JACK MIXNER STRATEGY

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Usually I am lucky. I visit the library about weekly to get another armful of books. I usually don't have to go farther than the new books shelf to find things that interest me. Lately, things haven't been so rosy. People aren't donating as many cool books, and, seemingly at the same time, the library isn't adding new, interesting books at the old rate. So, on my last trip, I had to visit the regular shelves to find new reading.

I lucked out. Of the four books I found, Hall's is the most creative. And that's what it is all about, how to spur creativity at your company. OK, that's not really what it is all about. It is really about how you can hire Hall and his team to spur creativity at your company. They do a good job, so that's OK by me.

Now, the biggest thing I learned from Hall is that the first step is not to take a first step. Silliness makes more sense than structure. He has all sorts of games and processes meant to foster good ideas for new products and new marketplaces. That's all good. There's one list I liked a lot. Since silliness is the root of all new product ideas, Hall suggests a series of silly questions to help out. Here are three of them. You'll have to get the book to read the rest. Remember, it is in the library. The three questions (Hall, 132): 

• What would be the simple solution?
• What would contradict history?
• What would be the most outrageous solution?

Consider: Hall is the sort of guy who, before he takes your gig, will visit a store where they sell your stuff (or your competitor's) and just watch people buying things on the same aisle as your stuff. He'll ask questions, maybe, but it seems that early on, he just watches. Simple enough. You could do it. But that is the point. You could do it, but you never will. Do it. Talk to people. Squeeze the Charmin (Hall worked for P&G, so maybe he really did squeeze the Charmin). Look around. Be creative. Take the day off and just watch. Don't act official. Be unofficial. Dream stuff up. Let it brew a while, then actually do something about your crazy ideas. A thing could happen: you give up on your crazy ideas. In the light of day, back at the office, they look trite, foolish. Well, remember Hall's admonition. Try crazy stuff. It works, I'll bet. At a minimum, it sure beats sitting around the office. More fun, too.

Hall, Doug with David Wecker. Jump Start Your Brain. Warner Books, Inc. 1995.

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Hack: as a noun, a "project undertaken or a product built not solely to fulfill some constructive goal, but with some wild pleasure taken in mere involvement (Levy, 23)." 

The hacker ethic:

• "Access to computers-and anything which might teach you something about the way the world works-should be unlimited and total. Always yield to the Hands-On Imperative (Levy, 40)!"
• "All information should be free (Levy, 40)."
• "Mistrust Authority-Promote Decentralization (Levy, 41)."
• "Hackers should be judged by their hacking, not bogus criteria such as degrees, age, race, or position (Levy, 43)."
• "You can create art and beauty on a computer (Levy, 43)."
• "Computers can change your life for the better (Levy, 45)."

Levy, Steven. Hackers. Heroes of the Computer Revolution. Penguin Books. 1984. 1994.

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Bill Gates, the philanthropist, is optimistic about world health (Coy, 46). Others say "people are no longer taking crazy, overleveraged risks, so they're less vulnerable to blowing up again.... For those reasons instability leads inevitably to stability (Coy quoting Peter L. Bernstein in Harvard Business Review, 44)."

So, has the pendulum started to swing in the other direction? Are the bad times over? No one is sure, so you have to be careful. Even more, even if things start to swing, no one knows how long this cycle will last, or, importantly, how high it will go. We'll just have to wait and see. Opportunities will present themselves. Our job is to be ready to take advantage of them when they appear. Have the right people on board. Have a plan. Be ready to implement quickly. Nothing has changed.

Coy, Peter. The Case for Optimism. BusinessWeek. 24 & 31 August 2009. 041. http://www.businessweek.com/magazine/content/09_34/b4144040812940.htm

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When they first tried to sell Jell-O, no one would buy it because it was new and made of "interesting" ingredients. When it was made up into the final product, it was sweet, tasty, and everyone who tried it liked it. But how to get people to try it, that was the question. They finally figured out how to get things started. Since they couldn't give out free samples door-to-door because of laws preventing salespeople to do such things, they gave out a free recipe book that drove folks to buy the product at the store in the center of town. Sales finally took off (Anderson).

This evolved into such things as giving away a razor so folks would buy razor blades to fit the razor - forever. Every MBA knows this as the "razors-and-blades" strategy. It works.

HP has done this for years with their ink jet printers. They sell the printer for give-away prices. Then they price the ink high. People buy.

Looks like HP's strategy is being challenged by the new cheapness of the American buying public, and businesses. Printing and imaging volumes are down twenty percent (Vance) from last year. So, is this the end for the HP printer business? HP is responding with tie-ins with MySpace and other web media. Something's got to give, somewhere. The ink strategy for HP has worked for a long time. It is going to take some effort to make it continue. Maybe focusing on related markets would work, or, more risky, new products into new markets. Let's keep watching.

Anderson, Chris. Free. The Future of a Radical Price. Hyperion. 2009.  

Vance, Ashlee. H.P. Tries to Keep the Ink Flowing. New York Times. 19 August 2009. http://www.nytimes.com/2009/08/19/technology/companies/19hewlett.html?_r=1&ref=technology

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The first complete human genome cost $500,000,000 to decipher in 2003.

The seventh complete human genome cost $50,000.

The difference? The first one used 1975 technology and lots of time (Wade). The second one used current technology (the Heliscope Single Molecule Sequencer).  

Within five years, a complete genome will probably cost $1,000. When it hits that number, genome sequencing will hit the main stream. Revenues from sequencing will sky-rocket.

This is disruptive technology at its best. It's cheaper, simpler, faster, unique, and, most of all, hopefully, useful.

There are problems with the technology. It is not clear how useful knowing your genome will be at curing diseases. Diseases that were hoped to have simple genomic identifiers turn out to have more variables than expected. So, ultimate applications and usefulness will likely lag the availability of a decoded genome. Eventually, however, genomes are going to be very useful. We'll all want one.

Nicely disruptive.

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

Wade, Nicholas. Cost of Decoding a Genome Is Lowered. New York Times. 10 August 2009. http://www.nytimes.com/2009/08/11/science/11gene.html?_r=1&hp

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Steven Jobs tried to be the good guy when it came to music piracy. Initially, you could buy an iPod, copy your CDs onto your Mac, and, then, download them to your iPod. You could also spend quite a bit of time putting stolen songs on your iPod. Jobs wanted something better. That something was iTunes.

Long story short, Jobs convinced the record labels to go along with his plan and ended up with eighty-five per-cent of the music on-line business very quickly. Oh, and by the way, the music labels made a lot of money, as well. After all, they got the bulk of the iTunes cash flow. Ultimately, the labels wanted more. They actually had the nerve to suggest that Apple should give them some of the profits from the iPod itself. Wrong move. Bad strategy. No one listened anyway. iTunes launched in April, 2003 (Levy, 010). By October, the Windows iTunes store was up and running. Apple had a home-run on its hands.

Fast forward to 2009. iTunes is still dominant. The labels have tried a couple times to raise prices and actually succeeded a bit. Not really surprising.

Through all this, everyone realized that there was a paradigm shift going on in the music business. I don't think things are done yet. When you read Anderson's Free and consider the model a bit, you come to realize that there is probably a way to distribute music that is free to the ultimate user and, still, very profitable to the labels - and Apple. I predict that that is the next step. It'll be some sort of advertising process or a gift to start the sale of something else, but my prediction still holds. Music will be free - legally - soon. We'll see.

Anderson, Chris. Free. The Future of a Radical Price. Hyperion. 2009.

Levy, Steven. The Perfect Thing. How the iPod Shuffles Commerce, Culture, and Coolness. Simon & Schuster. 2006.

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Rich and Gumpert created - in 1985 - one of the best books on creating a business plan to raise money. Here's a simple summary of a business plan outline (Rich, 33):

The Company: Current Status, Objectives, Management, Management Objectives

Markets and Competition: Present Market, User Benefit, Markets Near and Long Term, Summary of project market, Competition, Projected sales and market share, Sales strategy to reach goals.

The Products: Theory of operation, Applications, Performance data, Economics and advantages, Present status, Scale-up requirements, Patents

Selling: Current, near-term and long-term selling method, Sales support, Custom engineering requirements, Pricing and Warranties

Manufacturing: Facilities, Make/buy decisions, Purchasing issues, Secondary sourcing, Engineering support, Quality, Staffing

Financial Data: Financial history, Expansion requirements and budgets, Financial projections, Current shareholders and their shares

Investment: Use of proceeds, Description of offering,

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

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Steve Jobs is back at Apple for the third time (once he battled Scully lost, and left; then, his illness last fall forced him out for six months or so this year). We've talked about Jobs return in 1997 (Mixner). His main job in 1997 was to refocus Apple on a few products, a few suppliers, and, mainly, success. It worked. Actually, that was a strategy similar to the one he followed in the early eightiesduring the Macintosh launch.

Let's remember the landscape. The Apple II had been a huge success for Apple, making Jobs a billionaire before he was thirty. The only problem was the Apple board thought Jobs was too abrasive for management and slowly forced him out of the Lisa project, the next new computer in the pipeline after the Apple II.

Jeff Raskin actually did the first concept work for the Macintosh. The idea was to fix the Lisa's mistakes of being too overblown and too over-priced (Levy, 109). He kept his head down as he sketched out what the Macintosh was and how it would work. Unfortunately, he didn't keep his head down far enough, as Job's figured out what was going on - something really good, basically - and forced his way in.

Jobs added a elegance to the Mac that we all still appreciate. His practice there is directly applied to the iPod and the iPhone. Even though it looked cool, the Mac was nearly a failure. It was priced too high (blame that on Scully, who added $500 just before launch (Levy, 180)). It didn't have enough memory. The floppies basically were toys, incapable of making back-ups easily. There were no expansion slots. Jobs hated expansion slots. All major flaws. However, even then, there Mac-o-philes who would take basically anything Apple created because it was cool and elegant (and the software, what there was of it, was truly cool).

So, why bring up Jobs again? His management style left a lot to be desired, or so you might say. However, his employees were honored to work for him. They knew they were changing the world even if they weren't treated so well. They got the product out the door - they actually shipped, something that was rare in many of the design heavy firms of the day like Xerox.

Ultimately, the Mac was reconfigured and became a wildly successful product. The delays left chinks in the Apple armor that MicroSoft and IBM happily took advantage. So Jobs did things wrong, too.

There's a yin and a yang here, with both sides of the story evident. We like to say that work today is all about teams and working together. OK, that's fair. But let's remember that there is also a role for inspired leadership that borders on dictatorship. Sometimes it actually works. It has worked at Apple three or four times now. Not a bad result.

Levy, Steven. Insanely Great. The Life and Times of Macintosh, the Computer That Changed Everything. Viking. 1994.

Mixner, Jack. Strategic Realignment. http://mixnerstrategy.com/blog/2008/10/strategic_realignment.html

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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)."

Anderson, Chris. Free. The Future of a Radical Price. Hyperion. 2009.

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

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There are mumblings (or maybe more than that, maybe real protests) around the country against two issues that are wending their way through Congress (Rucker). The mumblings focus on issues that will be crucial to all of us over the next years, health care and environmental topics like green initiatives. Broadly, the mumblings say, "I'm not going to let the government tell me how I am going to live my life." For health care, the quote might be, "I'm not reducing my caloric intake just because you tell me it's good for me," or "Don't restrict my access to certain procedures because " for instance "I smoke." For green initiatives, the quote might be, "The global warming science isn't proven, so don't tell me what kind of car to drive (Friedman, 212-213), or investments to make (Milloy, 162)." Pretty volatile issues, issues I'd normally stay away from. Entrepreneurs, however, would spend good time if they considered the ramifications of the discussions on opportunities in the health care and green sectors.

Pretty preposterous ideas come to mind. Health care for smokers is one. Investment pools for non-green companies is another, something Milloy is addressing with his Free Enterprise Action Fund (Milloy, 162). Contrarian thoughts, certainly. Possibilities? Maybe.

Friedman, Thomas L. Hot, Flat, and Crowded. Why we need a green revolution - and how it can renew America. Farrar, Straus and Giroux. 2008. 

Milloy, Steve. Green Hell. How Environmentalists Plan to Control Life and What You Can Do to Stop Them. Regnery Publishing, Inc. 2009.

Rucker, Philip and Dan Eggen. Rowdy protests at health forums. The Washington Post. 6 August 2009. http://seattletimes.nwsource.com/text/2009607024_townhall06.html

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Class sizes are growing. Teachers have too many students. National testing forces school districts to focus on scores in math and reading to the detriment of courses like art and Greek. Focus on what you are graded on and forget the rest seems to be their mantra. Since high grades support more money for education, you can't blame them. There must be another way to get a good education, however.

Larger class sizes and concentration of students in specific courses allows for computerization in grading and teaching. Where teachers (and their unions) have allowed computers to grow in influence, computers are now teaching classes. Their class plans are the same in teacher led classes and computer taught classes. The tests are the same. Theoretically, the results are the same. That's a concentration strategy. Concentrate on what you're already doing. Forget the fringe classes like Greek and art.

This concentration yields two strategies for a disruptive company. The first is in tutoring all those students who don't get it the first time around in their teacher (or compute) led classes. Tutoring schemas in on the web can be modified to mimic the learning style of a student who doesn't keep up in a regular class. They can work at the pace of the student, not the state-approved syllabus. The second opportunity for the disruptive company is teaching all the classes regular instruction can't focus on, like the art and Greek we've been talking about. A student-paced computer can teach all sorts of topics that regular classes can't, at a pace the ensures that the student really learns. The computer, organized through the web, can find a human tutor who will make sure the student is getting what she needs. Maybe a Japanese high school student who wants to practice his English pronunciation but is good at Algebra II tutors an American student who has fallen behind in Algebra.  Everybody wins, including the company that is paid to put it all together.

Now, where's the sale get made? It's not the district - it's too worried about the bigger classes that drive the No Student Left Behind testing. It might be an Algebra teacher, a counselor, a parent, or another student. A referral is made, outside the normal scheme of things, and another student begins to really understand Algebra. Everyone wins. If you own a software company, how do you market? You don't market to the union or the curriculum committee. You market to referrers, to users groups, to tutoring organizations, any group that looks at individual performance and hopes for better. This isn't a hope strategy, however. It's the growth strategy for the future for any company that wants to sell more software to schools (Christensen, 38).

Christensen, Clayton M. Disrupting Class. How Disruptive Innovation Will Change the Way the World Learns. McGrawHill. 2008.

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Some generic definitions of terms Christensen uses in many of his texts:

Solution Shop: "businesses that are structured to diagnose and solve unstructured problems. Examples are consulting firms, advertising agencies, R&D organizations and some law firms" (Christensen, xxiv). In medicine, these shops provide a diagnosis.

Value-adding Process Businesses: "take incomplete or broken things and then transform them into more complete outputs of higher value" (Christensen, xxv). Examples are in retailing, restaurants, and manufacturing. In medicine, the treatment after the diagnosis.

Facilitated Networks: "enterprises which people exchange things with one another" (Christensen). Mutual insurance companies are an example.

A "cascade" of disruptive strategies in health care might flow from the expensive general hospital (each with its Solution Shops, Value-adding Processes and funding from Facilitated Networks). It would cascade through Outpatients clinics, Doctors' offices, and, finally, patients' homes.

So what's the diruption? General hospitals are by their very nature, general. The more specific the treatment across the cascade, the more possibilities for lowering the complexity of the treatment and the clinicians, and thus, hopefully, the price of the interaction. Colonoscopies in a general hospital are expensive. While we don't expect to see them taking place in private homes, they are perfect processes to take place in a clinic set up to do just colonoscopies. The treatment speeds up, the price goes down, in theory.

As solution shops and clinics grow, the need for general hospitals will fall. Foreseeable problems include the large political clout of the hospitals which will resist clinics in retail stores and treatment shops set up to treat only one malady.

OK, so now you're saying, "We know all this. Where is the disruption?" Let's look at reimbursement. A simple statement might be that Doctors may do anything to treat a patient that they think makes sense. That's true, they may. But, if they want to get paid for their treatment, they have to follow very specific methodologies and approved treatments. If something falls outside what is approved, there are good odds they won't get paid for their efforts. So, obviously, doctors stay within the approved norms. Follow that by the fact that patients are shielded from the real costs associated with treatments, as their insurance, with its low co-pay, doesn't let them feel the pain as it were. An HSA is different. Set it up properly in a situation where an individual pays the full amount of an office visit from her HSA and suddenly she's upset about shoddy or unneeded service. Simpler solutions like a cheaper but just as successful medically clinic visit start to make sense.

The debate has just started. There is an interesting role for strategy in health care. Let's hope the health  care system is listening.

Christensen, Clayton M., Jerome H. Grossman, M.D. & Jason Hwang, M.D. The Innovators Prescription. A Disruptive Solution for Health Care. McGrawHill. 2009.

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Three people are sitting on the marble steps outside a conference (Womack, 3). The recognize that a business problem, a big business problem, isn't getting the attention it deserves. They resolve to examine the problem and report on it. Simple enough so far. What happened next was what was interesting. Rather than begin their research, they approached the subjects of their interest and asked them to fund their endeavor. They didn't ask for a pittance; they asked for five million dollars (in 1984 dollars) and said the work would take more than three years. All their targets bought. My suspicion is that they actually didn't ask for enough in the first place. Nice story so far. Who was the target?

The target was the automotive industry. In 1984 or so, like most other sensible people, the conference attendees realized that American auto manufacturers had a problem. The problem was, however, that the manufacturers either couldn't - or wouldn't - take action to fix their problems. They needed a nudge. Thus the book.

Their final tome came out in 1990. It summarized lots of scholarly articles that had come before. They had visited with all the major auto manufacturers and visited maybe not all, but nearly all, the manufacturing sites in the world. They really knew what the problems were. They sketched the history of automobile manufacturing from a craft industry, through Ford's mass manufacturing, through the Japanese introduction of just-in-time manufacturing, and its final iteration, lean manufacturing. They even keyed in on the atmospheric warming effects of all the carbon spewed by millions of car's exhaust. Everything was there.

Some people listened. Ford got on board early in the eighties and began and evolution toward lean manufacturing. GM took a lot longer. Basically, however, no one listened. This wasn't a research problem, nor was it a writing or editing problem. The book is great. I'll bet however, that only ten-thousand or so volumes were actually published. Everyone yawned and did, essentially, nothing. Who's to blame. Why blame, you say? Think of the lost investments in the automotive business, and the growth of the Japanese industry.

So, all this boils down to a marketing problem. It's easy to say "The authors should have made a bigger stink." After all, these were MIT professors, the best in the automotive business. No one listened. Were they to blame? Nope they weren't, not really.

Even though the book pointed out all the problems in the automotive industry, it forgot to realize that, really, there was nothing the industry could to for itself. Everyone was so set in their ways and that real change was very hard to accomplish. Ford started and the others followed along, but, basically, they were far too late. The automobile industry had "sailed" without them - to Japan.

So, who could have solved the American auto industry's problems? Entrepreneurs, that's who. The auto makers were following a "sustain" strategy of making incremental changes each year without ever rocking the boat with real innovation. After all, everyone knew that the unions and suppliers, not to mention the auto manufacturers themselves, would never make substantive change. Entrepreneurs missed the opportunity of the century when they didn't step in with a disruptive strategy the focused, initially, on a simple car that was easy to manufacture, that the customer wanted, and, most importantly, was profitable after a few short years. No one did anything. OK, there was some action in the time period. The Delorean was a great car but it wasn't enough to stem the tide of the migration of a great industry from America to Japan. The Japanese had been disruptive for years, what with their cheap, simple cars early on, and later with their highly sophisticated offerings made in a lean way that the Americans didn't catch on to - or ignored - for decades.

Who's to blame for all this? Well, it's not really the Big Three's fault. They did what any other manufacturer would do. They just made little changes each year and ignored what was going on around them. The real problem, or shall we call it opportunity, was for entrepreneurs to take advantage and create a simple, American-made automobile using the lean manufacturing system. We'll see how this all shakes out, obviously, as time goes on. For now, there still are opportunities available (that the Japanese, Chinese, et al are taking advantage of in such sectors as hybrid and electric autos), but American entrepreneurs have to move quickly. Now. The opportunity is there.

Womack, James P., Daniel T. Jones and Daniel Roos. The Machine That Changed the World. Based On the Massachusetts Institute of Technology 5-Million-Dollar Study On the Future of the Automobile. Rawson Associates. 1990.

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Weiss lists nine roles of a consultant (Weiss, 17) organized along two planes, Transfer of Skills and Resolution of Issue. They are: Analyst, Commentator, Interventionist (along the Skills plane) and Analyst, Counselor and Independent Expert (on the Issues plane). Combining the two, especially in the seasoned consultant, are Instructor, Proactive Advisor, Exemplar, and Collaborator.

Using the old fishing or teaching someone to fish analogy, Collaborator combines the best of both roles in that the consultant focuses not only on actually doing something for the client (fishing, for instance) or teaching how to do something so the consultant doesn't have to hang around forever (teaching to fish, according to the analogy. Analyzing, the simplest of all the consulting skills is well applied, but only as a beginning of an engagement.

So, in choosing a consultant, what do you do? Look first at what you need from the consultant, then hire according to need. You have to do some work before you begin the dialog, especially if you want to maximize your investment. Sometimes you just hand off a project and expect a timely report. Sometimes, you need someone to actually direct your team - an interventionist - who focuses on training his or her successor as much as accomplishing the task at hand. Need both? Look for a collaborator. Get deliverables, and train your team, both at the same time.

Weiss, Alan. Million Dollar Consulting. The Professional's Guide to Growing a Practice. McGraw Hill. 2009.

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Kurzweil's Singularity Curve shows that computers will catch up with human intelligence in the near-term, probably in the next ten years or so (Kurzweil, 43). That's faster than we have been predicting because the curve is logarithmic, not the usual numeric. Things speed up, especially technical things, after they get going. Those are pretty much the facts. What makes those facts even more interesting is that some scientists are concerned because they think singularity - computers better than man - means that bad people will figure out how to use the new technology to mankind's horror. It's probably too late to think about it, so get used to it, scientists. Maybe a little control is in order, yes, but it's probably too late. Better to protect your systems instead.

Free spirits in Silicon Valley have their own way of responding, namely, Singularity University. Kurzweil is the Galactic Chancellor (do I detect a hint of Merry Prankster here?) of the University. An exclusive organization, they're pitching courses on nanotechnology, neuroscience, robotics, biotechnology and bioinformatics. People are lining up to take the - expensive - classes. Other people are complaining about the exclusivity of it all. Get used to it. Kurzweil, at long last, is fashionable. It's his time. Get to know him.

Hardwick, Chris. Know Your Future. Wired. July 2009. 034.  

Kurzweil, Ray. The Singularity is Near. Viking. 2005. [ Referenced in http://mixnerstrategy.com/blog/2009/04/singularity_and_modern_man.html  ]

Markoff, John. Scientists Worry Machines May Outsmart Man. New York Times. 4 August 2009. http://www.nytimes.com/2009/07/26/science/26robot.html?hp=&pagewanted=print

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After the fact, all my investing friends admitted that they knew something was wrong some time before, and, luckily, left the market. They never bothered to tell me, of course, so I stayed the course. I lost some money, but, luckily, I left it in and some time later I was back even. The trigger for the 1987 crash was interesting. Some years before, some smart analysts figured out a way to insure their stock market holdings. Buy these stocks and hold them - and buy these holdings so that, if your original holdings lose value, your back-up holdings won't. You can't lose.

You can't lose. Ah, savor the words. If only they'd kept their mouths shut, or, more likely, could have shielded their investment strategy from the scrutiny of other investors bent on mimicry. Too much of a good thing (the protection strategy) fostered too much of a bad thing (a market that couldn't react quickly to declines because too many folks followed the protection strategy) and we all know the result, those couple days of catastrophic loses.

Now, fast-forward to today. They say (Wilmott) that the newest trick is fostering a new disaster, as if we need another one to add to our woes. They say that increasing the speed of trades to take advantage of arbitrage opportunities (something is mispriced in a market, so take advantage of it even if the mis-pricing only lasts an instant) will eventually bring down the market.

Two facts from my point of view: the market is going to fall some time in the future. It might actually be caused by this new lightening speed trading. My prediction is actually two-fold: the market will fall, probably before the end of Obama's second term. Why it will fall, I have no idea. But it will fall. It's almost a given. But the other thing, the cause of the fall, is unknown at this time. It might be caused by lightening trading (I sort of like the name, don't you?), but my bet is that it'll be caused by something else that is unidentified at this time. I wish that all the things we have seen in the markets in the last one hundred years (mainly over-leverage, and too much reliance on analysis hiding risk-taking of unknown levels) was going to go away, that we had learned our lesson. Honestly, I don't think anything is going to change. My only prediction stands: there will be a fall in the market in the future. You might want to give some thought about how to protect your investments from that fall. Maybe your plan will actually work. I hope so.

One last thing: the administration wants to regulate lightening trading (they're calling it flash trading now - I like that name even better, don't you?). They're chasing solutions. Unfortunately, it's too late. Even if they regulate flash trades, traders will just move on to something else. Unless we change the underlying trading mentality, the deal-making mentality, nothing will change, really. Is that good? Well, I don't know. For a while there, a couple of months ago, I might have answered that the deal-making mentality had to go. Now, I'm not so sure. Capitalism is based on deal-making, isn't it? We'll have to see what happens.

Sorkin, Andrew Ross. S.E.C. to Seek Ban on Flash Orders, Schumer Say. New York Times. 4 August 2009. http://dealbook.blogs.nytimes.com/2009/08/04/sec-to-seek-flash-trading-ban-schumer-says/?pagemode=print

Wilmott, Paul. Hurrying Into the Next Panic? New York Times. 4 August 2009. http://www.nytimes.com/2009/07/29/opinion/29wilmott.html?pagewanted=print

Posted by jackmixner at 04:42 PM | Permalink

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Even Nobel prize winners can get no respect. The team that won the Nobel along with Vice President Al Gore some two years ago is catching flack. It seems their reports are nice, but they don't give us enough direction. Reports, good. Results, not so good. The world industrial powers haven't cut back the pollution that leads to global warming significantly. The reports must be flawed if no one is listening. That's the message we are getting (Revkin).

We have been getting the same grades on Orange County reports, one on workforce and the other on the community as a whole (County of Orange). We're hearing "Too many numbers, not enough action."

Now, having observed close-hand how tough it is to get things right in a meaningful fashion, perhaps we expect too much from reports like this. In my heart, however, I agree with the weak grades. In business we call it analysis paralysis. Too much information, not enough action taking.

When Carlos Ghosn arrived at the failing Nissan, the central management team was spending sixty-five percent of their time planning and only thirty-five percent implementing. Ghosn fixed that. Within months, they were up to ninety-five percent action (Magee, 102).

When you focus on action, a funny thing happens. The reports get shorter. People can remember what their supposed to do. And - wonderfully - they actually take action. Results follow. Try it with your team.

Magee, David. Turnaround: How Carlos Ghosn Rescued Nissan. HarperCollins. 2003. [ Referenced in: http://mixnerstrategy.com/blog/2006/08/on_strategy_too_much_practice.html ]

Orange, County of. Workforce Indicators Report. 2008-2009. http://egov.ocgov.com/vgnfiles/ocgov/Community%20Investment/Docs/OCWIB/Portals/Workforce_Indicators_Report_2008.pdf

Orange, County of. Community Indicators Report. 2008-2009. http://egov.ocgov.com/vgnfiles/ocgov/Community%20Investment/Docs/OCWIB/Portals/Community_Indicators_Report_2008.pdf

Revkin, Andrew C. Nobel Halo Fades Fast for Climate Change Panel. New York Tiimes. 4 August 2009. http://www.nytimes.com/2009/08/04/science/earth/04clima.html?_r=1&hpw

Posted by jackmixner at 04:11 PM | Permalink