March 05, 2012

Bangalore Started in 1893, not 1993

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Wilson on Banglore:

In 1893, J.R.N. Tata, the founder of Indian multinational company Tata, and the maharaja of Mysore met by chance on a ship sailing from Japan to Chicago. They agreed that science would be the path to successful modernization of India. During the following years, Tata donated money and the maharaja donated 370 acres of land in order to build a “science city” near a town then called Bengalaru, which had recently been struck by a devastating plague. The result was the Indian Institute of Science (IISc), which soon became one of the world’s great centers of science and technology education (and remains so today). In the ensuing decades, graduates established other science-related enterprises nearby. After World War II, the government of India located its nuclear science program in the area, and an Indian space program followed.

By the 1980s, new businesses began emerging there, including Infosys (today the second-largest exporter of IT services in India). Bangalore, as the growing city was now called, became a center of commercial activity. 

Clearly, this was not an over-night success.

Reference

Wilson, Ernest J. How to Make a Region Innovative. Strategy + Business. 28 Feb 2012. http://www.strategy-business.com/article/12103?gko=ee74a

Flow - and Project Management

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Like Facebook? You'll probably like www.asana.com, a new web-based productivity software that really works - "especially if you want to be productive." You assign a Project, then the Tasks related to it. Then your team interacts on what they're doing, what they need, and what's getting accomplished. The stream of updates is sort of like Facebook and the addiction may be as compulsive as Facebook. Asana makes a facebooking-like process productive for your company, no matter how you use it. Why's it like Facebook? One of the creators is a Facebooks alum, from way back in the dorm room at Harvard.

Reference

Vance, Ashlee and Douglas Mac Millan. Dustin and Justin's Quest for Flow. Bloomberg Businessweek. 7-13 November 2011. http://www.businessweek.com/magazine/asana-dustin-and-justins-quest-for-flow-11022011.html about http://www.asana.com/ .

Economic Development: Community Requirements

www.mixnerstrategy.com

Three things communities do for successful economic development:

  1. Human Mixing: Historically, the best innovations came from trading centers - think diversity and interchange.
  2. Education: "...encourage rampant experimentation in the education sector, whether it's taking the Khan Academy mainstream or expanding vocational training."
  3. Institutions Encourage Risk-taking: Lehrer makes the point that our most innovative sector isn't technology. It's youth sports. Who else gets all the carrying around and cheering so necessary for growth. 

Reference

Lehrer, Johah. Cultivating Genius. Wired. March 2012. 025.

February 21, 2012

On My Desk

www.mixnerstrategy.com

Aldous, Richard. Reagan and Thatcher. The Difficult Relationship. W. W. Norton & Company. 2012. 

Allen, Paul. Idea Man. A memoir by the cofounder of Microsoft. Portfolio/Penguin. 2011. 

Andrade, Tonio. Lost Colony. The untold story of China's first great victory over the west. Princeton University Press. 2011.

Cheney, Dick with Liz Cheney. In My Time. A Personal and Political Memoir. Threshold Editions. 2011.

Christensen. Clayton M. The Innovator's Dilemma. When New Technologies Cause Great Firms to Fail. Harvard Business School Press. 1997. 

Clinton, Bill. Back to Work. Why we need smart government for a strong economy. Alfred A. Knopf. 2011.

Covey, Stephen M. R. and Greg Link with Rebecca R. Merrill. Smart Trust. Creating prosperity, energy, and joy in a low-trust world. Free Press. 2012.

Cross, Rob and Jon Katzenbach. The Right Role for Top Teams. Strategy+Business. 6 Feb 2012. http://www.strategy-business.com/article/00103?gko=97c39

Drucker, Peter F. with Jim Collins, Philip Kotler, James Kouzes, Judith Rodin, V. Kasturi Rangan, and Frances Hesselbein. The 5 Most Important Questions You Will Ever Ask About Your Organization. Jossey-Bass. 2008.

Duhigg, Charles. How Companies Learn Your Secrets. New York Times. 16 February 2010. http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?_r=1&hp=&pagewanted=all

Duhigg, Charles. The Power of Habit. Random House. 2012. 

Dyson, George. Turing's Cathedral. Pantheon. 2012.

Estabrook, Barry. Tomatoland. How modern industrial agriculture destroyed our most alluring fruit. Andrews McMeel Publishing, LLC. 2011.

Gould, Lewis L. Theodore Roosevelt. Oxford University Press. 2012.

Heinrichs, Jay. Thank You for Arguing. What Aristotle, Lincoln, and Homer Simpson can teach us about the art of persuasion. Three Rivers Press. 2007.

Heller, Peter. Jay Heinrichs: You Can Do Anything. http://mobile.businessweek.com/articles/2012-03-14/jay-heinrichss-powers-of-persuasion

Hoffman, Reid. Connections with Integrity. Strategy+Business. 13 Feb 2012. http://www.strategy-business.com/article/00104?gko=5e4cc

Kanigel, Robert. On an Irish Island. Alfred A. Knopf. 2012.

Levy, Steven. In the Plex. How google thinks, works, and shapes our lives. Simon & Schuster. 2011.

Lewis, Len. The Trader Joe's Adventure. Turning a uniue approach to business into a retail and cultural phenomenon. Dearborn Trade Publishing. 2005.

McCullough, David. The Greater Journey. Americans in Paris. Simon & Schuster. 2011.

Moore, Geoffrey A. Dealing With Darwin. How great companies innovate at every phase of their evolution. Portfolio. 2005. 

Murray, David Kord. Plan B. How to hatch a second plan that's always better than your first. Free Press. 2011.

Perkins, Tom. Valley Boy. The education of Tom Perkins. Gotham Books. 2008.

Rice, Condoleezza. No Higher Honor. A memoir of my years in Washington. Crown Publishers. 2011.

Rowan, David. The Social Networker. For Reid Hoffman relationships rule the world. Wired. April 2012. 101.

Schultz, Howard. Onward. How Starbucks fought for its life without losing its soul. Rodale. 2011.

Thatcher, Margaret. The Downing Street Years. HarperCollins. 1993.

Turnbull, Stephen. Toyotomi Hideyoshi. Leadership. Strategy. Conflict. Osprey Publishing Inc. 2010.

Truot, Jack with Steve Rivkin. The Power of Simplicity. McGaw-Hill. 1999. 

Vance, Ashlee and Douglas Mac Millan. Dustin and Justin's Quest for Flow. Bloomberg Businessweek. 7-13 November 2011. http://www.businessweek.com/magazine/asana-dustin-and-justins-quest-for-flow-11022011.html about http://www.asana.com/ .

Vogel, Ezra. Deng Xiaoping and the Transformation of China. Belknap Press. 2011.

Warren, Beth Gates. Artful Lives. Edward Weston, Margrethe Mather, and the Bohemians of Los Angeles. The J. Paul Getty Museum. 2011.

Wilson, Ernest J. How to Make a Region Innovative. Strategy + Business. 28 Feb 2012. http://www.strategy-business.com/article/12103?gko=ee74a

Woodward, Bob. Obama's Wars. Simon & Schuster. 2010.

January 12, 2012

Good Management Circa 1812

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There is no question that the Napoleonic wars in Europe in the early 1800s stressed the community of states at the time. Great Britain, for instance, needed to crew their ships with experienced sailors. She had a problem, however, called the cat-o-nine tails. Do something wrong (sleep late, curse at the wrong time, etc.) and, on many royal ships, you could expect a whipping that might be life threatening. Once a crew realized that it served a captain capable of whipping for simple offenses, the ship's population was likely to  abandon ship at the next port. Can't blame sailors when you think about it. The navy had a plan, however. Whenever they came upon an American ship, especially a freighter, they'd stop the ship and take back anyone they suspected of deserting. Then the cycle would begin again. Yes, Parliament realized they had a problem in the Navy. They debated it in depth. A famous captain, Thomas Cochrane (Daughn, 17), even testified  in Parliament to the brutality of the navy. It didn't do much good. The brutality continued.

Patrick O'Brian's Jack Aubrey novels popularize Thomas Cochrane. Aubrey runs his ship sternly, yes, but equitably. A special captain who loves the heat of battle, his crew admired him for his fairness and his agressiveness against the enemy. A captured ship was worth a fortune when sold, a fortune the crew shared in. Aggression was good. So was fairness. Aubrey, Lucky Jack Aubrey in the novels, was skilled at sailing, aggressive against the enemy (America in some of the story, and France in other parts), and successful at capturing bountiful prizes.

In modern business parlance, we might say that Aubrey had experience and talent. He was able to apply his skills successfully against his competition. His team won, the Navy won, and so did his country. Not a bad combination.

References

Daughn, George C. 1812. The Navy's War. Basic Books. 2011. 

O'Brian, Patrick. Master and Commander.  W. W. Norton & Company. 1970.

December 15, 2011

Reacting Before the Fact

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Bill Bratton's approach to fixing neighborhoods in New York City was to fix the little things. If there were broken windows, fix them. If there was graffitti, remove it. Drug selling? Enforce the laws. The police department collected information about the immediate past and projected where problems would occur in the future. It worked pretty well.

The East Orange (NJ) Police Department tried to do better. Led by a Bratton alum, they installed enough sensors that they knew where shots were fired in real time, installed enough cameras that they knew when a single person was walking down a street in a high crime area, and, when, crucially, that person met up with someone in a car for a short chat. That chat caused the PD to respond with a roll-by just to see what was going on. The roll-by might be announced with sirens blaring. Some of the neighbors didn't really like the big brother-like attention. They did like the real reductions in crime (Ranadive, 118).

The Securities and Exchange Commission is filing fraud charges against hedge funds (Businessweek) which seem to be advertising improper gains. They're responding following examination of public data that seems to suggest a problem. They're using that suggestion to follow-up and ask questions. Then come the indictments. The industry, pretty obviously, sees this as some sort of violation of privacy rights. Some of it feels the same way to me. Let's see how the results pan out. There were necessary elements to this: we've had problems in the past that grossly effected the US economy, they have the data to check up on things, and, they have the willingness to ask questions in an environment where in the past they only followed-up after folks lost a lot of money. Times have changed.

What does this mean for business? All this relies on data mining. The first step requires data to mine. That means much of the financial data in your accounting and sales information may be useful in the long run. Analyzing it may be in order. Should you invest money in that analysis? Well, it takes money to make money; it takes an investment to reap the reward.

What about tools to mine that data? Tableau software, a new firm started by a Pixar alum (Kharif), has software that'll take a ream of data and present it graphically. The presentation many times shows relationships that aren't immediately obvious. That new obvious information may be actionable. That actionable  fact may turn, ultimately, into profits.

References

Hamilton, Jesse. A "Broken Windows" Approach to Fraud. Bloomberg Businessweek. 12-18 December 2011. 63. http://www.businessweek.com/magazine/the-secs-new-approach-to-fraud-12082011.html 

Kharif, Olga. Applying the Pixar Magic to Spreadsheets. Bloomberg Businessweek. 12-18 December 2011. 54. http://www.businessweek.com/magazine/the-secs-new-approach-to-fraud-12082011.html

Ranadive, Vivek and Kevin Maney. The Two-Second Advantage. How We Succeed by Anticipating the Future - Just Enough. Corwn Business. 2011.

 

December 14, 2011

Beyond Disruptive Strategy to Platform Strategy, And On From There

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Create something. Design it. Test it. Sell it in limited quantities. Sell it in large quantities. Move on to your next creation. See something missing in all this? You've done all this work. You could continue to incrementally improve your product. We'd call this (or Clayton M. Christensen would) sustainable innovation wherein you continually improve the features of your product. In disruptive innovation you might take your current feature set and reduce it by a couple features while simplyfying your product. When you're done, the market may applaud because your product in not only cheaper, it is easier to use (remember all those not-used-very-often features you discarded).

There's another way to look at all this. You could take your creation as a series of different features that, when combined, look like your product. There is the housing in a medical device, say. Then there are the electronic features, the mechanical features, the software features, and maybe, the chemical features. All different and all requiring initial creation steps. Many machines might need only a small change to become completely different machines with somewhat different uses. Why re-create everything when you can re-use much of what you've already created, mash it together in a different way, tweak some of the different parts of the features, and end up with a completely new machine? What you've done is recombine a series of different platforms that you already had on the shelf with those few bits of changes, and, pretty cool, you've got a new product.

The medical device companies have been doing it for years. Savage and Cohen laud the time-saving - and cost saving - attributes of all this. You should too.

There's more to all this. Moore has talked for years about the chasm that you've got to cross if you want to take your new product into the general marketplace after all the early adopters have about finished up and are moving on to the next new thing. You can disrupt a new market with a new product. You can disrupt an existing market by removing features to simplify your product while, maybe, reducing price at the same time. Sometimes price doesn't have to reduce if you do things right. Moore takes all this one step - well, fifteen steps, really - further by describing what you do with marketing related to an existing product. He talks about (Moore, 63) Customer Intimacy, Operational Excellence, and Category Renewal in addition to the Product Leadership Zone that we've been talking about already. 

Distilled, we have an opportunity to take a simplifying strategy and to expand it or follow it with a series of other strategies that fit not only the age of your company, but the age of your product line as well.

References

Cohen, Frances. Embracing Change. Software platform technology and other time-saving techniques can boost innovation and reduce development time. Medical Product Outsourcing. April 2011. http://www.mpo-mag.com/articles/2011/04/embracing-change 

Moore, Geoffrey A. Dealing With Darwin. How great companies innovate at every phase of their evolution. Portfolio. 2005. 

Sargent, Bruce, Dr. Andreas Faulstich and Brian Jarvis. Platform Perfection. IVD instrument development time can be reduced through the effective use of platform technology. Medical Product Outsourcing. May 2010. http://www.mpo-mag.com/articles/2010/05/platform-perfection

 

Grand Strategy

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We don't too often get a chance to tackle really big issues, or to create a strategy to address those issues successfully. When we in fact get to make a grand strategy, many times we never get to see how it works out, because those grand strategies take years, or sometimes decades, to play out.

George F. Kennan, in notes for a class at the National War College, drafted a strategy for dealing with the Soviet Union that he expected to play out over ten or fifteen years. As we all know, successful completion of his strategy took more than forty years. Here's the quote (Gaddis, 235):

Our task is to plan and execute our strategic dispositions in such a way as to compel Sov. Govt. either to accept combat under unfavorable conditions (which it will never do), or withdraw. In this way we can contain Soviet power until Russians tire of the game.

The strategy was about what to do about Soviet wishes to dominate the west over the decades following World War II, and in the years following during the nuclear build-up. The one key word, as you've probably already noticed, is a subtle one, but we all know it: contain. In two lines, Kennan laid out the American strategy for the next forty plus years. Reagan polished things a bit, but it was Kennan that originally laid out the strategy. Pretty interesting. Try to put your overall strategy in forty seven words. Even more interesting, yes?

Reference

Gaddis, John Lewis. George F. Kennan. An American Life. The Penguin Press. 2011.

Free

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Giving things away is a time honored practice in retail sales. We all know about the folks giving away free samples at the local grocery store on a Saturday morning. Giving things away to attract - or keep - customers works. There is a bit of disgruntlement about this, as some authors worry that, for instance, a contract is better than a frequent flyer program (Felton), or that free gets over done when you set up a methodology to give something away for free that you don't own as Napster was, and Google is, sometimes accused (Levine). Levine even takes a swing at Lencioni's Getting Naked, questioning the word loyalty and its assumptions about free.

For now, however, I'm pretty on board with Anderson's free and the steps he suggests for using the concept of free to sell more. He uses Microsoft's attack on freeware and open source software, two similar competitors that had the potential to take down Microsoft's hugely profitable operating system and business software/productivity products.

Anderson lays out the Microsoft responses in stages, some of which we've known about from psychology for years:

  • Stage 1 Denial (Anderson, 106): Basically, although its engineers were saying otherwise internally, Microsoft denied that there was a problem or ever would be a problem.
  • Stage 2 Anger (Anderson, 108): Microsoft's salespeople used the best line I've seen about all this, "Free like a puppy." Yes, you can get a puppy for free at the pound, but what are the long terms costs of that puppy in time and money.
  • Stage 3 Bargaining (Anderson, 109): Microsoft did a study that in fact did prove that its open-source competior Linux was, over time, more expensive than the Microsoft products. That got them at the table where they could at least state their case to the big users.
  • Stage 4 Depression (Anderson, 110): Microsoft's lawyers had forbidden its engineers to try out Linux, as the open source mantra required that if they made any changes to the code, those changes must become public. Microsoft didn't want to share. That kept them from understanding what was going on.
  • Stage 5 Acceptance (Anderson, 111): Microsoft finally realized they'd better get on board with opensource and by implication, freeware. Things settled down to eighty percent market share for Microsoft operating system product, with maybe twenty percent going to Linux based systems. There are three segments competing, free, free software with paid support, and "good old pay for everything (Anderson 111)."

Below is a good chronology of free in the tech arena, all tracing its roots back to a Stwart Brand quote in 1984. It is interesting to remember that even Brand realized that while some things should be free, there were instances where capitalism had a place to play.

Chronology of "Information wants to be free."

1984: "All information should be free" (Anderson, 94, and Levy).

1984: "On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other (Anderson, 96, quoting Stewart Brand)."

2009: "Commodity information (everyone gets the same version) wants to be free. Customized information (you get something unique and meaningful to you) wants to be expensive (Anderson, 97)."

2009: "Abundant information wants to be free. Scarce information wants to be expensive (Anderson, 97)."

References

Anderson, Chris. Free. The future of a radical price. Hyperion. 2009. 

Felton, Eric. Loyalty. A Vexing Virtue. Simon & Schuster. 2011.

Lencioni, Patrick. Getting Naked: A Business Fable About Shedding The Three Fears That Sabotage Client Loyalty. Jossey-Bass. 2010.

Levine, Robert. Free Ride. How digitial parasites are destroying the culture business, and how the culture business can fight back. Doubleday. 2011.

Levy, Steven. Hackers: Heroes of the Computer Revolution. Penguin Books. 1984.

December 13, 2011

Cook on Apple

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We all know about some of the levers for success Apple uses to dominate its marketplace like design, innovation and, well, Steven Jobs. We're all interested in Apple's continued success. So what is Jobs successor, Tim Cook, talking about when he discusses next steps? Production and operations efficiency (Satariano, 37). And Cook's reference, the one he recommends to folks who are trying to understand Apple from all points of view? Competing Against Time.

When you see the business (Bloomberg Businessweek) press quote a book written in 1990, you've got to wonder just what is going on. Management has changed in twenty years, hasn't it? Satariano and Cook remind us that there are things any manufacturing or out-sourcing operation would be wise to remember.

  • Time and Business (Satariano, 39): Remember the timely business words like respons time, lead time, and up time.
  • Time and Customers (Satariano, 83): You can force customers to take what you offer, you can insulate the organization from customers if you try hard enough, or, and this is where the profits are, you can embrace customers and "be sure that they are more satisfied with the service provided thaan they could ever have imagined."
  • Time and Innovation (Satariano, 107): Every now and then you see an auto manufacturer realize that its entire product line is no longer very pretty and, suddenly, they show up at a trade show with not just one or two new cars, but five, or seven, or maybe even a product announcement encompassing all thirteen cars in their line. And they start winning awards. Reminds you of all things "i" at Apple, doesn't it?
  • Time and Money (Satariano, 149): We've all been through the time and money story. Remember that this book was written in 1990. So we get it. Reduce raw materials. Reduce work-in-process. Reduce finished goods inventory. All good. Now, realize that reducing time and money doesn't mean foisting your inventory off on some supplier who has to warehouse things til you need them. That's not savings. It's waste - to everyone.
  • Time and Strategy (Satariano, 253): Don't coexist with competitors. Anymore, no one is staying in one place for long. Retreat is another strategy. I don't much like that one. Attacking feels a little better. Indirect attacking with subtle changes that suddenly add up from incremental change to dramatic change is nice. Cut price by adding capacity isn't very subtle, but it does work. Apple even has a strategy of cornering the market of production machines so their competition can't, for instance, stuff a board quickly because Apple owns all the latest and greatest production machinery. That one hurts, especially if you aren't paying attention.

Competing against time. Jobs never mentioned it. Cook lives by it.

Reference

Satariano, Adam and Peter Burrows. Apple's Supply-Chain Secret? Hoard Lasers. Bloomberg Businessweek. 7-13 November 2011. 35.

Stalk, George Jr. and Thomas M. Hout. Competing Against Time. How time-based competition is reshaping global markets. The Free Press. 1990.

Bush on Bush

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When George W. Bush began to consider his term in office, he asked a series of historians how to write a memoir, and, perhaps more importantly, what to talk about. The first step most of them recommended was to read Grant's Memoirs (Grant). Bush found that Grant didn't chronologically detail his experience as a leader. Rather he chose topics to focus upon that he found were crucial to the success of his presidency. Bush decided to do the same thing (Bush, xii).

The chapter entitled Quitting was about Bush's bout with alcohol. Running was about the decision to run in Iowa in 1999. Personnel was about how Bush used Dick Cheney to initially vet candidates for Vice President, and how, ultimately, Bush decided that Cheney was the best choice for VP. Day of Fire is about 911. War Footing was about putting the country into a state of readiness for war in Afghanistan. Chapters on Afghanistan and Iraq follow. In Leading, Bush says that his goal was to solve problems, not pass them on to future generations (Bush, 274). He meant to lead the public, not "chase the opinion polls." I guess we all know about the failures in New Orleans during Katrina. What we don't know was that things weren't quite like they seemed. Politics got in the way. So did missing a key point: when you see a problem confront it, don't wait for resolution from others.

Lazarus Effect was about the determination focus on solving the HIV/AIDS crisis. The Bush solution was successful. It focused on aleviating the pain as solving the infectious nature of the virus isn't done even now. The decision to send more troops to Iraq, never popular, is detailed in Surge. Bush's goal was the protection of democracy in Iraq. In his second inagural in 2005, Bush laid out his Freedom Agenda, a plan to support repressive regimes in Iran, Syria, North Korea, and Venezuela, among others. Financial Crisis is about the bursting of the financial bubble, and to Bush response to it, especially the bail-out of Bear Stearns, and the problems at Fannie Mae and Freddie Mac. The Epilogue quotes the Bible Psalm 18:22 as Bush is leaving the White House on the way to Obama's inauguration:

The Lord is my rock, my fortress and my deliverer; my God is my rock, in who I take refuge.

Reference

Bush, George W. Decision Points. Crown Publishers. 2010.

Grant, Ulysses S. Memoirs and selected letters : personal memoirs of U.S. Grant, selected letters 1839-1865  Library of America. 1990 edition.

November 28, 2011

Op-Ed Brooks on Drucker - and Decision Making

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David Brooks is well-known as an Op Ed writer for the New York Times. He breaks his normal form by writing about psychology and the development of the human brain in a book that almost feels like fiction, which, in a way, because it applies physical, biological and psychological attributes to fictional characters, it is.  The book works because the science flows out almost effortlessly in a descriptive manner that turns the normal self-help book on its head by not only telling you what you should do, but why. Since I've been working a lot on Drucker lately, I'll quote Brooks quoting Drucker (Brooks, 254):

The great business sage Peter Drucker said that about a third of the business decisions he observed turned out to have been right, another third turned out to be minimally effective, and another third were outright failures. In other words, there is a least a two-thirds chance that what we have done is wrong or largely wrong. We believe this is great, because we want to believe we are great. We want to preserve our own egos, so we're spinning ourselves. But the truth is life is about producing failure. We only progress through a series of regulated errors. Every move is a partial failure to be corrected by the next one. Think of it as walking. You shift your weight off balance with every step, and then you throw your other leg forward to compensate.

A way to make sure you are compensating properly? When you make a major decision, write up a one-pager describing your decision making process and the action you took. Revisit it in nine months to see how you did, what you can learn from it, and what changes need to be made now (Brooks, 259).

Ray Kurzweil, in his descriptions on computer efficiency and the likelihood of computers mimicing human brains, claims, basically, that the time when a computer works as well at decision making as a human brain is fast approaching. Brooks takes only a paragraph to debunk that hope. In describing the growth of a child, he describes a young boy running around the room, and, then, landing in his mom's lap, yelling during all this, "I'm a helicopter! I'm a helicopter!" Brooks knows, as we know, as well, that no computer can even fathom the processes that a five-year-old has gone through we he declares "I'm a helicopter!" Yes, computers are great. No, they're not ready to take over the world, a comforting thought.

Reference

Brooks, David. The Social Animal. The hidden sources of love, character, and achievement. Random House. 2011.

Kurzweil, Ray. The Singularity is Near. Viking. 2005.

November 08, 2011

Good Leadership vs. Inspired Leadership

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Having struggled through Machiavelli's various texts, and Unger's inspired biography, I have begun to understand the difference between Machiavelli's brand of ruthless leadership, and, say, Kouzes and Posner's demand that leaders reflect on what the people around them demand from their leader, or Bennis's "deployment of self through positive self regard (Bennis)". All this bred a bit of cynicism when I began to read Credibility. Ruthless leadership certainly is different from responding to demands of followers. There is a dichotomy. We do have a choice.

Kouzes Epilogue "Character Counts" (Kouzes, 201) does summarize the demanding point of view (from an anonymous source):

Be careful of your thoughts, for your thoughts become your words;

Be careful of your words, for your words become your deeds;

Be careful of your deeds for your deeds become your habits;

Be careful of your habits, for your habits become your character;

Be careful of your character, for your character becomes your destiny;

And, finally, from Kouzes: 

Be careful of your leadership, for your leadership becomes your legacy.

Reference

Bennis, Warren. Notes for a speech at University of California Irvine. 2000. 

Kouzes, James M. and Barry Z. Posner. Credibility. How Leaders Gain and Lose It. Why People Demand It. Jossey-Bass. 2011. 

Unger, Miles J. Machiavelli. A Biography. Simon & Schuster. 2011.

November 07, 2011

Five Ways to Loyalty? Maybe

www.mixnerstrategy.com

There is a whole new section in the business book realm, namely, books on loyalty. Witness the titles (Felton, 181):  

  • Loyalty Rules
  • The Loyalty Effect
  • Why Loyalty Matters
  • Lessons in Loyalty
  • The Customer Loyalty Solution, and finally,
  • Getting Naked: A Business Fable About Shedding the Three Fears That Sabotage Client Loyalty.

So, let's talk about loyalty, and some of the things that seem to productively produce loyalty, when, on closer examination, they might not produce loyalty at all:

  1. You've been with your credit card company all these years. You're a loyal customer. Other people get lower rates on their credit cards. You call in, asking for a lower rate, and are denied. The solution? Don't call customer service. Call the section that deals with people who want to drop their card. That section can make a deal, not the loyalty section (Felton, 183).
  2. Local breweries have all been, basically, closed down or bought up. Think you're buying the local brew? Probably not. Pabst is a local brew. It's not made by Pabst any longer. It's made by MillerCoors (Felton, 187). Go figure.
  3. TV ads target 18 to 34 year olds. Why? Because, once you choose a brand, you'll stick with it for life. Al Reis (Felton, 189) says that's not so. Sure you buy a small Chevy when you're just out of college. When you get a raise, you buy a BMW, not a bigger Chevy, right?
  4. The Beatles started out as the best boy band in the sixties. Once they were established, loyalty, even among friends, couldn't keep the band together. Each of them was justified in leaving the band and going out on his own (Felton, 191).
  5. Buy a company with loyal employees who you have no loyalty for. Why have they been there so long? Maybe, just maybe, they can't get a job anywhere else (Felton, 194). Think about it.

Finally, a comment on binding a customer to you for life. Make it a contractual relationship. That's probably the best way - not talking about loyalty, or some sort of loyalty program (Felton, 199).

Felton writes the Postmodern Times column for the Wall Street Journal. Maybe he's got a point.

Reference

Felton, Eric. Loyalty. A Vexing Virtue. Simon & Schuster. 2011.

October 24, 2011

The Infamous Black Swan

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Some statistics wonks get together in Las Vegas. The topic was, supposedly, how to protect the casinos from rogue players. There were two resulting messages from the meeting.

The first is relatively obvious. The casinos are completely covered when it comes to protecting themselves from rogues. No one really gets away with anything. They do it by limiting the size of the bets a player can make. With lots of players, all playing to relatively small sized bets, nothing can go wrong, basically. The maxim, "the house always wins," is true.  

Here's the second message: The casinos are clueless when it comes to protecting themselves. All the technology they have is worthless to protect them. Witness (Taleb, 130):

  • Their biggest loss in a long time wasn't at the gambling tables. Rather, it was the $100 million they lost when - you know all about this - Siegfried and Roy closed down because some tiger bit the wrong performer. Not predictable.
  • A mad contractor at the casino was mad about his treatment. Since he knew all about the construction of the casino, his plan was to dynamite the place. Not predictable.
  • Some employee decided to hide the reports to the IRS the casinos are supposed to make when gamblers strike it rich. Again, not predictable - and stupid, as well.
  • Finally, a casino's owner's daughter was kidnapped causing the owner to dip into the till, a seemingly good thing to do, although it was in fact very illegal, and, again, not predictable.

The message? There are some things that, no matter how much you prepare for them to happen, you can not predict. No, you probably can not plan for all the risks. If you can't reach the grapes, as Taleb says (Taleb, 297), distain them. They're probably sour anyway. Don't play somebody else's game trying to get them. Just move on.

"In Black Swan terms, this means that you are exposed to the improbable only if you let it control you. You always control what you do; so make this your end."

Reference

Taleb, Nassim Nicholas. The Black Swan. The Impact of the Highly Improbable. Random House. 2007.

October 06, 2011

Industrial Policy Follows Stimulative Policy

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References

The time for stimulatory economic policy is apparently past.

Two points of view to now consider (Economics Focus):

  • Either government intervention (with its attendant inefficiency breeding, reduced competition, lobbying encouragement and government supported production facilities producing products nobody wants) is past, or
  • Now may be the time to consider industrial policy.

Competent industrial policy requires disinterested, benevolent policymakers who do it well (Economics Focus, 84). Key points:

  • Governments should avoid open-ended incentives that in time entrench incumbents and raise consumer prices.
  • Like patents, ... industrial policies should eventually expire.
  • What matters is not whether governments can pick winners - they cannot - but whether thay have the good sense to let losers fall by the wayside.

References

Economics Focus. Tinker, tailor. The Economist. 1 October 2011. 84. http://www.economist.com/node/21530958

Acemoglu, Daron, Phillipe Aghion, Leonardo Burszityn and David Hemous. The Environment and Directed Technical Change. The American Economic Review. http://econ-www.mit.edu/files/6515  

Aghion, P. M. Dewatripont, L. Du, A. Harrison & P. Legros. Industrial Policy and Competition. 28 June 2011. http://www.economics.harvard.edu/faculty/aghion/files/Industrial%20Policy.pdf

Rodrik, Dani. The Return of Industrial Policy. Project Syndicate. 12 April 2010. http://www.project-syndicate.org/commentary/rodrik42/English

September 26, 2011

From the Guy Who Made WalMart Green

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Here's what it took to make WalMart green (Humes, 235):

  1. Start with the hire-fire guy: A company has to become sustainable from the top down. 
  2. Bake it in: Sustainability must be part of every employee's mission; relegate it to its own department, and it will fail.
  3. Waste = money (with real question being whether it's los or found money).
  4. Carbon = energy = money. (That's right, cutting carbon emmission can make money.)
  5. Burst the bubble: Talk to environmentalists and activists, consider their criticism and advice-it's free.
  6. Green is what the next generation of customers cares about.

The CEO at WalMart, Lee Scott, got interested first. Taking its time, WalMart focused on a few initiatives. Yes, some of it was driven, early on, by making a better image. Then they realized there was money to be made.

There was the health care media debacle when WalMart healthcare insurance was too costly and under-utilized. Light bulbs came next, with the conversion from incandescent to florescent. A big, early initiative was making all the cotton garments WalMart sells green. First step was to convert entirely to organic cotton. Cotton growers had to to convert from old way (with insecticides and fertilizers) to organic way,  which took years, forcing WalMart to make an unexpected, and first-time ever multi-year commitment to their suppliers. Either that, or they wouldn't supply WalMart. And - here's the reason to do this, in addition to the important social aspects - it made money for WalMart. Probably will for you, as well. First step: get the CEO on board.

Reference

Humes, Edward. Force of Nature. The unlikely story of Wal-Mart's green revolution. Harper Business. 2011.

September 05, 2011

Generic Strategies

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Generic Strategies

Innovation Catalysts (Martin) at Intuit: Select coaches from across the organization who focus on innovation stepwise: Painstorm - find the pain point, Soljam - solutions are prioritized and focused, Codejam - go to test with good enough code, maybe even faked code to see what works. An example is Mobile Bazaar, a market-place on-line where Indian farmers figure out where to take their perishable products to market for the highest price.

Innovation Cheaply (Bettencourt): Off-the-shelf, in-hand innovations for fast implementation - re-use innovations that failed to launch, old capabilities that resurface as new, products customers like for unknown reasons, split up bundled products into stand-alone products, re-combine components into a new product, simplify an over-designed product that failed. Rainbird figured out how to re-configure an existing product to include new drip features to take to market quickly for immediate payback.

Innovation Against Free (Bryce): Analyze how much you are losing from paying customers, better free, then up-sell, cross-sell, and bundle free with paid offerings. Ryanair offers free or discounted tickets and makes up the difference by charging for other services.

Innovation Quickly (Brown) at P&G: New-business creation groups, innovation guides, innovation manuals, disruptive innovation college with sustaining innovations to existing products, commercial innovations (like packaging up-grades) to existing products, transformational and sustaining innovations (take a cheap product and up-grade it so it in applicable in a new, higher margin, market), and finally, disruptive innovations like entering a new business with radically new products (like the Swiffer mop) .

Innovation Pyramid (Rangan): Two steps - first realize that focusing on the folks with money isn't always the best of strategies, then, when you are focusing on the folks with greats needs but little money, divide them into segments, even at the lowest levels, and, then, target offerings at specific needs, like shaving with out shaving creme (or maybe even water).

Innovation Org Chart (Tushman): Yes, let innovation happen in the trenches; Yes, have multiple ideas competing against each other; Yes, have the final decisions made strategically, at the top, not in accounting or by competing departments and divisions. IBM, because a general manager was making the decision, was able to focus resources on new product launch SWAT teams. USA Today, because the CEO was forcing the issue, was able to refocus on the web (to the detriment of the print division) and launch new editions (like USA Today Sports) exclusively on-line.

Some closer-to-home examples:

  • Vizio, which started out as a flat-screen TV manufacturer, is launching an entirely new product line - light bulbs.
  • Allergan, which started out as an ophthalmic supplier, is launching line extensions for its Botox line of wrinkle removers, and adding new products by acquisition (like the Lap-band for obesity).
  • T3 Motive has a two tier strategy of first making products for large target markets (like selling many units, all at once, to the government, for instance, and then, later, it is planning to sell single units to consumers).
  • IRIS Technologies has re-focused its product lines from remote sensing devices to battery technology to take advantage of DOD requirements for power in remote locations.

References

Bettencourt, Lance A. and Scott L. Bettencourt. Innovating on the Cheap. Harvard Business Review. June 2011. 88. 

Brown, Bruce and Scott D. Anthony. How P&G Tripled Its Innovation Success Rate. Harvard Business Review. June 2011. 64.

Bryce, David J., Jeffrey H. Dyer and Nile W. Hatch. Competing Against Free. Harvard Business Review. June 2011. 104.

Martin, Roger L. The Innovation Catalysts. Harvard Business Review. June 2011. 82.

Rangan, V. Kasturi, Michael Chu, and Djordjija Petkoski. Segmenting the Base of the Pyramid. Harvard Business Review. June 2011. 113.

Tushman, Michael L., Wendy K. Smith and Andy Binns. The Ambidextrous CEO. Harvard Business Review. June 2011. 74.

September 01, 2011

Growth Strategies

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Over time, we've spent a lot of time talking about growth strategies. Most of that time has, however, been spent talking about the strategies popularized by Clayton M. Christensen (Christensen), disruptive strategies. Moore reminds us that there are three other generic growth strategies to consider, some of which aren't as risky as disruptive strategies.

Moore differentiates growth strategies four ways (Moore, 98):

  1. New products for new markets: Disruptive Innovation
  2. New products for existing markets: Product Innovation
  3. Existing products for new markets: Application Innovation
  4. Existing products for existing markets: Platform Innovation.

Disruptive innovations target either complex systems markets, or volume operations (Moore, 75). In strategy, for years we've used a product market matrix delineating the likely risk of new strategy investments. The emphasis on new products for new markets always has been the most risky. It still is. In terms of risk, both product and appliction innovations are probably less risky. One relies on marketing strengths, the other on product innovation. Platform innovation seems to be the least risky. Interestingly, platform innovation seems to occur in the bigger companies. The classic example is the automotive industry. One car's under-lying architecture might be exactly the same as another's with just the body panels changed for appearance's sake. A local medical device contract manufacturer has derived a series of solutions to common problems. Clients bring their ideas for manufacturing. The contractor rearranges existing modules to solve the customer's problems. Prices are theoretically lower and production (or, maybe, engineering) times are faster.

We have made the point over time that working a flipchart with a small team might not be the best way to select new strategies. If you intend to grow, one of these four generic strategies might make sense. Each has a different amount of risk attached to it. A process to evaluate your strategies before you put them into action probably makes sense, as does a risk analysis that looks both at the short term and the longer term. 

Reference

Christensen, Clayton M. The Innovator's Dilemma. When New Technologies Cause Great Firms to Fail. Harvard Business School Press. 1997.

Moore, Geoffrey A. Dealing With Darwin. How great companies innovate at every phase of their evolution. Portfolio. 2005

August 30, 2011

Great Britain, United States - and China

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Great Britain 

Winston Churchill became Prime Minister at a time when his leadership skills were direly needed by the British government. Hitler was about to dominate the continent with a lightning fast warfare that no country had yet been able to hold at bay. In order to survive, someone needed to lead while providing an image of certainty that would inspire the whole country not only to survive, but dominate a clearly superior force intent on winning. Churchill's War Lab could be about all the inventions that flowed from British science during the war years. My first thoughts were that the book would list them all out and work through all the technologies on-by-one. Radar. Aircraft. Ships. Communications. The bomb. Operations research. They all came out of British labs in the early forties. War Lab didn't even try to explain things scientifically. It was all about leadership. Aggression was part of it. If the British were to win, their leaders had to focus on aggressively attacking the Germans. They had to get there first time after time. The first step entailed micromanaging. Churchill had experience in all the facets of governance in Britain. Since, in a way, he knew more, he trusted his intuition and started directing in all sorts of minute and grand ways. How many bombs arrived at such and such a port today? Move them out to the troops. Now. How many troops are available for re-assignment to Northern Africa - today? Move them there. Now. So direction was a big part of it. Maybe even micromanaging. Attracting the best scientists around him was another step. His dinner parties on weekends at his country estate might have the best scientists sitting next to the leading generals, discussing what to do next and how to do it, and, then, doing it Monday morning because Churchill directed it so. He visited the troops, on the front lines repeatedly. He visited the leaders in their capitals repeatedly. Face-to-face was better than a personal letter was better than a typed letter was better than a telegram, although he used all those methods. Amazing story.

America

Jacqueline Kennedy Onassis wasn't an elected leader certainly, in fact her portfolio was limited to the White House and the tasks of being the First Lady. We all know it wasn't so simple. I'd forgotten about all the crowds abroad and in, say, Louisiana, who shouted, "Jackie! Jackie! Jackie!" over and over. But that happened, even early on in the Kennedy years. She re-decorated the White House in a politically tense environment. Big deal, no, not really, when you contrast it to Jack Kennedy facing down the Russians over Cuba. The tone, however, showed through. This is an important place. Important things happen here. It deserves respect. Lastly, we forget about Jackie's last years in the publishing world. She obviously could have just sat back and waited for people to come to her, or, more likely, lived behind a wall. She didn't. She used all her contacts, all her skills, to bring some seventy or more books to market, some of them best sellers from the best authors. She used her rolodex, yes. She also used her sense of style and all her learning to make sure the books she chose to support were the right books, that they were well written, obviously, and more, that they were presented as art pieces in themselves, something easily forgotten. Quite a lady.

China

Now, a new face, Jianying Zha. Lucky enough to get into Peking University shortly after the Cultural Revolution ended in China, she could have taken a nice job somewhere in China and lived an easier life. She chose instead to come to America for more schooling, to South Carolina of all places, and then on to New York City. We're lucky she was here. Bright. Focused. Open. Lots of adjectives apply. One of them, the ability to listen, if probably very important, as is her skill at forcing what she hears onto the printed page. She ended up with best sellers in Chinese for the Chinese market, and, hopefully, with best sellers in English for our markets. She doesn't interview folks we've heard of before. A retailer who grows a market, and then sells at the opportune time. A printer who comes to America for a start but who returns home to challenges the publishing world at home to allow things that might not have happened before. Two of the biggest real estate developers in China today who got their start with aggression on a small scale, and who then had the nerve to grow things into the big scale using not only business skills, but artistic ones, as well. Finally, Zha takes through the politics of the Chinese University as it figures out how to become not only big, but world class. The first step? Admit, basically, that being big doesn't necessarily mean world class, and that, yes, there are wonderful scholars in China while at the same time recruiting competitively around the world. We've seen all this before. China is reliving the process now, but at a pace unseen before.

References

Downing, Taylor. Churchill's War Lab. Code-breakers, scientists, and the mavericks Churchill led to victory. The Overlook Press. 2011.  

Flaherty, Tina Santi. What Jackie Taught Us. Lessons from the remarkable life of Jacqueline Kennedy Onassis. Perigee. 2004.

Zha, Jianying. Tide Players. The movers and shakers of a rising China. The New Press. 2011.

August 28, 2011

On My Desk

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References

Anderson, Chris. Free. The future of a radical price. Hyperion. 2009.

Bauby, Jean-Dominique. The Diving Bell and the Butterfly. A Memoir of Life in Death. Vintage Books. 1998.

Brooks, David. The Social Animal. The hidden sources of love, character, and achievement. Random House. 2011.

Buckingham, Marcus. Standout. The Groundbreaking New Strengths Assessment from the Leader of the Strengths Revolution. Thomas Nelson. 2011.

Bush, George W. Decision Points. Crown Publishers. 2010.

Churchill, Winston S. Never Give In! The Best of Churchill's Speeches. Hyperion. 2003.

Daughn, George C. 1812. The Navy's War. Basic Books. 2011. 

Di Silvestro, Roger L. Theodore Roosevelt in the Badlands. A young politician's quest for recovery in the American west. Walker & Company. 2011.

A definitive account of Roosevelt's time in the west as rancher, cowboy, conservationist and adventurer. Always sickly, Roosevelt used physical challenges to regain his health after his wife's and his mother's deaths. Over time, he probably didn't make much money at ranching. The health and vigor he regained, however, helped him regain elective office as Vice President and then President after McKinley's assassination. In a way, the stories related in Di Silvestro's book make for better reading than a cheap cowboy novel, as they're true - and, sometimes, sad. Arriving in the west just after the demise of the buffalo, Roosevelt killed way too much game, more than he could ever eat. He took the racks on the best examples, and maybe a prime cut of meat, and left the rest. That was life on the range in the 1880s.

Downing, Taylor. Churchill's War Lab. Code-breakers, scientists, and the mavericks Churchill let to victory. The Overlook Press. 2011.  

Felton, Eric. Loyalty. A Vexing Virtue. Simon & Schuster. 2011.

Ferling, John. Independence. The struggle to set America free. Bloomsbury Press. 2011.

Those of us who write a bit are always hoping to effect people by what we write. The one pamphlet that in fact effected the future course of America was Thomas Paine's Common Sense. The King has just said he meant to punish the colonies for their actions (Ferling, 217). Paine made it clear that reconciliation was not in the cards. His pamphlet changed history.

Flaherty, Tina Santi. What Jackie Taught Us. Lessons from the remarkable life of Jacqueline Kennedy Onassis. Perigee. 2004.

Gaddis, John Lewis. George F. Kennan. An American Life. The Penguin Press. 2011.

Gawande, Atul. The Checklist Manifesto. How to get things right. Metropolitan Books. 2009.

Gill, Michael Gates. How Starbucks Saved My Life. A son of privilege learns to line like everyone else. Gotham Books. 2007.

Grant, U. S. Personal Memoirs of U. S. Grant. Konecky & Konecky. 1886. 

Hill, Linda A. and Kent Lineback. Being the Boss. The 3 imperatives for becoming a great leader. Harvard Business Review Press. 2011.

Humes, Edward. Force of Nature. The unlikely story of Wal-Mart's green revolution. Harper Business. 2011.

Jones, Steve. The Darwin Archipelago. Yale University Press. 2011.

Lewis, Michael. Moneyball. The Art of Winning an Unfair Game. W. W. Norton & Company. 2004.

Levine, Robert. Free Ride. How digitial parasites are destroying the culture business, and how the culture business can fight back. Doubleday. 2011.

Levinson, Marc. The Great A&P and the Strugle for Small Business in America. Hill and Wang. 2011.

Lohr, Steve. Reaping the Rewards of Risk-taking. New York Times. 27 August 2011. http://www.nytimes.com/2011/08/28/technology/steve-jobs-and-the-rewards-of-risk-taking.html?hpw

Lowenstein, Roger. The Nixon Shock. Bloomberg Businessweek. 8-14 August 2011. 74-78. http://www.businessweek.com/magazine/the-nixon-shock-08042011.html

Mackay, Harvey. The Mackay MBA of Selling in the Real World. Portfolio / Penguin. 2011. 

Mandal, Jay. LawPivot. A Q&A website that matches cash-sensitive startups with the lawyers who might be able to help them.  https://www.lawpivot.com/

Marcello, Simonetta and Norga Arikha. Napoleon and the Rebel. A Story of Brotherhood, Passion, and Power. Palgrave Macmillan. 2011.

Meyers, Christopher C. Junion General John A. McClernand and the Politics of Command. McFarland & Company, Inc. Publishers. 2010.

Morrell, Margot. Reagan's Journey. Lessons from a remarkable career. Threshold Editions. 2011.

O'Brian, Patrick. Master and Commander.  W. W. Norton & Company. 1970.

Ranadive, Vivek and Kevin Maney. The Two-Second Advantage. How we succeed by anticipating the future-just enough. Crown Business. 2011.

Ries, Eric. The Lean Start-up. 2011. http://theleanstartup.com/

Sorkin, Michael. All Over the Map. Writing on Buildings and Cities. Verso. 2011.

Stalk, George Jr. and Thomas M. Hout. Competing Against Time. How time-based competition is reshaping global markets. The Free Press. 1990.

Taleb, Nassim Nicholas. The Black Swan. The Impact of the Highly Improbable. Random House. 2007.

Thomas, Hugh. The Golden Empire. Spain, Charles V, and the Creation of America. Random House. 2010.

Trout, Jack, with Steve Rivkin. The Power of Simplicity.  McGraw-Hill. 1999.

Watts, Duncan J. Everything is Obvious*. *Once you know the answer. Crown Business. 2011.

Watts makes a case that wasn't obvious at first: things are never as simple as they seem. Quants of all sorts have always been convinced that analysis of problems will yield simple - and quick - results. He

Wills, Garry. Verdi's Shakespeare. Men of the Theatre. Viking. 2011.  

Zha, Jianying. Tide Players. The movers and shakers of a rising China. The New Press. 2011.

August 26, 2011

Bottom of the Pyramid Lessons

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Banerjee and Duflo recognize five lessons from their extensive research about the realities of being poor (Banerjee, 268-271):

  1. The poor often lack critical pieces of information and believe things that are not true.
  2. The poor have responsibility for too many aspects of their lives.
  3. There are good reasons that some markets are missing for the poor.
  4. Poor countries are not doomed because they are poor.
  5. It is possible to change governance and policy without changing the existing social and politcal structures.

Let a farmer know where the best market his, and what a reasonable price is, and he will modify his farming habits to take advantage of this new information. The poor have to worry about all aspects of their lives, to be experts at too many things, from health to nutrition to education for their kids, to markets, to politics. It is over-whelming. Making sure public nurses actually show up for work at the local infirmary makes a difference. Poor countries, by focusing on crucial first steps, are able to extricate themselves from poverty. It might be a health step, like immunization or figuring out whether you need to charge for a mosquito net, or whether, if you give it away, folks will use it more. A role for aid exists - beyond the normal supply of grain based food. Infrastructure particular to a specific community my work better. Help farmers get their produce to market, or create a market for their produce. Governance is important to long-term growth. Methods exist to right long histories of wrongs. Again, focus on a crucial few strategies makes sense. Alleviating corruption, if only in one part of interaction with the government, makes a difference. Just steps to provide legal identification might be enough to enfranchise a whole population.

Seemingly simple steps to get the ball rolling.

Reference

Banerjee, Abhijit V. and Ester Duflo. Poor Economics. A Radical Rethinking of the Way to Fight Global Poverty. PublicAffairs. 2011.

Machiavelli's Sensibilities

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Here's Erasmus in 1516, writing to Charles I of Spain, soon to be Holy Roman emperor Charles V (Unger, 221, quoting Erasmus's Education of a Christian Prince, 1516):

Wisdom is not only an extraordinary attribute in itself, Charles, most bountiful of princes, but according to Aristotle no form of wisdom is greater than that which teaches a prince how to rule beneficently.

Machiavelli, conceiving of a world "filled with violence, subject to sudden, inexplicable transformations" (Unger, 223-224), says "All human affairs are in a state of flux," forcing the prince to continually adjust" his actions. Unger goes on (Unger, 224):

To Thomas Aquinas, who wrote in his Commentary on Politics "No one can be called a good prince unless he is good in the moral virtues and prudent," Machiavell might well have responded: No one can be considered a good prince, or any prince at all, who loses his kingdom through a foolish adherence to such platitutes. The very notion of a fixed morality is preposterous in a lawless world.

Unger understands that Machiavelli has just left thirteen years of dealing with esentially ruthless, successful leaders. Erasmus and he take two points of view. One says do the right thing. Always. The other says do what gets you the result you need. Always.  It may be that Erasmus is correct. Machiavelli's suggestions, however, probably will get you the results you need. Two different things.

Reference

Unger, Miles J. Machiavelli. A Biography. Simon & Schuster. 2011.

August 17, 2011

Water Strategy

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In 1976, Orange County installed the first reverse osmosis treatment plant to purify household wastewater to drinking-water standards (Prud'Homme, 109). That means it had to convince the populace that this was a good idea. They were, after all, early adopters of a new technology. There was a very specific need, not drinking water, but water to stop the migration of salt water into the very plentiful (but receding) Orange County aquifer. That story, told repeatedly, became the basis for a very strategic adoption of treated sewer water into the Orange County drinking water system. Even today, the treated water is still injected into the ground, but now it has a different use. Transported inland more than ten miles, the water is injected into the aquifer, the same aquifer from which many Orange County communities pump their drinking water. An interesting thing happened. The mainstream populace didn't object to what was going on. The water didn't hurt anyone when it was used as a salt water barrier. Therefore, we all assumed, it wouldn't hurt anyone when it flowed through the aquifer to local pumps. It'll be a while, I predict, before we are ready to accept the treated water flowing straight from the treatment facility into the drinking water system. It's pure and healthy. The adoption cycle will take some more time before everyone accepts that purity. We're no longer as squeamish as we once were. We do, however, have a way to go before we totally accept this new technology in Orange County.

Interesting side note: other communities are still having this battle, some of them not so far away from Orange County. Their alternative strategies work just as well as Orange County's - they just cost a whole lot more in money, and resources.

Reference

Prud'Homme, Alex. The Ripple Effect. The fate of freshwate in the twenty-first century. Scribner. 2011.

Maximizing Moore

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Moore's first book,  Crossing the Chasm, is easily prescriptive in that it had one message:

  • there is a continuum of technology adoption spread consecutively from innovators, early adopters, early majority, late majority and laggards that is dichotymous in that innovators act differently than early adopters, and that
  • early adopters are separated in their buying behavior from the early majority by specific buying traits, like willingness to take risks on products and technologies that don't have clearly defined reasons to buy the product, not just that it is a cool new product.

Moore's Dealing With Darwin addresses all the other strategies that Chasm ignores. Not only is there a single way to cross the chasm (identify a single specific order-of-magnitude leap in benefits), there are multiple other strategies that address other chasm-like challenges at each stage, not in the technology adoption cycle, but in the corporate life cycle. Early stage firms need to worry about crossing the chasm, yes. Later stage firms (already rapidly growing, or, horrors, in decline) have a whole series of other strategies they could address. Recognizing that they have an opportunity to choose a good strategy is the first step. Choosing a strategy - and here things get good - actually adopting it, is the second step.

Chasm addresses a specific need for early stage companies that need to make it past the innovators and early adopters in their market place. Darwin has a whole other group of strategies to choose from when growth has begun and for each of the other stages that succeed growth.

Organizing your company to take advantage of specific strategies makes sense as profits increase, and, in fact, odds of survival of the firm increase, as well.

Two examples:

Researchers at Cornel University (Economist) are using CAT scans of fabric to help software engineer better looking textures for animated movies. If a company is formed around this technology, it'll need not only a patent or copyright on the algorithm, but a complete business plan that makes the case that there is something here for the general marketplace, that, essentially, this is more than a button on existing software, and that there is enough here for a company addressing not just the early adopters, but the main market.

Alternatively, a mainstream company, Intel, is hiring sci-fi writers (King) to help it come up with unthought-of new ways to package technology. Intel certainly isn't early stage. It's using a new way of looking at its current product lines to figure out how to, for instance, pack more transistors on a chip, or, perhaps, figure how to to make a chip with fewer transistors that is just a good as the old chip. The sci-fi writers dream up things that have been done before (in a sci-fi novel, perhaps) and suggest its applicability to current thinking. Intel is far beyond the early growth stages. It is, however, considering how to revamp what it is doing, to sell more of the next iteration of its current products, or, maybe, create new simpler products, that just happen to use fewer transistors. This is probably more of an enhancement innovation (Moore, Darwin, 62) from Intel's point of view, not a disruptive innovation an early stage company might use.

References

Fabricating Fabric. Economist. 13 August 2011. 76.

King, Ian. To Boldly Go Where No Chip Has Gone Before. Bloomberg Businessweek. 15-28 August 2011. 38.

Moore, Geoffrey A. Crossing the Chasm. Marketing and selling high-tech product to mainstream customers. HarperBusiness. 1991. (Soft-back edition, 1995.)

Moore, Geoffrey A. Dealing With Darwin. How great companies innovate at every phase of their evolution. Portfolio. 2005.

August 07, 2011

The Opportunity That Is China

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An interpretation in the New York Times (Barboza) of the Chinese announcement taking the U.S. to task for its "addiction to debts" says that, in a way, because other alternative bond sources don't really exist, the Chinese are stuck with investing in U.S. treasuries. Having financed the import boom in America, the Chinese are watching anxiously as U.S. bonds are down-graded.

Kissinger, while not responding to current events in On China, makes a different case, namely, that the U.S. and China have a forty-year-old opportunity to grow closer. While initially, what with Korea and to a lesser extent, Viet Nam, China seemed an aggressor uninterested in engaging the U.S., it has had the opportunity since ping pong diplomacy and the Nixon visit to re-consider our relations, and has, basically, constructively engaged in a non-adversarial relationship while making the decision to grow economically in an environment where it needed to learn a lot in order to catch up. The key is that during the eighties and early nineties, China engaged and grew, admitting and acting upon needs which Mao et al never would have admitted. The inner-looking China looked outside for guidance and training, and leveraged the energy and creativity of its populace to grow more quickly than the world had ever seen before.

So, we have two points of view. The Chinese announcement that the U.S. had better get its house in order, and Kissinger's longer view that China and the U.S. have an opportunity to "not shake the world, but build it" (Kissinger, 530). Yes, the U.S. needs to get its house in order. However, it can do that most constructively (if we buy Kissinger's analysis) by working with China for a better world, not in opposition to it.

Stepping back a bit, some interesting things are happening to the Sino-American relationship. Many of Apple Computer's hugely successful products are manufactured in China, some by Foxconn, a Chinese company of interest lately because of suicides in its workforce, and, alternatively, its rapid growth. Last week, Foxconn made an announcement (The Economist, 58) that it was going to "hire" one million robots to replace parts of its workforce. This is a good thing for productivity and, perhaps, a bad thing because almost necessarily, prices will rise. Apple and Foxconn obviously care. But so should we. Rising costs signal an opportunity for U.S. companies to bring tech manufacturing out from China, perhaps all the way to the U.S.

The Chinese relationship is a sympathetic one. The best course is for the U.S. and China to continue down the path of mutual understanding (maybe an improperly used Cold War term), respect, and dialog recognizing the fact that unless the U.S. and China continue to work together, both will ruin a strong opportunity.

Reference

Barboza, David. China Tells U.S. It Must 'Cure Its Addiction to Debt'. New York Times. 6 Aug 2011. http://www.nytimes.com/2011/08/07/business/global/china-a-big-creditor-says-us-has-only-itself-to-blame.html?src=me&ref=business

Kissinger, Henry. On China. The Penguin Press. 2011.

Economist. Robots Don't Complain. 6 August 2011. 58.

August 01, 2011

Bottom of the Pyramid - Profits Before Gifts

www.mixnerstrategy.com

Prahalad's now classic book on economic development strategy in India is well-known. It details a whole series of steps to take to help folks at the bottom of the pyramid help themselves up. Then it gives successful case studies from around the world that show that people, given tools and incentives, are very happy to help themselves succeed. Here are some words on governance that are applicable lots of places (Prahalad, 98):

The Bank of Madura initiated a model of village development in southern India that has shown great promise. It was based on three assumptions:

  1. Microsavings must precede microlending. Bottom of the Pyramid (BOP) consumers must learn to save, and there were no institutions to support microsavings.
  2. BOP consumers must start trusting themselves. They must be actively involved in solving their problems. Outside help (financial and other) can go only so far. The village must break its cycle of dependency built by more than 40 years of subsidies and government handouts, NGO interventions, and the like. Private-sector development (in this case, banking based on commercial principles) and subsidies do not mix.
  3. There is no dearth of latent leaders in the villages. Given the opportunity, they will emerge and will influence the start of a transparent and commercially viable system. This group will then become the custodians of transaction governance instead of lawyers or the local slum lords.

 Since Orange County is a medical device haven, I was enticed by the story of Jaipur Foot (Prahalad, 275). We have at least on major prosthetic manufacturer in town. Their devices cost thousands of dollars and are, indeed, wonderful. Jaipur Foot's devices are themselves wonderful. Wonder comes not only from their many satisfied customers who appear at the Jaipur Foot infirmary to leave, only days later (if not the next day) with a new foot. Wonder comes also from the price. Early on, Jaipur provided durable and very useful limbs for thirty dollars or so. The Orange County manufacturer's costs are significantly higher, being somewhere more than $8 thousand all the way up to $30 thousand. I'm not even going to do the math. This is wonderment.

When you take the time to consider the needs of your customer, to put them first, there are solutions that remain a wonder long after the sale. Prahalad's book is chock full of them.

Reference

Prahalad, C. K. The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Pearson Education. 2010.

Treasures in Reagan's Desk

www.mixnerstrategy.com

When a president and his family move out of the White House, things move pretty quickly. While the old president accompanies the new president to the inauguration, one set of possessions is replaced by another - in record time. Reagan's desk in the Oval Office was emptied into a box and labeled "RR's desk" (Reagan, xiii). It wasn't seen until years later - maybe twenty years later - when the Reagan library was redecorating and folks decided to look at what was in storage. Behold. The box. This wasn't just any box, it was a hand written archive of Reagan's thoughts, quotes, anecdotes and jokes, all in Reagan's own handwriting, each written on its own card. Take a stack of cards and, if you have Reagan's skill at talking to people, you have a ready made speech. The stack of cards? Well, it came from years of speeches, some of them probably back in Hollywood, some of them from the General Electric speechifying days, and, some of them from Reagan's campaigns and offices in California and in the White House. A speech writer would make up a speech. Reagan would fix it up with a proven one liner (or maybe a bit longer) from his trove of quotes and stories and jokes.

Here are three of them:

  • Greatness is measured by your kindness, your ed. & intellect. By your modesty. Your ignorance is betrayed by your suspicions & prejudices-your real caliber is measure by the consideration and thoughtfulness you have for others (Reagan, 142).
  • A state which dwarfs its men in order that they may be more docile instruments in its hands-even for beneficial purposes-will find that with small men no great thing can really be accomplished (Reagan, 36).
  • There are 3 kinds of lies: lies, d--m lies, & statistics (Reagan, 189).

The Reagan Foundation ended up owning the collection of cards. They've put out a book. Somehow, the cards need a better place. The book is nice. The cards are nice. They need to have a larger place in American history. My bet is that, ultimately, they will.

Reference

Reagan, Ronald. Edited by Douglas Brinkley. The Notes. Ronald Reagan's Private Collection of Stories and Wisdom. Harper. 2011.

June 30, 2011

Michael Phelps Strategy

www.mixnerstrategy.com

Michael Phelps - deserve ably - got a lot of press after the Beijing Olympics.  His first Olympic gold medal wasn't in Beijing. It was in Athens, four years earlier. The story of that win forms the first chapter of Phelps' obligatory book after all the medals in China.

There's one quote that sticks in my mind, from his father when Michael was seven (Phelps, 22):

If I was playing sports, no matter what it was, my father's direction was simple: Go hard and, remember, good guys finish second. That didn't mean that you were supposed to be a jerk, but it did mean that you were there to compete as hard as you could. The time to be friends was after the race; during it, the idea was to win.

The quote comes from Phelps' description of his first win (of six golds and two bronzes) in Athens, the Games before Beijing, when he won the 400 meter individual medley; four strokes, the equivalent of the swimming decathlon. Through Phelps' whole story, that paragraph proves crucial. Work hard, absolutely. Win when it mattered, too.

Reference

Phelps, Michael with Alan Abrahamson. No Limits. The Will to Succeed. Free Press. 2008.

June 29, 2011

Don't Tell Anyone

www.mixnerstrategy.com

I have favorite places that I always think about with these few words, "Don't tell anybody." They're favorite places I like to visit because they're beautiful in their own right, or they're pretty free of traffic or crowds. The 395 north from Victorville to, say, Reno, might qualify over much of its distance. My skiing friends will know all about the 395 because Mammouth is along the way. So will Sierra backpackers.

I sometimes have books like that, as well. "Don't tell anybody," I think, "these are special, just for me." Michael Lewis's book Coach is like that. I like all of Lewis's books, but this one is extra special. It's easy to carry around. You can read it in one session.

Coach is about Lewis's coach in high school. A hard ass kind of guy, Coach made sure that everyone on his teams understood why it was important to work hard. As times went on, Coach's environment changed what with domineering and protective parents butting in every time Coach intimidated little Jimmy. The last time I read Coach, I found some lines that are worth sharing. Having read them, you might decide to get the book for yourself:

I never had any great sense of what Fitz made of the world outside his baseball program. Not much, I'd guess. He was running an organization that, like the Franciscan order or the Marine Corps, depended on a more difficult system of values than that of the greater society.

In a similar manner, we find ourselves in organizations with different value systems. That's what makes them successful.

Reference

Lewis, Michael. Coach. Lessons on the Game of Life. W. W. Norton & Company. 2005.

On My Desk Today

www.mixnerstrategy.com

Bennis, Warren G. and Robert J. Thomas. Geeks & Geezers. How Era, Values, and Defining Moments Shape Leaders. Harvard Business School Press. 2002.

Dickinson, Boonsri. Power Struggle. Ivanpah Solar Electric Generating System. Wired. July 2011.

L'Amour, Louis. Taggart. Bantam Book. 1959.

Lewis, Michael. Coach. Lessons on the Game of Life. W. W. Norton & Company. 2005.

Mead, Russel. The Tea Party and American Foreign Policy. What Populism Means for Globalism. Foreign Affairs. March/April 2011. 29.

Palermo, Richard C. Do The Right Things... Right. A Step-By-Step Guide to World-Class Performace. The Strategic Triangle, Inc. 2003.

Parinello, Anthony. Selling to VITO the Very Important Top Officer. Adams Media Corporation. 1999.

Paul, Alan. Big In China. My unlikely adventures raising a family, playing the blues, and becoming a star in Beijing. Harper. 2011.

Phelps, Michael with Alan Abrahamson. No Limits. The Will to Succeed. Free Press. 2008.

Prahalad, C. K. The Fortune at the Bottom of the Pyramid: Eradicating Pvoerty Through Profits. Pearson Education. 2010.

Prud'homme, Alex. The Ripple Effect. The Fate of Freshwater in the Twenty-first Century. Scribner. 2011.

Reagan, Ronald. Edited by Douglas Brinkley. The Notes. Ronald Reagan's Private Collection of Stories and Wisdom. Harper. 2011.

Rich, Stanley R. and David E. Gumpert. Business Plans That Win $$$. Lessons From the MIT Enterprise Forum. Perrenial Library. 1985.

Schumpeter. The Bottom of the Pyramid. The Economist. 25 June 2011. 80.

Stack, Jack with Bo Burlingham. The Great Game of Business. Currency Doubleday. 1992.

Tanz, Jason. A Thousand Points of Infrared Light. Kinect Xbox. Wired. July 2011. 114.

Goetz, Thomas. The Feedback Loop. How Technology has turned an age-old concept into an exciting new strategy for changing human befavior.  Wired. July 2011. 126.

June 22, 2011

Warren Bennis

www.mixnerstrategy.com

Two things on Bennis's new book:

  • His first book (of forty or so) was entitled Planning for Change. It was published in 1961.
  • Proximity is important. Bennis's advice to Colin Powell when he was Secretary of State was to move into the White House, or at least have an office there. Powell didn't do it. The result was that he was the one who had to justify Iraq to a sceptical congress. No one ever really trusted him again.  I'll repeat that advice again. Proximity is important. If you are not close to your teams as they strategize on new strategies and then carry things out, you are much less likely to create successful strategies. Do you have to do everything? No. Does it pay to be close by? Yes.

Reference

Bennis, Warren. Still Surprised. A Memoir of a Life in Leadership. Jossey-Bass. 2010.

Is 3-D Disruptive?

www.mixnerstrategy.com

Evidence of disruptive technology (Mixner):

  • Simple
  • Cheap
  • Faster to market with new up-grades
  • Maybe not quite as good as what out there, but useful.
  • One or two unique features that pique folks interest, probably based on very good design elements.

Let's compare that list to the reality of 3-D movies, cameras, laptops, and televisions.

  • Manufacturing 3-D, in whatever form, is not simpler than regular technology.
  • It's not cheaper either, at least so far.
  • It's more complex; upgrades take longer.
  • It is better, seemingly, than 2-D, especially in the applications where you don't have to wear some type of special 3-D glasses.
  • Yes, 3-D is interesting. It does pique my interest. There's only one problem. It's not cheaper. I said that already.

When 3-D is simpler, cheaper, faster to market, useful, I'll be more interested in buying it. Maybe that means I am a late adopter. So be it. As it stands right now, 3-D isn't disruptive. It's just the next greatest thing that may or may not make it in the marketplace. The movie-going public has voted. They're not willing to pay the $3 to $5 distributors want for a ticket to a new movie release. Directors and producers are scared (Barnes). They should be.

Reference

Barnes, Brooks. As 3-D Falls From Favor, Director of 'Transformers' Goes on Offensive to Promote It. New York Times. 22 June 11. ttp://www.nytimes.com/2011/06/22/business/media/22transformers.html?ref=technology

Mixner, Jack. Disruptive Strategy. Small Companies Have the Edge. 23 Sept 2008.   http://mixnerstrategy.com/blog/2008/09/disruptive_technology_smaller.html

May 31, 2011

Jump-Starting Innovation

www.mixnerstrategy.com

Two ideas (Harford, Flipping) to make innovation happen faster (maybe, on a national basis): 1. Reward innovation with big contests, 2. Research funders set aside a portion of their funds for high risk ventures.

Seemingly, these are contrarian ideas. Spend more money - more risky money - on unproven ideas. Good idea? The statistics say yes. The X Prize spurred private developments in space. Netflix paid $1 million to independent developers who came up with the perfect way to offer folks movies they'd be interested in.

The Howard Hughes Medical Institute and the NIH are more likely to fund crazy ideas (Harford, Positive).

Reference

Harford, Tim. Flipping the Switch: We're running out of bright ideas. Here's how to fire up the innovation machine. Wired. June 2011. 26-27.

Harford, Tim. Positive Black Swans. http://www.slate.com/id/2293699/pagenum/all/#p2

Harford, Tim. Why Success Always Starts With Failure. Farrar, Straus and Giroux. 2011

May 30, 2011

The Rich-Gumpert Evaluation System

www.mixnerstrategy.com

I sat through six start-up company funding presentations at the OCTANe VC in The OC event [ www.vcintheoc2011.com/main.html ] last week. I am glad I did as I refreshed myself on what it takes to have a fundable deal. Each of the presentations, to varying degrees, was fundable because of two main attributes, the status of their product/service and the status of their management team.

Rich and Gumpert's system lays it all out on a simple one page graph with product/service status on the y axis and management status on the x axis (Rich, 169). Each is labeled one to four with a 1:1 deal having a "single, would-be founder-entrepreneur" and a "product or service idea, but not yet operable," with the "market assumed." The "most desirable" deal, a 4:4 deal has a fully developed product or service, many satisfied users, an established market and is fully staffed with an experienced managegment team.

Chuck Copin's presentation at OCTANe [ Renewit http://0101.nccdn.net/1_5/1e6/180/1d6/Renewit.pdf ] is a good example. Renewit has sales, which also means the product is fully developed and, basically, embraced by a market place. As importantly, they've taken the time to figure out what their marketplace is. Sales channels are identified, competitors named and strengths/weaknesses pointed out. So the market is described, the product developed, and maybe, a market developed. On the Rich-Gumpert scale, they might be a 3.5 for Product/Service Status.

People-wise, Renewit has a CEO and a Founder with two highly experienced advisors. We don't have a business plan, nor do we know who is managing production and the rest of operations. They're asking for $0.7 million. We might assume that some of the money is going for experienced managers, but we don't know for sure based on the limited information we have so far. Since they are in production and shipping, we can assume that they are out-sourcing, a useful, proven way to go in today's global marketplace. Maybe we can give Renewit a 3.0 for Management Status. Without a full business plan, we have been able to score Renewit's deal as a 3.0:3.5 which actually is a pretty good score. With more information, we might score it differently.

Now comes the hard part. How does your company score on the two scales? Will investors - or maybe, the bank - agree? That's the real test.

Reference

Rich, Stanley R. and David E. Gumpert. Business Plans That Win $$$. Lessons From the MIT Enterprise Forum. Harper & Row. 1985.

May 18, 2011

Googling Your Site

www.mixnerstrategy.com

It's pretty safe to say that all of us like the appearance of the Google website.  Not much there, is there? For a while, my website had a picture, my name, my email, and that was about it. I've since redone my site to include more descriptors on the home page. You want your site to be searchable by Google's search engines so you get some results from your site. Label things "We Make Widgets" not "What We Do" so Google can figure it out as well. Put your most important content on your home page. Make sure you have a call to action for humans and dynamic content modules for spiders (Goldman, 53). Have a simple message that makes people remember you and want to visit you.

Jack Mixner Strategy

    • Everyone knows the plan.
    • Everyone implements.
    • Everyone cares.
    • Profits increase.
    • So does valuation.               

Reference

Goldman, Aaron. Everything I know about marketing I learned from Google. McGraw-Hill. 2011.

Vetting the Media

www.mixnerstrategy.com

We used to read newspapers and watch the 7:00 news shows. Not any longer. Since we're getting our news from all sorts of sources, here are some questions to ask yourself about your news source of choice (Kovach, 32):

  1. What kind of content am I encountering?
  2. Is the information complete; and if not, what is missing?
  3. Who or what are the sources, and why should I believe them?
  4. What evidence is presented, and how was it tested or vetted?
  5. What might be an alternative explanation or understanding?
  6. Am I learning what I need to? 

When I realized that all the politicians and newspapers nationwide were reading the early editions of the New York Times to decide what stories they needed to spin that day, I started reading the NYT religiously. Things are shifting since the NYT has started charging for its site (although that charging seems to pretty non-intrusive, even for this pretty heavy user). I've been pausing a bit to decide whether I'll pay the Times for their content or trust other sites to give me "good enough" news. That list, above, will be part of the test process I use as I look at new sites and sources. The news business is in the midst of disruption. What to do is an interesting question.

Reference

Kovach, Bill and Tom Rosenstiel. Blur: how to know what’s true in the age of information overload. Bloomsbury USA. 2010.

Innovator's Values

www.mixnerstrategy.com

It is the year 1720. You, a traveler, arrive in the Italian town of Cremona in search of the best violins made. You look on the street of the violin shops. At the mouth of the street, immediately to the left, you see the shop of the Guarneri family. In its window is a very large sign with majestic calligraphy: Best Violins in All of Italy. Farther down on the right you see the shop belonging to the Gagliano family. In its window is an even grander sign: Best Violins in the Whole World. Down at the end of the street, tucked in the shady cul-de-sac, you find a small shop belonging to the Stradivarius family. In its window there is a small card. You have to lean over and squint to read the handwritten message: Best Violins on This Street (Denning, 379).

Denning's books starts you down the innovation path: first learn for yourself. Then bring what you know to your community, your company. Only then do you start thinking about global excellence. He and Dunham lay out the steps.

Reference

Denning, Peter J. and Robert Dunham. The innovator’s way: essential practices for successful innovation. The MIT Press. 2010.

Failure

www.mixnerstrategy.com

Most of us can remember the loneliness of walking back from home-plate after having struck out at bat. Not too good a feeling. Slowly, however, it dawns on us that there might be an explanation. Batting averages for the best batters average, maybe, .325 or so. For every ten times at bat, you can expect to strike out more than six times. Now things are starting to look better. What to do? Practice seemed to be one of the suggestions. Keep going up to the plate. Keep swinging. You will start to have more and more successes. Now, in a business environment, is practicing good enough?

Having a look at what went wrong - or right - might be in order. Failures seem to get more attention, but understanding why you made that first sale to IBM might help you make that crucial second sale. Folks have to want to take the time to look at their processes. Learning cultures (Edmondson, 51) examine their decisions to see which ones could have been made differently so next time goes better. Figuring out that something went wrong is the first step; analyzing it is the next. Experimenting to see if making simple changes will help outcomes is third.

These steps - detecting, analyzing, experimenting - ultimately lead to more successes. In some environments, perfection is the goal. In others, perfection is only a dream. Knowing, however, what went right or wrong in both perfect and less perfect environments still makes sense.

Reference

Edmondson, Amy C. Strategies For Learning From Failure. Harvard Business Review. April 2011. 49-55.

May 12, 2011

On My Desk Today

 www.mixnerstrategy.com

 

References

Bogle, John C. Don't Count On It! Reflections on investment illusions, capitalism, "mutual" funds, indexing, entrepreneurship, idealism, and heros. Wiley. 2011. 

Burns, Rebecca. Burial for a King. Martin Luther King Jr.'s Funeral and the Week That Transformed Atlanta and Rocked the Nation. Scribner. 2011. 

Denning, Peter J. and Robert Dunham. The innovator’s way: essential practices for successful innovation. The MIT Press. 2010.

Edmondson, Amy C. Strategies For Learning From Failure. Harvard Business Review. April 2011. 49-55.

Goldman, Aaron. Everything I know about marketing I learned from Google. McGraw-Hill. 2011.

Gostick, Adrian and Chester Elton. The Orange Revolution. How one great team can transform an entire organization. Free Press. 2010.

Hillenbrand, Laura. Unbroken. A World War II Story of Survival, Resilience, and Redemption. Random House. 2010.

Jones, Clarence B. and Stuart Connelly. Behind the Dream: the making of  the speech that transformed a nation. Palgrave Macmillan. 2011.

Kovach, Bill and Tom Rosenstiel. Blur: how to know what’s true in the age of information overload. Bloomsbury USA. 2010.

Lawrence, Greg. Jackie as Editor. The Literary Life of Jacueline Kennedy Onassis. Thomas Dunne Books. 2011.

Parinello, Anthony. Selling to VITO: the Very Important Top Officer. Adams Media Corporation. 1999.

Prince, Cathryn J. A Professor, A President, and a Meteor: The Birth of American Science. Prometheus Books. 2011.

Rutledge, Patrice-Anne. Using LinkedIn. Pearson Education, Inc. 2010.

Schepp, Brad and Debra Shepp. How to Find a Job on LinkedIn Facebook MySpace Twitter and Other Social Networks. McGraw-Hill. 2010.

April 04, 2011

Close's Tactics Work In Lots of Ways

www.mixnerstrategy.com

Chuck Close, early on in his career, didn't really have a technique. He just painted. Things came out like blobs. They weren't reproducible. Then he discovered how to make art work better for him. You can see it today in most of his work. He put a grid over his source sketch (Burstein, 5), drawing, painting, or photograph. Then, working block by block, he reproduced each section of the source material on his large canvasses. The Museum of Modern Art in New York has an early Close self-portrait. The curly hair, the glasses, it is all there. So is the grid. After a bit, you don't notice the grid as it blends back into the painting, but it is still there. This technique isn't new. Painters have been using it since, certainly, the Middle Ages. There is some evidence that the Egyptians used it four thousand years ago, to great success. The painting holds together if you look at it closely. It holds together if you stand back to take it all in. The scale matters, yes, but it doesn't interfere whether you look at the painting close up, or from afar.

The point is that the methodology doesn't matter. The results do. Whatever strategic process you use can work if you work at it. Close still uses his grid forty years later. Some people use Sun Tzu as a model for their strategy, others Von Clauswitz. Or Porter. Or Collins. The source of the methodology doesn't matter. The results do.  

Reference

Burstein, Julie. Spark. How Creativity Works. New York: HarperCollins Publishers. 2011.

Close, Chuck. Museum of Modern Art. http://www.moma.org/interactives/exhibitions/1998/close/

March 30, 2011

Soka Education

www.mixnerstrategy.com

Ikeda on the Soka brand of education (Ikeda, 127):

Soka is Japanese for "value creation." "The only value in the true sense is that of life itself. All other values arise solely within the context of interaction with life." ...The fundamental criterion for value ... is whether something adds to or detracts from, advances or hinders, the human condition.

The ultimate goal of Soka, or value-creating, education is to foster people of character who continuously strive for the greatest good - that of peace - who are committed to protecting the sanctity of life and who are capable of creating value under even the most difficult circumstances. 

Only a human being can foster another human being. It takes a truly humanistic person to raise a truly humanistic person. Schoolteachers and others dedicated to developing people carry out a task of immeasurable value. The effects of this task will last forever (Ikeda, 213).

Reference

Ikeda, Daisaku. Soka Education. For the Happiness of the Individual. Middleway Press. 2010.

March 28, 2011

Drucker on Dashboards

www.mixnerstrategy.com

Peter Drucker brought a case study to class (Cohen, 189). A CEO wanted to put together a Control Panel, much like the control panel of an aircraft, that would let the CEO know precisely what was going on with his company. Drucker asked his class to derive a list of what should go on the control panel. Then he asked the class whether a control panel was really a good idea. The results were almost obvious. The lists were long. Everyone thought a control panel was a good idea.

Drucker said it was a bad idea. There was just too much information for a CEO and her team to follow. An aircraft needs a control panel. The inputs are, basically, finite and easily demonstrable. A company is different. Focusing on what is, essentially, a short list may prevent the CEO from picking up on some other kernel of information that is crucial to her company. The CEO has a job to do that exceeds the capability of a computer to keep track of. 

Reference

Cohen, William A. A Class With Drucker. The Lost Lessons of the World's Greatest Management Teacher. AMACOM. 2008.

Grace Hopper - Then There Was Software

www.mixnerstrategy.com

Of course, during the forties and the fifties, there were lots of firsts. Before electronics dominated computer design, mechanical machines the size of buildings dominated. Engineers designed the hardward based upon the latest technology. Some of the technology was actually derived from machines created by Babbage in the thirties - the eighteenthirties, that is. The war drove initiatives to determine trajectories for artillery shells and shapes of aircraft wings. Human calculators gave way to mechanical calculators which in turn gave way to electonic calculators. As the engineers moved on to the next upgrade, they left behind the human calculators to figure out how to program the machines - the calculators - were supposed to work. Two philosophies developed, one saying that all software was custom, to be derived by the application, the other common in that certain sub-sets of ultimate programs were saved and re-used over and over again in all worts of applications. This re-use spawned the software industry.

Grace Hopper was there at the beginning. Most of the men had gone to war. A trained math PhD, she taught early on, then consulted in government, and then she ended up at Harvard, working on the large mechanical calculators - think building-sized - that the bosses seemed to think were effortlessly forced to calculate quickly and easily. They were wrong. Figuring out how to productively run the new machines was a long and arduous task.

It's a good story, one every technologist should understand. Let's fast-forward a bit to the time when things began to standardize. Early on, there were many types of calculators with all sorts of control parameters. They required engineers to run them. But because of the war, and because of the growth of the industry, there weren't enough trained folks to run and program the machines. Something had to give. Incremental changes in hardware and software design weren't enough. The industry would die unless something was done. Grace Hopper drove the standardization of the software industry by forcing the standartization of the software language and methods. Her invention was the process to create COBOL, one of the first high level programming languages that still serves as the back-bone of eighty percent of extant software. Yes, there were competitors. Yes, there were failures. Hopper lead the derivation of the standards that today drive the industry.

This brings up an interesting point. Early on, the assumption was that all software had to be custom to the job and the machine it was running on, a huge investment that was hard to recoup. Hopper's alignment and standardization of the software process led to growth in an industry that could have possibly failed.

Strategy is in the same boat, if you squint a bit. There are standard processes for strategy, but, honestly, they are whimsical, being based on the intuition and processes of individuals whether internal to an organization or external. There are twenty or thirty flavors of strategy. There is an opportunity to standardize things, much as COBOL standardized the software industry. What's the pay-back? Think about it.

Reference

Beyer, Kurt. Grace Hopper and the Invention of the Information Age. The MIT Press. 2009.

March 27, 2011

Rewilding

www.mixnerstrategy.com

Sometime around eight hundred years ago, man first arrived on the Hawaiian islands. While there is some question about what precisely happened next, it is clear that man's arrival was a very bad thing for the native flora and fauna. There were mass extinctions, some of them occuring very early in man's time on the islands, some of them later.

A scientist, David Burney, arrived to examine the Hawaiian islands in recent history. He had experience in using archelogical techniques, combined with advanced dating techniques and extensive experience in identifying extinct species of animals from their fossilized bones, and plants from their fossilized pollen. His biggest task was to locate a place on the islands with undisturbed soil stratas that would allow him to examine them to identify past species while at the same time carefully documenting the dates that plants and animals went extinct.

Now, let's combine the two data sets of extinction and identification into a new strategy for replacing lost ecologies. Digging in a relatively undisturbed cave on Kaua'i, Burney was able to place extinctions on a time-line and show a rough - exact really - correlation between the presense of first, initial explorers from other Pacific islands, and second, the first arrival of Western explorers. Now for the interesting part: Burney suggests that, using his data, he can suggest what plants to re-establish in Hawaii to recreate or closely simulate the environment before man arrived, including plants and animals. In fact, working with various agencies and land-holders on the island, he has begun work on re-introducing extinct species.

Obviously, there is a question of why this is important. It ends up that the older, now extinct, plants and animals are more sustainable. Keeping the gene pool dense with all the different species is easier to do in native habitats rather than in the green house. We can stop extinctions and environmental degradation, and provide a map for a future of newly introduced plants similar to extinct plants that will eventually be ecologically lush.

Reintroduction of extinct species into locales they were driven from is a possibility for large portions of the western United States because (and this is where it becomes interesting) some landholder like Ted Turner (who owns millions of wester US acres) wants to return his land to a "pre-man" state, or certainly, pre-whiteman state of ecological soundness and diversity. Using the methods of identification using archeology, etc. Turner is able to, with great assuredness, recreate sustainable environments soundly based on real historical data.

Re-wilding. A new word to add to the sustainability wars just kicking off because of global warming and the future necessity of replacing our oil-based energy economy with sustainable local "substitutes".

Reference

Burney, David A. Back to the Future in the Caves of Kaua'i. A Scientist's Adventures in the Dark. Yale University Press. 2010.

Bear Football

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College football has an opportunity to return to football the way it was in the fifties. It won't because the draw of the NFL is too large for universities and players alike. There's too much money involved. Bear Bryant liked it the old way, when there were smaller teams and smaller players. He didn't miss the segregation of football, especially Alabama football. And, yes, he did want to win. From his wallet (Barra, 503):

This is the beginning of a new day.

God has given me this day to use as I will.

I can waste it or use it for good.

What I do today is very important

because I am exchanging a day of my life for it.

When tomorrow comes, this day will be gone forever,

Leaving something in its place I have traded for it.

I want it to be a gain, not loss -  good not evil.

Success, not failure in order that

I shall not forget the price I paid for it.

Reference

Barra, Allen. The Last Coach. A Life of Paul "Bear" Bryant. W. W. Norton & Company. 2005.

Four Agendas for Four Kinds of Meetings

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Lencioni assumes that people hate meetings. No comment. He defines four kinds (Lencioni, 249): Daily Check-In, Weekly Tactical, Monthly Strategic, Quarterly Off-Site. They might be called "All the Meetings You'll Ever Need, in Eighty Hours Per Year" (Lencioni, 249):

  1. Daily Check-In last five minutes. They focus on schedules and activities.
  2. Weekly Tactical meetings last up to an hour and a half. They focus on activities, metrics, and tactical problems and issues.
  3. Monthly Strategic meetings are just that. They last from two to four hours. There is discussion, brainstorming, and decision-making on critical strategic issues.
  4. Quarterly Off-Sites may last two days. Strategy is reviewed, industry trends reported upon, competitors examined, individual and team training.

Having the first three carefully defined allows you to have productive Strategy Off-sites. Ignore these differentiators at you peril. The story is nice. The process is better.

Reference

Lencioni, Patrick. Death by Meeting. A leadership Fable...About Solving the Most Painful Problem in Business. Jossey-Bass. 2004.

Robert Kenndy in South Africa, 1966

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At a time when support of the black community in South Africa wasn't very popular, Bobby Kennedy spoke out (Isaacson, 292):

Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and crossing each other from a million different centers of energy and daring, these ripples build a current that can sweep down the mightiest walls of oppression and resistance..."

Reference

Isaacson, Walter. Editor. Profiles in Leadership. Historians on the Elusive Quality of Greatness. W. W. Norton & Company. 2010.

Initiative-Based Communities Inside Your Business

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Your team has finished their strategy sessions. They have identified a couple major initiatives they want to roll out to the company as a whole. A simple question first. Is this a minor tactic or is it a major strategy. A test for a strategy might be that it addresses your colleagues, company stakeholders, business partners, maybe competitors all with the goal of achieving a company-wide success beyond what a single person is able to achieve by herself. Tactics may be easily iplemented at the individual or small team level because communication is easier and focus on the limited goal of the tactic is relatively simple. Things get done quickly. Strategies seem different since they are a level up from tactics in, apparently, complexity and time needed to accomplish them. Wouldn't be interesting, however, if we could make our strategies as simple as tactics and implement them "effortlessly" at the local level without the hoopla and pain of rolling out huge initiatives across your company.

If we assume, especially in a large organization (maybe even a global one), that smaller teams in local environments may address new strategies dissimilarly, we may be on to something. Not everyone has to do the same thing to get you the result you need. If you make smaller teams of colleagues, stakeholders, partners and competitors, it might be possible to get local results quickly and effortlessly, just like we said. Let them address what they consider to be important in the global strategy, but let them do it locally.

Kahan suggests some questions to get things rolling locally (Kahan, 121-122):

  • Ask people why they want to participate?
  • Do you want some sort of reward?
  • So far, have your received a personal reward from your participation?
  • What do you want to contribute?
  • What, practically, would you like to get from your small work group?
  • Tell us something extraordinary that you'd like to get out of what you do.
  • How do we engage others, outside our small group, in what we are doing?
  • Who's missing? Who should be add?
  • If you don't want to do this, if we changed something to be more enticing to you, what would it be?

Two things: Don't assume a global strategy has to be addressed globally and don't assume that participants may not change things to meet their needs. You might be wrong. There are lots of different to meet your goals. Take the risk of allowing local teams to figure out what works best.

Reference

Kahan, Seth. Getting Change Right. How Leaders Transform Organizations From the Inside Out. Jossey-Bass. 2010.

Reinvention of Your Brand - On the Web

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We all thought we knew everything there was to know about marketing and branding until the web came along. 1960 saw the creation of the Four Ps of Marketing, Product, Pricing, Place and Promotion. Those classic Four Ps have been replaced by the Four Es,

  • Experience (you have to be involved while the customer makes a buying decision),
  • Everyplace (you have to me communicating continuously, and modifying along the way, in order to figure out how to close the sale),
  • Exchange (yov've got to give more information - maybe, exclusive information like new product information before the launch, or maybe letting the customer actually design the product she buys) - to keep a customer) and
  • Evangelism (share an idea with a contact in such a way the he wants to pass it on, to share it with his friends - who become your friends) (Moffitt, 48-49).

The Four Es are great. And, as you can well imagine, there are strategic steps (really, just one step) you'd better take before you focus on the Four Es. That is to focus what you're about before beginning to build out your Four Es. In a way, the fun part of a web effort is just doing it. Ask two questions first (Moffitt, 90):

  • Just what is your focus, and, this is a new twist on things,
  • How do you focus on your customer before you focus on your company?

This last question isn't much different than normal strategy. You've got a couple more questions to answer (Moffitt, 92):

  • Where are you going? What are your business goals and objectives?
  • What are you values? Then, what are your customer's values, what is their lifestyle, and what are their desires?
  • What does your brand mean in the community, yes? But, what does your brand mean to you? The community is interested in commoditizing things. If you know your your brand and what it means to you first, that'll influence what the outside community thinks of you, and how they react to you.
  • What is the value you want to deliver to your new community, to your customers? Is it apparent in what you are offering? If you don't know what it is, you won't be able to deliver it, or your offering won't be interesting. 

One final question, or comment, really (Moffitt, 97): My bet is that the size of the community you end up building on the web really isn't that large. It's probably going to be less than two thousand members. If you decide to keep things small early on, you are able to build in the intimacy to what you are doing early on in the process. Make it focused enough on your community and you will be able to open a dialog that remains a dialog over a longer time frame, a good thing.

Reference

Moffitt, Sean and Mike Dover. Wiki Brands. Reinventing Your Company In a Customer-Driven Marketplace. McGraw-Hill. 2011.

March 04, 2011

They say it's disruptive...

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The Pepperdine Alumni Association recently hosted a series of c-level folks to talk about disruptive strategy at their companies. Here are things they mentioned:

  • Parker Aerospace developed a system to replace (the very explosive) oxygen in airliner fuel tanks with inert nitrogen. They are expanding the system into new markets beyond fuel systems.
  • St. Jude Medical has a new wireless patient monitoring system. Constant monitoring reduces costs by allowing them to focus on the patients who need attention at the time they need it. Other folks appear for check-ups, but not in an emergency situation only.
  • Yamaha musical products had a perfectly good digital replacement for their old analog mixers. However, their user base didn't like how it sounded. Yamaho replicated the look and feel of the old analog system over five years diode by diode, transistor by transistor, and then sold the system to the complaining users as a system that worked and sounded exactly the same, but was cheaper and easier to use.
  • Nissan has approached their new Leaf fully electric auto differently by attacking the infrastructure system at the same time they designed the car, so there will be enough "re-fueling" locations at the final launch of the vehicle.
  • Vizio figured out how to staff their $6 billion company (approximate) with only 175 folks by working very, very closely with their suppliers in Taiwan (one had to buy a $250 million piece of new equipment to make the new 3-D screens) to not only have them design the new systems, but have enough confidence in the ultimate success of  Vizio's market penetration to justify such huge production line innovations. Vizio has focused on making the consumer experience cheaper and easier - their 3-D glasses cost $1.50, not $150. The TV itself is hugely more expensive to produce, costs Vizio will recoup in expanded production over time.
  • Tesla owns their whole distribution system, ensuring - they hope - happy customers.
  • Epicardial Technologies has a new heart surgerly system. No more chest-cracking - they go in through small incisions.
  • Spectral Molecular Imaging has focused on earlier diagnosis of disease with an imaging system that focuses on the molecular level.
  • Origin Oil is figuring out how to use algae to generate oil.

The test book definition of a disruptive strategy is that the new product system is simpler, cheaper and not an incremental improvement on an existing product or service. Some of the systems above aren't simpler, for sure, but they are improvements. We'll see how they do in the marketplace.

February 22, 2011

Cash Flow Model

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A very useful tool to figure out your cash flow. It helps you end up with depreciation, amortization, taxes calculations, and comparison to RMA standard ratios, if you look very closely. 

Reference 

U. S. Small Business Administration, SCORE Financial Projection Model, Ann's Nursery, http://www.score.org/downloads/SCORE%20Financial%20Projections-Anns%20Nursery-May%202010.xls

Strategy Execution - And Personal Strategy

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References

Christensen, Clayton M. How Will You Measure Your Life? Harvard Business Review. July-August 2010. 46.

Martin, Roger L. The Execution Trap. Harvard Business Review. July-August 2010. 64.

February 21, 2011

Strategic Story Telling

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Why worry about telling stories? Your employees need to hear you say what you mean about that new strategy.  When you do say it, say it right, so folks remember, care, and, take action.

Schumpeter makes the point that art should return to the executive suite, not physical art, but personality art (as it were). An interesting point? George Orwell's Why I Write as a useful management text.

Martin suggests a continuum on strategy formulation (in the executive suite) and execution, well, across the company (Martin, 71):

  1. After the choice has been made, explain it - and it's rationale.
  2. Recognizing that management made a choice (which they explained in step one), allow the next layer of management to make their own choice. Yes, management might say what they see as the next choice to make, and may even give their advice on which of the alternatives to make. However, the actual choice is made by that next layer of folks, not the management team.
  3. If choices get all clogged up - or basically remain unmade - management has a role in assisting those choices to be made expeditiously.
  4. This is the best of all the points: revisit your choices regularly, from the highest levels and their choices, to the local levels and the choices you or your team made there. Admit errors and make changes. Faster is a lot more profitable than later.

References

Guber, Peter. Tell to Win. 2011.

Martin, Roger L. The Execution Trap. Harvard Business Review. July-August 2010. 65.

Schumpeter. The Art of Management. The Economist. 19 February 2011. 76.

February 19, 2011

Strategy Execution: Top 5 Tactics - and Six Mistakes - and Seven Questions for Issues

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The Top Five Tactics for Accelerating Strategy Execution (Neilson, 61):

  1. Everyone has a good idea of the decision and actions for which she/he is responsible.
  2. Important information on competitive environment gets to headquarters quickly.
  3. Once made, decisions aren't second guessed.
  4. Information flows freely across organization boundaries.
  5. Field and line employees usually have the information they need to understand the bottom-line impact of their day-to-day choices. 

Six Classic Mistakes (Miles, 69):

  1. Cautious management culture.
  2. Business-as-usual management culture
  3. Initiative gridlock
  4. Recalcitrant executives
  5. Disengaged employees
  6. Loss of focus during execution. 

Seven Steps for Working an Issue (Professional Service Providers):

  1. What is the issue?
  2. It is significant because?
  3. My ideal outcome is?
  4. Relevant background information?
  5. My options are?
  6. Direction I'm headed?
  7. Help I would like from my group? 

Reference

Miles, Robert H. Accelerating Corporate Transformations (Don't Lose Your Nerve!). Harvard Business Review. February 2010. 69. 

Neilson, Gary L., Karla L. Martin, Elizabeth Powers. The Secrets to Successful Strategy Execution. Harvard Business Review. June 2008. 61.

Professional Service Providers. PSP Issue Outline. Professional Service Providers. February 2011.

Wiki Brands

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Nine types of stories that people most like to talk about (Moffitt, 115, after Kelly, Beyond the Buzz: The Next Generation of Word-of-Mouth Marketing):

  1. Aspirations and beliefs help form emotional connections to a company. Occasionally, you meet an intense young person who really believes she can save the world. Maybe they can't articulate the next steps, but you are pretty sure they are going to figure them out.
  2. David versus Goliath stories let you root for the underdog. In Orange County we have start-ups galore. Ever heard one of them tell you how their product is going to unseat the market leader - and why? Try it with your product.
  3. Avalanche about to roll stories are inspiring. We got to watch Botox launch a couple years ago when it migrated from fixing diseases in the eyes to fixing wrinkles around the eyes. Those kinds of stories are all over the place. A coming example? Allergan (marketer of Botox) just got the LapBand approved for a more general portion of the population. Avalanche forming if you watch carefully.
  4. If you challenge assumptions, you might have a story that gets talked about. Wisconsin assumes that unions in state government don't mix any more. That is a story with assumptions going both ways. It'll be interesting to see how it comes out.
  5. Anxiety and uncertainty inspire action. The future in Bahrain certainly, and Egypt maybe, is uncertain. Folks there are taking action because they are inspired by the possibilities.
  6. Personalities give your company a face. Robert Grant spoke repeatedly about possibilities when you was President of a division at Allergan. Botox was something that clearly got him excited. He just moved on to lead a division of Bauch and Lomb. The story - his excitement about the story - about what B&L is going to do to mimic the Botox success isn't written yet. Believe me, when Grant finally starts talking about his plans, the story will be personal to him - and very interesting to you and I. And the Bauch and Lomb investors.
  7. How-to stories work. How to write a five work values statement is a good story. How to combine that values statement with short vision, mission, objectives, and strategy statements, and, then, get it on one page, is one of our most interesting how-to stories. And, oh, yes, it makes companies more profitable.
  8. Glitz and glam sell. Botox gets injected a lot on the Upper East Side in New York City. That story drives a lot of sales on the Upper West Side - and in the Bronx, and in, well, your town. For sure.
  9. Seasonal stories are interesting. In California we don't have fall, or spring, either, for that matter. We have flood season (or mud-slide season, more like), and fire season, and, every now and then, earthquake season. I used to meet with a CEO in a camper outside his abandoned manufacturing facility while we planned the next stages of his company's growth. Why outside? The building was, basically, rubble after the latest earthquake. That was a real story that he used to his advantage. Manufacturing went on in all sorts of places by a dedicated workforce who pitched in to save the company while they saved their community. What are your seasons?

What is your story?

Reference

Moffitt, Sean and Mike Dover. Wiki Brands. Reinventing Your Company in a Customer-Driven Marketplace. McGrawHill. 2011. www.wiki-brands.com

Getting Change Right

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Reference

Kahan, Seth. Getting Change Right. How Leaders Transform Organizations From the Inside Out. Jossey-Bass. 2010. www.gettingchangeright.com

February 18, 2011

"Get the Best From Your People" - HBR

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"Get the Best From Your People." That's the cover headline on one of the latest issues of Harvard Business Review (October 2010). It goes on to say, "What You Need to Know About Your Staff: Secrets from Google, Best Buy, Comcast, and more."

Most of us don't own companies like Google, Best Buy or Comcast. What do we do? Let's have a look. 

Google says, "People stay because of 'the mission, the quality of the people, and the chance to build the skill set of a better leader or entrepreneur (Davenport, 57).' "

Best Buy can predict how much more operating income a 0.1% change in employee engagement is worth: $100,000 (Davenport, 53).

Sysco has shown that employee job satisfaction and turnover go hand-in-hand. Increase satisfaction, turnover goes down (Davenport, 54).

Google, obviously, is very used to analytics. Best Buy is bigger than most of us. So is Sysco. What to do?

  • Carefully define your mission. What is your product or service? What is your market? And, importantly, is that mission inspiring to your current employees? Ask for help from your team in re-crafting your mission, get better job satisfaction among your employees, and, yes, better profitability.
  • Turning over folks in one of your departments? Consider job satisfaction. First step? Talk to the team. Watch the team. Engage the team in a solution. A good first question that will work at any company? "Would your recommend this company as a good place to work - to your best friend?" That'll spark conversation, for sure. All you've got to do is listen.
  • What about employee engagement? A simple way to measure employee engagement in one of your departments is to consider that department's manager? How can you help her become more engaged? Just asking what she thinks isn't a bad first step. Sitting down with her - and her team - makes sense, as well. Open-ended conversations can get things started. Then start to focus on how to improve.

No, we're not the biggest companies out there. That doesn't mean we can't think like a big company.

Reference

Davenport, Thomas H., Jeanne Harris, and Jeremy Shapiro. Competing on Talent Analytics. Harvard Business Review. October 2010. 53.

February 16, 2011

Undercurrents

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Undercurrents to successful strategy:

  • Strategy Doesn't Have to Take Lots of Time.
  • Values Count.
  • People Are Important.
  • A Strategy That Isn't Implemented Is Useless.
  • Re-Evaluating a Strategy Frequently Makes a Difference.
  • Keep Things Simple.
  • Competitive Environment Matters.

February 06, 2011

Military Leadership - and Negotiation

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Useem talks about making decisions quickly, especially when you don't have all the information you need. One key point: in high-stress situations, when you have 70% of the information - readiness and consensus - you need, make the decision and move on your decision (Useem, 89). 

Weiss makes points on how to strategize - negotiate - in the middle of the action (Weiss, 68-74). Be curious - get the big picture. Collaborate - "why is that important to you?" Get buy-in - "What should we do?" Build Trust - respect comes first. Process focus - slow the pace if you've got to.

Interesting. Now we've got two opinions. Make your decision and act. Or build consensus by negotiation in the middle of the action. Normally, I'm more likely to try action. There are times, however, when my interest to learning, acting and correcting doesn't make sense, especially in complex environments with multiple players.

Reference

Useem, Michael. Four Lessons in Adaptive Leadership. Harvard Business Review. November 2010. 87. 

Weiss, Jeff, Aram Donigian, Jonathan Hughes. Extreme Negotiations. What U. S. soldiers in Afghanistan have learned about the art of managing high-risk, high-stakes situations. Harvard Business Review. November 2010. 67.

January 28, 2011

Dysfunctions

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Lencioni lists his five dysfunctions (Lencioni, 195-216): Trust, or lack thereof; Conflict, or too much thereof; Commitment, or lack thereof; Accountability, or lack thereof; Results, or inattention thereto. He does a good job of balling them all together in a novel.

Two things on Dysfunctions: Lencioni talks a lot about working with a team. Nowhere does he talk about how hard it is to create a team from scratch, or to hire individiuals for a new team, or an existing one, for that matter. Yes, start strategyzing with the team you've got. Yes, take the time to hire new folks that truely fit your value system. And yes, finally just like Lencioni, remove foks who are never going to fit in.

He emphasizes off-site meetings as the way to go for strategizing. I get that up to a point. This book was published in 2002 and written in late 2001. Businesses were flush and most hadn't been up-ended yet. Times have changed. You don't have to go to Napa to have a good meeting, and, by extension, your meetings don't have to take days and days. Try on-site for the first meetings on values; try standing for follow-ups. Everyone has work to do. Planning is still paramount; it just doesn't have to take as much time.

Reference

Lencioni, Partick. The Five Dysfunctions of a Team. Jossey-Bass. 2002.

Take-Aways

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Taught two classes last weekend, one in Business Planning and the other in Business Finance.

Two take-aways from the day:

Buy insurance. A new warehousing business decided not to buy insurance on their (growing) inventory. Big mistake. Thieves got them in the first month for everything. They bought good insurance. Thieves got them the fourth month for everything. They discovered their insurance wasn't so good. They bought better insurance. The moral: make good friends with your insurance agent early on in your business and make sure that agent is a specialist in your niche - and I don't mean just for theft insurance.

Know what gross margin means. One of the students had a highly successful service business. Gross margins were high twenties. The owner's Dad kept telling him that his margins weren't high enough, but the son couldn't figure out what Dad meant. We did a quick calculation, essentially on an envelope. Dad was correct. Margins were twenty points low. Luckily, they're fixable. Moral: know how to calculate your margins. Otherwise, you are probably not as profitable as you thought. A hint: network with other owners in similar businesses to know what your margins ought to be. In a highly competitive business where folks don't share? Follow the trends of your information and make sure that your margins, at a minimum don't go down, and, better, that they rise continually over time.

January 15, 2011

Vanderbilt

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Waterman. Steamboat man. Railroad man. Vanderbilt dominated all. A review of the things he was involved in that changed the way America worked (Stiles, 563):

  •  By his participation in Gibbons v. Ogden, he helped to break down restrictions on interstate trade.
  • Migrating from colonial America to business America, he, while maintaining his individualism in the vein of Jackson (and maybe even Jefferson), he "shattered" the "culture of defference" and made every man capable of success on his own terms, not his class.
  • Moving from boats to ships to trains, he shaped the transportation future of America.
  • His effort to dominate trade from New York to San Francisco via Nicaraugua and Panama transformed communication over long distance, especially during the Civil War years.
  • He epitomized the growing mind of the businessman, from gold coin to intangibles like bank notes and bank accounts, from physical objects to stocks to securities of all sorts, pioneering the giant corporation along the way.
  • Jacksonian freedom of competition for every man matured during his tenure. People who wanted to get rich quickly on the coat-tails of Vanderbilt ended up not liking him at all, as following along really didn't work. His family argued over the estate, and, maybe, felt relief at his passing, as his domineering personality wasn't easly to tolerate.

In all, Vanderbilt helped Americans look at themselves differently, showing us a way to grow a strong America without the imperial dynasties of the past. Amazing life.

Stiles, T. J. The First Tycoon. The Epic Life of Cornelius Vanderbilt. Alfred A. Knopf. 2009.

January 08, 2011

Strategy for Terrible - and Opportune - Times

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The New England Patriots realized that if you do not practice your game far in advance with a carefully selected and conditioned team, you may not get the results you need in clutch situations (Halberstam). We’re in a clutch situation – a quagmire, really – right now. Game strategy works best in terrible times. That means, in today’s business terms, planning to succeed at the few important things that make a big difference at crucial times in a terrible business environment. 

The three main components of game strategy are pick the right folks early on in your process and continue to evaluate them all the time, practice – plan – in advance, and, finally, speed up the pace. Then, expect results. The game strategy of identifying possibilities and enacting them with long–term focus makes sense, especially when compared to extricating yourself and your team from a quagmire. It also increases your valuation. 

PEOPLE 

Discipline and strategy go together. It takes discipline to implement strategies and tactics. For Collins (Collins, 34), however, discipline comes earlier. He points to the disciplines of choosing the right people and putting them in the right positions, structuring thought early on to confront and balance the “brutal facts” with the strengths of your organization in three areas: what you can be the best in the world at, what you are deeply passionate about, and economic results (Collins, 24). Then, finally, comes disciplined acting on responsibilities and relentless pushing to achieve results. Discipline early in the process brings success.  Focus on people first, then plan (thought in Collin’s parlance), and only then take action. 

When you talk about evaluating personnel, one person always comes to mind, Jack Welch. In his book (Welch), Welch talks about all the different charts and curves they used to evaluate senior managers over the years. They finally settled on a chart they called the “Differentiation Vitality Curve” (Welch, 159). The curve broke a management team into three quadrants, the Top 20 (people filled with passion), the Vital 70 and the Bottom 10. Let’s just say you didn’t want to be in the Bottom 10. Over the years, Welch has gotten a lot of bad press because of the Vitality Curve. Dividing personnel according to a curve sounds mechanistic. However, GE’s definition of a “passionate” leader is useful: high energy levels, ability to energize others, edge to make tough go/no go decisions and, finally, ability to execute and deliver on their promises (Welch, 158). Not a bad list. Use it to evaluate new hires. The list and the methodology point to why adopting game strategy takes a while. Start early on when you hire people by looking at how they will work out not just now, but later on when things really matter. 

PRACTICE 

One statistic tells it all: before Carlos Ghosn arrived at Nissan, middle management spent approximately sixty per cent of their time planning. After he arrived, the ratio changed to five per cent planning and ninety–five percent implementing (Magee, 102). On the day of his arrival at Nissan, Ghosn formed nine planning teams to figure out what was wrong with Nissan. They had two months – later changed to three months – to create plans for Nissan’s turnaround. That was the easy part. The hard part was implementing. Ghosn held the planning teams accountable for actually implementing their plan. Nissan closed plants in Japan (think about that), created a passel of new cars, simplified the management structure, changed compensation and advancement (read that, performance raises and promotion only), drastically reduced the number of suppliers, and tied employee bonuses to global results (Magee, page 94). No more talking about implementing. Now they implemented. The pay–off was huge. Planning stalled at your company? Focus on implementation, not strategy.  

PACE

Late in a game with the Houston Oilers, the Bill’s Coach Marchibroda dominated by running their “two–minute” drill. The plan was to score more than once in the last two minutes by running play after play without a huddle. Seeing results at the end of the game, Marchibroda later decided to call the two–minute drill in non–clutch situations as well, completely befuddling the opposition. Bill Belichick’s (the assistant coach at the time for the Giants) response the next time the Giants played the Bills? Slow the game down any way he could. His team practiced little things like taking longer to get up from after a play, messing up the ref’s placement of the ball and taking longer to respond to injuries. Then they worked on actually letting the Bills get more mileage out of their runs, all so they would not go to the air (Halberstam, 285–287). Belichick also installed special defensive plays to confuse the Bill’s quarterback Kelly. It all worked. Slowing down the Bills allowed the Giants to dominate and win. Years later, while coaching at the New England Patriots, Belichick watched the Philadelphia Eagles lose because they did not step up the pace at the end of a Super Bowl game with the Patriots. No urgency at the end of the game led to a defeat. 

Pace is part of game strategy.  If you are thinking of selling your business in the next three years, for instance, plan to pick up the pace of your sales effort. The competition may not understand until it is too late and probably will not keep up. Valuation should increase as a result. It works in football. It will work for your company.

RESULTS

On 1 April 1981, Welch became Chairman and CEO of General Electric. On 2 April 1981, he announced that GE would “manufacture and sell an industrial robot as the first product of its new factory automation business” (Slater, 70). Welch’s goal was to make things happen at GE in order to increase the share price and margin. He did it by speeding up the pace. He began a restructuring process to dominate a business line, or leave it. Using the onetwo mantra (have a market share of either one or two in your business, fix it quickly, or leave it), GE left many businesses, some of which  had been part of GE for years. 

Where to focus in order to fix a division at your company? Porter’s value chain approach shows where to look. Infrastructure, HR management, technology development, procurement, inbound and outbound logistics, operations, marketing/sales and service make up his list (Porter, 37). Having a look at each of your divisions also makes sense.

The first step is analysis, but don’t let it take too much time. Implementation is the key, not planning. Make things happen. Building upon a mainline company that needed to be stronger, Welch started immediately to increase profits and share price. The rest is history. 

References

Collins, Jim. Good to Great and the Social Sectors. Jim Collins. 2005.
Halberstam, David. The Education of a Coach. Wheeler Publishing. 2005.
Magee, David. Turnaround: How Carlos Ghosn Rescued Nissan. HarperCollins. 2003.
Slater, Robert. The New GE How Jack Welch Revived an American Institution. Irwin. 1993.
Welch, Jack with John A. Byrne. Jack Straight From the Gut. Warner Business Books. 2001.

December 26, 2010

On Disruption

www.mixnerstrategy.com

Good review of up-coming - and current - technology: The Economist. 11 December 2010. The Technology Quarterly. After page 60.  http://www.economist.com/science-technology/technology-quarterly/?google_rv=2&cx=001087441947416295956%3Al-gk8r9zm4i&cof=FORID%3A9&qr=technology+quarterly&area=1&keywords=1&frommonth=01&fromyear=1997&tomonth=12&toyear=2010&rv=2

Clayton M. Christensen on financial controls - and their ability to destroy innovation: http://hbr.org/product/innovation-killers-how-financial-tools-destroy-you/an/R0801F-PDF-ENG

November 27, 2010

Biographies, and a bit of Economics, and, even, Novels

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Nelson Mandela on criticism:  

Leaders fully appreciate that constructive criticism within the structures of the organisation, however sharp it may be, is one of the most effective methods of addressing internal problems, of ensuring that the views of each comrade are carefully considered, that if a comrade is to express his view freely there must be no fear of marginalization or, eve worse, of victimization (Mandela, 326).

On Henry Aaron (yes, he liked Henry way more than Hank - didn't even answer to Hank): "...it was his sense of duty, conbined with a certain steely, uncompromising compassion, that struck" observers "the most (Bryant, 265)." Quietly, almost unknown to his teammates, Aaron sought to help people who were less fortunate that him. On his hunting trips, he befriended a whole community in South Dekota, Spink County and its six major towns, where he visited the Redfield State Hospital and School, and its kids who just wanted to learn how to play baseball the major league way. Over the years Aaron spent days and days just being Henry and talking - and showing - about baseball (Bryant, 268). Aaron, in a way, was in the shadow of such more well known players - black players - like Willie Mays. He ended up playing longer and in his own way, achieved more both on the field, and off. 

On Custer: Given a little time, all of us could come up with a story about Custer's failures as a Western Indian fighter. An interesting aside about Custer's service in the Civil War, at Gettysburg (Philbrick, 47-48):

"The redoubtable Jeb Stuart launched a desperate attempt to penetrate the rear of the Union line. If he could smash through Federal resistance, he might meet up with Pickett's forces and secure a spectacular victory for General Lee. Custer, well ahead of his troops, with his sword raised" charged Stuart and broke Stuart's attack on East Cavalry Field, with "the most gallant charge of the war." Recognizing Custer's contribution to the war, General Sheridan gave Custer's wife Libbie "the table on which Grant and Lee signed the surrender" (Philbrick, 48).

On Lewis and Clark, and Western exploration (Hall): Lewis was the friend of Jefferson, the one that got many of the adventurers into what became one of the great explorations of all time, especially from an American expansion point of view. Technologically, there were quite a few interesting highlights of the journey. Horses. Boats and canoes. Fostering friendship amongst folks who might have no reason to be friendly. Figuring out what those new friends would like to take home. (Blue beads were a good start.) And let's not forget location. They used chronometer and sextant to figure out where they were, all the time trying to figure out which direction tributaries of the Mississippit went - and how far north - as those measurements (Hall, 192) would lead to the derivation of the border between Louisana and Canada. Since Hall's is a novel, we are also treated to a story about the baby born on the journey and, in fact, the technology of raising an Indian child in the wilderness with the technology of exploration. Custer may have failed at the Little Big Horn; Lewis and Clark named the river on their first journed years before.

On Freakonomics: Levitt and Dubner admit that their first book, Freakonomics, had no unifying theme. Upon submitting their second book some time later, they had a different attitude. There was a unifying theme to their work, namely, "people respond to incentives (Levitt, xiv)." There is a Law of Unintended Consequences that operates on economic activities that you ignore at your own risk. Macroeconomics are a big deal; so are microeconomics: a scientist taught a group of monkeys to use money as a form of exchange (Levitt, 212). The University stopped the experiment. Why destroy a happy colony of monkeys by showing them how, over time, one could become richer, and another, thus, poorer? Other key findings? Irrationality is not only human. Monkeys become just as irrational as, say, day traders, when given the right incentives( Levitt, 214). No wonder the University stopped the experiment. Why destroy a healthy colony, indeed?

On the RAND Institute (Nasar, 105):

World War II was a war in which the talents of scientists were exploited to an unprecedented, almost extravagant degree. First, there were all the new inventions of warfare - radar, infrared detection devices, bomber aircraft, long-range rockets, torpedoes with depth charges, as well as the atomic bomb. Second, the military had only the vaguest of ideas about how to use these inventions....Someone had to devise new techniques for these new weapons, new methods of assessing their effectiveness and the most eficient way to use them. It was a task that fell to the scientists.

On Patents, John Atanasoff, and John von Neumann: John Atanasoff, it now proven, developed the modern computer first in a laboratory in Iowa in the thirties. Anyone else who made claims was late to the party. John von Neumann, scientist par excellance and advisor to presidents, wanted to make sure that computers eventually ended up being useful to all scientists, not just a few. His papers, the eventually crucial title of which was "First Draft of a Report of the EDVAC, by John von Neumann", layed out the whole computational universe, and eventually, kept one manufacturer from monopolizing the development of the computer. Good for mankind. Not so good for competing computer patent-holders. There is a message here. Atanasoff was busy during the war years, too busy, in fact, to supervise the patent applications the university back in Iowa was supposed to be submitting. That lack of diligence muddied the whole story of the computer - and the patents thereto - opening up a can of worms that wasn't resolved until the seventies.

On Milton S. Hershey, Hersey's choclate magnate: During the Great Depression, most company's sales continued to fall. Hersey's did as well, bottoming out in 1932 or so and never looking back. In their favor, they were a cheap indulgence that strapped kids could continue to afford, yes, but they also continued to aggressively expand. A film "The Gift of Montezuma" was distributed to theaters about the birth of chocolate, and the birth of Hershey (D'Antonio, 199). During the Depression, Hershey continued to expand both the plant itself in Hershey, Pennsylvania, and the company town. There was, almost nostalgically when seen from today's eyes, a Utopian vision for the town and the company, both created and enlivened year after year by Milton S. Hershey.

On the first nuclear weapons, their utility, and their future: Robert Oppenheimer led a perfect scientific life. He was acclaimed for his scientific work, his management of the bomb facility at Los Alamos, and, finally, denigrated by the government for his realization that there would be no winner in the weapons race of the fifties and sixties, especially if it focused on total nuclear warfare. Eisenhower's "military complex," and political McCarthyism, won in the end, stripping Oppenheimer of his security clearance and the ability to manage large-scale projects while humiliating a kind and honorable man who, seeminly, misunderstood the possibilities of taking on the complex - and winning. The Institute for Advanced Study was his last refuge, a place he changed from a purely mathmatical haven to a creative institute for historians and poets, as well. After Hiroshima and Nagasaki, Oppenheimer realized the responsibility he retained, even if Truman himself thought him foolish, as the buck, as they say, really did end at his desk, not Oppenheimer's.

 

Asgedom, Mawi. Edited by Dave Berger. Of Beetles and Angels. A True Story of The American Dream. Magadee Books. 2001.

Bird, Kai and Martin J. Sherwin. American Prometheus. The Triumph and Tragedy of J. Robert Oppenheimer. Alfred A. Knopf. 2005.

Bryant, Howard. The Last Hero. A Life of Henry Aaron. Pantheon Books. 2010.

D'Antonio, Michael. Hershey. Milton S. Hershey's Extraordinary Life of Wealth, Empire, and Utopian Dreams. Simon & Schuster Paperbacks. 2006.

Hall, Brian. I Should Be Extremely Happy In Your Company. A Novel of Lewis and Clark. Viking. 2003.

Herriot, James. Every Living Thing. St. Martin's Press. 1992.

Lama, The Dalai. My Spiritual Journey. Personal Reflections, Teachings, and Talks. HarperOne. 2009, 2010.

Levitt, Steven D. and Stephen J. Dubner. Superfreakonomics. Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance. William Morrow. 2009.

Mandela, Nelson. Conversations with Myself. Farrar, Straus and Giroux. 2010.

Mariano, Connie. The White House Doctor. A Memoir. Thomas Dunne Books. 2010.

Nasar, Sylvia. A Beautiful Mind. Simon & Schuster. 1998.

Norman, Philip. John Lennon. The Life. Ecco. 2008.

Philbrick, Nathaniel. The Last Stand. Custer, Sitting Bull, and the Battle of the Little Big Horn. Viking. 2010.

Smiley, Jane. The Man Who Invented the Computer. The Biography of John Atanasoff, Digital Pioneer. Doubleday. 2010.

September 26, 2010

Warren Bennis - Twenty Years Later

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Warren Bennis' latest advice to folks who want to be CEOs (Brady, 22):

The first thing I would say is forget about balance of work and family. It's more that a full-time job. Abandon your ego. You can't solve everything yourself, so you've got to learn to build and work with a top team. If you don't have that, forget it. And you have to connect with as diverse a group as possible. You have to be as realistic as hell about the sacrifices to become a leader. But if you pull it off, you can make life better for so many people. What could be sweeter?

Now let's go back twenty-five years and see if that squares with his original thoughts (Bennis, 26-27):

    • Strategy I: attention through vision
    • Strategy II: meaning through communication
    • Strategy III: trust through positioning
    • Strategy IV: the deployment of self through (1) positive self-regard and (2) the Wallenda factor (it's not about failing).

My bet is that Bennis would make a couple changes if he could edit Brady's article. His mention of balance early in the discussion is polarizing, certainly, and, ultimately, problematic. 

References

Bennis, Warren and Burt Nanus. Leadership. The Strategies For Taking Charge. Perennial Library. 1985.

Brady, Diane. Speed Dial. Warren Bennis. Bloomberg BusinessWeek. 27 September - 3 October, 2010. 22.

September 17, 2010

Ready! Aim! Fire!

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In business, is it "Ready! Aim! Fire!" or, "Fire! Ready! Aim!", or, maybe even, "Fire! Aim! Ready!"?

You don't have to plan what you are going to do tomorrow. You already know what you are going to do.

What if, on reflection, you realized that most of your results tomorrow are going to come from just twenty percent of what you already have scheduled? Would you consider dropping some of your action items and focusing on the most important - the most productive - things? 

This leads to some interesting topics:

  • How do I choose which things to focus on tomorrow?
  • How do I choose which things to do next week?
  • How do I choose which things to do next month ...or next year?

Soon, you realize you're not planning to do all the work. Now we have more questions:

  • How do you involve a team in what you are doing?
  • How does your team decide, individually and as a team, what they are going to do?
  • How do you make sure they actually do what they decide to do, especially individually?
  • How do you measure results?
  • Maybe even more basically, how do you pick a team?

Now for some maybe even more interesting questions:

  • What about your suppliers? What do they think of what you are doing?
  • What about your customers?
  • ...your employees, especially those on the line who don't have the time - or, maybe - the inclination, or the right, to say something?

It's funny how a simple question, "What are you going to do tomorrow?" leads to all sorts of other questions that demand answers. The answers don't have to take a lot of time or expense to generate. You just need them. Now. Or how will you really know what to do tomorrow?

Investing 101

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Bogle on Investing (Bogle, 41)

  • Invest you must
  • Time is your friend
  • Impulse is your enemy
  • Basic arithmetic works: low expenses win in the long run
  • Stick to simplicity 
  • Stay the course. 

Model Portfolios

Malkiel (347), percents, with suggested funds

  • Stocks 50%
    • US Stocks 34% (Vanguard Total Stock Market Fund Index)
    • Developed International Markets 8.5% (Vanguard International Index Fund)
    • Emerging Markets 7.5% (Vanguard Emerging Markets Index Fund)
  • Cash 5% (Vanguard Prime Money Market Fund, or a short term bond fund)
  • Bonds 32.5% (Vanguard Total Bond Market Index Fund; also recommends putting 5% in TIPS)
  • Real Estate Equities 12.5% (Vanguard REIT Index Fund)

Swenson (84), percents*

  • Domestic Equity 30%
  • Foreign Equity 15%
  • Emerging Market 5%
  • Real Estate 20%
  • Treasuries 15%
  • TIPS 15% 

*These are Core Assets of any portfolio (Swenson, 92): "Contribution of a basic, valuable, differentiable characteristic to a portfolio; fundamental reliance on markets, not on active management, to generate returns; and representation in a broad, deep investable market."

References

Ahamed, Liaquat. Lords of Finance. The Bankers Who Broke the World. The Penguin Press. 2009.

Bogle, John C. Common Sense on Mutual Funds. Wiley. 2010.

Ellis, Charles D. Winning the Loser's Game. Timeless Strategies for Successful Investing. McGaw-Hill. 2002.

Malkiel, Burton G. A Random Walk Down Wall Street. The Time-tested Strategy for Successful Investing. W. W. Norton & Company. 2007.

Swensen, David F. Unconventional Success. A Fundamental Approach to Personal Investment. Free Press. 2005.

 

September 16, 2010

Bits and Pieces

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The Facts About Oakmont

Oakmont is a tough golf course, the toughest of all in America if you read Lazarus. That fine. It is also home to the US Open from time to time, and that is the topic of this Lazarus' book. It focuses in on the 1973 Open. Miller beat Palmer, incredibly, with a 63, the lowest score in Open history. Lazarus makes clear that (Lazarus, 353): the sprinklers didn't slow down the course that much, especially on Saturday night; the rains on Saturday should have slowed down the course and made the scores lower - they didn't; Miller's 63 should have been joined by lots of others if it was so ordinary - only four players broke 70, even with the rains; Nicklaus said the course played "normal"; Miller wasn't stressed so he could "go low" - actually he was a stressed as could be, so says, Lazarus.

Lazarus uses four criteria (Lazarus, 356) to label Miller's accomplishment real: this was the lowest score in a championship; this was the US Open, always the toughest; there were real champions in the mix, none of whom overtook his lead; Miller's hot putter kept him on track - he had to be hot, crucially, all through the tournament.

Those are the facts about the 1973 US Open. Took a whole book to get them out in the open.

Steelers/Cowboys

The Steelers and Cowboys were the best they had ever been for Super Bowl XIII. The Steelers won in a hard fought game. That's the story. The book (Millman) tells the story differently using the decline and ultimate failure of the steel industry in Pittsburg as a backdrop for the story. We could linger on the stories about the growth of the Cowboys - America's team from day one - and the fact that the ascendency of the Steelers occured during the decline of the steel industry, a not very pretty picture. Millman takes the time to frame the steel industry with a picture of the steel worker's union and the people who grew it and, as is normal for a union, especially a steel workers union, fought for its control. Pat Coyne's mom died. Pat was a battler for the union. Art Rooney Sr., the Steeler's owner showed up like he showed up at lots of funerals and wakes around Pittsburg. He liked people; he showed up to show it. The folks at the funeral? They smiled for the first time that day (Millman, 237). Art was giving out Steelers tickets to the kids. That's what Steelers football was really about.

Highlander Folk School and the Citizenship Schools

Setima Clark refused to quit the NAACP (Schiff, 277) even when her teaching career of forty years was threatened by her employer's (the Charleston public school system) demand following Brown vs Board of Education that all employees list their affiliations. Members of the NAACP were fired. Clark ended up at Highlander Folk School where ultimately she became education director. Her most famous student? Rosa Parks. Her most important topic? Citizenship and how to be a good citizen in the face of adversity.

Teddy Roosevelt at His Best - or Is It His Worst?

Winston Churchill had, if I remember correctly, moods that he called "The Black Dog," a time of depression that usually followed one of his many political downturns. His solution was to return to his country estate and build things, usually out of bricks and mortar. Teddy Roosevelt did the same thing, but is a different way. Sickly as a child (Millard, 15), Roosevelt's father had "sat his son down and told him that he had the power to change his fate, but he would have to work hard to do it." Work hard he did, in a life-long effort to use exertion and risk-taking as a way to bounce back from defeat. Perhaps Roosevelt's worst defeat was his loss during the presidential campaign in 1912. Post-election, Roosevelt sulked at his estate for months until one of his old friends came to him with a proposal that they explore an Amazon tributary, a journey that became the last - and toughest - jouney of exploration in Roosevelt's eventful life. Changing his plans at the last instant, Roosevelt abandoned his simple plan to journey down already explored rivers for a much more audacious plan to explore a totally unknown river that was, inevitably, rife with plant, insect, mamalian, reptilian (crocodilian, really) and previously unknown - and clearly unfriendly - human life that would just about kill him. This was a savage trip as dangerous as the other journeys of exploration in the early twentieth century (to the poles, for instance). Interestingly, Roosevelt's journey isn't well known, nor do we realize how close to death he came. Millard cunningly scares us with an amazing story. Roosevelt's father's words are the best part, however. You have the ability to change your fate. We all do. We still do. We can.

GxE - Genes Times Environment, Not Genes Plus Environment

The old notation, if there really was one, said that we are the sum of our genes and environment. That's all wrong. We really are not the sum of genes and environment, but the multiplicand of genes and environment. Genes are a good start, but they are not the whole story. The explanation is simple: genes are not just switches to be turned off or on by their presence. Think of them differently. They are really part of a control board, as it were, of switches that "can be turned up/down/on/off at any time - by another gene or by any minuscule environmental input" (Shenk, 7). This isn't genetic predestination. This is genetic variablily to the maximum degree. Roosevelt could change his fate. So can we. Our experiences shape our genes in ways we are just becoming to understand. Some of those experiences we get to choose. Our schools, the music we listen to, our friends - we have choices. Other experiences happened way before we had a choice. Our mother's selection of activities for instance and what she ate and when effected us. So do, and this is even more amazing, our grandmother's selection of activities and experiences. I sometimes use as an example of a strategic choice certain Chinese families which were experts at producing the best in ceramics. One generation would properly store clay for future generations to use to make fine, fine vases for, for instance, the Imperial family. Those strategic choices were good business choices, yes. They were also, probably, good environmental choices that ultimately multiplied the effects of genes in generations unborn.

The Best Sports Writing

I noticed somewhere a comment that the best short story on a sport topic was written by John Updike for The New Yorker magazine. Apparently, Updike's story, Hub Fans Bid Kid Adieu, was written quickly, after an afternoon at the park. It ended up being Updikes sole sports story. Good to know. I dug up the Adieu in Remnick's anthology. A fine piece of work. But there's more in the book, some of it better, in my estimate. John McPhee wrote a story about Bill Bradley, A Sense of Where Your Are (Remnick, 99). He wrote it in 1965 as, much like Updike's story, a farewell to a fine player. Well he got things wrong. Bill Bradley was supposed to never play again, as he accepted a scholarship to Oxford - a Rhodes scholarship, if fact. We all know what happened. Bradley finished his school work and returned to the New York Knicks and a long and wonderful career. That's the sports part of the story. It details the practice, practice, practice that it took for Bradley to make it at Princeton and, later, at the Knicks. His work ethic and his interest in people made coach after coach suggest that Bradley was destined for good things, most likely the governor of Missouri. Well, they got it a little wrong. Bradley ended up being a member of the US Senate. Close to governor, but better, maybe. The point is interesting. Reading this story, I've come to wish that Bradley's determination had led him to the White House. If I remember correctly, he had a couple tries. This story, at least from the determination and leadership side of things, gives evidence that Bradley would have made a fine president. Basketball gives you the opportunity to showboat if your coach will let you get away with it. Bradley didn't showboat. In fact, his Princeton coach had to remind him from time to time that he could shoot, especially when they were behind and needed points that their only All American could provide. Shoot. Now. We need you. Teamwork is great. We get it. Leadership also requires showboating, too. Don't forget that, especially when your star performer is holding back, trying to be a member of the team, especially when you don't need a team member but a performer in the clutch. There are times when you need to say to your best folks, "Stop playing. Shoot. Now." It's OK for you to say that. That's what CEOs do.

Ads on the Freeway

Some time back, I spent a Saturday morning out on the freeway taking pictures of the LapBand billboards. You've seen them, I am sure. One of the local doctor's groups is advertising like crazy. Obviously, there is lots of money in obesity. Allergan, headquartered in Irvine, makes the lapband. They like products like that. Allergan also makes Botox. Both the LapBand and Botox are sold to folks concerned about their appearance. I guess obesity and laugh lines are a little bit different, but they are evidence of the market today - and its changes from even a decade ago. Botox targets folks who want to improve their appearance. Their president talks about a near addiction that folks who try Botox end up with. Once you start, you want to keep erasing those crows feet, no matter how often you have to return to your dermatologist. Razors and blades without the need for a razor, if you get my gist. Wonderful strategy. This craze of appearance has its downsides, as some of the solutions to better looks aren't really that good for you. Anti-aging, the new science, probably had its start here in Southern California. The problem is, not all the science is convincing. Some of it is down right scary. My advice is, "Put up with a few of those lines." Some of the solutions (not Botox, necessaryily. Think human growth hormone and other similar products) out there really aren't solutions at all (Weintraub, 27). They're just a way for some doctor to make more money. Ultimately, the expenses you pay for short term fixes aren't just financial - they're medical, as well.

References

Lazarus, Adam and Steve Schlossman. Chasing Greatness. Johnny Miller, Arnold Palmer, and the Miracle at Oakmont. New American Library. 2010. 

Millard, Candice. The River of Doubt. Theodore Roosevelt's Darkest Journey. Anchor Books. 2005.

Millman, Chad and Shawn Coyne. The Ones Who Hit the Hardest. The Steelers, The Cowboys, The 70s, and The Fight For America's Soul. Gotham Books. 2010.

Remnick, David, Editor. The Only Game in Town. Sportswriting From The New Yorker. Random House. 2010.

Shenk, David. The Genius in All of Us. Why Everything You've Been Told About Genetics, Talent, and IQ is Wrong. Doubleday. 2010

Schiff, Karenna Gore. Lighting the Way. Nine Women Who Changed Modern America. Hyperion. 2005.

Weintraub, Arlene. Selling the Fountain of Youth. How the Anti-Aging Industry Made a Disease Out of Getting Old-And Made Billions. Basic Books. 2010.

Ten Thousand Hours of Practice Aren't Enough

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Gladwell said it first: Practice ten thousand hours (a thousand a year, best case), become child prodigy (Gladwell). Syed takes it a step further: Practicing ten thousand hours isn't enough. You have to spend ten thousand hours purposefully practicing, with the right training system, and, sometimes, in the right town or with the right coach (Syed, 92).

Brazilian football is a good example. Obviously, for many years Brazil has been a football powerhouse. No one ever looked for a cause. It was assumed that kids started kicking a soccer ball much earlier, and for longer, than kids in other countries. That misses an interesting nuance. Yep, kids had soccer balls, all right, but it was a different type of soccer ball, a heavier ball used in the Brazilian game futsal. Futsal is special. The playing field is smaller. The kids get the ball more often. When something goes wrong in the game of soccer, you just boot the ball way down field. In futsal, the ball is too heavy to do that. You have to get out of your predicament on your own. You don't want the ball? You have to find an open team-mate who is close to you and - here is the hard part - make a successful pass. Those skills of finding the open man close by and making the successful pass to him define why Brazilians dominate international soccer (Syed, 87-88), especially since Brazilian kids are fixated on the game. Getting ten thousand hours in before age twenty is easy for them.

Remember, football was an example. A pretty good one. Now, I care a lot more about how to make kids better technologists. The same wrinkles apply. Do a lot of math as a kid. Follow a training system. Move to a town with lots of other kids involved in math. Follow their system. Maybe you won't end up with one percent prodigies, but you will end up sort of like Brazil. You'll have a population of proficient kids who become proficient engineers, who contribute to society in meaningful ways. You could change the math skills to reading skills or writing skills or sports skills or, well, you fill in the blank.

There is a template for excellence. Now we have to figure out how to apply it in our communities, especially in early education. We want a competent society. Here's how to be competent.

Reference

Gladwell, Malcolm. Outliers. The Story of Success. Little, Brown and Company. 2008.  

Syed, Matthew. Bounce. Moxart, Federer, Picasso, Beckham, and the Science of Success. Harper. 2010.

August 25, 2010

Alan Greenspan Triumphant - or Not

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Autobiographies when soon after events and newly written history books have a problem. They sometimes don't stand the test of time, as analysis of current events, while useful, is dangerous as all the facts aren't in yet. Nixon wanted his say. Carter. Reagan. Bush I. Clinton. Bush II. They've all tried to have their say. However, it takes time to figure out what happened and what of it was significant.

My review of Greenspan's book in late 2007 (Mixner) just after Greenspan stepped down was almost exuberant in its willingness to accept Greenspan at face value. China was the great unknown. Inflation was the great enemy. Ah, if only things were only so simple.

13 Bankers really isn't about Greenspan at all. Its premise is that consolidation of the banking industry has led to an oligarchy of sorts, similar in some respects to the oligarchies we're seeing in Russia with the rise of capitalism and the rise of oligarchies from the ashes of the large state-run firms now in private ownership. Greenspan takes it on the chin (Johnson, 133):

  • Repeal of Glass-Steagall, one of the main-stays of Depression Era bank regulation was a bad idea.
  • Banks in 1996 were allowed to take up to twenty-five percent of their revenues from securities operations, up from ten percent. They then made things worse by leveraging said investmests.
  • Banks were allowed to enter new businesses not by gaining approval from the fed before-hand, but only by receiving a disapproval later, after they were already in business.
  • Old Glass-Steagall required Travelers and Citicorp to break up immediately after their merger as they were in unacceptable businesses at the same time. Their solution? Get Glass-Steagall repealed.
  • The huge merger wave of the late 1990's, and the passage of the Gramm-Leach-Bliley bill allowed the entry (or debacle, shall we say) of the entry of the huge banks into the mortgage business and into the mortgage-backed security business.

The history of banking is full of boom-bust cycles. This latest bust is just the latest in a series. The point is, however, without some re-writing of the rules, we can count on another bust cycle.  

References

Greenspan, Alan. The Age of Turbulence. Adventures in a New World. The Penguin Press. 2007. 

Johnson, Simon and James Kwak. 13 Bankers. The Wall Street Takeover and the Next Financial Meltdown. Pantheon Books. 2010.

Mixner, Jack. Greenspan Speaks. Mixner Strategy Blog.  http://mixnerstrategy.com/blog/2007/12/greenspan_speaks.html 2007.

August 24, 2010

On Character

www.mixnerstrategy.com

Barack Obama faced a test. Maybe he realized it was an important test; most likely, he didn’t. Michelle Obama famously asked her brother, Craig Robinson, to invite Obama along to a pick-up basketball game. She was interested in Obama but she wanted to see what her brother thought about him after a neighborhood game on the asphalt courts. “If you aren’t showing character on the court, you probably won’t show character in life.” That was her father and brother’s mantra over the years. Ball hogs needn’t apply. Neither should show-offs. Sharing was good, especially when you were sharing the ball with the open man.

Luckily, Obama passed the test. The rest, at least from the personal point of view, is history.  The stern and strict Michelle decided that Barack might make a good spouse.  He didn’t back down on the drive to the hoop. That was good. When he drove to the hoop, that drive was the best move for the team. If there was a better play somewhere else on the court, he passed off if he could.

So, we have a new – or revisited – metaphor on life. Not all of us are talented on the court, so asking new hires or new teammates to join us on the court might not work very well. A “test” on the court early in a relationship may make some sense. Michelle played a little different game. She had known Barack for quite a while and was just getting to the point of considering her life with him. She had been tough on other potential beaus in the fast. Most hadn’t endured as long as Barack. She took her time before she quietly posed her test.

A hiring process could include a test, but my bet is it’ll work better if you wait a while before you try someone out this way. It’s tough to do, certainly, and may slow your hiring process considerably. It still makes sense. Have test, yes. Wait a while if you can, however.

Reference

Robinson, Craig. A Game of Character. A Family Journey From Chicago’s Southside to the Ivy League and Beyond. Gotham Books. 2010.

 

August 22, 2010

In Support of a Liberal Education

www.mixnerstrategy.com

Umami says it all, at least in terms of the tastes - literally - we all feel. There's sweet, sour, salty, bitter, and, new in the last century or so, umami. MSG gives the feeling of umami if you squint a bit (mixed metaphors do ruin things a bit, I know), but it is not exact. It is really the taste you get when glutamic acid is ionized by cooking, fermentation, or sitting in the sun (Lehrer, 58). Aged cheese and ketchup are good sources of the taste. That's why they're such useful condiments. Fish sauce and soy sauce are others. Meat, cooked properly, converts glutamate to a free form you taste, making that steak so tasty (Lehrer, 60).

OK, why bother with a disucssion of umami in a discourse that's supposed to be about strategy? In my estimate, Betty Edwards' book Drawing on the Right Side of the Brain laid out a way to think about things that was revolutionary, if you think about it. There was the analytical side of our brains - the left side - that was very useful at, well, analysis. The right side was different. While you didn't really need to go into a trance to get in touch with the right side of your brain, with a little bit of training in doing things like drawing you could do things - like draw - that you couldn't do before.

Umami style cooking (focusing on taste in new ways) and Edwards' style drawing (focusing on drawing in new ways) are useful tools in strategy. Do your numbers, run the cash flows and ROI, absolutely. Those are all useful analytical tools. Now, stand back. What's missing? How do you take the left brain information - analytics - and combine it with right brain stuff like taste and perception. We've spent a lot of time on disruptive strategy (run "Christensen" on the blog if you want the references). Getting to umami, getting to right brain, getting to disruption require new ways of thinking about perceiving. Adding more features to what you already have is nice, but it is not disruptive. Removing some features to make things easier to use while making your product or service cheaper is disruptive. Heat and some flavors enhance the umami experience in food. Drawing differently - the whole process is not the stick figures we all drew in first grade - enhances your artistic efforts. Strategy is artistic in some ways. Yes, analytics are important, but so are thought processes. Take the science out of your product and look at it more like a novel. Look at your product a different way. You're starting to understand disruption.

Wosniak brought technical skills to Apple early on. Jobs brought marketing skills. Different skill sets. Add umami ingredients to your food, get taste explosion. Address your right brain, get better - different - drawings. Address the left brain and the right brain - the liberal arts side, maybe - in your product sessions, get disruption. Not bad.

Reference

Edwards, Betty. Drawing on the Right Side of the Brain. J. P. Tarcher, Inc. 1979. 

Lehrer, Jonah. Proust Was a Neuroscientist. A Mariner Book Houghton Mifflin Company. 2008.

August 21, 2010

Following the Rules

www.mixnerstrategy.com

West Virginia's Senator Robert C. Byrd was a legend in Washington. Everyone told Barack Obama, freshman Senator, that the most important person for him to get to know if he wanted to get ahead in the Senate was Robert C. Byrd (Obama, 73).  

Byrd had three things to tell Obama (Obama, 99):

  • Know the rules of the Senate. No legislation goes anywhere, ultimately, unless it follows the rules, especially legislation outside the norm.
  • Take your time. Get to know how the Senate works. Know the process before you start campaigning for the presidency, as everyone was seeming to do.
  • Finally, know the Constitution. Byrd carried a copy with him at all times. It's stood the test of time. Understand it. Use it. Respect it.

Byrd had one last thing to say to Obama about the "foolishness of youth," his membership in the KKK way back when. Byrd had regrets. "We all have regrets, Senator," Obama said, "We just ask that in the end, God's grace shines upon us."

Reference

Obama, Barack. The Audacity of Hope. Thought on Reclaiming the American Dream. Crown Publishers. 2006.

Disruptive Surgery

www.mixnerstrategy.com

A disruptive strategy is one where you take your current offering - or a new one, for that matter - and make it cheaper, with fewer features than the marketplace currently thinks it needs. Do it right, and your revenues and profits increase immensely.

Now, I'm lucky in that I've never had a hernia, but I assure you that if I ever do, I'll have it treated by Shouldice Hospital outside Toronto. Why? Well, Shoulice doesn't have specialists in the normal sense. They're not trained in all the different specialities far beyond their normal GP-type training. My prediction is that ultimately, Shouldice will be so sure of what they do, that nurses will be doing hernia repairs. Why am I so sure?

Shouldice only does one thing - repair hernias. The normal failure rate on a hernia operation is ten to fifteen percent (Gawande, 38). Shouldice's is less than one percent. Since everyone just does hernia repairs at Shouldice, they have seen it all, to the tune of six to eight hundred repairs per surgeon each year (Gawande, 38). They've done repairs so often that when something goes wrong, they've seen the same problem recently and can react from rote. They know the exact thing to do, every time. If the surgeon in the room hasn't seen something before, one of the attendants has. They know what to do. There are no work arounds. They've decided, in advance, what to do in every situation they are ever going to see. This is a very good thing if you have a hernia.

Now, let's talk business. An operation at Shouldice isn't twice a much as at other places, as you'd expect. It's half price. And they get you in and out of the hospital fast. Their operating theaters are made specially for hernia repairs. Yes, the team is specially trained, but it is mainly on the job training. GPs are doing the surgery in most cases.

It's cheaper, faster and has fewer features. It's disruptive.

Reference

Gawande, Atul. Complications. A Surgeon's Notes on an Imperfect Science. Picador. 2002.

Cuomo On Lincoln

www.mixnerstrategy.com

You have to smile when you read Cuomo's book because he takes his point of view and wraps it around what all sorts of different policians and leaders had to say about Lincoln. Of course, every smart politician has tried to say that Lincoln is on his side, an assumption that Cuomo shows is absurd. Leaving aside Cuomo's assumption that Lincoln is on his side, there is one intersting paragraph about Lincoln (Cuomo, 8):

Even as a boy he grasped the single most important idea that would sustain him-and provoke him-for the rest of his days. The proposition that all men are created equal became the thread of purpose that tied the boy to the man and then to the legend. The achievable dream of equality and opportunity for all was the "original idea" for which the struggle was made: the idea that all men are endowed by the Creator with certain unalienable rights-life, liberty, and the pursuit of happiness.

Not a bad paragraph.

Reference

Cuomo, Mario M and Harold Holzer, historical consultant. Why Lincoln Matters. Today More Than Ever. Harcourt, Inc. 2004.

Sticking It Out

www.mixnerstrategy.com

A slug of different, eye-opening books arrived at the local library's new book shelf recently. Usually populated by donations from the community, the new book shelf always has something new and interesting. For me, making my selections new and interesting and strategic is always a challenge. Strategy, luckily, is personal as well, so these new books about the craft of medicine and science are fine.

Indian family immigrates to America. Bright parents foster intellectual capacities of their children. Children succeed beyound all expections. They - the parents and the children - feel uncertainty along the way. That's a story we've all heard before. Indeed, it is the American experience. So what makes Juhar's book on being a doctor special?

Uncertainty is clearly part of the experience. One kid gets his PhD in physics only to decide that maybe it is better to complete his training, not in physics, but in medicine like his brother. He's got the smarts, obviously. Now, does he have the gumption? And that's the point. His discovery that medicine is formulaic, almost to the extreme, is disheartening. But (and now we're getting more strategic) even a formulaic interaction with a patient is always made better by the ability to actually listen to what the patient is telling the doctor. The biggest problem for the young doctor isn't his lack of knowledge, it is his inability to listen carefully early on. Of course, that lack of knowledge forces extra study and grows the ability to ask more senior interns for help. Medicine is formulaic, requires continual study, and forces very bright folks to rely on others for advice.

Interestingly, this is what a bright CEO does as well. CEOs don't havee all the information they need. Neither do doctors. They both have to move themselves and others based on their training, their intuition and advice they receive from others, often in an environment demanding rapid decision-making.

Reference

Jauhar, Sandeep. Intern. A Doctor's Initiation. Farrar, Straus and Giroux. 2008.

August 04, 2010

American Crossroads

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Most people think the American revolution occured in the 1770s and 1780s. A case could be made that a second American revolution occured in the 1890s or thereabouts (Turner, 244-246):

  • ...there is the exhaustion of the supply of free land and the closing of the movement of Western advance as an effective factor in American development.
  • ...there has been a concentration of capital in the control of fundemental industries as to make a new epoch in the economic development of the United States.
  • ...the expansion of the United States politically and commercially into lands beyond the seas.
  • ...the political parties of the United States now tend to divide on issues that involve the question of Socialism. This shows ...the birth of new political ideas, the reformation of the lines of political conflict.

This was only slightly more than a century ago.

On 22 July, Congress ceased discussions of a carbon cap (Pooley, 6). Without direct federal investment, "renewable energy is withering" (Pooley, 7). China, on the other hand, has announced that is is beginning an experiment in carbon trading, while wind power is "well ahead of schedule" (Pooley, 7). Worst of all, VC funds - American VC funds - aren't being invested in America. They are flowing instead to Green projects in China (Pooley, 7).

America was at the beginning of growth in the 1770s. It was again at the beginning of growth in the 1890s. We have to decide - now - whether we are at the beginning of growth in the the 2010s. I use Green as an example. Maybe it's not as bad as it seems. Consider, however, what America was like in the 1770s and the 1890s. Contrast it with today. One way to look at this is to say, "On, no, we have a problem!" The alternative is to say, "Wow, we have an opportunity!" Let's vote for the second, especially as we enter the next planning cycle for each of our companies. What a time it is. Opportunity scanning is a crucial first step. Where to start? Normally, maybe you'd all just meet in a room with a flipchart, do a quick scan, and take some actions. I suggest an alternative method (Palermo, 5-8):

  • Talk to customers, first. Ask them, "Are you receiving value?" and "Does the product perform as you expected?"
  • Talk to employees. They hold you back, maybe. Or, they know where to go. Ask them, "Would you recommend us as a place to work - to your best friend?" You can not do it alone. Your employees are key to implementation.
  • Finally, consider your financial performance. Is doing what you are currently doing going to get you where you want to go? Crucially, are you investing in your future, or just spending your equity?

America has been through at least two revolutions, so far. This could - maybe, should - be the third.  

References

Palermo, Richard C., Sr. Do the Right Things...Right. It Is That Simple. A Step-by-Step Guide to World-Class Performance. The Strategic Triangle, Inc. 2003.

Pooley, Eric. America Sits Out the Race. Bloomberg Businessweek. 2-8 August 2010. 6. http://www.businessweek.com/magazine/content/10_32/b4190006428519.htm

Turner, Frederick Jackson. The Frontier in American History. Robert E. Krieger Publishing Company. 1920. Reprinted 1976.

July 30, 2010

On Character

www.mixnerstrategy.com

Live dangerously. Tell the truth. Noonan talks about Reagan (Noonan, 212):

...Reagan thought honest words the only possible predicate for progress. ...He..remained consistent. The immature are always finding new truths, and the cynical are always discovering new philosophies to claim to believe in, but Reagan was neither immature nor cynical. And so was his consistency, which would have been impressive in anybody, but which was startling in a politician.

Let's parse out the important word, consistent. After his early union days in Hollywood, Reagan realized that his future evil empire was real. He stayed on message through those years and continued to stay on message through this GE speech-making days, his governorship, and his presidency. He stayed on message throughout. Now, as he became president, the Russians were looking for signs of how Reagan would act. Noonan thinks it was the air traffic controllers union strike that really started to turn the tide (Noonan, 222). The union threatened to close down American air space. Reagan said come to work or you are fired. They didn't come to work (at least most of them). They lost their jobs in short order.

I suspect that the Russians were expecting a blink, that Reagan would back down. Reagan saw the truth. The controllers wanted a huge salary increase. It wasn't right. He did the right thing. And the Russians watched.

This says quite a lot about being a leader. If you think little things - or big things, for that matter - are not important, you might want to reconsider. People are watching. The Russians watched Reagan and realized he was likely to do just what he said. Your team is watching you and making decisions as well. Make sure you are showing your true character at all times. And make sure your true character is the character of the right.

Reference

Noonan, Peggy. When Character Was King. A Story of Ronald Reagan. Viking. 2001.

July 18, 2010

The Positioning Process: The Claim

www.mixnerstrategy.com

Here is Moore's formula for creating a positioning statement (Moore, 161):

  • For (target customer)
  • Who (statement of the need or opportunity)
  • The (product name) is a (product category)
  • That (statement of key benefit-that is, compelling reason to buy).
  • Unlike (primary competitive alternative)
  • Our Product (statement of primary differentiation).

Reference

Moore, Geoffrey A. Crossing the Chasm. Marketing and Selling High-Tech Products to Mainstream Customers. HarperCollins Publishers. 1991.

The Case for Green

www.mixnerstrategy.com

Components: LEED 2009 for New Construction and Major Renovations (110 points total):

Sustainable Sites - 26 points

Water Efficiency - 10 points

Energy & Atmosphere - 35 points

Material & Resources - 14 points

Indoor Environmental Quality - 15 points

Bonus Points

Innovation in Design - 6 points

Regional Priority - 4 points.

Sustainability: "...a development that meets the needs of the present without compromising the ability of future generations to meet their own needs (Brundtland Commission, 1987 in Our Common Future)."

Benefits of Green Building (Energy, Professional, 16)

Environmental Benefits

  • Green Building consume 26% less energy
  • Green building have 13% lower maintenance costs
  • Green building have 27% higher occumpant satisfaction
  • Green building have 33% less greenhouse gas emissions

Economic Benefits

  • Green market grows from $36 billion to $96 billion by 2013
  • 2% market in 2005; 10% in 2008; 20% 2013
  • Price same as not LEED certified
  • Sale price of building 10% higher

Social Benefits

  • 27% fewer headaches from proper lighting
  • Sales in stores with skylights were up to 40% higher than without skylights
  • Students with most daylighting progressed 20% than peers on math tests, 26% faster on reading tests.

References

Energy and Environmental Solutions. LEED Green Associate One Day Training. http://www.e2-solutionsinc.com/home.php?id=1

Energy and Environmental Solutions. LEED Operations and Maintenance. http://www.e2-solutionsinc.com/home.php?id=1

Energy and Environmental Solutions. LEED Accredited Professional Exam Preparation 2 Day Workshop. http://www.e2-solutionsinc.com/home.php?id=1

U. S. Green Building Council. http://www.usgbc.org/

July 15, 2010

Picking A Team

www.mixnerstrategy.com

My old friend Don Phillips once asked me which player on a Pop Warner football team is the most important. My response, was, of course, "Oh, it's the quarterback." Whoops. Don very quickly asked me why. Well, the QB drives everything that happens on the field. In the pros, obviously, the QB is the highest paid player on the team. But, remember, we're talking about Pop Warner, not the pros. There's a difference.

In Pop Warner football, if the QB doesn't end up with the football in his hands, nothing happens. Kids aren't necessaryily dexterous, so there is actually a very good possibility that, if you don't have a very good Center, your team is never going to go anywhere. One of your best players might end up being the QB, OK. But another good player had better end up playing Center. If you as a coach want to spend time with individual players on the field, the Center is a very good place to start. That even goes before practice to actual team selection. If you can, make sure you have a good Center.

Jim Collins actually has a whole chapter on the people topic entitled "First Who ... Then What" (Collins, 41). He has some tough advice, especially in these times. He points to the ascention of Wells Fargo from regional has-been to national power house. From 1983 til about 1998, the bank out-performed other banks. The effort to grow healthier and then larger actually started back in the early seventies when the CEO Dick Cooley started to very carefully put together a team (Collins, 42). It took him more than a decade to put his team together. Their efforts, working together, sparked the ultimate growth. Collins' criteria for selecting folks are interesting (Collins, 52): Ruthless could be nice for some companies. Rigorous is better. Not sure? Keep looking. Not happy with a current team member? Make a change (Collins, 56). Put your best people on the largest opportunities, not your problem children (Collins, 58).

OK, you say. What's the next step? Start thinking about what goes into your plan.

References

Collins, Jim. Good to Great. Why Some Companies Make the Leap ... and Others Don't. Harper Business. 2001.

Fire! Ready! Aim!

www.mixnerstrategy.com

In preparing for a series of presentations to small groups of CEOs, I realized that, strategically, I had a problem. Each of the groups is composed of CEOs with whom I want to discuss strategy while at the same time sending them home with some action items for the day after our discussion. That seems doable until you consider that many, many CEOs are entirely booked for the next three or four weeks, let alone tomorrow. Giving them homework to do might be a stretch. What to do?

Since I can't really expect a CEO to drop what she is doing to quickly implement homework from a speech, I needed a work around. So let's go with what we've got. One simple question comes to mind, "What are you doing tomorrow?" Let have a look. My bet is that, if we follow the Pareto Principal, we'll find that eighty per cent of that CEO's productivity comes from twenty per cent of her activities. There may be a strategic implication that is useful: there may be some things you don't have to do tomorrow. If you didn't do them, would you have more time to do something else, maybe even something strategic?

The "Fire! Ready! Aim!" mantra comes to mind. This next day action plan is really a "Fire!" plan. You already know what you are going to have to do, so you have to go ahead and do it. My only request? Carve out some time to do something strategic in your busy day. How? Don't do something - one of those eighty per centers, maybe - so you are able to give some thought to how to proceed strategically.

Let's have another look at the three words in the mantra. Next comes "Ready!" and "Aim!" If you give yourself some time, getting ready for planning is a very good thing to do. If you've never done planning, what comes first? Pick a team to work with you. Meet with them. Decide together what to do next. Just make sure the dialog is strategic, not just an eighty per cent activity.

 

July 13, 2010

The Five Most Important Questions

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Let's get right to it. What are Drucker's five important questions (Drucker, ix)?

  1. What is our mission?
  2. Who is our customer?
  3. What does the customer value?
  4. What are our results?
  5. What is our plan?

Now, we all like Drucker's work. How could we not? The latest edition of his Five Questions text is just icing on the cake.  Complexifying his five simple questions might not be a good idea. Let's just suppose, however, that we decided to break the rules. What would we add?

Two additions come to immediate mind. The customer question, basically, "What do our customers think?" could have two additional key points, namely,

  • "What do the folks who work here think?" and
  • "What do our stakeholders think (after Palermo, Do the Right Things..., 1-6)?"

These questions really read closer to,

  • "Would you recommend this company to your friend as a place to work?" and
  • "Would you recommend this company to you friend or business associate as a good place to buy goods or services?" Finally, stakeholders are asked something like,
  • "Would you recommend our company as an investment (after Palermo, 1-6)?"

Now, as we know, Drucker kept things simple. However, considering things a little bit more closely makes some sense.

Reference

Drucker, Peter F. with Jim Collins, Philip Kotler, James Kouzes, Judith Rodin, V. Kasturi Rangan, and Frances Hesselbein. The Five Most Important Questions You Will Ever Ask Your Organization. Jossey-Bass. 2008.

Palermo, Richard C., Sr. Do the Right Things...Right. It Is That Simple. A Step-by-Step Guide to World-Class Performance. The Strategic Triangle, Inc. 2003.

Palermo, Richard C., Sr. Leadership...A Return to Common Sense. A Leader's Common Sense Playbook for Uncovering the Right Things...and then Doing Them Right! The Strategic Triangle, Inc. 2006.

July 12, 2010

You Want Change. You Also Want Results

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Consultative selling is a very useful sales process. You spend quite a bit of time figuring out just what a customer wants before you do anything. Then you work with the customer to make sure that you are both on the same page. Then - and only then - do you propose on the customer's needs. It is a very useful method  based largely on The One Minute Sales Person (Johnson).

Palermo uses a similar methodology for change management. He says look first at the current state of the organization and then look at the new, desired state (Palermo, Leadership, 38) and identifies six generic stumbling blocks to actually making the changes you desire:

  1. Reward and Recognition
  2. Key Measures
  3. Strategies and Action Plans
  4. Focused Training
  5. Role Model Senior Leader Behavior
  6. Focused Communications.

The title of this posting could also be, "You Want Change. You Also Want Results. Now." If it were only so easy. Have a look at the list. Fail at any one of the six items and your initiative is likely to fail. A crucial suggestion: admit defeat early. Plan for success. Measure yourself as you go into the change initiative to make sure you are ready for all six steps. If you are not ready, rectify the weaknesses early in the process (Palermo, 10-4). Don't wait around. Your action plans will include measureable objectives. That makes sense. Your team, especially the ones that didn't actually participate in the design of your change plan, won't really understand what is going on. Paint them a picture (Bridges, 55). Visual aides work, of all sorts. Meeting and discussing with all the different constituents of the change process also makes sense. Face-to-face. That takes time, yes. It also ensures that your change process has a better chance of success.

References

Bridges, William. Managing Transitions. Making the Most of Change. Addison Wesley. 1991.

Johnson, Spencer, M.D. and Larry Wilson. The One Minute Sales Person. Avon Books. 1984. 

Palermo, Richard C., Sr. Do the Right Things...Right. It Is That Simple. A Step-by-Step Guide to World-Class Performance. The Strategic Triangle, Inc. 2003.

Palermo, Richard C., Sr. Leadership...A Return to Common Sense. A Leader's Common Sense Playbook for Uncovering the Right Things...and then Doing Them Right! The Strategic Triangle, Inc. 2006.

Results From Planning

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Planning with the "end in mind" will make for a better plan that actually is implemented. We all are used to the classic SWOT analysis where you consider your company's internal strengths and weaknesses and your external threats and opportunities. We all tend to focus on weaknesses because, let's admit it, they're easy to come up with. Threats are pretty obvious, but many times they come from sources we can do nothing about. Strengths - and let's hope there are lots of them - help you decide what to focus on. If you don't have a strength to support a strategy, maybe it was a very good strategy for some other company.

Some thoughts come to mind: A simple SWOT analysis on a flipchart with a few people gathered around may not be enough. Spending just a couple hours or days a year considering your strategy may be woefully inadequate. Polling the room for opportunities is nice. You may in fact come up with a few good ideas. However, unless those opportunities are tied to actual execution you are wasting your time (Barrow). Everyone is busy. Unless you really commit resources to executing the plan, nothing is likely to happen. Folks, after all, are already busy doing what they are already doing. How can you expect them to do more? Those woefully short days of planning are flawed because they don't include any plan for monitoring performance. Just having the plan is not enough. Implementing is nice, but it can't be implementing in a vacuum. You've got to tie your planning to periodic, repetitve re-visiting of your strategies and the action plans you have put together to carry them out. Those re-visits have to take place with everyone regathered in the room to talk about progress, what changes to make, and what strategies or portions of action plans to drop.

Other ways to consider strategy (Center):

  • Spending some time considering how other folks in companies in your industry and in companies you admire - bench marking - can be very useful.
  • Considering you company not as an individual entity, but as part of a business ecosytem makes for more comprehensive strategy. Consider customers, yes, but don't forget suppliers, logistics, human resources, information technology, customer service, along with manufacturing and service delivery.
  • The more people you have involved in the process, the better. The receptionist knows more that you might think. So do the folks on the loading dock.
  • Simple, actionable, dated goals are easier to refer back to. People will forget the particulars, however, unless you make the objectives more relevant to the individuals involved. Tell a story about how your objectives work at your company. Include more narrative or, literally, stand in front of a small group and tell a story and ask for their feedback on implementing the plan based upon the story's description.
  • Keep a score card of performance on objectives may be useful. Posting it on the wall works. So does posting it on the wall with a neon sign. They've done it with safety results at steel mills for years (remember the signs "462 days without an injury"?). How can you do it with marketing results, or HR results for that matter, in a similar fashion?
  • Mission statements, done properly, will focus your company on providing products or services that match the company's core competencies. Straying from your core competencies may rightfully cause you to re-consider whether such straying really makes sense.

References

Barrows, Ed. Four Fatal Flaws of Strategic Planning. Harvard Business Reveiw. 13 Mar 2009. http://blogs.hbr.org/hmu/2009/03/four-fatal-flaws-of-strategic.html

Center for Applied Research. Briefing Notes: A Summary of Best Practice Approaches in Strategic Planning Processes. 2005.  http://www.cfar.com/Documents/BestPract.pdf

July 07, 2010

Animal Spirits

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Akerlof's Animal Spirits Table of Contents (Akerlof, v):

  • Preface
  • Acknowledgements
  • Part One: Animal Spirits
    • Confidence and Its Multipliers
    • Fairness
    • Corruption and Bad Faith
    • Money Illusion
    • Stories
  • Part Two: Eight Questions and Their Answers
    • Why Do Economies Fall Into Depression?
    • Why Do Central Bankers Have Power over the Economy (Insofar as They Do?)
    • The Current Financial Crisis: What Is to Be Done?
    • Why Are There People Who Cannot Find a Job?
    • Why Is There a Trade-off between Inflation and Unemployment in the Long Run?
    • Why Is Saving for the Future So Arbitrary?
    • Why Are Financial Prices and Corporate Investments So Volatile?
    • Why Do Real Estate Markets Go through Cycles?
    • Why Is There Special Poverty among Minorities?
  • Conclusion
  • Notes
  • References
  • Index

Reference

Akerlof, Geroge A. and Robert J. Shiller. Animal Spirits. How Human Psychology Drives the Economy, and Why It Matters For Global Capitalism. Princeton University Press. 2009.

BloombergBusinessweek. The BusinessWeek Best Seller List. 7 July 2010. http://images.businessweek.com/ss/09/06/0611_bestsellers/10.htm

Why Aggregate Demand Targets Aren't Enough This Time

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Traditionally, when the federal government battled a recession it had two main tools at its disposal, namely fiscal policy and monetary policy. You could reduce interest rates (monetary policy) and/or you could expand the money supply (fiscal expansion) (Akerlof, 86). When financial markets work, it is a straightforward task to stimulate aggregate demand using these two basic tools (Akerlof, 89). Unfortunately, because banks suddenly don't trust the system (and who can blame them) stimulating demand using these tools isn't working. Banks aren't making loans to business; they're keeping what funds they have on their balance sheets.

This time around the economy needs a greater boost than usual. Akerlof proposes a second target beyound aggregate demand, a target "for the amount of credit of different sorts that is to be granted. This target should correspond to the credit that would normally be given if the economy were at full employment. (Akerlof, 80)"

We all know why. Talk to any CEO and she will tell you that credit of any form is very tough to acquire. In order to book that new sale, a company needs to assure itself that it can actually produce what has been ordered and pay for the labor and materials related to the sale. Customers normally want terms for their sale, meaning, unless the company has funds to produce the order, the order isn't going to be produced unless someone supplies a credit line of some sort. Enter this new stimulus for credit.

For obvious reasons, banks pulled credit off the table. Interest rate reductions and increases in the money supply weren't enough to jumpstart the financial system, again. Enter federally provided (through non-traditional providers if need be) loans to reduce the credit crunch. Interest rate reductions and fiscal stimuli continue. Credit is added.

This is new. Some of the SBA lending guarantees currently available or discussed address part of the problem. So do guaranteed micro-loans (or not so micro loans). There may not be enough of them, but they are becoming available. If you need to leverage that new sale, look around for the funds. They are becoming more and more available.

Reference

Akerlof, Geroge A. and Robert J. Shiller. Animal Spirits. How Human Psychology Drives the Economy, and Why It Matters For Global Capitalism. Princeton University Press. 2009.

July 06, 2010

On Human Psychology, and Business Strategy

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John Maynard Keynes first tackled the concept of "animal spirits" in his description of how psychology effected the markets.

Keynes Confidence Multiplier - the Keynesian Multiplier - rated the propensity of a consumer to spend, especially her or his propensity to spend part of a stimulus package. You had a choice. Spend your portion of a stimulus package, or save your portion. The more people who decide to immediately spend their portion of a stimulus package, the greater the impact of the stimulus, as that expenditure allowed the person or entity which received your portion to immediately spend, and so on. The higher the propensity to spend funds, the greater the impact. As computers and modelling were growing economic tools during the Depression and the periods following it, there ended up being a multitude of multipliers like the consumption multiplier, the investment multiplier, a government expenditure multiplier, and a confidence multiplier (Akerlof, 16).

Akerlof expands the discussion of the Confidence Multiplier's effect on economies to include Fairness, Corruption and Bad Faith, the Money Illusion, and, finally, economic Stories that effect results. If you have thought about it much, you probably realize that portions of capitalism are unfair. That realization may require closer examination. Involuntary unemployment has an economic cause (or certainly a psychological one), but that doesn't make it fair. The disenfranchised - the involuntary unemployed - seeth at their status which effects consumption. Inflation has an effect - a fairness effect - on aggregate output, as well (Akerlof, 25).

Corruption is a little more obvious, as we have a series of scandals to point to, like the Savings and Loan fiasco in the 80s, the Enron fiasco in the 90s and, more recently, the Subprime Mortgage market. These scandals effected not only their immediate environment, but the whole system. Hear enough about what is bad about a system and you may decide that just maybe your stimulus funds are better put into savings than into a newly "corrupt" investment.

If accounting is the langauge of business, business isn't working very well. Why? Well, after quite a bit of discussion, Akerlof (50) shows that accounting doesn't take into account inflation. Leave out inflation and you don't know what your savings account will really be in five years, your estimate of the current value of a bond will be off, you projection of a stock's price will be erroneous, wage contracts will be spurious, prices will be off (especially those contractually set into the future), and, those wonderful statements your receive about your stock holdings will suddenly be a lot less useful than you had expected.

Economists are supposed to base their predictions on facts, not stories (Akerlof, 54). There is a flaw here that explains why confidence takes a dive during a recession. All consumers hear is statistics. They don't hear stories about what is really happening, nor what economists think should be done. What economists forget is that facts don't drive markets - stories do. Eighteen banruptcies in your zip code or census tract don't mean much until you see those people thrown out on the street (OK, that doesn't happen much any more, I know). Then, the story of their plight will guide your decision making. You want to help, yes. You also don't want to end up in the same position. That effects your relationship to a stimulus package: you'd better save, the story goes, even when consuming is better for the economy. The stories people tell are more important than the facts.

So, some recommendations for your stategizing this summer:

  • Start with confidence. Maybe there is a reason to build your team up.
  • Make sure things are fair. Sometimes, fairness takes some explaining. You want to be fair to your current team and you want to be fair to your new hires. Fairness to each of those populations may read differently.
  • Corruption does have an effect. You have to stand back and decide whether the shrinkage you are undergoing is a boost to limited salaries - or theft. Both effect ultimate profitability in very different ways.
  • Southwest Airlines made more money through the last years than other airlines because it made fair estimates of the oil price increases and built those future prices into its contracts. When prices spiked, they had fixed price contracts that helped them weather the storm.
  • Stories matter. Employees listen to what you say. If you are going to tell a story, consider what the real message is. Make sure it is confidence building. And, remember, a confidence building story is sometimes hard to come by, so don't just wing it. Finally, remember that your team won't remember the statistics - they'll remember the story. Make sure it is a good one.

Reference

Akerlof, Geroge A. and Robert J. Shiller. Animal Spirits. How Human Psychology Drives the Economy, and Why It Matters For Global Capitalism. Princeton University Press. 2009.

Wikipedia. Animal Spiritshttp://en.wikipedia.org/wiki/Animal_spirits_(Keynes)

June 28, 2010

Top OC Green Companies

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Here are the top twenty-five green companies in Orange County (OC Metro, 39): 

  1. B. Braun Medical, Inc.
  2. Towe Jazz Semiconductor
  3. Sustainability Leadership Program, UCI Extension
  4. Rent A Box
  5. Stantec Consulting
  6. The Costa Mesa Green Home
  7. Yard House Restaurants
  8. e-Recycling of Orange County
  9. McCarthy Building Cos.
  10. Miocean Fundation
  11. Nova Vita Salon & Spa
  12. OCB Reprographics
  13. NuWa Textiles
  14. Irvine Rance Water District
  15. Kaiser Permanente Irvine Medical Center
  16. Alere
  17. Toshiba America Business Solutions
  18. Waste Management of Orange County
  19. Cox Communications
  20. City of Irvine
  21. Green Foam Blanks
  22. The Irvine Co.
  23. Poseidon Resources
  24. UPS
  25. Sharp Solar Energy Solutions Group and the city of Huntington Beach

Reference

Borgatta, Tina. The 2010 Green Team. OC Metro. June 2010. http://www.ocmetro.com/t-GreenCompanies_MAIN0610.aspx

Designing Software When You're Late to Market

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"We're late on our software design project. What are we going to do?"

"Just add more people. More people means faster to alpha."

Ever had a conversation like that? Just throwing people at a project may not be the best solution says Fred Brooks in a now classic software design book. Brooks came out of IBM in the sixties where he managed the creation of big, main-frame software that took lots of time to create. Having seen it all, Brooks takes the time to share with us just what can go wrong on large software project - and how to avoid all the mistakes he watched happen over time. He has one basic premise. Actually, a bunch of them, but they all come back to the man-month.

Let's say management wants a computer program designed and implemented. They'll say, "Let's have it done by such-and-such date." Your job is to get the project done and the software implemented. Now, your company is like most others. It has a budget. So, wearing your best manager's hat you estimate how many hours you think the project will take. You do it pretty quickly, hand it in to the boss who approves it quickly, because, as we all know, the boss wants it done fast.

Brooks makes two points about the process just described: your estimate is always wrong because - are you listening? - you didn't plan enough for the ultimate implementation of the software (Brooks, 20). Interestingly, he says spend a third of your time planning before you even begin coding. Then, get the coding in a sixth of the time you have allocated to the project. "What?" you say. All the time should be spent on coding. Not if you want your software to work properly. You've planned it (and took a lot longer than you expected), you've coded it, and now, you want to implement it. You've forgotten half of the work, the early systems test (with the component test) and the late systems test with all the different modules in hand (Brooks, 20). They get half the work.

"OK", you're saying, "times have changed. We're making a different type of software than IBM made in the sixties." I agree with that. You've migrated to a different platform using all sorts of new bells and whistles, modifications and changes. I agree. My suspicion, however, is that Brooks has it right. Spend a third of your time planning, a sixth coding, and then, half of your time checking your work. That's Brook's first lessen.

The second one gets more interesting. When was the last time you delivered software on time? Never, right? Brooks has a formula for making up lost time. It's simple. Use the same number of - indeed, the same - coders. Extend the time. You can't do it right? It'll take too long. Well, adding more people won't save time. All you'll end up doing is messing up your time-line bringing people up to speed. The trainers are pulled from coding. The new coders never catch up (Brooks, 26). The only solution? I already told you: keep the same number of coders. Extend the time. Simple to do. Hard to sell to management.

What if you run a design firm? You have a job to do. Your firm's profitability depends on it. Estimate your project properly. Leave time for planning. Then, leave more time than you ever expected to test the result of your efforts before the code ever gets to a customer.

That's Brooks, 1982. The time has changed. The message has stayed the same.

Reference

Brooks, Frederick P. Jr. The Mythical Man-Month. Essays on Software Engineering. Addison-Wesley Publishing Company. 1982.

June 09, 2010

Bolles on Higher Mission

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Parachute certainly has been a business basic text for decades. Since Bolles has focused so squarely on "Hard Times" this time around, re-examining his prescription for starting a job-change effort is in order. His three parts of a human mission (Bolles, 248):

    1. To seek to stand hour by hour in the conscious presence of God, the One from whom your Mission is derived.
    2. To do what you can, moment by moment, day by day, step by step, to make this world a better place, following the leading and guidance of God's Spirit within you and around you.
    3. To exercise the Talent that you particularly came to Earth to use-your greatest gift, which you most delight to use,in the place or setting that God has caused to appeal to you the most, and for those purposes that God most needs to have done in the world.

Somehow, I don't think he'd mind if we each pause to consider what his statement means for us - and our teams.  

Reference

Bolles, Richard N. What Color Is Your Parachute? "Job-Hunting in Hard Times" Edition 2010. A Practical anual for Job-Hunters and Career-Changers. Ten Speed Press. 2010.

Kennedy: Take the Serious Road

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Being the younger brother and later to leave home, Teddy Kennedy formed a close relationship with his father, Joseph P. Kennedy. Teddy quotes his father suggesting how he structure his life (Kennedy, 162):

You can have a serious life or a nonserious life, Teddy. I'll still love you whichever choice you make. But if you decide to have a nonserious life, I won't have much time for you. You make up your own mind. There are too many children here who are doing things that are interesting for me to do much with you.

Teddy made his choice. He tried harder to have a serious life. He made all the errors we all know so much about. But he also made a choice to focus on what was serious. We owe him a lot for that.

Reference

Kennedy, Edward M. True Compass. A Memoir. Twelve. 2009.

June 03, 2010

This is Your Knee Calling

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I spent a lot of time at the Medical Device and Manufacturing show back in the winter. One of the neatest machines I learned about was a new x-y-z printer that made prototypes out of stainless steel. One of the prototypes on display was a new hip joint that had been made entirely using the x-y-z process. It wasn't smooth like you'd expect - they had built in micro-ridges on the polished surfaces to retain lubricating fluids so the joint would last longer and feel better. When I saw the Capell (When Body Parts Call the Doctor) article, I couldn't help but think of the MDM show.

When a new joint is starting to wear out, it hurts. If you could program the new part to whine - via, say, WiFi to your Doctor's office - when things aren't going correctly that failing joint could be replaced before it advance to the pain stage.

These stories are the fun of medical device innovation. Manufacture better. Build in technology. The x-y-z printer cost $600,000 if I remember correctly, not a simple expense if you are trying to upgrade your prototyping facility. The electronics in that joint might force you to go through a whole new application process to the FDA. The negatives could out-weight the positives, unless you consider a few things. There will be lots of innovations in your processes over the next year. If you choose to consider carefully which ones to invest in, you are farther down the way. You will reject some new innovations; others will get the green light. How do you choose?

Corning says have an innovation team, not in your silo but at the corporate level. Include lots of folks on the team. Force them to deliberate - quickly. Then, once they like an idea, keep the idea before the committee. Force them to track progress. Demand reports back. And, this is important, allow efforts to succeed by giving them assets repetitively, not just once or twice. The x-y-z printer spent the money to buy machinery that they weren't sure a market existed for. The Corning folks invested in a new glass (new in that, while it was created initially in 1963 as an auto glass, then never touched for decades) by allowing expensive ($300,000 a pot) test batches, not once but a series of times. And yes, they pushed production of the lines to get the test batches. The team said it was worth doing, ran the numbers, and continued to follow up. If the CEO was the only advocate, he would've forgotten about it by the time came around for the second test batch.

Allow the ideas to percolate up. Prioritize them. Follow-up. Sounds too simple, but it works.

Reference

Capell, Kerry. When Body Parts Call the Doctor. Bloomberg Businessweek. 12 April 2010. 54. http://www.businessweek.com/magazine/content/10_15/b4173054256568.htm

Holstein, William J. Five Gates to Innovation. Strategy+Business. 1 March 2010. http://www.strategy-business.com/article/00021?pg=all

I Want Telescopic Eyesight

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When my Grandmother had cataract surgery in the late sixties, it was debilitating, to say the least. She was hospitalized and they kept her in bed for what seemed a very long time. She never really was her old self again. Now a days, that surgery is an out-patient procedure with very little downtime, if any. About twenty years ago, optometrists had to look for something else to bill for. Enter Lasik surgery in all its different types and phases. That worked for a while. In fact, I still get a mailing from my Optometrist about every other month saying that now is the time for me to upgrade my eyes with some sort of surgery so I won't have to wear my contacts. If you wear contacts, you're getting the letter, too. right? OK, I'm a late adopter. My Doc is trying to upgrade me, yes. I certainly won't pay as much for my procedure as the folks twenty years ago, of course. So, if you think about it, you realize they're already thinking of the next step. In my mind, it's not just the next improvement to Lasik surgery. I want to have telescopic vision, just like my digital camera. And I'll bet somebody's working on it. What do you think?

What's happened here is that the eye surgery market has matured over time. Cataract surgery is now very mainstream. Lasik surgery is very mainstream. In order to make the margins they used to make, eye surgeons need to be looking to the next eye improvement like, maybe, telescopic eyesight. Or, they can change their focus to something else that is profitable. Soon (if isn't happening already) nurses will be doing Lasik surgery. The Doc's will need something new.

Geoffrey Moore lays out the whole scenario (Moore, 61). If you look closely, the same type thing is happening to your tech company. After a while, especially if you have an approved medical device, for instance, you focus not on the next new thing but on how to improve your manufacturing process. That's the next step for you if you follow the natural progression from early stage products to later stage manufacturing. Here is the fun part: if you put some effort into your research and development efforts, now, you are able to cycle back to early stage products and re-invigorate your profit margins while you do it. That's the opportunity for you. It's what's happening in eye products. Quit improving your product. Go back and re-think it. When you do, your profits will go up. That's a good thing.

Reference

Moore, Geoffrey. A. Dealing With Darwin. How Great Companies Innovate at Every Phase of Their Evolution. Portfolio. 2005. 

May 31, 2010

Inside-the-Box and Outside-the-Box Thinking

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When you're dealing with an unknown, potentially lethal biologic sample, the last thing you want to do with it is to open the sample container to take a whiff. In some cases, such activity is a death sentence. Unfortunately, that (Peters, 238) is exactly to one of C. J. Peters' team members did with a sample he suspected was Ebola, a very nasty virus, indeed. When the technician (actually a highly trained physician) finally realized his error and confessed, it was days later, after lots of people had been, potentially, exposed as well. Not a good start to a very tough story.

The Ebola sample came from a large monkey colony at a test facility in Reston, Virginia, just outside of Washington D. C. The colony, after much and diligent effort, was eradicated, along with the Ebola virus.

So, what is the strategic point of this discussion? The Army team in charge of cleaning up the monkey colony was long on education and experience. They knew what to do and how to do it. They were experienced. This wasn't a case of a strong leader out ahead of the pack telling everyone what to do. Each person on the team knew what to do and when to do it. If they hadn't done things correctly, lots of people could have gotten hurt.

The point, to return to the question, is that there are strategies that require highly trained and experienced personnel to effectively carry out. Some of those strategies require true "outside-the-box" thinking. Some of them require the opposite, let's call it "inside-the-box" training. Two different types of people are required. Moore's Chasm talks about crossing the chasm from early adopters to the main market. Lots of that is outside-the-box thinking. Bureaucratic thinking, maybe even mainstream thinking like getting things done right time after time, is inside-the-box thinking, more like the repetitive strategies (like quality upgrades and just-in-time processes) in Moore's Darwin. Next time you do your SWOT for a strategic analysis, you might want to consider the folks in the room and whether they are insiders or outsiders. Who get assigned what may be the difference between success and failure.

Reference

Mixner, Jack. Expertise - or Talent? http://mixnerstrategy.com/blog/2010/05/post_4.html 

Moore, Geoffrey A. Crossing the Chasm. Marketing and Selling High-Tech Products to Mainstream Customers. HarperBusiness 1991.  

Moore, Geoffrey. A. Dealing With Darwin. How Great Companies Innovate at Every Phase of Their Evolution. Portfolio. 2005. 

Peters, C. J., M. D. Virus Hunter. Thirty Years of Battling Hot Viruses Around the World. Anchor Books. 1997.

It Took Atari Graphics to Solve Brain Physiology

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We all know about neurons in the brain. They are, supposedly, the place where thought takes place. Have more neurons, have more intelligence, or so the theory went. Until scientists looked at Einstein's brain. His brain looked just like yours and mine in terms of neurons. Where it differed was in the number of cells that were not neurons. In some areas of the brain, his "not neurons" were off the charts (Fields, 7). That led to a whole new exploration of the brain. They used microscopes, binary microscopes and electron microscopes. The problem with all those systems was that they worked on dead tissues. If you've ever run an electron microscope, you realize that the beam has to be focused on specially preserved, especially dead, tissue. So how do you look inside brain tissue - at the molecular level - to see just what is going on? Enter Atari and the generation of scientists the Atari-like imaging spawned.

First it was home computers with their readily accessible controllers and color graphics (Fields, 52). Attach a home computer to a microcope to a video camera and interesting things began to happen. Add a laser system and even more things showed up. You could see what was happening inside a live cell. So, what do you focus upon inside a living brain cell? Calcium transmits information from outside brain cells to the inside of brain cells. All this new technology allowed scientists to see calcium migrate - and when (Fields, 52). When scientists added fluorescing calcium-detecting dyes to brain cells, they could see which cells lit up and what kind of signal caused the flash.

This took new traits in your scientist (Fields, 54). In the past, the good scientists took their time. Preparing samples for an electron microscope that are worth anything takes time. Now, real time science required real time decision making. Your test brain cells only remained alive for so long. While they were alive you had to figure out what to do with them. When you was something on your computer/camera/laser imaging system, you had to figure out what it was - fast. Speed was a new trait. Fixing things on your equipment came in a close second.

Reference

Fields, R. Douglas. The Other Brain. From Dementia to Schizophrenia, How New Discoveries About the Brain Are Revolutionizin Medicine and Science. Simon & Schuster. 2009.

A Dollar Too Far

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Novartis spent more than $100 million, maybe a lot more (Miller, 146), during the years between the mid-eighties and 2005 on xenotransplatation, "the use of live animal tissues and organs to heal sick people (Miller, x)." Ending in 2005, Novartis' investment over three years in the final xeno company they supported, Immerge BioTherapeutics, totalled $30 million. During the period, Novartis never saw a return on its investment.

With all the stimulus funding sloshing around our economy, billions of dollars seem more the norm, but Novartis' $100 million was a lot to them. For their money, they received significant results. Specially grown pigs with special genes were able to provide kidneys and hearts to baboons. The organs weren't immediately rejected. One kidney, in fact, lasted more than two months (Miller, 207).

Immerge and companies like it were established because there is a need for organs. Human donations aren't keeping up with demand. It seems there might be a calculation here to ascertain if federal spending on xeno projects makes sense. Totalling the lifetime of expenses for the normal kidney dialysis patient might give some indication whether additional NIH investments makes sense. We all know the answer. It all makes sense. The problem is "Where's the money to come from?" Not an easy question.

Reference

Miller, G. Wayne. The Xeno Chronicles. Two Years on the Frontie of Medicine Inside Harvard's Transplant Research Lab. PublicAffairs. 2005.

Kennedy on Kennedy

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It may be that I am abnormal. I got all teary-eyed reading the introduction to Kennedy's autobiography, especially since we all know the outcome. A sad story in an inspiring family. Let's focus on the inspiration side.

Mid-way through the book (Kennedy, 230) we start to hear how it felt to be Bobby Kennedy, especially as a new Senator. He had a choice: he could do what all junior Senators did, namely, knuckle down, do his homework, and keep quiet, or he could act differently from the norm. He was the brother of a President. He'd already been Attorney General. How should he act as a freshman Senator?

"Bobby decided that he would take on issues that championed America's dispossessed, such as antipoverty bills and further civil rights reform. He searched out injustices and moral causes. His involvement in them lent them a sense of urgency they might not otherwise have inspired. As he grew and learned, he became more and more interested in people, as opposed to abstract issues (Kennedy, 230)."

Reference

Kennedy, Edward M. True Compass. A Memoir. Twelve. 2009.