October 2008 Archives

"The stark truth is that the U.S. has no long-term economic strategy—no coherent set of policies to ensure competitiveness over the long haul. Strategy embodies clear priorities, based on understanding the strengths we need to preserve and the weaknesses that threaten our prosperity the most. Strategy addresses what to do, but also what not to do. In dealing with a crisis, experience teaches us that steps to address the immediate problem must support a long-term strategy. Yet it is far from clear that we are taking the steps most important to America's long-term economic prosperity."

That's the Portermeister in BusinessWeek.

What he's saying is Vote Obama :-)

If this was the Republicans, the theme would be fear and more fear... Time to Vote Barack Obama!

Good thing Obama has Warren Buffet on his team...

We need a leader, a leader
To march on to Liberty
Get it Together
Vote Barack, Barack Obama...

MP3 here >>

Invest a little, learn a lot.

I've always enjoyed his work >>

See also: "How Productivity Killed American Enterprise"

Corporate interests need to get out of government, period.

Tell that to the lobbyists...

I'm happy to see the Indians go for the moon, joining their Chinese and Japanese counterparts as they jockey for prestige and bragging rights.

Is it science or technonationalism? Both of the above, but somehow the politics outweighs the science.

Now let's all compete (or collaborate) to build green energy power generation projects!

Recession as Opportunity

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The nerds at Bain give us a few reminders from history:

- Southwest Airlines surged ahead during the 2001 recession

- Intel pulled away from AMD (also in 2001)

- Johnson & Johnson, GE and IBM shifted focus on economically healthier regions in Q2/2008

- Bank of America gobbled up Merrill Lynch (the opportunity of a lifetime) - just a few days ago

So, where are your opportunities?

In this month's Harvard Business Review, authors John Hagel III, John Seely Brown and Lang Davison provide a road map for the daunting task of shaping strategy as technology-driven infrastructures constantly change.

The article is called: “Shaping Strategy in a World of Constant Disruption” and you can download it here (thanks Deloitte Consulting!) >>

In my view this is a very timely piece of thinking from my heroes JH3 and JSB (and Lang Davison). I'll dig into it later this month on ecosystemwatch.com...

Wait, there's more. Check out the podcast >>

Don't look now, but P&G is trying some direct selling online.

From the Financial Times:

Procter & Gamble is testing its ability to use the internet to sell its toothpaste, household cleaners and nappies directly to US households, in a potential long-term strategic challenge to its retail partners.

...The move brings P&G into direct brand competition with its retailers, underlining the extent to which e-commerce is contributing to changes in the way the two sides have traditionally worked with each other.

OK. The site is called theEssentials.com, but so far it looks like they have very little traffic.

Is this how they intend to fight the private label war? I'll talk about them later this month on ecosystemwatch.com

For those of you emailing me about why I'm harping on about Peter Drucker, please read this: What Makes an Effective Executive>>

Drucker's Warning

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“In the next economic downturn there will be an outbreak of bitterness and contempt for the super-corporate chieftains who pay themselves millions.” Peter Drucker in 1997

And of course there's just plain hate >>

This is truly amazing. The folks at SNL get VP candidate Sarah Palin to applaud a song which rips her to shreds... What was the McCain campaign thinking? Total and utter lack of judgment on their part.

Watch as SNL schools the McCain campaign:

Brilliant work by SNL. They get the ratings and trash the Republicans.

Looks like Rupert Murdoch's WSJ is thinking along the same lines we are (for a few seconds at least).

They've gone an dug up an old article Peter Drucker wrote for them: Planning for Uncertainty.

Here are some of the key questions:

- ...traditional planning asks, "What is most likely to happen?" Planning for uncertainty asks, instead, "What has already happened that will create the future?"

- "What do these accomplished facts mean for our business? What opportunities do they create? What threats? What changes do they demand -- in the way the business is organized and run, in our goals, in our products, in our services, in our policies? And what changes do they make possible and likely to be advantageous?"

- "What changes in industry and market structure, in basic values (e.g., the emphasis on the environment), and in science and technology have already occurred but have yet to have full impact?"

- "What are the trends in economic and societal structure? And how do they affect our business?"

- "What is this company good at? What does it do well? What strengths, in other words, give it a competitive edge? Applied to what?"

He ends with a serious warning for the bean-counters:

There is, however, one condition: that the business create the resources of knowledge and of people to respond when opportunity knocks. This means developing a separate futures budget.

The 10% or 12% of annual expenditures needed to create and maintain the resources for the future -- in research and technology, in market standing and service, in people and their development -- must be put into a constant budget maintained in good years and bad. These are investments, even though accountants and tax collectors consider them operating expenses. They enable a business to make its future -- and that, in the last analysis, is what planning for uncertainty means.

And don't forget his advice for retail strategy >>

OK.

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Read all about it >>

Now is a good time to ask yourself these five business design questions (ht to Oliver Wyman):

1. Who is the customer and what do we offer? Which customer segments should we serve, and what is our value proposition for each segment?

2. What is our profit model for each of our offerings?

3. What do we perform in-house and what do we outsource?

4. How do we build in strategic control? Is there a way to create sustainable differentiation?

5. How should we organize ourselves to make it happen? What is the right organizational architecture to execute the business for each segment?

You can download the business blueprint (registration required): level-one flowcharts of how to run a profitable, sustainable, online business.

1) Offer development process
2) Offer creation process
3) Sales process
4) Marketing process
5) Order fulfillment & support process
6) Financial process
7) Licensee certification process
8) Licensee business development process
9) Events process
10) Archival process

As I mentioned earlier, it does seem like the comedians do a better job on serious issues.

In this case, David Letterman stands head and shoulders above our so-called news people like George Stephanopoulos, Tom Brokaw, Katie Couric, and Brian Williams.

Part One

Part Two

Part Three

Part Four

Note: Letterman's interview also turns out to be the first mainstream media mention of the Liddy-McCain connection. So who's the real terrorist?

In BusinessWeek:

Industry observers say that while those retailers can take 60 to 90 days or more to settle up, TJX typically pays within 30. These days, that's a critical selling point both to vendors, who are more concerned about finding funds to buy raw materials and pay expenses, and to the financers who act as middlemen in many of the deals. It could give TJX—which also owns discounters Marshalls and HomeGoods—an added advantage in getting a wider selection of items.

Makes sense. Can't sell something that's not on the shelf, Drucker used to say...

Read the article here>>

There's another very good reason to pay quickly: goodwill.

Your suppliers will take an extra step or two for you if they know they can count on you. This "trust" makes a giant difference in execution.

There's a software company I know which used to delay its vendor payments as much as possible as part of its strategy. While it may have gained a few bucks in capital, it lost in terms of responsiveness. Big time. Vendors would move extremely slowly to deliver value. It was frustrating on both sides. And all because a few "brilliant" bean-counters thought they had found a way to squeeze a few more pennies into the corporate treasury.

I have to say I was shocked when I saw the news about Michael Hammer. He was just sixty. Goes to show you how precious every second is. It may be that they need to do some process re-engineering up in heaven. Maybe make it more customer friendly or something...

Down here on Earth, process re-engineering isn't as fashionable as it used to be. And I wonder how many people got laid off because of Reengineering the Corporation: A Manifesto for Business Revolution (Collins Business Essentials).

But Hammer was misunderstood. His ideas were abused by company executives and the management consulting industry. Today his ideas live on in the heads of IT nerds and companies like Zara.

Where do you (and your company) stand? Check out the maturity models he created:
1) for process maturity, and 2) for enterprise maturity.

Too bad we didn't see the one on leadership maturity.

Here are some fun links:

- Put Processes First: Make High Performance Possible Michael Hammer
- Michael Hammer: A Tribute to the Guru of Operations Anand Raman
- Remembering Michael Hammer Tom Davenport

In the end, process matters. Even our buddy Drucker acknowledged that.

BTW, the other process guru who is still (very) alive and kicking isTom Davenport.

One of the great things about the late Peter Drucker is that he can be summoned to solve just about any problem.

One of my clients is a web retailer. They're having serious issues with "customer hesitancy."

And of course the headlines are now full of bad news in retail.

So we had a long chat about customer hesitancy. What makes the customer hesitant? Is it really the news on TV? Is it the fact that they might be out of a job?

My first piece of advice to them was straight out of Drucker: Stop selling and start buying for the customer.

Are you buying for the customer? Really?

That line of reasoning led to these predictable questions: so exactly who is your customer? Are there segments you aren't serving that you should? Are there segments you should stop wasting your time with?

We were able to go and look at their historic web-sales data (for the past two years down to the last two weeks) to find out who their customers really were. And surprise, there was no customer hesitancy there!

All they needed was to focus on the right segment. We changed the website to do just that.

Listen to good old (in this case a younger, "1.0 version") Drucker:

Who is voting for Obama?

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106 years old Mother Cecilia Gaudette votes for Obama. Her last vote was for Eisenhower! More about Catholics for Obama here >>

See also: Who is voting for McCain?

You can fool some people all the time:

This is all that's left: lies and racism. McCain has taken the rednecks for another ride.

Heckuva job, McCain!

What Went Wrong

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I'm still trying to understand what this economic meltdown is all about.

Here are a few good links:

When fortune frowned The Economist

Yes, It’s A Wreck, But We Can Fix It Newsweek

Financial crisis: World round-up BBC

Good Financial Information Matters More Than Ever Robert Schiller

Financial Leadership, the Missing Ingredient
Rick Wartzman

Our Choice Nouriel Roubini

We Have the Tools to Manage the Crisis Paul Volcker

Good Policies Can Save the Economy Lee Ohanian

Fundamentalists versus Realists Paul Romer

The Stunning Collapse of Iceland Business Week

and here's a "fun" look at another issue:

This stock collapse is petty when compared to the nature crunch Guardian Unlimited

Finally, here's some humor: 5 financial crisis jokes from Marketplace >>

* 5. I went to buy a toaster, and it came with a bank.
* 4. Money talks. Trouble is, mine only knows one word: Goodbye.
* 3. How do you define optimism? A banker who irons five shirts on Sunday.
* 2. What’s the capital of Iceland? Answer: $3.50.

And the No. 1 financial crisis joke of the week is …

Q: What is the one thing Wall Street and the Olympics have in common?
A: Synchronized diving!

Age and Classical Music

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Interesting:

"Popular conception says the arts' supporters are graying and shriveling. But it may be that as the crowd's individuals change, its age doesn't."

Personally, I'd still rather listen to Steel Pulse.

Namaste-ji! How's my accent?

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In India, speaking English with an American accent is no longer the preserve of call centre workers. Children, business people and the elderly here are now seeking a US twang.

Ouch.

The irrationally exuberant Robert Schiller is back with a book called The Subprime Solution.

Don't have time for the book? Read the summary >>

blueprint

Level-one flowcharts of how to run a profitable, sustainable, online business. Covers the following work processes:

1) Offer development process
2) Offer creation process
3) Sales process
4) Marketing process
5) Order fulfillment & support process
6) Financial process
7) Licensee certification process
8) Licensee business development process
9) Events process
10) Archival process

You'll have to register for this one >>

Despite the downturn, there is evidence that consumers are interested in "purpose branding."

That's the spin from Procter & Gamble's Jim Stengel who (surprise, surprise) is leaving P&G at the end of the month to join a "purpose branding" consultancy.

Back-up data: In a study released this month, 26% of consumers expect companies to give more support to causes and nonprofits in an economic downturn, while 52% expect companies to maintain existing programs. Another 79% of consumers said if price and quality were similar, they would switch to a brand associated with a good cause.

OK, I'll buy it.

And if your company is looking to do some cause-related branding, here's a cool green company you should team up with: The Solar Electric Light Fund >>

Einstein's Mathematics

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"We all must from time to time make a sacrifice at the altar of stupidity for the entertainment of the deity and mankind."

OK.

Is there any hope for Africa?

The first step is to understand why.

Krugman takes a Nobel?!

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Hard to believe, but true.

Is this the Nobel committee voting for Krugman or voting against Bush?

Either way, we'll take it!

Growing up in India, we'd occasionally see signs of "communal violence" in the streets. Sometimes, school would be canceled, and we'd stay at home playing cricket or soccer.

Curiously, these acts of violence between Muslims and Hindus, or Hindus and Sikhs, or Hindus and Christians, or Hindus and Dalits, would appear precisely at the same time as the elections.

Politicians have a simple formula. Divide people and win. This worked for the British, and unfortunately, it's still being tried in India today.

Another shameful political tactic to join a long list of tactics used to gain or maintain power. And the voice of sanity is, as usual, drowned out.

Now we have John McCain doing his best to raise fear and divide us here in the US. The sad truth is that we're not as civilized as we think, and the Republican party continues to exploit these poor racists - taking them for a ride - like their parents before them.

What's it going to be, America? Hope or Hate?

globeforobama.gif

It would be a blowout, according to The Economist (a sage periodical read by Sarah Palin)

Funny how truth in journalism always seems to come from comedians:



Thanks Dera!

Jean-Marie Gustave Le Clézio wins the Nobel. Is this literary globalism?

And yet, his language is his country!

Betcha Sarah Palin won't be reading his books... or anyone else's, for that matter!

USA: A Banana Republic?

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Christopher Hitchens at Vanity Fair seems to think so >>

How quickly we forget. More at keatingeconomics.com >>

This article really is a bit too skewed on the "social networking" side of things, but I do agree w/ what John Della Volpe is saying, that Obama's "blue-ocean strategy" to get the youth involved (beginning with Iowa), and his brilliant use of technology and social networking to attract, engage, and involve people in the campaign has made all the difference.

But Obama can teach business a lot more than Web 2.0.

His decision-making is classic Peter Drucker. According to campaign adviser Susan Rice:

"He listens to various viewpoints. He elicits dissenting views. He weighs those rationally and pragmatically. But then he tends to make a relatively swift and clear decision."

Which makes Obama an analytical decision-maker with a talent for delivering inspiring speeches.

Leadership 2.0 is what we call it.

ALSO:
McCain, on the other hand, is reckless. And his incompetent decision to choose a clearly incompetent Palin as his replacement is an insult to the office of the President and the American people. He just doesn't have a clue!

There's an interesting interview with Ronald Heifetz about "the leader of the the future" in an old edition of Fast Company which made me think about the difference between Barack Obama and John McCain.

Here's what made me sit up:

"Imagine the differences in behavior between leaders who operate with the idea that "leadership means influencing the organization to follow the leader's vision" and those who operate with the idea that "leadership means influencing the organization to face its problems and to live into its opportunities." That second idea -- mobilizing people to tackle tough challenges -- is what defines the new job of the leader."

OK. There it is in black and white. The difference between Leadership 1.0 and 2.0. Sounds cheesy, but hey, it is reality.

Leadership 1.0: authoritarian, fear-driven, no dissent, command and control.

Leadership 2.0: participative, purpose-driven, dissent encouraged, guide and coach.

[I know, we could compile lists like this for days on end...]

But think about it. This is nothing more than McGregor's old Theory X versus Theory Y.

God help this world if Theory X wins this time around!

The nerds at the World Future Society have been burning the candle at both ends to come up with these insightful predictions:

Forecast # 1: Everything you say and do will be recorded by 2030.

Forecast #2: Bioviolence will become a greater threat as the technology becomes more accessible.

Forecast #3: The car's days as king of the road will soon be over.

Forecast #4:
Careers, and the college majors for preparing for them, are becoming more specialized.

Forecast #5: There may not be world law in the foreseeable future, but the world's legal systems will be networked.

Forecast #6: The race for biomedical and genetic enhancement will — in the twenty-first century — be what the space race was in the previous century.

Forecast #7: Professional knowledge will become obsolete almost as quickly as it's acquired.

Forecast #8: Urbanization will hit 60% by 2030.

Forecast #9: The Middle East will become more secular while religious influence in China will grow.

Forecast #10: Access to electricity will reach 83% of the world by 2030.

Now let me add a few of my own.

If McCain wins this election, here are five additional predictions for the US of A:

Prediction #1: We will be a third-world country - with 95% of the wealth concentrated in the hands of 5% of the population.

Prediction #2: We will be standing in lines to buy gas at outrageous prices.

Prediction #3: We're going to be spied on by our own government which won't give a hoot about privacy rights or the Constitution.

Prediction #4: The media will be bought off by the corporations and feed us nothing but propaganda. Show us how, Tom Brokaw.

Prediction #5: We will never trust our government again. In fact we will learn to believe exactly the opposite of what they say.

Wait-a-minute! Those aren't predictions, they're reality -- under the current Republican regime!

So, get out there and vote >>

economist_digitaldownloads.jpg

From The Economist:

In 2007 digital downloads accounted for 15% of global music sales compared with almost nothing in 2003. But the outlook for the music industry is worrying. Despite the growing market for digital downloads, music sales have declined over the past four years and are set to continue to dwindle, partly as a result of piracy.

BTW, does anyone really believe that Sarah Palin reads The Economist?

About this Archive

This page is an archive of entries from October 2008 listed from newest to oldest.

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