Controversial Pay Debate– CEO Vs. Worker Pay Gap: What’s CEO Worth? What’s Worker Worth? Who Decides?

Share

CEO Vs. Worker Pay Gap: It’s good to be a Fortune 500 CEO these days at least pay-wise, e.g.: *One CEO Hour = 1,372 Minimum Wage Hours* or *One CEO Person = 354 Workers*. According to the 2014 AFL-CIO Executive PayWatch; it’s 331 times better to be a CEO than an average worker; the average CEO of an S&P 500 company made $11.7 million in 2013, while the average worker earned $35,293… According to Gillian B. White; business has become more efficient and profitable but workers aren’t sharing in the benefits… When you look at the relationship between worker wages and productivity there is a wide and many believe, problematic, gap that has arisen in the past several decades… According to Economic Policy Institute; productivity (defined as output of goods, services per hour of work) grew by about 74% between 1973-2013, while wages for most workers grew at a much slower rate of only 9% during same time period… According to Richard Trumka; these huge gaps are wrong, it’s unfair, it’s bad economics…

gap th7PET3ZBP

However, while most headlines on CEO pay focus on the total compensation packages of the CEOs of the largest public companies, the reality is that the vast majority of CEOs do not enjoy multi-million dollar pay packages… According to ‘Chief Executive'; of the roughly 30 million businesses in the U.S. fewer than 6,000 are publicly traded and only the largest 8% of these public companies make it into the S&P 500… Despite this reality, most media outlets focus on the $12 million average pay package among S&P 500 CEOs, or even more misleading, the $38.7 million average annual pay package for the CEOs of the largest 200 companies…

According to ‘2014-2015 CEO and Senior Executive Compensation in Private Companies Report'; the median private company CEO earned $343,000 in cash compensation in 2013 (base salary and bonus) and total compensation of $378,000, including; benefits, perks and equity gains… Median total compensation for private company CEOs was up approximately 5% from the prior year– outpacing the inflation rate of 1.5% in 2013– but not growing as fast as pubic-company CEO compensation packages. The S&P 500 median package increased by 9.5% over the same period…

In the article Pay Gap Between CEOs and Employees by Elliot Blair Smith and Phil Kuntz write: Under the Dodd-Frank law passed by Congress, several years ago; public companies must reveal their CEO-to-worker pay ratios, but many companies still are not making this numbers public…To get a sense of what such ratios could reveal, we conducted an experiment: We compared the disclosed CEO compensation information mandated by the SEC, including; salary, bonus, perks, changes in pension accrual, and the value of stock-based awards… with U.S. government data on average worker pay and benefits by industry. (Most companies don’t disclose actual payroll information for employees.) In addition we used the industry-specific averages for workers compensation, which compares CEO pay with the ‘average’ for all rank-and-file employees in the U.S., while the law calls for using the ‘median’ of all employees, including; executives other than the CEO…

Others organizations who have calculated similar pay ratios, such as; the AFL-CIO, didn’t differentiate worker pay by industry or include employee benefits in their math, but others like Bloomberg News did, which tended to make the ratios smaller. (The AFL- CIO’s average ‘CEO-to-worker’ multiple at large U.S. companies is 357. Bloomberg’s average ratio for Standard & Poor’s 500 companies is 204; the average of the top 100 companies is 495. That is, CEOs of the companies averaged 495 times the income of non-supervisory workers in their industries.) There’s no question that using industry-wide averages as the denominators is not a perfect substitute for the real pay ratios that Dodd-Frank calls for, but this a reasonable approximation to demonstrate the point…

gap thWBIPC0VX

In the article Pay Gap Between CEOs and Workers is Much Worse by Roberto A. Ferdman writes: A study conducted at Harvard Business School found that Americans believe CEOs make roughly 30 times what the average worker makes in the U.S., when in actuality they are making more than 350 times the average worker… According to the study; Americans drastically underestimated the gap for actual incomes between CEOs and unskilled workers… But that underestimation isn’t merely drastic; it’s also unmatched in the world. The gap between Americans’ perception and reality is the most among any of the 16 countries for which the researchers measured, both for the perceived and the actual pay inequality…

The U.S. CEOs are significantly better paid than those from just about anywhere else, for example; average Fortune 500 CEO makes more than $12 million per year, which is nearly five million dollars more than the amount for top CEOs in Switzerland, where the second highest paid CEOs live, more than twice that for those in Germany, where the third highest paid CEOs live… While a handful of countries might perceive larger ‘pay gaps’ than the U. S., none of the ones surveyed have an actual pay gap anywhere nearly as large. In Switzerland, the country with the second largest CEO-to-worker pay gap, chief executives make 148 times the average worker; in Germany, the country with the third largest gap, CEOs make 147 times the average worker; and in Spain, the country with the fourth largest gap, the ratio is 127 to one…

gap th88OWRFU9

In the article Are CEOs Paid Too Much? by Jack L. Lederer writes: The problem isn’t that CEOs are paid too much, it’s that outstanding employees are paid too little. Most top performers earn hardly more than the average, although they work much harder and create greater value: The solution? Implement a broad-based compensation system that defines and rewards outstanding performance… But, the criticisms are familiar: ‘CEO pay is unrelated to company performance’ or ‘No one is worth that much money’… And the most emotional of all: ‘The pay gap between CEOs and average employees is destroying the social fabric’…

But, the facts are just the opposite; most companies are strengthening the ties between CEO pay and company performance. Good chief executives are well worth the money that they earn, given their unique talents, and the enormous value they create… And, the pay differential between the ‘typical’ CEOs and ‘average’ workers is usually much less than what some critics (and politicians) claim… But while most companies do not overpay their CEOs, they do underpay outstanding non-executive workers. These high-achieving workers are lucky to earn even 10% more than the average… The solution is to design reward systems that deliver outstanding pay and other benefits for outstanding worker performance…

In the article Executive Pay Controversy by Anthony Smith writes: The outrage over executive compensation is largely a perception vs. reality issue. The perception is that a $5-10 million compensation package is out of balance because it’s either too large of a multiplier of an average worker’s salary or its greater than shareholders’ perceived rate of return on investment: Or both. This perception was a key factor in passage of a House of Representatives bill requiring public companies to put executive pay packages up for an advisory vote by shareholders. Unfortunately, many of those ‘outraged’ have failed to consider several important points.

  • Consideration #1: The reality is that the free market is alive and well, and is the true dictator of CEO pay. While what one’s peers are making is still a legitimate barometer, critics should look at the macro economics of ‘stars’ in all fields (after all, CEOs are the ‘stars’ of the business world), and not just the micro economics of CEO pay, if they are serious about understanding the calculus in determining compensation…
  • Consideration #2: Few people can– perform music like Bono, write books like Harry Potter‘s J.K. Rowling, play golf like Tiger Woods… They all have unique talents that the free market has decided are worth millions of dollars each year, even though Woods doesn’t win every ‘major’ and every album of U2’s is not double platinum… Likewise, only a handful of people are capable of leading major multinational corporations with 100,000+ employees and $50+ billion in annual revenue…
  • Consideration #3: These unique people create more than just entertainment value; they create thousands of jobs, deliver a lifetime of wealth for legions of investors, drive life-changing innovation… IBM’s Lou Gerstner saved a U.S. institution; Herb Kelleher at Southwest Airlines defied industry logic by consistently delivering profits, in the toughest of times; Many people became wealthy investing in GE; and yes, Jack Welch did have something to do with it…
  • Consideration #4: Unlike an artist with a distinctive talent, a CEO’s craft and contribution is highly subjective, you need to find an objective means, in this highly subjective universe, of separating a CEO’s overall performance from the number attached to his or her compensation… Historically, compensation was negotiated based on potential and probability of success, but company’s must now move closer to a ‘merit-based pay for performance’ model that will indeed drive greater differentiation…

Forward-thinking companies must negotiate a new contract with their workers, one that fits the demands of the next century… According to Jack L. Lederer; the workers’ agreements for the 21st century must accomplish three critical objectives: First, it must lure highly talented, self-confident, team-oriented employees who are comfortable with risk… Second, it must reinforce a culture of performance by delivering significant rewards to those workers who make outstanding contributions… Third, it must inspire team-oriented behavior, and treating workers more like business partners…

According to Peter Drucker; excessively high multiples undermine teamwork and promote a winner-takes-all attitude, and that is poison to a company’s long-term health… I’m not talking about the bitter feelings of the workers on the plant floor– they are already convinced that their bosses are crooks anyway– it’s the people in middle management who become ‘incredibly disillusioned’ by runaway CEO compensation: It’s morally unforgivable…

gap original

According to Weinberg and Davide Dukcevich; this is a free market capitalist system which tends to produce the best possible outcome for the greatest number of people, and nowhere is that more true than in the labor markets… and, nowhere is that principle more generally ignored… Many well-intentioned people love to muck with the seamless operation of supply and demand, and especially the labor markets; they interfere with– hiring, firing, mandate everything from vacation time to minimum wages… But are workers any better off for all this well-intentioned meddling? When, in fact, most companies are concerned about the well-being of workers, about fairness, about social responsibility… it’s just good business… However, without begrudging the compensation being offered to executives; wage systems, in general, both for CEO and worker, must be better connected to current market and social realities…

Share

Myth; Wage = Happiness: Illusion; Perfect Salary for Workers: Dubious Correlation; Money Alone Motivates Workers…

Share

Perfect salary means happiness: Conventional wisdom has it that when people are paid more; they are happier, and they work harder… But like most conventional wisdom this one is rooted in fact and requires: ‘Yeah but’ expression According to Hal E. Hershfield; Yes, money does  matter, but it depends on what you mean by ‘matter’… You may be more satisfied at work if you make more money, but this doesn’t necessarily mean that you will be happier: Happiness and satisfaction are simply different things. Being in upper echelon of income rankings won’t necessarily put you in upper echelon of happiness scale. According to Alan B. Krueger and Daniel Kahneman; while most people believe that having more income will make them happier, the researchers have found that the link is greatly exaggerated and mostly an illusion… Although income is widely assumed to be a good measure of well-being, the belief that high income is also associated with happiness is widespread but mostly illusory… However, despite the weak relationship between income and happiness, many people are still highly motivated to increase income thinking they will be happier…

happy thF7O71LZ8

According to Professor Glenn Firebaugh; ‘relative income’ is a better predictor of happiness than ‘absolute income’… Experiments suggest that what matters most is not income per-se but income relative to the income of one’s peers; people tend to compare themselves to others of the same age resulting in a hedonic treadmill, because incomes rise over most of the adult lifespan… Rather than promoting overall happiness, continued income growth promotes an ongoing consumption race where individuals consume more and more just to maintain a constant level of happiness… According to Kahneman and Deaton; higher income is neither the road to happiness nor the road to the relief of unhappiness or stress, although higher income continues to improve people’s life experiences… So money can’t make you infinitely more joyful, but it might be able to make  you infinitely more content…

In the article Is $50,000 Enough to Buy Happiness? What About $161,810? by FastCompanyStaff writes: According to a ‘Skandia International’ poll; $161,810 is the annual income you need to make to be happy; or maybe its $50,000, if you believe a Marist poll; or it’s $75,000, says a Princeton study. Don’t be misled: The role income plays in happiness is rife with conflict:

  • Myth 1: SALARY = HAPPINESS: If you ask someone how many cookies she’s eaten and then ask how happy she is, she’ll answer based on the cookies. Same with how much money she makes. It’s called the ‘focusing illusion’, and it skews polls like these… Be happy: The Marist and Princeton polls correlated people’s happiness and their income. The other asked people how much money they would need to be happy– and it was a lot. That goes to show: Take your focus off the money, and suddenly happiness becomes a lot more affordable…
  • Myth 2: Lifestyle Upgrades: ‘Hedonic adaptation’ is a psychologist’s way of saying ‘the novelty wears off’… Pretty soon that smart TV you were saving up for is going to become just another thing you own. It’s the same with achieving the income you’ve had your eye on: Your lifestyle adapts, you are back to wanting more… Be happy: Focus on experiences– good friendships, interesting vacations– and less on actual things. Compared to fancy things, psychologists say; happy memories are adaptation proof…
  • Myth 3: Communities are Supportive: The critic H.L. Mencken once wrote that wealth is ‘any income that is at least $100 more a year than the income of one’s wife’s sister’s husband.’… Richard Easterlin proved that relative income trumps personal income when it comes to happiness… Be happy: Focus on your own achievements. If you need help, try tweaking your social media feed; one person’s celebratory tweet can be another’s anxiety spike. Were we once easier to please? Yes: In 1963, 40% of Americans making less than $3,000 a year ($22,000 in today’s dollars) declared themselves very happy and 59% of Americans making $15,000 ($112,500) or more said the same. By 2004, only 22% of Americans who made less than $20,000 ($24,300) said they were very happy, as did only 43% of those making $90,000 ($109,400) or more…

In the article Perfect Salary for Happiness is About US$75,000 by Megan Levy writes: The perfect salary for happiness is about US$75,000 ($98,800); that’s according to a 2010 Princeton University study, by Angus Deaton and Daniel Kahneman, who came to the conclusion that, up to a point, money certainly can buy day-to-day happiness, but giving people income beyond US$75,000 is not going to do much for their daily mood… but it will make them feel like they have a better life… And that study motivated Dan Price, CEO of a U.S. company with 120 employees, to astonishingly slash his own million-dollar salary and bump up those of his employees to a minimum of US$70,000… Price said he would pay for the wage increases by cutting his own salary from nearly US$1 million to US$70,000, and by using 75 to 80% of the company’s anticipated US$2.2m in profit… According to Ryan Pirkle; company spokesman; current average salary at the company is US$48,000 year…

happy x5sz8nohhe1hkgv2ezy6

In the article Perfect Income for Happiness? It’s $161,000 by Robert Frank writes: More than one study has tried to determine the financial price of happiness. Some look at wealth and others look at income… Happiness itself is not easily defined and money does not always guarantee it… The financial considerations for happiness usually depend on various issues, e.g.; geography, peer groups, education, other external factors… According to Skandia International’s Wealth Sentiment Monitor; it found that the global average ‘happiness income’ is around $161,000 for 13 countries surveyed, and there was a wide range of answers depending on the country, for example; Dubai residents need the most to feel wealthy– they needed $276,150 to be happy… Singapore came in second place, with $227,553, followed by Hong Kong with $197,702…

The region with the most modest needs for happiness is Europe; Germans only need $85,781 to be happy, placing them lowest on the list; the French need $114,000, while the British need $133,000… The survey doesn’t ask about total wealth needed to feel happy, but it does ask about the amount of wealth needed to feel ‘wealthy’… Globally, the average amount needed to feel wealthy was $1.8 million… Singaporeans took the lead on the ‘wealth’ needs with $2.91 million needed to feel wealthy, Dubai ranked second with $2.5 million, followed by Hong Kong with $2.46 million… Surveys show that Americans, mostly say they need $1 million or more to feel wealthy… All of this shows that wealth and financial happiness is not an absolute number, but is relative to your peers, surroundings…

happy images

In the article Income & Happiness Studies: How much is Enough? by G.E. Miller writes: Question: At what $ amount can money no longer buy happiness? There are a number of studies that have attempted to answer this question by pinpointing a magical income number at which happiness is much easier to obtain…  Are these Money and Happiness Studies Legit? I always find these money and happiness studies interesting, but they always leave me with a bit of a ‘hungry-for-more’ feeling. I am always left questioning three things:

  • Causation vs. Correlation: Perhaps confidence, location, gender, race, education level, or even age is a bigger determinate of happiness than income? A correlation between income level and happiness does not mean that the income level led to the happiness, for example; even though the U.S. is a wealthy nation, it’s citizens are not the happiest…
  • Impact of Location: How does location impact happiness at different income levels? $50,000 will take you a long ways in Fort Wayne, but not very far in San Francisco. You can’t paint a broad brush across the entire U.S. when expense levels can vary so much by geography. What is the magic number when adjusted for cost of living?
  • Impact of Expenses: How do spending habits influence happiness? Is someone who spends much more than peers in their geography less likely to be happy?

What Can You Learn From Income and Happiness Studies? Despite their weaknesses, I think that these studies do help add some credibility to the following assertions:

  • Meeting basic needs does influence happiness: Just scraping by to put food on the table and pay for other basic needs is going to have an adverse impact on your happiness; and the numbers in these studies back this assertion…
  • Stuff does not equal happiness: At a certain level, more buying power (more stuff) does not lead to more happiness. Therefore, if happiness doesn’t increase infinitely with income, one would have to assume that stuff does not lead to more happiness: So stop buying all that stuff!
  • Take comfort in enough: The pursuit of money for the goal of increasing happiness is something that most people buy into. As a wage earner, take comfort in knowing that you don’t have to earn all that much to influence your happiness…

The idea that happiness is important to society is not new: Many other prominent intellectuals, philosophers and political leaders throughout history, including; Aristotle, Confucius, Plato… incorporated happiness into their work… Thomas Jefferson put the ‘pursuit of happiness’ on the same level as life and liberty… Jeremy Bentham believed that public policy should attempt to maximize happiness, and he even attempted to estimate a ‘hedonic calculus’… It may come as a surprise but money really doesn’t bring happiness to people. According to Jade; It does bring satisfaction and even a temporary happiness, but in the long run happiness doesn’t have a price tag. Earning more money can lead people to want more money and being surrounded with people who are well-off can lead to aspire to better standard of living, but it does not guarantee happiness…

happy th5CN7D29O

According to Shawn Achor; nearly every company in the world gives lip service to the idea that ‘people are their greatest asset’… Yet according to Conference Board Survey; employees are the unhappiest they have been in 22 years of tracking job satisfaction rates… Given the unprecedented level of unhappiness at companies and the direct link between the employees’ happiness and business outcomes, the question is NOT whether happiness should matter to companies: The real question is: What can companies do to raise the happiness level of employees? Just increasing salaries in the hopes of encouraging greater happiness can backfire… What works for one worker may not transfer to other employees in the same manner, for example; while one worker may increase productivity when given more pay, another worker is motivated more by the recognition of their ‘value’ to the company…

Overall, to effectively motivate workers and raise their level of happiness, companies need to employ a set of tools that provide fair and equitable salaries, while also placing emphasis on non-monetary rewards, for example; providing an empathetic work environment, providing training, opportunities for advancement, open communication, security… all balanced with a managerial style that encourages both loyalty and higher productivity…

Share

Antithesis of Market Capitalism– Market Failure: Government Intervention Vs. The Invisible Hand…

Share

Market failure: As comfortable as you may be with the successes of market capitalism, you must also have an uneasiness about its failures; rising wealth inequality, long-term unemployment, threats to environment, out of control health care costs, workers inequality, consumer protection… Hence, although free markets can fairly and efficiently distribute most goods and services, it may not be best system for all goods and services… According to Stan Sorscher; you can arrange the conventional mechanisms for market failure into two broad categories: Imperfect Markets and Misaligned Interests:

Imperfect (or Defective) Markets, e.g.; market domination, asymmetric information, inequity… Monopoly is an example of market failure by market domination; a monopoly can dominate a market and limiting choice for consumers… Asymmetric information is another example of a defective or imperfect market, which means no one person or group has insider information– ideally all buyers and sellers have the same information… And another defect is inequity— markets often produce inequity… But, some economists object when they hear ‘inequity’ characterized as market failure. Rather, they hold that markets are not responsible for fairness. Fairness is a political or social issue, not an economic one. Nevertheless, some market rules magnify inequality, while other market rules results in greater fairness…

fail imagesQHZR56WB

Then there are– Misaligned Interests, e.g.; Externalities, Moral hazard… Economists believe that self-interest drives behavior, and market failure can occur when the public interest is not aligned with narrow interests of market decision-makers… Externalities is the term used to describe shifting of costs or benefits outside of the market between buyer and seller, e.g.; carbon dioxide is dumped into the atmosphere, where the public pays extraordinary environmental costs, whereas the producer of carbon dioxide pays nothing for the free use of the atmosphere– this is classic market failure by externalities… Moral hazard is when someone or an entity makes a market decision and someone else pays for it, e.g.; if a bank lends money to a borrower knowing that they cannot repay the loan and sells the bad loan to an investor, and this action insulates the bank from any liability, then the bank is guilty of a moral hazard…

In order to reduce or eliminate market failures, government can intervene and choose two basic strategies: One strategy is to implement policies that changes the behavior of consumers and producers by using price mechanism, e.g.; this could mean increasing the price of ‘harmful’ products, through taxation, and providing subsidies for ‘beneficial’ products. In this way, behavior is changed through financial incentives, much the same way that markets work to allocate resources… Another strategy is to use force of the law to change or control unwanted behavior, e.g.; license sale of alcohol, tax sale of cigarettes, penalize polluters… However, Milton Friedman’s concept is skeptical of government’s ability to correct market failures through interventionist policies.. in fact, government often does not truly know what the ‘right outcome’ is in most cases, and government failure should be just as much a concern as market failure; therefore societal welfare would be best met by finding market-based solutions to misallocation of resources that sometimes arises under conditions in which externalities exist…

In the article Market Economies by Thomas Metcalf writes: Market economies are based on the laws of supply and demand; and left unfettered by government intervention and regulation, a market will theoretically find an equilibrium… Market economies are based on the concept that people are free to make their own choices about what services or products to purchase. In theory, market economies are efficient because a capitalist market system aims to produce goods with a minimum of wasted resources… Rational people do not throw away resources or money, so producers work to maximize their profits by minimizing waste… Consumers likewise spend their money in ways that maximize their satisfaction… However, the downside of a market economy is that costs associated with production are not always paid by the supplier, for example; if pollution is a by-product of manufacturing it may not be factored into the price that a consumer pays for the product; these external elements are passed on to others who are not party to the production or sale of the product…

Also, market outcomes may not be equitable, e.g.; a rock star earns substantially more than a teacher because fans are willing to pay much more money for concert tickets, than for teachers salaries… Nevertheless, this outcome reflects the value that a market economy places on different services; a market economy produces what people want, and not necessarily what they need… Also, a market economy is ill-equipped to handle, e.g.; national defense, regulation of industrial safety, environmental protection in areas, such as; utilities, pharmaceuticals, food production, energy…

fail11thHSDH6EKK

In the article Market Failure: The Back of the Invisible Hand by Ernest Partridge writes: Some economists insist that the free unregulated markets always brings about the socially optimum result, hence the government should never interfere with markets. Furthermore, government should not own property, which is better managed by private individuals or groups: In short: let the free market decide… An extension is the mysterious ‘invisible hand’ of the free market, which will promote the best wishes of everyone… (note: the concept of ‘the invisible hand’ has its origin in Adam Smith’s Wealth of Nations.) But practical experience tells us otherwise… it’s obvious that in numerous undeniable cases the unregulated free market fails to make everyone better off… And the reasons for the failure of free markets to produce optimal results for many societal issues is ingrained in its very nature– the driver for free markets is profits… According to William Vanderbilt; the public be damned; I work for stockholders… Moreover individual entrepreneurs and workers also want and strive for what is best for themselves. Indeed, as any neo-classical economist will insist, personal satisfactions (i.e., profits…) is what drive market economy. Also, implicit in ‘market absolutism’ is the belief that– what is best for individuals and  corporations is also best for society at large…

Market absolutism is a dogma: Market– good; Government– bad: Period! Those who are not captivated by the dogma of ‘market absolutism’ know better: They trust the scientists who say that– pesticides damage the ecosystem, CFCs erode ozone in the stratosphere, continuing use of fossil fuels is changing the climate, smoking causes lung cancer and premature death (the cigarette packs tell us so, not because the tobacco companies warn us out of a sense of social responsibility, but because the government requires them to print the warnings)… Government regulation, and laws restricting commercial activity, arise, not from dogma, but through accumulated practical experience and political action. As human institutions they are imperfect, which means, to be sure, they are sometimes excessive… According to James Galbraith; markets have their place; they are reasonably open and orderly way to assure the distribution of services and goods. They are not a general formula for expression of social will and the working out of social problems…

fail market_failure_policies_map

Most everyone has an opinion as to what’s wrong with ‘free markets’, and what government should do about it: On one end of the spectrum are those who remain persuaded that government intervention in the economy inevitably distorts private incentives, and thus that ‘free markets’ function best when they are left alone. In other words; If it ain’t broke: Don’t fix it… On other end are those who believe that government must be assertive to curb market excesses and rein in corporate power. In other words; It’s broken: Fix it now… A technocratic middle reconciles these two extreme viewpoints by invoking the concept of ‘market failure’. The logic is presumably simply: a role for government exists if, and only if, a market failure exists. The burden for policy lies in establishing the nature of the market failure, and then specifying the mechanisms by which it can be corrected… Whereas, many have an exaggerated opinion of what markets can achieve. They think of markets (and more so, free markets) as some magical force that acts in the best interests of society and makes all people better off in the end…

Consider that a market is not a moral entity that can be judged as right or wrong; a market cannot make decisions or take actions; a market is simply, information sharing. People provide information about things they have for sale, and other people can choose to buy it or not, but the market itself is not a moral actor, because it does not act or make decisions… Market failure exists when the competitive outcome of markets is not efficient from the point of view of society as a whole. This is usually because the benefits that the free-market confers on individuals or businesses carrying out a particular activity diverge from the benefits to society as a whole… Some experts suggest that market failure is an economic concept that justifies government intervention in economic activities… Others suggest that market failure considers health of the whole economy and not just isolated economic actors…

According to some economists; one of the issues with government intervention is that it can also contribute directly to the failure, and thus makes the problem worse by failing to allocate resources appropriately… Knowing how and when to intervene is a difficult decision that is complicated by political and social issues, and the people and institutions involved in the decision-making… Government justifies intervention in the name of public interest, whereas some economists argue that government should not even attempt to solve market failures, because the costs of government failure might be worse than the market failures it attempts to fix…

Share

If Your Business Sucks, It’s Because Leadership Sucks: Wrong Culture, Wrong Focus, Wrong Alignment, Wrong Metrics…

Share

How do you know if your business sucks? It turns out 80% of everything you do in business creates a sucking sound… According to Peter Philippi; most businesses are being sucked of time, energy, resources, profits… 80% of the time. You’re spending 80% of your efforts on things that don’t matter… when there are challenging questions like: What would you do when you learn that your business is grossly under serving your best customers, employees… and ignoring its biggest opportunities? According to Jonathan Fields; if your business sucks, don’t blame the market… it’s management’s responsibility to understand, anticipate, respond… to markets; it’s time to stop bleeding, complaining… it’s time for business leadership to take controlAccording to Mark Biernat; you are probably surrounded by jerks; people who are seeking a lifestyle (bonus) rather than creating something of real value… you find greed and arrogance that are ruling the kingdom, and the honest workers gets knocked around like corporate pawns… you are surrounded by; aggressive primitive minded people, control freaks, envy, super-egos… Yes, business sucks! suck th0IGNTVOB The genesis of a business that sucks never has a clear-cut single cause; it’s usually an amalgamation of issues… Warning signs: there are a number of signals that should let a you know that the enterprise is in trouble, for example; going to sleep at night with the gnawing sensation that something is wrong with the business but you are not being able to identify it, is one of the most common ways that corporate rot announces itself. Closely allied with this is going to sleep and waking up knowing what needs to be fixed but being too paralyzed by fear to take action… According to Mark Stevens: there are four ‘sucking sounds’ that can set-up a business for failure, such as:

1. Rudderless leadership tops the list; management loses control of the business and the company becomes a group of balkanized people who are working under the same roof, but are rarely rowing the same boat– when you take the rudder off a boat and it goes around in circles… 2. Lust to lax syndrome; lust that a company has when it lands a new customer, which frequently gives way to laxity– that usually paves the way to mediocre service… 3. Slavish adherence to conventional wisdom; the belief that change is bad– it’s disruptive … 4. Complacency; may well be the precondition for all the other agents of failure. Companies must continue to innovate and raise the bar– people need to spend time dreaming and staring at a blank piece of paper or a blank computer screen to think about how they can make things better…

In the article Why Business Sucks by Jacqueline Zhou writes: Innovation is the life-blood of any successful business… But, if you step back and really look at why many businesses suck, almost every organization will fall into one (or more) of these four categories:

  • Wrong Culture: Culture plays a key role in innovation. It’s the foundation for creating a healthy ecosystem and coexistence between employee engagement and innovation… In order for engagement and innovation to work together, there must be organization-wide culture that supports and encourages– ideation, innovation, execution of ideas… at all levels of the organization…
  • Wrong Focus: Focus is the foundation of a viable innovation program and it must be sustainable for the long-term. Once the innovation ball gets rolling, business must focus and integrate the innovations into the core part of the business…
  • Wrong Alignment: Alignment of the innovations with the business strategy must be a top priority… Often innovation is a side project for an individual or small team, but to be effective innovation programs must be mainstreamed with the highest priority and support organization-wide…
  • Wrong Metrics: Business relies heavily on metrics (numbers)– how the business is doing now… Business must broaden their scope, and use metrics both; as measure of long-term outcome, and as indicator for making business adjustments…

suck th5BLQKZMP

In the article Why Do Big Companies Suck? by Scott Berkun writes: There are things that tend to happen when companies get big that are problematic for the employees who are; talented, independent, creative… here is a list to think about for: Why big companies suck:

  • Soul has left the building: All big companies start as small companies. But by the time a company has 500, 1000 or 50,000 employees, many of the people who made the small company successful have left and their spirit went with them. You can have a financially successful company that is mostly banking on the ideas and successes of people who left years ago, but whose middle-managers take credit for what was mostly inherited the day they were hired. When things go bad, none of the ‘leadership’ has any of the tools required to– fix, rebuild, or recreate the pattern of success that started it all…
  • Obsessive optimization: As companies age the culture looks to optimize and refine, rather than innovate… Managers at big companies often have more incentives to minimize costs than to find new business or develop new ideas, since minimize costs or optimizing an existing process are cheaper wins that show results in the short-term. In an optimization-centric culture, the myopic love of short-term wins can make long-term improvements, which often require short-term sacrifices hard to achieve…
  • Addicted to bureaucracy: Often big companies have many workers doing the same work that is being done by just a very few workers at a more innovative competitor, and often with better results. It’s strange to see– smart, senior… people who have forgotten that it’s possible to make things happen without; a meeting, talking to a committee, filling out forms… Companies, over-time, accumulate processes, it gets inherited, and then no one can even imagine a simpler more autonomous way of working… it’s amazing how little process is actually necessary.
  • Believe their own bullshit: A company’s all-hands-on meetings can feel like political rallies, where no valid questions can be asked, and all bad news or mistakes are whitewashed away. When you’re not allowed to critique and criticize decisions even when they are dumb… then, it gets harder and harder for good ideas to rise, because real thinking is discouraged. When business party line is BS; wise workers keep their mouth shut and start looking for other jobs…
  • Peter Principle: When you have several layers of management it’s entirely possible that some managers are not contributing very much… and, line-level workers are mostly self-sustaining. There are many reasons ineffective people get promoted, and it’s more likely to happen in bigger companies, where there is much ambiguity about who is contributing what…
  • Hard to fire people: Big companies get sued more often small companies because they have more money… But, when a small company gets it’s first law suit for wrongful termination, discrimination… they run the numbers and conclude; it’s cheaper, on paper, to prolong the process of firing people, and they increase the amount of paperwork that managers must create, e.g.; performance evaluations, mid-year reviews, and all of that… which are heavily (not entirely) motivated by lawsuit prevention and defense…
  • Corporations can be psychopaths: In 1886 the U.S. Supreme Court ruled that corporations were entitled to the same protections as people. This made it possible for executives to make decisions on behalf of a corporation, which in certain matters might be legally or ethically questionable, without being directly liable for them… Hence, there are lines that corporations can cross and be held responsible, but not necessarily the individual leaders…
  • Status quo/Follower mentality: The bigger a company gets, and the more that it’s main attractive power for new employees is job security, rather than opportunity to grow, learn, take risks… The ‘innovator’s dilemma’ is real, and leaders who have success are often the last to recognize when it’s time to move on. Hence, workers, executives… interested in progress, risk taking, change or growth potential… a big company can be incredibly frustrating; since its dominant psychology is– play it safe and political correctness…

sucks thG5V60CKI Why Business Leaders Suck: According to personalpundit; a few short thoughts:

  • Always Confuse Ambition with Ability: People who excel in the corporate world are notable mainly for personal ambition rather than ability to do the job. People who take their jobs seriously and work diligently for the good of the ‘company’ rarely get promoted. Those who talk a good line but spend most of their time promoting themselves, rather than doing their job are ‘executive material’…
  • Meritocracy is Bogus: Many love to believe in the myth of the meritocracy. In short, the best people rise to the top, so it must follow that the people at the top ‘are’ the best. Never mind how they actually got there (nepotism, backstabbing, being sharp dresser, sleeping with the boss, having famous parents, have an Ivy League degree, etc.)…
  • Today’s ‘Me’ Leaders: The whole philosophy can be summed up in a few words: Look out for No. 1, screw No. 2, and forget about everyone, everything else… Today’s business leaders pretty much follow this philosophy: Get as much as you can for yourself, even at the expense of others. And, there is no greater good than ‘me': If the company fails, who cares? If you have the ‘right color parachute’ it does not really matter: ‘Me’ is all that matters…

Finally; Inside of every business that sucks there is one person who can clearly see the problems and knows just what to do to fix them… But, according to the ‘business that sucks’ creed– this person must be fired…

Share

Most Self-Proclaimed Entrepreneurs Are Fake– They Are Fakepreneur: Real Entrepreneurs Dare To Change The World…

Share

Most self-proclaimed entrepreneurs are fake– this might sound blasphemous to many people, especially to want-a-be-entrepreneurs… but there is an important distinction between ‘real’ entrepreneurs, and those who turn their passions into businessesAccording to Norm Brodsky; visionaries, pioneers, leaders… all build great businesses, but ‘real’ entrepreneurs are something else– they make something new out of nothing, they change the world with new ideas… Everybody wants to be an entrepreneur these days and– judging by the way the word is thrown around– you might think that everybody is one… The ‘entrepreneur’ has become the job designation of choice, and it’s applied to all sorts of people, whether desired or not, for example; politicians, college presidents, cab drivers, bookies, real estate developers, big-company executives… and they are all held-up as models of entrepreneurship…

entre thKKNQWT8D

This is nuts: Entrepreneur is not a meaningless word and we shouldn’t let it become one. It’s the only word we have to describe a person who performs a particular function that’s critical to world’s economic well-being. I’m talking about the conversion of ideas into viable businesses by means of ingenuity, hard work, resilience, imagination, luck, and all the other ingredients that go into changing the world… Although, entrepreneurship is not the only way to create wealth in a capitalist economy and the people who do it aren’t members of some sort of business elite; but they do something that’s critical for the world economy and different from what other business people do, and they deserve to have a special name, i.e., entrepreneur.

So what is the definition of an entrepreneur? According to Brett Nelson; consider these two definitions of ‘entrepreneur': Merriam-Webster defines it as: one who organizes, manages and assumes the risks of a business or enterprise… Dictionary.com defines it as: a person who organizes and manages any enterprise, especially a business, usually with considerable– initiative, passion, risk… The difference is subtle, but fundamentally; it’s the word ‘any’… Dictionary.com has it right; entrepreneurs, in the purest sense, are those who identify a need– ‘any’ need– and fill it with a solution that might seem almost insane that changes everything– it’s a primordial urge independent of product, service, industry, market…

The world needs all kinds of entrepreneurs; they are the ones who are forever craning their necks, addicted to ‘looking around corners’ and ‘changing the world’… According to Steve Spoonamore; there are people who love to sail the ocean or climb mountains, and more power to them– but it’s nowhere near as interesting as taking a technology nobody ever heard of, finding a market, launching it, and changing the world… and the world needs it, more than ever… Just ask yourself; who are the people who are creating something new out of nothing? Something that didn’t exist before, something that is changing the world, as we knew it…

In the article Real Entrepreneur–Most Entrepreneurs are Fake by Vijay Anand writes: Entrepreneurship is not a lifestyle, it’s the way that you are wired, and the only way you know how to live… According to Jerome S. Engel; entrepreneurship is the pursuit of opportunity beyond the normal way of thinking… its genius and madness; but what’s the difference? Genius resembles insanity, and its extremely hard to differentiate the two at times. The saying goes that; everyone is a crank-pot till the idea succeeds. Entrepreneurs have the innate ability to create something out of nothing: What’s stuck in their head, most times, is a reality that is only relevant and known to them, and no one else quite gets it till it can be seen functional in the realm of reality… Great entrepreneurs almost always have more than one skill-set, for example; they have the– ideas, they design, they sell, negotiate, speak, write, hustle – and in various combinations of what’s known and unknown… Step back and think about it: To create something– not just to transform it but to create it from scratch, is almost like an act of godliness; it’s what entrepreneurs do — they bring things into life that never existed before…

entre innovation-creativity-and-entrepreneurship-21481600

In the article Fakepreneurs–Modern Epidemic by Kelsey Ramsden writes: Entrepreneurs are  the sexiest profession going these days, a lot of people are wanting to get into the club. Saying you are an entrepreneur has a lot of social cachet about it beyond just the esteem, but no one will ever know if you do anything noteworthy as a self-proclaimed  entrepreneur, or not– as a result there are plenty of fakepreneurs… The real difference between fakepreneur and real entrepreneur is the effort, integrity, intention… to do something very different from the normal, to rethink the normal, to start something completely, adopt new thinking to solve old solutions… and, the difference lies in the ‘why’ behind the actions… Are you seeking to select a job title, or solve a problem? The truth in being an entrepreneur lies in the actions and problem solving a person does…

In the article Who Are the Real Entrepreneurs? by Norm Brodsky writes: I have a very simple definition for an entrepreneur; they are people who start with nothing more than an idea for a venture or product or service… and they have the ‘ability’ to take it to a point at which a business can sustain itself, notice I said ‘ability I’m not talking about people who happen to be in the right place at the right time… And, I don’t count people who start one company and then can’t do it again to save their souls: I call them ‘one-ers'; they are entrepreneurs by accident… The example I usually give is Ray Kroc, who built McDonald’s from a successful hamburger stand into one of the greatest companies in the world. He was without doubt a pioneer and a business giant, but the people who got the company up and running were the McDonald brothers, who turned out to be ‘one-ers’…

By the same token, I would exclude people who inherit a business, no matter what they do with it afterward, e.g.; Ned Johnson of Fidelity Investments, revolutionized the financial-services industry, but his father who started the business was the real entrepreneur. Ditto for Donald Trump… Also, I don’t think you qualify as an entrepreneur if you go in business with all the resources of a giant corporation at your disposal… Nor do you qualify if you do nothing more than acquire existing businesses, which you then bundle together to create a new mega-business. To be sure, many of these people call themselves entrepreneurs; a couple of them have even been designated ‘Entrepreneurs of the Year’, which is a joke: By and large, they are just smart accountants…

Real entrepreneurs are people with different ideas, and then create companies from scratch. They start with nothing except what they themselves bring to the party– a concept, few contacts, maybe some capital, plus all of those intangible qualities that are important to success in any new venture; that’s about it. There are no salespeople, no offices, no telephones or computers, no accounting system, no operations, no customers or suppliers. The entrepreneurs’ job is to put everything together– wearing 10 different hats, juggling 20 different balls, relying on their own knowledge, instincts, creativity… to get them to positive cash flow… And the best entrepreneurs are masters of the process, which is not to say that they are necessarily the greatest business people in the world… In fact, many of them fail in business but they know how to bounce back from failure, and many of them have a hard time managing the companies they create, but they keep on trying until they succeed…

So who are the real entrepreneurs? Ross Perot is certainly one of them; so is Steven Jobs. Some would also include; Microsoft founder Bill Gates and Federal Express founder Fred Smith, although technically the jury is still out on them. They could be ‘one-ers’… But most real entrepreneurs are people you’ve never heard of: There are thousands of them– men and women of every race and nationality, in every industry and every corner of the globe. They are starting businesses every day, and the world is a better place because of it…

entre thET0SOXVP

Entrepreneur is a powerful word and when it’s used as a label, it take on even greater power; you romanticize it, you glamorize it, you assign mystical properties to it… Entrepreneurship is not for the everyone, it’s only for the very few who have that special combination of– genius and madness… According to Hal Alpiar; listen to the politicians that toss the ‘E’ word around, and it will be transparently clear that they haven’t the foggiest idea of what entrepreneurship is all about… According to Brian D. Evans; there is a growing use of the term ‘fakepreneur’… It started because there are a lot of self-proclaimed ‘fake’ entrepreneurs calling themselves entrepreneurs. And some people have decided to become the entrepreneur ‘title’ police…

This is nothing new: It’s been happening in Hollywood for 50+ years, for example; where everyone in town is supposedly an– actor, director, producer… Who really knows– who is and who isn’t? And who really cares? All successful entrepreneurs just stumbled into it; they didn’t get a university degree in entrepreneurship, they just went out and did it. They learned through unconventional means, they innovated, they challenged themselves, they networked, they joined communities and online forums, they found mentors, they got accountability partners, they invested in the futures and learned to do whatever it took…

Real entrepreneur just do it; they go out and focus on changing the world, they build a business, doing what they do best… Everything else will fall into place, and at the end of the day having a ‘title’, or not, does not make much of a difference. And, since there is no ‘title’ police– you can call yourself whatever you want… Real entrepreneurs know who they are, and even after knowing the stark and bleak reality before them, they still dare go out to change the world, because that’s the only way they know how to live… So for their sake, let’s agree and reserve the title of ‘entrepreneur’ for the special group of people– the ones who earn it!

Share

Dangers in the Workplace– Backstabbing, Violence, Abuse, Stress… Beware: Better Watch Your Back…

Share

Work can be a dangerous place; about two million workers are affected by workplace violence every year, according to the Occupational Safety and Health Administration (OSHA)… According to Mike Martin; workplace violence is a growing concern for many workers and the threat of violence at work is not just limited to physical assault: workplace violence can include; any act where a worker is– abused, threatened, intimidated or assaulted in the course of his or her work. This can include a range of actions such as; threatening behavior, verbal or written threats, verbal abuse and, of course, physical abuse– hitting, shoving, pushing, kicking… With plenty of real warfare in the world, it’s hard to fathom the workplace being referred to as warfare: Yet, that is exactly what it is… The general perception is that the modern workplace is safe and well-managed and that there is hardly any possibility of any physical danger; but reality tells a different story…

watch2

Statistically, the federal government doesn’t give any precise costs beyond saying that the impact on business runs somewhere in the billions of dollars, and citing the many– seen, as well as, unseen effects; ranging– from loss of good workers, to psychological damage on surviving workers, to public relations nightmares, to legal actions, to physical property being damaged, stolen, sabotaged… In addition, there are much higher costs for workers compensation, and increased costs for workplace security…

In the article What Makes Workplaces Dangerous by watchtower: Millions annually suffer serious, even life-altering, injuries at their workplaces. Many others die prematurely because of on-the-job exposure to dangerous substances or as a result of stress at work… Since work-related death and serious injury occur in almost all sectors of industry and commerce, it is appropriate to ask: Just how safe are you at your workplace? What situations there, might threaten your health and life? Tremendous pressure is often placed on workers to be productive, e.g.; in Japan the term ‘karoshi’– death from overwork– was first used in the compensation claims filed by bereaved families. According to a survey there, years ago, 40% of Japanese office workers feared possible death from overwork…

A lawyer specializing in such claims estimated that there were– at least 30,000 victims of ‘karoshi’ in Japan every year… The police in Japan have suggested that work-related problems are a key factor in the increase in suicide among 50- to 59-year-olds… According to the book; The Violence-Prone Workplace, one court held an employer liable for the suicide of an employee who was beset with work-related worries… According to The Canberra Times (Australian newspaper) said that– U.S. has overtaken the Japanese in putting in the longest working hours in the world… Also, news stories with headlines such as; ‘Long Hours Are Working People to Death’, tell about fatigued workers, such as; ambulance drivers, pilots, construction and transport workers, and those working night shifts, being killed on the job…

watch 1473907

A British survey found that many office workers spend much of their working day in a state of irritation with colleagues, and that such conflict often triggers violent reactions… Another form of workplace violence is emotional abuse, which is recognized by the International Labor Organization as psychological violence; a major form of this abuse is bullying… According to Professor Robert L. Veninga; stress and its resulting illnesses impact workers in almost every corner of the world, and stress stems from impersonal, ever-changing, and often hostile workplaces…

In the article Beware of Workplace Frenemies by Robert DiGiacomo writes: Workplace ‘frenemies’ come in many guises, so be alert to the dangers lurking beneath some warm or appealing demeanor… According to Donna Flagg; many frenemies mean no harm, while others are workplace bullies whose power plays must be checked… To help you identify workplace frenemies, here are a few common types:

  • The Politician tell you one thing and tell the boss something else… the are in the boss’s office every 5 minutes, declaring their indispensable worth…
  • The Ambitious Ingenue is a direct report who professes nothing but admiration for your work– but beware; he or she may have a not-so-secret agenda: to take over your corner cubicle or climb even higher up the executive ladder…
  • The Funeral Director lives for crises and accentuates the negative of every situation — and appeals to the ‘inner Eeyore’… It’s all too easy to join in a self-perpetuating complaint-fest, and this negativity can be a career killer…
  • The Idea Thief appropriates your great idea from a public brainstorming session or other meeting, and passes it off as their own…
  • The Time Waster lurks by the proverbial water cooler, or parks in your cubicle, to chat about every possible topic– except the work at hand. And given the choice between analyzing profit-and-loss statements and talking about what’s up on your favorite reality show, it’s pretty easy to choose the latter…
  • The Wakeboarder uses charm to shift responsibilities to others, making them feel as if getting their work done should be others top priority…

In the article Watch Your Back by Leon Gettler writes: Watch your back because passive aggressive colleagues are stealth saboteurs, and they need to be handled with care… Remember the movie; Meet The Parents, starring Robert De Niro and Ben Stiller where the father keeps making snide little comments towards his prospective son-in-law, having digs at him about choosing nursing as a profession; that’s an example of a classic passive aggressive stance… Passive aggressive behavior is defined by traits such as; obstructionism,  procrastination, resentment, resisting suggestions, sullenness, blaming others, chronic lateness and forgetfulness, complaining…

Passive aggressive people also have trouble expressing hostility or anger openly. They avoid responsibility by claiming forgetfulness, they fear competition, and will often make excuses or lie to get out of doing something… According to Harvard Business Review; a passive-aggressive person may appear to comply with another’s wishes and may even demonstrate enthusiasm for those wishes, however the person will tend to perform the requested action– too late to be helpful, or in ways that are useless, or just sabotages the action to show anger that they cannot express in words…

In the article Protect Yourself From Untrustworthy Co-workers by Brandon Smith writes: What can you do to protect yourself? For a few strategies that can make the difference from getting blindsided by a untrustworthy colleague, consider the following:

  • Make it personal; you have heard the old adage– keep your friends close and your enemies closer– keep your work enemies close, e.g.; go of your way to say hello every day…
  • Build your allies; you need allies at work; your allies serve as your eyes and ears and lobby on your behalf when you are not around…
  • Document everything; a critical way to protect yourself is to have a– paper trail regarding your exchanges with untrustworthy or suspicious co-workers, but the trick is to not make it obvious…
  • Get close to your boss; stay close to your boss and keep his or her trust– become a loyal and constructive contributor to his or her team…
  • Do your job; do your job to the best of your abilities– it’s hard to argue against great performance…

It’s a nasty world in the workplace, and you need to be ready for it… According to Steven Wagenheim; there are people in the workplace who will put the screws to you just as soon as look at you– you must learn to watch your back… The workplace reality is such that you always will have more successful when someone is– ‘watching my back’… According to J Rod; do not trust anyone in the workplace! The ones that laugh loudest when laughing at jokes will be the first one’s to run and tell; never treat the workplace like a social scene… According to Ji Hyun Lee; a backstabber is someone who pretends to be your friend, or on your side, and then turns around and does or says things that leads to you being– harmed, exposed, or treated badly as a result of things they said or reveal… it’s a form of manipulation and reveals a person who is– disloyal, insecure, very unsure of their own place…

watch thMADT2ZUE

Then there are the ‘connivers’ who gain respect from attacking the efforts of co-workers and spread distrust of colleagues… and many managers are easily duped into believing that these hostile passive-aggressive employees who are masters at conniving everyone into believing their inflated sense of importance, productivity… are indispensable. Having allies in the workplace can be powerful weapons in dealing with conniving and hostile co-workers, so do your best to keep your office buddies close…

According to Dr. Dennis Reina; research found that gossip and backbiting are the number one killer of communication trust in teams; nine out of 10 employees experience this phenomenon in the workplace… Gossip is destructive because it damages relationships, invites retaliation and creates an environment of distrust. Ultimately, it causes the workplace to feel emotionally unsafe… According to Joan Lloyd; at some point in your career you are likely to have an ‘enemy’– someone who doesn’t agree with you, doesn’t like you, and someone who might even like to inject a little poison into your career!

It’s time to bring the dangers of the workplace out of the shadows and expose the real issues, but be alert… It’s ironic when you think about it that not only are you always being told, at work– how you are all one big happy family, but also how you never, and I mean ever, really believe it: The workplace can be a dangerous place, protect yourself and watch your back…

Share

CyberRevenge– Hacking the Hacker, Attacking the Attacker: CyberWarfare– Hire Mercenary to– Hack-Back, Retaliate… Or, Not!

Share

Hacking the hacker: In effect means being a thief to catch a thief… There is a hot debate over companies’ rights to defend themselves in cyberspace by taking offensive action… The hacker-on-hacker retaliation is a tantalizing option for some victims, however, many experts warn that the strategy, commonly known as ‘hacking-back’, could go very wrong… According to Jeffrey Carr; hacking-back is the worst option for companies because they don’t know who is on the other end of the keyboard nor what capabilities that person(s) has. What may start as simple [intellectual property] theft could, after a ‘hacking-back’ attempt, can result in unforeseen consequences… People with any life experience usually understand and respect the adage– ‘never pick a fight with a stranger'; the same adage applies in cyberspace…

hack untitled

According to Rick Howard; just because you are able to jab back against a cyber adversary does not mean that you should… More likely than not, you would have succeeded in poking the beehive and you may have unleashed a world of hurt on your organization that it did not need… However, other experts say companies should be allowed to hack-back after they’re hit… If companies cannot get timely help and protection from law enforcement, then they should be allowed to take responsible action to mitigate the impact of theft of their data; companies should be allowed to hack back…

According to Matthew Green; hacking-back sounds like a great idea until you think about how easy it’s to subvert. Today’s attackers go to great lengths to hide the source of their attacks. How can any company know they’re really hacking their attacker, and not some innocent bystander?

According to Mark Weatherford; it depends: there are so many possible unintended consequences in hacking back that unless you truly understand what you are doing, it isn’t worth the risk. Remember, when you hack-back, you are escalating an event with someone who may have far greater skills, resources and evil intent than you…

According to Melanie Teplinsky; hack-back, retaliation, vigilantism. These words not only make for great headlines; they spark heated debate over the appropriate roles of the private sector and government in cyber-security. However, defensive measures alone may delay, but are unlikely to prevent penetration of target networks by concerted adversaries. Focusing exclusively on defense will not solve cyber-security… We need to raise the costs and risks to concerted adversaries in order to deter their activities.

In the article Hack the Hackers? Companies Itching To Go On Cyber Offense by Matt Egan writes: Fatigued by a relentless onslaught from hackers, some companies are mulling a more aggressive and proactive approach to powerful cyber evil-doers. Offensive counter strikes are likely illegal in today’s murky legal structure, but some security professionals are calling for at least a more proactive stance that utilizes measures like disinformation campaigns, honey pots, intelligence gathering… All of this is aimed at squashing cyber attacks that can generate millions of dollars in damages and lost revenue, loss of intellectual property, and even cause reputation harm… According to Dmitri Alperovitch; these adversaries are like a dog with a bone… they will not go away… it doesn’t matter how many times you stop them, the one time they get through they cause very, very serious damage…

Whether it’s from vindictive terrorists, anti-capitalistic hacktivists or stealthy hackers, it’s clear that companies are under attack from nefarious online forces… According to a report, 65% of organizations polled suffered an average of three denial of service attacks in the past 12 months, costing financial-services companies a hefty $32,560 a minute… This helps explain a rising frustration about the limited options companies have to fight back… Some security firms are advocating a more proactive defense, though companies need to be careful to navigate laws… According to Dmitri Alperovitch; we are not advocating hacking-back, since in most cases it’s illegal… we are talking about doing legal things on the network… that are more aggressive as opposed to just sitting there and trying to swat away these intrusions… its active defense, which can be a very effective deterrent…

In the article Hacking the Hackers: Legal Risks of Taking Matters Into Private Hands by Becca Lipman writes: Private groups are beginning to fight back against foreign sources of malware and credit fraud, but methodologies put these digital crusaders and their employers at serious legal risk… Breaking into somebody’s computer, even if it belongs to a hacker in– Russia, China… who just hacked you, is illegal… It’s the same as if you broke into a robber’s house to take back your stolen jewels. Intention does not justify the crime of breaking and entering… As with any other battle, there’s also a risk of hurting innocent bystanders. The goal is to shut down hackers at the source, but that often involves going through botnets, networks of millions of infected PCs that report to a central server… Perhaps it’s only a matter of time before something truly shocking occurs from the actions of digital justice crusaders, but the fact is that institutions do illegal things all the time to stay on top of security protocols, and it proves effective in many cases… Many of the people involved in these activities are taking actions in legal grey areas in a form of vigilantism…

hack3

In the article Hacking the Hackers by Arthur Piper writes: Hackers use sophisticated techniques to block their server’s IP address-the unique digital code that identifies each device on the internet. But it is not impossible… That passive attitude to managing the risk of cyber-attack is changing; some organizations are setting traps for hackers within their own networks, or designing fake networks to catch the perpetrators. Data on the fake part of the site can often be traced to the criminals when they sell or attempt to use it… You are seeing a bit of a trend of not relying so much just on the government and businesses taking a more aggressive approach… Other businesses are setting up databases in more sophisticated ways to both prevent serious loss and to help create evidence that can be used in court at a later date… But, not all cyber-criminals have yachts and most are effectively subcontractors working for other criminals. When they do have money, it may be difficult to obtain, and they may be impossible to sue if they live in a jurisdiction with no legal extradition rights…

In the article New Brand of Cyber Security: Hacking the Hackers by Ken Dilanian writes: The traditional way of trying to defend your network is just not going to cut it; you have to do something different… one way is to engage the adversary… According to Irving Lachow; attackers often breach company networks using a tactic known as spear phishing, a practice that gets an employee to download a malware file by disguising it, for example; in an email purporting to be from someone the worker knows. Firewalls and anti-virus software are almost useless against such techniques… To counter these tactics some experts suggest the uses of decoys to lure hackers into a controlled environment, where investigators can observe and trace the attack… then hopefully identify the hackers by using clues in their malware, and by gathering information from a variety of other sources, they then might be able to develop a profile of the attacker… Profiles enable a more targeted defense by know– when an attacker is likely to strike, how they communicate, what malware they use, how they steal data…These methods are not without critics, who worry about how far companies might go down the road of cyber vigilantism… The Justice Department said hacking-back may be illegal under the Computer Fraud and Abuse Act, a 1996 law that prohibits accessing a computer without authorization. Many lawyers liken it to the principle that a person can’t legally break into his neighbor’s house, even if he sees his stolen television in the neighbor’s living room…

Organizations need to start thinking like the adversaries, and look at different approaches and techniques to confuse an attacker… According to Sara K. Gates; in the light of unprecedented attacks by cyber-criminals against businesses that span every industry, this question has come to the fore: Is it time to fight back? According to Jeff Bardin; hacker groups and disruption of business has reached an all-time high and no longer can be ignored. We want to get the ‘adversary’ to understand that if they launch an attack against a company, there will be costs to pay… But many experts are not in favor of going on the offense, because it just won’t work: it’s too difficult to pinpoint the location and source of many cyber-attacks… whereas, many security experts say there are some ‘offense-like’ tactics that can drive up the cost of hacking into a corporate network and, if deployed properly, could discourage hackers enough to have a major impact on the threat landscape…

hack imagesSG3YXMAZ

There are interesting questions being raised about how far businesses can go and what types of attacks can actually be effective… According to Martin Zinaich; it doesn’t necessarily have to go from nothing to launching a full-out assault against cyber-crime infrastructure. It could be much more subtle things like feeding the bad guys misinformation or doing your own reconnaissance… there are offensive security measures the good guys can leverage. Misdirection tactics, for example, can be deployed by heavily targeted companies, such as those in the– financial, defense sectors…

According to Tim McCreight; you need to start thinking like the adversaries, and look at your defenses as if you are trying to break into your systems. You need to adopt a much more aggressive mindset… Unfortunately, these security tactics may have their drawbacks as well; some companies are very apprehensive about specifically targeting hackivist groups since it raises ethical questions and the legality of the practice. In addition, building phony systems and fake credentials may be too costly to deploy… it’s hard to agree whether ‘hacking-back’ is an acceptable enterprise defense practice, when no one can agree what the term means. Offensive security is huge but relatively undefined, and it’s compounded by the fact that the laws governing it are vague…

 

 

Share

Power of Resilience– Shape Change, Manage Adversity: Resiliency in Organizations is the New Imperative…

Share

Resilience; it’s the new imperative… It’s the capacity to endure stress and bounce-back from adversity… it’s an organization’s capacity to anticipate disruptions, adapt to events, create lasting value… The concept of resilience is rapidly advancing as an important response to the needs of organizations, enterprises… to effectively address the issues of– security, adversity, risk, survivability… despite the anticipated and unanticipated challenges that might emerge… The concept of ‘resilience’ first showed up in the corporate lexicon in the late 1990s with the release of Paul C. Stoltz book; ‘Adversity Quotient: Turning Obstacles into Opportunities’, and he theorized that an organization’s (or person’s) success in the world is based largely on the ability to cope with adversity, and according to his research; people with a high ‘adversity quotient’– make more money, are more innovative, and are better problem solvers than those less adept at handling misfortune…

resil thGJTOO7GX

But ask five researchers; What is Resilience? And you will get five different answers: But put simply; resilience is the ability to thrive in the face of adversity… According to Larry Mallak; resilience is more than just coping– that is, just keeping your head above water– being resilient means being able to walk out of the water, for example; resilient workers are able to satisfy customers’ needs on the spot, act quickly in times of crisis, and take advantage of opportunities that might otherwise be missed… Resilience may sound like just the latest trend in pop psychology, but social scientists have long been intrigued by what enables some organization (or people) to thrive in the face of adversity while others buckle under the pressure… According to Rachele Kanigel; the new buzzword in organization board rooms these days is ‘resilience’… In an age of corporate– downsizing, mega-mergers, lightening-quick technological change… employers are realizing that to be successful they must manage stress in the workplace… Hence, the idea now is to seek out and develop a new kind of worker– one with the ability to weather adversity… According to Al Siebert; in today’s workplace everyone feels pressured to get more work done with fewer people, in less time, with less budget, and in new ways… Organizations need people who are resilient, people who can adapt quickly, change directions, bounce back…

In the article Is Resilience the New Sustainababble? by Laurie Mazur and Denise Fairchild write: Resilience, like sustainability before it, is an idea with potentially transformative power… Resilience is all about people’s capacity to survive and thrive in the face of disruptions of all kinds. If you were to take resilience seriously (highly recommended in an increasingly disruption-prone world), you would be making some far-reaching changes in your organization… However, the meaning of resilience is up for grabs– its become a buzzword; and it might be following the same trajectory as ‘sustainability’… The term sustainability shaped the thinking of a generation, but it devolved into just a buzzword, and co-opted to cover-up distinctly unsustainable practices, and mutating into what Bob Engelman called; ‘sustainababble’… After all, it may be more profitable to pretend to be sustainable than to actually be so… Aside from out-and-out co-optation, there is a danger that the term ‘resilience’ will follow the same fate… Too often, resilience is simply seen as bouncing-back after a set-back or as protecting the status quo… You could say that ‘sustainability’ was hollowed out by co-optation, but also by a failure of imagination… If ‘resilience’ is just about a bounce-back theme, it too will ring hollow… So, is resilience the new sustainababble?

In the article How Resilience Works by Diane Coutu writes: Does resilience really matter in business? According to Dean Becker; more than education, more than experience, more than training, a person’s level of resilience will determine who succeeds and who fails– that is true in the– cancer ward, it’s true in the Olympics, it’s true in the board room… Almost all the theories on resilience overlap in three ways: Resilient people, they posit, possess three characteristics: a staunch acceptance of reality; a deep belief, often buttressed by strongly held values, that life is meaningful; and an uncanny ability to improvise… You can bounce-back from hardship with just one or two of these qualities, but you will only be truly resilient with all three… A common belief about resilience is that it stems from an optimistic nature, but only as long as such optimism doesn’t distort your sense of reality. In extremely adverse situations, rose-colored thinking can actually spell disaster…

resil thPJMWVDIF

The ability to see reality is closely linked to another building block of resilience; the propensity to make meaning in terrible times. We all know people who, under duress, throw up their hands and shout: How can this be happening to me? But resilient people devise constructs about their suffering to create some sort of meaning for themselves and others… This dynamic of meaning-making, most researchers agree, is the way resilient people build bridges from present-day hardships to a fuller, better constructed future… Those bridges make the present ‘manageable’, and removing the sense that the present is ‘overwhelming’… It’s worth noting that resilience is neither ethically good nor bad: It’s merely the skill and the capacity to be robust under conditions of enormous stress and change…

In the article What Is This Thing Called Resilience? by Eric J. McNulty writes: The word resilience has become simultaneously; ubiquitous and meaningless… It’s not that the concept of resilience is not important anymore, but almost no one is clear on what the term actually means… The ability to survive and thrive despite significant disruption, which is the essence of resilience, is the new core competency for global enterprises… Resilience, in its simplest form, is often thought of as the ability to bounce-back, but this is misguided as there is actually no ‘back’ to bounce to– since time moves ahead… It’s more accurate to think of resilience as the ability to bounce ‘forward’… Resilient individuals, organizations, cities, nations, and species survive, learn, adapt, and grow stronger as a result… It’s important to note the distinction between ‘robustness’ (ability to withstand disruption) and ‘resilience’ (ability to recover): These ideas are complementary, for example; massive efforts to thwart cyber attacks are meant to build more robust systems; the ability to restore operations, public confidence, and reputation in the aftermath of a breach demonstrates resilience (or lack thereof)…

To foster resilience an organization must draw on the things that still work… However, becoming too wedded to outdated methodologies inhibits resilience and the ability to adapt to changed circumstances… an organization may need to radically reinvent itself, just as organisms and have done over millions of years… Resilience is a natural capacity; you can cultivate its growth by becoming more in touch with your organization and more aware of the world around you, particularly; relationships, interdependencies… Also you can remove impediments by constructing the organization to be responsive and agile in the face of rapidly shifting conditions. The world is getting more, not less, turbulent– your resilience is likely to be tested again and again…

According to Karl E. Weick; resilience is a reflex, a way of facing and understanding the world, which is deeply etched into a person’s mind and soul. Resilient people and companies face reality with staunchness, make meaning of hardship instead of crying out in despair, they improvise solutions, whereas others do not. This is the nature of resilience, and you will never completely understand it… According to Michael Croy and David Halford; operational ‘resiliency’ is bigger in scope than traditional business ‘continuity’, and all business functions need to be included in resilience planning… Everyone needs to constantly be adapting and altering plans to meet changing needs… Business continuity means keeping your business moving in the face of any challenge, and transitioning your corporate culture to one of resiliency means staying ahead of challenges instead of only responding to them…

According to Gary Hamel; resilience is the ability to dynamically reinvent business models and strategies as circumstances change… According to Andrew Zolli; resilience is certainly a good goal for any organizations, however, it will never be achieved if an organization is — fragmented, silo, disconnected… organizations require a new way of thinking, there must be more coherence… In addition, the belief that leaders have an endless supply of– stamina, ideas, skills… that it takes to deliver success year after year is a fallacy of the past; great leaders are resilient– they have the ability to bounce-back, cope, renew, revitalize– it’s the key watchword for today’s savvy leaders…

resil res-org-diagram

Resilience is not just a flowery concept: It’s a way for the leadership to assess and align resources in the best way to support the achievement of the organization’s objectives in the most efficient way. It sets the landscape and context for the organization’s activities, and levers the skills and capabilities needed to improve performance… Organizational resilience is a vital step in management thinking that underpins pretty much every other process and resource used. Building resilience takes time and focus, though the return on investment can be very significant, especially when you are in the midst of a crisis… but, getting the context and alignment is absolutely essential… Clear direction and leadership, strongly voiced from the Board; along with openness, commitment within the organization is essential to ensure real resilience…

Share

Eternal Clash– Inequality; Or, Is It Equality? Or, Is It Fairness? A Dabate That Leads Down Blind Alleys to Dead Ends…

Share

The ‘inequality’ debate continues to rage on, or is it ‘equality’? Inequality of What? Equality for Who? What does equality or inequality really mean? Or is fairness or justice the issue? Inequality refers primarily to the condition of being– unequal, or injustice, or unfair… Some people claim that inequality has worsened in recent years. They typically show a chart of the decline of real median household income, and the record high share of income going to the top 1%… Which raises an interesting question about the inequality debate: What are we arguing about? According to Richard V. Reeves; the debate about inequality just keeps heating up, but behind the headlines, the story is more complex, for example; we need to be clear about what kind of inequality we care about:

Do we want to close the gap between low and high earners? Or, between the employed and unemployed? Or, between the poor and the middle class? Or, between the affluent and the really, really affluent– the top 1%? Or, between men and women? Or, between races? Or, between young and old? Or, between countries? Or, between regions of the country? Or, between professions? The list of possible inequalities just goes on… But, most important, you must be clear about whether you are seeking greater equality of outcomes or greater equality of opportunity… Inequality is a political choice, rather than economic fact… But there is no moral justification for a society with a large gap between rich and poor with little movement between the two– it’s a toxic combination…

equal thK1SEZR11

According to Vivek Malhotra; the demand for equality has always been against the prevailing inequalities of the times. The existence of social inequalities is probably as old as human society and the debate about the nature and cause of inequalities is an ancient topic of political philosophy… In classical Greece, Aristotle in his book Politics distinguished between social classes… during medieval feudalism, legal privileges were based upon status and birth… But in short, different types of inequalities have been long-enduring, giving rise to the notion that inequality is inevitable in social relations. In fact, the pre-eighteenth century teachings argued that humankind was naturally unequal and that there was a natural human hierarchy…

Different ideologies justified inequality on grounds of superior– race, ancestry, age, sex, religion, military strength, culture, wealth, knowledge… According to Turner; inequality is multi-dimensional and the elimination of one aspect of inequality often leads to the exaggeration of other aspects of social, political and cultural inequalities. In fact, all human societies are characterised by some form of social inequalities in terms of class, status, gender, power… While debating the concept of inequality it’s important to understand the contradiction between equality as a general value of modern society and inequality at a practical level… and the realities of human societies must be kept in mind…

In the article What Is The Difference Between Equality and Inequality? by Rohit Bura writes: Equality is a contested concept: People who praise it or disparage it disagree about what they are praising or disparaging. Hence, the first task is to provide a clear definition of equality in the face of widespread misconceptions about its meaning as a political idea… The term ‘equality’ (or ‘equal’) signifies correspondence between a group of different objects, persons, processes or circumstances that have the same qualities in at least one respect, but not all respects. it implies similarity rather than ‘sameness': Two non-identical objects are never completely equal… Economic inequality comprises all disparities in the distribution of economic– assets, income… The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries… Economic inequality generally refers to equality of outcome, and is related to the idea of equality of opportunity. It’s a contested issue, whether economic inequality is a positive or negative phenomenon, both on utilitarian and moral grounds… Economic inequality has existed in a wide range of societies and historical periods; its nature and cause and importance are open to broad debate…

In the article Income Inequality in U.S. by Rebecca Borison writes: You don’t need to be an economist to notice that the income gap between U.S.’s wealthiest citizens and everyone else is expanding… Some including the ratings agency Standard & Poor suggests; that the widening gap is having a negative impact on the economy, and others veer away from acknowledging the differential altogether. To find out how some businesses feel about income inequality– The Inc. Publication polled entrepreneurs and executives from more than 300 fast growing companies and the results showed the following; very few business executives think that the government should try to narrow the income gap, for example; 64% thought it would be unwise for government to try to narrow the income gap, because that would lower the incentive for people to strive and succeed; 70% did not think that the government should try to narrow the income gap in the name of fairness; 53% were totally comfortable with the present state of the incomes, whereas 33% were uncomfortable with it…

equal12

In the article Is Inequality Necessary for Business Growth? by Fuad Hasanov and Oded Izraeli write: For decades economists have wondered whether inequality is bad or good for economic growth. On one hand, entrenched inequality threatens to create an underclass whose members’ have inadequate education and low skills, which leaves them with poor prospects for full participation in the economy as earners or consumers. On other hand, some argue that because inequality puts more resources into the hands of capitalists (as opposed to workers), it promotes savings and investment, and catalyzes growth… However, policies that aim for growth but ignore inequality may ultimately be self-defeating… whereas policies that decrease inequality by, for example; boosting job opportunity, education… have beneficial effects on the human capital that modern economies increasingly need…

The observation that income inequality is rising across the world economy is not a new one. This phenomenon has been analyzed in major reports by the OECD, IMF, International Labour Organization… The main conclusion of their analysis is that the forces of globalization and new technology have played a major part in the trend to increased dispersion of incomes. In many developed economies, globalization and technological progress have advantaged people with high skills, scarce capabilities… relative to those with low skills… According to John Hawksworth; there is a lot that can be done on the policy agenda to combat inequality… these could range from boosting early years education for lower-income families to increased building of affordable housing and paying a decent living wage… According to Andrew Sentance; rising income inequality has been a concern for many decades. Even though some economies have systems designed to redistribute income from the rich to the poor, and help the disadvantaged improve their economic prospects, these mechanisms may not be adequate in the face of the accelerating pace of economic change…

In the article Capitalism and Roots of Inequality by Fred Goldstein writes: The growth of inequality in the last 30 years, and especially in the last decade, has been talked about for years in many quarters by economic analysts and politicians. But, what does it mean to fight against obscene inequality of wealth? What is the ultimate goal? Is it to reform the tax code, or to reduce corporate money in politics, or to regulate the predatory capitalist class and the greedy bankers… if so, then the ultimate goal reduces itself down to a fight for a less obscene form of inequality… That is certainly a progressive goal and should always be pursued as a means of giving relief to the middle class workers… But no matter how you boil it down, if you limit the fight against inequality to keeping it within the framework of capitalism, then it means fighting to lessen inequality, but also to retain it, and allow it… According to Dominic Barton; rising and persistent income inequality is the biggest challenge to capitalism… A growing number of people in business have begun to take up the issue of income inequality because the social and economic framework of the country is unsustainable. It’s not that inequality is by its nature completely bad, but for capitalism to work, you need people who can invest in new activity; and people who have no interest in becoming ‘masters of the world’ and are just happy as employees or small business owners…

equal thL6IC9O03

However, there are misconceptions about the reasons for inequality, for example; high earners in modern societies are generally applying their– skills, knowledge, technology… which is intangible capital, rather than the accumulation of inherited physical wealth– the ultimate driver of inequality has little to do with the accumulation of physical wealth… You can see this clearly by looking down the ‘rich lists’ published frequently in the press. The rich are generally ‘nouveau riche’… They have earned their wealth by applying their highly developed skills, or leveraging innovation, or just a lucky break… whereas, the old ideas that accumulation (or inherited) wealth has a relatively minor impact… hence, a more diverse set of policies are needed that will help– raise skill levels, improve education, improve access to opportunities…

According to Michael Sivy; weakness in basic education is one of the worst causes of the growing inequality… U.S.’s superiority in graduate and professional schools helps to create an elite of extra-high-earners. But sub-par student performance at the high school level not only increases inequality but also is a huge drag on long-term growth… in addition, social mobility has declined in the U.S., and that lack of mobility, in fact, may be a more serious long-term social problem than inequality itself… According to the Brookings Institution research; children born into low-income families are 10 times more likely to remain there as adults than children from wealthier families. When you see statistics like this, we all must realize that more must be done… But, there are no clear paths to equality for all people– even if it was a desirable outcome. Apparently, the only tangible result of this grand debate is just a series of patch work programs that are enablers to achieve some level of fairness (not necessarily equality) for some people, but not others. A Darwinian view is– inequality is the natural order of things; whereas its the nature of humankind to strive for equality at some level…

Share

Find Your Strategic Sweet Spot– Its What Makes a Business Different: Great Companies Always Know Their Sweet Spot…

Share

You often hear– focus on your ‘sweet spot': But, what does that mean? For a business it might mean the intersection of its strengths, its customers’ requirements, its competitors’ weaknesses… and by identifying this intersection it provides clarity, creates opportunity, maximizes success… The concept of a sweet spot is an adaptation of the term in sports, for example; it’s the sweet spot on a golf club, or the sweet spot on a tennis racquet, or the sweet spot on a baseball bat… which when found achieves the maximum results– it’s the ‘spot’ that imparts the greatest amount of forward momentum to the ball for an optimum outcome… According to Rich Schefren; strategic sweet spot in business is the intersection of all its uniqueness– it’s the convergence of all its capabilities, and provides the best possible competitive outcome… However, a strategic sweet spot is never permanent it evolves over time, e.g.; as markets change, as technologies change, as competitors changes, as organizations change, as people talents change… hence, a business must continuously reassess and redefine its strategic sweet spot…

spot1 untitled

According to Frederick Buechner; the strategic sweet spot is the  place where passion, abilities, talents… align with opportunities to solve; economic, social and environmental problems… Finding their strategic sweet spot is an essential for any business– it’s the spot where passion + purpose + potential merges with the needs of a target audience. Finding the strategic sweet spot is not easy, for example; in sports the professional athlete practices a gazillion times to find the sweet spot on their– club, racquet, bat… and the same is true in business, in may take a gazillion failures before a business can find its sweet spot, which will propel it into a leadership role… According to startupprincess; the strategic sweet spot can only be found when the business dives deep into its real purpose, reasons for being, its uniqueness, its competence, its value the business must be strategically aligned with improving customer outcomes at its core foundation…

In the article Hitting the Sweet Spot by Paul O’Dea writes: In business the strategic sweet spot is where a target customers’ needs fit with what’s special about the business… In the proverbial 80:20 rule: 20% of customers deliver 80% of the profit: That 20% is the sweet spot. To grow a business, energies must be focused on finding the sweet spot– and it will provide the clarity, focus, alignment that will propel business grow… However, if you rush to execute a business strategy before finding the right sweet spot, you will just waste time and valuable resources on the wrong customers. Customers outside the sweet spot inhibit growth and should be considered off-strategy. They make you put in effort where there is little hope of being successful… Concentrate on just those customers whose needs match the unique value the business offer… Great companies know their sweet spot customers intimately, and continuously deliver better value than their competition. Their business is tailored around the sweet spot– that’s when customers see themselves as self-select. Also, great companies understand that finding the sweet spot is a continual battle, and it requires a process, discipline, and driven by the top management…

spot imagesFWORTFJR

In the article Finding Your Business Sweet Spot by Dasko writes: Businesses often find themselves producing a whole lot of products and services they struggle to profit from, as well as, chasing after customers they are actually ill-equipped to service… When that happens, it’s time to take a step back and refocus by identifying the ‘sweet spot’ in the business. So, how do you find that ‘sweet spot’? By asking three simple questions; What is the business best at? What do the customers want the most? Where do competitors struggle? The business strategic sweet spot is the intersection of these three elements (e.g., visualize a Venn diagram). Identifying this intersection provides clarity, creates opportunity, maximizes outcome… these, in turn, provide more efficient use of business resources, better focus, greater cost-effectiveness… hence, the final results are more ‘high value’ customers,  greater profitability, better return on investment… The key difference between business that identify their ‘sweet spot’ and those that do not is simply; better positioning, optimal outcome… and leveraging these actions:

  • Identify and pursue the most profitable market segments…
  • Create new products and services which draw on its operational strengths…
  • Evaluate partnerships, alliances… for maximizing business opportunities…
  • More business focus to achieve greater– return on investment (ROI)…

In the article Finding Your Sweet Spot by Rich Schefren writes: Finding your sweet spot is much more than simply picking a niche… In fact, one of the main reasons why so many businesses fail is because they look for a niche instead of their sweet spot… That’s because a niche is solely based on external factors, like a recognized need in the marketplace or a problem needing a solution… In stark contrast, your sweet spot is based on your own internal factors, such as; strengths, talents, experiences, passions… That’s why it’s a mission critical concept: By specifically identifying your sweet spot you will have a significant advantage in the marketplace… It’s the place where all these elements come together, it enables the business to provide unique value to customers… But, finding the sweet spot it’s not easy, it requires much research and introspection to find it… but it’s all worth it– the sweet spot is the unique advantage of a business– so to excel you must find it, engage it… but, don’t just wing-it.

In the article Sweet Spot–Become Extraordinary by Rick Meekins writes: Did you know that ‘you’ have a sweet spot, and that trying to operate outside of ‘your’ sweet spot can actually cause more harm than good over time? Think about it: Most people have one or two things that they are very good at… Most people have a sweet spot in which they operate very well, but are you operating in your sweet spot, now? The important thing is to get an accurate assessment of how– ‘you work best’ (your sweet spot)… Then, the next step is to plan how to ‘fire yourself’ from the work that is outside of your sweet spot, then model your new work such that you operate within your sweet spot most often… And that means finding other people who can do your old jobs better than you, because then; the customers will benefit, the company will benefit, the team will benefit… Being able to get great people around you is what makes great companies great. If you’re a great leader, find a great manager… If you are a great manager, find a great team… this continuum is the extension theory of the sweet spot…

All businesses have strategic sweet spots– it’s the business’ energy source; it’s where the business is most competent, in-sync, unique talent, predictable value, optimal outcomes… It feels like magic, but it’s not: It’s the intersection of the business– strengths, weaknesses, passions, differences… According to Peter Bregman; a poll survey showed that a full 72% of workers admit to doing work they neither excel at nor enjoy… For a business to fulfill its purpose it must have an engaged workforce operating within its sweet spot: Not outside of it… The truth is mediocrity sucks, and if you are not in your sweet spot, you are probably swimming in a sea of lukewarm mediocrity. According to Barbara Spencer Hawk; the sweet spot is the zone where you maximize strengths and minimize weaknesses. It’s that elusive, but powerful place that represents an optimum operating position in terms of– revenues, results, satisfaction… A sweet spot analyses is usually represented as a Venn diagram, and the process is simple, intuitive, self-explanatory…

spot sweet-spot

According to Alfred A. Marcus; great companies move into sweet spots and defended them, but they do not stop there; they deepened their position, they enlarge and extend it, they are focused… Their main concern is meeting the critical needs of customers... Their reach is global and consistent, and they reduce their risks by limiting themselves to their core competencies, steering away from activities that might easily involve failure… Great companies focused on core strengths, and they stuck to their mission… This lesson is illustrated by six traits that great companies exhibit, for example; 1. they streamline the organization by spinning off non-core businesses that detracted from their mission, 2. they stay away from activities that have high risk of failure, 3. they gain flexibility by allowing other companies to assume the risks of development, 4. they exploit brands through sequels and related products, 5. they reach out through new channels, 6. they totally dedicate themselves to the customer… Great companies always know their ‘sweet spot’ and exhibit the following characteristic; they have total focus, their performance is effortless, they are in-synch within the organization and with all stakeholder outside the organization, they display total dominance in whatever they are pursuing, they exercise exemplary leadership…

Share