Let That Sink In

The Supply Times Issue #67

Naseem Malik
November 21, 2024

Hello again, dear readers!

The private sector is stepping into the ring to reform the government sector, led by the most eccentric CEO of them all. Elon Musk, supported by Vivek Ramaswamy, has been tasked by the incoming Trump administration with stripping an eye-watering $2 trillion from the federal budget. How successful could he be? Historical attempts to do the same have produced toothless recommendations or ended up mired in litigation, but (love him or hate him), we know that Musk can get things done. SpaceX, anyone?

Also, I jump back into one of my favorite topics: the importance of hiring older workers. Fascinating new research shows worker motivations evolve with age, yet too few firms recognize the changing priorities of older workers when designing their talent systems. How can we better recruit, reskill, and retrain older workers while respecting their strengths?

This issue features the usual bunch of AI Insights and recommendations for the week's podcasts, books, shows, charts, and tweets, followed by a final chuckle.

Let’s get going.

Industry Highlights: Let That Sink In

You might remember the moment in 2022 when Elon Musk waltzed into Twitter HQ holding a kitchen sink, tweeting, “Let that sink in!” It was a nod to the platform’s culture and a not-so-subtle warning that change was coming. Fast forward to today, and Musk is gearing up for another shake-up, aiming to overhaul the U.S. government alongside Vivek Ramaswamy. Together, they’ve accepted Donald Trump’s mission to cut government waste, a project they’ve dubbed the Department of Government Efficiency—or "Doge," for short.

What’s Motivating Musk?

Elon Musk is no stranger to frustration, especially when navigating government regulations. As Tesla and SpaceX have soared, so too have his encounters with bureaucratic red tape. Musk has publicly lamented the inefficiencies he faces, noting that it takes longer to process paperwork than it does to build a rocket. His recent declaration that “unless we push back, everything will become illegal” shows how fed up he is with the regulatory environment.

Musk’s motivations are clear: streamline the government to unlock innovation and reduce what he sees as unnecessary obstacles to business. This isn’t just about making life easier for his own businesses—it's about embarking on a broader crusade against what he views as the stifling hand of bureaucracy. He has pledged to cut $2 trillion from the federal budget, a daunting task considering the total federal budget for fiscal year 2023 was approximately $6.3 trillion.

Ramaswamy’s Vision

Vivek Ramaswamy, the former pharmaceutical entrepreneur turned political figure, shares Musk’s disdain for bureaucratic inefficiency. He’s been vocal about the need to “massively downsize” the federal government, arguing that unelected bureaucrats inhibit innovation and progress. Ramaswamy has a particular target in mind: the Department of Education, which he’s suggested should be shuttered entirely.

Together, Musk and Ramaswamy are pushing for significant cuts in government spending, with an eye on departments that collectively account for over two-thirds of all federal outlays—namely, Defense, Social Security, and Healthcare. Musk’s ambitious goal of $2 trillion in cuts would mean eliminating an unprecedented 31.7% of the federal budget.

Targeting the Right Departments

So, what do we know about their targets? According to the Financial Times, early signals suggest a focus on the Department of Defence, which alone accounts for around $877 billion of the federal budget, and the HSS, which has a budget of approximately $1.7 trillion. Musk's track record of tangling with the National Highway Traffic Safety Administration (NHTSA) indicates he may also seek to reform or reduce regulations affecting his companies directly.

However, cutting through the government’s sprawling bureaucracy won’t be easy. The federal workforce comprises over 2.2 million people, and dismantling agencies or cutting budgets will likely face resistance, even from within the Republican party, where many members represent districts reliant on government jobs.

How Effective Might It Be?

Let’s take a look at the feasibility of this ambitious plan. Historically, efforts to trim government fat have met with mixed results. During Trump’s first term, he aimed to roll back regulations but was ultimately only able to rescind about 30% of Obama-era rules, largely due to legal challenges. Ronald Reagan’s 1982 initiative to root out inefficiency - similarly led by a tycoon from the private sector - generated thousands of recommendations but resulted in very few concrete changes: only about 10% of proposals were fully implemented.

Critics are already predicting that Musk and Ramaswamy’s endeavor might end up as “just another external advisory committee”. While they claim to seek radical reform, their initiative could mirror Trump’s Advisory Commission on Election Integrity, which fizzled out after getting tangled up in legal challenges.

The Economist predicts that amid this push for deregulation, two things will happen: American firms will do better than non-American ones, and smaller listed companies should enjoy a bigger boost than larger ones.

Cutting red tape (in theory) will significantly lower costs, especially for smaller firms that often struggle with bureaucracy. American companies are already outperforming their global counterparts in size and profitability, and deregulation could amplify this advantage. Many of these firms are less exposed to international trade, allowing them to lean on the vast domestic market during trade tensions. Plus, a more relaxed regulatory environment might pave the way for more mergers and acquisitions, which could be a game changer for smaller companies looking to grow.

Investor confidence is also rising, as seen with the S&P 500's 3.5% increase and the Russell 2000's impressive 5.8% jump post-election, signaling optimism about the future.

The Private Sector is Coming For Government Spending

The overarching narrative here is clear: the private sector is stepping into the ring to reform the government sector, led by an inimitable CEO. There’s a certain allure to the idea of a billionaire tech mogul turning his sights on the government, promising to apply private sector efficiency to public service. Yet, whether this translates into tangible results remains to be seen.

While Musk and Ramaswamy’s plan has the potential to shake things up, history suggests they might face significant hurdles. The challenge of navigating political realities, entrenched interests, and the complexities of government operations could leave them grappling with the very bureaucracy they seek to dismantle. With a budget of trillions on the line, will they sink or swim? Only time will tell, but one thing’s for sure: the kitchen sink is just the beginning.

Image: The Intern (2015)

The Future of Work: Companies are not ready for an older workforce

Come and work for us! We have bean-bag chairs, ping-pong tables, after-work happy hour, and Red Bull-sponsored spin classes!

It’s not unusual to see a company’s EVP aimed squarely at the 20-something demographic. But an increasingly clear trend is emerging where the ranks of the average business will soon swell with older workers. Talent teams need to start thinking - today - about how they can attract, train, retain, and engage older workers as they come onboard (or stay onboard) in increasing numbers.

All images: Bain

By 2031, workers aged 55 and older will make up over 25% of the workforce in the Group of Seven countries. In Japan, this figure will soar to nearly 40%. In the U.S., a striking 41% of workers expect to remain in the job market beyond age 65, a dramatic increase from just 12% three decades ago. Despite the pandemic causing a spike in retirements, many people are now reentering the workforce, indicating that this trend is more of a long-term shift than a temporary blip.

However, organizations are lagging behind this demographic reality. An AARP survey revealed that fewer than 4% of firms have implemented programs specifically to attract and retain older workers. More concerning, only 27% of employers indicated they were "very likely" to explore such initiatives in the future.

This slow response is alarming, especially considering that by the decade's end, around 150 million jobs globally will shift to workers aged 55 and older. This is almost equivalent to the entire working population of the U.S.!

So, how can companies effectively tap into this vast pool of talent? Here are three crucial steps to consider, according to research and recommendations from Bain’s Better With Age report.

1. Retain and Recruit

Understanding what motivates older workers is key to retaining and recruiting them. Predictably, good compensation is vital, especially before age 60. But after that, priorities shift significantly. By the time they reach their 60s, “interesting work” becomes the top job attribute, with autonomy and flexibility gaining importance as well. Older workers increasingly seek control over their hours and may prefer part-time, self-employment, or freelance roles as they transition toward retirement. Employers need to recognize these changing priorities and adapt their offerings.

The Japanese do this well. Mitsubishi established a Career Design Center specifically for employees aged 60 and older, offering customized training, job matching, and individual consultations. Similarly, Tokyo Gas's Grand Career System targets all employees over 50, providing career development support, training, and one-on-one mentoring.

Here’s an interesting idea: we know retirees like to follow the sun, but what if companies offered the same chance to their older workers? CVS Health’s “Snowbirds” program allowed several hundred pharmacists from cold climates to relocate their jobs to warmer states for the winter, resulting in a retention boost for older talent.

2. Reskill

While it might seem that older workers are less interested in learning and growth, the reality is nuanced. Only 3% of workers aged 55 and older rate learning as their top motivator, compared to 8% of younger employees. Many believe they are already equipped for their roles, with 29% of those aged 55 to 64 stating they don’t need new skills.

However, there's a significant demand for tech skills, with 22% indicating they need to upskill. Companies should design training programs that resonate with older workers, focusing on how these skills can lead to more interesting work. Encouraging supervisors to promote participation can also enhance engagement.

Targeted training works. Home Depot partnered with AARP to recruit and train workers 55 and older. Just a few months after launch, 11,000 older workers had applied, and more than 1,000 positions were filled.

3. Respect Their Strengths

Older workers bring unique strengths to the table. They tend to be more loyal, satisfied, and eager to mentor others, enriching workplace culture.

But age-related discrimination remains a significant barrier. As the workforce ages, companies that invest in hiring, reskilling, and valuing older employees will bridge talent gaps and cultivate a more balanced, diverse, and productive workforce.

Be sure to check out the example set by Allianz and its Engage program. The financial services company “helps each generation thrive on its own terms” by promoting life-long learning, knowledge transfer, and age inclusion across five generations.

The aging workforce is a demographic reality that companies can no longer afford to ignore. By implementing targeted strategies to attract and retain older workers, employers can harness a wealth of experience and loyalty that will ultimately benefit their organizations in the long run.

Image: Figure.ai

AI Insights

Figure Robots Now 400% Faster: AI robotics company has announced a significant milestone, claiming its robots (which look a lot like the evil robots from Mitchells vs The Machines) are 400% faster and 7x more accurate. Figure aims to manufacture millions of these helpers for deployment to commercial customers and the home.
DIY Conversational AI Bots: ElevenLabs has launched a new feature that lets users create customizable conversational AI agents, complete with adjustable tone and response length. Building on their voice cloning technology, this update makes it easier for users to integrate knowledge bases and build engaging chatbots tailored to their needs.
Nvidia launches the Omniverse Physics Simulator: This tech allows developers to create digital twins with realistic real-time physics, enhancing industries like aerospace and automotive. It will enable faster and more interactive simulations such as virtual wind tunnels for car design.

The Supply Aside

📕 Read - War

Watergate journalist Bob Woodward’s 18th book, War, provides a gripping look at three critical conflicts: the war in Ukraine, the Middle East crisis, and the U.S. presidential landscape. With his signature insider access, Woodward captures tense exchanges between President Biden and leaders like Putin and Netanyahu, while also exploring what he calls the “shadow presidency” of Donald Trump during Biden’s term. This very timely book dissects Biden's diplomatic strategies amid the complexities of modern warfare and the urgent need to prevent nuclear escalation.

What Else I’m Reading

Two ways Trump will change the domestic and world order: TIME’s Ray Dailo predicts a “giant renovation of government” that will include an internal political war to make it happen, along with a ramped up “America first” foreign policy and preparation for war with China.
Google’s culture of concealment: While the legal order for Google to sell Chrome is in the news, it was interesting to read this New York Times piece about Google’s efforts to avoid antitrust suits through destroyed messages, avoiding certain words in company communications, and copying in the lawyers as often as possible.
No degree, no problem: Is skills-based hiring a genuine trend, or a fad? Companies including IBM, GM and Walmart are increasingly disinterested in a candidate’s education, focusing instead on testing whether they have the skills to do the job. This approach makes a lot of sense, and is leading to the rise of the “New Collar” workforce.

📺 Watch - Surveilled

Following New Yorker journalist Ronan Farrow, this film delves into his investigation of the booming commercial spyware industry. The journey spans from New York City to Tel Aviv, a hub for espionage technology. Previously a victim of clandestine monitoring, Farrow examines the multibillion-dollar sector, highlighting the dual nature of phone hacking—its potential to track criminal behavior and its corresponding risks to civil liberties.

👂 Listen - Acquired Podcast: IKEA

IKEA doesn’t fit into the traditional flatpack of success. Despite being a $50B annual revenue company with no direct competitors, it only enjoys around 5% market share, and has no shareholders. This episode of Acquired talks about the history of IKEA, what the company is doing today, and its green future.

💡 Think - What’s Old is New Again

With the election results behind us, the reality of a Trump redux has sparked strong reactions—some hopeful, others deeply frustrated. But what if we approached this moment with a presumption of grace? This doesn't mean blind support or ignoring valid concerns—it means allowing new leadership an opportunity to tackle significant challenges, from bureaucratic inefficiencies to the growing deficit.

While disruption is rarely comfortable, it can break the status quo and create space for real change. For those excited, bold initiatives could make an impact within the first 100 days. For skeptics, the next four years certainly won't be dull. Some of these upcoming moves might be exactly what we need. Or not. Only time will tell.

📕 Be sure to check out my book: Fire the Boss, Keep the Love: 10 Jobs, 10 Exits, 10 Lessons.

Whether you're starting your career or a seasoned pro, this book offers fresh perspectives and actionable advice to help you level up. I delve into my own personal career story and career wisdom from top executives to explore topics including:

Career transition strategies
Building lasting professional relationships
Tips for thriving in diverse corporate cultures

Fire the Boss, Keep the Love is a must-read for anyone ready to take charge of their career journey and forge an authentic path to success. Get your copy on Amazon!

💡 Course: Craft Your Career!

As the world of work continues to evolve rapidly, with a more globalized labor market and many companies reducing headcount, the risk of getting left behind is higher than ever.

Throw in the rapid adoption of AI in the workplace and the rise of remote work, and even the most competent and hardworking leaders and professionals are struggling to keep up.

In Craft Your Career, Aaron Cleavinger and I teach you the skills you need to stay ahead of the curve and craft the career you deserve. Check it out here and enroll: http://craftyourcareer.com/

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