JACK MIXNER STRATEGY

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

Reference

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

Posted by jackmixner at 10:50 AM | Permalink

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

References

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

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

Posted by jackmixner at 03:40 PM | Permalink

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

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

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

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

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

References

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

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

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

Posted by jackmixner at 11:48 AM | Permalink

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

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

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

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

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

References

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

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

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

Posted by jackmixner at 04:59 PM | Permalink

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

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

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

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

Reference

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

Posted by jackmixner at 09:59 AM | Permalink

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

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

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

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

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

Chronology of "Information wants to be free."

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

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

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

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

References

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

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

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

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

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

Posted by jackmixner at 09:15 AM | Permalink

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

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

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

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

Reference

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

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

Posted by jackmixner at 05:31 PM | Permalink

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

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

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

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

Reference

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

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

Posted by jackmixner at 05:02 PM | Permalink

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

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

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

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

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

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

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

And, finally, from Kouzes: 

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

Reference

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

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

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

Posted by jackmixner at 09:10 AM | Permalink

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

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

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

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

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

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

Reference

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

Posted by jackmixner at 08:14 PM | Permalink

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

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

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

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

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

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

Reference

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

Posted by jackmixner at 02:28 PM | Permalink

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

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

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

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

Reference

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

Posted by jackmixner at 03:49 PM | Permalink

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Generic Strategies

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

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

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

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

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

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

Some closer-to-home examples:

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

References

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

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

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

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

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

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

Posted by jackmixner at 10:03 AM | Permalink

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

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

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

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

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

Reference

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

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

Posted by jackmixner at 08:23 AM | Permalink

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

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

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

Seemingly simple steps to get the ball rolling.

Reference

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

Posted by jackmixner at 03:50 PM | Permalink

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

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

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

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

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

Two examples:

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

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

References

Fabricating Fabric. Economist. 13 August 2011. 76.

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

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

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

Posted by jackmixner at 09:54 AM | Permalink

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Evidence of disruptive technology (Mixner):

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

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

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

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

Reference

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

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

Posted by jackmixner at 10:36 AM | Permalink

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

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

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

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

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

Reference

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

Posted by jackmixner at 08:27 AM | Permalink

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

Jack Mixner Strategy

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

Reference

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

Posted by jackmixner at 12:19 PM | Permalink

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

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

Reference

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

Posted by jackmixner at 11:28 AM | Permalink

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

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

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

Reference

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

Posted by jackmixner at 11:08 AM | Permalink

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References

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted by jackmixner at 08:03 AM | Permalink

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

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

Reference

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

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

Posted by jackmixner at 02:21 PM | Permalink

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

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

Reference

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

Posted by jackmixner at 10:17 AM | Permalink

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

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

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

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

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

Reference

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

Posted by jackmixner at 09:43 AM | Permalink

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

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

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

Reference

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

Posted by jackmixner at 01:04 PM | Permalink

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

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

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

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

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

Reference

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

Posted by jackmixner at 12:27 PM | Permalink

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

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

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

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

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

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

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

Reference

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

Posted by jackmixner at 11:15 AM | Permalink

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

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

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

Posted by jackmixner at 10:01 AM | Permalink

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

Reference 

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

Posted by jackmixner at 10:53 AM | Permalink

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

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

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

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

References

Guber, Peter. Tell to Win. 2011.

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

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

Posted by jackmixner at 10:07 AM | Permalink

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

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

Six Classic Mistakes (Miles, 69):

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

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

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

Reference

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

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

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

Posted by jackmixner at 04:49 PM | Permalink

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

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

What is your story?

Reference

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

Posted by jackmixner at 12:25 PM | Permalink

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Reference

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

Posted by jackmixner at 10:46 AM | Permalink

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

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

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

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

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

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

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

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

Reference

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

Posted by jackmixner at 11:06 AM | Permalink

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Undercurrents to successful strategy:

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

Posted by jackmixner at 08:45 AM | Permalink

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

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

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

Reference

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

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

Posted by jackmixner at 03:01 PM | Permalink

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

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

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

Reference

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

Posted by jackmixner at 02:39 PM | Permalink

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

Two take-aways from the day:

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

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

Posted by jackmixner at 02:27 PM | Permalink

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

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

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

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

Posted by jackmixner at 05:18 PM | Permalink

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Posted by jackmixner at 08:32 AM | Permalink

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

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

Posted by jackmixner at 03:09 PM | Permalink

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

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

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

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

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

References

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

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

Posted by jackmixner at 03:13 PM | Permalink

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

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

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

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

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

References

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

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

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

Posted by jackmixner at 02:31 PM | Permalink

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

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

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

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

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

Reference

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

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

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

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

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

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

Reference

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

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

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

Reference

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

Posted by jackmixner at 02:34 PM | Permalink

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

Sustainable Sites - 26 points

Water Efficiency - 10 points

Energy & Atmosphere - 35 points

Material & Resources - 14 points

Indoor Environmental Quality - 15 points

Bonus Points

Innovation in Design - 6 points

Regional Priority - 4 points.

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

Benefits of Green Building (Energy, Professional, 16)

Environmental Benefits

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

Economic Benefits

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

Social Benefits

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

References

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

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

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

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

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

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

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

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

References

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

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

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

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

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

Posted by jackmixner at 09:56 AM | Permalink

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

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

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

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

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

These questions really read closer to,

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

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

Reference

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

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

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

Posted by jackmixner at 01:49 PM | Permalink

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

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

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

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

References

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

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

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

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

Posted by jackmixner at 10:11 AM | Permalink

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

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

Other ways to consider strategy (Center):

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

References

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

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

Posted by jackmixner at 05:29 AM | Permalink

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

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

Reference

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

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

Posted by jackmixner at 10:01 AM | Permalink

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

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

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

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

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

Reference

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

Posted by jackmixner at 09:54 AM | Permalink

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

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

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

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

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

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

So, some recommendations for your stategizing this summer:

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

Reference

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

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

Posted by jackmixner at 03:04 PM | Permalink

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

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

Reference

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

Posted by jackmixner at 06:48 PM | Permalink

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

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

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

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

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

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

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

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

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

Reference

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

Posted by jackmixner at 03:23 PM | Permalink

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

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

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

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

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

Reference

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

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

Posted by jackmixner at 03:09 PM | Permalink

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

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

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

Reference

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

Posted by jackmixner at 11:27 AM | Permalink

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

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

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

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

Reference

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

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

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

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

Posted by jackmixner at 04:58 PM | Permalink

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

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

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

Reference

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

Posted by jackmixner at 03:13 PM | Permalink

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

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

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

Reference

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

Posted by jackmixner at 02:28 PM | Permalink

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Here's the story (Swan): hyper-active kid grows up, decides to become an adventurer and, because he read a lot of cool books as a kid about Artic exploring (and Antartic exploring, as well), decides he wants to retrace the steps of the original explorers in the Antartic. All good. We get that. All of us know enough about the topic to predict what happens next. Two things, actually. One, money is hard to raise for such an exploration. That's easy to figure out. Two, the explorers get in trouble. All this makes the story interesting. There's a twist in all this that makes it even better: the explorer becomes a green advocate and tries to change the world. Also predictable, if you think about it. I could stop now, but we need to consider the topic.

There are politics that make a solution for our green problems hard to solve. The science of our green problems is hard, as well. We don't know precisely what to do, especially when we balance the green problems with the capitalistic need for growth.

The federal government, in all sorts of ways, is trying to spur business to recognize the need for change, and more importantly, do something about it. In my speeches to entrepreneurs, I always try to make clear that there is no free money from the government. If you take a grant or a loan you're going to have to work to get it and then you'd better perform according to your business plan. Or you are in trouble.

So, we have to realize that the government is interested and that the government doesn't know what to do. We talked about capitalistic growth. Well, in less obvious terms, the government is pointing to an opportunity to fix things before it is too late. Take that government money or not, realize that the opportunity still exists for you and your company to do something. Think about it. What are you going to do? And how are you going to make it profitable?

Reference 

Swan, Robert and Gil Reavill. Antarctica 2041. My Quest to Save the Earth's Last Wilderness. Broadway Books. 2009.

Posted by jackmixner at 10:51 AM | Permalink

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Sometimes experience matters. There was a patient. She "didn't feel too good (Gawande, 1)." The medical student assigned to her had done his best. The nurses were watching. All seemed well. The resident wasn't buying it. His experience told him that that patient warranted close following, more than the medical student was providing, so he took it upon himself to continue to follow up. This time, the patient was lucky. The resident found a problem on one of his frequent, unscheduled, visits and made sure things were put right. A good result for the patient. A good result for the medical student. A good result for the resident.

Even without the resident's close attention, basically, the patient got the best care in one of the best hospitals. However, without the resident's willingness to admit that he didn't feel good about what was going on, the patient would have probably had a wholly different outcome. His experience - call it gut reaction, if you will - made all the difference.

So, strategically, what's the difference? Lots. We might say, "Trust your instincts and act," and we'd be partly correct. There's more. Follow-up takes work. Showing up and asking questions repeatly is a part of success. Training the staff - the team - that doing things by book might not be enough seems obvious. Sparking their interest in following-up is part of your job. Not easy, I know. However, relying on "following the book" isn't enough. So, it takes two things to succeed, at least in this instance. Do things by the book, yes. But, at the same time, you've got to focus on the patient and the book. Keep looking when things don't feel right. Showing up isn't enough. Show up engaged works better. The trick here isn't easy, however. You've got to figure out how not only how to motivate yourself to show up engaged. You've got to do the same thing with your team.

References

Gawande, Atul. Better. A Surgeon's Notes on Performance. Picador. 2007.

Posted by jackmixner at 09:26 AM | Permalink

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The stent has upset the perfusion market. It is cheap (well, cheaper). It is less invasive. It replaces surgery to fix arteries, veins and all sorts of major organz. All good things.

But, in its time, the heart perfusion machine - the heart lung machine - was an innovative device that helped millions to survive major surgery and to live long lives. By oxygenating blood outside the body, the machine allowed surgeons to make repairs that, until then, would have gone unrepaired.

Cate, George M. A Final Look at Perfusion in the 20th Century. AMSECT (American Society of Extra-Corporeal Technology) Today. December 1999. 1.

Posted by jackmixner at 11:08 AM | Permalink

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A decade ago we started to hear stories of kids with Type I diabetes. Since then, the prevalence of the disease in children has continued to grow. Of course, kids hate the testing related to diabetes. Enter a parent with an idea. Why not hook the testing to the very popular Nintendo DS video game (Weintraub)? That brainstorm led to the Glucoboy testing system and then to the Didget system from Bayer. The idea is to entice kids to keep testing on a regular basis. Available now in Holland, Australia (Glucoboy) and Ireland (Bayer), here's hoping the testing system catches on.

The biggest concern about any new product like the Didget is whether it will get the sales needed to propel it into the bigtime. The inventor came up with a new way of looking at an existing technology. He's hoping it catches on. Bayer - a world-wide pharmaceutical powerhouse - is hoping for more sales of all its diabetes products.

There are a couple flaws I hope the system overcomes. A disruptive product, almost by definition, is cheaper and has fewer features than existing products. It doesn't fit into the normal way a product is normally taken to market (Moore, 64). In the medical device arena, if a product is not cheap then, hopefully, it is on the list of insurance approved products. The Glucoboy/Didget is neither cheaper nor approved for insurance reimbursement (Weintraub). Kids who use it have very high success rates for managing their disease, that's true. Bayer is assuming "parents will spend anything" (Weintraub) to control their kid's diabetes.

Rooting for any device that reduces kid's problems with diabetes is a good thing. Here's hoping the Bayer Didget finds its niche.

Bayer Didget. http://www.bayerdidget.co.uk/Home

Glucoboy. http://www.glucoboy.com/

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

Weintraub, Arlene. Diabetes Is No Fun-But It Can Be a Game. Bloomberg BusinessWeek. 19 April 2010. 62. http://www.businessweek.com/magazine/content/10_16/b4174062706997.htm

Posted by jackmixner at 09:18 AM | Permalink

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It is tricky to say who defined terms first in the busines press. Value chains have been around for a while. Porter talked about them. So does Moore. Moore also shows why Christensen should have talked more about value chains in his work on disruptive strategy. Let's see if we can reconcile all this into a workable strategy.

Porter's model worked like this (Porter, 60): Inbound Logistics flows into Operations flows into Outbound Logistics flows into Marketing & Sales flows into Service. There are overlays of Firm Infrastructure, Human Resource Management, Technology Development and Procurement. It is handy to remember, as well, that Porter (Porter, 12) compared Competitive Scope with poles of Narrow Target and Broad Target, to Competitive Advantage with its poles of Lower Cost and Differentiation, to yield his Three Generic Strategies of Cost Leadership, Differentiation and Cost Focus/Differentiation Focus. I suggested recently that the Orange County Business Council use the Porter Value Chain model for research they are performing for the Workforce Investment Board because the methodology has been around a while and is seemingly bullet proof for workforce projections. Customers and competitors are crucial to the model, as a firm is always bench-marking performance against the norms.

Moore (Chasm, 12) talked about a bell curve comparing five sequential consumer populations: Innovators, Early Adopters, Early Majority, Late Majority and Laggards. The crucial section (Chasm, 17) described the near certainty that, while Innovators and Early Adopters might like your new product, if you ever want to make money, you'd better figure out a way to "leap the chasm" of failure for most companies and figure out how to sell to the Early Majority, as their buying habits were vastly different from the Early Adopters in crucial ways. In Darwin Moore applies the value chain concept to innovation (Darwin, 38) while enhancing his discussion of the chasm by describing its effects on complex sales and volume sales.

Christensen explores the evolution of the disk drive market (Christensen, 16), pointing to the inevitability that disruptive products (from new, smaller, more innovative companies) are nearly certain to replace sustainably improved products (from main-stream companies). His team at Innosight follows with a methodology (Anthony) to keep your main-stream, not very innovative, company disruptive.

The Boston Consulting Group compared relative market share with growth rate in its Growth Share Matrix (Boston). Question mark divisions become stars or dogs according to the their relative growth rate compared to the competition and the growth of the market. Hopefully, stars become long-term cash cows, not dogs. The message from this is that divisions migrate from section to section according to market conditions.

Moore very usefully attempts a mash-up of all this disparate information. He amplfies Porter's value chain with overlays for complex systems requiring consultative sales processes and for volume operations where the sales process focuses on a closed-end transaction (Darwin, 38). Then, he applies four innovation zones (Product Leadership, Customer Intimacy, Operational Excellence, and finally, Category Renewal) to the Chasm bell curve. For instance, he defines four different innovation technologies that apply to growth markets (Darwin, 73) in the Product Leadership zone of his Chasm bell curve and ranging up to mature markets: Disruptive Innovation, Product Innovation, Platform Innovation and Application Innovation. You have a choice in your company. If you are rapidly growing, focusing on just a few strategies in this range makes sense. If yours is a mature company or - horrors - a declining company, returning to the growth market strategies also makes sense.

Specific strategies are strengthed when you consider the stage of your technology - and your firm.

References

Anthony, Scott D., Mark W. Johnson, Joseph V. Sinfield and Elizabeth J. Altman. The Innovator's guide to Growth. Putting Disruptive Innovation to Work. Harvard Business Press. 2008. 

Boston Consulting Group. Growth Share Matrix. http://en.wikipedia.org/wiki/Growth-share_matrix

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

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

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

Porter, Michael E. Competitive Advantage. Creating and Sustaining Superior Performance. Free Press. 1985.

Posted by jackmixner at 05:10 AM | Permalink

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When you facilitate the strategic planning process, you focus on six basic objectives for the corporation (Birnbaum, 128):

1. Financial
2. Marketing/sales
3. Product/services
4. Operations
5. Human resources
6. Community.

It's a good list as it includes all the obvious objectives you might want to form. Consider making a couple objectives under each major category and you're done. That's simple. Sometimes things are forgotten. Marketing always seems to come first as it drives the top line. Operations is melded into human resources in today's environment as your objective many times is to reduce the head count to increase efficiency. That head-count reduction might have worked over the last eighteen months, but by now it is wearing thin, as are your worn out employees. You could lean on your suppliers to reduce costs, or convert to a quality system of some sort that focuses, for instance, on continuous improvement. I'm thinking those are nice strategies, but didn't we take care of them in the eighties? What do we do now in operations?

There's a picture of an Chrysler automobile manufacturing line that says it all (Simpson, 280). It shows three seemingly different models of Chryslers (two Grand Cherokees, a Chrysler 300C, and a Chrysler Voyager) all going down the same production line. Chrysler, although late to the flexible manufacturing game, is following a platform strategy, that of focusing on the commonalities in a group of products in order to cross-pollinate each of the products with like parts and processes. They do it to save costs and therefore increase profitability.

So, where does platform strategy fit into your strategic plan? Under marketing and product objectives, you might consider what products you are going to manufacture. You make sure that you have the technology strengths to manufacture the products you are targeting, and then firm up your product line strategy by segmenting all the different products in different lines. Right here you have an option to add a platform strategy to what you are doing. If you can figure out a way to provide like parts to many of your different products and product lines, you are on the way to a platform strategy. When the New Beetle came out, for instance, it really wasn't so new (Marion, 84). It fit into a product platform inside the world-wide Volkswagen scheme composed of VWs, Skodas, Seats and Audis. It's new design and all the hoopla related to it fostered growth across the platform as the New Beetle's use of platform parts reduced engineering costs and production costs as the volume of parts used across the platform increased with the bump in sales of New Beetles.

Now, there are impacts as a result of this decision. You have to consider product architecture, design, manufacturing and sourcing, and, finally, customer service. If you do it correctly, however, the platform strategy allows you to reduce costs significantly while at the same time increasing the diversity of your product line and its utility to consumers.

Reference

Birnbaum, William S. If Your Strategy Is So Terrific, How Come It Doesn't Work? AMACOM. 1990.

Bowman, Daniel. Effective Product Platform Planning in the Front End. In Simpson. 19.

Marion, Tucker J. and Timothy W. Simpson. Platform Leveraging Strategies and Market Segmentation. In Simpson. 73.

Simpson, Timothy W., Zahed Siddique, and Jianxin Jiao, editors. Product Platform and Product Family Design. Springer Science+Business Media, Inc. 2006.

Posted by jackmixner at 09:09 AM | Permalink

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My laptop blew out its screen recently and it looked like I was going to have to buy a new one. Since I wanted more portability, I looked at the netbooks. Since I had reported here about the one computer per child movement, I knew about Asus computers and their EeePC. I was focusing on the one with the new Intel chip, the 450N, because it seems that it had the longest battery life. All good. What was also good was that I was able to fix my old laptop and move on without buying another box. All this forced me to understand what the Taiwanese and other Asian businesses are discovering: Silicon Valley is a good place to do research and buy early stage companies. Why let the Silicon Valley VCs have all the fun? They can do it themselves.

And do it they are.  There's risk here, you say. Why would they want to take on this risk? And how can they compete with the VCs on the ground? Not possible. Possible! If you've dealt with Angels and VCs lately, you realize that they aren't investing like they used to, and, when they do invest, they are taking less risk. They feel more like bankers than VCs. What's an Asian tech company to do, especially when it wants access to new ideas and designs? Invest. And invest they are. That Asus computer I mentioned above used to be an unknown. They'd learned how to make the designs. All they had to do was make a complete box. They did it for others, now they are doing it for themselves. It all makes sense. Silicon Valley better get going. Now is the time.

Reference

Vance, Ashlee. Asian Computer Makers Move Into Riskier Ventures. New York Times. 15 March 2010. http://www.nytimes.com/2010/01/06/technology/personaltech/06valley.html?ref=global-home 

Posted by jackmixner at 12:57 PM | Permalink

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My friend Steve Maylish first referred me to an article (Marion) about the Chevrolet Corvair and platform strategy. I have to admit that early on, I was giving him a hard time because the Corvair, as we all know, has a storied past, what with Ralph Nadar and all. If you give the message a little time, it grows on you, however.

The Corvair was conceived in about 1955 as a Volkswagen killer. The Big Three in America realized that the foreign imports were doing something they hadn't even considered: selling small cars. General Motors decided to do something. The result was the Corvair. If you look a little more closely, you will notice that the Corvair isn't one car, but at least three or four depending on your definition of a car. There was a four door. There was a two door. There was a two door convertible. There was a van. There was a pick-up of sorts. Then, for most of the models, there was a souped-up version that was a lot of fun to drive. All new. All based on a new platform (when had we ever seen a rear engine car in America before, at least since the very, very short-lived Tucker?) with many shared parts across all the models. Now you have to squint a bit, but you will realize that the Camaro replaced parts of the offering, as did the Chevrolet Van. They were part of the platform, too.

Early on, the Corvair was disruptive in the industry. It was different, certainly. Cheaper, probably. It's smallness forced them to leave off some of the fins and chrome American autos were famous for at the time. It allowed General Motors to enter the compact market with a new design conceived from a blank piece of paper.

The platform part of the strategy allowed GM to use the engines and suspension parts across the whole product line, saving money and design time. Looked at another way, because they were focusing on fewer parts, they were able to invest more in each part.

Reference

Simpson, Timoth W., Zahed Siddique, and Jianxin Jiao, editors. Product Platform and Product Family Design. Springer Science+Business Media, Inc. 2006.

Marion, Tucker J. and Timothy W. Simpson. Platform Leveraging Strategies and Market Segmentation. In Simpson. 73.

Posted by jackmixner at 11:02 AM | Permalink

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Let's say the business press has been speculating about which firm in your industry will make a particular technological advance in an existing product line. The press is looking to identify the winner, as they speculate that the winner's stock value will go up when it announces this new incremental improvement. If you read between the lines - and you're the CEO - you might make the decision to invest heavily in the incremental improvement in order to take advantage of this hit to stock price. In strategic terms, we're talking about a sustainable improvement, one of many that have been made over the years in your product line. The question we're talking about still is "Does it make sense to invest heavily in this sustainable improvement in an existing product line, or is it OK to follow along as other industry participants make the incremental improvement first?"

Let's contrast this sustainable improvement with a disruptive improvement, an improvement made to a product in a small, emerging market. Let's underline the contrast again. Does it make more sense to invest in a sustainable improvement to a current product line, or does it make more sense to invest in a disruptive innovation in a product line that, while new, could grow rapidly?

Christensen tells us the answer (Christensen, 132). Invest heavily in the disruptive innovation to the new product line. The pay-off is twenty times as lucrative as the investment in the sustainably innovated product line.

In financial terms, we're talking about two types of risk, market risk and competitive risk (Christensen, 132). If you are going to invest for the biggest bang for your buck, invest in markets, especially emerging markets and products as opposed to investments in competitive situations where market leadership doesn't matter so much (Christensen, 132).

Reference

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

Posted by jackmixner at 12:06 PM | Permalink

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The New York Times just announced that the administration has the votes to pass the healthcare bill. Since I have just finished a book that includes whole sections on another chapter of the healthcare business history I couldn't help but look for commonalities.

Jim Clark helped found Silicon Systems back when. For his efforts (and after he was forced out) he made tens of millions of dollars. To prove he could do it again, Clark made hundreds of millions on the first Internet stock, the one that started everything, Netscape. Of course, as we all know, Microsoft slowly ate Netscape's lunch. So Clark had to do it all over again, with what they started to call Healthscape (later changed to Healtheon because some smart kid already owned Healthscape.com). Now, Healtheon was posed to really shake things up.

Jim Clark had drawn a picture that you can mimic easily on a napkin if you decide to (Lewis, 99). He put four dots on the paper. One was labeled Payers, another Providers, the third Consumers, and the final one Doctors. Pretty simple. You have to remember this was during the Internet boom. You didn't need anything but four dots to go public. So where was Healtheon in those four dots? Right in the middle, taking a portion of the flow of monies for every transaction flowing between the four dots. This was simple to do as this was the Internet. Everything would be automatic. 

Healtheon almost made it big, except for one problem: the Russians defaulted on some bonds, sending the whole market into turmoil and sinking many offerings, most forever. Healtheon ultimately sank too.

I promised commonalities between the Obama plan and Healtheon. I guess I won't be wrong if I say they are both big. Healtheon thought they had a simple solution that would work. The Administration may not be convinced that they have a simple solution, but they do clearly believe that they have a solution that will work. I am going to stop right there. All I will say is that something needs fixing in the healthcare mess and that, hopefully, the solution they are about to vote on will start the process of fixing some of the weaknesses. I suspect this will be even harder than we envision (someone told me the bill was more than two thousand pages long - amazing!), but the first step is always the hardest. Good luck to us all.

Reference

Lewis, Michael. The New New Thing. A Silicon Valley Story. W. W. Norton & Company. 2000.

Posted by jackmixner at 02:50 PM | Permalink

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Mike Bloomberg joined Salomon Brothers in 1966, fresh out of the Harvard MBA program. He counted securities for a while before he moved upstairs to the stock-trading department, working for Jay Perry, with whom he worked until Perry moved on the Dallas, allowing Bloomberg to take his job as head of Salomon's equities desk (Purnick, 26-32). Exile to the "information services" department in 1979 came as the result of serious in-fighting with the same man who was instrumental in exiling Perry to Dallas earlier (Purnick, 33).

Exile could have been the end of the story except for Bloomberg's interest in things any trader in his right mind in the seventies wasn't even considering: how to instantaneously use information to make more money. Manual was the norm. You made decisions based on gut feel and old data. No one was taking advantage of real time information very well. No one was making use of historical information at all. Enter Mike Bloomberg.

While still a trader, he started to figure out how to program the Quotron machines that Salomon had early on invested in. Ultimately, you could ask the machine "what if" questions, something no one had ever considered doing before (Purnick, 34). So Bloomberg's exile became a learning opportunity. The Quotron turned into desk top, personal computers for every analyst, something the rest of the firm still thought a foolish waste. Main frames staffed by staff in a back room were the norm. Bloomberg pushed and pushed and pushed for more personal computers. That pushing had an effect, just not the effect Bloomberg had expected. He still had enemies (remember the guy who exiled him to IT in the first place?) who, in a reorganization of the firm, finally pushed him out the door (Purnick, 36-37) for good in 1981. A nice thing was buried in the distaste of the firing: they handed him cash and securities worth $10 million and sent him on his merry (not too happy, probably) way (Purnick, 37). Bloomberg took two other Salomon values along with him: he didn't cheat, and he "wouldn't tolerate dishonesty" (Purnick, 37).

Drum-roll please! Enter opportunity.

Basically, we all know the story from there: Bloomberg and a small team sold their services to Merrill Lynch to program some computers. Merrill kept buying and investing in Bloomberg's firm long enough for him to reach the critical mass needed by an entrepreneur to succeed. Let's just remember that by the time he closed his first deals, Bloomberg had been working diligently not for a couple years, but for almost two decades. This was no over-night success.

Reference

Purnick, Joyce. Mike Bloomberg. Money, Power, Politics. PublicAffairs. 2009.

Posted by jackmixner at 11:35 AM | Permalink

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We've been talking for some time now about the advent of a computer for third world kids. Slowly, the talk is turning into a reality. Negroponte reports (Negroponte, 81) that "1.4 million children in 35 countries" speaking "25 languages" are using the original $100 computer (which actually cost $175), the XO from One Laptop per Child. That circuit board had lots of pieces, maybe 900 or so. The goal? A circuit board with "only one chip" (Negroponte, 81). That's all. One chip. And, oh, the computer actually costs $100 this time around, hopefully.

Who cares? First generation XO's go home with their owners. Kids sleep with their computers. They're learning like never before. All 1.4 million of them. Think about that number. 1.4 million is a lot. And yet it is nothing when you consider how many kids there are in Africa. Or South America. Or Santa Ana. We have a way to go yet.

But that's the good thing. There are opportunities here. The XO sparked all sorts of things, from cheap screens to cheap electronics to small computers to wider band width to more kids sleeping with their computers. This next chapter will do the same thing. The next version XO won't be a laptop, it'll be a tablet (Negroponte, 81). You're thinking, "Apple already did that, so what?" Think again. A one chip tablet isn't going to be given to 1.4 million kids. I'll bet 140 million get one. Think about that. Negroponte got beat up last time around because the price wouldn't go down fast enough, because Intel jumped in and created a cheap chip of their own (the Atom, in all those netbooks out there), and because Asus said, "We'll move from chips to computers" and started to make a good competitor to the XO. Big deal. Yes, big deal. Negroponte pointed out a need, started down the production path, got beat up, sparked a new industry, kept going, and still has a vision for more change. He's one guy.

How come your design team isn't acting like that? "Oh, they're too busy," you say. Really? Have another look.

Reference

Negroponte, Nicholas. The Next $100 Laptop. Wired. April 2010. 81.

Posted by jackmixner at 08:14 AM | Permalink

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Right now it is easy to take shots at Toyota. GM and Ford are taking pains not to, as they know what it feels like to be in the spotlight. But that doesn't mean that we can't have a look at what went wrong at Toyota. Now, we can point, look at the facts, and, realize that we aren't getting the whole story. Here's the story we're getting from BusinessWeek: Jim Press warned the Toyota brass in Japan in 2006 that there were quality issues with Toyota autos (Ohnsman, 34). Earlier, the company president "boasted of saving $10 billion in the previous six years by reducing operating costs (Ohnsman, 34)." Now, so you know, we have a Toyota. We like it for all sorts of reasons. And, so you know, I have stood back and tried to decide if I would recommend that we buy another Toyota. If you listen to the ads of satisfied new customers, Toyota is hoping that my decision - and lots of other folks' decision - will be to buy another Toyota. I guess the way I'll look at it is to try to figure, with all the problems we're hearing about, the Toyota I might want to buy someday is as good as or better than other autos on the market. That's how I'll make up my mind.

There are issues that apply to a well-run company that we all have to recognize. Continual focus on the bottom-line can ultimately have serious implications. Continuous improvement has to focus on improvement, not continuous cost-cutting. There is a difference. Sometimes it is hard to ascertain. The step that is missing is to realize the difference and act upon it. Just following along and removing every iota of quality to save money isn't what continuous improvement is all about. Reducing production time saves money. Reducing the number of parts in an auto, done correctly, can save money. Saving money is good. Ultimately, folks will notice if the quality isn't there. Toyota has gotten caught in a spiral. With effort they'll do fine. The real benefit is to notice what happened and make sure it doesn't happen to your company.

Reference

Ohnsman, Alan, Jeff Green and Kae Inoue. The Humbling of Toyota. Bloomberg Businessweek. 22 & 29 March 2010. 33. http://www.businessweek.com/magazine/content/10_12/b4171032583967.htm

Posted by jackmixner at 02:48 PM | Permalink

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Occasionally, my pragmatic spirit gets in the way. In a quick stand-up planning session after another meeting recently, I changed my direction two or three times in seconds based on new information from others in the meeting. One of the women in the meeting said, "I'm never marrying you. You change your mind too much." That certainly caused this happily married man to pause and go "What?" And of course, from her point of view, my friend was correct. I do change my mind too easily, or so it seems. In my defense, I realize I am pragmatic - do what it takes, and all that - not hopelessly unable to make up my mind.

That "What?" allowed me to actually read Fish's comments about pragmatism, and caused me to ask my friendly research librarian to order Margolis' new book on pragmatism. The librarian was able to show that only six copies of the book existed, and that, really, did I want to order the book? Closer reading of the OpEd said, "No, don't read the book. You'll go nuts."

Pragmatism "is among the 'very small number of Western philosophical movements ... that ... never exceed the natural competence and limitation of mere human being (Fish quoting Margolis).'" That says there is a philosophy called pragmatism. We make pragmatic decisions all the time. We overlay other codes of conduct on our decisions, but, given a bit of flexibility, those codes don't have to be inflexible. Strategically, when you are working with a team, go with the flow. Have some plans that don't change - grow xxx per cent this year - but be willing to change, sometimes on the fly, what you are doing day to day. That's my read on the situation, anyway. But, and here is my personal caveat from experience with my friend, sometimes it pays not to change your mind too often.

References

Fish, Stanley. Pragmatism's Gift. New York Times. Opinionator. 15 March 2010. http://opinionator.blogs.nytimes.com/2010/03/15/pragmatisms-gift/?ref=global-home

Margolis, Joseph. Pragmatism's Advantage. American and European Philosophy at the End of the Twentieth Century. 2010.

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First, he sold bonds on Wall Street back in the late eighties. Then he wrote about the experience in Liars' Poker. Now he is back with a book about the recent debacle entitled The Big Short. Already targeted for production as a movie (Osinski, 96), Michael Lewis' latest plays up the few players in the recent market who really made money, the ones who figured out that there was something wrong with all those mortgages out there, and figured out how to short the mortgage market, all to derision, first, and for great wealth, later. Osinski does a little digging and quotes an optimistic Lewis the day before the bond market broke in January 2007 and compares the quote with Lewis' final realization that, whoops, was he wrong. Rubbing it in when someone takes a bad stand is always fun for Monday morning quarterbacks, as it were.

Lewis got it wrong way back when. Luckily, the star of his book didn't. Michael Burry, a resident neurosurgeon, typed his predictions of doom into the ethers of the web as it existed in the late 1990's (Osinski, 95). People noticed, and sent him money to invest. He continued researching, hitting ultimately on the realization that mortgages "would start to blow up...when the original teaser rates expired" (Osinski, 96). Burry figured out how to invest his point of view and made a fortune.

Contrarians are always interesting to review in hind sight especially if they made money. There are always grey clouds over booming markets. The trick is to know when the rain is going to start. Modern strategy says have a plan and invest heavily in it. It is sensible to realize that everything good ultimately goes bad. Having a plan - having alternative investments already cooking - makes sense in any market. Right now, that means, yes, continue to improve the products and services your current customers happily buy. However, realize that it makes sense to invest in simpler, cheaper combinations for markets you might not normally address. Left a market behind in the last decade? It might make sense to look back to those customers to see if they might be interested in what you are making today, but at a cheaper price/feature point. If they're interested, maybe you have a way to grow, even in a slow growth market.

References

Lewis, Michael. The Big Short: Inside the Doomsday Machine. W. W. Norton. 2010.

Osinski, Michael. The Subprime of Their Lives. Bloomberg Businessweek. 22&29 March 2010. 94. http://www.businessweek.com/magazine/content/10_12/b4171094664065.htm

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Picture a middle-eastern bazaar on market day maybe in the middle of the eighteenth century. What do you see? People packing the square. Shouting. Cursing. Eying. Ignoring. Touching. Feeling. Negotiating. Settling. Paying. Carrying. Trusting. Not trusting. Knowing. Undecided. Decided. Rich. Poor. Packed. Tight. Close. Smelly. Smoky. Sensual. Nonsense. Cheap. Exquisite. Sunny. Shadowed. Wet. Rainy. Cold. Hot. Safe. Unsafe. Escorted. Unescorted. Free. Enslaved. Story. Sounds. Music. Singing. Horses. Monkeys. Pestering. Quiet.

Now picture a Target on a Saturday afternoon. How many of the adjectives above apply? Some of them just don't fly anymore. People want to be safe. They want a fair deal. Things have changed. Walmart the same way. The center of the retailing universe has become staid. Yes, the end-caps sell. So do the aisles, or, believe me, the items for sale won't remain at Walmart very long. But the experience has changed. Maybe it is a good thing. It might be what we really want.

Doc Searls (Levine, 76) says we really do want the bazaar, and that the bazaar has been re-created on the web. Want to argue? There's a place for you. Same with every one of the adjectives above. Quiet. Unsafe. Smelly. There's an idea.

Searls talks about a marketing assignment for a computer company that had spent years in the dark making their latest product. They wanted to make a big splash at the launch. There was no way. No one was interested.  They weren't part of the conversation, and, crucially, the conversation couldn't be created in an instant. My friend Shannon Barnes clued me in to The Cluetrain Manifesto. He does a good job with all the media out there. Twitter. Facebook, I guess. Linkedin, certainly. What's that mean for you? Want to launch a new product or service? Make sure you're part of the conversation (that might even be too simple - be part of the arguments) in today's bazaar, or have a very tough time marketing your new product.

Levine, Rick, Christopher Locke, Doc Searls and David Weinberger. The Cluetrain Manifesto. The end of business as usual. Perseus Books. 2000.

Posted by jackmixner at 03:13 PM | Permalink

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A Table of Contents is sequential. Following from the first chapter to the second to the third is the idea. Want to innovate? Forget about the Table of Contents. Focus instead on making connections throughout the book - throughout your company and your clientele - to make things new and worthwhile to customers.

Remember the pictures of bicyclists racing on those big-wheeled bicycles back in the last decades of the nine-teeth century? Bicycling has been a popular sport for a long time. The designs have changed, but it is a reasonable bet that you rode, if not owned, a bike when you were a kid. So, if we are all bicyclists, why did we mostly stop bicycling by our twentieth birthday? Shimano, after looking at the problem a bit, found out (Brown, 13). Bicycling is a cyclic business, something most marketing folks with expertise in the bike business will tell you. You are going to have down years. Shimano wasn't willing to accept that as a given, so they tried to do something about it. The first thing they should have done, if they followed the chapter-by-chapter scenario, was to go to their marketing department (or maybe their research and development department) and ask for a new flavor of bike for next year. They chose instead to look for connections in the biking community to see if they saw anything interesting.

Their classic assumption was that they should focus on the high end of the market. After all, they had thought all those years, you make more profits on higher priced parts and components. That makes for more profits, normally. Instead they looked down market. People stop bicycling when they hit twenty for a reason. If you've bicycled lately, you probably know why. The seats hurt. Leaning over isn't comfortable on your back. They found out a whole list of things folks hate about the experience (Brown, 14): people hate comparing themselves to lycra-clad sales clerks; the complexity - and cost -of owning a bike isn't conducive to a quick weekend ride; cycling on a clogged city street is dangerous to your health; maintaining a bike is a pain in and of itself; everyone owns a bike, but it has a flat tire, or a broken cable that has been broken and abandoned for years. Fix all that and you might increase sales. Thus was born (or re-born if you think about it) the coaster bike for weekend warriors who want a simple ride. Shimano makes components, so they had to convince manufacturers like Trek, Raleigh and Giant to follow along (Brown, 15). They didn't just make stuff. They designed campaigns for local bike shops to start with their local government. Safe place to ride. Safe equipment. Safe rules. Safe sold more bikes.

A simple concept if you think about it. Don't "complexify" your product to sell more product. Simplify it. Throw out parts. Make it easy to maintain. Make it a cool thing to do in your community. And -oh, this is cool too - sell more bikes. I didn't say it would be easy. It takes time to sell more stuff. But it is doable. Think about it.

Brown, Tim. Change by Design. How Design Thinking  Transforms Organizations and Inspires Innovation. Harper Business. 2009.

Posted by jackmixner at 01:58 PM | Permalink

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Table of Contents: The Innovator's Guide to Growth.

Forward - Clayton M. Christensen

1. Precursors to Innovation - Core business in control, growth game plan, allocated resources

Part One. Identify Opportunities

2. Identifying Non-consumers

3. Identifying Overshot Customers

4. Identifying Jobs to Be Done

Part Two. Formulate and Shape Ideas

5. Developing Disruptive Ideas

6. Assessing a Strategy's Fit with a Pattern

Part Three. Build the Business

7. Mastering Emergent Strategies

8. Assembling and Managing Project Teams

Part Four. Build Capabilities

9. Organizing to Innovate

10. Innovation Metrics

11. Conclusion

Anthony, Scott D., Mark W. Johnson, Joseph V. Sinfield, Elizabeth J. Altman. The Innovator's Guide to Growth. Putting Disruptive Innovation to Work. Harvard Business Press. 2008.

Posted by jackmixner at 03:42 PM | Permalink

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First, the rise of Europe as a power in the 17th century. Then, the rise of the United States of America in the late 19th century. Now, the rise of all sorts of economies around the world, mainly China and Asia and including India (Florida Flight, 236). Florida thinks things aren't so dire. We have a chance if - if - we have a "multi-polar (Florida Flight, 237)" strategy. "Cultivate new industry sectors, prepare people for the future, and most of all remain an open society (Florida Flight, 237)."

For decades America attracted talent from all over the world. Things have changed. Folks can go a lot of places to educate themselves. China. India. Scandinavia. Canada. Australia. All will compete. Florida say we have a choice. Restore creativity and openness. Succeed.

Florida's next book focuses on where to live if you're going to succeed. He has maps and formulas that say who's on top, and who's on the way down. Well, we already knew that Flint has a problem. If you take the time, however, there is a message. Americans have done it all along: migrate for economic reasons. Our county has immigration and emigration according to economic conditions. Florida (City) calls this a strength and recommends migration at will for economic reasons. His premise is that education and where you went to school aren't as important as where you end up living. He posits that living in the big mega-cities of the future ensures success  because of the vibrancy of the larger community. The World is Flat got it wrong, Florida says. Having an Internet connection isn't enough. You have to end up in a vibrant community. Then he proceeds to map out all the communities and suggest good locations for you according to your psychographics. Luckily, I appear to have ended up in a good place for my psychographics. Of the five people from my Fortune 500 company who migrated to southern California when I did, two, maybe three, have returned. This wasn't right for me. Interesting how it works. Florida recommends a strategy of deciding where you end up, as community dictates economic success. OK, I'll buy that. I also will buy that life is more fun when there is a bit of serendipity involved. Arrive somewhere and look around. Is it a viable community for you, your business, or should you move on? Have a look, especially before you put down roots you can't transplant.

Florida misses a big point. The high schoolers I talk to are considering relocating, all right, but not to NYC or LA. They're considering points all over the world. I can't blame them and, if we plan now, we can keep them here. It'll take a re-focus of American schools on creativity, not just science, technology, engineering and math. An interesting mix, not just a technical one.

Florida, Richard. The Flight of the Creative Class. The New Global Competition for Talent. HarperCollins. 2005.

Florida, Richard. Who's Your City? How the Creative Economy is Making Where to Live the Most Important Decision of Your Life. Basic Books. 2008.

Posted by jackmixner at 04:14 PM | Permalink

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Eight key points for building a Web 2.0 Community (Libert, 127):

• Lead from the rear. Provide direction and then stand back. Let the crowd lead.
• Know when to step in. You'll know when you have to take action. You just have to pay attention.
• Form a club of like-minded people. Start with, for instance, satisfied customers.
• Don't even try to hide. You're going to make errors. Admit them, fix them - and move on.
• It's never going to be perfect. The coders will continue to improve things. Editing may take forever. (Here's a hint: late in the process, take control of the editing. It has to end somewhere).
• Stir things up. A little bit of heat in a discussion makes the out-put stronger. Make sure you have a pretty good idea where folks stand.
• Here's my favorite: Always say "Thank you." Pretty easy. I am amazed about how many people forget this simple step.
• Don't encourage folks to pass through. Figure out how to engage them in what you are doing.

Final comments: if you are going to create a Web 2.0 project, don't let the crowd decide what your mission is. Decide, then invite folks to help out. Otherwise, you'll waste time you can't afford to waste.

Not only is it fashionable right now to build Web 2.0 communities, it just makes sense. Give it a try.

Libert, Barry and Jon Spector. We Are Smarter the Me. How to Unleash the Power of Crowds in Your Business. Wharton School Publishing. 2008.

Posted by jackmixner at 03:58 PM | Permalink

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My friend Peter Agarwal and I were discussing a new word (for me) that came from India: jugaad. Together we figured out that it meant "workaround." You've got a problem but no support whether from personnel or capital, what do you do? Work around the problem. You've acting in a jugaad manner. It ends up that there's a book being written about jugaad. Newest fad? Yes. Useful? Maybe it is intuitive and we all are doing it. Might be useful to think about and see if your team needs a five minute story about it.

Peter sent me this definition from Wikipedia:

Jugaad (Hindi: जुगाड़ Punjabi(gharuka)) are locally made motor vehicles that are used mostly in small villages as a means of low cost transportation in India. Jugaad literally means an arrangement or a work around, which have to be used because of lack of resources. This is a Hindi term also widely used by people speaking other Indian languages, and people of Indian origin around the world. The same term is still used for a type of vehicle, found in rural India. This vehicle is made by carpenters, by fitting a diesel engine on a cart.

"Jugaad" is also colloquial Hindi word that can mean an innovative fix,often pejoratively used for solutions that bend rules, or a resource that can be used as such or a person who can solve a vexatious issue. It is used as much for enterprising street mechanics as for political fixers. In essence, though it is a tribute to native genius, and lateral thinking.

Even though in everyday life, a Jugaad can be a solution, in context of Management, Jugaad is essentially a person who has some special capability or access to a resource or even access to another Jugaad that can be useful under extreme or special circumstances. A Jugaadu person is one who has numerous useful and cashable Jugaads. 

Jugaad is also mentioned by Jana. Need to learn how to develop products more cheaply? Maybe you need to do a little research on jugaad methods.

Posted by jackmixner at 01:46 PM | Permalink

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Three factoids about the up-coming battle for executive talent (Fernandez-Araoz, 72):

• Tata Consultancy Services calculates the ROI of each new hire, by university. The best schools' graduating classes get blanket offers from Tata.
• China is working to attract scientists from around the world. Singapore is shifting itself from a host for exec talent to a home. Subtle shift. Big meaning.
• A European-based company just moved its entire management team to Singapore so they could see things "from the other end of the telescope."

In the early eighties Japan was the big nemesis. Today the rest of Asia is filling that role. The battles aren't done yet, but they will effect your hiring process in subtle ways. Now is the time to start planning.

Fernandez-Araoz, Claudio. The Coming Fight for Executive Talent. BusinessWeek. 7 December 2009. 72. http://www.businessweek.com/magazine/content/09_49/b4158080830272.htm

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You have one meeting with the top brass in your biggest sales target. How do you prepare (Lay, 6)?

• Lodge a provocation. Come prepared with information that will unsettle the potential client. "If you don't do this, now, this will happen."
• Capture their reaction. No reaction? Leave. Concern? Push your case harder.
• Give war stories. Tell them what happened with another client when they did it your way.
• The close? A diagnostic. Charge for the diagnostic. If you do this right, expect them to find budget, even when there is no budget.

Who do you take to the meeting? This is not consultative selling. In consultative selling, you save your best sales people for late in the dialog. Regular folks found out what is going on. The sophisticated closers come in late, to close. Not any more. Take the best people early on. Arm them with the best information you've got, including war stories. Make the close earlier, even when you are not sure there is budget to do what you want to do.

Provocation is compelling, with new information (Lay, 5). You know they have angst. Address it. State your case and prove it with hard facts. Keep it executive level. Dealing with a manager? Go higher. Provoke. Lead. Force issues out.

Lay, Phillip, Todd Hewlin, and Geoffrey Moore. In a Downturn, Provoke Your Customers. The companies you serve are slashing their budgets-but you can still make the sale. Harvard Business Review. 2009.

Posted by jackmixner at 02:35 PM | Permalink

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More than a year ago, we extolled the virtues of the Pure Digital Flip video camera (Mixner). Since then, the camera has sold millions of units in a down economy. The company has since sold to Cisco for $560 million. The Flip is still riding high. Sales still continue to be "off the charts," competitors are taking notice (and failing in their efforts), and the company is carefully adding features as costs come down (there is now a high definition version of the Flip for basically the same cost).

Capps calls products like the Flip "good enough" products (Capps, 118) because they give eighty percent of the functionality for twenty percent of the price, or, more succinctly, "twenty percent of the effort, features, or investment delivers eighty percent of the value to consumers" (Capps, 118). He lists a whole series of similar products and services (Capps, 113-118):

• AutoCAD has a simple, cheap competitor called SketchUp that costs $500 versus AutoCAD's $4,000.
• 90% of Google's ad revenue comes from text ads: no pictures, no celebrities.
• Netbooks have minimal storage, minimal processing power, no graphics capability and they are cheap, small and light. Shipments are up seven-fold in 2009.
• Kindle isn't high resolution or complex graphics driven. It is slim and has hundreds of book titles. Oh, and $310 million in sales its first year out.
• Net calls aren't so hot. They are cheap, however. Skype sales are up forty-two percent year-to-year.
• Conlin talks about the new simple in healthcare: Doctors who make house calls. A trip to the emergency room costs $1,500 on average; a home visit costs $150 (Conlin, 071). In this case the quality and the price is there. Not bad.
• Wildstrom talks about Microsoft's new free virus scrubber. They tried to sell it and failed, so they are giving it away. It is apparently as good as Symantec's offering, but simpler and not as "invasive" on a computer.
• Markoff talks about I.B.M.'s entry into the genome business with a targeted $1,000 report. Cheap, simple genomes will revolutionize medical diagnosis and treatment. Let's watch and see if I.B.M. is actually able to pull this off. Their personal computer decades ago was successful because they assigned the project to a remote team and left them alone. Let's hope they decide to do that again.

I am interested in one flaw in the discussion. I said it a year ago, and it still appears to be true: only small companies can create disruptive strategies that work. It's true until you begin to examine things a little bit closer (beyond the Microsoft and I.B.M. examples above). Two big-company examples:

• Kaiser Permanente has a new clinic in Hawaii staffed by two physicians who are able to do eighty percent of what any walk-in customer/patient might need. What they can't do, they refer across town to the Kaiser hospital with full services. No one needs to cart around x-rays or patient records: they're digital and accessible everywhere in the system (Capps, 118).
• It used to be that attack fighters were fast, heavily armed and devastating to the enemy. The only problem is they can't stay over a battle field for hours. Predator drones are the opposite (Capps, 117). They're light and minimally armed. They are also able to stay put to watch 24/7 (via video) what is going on over the hill or over the mountain range. They either fire their simple weaponry or call in the troops or the fighters.

Both the clinic and the drone were created by big companies (Kaiser and General Atomics). This deserves more study. Disruptive strategies work for small companies. They also work for big companies.

Capps, Robert. Why Lo-Fi High Tech Will Rule the World. Wired. November 2009. 111-118.

Conlin, Michelle. The Return of the House Call. BusinessWeek. 16 November 2009. 70. http://www.businessweek.com/magazine/content/09_46/b4155070821061.htm

Markoff, John. I.B.M. Joins Pursuit of $1,000 Personal Genome. New York Times. 5 October 2009. http://www.businessweek.com/magazine/content/09_46/b4155070821061.htm

Mixner, Jack. Disruptive Technology: Smaller Companies Have the Edge. http://mixnerstrategy.com/blog/2008/09/disruptive_technology_smaller.html

Wildstron, Stephen H. Microsoft Steps Up Its War on Hackers. BusinessWeek. 21 September 2009. 76. http://www.businessweek.com/magazine/content/09_38/b4147076993366.htm

Posted by jackmixner at 03:33 PM | Permalink

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With risk comes reward. Collaborate at a high level, increase reward. There is a hierarchy of partnerships worth considering, from transaction based partnerships, shared learning, customer interactions through service innovation, and, finally, end-to-end collaboration (Tyagi, 131). Collaborations can focus on increasing market position, reducing costs, increasing responsiveness, growth and reducing time to market (Tyagi, 131-131).

Why bother? OK, increased profits are one reason. They're a given. In this marketplace, however, they're not enough. A brutal word might be more apt: survival. Collaborate. Survive.

Tisch talks about collaborating to help lower income potential employees to succeed as hotel workers by applying Workforce Investment Board technologies during the welfare to work process a decade ago. It's still working for him (Tisch, 21). This was a pretty high level rish for him, as he was making investments in up-grading his hotels to four-stars (five-stars were too expensive and too risky. Four star hotels have the ambience of five but without, maybe, a quarter of the staff.) The federal/company collaboration worked. He suggested it to other hotels nation-wide.

Tisch, Jonathan M. and Karl Weber. Power of We. Succeeding Through Partnerships. John Wiley & Sons, Inc. 2004. 

Tyagi, Rajesh K. and Praveen Gupta. A Complete and Balanced Service Scorecard. Creating Value Through Sustained Performance Improvement. Pearson Education Inc. as FT Press. 2008.

Posted by jackmixner at 01:24 PM | Permalink

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Win the race. Make the whole team famous - and more valuable. Lose team. Re-build. That was the process facing Lance Armstrong after his first win in the Tour de France. That, and the press's reaction to his win. They claimed he had cheated by using drugs to win his victory. Wasn't so, but what to do? New team? Yes. New PR? Yes. Same Lance.

The new team was necessary because all the good folks retreated to other teams. They got paid more, after all. You can't blame them. The PR? That was necessary because no one understood how Lance had won. When they couldn't see or understand his training regime, they balked (Wilcockson, 282) and cried "Foul!" Same Lance. Yes, again. After his bout with cancer, Armstrong came back fifteen pounds lighter. That allowed him to attack the hills better. Less weight, less to drag up the biggest mountains. His legs were the same, capable of long courses.

Armstrong utilized two new stragies. They were pretty obvious, but no one else was using them effectively: training and cadence. He rode all the legs of the next Tour all by himself, attacking them over and over (think about: he was attacking thirty mile hills over and over again - that's training) again until he understood how to win on them. Some of it was cadence: pedal in a lower gear, increase the number of revolutions, be more efficient (Wilcockson, 262) while, at the same time, attack going down the steepest slopes (Wilcockson, 122). All while training more than all the other pros.

So, you're trying to win at your market for a second time. Look at your team. Practice more on the hard parts (the hills) and the easy parts (the down hills). Change the cadence (speed things up - or slow them down). Might work for you.

Wilcockson, John. Lance. The Making of the World's Greatest Champion. Da Capo Press. 2009.

Posted by jackmixner at 11:33 AM | Permalink

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Long term strategy takes a back seat, usually, to profits next quarter. That's the illusion, maybe even the facts. There are contrary examples worth remembering, however.

American pharma companies which wanted to sell more in Japan after WW II gave away tuberculosis medicine.  River-blindedness in Africa was solved the same way. They build recognition in a new market with the hope that that recognition would turn into profits down the way. It's happening again.

Traditionally, pharma companies have two methods: fund hugely expensive research and development operations and profit on the few drugs that make it through the process, or, as in public health initiatives, subsidize the distribution of drugs into a population unable to fund the pharmaceutical purchase itself. Both can make sense. There is another way.

Martin tells of a researcher who did it a new way that was just as effective (Martin, 109). The researcher examined drugs - old ones - that were no longer manufactured because they weren't profitable. She found new uses for the old drugs, got them approved, and took them to market in poorer countries. She built the model before she found the drug or the target market. Old drug, new market, new manufacturer. With a little bit of thought, the process may have applications in other applications, as well, maybe even in your industry.

Martin, Roger. The Opposable Mind. How Successful Leaders Win Through Integrative Thinking. Harvard Business School Press. 2007.

Posted by jackmixner at 10:18 AM | Permalink

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Strategic "success can only be achieved in collaborations where all partners understand the fundamental role of creativity in the strategic plan. Business leaders who view design as little more that an aesthetic "fix" for dull and naive business models might temporarily look good in the media, but their moments in the spotlight are brief. It takes a day to create a fascinating "study," but years to create a new strategic business (Esslinger, 33)."

Esslinger's been involved in design at Apple (he owns frog design who advised on the Macintosh), designed the logo for Microsoft's Windows, made ship designs for Disney, and on and on.

He talks about the strategy of design. It's not just making things look good. It's about the whole company. Want a new airplane seat to save space and weight? Might want to look at the whole design of the interior of the airplane, and, while you're at it, the waiting area, the ticket taking area, and, oh yeah, the website. It's not a little thing. It's a big thing that effects the bottom line, big time.

Esslinger, Hartmut. A Fine Line. How design strategies are shaping the future of business. Jossey-Bass. 2009.

Posted by jackmixner at 09:08 AM | Permalink

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Denning's book has a premise: story telling is the way to make your company grow. Interesting concept. Sometimes useful. Here is a worksheet (truncated) on formulating a story about where you want to take your company (Denning, 99):

One piece of paper, three sections. First section: Where we've come from. Second section: Where you are now. Third section: Where you are heading. A line connects the sections. It ties the story together, "the journey of your life" (Denning, 99).

Now tell a short story (sixty seconds) about the first section. Review it for relevance. Tell it to other people. Check out if they understand it and have suggestions. Repeat for the next two sections. You now have a three minute speech to tell your team. Need a longer speech. Prepare more one minute stories. Add them to your speech.

Seem too simple? Try it. You don't want a complex formulation. You want simple stories, one after the other, to engage folks. They'll actually listen and engage. That's good.

Denning, Stephen. The Leader's Guide to Storytelling. Mastering the Art and Discipline of Business Narrative. Jossey-Bass. 2005.

Posted by jackmixner at 02:21 PM | Permalink

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Kawasaki was the marketing person involved in the launch of the Macintosh computer at Apple. His book is full of lists on how to do stuff related to new product launches. Lots of lists. Here's a list on why hiring market research consultants aren't necessarily useful all the time (Kawasaki, 115):

• You probably know - or will recognize - the subtleties that a trained researcher will miss.
• Because you don't focus on research per se, you'll notice more. Hang around places where buyers congregate. Look for what they need. Figure out how to supply it. Kawasaki talks about market research for auto show rooms. Without a Mom on the team, it would forget that Moms would love to have a place to put the kids while they wait for a car repair, pr better, buy a car.
• Sam Walton strolled through lots of competitor's stores. He'd notice it. By the next Monday, it was happening at WalMart. The Saturday management meeting made sure of that. Fast to market. More profits.
• Use folks with lots of different experiences on your market research teams. If they're all the same, you get fewer useful ideas. More ideas, more profits. Makes sense.

Kawasaki, Guy with Michele Moreno. Rules for Revolutionaries. The Capitalist Manifest for Creating and Marketing New Products and Services. HarperBusiness. 1999. 

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You'll remember that business engineering got a lot of press in the nineties. I revisited Hammer's book to see just what is applicable today. Here's Hammer's part of a list of things to do to make sure your process works (Hammer, 201-213).

1. Don't fix the process - change it.
2. Focus on process, not trivialities. Look for big issues to address, or don't bother.
3. Focus on values and beliefs as part of your process. Ignore them? Ignore your employees who are watching very carefully for a reason not to help you.
4. We talked about trivialities. Minor results are the same. Big results, or don't try.
5. Don't give up. Well, that's obvious, but how many instances can you supply where a company you are involved with gave up too quickly?
6. Don't constrain the scope. Everything is on the table, or nothing.
7. Move through, around, by culture if you must. Don't get mired down.
8. Bottom up doesn't work. Without the support of senior management, you've got nothing.
9. Now here's one that I don't like so much: Don't assign someone who doesn't understand reengineering to lead the effort. Well, remember, this book was written by consultants. They want you to hire them, and no one else. Remember that when you decide to hire them or not.
10. Reengineering has to be at the top of the agenda. Focus on the most important items that are likely to get the biggest results.
11. One project at a time, and only one project at a time. Concentrate your efforts if you want to succeed.
12. Don't stop when folks resist change. Resistance just might be healthy indication of results just over the horizon.
13. Get things done. Don't take too long. Get going.

Hammer, Michael and James Champy. Reengineering the Corporation. A Manifest for Business Revolution. HarperBusiness. 1993.

Posted by jackmixner at 01:55 PM | Permalink

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There is Wills on Washington (Cincinnaticus). There is Wills on Lincoln (Lincoln at Gettysburg). Then there is Wills on everyone else, a treatise on leadership discussing thirty-two good, and not so good, leaders. In this case, Napoleon is the good. We're going to forget about the bad and focus on the good of Napoleon.

Six key points that resonate with leaders today (Wills, 89-92):

1. Forget about victory for its own sake. Winning the battle, winning a town, without winning the war is useless waste of energy. Pick your battles.
2. "Attack in head-long lunges (Wills, 90)." Small groups, left to fight alone, lose energy and become fearful. Concentrate your legions. Give them drums and noise makers. Scare the enemy so they run before they engage.
3. "Fight toward supplies (Wills, 91)." Napoleon didn't travel with a lot of supplies. Ammunition, probably. Food, maybe not. If the troops wanted to eat, they had to fight their way to the food, which was always on the other side of the enemy.
4. "Fight only with preponderant force on one's own side (Wills, 91)." Mass your troops. Wait until your forces out-numbered the enemy. Split the enemy forces and fight them one at a time, never all at once. That meant he couldn't allow them to concentrate.
5. Here's one I like: simplify. Fight head on. Don't go around, forget about ambushes, and all the convoluted battle plans everyone else had. Attach. Head on. Now.
6. Finally, keep moving. If the enemy was fixed in a town, ready to sit it out, entrenched, find another army to fight. Keep moving. Don't lay siege, especially for a long time. Abandon, wait for the enemy to emerge, engage. Don't wait around if you can help it. Remember, if you are waiting around, you aren't fighting toward food. You're starving. Starving isn't good, especially if you didn't have supply trains coming.

Wills talks about Napoleon's first real campaign in Italy. He defeated two armies and was on his way to Vienna, having beat two other French armies to the punch. That wasn't supposed to happen, especially from an up-start like him. At the last minute, Napoleon stopped. He didn't attack Vienna. He just didn't have enough strength. Everyone at the time said he failed. Well, maybe so. Actually, if you look at it, he showed good decision making ability. At Vienna, he would have lost. Why fight a battle you're going to lose? Napoleon knew the answer to that one.

Wills, Garry. Certain Trumpets. The Call of Leaders. Simon & Schuster. 1994.

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It's pretty obvious that leaders have to have followers. Since we all watch CEOs in action, knowing when they are going to fail might be a good thing to know, yes? I think so. Wills takes the time to detail the leadership styles of thirty-two different leaders, half of them successful leaders, the others not so effective. Some of the leaders failed because they couldn't inspire any one to follow them. That's pretty obvious to see. Usually, corrupt folks are found out eventually. Not a very good leadership style. (OK, Madoff took a little bit longer, I'll warrant. He's an outlier, wouldn't you agree?)  What about the rest? They couldn't find followers. OK. Why?

There seems to be one effective predictor of failed leadership, namely, leaders and followers without a goal that they all agree on. Now, Madoff's staffers must have been following along, at least to some extent. Why they did it isn't clear. If they profited, why aren't they in jail, you ask? My prediction: they will be eventually. That's still an outlier example. Most CEOs, when they fail, fail because folks are not helping to create their company goals. The CEOs have followers, yes. But the followers aren't buying into - or, don't understand - the results the CEO needs from them.

Three key things to remember: There has to be a leader. There have to be followers. They have to have a common goal that they all agree to.

We could stop right here and call this the end of the lecture. Not so long ago we talked about failure in corporations (Mixner). We followed Block's description of failure. He said that effective leaders are stewards, not dictators. Stewards follow more democratic principles than dictators. As a result, because they allow their teams to make decisions - even about values and vision, usually high level tasks - on their own, their teams buy in to what they do and perform at a higher level, usually at much higher levels. That's good for everyone.

When we mix Wills (got to have a leader, followers and a goal) with Block (the best thing is to let the team make up their own values and actions with a little very high level training on how to do those things) we've got something very valuable. Let's combine terms, sort of like algebra: steward leaders, enlightened followers, high level goals that they create together and that they all buy in to. Now we're getting somewhere. Think about it.

Mixner, Jack. Democratic Strategy. References Block's Stewardship. http://mixnerstrategy.com/blog/2009/09/post_1.html 

Wills, Garry. Certain Trumpets. The Call of Leaders. Simon & Schuster. 1994.

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I took a graduate class in comparative literature along the way. The idea was to understand how to evaluate a book quickly not only for its conciseness, but also for its applicability. We'd ask ourselves who the narrator was in important scenes, how knowledgeable that narrator was, and, further, what kind of axe that narrator had to grind. I find myself doing the same thing with strategic plans.

In literature, they examine the narrator's point of view. In strategic planning, we do the same thing. The omniscient point of view (the narrator knows everything, is all knowing) is pretty obvious sometimes, especially when the CEO dictated the plan without any input from the team. Objective point of view (tell what happens without stating anything else) (Literature) loses the feeling of it all. When you are discussing values, for instance, forgetting about feelings may not be a very good choice. Whether the narrator participates in the story either directly (first person) or indirectly (third person point of view) sometimes shows through.

Having an omniscient CEO isn't all bad, especially when you're going through tough times. It is dangerous, however, in the situation where all creativity of the team at all levels is wrung out of the system. Sometimes, sales people - and loading dock people, for that matter - know what is best for the organization. Not allowing them to make decisions on their own isn't a very good idea, even when they are making strategic decisions.

When you think about it, while we live in a democracy, our businesses aren't very democratic. Leaders sometimes stay leaders for many, many years. In a democracy, elections and term restriction limit the amount of damage any one person can do. In a business, that isn't always the case. When a CEO is saying, "I know what is right for the organization," and doesn't brook any real comment about what she/he is saying, watch out. Dictatorships get things done, yes. Sometimes, however, they forget to do the important things, like motivate employees to help the company succeed.

Literary Analysis Guide. Point of View. http://www.ci.maryville.tn.us/mhs/studyskills/CompGuide/LitAnaPOV.htm 

Literature. Exploring Point of View. Types of Point of View. http://www.learner.org/interactives/literature/read/pov2.html

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My good friend George Morrisey, a professional consultant if there ever was one, suggested that I read the Zimmerman/Tregoe books on strategy back when I was first setting up my consulting practice. George was interested in the Tregoe explanation of Driving Force and how it applied to corporate strategy. The idea was to identify the driving force of an organization and, with it, the time frame for its application. Combine the force and a time frame into a quantifiable strategy. Critical issues were identified and planned for if there were supporting strategies that made sense.

Recently, I found the Zimmerman book in the library. It is interesting because it talks about culture and how to amplify its effects throughout the organization. My first impression of this discussion was that the strategy of spending a lot of time identifying the culture and then trying to communicate senior management's perception of values throughout the organization was just that - a strategy that took too much time to implement in this fast changing environment. That's my assumption, especially when it is amplified by Block's book on stewardship. Block, Tregoe and Zimmerman are all trying to effect positive change at an organization. Block uses management lightly, expecting them not to dictate a value system, but to open a dialog with customers and employees to deteremine what values and strategies are important to each part of the organization. No one grinds on results, because each person in the organization knows the metrics that are important to them and their individual customers and operates to them. Tregoe and Zimmerman are more analytical, spending large quantities of energy in examining the current belief system in an organization (Zimmerman, 219) and trying to effect its change to make it jive with management's point of view.

Zimmerman's team was involved in the turn-around at Harley Davidson in the early eighties. There is an entire chapter on what happened there. Basically, they realized that their bikes were over-priced and marginally shoddy, with, however, wonderful brand recognition. Their job was to fix the shoddiness and lower the price, something they were able to help the Harley team accomplish. Everyone was happy. Good story. Harley hadn't applied quality techniques yet; lean manufacturing was something that they couldn't even fathom early on. But they had craftsmen who cared about the bikes they produced. That was enough. Engaging teams of craftsmen to resolve they problems was enough to "kick-start" Harley for another twenty year run of success.

I feel like I have to say that I like the Zimmerman method better than the Block method, but I can't. I see value in both their points-of-view. Stewardship - letting the team figure things out, and do them without explicit direction - and beliefs set from above that flow throughout the organization are, in the end, be very similar. They feel different, but they're not. Interesting.

Block, Peter. Stewardship. Choosing Service Over Self-Interest. Berrett-Koehler Publishers. 1993.

Tregoe, Benjamin B. and John W. Zimmerman. Top Management Strategy. What It Is and How to Make It Work. Quickstone. 1980.  

Zimmerman, John Sr. with Benjamin B. Tregoe. The Culture of Success. Building a Sustained Competitive Advantage by Living Your Corporate Beliefs. McGraw-Hill. 1997.

Posted by jackmixner at 04:16 PM | Permalink

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Those of you have been following what I write will be aware that I am interested in Steven Jobs management techniques - or lack thereof - at Apple. After leaving Apple the first time in the mid-eighties, Jobs started a new computer firm, Next. He had money. He had time. He was mad. A good combination for starting a tech company. It didn't really work, unfortunately, and Jobs ended up selling some of the Next operating system to Apple in the late nineties, presaging his return as CEO. We know all that. I wanted to know about Jobs's time at Pixar. Did he act the same way? Was he as pushy? Or - and this is what really happened - did he just sign checks and leave folks alone because he couldn't really influence the art at Pixar, as everyone was better than him at animation. That's basically how it worked. Jobs ended up investing $55 million ($5 million to buy the company from Lucas Film (Price, 7), and $50 million over ten years to keep the doors open). Ultimately, his job was to stay out of the way, let the management in place run things, and, importantly, arrange for distribution agreements of Pixar animations through Disney, and, finally, the sale of the whole company to Disney. Along the way, Jobs was part of the reason that Eisner ended up leaving Disney, to be replaced by the more affable Iger, who Jobs could get along with, and, who, with Jobs nudging, bought Pixar for stock worth at that time $7.4 billion. Not a bad performance for Jobs. Patience paid off.

Price, David A. The Pixar Touch. The Making of a Company. Alfred A.Knopf. 2008.

Posted by jackmixner at 02:40 PM | Permalink

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A while back we talked about Machiavelli and John Bogle (Mixner).

Machiavelli says, basically, it is all right to break the rules, especially if you do so to reach your ends. Bogle says that the ends aren't your ends, they're society's. Character and courage don't count for much if they are all about you, instead of us.

Machiavelli was writing way back when, Bogle, last year. Bogle was trying to make sense of the melt-down in the financial markets over the last decade. Machiavelli was selling his services, his knowledge. Block adds words to the discussion that are worth reviewing here.

Democracy is all about people having a say in their future, capitalism not so much. Owners and managers - bosses - exert special powers in the workforce that vary from the democratic ideal. Bosses aren't elected to terms that are finite. Do it right, and a boss can hold on for a very long time. We assume that as we enter the plant gate, it is all right to leave some of your decision making ability behind. Bosses indeed do know better, and we'd better realize it - or else. No, it is not so blatant, but when was the last time you spoke what you were really thinking in a weekly review session, unless by chance, you were the boss - the manager - in the meeting?

Block has thought through a lot of this. His point of view is worth sharing. Normally, planning for the future of an organization takes place at the highest levels. A team - and, usually it is a team - of senior managers joins together to consider the values of the organization, its mission, its vision, objectives for the next years, and maybe even specific strategies for the organization to follow. The assumption is that the plan will be carefully articulated, shared with the organization, and, here things start to get sticky, implemented at all levels of the organization.

You know as well as I do that implementation is where all strategic plans begin to fail. Great plan, poor implementation. We see it all the time. We didn't have time to implement the plan. Customers were asking for stuff, so we didn't have time. Something like that, right? So, do you pitch the planning process and give up? Maybe not. But what to do?

Modify the process. Don't be dictatorial. Let the team determine what is important to them and their work. "Values spring from the top," you say. Maybe. Forcing the entire organization to use a time-clock may not make sense. Forcing the entire organization to follow edicts from headquarters may not make sense. We all say, "We knew that." Since you knew that already, what were you doing? You were defining some of the company's values locally, that's what. "You're caring for a sick child today. I'll cover for you." The work will get done. Control shifts from HR to individuals in their own work units. But "HR has to control," you say. Maybe not. Nor does a boss have to control if she does things right. Set parameters, yes. What customers, broadly, do we target? OK. Clarity, then is a management role (Block, 32). Value-added ways to address a market. Again, a management role (Block, 32). But the how and whys? They get answered not by senior management, but by the folks who know the answers. Reward goes down in the organization as it is no longer the carrot it once was. Punishment goes down too. The team rewards and punishes, not management. Direction goes down; clarity goes up.

So, who keeps their job in this new environment? People who understand that they are not subordinate, but equals, that's who. Want someone to protect you and your job? Not going to happen. Your responsibility is making sure a team wants you enough that they ask you to play in their game. That's not management's job. It's your job. Eventually, we'll need fewer managers, won't we? The teams will manage themselves. Some managers will realize that managing, even coaching, is an empty title. They had better be doing some work, not just managing. "But the reports due at the end of the month," you say. Is anyone reading them, anyway? Isn't it better to interact with customers, rather than managers, anyway? That's your job. That's management's job, as well.

Who leaves the organization? People who don't hold up their end of the bargain. Not interfacing with customers? Maybe it's time to leave. Don't know who your customer is? Maybe it is time to leave. Or, more properly, maybe it's time to find out, and do something about it.

Block, Peter. Stewardship. Choosing Service Over Self-Interest. Berrett-Koehler Publishers. 1993.

Bogle, John C. Enough. True Measures of Money, Business, and Life. John Wiley & Sons, Inc. 2009.  

Mixner, Jack. The Virtuous Leader. http://mixnerstrategy.com/blog/2009/01/the_virtuous_leader.html

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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.

Posted by jackmixner at 03:57 PM | Permalink

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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.

Posted by jackmixner at 01:10 PM | Permalink

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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.

Posted by jackmixner at 09:09 AM | Permalink

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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

Posted by jackmixner at 06:34 PM | Permalink

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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.

Posted by jackmixner at 09:29 AM | Permalink

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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.

Posted by jackmixner at 05:41 PM | Permalink

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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.

Posted by jackmixner at 03:48 PM | Permalink

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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.

Posted by jackmixner at 09:47 AM | Permalink

1+714.673.8578.     www.mixnerstrategy.com

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

Posted by jackmixner at 05:19 PM | Permalink

1+714.673.8578.     www.mixnerstrategy.com

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

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1+714.673.8578     www.mixnerstrategy.com

Bibliography on the Healthcare Cluster

California HealthCare Foundation. Medi-Cal County Data - Delivery Models. California HealthCare Foundation. 2003.  http://www.chcf.org/topics/medi-cal/index.cfm?subsection=countydata&itemID=20451

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

County of Sonoma. Public Health Division. Frequently Asked Questions: The Managed Medi-Cal Planning Process. 2008. http://www.sonoma-county.org/health/ph/mmc/faq.htm

Hurley, Robert E., Cheri Rice. An S.O.S. for the COHS: Preserving County Organized Health Systems.  Mercer Government Human Services Consulting with Pacific Health Consulting Group. 2004. http://www.pachealth.org/docs/PackardReport0504Final.pdf

Legislative Analyst's Office. Analyis of the Budget Bill Health: County Organized Managed Care Health Programs. Legislative Analyst's Office. 2004. http://www.lao.ca.gov/analysis_2004/health_ss/healthss_anl04.pdf#page=103

Marsh Mercer Kroll. County Organized Health System (COHS) Fiscal Year 2007 - 2008. Rate Range Development and Certification. State of California. Mercer. 2008. http://www.dhcs.ca.gov/dataandstats/reports/Documents/MMCD_Fin_Rpts/CA%20COHS%20SFY08%20Rate%20Range%20Cert%20010208%20FINAL.pdf

Schauffler, Helen and Sara McMenamin. Baseline 1997: A Survey of Medi-Cal Managed Care Plans in County Organized Health Systems and Two-Plan Counties. Medi-Cal Policy Institute. 1999.

Posted by jackmixner at 02:45 PM | Permalink

1+714.673.8578     www.mixnerstrategy.com

Block, Peter. Flawless Consulting. A Guide to Getting Your Expertise Used. Pfeiffer. 1981. 

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

Shenson, Howard L. Shenson on Consulting. Success Strategies From the "Consultant's Consultant". Wiley. 1994.

Weiss, Alan. Getting Started in Consulting. Wiley. 2009.

Weiss, Alan. Million Dollar Consulting. The Professional's Guide to Growing a Practice. McGraw-Hill. 2003.

Posted by jackmixner at 02:16 PM | Permalink

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http://www.cruiseindustrywire.com/HNR-pop.html

http://ats-sea.agr.gc.ca/us/4120_e.htm

http://www.cruiseindustrywire.com/article36526.html

http://www.cruiseindustrywire.com/article36547-The_State_of_the_Cruise_Industry_in_______Well_Positioned_for_Challenging_Times.html

http://www.cruiseindustrywire.com/HNR-category-category-Trends.html

http://www.cruiseindustrynews.com/annual-cruise-industry-report.html

http://www.cruiseindustrynews.com/cruise-news-articles.html

http://www.people.cornell.edu/pages/rjk34/Research/Carnival%20Cruise%20Lines%20Burnishing%20the%20Brand.pdf [ free version: http://www.allbusiness.com/accommodation-food-services/1190122-1.html ]

http://gttp.org/docs/HowToWriteAGoodCase.pdf

http://www.gttp.org/index.html

Womack, James P., Daniel T. Jones & Daniel Roos. The Machine That Changed the World. Maxwell Macmillan International. 1990.

Posted by jackmixner at 11:22 AM | Permalink

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When I was growing up, we used to take road trips in the family Pontiac. I remember sitting in the back seat, stiffling, hungry, and ready to be there, asking into the front seat, "Are we there yet?" And I remember the response. Early on it was a wry smile and no comment. Later on into the trip, say, two days later, the response came a little more quickly, "Stop asking!" And that's what I feel like right now. Actually, I have two questions to ask: "Are we there yet?" and "When we get there, will things be different from what I remember?" The market has rebounded nicely. Actually, we have a long way to go, but at least it doesn't look like things are going to go down that much farther, if any. We just finished four weeks that summed to a gain in the stock market, the first in a while.

So, are we there yet? Will things be different when we arrive? Some say consumers are more frugal (Kliner, 1). Some companies are making "gutsy bets on new strategies" (Weber, 37). There will be "more startups, fewer giants, and infinite opportunity" (Anderson, 99). That's what they say.

We're just going to have to wait and see. In the interim, make sure you have the right people on your team, join with them to make a plan and implement your plan. Now.

Anderson, Chris. The New New Economy. Wired. June 2009. 99.

Kleiner, Art. How Real Is the New Normal? strategy+business. Summer 2009. 1.

Weber, Joseph. Hunting for Growth. BusinessWeek. 22 June 2009. 37.

Posted by jackmixner at 12:51 PM | Permalink

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Growing up, my family had a record player. You could carry it around, as it had a handle on the outside of the case and the arm could be clipped down. Everything was one piece. Then we got a new record-player. It was in a cabinet of something like mahogany. It weighted a ton, but it had better speakers and a better turn-table. It was great until our deaf cleaning-lady turned up the volume so high that she blew out the speakers. If you played it quietly, you never knew it was broken, something that was just fine with my father. When I got my first stereo things were different. I got the speakers from one manufacturer, the amplifier from another, and the turntable from yet another. When I put it all together, it had great fidelity (it was stereo, after all) and it was a lot harder to blow out the speakers (not to worry, we still managed to blow out one of them). It was a modular system in which the pieces added up to a better total unit that a system made all by one manufacturer. My first computer was the same way. I bought an IBM PC (couldn't go wrong, right?) added floppy disk drives, a printer, a memory card, and a graphics card and I was ready to go. That worked pretty well, except it sure cost a lot. My next five or six PCs were off the shelf - the manufacturer put it together and I bought it as I had to keep up with technology. The costs fell with each successive machine. Cars have never really been modular in quite a while. Yes, during the sixties, we added performance parts and stereos all the time, but as I have gotten older, all that just hasn't been important. Too, the manufacturers increased quality significantly, so I went along with whatever they were selling, basically.

Mann's article shook me up a bit because it reminded how much more I like my modular stereo and my modular computer, and, yes, hopefully my modular car. Today you can't really get a modular car, but that may change. Detroit, with the ultimate reorganization that is happening today, won't be able to spend the big dollars to create the cars of the future. Each system - the propulsion system, the breaking system, the batteries, the communication systems, etc. - will need to come from a different manufacturer. They envision just snapping things together, testing it for safety, and delivering it to me. Well, that doesn't go far enough for me. I want to buy the braking system myself, along with the engine, and suspension and windows etc. and have it put together to my specifications. I'll want simple, cheap, and economical. You might want sleek, fast, cool, with money as no object. But we both, I predict, will want to specify what goes into the car - ourselves, just like when we bought our first stereos or our first computers. That's my prediction. Now we get to wait and see how it turns out. Things are going to change, that's for sure. Get ready. Smaller, inventive manufacturers are going to shake things up, and we all should benefit. Some risk will be there as smaller firms are more likely to fail and not support their products, but that is part of the price we will pay for getting the cars that do what each of us wants. That's what I think, anyway. I'm hoping for the time when I can snap together the car I want, maintain and repair it easily, and then rebuild it or recycle it easily. We'll see.

Mann, Charles C. Detroit. The New New Economy. Wired. June 2009. 101.

Posted by jackmixner at 05:15 PM | Permalink

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We've been enamored of Jim Collins books for some time, as they give solid advice that is actionable. His new book, How the Mighty Fall,  at first blush seems like just another book to extent the line of hits. Haven't read it yet, so we'll see. He does reinterate some things we've seen before, like how to get the right people in the right seats (Collins, 38): Choose people that fit the company's core values; don't tightly manage them; the right people realize they don't have jobs, they have responsibilities; the right people fulfill their commitments; the right people are passionalte about the company and its work; the right people display window and mirror maturity (if it is going well, it's the team; if it's not going well, it's their responsibility). We all know that when you watch a company for a long time, decline is inevitable. Collins is trying to figure out why, and, then, prescribe what to do about it. It seems that the prescription isn't what matters, it's the realization that something can be done. The real task is doing it, especially in the instance when things seem like they are going just fine. About three years ago we began working with a Fortune 500 home builder. Their plans included growth with nary a mention of the possibility that the market could turn against them. We pointed out that their growth plans (they envisioned growth of one hundred per cent a year) weren't realistic in a cyclic business. When we asked to see their lay-off plans, they thought we were nuts. Well, someone got that on wrong. And that's the point. Hubris born of success isn't a good determinate of future success. In fact, according to Collins, it is the first signal of decline. He got that one right, for sure.

Collins, Jim. How the Mighty Fall and Why Some Companies Never Give In. BusinessWeek. 25 May 2009. 27.

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Apologia. Today the term "apologist" is colloquially applied in a general manner to include groups and individuals systematically promoting causes, justifying orthodoxies, or denying certain events, even of crimes. Apologists have been characterized as being deceptive, or "whitewashing" their cause, primarily through omission of negative facts (selective perception) and exaggeration of positive ones, techniques of classical rhetoric. When used in this context, the term generally has a pejorative meaning (Wikipedia).

That word pejorative at the end the definition says it all. Holstein's book is an apologia about Wagoner's management of General Motors. Dumped as CEO as part of the bail-out process leading up to the recent bankruptcy, the book makes a case that he was the right man for the job and should have been allowed to finish the task of righting the GM ship. Well, it took to long, Mr. Wagoner. It was in fact time to move on to new management. From a strategic point of view, Wagoner had one neat win, the OnStar system. GM broke company rules big time early in the creation of the system. The strategy wasn't dictated in advance; it was allowed to become apparent over time. They didn't spend a lot of money; the initial investment for the alpha system they bought from General Magic was $15 million. The strategy for OnStar wasn't an automotive strategy; it mimicked the electronics world more closely with its continual improvement and continued innovation. Customers had complained about any remote control of their auto; OnStar began that control in a benign way that customers didn't complain about. It saved lives, after all (Holstein, 157-168). Benighted by Clayton Christensen in a Harvard case study, the OnStar success is a good example of a disruptive strategy that worked (Holstein, 169). The keys to a good strategy? Initial management wasn't told what to do; they figured it out as they went along. It wasn't top-down at all. Secondly, Wagoner ran interference between the traditionalists at GM and the new technologists. Finally, and maybe most importantly, OnStar stood alone. It wasn't assigned to any division. Yes, Cadillac was the first installation. However, over time, OnStar was rolled into most of the autos at GM. Wagoner proved he was a good manager when he championed a new technology. It was his championing old technology, namely, the "way things are done at GM" that proved his ultimate downfall.

Holstein, William J. Why GM Matters. Inside the Race to Transform an American Icon. Walker & Company. 2009.

Posted by jackmixner at 01:28 PM | Permalink

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For George Shultz, Secretary of State in 1987, globalism was a theme he returned to over and over again during interactions with Congress and, as important, the Soviet Union (Mann, 241). His definition? Shultz talked about "the information revolution, the impact of ever-faster computers and telecommunications, the speed with which money and capital flowed from one country to another, and the way which manufacturing could be transferred around the world" (Mann, 242). This would be really cool if Shultz was trying to impress CEOs in Silicon Valley, or, say, Hong Kong or Shanghai. He wasn't. Shultz's target was the Soviet Union, and, more specifically, Michael Gorbachev and his ministers (Mann, 243). The point of all the dialog was the interesting part. Based on research and discussions started by Theodore Levitt at Harvard, whose article The Globalization of Markets dated to 1983, Shultz was pointing out that international societies would have to adjust to a changing reality. Democracies would have a hard time. But, and this is the interesting part, Communist governments and closed societies would no longer be able to control what their citizens saw or heard (Mann, 243). It doesn't take a stretch of the imagination to realize where the revolutions in Eastern Europe came from. Global information was having a political effect later to be equaled - or actually surpassed if that is possible - by the economic effect. An aide to Shultz, Richard D. Kauzlarich, copied a telling sentence from a shipping label into a State Department memo (Mann, 243): "Made in Singapore, Taiwan, Mauritius, Thailand, Indonesia, Mexico, Philippines. The exact country of origin is unknown." In 1987, no one realized the impact of these discussions except, tellingly, Gorbachev, Shultz, and Reagan who was trying to "spook the Soviet leadership" (Mann, 244). If we fast-forward from 1987 to today, we find a similar message directed not at the Russians, but at the United States, and from the Chinese, not the Russians. The US dollar continues to dominate international exchange. The Chinese want to change that (LeVine). This feeds two questions: Do the Chinese concerns mean much to a world marketplace dominated by the dollar? and If so, what is the implication for the long-term health of the US economy? Globalization was a strength of the US in 1987. It still is a strength of the US in 2009. The tough part? Leveraging that strength in a difficult economic environment. How we respond dictates in large part our future vitality.

LeVine, Steve and Dexter Roberts. China's Doubts About the Dollar. BusinessWeek. 8 June 2009. 24.

Mann, James. The Rebellion of Ronald Reagan. A History of the Cold War. Viking. 2009.

Posted by jackmixner at 10:15 AM | Permalink

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At the Allen & Co. conference in Sun Valley, Idaho in 1999 (Schroeder, 15-21), Warren Buffett explained - to derision from the tech CEOs in the room - that he didn't think that much of the tech boom. They listened politely, but weren't buying. Buffett talked about the fact that the market was at 874 in 1964 and at 875 in 1981, the decline of horses ("I wish I'd shorted horses"), the fact that the airplane didn't make any investor rich, oil prospecting, the apparent over-valuation of internet stocks, Edgar Lawrence Smith's 1929 view that stocks always yielded more than bonds, and more. No one could really refute what Buffett said, but not many agreed with him. Schroeder's book has attracted a lot of interest in the press. If you want, you could read all 830 pages, or you could just read the second chapter on the Sun Valley Conference. It all boils down to the fact that Buffett really wanted to succeed at making money, that he continually learned all he could about investing, that his family life was different but successful in the end if you squint a little bit, that he was a contrarian investor at the right times, that he looked, early on, for under-valued stand alone companies to buy, and later on for bigger companies with special plays. Ultimately, as folks started to mimic his style, he found it harder and harder to invest the hoards he earned and was entrusted. For me, the best part of the story is understanding the joy Buffett finds in learning about companies and investing for profits. He's given away most of his money, so clearly he about more than money. He needs people, family - and investing.

Reference

Schroeder, Alice. The Snowball. Warren Buffett and the Business of Life. Bantam Books. 2008.

Posted by jackmixner at 02:13 PM | Permalink

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Here are fifteen strategies to reduce carbon dioxide build-up in the atmosphere. Picking just eight - any eight - of them will solve our carbon dioxide problem. Pretty simple, yes? Now look at the list and then answer the question (Friedman, 212-213).

1. Double fuel efficiency of two billion cars from 30 miles per gallon to 60 mpg.
2. Drive two billion cars only 5,000 miles per year rather than 10,000, at 30 miles per gallon.
3. Raise efficiency at 1,600 large coal-fired plants from 40 to 60 percent.
4. Replace 1,400 large coal-fired plants with natural-gas-powered facilities.
5. Install carbon capture and sequestration capacity at eight hundred large coal-fired plants so that the carbon dioxide can be separated and stored underground.
6. Install carbon capture and sequestration at new coal plants that would produce hydrogen for 1.5 billion hydrogen-powered vehicles.
7. Install carbon capture and sequestration at 180 coal gasification plants.
8. Add twice today's current global nuclear capacity to replace coal-based electricity.
9. Increase wind power fortyfold to displace all coal-fired power.
10. Increase solar power seven-hundred-fold to displace all coal-fired power.
11. Increase wind power eightyfold to make hydrogen for clean cars.
12. Drive two billion cars on ethanol, using one-sixth of the world's cropland to grow the needed corn.
13. Halt all cutting and burning of forests.
14. Adopt conservation tillage, which emits much less carbon dioxide from the land, in all agricultural soils world-wide.
15. Cut electricity use in homes, offices, and stores by 25 percent, and cut carbon emissions by the same amount.

Still think the green problem is easily solved? The problem is defined, the first step in a strategic solution. Now we know what to do. 

Reference

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

Posted by jackmixner at 10:34 AM | Permalink

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Economists sometimes make interesting assumptions. They assume "perfect competition" is the best model for the allocation of resources and rewards (Drucker, 184). Most times, however, imperfect competition rules. The learning curve is a good example. If your economy gets on the learning curve faster on a new technology, for instance, than its competitors, it is almost a given that your economy will dominate that technology over time. Economists assume that an economy is defined either by consumption or investment (Drucker, 184). In a knowledge economy, however, neither consumption or investment are good measures of success. There are three kinds of knowledge: continuous improvement of current processes, exploitation of existing knowledge to create new products and services, and, finally, real innovation (Drucker, 185). Positive economic returns require that the three knowledges work in tandem. The business press assumes they operate independently. It hawks the technique of the day over the technique of the century at its peril. So what do we do, especially since measuring a return on knowledge is so crucial on the one hand, and impossible on the other? How do we increase the output of knowledge? Knowledge productivity requires a long "gestation period" (Drucker, 191). The big bang for the buck comes at the end of a long period of activity. How do we know how long to wait? Long term productivity is measured by short term results. Set the expectation of results along the way early in the process. Don't invest in the long term unless there is a short term. Now, how do we do that? Well, part of it involves applying what we already know, i.e. connecting what we learned along the way to the problem at hand and, this is the hard part, trusting ourselves and our teams to apply knowledge in productive ways. The first step? Become a better problem definer than a problem solver. The definition part takes longer sometimes than the solution part. Spending more time earlier in the process on definition makes for a more productive outcome later (Drucker, 193). Making knowledge productive is crucial to competitive success. Let's consider the current Green initiatives.

We need to consider how to receive a huge ROI for our knowledge of the green problems confronting us. While I am leery of suggesting that we pause and plan before we attack the green problems facing us, that is precisely what I suggest. Since I am peripherally involved in Orange County discussions about green initiatives for the near term, this does provide me with some insight, and hope. My first observation is that this is not an arithmetic problem. It's logarithmic. What's that mean to me? The solutions we start now are going to take some time to have an effect, so pick wisely or we may not have time to re-visit our planning efforts effectively. Yes, we can depend on technology to solve some of the problem. Fuel cells, batteries, and solar devices are going to get more efficient. That is going to take time, however. We need to act now. What to do? There are two entrenched constituencies involved in the green problems and solutions, industry (both green technology manufacturers and industrial energy users), and individual consumers. Legislation is the first step, not locally, but nationally or globally. Since the US has resisted all the existent accords, there are low-hanging fruit to pick. Sign up for the global initiatives and force industrial users and consumers to begin to clean up their acts using existent rules and technologies. That will begin aligning the US with the rest of the developed world. Second, and this is both a strength and weakness of America, is begin to lead - now. Get out ahead of everything every other country on the planet is doing. Make green initiatives hurt. Much like the monetary crisis facing us, the hurt, if it doesn't kill us, will make us stronger long term. Friedman's suggestions (Friedman, 212-213) are a good place to start. Read his list (Mixner) and make your decision on how to begin. Then begin. This is an interesting example of ROI from knowledge. We have been avoiding obvious truths for quite some time. We can continue to ignore things until it is too late, or we can do something. This is a group decision. It is going to take leadership. Unfortunately, we don't have a lot of time for discussion. We have to act now.

Reference

Drucker, Peter F. Post-Capitalist Society. Harper Business. 1993.

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

Mixner, Jack. Green Problem - or Is It Solution? - Defined. http://mixnerstrategy.com/blog/2009/04/green_problem_or_is_it_solutio.html

Posted by jackmixner at 09:41 AM | Permalink

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We've been saying all along that once you have chosen your management team and created a plan you shouldn't wait around too long to implement your plan, and, as well, that the pace of implementation shouldn't lag, or, you're leaving money on the table. Today, that money on the table might actually represent your whole profit margin. Who wants to miss out on profits in a tough economy? Your pace of implementation speeds up if you have a coach involved to keep you focused on what is important. "Now," you say, "my plan keeps me focused. I don't need help."

Kolata talks about running the Boston Marathon. Her times didn't start to improve even though she trained regularly until she joined a coaching program related to the Marathon. She showed up for coaching - religiously. They pointed out things she hadn't considered and kept her accountable for the commitments of time and training she was making to herself. All along we have said, chose the right team, have a plan and speed up the pace. There are three ways to do that: set date quantified objectives and strategies, be ready to actually follow your plan, and finally, dump the things that aren't working quickly if it makes sense so you are able to focus on what is working. This is where coaching comes in. Chose your team using outside advice. Get more than one opinion on new hires. Hire for talent, not experience. Don't trust gut instincts. Create you plan while making sure it represents the best of what is available in your industry. Change your plan according to your own rules and - this very useful - realize that sometimes you have to keep sticking to the plan even when it isn't working. A coach will point things out from other situations - from your competition and other similar companies - that will help you keep focused. Actually implementing your plan is the first step. Making changes - informed changes - is the next step. And keeping focused on a plan that isn't delivering as much as you'd like makes sense, especially when the pay-off is long term. Building heart in a marathoner takes longer than you might think. Building share in a tough economy also takes time. Both present opportunities to take advice about implementation and opportunities for improvement along the way.

References

Kolata, Gina. Want to Go Faster? You Need a Trainer. New York Times. 23 April 2009. http://www.nytimes.com/2009/04/23/health/23best.html?_r=2

Posted by jackmixner at 09:31 AM | Permalink

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Porter's Five Forces Driving Industry Competition (Porter, 4) have been around awhile:

1. Potential Entrants - Threat of new entrants
2. Buyers - Bargaining power of buyers
3. Substitutes - Threat of substitute products or services
4. Suppliers - Bargaining power of suppliers
5. Industry Competitors - Rivalry among existing firms.

Why do they matter today? I mean, they were derived in the Stone Ages of Strategy, way back in the seventies, weren't they?

We used them today to help decide how to plan to spend some stimulus money that will soon flow into Orange County. We originally had the great idea that the best way to stimulate the "green" industry in OC was to pass a law that said that planning departments could only approve plans that followed a  model green abatement plan. Look closely and you'll notice that the abatement plan to decrease negative green impacts on the community focused only on buyers. It ignored potential entrants, substitutes, supplier and competitors. Something got left out of the plan, didn't it? What to do? Include them in the plan. How to do it? There's a question. The first answer is to decide if a plan is required at all. The Libertarians out there will be saying that government doesn't need to interfere in the markets. They'll be alright by themselves. Now, we know that's not so. If we let the markets control things, there are some odds that LA would still be choking on smog - or worse. So, there is a role for regulation. Is there a role for regulation effecting the green industry. Maybe. Working with the planning departments isn't such a bad idea. But there is a whole list of things that might not be such a good idea: don't interfere with the markets with subsidies or protection.

In OC, it is hard to interfere with macroeconomics, so we can't even bother there, but on the national level interference  on the macro level isn't going to help. Getting the green manufacturers to work together to share solutions sounds pretty cool, doesn't it? Wrong. Porter say it best, "Encourage new competitors; discourage cooperation (Porter, Competitive Advantage, 681)." Fierce competition is best for everyone. Yep, some companies will fail. The ones that survive will be stronger. Actually, my gut tells me that in fierce competition, there will be fewer failures, actually, because the competition will foster higher wages (how can that be good?), lower prices (again, how can that be good?), and better quality (doesn't quality cost, everyone says?). How does a government help if it wants to improve a competitive environment? Three steps, all long term: encourage better education so there will be more qualified, high level, employees; if you have enough money, invest in infrastructure, especially smart infrastructure, maybe even if you don't need it yet; consider ways to increase capital formation for smaller companies who are starving for cash in this environment. If you do it right small companies will get to profitability (and revenues, obviously) without huge venture capital infusions. If they can pull that off (and basically, in today's environment, they have to) they will be healthier, more long lasting, and more likely to create lots of very useful jobs. Sure there is an attitude. Some rules are OK, yes, but focusing on making the environment conducive to rapid growth in an environment that everyone, including the public, wins.

Porter, Michael E. Competitive Strategy. Techniques for Analyzing Industries and Competitors. The Free Press. 1980.

Porter, Michael E. The Competitive Advantage of Nations. The Free Press. 1990.

Posted by jackmixner at 08:31 PM | Permalink

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Ray Kurzweil writes books that you realize, as you read them, are beyond the thinking you have indulged in - ever. He has written books on health and the impact of technology on growth. His last book, written in 2005, takes everything he has written before and adds to it in crucial ways. Gordon Moore has Moore's Law. Encapsulated in Kurzweil's the law of accelerating returns (Kurzweil, 35), Moore's law says that the amount of computing power that can be crammed into an integrated circuit doubles every year. Lately, the doubling is even accelerating. Kurzweil takes that doubling and thinks, not about the technology involved in the doubling, but in the result of the doubling. We all learned about arithmetic progressions way back when when some teacher said something like, "Which would you rather have, two tons of gold every year, or, an ounce of gold that doubles every year." Everybody wants the two tons of gold, and, of course, they picked the bad choice. Arithmetic doubling is a wonderful way to get rich, especially if you're doubling gold. So who cares? In ends up that, while most people don't give it much thought, all this doubling effects all sorts of things. DNA was discovered in the fifties. In the early nineties, they started work on the human genome, expecting to take fifteen years to decipher it. One team started late - way late - but still ended up in the same place, only much faster, because they re-arranged their thinking and methodology. Ask a scientist when genomics are likely to significantly effect man-kind (as if they weren't doing so already) and she's likely to say, "fifty years from now, give or take." Kurzweil says that nonsense - we'll be using genomic solutions much quicker than that, because of the doubling effect. It took us fifty years to get the genome, yes, but it won't take us fifty years to put it to work. Focusing on shapes of paradigm curves, Kurzweil describes a three step curve of slow growth, rapid growth, and, then finally, a leveling off (Kurzweil, 43). What we forget is that, when stacked end-on-end, all those curves really represent an exponential sequence, not a doubling sequence. Once things get rolling with a new technology and new iterations are created as a next chapter, so to speak, those chapter sum to rapid growth, to exponential growth. He plots out the telephone industry, the cell phone industry, dynamic ram, dynamic ram price, and on and on.

The point of all this is interesting. Allow yourself to be boggled at this point because you're not going to believe what I am going to say next. Eventually, and it is not going to take too long, computer's computing - thinking - processes will catch up with man's. And it is going to take less time than we think. Kurzweil's Theory of Technology Evolution says that there is a migration occurring toward everything becoming information - everything. Nanotech manufacturing processes will allow embedding of information everywhere. So the question becomes not when will artificial intelligence become useful, but when. Then we have to decide what high level artificial intelligence means for us. Now, consider what I just said. AI is going to make significant contributions to thinking. Is that a threat? By now you probably realize that I don't always see threats, but opportunities. And I think this AI will be useful, and perhaps, the ultimate opportunity. HAL, yes. But a useful HAL. Wait and see. Or profit now. Interesting.

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

Posted by jackmixner at 10:09 AM | Permalink

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Three symptoms of a converging world: there is ample band-width, worldwide, there are enough platforms, again, worldwide, and finally, there is interest in local folks to utilize applications freely available on the web to manage workflow remotely. Word, Outlook, Netmeeting, 3D Studio MAX and, especially, Google, allowed game developers to thrive in India (Friedman, 219). It started in simple things like medical records and tax returns. It's going to game production. Ultimately, and this is the interesting part, the focus is shifting back to India, to games for the Indian market, made by extremely competent engineers - Indian engineers - for the Indian market.

Let's have a little fun with future convergence, a pair of words I just made up. The computer I am working on was assembled in China from parts probably sourced in, at least, China, Taiwan, Japan, and the US. When I had a complaint, early on, it was handled by a call center in India. They were nice, they spoke may language, and I didn't have to raise my voice to get what I wanted.

Let's just suppose, however, that China wanted to, finally, absorb Taiwan (Friedman, 586). Are they likely to do that, given all the profit motives that exist for them to co-exist? What about the conflicts between China and India? Same story as China and Taiwan? How about the US and China? All these ties based on trade make it less likely that threats will turn ugly. What will really happen? Can't tell yet. Ultimately, politics may trump business and personal relations. The odds of this go down as long as we are all playing on a level playing field. Make the rules universal and everyone will follow the rules. That's the theory. Let's see how it plays out.

Friedman, Thomas L. The World is Flat. A Brief History of the Twenty-first Century. Farrar, Straus and Giroux. 2007.

Posted by jackmixner at 02:28 PM | Permalink

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Long term goals at Berkshire Hathaway are just that, long term goals (Berkshire):

1. Maintaining financial position with its excess liquidity, modest near-term obligations, dozens of sources of earnings and cash.
2. Widening "moats" around operating businesses for durable competitive advantage
3. Acquiring and developing new and varied streams of earnings
4. Expanding and nurturing the cadre of outstanding operating managers.

That's the list. Finance. Competitiveness. Earnings. Managers. Not a bad list.

Of course, Warren Buffet still puts in his two cents. At the end of the letter, he exhorts attendees at the shareholders meeting (Berkshire shareholders' meetings have a country fair-like feel. They're held in a big arena with a trade show of Bershire companies in the convention center next door.) to buy lots of stuff made by Berkshire companies. "Make your neighbors jealous." There's a goal.

Reference

Berkshire Hathaway, Inc. To the Shareholders of Berkshire Hathaway Inc.: http://www.berkshirehathaway.com/2008ar/2008ar.pdf

Posted by jackmixner at 01:42 PM | Permalink

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Jack Welch's "Differentiation Vitality Curve" says to praise the top twenty percent of your employees, watch the middle seventy percent of your employees, and ditch the bottom ten percent of your employees (Welch, 159). OK, I don't much like that, but I do understand what Welch is up to.

Let's just suppose, however, that you own a basketball team. You have a guard that can't (or doesn't) shoot, but, oh, can he guard. In fact, he is liable to go scoreless when he guards Kobe Bryant. Why is he on the floor? Because he holds Kobe - and folks like him - to their worst nights of their careers. So, he doesn't shoot much, but he guards spectacularly. Boos - or applause from the front office? There is only one answer - applause, big time. Guarding Kobe takes special analytical skills. The successful guard has to be where Kobe makes his best shots, forcing him into parts of the court where he makes the least number of shots over an evening.

We say pick your team very carefully. In this case, the front office picked Shane Battier for one reason - the teams he play on win (Lewis). Maybe some of their statistics aren't so hot. That may mean, however, that the player doesn't need changing. In fact, you may need a new record keeping system instead. In this case, the Houston Rockets didn't have money to hire a star as they already had two of them in Yao Ming and Tracy McGrady. They needed somebody who was cheap and who got the job done. But what job? Battier, "can't dribble, he's slow, and hasn't got much body control (Lewis)." The job Battier does is guard the best play on the opposing team. He's a guard. He's defensive. He keeps the opponents stats down while the rest of his team focuses on scoring.

Now, in business we talk about offense a lot. It might be in order to consider your defense as well. While you're at it, it might be in order to consider the statistics you are using. Those two tactics worked for the Rockets.

Lewis, Michael. The No-Stats All-Star. New York Times. 15 February 2009. http://www.nytimes.com/2009/02/15/magazine/15Battier-t.html?pagewanted=3&hp

Welch, Jack with John A. Byrne. Jack. Straight From the Gut. Warner Business Books.

Posted by jackmixner at 04:26 PM | Permalink

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Goran Matijasevic is a Prof at UCI. He invites the community to sit in on his classes on entrepreneurship. It's a pretty cool class in that it seems that most of the students are at the graduate level, many of them PhD candidates. It's fun to watch for what they listen to, or don't listen to, as the case may be. He has a speaker, normally a CEO or C-level executive, every class. On the surface, the ones who garner the most attention have the coolest jobs. The coolest jobs aren't necessarily the ones you might think. Interestingly, the speaker who generated the most interest was a the President of NPI Services, Inc., Judy Greenspon. Not only is she a cool person (Peace Corps professional, entrepreneur, traveler, successful business woman) she runs an interesting company that makes prototype circuit boards for every major company in the high tech arena. Pretty cool. Just don't get her mad.

She was incensed that no one in the room had read The World Is Flat. Since I hadn't either, I couldn't smile smugly. So I got the book and have started to read it. It's thick, It's heavy. But it is a very good read.

After reading much of the book and reflecting a bit, I realize that Goran's students really don't need to read Friedman's book because they are the book. The basic premise is that the world is now a level playing field - it is flat. Opportunities abound all over the world, ripe for taking advantage of. When people in Goran's class ask questions, sometimes the speakers don't understand their accents. That's because they're from all over the world. They understand flatness because they are taking advantage of it. Also, what PhD candidate has had the time in the last four or so years (the book came out in 2005) to leisurely read a six hundred page book. These students certainly haven't. They've been publishing so they won't perish. That's my bet.

There is an economic development challenge here. In the past, we relied on the fact that students, first, wanted to come to America to study, and, second, that after they finished their studies, they would stay to staff our high technology companies. There's a breakdown going on here. Some of it is caused by the restrictions placed on immigration by 9/11. Some students aren't coming. Others are going home when they can't get a visa to stay.

Disaster for America? I don't know. I did like President Obama's comments last evening (24 February 2009) in his speech to Congress about increasing the number of technology graduates in American universities to a level above that of any other nation - a huge, go-to-the-moon-like goal that feels good when you think about it. It's a good start.

I do know this much: I have enjoyed Goran's class and every one of the students I have been learning with. They're pretty cool. So is our flat world. It's all Goran's fault that I read this book. I am glad I did.

Friedman, Thomas L. The World Is Flat. A Brief History of the Twenty-First Century. Farrar, Straus and Giroux. 2005.

Posted by jackmixner at 09:07 PM | Permalink

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That's a line - a chapter title actually - from Galbraith's classic The Great Crash 1929. In Goldman, Sachs We Trust. The idea of a trust was that a bunch of investors would pool their cash by buying stock in an investment company (Galbraith, 47). Not a bad idea on the surface. The investment company's management was supposed to be better at picking stocks than the average investor because, supposedly, they had better information. The trusts were initially big in England and Scotland (Galbraith, 48). Through the early twenties, there were very few trusts in the United States. That was to change, however.

The first trusts in America had rules. They'd tell you what stock they were going to purchase, place them in a real trust, and tell you what rules they were going to follow in managing the assets of the trust Galbraith, 48). You could trust them. Sounds pretty good, doesn't it? The rules didn't last.

Ultimately, the management of a trust sold you some sort of stock or bond representing ownership of a trust. You didn't know what they held. You just trusted management. There were "secrecy" reasons why they wouldn't tell you what they held - just like the South Sea Bubble stock funds, in fact (Galbraith, 49). Pretty interesting parallel if you think about it.

Then things got really interesting. You could now, for instance, buy five hundred dollars of stocks in a trust for two hundred dollars. You owed the owners of the trust three hundred dollars that you paid off over time (Galbraith, 53). This was genius. In a rising market, your money rose even faster. Markets always went up, didn't they? Well, for a time in the twenties, they sure did. People made a lot of money.

Then, things got even better. Trusts started new trusts. They didn't buy stocks in corporations. No, they bought stocks in other trusts. When you did that, you essentially leveraged your investment more. Now, when stocks went up, so did you trust holdings. But, and this is really neat, they went up even more than before. This was really neat.

It was all predicated on a rising market. When everything was going up, everyone made out. When things were going down, however, they really went down. That's what happened, essentially, in the fall of 1929. Things went really down - fast. A lot of people got hurt.

That's what unregulated leverage does. That's what it did in 1929. Why did I mention Goldman, Sachs in the title? While they entered the trust game late, they started one of these trust pyramids that lost a whole lot of people a whole lot of money. It took them more than thirty years to regain what had been a fine reputation.

Galbraith's summary lays out a lot of the problems and points to solutions (Galbraith, 177):

1. Incomes weren't equitably distributed. Some five per cent of the population received some thirty per cent of all the incomes. They had to spend it, first on consumerism, and then, on investments.
2. Businesses weren't run properly. They hosted "an exceptional number of promoters, grafters, swindlers, impostors, and frauds (Galbraith, 178)."
3. The banking structure was bad (Galbraith, 179). There were too many banking units. When one failed, runs began on others. Things dominoed. Not good.
4. Foreign nations owed a lot of money to the United States. Banks loaned a lot of money to them. There was graft. There were defaults (Galbraith, 182). Not good for U. S. banks.
5. Economic intelligence was flawed (Galbraith, 182) or non-existent. No one knew what companies or trusts were really doing. There was too much "trust". Bad idea.

The thing about this that bothers me, and ought to bother you, is this has continued to happen. Maybe it is not shocking so much as inevitable. There are answers. Unfortunately, we are having to live through a very similar marketplace and discover the answers all over again. Amazing.

Galbraith, John Kenneth. The Great Crash. 1929. A Mariner Book. Houghton Mifflin Company. 1954.

Posted by jackmixner at 08:06 PM | Permalink

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Formulaic books can be tricky. Follow these seven steps and succeed at innovation. Well, sometimes it doesn't work that way. So, how to decide whether Lafley's book is worth a read? How about this simple self-quiz from the back (Lafley, 280):

1. Do you set organic growth goals that cannot be accomplished without innovation?
2. How do you ensure that the consumer/customer is really the boss in the process of innovation?
3. How good are you at integrating the end-to-end process of innovation, within your area of responsibility?

There are more, seven other questions to be exact. P&G's results say that their process works for them. Their game-changing process relies on innovation in ways other firms are missing. If you need to rely more on innovation, both organic with incremental changes or disruptive with massive new changes, Lafley may be useful to you.

Reference

Lafley, A. G. and Ram Charan. The Game-Changer. How You Can Drive Revenue and Profit Growth With Innovation. Crown Business. 2008.

Posted by jackmixner at 12:12 PM | Permalink

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Two people said it was time. Luckily, they were the ones who count.

Larry Page and Sergey Brin, the founders of Google, decided to have a look at their strategy. They really didn't like process that much, but the IPO forced their hands (Battelle, 231).

The Tablets

Page and Brin sat by themselves and came up with notes on a tablet that formed the basis for the Google strategic effort. Batelle says the included "high-level stuff" ... about ... "principles and values (Battelle, 231)."

Then, with the help of their resident strategist, Shona Brown, they began a longer process of examining all of Google's processes (Battelle, 231).

The result? A methodology to grow the company from three thousand employees pre-IPO to a company ten times that large in the future (Battelle, 231).

The impression I get from reading the press is that Google has a pretty centralized management structure. Maybe it hasn't really changed that much since the IPO. My bet, however, is that the structure allows individuals to take action based upon company values and principles in ways that will continue to support the growth of the firm.

In a few years, we'll have more evidence. For now, things seem to be working.

The point is that strategy makes sense even if things are firing on all the cylinders. If things have slowed, it makes even more sense.

Reference

Battelle, John. The Search. How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture. Portfolio. 2005.

Posted by jackmixner at 11:57 AM | Permalink

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When you make inferences on the current state of the economy based upon someone's book, you have to realize that you're "looking through the rear view mirrow" in order to drive your car - or the economy, for that matter. If you're going to do that, you had better trust the information you're getting, and it had better be as current as possible.

Given those facts, here are simple recommendations based upon Paul Krugman's (Krugman, 186) analysis:

1. The $700 billion (it has since grown) won't be enough because it is too small relative to the economy. This is based upon the Japanese experience a decade ago.
2. There is a "shadow" banking system that is largely unregulated. That system is the one that needs the money most. It may not get what it needs.
3. The banks are likely to receive money from the feds and sit on it as opposed to handing it out in the form of loans. That doesn't do anyone any good. The Fed may actually have to make direct loans to business by buying commercial paper.
4. Eventually, we'll have to make the recapitalization wider and broader and become closer to a nationalization of the banking system, if only for a short time.

The bottom line seems to be there'll have to be more money to turn things around. You gotta trust someone. Krugman's advice might be a good next step.

Reference

Krugman, Paul. The Return of Depression Economics and the Crisis of 2008. W. W. Norton & Company. 2009.

Posted by jackmixner at 11:27 AM | Permalink

1+714.673.8578     www.mixnerstrategy.com

On Friday, 14 March 2008, Bear Stearns was worth $30 a share or thereabouts.  On Monday the 16th, it was worth $2 a share (Lewis, Panic, 341-342). No one had a clue.

Why (Lewis, Panic, 343-344)?

In good times, financial firms make too much money. In bad times, financial firms aren't worth anything.

The fact seems to be that in good times CEOs of firms like Bear have to ignore the fact that their most profitable products are very risky, because in bad time their firms hemorrhage money.

The average of the two, boom or bust, defines the market.

Something is about to give.

Lewis pointed out problems in March 2008 that, basically, still haven't been resolved. His analysis points to a problem CEO's in the industry have: Their best assets go down the elevator each evening. If they want to retain control of those folks, they have to let them do what they want, a formula that may lead to the boom/bust cycle. His point? If you regulate, it is in this environment that you have to start.

Reference

Lewis, Michael. Panic. The Story of Modern Financial Insanity. W. W. Norton & Company. 2009.

Lewis, Michael. What Wall Street's CEOs Don't Know Can Kill You. Bloomberg News. 26 March 2008. Also in Michael Lewis Panic.

Posted by jackmixner at 11:02 AM | Permalink

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Here's how to create leverage in a hedge fund (Morris, 113):

1. Raise cash by selling partnership shares.
2. For every $1 invested, borrow $4 for equity investments. Leverage is now  5:1.
3. Buy $100 million in first loss bonds underpinning a $2 billion CDO, $20 million of hedge fund equity, $80 million in loans. This results in a 20:1 leverage.
4. Combine the 5:1 and 20:1 leverages and you end up with 100:1 leverage.

Now the good part, or maybe not so good: lose 1% on your CDO investment, wipe out the partner's equity.

That's what 100:1 leverage does. Miscalculate your investment, lose all your money - fast. Multiply your risk and now you have a real problem when the market turns against you. As we all know, the market will turn against you. If you don't have time to recover, you're wiped out. That happened to Long Term Capital Management in 1998. It happened to Bear Stearns in 2007 (Morris, 114).

Welcome to real world high finance.

Reference

Morris, Charles R. The Trillion Dollar Meltdown. Easy Money, High Rollers, and the Great Credit Crash. Public Affairs. 2008.

Posted by jackmixner at 06:41 AM | Permalink

1+714.673.8578     www.mixnerstrategy.com

In 1950, General Motor's management wanted to create a pension plan for their employees. They had two options for the kind of funds they created (Beatty, 157):

"Defined benefits" gave you a fixed portion of your last salary.  If the fund went up, GM paid less. The idea was that GM would pay less- forever.

"Defined contributions" did it differently. GM paid a fixed annual sum into the plan. The retiree either received a fixed stipend, or a variable one with the success of the fund.

Defined benefits won out after the Board finance committee reversed management's defined contribution recommendation. This did two things. It forced fund managers to focus on returns. It also built up enough funds in both the GM fund and all the other ones that followed it to stoke the buy-out boom of the 1980s (Beatty, 158).

Drucker pointed out that in a hostile take-over, the big pension funds supported the buy-outs because of a bribe they received. The raider bought some stock of a company and then offered to buy the company. The company refused as it believed it could manage things better. Then the raider offered to buy the stock of other stockholders for a premium over the current market. The seller here was usually a pension fund after that bigger return. The purchase of the stock was paid for with a huge loan. When the buy-out was successful, the new management loaded the company with new debt to pay off the huge loan.

All this started the miserable cycle of self-protection, including golden parachutes for senior management, later in the 1980s. Companies ran themselves to fend off a raider, not to be profitable. They ignored stockholders who then were only too happy to support the raider. Miserable is the correct word. The result was miserable, ultimately, for everyone.

Reference

Beatty, Jack. The World According to Peter Drucker. The Free Press. 1998.

Posted by jackmixner at 06:06 AM | Permalink

1+714.673.8578     www.mixnerstrategy.com

PC sales are forecast to recede 5.3 percent in 2009. Intel has to sell three netbook processors for the same profit as a notebook processor. Microsoft gets $13 for netbook software versus $50 for a notebook (Hamm).

Whoops. Somebody got hit by a disruptive technology. Enter the netbook. Smaller. Fewer features. Cheaper.

There is going to be a shakeout, no question. It'll be interesting to see who gets left standing. Even Apple notebooks are selling one percent less than last year (Hamm). Interesting time.

Next step? New processor. New software. Not from Microsoft or Intel. Opportunity for new manufacturers, if they take the risk. 

Reference

Hamm, Steve. Why the PC Market Is Suddenly So Weak. BusinessWeek. 26 January 2009. 082. http://www.businessweek.com/magazine/content/09_04/b4117082616113.htm

Next Steps Checklist:

Practical Marketing. 7 Steps to Blast Through a Down Economy.  http://freshisgood.blogspot.com/2009/01/7-steps-to-blast-through-down-economy.html

Posted by jackmixner at 08:24 PM | Permalink

1+714.673.8578     www.mixnerstrategy.com

The Law of Unintended Consequences

Pass a law. Do good things.

The US Congress wanted more University research to be commercialized. It also wanted professors and the companies they started to get rich. The Bayh-Dole Act, passed in 1980, intended that federally funded research leave the public sector and enter the private sector. Ownership would transfer from public entities to private entities (Heller, 59). The un-intended consequence? Less business is getting done. Fewer inventions and discoveries are put to use because scientists are protecting their inventions instead of sharing them. Now, this isn't about keeping scientists from benefiting from their discoveries. It is about figuring out a way that they keep their discoveries and put them to use.

What to do? We learned how to proceed in this case in Kindergarten. Share. It is as simple as that.

 Let's say a new drug is envisioned by a pharmaceutical company. It includes tests that include thirty different genes, all patented by different organizations. Getting all thirty companies to agree to the pharmaceutical company's request for access for testing is just about impossible. Everyone wants to be the hold-out, the last one to agree, because theoretically, the last one to agree makes a lot more money than everyone else. The problem is, the musical chair like dance is so complex and time consuming, the drug company says "I'm getting out of the gene business" rather that complete the negotiations. Everyone loses, especially the poor person who has the disease, but doesn't have a drug to treat it because all those patent holders can't agree on how to work together.

We already said the word: Share. It looks to me like the law has to change. Now would be a good time.

Bill Gates' Creative Capitalism

Stanford professor creates unlimited supply of precursor to drugs that treat malaria. No one will support his research. Enter Bill Gates Foundation (Hamm). $42.6 million later, they're on the way to producing the drug. The Foundation acquired corporate support to figure out how to develop the active agent and get it ready for production.

That's quite a story. It could work in genomics. A third party acts as intermediary between all the owners of the different gene patents. They figure out how to work together. New treatments for diseases are created. Everyone makes money. No one makes a disproportionate profit. Mankind benefits. Everyone wins.

It could happen. 

Reference

Hamm, Steve. 'Creative Capitalism' Versus Malaria. BusinessWeek. 2 February 2009. 083. http://www.businessweek.com/innovate/next/archives/2009/01/the_world_vs_ma.html

Heller, Michael. The Gridlock Economy. How Too Much Ownership Wreaks Markets, Stops Innovation, and Cost Lives. Basic Books. 2008.

Posted by jackmixner at 03:54 PM | Permalink

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The Author 

Over time, it appears that anyone who knows anything about Goldman Sachs has resisted the opportunity to write about the history of the firm. Charles Ellis, a strategic consultant to the financial industry worldwide, finally decided that he had important things to say. He wrote a long, in-depth history with strategic analysis of Goldman Sachs that is detailed, people focused, strategy focused, and results focused. It should be required reading for every managing partner and CEO of larger professional firms, no matter what their specialty.

Pick the Right People: Goldman Gets It Wrong

Unfortunately, Goldman Sachs had to learn the hard way about hiring the right people. Goldman had lost leadership and capital with the departure of Henry Goldman at the beginning of World War I. Henry Goldman had supported the Germans during the ramp-up to war. He left the firm when it began selling war bonds to finance the war (Ellis, 15). His departure hurt as he had supplied much of its capital and his deal making ability. That hurt, but what was to come next hurt even more.

Waddill Catchings joined the firm in 1918 (Ellis, 19). An "articulate optimist" he had two things going for him: early success, and leverage (Ellis, 19). Having held back from the speculation of the 1920s, Catchings finally enthusiastically plunged into the market with a $100 million investment trust which with mergers, emerges as a $244 million trust within three months after initial sales of stock to the public (Ellis 22-23). Ellis uses the word house of cards late in his description - the house fell when first one then another of the stocks held in the trust failed to pay a dividend (Ellis, 25). Shares in the trust ultimately fell from $326 to $1.75. Size (meaning lack of ability to respond to crisis) and leverage (meaning much of the money was borrowed and therefore subject to margin calls) ultimately burst of the trust (Ellis, 26) and the firm's investment.

Let's remember why we're talking about the Goldman Sachs Trading Corporation. Waddill Catchings was hired to help expand the firm. His enthusiasm for investing in the late 20's, after a long period of conservative investing, proved disastrous. He made decisions on his own, even after being counseled to hold back (Ellis, 27), that almost brought Goldman Sachs to ruin.

Put Your Principles in Writing and Manage to Them: Goldman Gets It Right

On November 3, 1976, Gus Levy, the Managing Director of Goldman Sachs died. One of his largest accomplishments had been the creation of a large block-trading business that supported Goldman Sach' rise on Wall Street (Ellis, 180).

John Whitehead and John Weinberg succeeded Levy. Whitehead focused on high-level strategy, Weinberg focused on clients' operations (Ellis, 181). That's all great. Whitehead's contribution was to be long lasting. Now, remember we're reading a book written by Charles Ellis a strategist with long experience in the banking field. It was clear that he was thinking strategically when he wrote the chapter entitled "Principles." Whitehead, on a Sunday afternoon, filled a yellow pad with ten principles of the firm. Other partners suggested a few more for his list. What he ended up with is a simple list that they refer to in the annual report, in mailings to new employees at their homes (Ellis, 184) for everyone to see, and to, logically, their customers. They are on the Goldman Sachs website today.

You and I both know that Values and Principles are sometimes misused. Highly touted, rarely followed, or, maybe, ignored. Goldman Sachs seems to be different. Fiercely competitive, they drive their employees hard. They hire the best and expect the best from them. Try this: mention Goldman Sachs to friends of yours who know the investment community. See what they say. My experience shows that Goldman Sachs follows what they John Whitehead wrote back in the seventies. Teamwork, dedication, profits. It is all there. And - this is the big part - folks continue to live by the Goldman Sachs Principles today. Employees are expected to understand the Principles and use them in their decision making on a daily basis. They allow actions to take place in the fast-paced environment of a trading floor that reflect the views of senior leadership while allowing individuals great latitude in how they are applied (Ellis, 187).

Principles Applied - Jon Corzine: Goldman Sachs Lives By Its Principles

The Long Term Capital Management fiasco effected a group of senior firms on Wall Street because they had extended credit to LTCM that it used, in a highly leveraged environment, to build one of the largest hedge funds on Wall Street. The only problem was LTCM became too large and its bets too hard to un-ravel when the market began to turn bad. Yes, they could have waited for their bets to turn (as in fact they would turn) but the leveraged effects of their investments meant that margin calls almost forced them out of business. The Treasury Department forced a recapitalization of LTCM that called for Goldman Sachs to loan $300 million to LTCM, money that Jon Corzine, without authorization, invested (Ellis, 607).

That investment was "the straw that broke the camel's back" so to speak. Corzine, part of the six person senior management team, acted like the CEO he thought he was. He wasn't. The Goldman Principles said, basically, do the right thing, but remember the firm and your partners. He didn't and because of that, he had to leave the firm. The LTCM loan was just part of it. He was too "freewheeling" (Ellis, 609), and forgot that, while he was popular amongst the partners, he was ignoring the executive committee who called the shots. Wrong, un-Principled move. He left for a better opportunity as NJ Senator which ended up being a good move for everyone involved.

One final comment: If you read one book on strategy this year, read this one. It's long, yes. It is a well written book that you may apply to your firm - now and in the future. It shows how decisions you make now effect your firm for years and years, and delineates processes that are useful and applicable. It is no wonder that Goldman Sachs is so well regarded. Ellis brings that regard to light.

References

Ellis, Charles D. The Partnership. The Making of Goldman Sachs. The Penguin Press. 2008. [Other books by Ellis: Winning the Loser's Game, Capital and the biography of Joe Wilson.]

Goldman Sachs. Principles. http://www2.goldmansachs.com/our-firm/about-us/business-principles.html

Posted by jackmixner at 01:58 PM | Permalink

1+714.673.8578     www.mixnerstrategy.com

Criteria of a web start-up with possibilities:

1. High quality start-ups have better than average success rate right now. There is no number two (Maney, 27).

Why are "hard times" start-ups more likely to succeed?

1. During hard times, they're more likely to be more purposeful.
2. A well managed start-up attracts more attention during a down-turn. It actually has less competition.
3. History shows hard times are a fine time to begin. HP started in 1939 (Maney, 28). Microsoft launched in 1975 - one of the worst environments ever (Maney, 28). Same for Cisco in 1984 (Maney, 28). After 2001 how about this list: LinkedIn, MySpace, Six Apart, Vonage, Wikipedia (Maney, 28)?

My read on the situation?

• Be a high quality start-up.
• Companies with good management have a better chance. If you've done it before and succeeded, money, obviously, is easier to get.
• Disruptive technologies will help you succeed (Mixner). A disruptive strategy can be a very big deal.
• So will a very experienced management team.
• If you need to raise money, figure out how to sell something early on.
• Then make some profits.
• More profits? Better odds of VC or Angel funding.
• Aren't experienced? Work very hard to attract an A list advisory board.
• Then attract management that will come on board when you are funded, or before.
• Then brag about both the board, and the management.

Need to confirm your target for a new product? Have a look at Practical Marketing's hot-off-the-press survey.

Maney, Kevin. Best of Times. Conde Nast Portfolio. 9 February 2009. Page 27. http://www.portfolio.com/news-markets/national-news/portfolio/2009/01/07/New-Economy-Needs-Innovation

Mixner, Jack. Disruptive Technology: Smaller Companies Have an Edge. http://mixnerstrategy.com/blog/2008/09/disruptive_technology_smaller.html

Practical Marketing. Growth Sectors for 2009. http://freshisgood.blogspot.com/2009/01/growth-sectors-for-2009.html

Posted by jackmixner at 06:29 PM | Permalink

www.mixnerstrategy.com

Posted by jackmixner at 04:49 PM | Permalink

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When you describe Orange County to folks from out of town, describing the politics as Libertarian is a good way to start. Most politicians - and business folks, for that matter - agree that less government is good government. The simpler things are for business, the more possibilities to make more profits. Profits are good.

Then comes an idea that is preposterous on the surface. Create a US Department of Innovation. More bureaucracy. More folks on the government payroll. More. More. More.

What about more patents? Would that be good? Of course.

How to reconcile bureaucracy and patents? The real question is, "How do we help more businesses survive the brutal first years so they can afford to patent their ideas - and get rich?"

The simple answer? Forget about it. A company with a good idea will succeed. Yes, we're have a momentary (from the long point of view) problem finding venture capital for start-ups. And yes, the problem seems to be even harder for round two funding. Lean and mean still works. Yes, it's harder right now, but compared to what? Some companies will fail. Their founders will go on to create new things somewhere else. Progress will continue.

Now, if we were to do one thing related to all this, what would we do? Invest in K-12 education so more folks are prepared to do the tough math that ends up patentable. But that's another story.

Reference

Revkin, Andrew C. Does Obama Need a Department of Innovation? New York Times. 10 December 2008. http://dotearth.blogs.nytimes.com/2008/12/10/do-we-need-innovation-department/

Posted by jackmixner at 11:02 AM | Permalink

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Katie Couric taught us all that colonoscopies are important, so we all rushed out to get one. While life-saving, they also require a day or so of uncomfortable preparation, maybe anesthetic, and an invasive procedure. They are also profit centers for hospitals, some of which have established stand-alone centers to handle the volume.

I heard recently about another alternative, the CT scan colonoscopy. While it apparently requires similar preparation, it is less invasive. The only problem with it is that, if they see something, your Doctor will probably recommend that you now have the regular procedure you were trying to avoid.

Olumpus has another wrinkle to the mix, a new colonoscopy camera combined with digital technology, that differentiates internal anatomy better and shows tissues of interest more clearly. The only problem is that the new cameras is more expensive than the regular camera. That's not a good thing for Olympus as it is trying to sell more in a down market.

Is any of this disruptive technology that is likely to storm the market and sell lots and lots for huge profits?

Normally a disruptive technology is cheaper, simpler, easier to use, limited in features but usable.

The CT scan colonoscopy is simpler, cheaper (maybe), easier and limited in features, but a positive result forces you to go to the regular scan. Not mentioned much, but still something to consider, is that the CT scan comes with some added exposure to X-rays, something you really don't need more of.

The new Olympus camera, while showing lots of new features, isn't cheaper, simpler or limited in features.

So, is anything here disruptive? It doesn't look like the new Olympus camera is disruptive. It really is a new addition to Olympus' regular line, a sustainable technology, not a disruptive technology.

The CT scan might be disruptive if it is cheaper, as it is simpler and a bit easier on the patient, especially if it doesn't show anything to follow-up on. If I were going to go that route, I'd make sure the CT scanning camera was a very low dose imaging device.

What should a hospital do?

• First, clearly, make the regular colonoscopy as easy-to-take as possible and market that fact. After all, like Katie Couric has told us repeatedly, colonoscopies save lives.
• Second, examine the utilization rates of their CT scanners. If some are under-utilized, there may be some possibilities for their use as colon scanners. We do need more information on how many CT scans need follow-up with a colonoscopy. If that rate is pretty high, the CT may never be a good option.
• Finally, and unfortunately for Olympus and the patient this comes last, they might consider the new Olympus camera, especially if they need to replace their regular cameras.

Here's my challenge for Olympus: make the new digital camera cheaper than the regular camera. I'll bet that happens in the long run, anyway. Do it now, or some other technology will eventually overtake their cameras, I'll bet, and ace them out of the market entirely. Alas, that won't be easy for Olympus, as flipping from a sustainable R&D scheme to a disruptive one almost never occurs successfully.

Reference

Weintraub, Arlene. The Inside Track In Medical Cameras. BusinessWeek. 15 December 2008. 070. http://www.businessweek.com/magazine/content/08_50/b4112070229819.htm

Posted by jackmixner at 03:56 PM | Permalink

1+714.673.8578.     www.mixnerstrategy.com

A sheik wanted a bridge - in the middle of the desert. The engineer told him he didn't need a bridge. The engineer's competitor built the bridge. The sheik was very happy as he got what he wanted: more public glory (Maister, 171).

Maister's book is one of Peter's favorites. It's not an easy read. It talks about building a big firm, a good market for Maister, but not really useful to all of us. But it is one of Peter's favorites. Why?

Two reasons:

• You come first, not your client. Are you in the right business? Are you cruising or losing? And, here's a big question, are you willing to be managed?
• Once you figure out where you stand, the focus shifts to your firm. Are values enforced? Are there things you are intolerant of? Does everyone in your firm know what they are?

Is this useful in your firm? Yes, especially if you want to grow into a firm that gives its clients what they want and does it in an honorable manner.

Listening, especially to clients, is part of it. Understanding yourself is another part. Understanding your firm is important, too. Maister's taken the time to think it all through.

Your attitude toward your values in important. Your attitude toward your firm's values is important. Your attitude toward your client's values is also important. Three different sets of values. All important. Not all of them are obvious. Watch and listen carefully, especially early in a business relationship.

References

Maister, David H. True Professionalism. The Courage to Care About Your People, Your Clients, and Your Career. The Free Press. 1997. 

Peters, Tom. Reinventing Work The Professional Service Firm 50. Borzoi Book. 1999.

Posted by jackmixner at 10:11 AM | Permalink

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This is one of those books I wish I'd read a long time ago. E. B. White used to be a favorite of mine because of his concise way of putting words to paper. Strunk and White's Elements of Style took conciseness to a new level. Systematic conciseness it might scientifically be called.

Ogilvy's book could have been written by White. It's simple, to the point, entertaining, and oh so useful.

What works? What doesn't? It's in the book. Best thing for me? First, reading about advertising makes for better advertisements. Read one book? Yes. Read multiple books? Yes, as well.

Something's changed, however, hasn't it? Advertising is not as important as it once was. The web is taking over. Advertising is dead.

Reading Ogilvy reminded me that advertising is not dead. The web folks today would to do well to start with Ogilvy as they create websites for all of us. Why? That's tricky. One reason might be the honor of it all. Ogilvy reminds us that the sole intent of advertising is to sell stuff, that's true. But he never tries to sell the idea that chicanery of any sort makes sense. You and I both know that when you go on the web, you have to watch a bit to make sure something doesn't happen to your computer. Cookies and all that might do more than we expect. Ogilvy couldn't rely on trickery as much. A good ad sold because it was a good ad. There wasn't another reason.

His messages about simplicity, design, directness, density, and targeting still resonate. They are still applicable. The words "Think small" worked for Volkswagon. They might work for you. Ogilvy points out, however, that Volkswagon got lucky. You might want to know why as it effects your next campaign, web based or not. Have a look.

Reference

Ogilvy, David. Ogilvy on Advertising. Vintage Books. 1985.

Posted by jackmixner at 09:43 AM | Permalink

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Bill Walsh's three Super Bowl wins in the eighties made him famous. After the last one, in 1989, he announced his retirement. He had created the West Coast Offense (based on preparation, planning, precision, and poise) and was at the top of his career. Then he decided to write a book. Now, this isn't just any book. It tells how to be a football coach. It has first meeting lectures, and plays. It even has a lecture to give the secretarial staff about how to act. The book has everything.

The book also spends a chapter on what the value system for a winning team ought to be. This is Walsh's "philosophical counsel" (Walsh, 15-19):

• Be yourself. Take advantage of your strengths; diminish your weaknesses.
• Be committed to excellence. Work hard.
• Be positive. Teams respond better.
• Be prepared. The most important aspect of coaching.
• Be organized. Don't waste time or resources.
• Be accountable. Take responsibility.
• Be a leader. Develop a vision; establish a strategy to meet the vision; inspire everyone to carry it out.
• Be ethical. Have a strong value system.
• Be flexible. Adapt.
• Believe in yourself. Have confidence in yourself and your system.

The best story in the book is about a training camp for coaches. Sid Gillman, who was going to win the Super Bowl that year, spent a day at the chalk board with Vince Lombardi learning how to run the sweep. He sat in the front row. He listened. He concentrated. He asked questions. One of the best was learning from the best. That's winning football (Walsh, 31).

Reference

Walsh, Bill with Brian Billick and James A. Peterson. Finding the Winning Edge. Sports Publishing Inc. 1998.

Posted by jackmixner at 08:23 PM | Permalink

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Akio Morita was one of the founders of SONY after the war. He ended up building the world-wide marketing effort that made SONY what it is today. Read his book and you end up thinking "this was a guy who was able to let others make up their own minds, and act themselves." That was all true except for one product - the SONY Walkman.

When the Walkman was initially designed, no one at SONY thought the unit had any prospects - except Akio Morita. He became their one man focus group. Luckily he was high enough up in the company that he got his way on the Walkman and was able to bring it to market (Morita, 80-82).

He dictated most of the specs: lightweight, reliable (of course), miniature headphones, two output jacks so a couple could share the experience (that one didn't really sell Walkman's but it seemed like a good idea at the time), but not the name. Morita was traveling while other people on his team dreamed up the name and then went ahead and created all marketing materials. As he was objecting, it was too late - the materials were already printed and ready to go (Morita, 81).

Of course, many dominant CEOs get their way with new products. The one in more recent times, however, is Steven Jobs. He really is the one person focus group (Kahney, 53). He seems to do it a little bit differently than Morita. Jobs' method uses multiple iterations until the product is ready to ship. He'll look at the look, the feel, the utility, the quietness (no fans in the early Macintosh, even if the thing almost burnt up inside), the software - everything.

On introduction, the Apple new product usually isn't much customizable by outside suppliers. The iPod basically isn't, although there are lots of cases and such-like available. Finally, Jobs has lightened up, clearly, in that Apple allows third party software folks to create software, especially for the i Phone, and sell it, once approved, on the Apple site.

I bring up SONY and Apple for another reason. Early on, Morita got his way. Jobs did, too, then he left. After they gave up control, things started to flounder. SONY is floundering, as did Apple until Jobs returned in the late nineties.

So what's the solution? Not clear.

What is clear is that, sometimes, one person focus groups are best. The Walkman, the iPod, and the iPhone prove it.

The hard part is competing with a one man focus group.

Reference

Kahney, Leander. Inside Steve's Brain. Portfolio. 2008. 

Morita, Akio, Edwin M. Reingold and Mitsuko Shimomura. Made in Japan. Akio Morita and SONY. E. P. Dutton. 1986.

Posted by jackmixner at 04:09 PM | Permalink

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Read a book. Learn all about the Dodgers during the time Jackie Robinson joined the team. That was the idea.

The Boys of Summer is a classic. Kahn tells two stories, one about himself growing up in Brooklyn, and the second about interviews he completed with many of the Dodgers during the Robinson days.

The reviewers liked either the first story or the second. Not, usually, both. Me, I liked the second story about the players and the epilogue about what happened later. They're all interesting, actually.

Race was a pretty big issue in the fifties. Might still be if we wanted to talk about it.

The real story here, however, was about how a bunch of baseball players came to respect each other and understand that life isn't necessarily easy for anyone, and that being together - and working together - is a good salve.

References

Kahn, Roger. The Boys of Summer. Perennial Classics. Harper Collins. 1971.

Posted by jackmixner at 05:16 PM | Permalink

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First, there were the individuals: Ken Lay, Jeff Skilling, and, last but not least, Andrew Fastow.

The first, the founder and cheerleader for the energy business, claimed ultimately not to really understand what was going on around him.

The second, the consultant who was smarter that everyone else ended up being CEO. He resigned just before things began to unwind.

Finally, the last was ultimately the CFO, but earlier the creator of many of the off-balance-sheet financings that kept Enron going for so long, and whose financings made him rich without anyone higher up knowing - or so they say.

Then there was accounting experts, Arthur Andersen. Their problem? They were paid too much. All that money (Enron was one of their largest clients) jaded their protective stance toward the stockholders. When pushed to approve something they didn't like or didn't have enough time to inspect, they didn't push back vigorously enough. Then, there was no Arthur Anderson after all its clients left.

The analysts were experts on the stock had buy ratings up until the very end (Mclean, 407). They claimed "Enron lied to them" (McLean, 407). For years.

The banks and the investment houses all wanted part of the action. Even when they knew something was wrong - they could smell it, I'll bet - they stayed in the deal. They too relied on "good-faith accounting judgments that were reviewed by Arthur Andersen" (McLean, 407). Merrill Lynch and four executives were charged by the SEC. Merrill paid fines "without acknowledging that it had done anything wrong (McLean, 408)."

The Board said it was management's fault. It "was duped" (McLean, 408).

Always - always - it was someone else's fault.

The big challenge today is to ensure that it doesn't happen again.

One bit of trvia about how Enron made money during the energy crisis in California in 2000. Normally, some company would produce energy in California and sell the energy in California. Enron figured out a way around this: they'd buy energy in California, ship it out of state and then reimport the energy to California - at much higher prices (McLean, 274). And they got a way with it for a time. They were applauded for good business practices at the home office. Amazing.

Reference

McLean, Bethany and Peter Elkind. The Smartest Guys in the Room. The Amazing Rise and Scandalous Fall of Enron. Portfolio. 2003.

Additional Information on the more recent energy market company:

IntercontinentalExchange Inc. https://www.theice.com/homepage.jhtml

ICE CEO says banks' CDS capital needs to increase. http://www.marketwatch.com/news/story/story.aspx?guid={02d2d43d-1e61-4a31-a363-56e75f2cd7ca}

TESTIMONY OF JEFFREY C. SPRECHER, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, INTERCONTINENTALEXCHANGE, INC., BEFORE THE HOUSE AGRICULTURE SUBCOMMITTEE ON GENERAL FARM COMMODITIES AND RISK MANAGEMENT COMMITTEE ON AGRICULTURE. JULY 12, 2007. https://www.theice.com/publicdocs/press/PR_ICE_HOUSE_TESTIMONY_071207.pdf

Posted by jackmixner at 03:53 PM | Permalink

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Three years ago Nicholas Negroponte proposed building a $100 laptop for third world kids. Then he actually set about creating one. Interesting things happened on the way to final delivery. Mary Lou Jepsen joined Negroponte as Chief Technology Officer. She discovered that the laptop could be a lot cheaper if she made it with a cheaper, new technology screen.

Eighteen months ago Asus introduced its eee PC (easy to work, easy to learn, and easy to play) netbook. A cloud computer, it was designed to be a simple, lighter version of the big old laptops we're all familiar with.

Negroponte got there first with the $100 laptop (that now costs about $300 or so because $100 wasn't possible).  This laptop has lots of simplicity built in, so much so that some folks say its too simple. But the concept, cheap, easy to use especially in third world environs, wasn't such a bad idea.

Asus took the idea and created a cheap laptop for all of us, not just third world kids. Asus calls its new product the netbook. Prices are falling pretty rapidly and may approach the $100 laptop's $300 price (especially after the holidays).

It's all disruptive technology. The laptop folks continue to focus on sustainably improving their laptops. They tweak this, increase the speed of that, add a new color. Everyone is happy.

Well, just about everyone. Third world kids needed a new box. So did folks that don't really need all the capabilities of a big laptop. Thus the $100 laptop and the netbook small, light-weight machine.

Not quite as good. Not all the capabilities. But still, very useful for the folks that "get it".

Now there is a new disruption. Pixel Qi, Jepsen's follow-on company is now disrupting the screen technology. She realized in the $100 laptop program that the screen was the limitation. She's asking, and this is the new part, old line LCD manufacturers, to use her new, patented technology to bring cheaper screens to market.  Old line folks using new technology that isn't really as good as what they've got, the normal test for a disruptive technology.

The whole idea is disruptive. And that's the idea. Take what you've learned and make things simpler and cheaper. All three of these technologies do that. Asus started a new market. So is Jepsen. $100 laptops started it all.

One idea, smaller, cheaper laptops, has gone lots of places. Watch for the next installment in stores near you. There will be one.

References

Copeland, Machael. Disruptors: The 'netbook' revolution. Asus created a new market with a small, inexpensive portable computer for soccer moms and their kids. CNNMoney.com. http://money.cnn.com/2008/10/13/technology/copeland_asus.fortune/index.htm?postversion=2008101614

Greene, Kate. Simplified Displays. Mary Lou Jepsen is developing technology originally created for the $100 laptop project. Technology Review. 7 October 2008. http://www.technologyreview.com/printer_friendly_article.aspx?id=21472&channel=computing&section=

Posted by jackmixner at 12:06 PM | Permalink

1+714.673.8578.     www.mixnerstrategy.com

IDEO started out as a design firm. They designed Apple's first mouse and the first soft-handled toothbrush. Now they teach other firms to be more innovative. Some of what they do you've heard before: talk to customers and see how they are using your product or service before you make suggestions.

Sloan-Kettering in New York wanted to make it easier to use their cancer treatment services. They hired IDEO to have a look (Dvorak). Two things became apparent:

1. What Sloan thought was wrong - long wait times - wasn't a big problem from the patient point of view.
2. The problem was actually stress. Some tests were two step processes. Take a blood test. Wait around for the result. If the result was positive, you were able to receive chemo that day. Flunk the test and you had to wait for your next treatment. The two steps, both on the same day, were too stressful for patients. Something had to change.

What to do? Let patients come in for the pre-test a day early and go home. Call them back if they could proceed to chemo that week. What's the big deal? Patients could handle the waiting. What they didn't like was the wait for the test results.

Sloan changed the order of things and everyone became happier. Not a bad result.

The solution didn't take IDEO long to come up with. All they did was ask a few questions, watch what was going on, and then, finally, make a couple suggestions.

The IDEO process is pretty straight-forward (Dauphinais, 271-281).

1. CONFLICTS. The first step probably wasn't actually looking at what was going on or listening to Doctors or patients. It was forming a consulting team that was likely to ask questions that conflicted with what everyone was thinking. That meant forming a small team that left IDEO headquarters and moved into the hospital to watch.
2. FUTURE FOCUS. The small team went through training that focused on what was likely to be available in the future. In this case, they saw that a one day process is shorter and less stress inducing if it actually could take two days. Part of that future in this case was increased interaction between the nursing staff and patients. Somebody had to make that stress-reducing call after the test. When they did that, everyone was happier.
3. PROTOTYPE RAPIDLY. The IDEO team didn't wait around to test things. Right off the bat, they had customers calling in for results. Now, it was illegal for patients to call nurse's cell phones (Dvorak). The customers did it anyway. All IDEO had to do was fix the hospital's phone system to make it interact with nurses better. They failed a couple times, but no one complained. The result - faster communication about whether to come tomorrow and when to prepare the chemo drugs - saved everyone, patients and nursing staff alike, time and stress, a good result.
4. GET PHYSICAL. You've asked questions. You have an idea what the solution looks like. Go ahead and make up an actual, physical prototype. The prototype for the X-1 aircraft was a 50 caliber bullet. The prototype for the Aerobie football (it always is a spiral) was actually designed with straight fins to make it easier to stand the football up for a kick-off (Kelly, 109-111). Only after they made the prototypes and tested them did they realize that the X-1 was probably pretty stable and that the Aerobie was straight every time.
5. PLAY. This one sounds like a cliché, and I guess it is. Make team work - and all creative work takes place in teams - fun. Turn it into play. The simple stuff like having toys in the office, field trips to museums and competitors, training on new topics all seem to work. IDEO takes pride in their "greenhouse" where they grow new ideas (Kelly, 121). If the prototype is huge - like a rail-road car, for instance - work in the car itself (Kelly, 129). Every project gets a logo. Job's had a pirate flag over the Macintosh design center (Kelly, 130). One of my clients always brings lots of nerf toys to planning sessions. Get too serious, and you're likely to get hit in the head with a football from across the room. Retaliation is encouraged.

It all works. IDEO is getting a lot of press lately. That's fine. You can put their ideas to work without them. Try it.

References

Dauphinais, G. William and Colin Price, Editors. Straight From the CEO. The World's Top Business Leaders Reveal Ideas That Every Manager Can Use. Simon & Schuster. 1998.  

Dvorak, Phred. Business Take a Page From Design Firms. Wall Street Journal. 10 November 2008. http://online.wsj.com/article/SB122608904288009265.html?mod=googlenews_wsj#articleTabs%3Darticle

Kelly, Tom with Jonathan Littman. The Art of Innovation. Lessons in Creativity From IDEO, America's Leading Design Firm. Doubleday. 2001.

Posted by jackmixner at 10:10 AM | Permalink

1+714.673.8578.     www.mixnerstrategy.com

Rhetoric speaks. Jack Welch used a speech writer to put into words all the things he was thinking when he ended up CEO at GE.

Sometimes, we think all of strategy is a team effort. Lane makes the case that Welch, working all by himself, decided what to say. He just needed help in saying it. Welch realized that without "world-class" (Lane, 108) communication, GE wouldn't grow the way he wanted it to.

Unsaid in the review of Lane's book is any mention that Welch is normally an introvert. Maybe he wasn't. But he was smart enough to know that everything he said and forum he said it in, had to be properly scripted.

Interestingly, in the Welch's column this month is BusinessWeek they talk about how deleterious being an introvert can be to your career. Their advice? Fight it. Present every time you are able. Ask for advice on how you did. Don't be a wall-flower.

Welch is just giving advice he received in the early eighties. It seems to have worked for him.

Reference

Lane, Bill. Jacked Up: The Inside Story of How Jack Welch Talked GE into Becoming the World's Greatest Company.  http://www.strategy-business.com/press/article/08408a?pg=0 . Best Business Books 2008. Strategy+Business. Winter 2008. Page 108.

Welch, Jack and Suzy Welch. Release Your Inner Extrovert. BusinessWeek. 8 December 2008. 092. http://www.businessweek.com/magazine/content/08_49/b4111092962041.htm

Posted by jackmixner at 03:53 PM | Permalink

1+714.673.8578.     www.mixnerstrategy.com

Microsoft had a problem. Its 90,000 employees and $60 billion in annual revenues weren't enough to leverage the company into cloud computing.

Enter Ray Ozzie. An old techie friend of Bill Gates, Ozzie has begun a transformation at Microsoft to take advantage of the disruptions taking place in the market as companies migrate from desk top bound software (like the Microsoft Office products) to a web bound process where things are a bit different.

Way back when, Microsoft successfully migrated to the Windows environment. Then they migrated successfully to the web environment. All along, they still provided software that you installed on your computer for your personal use.

A great example of a cloud product that has been wildly successful isn't a Microsoft product at all. It's from Apple: iTunes. You install it on your computer to use it as an off-line media organizer. Then you go on-line to buy songs, stream stuff, and get recommendations (Levy, 174).

Now comes the red shoes.

Normally, when Microsoft does something, everybody gets involved. That guarantees slow launches with - maybe - plenty of bugs. How to solve the fast, bug-free problem? That's where the red shoes come in.

Ozzie created a company within a company right on the Redmond campus. One thousand engineers are focusing on four new product lines all by themselves. They don't have to report to anyone else. No one else gives them permission to do stuff. They just do it. Sort of like Nike's old slogan - just do it. They all needed a uniform, thus the red Nike shoes.

Company-within-a-company. No rules. Just do it. Must be be odds against success for Microsoft to take the risk of such an organization.

Big risks translate into big pay-offs. It looks like Microsoft is about to succeed at this new risk.

We'll see.

Reference

Levy, Steven. Ray Ozzie Has a Plan. Wired. December 2008. 170.

Posted by jackmixner at 03:16 PM | Permalink

1+714.449.1040     www.mixnerstrategy.com

Open sourcing your software makes sense. So does open sourcing your hardware, and your services, too.

Why do it? Open sourcing is tough to make money at, per se. Where the profits come from is the knowledge you gain by being the center of the action relating to your project, whether it be software, hardware or services.

References

Cook, Scott. The Contribution Revolution. Letting Volunteers Build Your Business. Harvard Business Review. October 2008. 60.

Thompson, Clive. Build It. Share It. Profit. Wired. November 2008. 166.

Posted by jackmixner at 08:39 AM | Permalink

1+714.449.1040     www.mixnerstrategy.com

Pitching a business plan? Consider (Business Briefing, R2):

• It's hard to fake excitement about your plan. Make sure it shows.
• If they can't wait to break into your conversation, they're listening. Listening is good.
• If they are mirroring your gestures, that's a good sign. Mirroring is innate. Everybody notices what's going on. Take advantage of it.
• People can read your fluidity, the consistency of your presentation. Practice far in advance. People notice.

The bottom-line: Face to face dialogs are where the decisions get made. If you are attempting to work via email, reconsider your strategy. Spend more time at the water cooler.

Reference

Executive Briefing. The Power of Nonverbal Communication. Wall Street Journal. 20 October 2008. R2. http://online.wsj.com/article/SB122426675804545129.html

Posted by jackmixner at 07:52 AM | Permalink

1+714.449.1040     www.mixnerstrategy.com

Two key facts (Engardio, 23):

1. The assumption that innovation and productivity alone will sustain the American standard of living may prove erroneous.
2. Real incomes have declined over the last decade, even as productivity increased.

Two interesting solutions:

1. Look for more state - and international support for - investment in production capacity in growth industries like autos (yes, there is growth coming), nanotech, and renewable energy.
2. That support will likely flow to companies in GDP producing industries: you've got to make something to survive.

Two interesting opportunities:

1. Position your company as a problem-solver in industries that will support high-paying, high technology jobs that create wealth.
2. Use that positioning to team with the government in high capitalization industries. Look for more government regulation in financial industries and manufacturing industries. If the government is going to provide subsidies, they are going to require new efficiencies that increase productivity - and GDP.

Reference

Engardio, Pete. Forget Adam Smith. Whatever Works. BusinessWeek. 27 October 2008. 22. http://www.businessweek.com/magazine/content/08_43/b4105022816429.htm

Posted by jackmixner at 07:28 AM | Permalink

1+714.449.1040     www.mixnerstrategy.com

The financial crisis we are witnessing today was fed by greed, lack of leadership, lack of controls, and a whole lot more. All this has happened before. sometimes at some of the most well known companies in America. Sometimes, it is hard to remember that well-respected people were making all sorts of bad decisions, decisions that sometimes led to personal and business failure.

Archer Daniels Midland Company has been a well respected pillar of the chemical, food and agricultural community for a long time. Things were wrong there in the early nineties. ADM's story is important because it reminds us that, while things have gone wrong today what with the financial mess we are experiencing, they have gone wrong in the past as well. That this has gone on in the past is not a pretty reality exactly.

The story boils down to this: a president of a division at ADM was stealing from the company to the tune of about ten million dollars over some years. To cover his tracks, he made up a story about someone from abroad threatening his family - and called the FBI. The FBI investigated, and, to continue to cover his tracks, the president reveals a whole series of illegal indiscretions the company has made and that he was privy to: price-fixing on an international scale and theft of company funds on a large scale (Eichenwald,30).

The story is intriguing and interesting. The facts are proven. People went to jail. Careers were ruined. That's all well and good.

The message of all this, while blatant, is subtle at the same time. Let's call it the "slippery slope" we are all so used to.

At ADM a culture grew in which both theft and price-fixing were accepted. Everyone did it. No one objected. It appears that some people left, but not many. The FBI was astounded that one person would reveal so much - the president of a division, no less - and further, that no else in this very large scheme even considered saying "This is wrong, we've got to stop," much less called the FBI. Some of the players were internationally known business leaders with contacts very high in the federal government. OK, greed played a role. The "I deserve more - this is a good way to get it," mentality grew too large. Lots of people participated.

This book should be required reading for all sorts of managers. Business schools should require it. Why? Because it reminds us all how easy it is for things to go very wrong in the management of a company. It happened to ADM. It can happen to your company, or mine, as well.

Reference

Eichenwald, Kurt. The Informant. A True Story. Broadway Books. 2000.

Posted by jackmixner at 02:06 PM | Permalink

1+714.449.1040     www.mixnerstrategy.com

Gap is a specialty casual retailer; Old Navy is a value-oriented family store; Banana Republic is a moderately priced designer retailer (Rubinfeld, 299). 

You knew that already. But Gap, Old Navy and Banana Republic didn't know that until Paul Pressler left Disney and moved to Gap Inc. His first move was to clearly define the core values of each of the brands.

Once you know what the value of your retail operation is, now figure out how to turn your brand's values into growth. Rubinfeld plotted out the growth of Starbucks early on in his tenure during the period when Starbucks grew from one hundred to four thousand stores. Values first, yes; then lay out a framework that takes those values to the mundane of such issues as store daily opening and closing. Starbucks uses demographics to choose locations. Then it examines the parking lot of suitable locations. Oil on the tarmac? Good. That's evidence of lots of traffic which helps build sales. Cluster your stores. Budget opening properly. They've thought of it all (Ehrenfeld, 7).

Innovation is part of all this. Your insights - especially in retail - define your innovation path (Rubinfeld, 300) :

• Prove you have the license to expand the category or enter a new one by planning far in advance.
• Time your entry properly. Now, what with the changing financial statistics related to recession, might be a good time to dust off old plans and re-examine the possibilities that you have had time to consider before. Things, obviously, will turn around eventually.
• Finally, if you are abandoning your current demographic or expanding in to a related one, make sure your plan - and your products and facilities - make enough room for profits in the new one.

References

Ehrenfeld, Tom. Starbucks and the Power of Story. How the coffee retailer uses its own narrative to brew global success. strategy+business. 10 October 2008. http://www.strategy-business.com/press/article/08211?pg=0

Rubinfeld, Arthur and Collins Hemingway. Built for Growth. Expanding Your Business Around the Corner or Across the Globe. Wharton School Publishing. 2005.

Posted by jackmixner at 01:35 PM | Permalink

1+714.449.1040     www.mixnerstrategy.com

Steven Jobs always gets the easy jobs.

• Create a new industry with the personal computer.
• Implement new technology for the first time with the MacIntosh computer.
• Battle with a CEO - and lose - in his battle with John Sculley.
• Return to a broken company with the aim of turning things around. 

In the first quarter of 1996, Apple Computer lost $69 million, laid off 1,300 staffers, fired their CEO, and, finally, brought in Gil Amelio as the new CEO. Amelio continued to cut out the pork in Apple's operation by reducing the number of projects from three hundred to about fifty. Amelio needed a new operating system for the Mac so he bought Jobs' NeXT computer because its operating system was up and running and perfect for the Mac. Apple had forty different product lines, a confusing, unfocused array that needed culling.

After a series of losing quarters, the Board asked Amelio to leave and hired Jobs as CEO (Kahney, 22).

When Jobs came on board, Apple had forty product lines. His job: reduce the forty to the profitable few. Make a profit. Now. How'd he do it?

Job's Seven Key "Realignments" (Kahney, 26-33)

• Replace most of the Board with tech industry allies, including Larry Ellison from Oracle.
• Resolve the suit with Microsoft about similarities between Apple's operating system and Microsoft's. Persuade Mircosoft to invest in Apple to show good will.
• Hired a new marketing company - TBWA/Chiat/Day - to create a new, bold marketing campaign.
• Dump the clone business relationships. No more non-Apple computers shipped with the Apple operating system.
• Simplify the pipeline. Just four products for the company: Consumer Portable and Desktop and Professional Portable and Desktop. Every thing else got dumped, including a very profitable printer business.
• Refocus the suppliers (IBM and Motorola) so they provided concessions he wanted and supported Apple going forward.
• Finally, he re-focused on the twenty-five million current customers of Apple. They were the foundation for the re-emergence of Apple.

The biggest change of all: Jobs focused the company on the four product lines, trimmed any remaining fat and began again, all without all the bravado and temper tantrums he was known for.

The iPod and the iPhone were in the future. The initial steps of focus in 1997 and 1998 laid the groundwork for future success.

Reference

Kahney, Leander. Inside Steve's Brain. Portfolio. 2008.

Posted by jackmixner at 12:24 PM | Permalink

1+714.449.1040     www.mixnerstrategy.com

I got hold of  a list of the "best non-fiction business books ever written" back in July (Nocera), not knowing that the list promised some amazing - and timely - reading. I've read about containers on ships, the movie business (twice), the New York Times, the sixties, the eighties, the nineties, you name it, it's in the list.

So, the latest book (Auletta) is scaring the day-lights out of me, I've got to admit. Our savings are tanking in the stock market, and I am reading a very exact description about the first time Lehman Brothers failed, in fact, the time Lehman Brothers first left its partnership business form and was purchased by another entity after 134 years of continuous operation In New York City.

Yes, I lived through this when it was in the papers. I suppose I am supposed to remember the facts. Maybe I did a little bit. But I never knew the story, the real story about what happened.

Auletta makes the case that it was greed that brought Lehman Brothers down.

For me, the failure of Lehman wasn't about greed, it was about power. Lewis Gluckman saw what he assumed was weakness in the current Chairman, Peter Peterson. He pushed, and he pushed, and he pushed until Peterson was gone, and he was in charge, able to do what he darn well pleased. Gluckman forgot a couple things. Yep, he'd been a wonderful Mr. Inside - he knew how to run the operations side of things. He thought that was all that mattered. Wrong. Mr. Outside - Peterson - was just as, if not more, important as he brought in the business and expanded what they already had. Some bad bets, combined with a downturn, put Lehman on the ropes within months after Gluckman's successful "coup" forcing a sale after nine months of Gluckman's tenure.

Amazing, sad, scary - all at one time. And the story isn't that different from this go around at Lehman. It is clear that history does provide guidance, if only we took the time to remember it.

Reference

Auletta, Ken. Greed and Glory on Wall Street. The Fall of the House of Lehman. Warner Books. 1986.

Nocera, Joe. The Best Business Books Ever? New York Times. 17 July 2008. http://executivesuite.blogs.nytimes.com/2008/07/17/the-best-business-books-ever/?hp

Posted by jackmixner at 06:20 PM | Permalink

1+714.449.1040     www.mixnerstrategy.com

Scott Cook, the co-founder of Intuit, talks about a very specific add-on to the TurboTax website that some of his managers didn't expect to work very well. It was simple, actually, a Q&A community built in the the 2007 version of TurboTax on-line (Cook, 67).

Five weeks into the Q&A's test period, they were ready to score it a success. In 2008, they added another section to the site, a user review section. Expectations were for complaints. Didn't happen. The vast bulk of the responses were positive (Cook, 67). Good news.

Why do folks contribute (Cook, 68)?

• They don't realize they are.
• They want their practical solutions implemented quickly.
• Interaction is its own reward.
• Reputation enhancement.
• Expression
• Give back to your community.

Finally, what are the keys to making you community enhanced site work better - or to get your at-work community to happily contribute (Cook, 69)?

• Take your time.
• Don't expect a lot early on
• Celebrate your successes
• Use the process to experiment
• Let folks "vote" on what they like best and find most useful.
• This could be a bottom-up process - seek buy-in from the whole organization only after you've had some successes.

We're thinking of applying this process to two opportunities:

• Creating a red team web site to respond to economic development opportunities where no response is a normal response.
• Creating a community of communities who are inundated with abandoned homes because of the mortgage crisis with the ultimate goal of managing the sales process of abandoned homes so they end up being owner occupied, not renter occupied. This ensures that the community will grow healthy - and more valuable - more quickly (See Rundle).

What opportunities do you see?

References

Cook, Scott. The Contribution Revolution. Letting Volunteers Build Your Business. Harvard Business Review. October 2008. 60.

Rundle, Rhonda L. California Officials Try to Avoid Second Housing Hit. Wall Street Journal. 7 October 2008. A8. http://www.wsj.com/article/SB122334317101810201.html

Posted by jackmixner at 04:39 PM | Permalink

1+714.449.1040     www.mixnerstrategy.com

"... social panics occur when large groups can't discern reliable sources of advice from unreliable ones (Cloud, 15)."

"In the middle years of this decade, we had negative real short-term interest rates. And that really means free money, which really distorts the system. Capitalism is premised on the idea that capital is a scarce commodity rationed with a price mechanism. ... People all over the housing and financial service industries figured out ways to lever themselves up way too far (Bartiromo, 22)."

"In the case of Fannie Mae and Freddie Mac ... Their massive lobbying machines thwarted every legislative attempt at reform (Rickards)."

"The problem is that Wall Street and regulators relied on complex mathematical models that told financial institutions how much risk they were taking at any given time, ... a colossal conceptual error: the belief that risk is randomly distributed and that each event has no bearing on the next event in a sequence (Rikards)."

"Since we have scaled the system to unprecedented size, we should expect catastrophes of unprecedented size as well (Rikards in Crovitz)."

Flip a coin. What are the odds that it will be a heads? Fifty percent. We all knew that. And we'd be right, at least most of the time.

The folks who make financial models for investment strategies have basically assumed the same thing. Every event is not related to any other event. Flip a coin. It's fifty-fifty whether it will be heads or tails. Every time. That's the assumption.

More complex situations muddy the math, but, basically, statisticians have always operated under the assumption that events were not related. They used those same assumptions when creating complex financial models to predict whether an investment would pan out. Most time, they were right.

Long-Term Capital Management made that assumption in the nineties. Trying to predict the volatility of the market, they assumed that volatility was a constant and could be predicted, or at least managed (Lowenstein, 68). They predicted that a group of bonds were good investment, even in an extremely volatile market. They invested on that assumption, big time. Not only did they invest their cash, they borrowed money to invest. That's called leverage. It is supposed to be a good thing in the right hands.

LTCM was sure that the investment was a good one, even as the volatility increased. The effect of the volatility, especially as other investors abandoned the investment, was that their leverage effectively increased. Now leverage can be good.

LTCM's leverage at its peak was one hundred to one (Lowenstein, 191) - one dollar invested of their money, ninety-nine dollars invested of someone else's money, money they would ultimately have to repay. Leverage is great if things go well. Leverage is not so great if things go wrong.

LTCM's market began to collapse with the collapse of Russian bonds in 1998. Their leverage foretold their ultimate demise. It was underlined by the fact that when LTCM bet, they bet big. Their bets were so big, in fact, that they couldn't unload them on the way down, because that unloading would have moved the markets even lower, yet. Ultimately, it took a near $3 billion investment to right LTCM. It survived. Everyone was supposed to remember that events are not independent. Panic ruled the bond market on a day when LTCM assumed it wouldn't. They couldn't abandon their positions quickly enough and got left holding the bag. It was a huge bag filled with bad investments.

The Fat Tail

One last thing about LTCM's assumptions.

They assumed that the bell curve of their variable went to zero out at the positive and negative extremes based upon their rationale that their assumptions were independent of other assumptions. They were wrong. Only approximately ninety-nine percent of the time do variables have zero percent extremes.

In times of panic, their extremes fall to one percent, not zero. That means that, inevitably, their projections will be different than they expected. When they're wrong, and they're leveraged, the losses are huge. Just like they were in 1998 - and in 2008. That's called panic.

What's that got to do with the fluctuations in the market in the last couple weeks?

• Bad information caused the markets to fall rapidly as folks assumed they were better off out of the market rather than waiting to see how things would shake out.
• Bad management of interest rates led some financial firms to create a market in mortgages that they shouldn't have been allowed to create.
• People bought too many of the new mortgages, then abandoned them when the markets made their investments in their homes worthless.
• The market grew huge faster than was expected, so huge, in fact, that no could get out without going bankrupt.

And bankrupt they went. We'll see how it all shakes out. Looks like someone is going to make a huge investment. I suspect it will be you and I. We all paniced. We all lost - big time.

References

Bartiromo, Maria. Blackrock's Peter Fisher On When the Pain Will End. BusinessWeek. 20 October, 2008. 21. http://www.businessweek.com/magazine/content/08_42/b4104000808352.htm 

Cloud, John. The Moment. 10/06/08. Time. 20 October 2008. 15. http://www.time.com/time/magazine/article/0,9171,1848734,00.html

Crovitz, L. Gordon. The 1% Panic. Wall Street Journal 13 October 2008. A17. http://online.wsj.com/article/SB122385689217827341.html

Lowenstein, Roger. When Genius Failed. The Rise and Rall of Long-Term Capital Management. Random House. 2000.

Rickards, James G. A Mountain, Overlooked. Washington Post. 13 October 2008. http://www.washingtonpost.com/wp-dyn/content/article/2008/10/01/AR2008100101149.html

Posted by jackmixner at 10:24 AM | Permalink

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The Civil War made a lot of people rich, John D. Rockefeller among them. He started as a trader in commodities (salt, clover seed, timothy seed and pork) and ended up a wealthy man. He was still in his twenties (Chernow, 71). During that period, Rockefeller learned one crucial technique, namely, how to make the railroads compete for your business. Since his commodities business had lots of shipping needs, and there were a myriad of railroads available - too many, really, as a shakeout had not yet occurred - Rockefeller attained the lowest price possible on his company's shipping. While later in life Rockefeller would shun debt financing of his business's growth, during the Civil War period he borrowed as need be. His lenders became his mentors, always helping him focus on the need to repay every loan he took. Yes, it was serious business for Rockefeller, but at the same time a joyous business. It was, truly, fun (Chernow, 68).  

During the same period that Rockefeller was building his business, he was also building his life. He married and began to grow a family. Just as importantly, he build a serious relation with his church, becoming an unfailing supporter of his church (the Erie Street Baptist Mission Church) in Cleveland (Chernow, 77).

He formed alliances with the railroads to secure kickbacks on his and others shipments of oil from the oil regions and refinery regions of Western Pennsylvania and Ohio to the East Coast, and then on to the world. The key word here was kickbacks. Since there weren't laws yet against such kickbacks, Rockefeller didn't mind plunging ahead with them no matter what his competitors thought.

Depending on your point of view, Rockefeller became, even this early in his career, either a religious homebody living a saintly life, or a scoundrel living on the spoils of other's work. As he retired thirty or forty years later, it still wasn't clear, and, basically, we still have a choice to make about it all. The government, finally, with the anti-trust legislation and court challenges and wins, forced the issue and broke up the empire that Rockefeller so carefully created. Rockefeller became a philanthropist - Churchill recognized Rockefeller for his generosity and discernment in science (St. Louis Post Dispatch) - who supported universities all over the country.

There was one final, saintly act that is forgotten, even in today's tumultuous financial markets. It was Rockefeller, in combination with federal money directed by Theodore Roosevelt, that turned the tide in the panic of 1907. J. P. Morgan got most of the credit. Rockefeller, quietly, supplied a lot of the funds that staunched the panic (Chernow, 544).

By order of the U.S. Supreme Court in May 1911, Standard Oil broke into thirty-four separate companies. We're not going to analyze here how well that split-up actually worked, as the entities were still owned by the same stockholders. There is, however, an interesting fact buried in the thirty four new companies created. Standard Oil of New Jersey inherited refineries, oil tankers, and marketing apparatus. It did not, however, inherit any oil to refine, ship or market. That spelled opportunity for another producer who had a lot of oil with no place to sell it (Davis, 77).

Edward L. Doheny had been developing oil fields in Mexico. In 1910 and 1911 his company had a couple gushers, a lot of oil, and no where to sell it. Standard Oil of New Jersey became one of the buyers for the Mexican oil, saving Doheny's company during the early development of the new fields in Mexico (Davis, 77).

Rockefeller's was a circuitous story with ups and downs all along the way. Doheny's wasn't much different. Revolution in Mexico ultimately made Doheny's ownership of the oil fields risky, as the Mexican government was interested in nationalizing them. In support of the Tampico oil fields, the U. S. Navy blockaded the port of Veracruz and supported American interests. The U. S. wanted the oil (Davis, 96).

Now, the Doheny story would have been a good Los Angeles boy makes good story except for one debacle that happened in the twenties, the Tea Pot Dome scandal. While finally found not guilty to all the counts against him, Doheny had hoped that his professional career wouldn't be judged by on scandal. It was not to be. Donheny spent his last years in declining health.

In contrast, Rockefeller targeted a one-hundred year life. He died in 1937 at ninety-seven, feeble, but bright to the end (Chernow, 674).

References

Chernow, Ron. Titan. The Life of John D. Rockefeller, Sr. Random House. 1998. 

Davis, Margaret Leslie. Dark Side of Fortune. Triumph and Scandal in the Life of Oil Tycoon Edward L. Doheny. University of California Press. 1998.

Gold, Russell. Market Slide Puts a Spotlight on Big Oil's Cash Hoard. Wall Street Journal. 7 October 2008. B1.

St. Louis Post Dispatch, 8 July 1936.

Posted by jackmixner at 02:13 PM | Permalink

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Mexico wants to build a port in Baja to compete with the ports in Long Beach and Los Angeles. Dickerson nicely lays out all the positives and negatives here.

So why would anyone build a port south of the border for the American market? We don't have the financial numbers. I'll bet that they pencil out OK for the right investor, especially given the forty-five year term of the lease on the harbor. Deep pockets are involved. Maybe we accept that. Now comes the hard part.

Why would the shippers want to use the port? Since the inception of the containerized shipping industry in the fifties and its growth in the sixties and seventies, things have changed. What was once a growth industry has matured into a commodity business. Changes are occurring, of course, but they are coming slowly. Prices for shipping a container will likely remain fixed unless there is a change in technology that allows for more profitability for the lucky early adopters of the new technology.

A rough timeline of the changes in the industry shows changes in the container itself, the crane used to pick it up and either place in on or off the ship, the technology imbedded in the ship, the size of the ship, the speed of the ship and the ship's likely fuel economy. Quite a list.

The containers have gotten larger year by year. The early ones were six and a half feet tall. I notice that they're now nine and a half feet tall. Looks like the length has stayed constant at forty feet. The container itself is not likely to change too much, especially in a way that effects a Mexican port. Perhaps, the containers could get even larger than they are today - say fifty-five feet long versus today's forty feet - but that would require huge investments in cranes at every port the ships call at. The trucks would need a change. Finally, who is going to fill up a fifty-five foot long container?

Cranes are crucial. They're the key element that trap a ship in port, a losing proposition for the ship owner who isn't making any money unless the ship is under way to the next port. That means two things: there have to be enough cranes. The cranes that are available must be fast a both unloading a ship, and loading it. Mexico could compete here if they buy the newest, best cranes and keep them up-graded.

Ship technology continues to evolve. Early ships were converted WW II tankers. No longer. The ships are behemoths. The interactions between the cranes and the ships are computerized to ensure that the correct containers are swapped at the right time and that the ship is trimmed properly (flipping in port used to be a problem, way back when) at all times. There may be a place for more growth in the size of a ship, but it is my bet that the best place for improvement is in fuel economy and speed. That means hull design - and maybe even surface designs - that reduce drag from water and air might increase profitability.

All this ship design doesn't effect Mexican ports any more than American ports, unless there is some way to equate ship design with port utility. American ports are becoming more and more environmentally conscious, so Mexico may be able to take advantage of that, at least for the short term. Alternatively, the ship owners, or the shippers themselves (the ones that own the product in the containers), may be able to make a case to their customers that an environmentally friendly port helps them. Mexico has the opportunity to build green technologies into their port that exceed American technologies - and that reduce costs or time in port for shippers.

The California ports need help getting the containers to the trains. Congestion seems to be great between the ports and the train hubs in the Inland Empire of Riverside and San Bernardino Counties. If Mexican operator can negotiate with the rail roads to place an adequate train hub at the port, that could create an advantage, enough to reduce crucial shipping costs. Time is money, after-all. In this time of security checks at borders, it seems that a technology solution for speeding the containers over the border could make the Mexican proposal sensible.

Since some of the rail lines in Mexico will probably be new, there may be speed technologies that could be built into them as well as into the trains themselves. Fuel economy is still important as is speed to market. Some changes might be possible especially if the infrastructure is newly constructed with new, "buried" technologies.

Mexico may be able to add fuel to the ships to the equation. If they were able to fuel ships cheaply while they are in port, there may be pennies to be saved, enough to tip the balance toward the Mexican location. Same for the trains.

The Long Beach/Los Angeles ports are up and running. Yes, they are making continual improvements. If the Mexican port was able to make all the suggested changes add up to reduced shipping costs - and reduced time in port - they might have a case for creation and expansion of their proposed port.

If we think of all this from the US side of the border, the same suggestions apply. If the trains can't cross the border, the Mexican port can't pencil out. Alternatively, the US ports can make environmental and efficiency changes that increase the odds that their ports are cheap enough and speedy enough to hold their current clientele and attract others.

A lot of pencils are going to need pushing on this deal before it is done.  The shippers may perceive savings in dropping containers in a Mexican port. The investments to make that happen will be large - and risky - for all sides.

Reference

Dickerson, Marla. Mexico plans huge Baja port for U.S. trade. LA Times. 28 August 2008. http://www.latimes.com/business/la-fi-mexico28-2008aug28,0,844963.story

Levinson, Marc. The Box. How the Shipping Container Made the World Smaller and World Economy Bigger. Princeton University Press. 2006.

Posted by jackmixner at 02:42 PM | Permalink

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We all know Speedo for their sleek racing swimwear designs from way back when. We also know that Speedo made Michael Phelps' swim suit at the recent Olympics where he won all his medals. What we probably didn't realize was that Nike also made swimwear for the Olympics, but it just wasn't as good as Speedo's. In fact, some of the swimmers sponsored by Nike were allowed to use Speedo equipment (Associated Press).

Speedo's been around a long time. They've probably made changes to their products in a sustainable fashion, meaning that they make incremental changes to increase utility and speed, but didn't shake things up too much. Until now. Their new swim wear really shook up these Olympics with demonstrably successful changes that won medals. Sustainable changes mean slow, incremental changes.

Disruptive changes shake things up. It looks like Speedo had a disruptive change going on as their latest upgrades helped swimmers in their suits win more medals.

The most interesting part of the story is yet to come: apparently, Nike is abandoning the swimwear market and leaving it to Speedo (Associated Press). It looks like Nike wasn't able to effectively out-perform Speedo in the engineering department where it counted. Nike left a market to a smaller, seemingly more innovative company. It'll be interesting to see if and when they return.

Reference

Associated Press. Nike to exit elite swimwear market. New York Times. 22 September 2008. http://www.nytimes.com/aponline/business/AP-Nike-Swimwear.html

Posted by jackmixner at 01:36 PM | Permalink

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Everything was fine, until everything on Wall Street was not fine. Now two old players in the investment banking business are more bank, less investment. Goldman Sachs and Morgan Stanley, after resisting change and insisting all was well, have changed their stripes and are now regulated bank holding companies (White). Less risk. Lower rewards. That's Wall Street today.

In parallel, as the investment banks become less investment and more bank, the remaining investment bankers are looking to build market share. Jefferies & Company and Evercore Partners are thinking of becoming more dominant in the new Wall Street (Story).

The rules have changed. The deck has been re-shuffled, disrupted. Disruptive strategies have pretty set processes, although they aren't sometimes obvious.

• Simple as compared to complex strategies make more sense. Warren Buffet said back in 2003 some of the derivatives he was looking at "weapons of financial mass destruction (Serwer, 24)." I think that pretty well describes some of the products that failed in the last couple of months.
• Cheap launches are more likely to succeed.
• Speed to market is a good indicator of future success for technology companies. It might be a predictor for service companies as well.
• Disruptive companies might actually not be as good as their competition. They'll have fewer bells and whistles on their products, but they'll be simple and easy to understand.
• Innovation in tech products does show, usually in unique design features that make the experience easier or more fun. Making a service product more fun makes it easier to use if done correctly.

The bigger investment banks are becoming more commercial and will probably leave opportunities for smaller investment banks to grow. Some people say the big companies will retain their business; others say the little guys have a change (Story). It seems to me that, if handled correctly, the smaller banks have a chance if they follow the disruptive strategy game-plan.

References

Serwer, Andy and Allan Sloan. The Price of Greed. Time. 29 September 2008. 32.

Story, Louise. As the Giants of Wall Street Topple, Smaller, Nimbler Rivals Move In. New York Times. 23 September 2008. http://www.nytimes.com/2008/09/23/business/23streets.html?_r=1&ref=business&oref=slogin

White, Ben and Louise Story. Last Two Big Investment Banks Reinvent Their Businesses. New York Times. 23 September 2008. http://www.nytimes.com/2008/09/23/business/23streets.html?_r=1&ref=business&oref=slogin

Posted by jackmixner at 01:07 PM | Permalink

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Bare bones. Light weight-three buttons only. Affordable-$120 versus $340 industry average. Shy - there's a word to describe a new product. Sales in the first year of one million units versus six million for the whole camcorder industry (Jana). What's the product? Pure Digital's Flip camcorder.

Disruptive technology? Yes. Why? There's a question.

• Sony owns the business. They invented light weight as in the first Walkman. They just forgot that people weren't interested in a new feature. They were interested in a simple camcorder that would take simple movies that could be simply shown on the Internet.
• The Flip isn't as good. The paint is cheaper. The lens probably isn't as good. Nobody cares. They probably don't notice, as most of the video shot with the Flip is ending up on low-res outputs like a laptop.
• Sony takes it's time, relatively. Innovation is progressing more rapidly at Pure Digital. They were able to ship a million units in the first year with no trouble - and not troubles, as well. Pure Digital started in the throw-away-camera business. Simple things that got thrown away quickly. Their customers said they wanted a throw-away camcorder. It ended up being not quite throw-away, but close. New products are coming out quickly.
• The Flip is so simple, you can't up-grade it. No additional memory sticks to worry about.
• It's low tech as the Flip works on regular batteries. No bricks or cords.
• No cords to down-load the movie. The USB "flips" out at the press of a button, thus the name. Nothing to lose. Nothing to go find when you're ready to see your production.
• The Flip software actually isn't cutting edge at all. It's not perfect. It's just good enough to do the job. Most people are satisfied with what they get for the price they paid.

Evidence of disruptive technology:

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

Oprah raved about it on her show. Rosie O'Donnel likes it as well (Jana). Think simple for your next new product.

References

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

Christensen, Clayton M. and Michael E. Raynor. The Innovator's Solution. Creating and Sustaining Successful Growth. Harvard Business School Press. 2004.

Jana, Reena. incase: How the Flip - a bare-bones digital camcorder-grew from a simple idea to a contender among giants like Sony. BusinessWeek. 28 April 2008. 76. http://www.businessweek.com/magazine/content/08_17/b4081076893508.htm

Posted by jackmixner at 12:34 PM | Permalink

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Think tiny. That's the size of Punta Colonet, a hamlet 150 miles south of Ensenada on the Baja Pacific coast.

Think huge. That's the size of the container port - and the investment at $4-billion - the Mexican government plans to install in Punta Colonet.

Big names are involved too. It is said that Carlos Slim Helu, the world's second richest man, is interested in bidding on the project. He's teamed with the Mexican railroad and mining company Grupo Mexico and Ports America Group, a port management company from New Jersey.

"The goal of the project is to make Mexico more competitive," says Miguel Favela, head of Mexican operation for Ports America (Dickerson)." They envision a city of 200,000 surrounding a port with a capacity of 2 million shipping containers a year, compared to LA/Long Beach's 15.7 million last year (Dickerson).

The big risk? The port has to hook up to American rail systems somewhere. The railroads are mum about whether they'll get involved.

Reference

Dickerson, Marla. Mexico plans huge Baja port for U.S. trade. LA Times. 28 August 2008. http://www.latimes.com/business/la-fi-mexico28-2008aug28,0,844963.story

Posted by jackmixner at 11:41 AM | Permalink

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Old way: compete with other cancer researchers for scarce funds. Focus on cancers with big populations of effected folks. Don't share results because someone may use those results to get funds for research you want for yourself and your team. The result? Solving the cancer  problem takes longer than it should. Some people with "unpopular" cancers die before their time.

New way: Communities in the health care battles create a business plan that focuses on measurable results from efforts supported across the scientific disciplines. Scientists collaborate on results instead of compete for funding. Collaboration takes a different form: the funding sources essentially hire scientists with the different skill sets and set them to work with scientists from other laboratories, all of them focusing on a broader problem (or specific problem if it makes sense) than would normally be addressed. Divisions within the community lessen. Collaboration ensures that crucial data is shared earlier. More people live longer.

The final product isn't a scientific paper. It is a result. A treatment is produced rather than a paper.

Funding sources are taking note by using a Silicon Valley approach. They're "paying for profits" (Saporito, 5) instead of waiting around. The focus on delivering a working pharmaceutical has reduced development time from a decade to four years in certain instances. Specific, targeted cancers with limited populations especially benefit from the targeted approach.

Ultimately, it is uncertain whether the new approach to cancer treatment is the right way to go. The focus on communication, sharing of information, and collaboration in an engineering and biological environment hopefully will yield results faster than today's norm.

Reference

Saporito, Bill. He Won His Battle With Cancer. Time. 4 September 2008. http://www.time.com/time/magazine/article/0,9171,1838776,00.html

Posted by jackmixner at 06:36 AM | Permalink

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If I were to ask you what shipping technology innovation in the last fifty years was truly disruptive I'll bet that many of you would say "FedEx" and Freddie Smith's innovations related to fast shipment. You'd be wrong.

The big innovation was the creation of the container, the big steel or aluminum box that allowed trucks to easily transfer their cargos to trains or ships. Total disruption of an industry - actually the creation of an industry - occurred in the fifties and sixties. Innovations continue to solidify the strength of the innovation.

Previously, a shipper called a forwarder which picked up its products, commingled them with other shipments, delivered them to a warehouse to be commingled again with hundreds of other truckloads, literally hand-carried them aboard a ship going essentially the correct direction, and, months later, your shipment arrived (hopefully in one piece) at your destination.

The container changed all that. We all know about containers and what a container load of product speeding across the Pacific from a manufacturer to a retail operation in the US has done for the level of commerce - and profits - for all the companies involved. There's a case to be made that containers, by speeding the delivery time of final goods and raw materials, cut inventories and spawned the whole just-in-time manufacturing successes of the eighties and nineties.

Applause is in order at this point. By now, all this is pretty obvious.

So, let's say that the container was disruptive. What were it's characteristics?

• The first container shipments were highly risky as rapid interactions between trucks, trains and ships didn't exist.
• The container itself didn't exist. There were no standards on size or strength. All that came later.
• Regulations were so strict that most shippers didn't want to know about the innovation as they were willing to accept the level of profitability that the government dictated in trade for protection from competitors.
• Prices on shipping came down so low that they became, essentially, commodity-like. Lots of container shipping companies went out of business, were bought or were strung together in some sort of roll-up.
• Bigness became the goal as did speed. Peripheral innovations in dock cranes, truck and railroad access to docks and traffic patterns created ancillary new businesses in manufacturing, inventory control and forwarding.
• Since no one knew how to control growth, growth got out of hand and almost killed the industry until governments and coalitions formed to regulate prices and routes.

One man, Malcolm P. McLean, dreamed up the container business. He went near-bankrupt several times during the growth of the industry. He was lucky as the Viet Nam war required the effective shipment of goods to a location that had no organization to receive the incredible bulk of shipments that the war required. He was able to take care of government pricing and the fact that, since no one had ever done what he was doing before, he could innovate on the fly. His biggest risk was an interesting one, especially when dealing with the government: he bid all his deliveries to Viet Nam on a fixed-cost basis meaning that if he got it wrong, he lost big-time. Luckily for McLean, he figured out how to make money at containerized deliveries before he went bankrupt.

Strategically, mission became crucial. McLean realized that his business was moving cargo, not sailing ships or driving trucks (Levinson, 53). Early on, containerized shipping was a niche business (Levinson, 161). As growth occurred, the evolution from niche (with its greater profitability) to mainstream (with its lower profitability and greater volume) followed curves we are all used to. McLean survived the shift - mostly - and created a new industry, an industry that allowed much of the global growth we see today.

Reference

Levinson, Marc. The Box. How the Shipping Container Made the World Smaller and World Economy Bigger. Princeton University Press. 2006.

Posted by jackmixner at 11:15 AM | Permalink

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David Begelman was caught embezzling from the corporation. Alan Hirschfield knew it, but he delayed doing anything about it. The delay cost Hirschfield his job, ultimately, but not in the way you might think.

The Board of Directors sided not with Hrischfield, the CEO of the corporation, but with Begelman, the President of one of the divisions and close friend of many on the Board.

Yes, ultimately, Begelman lost his job, too, but only after the press and the SEC started to weigh in.

The company? Columbia Pictures in 1976.

The story is part of the lore of Hollywood, certainly one that isn't important today, you might think. Actually, it says a lot about a lot of things.

Hirschfield discovered that the Board was truly in charge of Columbia Pictures. The Board room battle became fierce during a year when Columbia was quite successful, with Hirschfield and Begelman playing large roles in that success. Of course, the Board's in charge in any corporation, even a successful one owing a lot of that success to the CEO.

Personalities played a large role, as did long friendships between Board members and senior managers.

Begelman had stolen money by fraudulently creating and endorsing company checks made out to other individuals. The right thing to do was to fire Begelman immediately and move on, or so it seems. Hirschfield delayed firing Begelman allowing internal pressures and alliances to magnify the situation, ultimately effecting morale and profitability.

So, you find something going wrong in your company, but you are not just sure who did what. The first step is to investigate, quickly. Then make a decision, act, and move on. That's obvious. Hirschfield decided to delay the obvious because the Board wanted him to. Then the fights really began. They became worse because it became not just a battle of right versus wrong, but one of alliances and power structures battling each other.

No one really won in the long run.

Pick your Board very carefully, especially in a publicly traded organization. Investigate problems quickly and then act on the findings. Finally, leave personalities and alliances out of the right versus wrong discussion.

As McClintick makes clear, this was easier said than done. It's still good advice. In the parlance of strategy, Hirschfield knew his values. The problem was that he didn't act on his values quickly enough.

Reference

McClintick, David. Indecent Exposure. A True Story of Hollywood and Wall Street. William Morrow and Company, Inc. 1982.

Posted by jackmixner at 09:41 AM | Permalink

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In 1907 there was a huge recession. The Federal Reserves System was created. Everyone said there wouldn't be another recession - ever. In 1929 we all know what happened. We forget that there was an initial, severe market break eight years earlier, in 1921. The Go-Go Years of 1969 were just the same. Everyone claimed that there couldn't be a bust. Everything was protected. They didn't know about a shudder caused by insider trading in 1966 (Brooks, 4).

Brooks wrote his history of the formation of mutual funds in the fifties and sixties and their effect on the wealth markets in 1973. It's a great historical synopsis of the sixties boom - let's call it the conglomerateur boom - and the early seventies bust that followed almost as a direct result. The parallels to the twenties pool operators (as in investment pool) are remarkable and significant, especially when you consider the investment pool boom as a parallel to the rise of the mutual fund in like fashion.

1921 mini-bust. 1929 big bust.

1966 mini-bust. 1970 big bust.

2001 "mini-bust"? 2006 big bust? Interesting.

History repeats itself.

Different players. Different stories. Same result. Interesting.

The History of the "Hedged" Fund

Buy a stock. Hedge the purchase with a short sale. Makes sense, yes? If you pool a bunch of investments together, you have the first hedge fund (Brooks, 142).  This was in 1949. The rising stock market gave the fund its biggest problem - they couldn't find enough stocks to short with. Nice problem to have. Until the mid-sixties, the initial fund had no competition. They didn't advertise. It was all amongst friends in a basically unregulated, and very profitable, marketplace. They forgot one thing: the market was always rising. Their hedges were untested. They'd end up failing with the rest of the market in the early seventies.

Sound familiar?

The History of the Conglomerate

Make your company hugely profitable. Use the stock, which now is highly priced, to buy the stocks of less highly valued companies, and create a conglomerate. That's what they were doing in the sixties. One cute little accounting wrinkle is forgotten, but still good to remember. Merge a company with a high multiple (a high P/E) with a company with a lower P/E, and, suddenly, the acquiring company with the higher P/E has an even higher P/E, which it may then use to buy another lower P/E company. It goes on and on, theoretically, and wonderfully, if you are an investor. It works for a while, yes. But, it's all a pyramid. It all fall apart eventually (Brooks, 158).

Every time I get involved in some sort of stock purchase, especially with a start-up, I hope I remember the history of the stock market. Yes, there is money to be made. Yes, consider every way you are considering to make money in the stock market. Someone probably already did it, and there might be lessons to remember.

Reference

Brooks, John. The Go-Go Years. Weybright and Talley. 1973.

Posted by jackmixner at 10:39 AM | Permalink

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What with the current debacle in the home mortgage market, we forget that this isn't the first time home mortgages wrecked the securities markets. It seems that folks have decided that this is something new. Well, time to re-think that one.

Wall Street started trading residential home mortgages in the late seventies when Salomon Brothers, realizing that the savings and loans were dominating a market place that had real possibilities for packaging loans and selling them to investors, started the ball rolling. In 1980 the mortgage market surpassed the equity markets on size alone (Lewis, 83).

A simple analysis of what happened then might include the words "hayseed" (for the thrift industry managers) and "shark" (for the Wall Street sales people). Wall Street sharks ended up bundling mortgages and selling them to the hayseed thrifts. Why? Thrifts were limited in the markets they could sell mortgages to, but, and here is the big but, they wanted to grow. How to grow? Buy mortgage backed securities from Wall Street. They were able to expand their portfolios, lessen their risks, and become more profitable, all at the same time.

We all know what happened. The thrift crisis is a thing of beauty, to be studied in Harvard case studies for years.

One thing has happened. The knowledge we gained from the thrift crisis was forgotten. Harvard - or somebody - didn't do their job. Once again we have mortgage backed securities threatening the market.

My point? Studying history is boring for some folks. At the same time, history is crucial, as it allows us to avoid mistakes that have been make before.

A little bit of soap box story telling? Probably. A good idea to check your new strategy against the history of your industry? Absolutely. You might learn something that will save you a bundle.

Reference

Lewis, Michael. Liar's Poker. Rising Through the Wreckage on Wall Street. Penguin Books. 1989.

Posted by jackmixner at 10:08 AM | Permalink

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You work on a team to create a movie. The team does its best work. Things go wrong, yes. But things also go right. Who is to know whether it will all come together in the end?

Bonfire of the Vanities was a Tom Wolfe book about the breakdown of New York City during the eighties. If Wolfe is good at anything, he is good a portraying a time and the people in it.

They made the movie some years later. Salamon was able to watch closely as Brian DePalma tried to make his masterpiece under all sorts of constraints.

The book's big. It tells a lot about movie making. What about the strategy in it all?

Who does strategy? Let's assume it is senior management's job to put a team together, go away, and put a simple plan down on paper. Then they come back, articulate the strategy to their team (hopefully in a manner that everyone understands what they mean) and, then, sit back while other implement their plans.

The management team provides guidance, advice, critiques along the way, and, if it is normal, gets so involved in the day-to-day that they forget that a plan even exists.

The Bonfire team did the same thing. The constraints of the movie business are huge and the odds of success are not so huge. The management team watched, cajoled, screamed (especially over budget) and, when things were all done and they were shown the final cut, applauded - loudly - about the "masterpiece" (Salamon, 340) DePalma had created. 

The first weekend's revenues for Bonfire were $3.1 million (Salamon, 405), a bomb by anyone's standards.

First question: Is movie production art or business? If it is business, what do you do when things are going wrong?

There are points along the way when you have a feeling something is going wrong. It happens in your business. DePalma and his team certainly recognized things were going wrong when they couldn't find film locations, or their actors weren't performing up to expectations.

They never thought about pulling the plug on the production. Too many big names were involved, and, once things got started, to pull back would have wasted too much capital.

They had to absorb their losses and move forward. Sometimes you have to do that. You just wish that you had responded earlier when things just didn't feel right.

Reference

Salamon, Julie. The Devil's Candy. The Bonfire of the Vanities Goes to Hollywood. Houghton Mifflin Company. 1991.

Posted by jackmixner at 11:04 AM | Permalink

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The battle was essentially complete. Eisner was out; Bob Iger was in. Disney was under new management at long last after an epic battle for control of the board. Eisner was a lame duck awaiting his final day a couple months down the road.

Among Iger's first jobs? Dismantle the strategic planning department (Stewart, 538).

If you go back to the beginning of strategy at Disney, you see why the department was created in the first place.

Eisner was a new hire, having come aboard in September 1984. He toured the parks (which he had never visited as a kid), heard about plans for new hotels at Disney World, and met Gary Wilson the Marriott Corporation's Chief Financial Officer. Marriott had been eyeing Disney as an acquisition candidate not so long before and was involved in designing the new hotels at Disney World. Wilson had been part of the team gathering information about Disney as they prepared their bid (Stewart, 62-66). Soon as he could, Eisner hired Wilson.

Wilson almost immediately hired a series of Marriott executives to establish a strategic planning department at Disney. They had five year plans for all the divisions and targeted 20/20 growth: twenty percent growth in earnings each year and 20 percent growth in stock price each year (Stewart, 66 and 200). Leverage their cash flow to buy companies in industries related to Disney became part of the planning, especially broadcast companies (Stewart 201).

You know things are going badly for the strategic planning department when everyone starts to call it's members the "goon squad," labeling them "arrogant and insensitive" (Stewart, 231).

So, what went wrong at Disney? Stewart's point of view is pretty clear. Strategic planning's "scrutiny" coupled with Eisner's willingness to "intrude" on all sorts of matters at all levels around the company caused "dismay" among the executives (Stewart, 231), enough so that many of them were thinking about leaving.

You're a CEO. You like to know what's happening. You even like to push things to happen along the lines you select. What's wrong with that? Nothing, as long as you're a relatively small company. When you get big, things change.

Risk is avoided, opportunities missed, finance acquires new strength, power shifts to corporate staff - simply, inertia reigns (Adizes, 88).

CEOs pretty much know what to do, but sometimes they are unwilling to.

Actually, that is why Eisner was so successful. He came into a bureaucratic organization and initially had great success at shaking things up. Most of what he did worked. Ultimately, however, he couldn't stay successful. He couldn't or wouldn't trust his team to manage, even after he had broken up some of the most dysfunctional bureaucracies. That was his undoing.

Oh, yes. And what to do about strategy at Disney - or your company? My advice is, when it feels like a bureaucracy, it is a bureaucracy. Ditch the bureaucracy, if you have it. If you don't, nurture what you have.

References

Adizes, Ichak. Corporate Lifecycles. How and Why Corporations Grow and Die and What to Do About It. Prentice Hall. 1988.

Stewart, James B. Disney War. Simon & Schuster Paperbacks. 2005.

Posted by jackmixner at 01:30 PM | Permalink

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I thought relationship marketing was all about people. Make more acquaintances, build more relationships, sell more. Maybe not.

Let's redefine relationships. Let's say you're selling something. People are interested in buying, but don't really know what to pay or even whether they should buy, or what to buy. You need to help the solve the problem. The first step? Figure out how to give them something - a related product or service - free.

We have been working on this with one of my clients. He sells granite counter tops. To make the hole for the sink, he simply cuts out a bit of the sheet of granite, and, basically, throws it away. We've been talking about something different. Instead of throwing it away, he gives it, after proper edging, free, to his customer. It becomes a freebie. Customer gets a wonderful granite counter top - and a free matching cutting board. The counter top is less likely to become scratched by carving knives, looks better, lasts longer.

Why do this? Well, people ask for a bunch of quotes on counter tops, from all sorts of suppliers. My client has found a way to differentiate himself from the other suppliers. The free cutting board is enough to tip things his way.

What happened here? All things being equal, my client has tipped things his way by making them unequal. Buy from him get not only the best countertop available (I'm convinced - you ought to see his work) but get a free cutting board that matches your kitchen exactly. Who else gives that? And for free, at that.

Customers have choices. They can buy the cheapest option, which, without options, they generally will do. They could buy the most expensive option, something they're less likely to do. But, give them something free, and, amazingly, they're more likely to buy from you.

There're lots of other examples in Ariely's book. Magazine subscriptions. Homes. Basically, he points out why people make choices. If you think about how those choices are made, you can help them buy more of your products or services. Very powerful ideas. 

References.

Ariely, Dan. Predictably Irrational. The Hidden Forces That Shape Our Decisions. Harper. 2008.

Posted by jackmixner at 03:18 PM | Permalink

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IBM was at a fork in the road in 1955. They had a choice between two possibilities, one "safer" than the other.

• They could grow rapidly by focusing their efforts on computers, a risky vision at best as the number of installed computers probably numbered in the tens or hundreds.
• Or, basically, they could retain the status quo by slowing things down and focusing on what they did best, manufacture punch cards and the related rental equipment, all very profitable (Watson, 253).

What to do?

Anyone who knows anything about the Watson's - the father/son duo who consecutively managed IBM for years - knows exactly what they did. They, meaning Tom Watson's son and Al Williams, a senior manager, bet the farm, but in a good way. Their plan? Transform the company.

• They professionalized management, by installing a "chain of command, large-scale decentralization, a planning process," and "formal business policies (Watson, 253)." 
• They created an organization chart and split up some of the responsibilities that had reported to the Tom Watson, the father.
• Headquarters worried about computers and punch-card equipment. All the other products like "military products, typewriters, punch cards, and time clocks" (Watson, 254) were spun out into new divisions under their own management.

Another key change occurred away. It was driven by the market in a way, but it required a risk-taking attribute that ensured that IBM would continue to grow. The strategy is pretty simple stated: Make stuff, but don't customize it. In the IBM case that meant, sell computers, but figure out how to sell the same configuration over and over again. Yes, the initial few down the production line were hugely expensive, but over time the costs of manufacturing came down and they were able to take advantage of the scaling up of the manufacturing lines to reduce costs.

The first product IBM scaled up in this manner was a general purpose scientific computer that they pre-sold to government laboratories (Watson, 205). Later, they found out that there was only one little flaw in their plans. Their initial computer, called the Defense Computer, was initially priced at $8,000 a month. When production began, they found that the correct price might be as much as $18,000 a month (Watson, 228), obviously a big difference. First amazing discovery in computers for IBM: the customers still wanted the computer. That changed a lot of minds at IBM about the future of computers (Watson, 228).

The real transformation of IBM into a computer company didn't occur until the introduction of the IBM System 360, a 360 degree machine meant to be sold to both the scientific and business markets in all sorts of configurations. The investment came to more that $5 billion dollars, certainly a "bet the farm" undertaking. Three big problems presented themselves: hardware design for all the different configuration, and software design totaling millions of lines of code, all at the same time IBM was trying to manufacture its own electronic parts (Watson, 346-349). The biggest decision of all was whether to announce the complete line piecemeal, or to show it all at once. They chose the later and, even though they had to use mockups in the original product showings, ultimately pulled it off.

Mission statements (What is or product or service? What marketplace do we sell to?) actually play a big part in the story. Early on, IBM was a punch card company. It almost stayed that way, thus missing, almost, the huge growth in data processing in all its myriad forms.

Joe Nocera, writing in the New York Times, calls this one of the ten best business books ever. An interesting read.

Reference

Novera, Joe. The Best Business Books Ever? New York Times. 17 July 2008. http://executivesuite.blogs.nytimes.com/2008/07/17/the-best-business-books-ever-index.html?hp

Watson, Thomas J., Jr. Father Son & Co. My Life at IBM and Beyond. Bantam Books.1990.

Posted by jackmixner at 02:50 PM | Permalink

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The servants always know when something is going wrong in their "master's" home, sometimes before their master. 

Speechwriters are the same way.

Peggy Noonan (she worked in the Reagan White House as a speech writer) tells of a late request to complete a Bush I State of the Union address - five days before the address (Noonan, 94). It was evidence of lack of something - leadership, perhaps. Her estimate was that things weren't well in the White House.

Speechwriters also know when something is going right in the White House. The evidence is how much access they have to the President to make sure that what they write reflects what the President is actually thinking.

All the Presidents had important lines that delineated what they were thinking. All along there has been someone in the background providing the lines. And there was a President who made the delivery of the lines his business. Reagan was called the great communicator. He worked as closely with his speech-writing team as any president. Such lines as "we could intercept and destroy strategic ballistic missiles before they reached our own soil ..." (Schlesinger, 331) came from Reagan himself. Everyone said "you can't say that", "it can't be done." Reagan said it, went down that path, and made the words and the thoughts behind them stick. He thought it (his thought went back at least to the fifties, if not the forties) and he said it. The words drove his initiatives for the rest of his presidency.

What about CEOs? I saw a Gateway CEO wing it in front of an audience about a year ago. If I am not mistaken he is gone now. His words didn't really say anything. I heard a Boeing executive, who ended up CEO, speak. His words reflected his status. They were exciting, provided a vision for the future, and were actionable. I heard a COO of a housing company speak. His words were specific, laden with actionable thoughts, and the internal crowd loved it.

Which brings us around to you, and your strategy, and what your say when people ask you to speak. I've been doing this long enough that I ought to have the specific answer for every case. There are models - Kennedy and Reagan certainly were inspiring - for success. There are models for how to construct what you're going to say. We say, "What's your product, what's your marketplace. Don't talk about anything but that when you're talking about your mission statement."

What's right for you? Values count, so I'd delineate my values - and the company values - pretty early in the process. You have to make a decision about hierarchies. Do customers go first, or employees? What about the environment? Green is big right now. Is it going to be a heartfelt problem at your company, or marketing hype? You get to decide. I continue to be sure that people are listening more than you might assume. If you are going to speak, spend time on what you are going to say. It is important.

References

Noonan, Peggy. Life, Liberty and the Pursuit of Happiness. Random House. 1994. 

Schlesinger, Robert. White House Ghosts. Presidents and Their Speechwriters. Simon & Schuster, Inc. 2008.

Posted by jackmixner at 07:05 AM | Permalink

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I can't decide, so you'll just have to do some thinking on your own.

Ferriss has some original thoughts about how to succeed. His topic is the four hour work week, or how to design a business that sheds a lot of cash flow without requiring much oversight.

One of his interesting concepts is focusing not on the happiness your lifestyle produces, but rather on the adventure you have enough time to persue. Two basicallly similar, but opposite, ideas, if you think about it. Ferriss says that it's not the amount of happiness you feel, but the amount of excitement you feel that measures real success (Ferriss, 51).

Heffernan isn't accepting any of it. She points out that Ferriss achieves some of his gains by cheating and skipping important steps (Heffernan). I agree.

And I'll also say I understand both sides in the discussion.

My read on the right way to go? This is tricky. I've mentioned in the past (Mixner) that innovating and succeeding in new areas requires a bit of stretch, or perhaps, even, a little bit of stress. Clearly Heffernan is stressed by Ferriss' ideas on ways to create enough cash flow to live indepently.

Somehow, I feel good about what Ferris has to say and might try a little bit of stress myself, especially if it allows me time for more adventure.

References

Ferriss, Timothy. The 4-Hour Workweek. Escapte 9-5, Live Anywhere, and Join the New Rich. Crown Publishers. 2007.

Heffernan, Virginia. Advice Squad. The New York Times. 20 July 2008. http://www.nytimes.com/2008/07/20/books/review/Heffernan-t.html?_r=2&oref=slogin&oref=slogin

Mixner, Jack. First Step to Innovation: Build New Habits. http://mixnerstrategy.com/blog/2008/05/first_step_to_innovation_build.html

Posted by jackmixner at 07:52 PM | Permalink

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There is a reason Barack Obama's campaign has been so successful at raising money. It's called Blue State Digital.

Their successes:

• $200 million raised online
• Two million phone calls made on the candidates behalf
• 850,000 social networkers
• 50,000 campaign events (Lowry, 56).

Blue State is eyeing AT&T and Stonyfield Farm for next big projects. They are also talking about working for the White House, eventually. Just gotta win the campaign. 

It is looking more and more like, if you have a good idea, having the right web folks on your side makes a big difference. If you have the right folks creating, you are able to test your ideas in days or weeks as opposed to the months and months it used to take to create a web site and test your ideas. Prices are going down, as well, allowing you to generate revenues AND profits, a tidy situation, especially if you need to approach venture capitalists.

If you have a high growth idea, give your software/website provider a lot of thought.

Reference

Lowry, Tom. Obama's Secret Digital Weapon. BusinessWeek. 7 Juy 2008. 56. http://www.businessweek.com/magazine/content/08_27/b4091000977488.htm?chan=magazine+channel_what%27s+next

Posted by jackmixner at 07:27 PM | Permalink

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Lincoln started the campaign for the presidency in 1859 unknown nationally. His competitors for the position gave him no credence. Seward went to Europe for the eight months of the campaign assuming he had already clinched the nomination. Chase couldn't align his own state senate behind his bid for the presidency (they did the electing of Senate members in those days). And Bates said he didn't really want the job.

Lincoln wanted it. Invited to speak in New York, he stunned the crowd with his oration. Then he went on to speaking engagements throughout the northeast.

Those speeches, and the fumbling of his competition, enabled Lincoln's election. Arriving in Washington, Lincoln, toured and talked in ways that were new to the town. He visited the hill and was greeted respectfully. Early on, he invited Seward to join his cabinet at State. Ultimately, he brought in Chase, along with Bates and Cameron, all unexpected appointments (Goodwin 317).

Seward made the assumption, as did most of the other members of the Lincoln administration, that Lincoln was incompetent. He assumed that he would dominate the cabinet and the government as an American prime minister. He realized early on the error of his ways and came to greatly respect Lincoln as leader (Goodwin, xvi). The others followed in their grudging respect.

In and of itself, the Goodwin story about Lincoln is a good one. It gets better when you compare it to the political situation today. It ends up that Barack Obama "admires" (Klein, 27) Lincoln as much as Seward ended up admiring him. In fact, Obama quotes Lincoln and is "intrigued" (Klein, 27) by the way Lincoln engaged his opponents.

The fun of all this leads us to a discussion about whether Obama might include Hillary Clinton in his cabinet if he is elected. Klein, thinking a little more realistically, perhaps, suggests that Obama should include Robert Gates, current Secretary of Defense, in his cabinet (Klein, 27). It'll be interesting to see if Obama ends up "walking his talk".

And McCain, what about him? Romney is now supporting the McCain campaign. In fact, McCain says Romney is doing a better job representing him than he did representing himself (Cooper).

Now we have two-way fun. When/if Obama or McCain is elected, we get to watch who they include in their government. It ought to be interesting.

One last comment: I haven't seen Jack Welch chime in on all this yet, but I'll bet he has an opinion. My bet is it matches Lincoln's: find the best folks you can for your company and figure out how to constructively engage them in your company's success.

References

Cooper, Michael and Michael Luo. Once Bitter Rivals, McCain and Romney Make Up. New York Times. 17 July 2008. http://www.nytimes.com/2008/07/18/us/politics/19romney.html?scp=1&sq=once%20bitter%20rivals,%20mccain%20and%20romney&st=cse

Goodwin, Doris Kearns. Team of Rivals. The Political Genius of Abraham Lincoln. Simon & Schuster. 2005.

Klein, Joe. In with the Old. Obama says he wants to hire a Team of Rivals for his Cabinet. He should start by keeping Robert Gates. Time. 30 June 2008. 27. http://www.time.com/time/politics/article/0,8599,1815849,00.html

Posted by jackmixner at 02:32 PM | Permalink

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Toyota is adding joystick controls to their forklifts in order to entice young gamers to apply for jobs as material handlers (Wood).

Now Caterpillar is getting into the act, apparently for a different reason.

It so happens that the operators for road graders are retiring in record numbers (Brat). In order to keep them around, Caterpillar had to figure out a way make their job easier, without alienating them by creating something new - and unknown.

The best solution was joysticks, again. Operators go home more relaxed and less fatigued than before because joysticks are easier to use. Reducing the number of levers from fifteen to zero and eliminating the steering wheel, the new road graders are easier to use and give older workers a reason to stay around.

Toyota used joysticks to attract younger workers. Caterpillar used them to retain older workers. Two strategies end up having the same tactics.

Everybody wins, including Caterpillar. It ends up that the drive-by-wire road grader costs seven percent more. 

References

Brat, Ilan. A Joy(stick) to Behold. The Wall Street Journal. 23 June 2008. R5.

Wood, Brett. Grand Strategy - Product Development: Toyota Fork-Lifts - A Case Study. Presentation to the Orange County Chapter of the Association for Strategic Planning. 22 January 2008. http://mixnerstrategy.com/blog/2008/02/joysticks_arent_just_for_video.html

Posted by jackmixner at 10:11 AM | Permalink

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I held off reading the Heath's book for some time, I guess because it was a best seller (no, I don't understand that logic either). Once you start, the book is one of those you can not put down.

Key points: learn how to spot stories about your key message. Then, and this is probably harder than it seems, write them down and tell them to others.

Stories win hand down in the fight for retelling over and over. Don't recite all the facts about your product or service. Tell a story about someone using it.

Subway marketers turned downe the story about the Subway afeciando who lost a lot of weight by dining exclusively at Subway repeatedly because they didn't think the story would work. It took a franchisee to recognize it's utility and to pay for the first television spots about Jared (Heath, 219). Only then - and it took some time - did Subway national take notice and begin to use the story.

Stories work better than facts, especially in the battle for space in people's minds. And, to make things easier, sometimes it is just as easy to spot stories as it is to create them (Heath, 240). Making up stories, it seems, is just as hard (or easy, according to your viewpoint) as finding stories in your day to day experience.

Me, I prefer finding them to making them up.

Reference

Heath, Chip and Dan Heath. Made to Stick. Why Some Ideas Survive and Others Die. Random House. 2007.

Posted by jackmixner at 01:02 PM | Permalink

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Herbie happened to be the slowest Boy Scout on a crucial hike. He also carried too much. The point of the hike - and Goldratt's book - is how to speed things up and still make money (the goal).

I noticed that Goldratts's book was still on the best-sellers list years after publication and decided to re-read it to understand why. Business novels don't normally make much sense.

Using analogies, Goldratt's characters figure out their own problems and solutions for each of them. There's even a love interest under-current.

Two key questions for your operation: what is the goal of any manufacturing operation? What effect do bottle-necks have on a manufacturing operation?

I mentioned that I had read this book to a strategist for a bank. She had never heard of it. Let's just say that service operations have bottlenecks, and that sometimes they, too, forget why they are in business. 

Reference

Goldratt, Eliyahu M. and Jeff Cox. The Goal. A Process of On-going Improvement. North River Press, Inc. 1984.

Posted by jackmixner at 12:41 PM | Permalink

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Great Britain, France, Russia and the United States had decided far in advance that Berlin would be divided into four sectors after the end of World War II. The Russians were advancing toward Berlin more quickly that the western allies, so, from Eisenhower's point of view, it made sense for the Russians to go ahead and occupy Berlin first. But Eisenhower had an alternative, Lübeck, located at the base of the Danish peninsula. His goal was to prevent the Germans from fleeing up Denmark to Norway and, thus, to prevent the establishment of a German redoubt - or new front, basically - outside of Germany (Stafford, 131-132). The strategy also prevented the Russians from occupying Denmark and Norway.

Why tell the story? The best part is the sales process Eisenhower, Supreme Allied Commander in Europe at the time, had to go through in order to slow progress toward Berlin in order to address Lubeck. He flew first to Great Britain to meet with Churchill to ensure that he had backing for his strategy. Only then did he direct the British forces in Europe to attack Berlin at the same time attacks on Lübeck began One last parel of information. In his meeting with Churchill, Eisenhower got support to occupy the German atomic research facilities near Stuttgart, far to the southwest (Stafford, 131-132). 

Eisenhower had to play politics in order to make sure his campaign in Germany was successful. He worked in advance to verify support before he spent time with local commanders.

No question, politics slowed things down, much as they do with business functions. But, in this case, at least, playing politics was the most logical thing for Eisenhower to do. 

Reference

Stafford, David. Endgame, 1945. The Missing Final Chapter of World War II. Little, Brown and Company. 2007.

Posted by jackmixner at 12:12 PM | Permalink

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Emerson Electric had a choice: go after ground-breaking "new-to-the-world" products, or, nominally, "make a third of sales from products released in the past five years (Hindo, 46)." Their decision? Focus in large measure on new-to-the-world (Hindo, 46).

Today, we're waiting feverously to see what Steven Jobs announces for new innovations for the iPhone. Apple has made billions on i-Pods. Neither is a particularly new innovation, although the Apple design process certainly produces enticing products everyone wants.

Who has it right, Apple or Emerson?

By applying design to an older product, Apple resurrected (or should I say, invigorated) the MP3 market. Emerson sees lots of wasted time on incremental change when they are missing the bigger picture.

Gold-plating the product you've had for years doesn't make sense. However, an incremental change in a new market certainly has helped Apple.

Emerson is taking a risk, suspecting that they've been wasting money in incrementalism (Hindo, 46). We'll have to wait a bit to see how their strategy plays out.

Reference

Hindo, Brian. Insight. Far-flung Emerson Electric generates loads of ideas. Now it has a way to sort out the really novel ones. BusinessWeek. 16 June 2008. 46. http://www.businessweek.com/magazine/content/08_24/b4088046119515.htm?chan=search

Posted by jackmixner at 10:54 AM | Permalink

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We have learned in a past posting that Toyota looks externally for product innovation, specifically to design, green and safety for its lift truck business (Wood). Now lets look internally.

If we look to Toyota's internal focus we might look at characteristics of senior managers. They have:

• Willingness to listen and learn from others
• Enthusiasm for constantly making improvements
• Comfort with working in teams
• Ability to take action quickly to solve a problem
• Interest in coaching other employees
• Modesty (Takeuchi, 102).

How's this work? To grow a business, Toyota is willing to look outside for niche products and the effects of design, green initiatives and safety. To maintain a business, personal skills like listening and team work are important.

Many times, a company is technologically adept. That adeptness has to be matched with an outside focus - and an inside focus.

References

Takeuchi, Hirotaka, Emi Osono, and Norihiko Shimizu. The Contradictions That Drive Toyota's Success. Harvard Business Review. June 2008. 96.

Wood, Brett. Grand Strategy - Product Development: Toyota Fork-Lifts - A Case Study. Presentation to the Orange County Chapter of the Association for Strategic Planning. 22 January 2008.

Posted by jackmixner at 10:20 AM | Permalink

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Edward Jones, the investment company, says it's strategy is " ... convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions ... (Collis, 90)."

That strategy has caused Jones to do some special things, especially for the financial services industry. They have lots and lots of individual offices. You've probably noticed them on Main Street in your town. You get to know your broker because he or she probably knocked on your door to get to know you in the first place. They focus on financial advice and make money only by selling investment products. They sell to conservative investors who buy what they need and hold on to it. And finally, Jones' investors let someone else decide what to invest in - they delegate what they do.

In ten words or so, Jones spells out what they do.

Can you do the same for your business? If you can, can your sales team? Are you sure?

Reference

Collis, David J. and Michael G. Rukstad. Can You Say What Your Strategy Is? Harvard Business Review. April 2008. 82.

Posted by jackmixner at 08:28 AM | Permalink

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While no printer ever came out and said it to me directly, I always realized that when I bought printing services I could have any two out of the three deliverables of quality, delivery time or price. I'd plan ahead so the printer could gang my work with someone else's (while giving me a longer delivery time) in order to have the quality I wanted at the price I was willing to pay.

Gary Jaquess made the same point recently when he described the negotiations he had to go through with the Japanese parent of an American manufacturer in order to construct a new manufacturing facility on time, on budget - and with the quality the parent demanded. In Japan, their mass transit system is so good they don't need parking spaces around any of their facilities. They're mandated by law here, something that had to be carefully communicated to the home office, causing a delay. The Japanese think in "tsubo's" not square feet. A tsubo is a two dimensional measure based upon the size of a tatami mat in a typical Japanese home. It took a while for everyone to become conversant in just what a tsubo was, and how to quickly make the conversion to understand price per square foot.

Most interestingly, recognizing that lots of analysis is done by the parent organization before the final decision is made results in the ability to immediately begin implementation, a process that is different from the American method of making a decision and then modifying to to fit new discoveries found later.

It all still comes back to quality, delivery and price. If you want all three - and who doesn't - then you'd better design a process that takes all three topics into account. Over a series of projects constructing manufacturing facilities in the northwest, Jaquess perfected the ability to communicate in advance to ascertain real intent, decide just what quality was required, and, finally, plan together so things went smoothly during a long prcess of agreement, construction and manufacturing.

Reference

Jaquess, Garrison, W. Value Is In the Eyes of the Receiver. Productive Workplace Resources. 2004. [Handout for a presentation to the Orange County chapter of the Association for Strategic Planning.]

Posted by jackmixner at 10:37 AM | Permalink

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Family businesses have a group of central problems that will continue to play themselves out in the years ahead (Welch, 82):

1. Wealth preservation vs. accumulation
2. Succession
3. Passing control to unqualified progeny.

Protecting wealth is a whole lot different than accumulating wealth. To protect it, reduce risk. To accumulate it, increase risk. Your ability to accept risk - and your management team's - may effect your company for years to come.

Wait too long to hand off your company to your daughter and you may lose her entirely. You're still healthy? Not a good enough reason to hold on too long.

Only one reason might be good enough to hold off on passing on the company: your daughter isn't qualified to run things. Deciding who is qualified is a tricky question. Delay answering it at your peril.

Reference

Welch, Jack and Suzy. Red Flags for the Decade Ahead. On our list: family businesses under stress, dearth of managers, and corruption. BusinessWeek. 19 May 2008. 82. http://www.businessweek.com/magazine/content/08_20/b4084082575201.htm?chan=search

Posted by jackmixner at 01:00 PM | Permalink

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In the end, the ride the astronauts took to the moon was designed to reduce costs. How to do that? Reduce weight.

Reducing weight meant designing the orbital path around both the earth and the moon in such a way that a big booster wasn't required to land on - and leave - the moon. Light weight required a rendezvous above the moon with the orbiting command and service module, something that wasn't assured initially.

Somehow having a space craft that you could put your foot through if, by chance, you stumbled seems a bit Rube Goldberg. That was the case. The lunar module descent stage was wrapped in Mylar wrapping. During construction, a dropped screwdriver went right through the floor (Hardesty, 217). It was lightweight, that's for sure.

Why bother? We probably wouldn't have gotten there at all unless everyone teamed up to reduce costs.

I like the team aspects of the process. I like the reduce costs part, as well, not only as a taxpayer, but aesthetically, as well. Simple seems always to be better. Designing the orbits took almost all the computing power we could marshall, so the analytical steps weren't ignored. The emphasis was on getting the job done, safely and successfully, nothing more.

Reference

Hardesty, Von and Gene Eisman. Epic Rivalry. The Inside Story of the Soviet and American Space Race. National Geographic. 2007.

Posted by jackmixner at 10:37 AM | Permalink

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If you are like me you will find this methodology of presenting intricate information interesting:

http://www.nytimes.com/interactive/2008/05/03/business/20080403_SPENDING_GRAPHIC.html

The process is available here, from a sub-set of IBM: 

http://services.alphaworks.ibm.com/manyeyes/home

Harvard Business Review says there are ways to experiment (looks like they will work with you to present your information) with the technology here:

http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?_requestid=91130&ml_subscriber=true&ml_action=get-article&ml_issueid=BR0805&articleID=F0805K&pageNumber=1

Might want to check it out.

Posted by jackmixner at 08:54 AM | Permalink

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Us planners like to plunge right in. Values goes first, then Vision, Mission, Objectives, Strategies, and, finally, tactics.

Yes - and, no. That's a pretty good scheme for planning. But it doesn't go first. Collins (41) makes the best case. Pick your team - very carefully - before you embark on growing your company, or beginning your planning process. You have some duds. Cull them. You have some stars. Make sure they are team players. If they are, nurture them. What if you need new team members?

First point: it takes longer than you think. Wells Fargo began building a team in the early 70s. The growth occurred starting in 1983 (Collins, 42). They hired the best they were able and kept them around long enough to see if they were keepers.

Lots of HR managers claim that employee screening is the key. Use some sort of test like the Meyers Briggs, and you are able to predict behavior. Some people swear by it. I'm still looking for the perfect bullet.

Lewis writes about a professional baseball team. The whole book is about how to get the right folks on board. His key? It's all in the statistics. Everybody says it is batting percentage that is the best predictor. Lewis says nuts to that. It's on-base percentage and slugging percentage he watches. And, oh, yes, college players are better to draft than high school players because you have more statistics on them (Lewis, 101).

There's only one flaw to his work. It takes statistics to know how your team members are going to perform. If you don't have performance statistics - and who has performance statistics for new hires - you don't really know how things are going to work out.

The message? Start keeping statistics. All the tactical statistics make sense. Cold calls. Closed calls. Proposals delivered. You name it. Probably only one or two of the statistics make sense to your organization. Start keeping lots of different statistics, whittle them down to the crucial few and track the results. It works in sales. It works in operations. It works at the C-level as well.

One last comment. Bill Belichick got the right people on the field at the right time, yes. He also trained them far in advance of the need. For him, training included strength and endurance training, team work training, and strategizing for each opponent. Try it out.

Reference

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

Halberstam, David. The Education of a Coach. Wheeler Publishing. 2005.

Lewis, Michael. Moneyball. The Art of Winning an Unfair Game. W. W. Norton & Company. 2003.

Posted by jackmixner at 07:52 PM | Permalink

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Machiavelli said there are three ways to hold a state that previously had lived under its own laws (Machiavelli, 46):

• Allow them to live under their own laws and force them to pay tribute.
• Go there and live there in person.
• Despoil it totally.

King George tried to apply Machiavelli's principals to America.

First he tried to allow the colonists to live under their own laws and pay tribute. Taxes might be a better word. That didn't work very well, especially when he enacted taxes without including the colonists in the discussions.

He never considered living in America, but he did, of course, have a government in residence. It wasn't very effective.

Then, tribute failing and unwilling to live in America, he tried to despoil the colonies to bring them back under his control. That didn't work very well, initially, as his troops were bested in Boston.

After retreating from Boston, and landing in New York, Admiral Lord Howe sent captured American General Sullivan to address Congress in order to entice them to negotiate. John Adams accused Howe of "Machiavellian maneuvers" (McCullough, 156), namely, attempting to entice the nation back to subserviency with peace discussions when war had already been declared. None-the-less Adams, with Franklin and Rutledge, were elected to sit with Howe to listen to what he had to say. Howe's words forced Adams to realize that there was no pardon waiting him, and no freedom awaiting the colonies, if the revolutionaries lost. He - and they - would hang. After that realization, it was obvious that no negotiation was going to work and that Howe would have to despoil America to re-take control. While the British had some succeses, ultimately they had to surrender.

George failed, ultimately, as we all know. Distance, both physical and personal, caused him to fail - on all three strategies.

Modern day companies try to do better. Google might be a good case in point. The best recent quote says it all, "Usually, people want to be acquired by Google. It's always very friendly. Because they have choices, and they choose us ( BusinessWeek, 56)."

If only King George had tried a little bit harder. We might all still be British. And Google? Let's see how long their run lasts.

References

How Google Fuels Its Idea Factory. BusinessWeek. 12 May 2008. 54.

Machiavelli, Niccolo. The Prince. New American Library. 1952.

McCullough, David. John Adams. Simon & Schuster. 2001.

Posted by jackmixner at 12:38 PM | Permalink

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Collins answers the chicken or the egg question, at least as it pertains to building at team for growing a company. He says to "get the right people on the bus (and the wrong people off the bus) and then" figure "out where to drive it (Collins, 41)."

As a young woman, Goodall knew she wanted to move to Africa and to live among wild animals (Peterson, 80). A visit to a classmate in Kenya gave her the entrée she needed. Someone suggested that she meet Louis Leakey of the famous family, which, given Goodall's ambition, was probably inevitable. Leakey had a plan: he wanted to study the African great apes (Peterson, 116). They were interesting to him as he wanted to determine how the apes and man evolved together in early Africa. No one had successfully studied apes before. No one knew how to do it.

On July 14, 1960, Goodall began her great ape research with the chimpanzees in the Gombe Chimpanzee Reserve (Peterson, 179). She arrived with a companion, Leakey provided the money from his fund-raising, and Goodall provided, initially, youthful energy and enthusiasm. Her job was to figure out how groups of chimps interacted in the wild. Over the next thirty years, Goodall had scientific breakthrough discoveries (chimps use tools), formed teams to watch different attributes of chimpanzee life, wrote on the topic, figured out how to make pictures and then movies, traveled to America (especially to National Geographic headquarters in Washington D. C., a big supporter) to sell her projects and to fund-raise.

In Collins' words, Leakey got the right people on the bus, and then figured out what to do. Leakey truly lucked out in his choice of Goodall.

Reference

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

Peterson, Dale. Jane Goodall. The Woman Who Redefined Man. Houghton Mifflin Company. 2006.

Posted by jackmixner at 08:12 PM | Permalink

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Tolkoff puts Western Digital on the spot by asking if it is concerned about the growth of flash memory storage devices for laptop computers. The drives compete with Western Digital's bread-and-butter, disk drive storage devices.

Western Digital says, "We've never seen any viability in the space (Tolkoff, 82)."

Now, from an economic development point of view, I want Western Digital to survive. However, other Orange County manufacturers like Kingston Technology, and many other manufacturers world-wide, are eying the space.

In the past, we've said that some firms hold on to older technology too long (Mixner, Sustainable and Winning). Sometimes they make tiny little changes that have the ability to keep profits rolling for some time.

Western Digital says disk drives will survive for some time because flash drives are just too expensive. Much though I hate to say it, it looks to me like they are about to be passed by by the technology express. They'll deny the future, continue to make little changes, while the flash folks figure out how to make things cheaper, and, eventually, pass them by. My hope is that Western Digital has a competitive response ready. I think they'll need it.

References

Mixner, Jack. Sustainable Innovation II. http://mixnerstrategy.com/blog/2008/02/sustainable_technologies_ii.html

Mixner, Jack. Winning at Innovation. http://mixnerstrategy.com/blog/2007/11/winning_at_innovation.html

Tolkoff, Sarah. Flash Forward. PC Makers Add Flash Drives; Western Digital Unfazed. Orange County Business Journal. 7-13 April 2008. 1.

Posted by jackmixner at 07:22 PM | Permalink

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Better PLC of Palo Alto signed a contract today with Dong Energy A/S to supply Denmark a nation-wide system of automobile charging stations (Abboud). 

One very good way to increase your valuation is to sign a very big, and very long-term, contract.

Reference

Abboud, Leila. For Danish Drivers, Filling Up Will Be a Breeze. Wall Street Journal. 27 March 2008. B5.

Posted by jackmixner at 09:53 AM | Permalink

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If you have never read one of Warren Buffet's annual letters you should. Here is this year's: http://www.berkshirehathaway.com/letters/2007ltr.pdf

Here are the criteria Buffet - and Berkshire - use to select companies to buy:

1. A company Charlie (Buffet's partner) and I understand
2. Favorable long-term economics
3. able and trustworth management
4. Sensible price tag (Buffet, 6).

Buffet's favorite "moats" to protect return of invested capital (Buffet, 6-7):

• Low cost producers in the company's industry
• Enduring companies aren't "in industries prone to rapid and continuous change."
• Businesses requiring a great manager
• Long term competitive advantage.

Buffet's example of a prime Berkshire holding? See's Candies. Look at page 7 of the annual report. It makes for interesting reading.

Reference

Buffet, Warren. Berkshire Hathaway, Inc. To the Shareholders ... February 2008. http://www.berkshirehathaway.com/letters/2007ltr.pdf

Posted by jackmixner at 03:54 AM | Permalink

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In an packed presentation to the National Association of Workforce Boards, Gingrich summarized five steps to achieve real action amidst fierce opposition (Gingrich):

1. Doing more of what you are doing now is insanity. Do something different. Very different.
2. Have an unsolvable problem? Make it bigger, not smaller. Think of all the ramifications of the problem if you do nothing, or just a little sliver of what is really required.
3. Real change requires real change. Don't put up with less than real change.
4. Cheerful persistence is key. It's harder than you think.
5. When speaking in disagreement say, "Yes, yet..." not "No, because." It is amazing how a negative attitude kills real change. 

Gingrich recommended three books as crucial to the message:

• Guiliani's Leadership
• Bratten's Turnaround and, most of all,
• Lewis' Moneyball.

Gingrich,Newt. Real Change. Presentation to the National Association of Workforce Boards, 25 February 2008.

Posted by jackmixner at 11:52 AM | Permalink

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Toyota's Material Handling Division had a problem we'd all like to have. Its old product line was at least six years old and still very profitable. Since it entered the lift truck market in 1967, Toyota's share has risen to number one in the US with a twenty percent share. No one was complaining about the old line, but it was time to make changes. The real question, however, was, "What changes?"

Toyota never does anything without talking to folks, especially customers, and examining the situation very carefully. Three themes presented themselves (Wood): 

• The demographics of the final customers for their lift trucks were getting younger, lots younger.
• Consumers finally were waking up to the fact that energy usage couldn't continue to grow without major changes.
• Safety is still of prime importance to buyers.

What to do? The market research pointed to thematic responses:

DESIGN

The new fork lift incorporated features to younger entice users who were very likely to be playing with video games during their off times. The coolest feature? Joy stick controls mimicking those on video games.

GREEN

Toyota instituted a new green initiative promoting Toyota's green awareness. One big feature was its intent to plant 20,000 trees on Arbor Day. Of course, the new design for the new Eight Series of lift incorporated many energy saving features. In certain sectors of the lift business, large portions of the trucks were battery powered.

SAFETY

Lower profile, electronic controls, tilt control, speed control and height controls add up to safer fork lifts with better safety records.

The new Series Eight forklifts launched successfully around the world. Design, environment responses and safety initiatives all played a part in the successful launch.

Wood, Brett. Grand Strategy - Product Development: Toyota Fork-Lifts - A Case Study. Presentation to the Orange County Chapter of the Association for Strategic Planning. 22 January 2008.

Joystick controller: http://www.toyota8series.com/ergonomics.htm

Posted by jackmixner at 11:27 AM | Permalink

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Launching a new book title is never easy. Pink, in launching his third title The Adventures of Johnny Bunko, is entering new ground. He is mimiking the Japanese manga-style with a fully illustrated, business comic book targeting the twenty-something crowd who are familiar with the genre. His six lessons (Berfield, 73):

• There is no plan.
• Think strengths, not weaknesses.
• It's not about you.
• Persistence trumps talent.
• Make excellent mistakes.
• Leave an imprint.

I saw Pink speak at the National Association of Workforce Boards in Washington D. C. in February. The talk was supposedly about Pink's last book A Whole New Mind, but, looking back I realize that it was really a launch speech meant to drum up interest for the new book. It was subtle, but the picture of the new book dominated the closing screens of his presentation. Not quite a classic National Speakers Association process with piles of books available in the back of the room, Pink made his points about using manga texts with younger folks to a receptive crowd of about sixteen-hundred.

I'd rate the speech a success. We'll see if the book makes it, especially as manga hasn't really gone mainstream in the U. S.

Berfield, Susan. Career Advice From a Comic Book. Graphic books on business are already a hit in Japan. With Johnny Bunko, the genre heads for the U.S.  BusinessWeek. 3 March 2008. 073. http://www.businessweek.com/magazine/content/08_09/b4073073477127.htm?chan=search

Pink, Daniel H. The Adventures of Johnny Bunko: The Last Career Guide You'll Ever Need. Riverhead Trade Paperback. 2008.

Posted by jackmixner at 09:31 AM | Permalink

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Once again, some early adopters lost. Toshiba abandoned the high density DVD market to Sony's Blu-ray (McBride). We all knew the battle had to end with a clear winner, but didn't know when it would happen. The tipping point in the battle? The day in January that Time Warner's Warner Brothers announced that they were only going to support the Blu-ray format starting in May 2008.

There is a big strategic story here somewhere. It would be nice to say that what normally happens (a big manufacturer is eclipsed by a neophyte new invention-type manufacturer) happened again in this case. Maybe it did, if we are allowed to stretch things a bit. Sony lost on Betamax back in the eighties. It has been, basically, an also-ran, in the MP3 battle it lost to Apple's iPod. It's technology side hasn't had a big winner in a while. Maybe the scrappiness that comes from not winning was enough to propel Sony to the top.

I'm going to wait a while to see what really happened. Warner tipped things. I am interested in knowing why, specifically. I want to know if it was a technology decision, a marketing decision, or a just plain finance decision. We'll see. 

McBride, Sarah and Yukari Iwatani Kane. As Toshiba Surrenders, What's Next for DVDs?. Wall Street Journal. 19 February 2008. B1.

Posted by jackmixner at 12:12 PM | Permalink

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Self help books are a genre I thought were created in the 1970s or so. I couldn't have been more wrong.

An earlier self help book title, remarkably enough, Self Help by Samuel Smiles, debuted in 1859 as a Victorian best-seller. [1859 is interesting in that it is also the year Charles Darwin's Origin of the Species and John Stuart Mill's Essay on Liberty.]

I mention Self Help because it ends up being a reference book used by Sakichi Toyoda, the inventor who worked on devising a mechanized loom, created a company to manufacture it, and finally, directed his son Kiichiro Toyoda to begin research on the development of a fully Japanese-manufactured automobile (Togo, 36). Preaching Puritan values like the building of character through self-denial (Togo, 13) and strengthened by Toyoda's understanding of Japanese samurai codes, the book was read by thousands of Japanese during the period of the Meiji government after Perry opened Japan to Western trade in 1853.

Togo, Yukiyasu and William Wartman. Against All Odds. The Story of the Toyota Motor Corporation and the Family That Created It. St. Martin's Press. 1993.

Other References

Smiles, Samuel. Thomas Parke Hughes, editor. Selections From Lives of The Engineers with An Account of Their Principal Works. The M.I.T. Press. 1966.

Posted by jackmixner at 03:15 PM | Permalink

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Ask a young person what he or she wants to accomplish and they're likely to respond with what they want to have later on. The strategic thinker, however, will answer more about what they hope to be (Montgomery, 56). Relying on thought processes without a lot of analysis, this was a good example of what strategy was like before, say, twenty-five years ago.

Then came Michael Porter and his supporters will highly analytical processes focusing on competitor analysis and competitive advantage.

Either of the processes might take you where you want to go. My suggestion? Do both. Start with the classic SWOT (strengths, weaknesses, opportunities and threats), derive a Mission Statement, some objectives and pretty broad strategies. Follow-up with more concise analysis of competitors and the marketplace.

Then - and this is as important as anything else - implement your plan, revisit it frequently to measure progress, and, finally, make changes when they make sense.

Montgomery, Cynthia A. A CEO must be the steward of a living strategy that defines what the firm is and what it will become. Putting Leadership Back Into Strategy. Harvard Business Review. January 2008. 54.

Porter, Michael E. The Five Competitive Forces That Shape Strategy. Harvard Business Review. January 2008. 79.

Posted by jackmixner at 03:35 PM | Permalink

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Phil Knight, co-founder of Nike, on Steve Prefontaine:

"To many he was the greatest U.S. middle-distance runner ever, but to me he was more than that. Pre was a rebel from a working-class background, a guy full of cockiness and pride and guts. Pre's spirit is the cornerstone of this company's soul (Katz, 64)."

Katz, Donald. Just Do It. The Nike Spirit in the Corporate World. Random House. 1994.

Posted by jackmixner at 02:37 PM | Permalink

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Light bulbs make an interesting case study on innovation. Incandescents are about to be replaced in the marketplace by florescents. Walmart is in the game as are the big manufacturers like GE.

So why is GE introducing a new, high efficiency incandescent light bulb (Aston)? Let's just blame in on "transitionary periods" (Aston) between the adoption of a new technology and the full demise of an old one. GE is able to incorporate some portions of the new technology into its old light bulb and keep the ancient production lines humming for a while longer. It makes sense - up to a point. The instant GE thinks they are winning the battle against the new technologies is the same instant that they may lose the war. Usually completely new technologies are introduced by a new company while the traditional manufacturers continue to innovate a little bit at a time - "sustainably" (Mixner) - while "new idea" manufacturers leapfrog their processes with new innovations that have a very good chance of stealing the whole market.

My suspicion is that the bulb wars aren't over yet and that a new player, say P&G, will enter the fray. They'll figure out how to market the new technology and to profitably manufacture it in a way that GE never considered. GE thinks incremental technological changes lead. Maybe marketing prowess combined with new marketing leads, actually.

We'll get to watch and see. Our family switched all our bulbs to florescents and, wouldn't you know, our entire electric bill is down by twenty per cent. In this instance, we're early adopters. As florescents move farther into general use, it will be interesting to see who sells the most of the new bulbs. GE has a chance, but so do other companies.

Aston, Adam. Last-Gasp Goods. BusinessWeek. 18 February 2008. 15.

Mixner, Jack. Winning at Innovation.  http://mixnerstrategy.com/blog/2007/11/winning_at_innovation.html

Posted by jackmixner at 04:51 PM | Permalink

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When Key Words Entered the Toyota Lexicon 

Kaizen.     1890.

"... constantly improving the machines regardless of what" ...the ... "competition was doing." "... dedicated research to the never-ending search for perfection (Togo, 21)."

How 'Toyoda' Became 'Toyota.'     1936.

Early in its history Toyota used contests to build name recognition in Japan. Their first contest was for a logo for Totoda Automatic Loom Works. Twenty-seven thousand entries were received and one chosen. Toyoda required ten brush strokes in the logo, Toyota eight. Eight was a very lucky number. Risaburo Toyada, the CEO at the time, made the decision to migrate to the lucky spelling - Toyota. (Togo, 73).

Just In Time.      1937.

The first "Just In Time" sign was hung in the automobile factory in Koromo in 1937-38. Toyota had studied the American manufacturing system closely and realized that the Americans were able to stock-pile manufactured components far above daily needs. This required the dedication of capital that Toyota in the thirties did not have. The work-around became ground-breaking: don't manufacture something until you need it. Workers were issued slips of paper each morning with the required number of components needed. When they were complete the worker could go home. No extra stock was kept on hand. (Togo, 79).

Genchi Genbutso Shigi.     1943.

Ask a question of a manager at Toyota and you might be assigned the task of "learning through careful observation."

When Taiichi Ohno, the section chief, moved over from the loom manufacturing operation to the automobile facility, he moved from the ordered and logical to the disrupted manufacturing (because of close military oversight of the production process) at the auto plant. He would require a supervisor with a under-utilized process or machine to stand within a chalk circle to observe for hours just what might be wrong with his operation. Only after careful observation was he allowed to propose a solution to his problem that he then put into operation. (Togo, 115)

Kanban.     Circa 1943.

A series of work stations produced automobile parts. A part might be progressively machined and assembled until it was ready for installation on a car. Some of the steps went quickly which might allow for more products to be produced than were needed by the next station.

A "kanban," a slip of paper, showed how many parts a worker was ordering from a previous work station. The kanban limited the number of parts manufactured to the number of parts needed by the next worker. The result? Less inventory and, ultimately, fewer quality problems, as errors were caught more quickly as possibly flawed inventory wasn't allowed to build up. (Togo, 117).

Total Quality.     1953 to 1964.

W. Edward Deming arrived in Japan with the U.S. Bureau of the Census following a career in manufacturing perfecting the Shewhart work on statistical process control. Deming, wanting to stay in the U.S., discoved little interest in applying his techniques. In Japan, however, engineers responded to a series of lectures on quality control. His processes yielded immediate and dramatic increases in quality for Japanese manufacturers.

In the 50's Toyota applied some of Deming's teachings, but it wasn't until the early sixties that the processes were fully applied two ways: it had to become more systematic, and it had to be applied company-wide.

Application was made for the Deming Prize in the early sixties for the Corona manufacturing facility, a plant that hadn't fully implemented the quality program formally. On examination, however, it was realized that the plant, in talking very closely to customers, had added the final step to a quality program. The Deming inspectors concurred, and the Corona plant won the prize in 1964. (Togo, 163).

Togo, Yukiyasu and William Wartman. Against All Odds. The Story of the Toyota Motor Corporation and the Family That Created It. St. Martin's Press. 1993.

Other References on Toyota

Foster, Martin. Toyota's Profit Rises on Shift in Strategy. New York Times. 7 February 2008. http://www.nytimes.com/2008/02/06/business/worldbusiness/06toyota.html?scp=1&sq=martin+foster&st=nyt

Kim, Chang-Ran. For Toyota, Success Is A Bitter-Sweet Pill. New York Times. 9 February 2008. http://www.nytimes.com/reuters/world/lifestyle-toyota.html?_r=2&oref=slogin&pagewanted=print&oref=slogin 

Magee, David. How Toyota Became #1. Leadership Lessons From the World's Greatest Car Company. Portfolio. 2007. 

Liker, Jeffrey K. The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS. http://www.si.umich.edu/ICOS/Liker04.pdf 

Liker, Jeffrey K. 14 Management Principles From the World's Greatest Manufacturer. McGraw-Hill. 2006.

Posted by jackmixner at 05:52 PM | Permalink

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For years, Starbucks has succeeded with a $4 cup of coffee. It sold the store environment as much as it sold the coffee. Customers lingered and returned repeatedly.

Rising gas prices, recession fears, and other factors are taking their toll, however. 

Starbucks has had competition all along in Dunkin' Donuts' less expensive cup of coffee. Starbucks claimed it wasn't worried, as Dunkin' sold more regionally, and to a different market.

More recently, McDonald's entered the battle with stand-alone coffee bars "personed" by baristas, just like Starbucks. The only difference was the price. Mickie D's cup of coffee costs about a dollar.

Starbucks has been unfazed - until now.

Facing declining revenues and competition, Starbucks is making changes. It is testing a $1 cup of coffee in certain of its Seattle locations. Free re-fills.

There's a big difference between coffee for a buck and coffee for $4. It'll be interesting to see how this shakes out.

Adamy, Janet. Starbucks Tests $1 Cup, Free Refills in Seattle. Wall Street Journal. 23 January 2008. B4.

Posted by jackmixner at 12:52 PM | Permalink

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Disruptive technologies change the rules in ways that make it impossible to industry leaders to follow their old technologies with new.

When industry leaders continue to innovate on old technologies, things can seem rosy for quite some time. Mini-computer manufacturers got quite good at making 8.5 inch drives, but they completely missed on 3.5 inch drives - and the whole market - because they didn't predict there was enough demand.

TVs are going through a similar cycle. The replacement of cathode ray tube technologies with flat screen technologies is occurring quickly. For a long time, rear projection TVs existed on the periphery but they are being replaced as flat screen technologies become larger and larger.

Texas Instruments announced that they have a new rear projection method that is better than what was offered before (Taub). It looks like to me like too little too late. We're watching the last hurrah for CRT technology in TI's bid for rear projection dominance. The market will likely continue to dwindle. Let's hope TI doesn't get left behind. It looks like, however, they will be.

Taub, Eric A. Betting on a Bright Future for Rear-Projection TVs. The New York Times. 21 January 2008. http://www.nytimes.com/2008/01/21/business/21texas1.html?_r=1&scp=1&sq=eric+a.+taub&st=nyt&oref=slogin

Posted by jackmixner at 05:18 AM | Permalink

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Apple Chapter III said Apple could never get the movie studios, especially Sony and Universal, to agree to share movies for the iTunes website.

Wonder of wonders, Apple indeed got Sony, Fox, Warner Brothers, and Paramount to say "yes". Introduced at MacWorld (along with the new MacBook Air lightweight laptop), investors weren't initially impressed. Apple has only sold seven million movies on its website, versus four billion songs (Wingfield).

Wingfield, Nick. Apple's Latest Offerings Fail to Impress Investors. Wall Street Journal. 16 January 2008. B3.

Posted by jackmixner at 10:20 AM | Permalink

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Best website so far on the venture capital business? Try www.TheFunded.com . Run by successful entrepreneur Adeo Ressi, the  site allows you to rate the VCs based on your interactions with them, and share information you have that might be useful to others.

Adler's is the most interesting story on the site.

Adler, Carlye. The Man Behind the VC Slagfest at TheFunded.com Reveals Himself to Wired.  Wired. 15 November 2007. http://www.wired.com/techbiz/people/magazine/15-12/ff_funded

Ante, Spencer E. Show Me the Moneymen. BusinessWeek. 21 January 2008. 54. http://www.businessweek.com/magazine/content/08_03/b4067054317291.htm?chan=search

Posted by jackmixner at 12:54 PM | Permalink

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The predictions are in. Everyone (Burrows) says Jobs/Apple won't be able to crack the video marketplace now dominated by cable providers.

Jobs is set to announce a movie rental service on the iTunes site, hoping to attract the major studios - read that Warner Bros. and Paramount - to the fold.

Biggest problem? Songs sell for ninety-nine cents. The studios won't settle on a standardized, low price. Sony and Universal never will play with Apple.

The forecast? Well, the easy money says Jobs won't succeed at video. My cut? Hold on a while. Let's see what Apple comes up with.

Burrows, Peter and Ronald Grover. Steve Jobs's Video Dreams. BusinessWeek. 21 January 2008. 29.

Posted by jackmixner at 12:43 PM | Permalink

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Gary Hamel's new book is out. It details three "harbingers of the future (Holstein)" in terms of strategy:

• Whole Foods Market
• W. L. Gore & Associates
• Google. 

Holstein, William J. Orders From on High? That's So Yesterday. New York Times. 29 December 2007. http://www.nytimes.com/2007/12/30/business/30shelf.html?_r=1&oref=slogin

Posted by jackmixner at 01:03 PM | Permalink

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The Japanese gave us kanban (just in time) and kaizen (continuous improvement) (Giridharadas). Now the Indians, in creating the $2,500 car, give us Gandhian engineering "combining irreverence for conventional ways of thinking with a frugality born of scarcity". The car's characteristics (Giridharadas):

• Nice car - cute
• Three brake pads, instead of four
• No radio
• No power steering
• No air conditioning
• One windshield wiper
• No tach
• Analog speedometer
• Hollow steering column
• Bearings that wear out quickly if the car is driven above 45 miles an hour
• Small engine - maybe 660 cc's
• Variable transmission.

The bet is that India will pretty quickly up-grade vehicle codes to make the auto obsolete. For now, however, cutting edge is a step back in time.

Giridharadas, Anand. Four Wheels for the Masses: The $2,500 Car. New York Times. 8 January 2008. http://www.nytimes.com/2008/01/08/business/worldbusiness/08indiacar.html?_r=1&oref=slogin

Posted by jackmixner at 12:14 PM | Permalink

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First Off, I was bedazzled by the first chapters of Greenspan's new book, The Age of Turbulence. He talks about the people he grew up with, the people he worked with and his personal friends early in his career.  The list is like a Who's Who of the fifties and is interested in and of itself. Many of the reviews for the books stopped right there - they were bedazzled just like me - and missed out on the analysis and predictions for the future that make the book not only interesting, but important. The Greenspan book is two books in one. It is personal history, and it is analysis at a readable, and usable, level.

What Greenspan is Worried About

Greenspan is worried that the US Congress will take back the right to fight inflation. During the battle against inflation, the warfare hurts. He senses that Congress would like to re-take the ability to work on inflation from the Fed. What that really means is that Congress won't work on inflation at all, given the chance. Greenspan believes that if that occurs the results will be disastrous for the American economy.

His Predictions (Greenspan, 498)

• US economy in 2030 will likely be three-fourths higher than 2006.
• GDP will rely on concepts more and more. Battles will occur over copy-rights.
• Federal Reserve will confront inflation once again. Populist forces in Congress will resist action by the Fed.
• If Fed is restrained:

1. Inflation will exceed 2.6%, the core rate now.
2. Double digit yields on Treasuries, double now.
3. Higher risk spreads and equity premiums
4. Yields on stocks will be higher than the present (balanced by subdued asset price increases).

• Fiercest Economic Competitor: China (Greenspan, 502). A democratic China will continue to strengthen economically if - and this is the big if in the whole book - the Chinese government continues to support market forces. 

Additional Interesting Definitions

Dutch Disease: "Dutch disease strikes when foreign demand for an export drives up the exchange value of the exporting country's currency. This increase in the currency's value makes the nation's other export products less competitive. Analysts often cite this pattern as a reason why relatively resource-poor Hong Kong, Japan, and Western Europe have thrived while oil-rich Nigeria and others have not (Greenspan, 258)."

Creative Destruction: "A market economy will incessantly revitalize itself from within by scrapping old and failing businesses and then reallocating resources to newer, more productive ones. (Greenspan, 48)." An example: the tin can was supplanted by the aluminum can. Tin's demise was cemented by the creation of the pop-top, allowing easy access to your beer. Another example: Silicon Valley's re-invention of itself every couple of years (Greenspan, 504).

Most Interesting Quote

 The evidence, as best I can read it, suggests that for any given culture and level of education, the greater the freedom to compete and the stronger the rule of law, the greater the material wealth produced (Greenspan, 504).

Final Suggestions (Greenspan, 505)

• Education matters. Continue to support the improvement of primary and secondary education.
• Equitable incomes are better than large spreads between senior managers and workers. Immigration supports equitable income growth.

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

Posted by jackmixner at 05:56 PM | Permalink

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The US and the World Bank told Malawi to stop subsidizing fertilizer for food production (Dugger). The result? Famine.

How to break the famine? Subsidize fertilizer once again.

Malawi is now a net exporter of corn, is healthy, and, mimicking what the US does, and not what it says, continues to subsidize fertilizer purchases by farmers.

There's some luck involved in that rains came at the right time, no question. Longer term, studies will continue on the impact of free market dynamics in agricultural production. The president of Malawi was able to dictate to his ministers policy concerning agricultural production for short term results. The bet paid off this time. We'll watch how it works over the long term.

CEOs get to make choices like this every now and then. The recognition that they can break the rules successfully is part of leadership.

Recognizing when things work makes sense. So does recognizing when things aren't working.

Reference

Dugger, Celia W. Ending Famine, Simply by Ignoring the Experts. New York Times. 2 December 2007. http://www.nytimes.com/2007/12/02/world/africa/02malawi.html?_r=1&oref=slogin

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These readings are basically about political history from all sorts of points of view. The 600s

"Why were the Arab conquests so swift and far reaching - and permanent? ( Kennedy. 366.)" 

• Declining population - "demographic decline" -as a result of Bubonic plague in the region. That the booty of war included many human captives supports this, along with the speed of success in Iran and on the Iberian peninsula.
• Earlier battles and wars between the Romans and the Iranian empires were far reaching and destructive. The decline of the Babylonian Empire was a symptom of this, along with the weakening control of local religions it precipitated. The strength of these older Empires was also a weakness in that the defense of the Empire relied not on local peoples but on armies raised elsewhere. Government was more "sophisticated" (Kennedy, 369).
• The strength of the older empires the Arabs supplanted was a weakness in that the local populations were will to support the Arab conquests as they were, perhaps, the lesser of two evils from the locals point of view.
• While it might not be said that the Arabs were benevolent rulers, local opposition did not instantly spring up in defiance.
• Martyrdom and paradise were incentives for the Arabs in battle in ways never seen before.
• This wasn't migration. It was war by an invading army. Households joined the armies only after military success.
• Mobility played a role. The Arab armies moved literally astonishing distances. The Muslim world stretched 7,000 kilometers; the Roman world stretched 5,000 kilometers.
• Leadership played a crucial role. Hereditary posts and the ability of designated leaders contributed.
• Strong direction from afar, namely Medina and, later, Damascus, were important.
• Finally, one key point. While armies were conquered, absolutely, terms for governing the newly conquered were comparatively easy.

The 1940s

Jackie Robinson led the way toward integration of major league baseball. That's an old story. In other places, we've made the point that success isn't about experience or training, although both are important. Success is about talent. Robinson had the talent to keep his mouth shut while competing fiercely at the same time. His talents helped a whole lot of other players succeed, as well.

The 2000s

Since we're telling sports stories, how about this one: Jimmy Carter raised $175,000 for The Carter Center by selling a baseball signed by Fidel Castro and himself. The ball was the first pitch in a Cuban baseball game attended by Castro and Carter during discussions addressing freedom of expression and association, amnesty for political prisoners, right of private enterprise, direct election of public officials, and general elections. 

On his return to the US, Carter presented his findings to congressional leaders, George W. Bush and Condoleezza Rice. Almost immediately of Carter's meetings with senior leaders restraints against Cuba were increased (Carter, 88).

2006

Golf is always about individual stories. Take all the stories together and you have a book like no other. The Scorecard Never Lies reads almost like a diary with the weakness of lack of focus, and the strength of focus on individual performance, constant training - and luck.

Tiger stories are what we all look forward to today so here's one: Tiger cried for the first time in public after winning the 2006 British Open, the first Open his father hadn't attended with him. A sad time (Lewis, 258).

References

Carter, Jimmy. Beyond the White House. Waging Peace, Fighting Disease, Building Hope. Simon & Schuster. 2007 

Eig, Jonathan. Opening Day. The Story of Jackie Robinson's First Season. Simon & Schuster. 2007. 

Kennedy, Hugh. The Great Arab Conquests. How the Spread of Islam Changed the World We Live In. Da Capo Press. 2007.

Lewis, Chris. The Scorecard Always Lies. A Year Behind the Scenes on the PGA Tour. Free Press. 2007.

Posted by jackmixner at 01:35 PM | Permalink

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The fifties and sixties saw the disk drive companies continue to innovate to increase the utility of their storage devices for the main frame business. This was sustainable innovation. The flaw? Incremental changes made to existing products allowed them to miss out on new innovations on the periphery of their product lines.

The seventies and eighties showed the problems in the disk drive business which still focused on main frame computers. Taking off-the-shelf technology and repackaging it in new ways allowed new, small companies to address the needs of the personal computing industry with smaller, more easily packaged disk drives. The drives were less efficient, yes, but they addressed the needs of personal computer size - and price - requirements nicely. These were disruptive technologies. The disruptive companies ended up owning the business (Christensen).

It would be easy to preach that innovating for a disruptive technology is the only way to succeed and that sustainable innovation is the way to lose out over time. That sermon would miss out on other ways to grow, however, ways that large companies (normally tagged with the sustainable innovation moniker, not that of disruptive innovators) are best advised to address.

Cross-boundary, disruptive innovation does things differently. A big company eyes a possible new application for its capabilities. Apple jumps into music, for instance, and succeeds in ways that traditional players didn't. WalMart enters healthcare with their with their low cost doctor's offices in local stores a radical change for the heath care - and retail - environments. GE has a huge opportunity to enter the automotive marketplace with an electric automobile because of its skills in batteries and energy from atypical sources (Grove).

Incremental changes on your existing product line? You're probably innovating sustainably. Big companies do all right at this.

Disruptive, incremental changes on an existing product - into a new marketplace? You're probably innovating disruptively. Start-ups do a better job here.

Got skills and innovations applicable in a new marketplace that no one is properly addressing? Cross boundary disruptions by an big company into a new market make more sense. GE's deep pockets make a foray into the hugely regulated automotive marketplace sensible says Grove. A start-up disruptively addressing the market will have a harder time.

Microsoft and Intel have continually upgraded their offerings, lately in a sustainable manner. Negroponte at MIT pointed out the need for a low cost computer for third world applications, He designed it, sought funding, and went to market. What had been seen as a huge opportunity for a startup has in fact ended up being an opportunity for the sustainable Microsofts and Intels of the world to act disruptively by introducing a low cost alternative as well, if only to protect themselves (Stecklow).

The theory says that the big companies should fail and that Negroponte's One Laptop Per Child program should succeed. My suspicion is that there is another alternative: a company outside the normal technology realms, but with large ties to the Third World, will win at this battle by wrapping its contacts and marketing prowess with someone else's technology to sell a lot of cheap computers. The beauty of all this is that we get to wait and see.

Andy Grove says GE has an opportunity in electric cars. It looks like someone else has an opportunity in cheap laptops.

What are the opportunities for your expertise in other industries?

References

Christensen, Clayton M. The Innovator's Dilemma. When New Technologies Cause Great Firms to Fall. Harvard Business School Press. 1997. [Chapter One. How Can Great Firms Fail? Insight from the Hard Disk Drive Industry. http://www.businessweek.com/chapter/christensen.htm ].

Grove, Andy. Think Disruptive. Portfolio magazine. December 2007. http://www.portfolio.com/views/columns/2007/11/15/Innovation-At-Big-Companies

Stecklow, Steve and James Bandler. A Little Laptop With Big Ambitions: How a Computer for the Poor Got Stomped by Tech Giants. Wall Street Journal. 24-25 November 2007. A1. http://online.wsj.com/public/article/SB119586754115002717.html

Posted by jackmixner at 09:31 AM | Permalink

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Booz Allen keeps records on the status of companies asking for consulting services on strategy (Wheeler, 4):

• 15 percent are truly in need of change.
• 60 percent are in a state of inconsistency (of say six major initiatives, a couple aren't working).
• 15 percent are doing well, but leaders want new challenges.
• 10 percent are recovering from a "poorly designed full-scale transformation". 

In summary, four adjectives: "crisis, inconsistency, complacency, or exhaustion." Any of them sound familiar?

Maybe your company is just fine. Odds are, however, you've got issues.

Reference

Wheeler, Steven, Walter McFarland, and Art Kleiner. A Blueprint for Strategic Leadership. strategy+business. Winter 2007.  http://www.strategy-business.com/press/article/07405?gko=0a739-1876-26510307

Posted by jackmixner at 08:21 PM | Permalink

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Maybe this fits the bill for "cutting edge" strategy:

New data (Duggan) says that setting objectives and doing whatever it takes to reach them might not be as useful a strategy as spending quite a lot of time on an opportunity scan and then picking the opportunities that have "large pay-offs" (Easterly).

We've said all along that opportunities are the hardest to find, and the most important part of strategic planning. Now more evidence supports that statement. Maybe even cutting edge evidence.

References

Duggan, William. Strategic Intuition. Columbia Business School. 2007.

Easterly, William. Surprised by Opportunity. Wall Street Journal. 14 November 2007. D16.

Posted by jackmixner at 09:16 AM | Permalink

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Chapman had a choice. It could keep Division I/II football and its requirements for athlete scholarships, or it could increase the number of scholarships for academics (Chambers). Chapman's President Jim Doti chose to increase the academic performance of the University by awarding academic scholarships and moving the football program to Division III which doesn't award athletic scholarships.

Pretty good move. SAT scores have increased from 997 in 1991 to 1219 today. The University is rated tops in the nation according to Doti's comments at their recent economic forecast.

Chapman was the first accredited four year university in Orange County. Looks to me like it is still a credit to us all.

Reference

Chambers, Bruce. Chapman ascends in stature. Led by mountain-climbing President Jim Doti, the little college that could has made dramatic strides over the decades. OC Register. 4 November 2007. http://www.ocregister.com/news/doti-chapman-college-1915381-school-campus#

Posted by jackmixner at 10:27 AM | Permalink

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Emboldened by the success of appeasement, Chamberlain held on the Prime Minister-ship long beyond his effectiveness. Churchill knew he was the best replacement, but he wouldn't do anything to upset the government. That was left to a group of young Turks who gave voice to the people and slowly upset the government in favor of Churchill. The best speech in Parliament was by Leo Amery. He quoted Cromwell (Olson, 294):

"This is what Cromwell said to the Long Parliament when he thought is was no longer fit to conduct the affairs of the nation: 

'You have sat too long here for any good you have been doing! Depart, I say, and let us have done with you!

In the name of God, go!'"

Everyone in Parliament knew he was right.

Chamberlain's government fell. Churchill became Prime Minister and began the long mobilization which led to winning the war.

Reference

Olson, Lynne. Troublesome Young Men. The Rebels Who Brought Churchill to Power and Helped Save England. Ferrar, Straus and Giroux. 2007.

Posted by jackmixner at 11:36 AM | Permalink

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Training employees makes sense, sometimes, especially when you know what to teach them. So, what do you teach them?

Macromedia, a software company in San Francisco, posts in its lobby a scoreboard with this information (Case, Open Book Management, 68):

• Service revenue vs. plan
• Revenues for every product line
• Total revenue vs. plan
• International revenue vs. plan
• Products shipped to original schedule
• Accuracy of product delivery dates
• Marketing-driven calls per month
• Departmental expenses
• Annualized revenue per employee. 

So what do you train employees on? How about teaching them what each of the words above actually means and how to derive them from their own work.

Hire for specific talents like closing the sale.

Train on key attributes that will help your employees know where they - and the company - stand in terms of goals, all the time.

References

Case, John. Open Book Management. The Coming Business Revolution. HarperBusiness. 1995

Case John. The Open-Book Experience. Lessons from Over 100 Companies Who Successfully Transformed Themselves. Addison-Wesley. 1998.

Posted by jackmixner at 11:06 AM | Permalink

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Von Braun's talents were special. Involved in rocketry since the twenties, he migrated from private clubs, to clubs sponsored by the military (the army in Germany was supportive, as at that time, rockets were classified as munitions much like artillery), to helping the military design new rockets, and then, finally, to rocket manufacturing for the German government during WW II. This latter experience was controversial as it included slave labor to produce the rockets Germany used against the West.

Special talents?

Besides pretty good engineering skills (Einstein was helping him check his math while he was still in college [Neufeld, 45]), it ended up that Von Braun had two unique talents, one for managing large manufacturing projects and the other an intense personal interest in selling rocketry to the public.

Von Braun's management focused on three key attributes for success (Neufeld, 302):

• Teamwork, meaning getting diverse in-house laboratories and contractors working on a team,
• Dirty-hands engineering, meaning, basically, that managers didn't just push paper, they stayed close to the hardware and knew what was working, and what wasn't,
• Automatic responsibility, meaning if you or your department made something, you stood behind your work both when it worked and when it didn't.

First in Germany and then later in Texas and Huntsville, Alabama, Von Braun excelled at keeping teams busy and focused on their tasks. From a bureaucratic point of view, over time, he also excelled at the big science game. He kept his large engineering team together through the vagaries of federal funding cycles.

What's the message from all this?

Early on, Von Braun excelled at technology. Later on, he grew the ability to manage large projects and to keep them funded. His team ended up being better at the technology than he was.

Sort of like a tech CEO, wouldn't you say?

Reference

Neufeld, Michael J. Von Braun. Dreamer of Space, Engineer of War. Alfred A. Knopf. 2007.

Posted by jackmixner at 10:35 AM | Permalink

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Twitchell on men, church attendance, and marketing strategy for mega-churches:

Men are the crucial adopters in religion. If they go over the tipping point, women follow, children in tow.

The best strategy for growing a mega-church? Focus on the men. Use sports metaphors in the sermons (Riley, D8). Additionally, look at the church like a brand. Offer playgrounds, coffee shops and services.

Not that much different from a regular branding strategy. It may be useful for getting folks in the door. Keeping them coming, week after week, requires a different strategy.

Reference

Riley, Naomi Schaefer. A Congregation of Customers. The Wall Street Journal. 23 October 2007. D8.

Twitchell, James B. Shopping for God. Simon & Schuster. 2007.

Posted by jackmixner at 09:57 AM | Permalink

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Interesting fact buried in an article about the woes of builders in today's market:

The credit spread between Treasury bonds and corporate and other debt was at 2.5% to 3% earlier in the year. What with current problems, the spread has slipped to 6%. That's a problem, yes, but things have been far worse in the past. "During the past two recessions, spreads increased to almost 12% (Mueller, 78)." 

Looks to me like things could get a bit worse before they get better.

Reference

Mueller, Mark. Standard Pacific Corp. Bets Against Itself with Stock Offering. Orange County Business Journal. 15 October 2007. 78.

Posted by jackmixner at 10:08 AM | Permalink

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We have talked about Apple's woes concerning pricing on its iTunes website in the past (Mixner). Now comes the next chapter in the saga.

Universal Music recently refused to re-up its contract with Apple (Grover, 30). It left its music on the site, but only on a month-to-month basis. The music is still 0n the Apple site, but Universal has upped the ante by announcing the launch of an industry-owned subscription service. Sony BMG Music Entertainment has signed up, and Warner Music Group may as well. Universal is also talking to WalMart and Best Buy about agreements independent of Apple.

Apple has seventy percent of the download market (Grover, 30). The artists are bothered by lack of control and pricing on the iTunes site.

However, and this is a big however, Apple still has the sales.

It guess we'll have to wait for Chapter III to know how things work out.

Last time I said Apple would win out in the end.

I'll bet there isn't a winner. Looks to me like they will all get together with a new agreement. We'll see.

References

Grover, Ronald and Peter Burrows. Universal Music Takes on iTunes. BusinessWeek. 22 October 2007. 030. 

Mixner, Jack. Ill Bet Apple Wins Price War. http://mixnerstrategy.com/blog/2007/08/ill_bet_apple_wins_price_war.html

Posted by jackmixner at 09:13 AM | Permalink

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"He's up."

"He's down."

 Sounds like a fight movie from the fifties.

This isn't a movie, unfortunately. Airbus finally shipped its A380 to applause. Boeing has delayed its Dreamliner for six months.

What's it all mean?

The Airbus saga includes one key fact. The plane wouldn't have gone anywhere, what with Board-room battles, unless a French middle-manager  (Michaels, A1) finally got his team and an equivalent German team to work together to iron out difficulties in the fiendishly complex design.

Boeing is delaying because it needs more time to put its new plane together because of supply shortages for fasteners.

Airbus announced first, had the spot-light for a while, and lost it - and a huge portion of its stock-market capitalization - because of its difficulties.

Now it is Boeing's turn, or so it seems.

The message?

Airbus succeeded in part because middle managers toughed it out and completed production.

Boeing faces the same obstacles.

A final winner? I'll bet there isn't one. Both planes will launch, behind schedule, safely. We'll have to wait and see how much profit the planes product.

References

Michaels, Daniel. Airbus, Amid Turmoil, Revives Troubled Plane. The Wall Street Journal. 15 October 2007. A1.

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The US leads in innovation, probably by a long shot. The buzz is that things are changing and that China, India, et al are about to change.

What to do, according to the Council on Competitiveness?

• Improve science, engineering and mat education
• Welcome skilled immigrants 
• Beef up government spending on basic research
• Offer tax incentive to spur US-based innovation.

At the same time (Economist, 2):

• Remember that innovation comes from elites with access to information and capital AND ordinary people.
• Allow government to be involved, but don't let it dominate
• Free information
• Foster human ingenuity.

Reference

The Economist. The Age of Mass Innovation. Economist. 15 October 2007.

Posted by jackmixner at 02:50 PM | Permalink

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The economy of China is challenged by environmental problems that threaten to undermine continued growth. Some examples (Economy):

• China is host to sixteen of the world's twenty most polluted cities. Blame that on coal fired energy.
• Water is grossly polluted country-wide.
• Japan and Korea are now effected by Chinese pollution like acid rain and yellow dust from Gobian dust storms.
• Biggest indirect threat is to continued expansion and economic stability.

Grim statistics say that there are three hundred staffers in SEPA, the national environmental watch-dog. The EPA has nine thousand in D. C. alone.

China will accept advice from non-governmental organizations and other countries, as long as the advice doesn't include criticism of the national government ( Economy, 9). Now they need to actually act on change, or threaten future growth.

Reference

Economy, Elizabeth C. The Great Leap Backward? Foreign Affairs. 1 September 2007. http://www.foreignaffairs.org/20070901faessay86503/elizabeth-c-economy/the-great-leap-backward.html

Posted by jackmixner at 01:17 PM | Permalink

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BusinessWeek re-did their graphics in the print edition. Here's the why and how (Adler, 008):

• Brief "intelligently and efficiently" was the message from readers
• More global coverage was needed, thus the re-do of the Contents
• They'll include more referrals to stories in other magazines and newspapers.
• They'll focus on clarity and substance over style.

My suggestions? Lose the pagination (page 8 reads 008 in the mag). This isn't Ian Fleming. 

Reference

Adler, Stephen J. A BusinessWeek for a Busier World. BusinessWeek. 22 October 2007. 008.

Posted by jackmixner at 12:36 PM | Permalink

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What to do when your competitor is much stronger than you are? 

A 1978 chess manual, Chess for Tigers, describes how a Tiger (a strong player) could take on a stronger player (a Heffalump) (Hoffman, 340):

On open territory a Tiger doesn't stand much chance against a Heffalump"... . He can ... "entice the Heffalump on to swampy ground and hope it falls into a bog and gets sucked underground by the quagmire. He can put up a fight neither on open plains nor in the jungle." Finally, he can ... "hope that the Heffalump gets stuck before he does."

A chess board doesn't give you many places to hide. You have to confront the enemy on a defined turf, many times in a constrained time-frame.

The business solution to a fiercely competitive position? Consider changing the battlefield. In the forest? Bring things out into the light and slow them down, if necessary.

Reference

Hoffman, Paul. King's Gambit. A Son, a Father, and the World's Most Dangerous Game. Hyperion. 2007.

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Copyright Jack Mixner.    714 449 1040.     www.mixnerstrategy.com

Any Rand's Atlas Shrugged is fifty. It has been called "one of the most influential business books ever written" (Rubin). Reviews are all over the press. The most interesting was a synopsis of who claimed to have read - and followed - Rand's precepts (Rubin):

• Alan Greenspan, former Chairman of the Federal Reserve and author of the newly published The Age of Turbulence. [Greenspan scores Reagan highly, along with Clinton. Lower scores go to Nixon, H.W. Bushand G.W. Bush and Republicans in Congress who voted for big budgets that have led to big deficits (Mandel, 99).]
• Jim Kilts, recent CEO of Gillette during its turn-around and subsequent sale to P&G and past CEO of Kraft and Nabisco.
• Jack Stack, CEO of Springfield Manufacturing, and author of The Great Game of Business.
• Mark Cuban, owner of the Dallas Mavericks
• John Mackey, CEO of Whole Foods.

Any Rand on capitalism (Rand, 414):

If you ask me to name the proudest distinction of Americans, I would choose-because it contains all the others-the fact that they were to people who created the phrase 'to make money.'

References

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

Mandel, Michael. The Maestro Speaks His Mind. BusinessWeek. 1 October 2007. 99-102. http://www.businessweek.com/bwdaily/dnflash/content/sep2007/db20070919_658580.htm?chan=search 

Rand, Ayn. Atlas Shrugged. Random House. 1957. 

Rubin, Harriet. Ayn Rand's Literature of Capitalism. New York Times. http://www.nytimes.com/2007/09/15/business/15atlas.html?_r=1&oref=slogin

Stack, Jack with Bo Burlingham. The Great Game of Business. Currency/Doubleday. 1992. http://www.greatgame.com/

Posted by jackmixner at 02:18 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Databases make things more interesting.

Gallop, for instance, has used the same survey on employee satisfaction with hundreds of companies. As best I can tell, the beauty of the information not only is the trend of your company over time with multiple surveys, but how your company compares with other companies in the same situation as yours.

The most interesting statement in the assessment (and the one that has more complaints about its inclusion) (Wagner, 139)? "I have a best friend at work."

Got friends - or got politics? Might want to have a look.

Reference

Wagner, Rodd and James K. Harter, Ph.D. 12. The Elements of Great Managing. Gallup Press. 2006.

Posted by jackmixner at 09:41 AM | Permalink

Copyright Jack Mixner.    714 449 1040.     www.mixnerstrategy.com

Incremental value changes won't make you stand out in the marketplace (Kim, 13).

Innovation without value is technology-driven and market pioneering, a possible formula for failure.

If bleeding-edge technology or slow incremental changes to your product aren't important, what is? One solution is to align innovation with utility, price, and cost positions (Kim, 13).

Innovation and value go together. If your newly innovated product is priced too highly, only early adopters will be interested in buying. If all the features don't work, or maybe worse, there are too many of them, no one will be interested. If you haven't figured out how to reduce manufacturing costs - and pass them on to customers - your market will wither.

Innovation is important. So is the ultimate utility of your product, its price, and your ability to make a profit from your product.

Reference

Kim, W. Chan and Renee Mauborgne. Blue Ocean Strategy. How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Press. 2005.

Posted by jackmixner at 09:31 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Seven step process for formulating technology strategy (Porter, pages 198-200):

1. Identify all the distinct technologies and sub-technologies in the value chain.
2. Identify potentially relevant technologies in other industries or under scientific development.
3. Determine the likely path of change of key technologies.
4. Determine which technologies and potential technological changes are most significant for competitive advantage and industry structure.
5. Assess a firm's relative capabilities in important technologies and the cost of making improvements.
6. Select a technology strategy, encompassing all important technologies, that reinforces the firm's overall competitive strategy.
7. Reinforce business unit technology strategies at the corporate level.

One last overlay is important, that of price and differentiation.

If you will focus on a broad market decide if you will lead on costs, or differentiate your product (Porter, 12).

If, however, you will focus on a narrow market, you have the same choices of differentiation and cost, but in a focused manner. 

References

Porter, Michael E. Competitive Advantage. Creating and Sustaining Superior Performance. Free Press. 1985.

Posted by jackmixner at 09:08 AM | Permalink

Copyright Jack Mixner.    714 449 1040.      www.mixnerstrategy.com

In 2001, Jim Kilts described "The Circle of Doom" in a speech at the University of Chicago Graduate School of Business (and following his turn-arounds at Kraft and Nabisco) "as occurring when companies

1. Set unreasonably high growth targets,
2. Throw money at problems and
3. Raise prices in order to grow profits in the fae of falling sales (McGlothlin)."

Kilts said he would fight problems at Gillette, his latest assignment, with four critical success factors:

• Integrity,
• Enthusiasm,
• Action and
• Understanding.

In 2004, after ten of his fourteen senior managers had left Gillette (Brooker), Kilts was on track to straighten things out at Gillette. Sales were growing and working capital as a per centage of sales was down. He had implemented a quarterly goal/results grading system, stopped trade loading at quarter-end and overhauled financial reporting (Brooker).

In 2007, after selling Gillette profitably to P&G, Kilts published a book. His philosophy hasn't changed. The section titles:

• Fundamentals, Attitudes, and People Matter 
• Leadership Matters
• The Future Matters
• Doing the Right Things Matters (Kilts, vii).

Strategic Implications

Kilts had a vision of what management was all about all along. He applied it in Kraft, Nabisco, and, finally, in Gillette.

There's something to having a vision of what is right and sticking to it. It certainly worked for Kilts.

Roman makes an interesting comment: the test of a business book is whether it is useful to junior managers. This one is.

Reference

Brooker, Katrina. Jim Kilts is an Old-School Curmudgeon. Fortune. 24 December 2002. http://money.cnn.com/magazines/fortune/fortune_archive/2002/12/30/334571/index.htm

Kilts, James M. with John F. Manfredi and Robert L. Lorber. Doing What Matters. Crown Business. 2007.

McGlothlin, Ryan. Escaping the Circle of Doom. James Kilts Enlightens GSB on the Art of the Turnaround. http://www.chibus.com/home/index.cfm?event=displayArticlePrinterFriendly&uStory_id=cb5f4f9f-acd7-4f5b-89e2-ae170df64b36

Roman, Kenneth. The Man Who Sharpened Gillette. New York Times. 5 September 2007.  http://online.wsj.com/public/article/SB118894391680217370.html

Posted by jackmixner at 04:23 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

When you are hiring or promoting a marketing person do you hire a generalist or specialist? Focus on intuition or analytics? Promote from within the organization - or from outside?

All of the above.

How to do it (Hartner, 3)?

• Foster curiosity about new mediums. Force folks to learn about new ways of doing things, even if it creates new alliances within the marketing company or to agencies with e-experience.
• Don't do creative work on an island. Customers, both upstream and downstream, have to participate in planning and execution. Innovation is included, along integration with all the functions, on the floor is necessary.
• Training is part of it. P&G brings in media-friendly moms for senior management to watch in their daily media activities.

Realize new attributes of marketing (Hartner, 6):

• Consumers are watching on media channels dominated not by advertisers but by consumers themselves.
• Media strategy is the center of marketing strategy.
• Try new metrics. Experiment. Look for lower costs.
• Marketing's definition has changed. It includes such new things as user-generated content, and complex relationship management.
• New capabilities - from outside, maybe - are strengths that, while short-lasting perhaps, build value over time.

Reference

Hartner, Gregor, Edward Landry, and Andrew Tipping. The New Complete Marketer. strategy+business. 1 October 2007. http://www.strategy-business.com/press/article/07308?gko=50ccb-1876-26316006

Posted by jackmixner at 03:42 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

NBC decided not to re-sign its December-outdating contract with Apple's iTunes. The reason? NBC wants to charge more than the $1.99 Apple charges. 251% more as a matter of fact, all the way to $4.99 per episode (Barnes).

NBC is ranked in fourth place among broadcast networks. Clearly, it needs all the help it can get.

Looks to me like NBC ought to re-consider. New theories on strategy tip old strategies on their head, saying in effect that increasing value and lowering prices go together (Kim et al. 16.). It used to be that increased value allowed you to increase your prices. Not any more. While NBC is producing its new shows, it can't keep its eyes off the expense total. If it can't cut expenses, it needs to re-examine what it is selling.

A re-examination of NBC's current programming with an eye toward increasing value while reducing expenses, and thus price, is in order.

Let's think this through a bit. What is left out of the discussion (Hirschberg)?

• Apple doesn't do anything to help artists, except sell their work.
• Apple only wants to sell tracks for $0.99, far less than the studios want.
• The studios claim Apple is leaving money on the table. Why is a new release by a major artist worth the same as a track recorded in the thirties by an unknown band?
• The studios used to do a lot of hand holding, something they can no longer afford if Apples' pricing structure holds.
• The touring bands are unwilling to share their touring profits with the studios.
• Columbia is looking to using "word-of-mouth" to launch its next album.

Cirque du Soleil re-invented the circus (Kim. 1.) business twenty years ago by dumping the elephants and circus "stars", telling a story, however vague, pitching a high class tent, and losing the vendors in the aisles. Their invention has stood the test of time.

The music industry is begging for the same type of re-invention. Apple could lead if they choose to, but it'll be a stretch. Two things could happen: the industry itself gets real, or a new player with a whole new outlook emerges. I already told you that Apple is likely to win the price war. Let's see who wins long-term. I think it'll be interesting to watch.

References

Barnes, Brooks. Apple Bars New NBC Shows From iTunes. New York Times. 31 August 2007. http://www.nytimes.com/2007/08/31/technology/31cnd-nbc.html?_r=1&ref=technology&oref=slogin

Hirschberg, Lynn. The Music Man. New York Times Magazine. 1 September 2007. http://www.nytimes.com/2007/09/02/magazine/02rubin.t.html?_r=1&oref=slogin 

Kim, W. Chan and Renee Mauborgne. Blue Ocean Strategy. How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Press. 2005.

Posted by jackmixner at 03:17 PM | Permalink

Copyright Jack Mixner.     714 449 1040.      www.mixnerstrategy.com

Reis and Trout had six questions for you regarding your current position in the marketplace (Reis, 193):

1. What position do you own?
2. What position do you want to own?
3. Whom must you outgun?
4. Do you have enough money?
5. Can you stick it out?
6. Do you match your position?

They had you start not from your point of view, but your customer's. A key was to realize that you already owned a space and that moving isn't necessarily as easy as it sounds.

Additionally, the focus was on your competition. You tried to position your organization differently from your competition, to own a different space. Volkswagen entered a new marketplace dominated by entrenched competitors with huge, powerful offerings. Their pitch? "Think small." "It stated the Volkswagen position, and it challenged the prospect's assumption that bigger is better (Reis, 55)."

There's a new way to do this that you might consider, however, Value Innovation (Kim, 12). Innovate to create more value. 

Cirque du Soleil pursued two strategies simultaneously, differentiation and low cost. It innovated by making the traditional circus theatrical. It focused on cost by eliminating all the "must-haves" from the circus experience.

• No expensive actor clowns.
• No elephants.
• No rents for big venues.
• It returned to a carefully constructed tent with not three rings, but one.
• It introduced a theme to the performance. A new market opened up, adults willing to attend the circus.
• Cirque kept the clowns (but without a starring clown), kept the acrobats (but reduced their roles) and made the evening almost spiritual (Kim, 13-15).

The result? In twenty years, Cirque du Soleil grew to the size of Ringling Bros. and Barnum & Bailey circus. It took Ringling one hundred years to reach that level.  

Reference

Kim, W. Chan and Renee Mauborgne. Blue Ocean Strategy. How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Press. 2005.

Reis, Al and Jack Trout. Positioning: The Battle for Your Mind. Warner Books. 1981.

Posted by jackmixner at 03:46 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Ouchi defined a time. It was the early eighties. Japan hovered on the horizon. American business was convinced it couldn't compete and needed to understand what was right about its business practices - and what needed to change. Things are a little different today, but the basic constructs still work.

Ouchi's thirteen step process to understand your company (Ouchi, 99-127):

1. Understand what a Z organization is (loosely, life long employment, slow progress and evaluation, meandering promotion schemes) and your role in it.
2. Audit your company's philosophy.
3. Define the desired management philosophy and involve the company leader.
4. Implement the philosophy by creating structures and incentives.
5. Develop interpersonal skills
6. Test yourself and the system - after changes have been announced, test to see if they are being implemented.
7. Involve the union
8. Stabilize employment - this was the eighties. Japan was offering lifetime employment in return for a commitment.
9. Decide on a system for slow evaluation and promotion - the key word is slow. Advancement, even initial advance, was measured in decades.
10. Broaden career path development - specialization was not the watch word. Moving middle managers from assignment to assignment at the same level broadened skills, and commitment.
11. Preparing for implementation the the first level - everything above focused on managers and professionals. Only now did the focus shift to production and clerical employees. Invitation for participation had to come from above.
12. Seek out areas to implement participation - "if equitable reward, job stability, and inter-departmental coordination have been achieved, then the commitment and the productivity of hourly employees will already have begun to rise (Ouchi, 126)."
13. Permit the development of wholistic relationships - " ... bring superiors and subordinates together as temporary equals (Ouchi, 127) ..."

A first, quick read finds Ouchi dated and irrelevant, especially when you remember that Japan is starting to abandon the concepts of life-long employment and the dedication it fosters.

The goals are good. Process has changed. Re-evaluating what your company does to foster enthusiasm over the long-term makes sense. 

Reference

Ouchi, William. Theory Z. How American Business Can Meet the Japanese Challenge. Addison-Wesley Publishing Company. 1981.

Posted by jackmixner at 10:30 AM | Permalink

Copyright Jack Mixner.     714 449 1040.    www.mixnerstrategy.com

You could distill the Apple design story into one word (or two, to be kind): Steven Jobs.

More detail (Turner) on Apple:

• Spends 15 to 20 percent of design time on concept (a huge amount relative to other firms)
• Looks for new processes-and adopt them even if it takes more time.
• If it isn't quite right keeps working until it is right.
• Achieves precise design parameters-it shows.
• Listens to the design teams-democracy has its usefulness, of course, but so does focus.
• Simple is better than complex-dropping features is OK.

Is the focus on design worth it? That's a good question. Apple is still here after all these years, and growing. It's working.

Reference

Turner, Daniel. The Secret of Apple Design. The inside (sort 0f) story of why Apple's industrial-design machine has been so successful. Technology Review. 1 May 2007. https://www.technologyreview.com/Biztech/18621/

Posted by jackmixner at 03:55 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Forward looking investors can look to these attributes in the changing CEO landscape (Lucier, 47-48):

• CEOs are more likely to leave prematurely.
• CEOs who exit via a merger or buyout deliver the best performance for investors. 
• Boards are looking at future performance.
• Independent Chairmen (where they didn't ascend from being CEO or are closely related to the CEO in some way) are best performers.

If yours is a challenged market, looking for a merger or buyout may provide the best likelihood of long-term, positive financial performance. 

Inclusiveness of the Board in company decision making is new - and a good sign for investors.

Reference

Lucier, Chuck, Steven Wheeler, and Rolf Habbel. The Era of the Inclusive Leader. As turnover levels off, our annual CEO succession study shows chief executives and their boards adopting new survival strategies. strategy+business. Summer 2007. http://www.strategy-business.com/press/article/07205?gko=04dd3-1876-26242394

Posted by jackmixner at 03:40 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

We've talked about company training before (Mixner). 

Now more ways to ensure training on strategy works:

• Use insiders - not outsiders - to do the training (Welch, 13 Aug).
• Don't let your company university be a dumping ground for folks who can be spared for a couple of weeks.
• Make the university a bonus for superior performance. Leaders and HR pick attendees. 

Final observation: Deloitte says to use insiders, yes. They also say to use senior executives, the higher the better (Deloitte, 7).

References

Deloitte. Alligned at the Top. Deloitte. 2007.

Mixner, Jack. Post Neutron Jack. http://mixnerstrategy.com/blog/2007/05/post_neutron_jack.html

Welch, Jack with John A. Byrne. Jack Straight From the Gut. Warner Business Books. 2001.

Welch, Jack and Suzy. Ideas The Welch Way. BusinessWeek. 13 August 2007. 92.

Posted by jackmixner at 08:56 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Many books have been written about Secretariat, the Triple Crown winner. Statistically, his times in each of the three races have never been equaled which, of course, is pretty cool by itself. Scanlan spent some time reworking the story, a story which was supposed to be all about a racehorse and ended up being about a racehorse and its groom, Edward "Shorty" Sweat. The key point was that Sweat was forgotten in the mix of horse-owner-trainer-jockey, and he deserved to be remembered because it was as much his effort as anyone else's that helped Secretariat succeed.

This is all well and good (in fact, the story is quite amazing). What's it got to do with management?

Secretariat was an asset that needed to be managed. In large measure, Sweat managed Secretariat. He did everything for the horse outside the very rare moments on the track itself. The owner, the trainer and the jockey all listened to, and depended on, the groom.

I realize I could push this simile too hard, but this is almost like the way your customer service team handles your biggest customers. While you like to think you are managing your customer relationships, it is probably your team, out in the trenches, that is more important in helping your customer relationships thrive.

The implication?

• Know your customer service team.
• Train your customer service team to communicate with clients - and to communicate with you. Their loyalty to you and your company's clients is probably remarkable. What have you done lately to deserve that loyalty? Sweat apparently was under-compensated for his work and the author tries to make a case that he eventually died bitter over his treatment. I don't think so. I think he died proud of the his accomplishments with Secretariat.
• Pride gets tricky, I know, but what have you done lately to foster the pride your team inherently has for a job well done?

Strategically, the issues include Values specifically, but they also effect Vision and Mission. Having given the three some thought - and including your team in the process - goes a long way toward leveraging team, training and pride in your company's success.

Reference

Scanlan, Lawrence. The Horse God Build. The Untold Story of Secretariat, the World's Greatest Racehorse. St. Martin's Press. 2007.

Posted by jackmixner at 08:11 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Scenario planning requires that you examine totally outlandish possibilities.

How about this one? Hoover Dam's Lake Mead is pumped dry.

How will that effect your business?

Sceanario Planning is one solution, especially for capital intensive companies that need to plan farther in advance. Governmental entities also need to have a plan.

The Board of Directors requires management to identify unlikely events like running out of water and plan for them with strategies and action plans. Minimal investments are made. The plans along with some high-level activities, however, remain in place, ready for implementation when the need (like running out of water) arises.

Reference

Mixner, Jack. How Boards Assess Management's Strategy. 17 April 2007. http://mixnerstrategy.com/blog/2007/04/how_boards_assess_managements.html

Terdiman, Danial. A Dry Weather Crisis for Hoover Dam. New York Times. 23 July 2007. http://www.nytimes.com/cnet/CNET_2100-13576_3-6198255.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1185451437-FiCw9YK1OenDVxl9E1sMQQ

Posted by jackmixner at 04:09 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

In a book filled with outrageous suggestions for creating value in a professional services firm (and any other firm, for that matter) Peters lists his favorite books:

• True Professionalism. David Maister. Free Press. 1997.
• Managing the Professional Service Firm. David Maister. Maister & Associates.
• Ogilvy on Advertising. David Ogilvy. Crown. 1983.
• The McKinsey Way. Ethan M. Rasiel. McGraw-Hill. 1983. 
• Education the Refelective Practitioner. Donald A. Schon. Jossey-Bass. 1987.
• Hot Groups. Jean Lipman-Blumen and Harold J. Leavitt. Oxford University Press. 1999.
• Rain Making: The Professional's Guide to Attractin New Clients. Ford Harding. Adama Media. 1994.
• Finding the Winning Edge. Bill Walsh. Sports Publishing. 1998.

The Maister books and Hot Groups are quoted repeatedly.

Key Points:

• Be cool. Create cool organizations. Pick cool clients.
• Think client. Nothing else matters.
• Make every deal a big deal - or don't take it.
• Make changes - revolutions - in every deal.
• Your mission is important - to your company, and to your division, and yourself.

Reference

Peters, Tom. Reinventing Work The Professional Service Firm 50. Borzoi Book. 1999.

Posted by jackmixner at 04:26 PM | Permalink

Copyright Jack Mixner.     714 449 1040.    www.mixnerstrategy.com

Are leaders born, or can you develop them with training? Your point of view on the question might actually be an indicator of your success as a leader (Heath).

Born leaders are static, unchanging, avoid challenges, don't try as hard, and are threatened by negative feedback. Trainable leaders believe intelligence can be developed, "like muscles (Heath, 62)". They test themselves more, accept criticism, and perceive hard work as a "path to mastery".

Now the key point. If you show your team the facts and intervene in their thinking, they will improve as leaders. A couple steps in the process:

1. Spend more time training your team than evaluating it.
2. Turn performance reviews in coaching sessions.

Help your team to believe that "Your brain is a muscle that can be developed over time. A baby gets smarter as it learns - so can you. Everything is hard before it gets easy - never give up because you don't master something immediately." 

Reference

Heath, Chip and Dan Heath. Made to Stick. Leadership is a Muscle. How is your attitude about your abilities affecting your success? Fast Company. July/August 2007. 62.  http://www.fastcompany.com/magazine/117/column-made-to-stick.html

Posted by jackmixner at 04:35 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

We all know about Pac-Man's phenomenal success.

Here's what we didn't know:

1. Pac-Man was created to entice girls to play more video games, shifting Japanese game arcades and the whole game experience from the boy-dominated, dark, sinister war battles, to couples and girl-oriented games focused not on boyfriends or fashion but on - you guessed it - food and eating (Kelts, 110).
2. The creator of Pac-Man got, basically, nothing more than a job for his creation, something that would have been worth millions in the West. "You work for a company all your life in Japan (Kelts, 112)." They provide for you. That's the theory, any way, something that is changing.
3. Anime played a role: the ghosts (both evil and cute) were modeled on Obakeno QTaro, the famous anime ghost. You didn't control a tank or a car - you controlled a person. That was a first in video games.

Implications for Today

1. The Japanese government has realized that intellectual property (think Pac-Man or other electronics or software) creates value.
2. That value requires compensation. (Some creators have taken to suing their employers. The inventor of the blue laser received more than $100 million for his work when he sued after relocating to America.)
3. Intellectual property for engineered products can be a strategy. Sony dominates electronics because it dominated older manufacturers with new designs. Toyota and Honda dominated American manufacturers with engineering. That has been the point. All the products from Japan, until now, have been engineered, consumer products.
4. Now a new point: intellectual property for ideas can be a strategy as well. Japan has a huge investment in anime (sophisticated cartoons different than American favorites) that is exportable. Exports to date have not favored Japan: the American partner for Pokemon made millions for commercializing the idea - the Japanese received very little (Kelts, 108). That will change as Japanese animators and marketing companies gain confidence in the American market.
5. Innocuous creations like Hello Kitty seem valueless until you add up the many, many products launched using the icon. The branding technology of anime is exportable - and very, very profitable.

There is an opportunity for intellectual for ideas to exceed the value created in past waves of Japanese innovation. We say the Japanese can't innovate, that they'll never be as innovative as we are with movies and their tie-ins, for instance. Witness Star Wars and all its tie-ins. We forget that the hundred or so Star Wars characters are exceeded by the hundreds and hundreds of Pokemon characters. When Japanese animators attack on their own, without local representation, the ensuing battles will be fierce - and very profitable.

Reference

Kelts, Roland. Japanamerica How Japanese Pop Culture Has Invded the U. S. Palgrave Macmillan. 2006.

Posted by jackmixner at 12:32 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

The Crazy Horse/Custer story has been re-told many times. When I found new research on Crazy Horse, I was dubious about if any new content was available, especially when I discovered a new, British writer who owned a bookshop. However, Bray is readable, and applicable to the discourse on strategy because he takes the time to summarize largely underutilized material from Crazy Horse's time. Over time, Crazy Horse evolved his strategy to meet changing threats from the US Army. For instance, he evolved a strategies for dealing with mounted horse calvaries early on. Then, recognizing that infantry was now in the field with a willingness to dig in and fight, not flee or become disorganized, he learned over the ten years or so of the Indian Wars, to concentrate his fire power to engage disciplined, massed troops.

Two key points:

• Crazy Horse stood off and watched battles, decided on where key involvement was necessary, and then led his warriors into battle himself. He waited until he understood the action and then focused on isolating troop units and then breaking them piecemeal (Bray, 209).
• Crazy Horse watched for the moment of "critical imbalance".

At Little Big Horn, he did not engage his own group in battle until almost two hours after the battle had begun, as it was not yet crucial that he be involved. He dawdled putting on his gear, driving even his closest braves to distraction. As Custer was trying to have an overwhelming victory by preventing women and children from leaving the area, Crazy Horse was able to focus on Custer's areas of greatest weakness. When he did engage, he led from the front and focused on troops at their "moment of critical imbalance".

The rout at Little Big Horn began, for instance, during a short period of time when troopers were trying to disengage, mount their horses, and move to consolidate two units that have been broken already. Keeping the units separate allowed Crazy Horse to focus on on group then the other with a smaller force than the summed units of the Army.

Is there a business tactic in there somewhere? One good one is to be patient until it is clear what your competitors are doing. Attack at the weak points. Pretty obvious, yes, but a forgotten step more and more in these times of instant response to every threat.

Reference

Bray, Kingsley M. Crazy Horse A Lakota Life. University of Oklahoma Press. 2006.

Posted by jackmixner at 04:59 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

A re-read of the history of the Enron scandal (Smith) points to some key ideas I'll be working with in my clients:

• Simple is better than complex, especially when it comes to finance.
• Too many layers of management makes accountability and clarity less possible.
• Redefining terms, especially on a balance sheet, makes no sense, ultimately.
• When finance drives the operation, pause to reflect if things are going correctly.
• In a stressed marketplace, stressed deals are likely to sour, quickly.
• Living for the next report to Wall Street is not a wonderful way to manage a company.

Reference

Smith, Rbecca and John R. Emshwiller. 24 Days. How Two Wall Street Journal Reporters Uncovered the Lies That Destroyed Faith in Corporate America. HarperBusiness. 2003.

Posted by jackmixner at 04:28 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Six buttons to push when trying to create buzz for your product (Hughes, 29):

1. Push the taboo button to start conversations
2. Push the unusual button to start conversations
3. Push the outrageous button to start conversations
4. Push the hilarious button to start conversations
5. Push the remarkable button to start conversations
6. Push the secrets button to start conversations.

Apple just finished the ramp-up for the launch of their new iPhone. Let's see how they did it.

1. They made it secret - no one could touch one until June 29, the launch date.
2. They made it unusual - it has features that other phones and appliances have, just not all in one place like the iPhone.
3. They made it outrageous in its own way - the price is three or four times higher that other similar phones, without the likelihood of reduced pricing anytime soon.

Remarkable? Let's count the ways.

1. One, you can get it only in two places, Apple stores, and AT&T stores.
2. You had to wait.
3. The screen is absolutely different from anything else on the market.
4. Early on, the Asian competitors weren't worried. After launch, they realized Apple might have something. The list goes on.
5. No one knew what the components in the phone were til the launch.
6. Stock prices of most suppliers jumped when people tore their phones apart and announced the content list of chips and electronics.
7. And funny? Well, a lot of people camped out to be first in line to buy a phone. But the experience binds folks closer to their phones.

What did Apple miss?

• Not much taboo in the launch story. That's not the Apple way. Probably, of the whole list, I'll stay away from it as well.

Interesting success story. It will be fun to watch how it all plays out over time.

Reference

Hughes, Mark. Buzzmarketing. Get People to Talk About Your Stuff. Portfolio. 2005.

Posted by jackmixner at 03:42 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Recognize That You Have a Problem

Let's set the stage. Boeing had dominated the American, and later worldwide, commercial airframe market for a very long time. Deregulation in the 70s, however, was starting to effect profits, as airlines were irrationally competing on price, not value. Boeing felt their pain as suddenly price was very much a part of the discussion when it came time to buy new airplanes. Additionally, Boeing had a serious competitor in the form of Airbus.

By the early 90s, Boeing was experiencing huge cost over-runs (to the tune of $6 billion) in the creation of a new airplane, the 777 (Newhouse, 116 to 122). Boeing wasted money on the creation of not one, but two, production lines for the 777 when just one probably would have been just fine. Realizing their technologies were stuck in the late 40s, Boeing intended to upgrade processes, but they weren't doing a very good job of it.

Arrogantly, Boeing supposed that they were the best manufacturer in the world. They were contributing the biggest portion of exports to the American GDP, weren't they? At the same time, they realized that things weren't working as well as they could have. The Gulf War recession in the early 90s forced them to face facts. They began to search for a solution. Some even decided that, wishes aside, Boeing no longer was even world class.

Reinvention became the watchword of the day. A quick solution would be nice. Hiring a local consultant, Boeing senior management began an examination of the Japanese manufacturing system. They read books. They hired a consultant. They actually visited manufacturing plants in Japan, all in an effort that would take years to fulfill the promise of increased productivity and profits.

The first step was recognizing they had a problem. Yes, the fix took years and depended on ultimate missteps by Airbus a decade later. And, yes, Boeing would continue to make missteps - the factory floor melt-down in the late 90s comes to mind. But they took the first step, that of realizing that things weren't right.

Is Bigger Better?

When I used to make pharmaceuticals for a big manufacturer, some of the products were unprofitable, produced solely to "expand the catalog" and get us into the biggest hospitals with our myriad of items for every department. Boeing and Airbus were forced to think the same way. Airbus decided that in order to compete successfully with Boeing, it had to match every plane in the Boeing line-up, including a mega-airplane like the 747 but with new technologies allowing less expensive operation and longer flights. Boeing, Airbus and other manufacturers held discussions in the 90s that pointed to the need and tried to share the expense. Boeing pulled out, but Airbus continued in development of what ultimately would be called the A380. Essentially, Airbus bet that after a long and expensive development period, the market would applaud the big jet.

Boeing dithered under fierce management battles between the engineers who represented the past and "bean-counters" who represented profitability (Newhouse, 154). They announced a new plane, the Sonic Cruiser, that didn't really please anyone and would likely be unprofitable. Some said the announcement was made only to confuse the marketplace and to make Airbus hesitate midway through its investment in the A380.

After Airbus' commitment to the huge A380 was complete, Boeing recognized that the market might have changed and placed its bet on a new technology airplane made lighter and easier to construct by its largely composite construction. For years, Boeing had been following Airbus in technology. Now they leapfrogged them with an entirely new plane. Boeing also announced a "good-enough" upgrade to the 747 that might steal some of the steam from Airbus' A380 engine.

The battle is still going on. We will have to wait to see whose investment made the most sense.

Train, Train, Train

Jack Welch, during his management years at GE, capitalized on the expansion of the GE Crotonville training facility to train senior level executives who could not only follow, but lead while problem-solving and expanding the company.

While it is still not clear whether Boeing's purchase of McDonnel Douglas made sense, one good thing came of the merger. The new CEO, Harry Stonecipher, installed a management institute at Boeing (Newhouse, 216) that mimicked Welch's at GE. Professors taught the courses. Only successful managers - or the ones earmarked for leadership -could attend.

Three Key Points for Strategy

1. Recognize that you have a problem.
2. Decide if bigger is really better.
3. Training is part of the mix.

References

Newhouse, John. Boeing versus Airbus The Inside Story of the Greatest International Competition in Business. Alfred A. Knopf. 2007.

Posted by jackmixner at 11:47 AM | Permalink

Copyright Jack Mixner.     714 449 1040.    www.mixnerstrategy.com

So much is happening regarding the effects of global warming, an infrastructure dependent company might want to include a dialog - perhaps even a debate - at the Board level to decide how the different possibilities might effect future growth. Many companies, from the highest tech to the mundane will probably profit from the dialog as well.

Which issues will effect your company, and in what order?

• Water
• State courts in California block water deliveries to Central Valley and Southern California (Lowe, M7).
• New communities put on hold when unable to prove availability of water supplies.
• Land use policy is shifting toward no growth from rapid growth.
• Power
• Heat waves (as much as eight degree jump in average temperatures projected) and power usage spikes - and brown-outs - become the norm. While residential locations will be first effected, industrial users will be quickly effected, as well.
• This relates to green issues, as much of the power generated in the US is sourced from coal and other carbon based supplies.
• It looks to me like the "protection" claimed from producing energy from natural gas will diminish over time.
• Greenhouse Gas Emissions
• New California laws will probably address water, transportation, greenhouse gas emissions, land use and economic development.
• Land Use
• Thirty-one inch rise in sea-level will change ocean-front development specifications, flood plains, insurance companies and zoning rules.
• Ambient Temperature
• Forecast eight degree rise in ambient temperature will effect productivity and livability of communities and businesses nation-wide.

References

Lowe, Cary. California steamin'. Los Angeles Times. 19 June 2007. M7. http://www.latimes.com/news/opinion/commentary/la-op-lowe10jun10,1,7400184.story

Raynor, Michael E. The Strategy Paradox: Why Committing to Success Leads to Failure (And What to Do About It). Currency/Doubleday. 2007.

Posted by jackmixner at 07:33 AM | Permalink

Copyright Jack Mixner.    714 449 1040.    www.mixnerstrategy.com

Four assumptions (perhaps, misassumptions) about profit centers and decentralization (Henderson, 282):

1. Implication that absolute level of profit is a measure of profit center management's current performance.
2. Profit can be the measure of divisional performance in a multiunit company.
3. Improving the profit center's profits optimizes the the corporation's profit.
4. Profit centers can be measured and evaluated as if they were separate companies.

This implies that of the two extremes for corporate management of divisions, centralization and decentralization, decentralization is better, when in reality it is better to balance the two.

The first step in solving the riddle is to carefully define an explicit corporate strategy. Corporate strategy, corporate policy, and corporate organization, including the profit centers/divisions, are inseparable (Henderson, 283). Devise a strategy. Then devise the corporate structure.

Each profit center maximizes its own value system. Corporate optimizes the combination of profit centers. This implies two approaches for corporate management: Corporate can closely supervise the operation and internal policy of the profit center, or allow the division to operate on its own. Corporate sometimes decreases the profitability in some centers to optimize the  overall profit of corporate.

Centralization or decentralization implies seven possible degrees of "freedom" (Henderson, 284):

1. Parent is investment portfolio custodian, signifying least local control.
2. Parent acts as Board of Directors for individual operations.
3. Parent additionally provides financial support.
4. Parent actively participates in strategy development.
5. Parent coordinates activity in some key activity like the sales organization.
6. Parent provides detailed policy direction of operations in all activities.
7. Parent makes key operating decisions, for total corporate control.

Decentralization commonalities (Henderson, 284):

• Centralized policy based upon strategy.
• Decentralized operation administration based on complex, not simple, standards.
• Mechanisms of review and communication keep strategy and operating objectives related.
• Quality leadership based upon consensus on strategy and operating standards.

Consensus on strategy and operation standards out in the divisions are seemingly the keys for decentralization to work. Key words: consensus and local standards go together.

One last consideration on decentralization is in order. If we assume traditional organizations determine structure from the top, we also assume that central management aggregates key decisions for senior officers to decide.

Of course, there are other models like the network organization (Hixon, 289). In the networked organization, teams form to solve particular problems, then move on when the problem is resolved. The organization doesn't control so much as empower people to get the job done. The problem here is that networks can't take advantage of scale or perform massive tasks.

The probable best solution is to combine the centralized/decentralized discussion with networks. This means corporate forms networks to solve problems while the decentralized organization continues to function under corporate strategy.

References

Henderson, Bruce D. Profit Centers and Decentralized Management. 1968. In Stern et al. 282.

Hixon, Todd L. Network Organizations. In Stern et al. 289.

Stern, Carl W. and Michael S. Deimler. The Boston Consulting Group on Strategy. John Wiley & Sons. 2006.

Posted by jackmixner at 02:15 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

You - and your company - get to choose.

• You can be good at operations.
• You can be good at the products you produce.
• You can get to know your customer. 

How do you do it (Treacy, page 20)?

1. Provide the best offering in the marketplace by excelling in a specific dimension of value.
2. Maintain threshold standards on other dimensions of value.
3. Dominate your market by improving value year after year.
4. Build a well-tuned operating model dedicated to delivering unmatched value.

When I decided to read through Treacy's book, I first realized that it was 90s information. One of the examples he was using, Home Depot, was held out as one of the best performers in the marketplace because of their level of customer service. Times have changed. Lowe's has overtaken Home Depot in most of their common markets. Management has changed. Home Depot has more a feeling of a big-box retailer that a value conscious leader.

I'm not sure that changes the message. The four key points still apply. Pick a place to excel. Keep on the path. Watch for competitors, gauge what they are up to. Maintain your threshold standards in all the dimensions of value. It never lets up.

Reference

Treacy, Michael and Fred Wiersema. The Discipline of Market Leaders. Addison-Wesley Publishing Company. 1995.

Posted by jackmixner at 04:00 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

New CEOs face the decision of whether to create a traditional strategic plan or a scenario plan. Speed (or actually, slowness)  sometimes makes both processes ineffective. Unless the facilitator is careful, everyone isn't involved, or doesn't learn enough about the dynamics of the current situation. War-gaming can fill the void. It helps to (Kurtz, 13):

• Identify stronger and weaker players in the firm's markets
• Experiment with tactics that could improve market share.

Key lessons in a war-game (Kurtz, 20):

• Include a broad range of participants in the process
• Role playing is part of the process. All the different sides have to truly take on their roles
• The war-game is maybe 20 percent of the work load. Extensive research is involved beforehand.
• Follow-up the war-game with feedback to the participants about what actions were taken as a result of the activity.

Reference

Kurtz, Jay. "Business wargaming: simulations guide crucial strategy decisions. Strategy & Leadership. Vol. 31. No. 6. 2003. 12-21.

Posted by jackmixner at 10:47 AM | Permalink

Copyright Jack Mixner.    714 449 1040.     www.mixnerstratgy.com

What with Al Gore's now thirty year old slide show, his book and his movie, everybody knows about his plans for the environment.

The good thing for all of us is that some businesses are starting to do something about it:

• Wal-Mart is making changes in its product and marketing plans to support green
• GE, DuPont and a series of utilities have come together to reduce greenhouse emmissions by 30 percent over the next 15 years.
• Republicans are starting to support tough new legislation
• The Chinese government is starting to change direction of its green policy, including a carbon tax.

It seems Gore has changed. He has found a message. His attitude is new, a pugnacity not really there before, at least in public.

Looks to me like someone had better become pugnacious on the environment.

Reference

Traub, James. Enounters Al Gore Has Big Plans. New York Times. http://www.nytimes.com/2007/05/20/magazine/20wwln-gore-t.html?_r=2&pagewanted=all&oref=slogin

Posted by jackmixner at 10:01 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Apple made a series of decisions that helped the iPod succeed (Hindo, 107):

• It acquired, rather than wrote, the software that becaome iTunes
• Jobs required a nine month time frame for the iPod's development, forcing strict alignmet to a time schedule.
• Apple focused internal attention on the iPod.

The sum of all these steps? Apple reduced its risks. It "shaped" its risks to craft a winning strategy. Basic questions need answers (Hindo, 107):

• What if the big project fails?
• What if customers preferences change unpredictably?
• What happens if you have decide to go one way - or another?
• What happens if you perceive an unbeatable competitor?
• How do you avoid overconfidence?
• How do you avoid competition?
• What about stagnation?

Reducing risk is nice. Avoiding it is better.

Reference

Hindo, Brian. Don't Worry, Be Ready. BusinessWeek. 28 May 2007. 107. http://www.businessweek.com/magazine/content/07_22/b4036099.htm?chan=search

Posted by jackmixner at 09:39 AM | Permalink

Copyright Jack Mixner.     714 449 1040.      www.mixnerstrategy.com

Toll Brothers announced reduced profits driven by charges to write down protperty valus. It expects to deliver between 6,100 and 6,900 homes this year. The firm is carrying65,800 lots, down from 91,200, down 28 percent from the high.

Reference

Toll Brothers' Earnings Tumble. 24 May 2007. New York Times.  http://www.nytimes.com/aponline/business/AP-Earns-Toll-Brothers.html?_r=1&ref=business&oref=slogin

Posted by jackmixner at 09:25 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

I have come to admire some of the sales methodologies, especially the ones that help me listen better to a client early on in a dialog about what the client needs. Given the chance, I'd rather have listened too much than talked too much. Which brings me to a dialog, perhaps with you.

You can help me do a better job helping you. I'll lay out a simple program I am using to ascertain your needs. We can use it, if it makes sense, for us to reach agreement on your needs. If we can understand what you need, we're more likely to fulfill those needs and, hopefully, make you happy and your company more profitable (or whatever measure you use to measure success).

Early in our discussions, we need to understand the answers to two questions:

1. What is your current situation?
2. What is your desired situation?

The difference is how we might be able to work together.

Your homework for our first meeting is "simple".

Try to lay out for me your current situation. Then try to tell me your desired situation. I'm not worried at all about how long it takes us to figure out the answers. It could take several meetings. However, if you give it some thought in advance, we'll be farther down the road toward helping you.

Only after we have a pretty good answer to the questions will we start to figure out possible solutions. Then we'll have a pretty good idea how we might work together.

So, what is your current situation? And, what is your desired situation?

Key word: Discovery Agreement

Reference

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

Posted by jackmixner at 09:53 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

OCBC hosted Henry Samueli, CTO for Broadcom, for an interview by Larry Buster of First American Title.

Samueli's key points about starting Broadcom:

• Timing was perfect. Samueli had finished his PhD. at UCLA, gone to work for TRW for five years, and returned to UCLA as a professor. He loved teaching and published like mad. The papers he was writing attracted local companies who told him they wanted to invest in his research.
• With one of his grad students, Samueli started Broadcom in 1991 to take advantage of a rapidly growing market. Early chip set products were for TV set top boxes for cable.
• He was naive about business. Never had a business course. Tried to just "do the right thing". Never took VC investment. Was able to grow at his own pace because there were no outside investors.
• At Broadcom,  because no VC investment to push them along, they never over-hired. They broke even every year, at least. They were able to hire the best and the brightest. The UC system was crucial to their success.
• In 1998, went public. Today, they continually need fresh blood of newly minted engineers with current technology experience.
• No fab production is done state-side. All off-shore because of the expense of a fab factory ($3 billion and rising). Even TI is outsourcing because of the expenses.
• Not having a fab allowed them to spend 70% of R&D budget on design engineers, not production engineers.

About the Ducks:

• Wasn't an avid fan, but now is.
• Hockey has become his favorite sport.
• Bought the arena from the bankrupt Ogden as a "service to the community".
• Lose money every year on the Ducks. The play is for long term equity growth.
• Bought the Ducks after long dialog. Disney was negotiating with outside entities who would likely have moved the Ducks from Anaheim, losing the arena its biggest tenant.
• Ultimate goal: annual breakeven.

Personal:

•  Met his wife at a synagogue dance - she invited him to dance.

Links

Orange County Business Council. www.ocbc.org

Broadcom Corporation. http://www.broadcom.com/

Posted by jackmixner at 04:01 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

You bought that new division to maximize the value of your firm.  Let's assume, for the sake of discussion, these things:

• The new acquisition is in the same industry as your existing businesses
• You're not a holding company
• You don't have a lot of time - and neither does the new division
• You want to maximize the value of the new division while
• Increasing the return on your invested capital.

Let's start the discussion with two words, finance and behavior.

Finance includes the quantifiables like income, return on investment, gross profit, net profit and other financial measures your might find important at your firm - and in the new division. Finance has a human face in the way interactions occur in the finance departments of the newly merged entities.

Behavior is the way the organization acts when dealing with folks. Obviously, behavior has a human face as well. Since this is a new acquisition, there are five steps that probably describe the scale of interactions between the management and functional teams in both the acquirerer and the acquired.

The five steps in an acuirerer/acquired continuum (Jackson, 96):

1. Ignorance - My way is the only way.
2. Arrogance - My way is the best way.
3. Respect - You have a good way too.
4. Inquiry - Let me learn your way.
5. Building - Let's define what we want and create our way together.

Let's assume you've invested a lot of capital in the new entity and you want to maximize your investment. Maximizing your investment is a level 5 topic. You've defined what you want, at least. You're still unsure how to create a way together.

My advice?

Skip levels one and two. Don't ever assume your way is the only way - or even the best way - to go. Build respect in and with your new division. Listen first. Listen a lot. Learn how they do things. Finally discover a way to work together.

One company recently described to me a bit of its history in building value.

• About five years ago, they scored one of their divisions using the Baldrige Award methodology.
• They found they had deficiencies, including some in strategy.
• To overcome them, they installed a Balanced Scorecard approach to create strategic objectives to measure current progress against.
• Now they want to roll the process into another region and then, ultimately, across the country.

How will they probably begin?

• I'll bet they decide to go back through the whole process, region by region. Doing so will take some time. Time helps address the problems in the Ignorance/Building continuum.
• Training for the team is part of the process.
• So is a open dialog between the main company and each division.
• The focus of the entire process ultimately is on (Jackson, 96):
• Articulation of strategic imperatives,
• Integration of the cultures, and
• Building bridges to the divisions to achieve results.

Some of the folks who are "stuck in the past" will leave. Those who remain will build new divisions that address the past - and the future.

Reference

Jackson, Tim and Liza Spence. Hearts and Minds: The Key to Successful Mergers. Sisk, Michael and Andrew Sambrook, editors. Pages 90 - 100. The Whole Deal Fulfilling the Promise of Acquisitions and Mergers. Booz Allen Hamilton. 2006.

Posted by jackmixner at 08:38 AM | Permalink

Copyright Jack Mixner.    714 449 1040.     www.mixnerstrategy.com

I've been involved in the creation of numerous conferences. They take time. They take money. How about if you could hold a conference with limited investment of time and money?

How about an unconference?

• No formalities. Everyone participates (find a session boring, leave and find one that is interesting).
• No pitching (no selling from the podium).
• Ask questions, anytime (don't make people wait til the PowerPoints are done - in fact, ban PowerPoints - or post them on a blog in advance and update them during the meeting).  
• Post a board out front, on the day of the conference. Let speakers fill in their speech title under a given time on the way in the door. Folks vote with their feet on what they want to see.

What's required?

• High speed WiFi in the conference rooms for publishing notes and material.
• Make the conference website a wiki.
• Encourage networking during the sessions.

Who's doing it?

• Web 2.0 is holding their conferences using instant conferences
• In Paris, they held three conferences on banking and finance.
• Toronto held a one day event focusing on transportation in their city.
• More in the article, below (Kirsner, 73) ...

Reference

Kirsner, Scott. Take Your PowerPoint and... Cheap, audience-driven "unconferences" are shaking up the convention biz. BusinessWeek. 14 May 2007. 74. http://www.businessweek.com/magazine/content/07_20/b4034080.htm

Posted by jackmixner at 02:31 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Management development at GE needed an up-grade, a $75 million up-grade, and the troops weren't buying it. Why should they? They were enduring lay-offs and reorganizations while Jack Welch remade the company. So Welch had some selling to do. And some building. GE's headquarters is sixty miles north of New York just off the Merritt Parkway. There weren't enough good hotel rooms nearby to house managers from all over the world who GE needed to engage in growing the new GE. So they built new buildings and accommodations. Bricks and mortar were only part of the story. The real goal was an informal, family atmosphere - an excellent atmosphere to match the excellent GE Welch wanted to grow (Welch, 121- 125).

Why have a Crotonville at GE? On the way in, Welch realized he needed to communicate the changes necessary to re-invigorate GE. Training on basic management skills in the 60s had given way to discussions on how to react to the outside environment with its oil crisis and rampant inflation. Things needed to swing back the other way. Welch wanted to focus things back on leadership development, not functional training (Welch, 171). Early topics in 1981 were focusing on being No. 1 or No. 2 in an industry and changing the "feel" of the company. By 1984, the mood shifted to an action learning method using real business issues for managers and executives.

GE used the classes as in-house consultants to management. They focused on current problems management wanted solved like looking for opportunities for growth and how other companies were growing. They strategized on the 4 E's of GE management: amount of personal energy and how to increase it, the ability to energize others, the edge to make yes-no decisions and, finally, the ability to execute on them (Welch, 158). One "ticket to entry" to Crotonville was added later - no one got in unless they had been granted stock options(Welch, 176).

How long did it take to Crotonville really work? Ten years or so. Welch was able to spend lots of time with managers and future managers face-to-face. They ended up talking about evaluating team members, leadership dilemmas each attendee had faced over the last year, the shift to off-shore production, clarifying misunderstandings about current initiatives and, late in Welch's career, the move to the Internet (Welch, 181).

Reference

Welch, Jack with John A. Byrne. Jack Straight From the Gut. Warner Business Books. 2001.

Posted by jackmixner at 02:34 PM | Permalink

Copyright Jack Mixner.     714 49 1040.     www.mixnerstrategy.com

Who knows the customer best in your company? The sales team? Marketing? Engineering?

GE just re-instituted, after long disuse, the position of Chief Marketing Officer (Birchall, C4). Walmart just hired a marketing person to fill the newly created position of head of strategy for its stores.

Focusing on the product won't work anymore. Witness Sony's battles with the iPod. Now teams are focusing on customer needs. Crest didn't look to improve its toothpaste. It created a whole new product, whitening strips.

First steps for you? "Establish systems that let them look at themselves from the perspective of the customer" (Birchall, C4). A good example might be Tesco's launch of new stores in California. Rather than compete with Walmart's huge stores, Tesco is launching a series of drug store sized stores for customers to "top up" their refrigerator in mid-week as opposed to waiting for the weekend for the big visit to Walmart.

Interesting look at a new book.

Reference

Birchall, Jonathan. Business Bookshelf. Los Angeles Times. 29 April 2007. C4.

Joachimsthaler, Erich. Hidden in Plain Sight: How to Find and Execute Your Company's Next Big Growth Strategy. Harvard Business School Press. 2007.

Posted by jackmixner at 01:05 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

In high school, our football team normally beat South River, until Joe Theismann came along. Since then, it has always been a pleasure to think back to the old days and remember Theismann's career in the NFL. As we all know, that career was cut short by a bone-breaking tackle from his blind-side by the New York Giant's Lawrence Taylor.

That tackle later proved to be a defining moment in pro football history. Before, linemen, including left tackles, were basically commodities. After, far after as it turned out, left tackles became the second highest paid professionals on the field, with only the quarterback normally exceeding their compensation.

Why? That's simple. The left tackle protected the quarterback's blind side from fierce rushes by defensemen like Taylor (Lewis, 19).

The point? Protecting your obvious leaders, like quarterbacks, makes sense. In business terms, there aren't any singleton stars. Everyone has to work together. Yep, there are star sales people. Without star support from all over the company, they are meaningless.

Take the time to build a team.

[Inside information: Joe didn't change the pronounciation of his name to rhyme with Heisman until later.]

Reference

Lewis, Michael. The Blind Side Evolution of a Game. W. W. Norton & Company. 2006

Posted by jackmixner at 09:38 AM | Permalink

Copyright Jack Mixner.     714 49 1040.     www.mixnerstrategy.com

Andrew Card, White House Chief of Staff, kept a notebook on possible successors for White House insiders in a possible second term in a Bush White House.

He had fifty-four replacements for himself ranked according to three personality descriptions (Woodward, 355):

The Micromanager - "tight control, someone who would pronounce that no person, no piece of paper could go to the president" without his knowing. 

The Prime Minister - "A Hill operator, deal-cutter, negotiator and policy person who could handle the Congress, the media and the world."

The Facilitator - "doing what the president wanted, keeping the cabinet and staff focused on the president's agenda."

Card saw himself as a facilitator. Looks to me like a CEO would want a blend of all three for her or his manager.

Reference

Woodward, Bob. State of Denial. Bush at War, Part III. Simon & Schuster. 2006.

Posted by jackmixner at 06:23 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com\

Stupid School for new admirals. That's what they called it. It was a school for admirals to learn to manage like modern managers. In the old days, upon ascending to the top, new admirals learned etiquette. In 2000, realizing weaknesses in the group of senior admirals, the Navy instituted a two week training program. It focused on three things (Woodward, 61):

1. What are our top priorities?
2. Who are our best executives - the admirals - and how do we develop them?
3. How do we evaluate our product and our results? 

The biggest problem with the training? They never got beyond discussing priorities and executives. They never had enough time to discuss the product or results.

A good way to evaluate product and results? Some sort of score card might have been in order. Installing a scorecard takes time. How to jump-start the process? Two steps:

1. Create economies of scale through out the organization by sharing or centralizing processes.
2. Centralize knowledge as a resource and then share it entity wide.

We're talking about the Pentagon. Is it possible to share and centralize without stifling the process? That's a good question.

References

Kaplan, Robert S. and David P. Norton. Alignment. Using the Balanced Scorecard to Create Corporate Synergies. Harvard Business School Press. 2006.

Woodward, Bob. State of Denial. Bush at War, Part III. Simon & Schuster. 2006.

Posted by jackmixner at 02:24 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Interesting method for applying operational and strategic planning scorecard methods company wide.

Key points (Kaplan, 169):

• Begin where it makes sense
• Cascade down from the corporate level
• Start in the middle at the business unit level to build a corporate scorecard and map
• Begin enterprise wide at the start OR begin in one or two business units before expanding to the other units.
• Customize the process according to company needs.
• Franchise operations are of necessity top down
• Holding companies are bottom up
• Your company may be a custom case where a business unit proves the method for ultimate flow to the entire organization.

Reference

Kaplan, Robert S. and David P. Norton. Alignment. Using the Bananced Scorecard to Create Corporate Synergies. Harvard Business School Press. 2006.

Posted by jackmixner at 03:02 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

When I first started teaching strategy almost twenty years ago, HR wasn't at the strategy "table" yet. The layoffs in the early nineties and again in the late nineties took care of that. Now, since HR is at the table, they are forced to make things happen and measure results. How do you do that (Sartain, 149-153)?

• Use every occasion to find a way to quantify HR's value.
• Measure versus HR's contribution to the overall company strategic plan.
• Make a case - in writing - for each of HR's business objectives.
• Don't forget customer feedback. I know, now you have to answer the classic question "Who is my customer?"
• Measure results. Metric drive culture? Use fine metrics. Otherwise, back off a little bit.
• Excite your team, and the management team, with your language. "Fill the pipe line with highly qualified talent" versus "I need budget for advertising in the newspaper."
• Brand your department. First step? Get involved in the company-wide branding project. Make sure your voice is heard.

HR is at the strategy table. Now make your voice heard. Don't wait for the next lay-off or hiring spree.

Reference

Sartain, Libby with Martha I. Finney. HR from the Heart. Inspiring Stories and Strategies for Building the People Side of Business. AMACOM. 2003.

Posted by jackmixner at 02:19 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

For the sake of argument, let's assume that it is management's role to create strategies and carry them out. Sensibly, management will seek input from the Board as much as the Board will allow.

Where does that leave the Board?

The Board has another task besides giving lots of input to management. The Board assesses the amount of risk the organization is taking and suggests changes.

Their input might be couched four different ways:

1. Certain strategies are probably certain of producing certain, low, results. Sometimes the Board's role is to push management further into uncertainty (Raynor, 128).
2. The Board can accept the risk profile of management.
3. The Board might suggest - maybe, demand - that management take less risk in terms of a proposed endeavor.
4. Sometimes, the Board will say "Keep the strategy, just mitigate the risk."

How to take advantage of the Board's assessment of the company's risk?

My read is that CEOs and Boards generally operate very congenially together. The CEO takes pains to make sure everyone is on the same page and that there is agreement around the table. Or not.

Maybe a better role is for the CEO and her or his team to poll the Board on their assessment of current strategy compared to the Board's feel on how market place is reacting and likely to react in the future. When I hear "We're all on the same page," I'm happy, of course. No disagreement is good, yes? Maybe.

A CEO's team of necessity commits to a specific strategy. They feel it will be the most successful. All their extra capital is spent on the one strategy. That's pretty risky, isn't it?

A better way might be for the management team to ask the Board for direction on alternatives to the present strategy. The dialog could be quite spirited, as the Board will have input representing their - different - experiences in other markets they are active in. Some of those experiences may foster new ideas and strategies for the company. They become hedges to lessen the risks associated with driving toward a single strategy, a strategy that ultimately may be slightly, or drastically, off course. The hedges suggested by the Board for alternative strategies, even though the investments in them are relatively modest, lessen the "all in one basket" syndrome of a single, forcibly executed and expensive strategy. As the company matures and starts to diversity, the hedge strategies form the basis of new growth.

Reference

Raynor, Michael E. The Strategy Paradox: Why Committing to Success Leads to Failure (And What to Do About It). Currency/Doubleday. 2007.

Posted by jackmixner at 01:18 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Got a new technology that the market really doesn't understand yet? Maybe the best way to introduce it is to create a white paper telling all (Ferrazzi, 237).

A weekend effort probably won't be good enough. If you have some capital, engaging a marketing firm probably makes sense.

What to include?

• Case studies,
• Client testimonials
• Introduce new methodologies by telling, step-by-step how things work
• Work hard to come up with a new name for your new niche.

My father used to write lots of scientific papers during his research career. We used to sit around the dinner table dreaming up new words for the articles. Then we'd track how long it took the scientific press to begin using the words. We thought is was interesting, anyway, and it did work.

Who to show your work to? By now, you have a list of analysts who follow your industry. If you've been doing your homework, they probably know already what you are thinking about. Now use the white paper to fill in the blanks.

Your goal? Get your white paper into the best trade mag in your space. Wouldn't it be nice if it actually ended up in the Wall Street Journal?

References

Ferrazzi, Keith with Tahl Raz. Never Eat Alone and Other Secrets to Success, One Relationship at a Time. Doubleday. 2005.

Posted by jackmixner at 02:13 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Connecting with people is tricky.

Dale Carnegie wrote some of the most successful books on the process. One simple idea? Show up with a smile (Carnegie, 102).

Michael Milken doesn't use a technique. He is genuinely interested in people - and they know it. Want to connect the way he does? He helps people three ways:

• Help them become healthy.
• Help them become wealthy.
• Take a sincere interest in their children (Ferrazzi, 165).

Put the other person first. Listen. Then do something. And follow-up if necessary.

Not bad advice.

Let's test things a bit by having a look at Milken's web-site to see if he supports things in the three areas. The mission statement begins with the words: The Milken Institute is an independent economic think tank whose mission is to improve the lives and economic conditions of people in the US and around the world. The Institute is holding a Conference (the 10th annual) on shaping the future. There are news articles posted on global warming, Chinese IPOs, and investing in small and medium sized businesses. Looks like he walks his talk.

Might be worth emulating.

Reference

Carnegie, Dale. Revised edition by Donna Dale Carnegie and Dorothy Carnegie. How to Win Friends & Influence People.  Simon & Schuster. 1981. 

Ferrazzi, Keith with Tahl Raz. Never Eat Alone and Other Secrets to Success, One Relationship at a Time. Doubleday. 2005.

www.milkeninstitute.org

Posted by jackmixner at 06:21 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

We used to say something like, "Any press is good press," no matter what the message, good or bad. We assumed that people would remember your company name and forget the message, no matter what it was.

Nothing has really changed, except for one thing. They never forget the message, what with Google and all the other search engines.

Reputations, however, seem to be more resilient than we thought. There is a paradox in a reputation economy, namely, that it pays to be more open, not less (Thompson, 139). They're going to find out anyway. The story might as well come from you.

Microsoft was mad about an internal, unauthorized blogger who was telling too much, until they realized that it was easier to fix the problems than silence the blogger. CEOs are finding that telling all in their blog is a better way to communicate with the company team than trying to keep things between a few, in-the-know people. People will have opinions. Some will complain. Cooler heads, however, will prevail after everyone chimes in with the good and the bad about a new proposition (Thompson, 139).

Count on it.

The result? Customers might end up knowing more than you had expected, but so what. When you're all trying to make a better product or service, everybody can help, including customers.

And competitors? They won't have time to mess with you, because they'll have their own problems addressing their own opportunities - and weaknesses.

Battling over the same territory? Maybe openness will present new alternatives you hadn't considered before.

The changes have already occurred. All you have to do is take advantage of them.

Reference

Thompson, Clive. The See-Through CEO. Fire the publicist. Go off message. Let all your employees blab and blog. In the new world of radical transparency, the path to business success is clear. Wired. April 2007. 135.

Posted by jackmixner at 09:51 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

You pull into a new town, five hundred miles from home. At the first stop light, your clutch gives out. It's Thursday, and you need to be home by Friday night. Now what?

That happened to me last week. Interesting problem. It was just after noon so I needed to get going on a solution.

First step - Yellow Pages. Now-a-days no one advertises in the Yellow Pages, especially for dealer repair shops (I was out of town, remember, so I needed to hook up with someone I basically trusted - you get the picture).

On to the web, where I found the one dealer in town who sells my make.

Called them up.

Hesitancy. Oh, no. They're booked, I mean really booked, full up. Now what?

I guess you could say that the Service Manager at Jim Click Automotive in Tucson realized I needed help - now. He allowed his Assistant Service Manager, Sean Goodwin, to book me into the Click Ford dealership across the street, something that apparently doesn't happen that often. Luckily, they had the part I needed in stock. They started on my car at about 3:30 on Thursday and were done by 9:30 the next morning. I was back home by Friday night.

So I am happy. I got what I wanted. And I'll tell people about it.

Not a bad solution for me - or Jim Click Automotive, and Sean Goodwin, either.

Pass it on.

[There's more to this story. I needed a rental car for the evening.

Sean offered to call Enterprise for me, and they came to pick me up. I get in the SUV with the Enterprise guy, Andrew Meza, their assistant manager, for the trip to Enterprise to sign up for my rental. I'm feeling OK, as my problems are pretty much solved.

It gets better. Andrew drives me about fifty yards, parks the SUV and takes me into their offices.

He came to pick me up, after all, like they say in their ads.

I was laughing out loud. I think the folks at Enterprise didn't quite understand the whole story why I was laughing. It was like "Who is this guy laughing in our store?"

But you understand, don't you?]

Posted by jackmixner at 09:29 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

I've always wondered how well the bracketing process that winnows down all the teams in the annual NCAA basketball national championship tourney really works. Apparently, it works just fine (Laderman, 126).

What does that mean for CEOs?

Trust your ability to make yes/no decisions. If necessary, make a tree of decisions - just like the NCAA - to hone your decision 'til it shines with correctness.

The NCAA uses thirty-two brackets to determine the championship. You may use thirty-two as well in your decision making, or sixteen or even eight. It's the binary process - the yes/no process - that counts, not the number of brackets (Laderman, 128.).

In new books, Reiter and Winter apply "bracketology" to everything (Reiter) and investing (Winter). They might help you make better decisions, as well.

Reference

Laderman, Jeffrey. M. The Wisdom of Brackets. BusinessWeek. 26 March 2007. 128.

Reiter, Mark and Richard Sandomir, editors. The Enlightened Bracketologist: The Final Four of Everything. Bloomsbury USA. 2007.

Winter, Clark. The Either/Or Investor. Random House. 2007.

Posted by jackmixner at 07:43 AM | Permalink

Copyright Jack Mixner.    714 449 1040.     www.mixnerstrategy.com

Strategy Paradox: strategies with the greatest possibility of success also have the greatest possibility of failure (Raynor, page 1).

Fast Change Isn't a Solution 

Satisfying customers in ways competitors cannot copy requires significant commitment to a particular strategy (Raynor, page 4). If things change in the environment, the company may be so committed change is impossible. For instance, in the seventies it took GM ten years to re-design its cars to have better gas mileage (Raynor, page 6).

Incremental Change Isn't a Solution 

Incremental change isn't a solution either because the company may fail to make "fundamental transformations (Raynor page 6)." The auto companies continue to rely on the internal combustion engine by making incremental changes for improvement. Ultimately, they may abandon the engine. When it is, other companies with other engines may leap ahead and dominate the market.

Predicting the Future is Impossible 

Predicting the future is just as impossible as making changes (Raynor, page 8). Because of weaknesses in its home market, Toyota focused on creating lighter, higher quality cars with engines that achieved greater gas mileage, much to the derision of American manufacturers. It ended up, however, that its choice, or, rather, the reality of its situation, dictated a strategy that ended up being the correct one. This was luck, not strategy.

Solution: Different Level - Different Task

Requisite Uncertainty gives various levels of the management hierarchy different tasks for managing strategic uncertainty.

Senior management focuses on longer time horizons - on strategic uncertainty - by generating multiple scenarios with strategies for each. Investments, sometimes small and seemingly insignificant, are made in all the possible scenarios until things become clearer. All the different scenarios, and their resultant strategies for adoption, allow the company to cover all the bases when the ultimate situation becomes clearer. Now, fast change is more likely possible.

Lower down in management, shorter time horizon planning focuses on delivering on commitments already in place (Raynor, page 9).

In a perfect world, senior management is not about managing for results in the short term. They focus not on repairing existing strategies but on selecting the strategies to take on (Raynor, page 9). They generate strategic options - the strategies that could be useful in the future (Raynor, page 10).

Strategic Flexibility comes at the divisional level when operating divisions make decisions to optimize their current strategies, not about which strategies to choose. Senior management worries about creating a series of options and choosing which ones the divisions should address. The divisions, freed of choice, compete fiercely on the chosen strategies (Raynor, page 10).

References

Raynor, Michael E. The Strategy Paradox: Why Committing to Success Leads to Failure (And What to Do About It). Currency/Doubleday. 2007.

Posted by jackmixner at 02:46 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

What does the Board of Directors do?

Develop the "strategic risk profile" of the corporation (Foust, Page 107.)

What does the CEO do?

"CEOs should concentrate not on operations but on developing long-term strategies-or rather, a set of long-range strategic options."

What do line mangers do?

"A team of line managers ... oversee the company's short-term operations and" ... "don't worry about strategy."

Raynor's text looks like a worthy addition to a strategy book-shelf.

References

Foust, Dean. Sidestepping Disaster. BusinessWeek. 19 March 2007. Page 107. http://www.businessweek.com/magazine/content/07_12/b4026106.htm?chan=search

Raynor, Michael E. The Strategy Paradox: Why Committing to Success Leads to Failure (And What to Do About It). Currency/Doubleday. 2007.

Posted by jackmixner at 02:40 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Over 20 years, GE returned 16% to shareholders annually. Berkshire Hathaway returned 21%. S&P returned 12%. Danaher (DHR), with about $10 billion annual sales, returned 25% (Hindo, page 56). 

How?

• It imposes the "Danaher Business System" (Hindo, page 58 - 59), based largely upon the lean manufacturing process developed in the eighties by Toyota, on every new company purchased for the 600-company conglomerate.
• Managers from throughout Danaher work quickly to install the Danaher system to increase profits in new purchases.
• Sometimes it keeps the best lines and closes the under-producers.
• It carefully walks away from over-priced deals.
• It keeps a low profile by not competing for the Baldrige Quality Award, for instance, in order to reduce copycats and curtail employee raids by competitors.

Increasing manufacturing efficiency increases the bottom line. If you are interested in making your company more enticing to eventual buyers, installing a lean manufacturing process makes sense. 

Interesting update on Toyota's method of keeping management appraised on progress toward goals:

It does not occupy much space on the office wall, but Latondra Newton calls it the hardest thing for Toyota’s new American employees to accept: those colored bar charts against a white bulletin board, in plain view for all to see (Fackler). No, they are not the company’s progress toward goals. Rather, they are the work targets of individual workers, visibly charting their successes or failures to meet those targets. The idea is not to humiliate, but to alert co-workers and enlist their help in finding solutions.

Hindo, Brian. A Dynamo Called Danaher The Rales brothers' sprawling conglomerate makes everything-especially money. BusinessWeek. 19 February 2007. Page 56. http://www.businessweek.com/magazine/content/07_08/b4022065.htm?chan=search

Posted by jackmixner at 12:13 PM | Permalink

Copyright Jack Mixner.     714 49 1040.     www.mixnerstrategy.com

We all know the drill. Buy a new ink jet printer for $40 or so on sale, then, in the not-so-distant future when the ink cartridges are empty, spend $120 to refill the printer.

Kodak is proposing to do it differently. In March they will launch a new printer system relying on new inks and technology that reduce the replacement cost of a cartridge to between ten and fifteen dollars. Prints are archival, destined to last one hundred years, instead of the fifteen expected from current systems (Hamm, page 42). Overall cost reductions total fourteen cents for a Kodak print from the new Kodak system, a substantial (about sixty per cent) savings.

Kodak has been at the brink of failure for fifteen years or so, with various film-based divisions closing periodically. The new strategy represents a make/break strategy for Kodak. The strategy represents a departure from the razors and blades strategy of Kodak's competitor like HP, whose cheap printers require expensive HP inks. HP won't roll-over on this. The fight may be fierce. It will be interesting to watch what happens.

Reference

Hamm, Steve. Kodak's Moment of Truth. BusinessWeek. 19 February 2007. Page 42.

Posted by jackmixner at 02:46 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Jack Welch certainly said it with vigor. Replace ten per cent of your staff - the under-performing ones - each year.  State the company values and vision and expect people to buy-in - or leave. Stay in businesses ranking number one or two in their industry or sell the company.

Maybe there is another point of view. Training a new team takes time and money. Selling a company may be a waste of time.

Sometimes it makes more sense to change yourself. OK, there's always going to be turnover in a company, sometimes instigated by you. Many times, however, just changing yourself is quicker. When a consultant works with a company, she or he wants results quickly. If you fire people, things don't necessarily speed up, do they? So a consultant looks for places where change will get results. And the place to look isn't with the team. It's with the CEO (Farson, page 88). The CEO sees the problem. She knows what she wants to fix. She can't fire everyone, every day. No. She can change what she expects from people. Re-shuffle them. Assign them to new tasks that they're better suited to. And, this is the subtle part, make changes in yourself. Don't make big demands about the little things. Make big demands about big things. Big things are things like Vision and Values. But you don't necessarily have to make big changes to get big results.

I worked with one CEO and his team who managed a wonderful company. The only problem was that profits were becoming harder and harder to come by. Everybody thought they needed to sell more. To whom, they were not sure. Just sell more. We decided to sell less. Instead of selling all over the country, they focused on two regions where profits were higher. They needed fewer sales calls as a result. Productivity and net profits increased. They made significant changes, yes. The changes allowed the company to sell more with less effort. In the middle of a large planning effort focusing on nationwide distribution, the CEO made a change by allowing the company to take on a more regional focus. No one really noticed at the time. They had the same amount of work, but it was more focused. And profitable.

Reference

Farson, Richard. Management of the Absurd. Paradoxes in Leadership. Simon & Schuster. 1996.

Posted by jackmixner at 10:57 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Success is fun. You meet new people. You outgrow other people. Succeed long enough and new problems present themselves if you are not careful. Loyalty to your "old" team is one of them.

Tom Brady at the New England Patriots had the potential for a whopper of a problem. His new best friend was Donald Trump, but on Sundays he still depended on the left side of the line to protect him from being blind-sided. If they didn't cover him, somebody would get hurt, and the team would fail (Pierce page 159).

What to do? Brady didn't have to do much as he came in being humble. He ignored much of the press (while still being accessible) and stayed part of the team. His line starred with him in a TV commercial - and they were the stars. Brady chose to be loyal, in itself a decision to remain "loyal to loyalty." It's funny how it works. Loyalty spreads. At the Patriots, team members, recently eligible for free agency, stuck around - for less money than they could have earned elsewhere. Brady was one of them.

How about your company? Realize you have two spheres, one inside the company and the other outside the company. Keep them separate, but honorable. Make new friends, sure. But don't forget about your old friends, the team at work that may see less of you as you go out to grow the company. When things go wrong, like you have to have a lay-off or you lose a big client, be part of the solution. Don't wait around for someone to lead. Do it yourself.

References

Pierce, Charles P. Moving the Chains and the Pursuit of Everything. Farrar, Straus and Giroux. 2006.

Posted by jackmixner at 01:20 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Deeply troubled companies don't usually seek help. And when they do, they have a hard time benefitting from it (Farson, page 86). 

How to make your company open to help?

• Be open to change.
• Personal changes - read that, self-reflection - are necessary.
• Don't wait for a crisis to make a change.
• Boom times don't necessarily mean "healthy organization."
• Leaders make changes more easily than managers - or followers.
• Make accomodations yourself. Don't wait for others to.

Consultants work with folks who can change. Those folks, paradoxically, usually need it least. But the resulting changes have the biggest impacts (Farson, page 88).

References

Farson, Richard. Management of the Absurd. Paradoxes in Leadership. Simon & Schuster. 1996.

Posted by jackmixner at 10:05 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy 

New on-board as CEO? "Executive on-boarding" reduces risk to your company - and you - especially if you are new to your industry (McGregor).  Also sometimes called CEO Bootcamp, on-boarding seeks to increase the effectiveness of new CEOs or managers in the crucial sixty days after taking over. Times are reducing the ability of new managers to walk around for a while before settling in.

Every time I read a book or article that says speeding up the process is a good way to go, I pause for a reality check. Does speeding up the decision making process really speed up results, I ask myself.

Key areas on-boarding might help reduce risks for new hires faster:

• Strategic planning - focus on creating the plan in less time while implementing sooner.
• Understand political in-fighting between the folks who didn't get your job, or wish to see you fail
• Decide early on if on-boarding makes sense if supplied by your search consultants, your strategy consultants or executive coaching partners.

References

McGregor, Jena. How to Take the Reins At Top Speed. BusinessWeek. 5 February 2007. 55. http://www.businessweek.com/magazine/content/07_06/b4020077.htm?chan=search

Posted by jackmixner at 12:35 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

In the last six months or so, Pfizer has fired their CEO, dropped a blockbuster new drug because of safety concerns, reduced its sales force size substantially, and laid off 7,800 workers world-wide all in an effort to adapt to forecasted lower sales caused by generic drug competitors. 

J&J bought Pfizer's consumer products division last year (Johnson, page A3) resulting in its biggest consumer products year since 1998. Profit margins in the division are lower than in pharmaceuticals, and will eventually have to increase, but for now J&J is happy with its purchase. J&J is using the profits to staunch bleeding profits in their own pharmaceutical and medical device divisions.

The message for pharmaceutical companies? The days of the blockbuster savior of company profits are limited. Looking for profits in new places (or old ones in J&J's case) might make sense. Until the pharmaceutical companies figure out how to remain profitable without their expensive to research and short-lived blockbusters, new profits from other places will have to serve.

Reference

Johnson, Avery. J&J's Consumer Play Paces Growth. Wall Street Journal. 24 January 2007. A3.

Posted by jackmixner at 10:14 AM | Permalink

Copyright Jack Mixner.    714 449 1040     www.mixnerstrategy.com

There are two ways to prepare for a major game. One calls for researching your opponent and customizing your game strategy to the weaknesses or strengths of your opponent. The other calls for continually practicing your game and using the same strategies, both defensive and offensive, no matter who the opponent is.

It is tricky to choose which one is correct. John Wooden never looked at game film nor prepared specially for an up-coming opponent in all his years at UCLA (Wooden, page 106). Bill Belichick, for the last years coach of the New England Patriots, started his coaching career locked in a small room looking at film of his up-coming opponents. He was an expert at analyzing the strengths and weaknesses of his opponents and deriving a strategy to blunt strengths and to take advantage of weaknesses (Halberstam, page 194) for every up-coming game. Wooden won ten national championships. Belichick has won three Superbowls in four years.

Which is correct for planning your sales effort, customizing your approach for each potential client, or presenting the same information to everyone? It's not always clear.

In discussions with CEOs I hear repeatedly that customized approaches force companies to slow growth plans. It appears that they also reduce profitability over time.

What about "segment-of-one" markets where approaches are customized for every potential customer? If rapid customization is part of your market place, make changes to take advantage of the needs of your individual customers. Old strategy said have one strategy for the market. Segment-of-one requires more preparation. Just make sure it is profitable, as well.

References

Halberstam, David. The Education of a Coach. Wheeler Publishing. 2005.

Wooden, John and Steve Jamison. Wooden on Leadership. McGraw-Hill. 2005

Posted by jackmixner at 05:51 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Total recent layoffs at Pfizer now stand at 10,000 about ten per cent of its workforce. Jeffrey Kindler, the CEO, on the reductions: "Fundamental change is imperative, and must happen now (Pollack)."

Strategic issues: big-selling drugs challeged by generic substitutes and small niche drugs, huge sales forces and the need to reorganize research and development teams to focus on more, smaller revenue, new drugs. New drugs are needed in the channel, especially since Pfizer lost a huge new drug to perceived health risks in December and expiring patent protection on other, older drugs. Licensing from other companies should grow.

Opportunities still abound for companies ready to license to Pfizer. Additionally, Pfizer's reductions in sales staff may signal possibilities for new ways of approaching doctors with timely information.

Reference

Pollack, Andrew. Pfizer, Hurt by Rival Drugs, Will Lay Off 7,800. New York Times. 32 January 2007. http://www.nytimes.com/2007/01/23/business/23pfizer.html?_r=1&ref=business&oref=slogin

Posted by jackmixner at 09:50 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

The resident intellectual on the New York Giants staff during the period Bill Belichick was assistant coach, Ernie Adams, talked about two unique qualities Belichick brought to coaching:

• He "had the ability to adapt the gameplan even as the game was being played out, and not to be sucked in by the emotions of it, or to be a prisoner of what he had decided to do beforehand (Halberstam, page 260)." And,
• "he was an outstanding situational coach, a man who could get his team to adapt week after week in order to respond to the strengths and weaknesses of any particular team they were playing."

Belichick got the right people on the field at the right time, trained them well, practiced according to a gameplan each week based upon his read of the weaknesses of the opposing team, and modified the plan during play to fit the reality of the game. While he doesn't win every game (unfortunately he lost to Indianapolis for the League Championship in 2007 while trying to return to the Super Bowl for the fourth time), Belichick has been more successful than most. His program is useful in business as well.

References

Halberstam, David. The Education of a Coach. Wheeler Publishing. 2005.

Posted by jackmixner at 01:38 PM | Permalink

Copyright Jack Mixner.     714 449 1040     www.mixnerstrategy.com

Three things to do when hiring:

1. Don't trust your gut.
2. Don't rationalize away a bad recommendation.
3. Let the candidate do lots of talking - and listen (Welch).

More and more, it is becoming obvious that the right thing to do is make sure you have the best team for your operation possible. Hiring correctly is crucial, and very hard to do. Take your time. And listen carefully.

References

Welch, Jack and Suzy Welch. Hiring Wrong - and Right. BusinessWeek. 29 January 2007. 102.

Posted by jackmixner at 09:45 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Issues in developing strategic alliances:

1. Shared strategic direction, understanding, and vision
2. Establish project agreements, expectations and goals
3. Define accountable roles and responsibilities
4. Appreciate and respect how people think and do their work.
5. Build relationships and community to deal with issues and conflict.
6. Financial goals
7. Exposure/marketing goals
8. Customer driven needs
9. Autonomy and flexibility
10. Ownership
11. Commitment of top management
12. Culture of agreeing organizations
13. Parallel vision and goals - and benefits (Feiman).

Alliances improve profitability. They are also tricky to set up. It might seem like a simple handshake agreement to create an alliance might work. Probably not. Negotiate a new alliances from a win/win perspective. Then document the agreement for long lasting results.

Reference

Feiman, Daniel. How to Build Your Practice Through Strategic Alliances. Handouts accompanying speech to Association of Professional Consultants. 18 Jan 2007. www.dsf-consulting.com

Posted by jackmixner at 01:28 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Buried in the cover strory of the demise of the Nardelli regime at Home Depot is a gem comparing Nardelli to the other senior executive at GE who missed out on replacing Jack Welch, James McNerney. After GE, McNerney moved to 3M and then on to Boeing.

As opposed to Nardelli, McNerney "nurtured an environment of respect at his companies." He listened for a long time before he formed public opinions. No bombast here. Nor any new hires from GE to spike the management levels at his new companies.

Strategic Implication

The jury is still out on how successful Nardelli was at Home Depot. The numbers are still rising based upon strategies he put in place. He lost the battle with his team - and investors - by lacking humility with his board and shareholders.

Maybe I'll try Home Depot again.

Reference

Brady, Diane. 'Being Mean Is So Last Millennium." BusinessWeek. 15 January 2006. Page 61.

Posted by jackmixner at 01:21 PM | Permalink

Copyright Jack Mixner.     714 449 1040     www.mixnerstrategy.com

"Character is what a person is; skills are what a person can do (Covey, page 196)."

CHARACTER ....what a person is...

We think of integrity as a given, normally. Maturity is assumed. Abundance mentality, the willingness to share, is important.

SKILLS   ...what a person can do...

Combined with communication, the ability to plan and organize, and synergistic problem solving - the skills part - they give individuals the basis for providing an empowerment environment. (Covey, page 197).

Strategic Implications

Skills are learned.

Spending time during your strategic planning processes to train on

• communication,
• ability to plan and organize and
• synergistic problem solving will dramatically increase the effectiveness of your organization.

Reference

Covey, Stephen R. Priniciple-Centered Leadership. Fireside. Simon & Schuster. 1990.

Posted by jackmixner at 03:47 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Cooper focuses on recognizing and improving your emotions at work. He hypothesizes that better emotional control and understanding will lead to greater success at work and in life.

An interesting tool in the back of his book lets you score yourself and decide what needs more attention. Point of view is important. This is work related, although it appears that applying what you learn about your work environment will improve your life overall. Personal pressures and emotional literacy play a large part.

The values section (Cooper, page 337) is useful. Three statements are:

• "I can see pain in others even if they don't talk about it.
• I am able to read people's emotions from their body langauge.
• I act ethically in my dealings with people."

You grade yourself from it describes me very well to it describes me not at all.

Strategic Implications

What's the value of all this? Understanding yourself is a good first step. Understanding the needs of your team is a useful second step. Put them together with an understanding of your customer, and you will likely feed the growth of your company. Not a bad goal if you think about it. All it takes is understanding, patience at the right time and responding using not only intellectual intelligence, but emotional intelligence as well.

Reference

Cooper, Robert K. and Ayman Sawaf. Executive EQ Emotional Intelligence in Business. Orion Business Books. 1997.

Posted by jackmixner at 03:08 PM | Permalink

Copyright Jack Mixner.    714 449 1040.     www.mixnerstrategy.com

Bill Bradley talks about his values when he played basketball for the NY Knicks in the late sixties and early seventies. He list them out: "Passion, Discipline, Selflessness, Respect, Perspective, Courage, Leadership, Responsibility, Resilience and Imagination (Bradley, Table of Contents)."

Phil Jackson talks about rooming with Bill and seeing his values in action. He notes that "basketball is a perfect arena from which to draw much bigger lessons (Bradley, page xii)."

Strategic Implication

Bradley's last point is that basketball only lasts so long, that players bow out by their forties. His values work no matter how old you are, and in what occupation. So will yours.

References

Bradley, Bill. Values of the Game. Broadway Books. 1998.

Posted by jackmixner at 02:43 PM | Permalink