Fear of Failure– Atychiphobia– Leadership is the Courage-Permission to Fail: Failure is Merely a Pit-Stop to Success.

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Fear of failure (or atychiphobia or even more of a tongue-twister kakorraphiaphobia) is a condition that many organizations suffer, although they probably won’t acknowledge it… and many executives probably can’t even pronounce it… It’s an ailment that’s serious enough to affect the long-term survival of many organizations… Atychiphobia (or fear of failure) is not just a fear of failure but an irrational fear of literally everything… it can terrorize an organization so strongly that leadership will refuse to do anything without absolute assurance of success… According to Regina Dugan; when you remove the fear of failure– impossible things suddenly become possible… the reality is that we cannot fear failure and still do ‘amazing’ new things… In business, failure comes with the territory– and if you are going to– build, grow, create, innovate… or solve serious problems… you will eventually fail at some things… but its imperative that you continue, even knowing that, in many situations, you will probably have a high likelihood of failure… but you learn from the– mistakes, lessons, experiences… such that they can be applied elsewhere for success… According to Thomas Watson, Sr.; the fastest way to succeed is to double your failure rate… A business cannot develop breakthrough– products, processes… if it’s not willing to encourage risk-taking (possible failure) and learn from subsequent mistakes…

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There is a growing acceptance of failure and it’s changing the way companies approach innovation… According to Robert Shapiro; failure-tolerant leaders, don’t just accept failure; they encourage it… First and foremost though, failure-tolerant leaders encourage people to see beyond the simplistic traditional definitions of failure, i.e., viewing failure as the opposite of success, rather than its complement… a person with this mind-set will never be able to take the risks necessary for innovation… Although failures are inevitable when launching risk-based initiatives; management cannot abdicate its responsibility to assess the nature of the failures. Some are excusable errors; others are simply the result of sloppiness… Failure-tolerant leaders will identify excusable mistakes and approach them as outcomes to be examined, understood, and built upon… According to Alison Provost; ideas don’t have to be perfect before you take them to the marketplace. In fact, the true process of innovation is the opposite of that; it’s a process of iteration– first conceive it, build it, try it– it fails… adjust it, try it– it fails again but its better… adjust it, try it, and now its even better… It’s a process of failure and success… and the fundamental nature of innovation and creativity– moving in incremental bits to something that’s market ready, market worthy… It takes courage in leadership to face failures, and it’s often one of the best ways to learn life’s lessons– especially leadership lessons… We can (and should) learn much from failure… but, failure is only valuable if we face it, milk it… for all we can learn, than get-up, and lead again (maybe even fail again)… it takes real courage to face failure.

In the article Learn From Mistakes by Prasad Sangameshwaran writes: Most businesses only pay lip-service to the notion of learning from mistakes. When the cost of failure is high (and it usually is, especially when dealing with important projects), organizations can be notoriously unforgiving… According to Anil Thomas; the secret to success is failure and increasingly organizations are getting to realizing it… The best way to overcome fear of failure is to create an environment of learning within the organization… Empowering all employees to take risks and when failure occurs, and it will, be prepared and don’t treat it like the end of the world… Learn from mistakes and move on… According to Raj Bowen; companies take risks and sometimes failure is only apparent after huge investments of time, money have already been made… understandably it’s very difficult for a company to adopt a laissez-faire attitude under such circumstances but, nevertheless, it must make that effort, because failure in the short-term means greater success in the long-term… According to K Ramkumar; senior leaders need to back creative initiatives, strongly, and be persistent with new ideas… and making mistakes, failing… is understandable, but repeating the same mistakes over and over is not acceptable… According to James M Kouzes and Barry Z Posner; not everyone is equally comfortable with –risk, uncertainty, failure… so leaders must understand the capacity-ability of their constituents to take responsibility-control of challenging situations– leaders cannot exhort some people to take certain types of risks when they don’t have the capacity-ability to deal with failure.

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In the article Conquer Fear of Failure by Robert Kelsey writes: Fear of failure is driven not so much by fear of actual failure, but by the fear of humiliation resulting from failure, and that drives behavior… Indeed, fear of failure may be a far bigger driver of people’s actions, in business, than greed or ambition… According to Judson S. Brown; what people avoid is just as important as what people strive to acquire– for example; due to fear, rather than making money, many people avoid the risks involved in making money… It isn’t so much seeking success, but more of avoiding failure that drivers some business decisions– being defense rather than offense… Yet fear can occupy both ends of the behavioral spectrum. At one end is the obvious reaction to fear; paralysis– we delay decisions until the opportunity is lost, perhaps looking (and inevitably finding) that tiny flaw justifying a decision to opt-out… Nothing’s been lost but, significantly, nothing’s been gained, which can lead to the other end of the behavioral spectrum; impetuous and poorly judged decision-making, i.e., ballsy ‘do-or-die’ decisions that may also be a result of fear-driven avoidance… despite the fact that it may look like a confidence-driven, strong judgment decision… Of course plenty of the high-risk gambit might work out, which can lead to further problematic behavior, including hubris, which potentially masks deep-down feelings of undeserved success…

In the article Surviving, Thriving in Face of Failure by Elizabeth Freedman writes: Failure isn’t always pretty and you often hear the phrase; ‘failure is a great learning experience’… but, it’s one thing to intellectually know that failure is OK, and quite another to really feel that it’s OK… Sometimes failing at something is nature’s way of telling us to get a clue about ourselves. We’d be foolish if we didn’t try to understand why we failed at something, or listened to helpful feedback that truly can help us improve… But some of us have a hard time hearing criticism of any kind, which can really impede success… There are countless people who– got brutal criticism, were fired, lost deals… but continued unabated anyway… The moral of the story? We need to listen to messages of criticism, failure… but also review your own plan… and above all continue to be persistent… Sure, it’s tough to keep going when the going gets tough… Ask any marathoner, successful entrepreneur, or anyone else who has opted to stay in the race even though they had good reasons to quit. The truth is that for intelligent risk-takers, the bold road will offer its share of rejections and failures, and there will always be an ‘acceptable’ reason to quit… After all, most people aren’t risk-takers, so the fact that you’re willing to ride out the rejections and failures may be tough for people to understand. But as long as you understand why your goals matters to you, persistence will come naturally, at least most of the time…

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In the article Fail The Way To Amazing Things by Ekaterina Walter writes: Failure; that’s a scary word, isn’t it? What is failure? Really? This question always fascinated me… So I talked to people about it, trying to understand what failure meant to them, what role it played in their lives… And, what I found was profoundly simple: The definition of failure is shaped by three things; passion, purpose, attitude… Passion fuels everything in life: our energy, our ambitions, who we want to be. It fuels our actions. It shaped the lens through which we see the world… Our passion shapes our purpose, and the two in combination– passion and purpose– affect our attitude… At that point you know no failure, you accept no failure, but only the path that gets you to your goal… Are their times when you are frustrated? Absolutely. Are their times when taking a wrong path sets you back. Yes! But you keep on going, doing what truly matters to you… And that’s when failure becomes non-existent… For example: Henry Ford went broke five times before finally succeeding… Beethoven was proclaimed by his teacher as hopeless as a composer… Walt Disney was fired by a newspaper editor for lack of ideas and creativity… Albert Einstein did not speak until he was four years old and his teacher described him as ‘mentally slow’… The Beatles were rejected by many music labels… Michael Jordan was cut from his high school team… Winston Churchill failed the sixth grade… However, most people can deal with failure but it’s the doubts that kill more dreams that failure ever will… If you don’t try to build your dream, someone else will hire you to build theirs… True failure is– not to try at all…

Failure is an inevitable part of business and its important to understand that failure is not fatal, but rather an opportunity to try again… and by the lessons of failure you are than armed with better information to succeed… According to Napoleon Hill; every adversity, every failure, every heartache carries with it the seed of an equal or greater benefit… Nothing can take the place of persistence. Talent will not: nothing is more common than unsuccessful men with talent… Genius will not; unrewarded genius is almost a proverb… Education will not: the world is full of educated derelicts… Persistence and determination alone are omnipotent… No one is going to be successful at everything they try to achieve. But every failure is a chance to learn something new about how to do things differently, the next time. Success takes more than simply falling down and getting back up again: Success is getting back-up because you failed; in other words, being able to gain a new strength from each failure until they accumulate into a critical-level of persistence and determination…

According to Darren Hanson; there is no such thing as a journey unmarked by setbacks, hurdles and unexpected events. It’s how a business copes with obstacles that ultimately dictate its ability not only to survive, but to thrive in changing environment… According to Acadia; we all know of great leaders who achieve a small success than bottom out, yet overcome a host of serious setbacks, then fight their way back until they’re on top again, and that inspires the entire world… For example; Steve Jobs was fired from the company he started… Nelson Mandela was imprisoned for 27 years, labeled a traitor to his country and considered a dangerous insurgent… Abraham Lincoln was hated by many, had mental collapse, and lost eight elections… We all love comeback stories and believe that we too can do the same if placed in a similar situation… However, those who do succeed, do so for very good reasons… for example; they understand the existing conditions of the situation, they have supreme confidence in their abilities to meet the challenges… most important they have the persistence, determination to succeed. Winston Churchill once said; success is the ability to go from one failure to another with no loss of enthusiasm…

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Business Forensics– Untangling the Mysteries of Financial Shenanigan: Unmask the Illusions– Art of Following Money.

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Business forensics stems from the need to– curtail, suppress, manage… the increasing numbers of corporate financial crimes… More than ever, companies are operating in a complex global business environment: They are drowning in a sea of digital financial data, adapting to perils of doing business in new markets, struggling to comply with increased regulation and trying to avoid costly enforcement actions, litigation… Managing the risk of financial shenanigans and misconduct has never been more challenging… The effects of fraudulent activities through financial manipulations can seriously impact the financial welfare of the business, as well as; investors, suppliers, partners… Corporate financial scandals have given rise to outcries for improved transparency, honesty… in financial reporting, and untangling of complicated financial maneuvers that obfuscate ‘transparent’ financial reporting… The sophistication of cleverly schemed financial crimes is eroding the security of vital business sectors, particularly– banking, financial institutions… Financial forensic is a blend of traditional accounting, auditing, financial detective work, computer technologies… and the typical financial forensic investigator is experienced in determining if and when there is financial criminal activities, mismanaged funds… and whether these activities are the result of deliberate fraud or simply due to inexperienced or uneducated employees, executives… A financial forensic investigator can also be engaged to examine the financial impact, on a business, from– product liability claims or infringement on an existing patent… According to Timothy Sexton; the purpose of forensics is to assemble a sequence of evidence that act as facts to support investigative theories. This sequence of evidence is offered as part of the judicial process that either clears a suspect of a charge or confirms their guilt…

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In the article What Is Financial Forensics? by Tom Lutzenberger writes: Financial   forensics investigations frequently follows the principles of financial auditing to uncover evidence… Using the tried-and-true principle of– ‘follow the money’; auditing traces back the paper trail of transactions to their original starting point to verify funds– amounts, movement, purpose… However, unlike auditing, financial forensics involves much more intensive review– it looks at all documents available rather than just using spot samples on large amounts of data. As a result, large cases can involve multiple-person teams for reviewing the same set of files to find evidence in a timely manner… Corporate financial forensics teams are often an assemblage of financial business experts– auditors, analysts, accountants… and even, lawyers… Financial forensics are engaged in cases ranging from pursuing financing of terrorism, money laundering… and, as mundane as tax evasion, charity scams… All of these fraudulent activities generally have the same type of financial crime occurring, e.g., misrepresenting, misappropriating funds, including; their sources, amounts, locations… A typical case can involve falsifying sources of revenue, hiding the fact that the funds actually come from illegal sources (e.g., false contracts, falsified sales receipts, fake donations…), or it can be an investigation into why less revenue is being reported than should be for tax purposes (e.g., hiding gross profits, representing expenses that never occurred for fake deductions, taking tax credits that are not valid)…

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In the article Advanced Forensics Financial Analysis by Michael F. Rosplock writes: Corporate financial fraudsters are committing more devious forms of financial statement fraud by concealing, suppressing… the true worth of– assets, liabilities, cash flows, sales, profitability… Financial forensics examiners are trying to stay one step ahead of the bad guys by using advanced analytical processes to detect illegal activities, for example:

  • Perform a subjective analysis of history and operations of the company. Obtain credit and bank reference information to determine– changes in payment habits, relationship with banks, savings account balances, short- and long-term credit line exposures, and bank compliance…
  • Analyze the financial condition by performing a horizontal and vertical analysis of the balance sheet and income statement. The use of industry standard statistics is essential in the analytical process, as a means of verifying the condition of ratios and financials in relation to standards…
  • Once the conditions of ratios and statistics have been determined, trending analysis is the next step in the analysis process. This process assists in detecting inconsistent patterns in the ratios and statistics, which should be regarded as a red flag…
  • The detection of trending inconsistencies requires further analysis to determine the factors that impacted the changes in condition of ratios or financial statistics. The detection of imperfections or inaccurate statistics is essential during this analytical      process…
  • When analyzing the condition and trend of the income statement and balance sheet, it’s important to evaluate the gross margin, operating margin, and net profit margin as a percent of sales. This determines if the changes in condition of the income statement and balance sheet were accordant…
  • In-depth knowledge of the balance sheet, income statement, and statement of cash flow requires an understanding of how changes of consistent or inconsistent trending patterns impact the income statement and cash flow… The ability to determine inconsistencies, or unexplainable changes in the income statement and balance sheet assists in the beginning stage of forensic financial analysis. The ability to acquire an investigative perseverance requires– an ability to analyze below the surface…

In the article Art of Illusion by Bruce G Dubinsky and Tiffany Gdowik write: It’s not what’s on the page that matters; it’s what’s not on the page that matters… Forensics examiners have been taught to gather documents, review information, interview people and then draw conclusions… While this approach will detect the simplest of frauds, it won’t detect the type of complex financial frauds that are increasingly making headline news– where companies use ‘accounting gymnastics’ to manipulate financial statements… For example; in 2008, Lehman Brothers’ shaky balance sheet and falling profits left the firm in dire financial peril. It desperately needed to create an ‘illusion’ that it was healthier than it actually was. Lehman used what appeared to be a normal financial instrument in the banking world; repurchase agreement (repo)– to book billions of dollars of transactions… A repurchase agreement is a form of short-term borrowing for banks and other dealers typically using government securities. The bank sells the government securities to an investor (often it’s another bank), usually on an overnight basis, and buys them back the following day. In Lehman’s case, the company did it to exploit an accounting rule that was meant to give principled guidance to determine when ‘repo’ was a true short-term finance method versus a sale of a financial instrument. The latter desired treatment as a ‘sale’, and that allowed Lehman to slyly portray its financial condition as rosy when, in fact, it wasn’t.

Interestingly, investigators didn’t discover the ‘illusion’ created by Lehman by looking at what was on the page (i.e. the entries in the accounting system). The accounting entries, which seemed straightforward generated little-to-no alarm. The debits and credits were in the proper accounts. The explanation accompanying the entries also seemed normal. In fact, a review by even the most skilled auditor would, in and of itself, had revealed nothing. Rather, investigators exposed the company’s deceptive behavior by looking at what was literally– not on the page. The key to uncovering the ploy was– first to understand what Lehman’s financial perils were at that time… So, the first ‘red flag’ came in the form of a question: Why was Lehman spending so much time focused on de-leveraging its balance sheets? Its access to public capital was critical to its continued survival. During this time period, in the stock market, investor panic was running rampant, so Lehman had to create an illusion that it was a solid financial institution with sound balance sheet… So how did Lehman create the delusion? It simply used the chameleon approach: Make something that’s really one thing look like something else… Lehman took ‘repos’ that were really short-term loan transactions and made them look like they were sales of financial product inventory (e.g., treasuries, certain equities…). By knowingly exploiting that accounting rule and specifically structuring the ‘repos’, Lehman was able to disguise itself as a financially healthier institution…

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The term forensics stirs up vivid images: Crime scenes littered with obvious and equally less obvious evidence. Law enforcement investigators toiling to bring heartless criminals to justice… Unfortunately, the popular view of forensics is often in stark contrast with reality… According to Tom Kopchak; corporate forensics requires significant quantities of tedious, detail-oriented work, sifting through huge amounts of data looking for pertinent details… And, when the guilt or innocence of a defendant lies in the hands of a forensics investigator, a single mistake can corrupt or cost the prosecution its case… It happens to almost every company; an anonymous letter, phone call, perhaps an audit– tips the firm off to serious employee wrongdoing… Frequently, wrongdoing involves theft of company assets, including; proprietary or confidential information critical to company’s financial well-being. In either event, company must investigate allegations… All forensics analyses have four common ‘core’ duties that consist of: • Data collection • Data preparation • Data analyses • Reporting… The potential for fraud, misconduct… can reach far, wide within an organization, including; procurement, sales, marketing, accounting, operations… foreign and domestic subsidiaries, portfolio companies, joint ventures, merger and acquisition targets… According to amymatt; ‘cooking the books’ is an accounting phrase to describe a rewriting of past financial mistakes to justify fraudulent transactions or use of funds… Some companies can do it right, while others stay under the radar… the acts of ‘cooking’ are like a disease leading ultimately to the company’s demise… Managing risk of financial fraud, misconduct… has never been more challenging…

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Sinister-Side of Cartels, Collusions… for Dominating Markets: Sleeping with the Competition is a Dubious Business Strategy

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Cartels, collusions… are the most serious form of anti-competitive behavior– businesses  that have an agreement between each other not to compete… Essentially, the businesses are sleeping with their competition… In many countries it’s a criminal offense to engage dishonestly with agreements that limit– production, supply, bid-rigging, market-sharing, price-fixing… A cartel is special case of oligopoly– where a market structure of an industry is dominated by small number of competitors; oligopolists… These are silent extortion that undermine the efficient functioning of markets… and it affects billions of dollars, globally, from– business, consumers, governments… However, certain market conditions are necessary to create, maintain cartels, e.g.; few participants in an industry • significant barriers to entry • similar products produced • limited opportunities to keep individual actions secret • no legal barriers to production control agreements… Also, collusions are secret agreements to restrict competition, and they too have same impact as cartels, and both are illegal in many countries… According to Simon Power; the cartel activities, for example; price-fixing, bid rigging, market sharing… is the most harmful form of anti-competitive business conduct… These illegal activities cause significant economic harm by reducing production output, undermining trust in markets, slowing productivity growth, distorting investment signals… by making cartels appear more profitable than they would be in an undistorted market…

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Several economic studies and legal decisions of antitrust authorities have found that the median price increase achieved by cartels in the last 200 years is around 25%. Private international cartels (those with participants from two or more nations) had an average price increase of 28%, whereas domestic cartels averaged 18%, fewer than 10% of all cartels don’t raise market prices… the Organization of Petroleum Exporting Countries (OPEC) is one of the better-known cartels… studies also suggest that two-thirds of cartels are in industries in which the top four firms have 75% or more of the relevant market… Many western countries, including the U. S., have laws prohibiting cartels, but many other countries don’t… The negative effects on consumers include:

  • Higher prices – cartel members can all raise prices together, which reduces elasticity of demand for any single member…
  • Lack of transparency – members may agree to hide prices or withhold information, e.g., the hidden charges in credit card transactions…
  • Restricted output - members may agree to limit output onto the market, e.g., OPEC and its oil quotas…
  • Carving up a market – cartel members may collectively agree to break up a market into regions or territories and not compete in each other’s territory…

Cartels stretch back into antiquity: For as long as there’s been a market– there have been shady business people who have tried to rig it, e.g., Babylon’s ‘Code of Hammurabi’ had antitrust rules; Lysias documented a bid to corner Athens’ grain market during war-time… Cartels have also been fostered by nation-state: Japan’s ‘zaibatsu’ conglomerates fueled its empire, and U. S. was a hotbed of collusion well into the early 1900s. Indeed, for many countries outside the West, domestic cartels, monopolies… were ubiquitous until a few decades ago… That changed as the U.S.’s ‘best practice of competition’ went global… But few suspected that cartels would follow in capitalism’s wake toward globalization… Many agricultural ‘cooperatives’ are legal cartels, raising prices for members’ or reducing costs through collective purchasing power…

In the article Collusions and Cartels by David A. Mayer writes: Cartels are groups of businesses that effectively function as a single producer or monopoly able to charge whatever price the market will bear. Probably the best-known modern cartel is the Organization of the Petroleum Exporting Countries (OPEC). OPEC is made up of thirteen oil-exporting countries and is thus not subject to the antitrust laws of the U.S. OPEC seeks to maintain high oil prices and profits for their members by restricting output. Each member of the cartel agrees to a production quota that will eventually reduce overall output and increase prices… Fortunately for consumers, cartels have an Achilles heel: The individual members of a cartel have an incentive to cheat on their agreement. Cartels go through periods of cooperation and competition. When prices and profits are low, the members of the cartel have an incentive to cooperate and limit production. However, it’s the cartel’s success that provides the incentive to cheat. If the cartel is successful, the market price of the commodity will rise. Individual members driven by their own self-interest (greed) will have an incentive, justified by their own law of supply; they will ever-so-slightly begin to exceed their production quota and sell the excess at the higher price. The problem is that all cartel members have this same incentive, and eventually prices will fall as they collectively cheat on their production quota. However, cartels do find ways to discourage cheating, for example; drug cartels use assassination, kidnapping… and, OPEC uses something a little more civilized…

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In the article Business Cartels by Pauline Yu writes: Cartels are usually formed by firms that belong to same market segment. These businesses come together to form a union for the purpose of market monopoly and profiteering. Businesses that form cartels usually trade in prime commodities, e.g.; basic minerals, sugar, rice… They start by hoarding their products and in this case we’ll use sugar as an example. They hoard the sugar in hidden warehouses therefore causing a fake shortage of the commodity in the market. By doing so, demand for sugar increases due to the shortage and after a period of time these businesses will start to release their products into the market bit by bit at much higher prices. There are many documented cases of such activities in many countries around the world. The Philippines had once fallen prey to rice hoarders who would store the rice in large warehouses and they would keep it stored until the prices go up before they start releasing their products to the market. Even criminal elements form cartels to capture and control their market. Colombian drug traffickers have been known to do this. Forming a cartel manipulates the market by controlling the availability of supply… While forming a cartel is an effective way to control the market, maximize profit… in many countries it’s illegal… Moreover, such business practices can prove to be very harmful to an economy; manipulating supply can affect the demand, market prices…

In the article Cartels Good for Companies, Bad for Economy by Nicholas Ngepah writes: Cartels prevent competition, causing participating firms to act collectively as a monopoly, or near monopoly… Hence, there is little incentive for innovation, which keeps economy in a low-growth situation… while extracting higher prices from consumers. In most cases, cartels are bad for consumers, economy, government… In the study ‘Cartels and Antitrust  Portrayed: Private International Cartels’ by John Connor; calculates the range of cartel price overcharge to be between 17% and 21%… it’s important to note that the research may under-estimate the true extent of the higher price from cartels… Also, the study shows that prices don’t fall very quickly to market levels after a demise of a cartel. Rather, prices fall gradually over a period of time– few months, even few years, e.g., after the ‘construction concrete products industry’ cartel was dissolved, prices were still falling three years later… Researchers have investigated why companies gain more by belonging to a cartel in some parts of the world, than others: One reason is that the more regulators successfully disrupt cartels, the less these companies will fix prices at high levels…

cartels2Generally cartels contain seeds of their own destruction… cartel members are reducing their output below their existing potential production capacity, and once the market price increases, each member of the cartel has the capacity to raise output relatively easily. The tendency is for cartel members to ‘cheat’ on their quota, increasing supply to meet market demand and lowering their price. Most cartels agreements are unstable at the slightest incentive they will quickly disband, and returning the market to competitive conditions… Cartels appeared most strongly in those industries defined by scale and scope economies and with high fixed costs… Therefore, they are more common in wealthy countries with big businesses. Cartels also tended to appear among domestic firms first, before going international (except, for example; early– zinc, rail, shipping… cartels)… According to Jeffery Fear; cartels are a surprisingly slippery subject. there is no mystery as to cartel dynamics, yet those dynamics are not sufficient to explain any given cartel. So far most  research has stressed why cartels fail, rather than why they endure…

According to John M. Connor; for cartels the evidence is clear– crime pays… Often for business-on-business offenses, cartels rarely rise to public notice, but they are pervasive, costly phenomenon. Since the 1990s, they have accrued more than $80-billion in U.S. government fines… More cases go undetected; generous estimates suggest only a third come to light. These cartels thrive, then fail in the hidden abysses of the market, but not before they’ve garnished profits from the budgets of everyday shoppers out to buy– meat, computer monitors, cars… According to Conner; the number of global cartels is rising, or more are now being fished out– I used to see 30 to 40 new cartel formations per year, whereas, now it’s 90, to 100 per year– that’s only counting international cartels

Cartels have, historically, tended to be formed in industries with standardized products that inspire little customer loyalty… In recent years, however, international conspiracies have been uncovered in fields as diverse as, e.g., seat belts, seafood, air freight, computer monitors, lifts, even candle wax… A growing number of cases are in digital commerce, e.g., e-books, finance, interest-rates, foreign-exchange benchmarks… More sinister are the negotiations, deal-making that were in the proverbial smoke-filled room are now online in chat rooms… Some of the cartels are involved in a dizzying number of alleged collusions… According to aliakber; purpose of cartel formation is to enhance profits by much greater multiplier… As businesses collude, they put-off and manipulate competition… without competition, the newly formed cartel is at its leisure for fixing whatever price they deem fit… The demand is unchanged, but supplies are heavily monopolized, leading to price-fixing– cartels can be extremely profitable and that is why they are formed…

 

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Power of Thinking Differently– Invent, Imagine, Create, Disrupt.. Change the World: Companies Must Think Different or Fail…

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Thinking differently: Here’s to the crazy ones. The misfits. The rebels. The trouble-makers… Here’s to the ones who see the world differently… They’re the ones who invent, imagine, create… They’re the ones who push the human race forward. While some may see them as the crazy ones, we see genius. Because the people who are crazy enough to believe they can change the world are the ones who actually do– they ‘think different’… This theme is from– Apple’s, Steve Jobs; ‘Think Different’ Ad campaign, 1997… According to Lauchlan Mackinnon; I’ve been thinking quite a bit lately about just what exactly it means to ‘think differently’ and the meaning is not as simple as it sounds! The Apple campaign was very clever– it inspired people to become one of those– crazy ones, one of these innovators, one of the people who change the world… But this Apple theme also, interestingly, explored– who thinks differently, how people who ‘think different’ can be geniuses or misfits or exceptional or stubborn, they might or might not fit in… But they make a difference– they do important work and they change the world… Also, there are other ways people can think differently, for example: Be revolutionary– question old ways of doing things… Be an innovator– create new powerful ways to do things… Be  creative– express new powerful ideas… Be a performer– push boundaries, think in new ways that lead to improved results… Be a seeker– gain a deeper, better understanding of the world… Be a visionary– imagine an expanded vision of what’s possible and what’s worthwhile… Be independent– think independent for yourself… Be a leader– have the courage to discover and express your individual uniqueness…

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In the article Ability to Think Differently by Gary Bertwistle writes: The key to the future of business is thinking differently… All great accomplishments come from people who think differently about something… all innovations come people who are prepared to think differently… Even ‘inside the box’ can look at things differently… People use the quote the cliché: ‘Think outside the box’ and sometimes it’s necessary to think ‘outside the box’ in order to push forward, but often we also do good things by thinking ‘inside the box’, and do it better… The real advantage over the competitors is the ability to look at something, and think about it differently… By having the courage to consider different options– you will automatically be creative, innovative and the outcome will be a problem well solved… Don’t focus on creativity– focus on getting people to think differently and creativity will be the result, for example; imagine if the receptionist thought: What can I do differently or better today than I did yesterday? Or if the finance department were looking at operations of the business thinking: How can we do things differently to improve?  What if the sales team approached things differently, looking for improvements or new solutions to current or potential problems? How much time is allocated in your diary for thinking about the business, and considering what you could do differently? Thinking differently is coming up with lists of options to solve problems, challenges… When you constantly push boundaries to think differently, you leap-frog the competition… Thinking differently is a discipline, desire… it’s a rejection of mediocrity, status quo… In fact, if you’re not thinking differently then the person in the next office, then why are you needed? If a company is doing exactly the same thing as the competition, then why do customers need it? Thinking differently is the currency of the future… it’s business of the future… it’s the power of the future…

In the article Truth About Thinking Differently by Andrew Bennett writes: For decades we’ve been saying; ‘think outside the box’, and in a world where rapid, frequent innovation is essential, it’s certainly desirable to think differently. But admonishing people to think differently is an empty wish unless we understand a little more about how the brain works, and steps we can take to actually shift our thinking… The brain is very efficient– it turns much of its processing over to ‘autopilot’ in order to maximize the ability to handle things that require more brain power… Most of our thinking is on ‘autopilot’– when we admonish our teams, colleagues… to think differently we’re actually going against the way a brain is wired… Although 95% of our thinking is the same from day-to-day, we can make changes such that new thinking can happen… Here are three ways:

  • Understand what inspires you: It’s hard to think creatively when constantly reacting to business situations… face situations throughout the day based on what you’re trying to accomplish, create… and don’t simply react…
  • Become conscious of your story: Life experiences shape a ‘story’ that influences the way you navigate your actions… Being conscious of your personal ‘story’ enables you to know when you’re simply sticking with a safe strategy… understanding your ‘story’ or your inter-influences enables you to adjust, and begin to think differently…
  • Check your assumptions: Be an observer of your own thinking and challenge the facts upon which you base your thinking… step back, check your thinking process in order to engage in more effective thinking…

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In the article Think Differently by Steve Denning writes: What does it take to come up with thinking that’s– value-adding, game-changing innovations? According to Rosabeth Moss Kanter; Thinking ‘outside the box’ is not enough– the greatest breakthroughs will come from leaders who encourage thinking– outside a whole building full of boxes… The problem of innovation today is right ‘in the heart’ of the corporation, at the highest level… The core problem is the very thinking by which decisions, at the C-suite level, are made. It’s the thinking that is still taught in business schools that measures results in terms of short-term performance and stock price… and that’s the problem… According to Clayton Christensen; nothing will change unless the thinking that’s now prevalent in business and in business schools– for how business decisions are made– also changes... Indeed, when the business has a short-term mindset; the stranger the new ideas and the less likely they  will be funded… Merely changing sources of ideas is unlikely to produce a different result… Game-changing innovation lies outside the performance envelope of businesses built on hierarchical bureaucracy where the top management is focused on short-term gains and the stock price… Game-changing innovation requires a different kind of management with a new corporate bottom line in which value-adding innovation is necessity, not an option. Instead of focusing exclusively on short-term gains, efficiency, productivity… basic goals must shift from– internal to external focus, for example; primary business priority must be delighting customers through continuous value-adding innovation… Game-changing innovation requires a fundamentally different way of– thinking, managing, doing… It’s a paradigm shift in management…

In John C. Maxwell’s book ‘How Successful People Think’ writes: Thinking is discipline– you must work at it… You must figure out where to focus your energy, and then use the 80/20 rule… Devote 80% of your energy to the most important 20% of your activities. Remember that you can’t be everywhere, know everyone, and do everything… Expose yourself to different ideas and types of people… If you have an idea then follow through… Ideas have a short shelf life– you must act on them before the expiration date… Thoughts need time to develop– don’t just settle on the first thing that comes to mind, remember the last time you had a brilliant idea at 2 a.m., but it sounded sort of ridiculous when you woke up the next morning? Thoughts need to be– shaped until they have substance– and then they must stand test of– clarity, questioning… When questioning popular thinking– you must be prepared for pushback, and be OK with feeling uncomfortable… Plan ahead–but leave room for spontaneity… Be strategic– thinking differently means– do different things… The creative, innovative… ones don’t see limitations, they see possibilities… For example; former baseball star Sam Ewing once said that– ‘nothing is so embarrassing as watching someone do something that you said could not be done’… Creative people are dedicated to ideas– they embrace ambiguity, don’t fear failure, and hang out with other creative people… Thinking differently is fine but you must be realistic, and that means: 1. appreciate the truth… 2. do homework, get the facts… 3. think through the pros and cons, 4. consider the worst-case scenario, 5. align thinking with resources… Most important– we all can change the way we think– mastering the process leads to thinking differently, which leads to doing different things, which leads to game-changing innovation…

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A ‘think different’ mindset isn’t just a tag line; it captures, reinforces a company’s unique cult-like culture in the way it operates– top to bottom… The most successful businesses have one thing in common– they think differently… According to Roger Martin; it’s impossible to reproduce the successes of great business leaders… so rather than learning from what great leaders have done, a more productive starting point is to learn from how they think… In order to stay competitive, leaders, organizations… must break status quo and think ‘outside the box’, i.e., think ‘outside the box’ but ‘inside the circle’… Break the status quo, but do so in a way that’s creative, yet practical, effective…Its about time to start thinking differently… become more original… question the way you do business… According to John C. Maxwell; the world is not shaped by those who think the same, but by those who dare to think differently… According to Bob Johansen; most leadership models are based on the present and past, whereas, the future requires a different set of leadership models, skills… Leaders will operate in a different world– volatile, uncertain, complex, ambiguous (VUCA)… This means embracing a collaborative leadership style– collaboration, in this context, means more than just working together across geographical, organizational boundaries; it’s bringing together, integrating… people with different ideas, backgrounds, capabilities, ideas, potentially…

According to Navi Radjou; business leaders must be able to manage multiple viewpoints, perspectives… across the company… But rather than trying to seek convergence, which is the easy route, companies must encourage divergence– divergence leads to diversity, which leads to more innovation… According to Vijay Govindarajan, conventional western business thinking embraced the attitude that companies– take existing products created for customers in developed countries, markets… and then scale them down for emerging markets… However, consider the opposite or ‘reverse innovation’ (i.e., new way of thinking)… it advocates developing innovative solutions that work for consumers in the emerging countries, markets… and then apply those innovations to developed markets, globally… In fact, the very business best practices that made global western corporations so successful– actually get in the way of innovating in emerging markets… Now as a test ask: How does your business think differently about your markets, products…? In the movie ‘Dead Poets Society’ there are several inspirational lines that are relevant to this discussion, such as: We must constantly look at things in a different way. Just when you think you know something, then again look at it in a different way. Even though it may seem silly or wrong, you must try– dare to strike out, dare to be different… Ultimately, the key to innovation is not to just think differently, but rather think in a different way about things that are different…

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New Rules of Branding in Business– Golden Rules: Get Edgy, Get Relevant… or, Get Lost in the Competitive Noise…

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Branding is a promise of quality, reputation, value– It encompasses everything about a company– sometimes good, sometimes bad, depending on public’s perception… branding is what you do– not what you say… it’s a promise to deliver on– what’s wanted, desired, expected… branding is the sum-total of all customers ‘experiences’… branding is about shaping perceptions… branding is the idea that anytime, anyone hears the name of the business, product… they will know exactly what it stands for… branding, simply put, is a ‘promise’, which is derived from– who you are, who you want to be, who people perceive you to be… According to Frank Strong; branding isn’t a company name… it’s not a tag line… it’s not a logo… it’s an expectation of an experience… The company tag line, logo, colors… only exist to call that experience to mind… The essence of a brand lies within its meaning– words have meaning but ‘actions’ create the brand… According to Beau Phillips; brand is the identity– it’s what people say about you… the value of the brand changes daily– nurture the brand, care for it… Live up to the brand promise every day… According to Steven Donaldson and Michael Zinke; if you do anything, realize that the company (brand) has to stand out against the vast expanse of competitive– brands, options… Know and understand your competition, but don’t do what they are doing– be different, be relevant! You’ll get noticed… This is the mantra of the ultimate marketing guru, Seth Godin, who says– be a Purple Cow… The more truly unique (but still real) the brand is, the more interesting it will be…

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According to Jonathan Salem Baskin; Steve Jobs was a magician capable of casting a ‘reality distortion field’ on anyone in his presence… he ruined branding as we knew it… Jobs blew up the rules of branding simply because he didn’t recognize them… he didn’t follow the approved checklist… he knew that someone else’s success wouldn’t be his own, not because of his ego, but because it’s a fact that imitating others has never resulted in great successes… Jobs’ insight was that you can never connect emotionally, meaningfully with customers by conceiving great marketing… no segmenting, strategy, technology, psychological… insight delivers a great brand… But, in fact, you must deliver a ‘great business’. The brand will be the words, emotions people use to narrate it… Jobs focused on the ‘cart’, yet even today, most marketers confuse it for the ‘horse’… According to Drypen; branding takes place in minds of customers not in the real world. And whatever the mind perceives to be true is true. You may object but that’s the way it is: Perception is reality… No body likes Schizophrenic brands. That’s why the brand must be absolutely consistent in how it behaves, delivers… If it’s erratic, customers will be confused and will move to opposite camps… To build strong brands, businesses must provide a reason for its existence, and justify why it deserves to live…

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In the article Rules for Branding in New World by john k. grace writes: There is a basic shift in culture… a ‘new world’ is emerging in brand strategy for building relationships– with customers, employees, media, financial community, and other important audiences… Corporations have become places where employees are uncertain about messages from leadership– knowing that there is different agenda than their words often indicate… In traditional times, two things can occur: First, brands tended to amplify and exaggerate the ‘brand promise’– in order to have their voices heard above the crowd. This amplification of claims are often filled with over-promise, which can become unbelievable to customer audiences… Second, brand marketers become insecure about their strategy and begin making random promises wishing that some will resonate with someone, somewhere… These sit of the pants actions creates an atmosphere of uncertainty, wariness… For success in the ‘new world’, the rules for branding must be shaped in new ways: These new rules are ‘filters’ used to create, evaluate… brand communications, behaviors…  Here are a few rules for consideration:

  • Rule 1: Value must be communicated… Today, customers have much larger magnifying glass to evaluate price/value comparisons and they will find it hard to justify purchase without a very strong reason– why. So value becomes a very important filter…
  • Rule 2: Functional performance is more important than ‘benefits’… Each are looking for more communication about the functional value that brands bring to them…
  • Rule 3: Transparency, honesty are mandatory. There are two aspects to transparency – being transparent, communicating transparency… Questions; a) is the company/brand being transparent? b) how is the transparency communicated? This is a new filter for many companies…
  • Rule 4: Messaging must be simple, clear… brands must shed multiple claims, over-promises, implied benefits… and bring a new simplicity and clarity to messaging. It means creating new filters to evaluate messaging, and developing communications strategies to isolate what is important and what can be shed…
  • Rule 5: Express confidence, optimism through identity. An identity is visual expression of a brand, it should reflect a company’s core beliefs and strengths, and also signal an optimistic and positive attitude…
  • Rule 6: Communities are critical to brand acceptance. The evolving shift from top-down to bottoms-up brand influence is being further accelerated. ‘Communities’ have become the place where we can find– information, validation, security, new types of partnerships… social networks are part of larger concept of the integration for specific audiences to– bond, evaluate, determine, share…
  • Rule 7: Customer service can be a brand-defining attribute. Successful brands embrace the importance of this interaction… think about building world-class customer service rather than adequate, competitive levels of service…

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In the article Building Brands from Inside by Michael Dunn and Scott Davis write: There’s a trend in the making: Companies across the board are beginning to take a broader view of ‘branding’ as it shifts from its traditional role, as part of the marketing function, to play an integral part in the overall business strategy. To fully integrate brand strategy throughout the organization, companies must take a hard look at what the brand stands for and put internal structures in place to deliver on ‘brand promise’… Essentially, this means moving the brand’s role, influence… well beyond the marketing department so it becomes an integral part of the company’s way of doing business… Total alignment between business and brand strategy is a crucial starting point… Think about it: Strategies about customers, distribution, pricing, communications… are crucial links between business and brand strategy. Business strategy cannot be developed in a vacuum; neither can brand strategy. The connection between them must be aligned, strengthened… In today’s increasingly competitive environment, businesses need to find a way to stand-out from the rest of the pack… One sure way is to take a hard look at the brand, what it stands for, and then make sure that the structure is in place to deliver-on that ‘promise’– across entire organization… This realignment pays-off, big time, by creating a stronger brand but, more important, a stronger business…

In the article New Rules for Branding by kordell writes: The biggest enemy of business these days is being ‘average’… With mass customization, free information, and a tight economy, you must drive the branding image to be ‘exceptional’… Here are a few new rules for exceptional branding are:

  • It must have a plot or a storyline: Think Disney… Chipotle has it’s brown bags with stories on them… Harley is about terrorizing small towns…
  • It must be unique to stand out: Unless you have a BHAC (Big Hairy Audacious Concept) you have– beige, average, pedestrian…
  • It must fill a need or create a new mind-set for the customer: Columbus fought the flat world with a round world idea… Dyson killed the vacuum bag…
  • Rabid fans must be able to ‘join’: Think Blue Man Group… These fans will experience the brand again, again… and ‘tell others about it’…
  • Repeatable: There are Harley fans who motorcycle between locations just to get a ‘local’ Harley shirt… Another way to see this consumable– or– such a great experience that you just-want-to-do-it-again!
  • Once it’s in place it’s either re-created, destroyed, rebuilt (isn’t that the same thing?):  Just when the McMuffin is copied by everyone else, you have to recreate it in a new format/recipe…

In the article New Rules of Branding by Simon Williams writes: A few simple rules for the new age branding; Brands that influence ‘culture’ sell more; culture is the new catalyst for growth… A brand with no point of view has no point; full-flavor branding is in… vanilla is out… Today’s consumer is leading from the front; it’s a smart generation… Customize wherever, whenever you can; customization is tomorrow’s killer whale. Forget transaction, just give me an experience; the mandate is simple: Wow the customer every day, every way… Deliver clarity at point of purchase; be obsessive about value… You are only as good as the weakest link; know where you’re vulnerable… Social responsibility is no longer an option; know the cause, prepare your contribution… Pulse, pace, passion… really make a difference… Innovation is the new boardroom favorite…

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Branding is the core of any business… According to Ananth; Be very clear on what you tend to achieve from your ‘branding’ campaign… Clearly define ‘goals’: What must the  ‘brand’ achieve, across which audience… Websites don’t define a branding strategy… Success of a branding campaign depends on the sincerity with which your content reaches across a larger audience, regularly, with clear intention to add real-value to the end users. Branding is not one time process, its a constant effort to make a positive difference… It’s the solution to problems– do it with a ‘face’– ‘humanize’ the brand… According to Kevin Lane Keller; a strong brand is a promise to customers and a means to set expectations and reduce risk… the power of a brand resides in the minds of its customers and it could go away very quickly… A strong brand is also more than consumer-facing… it gives direction and purpose to its employees– strong brand is one of a firm’s most valuable intangible assets… According to Ashley I; churn out boring, repetitive stuff… and the brand will suffer… Modern brands must allow for– leeway, fun, surprise, playful… even flirtation… A contemporary brand must take leaps of faith, abandon self-obsessions, be flexible, embrace risk … Without such grounding, a brand loses what it’s supposed to be in the first place; a shape-shifter… According to Jakk; perfecting a branding strategy is more than just having– a logo, attractive slogans… Today, enthusiasts play by a fresh set of guidelines…The fresh rules for business branding are now focused on engagement, interaction, less on presentation… Defining the brand is more like a journey of business discovery… in today’s highly competitive marketplace, a strong brand is really all about relationships, trust, value…

 

 

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Business Fraud– Great Challenge Facing Business: Alarming Trends– Adapt Your Thinking, Take Control, Manage Risk…

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Business fraud (or corporate fraud) is one of the greatest challenges facing business and financial institutions, today– it encompasses a wide range of unethical, illegal… practices that business officers, employees, partners… often engage-in… although, not all business fraud is necessarily criminal… According to Certified Fraud Examiners (CBIA); companies around the world lose an estimated 5% of their annual revenues to fraud… that figure translates to a potential total fraud loss of more than $3 to $5 trillion... According to Mark Theoharis; while anyone in a company can commit corporate fraud crime, they are typically committed by managers, executives, corporate officers, others in positions of authority within the organization… Business fraud can be difficult to prevent, but by creating effective policies– a system of checks, balances, physical security– companies can limit the extent to which fraud can take place… According to Didier Lavion; more opportunities brings more risks, which means that business can no longer just focus their fraud prevention and detection strategies on only a few types of fraud… or, just certain fraudster profiles… or, just perceived threats– they must be prepared to cast a wider net because threats associated with fraud are becoming much more creative and growing rapidly… The ‘Institute of Internal Auditors’ conducted a poll of nearly 300 chief financial audit executives– found fraudulent acts by employees and outsiders have substantially risen since the beginning of the recession, and internal auditors predict the trend will continue. Among the 31% of survey participants from organizations where instances of fraud were detected; 43% report that fraud occurrences increased from 1% to 10%; 28% indicate fraud increased from 11% to 20%; and 14% say fraud increased by more than 20%. Theft of company property, resources, proprietary information (IP), which is the fastest-growing fraud reported by respondents, followed by embezzlement, expense account fraud, third-party–vendor fraud… Fraud within companies is a risk that can never be eliminated, just managed…

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The Annual Global Business Fraud Survey: The Economist Intelligence Unit surveyed senior executives from around the world, across a wide-range of sectors and functions. This year’s 901 respondents report that fraud remains a widespread problem regardless of industry or region in which the business operates… also, the infractions are ever-changing and unpredictable, as ever. The results reveal a number of key insights:

  • The incidence and costs of fraud rose markedly in the past year, in turn driving up companies’ sense of vulnerability: According to this year’s survey, the level of fraud increased by every measure, in the past 12 months, reversing recent trends. Overall, 70% of companies reported suffering from at least one type of fraud in the past year, up from 61% in the previous poll. Individual businesses also faced a more diverse range of threats: on average, those hit in the past year suffered, on average– 2.3 different types of fraud each, compared with 1.9 in 2012. The economic cost of these crimes mounted; increasing from average of 0.9% of revenue to 1.4%, with 1 in 10 businesses reporting a cost of more than 4% of revenue…
  • Information-related fraud is common and evolving, but many companies are not prepared for when things go wrong: Information theft remains the second most common fraud, affecting more than 1 in 5 companies over the past year, and three-quarters of respondents describe their businesses as at least moderately vulnerable. Looking ahead, complex IT structures are the most commonly cited reason for an increase in overall fraud exposure, suggesting there won’t be any quick diminution of the threat… Information theft, like most types of fraud, is typically an inside job… and of those hit in the past year in which the attacker is known, 39% say it was the result of employee malfeasance, which is roughly unchanged from 37% in last year’s survey…
  • Fraud remains an inside job but so does its discovery– fraud is typically carried out by employees within the company: For the businesses that had suffered fraud where the perpetrator was known; 32% had experienced at least one crime and the leading figure was in senior or middle management… 42% in which the incident involved a junior employee… and 23% where it was an agent or intermediary. Similarly, as noted above, employee malfeasance remains the most common driver of information theft. Overall, 72% of those surveyed say that their company has been hit by a fraud involving at least one insider in a leading role, slightly up from 67% last year…
  • Global business practices often increase fraud exposure: Globalization has changed the way business operates. Companies are in search of bigger international markets, while at the same time striving to become leaner. The latter typically involves becoming more focused on areas where they have strategic advantage, and finding ways in others areas through outsourcing, partnerships…
  • Those with local knowledge see fraud risks everywhere: Certain regions have a reputation for high levels of fraud. It comes as no surprise, therefore, that 13% of all      respondents were dissuaded in the past year from operating in Africa, and 11% in Latin America… from their experience or perception of fraud. More striking is the degree to which fraud is keeping companies from making local investments, even in regions where the problem is thought to be relatively well controlled, particularly North America. Even in a globalize world, companies typically invest closer to home. These figures therefore suggest that both the existence or appearance of fraud is a substantial drag on possible new investment, and that outsiders coming in need to be aware of risks even in regions with a reputation for low levels of fraud…

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In the article Business Fraud Shockingly Common by Lev Janashvili writes: A growing body of research supports two conclusions: 1. Accounting fraud represents a foundational threat to market integrity… 2. Corporations, investors, auditors, analysts and regulators are missing ‘low-risk/high-return’ opportunities to implement sustainable, system-wide initiatives; but the evidence often fails to persuade business leaders to take action… As a result, some of the most urgent problems in capital markets persist– not because we can’t solve them… not because we need to examine them more thoroughly… but, simply because we prefer to leave problems unexamined, unsolved… A long-running pattern of inaction-bureaucratic half-measures continues… Accounting standards are outdated and require  basic change… Instead of confronting them, we often deny their existence, gravity, or vilify sensible solutions that do not align with our ideological biases. This self-defeating dynamic has already produced some ironic outcomes, for example; Too-big-to-fail firms continue to grow, despite worries about systemic risk… Accounting needs a new conceptual framework and new regulatory and rule-making regime…

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The PwC’s Global Economic Crime Survey 2014: More than half of U.S. organizations that experienced fraud in the last two years reported an increase in the number of occurrences, representing a continuing upward trend in the occurrence, detection of economic crime. Forty-five percent of organizations in the U.S. suffered from some type of fraud in the past two years, more than global average of 37%… U.S. companies are growing international operations and expanding the role of Internet and mobile technology in business, which brings risk from beyond their geographic footprint. The survey revealed that 54% of U.S. respondents reported their companies experienced fraud in excess of $100,000 with 8% reporting fraud in excess of $5 million… According to Steven Skalak; economic crime has become truly borderless threat… The reality of fraud is it impacts a company’s revenues as directly as other competitive businesses and market forces. The risk of bribery, corruption grows as businesses increasingly operate-in, pursue opportunities in high-risk markets… Here are several other issues:

  • Significant Uptick in Cyber Crime: Companies are beginning to change how they think about cyber-security viewing it as a business issue, not just an IT issue. Forty-four percent of U.S. organizations that experienced fraud in the past 24 months suffered from cyber crime; and 44% of all respondents indicated they thought it was likely their organization would suffer from cyber crime within the next 24 months… According to Didier Lavion; corporations need to better leverage and implement the computational and analytical power of cyber-security technologies to help combat the increasing global presence of cyber crime…
  • Who is Committing Business Fraud? As organizations rely more on technology, they increasingly do business in a borderless economy where they are more susceptible to threats from all sides. The results are clear– while companies certainly should not lose  sight of the internal perpetrator of fraud, they need to remain very wary of the external perpetrator, as well… The ‘external’ perpetrator of fraud is closing the gap on ‘internal’ perpetrator of fraud; businesses are reporting that fraudulent crime is committed by external actors (44% of time) almost as often as it’s committed by internal actors (50% of time)…
  • Other Notable Findings: Two types of frauds are committed– accounting fraud and bribery-corruption– increased in 2013… Accounting fraud increased to 23% in 2013, as compared to 16% in 2012. Bribery-corruption, 14% in 2013, doubled from 2012 levels (7%)… For first time, PwC specifically asked respondents about procurement fraud.  The result was stark– more than 25% of the respondents reported procurement fraud (27%), thus immediately placing it as the third most frequent type of fraud experienced by organizations. According to the report, this reflects the increasing interconnection of companies and ongoing trend toward outsourcing more aspects of their businesses…

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Business Fraud: Oh no… it couldn’t happen to me! This is a very common attitude for many organization when discussing fraud… and it’s time to take a closer look… According to Britni Zandergen; there is a perfect storm for business fraud – and, it’s up to business leaders to put the right processes and systems in place to prevent it. As more companies expand their online business, and as more users share their information– both on and offline, it’s very much easier for fraudsters to get sensitive information… According to Thomas Donaldson; corporate governance is a hot topic, but companies tend to get overly optimistic about what corporate governance can really do– simply rearranging chairs at the higher echelons of a company will not prevent fraud… For too long, we have followed a mythology that if you write an elaborate code of ethics, appoint people to distribute it, and get everybody to sign-off on a fat-rule-book every year, that this will somehow prevent major disasters… We have abundant evidence that this simply doesn’t work… According to Skeel; corporate scandals are not unique, but there is something about the U.S. culture that allows these scandals to happen more easily… there is a fascination with risk-taking, possibly even related to greed… In many other countries, the cultural norms or restrictions on competition… seems to keep these tendencies more in check… According to Daniel Draz; business fraud is global– where there’s money to be made, benefits to be received, competitive edge to be gained… there’s always fraud… Fraud, abuse… happens in all organizations– and in many cases it can go unnoticed for years– businesses must understand how, where… it occurs– then take practical steps to detect, prevent it… The good news is that appropriate measures of prudence and common sense, combined with sound management practices can dramatically mitigate its impact on the organization…

 

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Robber Barons– Unmasking Modern-Day Titans of Industry: Scrupulous Profiteers, Generous Philanthropists…

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Robber Barons– The very words ‘robber barons’ speaks of– mystery, intrigue, power… deeds that no truly compassionate human being could ever commit in good conscience… According to J. Bradford DeLong; in the 20th century we called them– robber barons, capital of industry, economic princes… today we call them– billionaires… The capitalist economy can generate such enormous opportunities that individuals– lucky enough to be in the right place at the right time… who are driven… smart enough to see and seize economic opportunities… with foresight enough to take large share of equity of a highly profitable enterprise… well-connected enough to fend off political attempts to curb their wealth… these are the true robber barons… Theodore Roosevelt spoke of ‘malefactors of great wealth‘ and embraced a public and political role for the government in ‘anti-trust’ by controlling, curbing, breaking-up large enterprises of private economic power… However, their defenders painted a different picture: Robber Barons were examples of the U.S. as a society of untrammeled opportunity, where people could rise to great heights of wealth and achievement in their industries; they were public benefactors who built up very large and profitable enterprises… then they become philanthropists; sharing their great wealth…

According to Mark Twain; the robber barons’ credo is– Get money. Get it quickly. Get it in abundance. Get it dishonestly, if you can, honestly, if you must… According to Rich DiSilvio; most ominous is lobbying muscle of today’s robber barons that entice politicians with huge campaign funds; the result being that senators, congressmen, even presidents have too eagerly jettisoned their sworn public duties to embrace their overlords’ greedy agendas… According to Paul Shalmy; one hundred fifty years ago the ‘corporation’ was a relatively insignificant institution… today’s it’s the dominant institution, extraordinary power, influence over our lives… Over past century-and-half the U.S. economy has been at times relatively open to and at times closed to– the ascension of robber barons or modern-day billionaires… Becoming a billionaire has never been easy but next to impossible before 1870 and between 1929-1980, then the years since 1980 we have seen the return of super rich– modern-day robber barons…

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In the article Tech Moguls: Modern-Day Robber Barons by Mark Russell writes: New-tech moguls: Are they the modern robber barons– today’s captains of industry? They are the wealthy, powerful figures who control the digital universe… What’s striking about this is not just the staggering wealth that these people have managed to squeeze out of what are, after all, just binary digits (ones-zeros), but how recent are the origins of their good fortunes… Given their prominence, we know very little about modern moguls for various reasons: One is that we are remarkably incurious about what makes them tick… But this is all superficial stuff, the journalistic fluff of celebrity profiles and gossip columns… What’s much more significant about these moguls is that they share a mindset that renders them blind to the untidiness and contradictions of life, not to mention the fears and anxieties of lesser beings. They are technocrats who cleave to a worldview that holds that if something is technically possible then it should be done… it’s all about progress, stoopid… Actually, it’s all about values and money… The trouble is that technocrats don’t do values. They just do rationality. They love good design, efficiency, elegance – and profits… What gets lost in the reality is that they are fanatically ambitious, competitive capitalists… They may look cool and have soothing bedside manners, but in the end these guys are in business not just to make money, but to establish sprawling, quasi-monopolistic commercial empires. And they will do whatever it takes to achieve those ambitions… The strongest link that binds them is that they are all pioneers in the exploitation of virgin territory, and that rings some historical bells…

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In the article Return Of Robber Barons by Herrick Kimball writes: The so-called robber barons were men that took tangible things– minerals, resources, factories… built large companies, employed many workers… and made enormous individual fortunes, gaining much power… The exact same condition exists today, except these– people, institutions, corporations… are the primary holders of the majority of the world’s identifiable wealth in extraordinarily concentrated fashion– and, they don’t actually make anything… There are at last count–147 super-companies in the world that basically control about 40% of entire identifiable net worth of corporations… So it’s a pretty big chunk. Of the top 50, 17 are banks and quite a number of the rest of them are insurance companies, financial services, and brokerage houses… They’re just moving paper from point A to point B. That’s their job. And that’s where all the wealth is concentrated right now. More concentrated than it was at the height of the robber barons era; with the difference being that this time the power is concentrated in the hands of people who fundamentally don’t create value. They harvest value…

In the article Apple, Amazon, Google, Oracle… New Robber Barons? by Tim Worstall writes: In deed the; Jobs, Ellison, Gates, Bezos, Brinn, Page… are much like– Vanderbilt, Carnegie, Rockefeller… But this doesn’t make them anything like the robber barons of the past… For there were really two groups of entrepreneurs who made it big the 20th century: There were those who simply did thing– better, cheaper… than their competitors and thus they were able to stake claim-own a large part of an industry, for example; Rockefeller in oil. Vanderbilt in steamships, Carnegie in steel… Sure, they competed very hard against all comers: but they did it with better technology and cheaper prices… I would argue that the Apples, Googles, Oracles, Amazons… of this current world are much the same… Yes, there is that use of IP in-fighting, but by and large they are fighting each other through market competition, technological advance, ever lower prices… However, there are other sectors of the economy much more like — robber barons of old: those who conspire with politics to restrict entry in markets, used underhanded tactics to gain competitive advantage… It’s interesting to note that both groups still exist: Those who wish to profit from restricting competition… and, those who wish to do so by beating the competition…

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In the article Internet Robber Barons by Steven Hodson writes: Today the idea of robber barons might seem a rather foreign concept but the reality is that we could very well be seeing the creation of a whole new set of robber barons: Internet robber barons. Unlike the industrial robber barons before them; this generation of Internet robber barons are operating in two different realms: First, the corporations that control the– how, why, where… for accessing the web… Second, maybe even more insidious, are those collecting and keeping every bit of data on the web… It all hinges on one simple principle: Ease of Access… With control of access in the hands of a few companies; which grow fewer with each acquisition and merger, consumers have increasingly little voice in what is supposed to be the vehicle of free distribution and sharing of information– it’s the toll-booth we all must pass through… According to Matthew Lasar; a new generation of robber barons is being created; a generation who will in effect control information– how it’s shared, who has access, how much they will allow to be seen, read, use… They will also control the value of that information, price… As much as we might like to believe in the illusion of an open web that can be access by everyone, from anywhere in the world, by any possible method– the reality is that right now and for much of the foreseeable future this ideal is nothing more than a pipe dream… The new robber barons are coming to town– nothing good can come of it…

In the article Robber Barons of Wall Street  by Ken Moyle writes: Robber Barons of the 20th century created infrastructure (railroads), products (steel) and employment on the road to accumulating their enormous wealth. On the other hand, our 21st century robber barons are making their fortunes by skimming and leaching off loosely regulated financial system to detriment of individual investors, pension funds… Their methods, although assuredly legal, push the envelope in ways that are not available to most– individuals, small banks, many institutions… They use highly leveraged speculation (i.e., euphemism for gambling) on commodities, currencies and markets to manipulate, distorting original intent of the hedging process… Reining in the financial sector robber barons should be high priority… and yet there seems to be a collective passive response to these excesses…

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There are two sides to robber barons, just as there are two theories of thought about them: some consider them to be cunning and barbaric in their methods of pursuing wealth and power, while others believe they are integral factors in promoting the economy, giving people jobs, donating countless sums of money, social landmarks through philanthropy… Whichever way one thinks about robber barons they surely are– smart, entrepreneurial, business and politically savvy, often lucky… The 20th Century entrepreneurs built huge companies, conglomerates, cartels… They employed millions of people, operated huge
plants and equipment (e.g., railways, shipping, steel mills, oil refineries…) and made an indelible imprint on the landscape…The modern counterparts are mainly in the business of shipping bits – in the form of software, online services, technical support…

Skeptics point out that when modern-day robber barons are puts into historical context they aren’t quite as rich, or as important as their predecessors… for example; Forbes commissioned an economist to come up with an inflation-adjusted list of the richest Americans of all time, and the website ‘Business Insider’ published the results. The list is headed by the robber barons of old; John D. Rockefeller, Andrew Carnegie and Cornelius Vanderbilt, with $336bn, $309bn and $185bn respectively. The only contemporary figure who makes it on to the list is Bill Gates, whose net worth at its peak was estimated at $136bn – which (says the skeptic) rather puts Larry Ellison, Google guys, Jeff Bezos… into perspective… According to Nancy Stewart; debate rages on about the impact of the so-called robber barons on society, industry… Many believe the business practices of these people were/are, in fact, detrimental... However, some argue that these captains of industry are good for society because, they allowed it to go– from positions of potential to positions of realized potential… Robber barons are cunning, manipulative, greedy pursuers of wealth, power… they are smart, savvy, opportunistic… they build very large highly successful business enterprises… some even share wealth, knowledge, expertise… Clearly, without robber barons-billionaires the world would be a very different place…

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