The NewCo Daily: Today’s Top Stories
Nordstrom says it dropped Ivanka Trump’s product line because the clothing and shoes weren’t selling. President Trump complained on Twitter that the retailer treated his daughter “so unfairly.” Trump’s adviser Kellyanne Conway went on TV to, in her words, give Ivanka “a free commercial” and tell Americans to “go buy Ivanka’s stuff.” (Here’s The Washington Post’s rundown on the whole donnybrook.)
As Josh Marshall points out in Talking Points Memo, we are way beyond the concept of “conflict of interest” here: “President Trump sees the United States and his family businesses as a fully integrated entity … he is the state. He is the business. …Trump is openly using the presidency as the world’s greatest marketing opportunity.”
Since Trump started using Twitter to browbeat specific companies by name, many CEOs have cowered, hoping to avoid the executive’s peevish thunderbolts. But Nordstrom didn’t react to the White House attack, and its stock price didn’t budge. Slate suggests that’s because Trump’s attacks have become so routine, and people are beginning to realize there’s no follow-through. Also, urban luxury retailers like Nordstrom don’t have a ton of Trump-supporter customers, and they don’t have a lot of government contracts Trump could target.
It’s not just Trump’s political opponents who’re criticizing his Nordstrom attack. Peter Schweizer, the conservative author of Clinton Cash and ally of White House advisor Stephen Bannon, said the statements “crossed a very, very important bright line” and the behavior is “totally out of bounds and needs to stop.” Ethically and even legally, both Conway and the president are on paper-thin ice. When it cracks, who will help them to safety?
Republican Grandees Push For a Carbon Tax
On Wednesday, prominent Republican members of a new group called the Climate Leadership Council sat down with key aides to President Trump to promote the idea of a carbon tax (Bloomberg). The idea is big — put a $40 tax on every metric ton of CO2 released, and return the money to U.S. citizens as part of a broader tax reform plan. Many economists have long viewed this approach as an efficient hedge on climate risk that could draw bipartisan support.
Big names like former treasury secretary Hank Paulson and former secretaries of state George Shultz and James Baker have signed on to the effort. But getting the GOP of 2017 on board is going to be tough. “We know we have an uphill slog to get Republicans interested in this,” Baker said before the meeting, but “a conservative, free-market approach is a very Republican way of approaching the problem.” Trump’s new secretary of state Rex Tillerson supports the general carbon tax idea as well. But the president’s embrace of fossil-fuel energy sources and pledges to revive the coal industry suggest it will take more than impressive resumes to win him over.
Is Inflation Around the Corner?
Seth Klarman is an influential hedge fund manager with a pessimistic memo on the Trump economy that’s gone viral on Wall Street (Andrew Ross Sorkin in The New York Times). Klarman thinks the stock market is too giddy at the thought of Trump signing tax cuts and not wary enough about protectionist policies, which could squash economic growth, and unchecked government spending, which could reignite inflation.
Klarman isn’t a political partisan — he has supported both Republicans and Democrats in the past, though he did speak out last summer after Trump impugned the impartiality of a federal judge with a Mexican heritage. Guessing where the economy is headed is never easy, but it’s particularly tough with a president who is, in Klarman’s words, “erratic” and “overconfident.” “Trump is high volatility,” Klarman wrote, “and investors generally abhor volatility and shun uncertainty.”
How Spotify’s Squad Structure Keeps It On Its Toes
Autonomy keeps employees happy and motivated but it doesn’t guarantee teamwork or results. Managers want employees to be innovative but also to perform consistently. Spotify, the streaming-music giant, has found one way to balance these goals that’s worth a look (The Harvard Business Review).
Spotify works in “squads” of no more than eight members that are “loosely coupled” but “tightly aligned.” Each squad owns some discrete element of the product, has the freedom to make decisions about it, and has responsibility for its performance. Squad leadership is “emergent and informal.” Squads are organized into larger “tribes” and “chapters” based on skills or competencies. There are also “guilds” that share common interests. Coaching and feedback are walled off from salary discussions and performance evaluations.
How does all this unconventional structure cohere for customers? From HBR: “A common analogy at the company is a jazz band. Each squad plays its instrument, but each also listens to the others and focuses on the overall piece to make great music.”