recentpopularlog in

jerryking : de-risking   8

Lunch with the FT: Mariana Mazzucato - FT.com
August 14, 2015 12:07 pm
Lunch with the FT: Mariana Mazzucato
John Thornhill

* Mazzucato’s book The Entrepreneurial State

As Mazzucato explains it, the traditional way of framing the debate about wealth creation is to picture the private sector as a magnificent lion caged by the public sector. Remove the bars, and the lion roams and roars. In fact, she argues, private sector companies are rarely lions; far more often they are kittens. Managers tend to be more concerned with cutting costs, buying back their shares and maximising their share prices (and stock options) than they are in investing in research and development and boosting long-term growth.
“As soon as I started looking at these issues, I started realising how much language matters. If you just talk about the state as a facilitator, as a de-risker, as an incentiviser, as a fixer of market failures, it ends up structuring what you do,” she says. But the state plays a far more creative role, she insists, in terms of declaring grand missions (the US ambition to go to the moon, or the German goal of creating nuclear-free energy), and investing in the early-stage development of many industries, including semiconductors, the internet and fracking. “You always require the state to roar.”
... Some tech and pharmaceuticals companies are going to extravagant lengths to reduce their taxes, one of the ways in which they pay back the state. The more libertarian wing of Silicon Valley is even talking of secession from California so they can pay no tax at all. “Won’t it be nice when there’s the next tsunami and these guys call the coastguard,” she says....
One criticism of Mazzucato’s work is that she fetishises the public sector in much the same way that rightwing commentators idolise the private sector. She appears stung by the suggestion: “I’m from Italy, believe me, I don’t romanticise the state.” The challenge, she says, is to rebalance the relationship between the private sector, which is all too often overly financialised and parasitic, and the public sector, which is frequently unimaginative and fearful. “When you have a courageous, mission-oriented public sector, it affects not just investment but the relationships and the deals it does with the private sector,” she says. Europe’s left-wing parties could have run with this agenda. Instead, she says, they have “absolutely failed” to change the political discourse by obsessing about value extraction rather than value creation, by focusing more on taxing big business than fostering innovation.

====================================================
The Chinese get the state to do that risky and costly, research and the development to keep them ahead.

The US does the same, but just keeps quiet about it so it doesn’t spoil the narrative.
“The parts of the smart phone that make it smart—GPS, touch screens, the Internet—were advanced by the Defense Department. Tesla’s battery technologies and solar panels came out of a grant from the U.S. Department of Energy. Google’s search engine algorithm was boosted by a National Science Foundation innovation. Many innovative new drugs have come out of NIH research.!” http://time.com/4089171/mariana-mazzucato/
activism  books  breakthroughs  DARPA  de-risking  Department_of_Energy  early-stage  economists  fracking  free-riding  innovation  Mariana_Mazzucato  mission-driven  moonshots  NIH  NSF  private_sector  public_sector  semiconductors  Silicon_Valley  sovereign-risk  state-as-facilitator  value_creation  value_extraction  women 
august 2015 by jerryking
Nine retailers closing the most stores
Douglas A. McIntyre and Alexander E.M. Hess, 24/7 Wall St. 8:30 p.m. EDT March 12, 2014

A number of factors can lead companies to close stores. One is mergers and acquisitions activity. As organizations join forces under a single umbrella, locations that once competed for sales can become redundant, leading to store closings. The most recent example of this is the marriage of Office Depot and OfficeMax, completed late last year. Management has made it plain that the merger would produce cost savings by consolidating jobs and closing stores.

The pressures businesses face from the growth of online retail is another factor that can contribute to store closings....Outside of those retailers undergoing mergers, or shrinking to limit costs and preserve their bottom lines, a number of retailers have had to shrink their store count in order to shift into new markets. ...Companies close stores for different reasons. In the case of Sears Holdings, is likely to shutter a number of locations as part of a larger strategic overhaul to fund its transformation and make operations more efficient. Closing stores "frees up capital, reduces losses and de-risks our model," the company said in an earnings presentation.

In contrast, J.C. Penney is only closing stores that noticeably underperformed.
bricks-and-mortar  consolidation  de-risking  downsizing  e-commerce  LBMA  mergers_&_acquisitions  retailers  store_closings  store_footprints  under-performing 
march 2015 by jerryking
Anatomy of a Healthy Startup
October 02, 2002 | Businessweek |By Karen E. Klein.

A: First, do not consider opening a business unless you have worked in the industry or a closely related field, and have established relationships with talented accountants, lawyers, insurance brokers, and other experienced advisers. If you need some experience in the industry, take a year or two, get a job at a staffing agency, put as much money as you can into your startup fund, and learn first-hand how the business works. If you're ready, once you know how the industry actually works, start out on your own.
staffing  start_ups  howto  de-risking 
june 2012 by jerryking
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 by jerryking
Six Deadly Orthodoxies of Recessions | Articles | Homepage
Jan./Feb. 2009, article in CEO Magazine by Pierre Loewe and
Dave Jones
* Reduce costs selectively, not indiscriminately, monitor carefully the
impact of cost cuts on staff.
* Don't stop investing - seek undervalued assets and opportunities to
upend rivals who only think of retrenching.
* De-risk and lower the costs of innovation efforts by reaching outside
company and by conducting well-designed experiments.
*If your company has developed a new product or business that
significantly enhances the customer value proposition, a recession is
the time to introduce it and get a lasting advantage over more timid
competitors.
*A recession is the time to bypass incremental cost reduction efforts
and to focus employees' energy on innovation aimed at dramatic cost
reduction.
*Even if you have to curtail innovation efforts to conserve cash,
maintain a sufficient level of activity so you can ramp-up efforts
quickly, retain your key innovators, and tap the pulse of the changing
dynamics of the mkt.
innovation  rethinking  lessons_learned  recessions  Michael_McDerment  counterintuitive  CEOs  Daniel_Pink  Freshbooks  economic_downturn  orthodoxy  conventional_wisdom  breakthroughs  new_products  de-risking  cost-cutting  new_categories  undervalued  incrementalism  marginal_improvements  experimentation  moonshots 
february 2009 by jerryking
reportonbusiness.com: Disaster relief
November 28, 2008 at 2:46 PM EST G&M article by DOUG STEINER
Rules for post-disaster investing.
Step 1: Cope and gather new data. Smart people in hurricane-prone areas build defences into their homes and businesses, then watch the weather. Do you do that with your investments?.... Don't invest aimlessly assuming that you'll be able to avoid a crash, then buy at the bottom. I don't know when the next market plunge will happen or how deep it will be, but I'm fortifying my investment castle against disaster by spending less and saving more....Look for new sources of information.
Step 2: Analyze the data. I'm not smart, but I looked at historic data and made a connection-what happens in the U.S. usually happens here, too. We worried enough to sell our house in 2007, but I wasn't disaster-hardened enough to rent, so we bought a smaller house.
Step 3: Consider what country you're in
Step 4: Identify the worst thing that could happen right now. You think Canada's economy is grim? How about the city of Detroit, where the median price of a house or condo dropped to $9,250 (U.S.) in September from $21,250 (U.S.) just a year earlier? Could things get that bad here? Almost certainly not.
Step 5: Act when things stop getting worse (there's an element of "next play" here). Don't wait till they start getting better. If you wait for positive signs, it will be too late. I like hotpads.com, the U.S. real estate search engine with information on foreclosures from RealtyTrac. It lets you swoop across a map of the country like a vulture, looking for distressed properties. I'm not looking in Detroit, but I am interested in Longboat Key, Florida. I'm also combining the online information on foreclosures with updates from a local real estate agent who's desperate for buyers, and who forwards me every property listed in the area.
Step 6: Find out who's ahead of the curve and learn from them. The most interesting financial analysis these days isn't in stock and bond markets-it's in the markets for things like natural disaster insurance. A 2007 study, led by Laurens Bouwer from the Institute of Environmental Studies at Vrije University in Amsterdam (remember that Dutch people living below sea level are keenly interested in floods), includes estimates of the costs of future weather-related disasters. By 2015, potential financial losses from disasters in the world's 10 largest cities will likely climb by up to 88%. Three recommendations: 1) Get more and better data. 2) When adapting to surroundings, take precautions to reduce disaster risk. 3) Find new financial instruments or innovations to spread risks among investors.
Step 7: Invest where the potential returns are highest relative to the risks. Even though stock markets have plunged due to panic, they may not be the most profitable place to put your money in the future. The worst mispricing of assets will almost certainly be in the real estate market, so that's where you may find some of the best bargains. Detroit might turn into a mecca for artists, where $9,000 buys you a house in a neighbourhood that may rebound and thrive. You just have to have the courage to look at the disaster data and act.
ahead_of_the_curve  crisis  dark_side  de-risking  defensive_tactics  disasters  Doug_Steiner  extreme_weather_events  financial_instruments  financial_innovation  first_movers  hacks  historical_data  information_sources  instrumentation_monitoring  investing  lessons_learned  measurements  mispricing  next_play  precaution  risk-sharing  rules_of_the_game  smart_people  thinking_tragically  tips  worst-case 
february 2009 by jerryking

Copy this bookmark:





to read