Pop-Up Retail and Future of Retail– Fueling a New Customer Experience: Bridging Online, Offline Gaps…

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Pop-Up retail is a short-time duration retail store, which ‘pop-up’ one day and is gone the next… It’s a temporary shop, stall, or brand experience used to sell goods and services for a limited period of time… Pop-up retailing, also known as– flash, ephemeral, hit-n-run, guerrilla retailing… was coined because these stores seem to ‘pop-up’ out of nowhere and gone within a few days… Pop-ups are perfect deployments for making ‘flash’ appearances to engage customers face-to-face for online retailers… and when done properly customers can be intrigued to follow the retailer online…

So, regardless of where you fall on the spectrum when it comes to selling, e.g.; exclusively online, or in-store, or somewhere in the middle with a mix of sales channels… pop-up is the perfect opportunity to try something different to sell products and publicize your brand… The concept of pop-up stores was first inspired by small-scale retailers that sprung up to cater to seasonal demand for holidays, such as; Halloween, Christmas, Easter, July 4th… These outlets are an exciting change to the typical homogenous, big-brand, impersonal online and retail mall shopping experiences that are so common…

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According to research; the pop-up retail industry is about $50 billion in sales, and the following categories are the biggest players in the pop-up market; farmers markets– $8 billion, flea markets– $30 billion, food trucks– $1 billion, yard sales– $1 billion, and pop-up stores– $10 billion… Also in a survey, when respondents were asked to name top reasons to shop or visit a pop-up store they cited; ‘seasonal products’– 61%, ranked next was ‘finding new or unique services/products’– 39%, then ‘shop locally’– 36%, ‘great prices’– 34%, ‘convenience’– 33%, and ‘fun experience’– 30%… an online directory features over 7,000 ‘pop-ups’ in 2014 alone and expecting that number to explode in 2015…

Trends in Pop-up Retail: Retailers and other enterprises are beginning to view a ‘pop-up’ strategy as a legitimate and innovative way for connecting to customers and extending their brands. The latest iterations of pop-up reveals– more elaborate displays, high-end signage, sophisticated POS, mobile commerce capabilities, and interactive experiences that enable useful conversations with customers… Pop-ups are driving innovation in the retail space with various implementations that serve as unique platforms for both– the well established brands and daring new start-ups… There are several key opportunities that pop-up affords retailers:

  • Target a niche audience…
  • Test new products, markets, concepts…
  • Generate buzz, create memorable, visual experience…
  • Economic alternative to full-scale retail set-up…
  • Sell-off old inventory…
  • Market merchandise around a finite period of time, season, holiday…
  • Create a learning center for customers…

In the article Retailing in a Pop-Up World by Doug Stephens writes: The concept of pop-up retail has been around for more than a decade… ‘Vacant’, a company in Los Angeles is credited with pioneering the concept of pop-up shops in North America, after seeing similar concepts in Tokyo… They observed that Japanese consumers would sometimes line-up for hours to buy limited edition goods. Once stock was sold out, the store would simply close and move-on… This led ‘Vacant’ to innovate the current model for pop-up, whereby stores would open for a defined period and then simply close, only to pop-up later in a different location… Pop-up shops, while intriguing, are regarded largely as novelty but that mindset is changing… The traditional retail industry is dominated by the precept that stores are permanent establishments with long-term property leases, good locations, trusted consumer traffic levels… But, the economic recession and changing consumer buying behavior is changing this well established reality… and bringing new opportunities for pop-up retail… pop thMMBQI11G

Traditionally, landlords and property owners would only consider long-term property leases but they are now entertaining the unthinkable; short-term agreements for their space, paving the way for host of temporary retail installations; from Los Angeles to the mean streets of New York, the economic meltdown spurred a brilliant series of unique and daring pop-up concepts… Today, pop-up is a legitimate channel strategy, and everyone from Walmart to Hermes has turned to this temporary format to reach consumers where their full-line stores couldn’t… Technology is also fueling more creative approaches to pop-up… Reality applications are transforming inanimate spaces into engaging consumer buying portals– they are enabling trips through the looking-glass…

In the article What is a Pop-Up Shop? by Erik Eliason writes: Whether you hear temporary retail, flash retailing, pop-up store, or pop-up shop, it’s all one and the same. Pop-up shops are taking over the retail world, and rethinking traditional brick-and-mortar and big-box stores, but what exactly is a shop that pops-up? Sighted as early as the 1990s in large urban cities, such as; Tokyo, London, Los Angeles, New York City… Pop-up shops and pop-up retail are temporary retail spaces that sell merchandise of any kind… That’s right, just about every consumer product is sold via a pop-up shop… from art, to fashion, to tech gadgets, to food… pop-ups are exciting because they create short-term stores that are just about as creative as they are engaging…

What are the demographics of a pop-up shop? Consider: Duration; Typically 1 day to 3 months… Location; High foot traffic areas, such as; city centers, malls, busy streets… Price; Much lower than a traditional store; typically paid upfront… Use; Sell products, usually during holidays or special events, launch new products, move inventory, test ideas or locations, increase ‘brand’ awareness…

What are the benefits of a pop-up shop? Consider: Connect with customers; The pop-up retail format enables a personal connection with customers by building a face-to-face relationships… Sell more; About 95% of all purchases are still completed offline (vs. online), and pop-ups provides an opportunity to take advantage of the retail channel… Build awareness; The pop-up generate much excitement for both the consumers and the media, they build brand awareness with ‘online retailers’ going offline via the pop-up… Cheaper; Launching a pop-up shop is 80% cheaper than a traditional retail store… Test new markets; Much easier to enter new markets, launch new products, publicize brands.

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In the article Why Pop-Up Shops May Be The Future Of Retail by Ivan Widjaya writes: The future is looking rosy for pop-up shops, and here’s why:

  • Cheap Competitive: There is no denying that pop-up shops have the financial edge in the competitive retail market place, as the overheads can be incredibly low. Empty shops are not good for the community or landlords, thus many landlords are being encouraged to rent shop space for short periods of time, and at competitive rates…
  • Create Experience: If you think that pop-up shops are just about flinging open the doors and waiting for the masses to arrive, think again. The concept has slightly more class than that… Pop-up shops are an experience, as well as, a great selling vehicle to shift surplus stock, warehouse clearance… Telling consumers that you are only going to be in town for ‘X’ number of days, weeks… is one way of getting much attention…
  • Mobile: The beauty of the pop-up store is the fact that it can also be nomadic… So, e.g.; if you have always wanted to try your brand in a big city, fancy mall, outlying areas… then a pop-up strategy provides that opportunity… The mobility of the pop-up shop is something that many established businesses find very attractive…
  • Versatile: The mobility of the pop-up shop is one facet of a business model that is essentially versatile beyond the wildest dreams of retailers only a few years ago… However, this versatility moves beyond that of being able to move from town to city and back again. The nature of the pop-up is such that you can customize it for specific locations or consumer types spend… and many brands have created a whole sub-brand, tagged on to their main image using the pop-up experience…
  • Creative: And herein lies the secret of success of the pop-up– the creative nature of a business model with which you can be as different, unique, and creative as you want… How consumers shop is changing and business needs to morph, and the pop-up experience is a valuable tool for engaging consumers, and experimenting with new markets…

Pop-Up, Pop-Out, Pop-On… How far and how fast can the pop-up concept be pushed? New York is seeing its fair share of innovative pop-ups, with Forever 21 (6-month lease testing out 5th Avenue), The Limited (3,400 sq. ft. store in Soho), and Procter & Gamble (4,000 sq. ft ‘free’ store to build brand loyalty for its products on 57th Street) all launching pop-ups in Manhattan. Other notable pop-ups include; Disney’s Tron–Legacy store in Culver City, CA created to take advantage of the movie’s opening, and American Red Cross stores in Phoenix and Las Vegas, where gift buyers could make donations for disaster relief… pop 41Vj8x-qmSL__SY344_BO1,204,203,200_

Pop-up stores give brands the opportunity to test a new marketing program with a specific, confined retail space and launch period… Due to its temporary nature, retailers are less risk averse and are encouraged to inject more creativity into creating a refreshing and innovative brand experience for consumers… The pop-up’s unpredictable– ‘here-today-and-gone-tomorrow’– concept helps to create a sense of excitement and urgency for consumers to visit the store… Pop-ups will never replace permanent stores or online retailers, but they are an important complement to retailer’s business strategy, and/or promoting ‘brand’ awareness…

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Perils and Promises of Business Partnership– When It Works, It’s Fantastic; When It Doesn’t, It Can Get Ugly…

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Most business partnerships fail– research show that the failure rate for business partnerships and strategic alliances is up to 80%… Should your company invest in a venture where there is a 4 out of 5 chance of failure? However there is another side to the 80%; the success side: So, companies that follow a structured approach to establishing and managing business partnerships reach a success rate of up to 80%… Hence, business partnership do work, but they should be entered into with a healthy dose of reality…

According to Amanda Neville; a business partnership is like marriage; they both have similar baggage, but partnerships are far more difficult to maintain than marriage and, just like marriage, partnerships are not for everyone; sometimes it makes sense, and sometimes it does not… One formulation for business partnership success = shared vision + common values + complimentary strengths + communication… Any thing less will fail…

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According to David Gage; business people are experts in what they do; not in partnership… If you are considering a partnership structure for your business then ask these questions: Why do I want a partnership? Are there better alternatives than a partnership? Who are the best candidates for a partnership? Then also ask: Does the potential partnership have compatible work ethics? Are partnership vision compatible? Does the partnership share values? What is the exit strategy from the partnership? You must discus all the issues before you start a business partnership to create a healthy foundation, which is essential for long-term success… It also establishes a framework of ‘trust’, and trust is absolutely essential, especially in the fragile world of business relationships…

In the article Profits and Perils of Business Collaboration by Tass Messinis writes: Strategic partnerships and collaboration help businesses grow… Think IBM and Apple’s partnership last year, aiming to bring together IBM’s analytics and ties to corporate enterprise with Apple’s image, innovation, and consumer experience. Both partners get something new and unique out of the pairing, and help to cover each other’s weakness or inexperience… Hence when looking to collaborate with other businesses, consider both benefits and pitfalls, for example:

  • Building a Partnership: Many partnership occur naturally over time and can be highly successful– but just as often they are born of a company’s weakness or need… The first step in a mutually beneficial partnership is identifying where you are weak within your business, e.g.: Is there an area in which you are losing customers? Are other companies offering a capability or service you simply aren’t able to? These are the areas where a partnership can supplement your weaknesses and help you retain a competitive edge. They need not always be borne from a negative issue, though– it could be that you’re simply looking to expand services or value-add on existing business… The actual relationship-building that’s part of a collaboration between businesses will vary depending upon the approach and industry… But, you need a shared understanding of the scope and boundaries of the collaboration…
  • Reaping the Benefits: Collaboration between businesses can unlock a whole host of benefits, such as; learning and the sharing of expertise, technology… By bringing businesses together, they can share– in an atmosphere of trust– invaluable information about what has worked for them, what has failed, and where they are headed next… Another benefit that often arises from collaboration is access to new markets that were previously inaccessible, e.g., in the IBM/Apple example; Apple is incredibly successful in the consumer market– but in partnering with IBM they open-up opportunities to make inroads in the enterprise space… Also, partnerships can give a business the reach for customers or deals it might not otherwise have the size to navigate…
  • Avoiding Pitfalls: Though the potential benefits of business collaboration are significant, it’s still an area where your company should be cautious… the primary thing to remember is to stick to the scope and understanding of the partnership agreement… Go in with eyes wide open about what you will be giving to your collaborator in terms of knowledge, industry insight, or services, and what’s off-limits… Be especially cautious when your partner is a competitor or potential competitor– make sure you’re getting as much as you’re giving out… However, the business ‘bottom-line’ should not be the only consideration that goes into whether to collaborate with another company. What also needs to be recognized is the potential of impact on your reputation… reputation is one of the most powerful commodities a business can trade in…

In the article Partnership Perils: Planning to Prevent Them by David Gage writes: Horror stories about business partnerships float around in the business world… The stories strike a chord of fear in the hearts of many business executives… But despite the fear, and often against advice of lawyers and accountants, who warns of the dangers of partnerships, every year thousands businesses form them anyway, even though they are told; it’s too risky… Sadly, within a few years of formation, the majority of partnerships fizzle, and often because the partnership simply just don’t get along– it’s a personality thing…

Also, far to often, business executives think that if they put appropriate legal documents in place, they’ve done everything that needs to be done for the partnership; but in fact, legal documents give people a false sense of security… legal documents, although necessary, only scratch the surface of what people need to– discuss, negotiate, and come to agreement on for the partnership to work… Business people are experts in their business, not in business partnerships; and entirely too often, businesses work in a rudderless partnership– no direction, no communication, no outcome…

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In the article Some Business Partnerships Don’t Work by Donata Huggins writes: There are countless stories of business partnerships going bad. Steve Jobs famously teamed up with John Sculley only to be fired by him two years later… Facebook founder Mark Zuckerberg’s falling out with his partners is so well known they made a film about it. Some clearly do work out though, and here are several successful pairings that worked for them.

  • LAUGH AT MISTAKES: Hayley Sudbury, co-founder of The Tasting Sessions, says her relationship with Angella Newell is pretty rare: We are best friends and business partners. I think the secret to our success is to have a drink and laugh when things go wrong…
  • TRUST: Redington’s co-founder Robert Gardner says that his relationship with his co-founder is just like marriage: It’s all about trust. If that’s broken between the two of you, then things break down…
  • VISION: Eric Partaker, co-founder of the Mexican chain Chilango, says that– success is built on alignment of vision. You are asking for trouble if you need to negotiate the way through every decision…
  • MOTIVATION: Barry Ferdinand and Jason Collins from the company Apogee say that it’s motivation that holds them together. We worked with people in the past who didn’t have the same work ethic as us. It didn’t work out…
  • DIFFERENCES: Michael Hayman and Nick Giles who run the agency Seven Hills say their business needs their differences to survive; it works because we are not the mirror image of each other. We have different skills, outlooks and passions and this creates the dynamic that works…

In the article Perils of Business Partnerships by tb writes: Partnerships are very common but, successful partnerships are relatively rare. They start with the best of intentions and seem like a great idea but far too often end in acrimony, bitterness, anger… Having said that, partnerships are still an excellent way to get the necessary resources and skills necessary for a business to succeed, but steps must be taken at the very start to maximize the chances of success and minimize the hassles if things don’t work out as envisioned… Another way to understand the dynamics of a partnership is to think of it as a marriage. As in marriage, ‘trust’ is essential in a partnership; also– respect, ability to listen, open communication, compromise, empathy… Even if all these things are present there is still a good chance that the relationship will break down, so before forming a partnership, ask; Do I really want to be married to this partnership?

In the article Avoiding the Perils of a Bad Partnership by Mike Armour writes: No partnership is ever formed with people expecting things to go wrong; quite the contrary. Despite having heard all the horror stories about partnerships that proved disastrous, business people who approach a partnership are always convinced that their undertaking will be the epitome of harmony, good will, success… but, before you commit, map out how you will get out of it if things go wrong… Map out your exit strategy– legal issues, organizational issues, issues of technology, markets, customers, employees, business reputation… In a word, detail the consequences of the partnership failing… It behooves you, therefore, to approach potential partnerships carefully. Surely, a good partnership has the advantage of leveraging the collective experience of its partners and creating a synergy that can pay huge dividends… But, put together carelessly or managed poorly, partnerships can be an absolute disaster…

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The heart of a partnership is building relationships and trust… and that means working together on projects, socialize, share ideas… Also, issues of power and control are central to the development of partnerships, for example; Who designs the partnership building process; to whom are they accountable? Who sets timetables and controls the agenda? Who makes the final decisions? Conflicts often arise in partnerships because people are looking for different things, and may not understand each other’s hopes, expectations… That’s why it’s very important to see a partnership as a process of creating a shared vision, building trust, open communication… but, ultimately, partnerships are all about delivering results, and anything less puts the partnership in peril… 

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Art of Failure– Ever Tried? Ever Failed? No Matter; Try Again, Fail Again: Fail Better: Embrace Failure and Learn…

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Failure: It’s this ‘f”-word that most people absolutely ‘hate’… for many, failure is the worst thing that could ever happen to them… Failure elicits strong emotional feelings, such as; anger, disappointment, frustration, sadness… but the term is somewhat of a misnomer because it’s not failure per se that underlies the behavior of people who have it, but rather a fear of ‘shame’. People avoid failure not because they cannot manage the basic emotions, but because failure makes them feel– deeply ‘shameful’… However, failure is inevitable and learning from failure is a choice; if you choose to– admit, accept, and learn from failure, then you are well on the way to the mastery of your own fate… According to Joe Kraus; people who have no fear of failure are merely dreamers, and the dreamers don’t build great companies. The people who thread the line between ‘vision’ and ‘healthy fear of failure’ have the magic formula for success– they are not paralyzed by failure but energized and driven to be more persistent, and to work harder…

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In modern cultures, success is the high altar of achievement and failure is the dungeon of fear… But cultures that celebrate success without fear are in fundamental conflict with– entrepreneurship, innovation, risk-taking… Success without failure is simply; luck… Innovation is a double helix built with creativity, risky exploration, testing assumptions, learning, re-trenchment, re-creation, re-exploration, re-learning, mutation, and eventual success… Failure is not the opposite of success, but its compliment… failure must be embraced as an essential platform for innovation and success… But in business, failure is often seen as a dirty word– no one wants to be responsible for a critical commercial flop… But without taking risk and pushing boundaries, business remains stagnant and the creative spirit is wasted on fears… Failure is just a synonym for experience, so maybe failure isn’t such a dirty word after all…

In the article The Art of Failure by Malcolm Gladwell writes: Executives sometimes falter under pressure; they fail, and they can failed in different ways, e.g.; some ‘panic’, others ‘choke’, and still others are ‘clueless’… But, what do those words mean? The word ‘choke’ sounds like a vague and all-encompassing term, yet it describes a very specific kind of failure, whereas ‘panic’ is something else altogether. People with lots of relevant experience tend not to panic, because they drawn-on their wealth of experience… Panic causes what psychologists call– perceptual narrowing… and, in this sense, panic is the opposite of choke. Choke is about thinking too much; Panic is about thinking too little… Choke is about loss of instinct; Panic is reversion to instinct… They may look the same, but they are worlds apart. Why does this distinction matter? In some instances, it does not much matter, e.g.; if you lose a customer’s business, it’s of little consequence on whether you choked or panicked; either way, you lost. But there are clearly cases when– how failure happened is central to understanding… why failure happened, which affects the type of remedy that might be appropriate for next time…

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In the article Art of Failure and Why It’s Good for You by Caroline Dowd-Higgins writes: I was in job interview when the interviewer asked me the question; What was your biggest professional failure? This question really freaked me out, since I did not want to expose my vulnerable side or my true weaknesses… Apparently, the interviewer was trying to see if I had the humility to admit that I failed, the ability to bounce back and learn from my mistakes… and the courage to move forward… But, I was so stuck in not wanting to expose my flaws that I blew a teachable moment, and I could not admit the possibility of a failure… Failure should not be a mark of shame, but a badge of honor showing the world that you are willing to try again… Here are some failure lessons:

  • Assemble Support Group: Make sure you have unconditional supporters who will let you talk it out, work through the pain, help bring you back to emotional normalcy. Active-listeners are essential as you process your failure and begin to learn from these mistakes…
  • Twenty-Four Hour Pout Period: Give yourself time to grieve your loss, and spend minimal time commiserating and indulging in ‘what if’ scenarios… make a clean break with the past and focus on the future. Give yourself a 24-hour ‘pout’ period when you can really– rant, rave and vent emotions. It’s cathartic and clears the deck emotionally for what is next…
  • Give Up The Guilt: Skip the shame; sometimes things don’t work out as planned. Embrace constructive criticism, and fight perfectionism; it’s unattainable and debilitating… focus on what you do well and not what others think… Move on!
  • Take Risks Again: Take the time to unpack your failure and figure out what you have learned, but don’t let the set back deter you from moving forward. If you stop taking risks you will become inert and lose your mojo and, more important, your nerve. Be a creative innovator, take prudent chances, and learn how to fail…

In the article Strategies for Learning from Failure by Amy C. Edmondson writes: The wisdom of learning from failure is incontrovertible, yet the organizations that do it well are extraordinarily rare… However in the vast majority of enterprises, managers are commitment to help their organizations learn from failures and improve performance… But, most managers think about failure in the wrong way… their deep believe system says– that failure is bad… They believe that learning from failure is very straightforward, for example; just ask people to reflect on what they did wrong, and exhort them to avoid similar mistakes in the future… or better yet, assign a team to review and write a report on what happened and then distribute it throughout the organization…

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But, these widely held beliefs are misguided: First, failure is not always bad… Yes, it’s sometimes bad, sometimes inevitable, but sometimes even good… Second, learning from failures is anything but straightforward: The attitudes and activities required to effectively detect and analyze failures are in short supply in most companies… Organizations need a new and better ways to go beyond lessons that are superficial, e.g.; just saying that– ‘procedures were not followed’, or self-serving statements, such as– ‘the market just was not ready for this great new product’… are not good enough. The ‘best’ solution is to jettison the old cultural beliefs and stereotypical notions of success, and embrace the ‘real’ lessons of failure…

Inevitably the ‘blame’ game gets in the way… ‘failure’ and ‘fault’ are virtually inseparable and everyone learns at some point that admitting failure means taking the ‘blame’… That is why so few organizations shift to a culture of ‘psychological safety’ in which the rewards of learning from failure can be fully realized– this is a culture that makes it safe to admit and report failures. So, how do you evaluate the blame game? Consider a few examples;  if its deliberate deviance it obviously warrants blame; if it’s inattention it might not; if it results from lack of effort maybe it’s blameworthy; if it results from work fatigue maybe the manager who assigned the task is more at fault than the employee… Hence, as you go down the list of blamable offenses, it gets more difficult to find blameworthy acts… In fact, a failure resulting from thoughtful experimentation that actually generates valuable information maybe praiseworthy…

In a speech Fringe Benefits of Failure by J.K. Rowling: This is about benefits of failure… However, the fact that you are graduating from a prestigious university suggests that you are not very well-acquainted with failure; although you might be driven by a ‘fear of failure’ quite as much as a desire for success. Indeed, your conception of failure might not be too far from the average person’s idea of success… Ultimately everyone must decide-for themselves– what constitutes failure… However, the world is quite eager to give you a set of criteria if you let it… So I think it fair to say that by any conventional measure, a mere seven years after my graduation day, I had failed on an epic scale, for example; an exceptionally short-lived marriage had imploded, I was jobless, a lone parent, and as poor as it’s possible to be in modern Britain… without being homeless but by every other usual standard, I was the biggest failure I knew…

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So why do I talk about the benefits of failure? Simply because failure means a stripping away of the inessential… I stopped pretending to myself that I was anything other than what I was, and I began to direct all my energy into finishing the only work that mattered to me. And if I had really succeeded at anything else, I might never found determination to succeed in the one arena I believed I truly belonged… I was set free because my greatest fear had been realized; I was still alive, I still had my old typewriter, and I had a ‘big’ idea… And so, rock bottom became a solid foundation on which I rebuilt my life…

It’s impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all– in which case, you fail by default… Failure gave me inner security; failure taught me things about myself that I could not have learned any other way, e.g.; I discovered that I had a strong will and more discipline than I suspected; I also found out that I had friends whose value was truly above the price of rubies… And, most important, lessons learned from these setbacks meant that I was wiser, stronger, and more secure in my ability to survive, thrive… You will never truly know yourself or the strength of your relationships, until both are tested by– adversity and failure…

 

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Imagine the Ultimate Business Mega-Deal: Sell the Planet Earth– All Its Resources, Assets… But; What is the Earth Worth?

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Your ‘mission’ should you decide to accept it: Sell the planet Earth– to an intergalactic investor… But first, a few facts you need to know: Earth is estimated to be 4.5 billion years old; Earth weighs 6,588,000,000,000,000,000,000,000. tons; Earth travels through space at 660,000 miles per hour; Earth is shaped as an oblate spheroid, flattened at the poles and bulging at the equator… Earth is the only planet, we know of, that has the means of sustaining human life and in all respects; it’s the unique, priceless– human habitat… How then would you even begin to attach a monetary value for all– resources, life forms… on the planet?

Who would even want it? Is there anyone (or thing) out there, in the intergalactic universe, that would even be interested or qualified to purchase Earth? Billionaires are incredibly wealthy, but their wealth is pocket change compared to the estimated value of all the physical assets of Earth… According to one calculation; Earth and all assets are worth $US 6,873,951,620,979,800. or, nearly ‘seven’ Quadrillion dollars, which includes all the planet Earth’s; oil, diamonds, gold, lumber, water, precious metals, everything on Earth… (Note: one Quadrillion equals 1,000,000,000,000,000. or, one thousand trillion, or one thousand million million, or 1015 prefix peta-)…

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According to Wikipedia; there are several ways to estimate the value of Earth, for example: Estimate the value of life for everything that lives on it… or, estimate the cost of replacing the Earth… or, as a variation, estimate the cost of a smaller habitat, such as ‘Biosphere 2′ and multiply its cost by the ratio between the population of the planet and of the smaller habitat… or, calculate the yield of the ‘natural’ capital and use the size and consistency of this yield to calculate the worth of the planet…

As one might expect, all these estimates produce very high values for the entire planet, usually at least in millions of trillions of US dollars… So then; What is the Earth worth? Since, everything on the planet is legally owned by one entity or other and for most things there should be an estimated worth… Hence, it might be just a matter of adding all of these number together… So as a guess-estimate, the total worth of all assets of the entire planet is roughly– $US1 Quadrillion dollars… In other words, according to one estimate; if a ‘intergalactic investor’ offered to buy Earth; a reasonable starting price is at least $US1 Quadrillion dollars…

In the article Global Wealth Hit $US263 Trillion by Arjun Kharpal writes: According to Credit Suisse Global Wealth Report; global wealth has grown to a record $US263 Trillion in mid-2014, which is $US20.1 Trillion more, an 8.3% increase, over mid-2013. Household wealth has more than doubled since 2000, when the same report calculated it at $117 Trillion… the U. S. boasts the highest average wealth with 34.7% ($US91 Trillion) of global wealth. Europe’s portion comes in a close second with 32.4%, followed by India and China’s 23.7% share, and then the 18.9% concentrated in the Asia-Pacific region… North America has the highest average wealth, and is also the world’s leader in GDP, which the report estimates grew by $12.9 Billion in 2013…

Wealth in the U.S. and Europe was driven by a spectacular year on the stock exchanges. Since the financial crisis of 2008, the U.S. has added $31.5 Trillion in household wealth… global wealth is expected to rise by nearly 40% in the next five years, reaching $368 Trillion by 2018, and emerging market wealth generation is expected to outpace the developed world… Research shows that global wealth has doubled since 2000, which is quite compelling given some of the economic challenges of the last decade… The number of global millionaires could exceed 47 Million in 2018, a rise of nearly 16 Million with China potentially seeing its number double by 2018…

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In the article How Much Wealth is There in the World? by Cameron Ellis writes: It depends on whether you are just counting financial assets (such as, combined wealth of people with invest-able assets greater than $US1M), or if you also counting physical assets, such as; houses, oil and coal in the ground, trees growing on government land, etc… If you go with the broader definition then the $US47.9 Trillion number estimated by Merrill Lynch is way too small, for example; all residential real estate just in the U.S. was worth over $US23 Trillion, in 2002, and after that boom and bust it’s probably worth that much again… and in addition, all residential real estate around the world is certainly more than $US100 Trillion… Then the top 10 ‘natural’ resource reserves in the top 10 resource rich countries is worth almost $US300 Trillon… I suspect the grand total of all assets is on the order of $US500 Trillion… As a sanity check you might compare this to global GDP which is about $US74 Trillion. So if all assets are about $US500 Trillion then the ratio to assets to one year’s income is about 7x. This would mean that the value of all assets is equal to 7 times the value of one years total production, which sounds like a reasonable number…

In the article Formula for Valuing the Worth of the Earth by Stephen Messenger writes: According to Greg Laughlin, astrophysicist, who came up with a calculation for valuing planets; Earth is worth a bank-breaking $US5 Quadrillion ($US5,000,000,000,000,000), unsurprisingly the priciest in the solar-system… However, whether or not this cosmic abode retains its value depends on how well; tenants (i.e., humans) maintain, protect, conserve, keep-up… the planet. According to Greg Laughlin; Earth is the most expensive planet measured, whereas the neighbor on one side; i.e., the planet Mars is estimated at a modest $US16,000, and planet Venus, fairs far worse, is valued at about one penny…  These calculations were based on the sum of the planet’s– age, size, temperature, mass, other vital statistics… However, while putting a value on something as irreplaceable as the place of your existence (i.e., Earth)– it would seem like you are neglecting its true worth, which is its pricelessness for humankind…

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However, the truth is humanity cannot afford to replace Earth; it’s not a– ‘you break it, you buy it’– sort of situation. And picking-up the $US5,000,000,000,000,000 tab would require a century’s worth of the planet’s global GDP– however if humans continue to ignore its vital health signs, Earth is bound to be just a bit less inhabitable, and as it slips into decline and looses much of its value… In still another calculation consider these facts; the world population currently exceeds 7 Billion with about 3 Billion in the global workforce… Also, the world-wide GDP is about $US74 Trillion dollars, or about $US10,500 per person, or $US 24,000 per worker… then, let’s assume that the average worker works for about 45 years, over a life time, then $US74 Trillion times 45 years is $US3,330 Trillion dollars… Now also consider all stocks and bonds and they are estimated at over $US140 Trillion worldwide… but these estimates are only the value of publicly traded companies. Then, double that estimate to cover private business world-wide, and probably double it again to cover public property, so that gives something like $US560 Trillion dollars… And, this does not include any of the replacement costs for all the ‘natural’ Earth resources…

Nice try, but how realistic are these calculations? What about Earth many issues, such as; contaminated chemical sites, global warming, over-human population, depleting oceans resources… they all detract from the earth’s value? However, since the value of something is determined in relation to supply and demand, hence the Earth is worth precisely what somebody (something) would be prepared to pay for it… And, who would this somebody (something) be? In which currency would they pay? But more important; Who does the Earth even belong to? Is it the original inhabitants, God, Queen of England, she (the Queen) is supposedly the largest land owner ever… according to the website; Who Owns The World.Com, and she owns 10.4 million square kilometers, which is a sixth of the earth’s total land surface…

asset we_are_destroying_earth_cartoonIn the documentary; What’s the Earth Worth? it attempts to conduct the largest asset, resource…inventory that was ever done for the planet Earth… and it tries to determine the worth of all the Earth’s commodities using stock exchange valuations, for example; gold stocks, diamond deposits, rare earths, rocks, base metals, oil reserves, every animal and every plant are counted and given price tags… according to the documentary– the sum of all the world’s resources amounts to: €5,341,732,716,000,000, or 5.3 Quadrillion euros… and at €4.3 trillion ($US5.9 trillion) fresh water is the most valuable commodity, and worth four times more than all other resources combined; but what if all the fresh water becomes contaminated? The documentary even determined the stock of trees, down to last trunk, using a satellite scanner; there are 400,240,300,201 of them; but what if all the trees are destroyed? Basically, any sensible investor, no matter from which planetary system, would surely shy away from purchasing the Earth. The risks and hidden shortcomings are simply too unpredictable…

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Riding the Waves of Innovation– Surfing the Engine of Economic Growth– Catch the Wave, or Risk Wipe-Out…

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Innovation is the engine of economic growth; over the past 100 year it’s clear that innovation– more than inputs of capital and labor– is what drives a modern economy… Innovation and application of technological know-how and scientific discoveries accounts for over half of all economic growth… According to Irving Wladawsky-Berger; every decade or so (it used to be about every 50 years) the world goes through a major innovation technology-based economic revolution– also known as Kondratiev Waves… Historically, the cycle of innovations is as follows; a cycle starts when a new innovation begins to emerge, which stimulates investment, which invigorate markets, which gets embraced by entrepreneurs who start new businesses based on these new technologies, and begins to gain market share at the expense of the then existing technology… eventually, the new innovation dominates markets, set standards, kill-off weaker rivals… but then over time, it too becomes venerable from other emerging new innovations…

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Eventually, the cycle of innovation is repeated; it begins again as a new wave, which destroys the old way of doing things and creates conditions for a new cycle… According to Joseph Schumpeter; it’s a process of– ‘creative destruction’… These new innovations continue to attract more and more financial capital from investors, which in turn helps to improve the quality and lowers the cost of the new technology, and leads to many new innovative applications… And over time, these new paradigms significantly transform global economies, as well as, re-shaping social behavior and institutions of society… Hence, the previous decades of ‘creative destruction’ now become a golden age of ‘creative construction’…

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In the article The Surfers of Innovation by Maurício Manhães writes: The sport of surfing is a perfect metaphor for understanding the phenomenon of innovation… Of course, I am not the first person to equate waves with innovation in business. This discourse was created by several early researchers and further developed by Joseph Schumpeter, who in his theory connected– innovations, cycles, development… and his continuing hero was the entrepreneur… But for me, it’s a surfer… For Schumpeter, capitalism ‘looks like’ an evolutionary process producing– continually alternating waves of innovation and destruction… which are waves, followed by waves, all come crashing onto a beach… Hence, surfing offers countless metaphors that can help to understand the evolutionary nature of ‘innovation’, for example:

  • The Wave: Nobody creates a wave. It just ‘happens’ out of countless uncontrollable interactions of the sea with winds, the movement of the moon, and anything else that affects bodies of water. Surfers don’t create waves… A wave is just a wave and no more. It may be small, medium large or a ‘tube’. It may be good for surfing or not… The wave, as a generative metaphor, symbolizes the will of a social context to direct its resources/energy towards a sector or product (goods or services). The ‘sea’, in this metaphor represents human beings, a society; and, incredible as it may seem, society is as uncontrollable as the wave…
  • The Surfer: So, the wave is uncontrollable. But, it can be surfed. And it may be poorly or very well surfed… In the case of innovation, the surfer is like an entrepreneur. The wave is the ‘energy’, channeled by a sea of people in a certain ‘direction’. The surfer’s maneuvers are the products created. And in that resides an interesting concept: the maneuvers do not themselves create waves; likewise, products do not create demands…
  • The Beach: Well, the beach is the niche of expertise, each with its own characteristic set of waves. One that may be crowded or just have you alone on it. Indeed, the pleasure of riding the perfect wave on a deserted beach might be phenomenal… but finding a ‘new’ beach with perfect waves is a very risky adventure. Most of the times it’s better to head for a well-known surfer’s beach and try to create new maneuvers…
  • Innovation: Joining these elements (i.e., wave, surfer, beach) you can understand the dynamics of innovation a little better. We can also clearly see the  difficulty of predicting who will be the next innovative ‘billionaire’. For this to occur requires the coincidence of these three factors: ideal beach, prefect wave, gifted surfer…

In the article Riding the Crest of the Wave by Leonard Sweet writes: Riding the crest of a wave can be the ‘moment’ when you are most likely to be swept into– depression, panic… or, euphoric exhilaration… Reaching a position of success and acceptance, through innovations; entails hard, slogging work… long hours of study, unfulfilling chores, unimportant ‘entry’ level jobs, carefully cultivated ‘right’ relationships… The moment of your greatest success and achievement is when you are riding the crest of a great wave of business ingenuity, is also the moment you are most likely to be subjected to the severest temptations; gnawed by your most debilitating insecurities, and seduced into believing the most grandiose visions of your own abilities… For most then, wave-riding puts you into dangerous and tenuous positions, but reaching the crest of the wave and riding with the wind is an ecstatic experience… Remember the poster of the Peanuts’ beagle ‘Snoopy’, surfing at the tip of a perfectly curled wave, shouting his victory cry; Cowabunga! It’s these moments of pure joy, of unabashed rejoicing, but they are only ‘moments’… It’s how you follow-up those sporadic successes that determines your ability to grow, so that you may be prepared to struggle your way up the next on-coming wave…

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In the article Releasing Innovation: Riding the Wave by Scott Propp writes: Something amazing happens when a wave of innovation moves through your company; lifting-up and carrying the ripest ideas all the way to market without losing their freshness and vitality… However, most companies are actually doing the opposite– they are focused on pushing innovation that fits within a pre-existing model, out the door… The problem here is that once a product has been successful within a first core market, other growing market needs, tend to go unnoticed. It’s important to remember that once one set of needs is locked onto and served, it’s time to look for the next wave– and for sure another one is always being formed: Finding this next wave takes– listening, learning, doing… Instead of just pushing and driving innovation from within an organization, you want to become perfectly poised to catch and ride the edges of two waves: the technology capability wave’ and the ‘market needs wave’… Finding the next wave is essential for sustainability, and when an organization catches the next wave and its formation is just right, the effects on business are transformational…

There is no shortage of new innovations in the world, but innovations without execution are just that, innovations…It’s vital to have the courage to champion your innovation with passion and conviction, take the appropriate risks to ensure that it goes from a sketch to a finished product, and the tenacity to ensure that nothing gets in the way of seeing it to commercialization… According to Shawn Parr; innovation is hard, because it means finding new, original ways to solve problems, or inventing something completely new. There are always significant barriers in the journey to commercialize innovation, which is laden with many challenges, reasons to quit… It takes incredible determination to do something new for the first time and overcome the obstacles to succeed…

According to Edward Draper; innovation is like a wave; there are people in it, and people riding on it. The trick is to ride the wave your are on, and to prepare for the next wave… Like surfing and comedy, timing is everything; if you try to move too soon you are likely to be wiped-out or lost– if you move too late all the energy is gone… Innovation is scary– and not just to those that are being disrupted… but also for the disruptor who is driving radical change, and although it might be very exciting… but it’s also full of risk… An innovative wave is full of adrenalin-fuelled energy, and best place to be is– riding its crest, like the surfer…

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According to Alex Frankel; surfing is all about spotting the opportunity to crest the wave in a turbulent environments… In big-wave surfing, you must stay calm in chaos, and the big attraction in surfing is that you never master it, very much like business… That’s why people get so hooked; as soon as you think that you have everything wired, a wave comes along and wipes you out, again very much like business… According to Sharad Sharma; surfing the waves of innovation means having behavioral traits, such as; stepping outside one’s comfort zone… having an internal compass, relying on one’s self-mastery… getting comfortable to stand out, being an underdog… persisting in the face of adversity…

According to David Brier; the single difference between the innovator and the ordinary person; innovators sees the dots and connected them, while others 1) didn’t see them, or 2) if they did, they didn’t– explore, question, or connect any of them… It’s a constant attentiveness to how things are applied… it’s the foundation for innovation… So what is innovation? It’s those other dots; the ones others miss… and, having the certainty to know that the dots you see are not only valid, but necessary if the world is to move forward…

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Art of the Pivot– Shift in Strategy to Reposition the Business: Mapping a New Path– Course Correction.

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A ‘pivot’ in business is a shift in strategic direction… it’s a course correction for mapping a different path forward… The term ‘pivot’ is a metaphor derived from basketball, where a player keep one foot planted firmly, while changing direction with the other foot… in business, a ‘pivot’ keep one foot in the existing strategy, while pivoting the other foot to engage various elements of a revised strategy… Envision a leader standing firmly with the existing business vision, while pivoting to test– new markets, new products, new services, and even new customers… According to Steve Blank; pivot can be a substantive change to one or more of many different elements in a business model, for example; a pivot can change the– customer segment, channel, revenue model/pricing, resources, activities, costs, partners, customer acquisition… A pivot is a deep breath, critical action to map a different course for the business…

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According to Eric Ries, who introduced the business term ‘pivot’ in his book ‘The Lean Startup’ writes; few companies ever create an original business plan that sustains it for very long… a business, typically, transitions through a continual series of course corrections to stay competitive and/or engage new opportunities… a pivot is making a change in strategy without a change in vision According to Amar Bhide; 93% of all companies that ultimately become successful abandon their original strategy, because the original plan becomes obsolete in a continually changing business environment … In other words, successful companies don’t succeed because they had the right strategy in the beginning, but because they pivoted and tried other approaches, which were better aligned with the changing competitive environment… A quote from Wayne Gretzky (great hockey player); a good hockey player plays where the puck is, whereas, a great hockey player plays where the puck is going to be…

In the article The Real Pivot by Ben Yoskovitz writes: The term ‘pivot’ has been bastardized to the point where it doesn’t mean much to people anymore… Often, when you hear the word ‘pivot’ you will groan or shrug, knowing there is a good chance that people are using ‘pivot’ as an excuse. So what is a pivot? A pivot is shift in one or more aspects of existing focus based on ‘validated learning’… whereas, if you are changing the entire business that is a ‘do-over’… A pivot is much more narrow than a ‘do-over'; it starts with learning something new, different… it’s called– ‘validated learning’… presumably you gained insight through ‘learning’, which will tell you– where to pivot and why... but without ‘validated learning'; you are just pivoting blindly…

That is called a ‘lazy pivot'; and it will most likely lead to failure. The ‘lazy pivot’ thought process goes something like this; well since this thing I’m doing isn’t really working and I’m not sure why, but this other thing over there looks really interesting and cool, so I’ll go do that and see if that works... Ugh. Apparently you have not put enough rigorous effort into understanding your existing business, and it certainly doesn’t sound like you have the necessary insights to move to something else… Hence, you jump from one shiny object to another and repeat your failures… To pivot successfully you need focus and learning: Pivot is a cycle of ideas… it’s a process of testing and deciding whether– ‘to pivot or not’, and a critical question you must ask: Do you really know what the hell you are doing?

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In the article Art of the Pivot: Successfully Shift Business Strategy by Nicole Fallon writes: When a business start going south, business leaders face a critical dilemma: They can stay the course and see if their current strategy just needs a little more time, or recognize that a change in direction is necessary for the business to survive… Shifting gears and finding another strategy to achieve business goals is what James Reinhart calls; Art of the Pivot: It’s about changing course in pursuit of your same original business goal, but with a few course corrections… Pivots aren’t about moving from one business model to the next; they are about evolving a different– service delivery model, or monetization, or growth strategy… The only way to guide the business through these changes is to continually evaluate, both the internal and external factors affecting the business, and remain flexible enough to adapt to them… A business must be willing to constantly disrupt itself to remain relevant… Hence, be paranoid and don’t tune out the world around you… When it’s time to change, then make a strategy– shift, or pivot… all with the goal of  realigning the business… Quote from Winston Churchill; to ‘improve’ is to change; to be ‘perfect’ is to change often…

In the article Classic Strategies For A Fast, User-Focused Company Reboot by Eric Ries writes: Pivots are a permanent fact of business for any growing business, and even after a company achieves initial success, it must continue to pivot to be sustainable, for example; according to Geoffrey Moore in his book ‘Crossing the Chasm’ he writes; there is a vast ‘chasm’ between the early adopters and the early majority… the challenge for business is to narrow this chasm and ultimately accelerate adoption across every segment… According to Clayton Christensen; companies fail to pivot when they must… The critical skill for managers today is to match these theories to their present situation so that they apply the right advice at the right time… Modern managers cannot escaped the deluge of recent books calling on them to– adapt, change, reinvent, up-end their existing business… But, many of these same works are long on exhortations and short on specifics… A pivot is not just an exhortation to change; its special kind of structured change designed to test new fundamental hypothesis about, e.g.; product, business model, growth engine… If you take a wrong turn, then you must have the agility to find– another path, another ‘pivot’…

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In the article The Strategic Pivot by Dave Kellogg writes: A ‘complete’ strategy change is not a pivot, it’s a traveling violation: In a complete strategy change you– entirely abandon the old strategy, as opposed to a pivot where you– change direction while leaving one foot in the old strategy and one foot in the new… The pivot metaphor is meaningful because its basic premise is that a business from its very inception will need to pivot multiple times to sustain itself– it’s continual process of adjustments, reinvention… Then an interesting question become: How you know if the ‘pivot’ worked?  The answer is by evaluating revenues and margins contributed by the– old strategy vs. new ‘pivot’ strategy: If the old strategy is driving all the revenues, margins… this means that the pivot is not working… whereas, if the new strategy is driving the lion’s share of revenues, margins… then the pivot is working… at least for now, until the next pivot…

In the article To Pivot or Not to Pivot by Ashkan Karbasfrooshan writes: Although the concept of pivoting has become more commonplace in many organizations, it’s good to separate the fad from its core concept, such that you can answer the question: To pivot or not to pivot?  A ‘pivot’ works for most organizations, but before you engage the process, consider the following:

  • Pivoting is a Function of Your Employees: As much as I dread quoting Donald Rumsfeld; you go to war with the military you have, not the one you might want or wish to have at a later time… Time is crucial in any company and hiring is a challenge… So initially you must use the people you have as effectively as possible, and improve things as best as possible, and don’t assume that you have to nuke the entire joint…
  • Focus on A Different Target: While the concept of the pivot may refer to a radical and transformative change in a company’s– direction, strategy, focus, product line… it’s important to note that sometimes it’s prudent just to pivot on a single element of the business, rather than the whole business…
  • Timing and Externalities Matter More Than You Think: After 9/11 many companies repositioned themselves to engage new opportunities, e.g.; homeland security, national defense market… and some companies hit the jackpot. This isn’t so much chasing a fad but realizing that the broader macro-economic environment and trends can affect your company, more so than you think… hence stay alert, and be prepared to pivot when new opportunities present themselves…
  • Success Comes From Incremental Gains, Not Hail Mary’s: Apple is the ultimate ‘pivoter’… Most of its revenues come from iPhone and iPad; products that didn’t even exist five years ago, and they were all born from the iPod… Hence, the best pivot for many companies is not a radical overnight change, or 180-degree turn… but the execution of a well-conceived, progressive strategy of; shifts, extensions, adjustments…

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The effect of a ‘pivot’ is shifting the business ‘bet’… it’s a process for changing course when the current direction is not working… According to Harshdeep Rapal; when the ‘going gets tough'; pause, rethink… pivot: The whole concept behind the ‘pivot’ is to enhance the effects of what is working, and minimize the effects of what is not… According to Steven D. Peterson, Peter E. Jaret, and Barbara Findlay Schenck; business must under-go continual change to stay competitive, or to engage new opportunities… it’s remapping the business path forward… Hence, don’t wait until your business is up-ended by change before you refocus; be proactive by annually assessing how well the business is doing, e.g.; products, technology, sales, marketing,  operations, staffing… And, continually watch for (or, better yet try to anticipate) signs that might indicate that a major business redirection, or even a total reinvention is needed…

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Obsession– Requisite for Business Success, Core of Entrepreneurial Spirit… Or, Dangerous Fixation…

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Obsession is a persistent preoccupation with an– idea, feeling, desire… it’s a compelling motivation to achieve a goal, e.g.; leader’s obsess with business profits, entrepreneur obsess with business ventures… According to experts; if you want to ‘excel’ at anything, you must be obsessive, i.e.; constantly think about it, without concern for anything elseThat is why some business people are said to be obsessed with their business– all they think about is their business… Same is true with many of the great– writers, artists, architects, scientists… obsession is their mojo… But then, when does ‘passion’ become ‘obsession’? Passions and obsessions are powerful motivators to take risks, to make sacrifices, step outside of conventional norms to achieve a goal…

Passionate people are driven to create, as a way to grow and achieve potential, they are constantly seeking out others who share their passion in a quest for collaboration, inspiration… In contrast, obsessive people hide behind their objects of obsession… The ‘object’ is most important, nothing else matters not even family or themselves. The key difference between ‘passion’ and ‘obsession’ is fundamentally social: passion builds relationships and obsession inhibits them… Passion creates options, while obsession closes them… According to Amy S. Choi; obsession is the core of the entrepreneurial spirit… it’s a single-mindedness, even on the verge of madness at times, that drives business success… entrepreneurs who dive into their business ventures wholeheartedly sacrifice everything for– ideas, visions… consider; entrepreneurship = obsession; business success = obsession… 

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According to some experts; anyone who is trying to achieve anything huge in business, or even non-business, must be obsessed about it; obsession is truly a prerequisite for any great achievement… According to Aziz Ali; just think about the times, in business, when you achieved something great, something significant that you really wanted. Chances are that you were obsessed about how you could find a way to achieve it… Whether its finding– a new job, starting a business, closing a big deal, penetrating new markets… it all requires– clarity of purpose, commitment, driving obsession (some might say ‘passion’) to achieve it…

In the article Obsession: Key To Success by Madison Moore writes: How do people achieve ‘outstanding’ success? Do they work harder and more efficiently than others? Are they innately more talented and gifted than everybody else? Yes, it’s probably a combination  of all these things, but the key factor is their ‘obsession’ with success. Successful people ‘excel’ because they find their passion and become obsessed with it, for example; artists like– Renoir, Matisse, Duchamp… once said that artists usually have only one great idea, and their lives become obsessed with that idea, and they pursue it over and over… This is something like the obsession equals success formulaWhatever your idea is: Go for it. Learn every thing about it. Live it. Breathe it. Know it inside out. Sure, success depends on many variables, and some people are admittedly born with certain advantages. But that’s why success when achieved with one’s own obsession, passion is always more  rewarding, because you have truly earned it…

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In the Unusual Obsessions For Extreme Achievement by Robin Sharma writes: One of the biggest ways you limit your potential and deny your genius is following– ‘The Herd’ and ‘Modeling the Crowd’… If you want to win you must break free of– ‘Cult of Mediocrity’. You must stop listening to the chattering voices of the cynics around you. You must trust yourself, your instincts… And, your devotion eventually becomes your ‘obsession’… You practice it daily, constantly, consistently… This is how ‘genius’ unfolds: No magic, just trust your passion, and put in the work… A few unusual obsessions:

  • Mastery Obsession: You get the life you settle for. You get the brains you earn. Start looking for those things in your work (and life) that you excel at, and your life shifts once you do…
  • Progress Obsession: Make every day better than yesterday. Make this year 1000X better than last year… People are built for growth (not stagnation). For expansion (not contraction). Good enough just isn’t very good… The whole nature of the game is to see how far you can go…
  • Excellence Obsession: Leave everything you touch better than you find it. Surround yourself with excellent people. Use excellent words. Think excellent thoughts. You deserve no less…
  • Happiness Obsession: Sometimes people say; ‘you don’t live in the real world’. But, who wants to live in a world with negativity, wars, greed, chaos… create a world of your own making– while living in this very real world… do work that matters, pursue the highest ideals… be happy and block out the noise…
  • Creativity Obsession: You are designed to create… You are meant to– innovate + ideas– use your brains to birth your best ideas into the world… be obsessed with creativity…
  • Contribution Obsession: This is one’s oxygen. The real purpose of life is to serve. To be of use. To uplift those around you. To be helpful– Yes, run a business. Yes win… But, above all else, make it your obsession to serve…

In the article Goal Obsession: Flaws Creates More Flaws by Marshall Goldsmith: writes: It’s hard to criticize people who become obsessed to do things 100% the right way (especially when you consider the sloppy alternative). But taken too far, it can become blatant cause of failure… In its broadest form, obsession is the force at play when you get so wrapped up in achieving a goal that you do it at expense of a larger mission… It’s a misunderstanding what needed in business. It also comes from a misunderstanding of what others expect from you… Obsession can warp your sense of what is right or wrong… As a result, in your dogged pursuit of goals you forget your ethical behavior, e.g.; you are nice to people when they help you achieve your goal, and you push them aside when they are not useful to you. Hence, you can become a self-absorbed schemers for your obsession… Obsession is not a flaw; it’s a creator of flaws… it’s the force that distorts otherwise exemplary talents and good intentions, and turns them into something that is no longer admired…

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Obsession is usually looked upon as an unhealthy fixation, however, obsession need not be unhealthy. In fact, finding a healthy obsession is what most people will characterize as a purpose for living… You are all either searching for purpose and passion in life or you are already living it. That is exactly what a healthy obsession provides, and it’s key to become very successful in any field… According to Paul Hudson; being obsessed is the only way to become truly successful… Obsession sets the leaders and trend-setters from followers… As long as you remember to feed the healthy obsession, and manage to avoid distraction (the most common culprit of failure), you will succeed… According to Marshall Goldsmith; obsession can become one of the greatest problems with successful people… obsession occurs when we become so focused on achieving a goal (or task) that you forget the larger mission…

For example, in the classic movie ‘The Bridge on the River Kwai’, Colonel Nicholson (played by Alec Guiness) becomes so obsessed with his goals– build a great bridge and improve troop morale– that he completely forgets his mission– winning the war. At the end of the movie, he realizes that he built a fantastic bridge, but it supports the wrong army (the enemy), and exclaims; What have I done? Hence, I would just suggest that you ask yourself two challenging questions: 1.) What are your most important values in your business? Are your values reflected in the way you spend your time? 2.) What is your mission, as a team member, in the business? Are you becoming so focused on achieving goals, that you forget the mission? In the end, like Colonel Nicholson, you don’t want to look back and ask; What have I done?

According to Scott H. Young; in chemistry, there is the idea of an activation cost. This is the threshold of energy you need to surpass– to start a chemical reaction. Dynamite, for example, contains a lot of energy, but unless a spark or lit fuse pays the activation cost it won’t explode… If a pursuit is extraordinary, it tends to have a high activation cost. That activation cost is obsession, and it’s only possible if you put everything else in aside… Telling yourself to focus on one thing (i.e., obsession), putting aside all other desires is very difficult… and that’s probably why most people never do it…

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According to Ali; obsession is a convenient excuse for work to be the focus of your life and for everyone else around you… But ultimately, obsession leads to burn out– working too hard, for too long isn’t good– even if you love the work… Sometimes you must just– let it go, reconnect with the rest of your life… Of course, work matters, but so does health, relationships, happiness… However, if your mind keeps on coming back to the same innovative ideas, if you keep on getting sparks of creative energy, if you cannot stop thinking about that new widget… then pay attention, since it might be– your obsession waiting to happen… and more important, it just might be your purpose in life…

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Strategic Planning; Waste of Time, Obsolete: Dead as a Roadmap for Shaping the Future of Business…

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Strategic planning is a waste of time: Oh, it might do good for some business but the idea should be scrapped in favor of business practices that embrace; flexibility, agility… that’s because most strategic plans just don’t work… strategic planning has become a ritualistic process where discussions are held in thoughtful tones, while most participants secretly suspect that nothing will really be decided or changed… According to J. Brian Quinn; a good deal of the strategic planning is like a primitive ritual rain dance– there is a lot of dancing, waving of feathers, beating of drums… there is an almost mystical hope that something good will come out of it– you pretend to make strategy and then pretend to implement it… the process involves too much paper, too much time, too many nodding heads, and far too many poorly informed so-called experts… it’s anathema to even question the validity of the strategic planning process, but it’s time to challenge reality.

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According to Henry Mintzberg; strategic planning discourages change, narrows a company’s vision, limits flexibility and it’s, in fact, oxymoronic. The process fails more often than not; it just doesn’t work anymore, and it can be downright dangerous… However, many experts believe that planning is fundamental to success, but it’s naive and counter-productive to assume that traditional strategic planning, as we know it, is the answer… Flexibility, agility, fluidity, and not strategic plans are the keys to success in the modern business world… It’s a digital world: The Internet and affordable high-speed technology have radically reduced time lines, and profoundly changed the way you need to operate, and the way you need to plan…

In the article Can Strategic Planning Pay Off? by Louis V. Gerstner, Jr. writes: One of the most intriguing management phenomena of the late 60s and the early 70s was the rapid spread of the strategic-planning concept… Few management techniques have swept through corporate and government enterprises more rapidly or completely. Writer after writer has hailed this new discipline as the fountain-head of all corporate progress. In 1962, one published report extolled strategic planning as– a systematic means by which a company can become what it wants to be… Five years later, it was called– a means to help management gain increasing control over the destiny of a corporationBy 1971, praise of strategic planning verged on the poetic; it had become– the manifestation of a company’s determination to be the master of its own fate to penetrate the darkness of uncertainty and provide the illumination of probability… It’s not surprising, therefore, that one company after another raced to embrace this source of managerial salvation…

Hence, it seemed appropriate to ask some chief executives whether strategic planning has lived up to its advance billings. Three anonymous reactions were as follows; strategic planning is basically just a play thing of staff… and, it’s like a Chinese dinner: I feel full when I eat it, but after a little while I wonder whether I’ve eaten at alland, strategic planning is a staggering waste of time and money… Some CEOs, of course, would disagree with these comments, but the fact remains that in large majority of companies strategic planning tends to be an academic, ill-defined activity with little or no bottom-line impact… Nothing really new happens as a result of the plan, except that everyone gets a warm glow of security and satisfaction now that the uncertainty of the future has been contained: Unfortunately, warm feelings do not produce tangible business results…

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That is, the strategic plan should clearly set forth the critical issues facing a company or division in terms of alternative courses of current action… And, if there are more than five or six issues, then they are probably the wrong ones… also, if the decisions do not involve major risks or investments and/or changes in competitive posture, or if the decisions do not have to be made now, then they are the wrong decisions… This is the creative leap that too many managements fail to make in strategic planning. They fail to ask; What do we do now as a result of this plan? They fail to recognize that the end product of strategic analysis should not be plans; but– decisions, actions… Hence, strategic planning should be more like; strategic agility and that means– it’s risky; it’s difficult; it requires leadership

In the article What Makes Strategy Fail by Ruth Tearle writes: Many senior managers are very cynical about the strategic planning process… The usual commentary is that strategic planning is a waste of time; the agenda is just like last year where we achieved nothing… there was no real direction, nothing was ever implemented. For many observers strategic planning is a process of having many great ‘pretenders’ and the end result is a sham. Time spent away at fancy retreat where nothing gets achieved, and employees throughout the organization continue to complain about the lack of direction… How do you know if the strategy retreat is ‘pretence’ or ‘success’? How do you know if the retreat delegates are only just great ‘pretenders’? Consider, for example:

  • Delegates who:­ Pretend to be there. Pretend to listen. Pretend to ask questions. Pretend to contribute. Pretend to act in best interests of the organization, while cleverly sabotaging the process…
  • Leaders who: Pretend the purpose of the retreat is to allow the group to co-create a strategy. Pretend that simply presenting a strategy to the teams is enough to excite and inspire them. Pretend it’s possible for a team to develop a vision of the future without considering how the future may be different from today. Pretend it’s possible for a group of bored people to create a brilliant strategy, which will excite and delight– customers, employees….

In the article Strategic Plan: Neither Strategy Nor Plan But Waste of Time by Benjamin Ginsberg; It would be incorrect to assert that strategic plans are never what they purport to be, i.e., blueprints for the future. Occasionally a business plan does, in fact, present a grand design for next decade… A plan that is actually designed to guide an organization’s efforts to achieve future objectives… Such a plan typically presents concrete objectives, a timetable for their realization, an outline of the tactics that will be employed, a precise assignment of staff responsibilities, and budgets… Whether one agreed or disagreed with the goals stated by the plan, there could be little disagreement about the character of the plan… However, this ultimate plan is usually indistinguishable from dozens of other plans, which were probably copied from still other plans… Usually there is nothing new or different, it just a rehash of the same old rhetoric… this inter-changeability of visions, underscores the fact that the precise content of most business strategic plans is pretty much irrelevant… Plans are usually forgotten soon after they are promulgated, and no one can remember much about any of those plans… These plans are not a blueprint for the future, instead they are management tool for the present… The ubiquity of traditional planning is another reflection and reinforcement of the continuing realization that many leaders are out of touch with the reality of the changing world…

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However, it must be remembered that the underlying objectives of the strategy planning process is as important today, as ever.  It’s still critical to establish and communicate the strategic direction of a business… and if business competitive environment is static and pretty much as assumed by business leadership, then traditional strategic planning process will likely produce the desired results… But herein lies the failing; the business environment is no longer predictable, and it’s changing at rate faster than the planning horizon, which requires a new way of thinking– it requires a focus on ‘agility’ as the strategic imperative… According to Denise Lee Yohn; the amount of disruption in today’s markets (and speed at which it happens) requires a very different planning approach… Instead of setting a definite strategy and following it through at all costs, companies should focus on– strategically adapting-to and excelling-at whatever path they find themselves on…

Developing strategic agility starts with changing many of the traditional thought bubbles (i.e., beliefs, assumptions, rules…) about the strategic planning process… According to Fred Pidsadny; focus on how the business must shift and adapt to stay competitive, or better yet to disrupt and leapfrog the competition, and once you determine necessary course corrections, take action ‘immediately’– don’t wait for next strategic planning session… Today’s market leaders must be– fast, agile, and able to change course with a minimum of disruption– strategic agility, fast execution– must be Priority #1.

According to C. Eric Brown; Don’t overly complicate it. Don’t over-think it. Create a relevant strategy, define the tactics, measure progress… then change it, if it’s not working… There is no natural cycle of when to define and refine strategies; strategic planning, monitoring– must happen whenever necessary, anytime, all of the time… Creating strategies that are truly adaptive requires that you give-up on many long-held assumptions, and focus on answering a series of specific interrelated questions about the organization’s strategic direction, for example; what vision to pursue… how to make a difference… how to succeed… what capabilities it will take to get there…

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It’s time to radically change the way you think about business; In the book, ‘Execution: The Discipline of Getting Things Done’, they say– So much thinking has gone into strategy that it’s no longer an intellectual challenge; rent any strategy you want from a consulting firm… In the book, ‘Confronting Reality’, it argues that the methodologies used to plan the future of business have steadily drifted away from reality and the strategic plans of most companies just don’t work… According to Tom Peters; it’s foremost task, responsibility of the current generation of leaders to re-imagine the entire business process… To that end, it’s necessary to break away from that which does not work, and reinvent the process of creating strategies… According to Dwight D. Eisenhower; plans are useless but planning is everything… and you must be ready to adapt to whatever curveballs the twenty-first century sees fit to throw…

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Cracking Enigma– The Exception That Proves The Rule: It’s Nonsense, Absurd, Or An Unlikely Defense…

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A big issue with most business and organizations are the many rules that govern their existence, but an even bigger issue are all the exceptions to those rules. In fact, there can be so many exceptions that it’s a wonder that anybody can discern any rules at all… A business ‘rule’ is a statement that defines or constrains some aspect of the business. It’s intended to assert structure or to control or influence the behavior of the organization… However, the English language is rich with many seemingly nonsensical sayings that are part and parcel of the vernacular, for example the phrase; the exception proves the rule… or similar variants is an old adage that originated from the Latin expression– ‘exceptio probat regulam’ ( i.e., the exception confirms the rule), which says that an inconsistency of a rule confirms the validity of a rule, which is a completely absurd notion…

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Do you get it? According to Cecil Adams; the whole point of this expression is that it does not make sense. It’s what you might say to confound adversaries when your argument is completely discredited… to suggest that since a non-conforming case exists and that it somehow confirms or supports a generalization is absurd… According to Brady Manning; so why do people continue to use the phrase, even though the original version was not logically sound? Probably because it sounds fancy and has helped many people to win arguments against people who do not understand logic… But regardless, there is no such thing as– an exception proving a rule… it’s wholly illogical and contradictory…

In the article How Does An Exception Prove A Rule? by Arika Okrent writes: The phrase; the exception that proves the rule  indicates a deviation from the norm, a challenge to the stereotype. It says, in effect, the norm or stereotype is the rule and here is something that is an exception to that rule. But wait, how does the exception prove the rule? Wouldn’t it do just the opposite? Doesn’t it prove the rule does not hold for all cases and is, therefore, not a rule at all? It’s sometimes argued that the confusion over this expression stems from the wrong understanding of the word ‘prove’, and that ‘prove’ here means ‘test’. The idea is that the exception ‘tests’ the validity of the rule, and the test could either leave the rule intact (i.e., if some kind of explanation can be found), or overturns it… Its been suggested that the expression has probably evolved through some blending of other expressions, for example; when people say something is– ‘the exception that proves the rule’, they could just as well say it’s– ‘an exception to the rule’… however, ‘the exception that proves the rule’ does more by highlighting the unusualness of the exception. Clearly,  there is a good bit of hyperbole going on when someone pulls out this expression, but that doesn’t mean it make any sense…

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In the article The 7% Rule; Fact, Fiction, Misunderstanding by Philip Yaffe writes: Have you ever heard the suggestion that a person’s communication effectiveness is only 7% verbal and 93% non-verbal? According to a study by Albert Mehrabian; customers based their assessments of a salesperson’s credibility on factors other than the words they speak… and his study assigned 55% weight to the speaker’s body language, 38% to the tone and music of their voice, and 7% to the actual words. however, over the years many experts, including Phil Yaffe himself, have rejected the validity of a; 7/93 Rule… Although you live in a highly ‘visual’ world, most information is still promulgated in written form, where vocal variety and body language play little role… Likewise with a speech, if your words are incapable of getting the message across, then no amount of gestures and tonal variations will do it for you… Hence, you are still obliged to carefully structure your information and look for– ‘le mot juste‘ (i.e., best words or phrases) to express what you want to say…

So, what does the ‘7% Rule’ really mean? It means that there are many, so called, rules that are nonsensical, like the expression– ‘the exception that proves the rule’… This is another expression people say without examining its meaning… In fact, an exception can never prove a rule; it can only disprove it… The problem is not with the adage, but with the language. In old English the term ‘prove’ meant to ‘test’, not to confirm as it does today. So the adage really means: It’s the exception that ‘tests’ the rule, and if there is an exception, then there is no rule, or at least the rule is not total… English speakers are not alone in continuing to mouth this nonsense; in some other languages it’s even worse, for example; the French actually say; the exception that confirms the rule (i.e., l’exception qui confirme la règle…) probably because it was mistranslated from English but it’s still wrong…

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In the article The Pareto Rule, Or The Exception That Prove the Rule by Brian Hull writes: The Pareto Rule (or, 80/20 Rule, or Law of Vital Few…) ostensibly states that for many phenomena; 80% of the consequences stem from 20% of the causes…  A common application is, e.g.; 80% of revenues, profits, sales… come from top 20% of customers… also, 80/20 rule is often used as a metric to analyze many business activity, problems, issues… and that makes a lot of sense. However, being obsessed with strictly ‘adhering’ to it is probably unwise and counter-productive, for example; working to get more than 20% would seem like a worthwhile objective, but then it becomes an exception to this rule. Hence, it’s important to observe the benefits of the rule and alert to its implications, but not to live or die by it… for example; if a business has 90% of profit, revenue… coming from 10% or less of its customer base, it’s obviously at a greater business risk than one that has 60% of its profit, revenue… coming from 40% of customers… Hence, does the business with the latter or a more even performance profile really need to get closer to the 80/20 Rule? Probably not: The point is– the Pareto Rule can be useful under the right circumstances; but is it the exception, or the rule…

Many people use exceptions fallaciously to show that a rule does not exist. A typical retort to a generalization starts by disagreeing that it is a rule, followed by citing a compelling example of an exception to the rule… these exceptions are usually rare, but they can be very effective at swaying popular opinions against well established rules… However, when relatively rare exceptions get fallaciously cited as if they were common-place, e.g.; the exception proves the rule… it can legitimately mean that the attempt to refute the rule is fallacious; by a kind of logic that says; Is that all you’ve got? rationale… According to Dhirendra Kumar; how can an exception prove a rule? It clearly does the opposite… Hence, if you have a rule and if there is an exception, then the rule is wrong. This logic is generally used as an excuse by people who have accepted some rule or principle and then violate it… and it’s often associated business decisions…

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There may well be situations when violating basic rules of business’ best practice can result in a better outcome… However, these exceptions are few and far between and, in many case, they can only be detected with certainty in hindsight… Hence as a guideline, it makes a lot of sense to never fall for; ‘the old exception that proves the rule’ story… According to Jon Brock; I have often had cause to query the wisdom of old sayings; one that has always seemed particularly nonsensical is the phrase; ‘the exception that proves the rule’… this so called rule basically says– there is a rule and if you find something that breaks the rule, then that somehow proves the rule was correct, which is totally idiotic… According to Lorenzo Paoli; the pursuit of excellence is often seen as a rare occurrence, an exception… and when it does occur it can be referred to as; ‘an exception to the rule of being average’ but exceptions– ‘do not’ prove rules they ‘deny’ them…

All of this analysis is good stuff; but how did the phrase– the exception proves the rule… get so corrupted in the first place, and how did it manage to survive so long? It’s current usage is so obviously absurd that unless it satisfied some highly desirable rhetorical niche, it could not have survived… Here is a theory; consider a situation where in the face of indisputable evidence, a person is cornered with an embarrassing rhetorical moment and they have nothing substantial to say in their defense; and consider if they had a ‘snappy’ comeback phrase, such as; the exception that proves the rule… the shear strength of the phrase will leave an average person gasping for some type of response to this enigmatic statement… Hence, whether nonsensical or not– it may very well make a very handy expression to have around as an unlikely defense, which is probably the reason for its survivability…

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Urge to Purge– Business Divestiture, Spin-Off, Crave-Out… Shrink to Grow: Value-Creation…

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Shrink-to-grow is a basic justification for business divestitures… a divestiture is a strategic restructuring option for partial or full removal of a business unit… and, depending on purpose of restructuring, it can take different forms of execution, such as; sell-offs, spin-offs, equity carve-out… Companies offer several common reasons for a divestiture, e.g.; removing an under-performing business units… or, focusing on the core business through the selling-off of unrelated business units… or, government regulatory authorities might use legal action to demand a business divestment due to antitrust, anticompetitive practices… According to EY; leading companies view divestment as a fundamental part of their capital strategy, and an important vehicle for funding growth. More than half of companies surveyed in the 2015 EY Global Corporate Divestment Study expect the number of strategic sellers to increase in next 12 months…

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Also the study reports; 74% of firms are using divestment to fund growth… 66% saw an increased valuation multiple in the remaining business after their last divestment… 45% of executives say shareholder activism influenced their decision to divest… 50% of executives say that closing deals quickly and with certainty is more important than waiting longer to secure higher price… But regardless of the form or specific motivations behind it, a divestiture is almost always undertaken to do one thing: maximize the value of invested capital. It provides an exit mechanism to convert invested capital back into a negotiable form of assets, usually cash, shares, or some other debt instrument. These assets, which are freed from their previous application, can then be applied to some new form of investment…

In the article How The Best Divest by Michael C. Mankins, David Harding, Rolf-Magnus Weddigen write: Research shows that the most effective ‘divestors’ follow four rules: 1.) Set-up a dedicated team to focus on divesting… 2.) Avoid holding on to businesses that are not core to their portfolio– no matter how much cash they may generate… 3.) Make robust de-integration plans for the businesses they intend to sell… 4.) Develop a compelling business unit exit story to use in taking the– buyers’, employees’, other stakeholders… perspectives very much into account… To identify the right divestiture, the best divestors apply two criteria: Fit and Value. To determine ‘fit’, management asks: Is keeping the business essential to positioning the company for long-term growth and profitability? And, to judge ‘value’, management must work out whether the business is worth more held in the company’s portfolio, than it’s anywhere else…

Conventional wisdom is that companies should sell only businesses that are not critical to the core business… in addition, a business that has more value to another firms, other than their own. In making divestiture selections, the best companies are studiously unsentimental, and prepared to jettison businesses with long and storied histories… Whatever form the divestiture takes, good divestors are meticulous about planning how it will unfold– just as savvy acquirers are diligent about post-merger integration… Divestors start by comprehensively defining the boundaries of any divested business considering issues, such as: Which products and assets will be included? Which customers? Which facilities? Which management and employees? They consider tried-and-true methods for dealing with– shared overhead costs, brands, patents, trademarks… They consider how to carefully unravel cross-company systems and processes (or even share them, by both companies, during transition period) to ensure effective separation…

A common method to maximizes value is to structure the deal so that both, buyer and seller are winners, by taking actions that ensures the success of the divested business… According to Ted French; the underlying principle is simple; maximize the value of the business, facilitate a smooth transition, treat all affected management and employees fairly… Selling a business is rarely a one-off activity; research shows that companies that actively manage their divestiture portfolios in a selective and disciplined manner out-perform competitors that sit on sidelines… These active companies, through experience and commitment to business strategy with divestitures, create an institutional capacity to spot and take advantage of divestiture opportunities, whenever they arise: The best divestors are ‘divestiture ready’ and able to consistently move– at the right time, in the right way– to create the most value for all stakeholders…

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In the article Corporate Divestitures From Strategy To Execution by PwC writes: The highly competitive business environment has increased pressure on companies to revisit their operational strategies to determine if divestiture solutions are a viable response to some of their most pressing business issues… But, a divestiture strategy is not for the inexperienced, and companies must be well-prepared to deal with many serious issues to be successful, or avoid a disaster, e.g.; if sellers are not prepared and present a less than compelling business case for the divestiture, buyers can rationalize uncertainty and the perception of unmeasurable risk, which can derail a potential deal… These perceptions usually result when there are significant delays in closing a deal, if the deal gets closed at all… However, more often than not, management is working very hard and spending much time and resource trying to close a deal, and do not adequately attend to the operational needs of the overall organization, which then can result in some very serious issues, for example:

  • Employee turnover increases and productivity declines as staff members speculate about their future, weigh their options, and potentially leave the company for other opportunities…
  • Critical business investments and new products are often put on hold…
  • Competitors use the opportunity to attack the target business on its most vulnerable points, raising doubts among key customers, and making it harder to attract new business…

It’s a well-known fact that buyers must implement a sound due diligence and integration process if they hope to capture the value of an acquisition, but ironically many companies fail to recognize that a comparable process is vital when divesting a business… Hence, if companies expect to realize value on the sell-side of a company divestiture, they must understand that– value erosion begins long before a deal is completed, it’s imperative for sellers to prepare well, even before they identify a buyer: A thorough preparation process is crucial for a successful divestiture… Such a process arms a seller with critical information needed to present the business most effectively, address deal issues early on, answer challenging questions so as to boost value, for example; a few basic principles:

  • Plan for all aspects of the divestiture process: Outline the transaction objectives, key value drivers, boundaries, risks…
  • Present tailored financial information for the transaction: Develop detail financial information for the target business, such that the information is– true, verifiable, compelling, appropriate, and builds buyer confidence in the process…
  • Prepare, prepare, prepare: Identify critical issues, upside opportunities, develop detail operational information that justifies the asking price, prepare sell-side due diligence before marketing the deal…
  • Position for the exit and execution: Actively manage all aspects of the divestiture; develop a post-divestiture separation plan for internal support functions, identify key people who are affected by the divestiture, develop a time line, responsibilities, and the key ‘to do’ list for final execution…

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In the article Divestitures Are Harder Than You Think by Gerald Adolph and J. Neely write: In a highly competitive business environment, it’s clear that many companies are taking the opportunity to divest non-core businesses… It’s an active market and there are plenty of buyers, both financial and strategic that are sitting on hordes of cash and looking for attractive deals… However, before moving to ‘cash-in’ on a business divestiture, it’s worth taking a hard look at the process… Whether an outright sale or a spin-off… splitting-off pieces of a business is much harder than it appears; it can have an impact, not only on the divested entity, but the entire seller organization… Breaking-up a piece of a business may be harder than you think, especially if the target piece is well-integrated in the overall organization…

For example; consider how well the business information systems are integrated and how they can be separated, how are support services shared, how is R&D shared, how are administration and financial issued shared… there are many challenges working against the divestiture process. That is not to say divestitures should be abandoned, the point is this: It’s critical to fully understand the major impediments to unraveling a business unit before making the decision to sell… The trick is to be aware of challenges in advance… There are many assessments to be made, e.g.; How much of the business to sell? Which is better; divestiture or spin-off? By truly understanding all relevant issues the seller is in a better position to get the very best deal, and find a good home for the divested piece…

In a study McKinsey & Company found– companies that actively manage their business portfolios through acquisitions and divestitures create substantially more shareholder value than those that passively hold their businesses, and they also found that there are significant differences in management performance, e.g.; management that balance the strategy of ‘acquisitions and divestitures’, performed much better than those who focused more narrowly on either, ‘acquisitions or divestitures’…

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Unfortunately, most corporations divest either, too little or too late, and most divestitures are rarely purposeful, and in many cases they are viewed as a sign of desperation… In fact, many divestitures are perceived as a sign of a company’s weakness and management  failure; whereas, acquisitions are usually viewed as a mark of a strong company with growth-focused management… Reality shows that either of these assumptions are necessarily true; divestiture is not a symbol of failure and, if executed properly, it can be a badge of smart, strategic-oriented management… whereas, an acquisition may be a fool-hardy attempt to save the company…

According to Lee Dranikoff, Tim Koller, Antoon Schneider; divestitures can be used to strengthen and rejuvenate a company but only if management looks beyond the stigma that is often associated with selling off businesses and embrace divestiture as vital to their strategies… According to Allan Cunningham; having a solid understanding of the value of a company’s assets and evaluating which assets have greater value, both for within the company fold, and those that are best elsewhere– is critical… Management must maintain a balanced, realistic assessment of its strategic outlook, and not be influenced by aggressive investor activism, which shows no sign of abating…Ultimately though disposing of an appropriate company assets is about ‘value-creation’, and often companies must– shrink to grow…

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