason for the state’s reliance on income taxes is Proposition 13, a voter-approved change to the state Constitution that limits property tax increases and requires any plan to boost taxes to receive the approval of at least two-thirds of the legislature. As a result, state Legislators have responded by burdening state residents with some of the highest income and sales taxes in the U.S.

This has worked up till now because of steadily increasing employment and wages. But now unemployment rates have turned grim, with the state’s jobless rate in December rising to a 14-year high of 9.3 percent, well above the national average of 7.2 percent. This rate is approaching the same level as the recession in the early 1990s, when California’s economy suffered from the post Cold War decline of the aerospace and defense industries, and unemployment rose to nearly 10 percent.

Clearly income and sales tax revenues will come up short if more Californians aren’t working.

Time to re-set the economy

Many economists say California has long needed to fix that revenue roller-coaster ride and are hopeful that this current crisis will force state leaders to take action.

Is the problem going to be compounded by the exodus of people? Probably not, since California’s population (currently 38 million) is actually still growing thanks to immigration and births. It is misleading to compare absolute numbers with other states when California’s population is so much larger than any other state. California’s population could hit 60 million by 2050, according to some projections, six times 1950’s 10.5 million people and 60 percent more than today.

Looking ahead

Despite the recession, California remains a leader in technology, green energy, biotechnology, aerospace and other industries that are expected to fare well in the world economy and create many new job opportunities.

Demographics give California one other bit of good news: the state’s relatively young work force will certainly give it an edge as the economy recovers and baby boomers once again think of retirement.

Hard-hit by the mortgage crisis and foreclosures, home prices have dropped across California - making home ownership achievable for the first time in nearly a decade for many young families. Although this is not good news for current homeowners, it will prove to be important as the war for talent heats up and the cost of living in California potentially becomes a detriment to recruiting.

The time for industry and government to re-invent themselves is now. The sooner we stabilize things and make realistic plans for the future, the better positioned we will be to capitalize on the recovery. At M Squared Consulting we’re actively helping many clients to both weather the storm and build solid foundations for future growth.

There’s an old copywriting rule, known as K.I.S.S., which I think has broad applicability to business.

Apple is a great example in the Silicon Valley. They recently announced that they made over $10 billion in revenue last year with record profits, and also sit on an estimated $28 billion in cash. Their dedication to designing great products and making it easy for their customers to buy are the keys to their success.

Think about it: Apple sells one cell phone, four iPods, three notebooks, and three desktop computers. (And, of course, a few million songs on iTunes!) That’s their entire product line.

Compare that to the other major companies in the space (Dell, HP, etc.) who have a bewildering number of choices in the product lines.

Full disclosure: While I own an iPod, I carry a Blackberry, and also use a ThinkPad…so I come at this less from a raving fan’s perspective and more as a business admirer.

Apple’s brilliance is in making great products and not overwhelming the consumer with choices. They’ve condensed their product lines into distinct segments geared to different buyers. You want a basic Macintosh computer? Buy the Mini. The iMac is available for all-in-one solutions and the Mac Pro is for professionals. The same logic follows into their notebooks and iPod realms.

Apple’s strategy of keeping things simple also allows them to perfect their offerings and offer greater value to their customers as a result. It allows them to focus on engineering and the user interface - every Apple product is intuitive to use and works right out of the box.

This strategy is vastly different from that of most other companies in the technology sector.

Interestingly enough, it is not limited to just technology companies. Hamburger aficionados on the West Coast know that it can also be found at In-N-Out Burger. This privately-held fast food chain offers one of the simplest menus you will find anywhere (hamburger, cheeseburger, fries, soda, and milk shakes.) Everything is fresh and, as the lines out the door will attest, their food tastes great. I’m told their menu has never changed. Compare that to a McDonalds, where the overwhelming menu seemingly changes every week, and the food certainly isn’t fresh.

At M Squared Consulting we like to keep things simple too. Our value proposition to clients is delivering expert consultants who drive results. This single-minded dedication to client success allows us to be totally focused on client satisfaction on every engagement. Whether it’s a single consultant, a team of consultants, or an interim role, M Squared cost-effectively delivers a consistently high caliber of expertise. In a world full of hype and confusion we find that clients appreciate this consistency and value from us.