recentpopularlog in
« earlier   later »
ASAP Interview_Don Valentine
Forbes ASAP | by Rich Karlgaard.

The great thing about evaluating markets first is that usually there are very poor data sources. So you have to create these scraps of information and most people don't do that--they prefer to make a judgement on some other basis, whether the product is patentable, whether the technology is differentiated, whether the people are world class. To us, you can scrape and push and dig and find out tidbits of information which when you put them together, you get a conviction about when something will happen. You talk to people in distribution, you talk to all the sources of information that you can, and you make a judgment....Are you solving a problem? Are there great installations of incompatibility that need to be linked? Who cares about this product? and do they care with a time frame that's important to us--eight years, the length of a fund?...To me, the most important person in management beyond the president has always been the sales manager. I want to meet and get comfortable with the guy who is going to create the backlog. This is different that marketing. Marketing runs the company, as it should, but it is the sales department that creates the orders and creates the cash-flow. So the sales manager is always a very important character to me, much more important that a log of other people. They must be relentless, driven and have enormous energy. Winning is terribly important to them, Where we've had great successes with companies, we've had great sales managers. Where we've had mediocre success with companies, we've had mediocre sakes managers. Nothing happens if you don't get a backlog.
Sequoia  Don_Valentine  Rich_Karlgaard  due_diligence  sleuthing  information_sources  sales  tacit_data  scuttlebutt  incompatibilities  primary_field_research 
june 2012
Don Valentine, Venture Capitalist - Forbes
12/09/2005 @ 10:59AM |149 views
Don Valentine, Venture Capitalist
Rich Karlgaard Rich Karlgaard,

Most VCs say they invest, first and foremost, in people. Technology and markets are secondary considerations. The thinking goes: “A” people will know how to find “A” technology and “A” markets.

Valentine rejects that. He bets on markets that are ready to explode. Deep in his salesman’s bones, Valentine knew the market for microcomputers (Apple), databases (Oracle) and routers (Cisco) would go nuclear before other investors did.
Don_Valentine  Rich_Karlgaard  Sequoia  large_markets  teams  high-growth 
june 2012
Ten Laws Of The Modern World
04.19.05 | Forbes | Rich Karlgaard.

• Gilder's Law: Winner's Waste. The futurist George Gilder wrote about this a few years ago in a Forbes publication. The best business models, he said, waste the era's cheapest resources in order to conserve the era's most expensive resources. When steam became cheaper than horses, the smartest businesses used steam and spared horses. Today the cheapest resources are computer power and bandwidth. Both are getting cheaper by the year (at the pace of Moore's Law). Google (nasdaq: GOOG - news - people ) is a successful business because it wastes computer power--it has some 120,000 servers powering its search engine--while it conserves its dearest resource, people. Google has fewer than 3,500 employees, yet it generates $5 billion in (current run rate) sales.

• Ricardo's Law. The more transparent an economy becomes, the more David Ricardo's 19th-century law of comparative advantage rules the day. Then came the commercial Internet, the greatest window into comparative advantage ever invented. Which means if your firm's price-value proposition is lousy, too bad. The world knows.

• Wriston's Law. This is named after the late Walter Wriston, a giant of banking and finance. In his 1992 book, The Twilight of Sovereignty, Wriston predicted the rise of electronic networks and their chief effect. He said capital (meaning both money and ideas), when freed to travel at the speed of light, "will go where it is wanted, stay where it is well-treated...." By applying Wriston's Law of capital and talent flow, you can predict the fortunes of countries and companies.

• The Laffer Curve. In the 1970s the young economist Arthur Laffer proposed a wild idea. Cut taxes at the margin, on income and capital, and you'll get more tax revenue, not less. Laffer reasoned that lower taxes would beckon risk capital out of hiding. Businesses and people would become more productive. The pie would grow. Application of the Laffer Curve is why the United States boomed in the 1980s and 1990s, why India is rocking now and why eastern Europe will outperform western Europe.

• Drucker's Law. Odd as it seems, you will achieve the greatest results in business and career if you drop the word "achievement" from your vocabulary. Replace it with "contribution," says the great management guru Peter Drucker. Contribution puts the focus where it should be--on your customers, employees and shareholders.

• Ogilvy's Law. David Ogilvy gets my vote as the greatest advertising mind of the 20th century. The founder of Ogilvy & Mather--now part of WPP (nasdaq: WPPGY - news - people )--left a rich legacy of ideas in his books, my favorite being Ogilvy on Advertising. Ogilvy wrote that whenever someone was appointed to head an office of O&M, he would give the manager a Russian nesting doll. These dolls open in the middle to reveal a smaller doll, which opens in the middle to reveal a yet smaller doll...and so on. Inside the smallest doll would be a note from Ogilvy. It read: "If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants." Ogilvy knew in the 1950s that people make or break businesses. It was true then; it's truer today.
Rich_Karlgaard  matryoshka_dolls  Moore's_Law  Metcalfe's_Law  Peter_Drucker  Ogilvy_&_Mather  Gilder's_Law  hiring  talent  advertising_agencies  transparency  value_propositions  capital_flows  talent_flows  David_Ogilvy  inexpensive  waste  abundance  scarcity  constraints  George_Gilder 
june 2012
The Decline of U.S. Naval Power - WSJ.com
March 2, 2011 |WSJ|By MARK HELPRIN

The Decline of U.S. Naval Power
Sixty ships were commonly underway in America's seaward approaches in 1998, but today there are only 20. We are abdicating our role on the oceans.
U.S._Navy  maritime  America_in_Decline?  decline 
june 2012
'They Are All So Wrong' - WSJ.com
September 9, 2005 | WSJ |By MARK HELPRIN
9/11  terrorism 
june 2012
How to Prevent Verbal Gaffes - WSJ.com
July 7, 2010 | WSJ | By JEFFREY ZASLOW.

Keeping Your Foot Away From Your Mouth
Communicating_&_Connecting  Jeffrey_Zaslow 
june 2012
This Is a Religious War - NYTimes.com
Oct. 7, 2001 | NYT | Andrew Sullivan
religion 
june 2012
Soft Power, Hard Truths - WSJ.com
February 22, 2005 | WSJ |By VICTOR DAVIS HANSON
soft_power  hard_truths 
june 2012
Not All Bad - WSJ.com
February 20, 2003 | WSJ |By R. JAMES WOOLSEY
Europe 
june 2012
The Rat That Roared - WSJ.com
February 6, 2003 | WSJ |By CHRISTOPHER HITCHENS
Christopher_Hitchens  France  feckless 
june 2012
The Eastern Front - WSJ.com
October 15, 2002 | WSJ |By RALPH PETERS
terrorism  Indonesia  al-Qaeda 
june 2012
Canary District looks beyond the Pan Am Games - The Globe and Mail
SHELLEY WHITE

The Globe and Mail

Published Monday, Jun. 25 2012

“We're going to create the most sustainable mixed-use development that the city has ever seen,” said Jason Lester, president of Dundee Kilmer Development Limited, the real estate developer leading the creation of the “Canary District” – named after the now-closed Canary Restaurant that operated from a 19th century Cherry Street building since the 1960s.

Their task is twofold. First, the Ontario government has given Dundee Kilmer the job of creating housing for 10,000 athletes and coaches for the 2015 Pan American Games. But the end goal goes far beyond a sporting event. The buildings will be converted and sold as condo and townhouse units, creating the foundation of a new downtown east side community that will knit together other communities such as St. Lawrence Market, Corktown and the Distillery District.
commercial_real_estate  Toronto  Canary_District  Waterfront_Toronto  19th_century  property_development  St._Lawrence_Market  Corktown  Distillery_District 
june 2012
No more illusions about Egypt after Mubarak - The Globe and Mail
Yossi Klein Halevi

Jerusalem — The Globe and Mail

Published Tuesday, Jun. 26 2012
Egypt  Muslim_Brotherhood  Israel  Hosni_Mubarak 
june 2012
Selkirk slighted
Selkirk slighted

Re The War That Everybody And Nobody Won (Books, June 23): Roger Hall correctly points out that by far the best book on the War of 1812 is by an American scholar, Allan Taylor. It is ironic his fellow countrymen are paying the 1812-14 events very little attention.

They are not alone: Last Thursday, BBC World accurately described the war as one between Great Britain and the United States. Canada went unmentioned. The main significance of the war was reported to be the composition of the U.S. national anthem.

Is this what we are being asked to celebrate at such extravagant cost, while ignoring the much more significant event of those years: the founding of the Selkirk Colony at Red River?

Given the composition of Stephen Harper’s caucus, this seems odd – and unforgivable.

Ramsay Cook, Toronto
history  crossborder  books  War_of_1812 
june 2012
Controversy underscores first day for Egypt’s Morsi - The Globe and Mail
SONIA VERMA

The Globe and Mail

Published Tuesday, Jun. 26 2012
Egypt 
june 2012
What's Next for Newsmagazines? - WSJ.com
April 4, 2008 | WSJ | By REBECCA DANA.
Fading Publications Try to Reinvent Themselves Yet Again

"Like any managers anywhere, we looked at a revenue picture that could be more thrilling and said, 'How can we accomplish two or three things?,' " Mr. Meacham said in an interview. " 'How can we control costs? How can we have money to rebuild and hire new voices and new reporting talent? And how can we do that in the service of what we've been trying to do with the magazine of the last year-and-a-half, which is make it more serious and try to make ourselves indispensable to the conversation?' "....."My whole view was there's more information out there than any time in human history. What people don't need more of is information," Mr. Stengel said. "They need a guide through the chaos."..."What's happened in the business as a whole is talk is cheap and reporting is expensive," said Newsweek writer Jonathan Alter, a 25-year veteran at the magazine who qualified for the buyout but declined it. But he adds, some of the change in culture is welcome. "In general, the office politics are at a much lower volume than in the past because the old fight of space is different than it was. If there's not room in the magazine for something, you can just do it online," he said.....At a recent speech at Columbia University, Mr. Meacham delivered a blistering response after he asked who reads Newsweek and none of the 100-odd students in attendance raised their hands.

"It's an incredible frustration that I've got some of the most decent, hard-working, honest, passionate, straight-shooting, non-ideological people who just want to tell the damn truth, and how to get this past this image that we're just middlebrow, you know, a magazine that your grandparents get, or something, that's the challenge," Mr. Meacham said. "And I just don't know how to do it, so if you've got any ideas, tell me."
chaos  commoditization_of_information  cost-controls  cost-cutting  curation  indispensable  information_overload  Jon_Meacham  journalists  journalism  magazines  multiple_targets  newsstand_circulation  office_politics  print_journalism  questions  reinvention  talent_acquisition  think_threes 
june 2012
Why some start-ups finish badly
November 15 2005 | FT | By Jonathan Moules
start_ups  United_Kingdom  failure 
june 2012
Serial Entrepreneurs_They're grreat!
January 2001 | Upside | Ed Gubbins, Brian Quinton

Okay. What is it with these people? They suffer the slings and arrows of starting up a business - raising capital. finding a product. assembling a staff - then. when they have amassed their outrageous fortune, they go out and do it all over again. Serial entrepreneurs, they are called - masters of the multiple start-up. Most of them admit that they get antsy when the paperwork blizzard starts to fly and the company gets too big to hold its Christmas party in the back dining room of the local winery. Profiles are presented of 5 serial entrepreneurs: 1. Kirby Pickle. 2. Vern Fotheringham, 3. Rubin Gruber, 4. Mory Ejabat and 5. Jeanette Symons.
serial_entrepreneur  women  profile  entrepreneur 
june 2012
Blacks at the Nation's Top-Ranked Business Schools: Enrollments Are Down But Graduation Rates Are Almost Perfect
Winter 2005/2005


Blacks at the Nation's Top-Ranked Business Schools: Enrollments Are Down But Graduation Rates Are Almost Perfect
enrollment  African-Americans  business_schools  MBAs  Ivy_League  elitism 
june 2012
African entrepreneurs: Parallel players | The Economist
African entrepreneurs
Parallel players
Why many of Africa’s budding businessfolk are jacks-of-all-trades

Jun 23rd 2012
entrepreneur  Africa  entrepreneurship 
june 2012
Financial literacy: Getting it right on the money | The Economist
Financial literacy
Getting it right on the money
A global crusade is under way to teach personal finance to the masses

Apr 3rd 2008
financial_literacy  uFSC  personal_finance 
june 2012
'Innard' Circle Eats All Kinds of Offal Food - WSJ.com
June 24, 2012 | WSJ | By SPENCER JAKAB.

Offal Tale: For This Club, Everything Is on the Menu
In New York City, 'Innard Circle' Samples Wide Range of Fare; 'Always Terrific'
offal  recipes  food  snout-to-tail 
june 2012
The Management Myth
June 2006 | ATLANTIC MAGAZINE |By Matthew Stewart

Most of management theory is inane, writes our correspondent, the founder of a consulting firm. If you want to succeed in business, don’t get an M.B.A. Study philosophy instead
skepticism  management  curriculum  business_schools  MBAs  philosophy  philosophers  myths 
june 2012
Can You Say What Your Strategy Is?
April 2008 | HBR | by David J. Collis and Michael G. Rukstad
business  strategy  HBR  Wal-Mart  Edward_Jones 
june 2012
Hierarchy of Company Statements
April 2008 | HBR |by David J. Collis and Michael G. Rukstad.

The trade-offs companies make are what distinguish them strategically from other firms.
HBR  mission_statements  definitions  company  tradeoffs  vision  values  strategy  balanced_scorecard  hierarchies 
june 2012
7 Things Graduating Seniors Should Know About College - NYTimes.com
June 21, 2012, 5:58 am 7 Comments
7 Things Graduating Seniors Should Know About College
By LYNN F. JACOBS and JEREMY S. HYMAN
high_schools  students  Colleges_&_Universities 
june 2012
Unforeseen consequences - FT.com
May 24, 2007 | Financial Times |By Robert Matthews.

The Germans have a word for it: Schlimmbesserung - literally, a "worse improvement". You may not recognise the word, but you'll know plenty of examples of what it means: efficiency drives that reduce efficiency, cost-cutting measures that prove punitively expensive, software upgrades that cause months of downtime.

All businesses can fall victim to such "revenge effects"....

Edward Tenner, a visiting scholar in the department of history and sociology of science at the University of Pennsylvania and author of Why Things Bite Back, the classic study of the phenomenon first published in 1996, believes there are several measures that businesses can take. Indeed, he has given lectures at Microsoft, Intel and AT&T on the subject.

Ensuring there is in-house expertise that can spot emerging revenge effects and deal with the consequences is crucial, Mr Tenner says. "Many companies fail to deal with revenge effects because they are 'outsourcing their brains'," he says. "Lean organisations are supposed to be more flexible, but they may also be giving up a lot of their capability to respond to change."

According to Mr Tenner, businesses can keep a constant watch for reports of potential revenge effects in news and research findings. This has never been easier, thanks to online tools such as Google news alerts and RSS (really simple syndication) feeds.

Even so, revenge effects have a nasty habit of affecting businesses in unexpected ways. "The precondition of vigilance is the selection and development of ability at all levels,"

thinking about the downside to new developments can save a lot of heartache. "Excessive optimism risks revenge effects," he says. "You have to be prepared to work in Murphy's Law mode - and to consider that every possible thing that can go wrong will go wrong."
unintended_consequences  books  limitations  in-house  specificity  outsourcing  unexpected  revenge_effects  Murphy's_Law  thinking_tragically  lean  adaptability  flexibility  responsiveness  change  downtime 
june 2012
Three Cheers for Lawyers - WSJ.com
April 17, 2007 | WSJ | By RANDY E. BARNETT.

For better or worse, we have an adversary legal system that relies for its proper operation on having competent lawyers on both sides. In every case I knew about where an innocent person had been convicted, there had been an incompetent defense lawyer at the pretrial and trial stages....Do you suppose that lawyers like these gained their skills only representing the innocent? Criminal lawyers are constantly asked how they can live with themselves defending those guilty of serious crimes. The full and complete answer ought to be that, because we can never be sure who is guilty and who is innocent until the evidence is scrutinized, the only way to protect the innocent is by effectively defending everyone.
lawyers  justice_system  legal_system 
june 2012
Kit and Caboodle
April 1, 1999 | CFO Magazine | by Russ Banham.
ERM  risk-management  CFOs 
june 2012
How Much Risk Can You Take?
Dec 1, 2005 | Inc.com| Street Smarts | by Norm Brodsky.

there are two types of people who start companies: those who like risk, and those who don't. Whichever type you may be, there are challenges you need to confront if you want to build your business. Entrepreneurs of the first type had better learn how to rein in their risk-taking, or they'll make bad decisions that put their companies in jeopardy. Those of the second type have to understand that you can't grow without taking risks. The relevant questions are, how much risk can you handle, and how much is required to get you where you want to go?
risk-taking  Norm_Brodsky  entrepreneur 
june 2012
Managing Risk In the 21st Century
February 7, 2000 | Fortune | By Thomas A. Stewart.

Take risk management, a responsibility of the treasury function. Most risk managers haven't begun to cope with the real threats 21st-century companies face. Like the drunk in the old joke who looks for his lost keys under the streetlamp because the light is better there, risk management is dealing with visible classes of risk while greater, unmanaged dangers accumulate in the dark.

Risk--let's get this straight upfront--is good. The point of risk management isn't to eliminate it; that would eliminate reward. The point is to manage it--that is, to choose where to place bets, where to hedge bets, and where to avoid betting altogether. Though most risk-management tools--insurance, hedging, diversification, etc.--have to do with reducing loss, the goal is to maximize the gains from the risks you take (alpha? McDerment?)

So where should we look for these new risks?

--Your reputation or brand. When a bad batch of carbon dioxide in Coca-Cola sickened some Belgian children last summer, Coke's European operating income fell about $205 million, and Coca-Cola Enterprises, the bottler, incurred $103 million in costs. What about the cost to brand equity? One highly imperfect proxy: Coke's market capitalization fell $34 billion between June 30 and Sept. 30, 1999.

--Your business model. Asset-free, knowledge-intensive competition is to entrenched business models what the Panzer was to the Maginot Line. MP3s changed the music business more fundamentally than anything since radio. E*Trade, 18 years old, forced Merrill Lynch, 180, to change its way of doing business. Yet the new guys' very nimbleness creates its own risks, which traditional risk management can't help. You can protect the hard assets of a brick-and-mortar mall. Click-and-order stores are much more exposed: Cash flow is just about all they've got.

--Your human capital. The obvious human-capital risk is flight--especially in a tight labor market--but it's only part of a larger, subtler problem. When the CEO intones, "People are our most important asset," he's wrong, even if he's sincere. People are your most important investors. Your stock of human capital matters less than your flow of it. Any turbulence--and is there anything but turbulence these days?--can disrupt the flow, damaging your ability to attract human capital or people's desire to collaborate. Says Thomas Davenport, a partner at Towers Perrin: "Uncertainty is a real enemy of human capital. People rebalance their ROI by cutting back the investment."

--Your intellectual property. Many risks to intellectual property--theft, for example--can be dealt with in obvious, if sometimes onerous, ways. Here's the cutting-edge question: How do you manage risk in the process by which new intellectual property is created? How do you cope with the fact that the safer a given R&D project is, the less likely it is to be a big-money breakthrough? How do you balance the virtues of specialization against those of diversification?

--Your network. No company is an island, entire of itself; odds are your business is embedded in a network you do not control. It's not just that AOL might crash and cost you a few days' sales; your whole business may depend on tangible and intangible assets that belong to outsourcing partners, franchisees, sugar daddies, or standard-setters.
There are a couple of patterns here. First, an ever-greater part of business risk comes from sources your company can't own--people, partners, environments. Second, volatility isn't just a currency or stock market risk anymore. Labor markets, technologies, even business models oscillate at higher frequencies--their behavior more and more resembling that of financial markets.

In those patterns are hints of how to manage intellectual risks--which we'll examine next time.
risk-management  21st._century  risks  Thomas_Stewart  reputation  branding  business_models  financial_markets  talent_management  intellectual_property  networks  human_capital  turbulence  uncertainty  volatility  instability  nimbleness  labour_markets  accelerated_lifecycles  intellectual_assets  e-commerce  external_interaction  talent_flows  cash_flows  network_risk  proxies  specialization  diversification  unknowns  brand_equity  asset-light  insurance  hedging  alpha  Michael_McDerment 
june 2012
Managing in chaos October 2, 2006
September 19 2006 | Fortune |By Geoffrey Colvin, Fortune senior editor-at-large
Geoff_Colvin  Ford  chaos  digital_economy 
june 2012
How to Tell When A CEO Is Toast: The Early Warnings - WSJ.com
April 18, 2000 | WSJ |By CAROL HYMOWITZ

Here's a short list of telltale warning signals indicating trouble at the top.

TURNING A DEAF EAR to directors: When the CEO of a technology company that had grown considerably during his tenure suddenly faced enormous competition from a faster-growing rival and difficulty absorbing two acquisitions, he ignored a number of suggestions from his board. "We told him to try this, do that, consider this -- and he simply wouldn't listen," fumes a director who did not want to be named. The more the CEO insisted on business as usual and refused to listen to his directors' concerns, the more he lost their trust. "His failure to listen became a warning signal to us" and led to his ouster, the director says.
[Illustration of a CEO with a rocket strapped to the back of his chair]

Similarly, former Coca-Cola KO +0.36% CEO Douglas Ivesterdidn't heed his board's urgings to name a No. 2 executive. And when Coke customers in Belgium and France complained of nausea after drinking Coke products, Mr. Ivester ignored at least one director's advice to go quickly to Belgium and address the situation.

Turning a deaf ear to employees: Mr. Ivester also decided, as part of a management reorganization, that the company's highest-ranking African American, Carl Ware, one of his longtime supporters, would no longer report directly to him -- effectively demoting him. The timing couldn't have been worse since Coke is facing an employee lawsuit alleging discrimination. Mr. Ware announced plans for early retirement, and Mr. Ivester lost more credibility as Coke's leader. He stepped down as CEO at the end of last year. Mr. Ivester couldn't be reached for comment.

Former Delta Air Lines DAL -1.69% CEO Ronald Allenalso was a victim of his own insensitive management style three years ago. Mr. Allen had pulled Delta out of a financial tailspin by slashing costs. But a lot of those cuts represented employee layoffs and he did little to smooth over anxieties. Directors ultimately blamed him for a drop in morale throughout the company. With many executives who reported to Mr. Allen leaving and blue-collar workers considering unionization, Mr. Allen was asked to step down. He declined to comment about the ordeal.

PROMISING TOO MUCH: At toymaker Mattel , MAT +0.59% former CEO Jill Barad madeearnings forecasts to her board and shareholders that the company then failed to meet. "Nobody likes surprises," says Thomas Neff, chairman of the executive recruiter Spencer Stuart's U.S. operations. "The best CEOs beat their forecasts, while the worst thing you can do is be overly optimistic," he adds.

Ms. Barad at times dismissed forecasts made by other executives, insisting to directors that Mattel would do better. She resigned in February, after three years as CEO and a stream of disappointing earnings. She was unavailable for comment.

Misreading expectations: A former CEO ousted from his job with a large financial-services company a few years ago recalls how he thought he was in agreement with his board on a succession plan, only to realize they wanted him gone much sooner, mostly out of fear that he was intentionally dragging his feet. The CEO had formed a search committee for a successor, but was taking his time about recommending candidates. Then, at a board meeting, he was asked to leave the room so directors could confer alone. What he thought would be a 15-minute exchange turned into an hour-long discussion. "That's when I knew something was up," he says. "They wanted to move on succession right away."

Underestimating conflict: Bank One 's ONE +2.80% former CEO John McCoyoversaw numerous acquisitions before he merged his Columbus, Ohio, bank with First Chicago to create a $260 billion powerhouse Midwestern bank. Previous smaller mergers, he says, took about 18 mon
aloofness  blue-collar  Carol_Hymowitz  CEOs  expectations  misinterpretations  misjudgement  overoptimism  overpromising  signals  surprises  tailspins  underestimation  unionization  warning_signs 
june 2012
Risky Business - WSJ.com
April 24, 2003 | WSJ |By STAN O'NEAL.

Historically, investors' trust in the markets has been well founded because enterprising people have been willing to take risks. Backed by venture capital, entrepreneurs create value, employment, wealth, and opportunities. Without risk, there would be no electricity, no personal computers, no vaccines. No GE, no IBM, no Pfizer.

Of course, in any system predicated on risk-taking, there are failures, sometimes spectacular failures. But for every failure to be viewed as fraudulent or even criminal bodes ill for our economic system. The message to CEOs, to entrepreneurs and to venture capitalists right now is that you cannot afford to be wrong.

In the aftermath of history's greatest market bubble, this backlash against risk is understandable. Excesses in the system were taken to incredible levels. And while our industry did not create the bubble, it also did not bathe itself in glory recognizing or resisting those excesses.

But if we attempt to eliminate risk -- to legislate, regulate, or litigate it out of existence -- the ultimate result will be economic stagnation, perhaps even economic failure. To teach investors that they should be insulated from these forces, that if they lose money in the market they're automatically entitled to be compensated for it does both them and the economy a disservice.

In my view, the great, historical contribution of American capitalism is its ability to create value. Even when the system works imperfectly, value is created. If our financial system is to retain this particular genius, we need to be willing to continue to innovate. If we fail to rebalance the forces of risk and reward, the greatest danger may be deflation. Not probable, but not impossible either.
capitalism  Merrill_Lynch  CEOs  risks  Stanley_O'Neal  economic_stagnation  financial_system  overregulation  imperfections  value_creation  risk-taking  moral_hazards  backlash  innovation  deflation 
june 2012
Go Ahead, Take a Risk
June 22, 2004 | WSJ | By ADRIAN SLYWOTSKY

What are the risks you should be taking but aren't? Most managers treat risk as an unwanted byproduct of the business. They think narrowly of financial, operating, and hazard risks, such as currency fluctuations, employee fraud, and earthquakes. And they defend themselves through practices like hedging, internal controls, and insurance.

But disruptive strategic risks can be a much larger source of value destruction for a firm. I looked back to the bull market of the 1990s to analyze movements of the Fortune 1000 stocks; even then, before the market collapsed, 10% of stocks lost over one-quarter of their value in a single month, primarily because of strategic-risk events.

The most successful companies do not try to simply minimize strategic risk; they embrace such risk by making prudent bets in their growth-oriented strategies. Strategic risks include not just the obvious, high-probability events that a new ad campaign or new product launch will fail, but other less-obvious risks as well: Customers' priorities will change quickly -- as when baby-boomer parents quickly migrated from station wagons to minivans, catching most automakers off guard. New technology will overtake your product -- as mobile telephony has stolen market share from fixed-line voice. A one-of-a-kind competitor will render your business model obsolete -- as the Wal-Mart tidal wave has washed over mid-range department stores.

Although insurance and hedging can't address strategic risks, there are an array of countermeasures that can, including these three:
1) Smart sequencing for new growth initiatives. Look for incumbents that are moving deliberately, leveraging existing assets and customer relationships to gain the experience, knowledge, and reputation necessary to take the next step with confidence.
2) Proprietary information to reduce the risk of each new initiative. Gather and generate proprietary information that produces a depth of insight into the customer's needs and activities that traditional suppliers cannot match. This will make you a supplier of choice, reducing bidding volatility and allow you to plan with greater certainty.
3) Double betting to minimize the risk of obsolescence. When several versions of a new technology are competing to become the standard, it's impossible to predict which will prevail. So smart managers make double bets. Betting on both Windows and OS/2 positioned Microsoft to be the winner, regardless of which operating system prevailed.

Traditional risk management seeks to contain losses. But that's just one-half of the growth equation. By embracing strategic risk, Cardinal, JCI, and other risk-savvy companies have raised their growth potential in addition to reducing their economic volatility. That's important at a time when aggregate market growth is sluggish: The biggest risk of all is not to take the right growth risks for the business.
leaps_of_faith  Adrian_J._Slywotzky  risk-taking  proprietary  sequencing  scuttlebutt  information  growth  strategic_thinking  Mercer  Oliver_Wyman  product_launches  nonpublic  low_growth  slow_growth  insights  customer_insights  value_destruction  disruption  insurance  new_products  obsolescence  countermeasures  volatility  customer_risk  one-of-a-kind  hedging  overly_cautious  risk-aversion  de-risking  double_betting  risk-management  bull_markets  customer_relationships  dark_data  risk-savvy  internal_controls  financial_risk  risks 
june 2012
Starting Up in High Gear
July-August 2000 | HBR |An Interview with Vinod Khosla by David Champion and Nicholas G. Carr.

To create the kind of new wealth you’re talking about, we’re going to have to see massive investments in information technology. Where’s the money going to come from?

It’s going to come out of corporate budgets. Companies invest wherever they’re going to get the biggest returns, and right now that’s IT. Look at the trend in capital expenditures. Twenty years ago, information technology accounted for about 10% of capital expenditures in the United States. ...
Today, if you have a plan for a new business, you circulate it in the venture community and you get funded in a week. What you don’t get is an honest, painstaking critique. What are the downsides in your plan? What are the shortcomings? What are the weak links? The strengths of your idea get a lot of attention, but the weaknesses get ignored—and ultimately it’s the weaknesses of your plan that will kill you. A start-up is only as strong as its weakest link....
The first thing we focused on was getting the right set of people for the company—the right gene pool. We started out on the technical end. Pradeep had helped architect the Ultrasparc processor at Sun, so he had strong skills in building technical architectures and could apply those skills to routers. But he needed somebody with experience in building and operating an IP network, and he needed somebody who’d done operating systems software for routers and somebody who’d done protocols for routers. So we drew out a map that said, “Here are the ten different areas of expertise we need.” Then we made a list of the companies doing the best work in each area, and we listed the five people in each company who would make good targets. We went after those people, and piece by piece we assembled a multidisciplinary team that could make Juniper a leader.
IT  interviews  HBR  Kleiner_Perkins  start_ups  large_companies  management_consulting  Vinod_Khosla  executive_search  shortcomings  weaknesses  new_businesses  CAPEX  weak_links  Nicholas_Carr  talent_acquisition  gene_pool  expertise  team_risk  wealth_creation  cross-pollination  interdisciplinary  teams  protocols 
june 2012
The World's Hottest Commodities Are In Your Cereal Bowl
February 16, 2008 | Globe and Mail pg. B4 | JOE FRIESEN AND MARCUS GEE
cereals  grains  Marcus_Gee  Joe_Friesen  lentils  food_scarcity  farmland 
june 2012
Bad at Complying? You Might Just Be A Very Bad Listener
September 25, 2007 | WSJ |By JARED SANDBERG.

understand the limitations of your listening skills. Bad listeners tend to tune out dry subjects, get into arguments, fake attention, react to emotional words and daydream. (Wow, do humans actually drink from that encrusted water tower on the building across the street?)

While allegedly listening, bad listeners often are rehearsing what they're about to say, grab every conversational opening and scout for flaws in an argument.

By the end of the first day, you're not simply looking at a second day of course work but a long, slow rehabilitation.

The trick to listening better begins with readiness to listen, which, concedes instructor Jennifer Grau, isn't easy in an age of interruption abetted by call waiting and instant messages. It also helps a lot if you can set your judgments aside....the task of listening to understand rather than simply to reply has three key elements: Involved silence (eye contact, vocal encouragements), probes (supportive inquiry using questions like "what" as opposed to the aggressive "why") and paraphrasing ("What I think you said is..."). That last step shouldn't simply be spitting back what people say, but integrating information about the speaker's attitudes and feelings, 55% of which is communicated nonverbally in body language (only 7% of feelings are communicated with words, Ms. Grau says).

When you consider that these skills are culled from a longer list (awareness, attending, perceiving, etc.) it's clear that listening takes an awful lot of time, which few of us have.

"Efficiency and politeness are inversely correlated,"
listening  Communicating_&_Connecting  soft_skills  interruptions  silence  open_mind  nonverbal  body_language  people_skills  disagreements  argumentation 
june 2012
Building a Beauty Regimen for Dark Skin - WSJ.com
March 27, 2008 | WSJ | By ELVA RAMIREZ.

After she opened her Philadelphia dermatology practice, Susan C. Taylor began thinking a lot about the beauty regimens of women with dark skin.

Since then, Dr. Taylor, who is African-American, has become co-founding director of the Skin of Color Center at St. Luke's and Roosevelt Hospitals in Manhattan and Chief Executive of Rx for Brown Skin, a skin-care line designed for Asian, Indian, Latino and black skin....The most common mistake that women make is to use the same products year-round, she says. As humidity fluctuates, the skin reacts by becoming flakier or oilier. So she changes up her products throughout the month, as seasons change and especially when she finds herself flying. (Airplanes are especially drying.) Every day, she says, "Your skin speaks to you and tells you what you need."
mens'_health  personal_grooming  personal_care_products 
june 2012
Netflix vs. Naysayers - WSJ.com
March 27, 2007 | WSJ | By NICK WINGFIELD

CEO Hastings Keeps Growth Strong; Plans for Future After Death of DVDs. In the decade since Netflix Inc. NFLX +3.07% began renting DVDs online, CEO Reed Hastings has faced down a murderers' row of rivals.

Wal-Mart Stores Inc., WMT -0.59% Amazon.com Inc. AMZN +0.72% and Blockbuster Inc. have all piled into the market with services that mail DVDs to consumers who've ordered them over the Web.

...WSJ: You've started letting some of your subscribers watch movies from your Web site. How seriously are you pushing into Internet-delivery of movies?

Hastings: We're taking it pretty aggressively. We're investing about $40 million into it this year. We feel that that's the appropriate size investment, given the size of the market. If you overinvest in a market, of course, a lot of the money is wasted.

If you underinvest, then someone else can get ahead of you. We'll be up to 5,000 films by the end of the year, open to all of our subscribers....

WSJ: Blockbuster was once dismissive of Netflix, but now they're taking you very seriously. Did their initial attitude affect the way you view potential threats to Netflix?

Hastings: Absolutely. We have to recognize that now there are tens and maybe hundreds of start-ups who think that they're going to eat Netflix's lunch. The challenge for a management team is to figure out which are real threats and which aren't.... It's conventional to say, "only the paranoid survive" but that's not true. The paranoid die because the paranoid take all threats as serious and get very distracted.(jk....which threats are worthy of my attention?==> distinguish between illusory and legitimate threats and fears.)

...WSJ: What are some examples of how you were choosy in reacting to potential threats to Netflix?

Hastings: There are markets that aren't going to get very big, and then there are markets that are going to get big, but they're not directly in our path. In the first camp we have small companies like Movielink -- a well-run company but not an attractive model for consumers, sort of a $4-download to watch a movie. We correctly guessed when it launched four years ago that this was not a threat and didn't react to it.

The other case I brought up is markets that are going to be very large markets, but we're just not the natural leader. Advertising supported online video, whether that's at CBS.com or YouTube -- great market, kind of next door to us. But we don't do advertising-supported video, we do subscription, so it would be a huge competence expansion for us. And it's not a threat to movies.
Netflix  Reed_Hastings  CEOs  DVDs  downloads  streaming  subscriptions  threats  large_markets  discernment  paranoia  distractions  overextended 
june 2012
Maximizing Money
June 11, 2008 | WSJ.com |By EDWARD KOSNER
How to Get Rich
By Felix Dennis

Beneath the braggadocio and buffoonery, Mr. Dennis's book is full of cold-hearted advice for succeeding in any field, some of it familiar, some quite sophisticated. He harps on the essential virtues of stamina, persistence and focus, and on the paramount importance of execution. "If you never have a great idea in your life, but become skilled in executing the great ideas of others," he says, "you can succeed beyond your wildest dreams." It's good to panic in a crisis, he says, because it focuses the mind on what has to be done. Grovel for capital if you need to but always remember: "No deal is a must-do deal."
United_Kingdom  entrepreneur  book_reviews  howto  advice  sophisticated  stamina  persistence  personal_enrichment  focus  execution 
june 2012
Welcome to 'Moral Hazard' - WSJ.com
October 2, 2008 | WSJ | By DANIEL HENNINGER.

"Moral hazard" is an odd phrase. Its meaning isn't obvious though it does sound like something one ought to avoid. "Moral hazard" dates back hundreds of years in obscurity, but its use eventually settled inside the insurance business in the 19th century. The French call it risque moral.

Back then, it really was taken to mean that reducing risk too much exposed people to the hazard of poor moral judgments. If an insurer charged too little for a policy to replace farms in the English countryside, Farmer Brown might be less careful about cows knocking over oil lamps in the barn.

In time, the economists got their hands on "moral hazard," and the first thing they did was strip out the heavy moral freight to make the concept value-neutral. Now moral hazard became less about judgment and more about the economic "inefficiencies" that occur in riskless environments.

We're back to the original meaning. Losing tons of money for an institution is an economic inefficiency. Lose the nation's financial structure, however, and moral fingers get wagged.
moral_hazards  Daniel_Henninger  automotive_industry  TARP  inefficiencies  riskless  19th_century 
june 2012
« earlier      later »
per page:    204080120160

Copy this bookmark:





to read