Lowell's

The Trouble with Consultants

In the wake of the scandal surrounding Angelou Economics and their "recycled" economic development plan for Lexington, there have been a number of calls for developing a more homegrown economic development strategy.  

These include Tom Eblen's thoughts on local knowledge and leadership, John Cirigliano's project-based approach, and our own ideas about extending the work of the mayoral transition teams.

In response to these calls for a more local economic development approach, I've noticed counter-memes emerging.

• One argument contends that we need consultants to fight insularity and to provide a valuable outside perspective.  
• Another - in a particularly egregious defense of the indefensible - contends that this is what creative professionals do, and shame on those who called out Angelou - they destroyed a civic foundation of teamwork and trust.

I think these arguments are mostly wrong, and that they mostly distract us from taking the reins of our own economic development.

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I'm pretty jaded when it comes to consultants.

I've managed a wide range of consultants throughout my career: industrial designers, research agencies, brand consultants, business strategy consultants, operations consultants, and even internet consultants at the height of the dot-com bubble.

I've engaged with enough consultants over the past 15 years to notice distinct patterns:

• Consultants play "follow the leader".  Every industrial design consultant starts by deconstructing what Apple does.  Business strategy consultants start with Google.  Or GE.  Or Proctor and Gamble.  They consistently take the leader in a category and dangle it in front of the client like red meat.  The implication: "With us, you can make products like Apple.  You can grow like Google.  You can mint money like P&G.  Just hire us and we'll share that 'secret sauce'."
• Consultants tell clients what they want to hear.  A few consultants throw some early jabs to get a client to sit up and listen - "Here's why your marketing sucks..."  Ultimately, though, they calibrate their recommendations to what they think the client wants to hear.  What they deliver are bland, unobjectionable, safe ideas which don't really threaten the status quo.  "You can be wildly successful without discomfort!"
• Consultants position for the next engagement.  The most successful consultants are always angling for their next big score.  They deliver big, fat, visually-stunning reports loaded with aspirational recommendations which seem reasonable enough, but which neglect any significant detail on how to execute what they recommended.  Because execution is something they would be glad to help you with, for an additional fee.  They promise the 'secret sauce', but never actually provide the recipe.
• Consultants recycle.  Relentlessly.   Once a consultant comes up with a 'big idea', they don't usually isolate it to a single client.  They leverage that idea over and over again, across their business.  They might customize or repackage their big idea for each client, or they might just make it a signature 'product' which they patent or trademark.  About eighteen months after we rejected an industrial design, for example, we'd see elements of that design pop up in another client's products.  Many of the presentations and reports we got from consultants were 70% to 90% 'boilerplate' - stuff which could have been used for any of their clients in any industry.

Not every consultant follows these patterns, but enough do that these behaviors are fairly predictable.  If consultants are so predictable, why do so many people work with them?  There are a couple of unfortunate reasons.

First, consultants can provide a kind of political cover for difficult decisions: "I'm not recommending layoffs, the consultant is..."  Their 'independence' and 'objectivity' make the consultants' recommendations seem to carry more weight than when those same recommendations come from the people who hired them.

Second, and often related, is that consultants help us look busy when we're tackling a difficult problem.  They signal to others that we're taking action: "Our consultant is looking into that."  In these cases, the appearance of action seems more important than the production of results.

Consultants can, indeed, provide a valuable outside perspective.  Often, they've seen a lot of diverse examples of smart stuff that others are doing, and they bring those best practices to their clients.

But consulting engagements perform best when consultants augment and enrich the client's work - when the clients have already done their homework; They fail when the client abdicates their work to the consultant. 

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Given my jaded perspective on consultants, I wasn't too surprised when Ben Self exposed the Madlibs-style, fill-in-the-blank consulting work done by Angelou Economics in their "Advance Lexington" strategy for economic development. 

Angelou fit a lot of the consultant patterns.  

• They recycled reports they had created for other cities.  
• They played "follow the leader", holding out their work in successful cities like Austin and Boulder with the implicit promise that Lexington could be like them.  
• They also told their clients what they wanted to hear - recommending a much more prominent role for report sponsor Commerce Lexington (which is partly subsidized by Lexington taxpayers) in Lexington's economic development.  That gives Commerce Lexington "cover" when it requests increased public funding; After all, it isn't Commerce Lexington's idea...

The problem for Lexington is that we attempted to have the consultant do our work for us without doing our own homework first. We can't expect to get great economic results when we outsource our economic development strategy to others.

We had folks whose job it was to produce such a strategy.  They just didn't.  They abdicated their responsibility to a consultant.  And that's not acceptable.

The important question: Why didn't Lexington already have a strategy for economic development before we engaged Angelou?

Chaos: South Limestone Closure Lawsuit Details

When we initiated LexMobs to help businesses on South Limestone on Wednesday, we noted that the closure of the street seemed hasty and poorly-planned.  Well, now we've obtained the Fayette Circuit Court filing from a lawsuit intended to stop the work on South Limestone (first reported by Jake at Page One Kentucky).

And that filing reveals just how chaotic the closure process actually was.

Filed by the owners of several businesses and properties lining the route, the lawsuit seeks an immediate injunction to halt the roadwork and to reopen South Limestone to traffic.  It also seeks damages for the interruptions to business operations along the street.  The suit names the Mayor, LFUCG Urban County Council, and ATS Construction (the firm contracted to renovate SoLime) as defendants. 

And the filing tells a story of a poorly-communicated, hastily-assembled, highly-inconsistent project with an escalating price tag:

• Communication.  Initial letters from the LFUCG Public Works Commissioner to the affected businesses invited them to a open house to discuss "a streetscape design" and "utility needs", but didn't indicate a complete road closure was immanent. The actual details of the project (and of the changes to the project) were usually disclosed to owners through rumors or media accounts.
• Timing.  Owners had six days' notice before the first open house (May 18th), and there was no mention of a road closure.  A second "utility needs" meeting was held on June 3rd, and the full closure of South Limestone was disclosed.  But some owners didn't learn of the possibility of closing SoLime until the day before; The letter announcing that meeting didn't mention closing the street.
• Consistency.  In June 3rd discussions, South Limestone was to be closed from Euclid to High.  After voicing opposition, property owners were told on July 10th that SoLime would initially be closed from Euclid to Maxwell, opening up a full block between Maxwell and High Streets.  On July 21st - the day before the project began - owners learned from media accounts that SoLime was now to be closed all the way to High Street again.  That day, owners met with the Mayor and others from LFUCG to learn that ATS and LFUCG won't know what they're dealing with until they dig up the street.
• Price.  The "Downtown Streetscape Master Plan" proposed improvements to South Limestone costing more than $5.2 million.  The LFUCG council approved the streetscape plan in August 2008.  On July 7th, 2009, the council approved the $13.1 million contract with ATS.  Two weeks later, media accounts put the total at $17 million.

The patterns emerging from this (admittedly one-sided) account of the closure of South Limestone parallels with what we've seen recently from LFUCG on urban development projects:

• Projects languish for years, then are suddenly initiated.
• Decisionmakers seem to have little sense of the full scope or true impacts of their decisions.
• The true impacts of the project are only understood, if ever, after it is long underway.
• Communication with citizens is unclear, intermittent, and/or non-existent.
• The project changes direction suddenly.
• It is unclear who is accountable for the success or failure of such projects
• Because they are so committed to the (frequently noble) idea of the project, decisionmakers accept a series of concessions which cause the project's price to balloon to multiples of original estimates.

We've seen some or all of these elements in numerous recent urban development projects: CentrePointe, Tax Increment Financing (TIF), the Lyric Theatre, the Newtown Pike extension and, now, the South Limestone Streetscape.  

What results is chaos.

Business owners on South Limestone had 2 months to prepare to lose customers for 12 months.  Many owners had one day to figure out how to get customers and suppliers to their door.  The cost of the project is 3 times what was initially approved. 

And the results of the chaos are easy to predict.  Confused commuters and shoppers stay away from "the mess" downtown.  Downtown businesses die.  And, after fits and starts, Lexington ends up with a beautiful street.  To nowhere.

Chaos is no way to run a business.  And chaos is no way to run the business of our city.

Toward a Better Lexington

"It has taken five years on Council to understand what we can and cannot control."
Lexington-Fayette Urban County Council Member Kevin Stinnett, 7/2/2009

How do we make Lexington a better city?  Really better?  I have some ideas, but first we need to understand some of Lexington's fatal flaws in order to design something better...

A Broken City
As a relative newcomer to the inner machinery of our city (but a lifelong resident), I have spent a few months trying to figure out how Lexington 'works'.  As a downtown business owner, my focus has been on how we craft a functioning, vibrant, and livable city: How do we create a better Lexington?  And it has been a maddening exercise.  The more I delve into how decisions are made in Lexington - the more I understand what is actually going on - the more perplexed I become.  I am forced to conclude that our city is deeply, systemically, and utterly broken.

Lexington is an uncoordinated tangle of overlapping agencies, boards, task forces, committees, departments, rules, and processes.  Within this messy system, each organization is charged with its own distinctive - but often overlapping or conflicting - mission, mandate, authority, ability, accountability, and expertise.  Some of the organizations consist of long-term government administrators, some of elected officials, some of volunteers, others are quasi-governmental public/private agencies, and still others are fusions of all of these.

This highly fragmented machinery yields a city which fosters turf battles, redundant effort, convoluted processes, secrecy, uncertainty, and, as we have seen most recently, corruption.

The ultimate result is a profoundly inefficient city with an effectively paralyzed government. 

Scandalous
Lately, our local news has been rife with scandals and poorly-conceived, -designed, and -executed projects:

• Out of control spending sprees at the Airport, the Library, the Kentucky League of Cities, and the Kentucky Association of Counties.
• The scar of CentrePointe's failure with its phantom financier, phantom tower, phantom business model, and phantom jobs.
• The seemingly hasty and disorganized pending closure of South Limestone.

All of these scandals fit a disturbingly regular pattern: Inadequate oversight which leads to lax controls which permits gross mismanagement and/or outright waste of taxpayer dollars. 

Behind this pattern of scandal and appalling inefficiency lies Lexington's deeply flawed governing apparatus.  And when we observe that apparatus in action, we can begin to understand the root of the scandals.

Laurel and Hardy
Many Urban County Council meetings bear an astounding and troubling resemblance to a Laurel and Hardy "Who's on First?" sketch.  A prime example of this was last Thursday's Economic Development Task Force meeting (See Ace Weekly's wonderful reality-show spoof here for further examples).  A central question of last week's meeting was "Who is (really) responsible for economic development in Lexington?" 

At the outset, one councilmember stated, "It has taken five years on Council to understand what we can and cannot control."  Re-read that statement, because it is a profound indictment of our city's overcomplicated decisionmaking infrastructure.  Five years.  It takes five years for a councilmember to "get it" when they are steeped in it day-to-day?  How long will it take for an ordinary citizen? 

And by the way, despite the councilmember's assertion, I don't think the Council yet understands what they can and cannot control, as the ensuing conversation demonstrated.

The Task Force (Consisting of Urban County Council members) debated the Council's role in economic development relative to Commerce Lexington ("CLex", Lexington's semi-private chamber of commerce) and the Downtown Development Authority ("DDA", a corporation commissioned by the city and charged with helping redevelop downtown).  Both CLex and DDA have a board of directors and a staff of professionals.

What emerged from the discussion (chronicled best by Debbie Hildreth on her new blog about acclimating back to Lexington) is that the councilmembers have little clarity and little agreement on the respective roles, responsibilities, plans, and accountability of the Council, CLex, DDA, and the CLex and DDA boards.  Reading through Debbie's transcript, the councilmembers' statements are filled with stale bromides, helpless complaints, quick answers and utter confusion.  It all becomes tragically comic when you see how our elected officials are not even remotely on the same page.

And it is no wonder that our Council is befuddled.  The situation is actually far more complicated than just the Council, CLex, and DDA.  Within the Council itself, there are a bewildering array of committees and task forces, all of which could lay legitimate claim to economic development.  There is, of course, the Economic Development Task Force.  But there is also the Infill and Redevelopment Task Force.  There is the Planning Committee.  But there is also the Budget and Finance Committee.  And the Outside Agency Oversight Committee.  And the Corridors Committee.  (But wait, there's more!)  There are staff professionals within Lexington's Division of Planning.  There are volunteers who serve on the Planning Commission.  And with CentrePointe, there is the Courthouse Area Design Review Board, which issues the building permits for the site.

Within this ridiculous balkanization of our government, who has the jurisdiction, the responsibility, and the accountability for building a better Lexington?  Everyone and no one at once.  And therein lies the problem.

All of these organizations can claim they spearhead Lexington's development into a better city.  All of them "own" a piece.  But ultimately, none appear truly accountable for actual on-the-ground progress. 

The Lyric
With a noble project like the restoration of the Lyric Theater, who is in charge?  Who takes the lead on coordinating and executing the Lyric's redevelopment?

The Lyric could plausibly fall under the auspices of the DDA.  Or CLex.  Or the Infill and Redevelopment Task Force.  Or the Economic Development Task Force.  Or the Planning Commission.  Or, even, the Corridors Committee.  Ultimately, though, responsibility fell to another shard in the splintered machine: the Lyric Theater Task Force (who, by the way, appeared to do a great job).

And while the Lyric task force optimized the project for the theater's redevelopment, it isn't at all clear where this project falls within the wide array of potential development opportunities in our city.  It isn't clear how the Lyric was connected to our other urban initiatives.  In a fiscally-strapped economic environment, was the Lyric the best possible allocation of public funds?  We can't really tell, because we haven't really prioritized such development projects by return on our public investment.

Destination 2040: Destined to Fail
Some councilmembers have pointed to the Destination 2040 report as a roadmap for Lexington to follow in its development endeavors.  Destination 2040 is an admirable vision of the future constructed by our citizens.  It is filled with interesting ideas and initiatives to help improve our city.  But it is most certainly not a roadmap. 

Destination 2040 lacks clear prioritization of the initiatives it proposes.  It fails to identify adequate operational details of how to fund, structure, and execute the components of the Destination 2040 vision.  And, most of all, it fails to address the profound structural inefficiencies within Lexington which have long hampered such well-intentioned visions.

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Toward a Better Lexington

What kinds of structural changes are needed in Lexington?  I have a few ideas.  I hope that you will add more. 

Transparency
When I began to look at how our city works, I quickly joined the chorus of advocates for greater transparency in how decisions get made in Lexington and throughout Kentucky. 

And that advocacy has begun to pay dividends (whether the results of our actions or not).  As local officials take their first baby steps on Twitter, and as more of our citizens engage in local decisionmaking through attending meetings in person, watching them on public access television (GTV3), or following vibrant discussions on Twitter, one fact has become abundantly clear to me: Transparency is not enough.  Not nearly enough.

While transparency has helped reveal the scandals and issues facing our city, transparency alone won't really solve them.  Don't get me wrong - we're now starting to see into the machine.  It's just that we're learning that the machine is completely dysfunctional.

Comprehensive Urban Development
Whatever 'system' we have in place today, it isn't one which promotes sustained urban development.  I use the term urban development purposefully here: It is more than mere city planning; It is more than simply promoting our city; It is more than just economic development.  Urban development looks at our city as a functioning engine of economic and social progress, and strategically deploys our city's 'fabric' - spaces, corridors, amenities, people, businesses, buildings - to maximize sustainable advancement in our economy, in our social lives, in our physical environment, and in our aesthetic surroundings.

In short, it looks at how we intentionally design a better-functioning, vibrant, and livable city.

Simplification
It is clear that the splintered approach to bettering our city is failing.  Our continuous scandals and perpetual lack of progress cement that conclusion, as does the bewildering overlap of dozens of separate well-intentioned but poorly-conceived organizations.

My proposal: Eliminate today's governmental tangle by collapsing the DDA, Planning Commission, the Division of Planning, and the LFUCG Economic Development Office (for starters) into a single, centralized, and well-staffed organization with the clear mandate, clear authority, and clear accountability for successfully implementing our city's urban development initiatives.  

Focus
Concentrating urban development authority in a single organization will only work if we provide them with crystal-clear priorities on what is important.  With dozens of possible initiatives, visions like the Destination 2040 report lack clear priorities.  In essence, it declares that everything is important.  And in trying to do everything, we'd fail to accomplish anything.

We need to provide such an organization with guiding principles on what's important (and what isn't).  Is the organization designed to maximize tax revenue, jobs, infill, downtown density, or something else? 

From out of these principles, we should set realistic and quantifiable goals: "3000 new jobs by the end of 2010"; "$30 million in new tax revenues by 2012"; "10% higher residential density in downtown by 2014"; etc. 

My initial thoughts are that the core principles and the goals attached to them should be outlined by the Urban County Council.  That said, I'd like to see a way to balance continuity and change: As a city, we probably don't want long-term initiatives derailed by short-term political changes.  But we also don't want to 'lock in' failing projects merely for the sake of continuity.

From these principles and goals, staff professionals should derive the best 4 or 5 initiatives for achieving the established goals.  Would the Lyric Theater have emerged as one of the 4 or 5 best possible urban development projects?  I don't know, but I have my doubts.  It doesn't appear to scale very well on "jobs" or "revenues" dimensions.  But, of course, neither does CentrePointe at present.  Would we risk destroying surrounding businesses to "beautify" South Limestone's streetscapes?  I don't know, but I have my doubts.

Accountability
When the Economic Development Task Force met last week, councilmembers bemoaned the $400,000 provided to Commerce Lexington to bring new business to the area.  To date, there's little proof that this 'investment' has paid dividends.  How much business?  How many jobs?  What new tax revenue?  CLex really isn't accountable to the Council, so there's no real penalty for not delivering.  Where'd the $400,000 go?  The Council would like to know, too...

When we make the transformation to a simplified and focused urban development authority, we must have accountability for progress on these development initiatives.  Do they adhere to our principles?  Are they meeting our goals?  Are they successful?  If so, who gets rewarded?  If not, who gets fired?

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Do I expect my proposed system to be adopted?  Not really.  But I would like for our leaders to begin to discuss seriously reforming how our city's decisionmaking machinery functions.  And the system which emerges must be more transparent, more simplified, more focused, and more accountable. It must help us build a better Lexington.

Tangled Webb

At the Lexington Forum last week, CentrePointe's developer spun a dazzling and dizzying tale about the history and the future of the pit in the middle of our city. 

His presentation resonated with the receptive Forum audience.  Looking around the room, filled with many of Lexington's other business and civic leaders, I was a bit confounded.  While many in the audience seemed familiar with the ongoing controversy of CentrePointe, few seemed knowledgeable about the actual details.

I then began to realize the scope of the challenge for CentrePointe critics: How do we effectively demonstrate the full extent of our skepticism and concern to the uninitiated or uninvolved (in other words, to the majority of our citizens)?  CentrePointe is an elaborate project with an equally elaborate backstory.  It is a complex web which is difficult for newcomers to disentangle.

Even so, there are at least 5 distinct patterns which lie within the web: 1) Secrecy, 2) Runaway Optimism, 3) Loss of Credibility, 4) Contingency, and 5) Victimhood.  These patterns form the basis of our critique of the project, and should raise important questions about CentrePointe for any public official, business associate, or concerned citizen.  

Secrecy.  From the beginning, CentrePointe was shrouded in secrecy, and the developers have been hostile to reasonable inquiry into the details of the project.  While seeking public commitments for tax increment financing (TIF), they refused to disclose the name of their secret financier.  They failed to disclose that their financier had been dead for six months.  On Thursday, the developer announced two new financial backers, but wouldn't disclose their names either.

The developer claims that private property rights let him maintain secrecy, even as he publicly sought specialized TIF tax status.  The premise of tax increment financing is that today's public debt would be paid for by future tax increases (the "tax increment") which arise from property improvements (increased property values, increased commercial activity, etc.).  While the developer maintains his right to secrecy, the special status which the public granted to his property should require him to be more forthright and more detailed about the project's timing, financing, and business model.  Or, the special TIF status should be removed.

Runaway Optimism.  The few details which have emerged have shown that the developers frequently engage in runaway optimism.  They bank on the flimsiest of commitments, and lean on them to demonstrate the viability of the project.  They are willing to mislead people to believe these commitments are real.  

In last week's presentation, the developer stated that one of the first calls he got upon announcing the project was from Hard Rock Cafe, who wanted to locate in CentrePointe.  This was met with murmurs of approval from his audience.  

Trouble is, it wasn't Hard Rock.  And they didn't initiate contact with the developers.  And they aren't coming to CentrePointe.  As Dr. Nick Kouns chronicles, Kouns initiated contact with House of Blues, who felt that Lexington wasn't a sufficient market for their brand, but met with the developers out of courtesy.  So the 'commitment' was never much more than an exploratory discussion.

Alas, such optimism pervades CentrePointe.  On Thursday, the developer announced that he had 65 'almost-certain' prospects for his 91 condominiums which will sell for an average price of $1.2 million.  Trouble is, only 10 million-dollar properties sold in all of Fayette County in all of 2008.  In today's even-more-depressed market, what would enable the developers to attract 6 times more luxury property commitments, just for an unbuilt CentrePointe alone?  Runaway optimism.

Loss of Credibility.  The trouble with runaway optimism is that, eventually, reality sets in.  And as the developer's gossamer threads of optimism unravel, they reveal his profound credibility problem.  

For the better part of a year now, the developer has continually decommitted from prior public statements.  These decommitments have been on videotape, in print, and to the Urban County Council, and have touched on all major dimensions of the project: its financing, its business model, and its timing.  The pattern which emerges is one in which the developer continually bends facts (and history) in the attempt to prop up his faltering story.

The developer rushed to create the pit in the center of our city last July, and was scheduled to begin construction on CentrePointe in 60 to 90 days.  As the months dragged on, he claimed that the permitting process was holding him back from doing anything else with the property, but that he expected the permitting issue to be resolved in 60 to 90 days.  Only later was it revealed that, even as he made such statements, he knew that his primary financier was dead.  But even though the financier was dead, the developer told the Urban County Council he was certain that construction would begin in 60 to 90 days.  Last week - some 60 days after he announced the death of his financier - the developer expected the financing to be resolved in 60 to 90 days.  

Contingency.  CentrePointe is a complex $250 million development with several intertwined components: over $100 million from 91 condos, a $100 million 250-room hotel, and some $50 million from retail and office functions in lower floors.  There has been a year-long delay in securing financing.  Construction has been delayed many times.  Every piece is contingent on the others, and it all has to come together flawlessly for CentrePointe's business model to 'work'.  And there are enough doubts about every single component that public officials, business associates, and concerned citizens should be worried.

As outlined above, the condo plans seem over-ambitious.  While Marriott has expressed interest in and support for the hotel, they aren't actually financing it, and the higher-than-average occupancy at higher-than-average room rates assumptions used in the CentrePointe business model are far from viable. The fact that the developer is willing to mislead a prominent audience about a major retail tenant raises questions about the rest of the project's business model.  The continual delays in securing financing and beginning construction - coupled with the secrecy of every major aspect of the project - have contributed to the mounting skepticism about whether CentrePointe is truly viable.

Victimhood.  In his public addresses, the developer often adopts a persecuted posture, which often positions him as a blameless victim of the sinister agendas of press, of bloggers, and of ambitious politicians.  He claims not to understand all of the fuss.  He just "wants to shut these people up".  

Let's take a look at the explanations the developer has provided for us:

• The financier was secret because he feared public backlash.  When he died, that was kept secret because it wasn't going to affect financing.  But when the financier's heirs wanted to know whether he had sufficient assets to cover obligations like CentrePointe, the assets were tied up in numbered Swiss bank accounts.  They couldn't get access to the accounts unless they also took on the obligations, which creates a Catch-22: the heirs can't see the assets without accepting the obligations, but won't accept the obligations without seeing the assets.  But even though the heirs can't be certain of the dead financier's assets, the developer somehow is...
• Last week, the developer introduced two new financing sources.  But both sources - an individual and an investment bank - also demanded anonymity.
• Even though the developer has always claimed the financing was rock-solid, last week he introduced three additional contingency plans.
• When challenged on the viability of CentrePointe's condominium assumptions, he claims that 65 of the 91 condos are 'spoken for' through undocumentable 'handshake deals'.  He also names vague tenants for the properties - horse farms in Ireland and Dubai and vintners in Napa Valley.
• He claims that people are lining up for the retail and restaurant spaces, but the one deal he has detailed to the public was both wrong and unconsummated.
• Every time he provides an update on the project, the projected start date is 60 to 90 days hence.  Unfortunately, '60 days from now' never arrives. 

To the extent he is a victim, he is the victim of his own machinations.  If he really wanted to shut these people up, he would simply provide some proof that his critics are wrong.  But the proof which would silence his growing list of critics never arrives.  

* * *

Looking through the tangle of explanations and the patterns outlined above, one is forced to make one of two conclusions about the developer's ability to silence his critics:

1. That he is the unluckiest man alive (every opportunity to exonerate himself is confounded by another unfortunate twist in his story);
2. That he is simply lying (every opportunity to exonerate himself is confounded by another convenient twist in his story).

Until we get a full and clear accounting for CentrePointe's real-world status, I, for one, choose not to be silenced.

A modest proposal to end blight

Comprehensive Care Parking Lot

Every morning when I walk into work at Lowell's, I see 8-foot-tall tree-weeds growing through unkempt hedges and spilling over into the public sidewalk.  I see a planter adjoining our building, burgeoning with weeds and grass and the massive stump of a long-dead tree.  I see a pitted, crumbling parking lot with clogged drainage.

Many customers assume it is our lot.  It does adjoin our building.  And they can't see the sign declaring "Comprehensive Care Center Parking Only".

116 Mechanic Street

Across the street I see a tiny old shotgun house with a gigantic half-rotted tree looming ominously over both the house and the main Lowell's parking lot.  After the ice storm and other storms this spring, downed branches lay in the asphalt front yard of the house.  For over two months.

Absentee owners neglect both properties.  Neighboring businesses have conducted the most of the maintenance on the properties over the past couple of years.  In effect, they are abandoned.

As a business owner, I worry about the effect it has on Lowell's famously loyal customers.  Even if they cherish us and the service we provide, I'm genuinely concerned about the ability of such eyesores to repel visitors to the shop.

I often talk with nearby business owners, who share my concern for the negative effects of these properties on our neighborhood.

* * *

Many folks have wondered why I have been so vocal on the CentrePointe mess.  There are many reasons, but one of the biggest is that the abandoned properties surrounding Lowell's have given me firsthand experience the negative effects of blight like the CentrePointe scar.

There are many such highly-visible, blighted, non-productive and apparently abandoned properties in Lexington: CentrePointe in Downtown, Lexington Mall on Richmond Road, and Continental Inn on New Circle at Winchester are some of the most apparent.  But there are numerous smaller examples littering our city.

Just like the properties surrounding our shop, the absentee owners seek to avoid any and all expenses.  They avoid capital gains taxes by refusing to sell their properties.  They avoid maintenance expenses by refusing to invest to make their properties economic contributors to the community.  They avoid property taxes by refusing to improve their decrepit real estate.

Such abandoned properties generate near-zero direct contributions to the economy.  Moreover, they generate negative economic effects for surrounding properties and businesses: They drive away business and drive down property values.

* * *

It is time for such neglect to end.  It is time to make sure that lazy landowners are motivated 1) to improve their holdings and 2) to transform their properties into contributors to our community's economic engine.

My modest proposal: Implement a 'blight tax'.  Lexington landownders whose property qualifies as 'blighted' would have to pay a moderately severe annual blight tax.

The definition of 'blighted' would need to be worked out, but should include an assessment of the property condition, as well as proof of substantial progress on needed improvements.  We could start with Division of Code Enforcement standards.

To overcome their avoidance of maintenance expenses, property taxes, and/or capital gains taxes, I'd propose that the blight tax have some teeth: Say, 35% to 50% of assessed property value per year.

In the CentrePointe case, the blight tax would generate $8 to $12 million per year of revenue to the city until the developers improve their land.  When historical buildings were demolished to make way for CentrePointe, many rationalized that the old buildings were greater eyesores than the pit which remains today.  I disagree.  But a blight tax may also have helped prevent the demolition-by-neglect which occurred on that block over the years.

I would imagine the former Lexington Mall and Continental Inn properties would generate amounts similar to CentrePointe, given their sizes and their locations on busy thoroughfares.

Such tax revenue could be specifically allocated to offsetting the effects of blight: community improvements to sidewalks, bike paths, streetscapes, parks, community centers, business incubators, community ventures, and the like.  If property owners avoid the blight tax by making their properties more valuable (i.e., by improving them), then all the better.

To create a vibrant city, we need to ensure that Lexington doesn't have the economic scars that blight leaves behind: dead spots which contribute little (or which actually destroy) monetary value in our community.

My proposal is the blight tax.  What's yours?

Unfortunately. Private.

There were two common refrains at Tuesday's Urban County Council confrontation between our vice mayor and the developers of CentrePointe. 

One was the word "Unfortunately" continuously invoked by the developers.  While "unfortunately" led some 6 sentences in the developers' prepared statement, it also led nearly every response from the developers to difficult questions from the Council.  Unfortunately, the developers didn't foresee the economic downturn.  Unfortunately, things change in projects like these.  Unfortunately, bloggers and the press and rumor-mongers have pointed out immense and inconvenient flaws in our business case.  Unfortunately, it is apparently their free-speech right to do so.  Unfortunately, people die.

Well, um, unfortunately, REAL businesspeople are supposed to anticipate and overcome such circumstances (not be paralyzed by them).  Anything less amounts to sheer speculation.  Which is what Lexington has encountered with CentrePointe.

The second refrain was actually more worrisome and more puzzling.  It came from members of the Council who acted as apologists for the developers (developers whose actions can only be characterized as bumbling).  These same councilmembers - Lane, Stinnett, Myers, McChord, and Beard - felt compelled to offer apologies for forcing the developers to account for their continuous inaction.

The refrain they used was "private".  Councilmember Myers asserted that this is private property assembled by private developers with private funds, that the developers could do whatever they wish with it, and that the council had no business forcing CentrePointe's developers to explain their incompetence.

Balderdash.

Before more libertarian readers resort to labeling me a socialist, let me assert my firm belief in property rights.  Unlike some of my more radical friends, I believe that property and capital and money have driven the vast majority of improvements in our living conditions and overall social well-being.  To be sure (and as we have seen quite clearly of late), capitalism often has an ugly downside driven by unrestrained greed.  But the long term gains have far outweighed that downside.

The crater created by CenterPointe's developers is certainly private property.  It belongs to them. 

But here's where the stalwart defenders of property rights are wrong: Private property always comes with civic responsibility.  Owners of private property cannot use their property in ways which destroy value for surrounding properties or surrounding businesses.

Let me illustrate this principle with a recent and vivid example:  A year and a half ago, in the Andover neighborhood, there was a private home that was infested with rats.  The community and the Health Department mobilized to eradicate the rats and eradicate the problem.  Nearby property owners (including yours truly) were rightly concerned for both our safety and our property values. 

Apparently, these same councilmembers would claim that the rat-infested house was private property, and, thus, the community had no right to defend their health or their property values.  Would councilmember Myers sit on his hands if a rat-infested house was next door to his house?  Apparently so.  Would councilmember Lane approve of a neighbor's right to spread pig manure (and noxious fumes) to fertilize their lawn in his Hartland Gardens?  Apparently so.  After all, it is their property, and they can do what they wish with it.  Right?

Of course not.  Private property comes with civic responsibility. 

* * *

With CentrePointe, we have a rathole downtown.  The rats, while not physical, are more insidious and more destructive:

• There's the bulldozer rat that razed buildings, jobs, businesses, and revenue last July.  The rathole has produced no jobs, no revenue, no businesses, and no buildings.
• There's the ugly-city rat that an out-of-town visitor takes back to their home as tourism dollars and tourists mysteriously disappear from downtown.  I suspect there will be many of this breed of rats available for the World Equestrian Games next year.
• There's the blight rat which drains surrounding property values and sucks patrons out of surrounding businesses.  
• And, finally, there's the developer rat, who repeatedly fails to deliver on public statements about CentrePointe's timing, funding, and business model. 

Councilmembers Stinnett, McChord, Myers, Lane, and Beard appear to sympathize with both the rats and with the rathole.

I do not.  And I don't appreciate our representatives who do.  And I'm not alone.

Private property comes with civic responsibility.  We need leaders who recognize that fact.

I choose both

"The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function. One should, for example, be able to see that things are hopeless yet be determined to make them otherwise."
                                                -- F. Scott Fitzgerald (via Ace Weekly)

"You must be the change you wish to see in the world."
                                                -- Mohandas K. Gandhi

There is a revolution brewing in Lexington.  Fed up with the intransigence and bureaucracy of 'old' Lexington, 'new' Lexingtonians are gearing up for an overthrow of the old regime.

As a lifelong rebel and iconoclast, I love it.  As a business owner, I want the more vibrant Lexington (and downtown) that these changes promise.  As a father of a two-year-old, I want my son to have the greatest opportunities to learn, live, play, and work - and want his birthplace to provide those opportunities.  Lexington must change, or it will not grow.  If it does not grow, Lexington will wither and die.

Still, I'm a bit troubled...

More on why in a bit.  First, we need to describe the new and old Lexingtons.  (Or, if you Twitter - and you should - #OldLex and #NewLex.) 

OldLex is rooted in our city's and our region's traditions.  It wants to build on the heritage of our horse farms, our coal, our bourbon, our tobacco, and our basketball.  It values formality and processes and order and control, and is often obstinate in the face of change.  OldLex tends to respect big international companies, large events, and wealth.  It generally shuns technology. 

NewLex is borne of our city's innovative and intellectual potential.  It yearns to be free of restrictions and limitations imposed by centuries of tradition.  It values innovation and creativity and transparency and freedom, and usually gleefully wallows in the messiness and chaos of change.  NewLex tends to respect speed, intellect, local-ness, and the environment.  It embraces technology.

So there, in admitted caricature, are the two cultures of Lexington.  They currently stand in perplexed opposition to one another.  They blink in bewilderment at the other's actions (or inactions) and question the other's motives.

I am a confirmed NewLex kinda guy.  As a reader of this blog, I suspect that you also lean toward the NewLex camp.

But, as I mentioned, I'm troubled by something in the conflict between NewLex and OldLex.  I also hear the same concern echoed in comments on my blog and in NewLex Twitter discussions.  In summary, it is this: The desire for continuity is almost as strong as the desire for change.

While we decry the adoption of outdated icons of horses as the central identity our city, we still love the beautiful horses, the farms, the racetracks, and the uniqueness they bestow upon our city and state.  

We wish that some of the $36.5 million that just went to our new basketball coach had gone instead to improve our schools or our university.  But we do love our 'Cats, our Coach Cal, and our championships. 

We cannot fathom why our city's representatives haven't adopted more transparent practices and implemented more current technologies, but what, really, have we done to facilitate that?  (Have I already forgotten how mystifying Twitter was just a couple of months ago?)

As much as we advocate overturning the old ways of thinking and the old ways of doing things, we NewLexers sure like a lot of the old things.

And we should like them.  The horses, the basketball, and the bourbon are all significant and important parts of our heritage and our identity.  They are a part of what makes us 'US'. 

And in that heritage lies our one bond with our OldLex foes, and, I believe, our single best opportunity to effect real and necessary change in our city.  As NewLexers, we must challenge ourselves to embrace and leverage our past as a springboard into our future.  

Can a vibrant horse industry exist alongside an even-more-vibrant Eds-and-Meds economy?  I think so.

Can we use Lexington's defunct distilling industry and empty warehouses to build a vibrant arts and cultural (and distilling!) community?  I think so.

OldLex certainly comes with many flaws.  But, if we're honest with ourselves, NewLex can be just as problematic.  We often come off as brash and abrasive.  I kinda like being brash and abrasive.  The problem is that 'brash and abrasive' doesn't get the hard work of changing our city done; It brings such work to a halt as OldLex digs in their heels.  

NewLex often appears impractical.  We are full of plans and ideas, but frequently come up way short on tangible actions and, ultimately, results.  We must learn to transform our ideas and plans into actions on the ground.  We must, in short, be the change we wish to see in the world.

So I make a declaration that may not be popular with all of my NewLex compatriots: I choose both.  I choose the heritage that makes Lexington great.  I choose the creativity and intellect that will drive us into the future.  I choose to act with transparency and speed.  I choose to love the singular beauty of our horse farms.  I choose to reject the parts of (Old AND New) Lexington which hold our city back from becoming truly great.  NewLex?  OldLex?

I choose both.  I choose Lexington.

A better brand for Lexington

Lexington's leaders are busy picking a new brand for our city.

Sorry, gang.  You don't get to decide.

Last week, the Urban County Council's Planning Committee considered the city identity possibilities of the blue horse that Pentagram (an international design firm) crafted for the Lexington Convention and Visitors Bureau.  The committee forwarded the discussion on to the full Council. 

Unfortunately, the Blue Horse Debate is a waste of time, talent, money, and attention.

Our representatives fail to realize that Lexington's brand is largely out of their hands.  And it certainly isn't in Pentagram's hands.  Whether they choose to promote a blue horse or a spotted yak is irrelevant to Lexington's brand. 

Telling versus Earning
Marketers (and leaders) suffer from a kind of conceit.  The marketers' conceit is that they can tell us what their brand means.  They fail to realize that brands are reputations which are earned.

A brand isn't a declaration.  It isn't an intention or a vision.  It isn't what leaders say it is, no matter how well it is designed and researched.  It isn't a great ad campaign or a really slick logo or a lyrical tag-line.  It is certainly not a marketing function.

Brands arise from all of our experiences with that product or that city, not from what the leaders of any company or city want them to be (or say they are).

The best brands don't tell people they're great.  They earn greatness.

If people believe that Lexington is a boring town, then (unfortunately) that is part of our brand.  If people believe that we are a technology backwater, then that, too, is part of our brand.

This is scary because our brand is pre-set in peoples' minds, and it takes a lot of hard work to be good enough to dislodge entrenched perceptions.

It is scary because it isn't about saying we're better; it is about actually BEING better.  Really better, not just in-our-marketing-plan 'better'.  Not just approve-a-message/logo/strategy-in-a-meeting 'better', either.

We have to earn a reputation for better schools, better businesses, better technologies, better leaders (and not just at LFUCG, either), better conversations, better people, and better visions of the future.  And we can't buy that reputation from any design or branding firm.

To improve our brand, we have to truly transform Lexington.

Inertia
So why do our representatives persist in their silly pursuit of the blue horse?

Over the years, I've frequently witnessed something I call institutional inertia.  Institutional inertia happens when individuals in an organization don't really feel responsible for (or influential upon) the success of the organization.

In those cases, the easiest thing to do is just stay the course, even if that course is doomed to failure...  When inertia raises its ugly head, it is often, maddeningly, the powerful (those who think they have the most to lose) which become the most hostile to change and most determined to stay the destructive course.  Doing nothing is always easier than doing the right thing, especially when doing the right thing is a lot of hard work.

And paying someone to design an 'identity' is an easy-but-doomed course for improving Lexington's brand.  There is no 'magic bullet' for crafting a better brand for our city.

If we want a better brand for Lexington, then make sure our city is an attractive, welcoming place for our visitors.  Ensure that our people are knowledgeable, warm, and friendly.  Create rich, distinctive, and memorable experiences for both our citizens and our visitors.  Foster the growth of vibrant businesses and arts communities that make Lexington a compelling place to work and play.

Then, perhaps, Lexington will earn the better brand we are seeking.

Update: 4/28 Cross-posted to both Ace Weekly and Transform Lexington.

Full disclosure: In a previous job, Rob severed his firm's relationship with Pentagram.

[where: 200 E Main St, Lexington, KY, 40507]

The UnTower Manifesto: 1. Truth

[Note: The UnTower Manifesto is a three-part series about responding to the failure of CentrePointe.  You can read the full story of that failure here.]

As the CentrePointe project becomes the UnTower scandal, a general consensus has developed which agrees that CentrePointe will never be built on the crater that its developers rushed to create. 

A critical question, then, is this: If CentrePointe will not be successfully constructed, how should Lexington move forward in the wake of the UnTower scandal?

There is the obvious question of how to proceed with the colossal scar in the middle of our city.  But there is also the less obvious - but, ultimately, more important - issue of changing how Lexington works in order to prevent the next UnTower catastrophe.  Let me start there, and we'll return to the issue of what to do with the site.

Toward a Better Lexington
The details of how UnTower happened have slooowly trickled out from the developers.  Their secrecy, lack of candor, intimidation, outright deception, and possible fraud have sharpened questions about how decisions have been made throughout the project's approval process.  UnTower has exposed how opaque and how ill-informed our mayor's and our Urban County Council's decision-making processes have been.  And, if you look closely enough, the scandal shows us how Lexington should improve.

So, how did this fiasco happen?  The details have been covered many times from many, many, many quarters, so I'll simply summarize the key themes:

• Throughout UnTower, the developers have maintained great secrecy about the financing and the business model behind their development.  As details have emerged, neither looks viable.
• The developers claim their project is 'private', but have pressured the public to provide approvals and special Tax Increment Financing (TIF) for the project, with much of the TIF dependent upon a vibrant long-term business model which they don't have.
• The developers, the mayor, and some council members have not shared how and when they learned about key elements of and issues with UnTower which led to its ultimate demise.
• The developers, the mayor, and much of the council have responded to pointed and informed questions about the project with vague, non-responsive answers.  Often, they refused to respond at all.
• While there was public discussion about the decisions our government was making, the conversation was muffled by their timing and format.

In the end, the whole affair had a distinct 'backroom deal' flavor to it which left more questions than answers: How were these decisions made?  What information went into the decisions?  What information was withheld?  What information was fabricated? Who talked with whom about the project?  When did they talk? 

All of the questions have raised a bigger question: How is it possible that our community doesn't have absolute clarity into how decisions are made by our elected representatives?

In my business, if we failed to clearly explain how a vehicle was repaired, we'd lose customers.  If we came across as less-than-honest, our loyal customers would fire us.  If we refused to meet with a customer to address their complaints, they would tell their friends and family.  If we didn't make things right when we screwed up (and, yes, that does happen occasionally), our reputation would suffer.  In the end, our business would fail.

With UnTower, our community's 'business' failed us.

Clarity.  Explanation.  Honesty.  Availability.  Accountability.  These are the pillars of a transparent business that customers can believe 'does things right'.  A healthy, vibrant business which grows and prospers.

We wouldn't accept anything less than these qualities from a business.  And we shouldn't accept anything less from Lexington.

In an age of websites, blogs, Twitter, and Facebook, every business has had to engage in conversations with customers on the customers' terms.  The ubiquity of the internet means that these tools are available to nearly everyone, nearly everywhere.  The latency of the internet means that the conversations don't have to happen at the same time - they can build over time.  The internet's ubiquity and latency forms the foundation of a new and better town hall.

Why should we all have to cram into a room at the same time?  Why should we have to play 'beat the clock' when talking about issues which are complex and nuanced?  Why should we have to forgo pressing business or personal matters to attend a meeting which is designed to be convenient for our representatives?

The internet provides the perfect public forum for every citizen to express his or her public policy views, ideas, and thinking.  Even better, our ideas can build on one another as we tinker with and improve the ideas of our neighbors.  Plus, conducting civic conversations on the internet can happen around the clock.  Citizens can participate in the public discussion when and where it is convenient for them, not for the elected representatives who serve them.  Isn't that the way it should be?

Further, every single representative should publish their conversations, thinking, dilemmas, trade-offs, beliefs and positions (and the transactions between them and other interested parties - like developers or investors or campaign contributors).  These records should be posted online for all citizens to see, comment on, debate, and improve.

The council members' emails are listed on the city's website, as are the mayor's newsletters.  But these are old, closed, one-way forms of communication.  They aren't vibrant community discussions.

So, do I want to see tweets that the mayor's advisor is picking up eggs?  Or a Facebook entry featuring the halloween costumes of the councilwoman's children?  Not particularly.  But we deserve to see real-time updates of their thinking on critical community issues.  We should know why they have changed their minds at the last minute.  They should tell us who they talked with and what they said.  After all, they are public officials.  We should see into a transparent civic machine which serves all of us.

What is clear is that a 19th-century civic apparatus has hamstrung our 21st-century community. The ancient contraption allows far too many secrets to hide within.  Whether our representatives and our governments use blogs, Twitter, Facebook, or some other platform matters far less than whether they start participating in open conversations with the people they serve.

The technology already exists.  Millions of people already use it.  Thousands of your constituents use it every day.  It's easy.  It's free.  And it will make Lexington better.  What are you waiting for?

[Continued in: The UnTower Manifesto: 2. Consequences]

[where: E Main St & N Limestone St, Lexington, KY 40507]

The UnTower Manifesto: 2. Consequences

[Note: The UnTower Manifesto is a three-part series about responding to the failure of CentrePointe.  You can read the full story of that failure here.]

The consequences for UnTower should rest on the people who perpetrated the scandal: The mayor, some council members, and the developers.  Let's start with the mayor.

In other venues, I've seen the mayor talk with his skeptics with apparent openness and graciousness.  He was quite articulate.  He listened to their concerns and seemed to hear them.

But the last several months have shown a repeated abdication of his duties in the face of scandal.  This pattern first emerged with the airport staff's misappropriation of public funds in their credit-card-and-travel scandal, where the mayor displayed a perplexing tendency to drag his feet.  Now, as CentrePointe devolves into the UnTower scandal, the mayor has shown a similar lack of initiative to lead on his citizens' behalf.  Instead, he has resorted to 'happytalk' to defend what is clearly a failed project.

Meanwhile, the vice mayor has been active and vocal in challenging both scandals.  The effect: a grassroots effort to draft him to run for mayor in 2010, complete with its own Facebook fan page and glowing coverage in local media.  The current mayor seems to have no such dialog with the citizens he serves, and seems to have generated little enthusiasm for a 2010 run.

The mayor needs to begin to lead with candor, action, and transparency - beginning with complete clarity around what happened to create UnTower - or his constituency will chase him from office.

The same can be said for the members of the Urban County Council - especially those who rubber-stamped the UnTower project without adequate scrutiny or analysis.  They must assume a more actively transparent posture - including using the tools and technologies to have conversations with the people they serve - or they, too, will be removed from office by their increasingly-informed electorate. Their citizens will no longer tolerate the kinds of hijinks and misdirection that characterized UnTower.

Finally, there are UnTower's developers.  What should happen to them?

The scar in the middle of town is their property.  But the destruction of the block and the special tax status endowed on the block were public events, with public investments and public impacts.  If anyone doubts the public impacts, just talk with businesses bordering the UnTower eyesore about its effects as a customer-repellent.

So here's my modest proposal for penalizing their deception.

First, the council should explore all options for rescinding the block's special Tax Increment Financing (TIF) status.  TIF was granted under conditions which no longer seem to apply, and the developers no longer appear to have earned that special status.

Second, the council should - to the extent it is able - strictly re-define acceptable future uses of the property in light of the UnTower scandal.  Given that the developers contributed to the scandal with their hollow promises and continual lack of disclosure, I would hope that our council would be particularly stringent with requirements for how the property functions as part of our community and that they would set a strict timetable for the developers to act.

The developers misled us to gain advantage; now they should pay the price.

[Continued in: The UnTower Manifesto: 3. Beyond UnTower]

[where: E Main St & N Limestone St, Lexington, KY 40507]

The UnTower Manifesto: 3. Beyond UnTower

[Note: The UnTower Manifesto is a three-part series about responding to the failure of CentrePointe.  You can read the full story of that failure here.]

The final piece of the UnTower puzzle is what to do with the pit now that the historic buildings are gone and the promised tower cannot be built. 

Up front, let me declare that I don't have all of the answers regarding what needs to be done with the block.

But I do have some general principles which we might start to apply to the site.

• Create a vibrant destination which attracts in-town residents, weekday workers, other folks from throughout the Bluegrass, and tourists.
• Make that destination a distinctive place which no other city has (and this doesn't need to be a towering monument to ego)
• Create public and private spaces within the destination which allow the community to create shared experiences while also providing a much needed economic boost
• Balance the types of uses within the development to include an attractive mix of retail, nightlife, dining, and lodging options
• Ensure local businesses have significant presence within the development to help supercharge the local economy
• Ensure that the space is well-integrated with the surrounding community and that its design promotes circulation throughout surrounding businesses and public spaces
• Build it soon.  Remove the eyesore that the UnTower scandal left behind.

So lets look at these principles in more detail.

Destination.  If we want the UnTower block to directly feed the local economy, we need it to function as a destination for both our visitors and our community.  The previous imposing design did not encourage local residents to participate in the space.

Distinctive Place.  The new development should, to the extent possible, function as a signature place for Lexington.  Much like Keeneland and our horse farms showcase Lexington as a city like no other, the new development should showcase our city, our region, and our people.  Portland, Austin, Miami, Chattanooga, Denver, and even Louisville have these memorable and distinctive signature places.  Lexington should, too.  A distinctive place will draw people (and dollars) into our community; A forgettable one will not.

Public and Private Spaces.  The most effective places (like those in the cities above) combine public spaces with private enterprise.  Thus, memorable shared experiences can also feed the local economy.

Balanced Use.  Others have proposed using the block for a single kind of use - say, a new basketball arena.  Such dedicated uses of the property would be counterproductive to our economic engine.  To get the biggest economic bang for the buck, we should encourage a unique and balanced mix of stores, restaurants, attractions, clubs, and perhaps a unique 'boutique' hotel.  (My best-ever customer experience was at a Kimpton Hotel, which made for a hugely positive impression of Portland in general.  What if Lexington could wow its visitors like that instead of giving them a bland cookie-cutter hotel?)

Local Businesses.  To supercharge the impacts of the dollars spent within the new development, we should try to ensure that many of the businesses located there (30%? 50%?) are local businesses.  This will yield two big benefits.  First, it would contribute to the distinctive character of the place.  Second, it would keep a significant portion of that money in Lexington.

Integration.  When CentrePointe was proposed, many derided the design as too fortress-like and too disconnected from the city fabric.  The UnTower scandal offers an opportunity to correct that mistake.  The new development could more thoroughly integrate with several aspects of downtown development.  The site borders Phoenix Park, Courthouse Plaza, and the History Museum / old Courthouse / Cheapside complex.  An 'open' design would promote circulation through those spaces (and into surrounding businesses) and would better integrate with our other urban initiatives (such as our street improvement plans).

Build Soon.  Regardless of the type of development we ultimately put on the UnTower block, we probably have missed our window for using it to improve our city's appearance for the World Equestrian Games in 2010.  Nonetheless, we cannot allow the crater left by UnTower to remain. 

Is this list comprehensive enough (or even correct)?  Probably not.  Feel free to point out what I got wrong or what I missed.

In any case, this is the kind of civic discussion that the citizens of Lexington must engage in if we are to build a better community - and if we are to heal the scar in the middle of our city.

[where: E Main St & N Limestone St, Lexington, KY 40507]

Recession Pants

Part of our Customer Service Hero, Zero, or Nero series.
Zeroes seemed to have just stopped trying.

I like Dockers pants.  They are easy to find, and their sizes are reliable and fit me well.  I'm a particular fan of their "Golf Pant" - not because I play golf, but because they have a few bonuses I like: a 'shirt-gripper' waistband (to keep shirts tucked in) and extra interior pockets (to keep my stuff easy-to-find).  Also, I don't have to iron them -- a big time-saver.

So I visited a store earlier this week to look for them.  But the Dockers section had a lot of new, unfamiliar names for their pants: 'The Broker Chino' and 'The Lincoln Pant'.  The Golf Pant was nowhere to be found...

I was in a hurry, so I grabbed the ones which looked closest to the style I liked: The Lincoln Pant.  Same price, same style.  Just a different name...

Or so I thought.

The next morning, I put these pants on, and noticed to my annoyance that the shirt-gripper was missing.  My brain was filled with images of me constantly stuffing my shirts back into the back of my pants.

Then I went to load my stuff: change, cell phone, pens, glasses case, cash, and such.  No interior pockets, so all my stuff was swimming in there together.  Plus, the pockets aren't as deep as they used to be.  Another annoyance, especially when I'm driving or sitting and stuff spills out of my pockets.

It seems that the Lincoln pants are a recession version of the Golf pants: All style, no substance.  By skimping on a few square inches of cloth and that little rubbery strip around the waist, the pants have lost most of what made them worth buying in the first place. 

Lessons for Business
Times are tough for a lot of businesses, and the desire for cost-cutting is understandable.

But when a business chooses to scrimp on the very things their customers value, they make things even tougher for themselves.  Ultimately, such businesses wither as customers see no particular reason to patronize them.

Did Dockers offend me?  No.  I bought a decent (but not special) pair of pants.  But by charging the same price for a blander product, they did create a Zero experience and gave me the impression that they just stopped trying to meet my needs.

So, by saving costs on these "recession pants", Dockers will likely lose a customer.  That's a steep price for the few pennies saved.

What if, instead, Dockers had leaned into the recession winds, and invested a few extra cents?  Maybe heavier cloth, more pockets, or some cool innovation.  What if they had chosen to stand out from all of the competitors who also cut costs?  What if they treated the recession as an opportunity to grow, rather than a threat requiring fiscal tightening?  What if they had chosen to change things instead of being changed by them?

It might have cost them a little more in these hard times, but it would have increased my devotion to their brand, perhaps for several years.

What is that worth?

[where: 1988 Pavilion Way, Lexington, KY 40509]

Service Nero: Ruby Tuesday

Part of our Customer Service Hero, Zero, or Nero series.
Neroes fiddle while the organization is on fire.

The meal was fine.

But I left my glasses at the table.

When we sat down, I distinctly remembered setting them near the edge of the table.  As the meal progressed, and we attended to our 2-year-old, they got obscured by plates and napkins. 

As we were leaving the table, we saw some long-time friends at another table.  My wife took our son over to visit while I paid the bill (nice tip - more than 25% because we had a coupon) and gathered our things.  But I forgot my glasses. 

We visited with our friends for about 5 minutes on the other side of the restaurant and went out to the car.  That's when I realized that I didn't have them. 

I returned to the table, which had already been cleared.

That's when it got ugly.

I found our server, and when I asked her about the glasses, she declared that they weren't on the table: "I would have seen them if they were there."  She was quite defiant, and I started to regret that I had been generous with her tip. 

She then asked if I had left them in the bathroom - which I hadn't visited.  I had to verbally nudge her to get her to ask around in the kitchen to see if anyone else had seen them.  She came back: "They're not here."  She was getting impatient with me.  I was getting impatient with her.  I regretted tipping her at all.

I told her I was certain I left them on the table, and I wondered whether they could have been placed into the trash.  Now, she looked at me with disgust.  She reiterated that she would have seen the glasses "if they were there."  When she saw I was serious and wasn't going to leave, she offered to talk to the manager about whether I could go through the trash. 

While she was in the kitchen, I heard her declare that she wasn't going "in there" (the trash can).  There were also rounds of laughter -- I assumed it was at my expense.  She came back, and informed me they would carry the can out to the back of the restaurant, and I could rifle through it out in the cold.  She looked at me as though I had bugs crawling all over me.  Now furious, I told her I'd go out there.

I pulled my car around back, and two kitchen dudes brought a couple of garbage cans out.  Without saying a word to me, they plopped them down, returned to the kitchen, and slammed the door.  I stood there in the cold, stunned for a few seconds as I realized that no one was going to help in the slightest -- even to offer any suggestions on where to start or implements with which to sift through the trash...

Then, I remembered that I had a 24" level in the back of my car.  At first, I poked and prodded through the kitchen waste with the bright yellow level.  No glasses.  Then I was rowing through the stuff to get deeper and deeper into the can.  My son was repeating "What is Daddy doooooing?" over and over again.  It must have made for a comical scene, but I was livid.

I was angry enough that I entertained the thought of emptying the trash cans all over the lot.  Or, even better, the lobby!  I just wanted revenge.

Then, I rowed back a piece of lettuce and found my "prize": The glasses were covered in some sort of ranch sauce, onion, and ketchup concoction.  I went back to the car to get a few paper napkins, and then fished the disgusting mixture out.

I wanted to show our server -- despite her absolute certainty that the glasses weren't there -- that in fact, they were.  So I headed around to the lobby.  One of the kitchen dudes was outside the front door on his smoke break.  "Did you find 'em?"  "Yes," I said, holding up the messy prize.  "Really?  That's amazing..."  I asked him to let our server know, deciding not to make a bigger confrontation out of it.

While I had gone to the front, the manager had come out briefly to talk with my wife.  He went inside before I got back.

But for me, it was too little, too late.  I hated Ruby Tuesday.  That was two weeks ago, and I'm still peeved.  Can you tell?

A Few Lessons for Business

1. It isn't just what you are selling.  Bad service ruins a great, quality product.
2. Be vigilant.  One employee (and one incident) can reflect badly on the entire company.  It won't matter if you do great 90% of the time.
3. Be humble.  Don't pretend to be certain, whether to cover for what you don't know or to cover for what you didn't do.
4. Don't tell customers they are wrong.
5. Don't treat customers with contempt, disgust, or derision.
6. Own some part of the customer's problem.  Even if it involves something distasteful, offer to help the customer in some way.  They didn't have to sift through the trash with me, but I would have appreciated simple suggestions or tools or even sympathy...
7. The real problem is bigger.  Very few customers blog or confront like I just did.  Most simply give up and never come back.  Find out why.  And fix it.
   
8. Customers talk.  Customers will tell family, friends, and acquaintances (and, sometimes, blog readers) about their bad experiences.  But they probably won't tell you.
9. Don't leave your glasses at Ruby Tuesday.  On second thought, better be safe and just don't go there.  Ever.

[where: 1808 Alysheba Way, Lexington, KY 40509]

Customer service: Hero, zero, or Nero?

Here at Lowell's, we strive for an exceptional level of customer service.  We want our customers to remember and recommend us.  When they do, we grow.

In reality, we make mistakes.  But we do try to learn and improve when we make them.  And we try to make up for mistakes whenever possible.

Recently, we have had some, er, memorable customer experiences with other organizations.  In upcoming posts, I'll document some of them.  It will be quite entertaining.

In the process, I'll use three categories to talk about customer service levels:

• Heroes:  Heroes are the folks who surprise, delight, and really create memorable customer experiences.  They are the ones who care the most about their customers, and really deliver what customers want.  Heroes create vibrant, growing businesses.
• Zeroes:  These are the people who, in some way, have seemed to just stop trying.  There's nothing particularly bad about their experiences, but there's nothing great, either.  They're just complacent.  And the end result is a blah, unremarkable encounter.  'Zero' businesses are usually stagnant or shrinking.  They tend to have shifted their focus from customers to internal processes, and often end up quite bureaucratic as a result. 
• Neroes:  Named in honor of the emperor who 'fiddled' while Rome burned, a customer service Nero is someone who actively creates a crappy, customer-repelling experience.  'Nero' experiences often come from rogue employees, but some organizations seem to allow poor service to spread throughout.  Nero businesses often implode as customers simply evaporate.

We're going to have some fun with these posts, but we're also going to try to extract important business lessons from them. 

We're also very interested in hearing about your hero, zero, or Nero customer service experiences.  Comment below about your notable experiences.  We can't wait to hear from you.

[where: 111 Mechanic St, Lexington, KY 40507]

Taxes, Taxes, Taxes

I'm quite a bit different than my business-owning peers -- I actually don't mind paying taxes. I get a lot of benefit from those taxes: providing for our common defense, local police and fire protection, and a pretty great infrastructure (by world standards), among many other services that our governments provide.  It is my duty as a citizen to financially support the governments that protect and enable our freedoms.

I feel this way even though those services and those governments should be much more efficient and much less bureaucratic than they are.  So I'm not a typical all-taxes-are-evil type of business owner...

But I hate dealing with taxes.

When I bought this business, I knew that I was going to have to deal more with taxes and payroll issues than when I was an individual employee of a corporation. (Unlike many businesses, we don't send our payroll or most of our taxes out to other professionals. Yet.)

But I totally underestimated the crushing administrative burden of the variety, frequency, and complexity of tax payments.  Besides dealing with federal, state, and local governments (which I expected), I quickly learned that each entity had many different types of taxes, each with different weekly, monthly, and quarterly schedules, and each out-of-sync with the others.  There were many taxes which we paid and documented on a regular basis which had to be re-documented periodically.  Then, in January, the schedule gets jumbled from every other tax period.  It is needlessly complicated and time-consuming. 

Again, I'm a willing taxpayer (although I'd always welcome paying less).  But I don't want to be a tax expert.  And I don't want to be forced to hire one.  And I don't want to spend so much time managing our taxes when it should be spent managing our business... 

There must be a simpler way for businesses to contribute to their governments. 

A scar upon our city?

I have to admit I wasn't engaged in the discussions surrounding "the Dame block" and the CentrePointe development in downtown Lexington last year.  I didn't frequent the places on the block, and I didn't follow the day-to-day developments as the debate raged about what to do with the block.  I don't have a sentimental attachment to the issue.

But, today, two aspects of the CentrePointe project have struck me:

1. The rapidity with which the the Webb Companies razed the buildings, leaving behind a crater of rubble.
2. The complete lack of any visible activity since.

Only one thing is now missing from the CentrePointe development: Actual development...

The Webbs promised Lexington that CentrePointe construction was to begin in December.  Now, a month later, activity is yet to begin.

The company asserts that it is waiting for various state approvals in order to begin construction.  Apparently, some of that includes permission to begin blasting an even-deeper pit for the complex's parking garage.  (Blasting...  Sets a nice ambiance for downtown businesses like ours.)

This is an extremely poor economic and financial environment for initiating a major real estate development project.  One has to wonder: As the financial system has crumbled faster than the Dame block was demolished, do the Webbs really have the financial horsepower (or backing - they haven't named their "private backers") to pull off a project of this magnitude?

One also has to wonder...  Why did they proceed with razing the block if they were (and are) awaiting basic approvals to begin construction?  Prudence would dictate waiting until approvals were in hand.

Finally, one wonders...  Who is accountable for this scar upon our city if, perchance, the unnamed Webb financers do back out?  CentrePit, indeed.

Update, 1/24:  CentrePointe is supposed to house a J.W. Marriott hotel.  This morning, this bit of sunshine from NPR, including the following:

Still, it's hard for many businesses and people who don't have the very best credit ratings to get loans.

Arne Sorenson is the chief financial officer of the hotel corporation Marriott International.

"There are clear signs of improvement, I think," he says, "not withstanding that there is an abhorrence of risk."

Sorenson says it's still almost impossible to get funding for new hotels, even for low-risk projects that he says make sense right now. He says banks just aren't lending enough money. And that hurts the economy.

At Marriott alone, he said, "there are thousands of jobs that are not being created that normally would be created. And that's entirely due to the lack of credit available to fund new hotel projects."

[where: E Main St & N Limestone St, Lexington, KY 40507]

When markets don't work

Michael Lewis and David Einhorn have written the best summary I've seen of why the recent financial meltdown happened, in an amazing editorial in the New York Times.  Their very long, very well-done article (Part I and Part II) details both how regulation failed and how it is integral to smoothly functioning markets. 

Einhorn is one of the real heroes of this meltdown.  As a brilliant and wrongly-maligned hedge fund manager, he was one of the first and most articulate critics who chronicled the outright fraud, misconduct, willful ignorance, and inbred conspiracy perpetrated by financial companies (like Allied Capital and Lehman Brothers), bond insurers (AMBAC and MBIA), ratings agencies (S&P and Moody's), and government regulators (SEC, Treasury, and the Fed). 

This meltdown (and the hundreds of billions we're throwing at it) are the results of an unfettered, unregulated, so-called "free" market.  Einhorn and Lewis demonstrate why regulation is necessary to a healthy, functioning marketplace.

Discovery tale: Do you have a Bugatti in the garage?

The recent discovery of a classic, rare, and dusty 1937 Bugatti in an old English garage got me thinking.

The Bugatti fits neatly into the popular imagination as a kind of "discovery tale".  Discovery tales are those romantic, hopeful stories about finding some valuable piece of treasure in an unexpected place.

The discovery tale permeates our culture:

• The Rembrandt (or Picasso) in the attic
• The winning Lotto ticket
• The mid-19th-century stock certificate left by a long-lost aunt
• The pot of gold at the end of the rainbow
• The gambler who wins the big jackpot in Vegas
• The starlet discovered in the drugstore
• The search for El Dorado
• Cinderella
• The Antiques Roadshow

These are all stories built around the discovery tale.  Usually, the tales result in untold millions for the "discoverers": the family who found the Bugatti will be getting nearly $4.5 million.

It is a compelling story.  Except that it is totally unrealistic.

Don't get me wrong -- I really like these stories, too.  As long as they are treated as fun, fantastical tales.

When the discovery tale becomes a personal strategy for wealth or success, it is a problem.  It is deadly when it becomes a build-it-and-they-will-come business strategy.

It is a problem in two ways.  First, it promotes faith in a highly unlikely outcome.  What do I mean?  Let's be generous and suppose that there are 100,000 Bugattis (or Rembrandts or jackpots or stock certificates) in the world.  Only a fraction of those Lotto tickets are going to be found in any one year (it took nearly 50 years for the family to find the Bugatti - there's a reason that such discoveries are so rare and notable).  Again, let's be generous and assume that 5% of these (5,000 or so) are discovered per year.

At this point, there is literally a one-in-a-million chance that you will be the discoverer of the next Bugatti in 2009.  And that's after being generous with our assumptions.

If you are now tinkering with the assumptions -- "Maybe there are really a million Bugattis and there's really a 20% chance of finding one..." -- please STOP.  It is nice to hope, but it is destructive to manipulate the odds in order to justify hoping.

The second big problem with discovery tale strategies is that they are passive.  Discovery tales encourage waiting and hoping as a substitute for industry and ingenuity.  People put off getting a better job or starting their own business while they wait for "things" to get better or for their lottery ticket to come in. 

So am I a total cynic?  No.

Everyone has undiscovered treasure.  But you don't find it.  You use it.  Your treasure lies in your hands and between your ears.  You are the garage -- go make your rare Bugatti.

[where: United Kingdom]

Two ways

There are only two ways to live your life:
One is as if nothing is a miracle;
The other is as if everything is a miracle.
- Albert Einstein

As I see the world through my 2-year-old son's eyes, I'm constantly reminded of the everyday wonders we sometimes take for granted as adults.  I've always liked Einstein's "two ways" quote, and have tried to maintain a child-like amazement at what I encounter in life.

Jaded people (the "nothing is a miracle" people), frankly, bore me to tears.  It is far too easy - and lazy - to pretend that you've been there and done that, and that there is nothing new or wonderful in the world.  Ultimately, that cynical attitude stunts one's ability to grow, learn, and change.  It isolates jaded people from others.

I was talking (debating, really) with a group of business leaders the other day, and it struck me that there is a nearly identical "two way" attitude division in the business world. 

The Lazy Way
Some companies approach their business with a cold, calculating, flinty-eyed precision.  These companies look at business as a pure numbers game.  They often see their customers, suppliers, and employees as opponents or obstacles or dupes to be taken advantage of in their pursuit of the almighty dollar.

They see every relationship as an opportunity to "take" -- in fact, "relationship" is seen as a soft, weak, and silly notion which has no place in business.  This is the case among executives at my last company. 

In their lazy reliance on numbers, such miserly companies manage for the short term, the "quick fix" -- "Let's make a mint before the customer (or employee or supplier) gets wise to us!"  Eventually, these companies get so disconnected from customers and employees that the dominant day-to-day focus of the organization is on internal politics and positioning. 

From my experience, I can tell you that such shrinking companies are miserable places to work, and they ultimately suffer long, slow, painful deaths as customers and employees flee in droves.

The Generous Way
Other companies adopt a fundamentally different philosophy and approach to their business.  They approach business with a spirit of generosity.  They see that building long-term relationships with customers, employees, and community creates both financial and human rewards.  While the numbers might inform their choices, these companies make decisions based on doing the right thing.

"Doing the right thing" shifts the focus from the financial numbers to the human equation. Doing the right thing isn't easy.  It can be hard work.  It isn't always profitable.  "Right thing" companies usually grow more slowly than "quick fix" companies (at first).  But they do continue to grow when quick fix companies fade (or implode). They build lasting relationships which sustain them through good times and bad.

The "right thing" companies still pursue profit, but their primary focus is outward: on generous relationships with their customers, their employees, and their communities.  They trust that the profit will follow.

These growing, vibrant, connected companies are engaging and rewarding places to work (and to do business with), and they have long-term employees and customers.

Everything is a Miracle
As the economy weakens, many companies have scrambled back to the quick fix of analyzing cold, hard numbers (and charts and plans) and have abandoned their "soft and fuzzy" relationships with people.  The numbers make them feel safe and precise and comfortable.  But they aren't any of those things...

They might not know it yet, but they are the walking dead. 

The companies who will ultimately thrive in this economy (and who will drive real economic growth) are the ones who continue to connect with their customers, employees, and communities -- and who continue to do the right things.

But Albert Einstein could have told you that.  My 2-year-old could have told you that.  It is just that simple.