tag:blogger.com,1999:blog-59173707953993424322024-03-13T01:12:24.483-05:00Compassionate Curmudgeon & Radical BusinessViews of business that may be contrary to traditional thought. Applying common sense and borrowing from some other brilliant thinkers, new perspectives will be shown how they apply to the current business situations. Exploring corporate and organizational culture, strategy, metrics and other issues that affect business performance. For consultation on these issues, contact us through www.4wardassociates.com Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.comBlogger692125tag:blogger.com,1999:blog-5917370795399342432.post-13685654129755502882024-02-22T06:38:00.001-06:002024-02-22T06:42:42.808-06:00Higher Marginal Tax Rates! More Economic Growth!<p> Let’s pose a couple of hypothetical situation. Suppose the top marginal tax rate in the US and UK is 98 percent, which it has been at times in their histories. Suppose companies are growing and potentially becoming more profitable as the Industrial Revolution takes hold, a Baby Boom happens which juices the economy through consumer spending. Demand is growing, profits are growing.</p><p>Many orthodox macro-economists argue governments should drop the tax rates to boost the economy. This is true of Milton Friedman and even the authors of a forthcoming book, “Common Sense Economics.” However, before government can take action, your company and all other successful companies have a choice.</p><p>Your company could take action to avoid further growth. Especially in manufacturing where often more production means more gross margin over fixed general/sales/administrative expenses. Maybe the action is capping your output: no increase in production or capacity or prices (despite clamoring demand for limited supply); artificially suppressing demand by limiting distribution; or worse yet, lowering demand through poor quality products or services or minimal warranties on workmanship and materials. Your small-fry competition jumps into the gap to soak up the demand. Yea! Your company has avoided tipping into the higher marginal tax rate. </p><p>Contrarily, your company could embrace the growth. But instead of bemoaning the higher tax rate, you use it to fund expansion. Demand is growing. Return on investment is high for new opportunities. You increase your expenses: higher wages, bonuses, more employees, more marketing, more equipment, subcontract to other companies for services, more capital expenditures, more training/education, more benefits…more mergers and acquisitions…anything to reduce profits. Because the tax avoidance will fund the increased spending. You’d make sure your net (taxable) profit was as low as possible, if not negative through cash-less expenses like depreciation and amortization. You might not even worry about unions or moving work to low-labor-cost countries.</p><p>The authors of that forthcoming book, “Common Sense Economics” (St. Martin’s Press), argue that high marginal rates hinder growth. Yet, they cite the example of British companies buying Rolls Royce cars for corporate vehicles to increase expenses, and essentially only “costing” the companies 2 percent of the car’s value—assuming a quarter million dollar (hundred thousand Pound) car could be expensed rather than added to the capital goods depreciation table, expensing one-fifth, one-quarter or one-third of the value each year. In this example, isn’t Rolls Royce experiencing high growth? What are they going to do? Take the first choice? Go out and buy Ferraris? No, they too will figure out how to avoid only making 2 percent on this increased revenue by buying, contracting, hiring, etc.</p><p>I have often called b**s**t on <a href="https://www.compassionatebusinessradical.com/2011/03/lemonade-stand-conundrum.html" target="_blank">company owners who claim they need lower tax rates</a> to fund hiring or more capital expenditures. If the demand is there, and the ROI is high, an owner or CEO will expand despite the tax rates. A higher tax rate might actually be the incentive for growth throughout the supply chain. No need to off-shore for lower wages maybe.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjagzfazZEP6JgLXCRcdfKSDaPd2OyXdPaOLUVZzS_qYr5BrFYdoer4H7RKz6ClZzBt9_SDOHSTpjFjhO7GDBFBAbb_vO9wasQKSNleT53LhhOZ6gNEF4wYnOMRX2H5wmGiuz3HlhfKraapiOaOgxI_UmrvisigGUClOtNd7sokh9w084xfCD6g8YGvuTS/s450/IMG_0311.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="375" data-original-width="450" height="267" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjagzfazZEP6JgLXCRcdfKSDaPd2OyXdPaOLUVZzS_qYr5BrFYdoer4H7RKz6ClZzBt9_SDOHSTpjFjhO7GDBFBAbb_vO9wasQKSNleT53LhhOZ6gNEF4wYnOMRX2H5wmGiuz3HlhfKraapiOaOgxI_UmrvisigGUClOtNd7sokh9w084xfCD6g8YGvuTS/s320/IMG_0311.png" width="320" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhL1qn0p6yf2NuRbRxQwXhdi1m9BkU9uz_3OZI2BdQWri2cW0QKVJxqZLc-qZLhnqYju1H_lX7MenXicUPM7RJTAXOHqVBwvpqtsL_0_BoIBH_QaYAImMRklKGjD0LAkVj79AzAMtVtWmIh_FFUOWqHj1GS9X_x3iqe4orHmoJV8OC7w2QQxxj1dcmSwxUN/s450/IMG_0312.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="375" data-original-width="450" height="267" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhL1qn0p6yf2NuRbRxQwXhdi1m9BkU9uz_3OZI2BdQWri2cW0QKVJxqZLc-qZLhnqYju1H_lX7MenXicUPM7RJTAXOHqVBwvpqtsL_0_BoIBH_QaYAImMRklKGjD0LAkVj79AzAMtVtWmIh_FFUOWqHj1GS9X_x3iqe4orHmoJV8OC7w2QQxxj1dcmSwxUN/s320/IMG_0312.png" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;">You can discount some of the first table because growth occurred during WWII or the Allied support prior to US military involvement in 1942. And you can discount post-war growth when the US was essentially the only unscathed industrial nation providing goods to the rest of the world. Note: top tax bracket is not the “effective” tax rate on top income companies and individuals since there are many credits (e.g. R&D, energy efficiency upgrades, etc.) that reduce the tax burden.</div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-10157300389962168612024-02-21T21:45:00.005-06:002024-02-21T21:45:34.070-06:00Good Friction and Bad Friction<p> Sutton and Rao are well-known teachers and researchers on how to fix problems. Their book, The Friction Project, shows us how to add the good kind of friction—to make mistakes or slogging through administrative sludge harder to occur—and reduce the bad kind of friction—to streamline getting the desired results. Unfortunately, this is the first paradox: the title and use of the word “friction” as both a good thing and a bad thing. The authors may have wanted to use different words to describe the good form and the bad form. They report on not only their own work but admit that they’ve built this treatise on the research, writings and consulting efforts of others as well. So secondarily, it’s hard to discern where their originality begins and ends.</p><p>They define a pyramid of methods for fixing friction, enabling friction, getting the results you want and avoiding the undesirable consequences. They provide a toolbox for discovering those areas that are rife with bad friction. They give a plethora of case studies throughout the book.</p><p>For those unfamiliar with how to look at their organization’s efforts with objective lenses, this is a helpful book. It won’t be so helpful for those familiar with evaluative and awareness techniques encompassed by Theory of Constraints (identifying the critically constrained resource and eliminating obstacles for complete utilization and effectiveness and improving the throughput of the whole system), Lean (specifically identifying wastes and value-stream mapping), Six Sigma, Kepner -Tregoe, Kahnemann’s and Tversky’s thinking biases and blind spots (Think Fast, Think Slow), simply experiencing your own systems as your internal and external customers would, simply asking of each procedural step/report request “So what? Who cares? What will we know or do differently based on this?”, and so on. </p><p>I’m appreciative of the publisher and NetGalley for allowing me to preview this book.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirGZm4lyp4Vm66eRItvKv8gu-xIBxEVojQuwZ3bbJNeCDPATIPurXgM-hdKFk8pU6NSHqJy9DTxV2dnnFS7MQX1WhY7ajDFlE4ZwV7bDv1Ne8-WpJSbIMwnsFHdvMRJE7wrNs5TxQMKm_DOUJsN_cM0iuf3hF54mNvT8oUgYi7YmtngFg61zi6a3PJ5sg3/s436/IMG_0310.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="436" data-original-width="436" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirGZm4lyp4Vm66eRItvKv8gu-xIBxEVojQuwZ3bbJNeCDPATIPurXgM-hdKFk8pU6NSHqJy9DTxV2dnnFS7MQX1WhY7ajDFlE4ZwV7bDv1Ne8-WpJSbIMwnsFHdvMRJE7wrNs5TxQMKm_DOUJsN_cM0iuf3hF54mNvT8oUgYi7YmtngFg61zi6a3PJ5sg3/s320/IMG_0310.jpeg" width="320" /></a></div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-1158888677458608452024-01-04T08:14:00.001-06:002024-01-04T08:14:13.191-06:00Talk About Mistakes, or Near-Mistakes<p> At many companies, I've had to remind staff and employees, "I can't help fix problems if I don't know about them." Sometimes I got the response, "I would tell you...but I don't want to get into trouble." My followup was always, "You'd only get in trouble with me, if you don't talk about them." This was in contrast with one of my early-career assignments: I had a VP tell me he'd never admit making a mistake like I had just done.</p><p>Recently reported on a <a href="https://hiddenbrain.org/podcast/making-the-most-of-your-mistakes/" target="_blank">Hidden Brain</a> podcast, a researcher was surprised when her findings showed that the best, collaborative, communicative healthcare teams had poorer results: more errors. Then she had the insight that perhaps the best teams report their errors consistently whereas poorer operating teams don't. She then correlated her results to a survey question regarding the impact of reporting errors. The worse teams were more fearful to report errors whereas the better teams freely reported errors.</p><p>We not only need to talk about the errors and mistakes and problems, but also the near-mistakes taking a tool from the safety handbooks of reporting near-accidents. For example, I almost bumped my head on a projecting piece of steel sitting on a rack shelf. I paid attention and got the piece of steel either repositioned or flagged so that others would see it and avoid injury. One of the situations mentioned in the research was a less-experienced nurse resetting an unfamiliar device in a dimly lit corner of the patient's room. If the person had reported it, the team could make sure all devices are in well-lit places or there's a mechanism to illuminate the device when needed.</p><p>In one company, we had thirty percent (30%) of the employees on internal audit teams. [Honestly, we didn't have enough to audit to keep them experienced as auditors; we had too many volunteers.] Two reasons for this: we framed the program not as "gotcha" mentality but as learning about other departments and what they do--to reduce the thoughts "they don't do anything all day" or "why can't they avoid these problems?"; we also wanted to learn how people avoided errors and mistakes through deviations from the written procedures and incorporate those best practices in the documentation. </p><p>If your company doesn't like talking about mistakes, your company is not on the path of improvement. It's not a learning organization as Senge taught us decades ago. Learning organizations get better and have better results.</p><p>Good judgment comes from experience and experience comes from bad judgment, an old saying advises us.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrfq6vBMqNZiMTwDF8aCrNCJBh6sV53t_kMJWbRiqOBSPQSMqkCg1PfQfnUeSbK7GE2RfLbhWRuifWWBV0WdCEmgxfIOhQhNxBOsCW4k4TWBryCBwvysAN2S6sgJuJpyqotg-b733cd2MMrdDVUS2lK3nBIJRH4MWrHVdct49AwLgbIcrQ86zon__x4QAo/s425/meeting%20majors.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="282" data-original-width="425" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrfq6vBMqNZiMTwDF8aCrNCJBh6sV53t_kMJWbRiqOBSPQSMqkCg1PfQfnUeSbK7GE2RfLbhWRuifWWBV0WdCEmgxfIOhQhNxBOsCW4k4TWBryCBwvysAN2S6sgJuJpyqotg-b733cd2MMrdDVUS2lK3nBIJRH4MWrHVdct49AwLgbIcrQ86zon__x4QAo/s320/meeting%20majors.jpg" width="320" /></a></div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-65310372918988279072023-10-22T15:01:00.000-05:002023-10-22T15:01:05.456-05:00Look Again: Beware of Becoming Habituated<p> <span style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: white; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway, sans-serif; font-size: 14.4px;">This may become one of my favorite, go-to, oft-quoted books, like “Invisible Gorilla,” “Tipping Point,” “Black Swan,” “Abolishing Performance Appraisals,” “Progress Principle” and others of this sort that challenge our paradigms. Sharot and Sunstein alert to how easy it is to become habituated to our routines, our beliefs, our ingestion of news and friends’ stories. The “Power of Habits” taught us that 40-60% of our routines are habits: decisions we made once and don’t re-evaluate unless there’s a disruption. These authors encourage the disruption so we can avoid becoming tolerant of lying, misinformation/disinformation, risky behavior and slow adjustments to the political enterprises…and more. They also provide ways to break “the trance” that don’t provoke defensiveness, fear, flight/fight when our own ‘habits’ of thinking, deciding, acting are challenged. The book is easy to read, digest and act on, if you’re willing to “look again.” (I appreciate the opportunity to get an advance copy provided by the publisher and NetGalley.)</span></p><p><span style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: white; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway, sans-serif; font-size: 14.4px;">In business, we have a lot of habits—SOPs, policies we’ve adopted from other organizations, and other behaviors because “that’s the way we’ve always done it”—and most of us who have explored and implemented world-class, best practices know that it’s good to review, re-evaluate and revise those ways we do business. I’ve written about how we did away with work shifts in a manufacturing company. I’ve challenged the promise of social media marketing for every industry—in construction, you have to be in the project manager’s top 3 list for those rush-jobs.</span></p><p><span style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: white; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway, sans-serif; font-size: 14.4px;">Therefore, it’s wise to avoid the trap of taking for granted that what we’ve done is always the best.</span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeXMweEnByccourycRYjGaBodH1OD-GOM_lENe_aA3MKOpsPDd0oSqlA46YsynLto3HIS7bYkAMK8rsegviRYOy1o7QgAez4Ppi-nN-c4N1nDYzt9x83o2IiZpto2nyrkCMiBxssGKcOYSnm7A2kmy8gj6sRzmfkhIDDK8hXqAVV7h9adzWupJJFyBHNr9/s640/130207-133535.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="640" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeXMweEnByccourycRYjGaBodH1OD-GOM_lENe_aA3MKOpsPDd0oSqlA46YsynLto3HIS7bYkAMK8rsegviRYOy1o7QgAez4Ppi-nN-c4N1nDYzt9x83o2IiZpto2nyrkCMiBxssGKcOYSnm7A2kmy8gj6sRzmfkhIDDK8hXqAVV7h9adzWupJJFyBHNr9/s320/130207-133535.jpg" width="320" /></a></div><br /><span style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: white; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway, sans-serif; font-size: 14.4px;"><br /></span><p></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-30296518525366760072023-10-19T15:42:00.002-05:002023-10-19T15:49:40.091-05:00Like a Drunk, Maybe We’re Looking at the Wrong Data<p> The proverbial joke: a drunk is looking for car keys under the lamp post; not because the keys were lost there but because the light is better. Similarly, there’s a <a href="https://nautil.us/this-wwii-story-made-us-better-thinkers-353414/" target="_blank">story out of WWII about a statistician</a> analyzing data on flak damage to bombers with the purpose of determining where to reinforce the armor plating on the plane. The Allies couldn’t add armor everywhere; the bombers would be heavier and consume more fuel and have a smaller bomb payload. After collecting the data from returning bombers and comparing this information to surface area and corresponding ratios, Abraham Wald reported that some areas are disproportionally damaged. However, in a key insight, Wald advised that these were the wrong areas to reinforce. These planes survived damage to those areas. He didn’t have data on the planes that did not return. Where were the lethal hits on those aircraft? He coined this bias towards available information: survivorship bias. We look at the successful companies, for example, and determine they were resilient to certain problems. But perhaps all companies are resilient to certain problems. We don’t know what damage—decisions, policies, behaviors, circumstances—occurred that finally did the unsuccessful companies in.</p><p>Dan Simons and Chris Chabris, the co-authors of <u>Invisible Gorilla—</u><a href="http://www.compassionatebusinessradical.com/2010/09/if-you-liked-tipping-point.html" target="_blank">which pointed out problems with our attention/focus and our memories—</a>have given us a new book, <u>Nobody’s Fool: Why We Get Taken In and What We Can Do About It</u>. This survivorship bias shows up everywhere and too often consultants sell us the methods that worked for Google, Meta, Apple, IBM, GE, 3M, Walgreen’s… Even Jim Collins and his comparative studies still can’t report on the thousands of companies that go out of business and the reasons why.</p><p>I’ve been in companies that really couldn’t answer the question because the information was missing. I’ve seen leaders tempted to use the available data to answer a different question assuming “it’s close enough” or “it’s the metric everyone else uses.” Like overall profitability instead of product line/service line specific. Or applying the same overhead rate for all activities even though resource consumption is lower on legacy products/services.This can be a problem. And proverbially has you looking for car keys under the lamp post, when they’re in the middle of the block. Close enough?</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbeMVQWRQ6v73Ix_aM8N5qiSXp90wSjqTb0-7xZm_tmVSD5JfUT46_uaX2VDXjN3GLjROXMuIPgWP5vhbZJrk03D7jMlv7a3V12pV0_EPAPNYIB-XxImyonrvi-Vh_B-z4VXALgOd-KFu8_wd9JQGiieUYnvEzcPNDaP34DKsDiRrTn41v-0PB2Ni1xiot/s346/closed-742070.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="333" data-original-width="346" height="308" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbeMVQWRQ6v73Ix_aM8N5qiSXp90wSjqTb0-7xZm_tmVSD5JfUT46_uaX2VDXjN3GLjROXMuIPgWP5vhbZJrk03D7jMlv7a3V12pV0_EPAPNYIB-XxImyonrvi-Vh_B-z4VXALgOd-KFu8_wd9JQGiieUYnvEzcPNDaP34DKsDiRrTn41v-0PB2Ni1xiot/s320/closed-742070.jpg" width="320" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfmEtPil7_iv7aX_1B3mJCHIRuxxfU5yglXktTA5pAdeqyXg6iSGRfOPTKwUPwTEyDuveJQlXRTZaNy3tLhtsz9NMRs_n7Q7q7_tnLL7O98Z-65PvL_Ugjkn8ohkeIoP39yDQzY2fYmAtWVhiMMb3ONKW71Xxfpp-W5XJoOy6xh-7U5uV9CGn3E3DWF-kY/s601/invisible-gorilla.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="601" data-original-width="400" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfmEtPil7_iv7aX_1B3mJCHIRuxxfU5yglXktTA5pAdeqyXg6iSGRfOPTKwUPwTEyDuveJQlXRTZaNy3tLhtsz9NMRs_n7Q7q7_tnLL7O98Z-65PvL_Ugjkn8ohkeIoP39yDQzY2fYmAtWVhiMMb3ONKW71Xxfpp-W5XJoOy6xh-7U5uV9CGn3E3DWF-kY/s320/invisible-gorilla.jpg" width="213" /></a></div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-37216411912325088112023-07-10T04:09:00.001-05:002023-07-10T04:09:00.150-05:00Entrepreneurial Brain?<p> Occasionally I guest-lecture for an entrepreneur class at a local university, so I was intrigued by Jeff Hays’ forthcoming book, <u>The Entrepreneurial Brain: How to Ride the Waves of Entrepreneurship and Live to Tell About It</u>. </p><pre class="display" id="review-display" style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway-Regular, sans-serif; font-size: 14px; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;">Jeff Hays compiles a lot of helpful advice and strategies for entrepreneurs, especially serial entrepreneurs and entrepreneurs from business schools (why I say this latter part, I’ll explain later). Two helpful keys are found in this book: business is full of paradoxes—contradictory advice where both sides are true at times; the key business functions and different strategic tools to grow (or survive). An example of the first is the advice to “never quit” while it’s also true that you should “quit early and learn” so you can make improvements for the next round. An example of the latter key is to be reminded that sales and marketing are two different and necessary business functions. His compendium of strategic tools may be worth the price of the book.
Hays himself is a paradox. He describes his values and how they rank in his decision-making and then conforms to his principles and violates them at the same time. For example, he describes the time value of money and explains how he’s refused to have lunch with people who want to learn from him. It’s not worth a $1ooo of his time to have lunch with someone. But then later explains that he’s willing to give because others have given to him. That it’s all about serving others especially customers. You give, and as a result you get. Through all his stories/adventures I’m wondering if he gives only to those that he can get something from. (I’m not impugning his character; I just couldn’t find a preponderance of evidence that he has lunch so others can pick his brain.)
While he’s trying to encourage entrepreneurs and notes that “all” entrepreneurs score high on the Quick Start dimension of the Koble assessment—versus Follow Through, Fact Finder, Implementor—it may do a disservice to those overlooked entrepreneurs who start most of the businesses in the US. We often call them “mom and pop” shops because they’re the key to providing for the owners’ families. They’re started sometimes by recent immigrants and refugees who see a need in the community. They’re started by non-Stanford, Silicon Valley-bound graduates. I challenge the author’s premise; I doubt all of these entrepreneurs score high on Quick Start. Millions of businesses are sole proprietorships. (Millions of businesses are also asset owner/holders like LLC’s to own/operate a solar farm in order to sell energy to a single customer, like a hospital, college or factory.) While the author’s book might help the millions of independent contractors in construction, computer programming and related, event planning, videography and home healthcare, and many other service industries, this audience will have trouble relating to the multi-million dollar deals Hays highlights. Maybe rather than knowing the Brain of the Entrepreneur, it might be worth paying attention to the Soul of an Entrepreneur (a book by bestselling author David Sax with the subtitle “The Work and Life Behind the Startup Myth.”)
Quick Start brains, according to Kolbe, can assess risks and are risk tolerant. Perhaps being risk tolerant, opposed to risk averse, is the key here. Others have shown that we’re horrible at assessing risk and predicting the future. Review Daniel Kahnemann’s and his co-authors’ works. Ask Nassim Taleb about black swans and how to invest broadly because we can’t predict who will win—for example, he describes the difference between NYT bestsellers and other writers as a lottery of catching the readers’ attention. There are many gifted authors but only a few sell more than a hundred or a thousand copies. Same with businesses (and economic trends and stock market stars, since most economists are wrong and most mutual fund managers can’t beat the stock market indices repeatedly). Hays’ mantra here is to make sure you avoid complexity and keep a simple business model. Whether that reduces risk or not, I don’t know. The guy who developed the copy machine thought there was a need for three in the whole world—maybe it was more complex than pen/paper and a good mimeograph machine. Risk tolerance might be the key to the entrepreneurial brain, or a bit of desperation if you’re trying to feed your family.</pre><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmdJs6s09wiaqihuqPLOIJql5I1lZ2EFPIucCi5mzwF_FbfCTG4yTtpVCAcihncbu1QnyzhyG3B1pZC6x-uiJuo9utJIblfoMfl1VuZK2Pxfa9wdxPmtPiIcPDLESzjrn5ncCrSZMAEvH0v6b3eVwBUFpTxtGTnWM6CAZ0cQmi0d56tLq8or5U-Qc6KUV2/s5760/Drinking%20Coffee.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3840" data-original-width="5760" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmdJs6s09wiaqihuqPLOIJql5I1lZ2EFPIucCi5mzwF_FbfCTG4yTtpVCAcihncbu1QnyzhyG3B1pZC6x-uiJuo9utJIblfoMfl1VuZK2Pxfa9wdxPmtPiIcPDLESzjrn5ncCrSZMAEvH0v6b3eVwBUFpTxtGTnWM6CAZ0cQmi0d56tLq8or5U-Qc6KUV2/s320/Drinking%20Coffee.jpg" width="320" /></a></div><br /><pre class="display" id="review-display" style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway-Regular, sans-serif; font-size: 14px; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><br /></pre>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-84630398299007868472023-07-07T03:47:00.001-05:002023-07-07T03:47:00.146-05:00Managing Risk<p> K. Scott Griffith’s forthcoming book, <u>The Leader’s Guide to Managing Risk</u>, describes how most of what we see in terms of risky situations is just the tip of the iceberg. What we often fail to see are the numerous systems and people aspects lurking below the surface that need attention as well.</p><pre class="display" id="review-display" style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway-Regular, sans-serif; font-size: 14px; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;">Griffith can tell us a lot about success and how to develop high-reliability, high-performance teams and systems. He’s had an enormous amount of success and is very familiar with systems thinking and how we all can create more robust mechanisms/systems/experiences for the probable risks. The author coaches us to think differently and coherently puts a way of thinking that can help us all.
It is, however, a pedestrian, common-man way of thinking through reliability, robustness and risk. I’m sure the author is familiar with a lot of techniques: accelerated failure testing, and the like, as well as Failure Mode Effect Analysis (FMEA), which requires us to step through the mechanical, cyber-system, digital and human elements. We have to think through potential failures at each step, each element. We have to rate its probability of occurrence, its severity and the likelihood of detection. High scores in those three aspects necessitate mitigating efforts to reduce probability, reduce severity or improve detection.
The author sufficiently covers redundancy to reduce probability (because we’re putting elements in parallel paths and “both” would have to fail). Not all systems can accommodate such mitigating factors. And humans are notoriously inept in multiple-stage “inspection” points—such as auditing, observing safety system changes, etc.: inspector A assumes inspectors B & C will catch the problems, while inspector B assumes A has already caught them or C will catch them….(you can probably guess inspector C’s reasoning as less-than-full attentiveness).
The audience for this book are the people who don’t want to pick up a small-ish article or book on FMEA.</pre><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5203wQVs_ryMeJoYqijbaQGy2VPgSEjmR-JQh8QBOPL4bzqyKBzgO4E3RVaX3bnA7kXtBQzhgAMtyANNOrc7ccIAv7KYPwvOiYwhzcY63dkFemjz0_k-mI_0JheOAVhcfU7jSkqoX5gszg_Bj3025P_evt6FRo2NMotbXoPtTMWKH-AisxafRMmK8tCYj/s254/charge%20of%20the%20light%20brigade.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="199" data-original-width="254" height="199" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5203wQVs_ryMeJoYqijbaQGy2VPgSEjmR-JQh8QBOPL4bzqyKBzgO4E3RVaX3bnA7kXtBQzhgAMtyANNOrc7ccIAv7KYPwvOiYwhzcY63dkFemjz0_k-mI_0JheOAVhcfU7jSkqoX5gszg_Bj3025P_evt6FRo2NMotbXoPtTMWKH-AisxafRMmK8tCYj/s1600/charge%20of%20the%20light%20brigade.jpg" width="254" /></a></div>[A scene from the movie, <u>The Charge of the Light Brigade</u>, a tragedy that could have been avoided with clearer communication and shared intelligence.]<br /><pre class="display" id="review-display" style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway-Regular, sans-serif; font-size: 14px; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><br /></pre>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-66681358578740450302023-07-06T03:46:00.001-05:002023-07-06T03:46:05.897-05:00The Geek Way to Run Your Company<p><span style="font-family: inherit;"> I appreciated getting an advance copy of Andrew McAfee’s forthcoming book, <u>The Geek Way: The Radical Mindset That Drives Extraordinary Results</u>. I’m all in for extraordinary results, as I’ve been fortunate enough to have seen it happen in turnaround situations—where the employees are hungry for a new style of leadership.</span></p><pre class="display" id="review-display" style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: helvetica;">McAfee, an author of many tech books, now puts the culture of successful companies in front of us. He asserts that the culture of speed, openness and other elements provide the medium for growth. He provides data to support his claim, which I’ll discuss below. While the author claims this new way of operating companies started in the 2000s, and is codified in a Netflix presentation openly shared with everyone, he also says that the crux of the Geek Way is found in a stack of business books sky-high. Which probably would include “Creativity Inc.” by Ed Catmull about Pixar’s culture. McAfee’s experience makes this a fun read, but for those of us who have read the mile-high stack of business books about cultures of mutual trust—competence, reliability/dependability, openness, acceptance (of failure in particular) and integrity—and driving accountability, responsibility and creativity will hardly learn much here. We would have seen similar things in Deming’s work, the culture of Westinghouse’s Hawthorne Works operations from the 1920s and 1930s, famous Skunkwork developments for World War II, high-reliability/high-performance military and civil operations teams, and so on. Much of McAfee’s advice can be found in “Built to Last” by Collins and Porras. Or McFarland’s “The Breakthrough Company” for the small- or medium-sized enterprises. Still, this book will help start-up leaders set the right course for their fledgling companies.
Like many other business books, McAfee’s suffers from a lack of contradictory evidence. He and others can write about the 10-50 successful companies practicing the Geek Way. He cannot or does not uncover if there are thousands of companies practicing the Geek Way outside of Silicon Valley, outside of tech, and how successful or not they are. There may be many that don’t succeed. How many tech startups have died, and yet had a Geek Way culture? How many other business failures—and the number is staggering in the first five years of any one business—weren’t prevented by the Geek Way? We may never know because Harvard Business School—of which McAfee had been a faculty member—cannot tell us. There isn’t a database for this.
While he applauds the social aspects of Geek companies—cultural evolution—he neglects some of the complaints that have happened even inside his star companies. There’s still tribalism in society and in tech companies: gender, race, caste are still obstacles to hearing and accepting another’s input or feedback. While constructive debate might be healthy, psychological safety can be key as McAfee points out. Still different personality types and different inherent motivational bases need different communication environments, methods and venues for safety and overcoming timidity. Ethical failures have also occurred in Geek Way companies. Maybe in a few decades we’ll know if Geek Way companies are “built to last.”
Likewise, the inertia in organizational dynamics and corporate culture requires several years to change a non-Geek company into one practicing the Geek Way. It’s why some startup kings and queens have had a hard time moving over to established companies. The people have “grown up” under a different kind of leadership and have a hard time trusting the new leadership styles, especially in the lower ranks who have less exposure to the C-suite.
The author avoids the trap of multiple anecdotes masquerading as data. However, McAfee fails to discern the quality of the data he includes. For example he touts a study of GlassDoor comments. GlassDoor surveys are self-selected, not random. This has an inherent bias towards the theoretical ends of company-culture distributions: the really bad and the really good. So we know nothing of the cultures—perhaps some operating in the Geek Way—of the middlingly rated, middlingly successful companies.
While there are some inherent flaws in McAfee’s approach—but not unique for business books—his work can be important for those who need to hear and want to hear how the successful tech companies are thriving.</span></pre><pre class="display" id="review-display" style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVrT8WUrzaFH5g1TgUFMjsvrYrbwnY03_SCRkEmiLnc_BMagamCAbIhsLTwiHjssd_Uz_fMwSUcTPXtEOb-RSQ89KXWEQCAb6-KZi5CRnIqcayDSlUEdue9ah7tyK5C8fS2tqJzzJ2zktfDvKu8Zv-7dAxtpgTdzUhw4ZWyGcb7RLW5g3lN0dFzuIRIior/s4724/9B16C2B6-9A6F-4B62-8DED-3E0B38429B34.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2647" data-original-width="4724" height="179" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVrT8WUrzaFH5g1TgUFMjsvrYrbwnY03_SCRkEmiLnc_BMagamCAbIhsLTwiHjssd_Uz_fMwSUcTPXtEOb-RSQ89KXWEQCAb6-KZi5CRnIqcayDSlUEdue9ah7tyK5C8fS2tqJzzJ2zktfDvKu8Zv-7dAxtpgTdzUhw4ZWyGcb7RLW5g3lN0dFzuIRIior/s320/9B16C2B6-9A6F-4B62-8DED-3E0B38429B34.jpeg" width="320" /></a></div><br /><span style="font-family: helvetica;"><br /></span></pre>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-82926713434865732382023-07-05T15:08:00.001-05:002023-07-05T15:08:08.785-05:00Trying to Alleviate Your Own Worker Shortage<p> Construction trades has been struggling for a long time with a shortage of new entrants into the workforce. 25 years ago I was on a local school district's tech prep committee to encourage students to get into the trade tech classes in high school. This year, it was reported that <a href="https://www.bizjournals.com/twincities/news/2023/03/31/hvac-genz-ryan-training-program-worker-shortage.html" target="_blank">one HVAC/plumbing/electrical installation and service company</a> has developed their own trade school for 45-50 students/year. They modified a space for $500K to accommodate the training.</p><p>Besides the modification, which can be amortized/depreciated over several years, they are investing in instructors' wages and benefits, materials and equipment. They might have a vicarious lock on graduates but it's still quite an undertaking. Some estimates place the cost of recruiting at 15-25% of a person's wages, plus there's the average time (opportunity loss) of 27 days...and if the new hire doesn't work out or doesn't like your work/company, then you've lost 30% of wages on attributed benefits (FICA, PTO, etc.) if they quit before you've recovered your hiring costs through productivity. </p><p>Let's say you have a net margin of ten percent (10%). If you pay a tradesperson $50K (for easy calculations, roughly $25/hr), then you need $500K in revenue to pay for the wages, $660K for wages & benefits. And an additional 8% or $40K for lost opportunity in the one month you are short a worker, and even more if you paid overtime to current workers to make up for lost capacity.</p><p>We're at nearly an additional $750K in revenue to cost of acquiring the new worker. Gens-Ryan might be able to offset some of the recruiting costs through their school. But they've added the school costs as well. Still they seem to be counting on nearly $30-50 million in additional revenue. And that's a pretty hefty lift for a company estimated to have $20-50 million in revenue.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNPQ5Y5OhpSaftY52vwcLsMQbUcP5LobRCurBviEcDl01q3lbXm7Rn-CoBJ2JfNMZdPX92uiu0Sby6v29tLPXscSJQXrgJtgQUU0xSijwI9f-9ZwWfuQMTKWiZe07gd0ivHYZ4GNlTahiYlcCoh8jaVvJnKjYdZXUH0bLKq64fDLJf7SR72HpA-rGJMNiY/s3024/3AE912D6-4165-4F4E-9623-64E9B8A44CB8.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3024" data-original-width="3024" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNPQ5Y5OhpSaftY52vwcLsMQbUcP5LobRCurBviEcDl01q3lbXm7Rn-CoBJ2JfNMZdPX92uiu0Sby6v29tLPXscSJQXrgJtgQUU0xSijwI9f-9ZwWfuQMTKWiZe07gd0ivHYZ4GNlTahiYlcCoh8jaVvJnKjYdZXUH0bLKq64fDLJf7SR72HpA-rGJMNiY/s320/3AE912D6-4165-4F4E-9623-64E9B8A44CB8.jpeg" width="320" /></a></div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-18919731950393765122023-06-26T09:44:00.003-05:002023-06-26T09:44:50.522-05:00Recession in 2024? Not If Our Innovation Continues<p> Recently I've seen two conflicting reports on the probability of a recession in 2024. In one, they cite that infrastructure spending has been spread out. Capital investments, such as needed for the CHIPS Act for semiconductor manufacturing, haven't started and waiting for inflation to stabilize. Perhaps waiting for supply chains to stabilize as well. Employment is still high. A key factor in keeping unemployment elevated is a lack of day care so one parent stays home or is limited to part-time work. Relative birth rates from five years ago to this year will determine if more parents re-enter the full-time work force than depart it. </p><p>Another (see figure below from Pitchbook) is predicting a recession in the first or second quarter of 2024, based on historical trends. Look closely at the chart. Really close. It plots a "smoothed" probability of a recession in the next 18 months. Note that when recessions occurred in the last 45 years, it was when the probability dropped. A recession did not occur at the peak probability nor 18 months after. A recession seems to appear within 12 months of the peak or longer. Now look at all the peaks above 40%, 50%, even 60%. There were seven/eight such peaks, and only 5 have recessions afterwards. That's an 60-70% accuracy rate. </p><p>Consumer spending is still strong and businesses may be struggling to provide all the goods/services we demand. Hence tight labor market and supply chain strains. Logistics firms are staffed below capacity needs. As long as demand keeps pushing, the economy will keep growing as all of us business leaders figure out creative ways to meet the demand.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjL1AZPUdatp284Yv9GryE70KmCIGcIcGHUqjxXbDTCfxcchu1oKVfB_KdSgwmuW_VGMXLdsey_F6tnrXFlFFEB6xVE35y_kHRNTdREgxgIOx2YZTUGysM2dZWkoHQH6tSGi_CDOHw9GXFCgW1nAT6nHGiNLvmuZTflgEzUVblUmgEZ13n4IJFbBpH9LGZv/s2018/Screen%20Shot%202023-06-26%20at%209.24.09%20AM.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1130" data-original-width="2018" height="301" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjL1AZPUdatp284Yv9GryE70KmCIGcIcGHUqjxXbDTCfxcchu1oKVfB_KdSgwmuW_VGMXLdsey_F6tnrXFlFFEB6xVE35y_kHRNTdREgxgIOx2YZTUGysM2dZWkoHQH6tSGi_CDOHw9GXFCgW1nAT6nHGiNLvmuZTflgEzUVblUmgEZ13n4IJFbBpH9LGZv/w539-h301/Screen%20Shot%202023-06-26%20at%209.24.09%20AM.png" width="539" /></a></div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-75110430713896196842023-06-15T09:05:00.001-05:002023-06-15T09:05:15.052-05:00Legal, Political Analogy<p> A friend owns an AR-15 semiautomatic weapon and keeps it in his gun safe. Let's call him Zach (and as far as I know, any Zach's in my family or acquaintances don't own an AR-15). Another friend, who we'll call Adam, wants to see the weapon in Zach's home. Zach shows it to him. Zach even lets Adam fire it in Zach's personal home gun range.</p><p>Adam asks to borrow the AR-15 and Zach agrees with the warning that it should be kept secure. Adam takes it home. Later Adam brings it back to Zach's house. He uses it in Zach's gun range again. Adam takes the gun home again. Adam's wife tells Zach's wife that Adam is leaving the AR-15 out in the living room, loaded, unsupervised and the kids could get hold of it. Zach hears this and asks for the weapon back. Adam says, "Oh, I only have the bullets. I'll send them over to you." Zach gets the box of ammo and some bullets are missing. </p><p>"Adam, I need the weapon back and the rest of the bullets. You're not complying with my demand that you keep the weapon secure."</p><p>"Zach, I don't have it."</p><p>Zach heads over to Adam's house. He looks in the living room. No gun. He goes home. Adam's wife later tells Zach that Adam moved the gun to the garage. Zach heads back the next day to Adam's house and looks everywhere. No gun. Adam had moved it to his parent's house. </p><p>Does Zach stop looking for the gun? They're friends. Might even have brotherly love for one another. Or does Zach keep pursuing the return of the gun so that nothing bad happens to Adam's wife or kids or Adam himself because the AR-15 is not being kept in a gun safe? Should he involve the police so there's more authority behind the return? If Adam still resists the return, what should the consequences be for Adam? Merely a loss of gun privileges, loss of friendship, fine/jail time for reckless endangerment of children?</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8S5EwTOL3LhAPiGIiKUaIpAFo6aTbaqQGKiJqB7BoO1uu0bRJMnwY6P4oCfQx_m6nWWo1T0iTTcSEQtSrKBiUjVGs_t5oIkY-8VDF-443WVhBxme64FGPZ98w2atsST6dkiEMJXPSA-34Pntj-b8JnEwgccv1a8PBReErO9N6kUpPghq4P0oE73KwoA/s545/curmudgeon--small.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="408" data-original-width="545" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8S5EwTOL3LhAPiGIiKUaIpAFo6aTbaqQGKiJqB7BoO1uu0bRJMnwY6P4oCfQx_m6nWWo1T0iTTcSEQtSrKBiUjVGs_t5oIkY-8VDF-443WVhBxme64FGPZ98w2atsST6dkiEMJXPSA-34Pntj-b8JnEwgccv1a8PBReErO9N6kUpPghq4P0oE73KwoA/s320/curmudgeon--small.jpg" width="320" /></a></div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-57462579659602085742023-06-07T09:06:00.002-05:002023-06-07T09:06:24.199-05:00DEI and All That<p> Lately I heard that some conservatives are upset that Chick-Fil-A has a VP of DEI (diversity, equity and inclusion). They’ve had one for many years but Chick-Fil-A has been “outed.” An upcoming book—Kevin Woodson’s <u>The Black Ceiling</u>—could help enlighten us on the issues and options for Black advancement. The author adopts Nancy DiTomaso’s perspective of “racial inequality without racism.”</p><pre class="display" id="review-display" style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway-Regular, sans-serif; font-size: 14px; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;">Woodson provides an important and easily understood contribution for those organizations trying their best to have more diversity and inclusion. Unlike many programs and workshops, he comes from a broad range of exploratory disciplines—cultural sociology, organizational dynamics and social psychology—to go deeper than surface symptoms that hinder Black professionals’ career advancement. Though limited to the legal and financial arenas, his conclusions can be applied to any industry, any organizational tier and any size of business.
He expands on the insight that the “ceiling” is enhanced by social alienation and stigma anxiety. Everyone will recognize the ensuing reactions when they’ve been in a culture clash. Even White people experience this if they’re honest when they travel from northern US to southern US or vice versa, or travel to other parts of the developing world. We will all have a tendency to develop the coping mechanisms of isolation, seeking out familiar people and situations and disparagingly assessing others without full understanding. Therefore, White people should be able to commiserate with their Black professional brothers and sisters. To overcome the alienation and anxiety, Kevin Woodson provides several effective options for organizations and individuals to dissipate the obstacles for Black professionals. These are not your usual prescriptive tropes you might see in other places.
I did spot one glaring omission in his recommendations. While acknowledging the inaccuracies, biases and damage inherent in <a href="https://www.washingtonpost.com/national/on-leadership/the-corporate-kabuki-of-performance-reviews/2013/02/14/59b60e86-7624-11e2-aa12-e6cf1d31106b_story.html" target="_blank">performance reviews/appraisals</a>, earlier in the book he fails to call for their “abolishment” as an idea to help Black professionals (and actually all professionals). Confirmation bias, recency bias, (and other prejudices), collaboration inadequacies, timing issues, rating/ranking policies and individual reviewer’s perspectives and preferences conspire to raise the level of inaccuracy and reviewer’s projections to a level of 90 percent. The person’s actual performance provides a mere ten percent influence to an appraisal of a year’s performance or particular project review. This problem is compounded when these faulty reviews are the basis for promotion, wage increases, and other “juicy” assignments that can propel a person’s career. If organizations take this problem to heart and develop different, simpler assessment techniques and reduce the enormous significance these assessments have, all professionals (and other categories of employees) will benefit. Assessed individuals could try to let the reviews not inflate or deflate their egos.</pre><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicrJE3xRCpzJs3bJyLLJ3q0gFSbekZ2DEQtavsnn-DsGjaD5h_Hn2_eSEvcC6b3bhzrDV47QyVtJ0wciYrD3FplJkQ30g3EHJ1sJrdGCpCnu5fhDthtBGvXi0wk3vOWGBhNzXxRpIcHIo5rYj-syC2eNn9RQf_rtYT7kixF5A1P2MuVqSsny5586Ostw/s382/blog%20image.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="290" data-original-width="382" height="243" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicrJE3xRCpzJs3bJyLLJ3q0gFSbekZ2DEQtavsnn-DsGjaD5h_Hn2_eSEvcC6b3bhzrDV47QyVtJ0wciYrD3FplJkQ30g3EHJ1sJrdGCpCnu5fhDthtBGvXi0wk3vOWGBhNzXxRpIcHIo5rYj-syC2eNn9RQf_rtYT7kixF5A1P2MuVqSsny5586Ostw/s320/blog%20image.jpg" width="320" /></a></div><br /><pre class="display" id="review-display" style="-webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%; background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway-Regular, sans-serif; font-size: 14px; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><br /></pre>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-64721521820729850832023-04-10T16:15:00.002-05:002023-05-02T08:18:47.102-05:00To Be Invested or Not To Be Invested?<p> <span style="background-color: inherit; caret-color: rgb(102, 102, 102); color: #666666; white-space: pre-wrap;"><span style="font-family: arial;">As a minimal business investor and entrepreneur coach, Pulak Prasad’s upcoming book, <u>What I Learned About Investing From Darwin</u>, is a godsend. His first chapter alone is worth the price: combining Buffet’s advice, with statistical inference on the types of risk and how natural selection works, you get a great idea of how Prasad evaluates opportunities. As the author says, you might miss out on an Apple or Tesla, but you will avoid hundreds, thousands of JC Penney’s (in the 21st century) and the like.</span></span></p><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: arial;">
The key is minimizing calling a bad investment a good one (type I error). Mistankenly putting money into a bad company is a losing risk and the biggest hindrance to having an overall good record. Whereas most investment funds chase lots of opportunities, they underperform against the stock exchange indexes (S&P 500, DJIA e.g.) This might be in contrast to Taleb’s Black Swan strategy—because you can’t predict winners, invest some in a lot of companies and the winners will overwhelm the losing multitudes. But then Prasad gives simple advice on how to simply identify a few solid investments. For those familiar with Stern Stewart’s Economic Value Added, you’ll resonate with Prasad’s analysis.
While you think evolution is only concerned with physiological traits, the author identifies some behavioral evolution and relates this to company leadership and strategies.
I spotted one consideration worth changing on this upcoming book: Buffet’s guidelines are referred to as “diktat” but better is “dicta” since the former is considered pejorative as it refers to edicts from an external or distrusted authority.</span></pre><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: arial;"><br /></span></pre><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhlE_7uxUpqP8x6SdEd44e_xufdNVEX7F7e_SxrcrmJgx2aOwwxr67-4HBebqLmpNP0be4nhe_E5ZJtdoeJA0711i-UjXysx4hSBCxJoPaP-RC1gSXHgHnVV7nsKyFo5PkblhgFbD_vxdRCJpDL04CfmujWd4X_Hbx5lrELuDbr_stF_pmUFBOylBwIqA/s4724/9A18BA15-E149-4F17-BE93-2C9C152F8734.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2647" data-original-width="4724" height="179" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhlE_7uxUpqP8x6SdEd44e_xufdNVEX7F7e_SxrcrmJgx2aOwwxr67-4HBebqLmpNP0be4nhe_E5ZJtdoeJA0711i-UjXysx4hSBCxJoPaP-RC1gSXHgHnVV7nsKyFo5PkblhgFbD_vxdRCJpDL04CfmujWd4X_Hbx5lrELuDbr_stF_pmUFBOylBwIqA/s320/9A18BA15-E149-4F17-BE93-2C9C152F8734.jpeg" width="320" /></a></div><br /><span style="font-family: arial;"><br /></span></pre>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-1403013934901723452023-04-07T16:09:00.001-05:002023-04-07T16:09:00.191-05:00Big Data: Help or Hindrance?<p><span style="font-family: arial;"> <span style="background-color: inherit; caret-color: rgb(102, 102, 102); color: #666666; white-space: pre-wrap;">Tumin and Want in their upcoming book, <u>Precisely</u>, highlight a necessary discussion regarding “big data” and its analysis. While they tout the many benefits of “precision systems”—reliable, reproducible, accurate output from data analysis—they do not overlook the past failures or forthcoming issues if imprecision is not exorcised from our data sets and algorithms. In this regard, this book builds on others like <u>Weapons of Math Destruction</u>. The authors discuss key successes in sports, criminology and business. </span></span></p><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: arial;">
They warn against people who want to take action on analysis results before asking the tough, probing questions regarding the collation of data, the assumptions behind algorithms and so on. They caution that the “action vanguard” who blindly trust the data engine outputs will “fire, aim, ready” in that order. Part of the ready, which needs to be first, is ensuring high quality data integrity and freedom from corruption or misapplication.
There are some examples that we can find success by utilizing simpler tools. Many business processes (not just manufacturing) have benefited from timely Statistical Process Control analysis where outliers quickly instigate an investigation to determine if “something” has changed—or other patterns. Like any good business prospectus’ caveat, historical success does not guarantee future success, extrapolation of data should be “taken with a grain of salt.” Too many have been burned assuming projections are linear, only to discover there’s a performance plateau (e.g. market saturation). Whenever we’re dealing with markets and other phenomena of human behavior, it becomes less predictable; behavior changes when it’s observed, sort of like the quantum Heisenberg Uncertainty Principle. I’ve seen results often improve by ten percent just because people knew it was being measured. Consumer trends can run hot and cold in an instant and they become less predictable. Thus, precision systems might have their place in static processes and environments. I wish the authors would address this more completely.
For example, how would the authors build a precision system for most of our endeavors which can be characterized as an Infinite Game (Carse, 1987 and Sinek, 2019). In an infinite game, the rules may change, the competitors may change, the boundaries may not exist and there’s no time limit. In business, I always asked my staff to revisit policies, processes and procedures every six months—and I advise other business owners similarly—because what used to work may not work still: competitors, suppliers, service providers, regulations, customers, team members’ behaviors and skills, community resources, etc. have all changed. (As a Greek philosopher said many centuries ago, “You cannot step in the same river twice.”)
In addition, we’ve probably all experienced that our metrics were leading us to the wrong behaviors, decisions and goals…and businesses go bankrupt when this happens. So Tumin’s and Want’s precision systems need to ensure that we’re not “putting the ladder against the wrong wall.” Their chapter on transformation, red zones and watching out for misleading correlations is worthwhile.</span></pre><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: arial;"><br /></span></pre><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: arial;">This is good addition to the data analysis conversation to move us toward reliable, reproducible and accurate results.</span></pre><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivH0g14pS6nrxpg27tjrAuEYOTdbUjOl1zsQ3H3VJSnI8X1bEk0Ex3TPp7KS8vUw1BLaMHuAJfAah_otpFFc4WD7RZsa23QYWj3nOhjCY6jOuzL1OYbcQqVeL5CILfYL8t2L6m7eBdsUnjcqw0hcSwO97ThcQE2crZCxLBh-szqks2ZNEEONAE26eFig/s267/Emperor.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="189" data-original-width="267" height="189" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivH0g14pS6nrxpg27tjrAuEYOTdbUjOl1zsQ3H3VJSnI8X1bEk0Ex3TPp7KS8vUw1BLaMHuAJfAah_otpFFc4WD7RZsa23QYWj3nOhjCY6jOuzL1OYbcQqVeL5CILfYL8t2L6m7eBdsUnjcqw0hcSwO97ThcQE2crZCxLBh-szqks2ZNEEONAE26eFig/s1600/Emperor.jpg" width="267" /></a></div><br /><span style="font-family: arial;"><br /></span></pre></pre>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-58669382364965446352023-04-06T16:05:00.001-05:002023-04-06T16:05:00.189-05:00Fifteen Tools to Turn the Tide in a Negotiation?<p><span style="font-family: arial;"> Seth <span style="background-color: inherit; caret-color: rgb(102, 102, 102); color: #666666; white-space: pre-wrap;">Freeman’s upcoming book, <u>15 Tools to Turn the Tide</u>, provides lots of scenarios to which his fifteen tools have been applied. As the title suggests, most of the scenarios have a crisis, catastrophe or conflict as the starting point. The book’s value comes in the acronyms (what Professor Freeman calls mnemonics): I FORESAW IT, APSO, WIN-LOSE are some of them, with the foremost being the main one. Underlying his tools are principles of kindness, generosity and respect and a desire for win-win agreements. Though he recognizes that his “students” may abuse their negotiating expertise, he hopes they recognize the biblical and Spider-Man’s dictum that great power entails great responsibility. While citing General Eisenhower’s secret weapon of generating harmony among rivals, he exhorts us to negotiate in a way that brings contentedness, wholeness to everyone (the Jewish concept of shalom). </span></span></p><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: arial;">
Freeman’s mnemonics easily guide negotiators from having to remember others’ elaborate tactics (like Roger Dawson’s 40 rules, principles and <span style="background-color: inherit;">gambits). Though the author encourages fact finding, it lacked much discussion on good, non-leading open-ended questions. I was particularly struck that Freeman highlights some of Harvard professor Mnookin’s work and yet neglected a former FBI negotiator Chris Voss’ advice on becoming the “smartest person in the room” by utilizing these types of questions. Voss beat Mnookin in a staged but surprise kidnapping by asking questions such as “How would I get that kind of money to pay the ransom?” Thus making his problem their problem, making their request into a problem. In my thirty-plus year career in business, negotiating customer complaints, supplier issues, customer contracts, these are some of the best tools. Freeman’s tools start with researching the other’s (and our own) interests, facts and options. Open-ended questions are important, especially if you listen deeply and empathetically as Freeman suggests.</span></span></pre><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: arial;">
Even though Freeman discusses dealings with “Godzillas” and junkyard dogs, and provides a few strategies for dealing with them by de-escalating the situation or isolating them from the negotiation or getting allies involved, I was wondering just how Freeman would handle a narcissistic Godzilla—and I’ve had a few bosses like this—when it seems no amount of persuasion helps and the facts become fluid. Donald Trump in his book The Art of the Deal talks about “fighting back and fighting back hard.” This has been proven by his record in litigation that, according to USA Today in 2016, showed he entered into more litigation than a half-dozen, larger real estate developers combined. Some of those lawsuits had to do with non-payment to construction contractors. If you find you couldn’t walk away (win-win or no deal, right?), and the deal goes sour, what’s the best strategy for recovering shalom when the Godzilla is as rabid and tenacious as a junkyard dog?
I would recommend this book for every business person, who may or may not have to negotiate, because Freeman’s tools are also helpful in problem-solving some project team dynamics, budget discussions, etc.</span></pre>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-19970361646260182842023-04-05T15:56:00.001-05:002023-04-05T15:56:00.199-05:00Decision-Making and Risk<pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: arial;">Hasard Lee gives us an exciting read about decision-making in his upcoming book, <u>The Art of Clear Thinking</u>. It’s easy to get lost in the Top Gun stories and miss his important lessons about clear thinking. Many of us don’t face life-death situations that require split second decision making. Thus, the author intersperses business and other examples to elucidate his points. He teaches us that the fighter pilot’s mantra applies to all of us: “No situation is so bad I can’t make it worse.” Especially if I don’t follow the author’s guidelines. Those who have studied leadership response mechanisms might be familiar with Boyd’s OODA Loop or Deming’s PDCA and such. Lee simplifies these mechanisms into a more easily remembered key.
His experience complements the teaching while adding an important aspect that cripples a lot of us: the lack of mental toughness, which can be taught. We might find ourselves in traffic situations or business situations where things are spiraling out of control. Everything we try fails. All we can foresee is disaster. Stress is maxed. Our clear thinking is diminished. We get “tunnel vision” and become so desperate to gain an edge that we actually can sabotage our desired result: more money, more time, more social connections, etc because we become asset wasters, time wasters and socially awkward in our desperation. Hasard Lee gives us some tools to identify and counter stress that clouds our thinking.
For those of us who have evolved workplace cultures into high performance, highly reliable teams understand many of the key elements here: get input from diverse thinkers, get as much info as you can and then execute well. As importantly, also debrief the implementation with everyone being equal. I learned this from seeing flight deck crews on aircraft carriers chide a superior officer for poor orders or decisions. In a manufacturing workplace, we incorporated this by making sure our machine operators had the opportunity and encouragement to voice not only what they knew but what they thought the decision should be and then what worked and what didn’t from their perspective, which was just as valid as any manager’s or engineer’s.
</span></pre><p><span style="font-family: arial;"><span style="background-color: inherit; caret-color: rgb(102, 102, 102); color: #666666; white-space: pre-wrap;">If you’re familiar with General McChrystal’s book “Risk” many of the principles in Lee’s book will resonate. McChrystal would add a phase of detection before Lee’s first stage. McChrystal acknowledges the many forms of bias that can fog our ability to detect—we see what we believe. The work by the authors of “Invisible Gorilla” have pointed this out. If we’re not expecting something, we don’t see it, whether it’s a gorilla in the midst of basketball players or a motorcycle in traffic. If we don’t expect to see the small, industry-disruptive and indirect competitor, we’ll miss the threat. Biases can prevent us from detecting the threat and our own vulnerabilities in our organizations. Even if we detect it, we might categorize the other “foe” based on past experience—Nokia did this when confronted with the first smartphones and the fragile screens—and not notice the important details and overlay unobserved but assumed details, like consumers were willing to risk screen fracture to obtain immense functionality with their nano-computer-in-a-pocket.. Lee doesn’t help us much with learning to overcome our observational biases, except to advise us to better understand the potential failure</span> <span style="background-color: inherit; caret-color: rgb(102, 102, 102); color: #666666; white-space: pre-wrap;"> in thinking phenomena follow a linear path when many can be exponential. Scaling up a small distinction can lead to tremendous results if we recognize this. </span></span></p><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: arial;">
I would use Lee’s book as the foundation to teaching good decision-making to my “apprentices.” It is a worthwhile addition to any leadership library.</span></pre>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-28472072157138639562023-04-04T15:52:00.001-05:002023-04-04T15:52:00.197-05:00Plunder: the Problem with Private Equity<p><span style="font-family: inherit;"> </span><span style="font-family: arial;">Brendan</span> <span style="font-family: arial;"><span style="background-color: inherit; caret-color: rgb(102, 102, 102); color: #666666; white-space: pre-wrap;">Ballou brings a lot of experience and research to the mechanisms and effects of large private equity firms in his upcoming book, <u>Plunder</u>. Much of the book catalogs the incentives and the resulting problems for acquired companies and their employees—and in the field of healthcare, their patients/clients and families. At the end of the book (ironically, in Chapter 11) he gives solutions to prevent acquired enterprises’ bankruptcies and collapses. Some we can do but most that need regulatory and legislative efforts.</span><span style="background-color: inherit; caret-color: rgb(102, 102, 102); color: #666666; font-size: 14px; white-space: pre-wrap;"> </span></span></p><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><span style="font-family: arial;"><span style="font-size: 14px;">
</span>Though he painstakingly describes what’s happened in a few industries by the 800-pound gorillas of the private equity world (e.g. KKR, Blackstone), he attributes a lot of the consequences to malicious intent. I doubt this is the widespread case. Only insane people would sabotage their investment even if they’ve recovered their initial capital outlay. Also, reading this book, you’d think all private equity firms are “evil” and bad for companies, and society. Many investment firms are often prescribing to the hold, secure and grow acquisition model and then sell if the capital is needed elsewhere or there’s an obvious strategic buyer. Though Ballou highlights a few industries and regional markets where PE investments have been detrimental, many more industries have survived and thrived with PE infusions.</span></pre><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwU4JYLnOL3Ieh6j9hOevSiNY9iPjGhPz54y_RE64tZ3ZBt7xUmk1ddcFoMI8DLw9QOQtI-35k7lRv08fJC5rU5BgsMhnImaOmUdmdG206OP25m5CYofRG-V64VArKE58G0uIHZ7w3sOn0XH4pTMhYjsTnoCAMr6AFXoiRmgAJ7UDzfpsjPeRuY7dmGQ/s346/closed-742070.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="333" data-original-width="346" height="308" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwU4JYLnOL3Ieh6j9hOevSiNY9iPjGhPz54y_RE64tZ3ZBt7xUmk1ddcFoMI8DLw9QOQtI-35k7lRv08fJC5rU5BgsMhnImaOmUdmdG206OP25m5CYofRG-V64VArKE58G0uIHZ7w3sOn0XH4pTMhYjsTnoCAMr6AFXoiRmgAJ7UDzfpsjPeRuY7dmGQ/s320/closed-742070.jpg" width="320" /></a></div><br /><span style="font-family: arial;"><br /></span></pre>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-31051600198055383542023-04-03T15:51:00.003-05:002023-04-03T15:51:36.951-05:00Team Habits: A New Book for Org Leaders<p> <span style="background-color: inherit; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway-Regular, sans-serif; white-space: pre-wrap;">It didn’t take long for me to fall in love with this book--<u>Team Habits</u> by Charlie Gilkey to be published August 2023--as soon as I saw Gilkey’s citation of Amabile’s and Kramer’s book, The Progress Principle—a must read for any manager or leader. Of course, this book’s title “Team Habits” is also attractive since so much of business and organization life is conducted through habits (see The Power of Habits by Duhigg). We make a decision “once” and stick with it until there’s a disruption to our processes, policies, strategies, etc. Leaders and teams operate the same way. We conduct ourselves through routines that are hard to change, just like any habit. Gilkey’s book helps disrupt those “trances” by providing takeaways at the end of each chapter and, more importantly, practice ideas to implement and start creating new habits. A leader will do well to reinforce new behaviors and find ways to put obstacles in the path to “the way we used to do it” (ala the fable of Cortez burning his ships or sending them back to Spain, so that his conquistadors were forced to march forward and no chance to quit). For anyone who’s tried to create change in organizations, this is important and Gilkey provides a service to us all with his book.</span></p><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway-Regular, sans-serif; font-size: 14px; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;">Since decision-making is one of those habits that interferes with team performance/excellence and overall motivation (see Kohn’s Punished by Rewards in which he shows giving employees choice is important, and its iteration in Daniel Pink’s Drive), the author’s broad treatment of how teams and leaders make decisions is vital. I once had a CEO ask me how he could get his staff to be more empowered. I advised that his staff would continue to be “disempowered” as long as he continued to behave (i.e. handle decision-making) as he always has. The team would continue to defer to his judgment and look for his approval of ideas. He needed to decline attendance at meetings. If he did attend, he needed to put on his best “poker face”: no non-verbal cues as to his interest or dislike in any of the proposals, no raised eyebrows, frowns, sighs, smiles, drumming fingers, sitting back/forward, etc. Until he changed the decision-making process, the team was going to be stuck. Gilkey would teach this CEO about which decisions he needed to retain, which ones he should seek input before deciding and which ones the staff could decide. (What I have learned and taught as discerning when to tell, sell, consult and join your team in the decision-making. The differences are determined by urgency, responsibility and how much team ownership in the decision is evident or desired.) Gilkey’s material would also coach that team in how to make and implement decisions.
There is a lot more here than just decision-making, but I find it’s often overlooked in team-building materials. Gilkey also covers the “traditional” topics of team structure, team composition, team dynamics and so on.
Even team-building, team-leading veterans will glean something from this book.</pre><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxsizhVEPFGxJV9hfaVZ3dOHyxxmNRje4DFagpchyRz6u-l-loJauxJQA3yglxKBnLHCH6GgOrk6d1H7V3HjeO_Zz5kIPtRiEUyQNuD2FJ-GgDyc51J-7xRNBlSTMaHknlMJvxLGi7C7atcHnWoExKZipobu6cL2z24Ev0_A2hcXi97QZksg3dPd3XpQ/s254/charge%20of%20the%20light%20brigade.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="199" data-original-width="254" height="199" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxsizhVEPFGxJV9hfaVZ3dOHyxxmNRje4DFagpchyRz6u-l-loJauxJQA3yglxKBnLHCH6GgOrk6d1H7V3HjeO_Zz5kIPtRiEUyQNuD2FJ-GgDyc51J-7xRNBlSTMaHknlMJvxLGi7C7atcHnWoExKZipobu6cL2z24Ev0_A2hcXi97QZksg3dPd3XpQ/s1600/charge%20of%20the%20light%20brigade.jpg" width="254" /></a></div><br /><pre class="display" id="review-display" style="background-color: inherit; border-radius: 4px; border: none; box-sizing: border-box; caret-color: rgb(102, 102, 102); color: #666666; font-family: Raleway-Regular, sans-serif; font-size: 14px; font-stretch: normal; line-height: 1.5em; margin-bottom: 0px; margin-top: 0px; outline: none; overflow-wrap: normal; overflow: auto; padding: 0px; white-space: pre-wrap; word-break: normal;"><br /></pre>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-4105225704362661632023-03-23T14:11:00.003-05:002023-03-23T14:11:28.055-05:00Sales Commissions for Life, and Beyond Life<p> Recently I talked to a company advertising for fractional CFO/CEO. The business model is: introduce us to your business contacts, we’ll bring in the subject matter experts in 4-5 financial area, and you’ll get a sales commission based on the savings we generate for the new client. Not only will you continue to be paid a portion of the savings as long as the contract is in place, but they are payments that can be made to your estate.</p><p>I passed. As I’ve written before, I have a love/hate relationship with sales commissions. A person’s sales commissions can increase because the client’s business increased—without any effort or influence by the salesperson. They did nothing to earn the extra pay but they get it anyway. There is no correlation between the value they bring to the organization, the value they bring to the client and their pay. All they have to do is not cause the client to fire the product/service provider. So strike one on the advertising company is that when they should be paying a referral fee, they’re paying a commission. </p><p>The company argues that nothing is paid unless savings are found and achieved for the client. Still doesn’t mean they should pay, nor should the person accept, perpetual commissions. If they weren’t paying these commissions, could they cut their take on the savings? Probably. Wouldn’t that help the clients to see more of the savings than 50%? Wouldn’t help their bottom line even more if they could retain 60% of the savings? </p><p>Likewise, a lot of these savings could be achieved by internal staff reviewing A/P, credit card, freight, utility bills. Once you enlighten your tax accountant on several of the business credits—like R&D credits, which several of my companies took as we researched/designed new production processes to accomplish custom manufactured parts to customer specs—your tax accountant just automatically reviews those inputs annually after that.</p><p>If I signed up I wouldn’t be getting paid for my expertise, but just for my friendliness. I’d hate to have my friends and acquaintances be worried about who else I was going to ‘sic’ on them.</p><p>These are the biggest areas to help businesses either. Companies lose more money by not optimizing the one thing that attracts customers to them, instead of to their competitors. They also lose money by not building trust within the organization which can lead to alignment and engagement. These are not things that your competition is not paying attention to. You could really do well by gaining market share and improving your value proposition to the customers.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_kt1GecTXSfi6KIMj-qKb_0FkSAV8lkOu3jx9A1HtDJvlpNyQPQgw9-Jb87IwN1tDmRvrfA2BvkyymqdZkOupJAV1MINbmpxIaplRVy90pMEGiE6kiVq_ddNsC3Xg0RU-48LuV07amkyAvg_FwXEeDmIXv73p7ca79peGxOIdw03RGAqViEHKnNNtXQ/s346/closed-742070.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="333" data-original-width="346" height="308" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_kt1GecTXSfi6KIMj-qKb_0FkSAV8lkOu3jx9A1HtDJvlpNyQPQgw9-Jb87IwN1tDmRvrfA2BvkyymqdZkOupJAV1MINbmpxIaplRVy90pMEGiE6kiVq_ddNsC3Xg0RU-48LuV07amkyAvg_FwXEeDmIXv73p7ca79peGxOIdw03RGAqViEHKnNNtXQ/s320/closed-742070.jpg" width="320" /></a></div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-74106934306748050062023-02-23T08:20:00.004-06:002023-02-23T08:25:13.135-06:00Leadership Playground<p> A synopsis of a <a href="https://fortune.com/2023/02/17/lego-leadership-training-employee-satisfaction/" target="_blank">Fortune magazine article</a> intrigued me. It described how Legos’ Leadership Playground increased engagement and motivation. The mantra around the “playground” is be brave, curious and focused. Then it had a quote from the Chief People Officer saying this increased empowerment and accountability. Does empowerment and accountability increase engagement and motivation?</p><p>As I’ve written before from noting key research and my own experiences leading successful teams, empowerment can go a long way towards engagement. Because you’re giving others some (or a lot) of decision-making power, it increases motivation. (See Alfie Kohn’s work and more recent narratives like Daniel Pink’s <u>Drive</u>). Of course, this assumes a lot of mutual trust. Otherwise, leaders will jump in and tweak the new endeavors and then it’s not the team’s idea but the leader’s. Empowerment goes down. Team decision-making goes down. Trust in leadership goes down.</p><p>The curiosity factor of the “playground” encourages people to explore new ways of doing their work, overcoming obstacles. This fits in well with <u>The Progress Principle</u>, a critical aspect of improving motivation.</p><p>Gathering around the “campfire” in the playground, team leaders can be vulnerable and ask for help. This builds trust. And the thrust of the gatherings is to engender creative collaboration, another key component to improving motivation. Collaboration forces us to look beyond our particular role and realize we each are part of a bigger vision, strategy and customer delight effort.</p><p>So at first, I was skeptical that a “leadership playground” could improve engagement but, if handled well, it could.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7KR_2jXMkBS1AthLHXvy03VS4D199U7Faog0qEBHfVmS5-UYgSwDKAImVDLsLeEpCrm_-kE5QOMS3D3qSpwHlUZO7GGDPBAfcYn1EmbAh28aZjwRUAqIn_Tb5cqgtrRsPOKO14js2lBpiuLkKJuresd2h3UhZbiyCKRvV6eZo8_IfYKlgpLiPj6vCpw/s6048/Work%20team%20collaboration.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="4032" data-original-width="6048" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7KR_2jXMkBS1AthLHXvy03VS4D199U7Faog0qEBHfVmS5-UYgSwDKAImVDLsLeEpCrm_-kE5QOMS3D3qSpwHlUZO7GGDPBAfcYn1EmbAh28aZjwRUAqIn_Tb5cqgtrRsPOKO14js2lBpiuLkKJuresd2h3UhZbiyCKRvV6eZo8_IfYKlgpLiPj6vCpw/s320/Work%20team%20collaboration.jpg" width="320" /></a></div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-23868907920680584652023-02-21T08:36:00.003-06:002023-02-21T08:36:40.524-06:00Contracts and Their Future<p> A long time ago, a new customer came to us to work on a project. Many years before, we had talked to this customer through a referral from a design engineer. At that time, we created a referral bonus for that person. If the customer gave us the contract to manufacture their product, we would pay some percentage of the revenue to the engineer. That particular project didn’t happen. But then the customer came to us directly ten years later on a different project that didn’t involve that design engineer. We struggled with the question of whether the engineer should still get the referral bonus or not. Was there a time limit/expiration on the contract? No. Were there any qualifiers, such as the involvement of the engineer in the project? No. After asking and answering many other considerations, we ended up paying the engineer a bonus but rewriting the agreement. At the time, the original contract was written, we had not foreseen or we had ignored the possibility that a customer would find us on their own and we might still have to pay a referral bonus even though an engineer had not made any effort in the project or involved in making an introduction.</p><p>Recently, I was involved in a discussion as a real estate broker was contemplating how to hook a construction company with an exclusive marketing/listing deal. An option under discussion was offering a portion of the commission (or ownership) to the construction company, besides providing a benefit of faster turnaround on their properties and spec homes, as well as improved cash flow and quicker repayment of construction loans. One of my questions was: Currently, they focus on residential construction, which you’re interested in, and they only dabble in multi-family rental unit construction. What happens when that shifts and you end up paying them a percentage of residential sales for which they have no involvement?</p><p>After pondering that for a bit, the broker admitted that wouldn’t be good so he was going to draft an agreement that was limited to the units the construction company built. I also encouraged him to consider other scenarios that might instigate a voiding of the agreement.</p><p>Too often we project situations as continuing in perpetuity. We don’t foresee that something may change for one of our business partners: divorce, death, distraction with another business venture, dissolution of their company in its present state (sale, merger, acquisition) and so on. So we don’t prepare for those “inevitabilities.” </p><p>I strongly encourage you to project any contracts or agreements into the future and at least explore more likely and foreseen scenarios.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZaXVOLHgT1Kpdfi8wtoy0o1OoZmFBFW6WiZD3qUGynFLJ-Hyx43uF9SXibyLlybHbGgQiX62rPVKmdDxNlNg7rZSx1trjlJ7FcCp1c2yx3MPzH5l38cTPu2IudRwmMUXaMQKyF4en-2Wes6KO9i4ToDVkxC7e4k4er9uw-7E4MBktOo6O9AyLlfmT7Q/s3888/Plaza%20with%20clocks.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2592" data-original-width="3888" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZaXVOLHgT1Kpdfi8wtoy0o1OoZmFBFW6WiZD3qUGynFLJ-Hyx43uF9SXibyLlybHbGgQiX62rPVKmdDxNlNg7rZSx1trjlJ7FcCp1c2yx3MPzH5l38cTPu2IudRwmMUXaMQKyF4en-2Wes6KO9i4ToDVkxC7e4k4er9uw-7E4MBktOo6O9AyLlfmT7Q/s320/Plaza%20with%20clocks.jpg" width="320" /></a></div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-45737800067805218952023-02-01T04:21:00.001-06:002023-02-01T04:21:33.296-06:00Grocery Shopping and Other Business Traps<p> When you go to the grocery store, or your partner does, how often are you purchasing a different brand or style of food? If you’re like most of us, you thoughtlessly wander down the aisles pulling off those same, familiar packages or produce. In the “name of efficiency” we don’t often stop to reevaluate our previous decisions unless there’s a hiccup in our system, like a stock shortage or dramatic price increase. Once we’ve made the decision about the most economical, most trusted, most nutritious, most flavorful, most delightful food stuffs, we make our shopping trip as short and painless as possible by getting the same old, same old. </p><p>Likewise, in business, we have the same habits. Once we decide on certain service providers and suppliers, we thoughtlessly just “reorder.” Once we decide on our strategy, we rinse and repeat. Same with marketing channels and job advertising. If we make any adjustments, we increase the intensity: more, faster, harder… If one person is making the grade, hire another high-powered, more experienced person. If the sales leads aren’t happening, up the advertising budget, put it in more places, make it more frequent.</p><p>Rarely do we stop and question whether we’re heading in the right direction, targeting the right audience, seeing the gaps in competitive offerings. If there’s a problem, we want a magic pill to solve it. It’s true in our health—90% of heart disease patients don’t change their detrimental lifestyle—and it’s true in our decision-making habits. We rarely change how we do strategic planning, how we explore the unknown unknowns, etc. Even a crisis doesn’t make long-lasting changes. With a stock shortage, we go back to the comfortable, purchasing once again what we used to buy when it’s newly replenished. With strategies, we see glimmers of success and so we continue on blissfully unaware that this may lead to a dead-end, a trap.</p><p>You can <a href="https://www.compassionatebusinessradical.com/search?q=Habits" target="_blank">reinforce habits, even business habits, with good feedback mechanisms. You can also create new habits by “burning the ships” so you can’t go back to the old way of doing things, the old standby “recipes” of strategies and decisions. Beware: even change programs don’t create lasting change.</a></p><p>When was the last time you made a long-lasting behavior change? When was the last time you made a significantly different, countercultural, revolutionary, industry disruption? Please don’t just thoughtlessly go down your business “aisles” plucking the same old, same old decisions and strategies off the shelves.</p><div class="separator" style="clear: both; text-align: center;"><br /></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOf39xDXyPvm5tvWNOOQzMuwm28goNqEtt55iDyqXQ0o1ZsTqjQc5YcWI5ixpjwNg2kvBPxq-o_rB6I8LAWUXtvG8pN9yYM0HSUWkJ3fB7TFPlAER6KBO8Kl-ZgQIeWW3IdH0a2b1rDEZugsbJCzO4Hj5NtLT-yPsgxY6R_Yf3J9DUa4E5z6gRilmyjQ/s4288/iStock-172174767.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="4288" data-original-width="2848" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOf39xDXyPvm5tvWNOOQzMuwm28goNqEtt55iDyqXQ0o1ZsTqjQc5YcWI5ixpjwNg2kvBPxq-o_rB6I8LAWUXtvG8pN9yYM0HSUWkJ3fB7TFPlAER6KBO8Kl-ZgQIeWW3IdH0a2b1rDEZugsbJCzO4Hj5NtLT-yPsgxY6R_Yf3J9DUa4E5z6gRilmyjQ/s320/iStock-172174767.jpg" width="213" /></a></div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-41798535264022482052022-12-09T08:53:00.005-06:002022-12-09T08:53:46.535-06:00Profound Investment and Decision-Making Insight<p>I'm previewing a book, soon to be published, <i>What I Learned About Investing from Darwin</i> by Pulak Prasad. In the first chapter, he reviews Warren Buffet's strategy: don't lose money. He relates this to prey and predators not risking an error in judgment that a situation is good when it's bad. For example, don't risk thinking the watering hole is safe when you know a lion is nearby. Or don't risk chasing a heavyweight prey like a wildebeest if you're just a lightweight cheetah. In statistics, this is a type I error. The counterpart to this is passing on good opportunities; this is a type II error. According to the author, almost all, if not all, investment literature teaches you how to reduce the error of missing out on good opportunities.</p><p>The author's, mimicking Buffet, key insight so far in my reading is improving your systems to reduce taking risks on investments that appear good but aren't. You're overall performance in decision-making results, investments, etc. will improve dramatically.</p><p>The author uses this example: Suppose there are 4000 investment opportunities. Since most early businesses fail, the likelihood of good opportunities in that pool could be 25%. Suppose you have an 80% track record of being right--far above most sports statistics success rates, by the way. </p><p>A lot of advice goes along the path of "you can't win if you don't play." "Need to buy a lottery ticket if you want to win." "Better to shoot a thousand times and hit 300 then shoot 10 times and only hit 3." As Taleb points out in <i>Black Swan</i>, it's impossible to precisely pick the winners so it's better to spread the bets knowing a few are going to win while most won't.</p><p>Prasad counters this by saying, "It's better to miss out on some good opportunities rather than waste time not improving the ability to avoid bad investments."</p><p>Take the 4000 opportunities. A thousand are good. You'll pick 800 of them with an 80% success rate; you'll miss out on 20% of the good opportunities. But you'll also pick 600 of the 3000 bad options (20%). Your overall success rate is 57%, slightly better than 50/50 or throwing darts at the list and picking that way (800/1400).</p><p>If you could reduce your risk in one of the areas, which risk would you select? Missing out on good opportunities or investing in bad companies?</p><p>Starting position: 20% type I, 20% type II = <b>57% success rate</b></p><p>Not missing good opportunities: 20% type I, 10% type II = 60% success rate [whoops, not much improvement since we'll get 900/1500 success ratio]</p><p>Not investing in bad opportunities: 10% type 1, 20% type II = <b>73% success rate </b>[wow, a big jump since we'll get 800/1100 success ratio]</p><p>Also, if the ROI on the good opportunities equals the loss of the bad investments than, with a 73% success rate, your overall profits will soar compared to the other strategy of not missing out on some good opportunities.</p><p><b>Doesn't this just make sense? How come so many of us don't do this? </b>Probably because we think if we spiral this logic to a reduced conclusion, we'll only be investing in savings accounts earning tenths of one percent on our assets. But I'm looking forward to Prasad teaching us how to spot those money-losing opportunities.</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhJ8ya1sDUbtd5lsepOgWupFyD5DDw_SKnnVZ00nN1uCvMti-rKz9XD9XUVQsCcYrtVg3GcgbC0_xi4X7dRsPdUcxwD--IUEZ_aQh4r1QOfS9XMq24y34Ft7UvJWoJHn3GKrf-98CZCBPUJObEE-zY0OAdDtliKZnSRAAGMw7bj9bE-V2wBdjCrU-ZzA/s254/charge%20of%20the%20light%20brigade.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="199" data-original-width="254" height="199" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhJ8ya1sDUbtd5lsepOgWupFyD5DDw_SKnnVZ00nN1uCvMti-rKz9XD9XUVQsCcYrtVg3GcgbC0_xi4X7dRsPdUcxwD--IUEZ_aQh4r1QOfS9XMq24y34Ft7UvJWoJHn3GKrf-98CZCBPUJObEE-zY0OAdDtliKZnSRAAGMw7bj9bE-V2wBdjCrU-ZzA/s1600/charge%20of%20the%20light%20brigade.jpg" width="254" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">From the "Charge of the Light Brigade"</td></tr></tbody></table><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-40254756037052266362022-10-07T09:04:00.000-05:002022-10-07T09:04:00.951-05:00Crime a Problem?<p> Recently, I read one person's analysis that crime is down but prison populations are up so what privatized prisons are the problem. For-profit prison services need to maintain revenue streams so any attempts towards rehabilitation are going to be ineffective. Non-violent offenders become violent offenders through informal prison "training." Soft criminals become hardened criminals through doing time.</p><p>Then I looked at the data. Prison populations grew through 2013 but <a href="https://bjs.ojp.gov/content/pub/pdf/p20st.pdf" target="_blank">in the last decade, state and federal prisoner populations have decreased</a>. Many states have their lowest prison populations since the 1990s and 1980s. And that now matches the trend in reported violent crime, with some additional analysis (because of inherent differences and omissions by the two main reporting agencies according to Pew Research).</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiB2AzzBSQa42L294aA06Sw7e4t9Ol2BmhgBFIVPuNCnor3iwNJr17aPaSM2VRxr7sjnsvcir5j53CFjJq3BxmuTtLNP-nGSJIc1Ff1gDpYo7qKJagZ1dYAbyli6VIfyP-Co19ePoWC3qG3xqrMy5klf1LVOzwN_9HMJSlt_fXjLCCdnSHiX8ASJNc6SA/s683/Screen%20Shot%202022-10-07%20at%208.45.45%20AM.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="482" data-original-width="683" height="452" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiB2AzzBSQa42L294aA06Sw7e4t9Ol2BmhgBFIVPuNCnor3iwNJr17aPaSM2VRxr7sjnsvcir5j53CFjJq3BxmuTtLNP-nGSJIc1Ff1gDpYo7qKJagZ1dYAbyli6VIfyP-Co19ePoWC3qG3xqrMy5klf1LVOzwN_9HMJSlt_fXjLCCdnSHiX8ASJNc6SA/w640-h452/Screen%20Shot%202022-10-07%20at%208.45.45%20AM.png" width="640" /></a></div><div class="separator" style="clear: both; text-align: left;">So is crime a problem? Why are people so fearful of rampant crime (again) when the number of crimes and victims have dramatically dropped over the past decades?</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">We must need something to worry about!</div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0tag:blogger.com,1999:blog-5917370795399342432.post-74998713688761484552022-10-04T11:52:00.004-05:002022-10-07T08:55:29.433-05:00Sign of Inflation Easing?<p> Container ship freight costs across the Pacific have <a href="https://www.wsj.com/articles/cargo-shipowners-cancel-sailings-as-global-trade-flips-from-backlogs-to-empty-containers-11664681947?utm_source=substack&utm_medium=email" target="_blank">dropped 75% in the last year</a>. Container traffic has dropped 13% as inventories grow. This also may ease over-the-road truck demand, and demand for drivers.</p><p>When inventories are high, price reductions abound to try to move “stuff.” Also, with logistics costs easing, that lowers the burden rate on that inventory bringing the cost down—and may lead to lower prices as wholesalers and retailers can bid lower for that “stuff.”</p><p>Early in my career, I was at a company where freight costs made up a greater portion of the total cost by four times (4x) compared to labor content. If we had done more outsourcing of manufacturing and assembly, the proportion would have been worse and killed the company in 2020-2021 as freight costs increased.</p><p>Strategically, we would have looked at more “on-shoring” as many companies have done since the COVID pandemic figuratively “sunk ships” and “derailed trains” and “flat tires of semis” abounded. The supply chains became less robust and made cost/price pressure increase.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiuLv8tLbS-f9B8UzmdHFTStX41GuSojDZhzVS8o9KpvpX14_2aGMQhb6-jpuqmDYWkWOG9cwJhupdN2L_Ll5APQV7u5JyBZ_tlJ3EOMV2_urK12ACqTDSb4aalW__wB4o3e0ehAollvO1XqsmAQHttPIUcIIFIckK8xdG6rN87JZMIbZT2qMVximMCmg/s1803/0D3E13BC-018F-459A-BC1F-4D40D454AB39.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="886" data-original-width="1803" height="157" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiuLv8tLbS-f9B8UzmdHFTStX41GuSojDZhzVS8o9KpvpX14_2aGMQhb6-jpuqmDYWkWOG9cwJhupdN2L_Ll5APQV7u5JyBZ_tlJ3EOMV2_urK12ACqTDSb4aalW__wB4o3e0ehAollvO1XqsmAQHttPIUcIIFIckK8xdG6rN87JZMIbZT2qMVximMCmg/s320/0D3E13BC-018F-459A-BC1F-4D40D454AB39.jpeg" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;">Update 8/7/22: Of course, this week OPEC (including Russia) decided to reduce production that will keep upward inflationary pressure worldwide through energy costs!</div><br /><p><br /></p>Business Compassionate Curmudgeonhttp://www.blogger.com/profile/03650190858541738625noreply@blogger.com0