The U.S. 2013 Budget Debate in Washington: Alarming National Debt & Deficit Facts– Impact on Competitiveness, Social Programs, Quality of Life…

Posted on February 20, 2012 by Bizshifts-Trends
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Whether they run a record company or a grocery store, every boss will tell you you’re in big trouble if you’re borrowing more than you can ever afford to pay back. Delaying the pain for future generations is suicidal. We’ve got to start getting the deficit down right now, not next year ~Simon Cowell

‘National debt’ and ‘national deficit’ are tossed around – often interchangeably – and confuse rather than clarify an understanding of the U.S.’s ‘national debt’ status.  In simplest terms, the federal budget is the amount of money set aside to finance the government’s operation for one fiscal year. The budget can be viewed as a two column sheet. One column represents the revenue collected to finance the budget’s expenses. The second column represents the expenditures the government makes. Ideally, at the end of the year there should be more money left in the surplus column, or revenue exceeded expenditures. At the least, revenue should equal expenditures for a ‘balanced’ budget. Unfortunately, during the past decade expenditures have exceeded revenue to create deficits. A ‘national deficit’ or ‘budget deficit’ is considered part of the ‘national debt’ and is added to the debt each year that a deficit occurs. The effect is cumulative. The total ‘national debt’ is a combination of the debt held by the public or all federal securities held outside the government, and intergovernmental debt or treasury securities held in accounts and administered by the federal government. One of the troubling aspects of the debt held by the public is that it includes debt owed to foreign countries; roughly 32% of the national debt. In essence, this borrowing from other countries’ governments is borrowing from their citizens to pay for programs for our citizens. The solution to reducing the growing ‘national debt’ is less spending and more revenue…

In the article “Scary Debt Facts for 2012” by Jill Schlesinger writes: As the President unveiled the 2013 fiscal year budget, the nation’s financial situation came back into sharp focus. Experts say partisan gridlock in Washington means the budget will probably go nowhere. Considering this is an election year, however, expect politicians to harp on facts, figures and terms that most Americans weren’t taught in high school. To help out, it’s time to dredge up lots of scary facts to make you pay attention. Before we get going, a quick primer on the number ‘TRILLION’: $1 trillion = $1,000 billion or $1,000,000,000,000 (that’s 12 zeros). How hard is it to spend a trillion dollars? If you spent one dollar every second, you would have spent a million dollars in 12 days,  it would take 32 years to spend a billion dollars, and more than 31,000 years to spend a trillion dollars. Some facts about the national debt and the deficit:

  • 2012 U.S. deficit = $1.33 trillion
  • 2013 Proposed budget deficit = $901 billion
  • Current national debt = $15.3 trillion (or $49,030 per every man, woman and child in the U.S. or $135,773 per taxpayer).

A few historical facts:

  • When Ronald Reagan took office in 1981, the U.S. national debt was just under $1 trillion. When he left office eight years later, it was $2.6 trillion.
  • Under President Bush: At the end of calendar year 2000, the debt stood at $5.629 trillion. Eight years later, the national debt stood at $9.986 trillion.
  • Under President Obama: The debt started at $9.986 trillion and escalated to $15.3 trillion, a 53% increase over three years.
  • FY 2013 budget projects a deficit of $901 billion in 2013, representing 5.5% of GDP, down from a deficit of $1.33 trillion in FY 2012.
  • The U.S. national debt rises at an average of approximately $3.8 billion per day.
  • The U.S. government now borrows approximately $5 billion every business day.
  • The current debt ceiling is $16.394 trillion effective Jan. 30, 2012.
  • The U.S. government has to borrow 43 cents of every dollar that it currently spends.

In the article “The 2013 Budget and Corporate Taxes” by Jonathan Masters writes:  The release of the 2013 White House budget will provide fresh grist for the fiscal policy debate in Washington as lawmakers look to balance short-term stimulus measures and the economic recovery with long-term deficit reduction and a spiraling national debt. One issue where Republicans and Democrats may be able to find common ground, analysts say, is on corporate tax reform. Both parties have acknowledged shortcomings in the current corporate tax code and support a reduction in the U.S. statutory rate as a way to increase the global competitiveness of U.S. corporations. Lowering the corporate rate and closing loopholes, or base broadening, may also provide a higher level of federal revenues. But disagreement remains on several issues, including the way U.S. multinationals are taxed on foreign profits. Corporate taxation is currently the third-largest source of federal income, fluctuating around 10% of all revenues, or 2% of GDP, in recent years. Tax breaks enacted to help drive the recovery have kept corporate income tax receipts at unusually low levels for the past three years, averaging just 1.2% of GDP– although the Congressional Budget Office expects this number to more than double by 2014. The United States has a comparatively high statutory corporate tax rate–39.2% (including state taxes) versus a OECD weighted average of 25.5%. But the effective corporate tax rate–the ratio that companies actually pay after leveraging a myriad of tax ‘loopholes’ will soon average around 26%, up from a forty-year low of 12.1% in 2011, due to new regulations. Still, business groups contend they are at a disadvantage in the global marketplace because they often face a higher effective rate than foreign competitors. The U.S. also taxes the foreign income of its firms, unlike most other large economies, encouraging many U.S. companies to keep their profits overseas to avoid the cost of repatriation. A high U.S. rate may incentivize U.S. firms to move operations overseas altogether, taking valuable jobs with them.

The White House supports deficit-neutral policy proposals that reflect cutting the statutory rate while broadening the corporate tax base. President Obama’s 2013 budget specifically calls on Congress “to immediately begin work on corporate tax reform that will close loopholes, lower the overall rate, encourage investment here at home, and not add a dime to the deficit.” In his 2012 ‘State of the Union’, the president also proposed that every multinational corporation pay a basic minimum tax that would prevent some companies from avoiding most of their tax burden. Republicans support a cutting and base-broadening strategy, but would also like to move the U.S. to a territorial tax system and exempt U.S. companies from paying taxes on overseas earnings. Critics of this policy contend it would preference foreign over domestic investment and effectively export U.S. jobs overseas. Any cut to the statutory rate should be tied to inducements for firms to invest rather than simply pocket the profit, writes Bruce Stokes for the National Journal. “Incentivizing companies to invest some of their tax savings into bonds issued by a national infrastructure bank would do so and help rebuild the nation’s eroding roads, rails, and water systems”, Stokes writes. A policy brief from the ‘Peterson Institute for International Economics’ recommends the implementation of a broad-based consumption tax to replace the high statutory corporate tax rates. Such a tax would be akin to the value-added tax or the goods and services tax used as the primary means of taxing consumption in every OECD country except the U.S. “Lawmakers should exempt U.S. firms from paying taxes on profits repatriated from foreign countries with an effective corporate tax rate of 20% or higher”, writes Harvard’s Robert C. Pozen for Bloomberg. According to Pozen, such a measure would encourage the payment of reasonable taxes and limit companies’ ability to exploit tax shelter countries like the Cayman Islands. In the New York Times, David Leonhardt says; “the U.S. corporate tax code is ‘the worst of all worlds’, with its high rate and numerous loopholes”. He argues the system makes compliance inefficient and expensive, and ultimately slows economic growth.

In the article “Quantifying National Debt- Just the Facts” by James D. Agresti writes: As of August 12, 2010, the official debt of the U. S. was $13.3 trillion ($13,317,048,837,517). As of September 30, 2009 (end of fiscal year) the U.S. had:

  • $6.5 trillion ($6,544,700,000,000) in liabilities such as federal employee retirement and veterans’ benefits.
  • $18.5 trillion ($18,538,000,000,000) in projected shortfalls in the Social Security program.
  • $33.5 trillion ($33,467,000,000,000) in projected shortfalls in the Medicare program.
  • $140 billion ($140,000,000,000) in projected shortfalls in other ‘social insurance’ programs.

These shortfalls are referred to as ‘closed group present values’ and are calculated in a manner that approximates how publicly traded companies are required to calculate their debts and obligations. The figures represent how much money must be immediately placed in interest-bearing investments to cover the shortfalls between projected revenues and expenditures for all current taxpayers and beneficiaries in these programs.

  • Combining the figures above with the national debt and subtracting the value of federal assets, the federal government has $63.6 trillion ($63,604,500,000,000) in debt, liabilities, and unfunded obligations as of September 30, 2009.
  • This shortfall exceeds the combined net worth of all U.S. households ($53.5 trillion), which includes all assets in savings, real estate, corporate stocks, private businesses, nonprofit organizations, and consumer durable goods such as automobiles, televisions, and furniture.

Last year, Standard & Poor’s cut the outlook on the U.S.’s long-term credit rating from stable to negative for the first time since World War II. While the impasse is frustrating, it is important to understand that the real hurdles are more political than philosophical. Raising the federal debt limit without first agreeing to a sweeping plan to reduce the $14.2 trillion national debt is irresponsible.   According to the Congressional Budget Office, in fiscal year 2011, the U.S. budget deficit amounted to $1.3 trillion, with federal receipts amounting to $2.3 trillion and government spending to $3.6 trillion. In short, the U.S. borrowed about 36 cents for every dollar it spent. That is lower than the 40 cents borrowed in 2009, but still very unsustainable if continued. According to the article; ‘Blueprint for Reducing Debt Lies in Cuts and Revenues’ by Mario Belotti and Chase Thomet write: It is time for the president and Congress to get together and reduce government deficit to a more sustainable level. For example: Bush tax cut should be allowed to expire for all income levels, dividend and capital gains tax rate should be increased to 20%, and most carried interest income should be taxed at the personal income tax rate. On the spending side; apart from some defense cuts, real cuts in spending must come from greater government efficiency, the elimination and consolidation of government offices, and cuts in entitlement programs. In the long run, Congress should modify the tax and spending laws in line with the proposals of the ‘Simpson-Bowles Commission’. The longer Washington waits, the higher the revenue increases and the deeper the spending cuts that will be required in future years. According to the ‘Government Accountability Office’, the U.S.’s unrestrained spending ‘will ultimately affect every citizen in the nation’. In his testimony before Congress, Congressional Budget Office Director, Peter Orszag noted; “under any plausible scenario, the federal budget is on an unsustainable path—that is, the federal debt will grow much faster than the economy over the long run. Therefore, though the decisions will be difficult, the deficit and the debt cannot continue to grow uninhibited.” From an economic standpoint, time simply is running out, and to continue to borrow at these levels is ‘utterly unsustainable and irresponsible’.

Congress must end the rise in the debt-to-GDP ratio and keep our growth in obligations in line with our growth in resources. With government expenditures now running 185% of receipts, truly major changes in both taxes and outlays will be required. A revived economy can’t come close to bridging that sort of gap ~Warren Buffet

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Changing Face of Women in Business Leadership: Reality or Myth… Stereotyping Executives– Women ‘Take Care’ and Men ‘Take Charge’

Posted on February 16, 2012 by Bizshifts-Trends
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Ultimately it’s about business performance… and the best companies in terms of performance will be those that truly embrace diversity [by] hiring, developing, and promoting women to key business leadership roles.~ Mary Fontaine

Women are transforming the face of business and society, moving into leadership roles as business owners and corporation executives. The business case for gender diversity is tangible and straightforward, and it is a platform that should resonate with all executives. A study titled “The Bottom Line: Connecting Corporate Performance and Gender Diversity” by Catalyst, examined 353 Fortune 500 companies and proved the correlation between increased gender diversity at the highest levels and improved financial performance. The findings assert that “the group of companies with the highest representation of women on their top management teams experienced better financial performance than the group of companies with the lowest women’s representation”, with a 35.1% higher ‘Return on Equity’ (ROE) and 34% higher ‘Total Return to Shareholders’ (TRS). Another study reported in the Harvard Business Review; 215 Fortune 500 firms were evaluated for their support of women executives and respective profitability. The results of this survey demonstrated that the Fortune 500 companies with a higher number of women executives outperformed the median firms in their industry. Other studies have found a correlation between gender diverse boards of directors, particularly boards with female directors, and improved performance, including higher revenues. Women currently earn more than one half of all bachelor’s and master’s degrees in the U.S. (57.3% and 58.5%, respectively), nearly one half of all doctorates and law degrees (44.9% and 47.3%, respectively), and comprise about one half of the U.S. paid labor force (46.5%).  However, women are under-represented in business leadership throughout the U.S. Women hold only less than 20% of board seats for U.S. Fortune 500 companies. Women are also under-represented in executive positions, representing less than 20% of Fortune 500 executives. These statistics suggest that although women are viewed as an important factor in an organization’s success, their limited advancement into executive and director roles indicates that barriers continue to exist.

In the report “Women and the Paradox of Power” by Dr. Anne Perschel and Jane Perdue write: Many women relate to power in ways that prevent them from attaining senior level positions, be it lack of confidence; cultural conditioning; or simply not understanding what power is. In comparison, interviews with women in senor business leadership roles at the highest levels of corporations, reveal that they have a different understanding of power and use different approaches to gain more of it. They then use their power and influence to make important changes to the culture and to leadership practices. Reshaping a male-dominated business culture, changing the ratio of women to men, and thereby improving bottom line results; requires a very specific set of actions by those currently in leadership positions, as well as by women themselves. The authors identify the key issues and solutions:

  • Know power and be powerful: Sixty-one percent of survey participants hold mistaken views about how to advance their power (and themselves). The authors emphasize that women must study power, understand power, and use their power to change the culture of business.
  • Ditch Cinderella: Over sixty percent of the participants preferred passive approaches to gaining power, opting to be granted access, rather than actively taking it. Women cannot passively wait on the business sidelines, hoping business culture will change and hand them the most powerful decision-making positions.
  • Show up. Stand Up. Voice Up: Women comprising nearly forty-seven percent of the entire workforce, holding forty percent of all management jobs, and earning sixty-one percent of all master’s degrees, they are uniquely positioned to work together and with interested men to dismantle legacy organizational barriers and stereotypes.
  • Forge strategic connections: Relationships are the currency of the workplace, yet sixty-seven percent of the women in this study are not taking charge of building their networks.
  • Unstick their thinking: Thirty-eight percent of participants opted for being well-liked rather than powerful. The authors contend this is an area where some women need to re-order their preferences and adopt both.

In the report “Global Gender Gap Report” by ‘The World Economic Forum’ measured the performance of 134 countries on gender-equality by looking at gender disparities in access to resources and opportunity over-time along economic, political, education, and health-based indicators. Iceland, Norway, Finland and Sweden maintain top rankings closing over 80% of their gender gaps, and the U.S., Mali, Pakistan, Chad, and Yemen taking the lowest rankings with around 50% of their gender-gaps yet to close. New quota requirements in Europe are placing more women at key leadership levels in European companies; reports ‘Corporate Women Directors International’ (CWDI), a non-profit research organization on women directors. In its latest report, CWDI examines the gender-diversity on corporate boards of Fortune Global 200 Companies. In Europe; Norway, Spain, France, the Netherlands, Iceland, Italy and Belgium currently uphold government-issued quotas mandating the number of seats reserved for women on corporate boards. France and Italy are showing strong gains in women’s boardroom representation with women directors comprising 20.1% and 9.2% of seats on corporate boards, respectively.

In the article “Why Women Leaders Need Self-Confidence” by Leslie Pratch writes: I headed research at the University of Chicago investigating the longer-term personality predictors of leadership. Among the relationships examined were those among gender; coping and motivation, in the evaluation of leadership effectiveness. Among the particularly striking findings of this research were the differences between men and women on measures of active coping. In a nutshell, we took measures of; coping, motivation, and intelligence at the beginning of the study. At the end of the study, we assessed the ability of these measures to predict leadership effectiveness as evaluated by peers, superiors, and subordinates. We found that the only measure that predicted leadership for men and women alike was an overall measure of active coping, which  indicates the ability to respond adaptively to stress and to grow. Gender-based expectations for behavior, influence the styles and evaluations of leaders. Women are expected to display high levels of social (communal) qualities, including; needs for affiliation, a tendency to be self-sacrificing, concern with others, spontaneity, and emotional expressiveness. Men are expected to display high levels of agentic qualities, those associated with acting or exerting power, including; independence, assertiveness, self-confidence, and instrumental competence. The correlation between self-confidence and leadership effectiveness was also overwhelmingly statistically significant. As a whole, these findings indicate that women have to have high self-esteem and high self-confidence while leading in a communal style, in order to be perceived as effective leaders. In short, they must be stronger copers in order to transcend the constraints placed on their business leadership style.

In the article “As Leaders, Women Rule” by Rochelle Sharpe writes:  New studies find that female managers outshine their male counterparts in almost every measure. That’s the essential finding of a growing number of comprehensive management studies conducted by consultants across the country for companies ranging from high-tech to manufacturing to consumer services. By and large, the studies show that women executives, when rated by their peers, underlings, and bosses score higher than their male counterparts on a wide variety of measures; from producing high-quality work to goal-setting to mentoring employees. Using elaborate performance evaluations of executives, researchers found that women got higher ratings than men on almost every skill measured. Ironically, the researchers weren’t looking to ferret-out gender differences. They accidentally stumbled on the findings when they were compiling hundreds of routine performance evaluations and then analyzing the results. The gender differences were often small, and men sometimes earned higher marks in some critical areas, such as strategic ability and technical analysis. But overall, female executives were judged more effective than their male counterparts. ”Women are scoring higher on almost everything we look at,” says Shirley Ross. Women think through decisions better than men, are more collaborative, and seek less personal glory; says the head of IBM’s Global Services Div., Douglas Elix. Instead of being motivated by self-interest, women are more driven by ”what they can do for the company”, Elix says. Professor Rosabeth Moss Kanter, Harvard Business School, author of the 20-year-old management classic book, ‘Men and Women of the Corporation’, says; ”Women get high ratings on exactly those skills needed to succeed in the global Information Age, where teamwork and partnering are so important.”

The concept of business leadership is changing; however, there is a clear double standard: Studies show: ‘Male CEOs and senior vice-presidents got high marks from their bosses when they were forceful and assertive and lower scores if they were cooperative and empathic. The opposite was true for women: Female CEOs got downgraded for being assertive and got better scores when they were cooperative’. Concluding that at the highest levels, bosses are still evaluating people in the most stereotypical ways. That means that even though women have proven their readiness to lead companies into the future, they’re not likely to get a shot until their bosses are ready to stop living in the past. But if women are so great, why aren’t more of them running the big companies? According to ‘boomerdivanation.org’; there’s still a pipeline problem: Most women get stuck in jobs that involve human resources or public relations; posts that rarely lead to the top. At the same time, female managers’ strengths have long been undervalued, and their contributions in the workplace have gone largely unnoticed and unrewarded. Companies are now saying they want the skills women typically bring to the job, but such rhetoric doesn’t always translate into reality. These under-currents of bias are forcing many women to seek other career opportunities, such as, starting their own businesses.  As of March 2011, there were 10.1 million businesses owned by women, making up 40% of all private businesses. Many women admit that because they spend so much time focusing on getting results, they don’t think enough about strategy and vision; qualities that Harvard’s Kanter says, are still the most important in a top executive. ”If women are seen as only glorified office facilitators but not as tough-minded risk-takers… they will be held back from the CEO jobs.” says Kanter,  In the end, it takes a lot more than competence to make it to the top. Getting the best performance evaluations in the company’s history may not be nearly enough. ”When you actually sit down in a selection committee to choose the CEO, lots of subtle assumptions come into play,” said Deborah Merrill Sands. Companies may say they want collaborative leaders, but they still hold deep-seated beliefs that top managers need to be heroic figures. The bottom line is that the business case for diversity is strong. Companies with gender diverse leadership teams have seen the positive results and are outperforming those without women at the helm. The prospect for improved financial performance is a business case that cannot be ignored.

We knew we had to be twice as good, twice as reliable, and twice as tough-minded as the bright young men who surrounded us, and we worked like horses to prove our worth. ~Ellen Kaden

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Think Outside The Box– Doesn’t Work: Think Inside The Box for Innovation, Transformation, Change… Stay In the Box and Get Results

Posted on February 13, 2012 by Bizshifts-Trends
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We’re concentrating on the things we are good at. The minute we started doing just that, the company has come alive… I’m 100 percent focused on movies. I don’t ‘think outside the box’. I’m loving playing in the ‘box’. ~Harvey Weinstein 

Think outside the box, think beyond the box, think out of the box…  is to think differently, unconventionally, or from a new perspective. This phrase often refers to novel or creative thinking. The catchphrase, or cliché, has become widely used in business environments… To think outside the box is to look further and to try not thinking of the obvious things, but to try thinking beyond them. What is encompassed by the words ‘inside the box’ is analogous with the current, and often unnoticed, assumptions about a situation. Creative thinking acknowledges and rejects the accepted paradigm, and to come up with new ideas. According to Christopher Peterson: We’ve gotten so accustomed to thinking that ideas need to come about in new and exciting ways that we often neglect the utility of established paradigms. When crafting your ideas, first think inside the box before you look outside. Most who think seriously about creativity agree that it entails not only novelty (that outside the box stuff) but also utility, and in order to be useful, it has to go above-and-beyond what is already known (that inside the box stuff). This is not a new idea, but that’s kind of the point. It’s about embracing what’s been done before, because it’s practice that gives us the capacity to build on the old ideas to make the new:Psychologists who study prodigious accomplishments, in science, music, or art, speak about the 10,000-hour rule, meaning that in order to do something notable in some field, one must devote 10,000+ hours to mastering the discipline in question. Practice, practice, and practice; and appreciate that much of this practice needs to be done inside the box.  If you never venture ‘outside the box’, you will probably not be creative. But if you don’t get ‘inside the box’, you will never get ‘outside the box’.

In the article “Thinking Inside the Box” by Naomi Karten writes: The problem with urging outside the box thinking is that many of us do a less than stellar job of thinking inside the box. We often fail to realize the options and opportunities that are blatantly visible ‘inside the box’ that could dramatically improve our chances of success. Often we fall victim to familiar traps, such as doing things the same old (ineffective) way or discounting colleague and teammate ideas. Thinking outside of the box can generate innovative and ingenious ideas and outcomes, but the results will flop when teammates ignore the ideas ‘inside the box’. If I had a doughnut for every time someone advocated thinking outside the box, I wouldn’t be able to squeeze ‘inside the box’ to point out the flaws in this idea.  Outside the box thinking can generate ideas for processes, techniques, and outcomes that are innovative, and WOW-generating. But the resulting ideas will flop in a climate in which the people involved ignore the ‘inside the box’ ideas.  The next time you hear someone urge outside the box thinking, see if the situation is one in which those involved have overlooked the possibilities ‘inside the box’. And whenever you hear a claim about someone having done outside the box thinking, see if you agree. Or might the thinking have actually taken root well within the box?  Our challenge is to look around from our perch ‘inside the box’ and ask: What options and opportunities are right here in the box for the taking?

In the article “Think Inside the Box” by Fred Nickols writes: What’s wrong with what’s ‘inside the box’?  How would you know if you did get ‘outside the box’? My answer is that you wouldn’t. You couldn’t. All you can recognize is what your box will let you recognize. We’re talking about learning, growing, improving, changing and being open to new ideas and ways of thinking. We’re talking about your mind– and mine– and everyone else’s. But we can’t get outside our minds. However, we can do something about what goes on in there.  The best thing you can do is open the box. You see, the stuff in a closed box is fixed, static, unchanging, and quite literally in the dark. If you open the box, you can let new stuff-in and that new stuff will interact with the old stuff and create some more new stuff ‘inside the box’. Then, you can change what the box has in it and what it can do, but you don’t need to get ‘out of the box’ to do that; you just need to let more stuff-in. Another thing we can do is bring together a bunch of different boxes and let their interactions generate stuff that’s not to be found inside any one of the boxes. Once that’s done, this new stuff is now ‘inside the box’. (Well, it makes its way inside the ones that were open. The closed ones don’t change.) So, the next time someone starts blathering and babbling to you about the importance of thinking outside the box, just smile and say, ‘That sounds like a really good idea. Just exactly how do you do that?’ If you get some good answers, let them ‘inside your box’ and make use of the ideas. Focus on keeping the box open and keep-on putting more good stuff into it. Then just maybe, the box will be satisfied with all the good stuff inside, and ignore all that advice to think outside.

In the article “Thinking Inside the Box” by Henry King writes: Boundaries help focus attention on problems, and help limit the process of finding solutions. In this case limit is not a bad thing…there are so many possibilities; we can make ourselves dizzy just thinking about the next option, the next change. Without boundaries, we can keep thinking forever. For innovation to materialize, we need to get beyond the thinking phase and into the ‘doing’ phase. Of course the flip side of the argument is that if we never break the rules… if we keep the blinders on… we risk making only incremental innovation, and not game changing advancements. Boundaries are useful for adding efficiency to the innovative process. In this way boundaries serve as inspiration, until we learn what we need to change.

In the  article “Stop Thinking Outside the Box” by Dan Pallotta writes: The exhortation to think outside the box has become ubiquitous in business. So much so that it has become the new box inside of which everyone thinks. It pays lip service to the notion of transformation without really understanding the difference between transformation and change, and often without tolerance for the real thinking that must occur for an idea to be truly outside the existing paradigm. But worse than that, the advice is backwards. You cannot possibly think outside the box unless you understand the nature of the box that bounds your current thinking. You must come to know that nature deeply. You must have real insight into it. You must accept it, and embrace it at some level, before it will ever release you. There’s a Zen saying, “What you resist persists, and what you allow to be, disappears.” Thinking outside the box without understanding the box is a petulant exercise in resistance; every idea that comes from the process has the box written all over it. It’s a reaction to the box. It’s fighting the box. It’s a child of the box. So figure out the box you’re in. If you try to get out before you understand the box’s parameters, you’ll just stay stuck inside of it. And that’s exactly what it wants.

In the article “For a Creativity Boost, Think Outside the Box… Literally” by Kate Shaw writes:  It happens in schools, cubicles, and boardrooms everywhere: someone working on a project hits a mental block. A boss or teacher might resort to a cliché like think outside the box or put two and two together, encouraging a creative solution to the problem. As it turns out, this isn’t just abstract advice. According to an article in Psychological Science it says; ‘that literally working outside of a box or putting two halves of something together just might help those creative juices start flowing again’.  Since physical metaphors regarding creativity are so common and appear in several different languages, a group of researchers hypothesized that they may extend beyond mere clichés. Their study showed that metaphors really affects how our minds work, and thinking outside the box does encourage creativity. Acting out metaphors linked to creativity really can help us think creatively. In fact, it does more than just let us access the knowledge we presently have; it encourages us to come up with new, unique, and creative ideas. Next time you’re stuck on a problem, take a minute to ponder– or even act out– your favorite metaphor, and you might happen upon a creative solution.

In the article “Think Inside the Box” by Tim Sanchez writes:  Think outside the box is a just another way of saying, ‘we need to be creative, innovative, and find new ways to increase market share.’ It’s fun to say, but the reality is that parameters and constraints are necessary in nearly every business decision you’ll ever make. They provide limits, guidelines, budgets, goals… all of the things that wise decisions typically require. Here’s the trick: The ‘box’ can get bigger… much bigger. Change is hard, but often a necessary evil when tackling things; such as, customer experience initiatives… I think our job is to push the parameters of the ‘box’ until we can attack and accomplish what needs to be done. The more the box expands, the more innovative we can be with our customers.

Think out of the box has come to mean thinking of a solution that is somehow outside of what you already know and do, coming up with something wholly new. Sounds great, but does it work? According to Andrew B. Hargadon: Pushing people harder to think out of the box doesn’t work. Many of the revolutionary ideas in the technologies and arts don’t come from the person who solves the problem by thinking out of their box. It comes from the person who has seen the right solution already somewhere else; who has other boxes to think in. People don’t think out of the box. They think in other boxes. The difference is that the new market hasn’t seen those other boxes before. If a manager pushes employees, or we push ourselves, to come up with something new, to think out of the box, we won’t get the results we want. So instead of thinking out of the box you ask them to analogize: Think of other boxes that are similar. Think of other places where this might have been done before. The farther afield you go the more revolutionary will be the ideas you find…

Innovation is a necessity in business, but it will only succeed if you already know the ‘Box’; both ‘inside and outside’ ~ Kirk Cheyfitz

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Comparing Global Decision Making Styles: U.S., China, Japan, Europe, Germany, U.K… Middle East…

Posted on February 9, 2012 by Bizshifts-Trends
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Informed decision making comes from a long tradition of guessing and then blaming others for inadequate results. ~Scott Adams

Globalization creates a need to know how managers in different parts of the world make decisions: Business leaders, globally, have a distinctive prevailing decision style that reflects differences in cultural values and the relative needs for achievement, affiliation, power, and information. The decision making process and value systems influence the overall approach of decision makers from various cultures. The relative level of utilitarianism versus moral idealism in any society affects its overall approach to problems. Generally speaking, utilitarianism strongly guides behavior in the Western world. In fact, research has shown that U.S. executives are more influenced by a short-term, cost-benefit approach to decision making than their Asian counterparts. U.S. managers are considerably more utilitarian than leaders from China, who approach problems from a standpoint of moral idealism; they consider the problems, alternatives, and solutions from a long-term, societal perspective rather than an individual perspective.  Another important variable in companies’ overall approach to decision making is that of autocratic versus participative leadership. In other words, who has the authority to make what kinds of decisions? A country’s orientation whether it is individualistic or collectivist influences the level at which decisions are made. In many countries with hierarchical cultures: Germany, Turkey, and India, among others, the authorization for action has to be passed upward through echelons of management before final decisions can be made. Most employees in these countries simply expect the autocrat, the boss, to do most of the decision making and would not be comfortable otherwise. Even in China, which is a highly collectivist society, employees expect autocratic leadership because their value system presupposes the manager to be automatically, ‘the most wise’. In comparison, in the Scandinavian countries, decision making authority is decentralized and built on consensus. Americans talk a lot about the advisability of participative leadership, but in practice they are probably around the middle between autocratic and participative management styles. A country’s culture affects how fast or slow decisions tend to be made. The pace at which decisions are made can be very disconcerting for outsiders. North Americans and Europeans pride themselves on being decisive; managers in the Middle East, with a different sense of temporal urgency, associate the importance of the matter at hand with the length of time needed to make a decision. For example, a hasty American would insult a Middle East customer by pushing for a quick decision; it would reflect a low regard for the relationship and the deal.

Under the European model, decision making is typically done in groups reaching consensus, rather than by single manager commands. According to Andrew Kakabadse, Cranfield University Professor and his colleagues; they identified four basic European styles: consensus (Finland, Sweden), managing from a distance (France), working towards a common goal (Germany, Austria), and leading from the front (UK, Ireland, Spain). Executives from Finland and Sweden use consensus to manage their workforce. In England, decision making is slower than in the U. S., therefore it is unwise to rush the English into making a decision. In Germany, personal relationships are not needed to do business. The Germans are more interested in your academic credentials and the amount of time your company has been in business. Germans display great deference to people in authority, so it is imperative that they understand your level relative to their own. Following the established protocol is critical to building and maintaining business relationships. Germany is heavily regulated and extremely bureaucratic. Decision making is held at the top of the company. Final decisions are translated into rigorous, comprehensive action steps that you can expect will be carried out to the letter.  Avoid confrontational behavior or high-pressure tactics. It can be counter productive. Once a decision is made, it will not be changed.

In the article “Comparing the Decision Styles of American, Japanese and Chinese Business Leaders” by Maris G. Martinsons writes:  A survey of Japanese and Chinese managers found that they perceived Western (particularly American) thinking to differ vastly from their own way of thinking. They characterized Western thinking as; objective, analytic, cerebral, and impersonal, as opposed to a self-perception of; subjective, synthetic, emotional, and personal thinking. The Western distinction between the rational and the irrational may also contrasted with the Japanese concept of  ‘omoi’, which bridges the two. In this study; American, Japanese, and Chinese business leaders were each found to have a distinctive national style of decision making. The American decision style reflects a comparatively higher need for achievement. Business leaders in the U.S. tend to make decisions that either respond to challenges or create opportunities for their efforts to be recognized and praised by others. More generally, American managers have a tendency to ‘analyze’ situations and/or ‘conceptualize’ potential solutions. This mindset encourages a structured and formalized decision making process. In contrast, the Japanese and Chinese decision styles reflect comparatively high needs for affiliation and personal power, respectively. Japanese business leaders tend to favor decision making outcomes that preserve already established relationships or help to cultivate new ones. Meanwhile, the strong Japanese need for affiliation also limits management’s ability to change the social structure of a business network in response to a competitive challenge. The ability to maintain and exercise power was found to be a key factor for Chinese business leaders. In a China-U.S. joint venture, their desire to maintain a high degree of control could become a source of conflict. American managers will likely try to change the organizational power structure in order to improve business performance. Enduring differences in decision making tendencies continue to hinder the global transfer of management knowledge. Business leaders who prefer to make decisions in different ways are unlikely to accept a universal set of management principles or ‘best’ practices. International business people must thus be able to accommodate different decision making styles in order to be successful.

In the article “Cultural Differences in Decision Styles” by Brittany Goss writes:  Different cultures utilize different decision styles. There are many different ways in which individuals come to a decision, but there are also differences in decision styles between cultures. Companies, managerial systems and governments make decisions differently in different cultures. It is important to understand and respect these cultural differences in decision styles in order to foster positive cross-cultural communication. U.S. culture operates on debate and discussion between opposing parties that leads to democratic decision making. Americans also tend to utilize a hierarchy, whereby someone in a management position can occasionally overrule the vote or make a decision without consulting a team. Japanese citizens will often make a decision by consensus rather than majority. This means that everybody in a group has to agree on an idea before the group takes action. Japanese style decision making focuses on understanding multiple alternatives rather than a single ‘right’ answer. Chinese managers tend to be more hierarchical in their decision making processes. They tend not to ask employees for their ideas, but to make the decisions themselves. The power distance between employer and employee is significantly larger in China than it is in either American or Japanese managerial systems. The Chinese typically seek to maintain social order through a harmony-within-hierarchy arrangement.

In the Middle East, as a region, it is important to bear two things in mind. First, the Middle East is not a homogenous region. The area is not solely populated by Arabs but also Kurds, Turks, Iranians and more. In addition, it not only inhabited by Muslims. There are many manifestations of Islam across the region that lives alongside Christianity, Judaism and Zoroastrianism. In the Middle East, Arab managers have long traditions of consultative decision making, supported by the Koran and the sayings of Mohamed. However, such consultation occurs more on a person-to-person basis than in group meetings, and thus diffuses potential opposition. While business in the Middle East tends to be transacted in a highly personalized manner, the final decisions are made by the top leaders, although there is a level of consultation with others called ‘shura’. It’s important not to only concentrate on building relationships with decision makers, but also those that advise them. Relationship driven cultures usually have the following traits:

  • Collectivist: ‘We’ takes precedence over the ‘I’. This group mentality means the interests, opinions, and decisions of the group carry much more weight than that of the individual.
  • Family: Family or tribe takes central focus in daily life. In such cultures very tight relationships are built with a small group of people whereas in more individual cultures people tend to have loose relationships with many people.
  • Hierarchy: The Boss takes sole control, and the staff will expect explicit orders and guidance. Meetings will be where decisions are implemented, rather than discussed. Very formal relationships exist with the boss.
  • Honor/Shame/Face: Emphasis on maintaining face, i.e. upholding the family/tribal honor. As a result there are usually very complex rules of engagement and communication styles. A simple example; instead of getting a ‘no’ you may get ‘I will try’, ‘Let’s do our best’ or ‘God willing’.

In the article “Influence of Chinese Culture on Decision Making Styles & Processes” by Natalie Smith writes:  China is home to many skilled businessmen and politicians. To the uninitiated, Chinese decision making can seem mysterious, or even, for some Westerners who rely on scientific thinking, erroneous. However, decision making in China has logic of its own, and this logic is based on several factors. These factors include the Chinese preference for ‘inductive reasoning’, and to look at the big picture when making decisions. Inductive reasoning starts with general observations and uses these observations to form a conclusion. On the other hand, Western thinking is based on ‘deductive reasoning’, in which a hypothesis or idea is proposed and then evidence is gathered and a decision is made based off the evidence. Neither way is correct or incorrect; the two styles of reasoning are just different. Then there is ‘guanxi’, which is based-on the Confucian principle of caring for family and close friends. Under the principle of guanxi, there is no black and white answer based on the context of the situation. The Chinese are very oriented toward the long-term, and persevering and considering the long-term implications of a decision are very important. Confucianism still influences Chinese decision making in many ways, and it considers the welfare of society as a whole, rather than the happiness or needs of individual people or families.

According to ‘Rowe & Boulgarides’; the process of decision making depends on many factors, including; ‘the context in which a decision is made, the decision maker’s way of perceiving and understanding cues, and what the decision maker values or judges as important’. Two significant influences on decision making are values and cognitive perception. Both affect how a decision maker interprets and responds to particular stimuli and conditions.  However there is a dilemma; with all of these cultural differences in decision-making styles, how are people going to work together? It is important to build knowledge and respect for cultural differences when working across cultures. Managers and teams can learn from the decision making styles of other cultures, enabling them to try new approaches. None of the decision styles are the ‘right’ way to make a decision; they are only different. Styles can be combined for a variety of purposes in different situations, fostering flexibility and cross-cultural understanding. The existence of different decision making approaches is widely acknowledged, but remains poorly understood. As global interactions increase, there is a growing need to know how managers make decisions in different parts of the world. ‘Rowe & Boulgarides’ assert that: “Knowing an individual’s decision style pattern, we can predict how he or she will react to various situations.”

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Organizations Are Not Eternal–They Fail: In Fact, Some Organizations Are Not Built to Succeed… Seeds of Success and Why Companies Fail

Posted on February 6, 2012 by Bizshifts-Trends
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Companies must learn to celebrate and support people within the organization who are willing to challenge the status quo, to bring totally different perspectives on delivering value to customers, and to take experimental risks to explore new business models.

Companies are born, companies fail, capitalism moves forward; ‘creative destruction’, they call it, and what Paul O’Neill, former U.S. Treasury Secretary, called ‘the genius of capitalism’. “There is a myth, a misconception, floating around the universe that companies fail for millions of reasons”, says Mark Stevens. “That every death of the entrepreneurial dream is the result of a separate and distinct story unrelated to any other. But the fact is, every company I have ever worked with that is dysfunctional, bleeding, damaged and en route to a head-on collision with disaster lacked basic fundamentals…”  In the writings of Gary Hamel he says; most businesses were never built to change; they were built to do one thing exceedingly well and highly efficiently, ‘forever’. That’s why entire industries can get caught by change. In a world where change is shaken rather than stirred, the only way a company can renew its lease on success is by reinventing itself root and branch, before it has to: A feat that even the smartest companies have trouble pulling off.  Without doubt, the greatest threat to success is success itself: Success corrupts. Hamel continues, saying; given enough time and enough incrementally myopic decisions, companies will eventually run out of momentum. Strategies start to die the moment they’re born. While death can be delayed, it can’t be avoided. Autopsies reveal three primary causes of death.

  • Clever strategies get replicated.
  • Venerable strategies get supplanted.
  • Profitable strategies get eviscerated.

The seeds of failure are usually sown at the heights of greatness; that’s why success is so often a self-correcting phenomenon. Years of continuous improvement produce an ultra-efficient business system; one that’s highly optimized, and also highly inflexible. Successful businesses are usually good at doing one thing and one thing only. Over-specialization kill adaptability; but this is a tough trap to avoid, since the defenders of the status quo will always argue that eking out another increment of efficiency is a safer bet than striking out in a new direction…

In the article “Why Companies Fail” by Ram Charan and Jerry Useem write:  CEOs offer every excuse but the right one; their own errors. Corporate collapses involve many breakdowns, including; ethics, trust, common sense, and that’s just to name a few. But perhaps the most troubling breakdown is in corporate oversight: Directors, senior executives, and Wall Street analysts all failed miserably by missing–or concealing–danger signals until it was too late. Regulators will no doubt have plenty to say on the issue, but the most zealous reformers should be the companies themselves. They can begin with three changes that, taken together, will provide a better early warning system against failure:

  • Reengineer the Board of Directors. Remember re-engineering? It was applied to every corner of the corporation at one point or another–except the Board. That needs to change. Incompetence is not the problem. Boards can be full of very capable people, and yet be totally ineffective as a group. Boards are the heart and soul of a company and they must act responsibly to identify and prevent trouble before it becomes a crisis.
  • Turn employees into corporate governors. Regular employees; not executives, not directors, not shareholders, have the most to lose when a company fails. With their jobs, pensions, and stock-option wealth on the line, it follows that they have a greater incentive than anyone to act as company watchdogs. Yet few companies tap this built-in alarm system.
  • Banish EBITDA. Companies hit the skids for all sorts of reasons, but there is one thing that ultimately kills them: They run out of cash. Yet most managers are too preoccupied with measures like EBITDA (earnings before interest, taxes, debt, and amortization) and ‘return on assets’ to give cash much notice. Boards don’t ask for it. Analysts don’t analyze it. Corporate financial statements do typically include a statement of cash flow, but it’s a crude snapshot that excludes off-balance-sheet items and doesn’t show where the cash comes from. The solution is a detailed, easily readable cash-flow report. Give it to the Board. Give it to employees. Break out cash flow by division, letting people track the company’s blood-flow themselves.

In the article “Why Companies Stagnate and Fail” by John W. Davin writes: Success breeds arrogance. Caretaker executives who’ve never been entrepreneurs and have never built something out of nothing are prone to view success as an entitlement, rather than the result of innovation, gut-wrenching decisions and perseverance. Isolated from the bleeding edge of change by subservient minions, they start believing their own speeches. Unlike Andy Grove, Intel’s former CEO, they aren’t perpetually paranoid. Instead, they’re naively confident and therefore prone to under-estimate threats and discount new competitors. These aren’t the only things that can turn leaders into also-ran, but they’re the ones I’ve encountered most often. To the question; “can an organization die an untimely death?” an economist would answer ‘no’: “Institutions die when they deserve to die, that is, when they have shown themselves perpetually incapable of fulfilling stakeholder demands”. There are many causes why companies fail or stagnate, but four reasons continue to come up in almost all cases.

  • No Vision, strategy or strategic business plan.
  • Weak or ineffective management.
  • Lack of information and control systems.
  • Under capitalization.

In the article “Why Has Anyone Ever Failed?” by Bill Gluth writes: The only reason anyone has ever failed is they didn’t take action when it was most needed.  They sat on the sidelines trying to figure out what to do, or they took the wrong action and it cost them dearly. There are really only a few reasons for failure:

  • They didn’t know what action to take.
  • They didn’t trust their own knowledge and personal intuition in moving forward.
  • They looked at their options for so long they became paralyzed. This is often called ‘analysis paralysis’.

According to statistics from the Association of Insolvency and Restructuring Advisors (AIRA), the majority of business failures (67%) are caused by internally generated problems within the control of management; not by bad luck or external events like an economic recession. Being accountable is a crucial step to overcoming the obstacles that face management.  Without someone taking ownership of a problem, nothing changes. Waiting for an external factor, outside of your control, in order to have a reason to change is a sure-fire recipe for business failure.  According to Gary Hamel: “To thrive, in turbulent times, organizations must become a bit more disorganized; less buttoned down, less uptight, less compulsive, less anal.” Strategies get old and, in recent years, strategy life cycles have been shrinking and, sooner or later, every strategy dies. The signs of advancing age are always visible; if you’re looking for them. As William Gibson once said, “The future has already happened, it’s just unequally distributed.” To see it coming, managers have to pay attention to nascent technologies, unconventional competitors and un-served customer groups. The future will sneak up on you unless you go out looking for it. It’s not enough to spot trends, you have to think through their implications and how they’ll interact; and then develop contingency plans appropriate to each scenario. The more time a company devotes to rehearsing alternate futures, the quicker it will be able to react when one particular future begins to unfold.

In the April 16, 1999, an issue of the ‘Informant’ writes: “An organization is like a tree full of monkeys, all on different levels, some climbing up, some falling down, most just swinging round and round. The monkeys on top look down and see a tree full of smiling faces. The monkeys on the bottom look up and see nothing but ass-holes.”  Too often CEOs succumb to an undisciplined lust for growth, accumulating assets for the sake of accumulating assets. Why? It’s fun. There are lots of press conferences. It’s what powerful CEOs do. No one likes a good growth story better than Wall Street…. When companies run into trouble, the desire for a quick fix can become overwhelming. The frequent result is a dynamic that Jim Collins describes in his book ‘Good to Great’; “vacillated, shifting from one strategy to another, always looking for a single stroke to quickly solve its problems. [It] held pep rallies, launched programs, grabbed fads, fired CEOs, hired CEOs and fired them yet again.” Lurching from one silver bullet solution to another, the company never gains any traction. Collins calls it the ‘doom loop’, and it’s a killer.  Company failure has many parents, but the most critical of these is a breakdown in how executives perceived reality for their companies, how people within an organization faced up to their reality, how information and control systems in organizations were mismanaged, and how organizational leaders adopt spectacularly unsuccessful habits. Most companies don’t change until they are in pain… on the verge of dying… then, it’s too late… Companies must be truly proactive and adaptive to succeed…

When executives look at new opportunities they see them through the lens of the current business model and view them as competing with the current way the organization creates, delivers, and captures value. Organizations fail at business model innovation because they blindly take cannibalization off the table even if a new business model may have significant upside potential.

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Manifesto or False Assumptions or Rubbish: Web Economy to Reach $4.2 Trillion in a World Economy of Over $80 Trillion…

Posted on February 2, 2012 by Bizshifts-Trends
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Leaving aside the question of whether economics has ever accurately predicted anything, the argument that ‘the more significant the theory, the more unrealistic are the assumptions’ is simply bad philosophy. ~Steve Keen

The World Economy in 2010 was worth $74.007 trillion in GDP terms, using the Purchasing Price Parity (PPP) method of valuation. This is expected to grow to $78.092 trillion in 2011. Fueled by the rapid growth of mobile Internet access, the value of Web Economy will nearly double, from $2.3 trillion to $4.2 trillion in G20 countries by 2016, in a report by the  Boston Consulting Group (BCG). “If the report’s predictions are correct, then speaking of a ‘web economy’ will soon become redundant terminology, and this could be reached as early as 2020” says David Dean, managing director at BCG. The Web is the largest human information construct in history. The Web has transformed the way we live, communicate, entertain, work, and doing research. Nowadays, more than 2 billions users, worldwide, are accessing some trillion web pages, spending 700 million minutes per month in Facebook, ordering 73 items per second in Amazon, and sending 1.3 exabytes from mobile Web devices. During the last decade, the Web has been metamorphosed from an information software system to a major socio-technical ecosystem and this has transformed and transforms human societies. Web technologies have been proven to be an enormous stimulus for market innovation, economic growth, social discourse and the free flow of ideas. After the hard lesson of the dot-com bubble in early 2000’s, the Web economy is now an important part of the real economy, bigger and more robust with new services ranging from search to social networking, virtual entertainment and giant multi-stores. But this also raises concerns, notably in the area of reliability, scalability, security and openness of access. If global supply chain management depends on the Web, then a breakdown or security breach could cause major economic damage. If people’s personal data are compromised online, it may breach their privacy or affect many other aspects of their lives. Looking forward, the Web is poised to connect an ever-greater number of users, objects and information infrastructures. This means that the policy framework governing its use and development also needs to be adaptable, carefully crafted and coordinated across policy domains, borders and multiple stakeholder communities…

In the report “The Digital Manifesto: How Companies and Countries Can Win in the Digital Economy” by Boston Consulting Group (BCG) writes: Businesses will be fundamentally transformed over the next five years. “No company or country can afford to ignore this development. Every business needs to go digital. The ‘new’ Internet is no longer largely Western society, accessed from your PC. It is now global, ubiquitous, and participatory” said David Dean, coauthor of the report. Consumers are starting to derive extraordinary value from the Internet, according to the BCG report. The uninterrupted growth of the Internet economy is not a foregone conclusion and businesses need to take an adaptive approach to strategy: Managing their legacy businesses while creating new ones, developing new capabilities, organizational structures, and cultures. “We are still only at the beginning of realizing the potential of the Internet. To compete, companies need to strengthen what we call their digital balance sheets by building their digital assets and reining in their digital liabilities to create digital advantage” said Paul Zwillenberg, coauthor of the report. The report also urges that governments must take actions that support rather than impede progress. “In setting policies, government should be guided by what is needed to encourage growth, innovation, and consumer choice rather than by dogma. In most areas, governments should let the market sort out the winners and losers” said Zwillenberg. The biggest drivers are; dramatic increase in the number of users around the globe, rise of emerging markets, increasing popularity of mobile devices–especially smart phones, and growth of social media. The economic impact of the Internet will grow from 1.9 billion users in 2010 to a projected 3 billion users in 2016, about 45% of the world’s population.

In the article “Understanding the Economic Potential of the Web Economy” by Tim Weber writes: The Boston Consulting Group (BCG) report’s projected numbers look impressive, but they are still just a fraction of the global economy. “We don’t fill empty holes on websites any more, we engage customers” says Michael Lazerow, CEO of Buddymedia.  In 2010, the internet economy in the G20 group of leading nations was worth $2.3 trillion, but a mere 4.1% of the total size of all G20 economies. The Boston Consulting Group researchers speak of the emergence of a ‘new internet’ where: web access will not be a luxury any more, and the majority of web users will live in emerging markets (within four years, China is expected to be home to 800 million people using the Internet; that is more than the United States, India, France, Germany and the UK taken together) about 80% of all Internet users will access the web from a mobile and the Internet will go social and allow customers and companies to engage with each other directly. This trend will be coupled with another huge technology shift that will fundamentally change the nature of how to run a business – the rise of the so-called ‘internet of things’, where all kinds of devices, widgets, sensors… will be connected to the web. “Understanding the economic potential of the web should be an urgent priority for leaders… [with] a powerful case for countries and companies to get online and reap the rewards of an age of data” says Patrick Pichette, Google CFO. IBM estimates that by 2015, one trillion devices will be internet-connected. However, what the BCG research fails to capture is the balance of employment between new, more efficient digital companies and old-style businesses. A problem with BCG’s research is that it’s difficult to define the actual digital economy: “During the research we discovered very quickly that there is no approved way of measuring the Internet economy” says David Dean. Official statistics simply do not capture the sideways move of old technologies into the digital world; for example, when a widget maker starts upgrading its devices so that they can be hooked up to the internet…

In the article “The Great Transformer: The Impact of the Internet on Economic Growth and Prosperity” by James Manyika and Charles Roxburgh write: The Internet is changing the way we work, socialize, create and share information, and organize the flow of people, ideas, and things around the globe. Yet the magnitude of this transformation is still underappreciated. The Internet accounted for 21% of the GDP growth in mature economies over the past 5 years. In that time, we went from a few thousand students accessing Facebook to more than 800 million users around the world, including many leading firms, who regularly update their pages and share content. While large enterprises and national economies have reaped major benefits from this technological revolution and individual consumers; small upstart entrepreneurs have been some of the greatest beneficiaries from the Internet’s empowering influence. If Internet were a sector, it would have a greater weight in GDP than agriculture or utilities. Yet, we are still in the early stages of this transformations that the Internet will unleash and the opportunities it will foster. As a result, governments, policy makers, and businesses must recognize and embrace the enormous opportunities the Internet can create; even as they work to address many of its risks…

The Internet is a vast mosaic of economic activity, ranging from millions of daily online transactions and communications to smart phone downloads of TV shows. Little is known, however, about how the Internet in its entirety contributes to global growth, productivity, and employment. According to new McKinsey research that examined the Internet economies of the G8 nations (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States), as well as Brazil, China, India, South Korea, and Sweden. It found that the Internet accounts for a significant and growing portion of global GDP. The extensive study “Internet matters: The Internet’s sweeping impact on growth, jobs, and prosperity” by the McKinsey Global Institute (MGI), includes these findings:

  • The Web accounts for 3.4% of overall GDP in these thirteen countries. More than 50% of this relates to private usage (mainly advertising and online purchases). The Web economy now exceeds sectors such as agriculture and energy.
  • In the mature countries studied (the G8 countries plus South Korea and Sweden), McKinsey found the Web to have accounted for as much as 21% of GDP growth between 2004 and 2009.
  • McKinsey found most of the economic value of the Web to fall outside the technology sector with 75% of the benefits captured by the more traditional industry sectors.
  • In Sweden (the country where the Web economy has had the biggest contribution to GDP growth), the Web economy contributed to as much as 15% of GDP growth between 1995 and 2009 and 33% between 2004 and 2009. Germany comes second with 14% between ’95 and ’09 and 24% between ’04 and ’09.

All these numbers sound amazing, except that they still only represents a tiny proportion of the World Economy: It’s around 5% of the total world economy; yes, we have ways to go. While the BCG’s Web Economy projections sound like a major shift, they’re actually slightly more conservative than other estimates… A report from Ericsson, for example, predicts mobile data subscriptions will hit five billion in 2016, 10 times larger than the current figure. However, the big takeaway for worldwide businesses is pay more attention to the Web; it’s critical for the survival and growth of the business…

Economics is the intellectual ‘Trojan Horse’ of our time with political propaganda hidden by known-false assumptions. The conclusions follow logically from the deception, so if you accept the known-false assumptions, then you accept the deception. ~Robert Kuttner

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Risk Taking & Leadership: Irrational, Reckless, Irresponsible, Swim with Sharks; Or, Rules-Breaker, -Shaker, -Taker, -Maker.

Posted on January 30, 2012 by Bizshifts-Trends
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Only those who risk going too far; can possibly find out how far they can go. ~T.S. Eliot

Risk taking is a critical element of leadership and essential for a leader’s effectiveness. Risk taking can be defined as… “Undertaking a task in which there is a lack of certainty or a fear of failure.” The problem at the core of risk taking is fear; fear of failure, fear of success, fear of looking like a fool, fear of seeming ignorant, fear of seeming too aggressive… Taking risk means confronting the fears/challenges and having the courage to move forward, or recognizing that the calculated risk is beyond the tolerance of the consequences… the difference between calculated risks and risky behavior. According to Seth Godin; “playing it safe and not taking a risk is probably the most dangerous thing you could do in today’s rapidly changing and highly competitive business environment”. Without an element of risk, nothing would ever be accomplished. According to Elaine Love; “whether you are starting a new business or working on a new marketing plan within your current business. There is an element of risk. You can reduce the risk, but nothing ever removes all of the risk.” Reward comes in direct proportion to the risk involved. The best results come to those willing to take a chance; an important reminder for entrepreneurs, financiers, and political leaders as the global economy navigates through rough times…

In the article “Leadership Requires Risk Taking” by Steve Adubato writes: Leaders of all stripes say they want their people to ‘think and act outside the box’. While everyone talks about risk taking, employees who actually have to take the risks are often reluctant to do so. Why is that? If real leadership sometimes requires the taking of smart and calculated risks, why are there so many barriers and obstacles to making this happen? Consider the following:

  • Employees aren’t really convinced that senior organizational leaders want them to take risks. They hear the rhetoric, but aren’t sure that their bosses will still stand behind them if the risk goes bad and things don’t turn out right.
  • All the horror stories about someone who took a risk and got his head handed to him. Organizational culture is shaped largely by these stories.
  • Not enough success stories of people who took risks. If people can’t readily identify others around them who have thought and acted outside the box and who were recognized for it, it can be really tough to get people to “buy in.”
  • Fear: Fear of failure. Fear of succeeding. Fear that as a risk taker you will be perceived as ‘kissing up’ to upper management.
  • Employees aren’t clear on the organization’s top priorities and strategic objectives. People need to know that the benefit derived from the risk they take will be directly connected to the goals that are most important to the organization.

In the article “Swimming With The Sharks: Perspectives On Professional Risk Taking” by Julie J. McGowan writes: Risk taking is a defined component of leadership, but risk taking must be grounded, a favorable balance of benefits weighed against the potential dangers of taking the risk. Risk taking is done on a daily basis, although some embrace risk taking more than others.  Risk taking is hard to adopt among leaders, because recognized leaders have the most to lose and aspiring leaders may be discounted as lacking in knowledge or common sense. However, most well-known leaders at some point face a challenge that requires risk taking. This becomes a measure of their greatness. This will set their leadership apart from others. In looking at the global marketplace, technological innovations, and leadership, a number of studies focused on the future have all concluded that risk taking will be an integral part of any successes. Sharing risk is also considered a critical attribute for the new global business leader. Key to success in any undertaking is to understand that risk taking is an integral part of leadership. However, risk taking by itself without understanding the nuances of the challenge will doom any project to failure. ‘McLean and Weitzel’ propose a classification of risk as it relates to decision-making. They suggest that the likelihood of risk taking is found in a four-quadrant grid, with ‘high reward, low risk’ the most likely to be selected and ‘low reward, high risk’ the least likely. In addition, they look at common generic fears that accompany risk taking and find the most motivating to be fear of failure, fear of embarrassment, fear of disappointing others, and fear of resentment. Successful risk takers acknowledge their fears… Jimmy Johnson, football coach, once said, “Do you want to be safe and good, or do you want to take a chance and be great?”

In the article “Risk Strategies: Are You a Rule Breaker, Shaker, Maker, or Taker?” by  John Kador writes: To determine your company’s attitude toward risk, you need to examine whether your enterprise would be considered; a rule breaker, a rule shaker, a rule maker, or a rule taker. Each of these terms reflects a strategy or posture that people or companies take-on to define their willingness to take risks. Successful companies excel by engaging in one of four types of relationships to deliver value to their chosen customers. The key is focus on a single strategy:

  • Rule breaker: Rule breakers bust up business models. They explode in an industry by offering a new paradigm so compelling in its benefits that it simply cannot be ignored. . Rule breakers often have first and preferred access to: Customers and markets, best talent in the market, funding and venture capital, most valuable partners.
  • Rule maker: Holding a position as a rule maker is a highly desirable state because it is a token of the fact that you dominate the industry to such an extent that everyone else has little choice but to play follow-the-leader.
  • Rule taker: You don’t have to be a trailblazer to be successful. Rule takers can look at what competitors are doing, benchmark companies outside their industry, get track records of what’s worked, and then copy whatever has been successful.
  • Rule shaker: Rule shakers believe that a good way to get fruit is to take the branches of a tree and start shaking. Not every initiative will bear fruit, but some will. Rule shakers distinguish themselves from rule breakers by being content to Web-enable or otherwise juggle a larger number of non-critical business processes.

In the article “How to Become a Successful Risk Taker” by Steve writes: Of all the skills in life to learn, I believe risk taking is the most important. Imagine how dull your life would be if you never took chances.  Becoming a risk taker seems to have a negative connotation, and it brings up images of danger, hazards or even loss.  But no matter how dangerous the idea of risk taking, there is an even greater danger of not taking risks.  Risks are a key ingredient to living life to the fullest and, fortunately, the skills of becoming a successful risk taker can be learned. When you understand how fears limit you then overcoming them is easier. Gambling is an extreme form of risk taking. The key difference between a risk and a gamble is the consequences.  If the situation you’re taking would seriously set you back or even ruin you, if it didn’t work out; that’s a gamble. A calculated risk is something that even if it doesn’t work, you’ll easily recover, and be able to function normally afterwards.  There is a fine line between the two, but if you carefully ease into risk taking, you’ll get a good instinct of where the line (tolerance) is for you. Once you learn how to become a successful risk taker, you’ll be able to take-on just about any challenge and work for the best outcome. Fear will still be there, but it can be managed. As Dale Carnegie once said, “Take a chance! All life is a chance. The man who goes the furthest is generally the one who is willing to do and dare.”

In the blog “Why Creativity And Risk Taking Is Critical To Leadership Success” by Duncan Brodie writes: Leaders are ultimately judged on the results that they deliver. Sometimes it can be easy for leaders just to tread water, especially when things seem to be going well. Yet in truth continued creativity and risk taking is critical to leadership success:

  • Leadership success is about finding new or better ways of doing things or meeting needs of customers or clients.
  • Leadership success is about finding different solutions to long-standing problems or issues that are getting in the way of results.
  • Leadership success starts with an idea or concept that needs to be developed.
  • Leaders need to be willing to dip their toes into the pool of uncertainty without fear of failure.

In these highly competitive and fast-moving times pushing the boundaries; personal, team, and organization is not an option, but a necessity. Leaders who want to achieve success understand that taking risk is an essential part of achieving results.  Leaders must discover their ‘risk tolerance’ by stepping-out of the comfort zone and engage:

  • Don’t let restricted thinking stop you.
  • Focus on the rewards.
  • Learn from mistakes.
  • Recognize that success and failure are connected.

If you want to be successful as a leader you need to be comfortable taking risks. Risk taking is a vital part of leadership. Leaders have the courage to begin; while others are waiting for better times, safer situations, or assured results. Leaders are willing to take a risk because they know that too much caution and indecision rob them of opportunity and success. They are willing to fail in order to succeed… President Harry Truman said, “Life is risky”. Leaders take risks.

“The person, who risks nothing, does nothing, has nothing, is nothing, and becomes nothing. He may avoid suffering and sorrow, but he simply cannot learn and feel and change and grow and love and live.” ~ Leo F. Buscaglia

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Changing Face of Salesmanship: Intangible ‘Soft’ Attributes– Attitude, Rapport, Credibility, Curiosity, Behavior, Knowledge, Relationship…

Posted on January 26, 2012 by Bizshifts-Trends
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Salesmanship is a process that; makes your customers smarter, focuses on relationships (not transactions), makes it safe and easy to leave, doesn’t disparage the competition, and doesn’t judge the customer.

Salesmanship: There are many definitions, characterizations, descriptions, interpretations, concepts, attitudes, prospective, presentations… In the words of W.G. Carter, “salesmanship is an attempt to induce people to buy goods.” In the words of Whitehead; “it’s the art of presenting offerings when the prospect appreciates the need, and when a mutually satisfactorily sale follows.” On salesmanship G. Blake writes; “salesmanship consists of winning the buyer’s confidence for both the seller’s company and goods, thereby winning regular and permanent customers– with emphasis on lasting satisfaction”. Paul W. Ivey defines the term salesmanship as “the art of persuading people to purchase goods which will give lasting satisfactions, and winning over the buyer’s confidence so that permanent goodwill may be built with lasting satisfaction”. According to Amey Puranik; “salesmanship is an art of persuasion and customer satisfaction. The fundamental (requisites) of success in the ‘art of salesmanship’ is ‘knowledge’: Knowledge of self, knowledge of selling techniques, knowledge of customers, knowledge of product, knowledge of company, knowledge of competitors.”

In the article “The Art of Salesmanship Is the Absence of Salesmanship” by Jack Carroll writes:  My career in sales has undergone three separate and distinct phases, or levels of growth. It’s a track I’ve seen in others who have hung around long enough to establish some kind of a pattern, so it might be instructive to discuss my view on the ‘art of salesmanship’. The three characteristics are:

  • The Art of Salesmanship is Showmanship: Characterized by the development of sophisticated and polished presentation skills that almost unfailingly dazzle (but do not always win the business). ‘Positive aspects’: good exhibition of product knowledge wrapped in exceptional presentation skills. You receive many compliments on style. ‘Negative aspects’: One-sided approach that doesn’t take into consideration much of what is going on with the customer. If their eyes don’t light up on one of your presentation points, you’re in trouble.
  • The Art of Salesmanship is the Concealment of Salesmanship: Characterized by well-prepared, interactive questions that elicit the right responses from the customer. ‘Positive aspects’: interaction with and feedback from the customer. ‘Negative aspects’: Often a stacked deck. Leading questions usually reveal what you think the issues and problems are, not what the customer knows they are.
  • The Art of Salesmanship is the Absence of Salesmanship: Characterized by a quiet, relaxed, well-prepared salesperson who forgets every aspect of technique and just listens and reacts in real-time.  ‘Positive aspects’: It’s so easy to tell the truth. ‘Negative aspects’: It often takes a lifetime in sales before one has the confidence to say almost nothing and communicate effectively.

In the article “Salesmanship Lessons From Donald Trump” by Mark Stevens writes: In his bestselling book ‘The Art of the Deal’  by Donald Trump; provides a unique perspective on constructing and negotiating business transactions. But as much as we know ‘Trump’ as a deal-maker extraordinaire, his greatest skill is his salesmanship. Think of ‘The Donald’ as a salesman on steroids. And in this lesser-recognized role, ‘Trump’ practices ‘the art of the thrill’, which means ‘dress to impress’ and ‘go big or go home’. The lessons we can learn from this for our own ‘salesmanship’ are:

  • Never do things for your customers and prospects in a small way. Make it ‘big and important’ or ‘don’t do it at all’.
  • Everyone likes to do business with a winner. No matter what stage of your career, you need to look like you’ve made it.
  • Bring your ego with you in full bloom. It’s not enough to look successful; you need to act it as well.
  • You don’t sell: ‘You Thrill’.

In the article “Top 7 Principles Of Professional Salesmanship” by Jonathan Farrington writes: I received a call from an ex-student who was designing an induction program for new recruits about to embark on a career in sales. He asked that if one had to create ‘twelve golden principles of selling’, what would I come up with. I responded that I could do better than that; I could reduce my list to seven. Clearly this is a very subjective view but mindful, of the fact, that this exercise is designed to provide guidance to salespeople just starting on the first rung of the ladder, this is what I came up with.

  • Always sell to people.
  • You have to sell yourself.
  • You must ask questions and listen to the answers.
  • Features must be linked to benefits.
  • Aim to be unique – ‘me first’ rather than ‘me too’.
  • Don’t sell on price.
  • Be professional at all times.

In the article “In a Test of Sales Savvy– Selling a Red Brick on YouTube” by Stuart Elliott writes: The goal is “recreate the noble art of ka-ching.” There’s an interesting case to be made that advertising has strayed too far from the business of salesmanship, which is unfortunate because it can be ‘a good test of how well you understand people and your creativity’.  Another observation by Brian Fetherstonhaugh, OgilvyOne, says; “salesmanship has been lost in the pursuit of art and the dazzle of technology. It needs to be rekindled, as consumers are making more informed and deliberate choices. At the same time, technologies like the Internet and social media are putting the consumer in control, and now the salesperson– needs to get invited-in. That means selling is less about intrusion and repetition and more about engagement and evangelizing”. According to Mr. Zucker: “If we believe in selling, and our founder (Ogilvy) was a salesman, we have a special responsibility to reassert the importance of salesmanship. Mr. Ogilvy, who died in 1999, expressed his philosophies in colorful ways. Once, referring to his stove-selling days, he said: “No sale, no commission, no eat.” That made an impression on me…”               

In the article “Salesmanship” by Donald DonOmite writes:  Salesmanship is the ability to persuade others to buy one’s products, services, ideas… which is not necessarily something that a person is born with. Effective salesmanship is composed of specific abilities and attitudes which can be named and learned. One can adopt and develop these basic attitudes, and two of the basic attitudes which define effective salesmanship are: 1) an orientation to set and reach goals, and 2) a strong sense of persistence. Three of the actual skills or abilities which are required for effective salesmanship are: 1) an ability to win the prospect’s trust, so that his communication with the salesman remains open and honest; 2) an ability to present a product or service in such a way that the prospect builds strong enough interest and desire to want to acquire the product or service; and 3) an ability to smoothly overcome any and all objections which might come up so that the sale closes successfully. And even more essential to effective salesmanship is a proficiency in the basic ‘people skills’, which underlie and support the techniques of good salesmanship, such as, communication skills and the ability to garner agreements.      

Salesmanship is just as primitive today as it was 100 years ago. It works, but no one seems to understand quite how and why. In contrast to the advances of modern industry in such areas as automation, electronics, chemistry, and physics, selling as an art and science has made little or no progress since the early days of the Industrial Revolution. Today as then, ‘representatives’ attempt by various occult devices to persuade others to buy and use their wares. In terms of the methods employed, the salesman of today is essentially no better qualified, in my judgment, than the ‘peddlers’ of yesteryear.  Although, merchandising methods have improved with the advent of technology, and advertising has taken advantage of motivation research. Consumer sales have been made much easier because of the availability of consumer credit. Training in selling skills, methods, and techniques is much more sophisticated and widespread, today. However, salesmanship is a pattern of behaviors. It’s an oversimplification to suggest that knowing the ‘selling system’ itself, will make you successful at sales. It’s sad to say that many people have followed ‘the system’ to the letter, only to fail miserably at selling. This happens because selling systems fail to get to the heart of salesmanship. Salesmanship depends upon interpersonal behavior, which relies upon attitudes, assumptions, knowledge, and conduct, but not formulations. Perhaps one of the greatest myths is the idea that good salesmanship is born not made. Many still believe the old idea that if you have got the gift of the gab and can talk to anyone at any level, then you could probably sell anything to anyone; e.g., refrigerators to Eskimos. Unfortunately in the modern world, and especially in business-to-business selling, these factors are merely the raw materials for developing effective salesmanship…

Salesmanship, too, is an art; the perfection of its technique requires study and practice. ~James Cash (JC) Penney

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Power of Symbols, Symbolisms, and Brand in Developing Global Markets: Anthropology of Business, Marketing, Leadership…

Posted on January 23, 2012 by Bizshifts-Trends
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Symbols transform abstract concepts, ideas and beliefs into tangible things that we can touch, see, hear, taste, smell and understand. Symbolisms bring power to the abstract concept, and also to the object that symbolizes it.

Symbols are objects, characters, or other representations of ideas, concepts, or abstractions; they are the universal language in a culture. Symbols have been used for thousands of years, they help people communicate and interact with one another. Thus, as a representation, their meaning is neither instinctive nor automatic. The culture’s members must interpret, and over time reinterpret, the symbol… Symbols convey meaning and occur in different forms, such as: verbal or nonverbal, written or unwritten, words on the page, drawings, pictures, gestures… They are things which act as triggers to remind people, in the culture, of its rules, beliefs… Symbols can also be used to indicate status within a culture. Every society has evolved a system of symbols that reflects a specific cultural logic; and every symbolism functions to communicate information between members in much the same way as, but more subtly than, conventional language. Without knowing and understanding each culture’s individual symbols and symbolisms; there is little likelihood that a business engagement with the culture would be successful.

In the article “Symbols in Organizational Culture” by Anat Rafaeli and Monica Worline write: Symbols take on important meanings in organizations; meanings that are defined by cultural and social conventions and interactions. In our definition, symbols are things that can be experienced with the senses and used by organization members to ‘make meaning’. Symbols are noticed through sight, sound, touch, and smell, and their impact has significant organizational consequences. Our broad message is that an important part of understanding organizational culture is the careful reading and analysis of organizational symbols. Our analysis suggests that symbols serve four functions in organizations: They reflect underlying aspects of culture, generating emotional responses from organizational members and representing organizational values and assumptions. They elicit internalized norms of behavior, linking members’ emotional responses and interpretations to organizational action. They frame experience, allowing organizational members to communicate about vague, controversial, or uncomfortable organizational issues. And, they integrate the entire organization in one system of signification. Organizational symbols have the power to facilitate or hinder smooth organizational functioning, and their neglect may lead to a lack of shared interpretative codes among organizational members. This is perhaps easiest to see when a product does not match the quality symbolized by its brand, and therefore loses out in the market. Organizational symbols relate to the physical environment and the conversations, thoughts, emotions, and actions of organization members, and the symbols can provide a deep, rich, and worthwhile understanding of organizational culture.

In the article “Cultural Symbolism” by Cynthia Chan writes: When developing message that target ethnic groups, “there are symbols and design that you want to hone in on as far as culture is concerned.” For example, within the Japanese culture, placing a check in a box indicates that this is an item that is being declined, rather than selected. Another example is phone numbers, which should be chosen with care when targeting Chinese prospects. While using lucky numbers will help prospects remember your contact info, bad luck numbers, such as ’4′, would turn them off. Make sure to thoroughly research and test within your target market to ensure that your carefully crafted message is not thrown off track by culturally misleading symbols…

In the book “Symbolism of Popular Culture” by John Fraim writes:  Symbolism is one of the most powerful yet least understood concepts. The challenge is to provide a modern understanding of it, without trivializing its ancient heritage. Reverence is close to a lost concept today, but if anything deserves reverence; it’s the concept of symbolism. While symbolism may, in fact, be the key behind the greatest products of popular culture, symbolism itself should never be viewed as a product. In 1957, Vance Packard wrote a ground breaking book called ‘The Hidden Persuaders’. It was one of the first books to discuss symbolism in advertising and products. Back in those years, symbolism was called ‘subliminal persuasion’ probably with a tip of the hat to the dominating Freudian psychology of the times. Today, Packard observes the incredible evolution of product symbolism noting that ads for; ‘watches’ have nothing to do with watches; for ‘shoes’ that scarcely mention shoes. It used to be the brand identified the product. In today’s advertising the ‘brand is the product’. Modern advertising has an almost total obsession with images and feelings and an almost total lack of any concrete claims about the product and why anyone should buy it.”  I’m puzzled, he continues; “Commercials seem totally unrelated to selling any product at all.” Seeing symbols within culture may help revitalize an ancient science and place it into a modern perspective. It could help make the study of symbolism a ‘science of the day’ rather than a ‘metaphysics of the night.’ Modern symbols might then be seen in such products of popular culture, such as; films, television programs, music, celebrities, toys, books… The elusive ‘zeitgeist’ or ‘spirit of the times’ might have a direct relationship to dominant media forms and technologies. Emerging technologies such as the Internet might provide a modern symbol for the ‘zeitgeist’ of the collective unconscious…

In the article “The Power of a Symbol” by Kevin Eikenberry writes: We all have symbols in our lives and these symbols remind us of our beliefs, loyalties, accomplishments… Whether physical like a flag, symbolic like a story, or memory-anchored like a picture these can serve us in powerful ways. Although this may not seem particular important, on the contrary, these symbols can be used to our advantage as individuals and leaders. For example: The Rock. The ‘Rainmakers’ organization in Indianapolis began a tradition, at their events, where the leader brings a ‘rock’ and writes on it “Be More, Serve More” (a part of their mission and purpose). During their meeting, all participants sign the rock then, at some point in the meeting, that rock is presented to someone in the group who has made a difference; lived the Rainmaker’s ideals or is in some other way deserving of the recognition. Started as a way to reward and recognize without breaking their budget, it now is a powerful part of the organization’s culture. It also is a highly valued award, meaningful in many ways to each recipient. We can draw much from this, and many other examples: First, notice how symbols can serve as; recognition, reminder, or both. The symbol need not be elaborate or fancy, as long as the meaning and message attached to it is valuable.  The same is true in organizations, the ‘physical representation’ doesn’t have to be glossy, shiny or valuable; i.e., a ‘rock’… The power comes from the meaning and message.  Symbols are powerful, and can aid us personally and organizationally as we attempt to improve or move toward valuable goals: Understand them and use them wisely and sincerely, and this underutilized tool could become instrumental in your future success.

In the article “What Do You Mean? The Power of Symbols” by Miss Mellie writes: Symbols enrich our lives by standing as reminders of philosophies, dreams and achievements we hold dear. They are mini-billboards of our thoughts, feelings, emotions and values. They serve a shorthand method of communicating at a glance something which could take several sentences, pages or books to explain in words. The old adage ‘A picture’s worth a thousand words’ has long-held fast in our lexicon due to its multi-generational truth. Symbols can be powerful… but, they can also be confusing. The confusion can set-in when two or more people interpret the symbol differently, and the meaning can change over time; either intentionally or unintentionally. Consider how powerful at one time the Enron logo was: Their symbol once indicated a large, strong, powerful company at the peak of corporate health. Nowadays, even a fleeting impression of that very same symbol indicates scandal, theft, shame and a whole host of other negative feelings. Symbols are nice, as long as their representations are accurate and truthful… they can indeed boost self-esteem, rekindle warm feelings and bring joy to our souls. But symbols are just that: symbols… They themselves are not the substance of what’s being represented. Plenty of folks wear wedding rings, wave their country’s flag and publicly attend church while living their lives as turncoats against that to which they claim devotion. If the devotion is there, no symbol is needed; if the devotion is not there, no symbol will engender it.

In a world where people and companies are more readily recognized for what they represent, then for who they are; symbols, symbolisms, and brand are ‘essential assets’. According to Sebastian Guerrini; Symbols can be used to exploit the most unconscious-level of human desire, thus when incorporated into a brand, symbols gracefully create associations between a company and that which the company would like to represent. From a psychoanalytical perspective, brand is a representation of symbols and symbolisms, and creating brand (branding) is linked to understanding how humans communicate and express their feelings. It’s a matter of understanding the very basics of human communication and how our minds work to create, within us, a sense of satisfaction. Successful business relationships, globally, are developed by understanding and respecting the symbols, symbolisms, and brands of cultures…

The best leaders… almost without exception and at every level are master users of stories and symbols. ~Tom Peters.  We are symbols, and inhabit symbols. ~Ralph Waldo Emerson

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Internet Currency and Value of Virtual Money: Internet (Virtual) Currency Models; Bitcoin, Ven, Facebook Credits, Google Checkout…

Posted on January 19, 2012 by Bizshifts-Trends
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What makes Bitcoin currency so appealing to its advocates are; unlike other online methods of payment, such as credit cards or Paypal– transactions made using the currency are virtually untraceable, almost like a digital version of cash. ~Whippman

Internet Currency: Creating currencies for the internet economy is a reality and a new multi-currency world is inevitable. Nobel laureate F. A. Hayek makes a powerful case that government involvement in providing a medium of exchange (money) is neither necessary nor beneficial. He argues that the best hope for sound money lies in competition between privately issued currencies.  More businesses are making virtual currency part of their business model. While the use of Internet (virtual) currency provides great opportunities, companies need to be aware of the emerging legal issues before using it as a means to build customer loyalty. Put simply, ‘virtual currency’ is any medium of exchange, other than real currency, used to facilitate Internet or other electronic transactions. Numerous companies are currently using forms of ‘virtual currency’. For example, Apple provides iTunes users the option of buying prepaid iTunes gift cards, which contain credits that can be redeemed for music and movies. Many online games allow players to earn and purchase ‘points’, ‘tokens’, etc. that can be redeemed for virtual and real-world prizes. Facebook recently started a system of ‘credits’ that has a wide variety of applications apart from gaming, such as making charitable donations using a particular charity’s Facebook page. Looking into the future, Google has announced that it acquired the start-up company ‘Jamboo’ and its proprietary ‘Social Gold’ virtual currency platform. There is industry speculation that Social Gold will be used to supplement Google’s current online payment system, Google Checkout. The bottom line is the use of virtual currency in e-commerce is on the rise. This trend is due in significant part to the advantages that virtual currency affords to a vendor. Virtual currency platforms allow issuing companies to lower costs by eliminating the need for a third-party company, such as a bank or Paypal, to process each payment transaction. Further, a vendor has significant control over the value of, and authorized uses for, virtual currency. This control enables companies to realize higher revenues, cut costs, and build more-attractive customer loyalty programs.

In the article “Internet Currencies for Virtual Communities” by Bernard Lietaer writes: Budding cyber-economies should look beyond the limits of national currencies (i.e. dollar, euro, yuan, etc.) toward a richer variety of payment systems specifically adapted to the requirements of cyberspace. In parallel to national currencies; a specific Internet currency system could be implemented which would provide an alternative for use for Netizen (Internet citizen) who choose to do so.  After all, money is not a thing, it is simply an agreement within a community to use something (almost anything has been used historically) as a medium of exchange.  Because Internet offers unlimited ‘space’ and transcends natural and cultural boundaries, the electronic marketplace need not be limited to one exclusive currency system; indeed, a ‘free market’ of different kinds of currency systems may benefit all of them. Virtual space provides indeed an ideal space for the coexistence and integration of different economic paradigms, because of its flexibility and non-exclusiveness…

In the article “Bitcoin, Ven and the End of Currency” by Stan Stalnaker writes: Digital currencies are really just online account books that measure and record transactions of financial value between nodes on the Internet.  The first ones; Beenz, Flooz and others, arrived with the first wave of the Internet in the 1990s and failed. By the middle of the last decade, the virtual currency economy boomed on the strength of gaming systems: Linden Dollar in Second Life, World of Warcraft Gold, Entropia, and Tencent’s QQ in China encountered success with volatility.  Now Internet currencies are moving out of virtual gaming systems and into the global economy with; Bitcoin, Ripple, Ven, Flattr… and ‘local exchange trading systems’ (LETS) leading the way. The central differentiation between these digital currencies is whether they operate in a closed loop (Ven, Flattr, Amex  Rewards) or open nodal architecture (Bitcoin, Ripple). This distinction determines to a large extent their ability to be managed. By and large, digital currencies are changing what money can be, and widening the vistas for how our global society determines and trades value.  We need to think about how the blurring of lines between currencies affects the world around us– relationships, economies…

In the article “New Internet Currency Bitcoin Grows in Popularity” by Charles A. Jaffe writes:  The ‘Bitcoin’ digital currency differs from traditional currencies, and has become an increasingly prominent method of payment in the world of internet commerce. Traditional currencies are regulated by governments, but Bitcoin digital currency is only regulated by its value to users and its expected value in the future. This allows Bitcoin digital currency users to feel somewhat secure since no government can arbitrarily reduce the value of the currency. Bitcoin digital currency receives further praise from users as transactions with Bitcoin digital currency can be made with more anonymity than traditional currencies afford. Bitcoin is like a foreign-exchange play with even less information on which to make currency calls; currency trading is no place for average investors, no matter how cool or cutting-edge the concept. Bitcoin, right now, has the feel of a mania, like tulips in the 17th century or Beanie babies in the late 1990s, where supporters appear ready to suspend rational thought to throw money into something that they desperately want to believe can maintain its growth. Technically, Bitcoin is digital, person-to-person (peer-to-peer) currency. It doesn’t exist in any tangible form, and is not backed by any physical currency or commodity, meaning there is no promise in place that Bitcoins can be exchanged for some form of ‘real money.’ The issue is whether Bitcoin will ever be so widely adopted that it acts like a real, stable currency; right now, it acts more like a commodity with wild price swings on rumors, articles, anonymous chat-board postings, and well-publicized problems with theft.  According to Bruce Wagner “Bitcoin has three major problems; “Number one is security, number two is liquidity and number three is currency risk… There may well be a global financial role for this kind of currency going forward. But until the execution is as sound as the concept is cool, there’s too much risk of a total loss. For average investors, that makes Bitcoin a look-but-don’t-touch situation.

In the article “Internet Currency Wars are Coming” by Milo Yiannopoulos writes: It’s clear that we are moving away from the era of real-world currency and credit card payments and towards virtual currency. The question is: which currency will it be? Digital money and digital payments will be a consumer norm in less than a decade; making the war between currencies and credits the single most interesting issue around the internet since its inception. As contact-less payment and stored value systems become a major source of payment, most large companies will begin to roll out their own versions. This is happening already: American Express is experimenting with social currency and British Airways recently replaced ‘BA Miles’ with Avios. Digital wallets like Google Wallet will become the mechanisms for navigating the multiple currencies you’ll carry with you around the internet. Your debit card will become redundant as your digital wallet will contain; dollars, euro, Bitcoin, Ven, and, possibly, Facebook Credits. Bitcoin, the currency you hear most about, worries economists. That’s because, as an anonymous, decentralized currency, it has attracted what the Federal Trade Commission (FTC) calls money laundering. Ven, the invention of Hub Culture chief executive Stan Stalnaker, is becoming a stable, respectable part of the global financial system. In September 2011, it was the first to be added to Thomson Reuters, making it possible for banks and financial institutions to trade in it. At the other end of the privacy spectrum is Facebook Credits… Think of the entire internet as an ‘app’; circumscribed by a persistent Facebook login and punctuated with Pay icons as familiar to users, and as easy to implement, as retweet buttons…

The future of money is increasingly digital, likely virtual, and possibly universal. A globally accepted networked currency would reduce costs and alleviate many problems, but there are still many obstacles to such a system, reports the Organization for Economic Cooperation and Development (OECD). In its report ‘The Future of Money’, OECD says; “The digitization of money could have far-reaching impacts, creating a system of  peer-to-peer digital money that is network based, transparent, easy to use, and highly secure”.  The report concludes: “The challenge for national policy makers is to accelerate the introduction of universally trusted and accessible peer-to-peer, instant clearing systems for all transactions throughout the entire economy. Information technology makes this goal feasible, but in the end only appropriate rules and institutions can make it practical locally and globally.”  Digital currencies transcend political borders and will facilitate a new era of international mercantilism while simultaneously freeing businessmen from national fiat currencies and the draconian controls that go along with them.  According to Bob Hettinga; “digital bearer instruments are three orders of magnitude cheaper to use than book entry money.”  Digital currencies, once they come to full maturity, will become world standard by virtue of the fact that they are the most secure, the most efficient, and the most inexpensive way to complete business transactions…

“There are certain things that we want from a currency: A medium of exchange, a store of value, liquidity, and security. No currency can have all of these features (although humans have used some pretty odd things as currency over the centuries; salt, gold, silver, and even pieces of paper with ‘dead presidents’ on them– surely the final lunacy) to perfection, but a currency which doesn’t have any of them in appreciable quantities isn’t going to last very long.” ~Worstall

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