Selling Value and Haggling Price Is Self Destructive: Distinctive Negotiation Behaviors of International Cultures; China, Japan, Russia, Korea, Brazil, Germany, France…

“In business, you don’t get what you deserve, you get what you negotiate” ~Chester L. Karrass

International negotiation. If there’s one thing everybody knows about selling, it’s that serious negotiation starts when you and your customer sit down together to close a deal: Right? “Well, maybe…” The best salespeople start thinking about negotiation much earlier – sometimes even before they’ve made the first contact.

Negotiation is not a destination that you reach at the end of a sale, nor is negotiation about one party winning and the other losing. Negotiation is part of each step of the sales process, and not a one-time event. Salespeople need to find out the customer’s real interests, ASAP: Is it value, price, terms and conditions, or something else?

When you begin early in the sales process, you uncover the buying organization’s real interests and you learn the criteria on which their interests are based. Most important, you discover the deal-breakers & deal-makers and explore how both parties can win. Perhaps even more importantly, you discover ‘if’ both parties can win; after all, it’s far better to lose quickly and exit the situation, than to lose slowly…

In the article “Why Selling on Value and Negotiating on Price Does Not Work” by Grande Lum writes: A common scenario that a salesperson encounters during the final ‘close of the sale’ is when the customer says something like: “We (customer) are all ready to sign the Contract today, and we want to thank you for having invested four months with us to develop the terms. Now, the only thing I(customer) need you to do for me(customer) is to discount the final contract figure by 10% and it’s a done deal.” What’s the salesperson’s response to this time-tested classic?

Seasoned sales executives know from long experience that haggling on price and contract terms can be a costly tactical and ultimately strategic error, most of the time. Haggling can quickly become a self-destructive behavior and damage the customer relationship. In traditional selling the salesperson sells (that’s their job), and at the end of the selling work, then ‘negotiate’, or rather, ‘haggle’. On the other hand, an enlightened view of selling is that there is continuing negotiations from the moment we speak with a prospect, to the moment we close a deal, and beyond…

Rather than seeing negotiation as a transactional activity, we see it as transformational. The classic dividing line between negotiation and sales becomes intentionally blurred: We can’t negotiate without strong sales skills, and conversely, we can’t sell without strong negotiation skills. Negotiation, as a transformational tool, is essential for sales executives as they manage their sales forces, as they manage internal negotiations with all business functions within their organizations, and as they manage the critical customer relationships they seek to broaden, deepen and enrich…

International sales negotiation is an important and very complex process, and often not just between individual people, but between large delegations, each of which is well organized and where every person has a specialized and skilled work responsibility. A big trap in international selling lies in misunderstanding the culture of other countries, especially in the rules that they use to negotiate.

Whereas one country may emphasize politeness and integrity, another might use deception and coercive methods as a norm of negotiation, while being polite and friendly outside of the negotiation arena. An article in Wikipedia identifies the ‘distinctive negotiation behaviors of 15 international cultural groups’; here is a sample:

  • Japan. Consistent with most descriptions of Japanese negotiation behavior, the results of this analysis suggest their style of interaction is among the least aggressive (or most polite). Threats, commands, and warnings appear to be de-emphasized in favor of the more positive promises, recommendations, and commitments. Particularly indicative of their polite conversational style was their infrequent use of ‘no’ and ‘you’ and ‘facial gazing’, as well as more frequent ‘silent periods’.
  • Korea. Perhaps one of the more interesting aspects of the analysis is the contrast of the Asian styles of negotiations. Non-Asians often generalize about the Orient; the findings demonstrate, however, that this is a mistake. Korean negotiators used considerably more punishments and commands than did the Japanese. Koreans used the word ‘no’ and ‘interrupted’ more than three times as frequently as the Japanese. Moreover, no silent periods occurred between Korean negotiators.
  • China (Northern). The behaviors of the negotiators from Northern China (i.e., in and around Tianjin) were most remarkable in the emphasis on asking questions (34 percent). Indeed, 70 percent of the statements made by the Chinese negotiators were classified as information –exchange tactics. Other aspects of their behavior were quite similar to the Japanese, particularly the use of ‘no’ and ‘you’ and ‘silent periods’.
  • Taiwan. The behavior of the business people in Taiwan was quite different from that in China and Japan but similar to that in Korea. The Chinese on Taiwan were exceptional in the time of ‘facial gazing’ –on the average, almost 20 of 30 minutes. They asked fewer questions and provided more information (self-disclosures) than did any of the other Asian groups.
  • Russia. The Russians’ style was quite different from that of any other European group, and, indeed, was quite similar in many respects to the style of the Japanese. They used ‘no’ and ‘you’ infrequently and used the most ‘silent periods’ of any group. Only the Japanese did less facial gazing, and only the Chinese asked a greater percentage of questions.
  • Germany. The behaviors of the Germans are difficult to characterize because they fell toward the center of almost all the continua. However, the Germans were exceptional in the high percentage of self-disclosures (47 percent) and the low percentage of questions (11 percent).
  • United Kingdom. The behaviors of the British negotiators were remarkably similar to those of the Americans in all respects. British people believe that most British negotiators have a strong sense of the right way to negotiate and the wrong. Protocol is of great importance. Some cultures may consider the British negotiation style as extremely cold and arrogant.
  • France. The style of the French negotiators was perhaps the most aggressive of all the groups. In particular, they used the highest percentage of ‘threats and warnings’. They also used ‘interruptions’, ‘facial gazing’, and ‘no’ and ‘you’ very frequently compared with the other groups, and one of the French negotiators touched his partner on the arm during the simulation.
  • Brazil. The Brazilian businesspeople, like the French, were quite aggressive. They used the second-highest percentage of commands of all the groups. On average, the Brazilians said the word ‘no’ 42 times, ‘you’ 90 times, and ‘touched one another on the arm’ about 5 times during 30 minutes of negotiation. ‘Facial gazing’ was also high.
  • United States. Like the Germans and the British, the Americans fell in the middle of most continua. They did interrupt one another less frequently than all the others, but that was their sole distinction.

The differences across the national  cultures are quite complex, and great care should be taken with respect to the dangers of stereotypes. The key here is to be aware of the kinds of cultural differences so that the Japanese “silence”, the Brazilian “no, no, no…,” or the French “threat” are not misinterpreted…

In the article “Equal Pain or Equal Gain? Negotiate for Win-Win by Anne Stuart writes: The best salespeople start thinking about negotiation much earlier; sometimes even before they’ve made the first contact. Specifically, top performers prepare for those at-the-table talks by learning as much as possible about the other party’s needs and concerns: “You have to look for their underlying interests”. “You need to understand what their personal motivators are; what they’re really after”.

It’s equally important for salespeople to understand their own interests: As a salesperson, what is it you want to get out of the negotiation? Of course, the simple answer is selling that product or service. But the best salespeople tend to have bigger-picture goals, such as building the foundation for long-term new relationship or expanding an existing one, top performers achieve those objectives by equipping themselves with knowledge and information about the needs and wants of the customer. 

Salespeople have a tendency to capitulate too quickly and in the spirit of trying to get the deal done; they discount too quickly or leave dollars on the table, which they didn’t need to do: They take shortcuts. It’s easier to just discount something than to go through further discussions to find new value, which takes far more salesmanship.

When salespeople capitulate on discussions involving prices, it’s typically because they haven’t explored the customer’s interests thoroughly enough. “If you haven’t discussed value, then any price is going to sound too high.” A successful salesperson can see beyond the smokescreen of price and rigidity. Be like a detective: Ask good questions. Based on the answers, suggest alternatives: It’s about being a problem-solver rather than just pushing a product…

Negotiation is a critical skill needed for effective selling and sales management. Successful negotiation requires compromise: Both parties must gain something and both parties must lose something. You cannot expect to defeat your opponent or “win” a negotiation by either the power of your negotiating skills or the compelling force of your logic. This is not to say good negotiating ability is irrelevant. In most cases, a range of possible outcomes exists.

A skilled sales person often can achieve a settlement near the top of the range.  The evidence is overwhelming that cooperation is the surest road to successful settlement. Hostility, distrust, stubbornness, self-righteousness, conflict intensification, unjust demands, and attempts to gain unjustified advantages beget non-cooperation rather than concessions, and tend to cause a breakdown in the communication necessary to reach a settlement.

The key ingredient in cooperation, however, is mutuality; you cannot be unilaterally cooperative. If you are making concessions while your opponent is not, you are engaging in appeasement, not cooperative negotiation. Successful bargaining occurs only when you are prepared, both to be cooperative and to demand cooperation from your customer… 

  “You must be fully prepared to lose a great deal in order to make a great deal.”

When the Game of Business Gets Tough, Change the Game: Paradigm Shift to New Economics, New Strategy, New Alignment…

“Business is a game, played for fantastic stakes, and you’re in competition with experts. If you want to win, you have to learn to be a master of the game.” ~Sidney Sheldon

Business is a high-stakes game, but counter to conventional thinking, business is not about winning and losing. Nor is it about, how well you play the game. Companies can succeed spectacularly without requiring others to fail. And they can fail miserably no matter how well they play, if they make the mistake of playing the wrong game.

The essence of business success lies in making sure you’re playing the right game. How do you know if it’s the right game? What can you do about it if it’s the wrong game?  Successful business strategy is about actively shaping the game you play, not just playing the game you find. A paradigm shift is a change to a new game, and a new set of rules.  By changing the rules you can create innovative solutions and new strategies that change industries.

But, innovation without ethics is blind. Ethics without innovation is lame. Innovation in combination with ethics creates value, profitability, and sustainability. However, changing the game is not easy; according to Albert Einstein; “no problem can be solved from the same consciousness that created it”.

In Alan M. Webber’s book ‘Rules of Thumb’ is a collection of 52 truths he’s culled from  notes specifically related to winning in business. These were notes, lessons, and insights he gleaned from his experiences travelling the world and in his interactions with people ranging from CEOs and spiritual leaders to basketball coaches, novelists, and stars from dozens of other worlds…

Here is Rule #24: “If you want to change the game, change the economics of how the game is played.”  Once you start to look you’ll find companies in every industry that have changed the economics to change the game: from razors to cameras, computers to airlines, magazines to nonprofits. Companies that start by redesigning the economics of an industry often finish by redesigning the whole industry — and owning it. Start by analyzing the status quo: What’s the standard economic model the industry uses today? When you pull it apart, how does it work?

Take a look at it from the point of view of the customer. Exactly what is the customer paying for? And where does the business make its real money? Go back to the fundamental question: ‘What business are you really in?’ Can you imagine new revenue streams that reflect changes going on in customer habits, customer experiences, or customer loyalty? Is emerging technology opening up new ways of connecting; or making customers pine for the good old days when things weren’t so high-tech?

Don’t forget, everyone agreed that retail outlets were dead and all commerce was shifting to the Web. Then Steve Jobs opened up Apple stores with their Genius Bars. There are a lot of ways to reinvent an economic model. But most established companies are unwilling to do it because it would mean destabilizing their own operation. Which is exactly what those innovators and entrepreneurs in the garages and dorm rooms are counting on. Rule #38:”If you want to think big, start small.”

In the blog “Will Your Social Strategy Change the Game?” by Jay Deragon writes: ‘Social media is a game changer’. It is changing how people interact with markets. How buyers influence sellers and how traditional media adapts to this thing we call new media. The dynamics and disruptive nature of all things social are emerging on a daily basis. There is no road map for how to use social media, only temporary roads that are tactical uses aimed at getting attention and awareness. Fueled by creativity these tactics are short dead-end roads; unless there is an overriding strategy that creates new highways (metaphorically) for others to follow and use.

A highway using social media requires deep thinking about the users wants, needs and intentions, and to create a highway where none exist.  Doing so takes creative thinking long-term and development of tools and experiences that users find valuable, useful, and serves their intentions. Slick marketing and tactical attempts to get the audiences attention are side roads not long-term highways.

A sound social strategy is one which changes the rules of the game for more than a moment. If you can change the rules of the game and users like the new rules, then competition will have to follow your highway. “If you are not thinking strategically about all this social media stuff you may end up on a dead-end road”.

In the article “Changing the Game” by Haydee Hernandez, Rick Murtha , Micah Peng , Yuhong Xiong write:  In deciding how to conduct your business, one of the traditional and most widely accepted approaches of the past twenty years has been to conduct a competitive analysis.  Michael Porter formalized this approach with his competitive forces model which identifies five basic forces with which a commercial organization must contend.

This model provides a framework for collecting and organizing industry information.  Adding to the game changing strategic fray, Joseph Pine outlined a creative strategy in his ‘Dynamic Stability Model: Mass Customization’.  Pine says industries are characterized by their products and their processes.  The degree of change in those products and processes defines the kind of strategy the company is pursuing. 

So, for example, a traditional production strategy such as ‘Mass Production’ concentrates on generating economies of scale by specializing in standardized, unchanging processes to manufacture cookie cutter products.  This represents a low degree of change in products and process and is one alternative route toward Porter’s Cost Leadership strategy.

Another traditional strategy involves Invention in which there are constant changes in processes and products.  This reflects a high degree of both product and process change and gibes with Porter’s Differentiation strategy.  In the past 30 years Japanese manufacturing companies have championed another strategy known as Continuous Improvement. 

These are incremental improvements in an ‘evolutionary strategy’, and their sum can be more significant than the occasional changes brought about by a ‘revolutionary change strategy’.  This is another route companies take to achieve Cost Leadership with fairly standardized products.  However, as a game changer, imagine a strategy in which you are able to benefit from your ability to customize your products to individual customer specifications while still maintaining the capacity to produce with economies of scale. 

This scenario describes a situation in which your products change as needed but you are able to specialize and generate economies of scale by utilizing stable processes: This is Pine’s game changing ‘Mass Customization’ strategy, and it is considered to be outside the realm of Porter’s traditional strategies.

In the article “Competitive Strategy: Game – Changing Strategies” by Bob Tyler writes:  Common sense, as well as, academic research argues that attacking bigger competitors will most likely lead to failure. Take for example, a series of studies undertaken at London Business School in the early 1990s which examined; ‘how new market entrants in several UK industries fared against much bigger established competitors’.

Not surprisingly, the failure rate of ‘newbies’ was quite high. More than 85% of them failed within 5 years of entry, whereas a No.1 ranked firm, in a particular industry, had a probability of about 96% of surviving as No.1. Yet, without disputing the statistics, we all know of examples of companies that attacked much bigger competitors with great success. In several instances, not only did the smaller firm survive but often managed to emerge as one of the leaders in the industry.

In other words, the small fish ate the big fish! IKEA did it in the furniture retail business, Canon in copiers, Starbucks in coffee, Amazon in bookselling, and the list goes on… So, what explains the success of these outliers and what can we all learn from their experience? After studying more than seventy such firms Dr. Costas Markides, Professor of Strategic and International Management at London Business School and author of the book ‘Game Changing Strategies’, has found a simple answer;Successful attackers do not try and be better than their rivals. Rather, they actively adopt a different strategy and aim to compete by changing the rules of the game of the industry”.

In the article “How to Win by Changing the Game” writes:  A true capabilities-driven strat­egy is the most reliable way for a company to thrive when the rules of the game for its industry are in flux. Instead of looking inward at the capabilities you already have and trying to discern your strengths, start by looking outward at the capabilities you need. ‘What must you be able to do to reach the customers you want to attract?’

By designing a portfolio of skills and tools (capabilities) needed to win customers, you can end up changing the game instead of playing by the rules. However, as many senior executives will confirm, this focus on capabilities is easy to write about but surprisingly difficult to execute, especially in highly turbulent times. But the al­ternative is worse: This is not the time to find a cave and hibernate until the economic storm passes; for its unlikely the storm will pass anytime soon, and a capabilities-driven strategy is the only way to remain equipped for perpetually stormy weather.

Remember that capabilities do not manifest themselves over­night; they take time to grow. That’s why foresight, particularly the ability to anticipate future industry dynamics and customer needs, is so crucial.  As you look for ways to foster growth, consider every move through the lens of your ultimate aspiration; your ability to thrive by consistently attracting customers. To achieve that goal in today’s global business environment, it’s not only what you do that matters; ‘it’s how well your business is equipped with the appropriate capabilities’… 

Game changing strategies are developed by engaging customers in meaningful dialogue, and asking the critical question: “What can I do differently in my business that would make a real difference to my customers?” The answer(s) to this simple question will give you the stuff that can change the game and provide a significant business advantage. There are dozens of different ways you can change the way you play the game, in your field of business, and you actually have a lot more choice than you think… think about it…  

Competing head-to-head on products and services is table stakes. Innovators are looking for a new business model that will destabilize their rivals and produce a breakthrough opportunity. In fact, in a recent survey of top-level executives in established companies found that the biggest shared concern is that somewhere in the world—in a garage or a dorm room— someone is coming up with a new business model that will overthrow their established way of doing business…

“Don’t wait for the business trends to develop. Instead, watch for people messing with the rules, because that is the earliest sign of significant change. And, when the rules change, the whole world can change.” ~Joel A. Barker

Convergence of Disruptive Strategic Forces that Destroys Businesses: Perfect Storm …Bad Luck or Failed Leadership

A bit of unsolicited advice to business executives trying to explain why their company or their industry is suddenly in the soup: Please spare us the “perfect storm” metaphor. ~ Steven Pearlstein, Journalist

In Sebastian Junger’s gripping account of a shipwreck that popularized the notion of the “perfect storm”, Billy Tyne, the skipper of the Andrea Gail, received urgent and repeated warnings that he was heading into what could be a monster storm off the Grand Banks– warnings that Tyne and his crew chose to ignore.

After all, the weather immediately around them had been relatively calm, and the swordfish had been tantalizingly plentiful. And there were always worrywarts warning not to do this and not to do that. If Tyne had listened to them, the Andrea Gail would never have left port, let alone become one of the most successful sword boats in Gloucester,Mass.

In an article by Steven Pearlstein, journalist writes: “The reason the perfect storm is such an appealing metaphor for these shipwrecked captains of industry is that it appears to let them off the hook. Who can blame you if the ship goes down in one of freak, once-in-a-century storms that result when three weather systems collide? It’s an act of nature that nobody could have predicted — or so the story goes.”  Sam Zell, the real estate tycoon, who was smart enough to sell out at the top of the commercial real estate cycle, only to dive into the newspaper and broadcast business of the Tribune Company just as circulation and advertising revenue were about to collapse, then claims the “perfect storm” as the reason for the Tribune’s business failure…

Auto executives tried to convince us that the only reason they were running out of cash was a sharp drop in vehicle sales brought on by sky-high gas prices, a credit crunch and rising unemployment; it was the “perfect storm”, rather then their failure in leadership… Robert Rubin, the Treasury secretary turned boardroom consigliore, conjured up the “perfect storm” to explain how Citigroup and the rest of Wall Street nearly brought the global financial system to a grinding halt, vaporizing trillions of dollars in wealth and putting large swaths of the economy on government life support…

Pearlstein writes: “The first thing to understand about the “perfect-storm” defense is that these guys actually buy into this nonsense. The rest of us want desperately to believe that what brought us this economic crisis was some combination of greed, fraud and negligence…. What the populist critique ignores, however, is that at the heart of any economic or financial mania is an epidemic of self-delusion that infects not only large numbers of unsophisticated investors but also many of the smartest, most experienced and sophisticated executives and bankers.”  

Fundamentally, they’re wrong: The only “perfect storm” was the one that resulted from the collision of Zell’s ego, his arrogance and his utter ineptitude in running a media empire, along with a total disregard for the financial well-being of thousands of employees whose retirement assets he commandeered for a financing scheme that gave him control of the company while putting in very little of his own money.

I suppose we can have a bit more sympathy for the car guys, who might not have understood that the reason Americans were buying record numbers of foreign vehicles in recent years had nothing to do with cheap credit or mortgage cash-outs and everything to do with the superior styling and quality of other auto makers products…

 “When it comes to self-delusion, however, Wall Street’s top bankers and financiers take the prize. The most common rationalization is that because housing prices had not fallen nationwide since the Great Depression, nobody could have anticipated the current meltdown in the housing and mortgage markets…how about all those discussions back in 2005 about whether there was a housing bubble? Or, were there clues when housing prices nationally were increasing two and three times the rate of inflation, year after year, which was also without recent precedent?”

What capsized the economy was not a “perfect storm” but a widespread failure of business leadership — a failure that is only compounded when executives refuse to take responsibility for their misjudgments…

The article “Perfect Economic Storm” by Kent Gilbreath, professor of economics, writes:  Modern history of the American economy teaches us that unanticipated (exogenous) events can sometimes have serious, negative economic consequences.  The forces of change do not have to be dramatic to be consequential.

Potentially individual negative economic forces, by themselves, would not constitute the “perfect economic storm” but, together, these negative forces can weaken the foundation of the American economy and produce most unwelcome consequences for recovery the next time a major exogenous force strikes the economy… There are some disconcerting economic trends and forces on America’s economic horizon, clouds that, coming together, may produce the “perfect storm” for the U.S. economy:

  • Decline in the “real” wages or “real” personal income
  • Decline in real income for millions of families
  • Decline in the labor force participation rate of women
  • Decline in the labor force participation rate of men
  • Drop in the rate of America’s personal saving
  • Growth in the level of government, personal and family indebtedness

Gilbreath continues: To truly test the “perfect economic storm” hypothesis, it is first necessary to know if the economic “clouds” actually exist, and, if they do, what is their magnitude; and what is the timing of their potential convergence?  As with most economic clouds, it is important to remember that clouds often produce only a brief squall and then blow away leaving only a few tattered sails. If there is, indeed, a serious economic threat economists must ask; “what can be done to prevent any dire consequences?” Recommended remedies might include changes in public policy or suggestions that the marketplace will take care of the problems…

In the blog “The Rising Revolution: A Perfect Storm is Brewing“ by Robert Reich writes: The elements are there; wealth concentrates at the top, record contributions flood our democracy, and the populace fumes over a government that raises taxes…reduces services…and the lack of jobs. It’s a “perfect storm”.  A relatively few wealthy people are buying our democracy as never before. And they’re doing it completely in secret. Hundreds of millions of dollars are pouring advertisements for and against candidates in the election cycle — without a trace of where the dollars are coming from…

The Federal Election Commission says only 32 percent of groups paying for election ads are disclosing the names of their donors. By comparison, in the 2006 midterm, 97 percent disclosed; in 2008, almost half disclosed… The third part of the ‘perfect storm’: Most Americans are in trouble. Their jobs, incomes, savings, and even homes are on the line. They need a government that’s working for them, not for the privileged and the powerful.

Yet their state and local taxes are rising. And their services are being cut. The roads and bridges are crumbling, pipelines are leaking, schools are dilapidated, and public libraries are being shut. Unemployment insurance doesn’t reach half of the unemployed… Much of the income of the highest earners is treated as capital gains…

The ‘perfect storm’: An unprecedented concentration of income and wealth at the top; a record amount of secret money flooding our democracy; and a public becoming increasingly angry and cynical about a government that’s raising its taxes, reducing its services, and unable to create jobs. We’re losing ‘democratic capitalism’ to ‘plutocratic capitalism’…

According to Nobel Laureate Michael Spence; U.S. companies with global interests have contributed almost nothing to American job creation since the 1980’s. The investments that U.S. global companies have made have been in the high growth markets of Brazil, China and India. These three nations create 50 plus million new consumers every year. So, tax incentives, abatements, corporate welfare, or subsidies, none of these incentives have resulted in these companies creating jobs in America. The only firms creating jobs in America have been companies whose total business is American…hotels, retail and health care are some examples…

In a report “Pathway to Global Product Safety and Quality” the FDA said two-thirds of the fruits and vegetables consumed in the United States and 80 percent of the seafood eaten domestically are imported. Half of the medical devices sold in the country and “80 percent of the active pharmaceutical ingredients in medications sold here are manufactured elsewhere,” the report said. “There is a growing concern about safety, and the potential for a ‘perfect storm’: More products, more manufacturers, more countries, and more access.

A dramatic change in strategy must be implemented,” FDA Commissioner Margaret Hamburg said. “FDA regulated imports have quadrupled since 2000,” she said. The FDA outlined four steps to increase its reach and efficiency. The steps included ‘forming partnerships with regulators around the world’ and ‘developing international data information systems’. The agency also said it would ‘focus on risk analytics and information technology’ and ‘leverage the efforts of public and private third parties and industry’…

In the article “Pharma Sector Faces ‘Perfect Storm” by David Seemungal writes: The pharmaceuticals industry is facing its biggest challenge yet. In 2011-2012, the patents for 20% of current drug sales will expire and with a lack of adequate replacements in the pipeline, low sector growth and investor apathy, pharmaceutical groups are being forced to consider how they will tackle these issues; and sooner rather than later.

The industry has been reluctant to indebt itself in the past, maintaining a strong cash-rich position on the back of the threat of litigation, and the need to remain flexible in order to take advantage of investment opportunities. With the looming off-patent threat, which has been referred to as the sector’s “perfect storm”, and a tightening of regulations, the industry is clearly facing problems that could see a more aggressive use of balance sheets as companies can no longer sit back and rely on their portfolios.

An article “Buying a Business: The “Perfect Storm” by Brauer & Harper, accounting and consulting firm, write: Given the recent stock market volatility, political uncertainty, high unemployment, massive federal debt and ongoing spending, and the bleak economic outlook in general, it’s no wonder investors are fleeing “risky” investments to simply sit on cash and gold.

However, our current economic environment could have created the “perfect storm” for business buyers, and now could be the best time in decades to invest in small business given the factors as follows: Aging population, low business valuations, low financial projections, low interest rates, tight credit, and quality workforce.

Amid a struggling stock market and lagging economy, Buffett told reporters: “Now is the time to invest and get rich”.  Buffet was right.  Our current economic “storm” could again provide a tremendous opportunity to take advantage of the buying opportunities at a time when most others are fearful… 

Warren Buffett’s Principle: “Be greedy when others are fearful.” 

Tracking U.S. Debt and Deficit –Crisis or Charade: Impact on Economy, Businesses, Citizens…

“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 deficit are tossed around – often interchangeably – and confuse rather than clarify an understanding of the U.S.’s ‘national debt’ status. The reality is that the United States has a ‘national debt’ of over $14.3 trillion dollars. That is a difficult number to comprehend and even more difficult to resolve. The other reality is that the 2010 federal budget posted a $1.29 trillion deficit. 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 blog “Quantifying the National Debt-Just Facts” by James D. Agresti writes: As of August 12, 2010, the official debt of theUnited States government was $13.3 trillion ($13,317,048,837,517). This amounts to:

  • $43,377 for every person living in theU.S.
  • $113,645 for every household in theU.S.
  • $284,113 for everyU.S.household that pays more in federal taxes than they receive in benefits from the federal government
  • Publicly traded companies are legally required to account for “explicit” and “implicit” future obligations such as employee pensions and retirement benefits. The federal budget, which is the “federal government’s primary financial planning and control tool,” is not bound by this rule.
  • As of September 30, 2009 (the end of the federal government’s fiscal year), the federal government 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. 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 ofSeptember 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. This shortfall equates to:

    • $207,176 for every person living in the U.S.
    • $542,789 for every household in the U.S.
    • $1,356,971 for every U.S. household that pays more in federal taxes than they receive in benefits from the federal government.
    • These figures do not account for future deficits implied by any federal programs outside of the “social insurance” programs.
    • These figures depend upon the assumption that the government projections about future economic conditions are accurate (i.e., unemployment would average 5.6%).
    • The total shortfall ($63.6 trillion) is immediately placed in investments that consistently yield about 2.97% above the rate of inflation.

In the articleThe Effects Of Our National Debt” by Mark Anthony Cella writes: Currently the U.S. national debt is estimated at something more than $10 trillion, (in reality it’s more like $100 trillion, but $10 trillion is what the treasury tells us) taking into consideration all the money owed to all creditors around the world. More than half of this is public debt, which means that the government owes money to individuals, businesses and other countries that have loaned money by buying Treasury notes, bills, bonds, and so on.

The remainder is inter-governmental debt, money that the federal government owes to itself because it borrowed funds from a government agency such as Social Security. The $10.6 trillion that the United States government owes is the largest national debt of any on the planet. Some economists say they believe that it isn’t quite time to be concerned about the effects of the national debt because the U.S. economy overall is so massive.

In this argument, the economists point to the fact that the national debt was 125% of GDP (gross domestic product) after the Second World War. By comparison, the debt has been between 40% and 70% since that time. However, these same observers of the economic scene note that even though we aren’t alarmed just yet; people should be concerned that so much of the GDP goes to pay interest rather than being used for social services, infrastructure and other uses….

In the article “70% Say Default is Bad for Economy, 56% Say Failure to Cut Spending is Worse” by Rasmussen writes:  A ‘Rasmussen Report’ national telephone survey finds that 70% of ‘Likely U.S. Voters’ think it would be bad for the economy if the debt ceiling is not raised and the federal government defaults on some of its loan obligations. Just 7% disagree and think it would be good for the economy. Eleven percent (11%) feels a government default will have no impact, and another 11% are not sure.

But 56% of voters see more short-term economic danger in failing to significantly cut federal spending than in a government default on the federal debt. Thirty-four percent (34%) disagree and believe a default is worse.  Looking to the longer-term, 63% say failure to significantly cut spending is more dangerous than defaulting on the federal debt. Just 28% hold the opposite view. The formal debt ceiling currently allows the federal government to borrow just over $14 trillion. To fund the current operations of government will require raising that limit to just over $16 trillion.

The debt ceiling comprises only a small portion of the actual liabilities of the federal government. Unfunded liabilities for a variety of programs bring the total government debt to over $100 trillion.  There is little partisan disagreement that the government defaulting on its debt would be bad for the economy. But sizable majorities of both groups agree that a failure to make major cuts in federal spending is the greater long-term threat…

In the article “Does Exceeding the Debt Limit Impact Government Operations?” by Ed O’Keefe and Eric Yoder write: What happens if Congress and the White House can’t reach an agreement?  Simply put, exceeding the debt limit isn’t likely to bring the government to a screeching halt the way a government shutdown would. Employees wouldn’t be sent packing, and paychecks would still be issued. But hitting the debt limit would likely delay the government’s payment of financial obligations and might disrupt the flow of other normal government operations.

The Treasury Department has yet to face a situation in which it was unable to pay its obligations as a result of reaching the debt limit, according to Congressional Research Service (CRS). But it has taken “extraordinary actions” during previous debt limit debates in order to meet the government’s financial obligations. If it gets close to the limit, “the federal government implicitly would be required to use some sort of decision-making rule about whether to pay obligations in the order they are received, or, alternatively, to prioritize which obligations to pay, while other obligations would go into an unpaid queue,” CRS wrote in a February report.

In other words, “the federal government’s inability to borrow or use other means of financing implies that payment of some or all bills or obligations would be delayed.” Treasury officials believe they don’t have the legal authority to prioritize which payments to make, meaning the government would have to pay its obligations as they come due, CRS said.

Earlier this 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. If we don’t change course soon, the next shot won’t be across our bow, but at our hull. While our 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.  The debt limit now stands at $14.29 trillion. With federal government piling up debt at the appalling rate of $4 billion a day, the debt ceiling will be breached within weeks. If Congress doesn’t agree to raise the ceiling soon, the government will lose the ability to issue debt… There is a practically unanimous consensus that the deficit, and the more-worrisome national debt, must be solved.

According to the ‘Government Accountability Office’, the United States’ unrestrained spending “will ultimately affect every citizen in the nation.” In his testimony before Congress, ‘Congressional Budget Office’ director Peter Orszag seconded this opinion, noting that “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 40 cents of every dollar to pay debt is “utterly unsustainable.”

“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 percent 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

People with Very-High IQ (Smartest-to-Genius) Are Not Highest Achievers in Business, Try Normal…

“When you’re one step ahead of the crowd you’re a genius. When you’re two steps ahead you’re a crackpot.” ~ Rabbi Shlomo Riskin

The good news is that the real world accomplishments are not made by those with the very highest level IQs (intelligence quotient) or smartest in the world, but achieved by those who are considered to have normal or slightly above normal intelligence. Many so called smartest people on the planet were known to have problems that make us wonder what is the benefit to be the smartest person if the individual cannot even manage his/her life properly,

Mozart is said to have a very high IQ, however he was financially very poor and full in debt, and there are many other example of people with genius level IQs that have not succeeded. The real question is what are the boundaries for real world success? It turns out that there are actually two: one for practical real world achievements, and a second for theoretical accomplishments.

The first consists of solving real life problems, concrete issues. And the second one consist of solving theoretical problems, some people are good at the first part (real world achievement), and they’re usually people with average or slightly above average intelligence, the latter (the theoretical accomplishments) are for those with very high IQs who can solve complex theoretical problems mainly on tests, but don’t do as well in real world achievements.

However, there are critics who do not dispute the stability of IQ test scores or the fact that they predict certain forms of achievement rather effectively. They do argue, however, that to base a concept of intelligence on IQ test scores alone is to ignore many important aspects of mental ability. Psychologist Peter Schönemann was also a persistent critic of IQ, calling it “the IQ myth”.

In the article “What Different IQ Scores Mean” by James Neill writes: What is a good IQ score?  What is a high IQ score?  What is a low IQ score?  These are common questions, particularly after someone finds out score from an IQ test. Lewis Terman (1916) developed the original notion of IQ and proposed this scale for classifying IQ scores:

  • Over 140 – Genius or near genius
  • 120 – 140 – Very superior intelligence
  • 110 – 119 -Superiorintelligence
  • 90 – 109 -Normalor average intelligence
  • 80 – 89 – Dullness
  • 70 – 79 – Borderline deficiency
  • Under 70 – Definite feeble-mindedness

The properties of the normal distribution apply to IQ scores:

  • 50% of IQ scores fall between 90 and 110
  • 70% of IQ scores fall between 85 and 115
  • 95% of IQ scores fall between 70 and 130
  • 99.5% of IQ scores fall between 60 and 140

5% of people have an IQ under 70 and this is generally considered as the benchmark for “mental retardation”, a condition of limited mental ability in that it produces difficulty in adapting to the demands of life. Severity of mental retardation can be broken into 4 levels:

  • 50-70 – Mild mental retardation (85%)
  • 35-50 – Moderate mental retardation (10%)
  • 20-35 – Severe mental retardation (4%)
  • IQ < 20 – Profound mental retardation (1%)

‘Genius IQ’ is generally considered to begin around 140 to 145, representing ~.25% of the population (1 in 400).  Here’s a rough guide:

  • 115-124 – Above average (e.g., university students)
  • 125-134 – Gifted (e.g., post-graduate students)
  • 135-144 – Highly gifted (e.g., intellectuals)
  • 145-154 – Genius (e.g., professors)
  • 155-164 – Genius (e.g., Nobel Prize winners)
  • 165-179 – High genius
  • 180-200 – Highest genius
  • >200 –  Immeasurable genius

Note: Einstein was considered to “only” have an IQ of about 160.

In the article “Identifying the Most Intelligent Person in the World” by Dayahka  writes: Howard Gardner, Harvard educational psychologist, has identified nine (9) types of intelligence. Traditional education (and IQ tests) have measured only two of these types (mathematical and linguistic). All people have these nine types of intelligence, but they develop usually only one or two of them. No one is known to have mastered all nine (none of the great masters or gurus or buddhas).

The most intelligent person in the world would have to be the person with the most development of all nine intelligences (Gardner calls them smarts). Since IQ measures only two types of smarts, we’d first need IQ tests for the other seven before we could begin to identify the smartest person in the world. However, since no one (according to Gardner) has developed more than two or three smarts, we would end up in endless wrangling over which of the nine is the best type of smart.

Then we could end in meaningless discussions like asking if someone with a 138 IQ in linguistics is smarter than someone with a 137 IQ in mathematics. The highest IQ score recorded was 228 by Marilyn Vos Savant (at age 10). However, high IQs are notoriously difficult to measure meaningfully. There are many critics who doubt the ability of modern IQ tests to meaningfully measure intelligence…

In the article “Genius Isn’t About Intellect As Most People Believe, It’s More About The Way The Brain Works” by Devon K writes: Contrary to popular belief, genius isn’t about intellect as much as most people believe. Even though they rate genius based on IQ, there are some very smart people who are not geniuses and some very dumb people who are. The reason for this is that genius is actually more about how the brain/mind works than how smart someone actually is. The brain can be trained to focus on intelligence and thus allow the genius to become exceptionally smart.

However, the brain can also be applied (or not applied) too many other things and thus lead to many, many other outcomes (besides intelligence). Don’t confuse all of this with people being called a “musical genius” or other such thing. In many ways that’s a label people use to try and make the person “more than”. That isn’t to say they are not a genius, only that the word ‘genius’ is being used in an arbitrary fashion without regard for what it actually is.

In the article “Is Genius Born or Can It Be Learned?” by John Cloud writes: Is it possible to cultivate genius? Could we somehow structure our educational and social life to produce more Einsteins and Mozarts — or, more urgently these days, another Adam Smith or John Maynard Keynes? How to produce genius is a very old question, one that has occupied philosophers since antiquity. In the modern era, Immanuel Kant and Darwin’s cousin Francis Galton wrote extensively about how genius occurs.

Pop-sociologist Malcolm Gladwell addressed the subject in his book Outliers: The Story of Success. The latest, and possibly most comprehensive, entry into this genre is Dean Keith Simonton’s book ‘Genius 101: Creators, Leaders, and Prodigies’. For most of its history, the debate over what leads to genius has been dominated by a bitter, binary argument: is it nature or is it nurture — is genius genetically inherited, or are geniuses the products of stimulating and supportive homes? Simonton takes the reasonable position that geniuses are the result of both good genes and good surroundings.

His middle-of-the-road stance sets him apart from more ideological proponents like Galton (the founder of eugenics) as well as revisionists like Gladwell who argue that dedication and practice, as opposed to raw intelligence, are the most crucial determinants of success. And, Anders Ericsson who has become famous for the 10-year rule: the notion that it takes at least 10 years (or 10,000 hours) of dedicated practice for people to master most complex endeavors.

“Geniuses are those who have the intelligence, enthusiasm, and endurance to acquire the needed expertise in a broadly valued domain of achievement” and who then make contributions to that field that are considered by peers to be both “original and highly exemplary.” ~ Simonton

In the article “Top 5 Mad Geniuses” by Jane McGrath writes: Is insanity the secret companion to ­genius? It turns out some of the world’s greatest geniuses were quite mad. In fact, some scientis­ts claim that a far greater percentage of creative types (poets, painters, musicians and the like) have been afflicted with bipolar disorder than the general ­population. Some of the world’s most renowned creative minds, including writers Mary Shelley, Virginia Woolf, and Ernest Hemingway; composers Irving Berlin and Sergey Rachmaninoff; and painters Paul Gauguin and Jackson Pollock are all believed to have suffered from the illness

Despite evidence of a link between genius and madness, no one has proved that such a link exists. However, scientists at the University of Toronto have discovered that creative people possess little to no “latent inhibition”, that is, the unconscious ability to reject unimportant or irrelevant stimuli.

As University of Toronto psychology professor Jordan Peterson puts it, This means that creative individuals remain in­ contact with the extra information constantly streaming in from the environment. The normal person classifies an object, and then forgets about it, even though that object is much more complex and interesting than he or she thinks. The creative person, by contrast, is always open to new possibilities.”

Think you are smart? Well, if your IQ is 130, that puts you ahead of 98% of people. Of course that means there are still 120 million people who are smarter than you (the other 2%). Also, recent research shows that a person’s level of self-discipline is more predictive of success than their IQ level. In other words, don’t take too much meaning from your score on an IQ scale.

IQ scores measure the ability to carry out symbolic thinking, while intelligence is a multidimensional entity, a human characteristic too complicated to be accurately and sufficiently measured by any IQ test. IQ tests merely photograph one’s cognitive level/mental performance… Being a genius and being successful are two different things, although they can be combined in many individuals…

“Talent hits a target no one else can hit; Genius hits a target no one else can see” ~ Arthur Schopenhauer

The ROI, Return on Investment, and Why It’s Important for Marketing, Sales, Social Media, HR, R&D, Training…

“Not only are we able to help our customers navigate the complexity of the marketplace. We are able to show a 20 percent to 50 percent ROI’ ~ Ellen Siminoff

The ROI (Return on Investment) and Why It’s Important (or, Is It?) for Marketing, Sales, Social Media, HR, R&amp;D, Training…ROI analysis compares the magnitude and timing of investment gains directly with the magnitude and timing of investment costs. A high ROI means that investment gains compare favorably to investment costs. 

In last few decades, ROI has become a central financial metric for asset purchase decisions– computer systems, factory machines, or service vehicles… approval and funding decisions for projects and programs of all kinds (such as marketing programs, recruiting programs, and training programs), and more traditional investment decisions (such as the management of stock portfolios or the use of venture capital).

In the article “Ten Myths About ROI” by Jack and Patti Phillips write: Originally, the concept of ROI was used in the context of showing value from investing in capital expenditures, such as buildings, equipment, and companies. In the past two decades, it has been used in the context of showing return on investing in a variety of non-capital expenditures like human resources, technology, quality, and marketing.

But the term ROI is entered into the business lexicon on a routine basis. What’s the ROI on that? is a common question. “Can you show me the ROI?” is often a request from executives. “This will deliver a very high ROI” or “You can expect a very high ROI with our solution” are commonly heard from sales professionals.

Most of these requests are brought into play without understanding the true meaning of ROI. In reality, the return on investment is a financial term. It shows, in a single metric, the potential (or actual) contribution of different projects, services, programs, and events…

In the article “Return on Investment: What is ROI analysis?” writes: One serious problem with using ROI as the sole basis for decision making, is that ROI by itself says nothing about the likelihood that expected returns and costs will appear as predicted. ROI by itself says nothing about the risk of an investment. ROI simply shows how returns compare to costs, assuming the action or investment brings the anticipated result.

For that reason, a good business case or a good investment analysis will also measure the probabilities of different ROI outcomes, and wise decision makers will consider both the ROI magnitude and the risks that go with it. In complex business settings, however, it is not always easy to match specific returns (such as increased profits) with the specific costs that bring them (such as the costs of a marketing program), and this makes ROI less trustworthy as a guide for decision support.

The standard advice for ROI is usually explained as this: “Other things being equal, the investment with the higher ROI is the better business decision.”  However, important business decisions are rarely made on the basis of one financial metric and with business investments, moreover, the condition, “other things being equal” almost never applies.

Therefore, when reviewing ROI figures, or when asked to produce one, it is a good idea to be sure that everyone involved: “Defines return on investment the same way and understands the limits of the concept when used to support business decisions”.

In the blog “The Internal Importance of ROI” by Greg Ness writes: To some, return on investment (ROI) may appear to have reached marketing buzzword status. However, despite the term’s widespread use in the current business lexicon, its importance cannot be understated — especially to marketing executives. While understanding and being able to measure ROI is of vital importance to external marketing efforts, it is just as important for internal communication and credibility.

With all the financial turmoil that many companies are presently facing, it will be vitally important for marketers to exquisitely detail that marketing is a lifeblood investment for the enterprise rather than a costly excursion.  Without hard numbers to support requested marketing budgets, top management and boards of directors will be in no position to approve marketing outlays in today’s economic quagmire. Faced with declining sales, some companies cut marketing by a certain percentage across the board.

That may be an easy way to cut budgets, but it is seldom the smart way. If, and that is a big if, you absolutely need to cut your marketing, concentrate on cutting out what isn’t working for you and preserve what is working well for the organization. The only way to know that is to have an ROI analysis in hand.  Getting a handle on ROI isn’t tough if you wire a system into your efforts through the entire sales and marketing funnel.

However, that commitment must start at the top of the marketing chain of command: The thought of CMOs or marketing executives trying to navigate their way to success – externally or internally – without having numbers that support their efforts could be a challenge.

In the article “Why ROI Doesn’t Work” by Glenn Gow writes: Many technology companies, especially those that offer complex or expensive solutions, have developed ROI tools for their sales organizations. The goal is to provide a way to offer prospects a factual, economic basis for making a purchase decision. A truly useful ROI tool/sales approach will be flexible enough to guide the buyer and sales person to constructing a customized business case and in the process will help to define the playing field for the evaluation itself.

The right tool, presented in the right way, gives the sales rep the power to help the prospect make his economic justification as to the value of the solution. Prospective buyers need help in articulating their own ROI, and in constructing a business case. By providing this pivotal business-case-construction assistance, the sales professional is positioned for greater visibility into the deal, providing him with key information that can move the dialogue forward and accelerate the time-to-close.

The sales organization needs skills to assist prospects in developing their own approach to whatever economic justification process is best for the prospect and your solution. An ROI program designed to build trust and face-time opportunities will accelerate the sales cycle only if it is enthusiastically adopted, and proper support mechanisms are in place.

In the blog “Your ROI: The Most Important Number for Your Business” by Richard Seppala writes:  The bottom line success or failure of a business boils down to the numbers: Profit, revenue, labor cost, profit margin—each of these calculations (and others) are powerful indicators of the health of your business. The marketing ROI is another important number for the business. Knowing the ROI for each of your marketing investments tells exactly how successful each initiative is per dollar spent.

And that enables you to stop spending money on campaigns that don’t produce results. It enables you to focus all of your marketing dollars on the initiatives that are the most profitable. Once you identify tactics with a strong positive ROI, you can invest money confidently; knowing that you’ll recoup your investment and more. Knowing your marketing ROI allows you to pick up more business efficiently. And that, in turn, allows the improvement of most other financial numbers dramatically.

In the article Marketers Use Varying ROI for Social Media” by KingFish Media writes: Marketers use a wide array of metrics to measure return on investment (ROI) from social media campaigns, according to a new study from King Fish Media, Hubspot, and Junta 42. Results from “Social Media Usage, Attitudes and Measurability” indicate that out of quantitative measure and techniques marketers are using to measure the ROI of social media campaigns, the most popular directly measure the number of people responding.

Almost all (93%) measure the number of visitors/page views, while 85% measure the number of fans/followers generated. Another 79% measure the traffic generated to the corporate site from social media. Other popular metrics directly measuring people include leads generated (72%) and new customer conversion (58%). Some metrics measure the actions people take, such as number of comments posted (71%) and shared links (55%).

In their use of qualitative metrics, marketers are most apt to measure the impact social media campaigns have on customer relationships. Eighty-four percent measure increased dialogues with prospects and customers, while 68% measure how much existing customer relationships were strengthened. In addition, 57% measure customer retention and 43% track the ratio of negative to positive relationships with prospects and customers.

One popular qualitative metric, corporate/brand reputation (68%), does not directly measure some aspect of customer relationships. Surprisingly, 43% of marketers say they have not yet measured the ROI of their social media efforts. Another 34% say social media efforts have met expectations, and 13% say they have exceeded expectations.

In a positive sign for the effectiveness of social media as a marketing tool, only 8% of marketers say social media efforts performed worse than expected, with 2% considering them far below expectations. In what may be reflective of the relative newness of social media as a marketing tool, only 29% of marketers say they will have to show positive ROI to continue their social media programs.

Forty-three percent will track ROI but not set requirements, while 21% will not track ROI and 6% don’t know. Other results from “Social Media Usage, Attitudes and Measurability” indicate that 87% of companies currently use LinkedIn as part of their social media strategy, while 12% plan to in the next 12 months. Similarly, 84% use Twitter and 16% plan to in the next 12 months, and 78% use Facebook and 22% plan to in the next 12 months.

In the blogExperts: Old-fashioned ROI is Best” by Barney Beal writes: The most dangerous pitfalls in attempting to measure ROI are people who rely on average ROI or rely on the ROI from another company. A sales rep may be selling an application and says the average ROI is 200% or the person down the street has a 300% ROI. There’s no such thing as an average ROI. You can’t compare your ROI to someone else’s. ROI is just an indicator of how big a step you take. 

Another important problem is that many companies rely on benchmark data. Benchmark is good guidance data, but you should never use benchmark data to drive your calculation. Your calculation is just for you and your company. If you use benchmark data, you’re going to generate an average ROI based on average companies and an average benchmark, which doesn’t tell you anything about what you’re going to get.

Finally, never trust a sales person to do an ROI assessment for you. You might as well trust a car dealer to write the check. It’s like handing them a checkbook and saying, “You figure out what I can spend on the car.”

In business, it is often said “it takes money to make money”. The ROI is a profitability ratio that helps measure the performance of the application of money. ROI measures the link between profits and the investment required to generate profits. ROI is frequently used by management to measure performance against internal goals, competitors, or a specific industry.

Management also utilizes ROI to determine where to allocate future resources based on previous investment’s profitability. ROI allows the return of investments generating different amounts of revenue to be compared. For example, an expensive piece of machinery may generate more revenue than a lower cost investment, but that lower cost investment may have a better ROI. ROI allows management to see past revenues, and view the effects of investment expenses on return.

Although there are many issues with the ROI calculation, it is a good method of measuring and comparing the earning power of investments. The ROI is a versatile and simple measurement for deciding where to allocate capital funds, and that makes it a very useful management decision-making tool…

“Most companies are looking for a 12-month return on investment, or payback in the same fiscal year. It may be that the price point is too high”. ~ Richard Barrett

Great Modern Business Leaders & CEOs and Traits That Really Matter…

“The ability to ‘inspire and motivate to high performance’ was the single most powerful predictor of being perceived as an extraordinary leader” ~ Jack Zenger…

Business executives are no longer in the “command and control” position where their business can survive and thrive by their issuing directives and having their trained and willing minions carry out those instructions.

A leader must be agile and capable of being both proactive and reactive, often simultaneously and sometimes ignoring the formal artificial dignity that a position of power once dictated. Being bent over with your ear to the ground may not be the most dignified position, but it might be the only one that will warn you of the danger lurking just over the horizon…

In the articleWhat Makes a Great Leader? by Alan Murray  writes: Leaders come in all shapes, sizes and styles. But the question that has to be asked is: Is there a “right” way to lead an organization? If there is one strong conclusion that emerges from the best work on leadership, it is this: “Great leaders exhibit a paradoxical mix of ‘arrogance and humility’.

One of the most influential business books of recent years is Jim Collins’ “Good to Great”. Collins’ findings on leadership are compelling in part because they were unexpected. Collins and his team launched a huge research project looking at 1,435 large companies and ultimately identifying just eleven that had made the leap from ‘good results to great results’, and then sustained those results for at least fifteen years.

The team examined the good-to-great companies in relation to a comparison group, to see what made them special. “The good-to-great leaders seem to have come from Mars,” Collins writes. “Self-effacing, quiet, reserved, even shy – these leaders are a paradoxical blend of personal humility and professional will. They are more like Lincoln and Socrates than Patton or Caesar.” Collins’ good-to-great CEOs were people you’ve likely never heard of and their common characteristic was their profound humility – and a tendency to use the pronoun “we,” not “I”...

“Humility alone, of course, is not enough to make a great leader. Equally important is ferocious resolve – an almost stoic determination to do whatever needs to be done to make the organization great. And that determination is often accompanied by a toughness and even ruthlessness in pursuit of goals” ~ Alan Murray

In the article Five Strategies for the 21st-Century Leader” by Diane Brown writes: Effective leaders can no longer rely on their own expertise. They must be able to meet goals by collaborating with others to develop solutions with flexibility and energy. Successful 21st-century companies will establish, develop and foster company-wide leadership.

Top leaders will learn to capitalize on the talents and expertise of each team member to benefit the organization as a whole. Driving stronger contribution within teams is possible. Here are five strategies critical in effective leadership:

  • Share a unified vision and purpose.
  • Strategic goal alignment and prioritization.
  • Learn motivators, and use them to help your team
  • Provide tools for success.
  • Determine realistic and measurable outcomes for a collaborative climate.

“A business leader’s ability to make sense of his or her contextual framework and harness its power often made the difference between success and failure” ~ Tony Mayo

In the article What Great American Leaders Teach Us by Sean Silverthorne: In an interview with Tony Mayo & Nitin Nohria, Harvard Business School, Silverthorne asks the questions: “Are there certain characteristics that all leaders possess? Could Wal-Mart founder Sam Walton be equally successful today running another company?”

In response, Tony Mayo & Nitin Nohir spoke about the ‘Harvard Business School’s Leadership Initiative’ and their attempt to answer these and other questions about the nature of leadership through its formation and study of the ‘Great American Business Leaders’ database. The study identified and analyzed the accomplishments of some 860 top executives in the 20th century, and results are now starting to emerge…  Mayo continued saying, “Having identified our pool of great business leaders, we organized the data by the decades in which business leaders initially came into the CEO position or founded their companies.

We chose to evaluate candidates based on the beginning of their CEO tenure in an effort to understand the contextual elements and influences that they faced at the outset. By analyzing our pool of great business leaders by decade, three distinct leadership patterns or archetypes emerged. We called these leadership archetypes Mold-Makers, Mold-Breakers, and Mold-Takers”.

‘Mold-Makers’ essentially created or enhanced businesses that took advantage of the coalescing context of their times. They built businesses that thrived in a specific contextual framework and modified their operations and leadership styles as the contextual factors evolved. Some admittedly were in the right place at the right time, but it was often more than luck that made the difference between being merely successful and being wildly successful.

In contrast, ‘Mold-Breakers’ were business leaders who succeeded in breaking through the contextual mold of their times. They sought not to be constrained by the present conditions of their market; they were able to envision a future landscape for success. Finally, ‘Mold-Takers’ were business leaders who saw value in industries and/or businesses that others thought were no longer viable.

They took advantage of industry consolidations and often breathed new life into companies; extending business value well beyond what others thought was possible. Throughout each decade of the twentieth century, Makers, Breakers, and Takers emerged in a variety of industries—all demonstrating a keen sense of contextual intelligence. However, despite the overwhelming evidence to the contrary, companies still tend to favor the just “proven” talent, but often fail to ask “proven in what context?”

In the article “The Kama Sutra of Business: Management Principles from Indian Classics” writes: ‘The Kama Sutra of Business’ could be summed up by the old saying that “there is nothing new under the sun”. Or to use the terminology of Hong Kong-based author and inspirational speaker Nury Vittachi, the piece of ‘wetware’ called the human brain hasn’t been upgraded. As a result, many neglected texts of ancient wisdom are surprisingly relevant today.

Vittachi proves this point by taking us on a guided tour through three Indian classics – the Kama Sutra, Bhagavad Gita, and Arthashastra. Along the way he shows that “modern” business management concepts, such as, principle-based leadership, putting your people first, establishing win-win relationships, time management, and supply chain management have all been around for thousands of years. You could argue that there is nothing new here – but that is exactly the point… We don’t need new management theories; we need to rediscover the wisdom of the past…

In the articleWomen, Better Leaders for the Modern Workplace?” by Hudson writes: Women could be better suited to lead modern organizations, according to a major international study by global recruitment and talent management consultancy. The study, which involved data drawn from assessments and psychometric testing of more than 65,000 people around the world over several years, reveals the different working and leadership styles of men and women of various ages and positions.

It found that women’s natural characteristics and working style hampers their route to the top, and that they break into senior leadership positions by adopting or mimicking a ‘male’ leadership style. The study found that:

  • C-level women show personality traits that are almost the opposite of women in general.  Like C-level men, C-level women score very high on extraversion, decisiveness, strategic thinking, results-focus and autonomy. 
  • C-level women, contrary to their male colleagues, also pay attention to more typically female characteristics around altruism and openness.
  • Younger female leaders appear to focus rather on altruism, people orientation and cooperation, experienced female leaders on their end concentrate on openness and thought leadership.

According to a survey conducted by ‘TheLadders.com’, “leadership” above all else, is the defining characteristic of a great CEO. When asked: What skills or personality traits are most important in a CEO? A 53% majority selected leadership, next was ethics with 19%, strategy followed with 10%, and accountability followed that with 8%.

Rounding out the bottom was a list of traits that are typically associated with strong on-the-job performance: management claimed 5%; creativity with 3%; and industry expertise with 2%. In a separate survey of 911 executives, ‘TheLadders.com’ sought further clarity on the topic of CEO performance, asking the question: What are the criteria on which your CEO’s performance should be evaluated?

Again, leadership reigned supreme with 29%, then followed by impact on shareholder value with 22%, strategy for growth with 16%, and operational excellence with 11%. Then, creating an ethical work environment and creating a corporate culture both with 8%, and ability to hit quarterly growth targets with 6%.

Modern business leaders must have the ability to think like the creatures they are attempting to influence: The ability to immerse themselves into the role of their customers. The modern leader also must learn to play a good game of social and ecological citizenship.  

However, some experts say that only half of business management is leadership; a complex issue encompassing important, competing and strategic elements of business operations; twisting the age-old saying of ‘leaders being born’, whereas, it may be that ‘leaders in the modern business world are created’. And, the other half of business management is being an expert with elevated and enhanced management skills upon which a business thrives. Their job is identifying, understanding, and addressing key strategies regarding various management oriented operational issues that a company faces…

In other words, you must be a co-creator and materialize your vision through others. No one succeeds alone! A leader is nothing without a following and vice versa, so communication paves the way for implementation of ideas, support, understanding, and commitment to a planned action both by employees and stakeholders…

“A good general, a well-organized system, good instructions, and severe discipline, aided by effective establishments, will always make good troops, independently of the cause for which they fight.” (Maxim 56) ~Napoleon Bonaparte