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jerryking : information-poor   3

Twilight of the Brands
FEBRUARY 17 & 24, 2014 | - The New Yorker | BY JAMES SUROWIECKI.

** “Absolute Value,” by Itamar Simonson and Emanuel Rosen,

It’s a truism of business-book thinking that a company’s brand is its “most important asset,” more valuable than technology or patents or manufacturing prowess. But brands have never been more fragile. The reason is simple: consumers are supremely well informed and far more likely to investigate the real value of products than to rely on logos. “Absolute Value,” a new book by Itamar Simonson, a marketing professor at Stanford, and Emanuel Rosen, a former software executive, shows that, historically, the rise of brands was a response to an information-poor environment. When consumers had to rely on advertisements and their past experience with a company, brands served as proxies for quality; if a car was made by G.M., or a ketchup by Heinz, you assumed that it was pretty good. It was hard to figure out if a new product from an unfamiliar company was reliable or not, so brand loyalty was a way of reducing risk. As recently as the nineteen-eighties, nearly four-fifths of American car buyers stayed loyal to a brand.

Today, consumers can read reams of research about whatever they want to buy. This started back with Consumer Reports, which did objective studies of products, and with J. D. Power’s quality rankings, which revealed what ordinary customers thought of the cars they’d bought. But what’s really weakened the power of brands is the Internet, which has given ordinary consumers easy access to expert reviews, user reviews, and detailed product data, in an array of categories.
Achilles’_heel  books  brands  Consumer_Reports  customer_loyalty  decline  fragility  GM  information-poor  information-rich  J.D._Power  James_Surowiecki  Kraft_Heinz  Lululemon  new_products 
february 2016 by jerryking
Pandemics and Poor Information -
MAY 11, 2009 | Wall Street Journal | by L. GORDON CROVITZ.
Whenever there's a threat of epidemic, alongside early deaths comes the casualty of information. Asian governments at least learned from their recent experience of bird flu and SARS the importance of not covering up outbreaks. The still open question is how to assess warnings that health professionals make based on inadequate information. Almost by definition, the risk of an epidemic occurs when the one thing disease experts know for sure is that they don't know for sure what will happen.
"What new information would be sufficient to change your decision?"

Alexander's question (AKA 'Dr. Alexander's question') is a question used to uncover assumptions and associations that may be confusing your judgment. Asking what information would be needed to change your mind can help bring faulty reasoning to light, and it can also point out what facts you should be researching before committing yourself and others to a course of action.

The uncertainty about the longer-term threat of the current swine flu is a
reminder that nature is more complex than mathematical models.Scientific
hypotheses can then be tested, but this approach has limits when it
comes to predictions.
"Alexander's Question," named for a physician who had posed a canny
question of his fellow experts: What information might make the group
change its mind about the need for immunization? Focusing on it would
have led to more focus on uncertainties: the trade-off between side
effects and flu, the difference between the severity of the flu and its
spread, and the choice between mandatory vaccinations and stockpiling in
case of later need. Decision makers should ask themselves what new
"knowns" would change their views.
assumptions  CDC  change_your_mind  critical_thinking  decision_making  Dr.Alexander's_Question  epidemics  facts  flu_outbreaks  hidden  immunization  information  information_flows  information_gaps  information-poor  L._Gordon_Crovtiz  latent  medical_communication  pandemics  physicians  problem_framing  questions  risk-assessment  side_effects  stockpiles  tradeoffs  uncertainty  unknowns  vaccines 
may 2009 by jerryking
Information Haves and Have-Nots -
Sept. 22, 2008 | Wall Street Journal | by L. Gordon Crovitz.
Piece on the ramifications of not having access to good information has
had on pricing securities. No one asks the right questions as research
analysts desert Wall Street.
...The credit crunch can be reduced to a single word. Not "greed," which also exists in stable markets. The word is "information," the absence of which has put taxpayers on the hook for billions, ruined Bear Stearns and Lehman Brothers, and led to the fire sale of Merrill Lynch and AIG. The continuing absence of information about the true value of underlying securities means no one knows when the market has hit a new normal for the important purpose of rebuilding.

Why did so many smart people at so many top firms make dodgy investments? Why were there so many unknown unknowns, now at least becoming known unknowns? One explanation is the absence of warnings from research analysts. For decades, the large Wall Street brokerages had armies of analysts who, when they did their jobs right, asked the hard questions and issued tough reports that often alerted both company executives and public investors to market-moving issues.

There are now about half as many Wall Street analysts as in 2000......."Research analysts have gone the way of high-button shoes and buggy whips." Alas, unknown risks have not. The now-former senior executives at Bear Stearns, Lehman and Merrill must wish they had been able to retain all their star banking analysts. Those analysts just might have waved enough red flags -- in public or even in the hallways of the banks themselves -- to alert management to risks in their portfolios......a few of those analysts left these Wall Street firms for the "buy side," such as hedge funds, which keep their research proprietary, for their own trading. Predictably, it was well-informed short sellers at these firms who first alerted the market to the true value of credit derivatives and other mispriced instruments by driving down shares of firms such as Lehman.

At a time when real understanding is at a premium, we're increasingly in a world of information haves and have-nots......A corollary is that proprietary information will be more valuable than ever, giving well-informed traders an even bigger edge.

What's the solution? The temporary ban on short selling of financial firms will have the unintended effect of worsening the information gap. Professionals will perform the equivalent of short selling through nontransparent instruments and markets, leaving individual investors to be guided by public share prices that no longer reflect all known information......Part of the answer came in news earlier this month that Credit Suisse will make macroeconomic research from its analysts available to noninvestor clients of Gerson Lehrman Group, a powerful force in the world of independent research such as for hedge funds. Equity researchers from Credit Suisse joined the some 200,000 expert consultants that Gerson Lehrman has attracted to its network.......Clients of Gerson Lehrman pay hefty fees to tap this deep knowledge through one-on-one phone calls and meetings. Serving these clients will help Credit Suisse fund its 700-person research department.

When Gerson Lehrman launched a decade ago, it was to serve the deep information needs of investors in highly technical areas such as health and biotechnology. As Wall Street analysts began to leave the scene, it brought on experts in virtually every industry globally, with 150 research managers to help clients conduct more than 10,000 consultations monthly. These are often on arcane topics, such as the likely growth in salmon farming in Norway, or the odds of success for a particular drug trial. Perhaps some research was even done on, say, the proper pricing of derivatives.

Regulators can try to put genies back in bottles, but complex financial instruments that, when properly used, create value will only become more commonplace. Innovation will also be required for better-informed markets. By recruiting a huge number of experts and using online social-media tools to connect them to clients, firms like Gerson Lehrman can bring information, knowledge and insights to the people who most value and need it.
arcane  asking_the_right_questions  buy_side  equity_research  expert_networks  financial_instruments  Gerson_Lehrman  hedge_funds  information  information_gaps  information-poor  information-rich  L._Gordon_Crovtiz  market_intelligence  proprietary  regulators  research_analysts  selling_off  short_selling  uncertainty  unintended_consequences  unknowns  Wall_Street 
january 2009 by jerryking

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