The big apple

By: Big Picture   Article

“Apple is disproportionately impacting indices and earnings data, skewing the picture of what is actually occurring.

WSJ:

“While most U.S. companies have struggled to meet earnings expectations, the Cupertino, Calif.-based maker of iPads and iPhones has surpassed even the most bullish of expectations, reporting $13.1 billion in profits during the fiscal 2012 first quarter that ended Dec. 31, more than double that of a year earlier. Revenue soared 73% to $46.3 billion. Those earnings account for about 6% of the S&P 500′s fourth-quarter earnings, according to S&P Indices, making Apple the biggest earnings contributor to the S&P 500.”

I have jokingly told people recently that there are 4 asset classes: Stocks, Bonds, Commodities & Apple.”

Patients versus profits at Johnson & Johnson: Has the company lost its way?

Published: February 15, 2012 in Knowledge@Wharton   Article

“For a corporate icon long held up as the gold standard in business ethics, Johnson & Johnson has suffered some stunning setbacks in recent years. Among the headaches: a seemingly endless string of product recalls, from Tylenol Arthritis Pain caplets to Benadryl to Rolaids; safety issues with the company’s artificial hips, and lawsuits brought by numerous states over the marketing of its anti-psychotic medication Risperdal. …

The recent troubles are a major reversal of fortune for J&J. The company cemented its reputation for responsible management in 1982 when bottles of Tylenol were found to contain traces of cyanide, resulting in seven deaths. Then-CEO James Burke recalled millions of bottles of Tylenol and replaced them with new tamper-proof packaging. Burke’s handling of the crisis put J&J’s credo — outlined in a mission statement that clearly says patients come before profits …

The recent setbacks at J&J, however, have caused many to question whether the firm has lost sight of that credo. The company’s problems with plants in Fort Washington, Pa., Lancaster, Pa., and Puerto Rico — the sites of recalls of over-the-counter products like Benadryl and Children’s Tylenol — dragged on for years. In addition, an outside contractor for the company was found to have led a “phantom recall,” sending employees to buy all the painkiller Motrin on store shelves after it was found to be dissolving improperly. Two hip devices were recalled in 2010 after the shredding of metal fragments led to post-surgical complications in some patients. And the company agreed to pay $158 million to the state of Texas to settle claims it improperly marked the anti-psychotic drug Risperdal to patients on Medicaid. Other suits surrounding the marketing of this drug are ongoing. Recalls of surgical sutures and contact lenses have been announced as well.”

Rejected U.S. hip implants sold abroad

Source: Levine Breaking News newsletter@lbnelert.com Wednesday, February 15, 2012 – Afternoon Edition

“Johnson & Johnson may have recalled faulty hip implants in the U.S., but they weren’t about to let them go to waste. The company sold the implants overseas after the U.S. Food and Drug Administration rejected them in the United States. They also continued to sell a related model that went on the market through a regulatory loophole. Johnson & Johnson formally recalled the models in August 2010 amid reports of high rates of failure in patients abroad, but in August 2009 the FDA had rejected the implant in a confidential letter that Johnson & Johnson never made public. It’s not illegal to sell medical products overseas that have been rejected in the U.S., but the company’s decision to withhold the FDA letter could damage its brand.”

Never say never!

Source

4 leadership styles to master

By Glen Blickenstaff CEO of The Iron Door company   Article

“It’s not enough to have just one way of leading: Different circumstances require separate management styles.

When it comes to leadership it doesn’t matter if you manage a company with 500 employees or one where you are the only employee. Either environment will disprove the myth that leaders should stick to just one leadership style that they have perfected. In a dynamic setting several styles will be necessary and the ability to adapt is key. There’s a lot to learn from each leadership style and when to use it. Here’s the four that basic styles:

1. Directive: One of the oldest styles and frequently described as autocratic. Someone using this style tells people what to do and expects them to jump to it.
2. Participative: This style seeks input from others and participates with those they are leading in the decision making process.
3. Laissez-faire: Typically a hands-off approach allowing for both initiative and the latitude to determine process to affect an outcome.
4. Adaptive: A fluid style that takes into consideration the context of the environment and the individual being led.”

It’s a big step from engineer to an entrepreneur

By Martin Zwilling   Article

“… the key business misperceptions of most engineers …

1. “Everyone loves ‘cool ideas’ and new technology.” Before investing a lot of time and money into any idea, entrepreneurs should assess the commercial viability. That means evaluating third-party market research, getting real customer feedback from prototypes, and listening to concerns of successful executives in the same business area.
2. “I need to go-it alone to assure quality and elegance.” Engineers assume that the business issues can be resolved later. Working alone, or with other engineers, is great for the average engineer introvert, gives them better control, and minimizes distractions. A team with diverse skills is harder to manage, but more likely to build a thriving business.
3. “Marketing is fluff and selling is black magic.” The old adage, “If we build it, they will come” came from engineers. In reality, building a solution won’t make it connect with customers, manage competition, or communicate and proselytize the offering in the industry. With today’s information overload, selling is always required.
4. “We need to get functionality maximized before we focus on customers.” The business reality is that you can’t engineer the functionality right UNTIL you focus on customers. Superfluous functionality, from a customer perspective, is a failure. The mantra for an entrepreneur today should be to ship fast, make changes, and iterate.
5. “A good engineer hates unpredictability and risk.” A good entrepreneur embraces risk as an opportunity, whereas most engineers are risk averse and cautious. The result is that engineer-driven solutions often are too little, too late, if they ever ship, in today’s fast moving market. Managing risk is good; eliminating risk is bad for startups.
6. “We can’t worry about making money until we get it built.” If you can’t make money, it isn’t a business. Business constraints, such as market size, customer demographics, manufacturing, distribution, and support costs need to be set, or there is no context for getting it right. Getting it right at the wrong cost will get you no customers.
7. “Outside funding causes loss of control and undue pressure to deliver.” Funding is like a turbocharger for a startup company, if used correctly. Investors love to fund growth and scaling of a proven business model for entrepreneurs, and they avoid at all costs funding research and development for engineers. Hence the pressure to deliver.”

US total nation debt

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Strategy essentials you Ignore at your peril

By Joan Magretta   Article

“…

1. Competitive advantage is not about beating rivals; it’s about creating unique value for customers. If you have a competitive advantage, it will show up on your P&L.
2. No strategy is meaningful unless it makes clear what the organization will not do. Making trade-offs is the linchpin that makes competitive advantage possible and sustainable.
3. There is no honor in size or growth if those are profit-less. Competition is about profits, not market share.
4. Don’t overestimate or underestimate the importance of good execution. It’s unlikely to be a source of a sustainable advantage, but without it even the most brilliant strategy will fail to produce superior performance.
5. Good strategies depend on many choices, not one, and on the connections among them. A core competence alone will rarely produce a sustainable competitive advantage.
6. Flexibility in the face of uncertainty may sound like a good idea, but it means that your organization will never stand for anything or become good at anything. Too much change can be just as disastrous for strategy as too little.
7. Committing to a strategy does not require heroic predictions about the future. Making that commitment actually improves your ability to innovate and to adapt to turbulence.
8. Vying to be the best is an intuitive but self-destructive approach to competition.
9. A distinctive value proposition is essential for strategy. But strategy is more than marketing. If your value proposition doesn’t require a specifically tailored value chain to deliver it, it will have no strategic relevance.
10. Don’t feel you have to “delight” every possible customer out there. The sign of a good strategy is that it deliberately makes some customers unhappy.”

Dilbert – Act more like a startup

Source

Managerial intuition is a harmful myth

By Andrew Mcafee   Article

“… we’ll all be better off if we stop placing so much weight on the intuitive judgments of ‘experts’ — those who have risen to the top of their professions or hierarchies due, typically, to some combination of education, experience, tenure, previous success, and moxie. The business world, of course, is full of experts. We have financial analysts, product planners, business unit managers who hire people and assemble teams, marketing VPs, and an endless variety of consultants, pundits, and gurus.

And their ‘expert’ (read: intuitive) judgments – about whether a stock will rise, how a new ad campaign will go over, how a competitive battle will play out, which products will succeed in the marketplace, whom to hire and promote, and so on – should be received with great skepticism. In fact, they usually shouldn’t be received at all.

This is because human experts are overconfident, inconsistent, and subject to a swarm of thoroughly documented biases, most of which they’re not even aware of. What’s more, in many cases they’re making their confident predictions in areas where accurate predictions just aren’t possible. If anyone tries to tell you what the price of gold will be in six months, or who’s going to be on top of the high-tech industry in 2020, excuse yourself as quickly as possible.”

Steve Blank vs. Steve Jobs

Seeing Both Sides Blog   Article

“I am co-teaching a class at Harvard Business School on entrepreneurship called “Launching Technology Ventures” along with my friend and colleague, Professor Tom Eisenmann.  The class kicked off this week with two cases:  Dropbox and Aardvark.

As I reflect on the class discussions, one of the interesting tension points that arose is the challenge an entrepreneur faces in selecting their primary product design approach.  Should they follow the Steve Blank, Customer Development Process school of product development or the Steve Jobs “vision” school?  In other words, should they pursue a user-centric design paradigm — setting priorities based on rigorous tests and listening excercises that determine what users want — or should they pursue a more top-down approach akin to Steve Jobs, who famously said: “It is hard to design by focus groups because most of the time people don’t know what they want until you show it to them. “

Steve Blank’s book, Four Steps to the Epiphany, has become an instant classic in Start-Up Land for good reason.  Along with the complimentary book by Eric Ries, The Lean StartUp, it provides an incredibly useful guide for starting companies, testing hypotheses and creating products that users love.”

Traveling light in a time of digital thievery

Levine Breaking news 2-12-12 
http://www.lbnelert.com/

“When Kenneth G. Lieberthal, a China expert at the Brookings Institution, travels to that country, he follows a routine that seems straight from a spy film.  He leaves his cellphone and laptop at home and instead brings “loaner” devices, which he erases before he leaves the United States and wipes clean the minute he returns. In China, he disables Bluetooth and Wi-Fi, never lets his phone out of his sight and, in meetings, not only turns off his phone but also removes the battery, for fear his microphone could be turned on remotely. He connects to the Internet only through an encrypted, password-protected channel, and copies and pastes his password from a USB thumb drive. He never types in a password directly, because, he said, “the Chinese are very good at installing key-logging software on your laptop.”  What might have once sounded like the behavior of a paranoid is now standard operating procedure for officials at American government agencies, research groups and companies that do business in China and Russia — like Google, the State Department and the Internet security giant McAfee. Digital espionage in these countries, security experts say, is a real and growing threat — whether in pursuit of confidential government information or corporate trade secrets.”

The 10 worst things to say when you fire someone

By Jeff Haden   Article

“Letting an employee go can be a stressful and even painful experience. Possibly that’s why making the firing process as easy as possible—for the boss—is something of a cottage industry. That’s too bad, because while terminating an employee is hard for you, getting fired is way harder for the employee. So forget about your feelings. Whenever you have to fire an employee you must protect your business from a legal aspect. After that, your only goal is to treat the employee as compassionately and respectfully as possible. Your feelings are irrelevant. Which is why you should never say any of the following:

1. “Look, this is really hard for me.” Who cares if it’s hard for you? The employee certainly doesn’t. Any time you talk about how difficult the situation is for you the employee thinks, “Oh yeah? What about me? How hard do you think this is on me?” If you feel bad—and you will—talk through your feelings later with someone else. And also never say, “Look, I’m not sure how to say this…” You’re sure what to say. You’re just uncomfortable saying it. Never even hint that the employee should somehow feel your pain; that’s just selfish. …

8. “I need to walk you to the door.” I worked for a company where the policy was to immediately escort terminated employees out of the building. An employee you fire is not a criminal. Don’t put them through a walk of shame. Just set simple parameters. Say, “Mark, go ahead and gather up your personal belongings and I’ll meet you back here in 10 minutes.” If Mark doesn’t come back, go get him. He won’t argue. ….”

What Facebook’s IPO means for women

By Penelope Trunk   Article

“After the Facebook IPO, Sheryl Sandberg will become number two on the list of richest self-made women. She is the COO of Facebook. …  she is really smart (Harvard), a really hard worker (startups, Google, Facebook), a great speaker (here’s a commencement speech) … There is nothing, really, that is bad to say about Sandberg. And she works very hard to encourage other women to go as far as she has gone. The problem is, very few women want to be Sandberg, but there is very little discussion of this.

Sandberg has two young kids. She runs a company that is very public about having “lock-ins” to move fast enough to compete with Google … She encourages women to have ambition and “never take their foot off the gas pedal,” but very, very few women would choose to do this after they have kids. Pew Research shows that the majority of women would like to work part-time after they have kids. …

It’s revealing that the New York Times profile of Sandberg shows her surrounded by men who are only marginally involved in raising their kids. Obama, for instance, is shown kissing her on the cheek. At that moment, presumably, Michelle Obama was with his kids. Because Michelle has been very clear that he is almost never with their kids, and she’s pissed, and she has confessed to screaming at him that she didn’t sign up to be a single mother. In fact, she quit her job so she could manage the family while her husband’s career took off. Sandberg is also pictured with Jeff Immelt, CEO of GE. I was so struck by his lack of involvement with his kids that I wrote a whole post about it, here. He has a wife at home taking care of his kids. Sandberg is pictured with Mayor Bloomberg, who is divorced and single, and left raising his daughters largely to his ex-wife.”

Start-up step 1: A culture plan

By Frank Addante   Article  Shutterstock image

“I used to think that company culture happened naturally.  After starting and building five companies, I’ve learned that great culture doesn’t just happen—you need to make it happen.  In general, a company’s most expensive asset is its people.  So it surprises me that so many companies fail to develop a culture or “people plan” to invest in and grow that asset.

When I started my most recent venture, the Rubicon Project, an online marketplace for buying and selling ads, the first thing I did was create a blueprint for our culture.  I talked with the founding team about the kind of organization we wanted to build and the values that we’d instill to guide our employees.

We didn’t start with a business plan, product roadmap, or marketing budget.  Why?  Well, what I have learned is that as you’re growing a business, everything around you is constantly changing.  The market, the product, competitive landscape, and economy all change.   Your business plan and product are far easier to evolve than your people.  I firmly believe that the difference between a good company and a great one is the strength, passion, and loyalty of its people.

Here’s how to design your “people plan”: ….”

Best disclaimer language ever

By Barry Ritholtz    Article

“I like a legal department that has a sense of humor. This is the standard disclaimer that Contango Oil & Gas Company (MCF) includes with their quarterly earnings reports:

Lawyer Stuff

The future is unknowable. We have good intentions but all of our projections and estimates will be wrong, and could be materially wrong. Wildcat exploration is expensive, speculative and potentially dangerous. An offshore spill or explosion would be enormously expensive. We have insurance but it may not be enough. You could lose your entire investment. Don’t be lazy – read our 10-Q’s, 10-K’s and press releases, and if you lose money – please no tears.

“Don’t forget about risk-free T-bills in your portfolio…After inflation and taxes you’ll likely only lose 5-10% of your investment.”

- Contango V.P. Investor Relations”

Does “maximize shareholder value” really make sense?

Posted by Contributor   Article

“Don’t get me wrong. I believe maximizing shareholder value is a lovely result — but I also believes it’s a lousy goal.

Think about it this way. What happens when you give your employees a rousing speech about maximizing shareholder value? Once they wake up from their boredom-induced nap, they’ll go back to doing exactly what they had been doing before. After all, what can they do that will raise earnings per share? It’s like you’re asking them to count all the stars in the sky.

In other words, maximizing shareholder value — a mantra made popular in 1976 by the most-cited academic business article of all time, Jensen and Meckling’s “Theory of the Firm”— is just too vague and uninspiring to move employees to action. This viewpoint was also expressed by Peter Drucker, who insisted that the primary purpose of a business is to acquire and keep customers.

People need something tangible and actionable to focus on — something that will result in maximizing shareholder value. Tell an employee to increase shareholder value, and he’ll struggle. Tell him to increase customer value, and he can think of a dozen things to do, many of them actionable, measurable, and beneficial to your bottom line.

The uninspiring nature of the “shareholder value” mantra is only one reason I suggest you consider embracing a new one. The whole notion of shareholder value is built on a foundation of failed logic. Here are five reasons why it’s time to focus instead on understanding and meeting the needs of your customers: ….”

Five troublesome truths about leadership

By Todd Ordal   Article

“Here are my top five troublesome truths about leadership:

1. You should minimize conflict. This is another one my mother taught me, and she was flat-out wrong. In an organization, you should optimize conflict, not minimize it. Avoid conflict at your own peril. I’ve seen far more trouble in company cultures for too little conflict rather than too much.

2. It’s all about the execution. Hogwash! Bad ideas executed well just cause you to fail faster. You must be heading in the right direction. Strategy first, then execution; they’re equally important. Execution, however, is a daily thing (managing complexity). Changing strategy is typically infrequent, which makes it hard to do.

3. Be nice! No … be kind. Kind means that you’ll tell people what they need to hear, even if it’s painful. Nice people often avoid tough conversations and fear upsetting someone else. Nice mangers always find something to compliment you on. Kind managers tell you what you need to hear, even if you’re screwing up. Be kind, not nice!

4. Only hire brilliant people. This is partially correct. Emotional intelligence, however, is more important than being the smartest guy in the room. In most jobs, I’d sacrifice 20 points of IQ to find someone who is self-aware and socially aware and has good self-control and social skills.

5. Be solutions-oriented. Sometimes you need to find quick answers, but I believe it’s much more important as a leader to focus on asking the right questions. More time crafting great questions will yield better answers. Too often, we’re solving the wrong problem! Ask a good question today!”

Steve Blank vs. Steve Jobs

Seeing Both Sides Blog   Article

“… one of the interesting tension points that arose is the challenge an entrepreneur faces in selecting their primary product design approach.  Should they follow the Steve Blank, Customer Development Process school of product development or the Steve Jobs “vision” school?  In other words, should they pursue a user-centric design paradigm — setting priorities based on rigorous tests and listening excercises that determine what users want — or should they pursue a more top-down approach akin to Steve Jobs, who famously said: “It is hard to design by focus groups because most of the time people don’t know what they want until you show it to them. “

Steve Blank’s book, Four Steps to the Epiphany, has become an instant classic in Start-Up Land for good reason.  Along with the complimentary book by Eric Ries, The Lean StartUp, it provides an incredibly useful guide for starting companies, testing hypotheses and creating products that users love.

… founders should never let themselves off the hook to applying the test and learn principles of Steve Blank to monitor their decisions and continuously validate them.  And the bar should be very high for such overrides.  As the 19th century German philosopher Arthur Schopenhauer observed:  “Talent hits a target no else can hit.  Genius hits a target no one else can see.”

Founders who override their users are betting on genius.  Steve Jobs and Drew Houston have proven that genius pays off.”

Study suggests disarmingly simple way to better job ethics: slow down

Article

“Research in the new issue of the Academy of Management Journal suggests not. It finds that, confronted with clear choices between right and wrong, people are more than five times more likely to do the right thing when they have some time to think about the matter than they are when they have to make a snap decision.

“Having time to think things over may not make much difference in big-time financial swindles, but our findings suggest that it would make a considerable difference in innumerable instances of lying and fraud that happen every day in the business world,” comments J. Keith Murnighan of the Kellogg School of Management at Northwestern University …

In explanation, Prof. Murnighan adds: “Immediate, automatic moral intuitions tend to be selfish, given that self-interest is a basic, instinctual response to external stimuli. In contrast, conscious, deliberative thought adds social concerns, setting off a battle within the individual that pits the strength of self-interested intuitive desires against the constraints established by social learning.” …

In sum, as the study puts it, “Organizations with a ‘fast pulse’ or tendency to reward quick decision-making may suffer ethical penalties by discouraging contemplation and conversation… At a minimum, our results suggest that individual, organizational actors facing right-wrong decisions should take the time to think or to consult an ethical colleague.””

America’s Income Statement

 

 

 

 

 

 

 

 

 

 

 

 

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Measuring the efficacy of the world’s managers

By Carmen Nobel   Article

“Firms in the United States, Japan, and Germany tend to be managed especially well, while firms in Brazil, China, and India tend to be managed poorly. … over the past seven years, large teams of … analysts have interviewed managers at some 10,000 organizations in 20 countries, setting out to determine how and why management practices differ vastly in style and quality.

Best practices

The researchers used an evaluation tool … that broadly rated management practices in three areas: monitoring—how well managers keep track of what’s happening in a firm and make good use of that information;targets—how well organizations set appropriate goals and outcomes, and whether they take action if the two are inconsistent; and incentives—whether organizations promoted and rewarded employees based on performance and tried to keep the best performers from quitting. …

In the United States, India, and China, managerial use of incentives are much more common than the use of monitoring and target-setting, especially in the manufacturing field. In Japan, Sweden, and Germany, monitoring and target-setting far exceed the use of incentives.

But the differences surpassed international boundaries. … the researchers managed to discover certain ownership patterns that help to explain the dispersion. For instance, government-owned organizations tend to receive low management scores across all the sectors and countries in the study. “They are particularly weak at incentives,” the paper explains. “Promotion is more likely to be based on tenure (rather than performance), and persistent low-performers are much less likely to be retrained or moved.”

Family-owned businesses scored even lower—particularly those run by a firstborn son who inherited the role of CEO. Family-owned businesses that employed a non-related CEO scored much higher. “The finding there is not so much that family ownership per se is associated with lower scores, but rather family ownership when the selection of the CEO is not meritocratic,” Sadun says. “Especially in Europe, you have a lot of companies where the transmission of leadership is based on criteria completely unrelated to your ability to lead.”"

The best career advice of all time: shut Up

By Tim Murphy   Article

“Too often the difference between a good conversation and a terrible one is a matter of who did most of the talking. If it was you, you probably loved it. If it was the other person, it was probably awful.

Whether it’s first dates, interviews or introductions, no one wants to hear someone prattle on and on about him or herself. In fact, that’s the opposite of what people want. People enjoy talking about themselves, hearing themselves speak, so why get in the way of that, especially when networking or during an interview?

Why quiet is better

Taking a more measured approach and letting people indulge the desire to hear themselves speak can pay off in two ways. First, it lets the person do what they want, which is steer the conversation toward something they know well and like. If you get a new contact or interviewer going on how great or exclusive or prestigious their company is, it makes them feel good because it’s (indirectly) about them. Now you’ve set the stage for them to form a favorable impression of you. …

The second way shutting up and letting people talk pays off is by preventing you from grabbing the conversation like a greedy kid. It also prevents the other person from having that negative feeling of “Ugh, when will this end!?” …

Do the asking rather than the answering …”

The coming tech-led boom

By MARK P. MILLS AND JULIO M. OTTINO   Article

“In January 1912, the United States emerged from a two-year recession. Nineteen more followed—along with a century of phenomenal economic growth. Americans in real terms are 700% wealthier today. In hindsight it seems obvious that emerging technologies circa 1912—electrification, telephony, the dawn of the automobile age, the invention of stainless steel and the radio amplifier—would foster such growth. Yet even knowledgeable contemporary observers failed to grasp their transformational power.

In January 2012, we sit again on the cusp of three grand technological transformations with the potential to rival that of the past century. All find their epicenters in America: big data, smart manufacturing and the wireless revolution.

… consider three features that most define America, and that are essential for unleashing the promises of technological change: our youthful demographics, dynamic culture and diverse educational system. First, demographics. By 2020, America will be younger than both China and the euro zone, if the latter still exists. Youth brings more than a base of workers and taxpayers; it brings the ineluctable energy that propels everything. …

The American culture is particularly suited to times of tumult and challenge. Culture cannot be changed or copied overnight; it is a feature of a people that has, to use a physics term, high inertia. Ours is distinguished by incontrovertibly powerful features, namely open-mindedness, risk-taking, hard work, playfulness, and, critical for nascent new ideas, a healthy dose of anti-establishment thinking. Where else could an Apple or a Steve Jobs have emerged?

Then there’s our educational system, often criticized as inadequate to global challenges. But American higher education eludes simple statistical measures since its most salient features are flexibility and diversity of educational philosophies, curricula and the professoriate. There is a dizzying range of approaches in American universities and colleges. Good. One size definitely does not fit all for students or the future.”