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

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

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

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.” According to 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”.

According to Paul W. Ivey; salesmanship is 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 articleSalesmanship 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 isrecreate 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 pattern of behaviors. It’s 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

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

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 articleSymbols 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 organization members and representing organization values and assumptions. They elicit internalized norms of behavior, linking members’ emotional responses, interpretations to organization action. They frame experience, allowing organization members to communicate about vague, controversial, uncomfortable organization 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 very basics of human communication and how our minds work to create, within us, a sense of satisfaction. Successful business relationships 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

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

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 articleBitcoin, 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 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

Benefit Corporation, B Corp: Changing ‘Profit’ Capitalism to ‘Social Conscience’ Capitalism for New Economy… Paradigm Shift for Social Responsibility…

Many major corporations have already proven that they can be socially responsible for the well-being of societies, communities, and environments in which they operate.

There is a growing movement for a new type of corporation, a corporation structure that  is more socially responsible; namely, the Benefit Corporation. The Benefit Corporation is a class of corporation required by law to create general benefit for society, as well as for shareholders.

The Benefit Corporation must create a material positive impact on society, and consider how their decisions affect their employees, community, and the environment. Moreover, they must publicly report on their social and environmental performances using established third-party standards.

The Public Benefit Corporation is a public corporation chartered by a state designed to perform some public benefit. The chartering of Benefit Corporations is an attempt to reclaim the original purpose for which corporations were chartered in early America. Then, states chartered corporations to achieve a specific public purpose, such as building bridges or roads.

Their legitimacy stemmed from their delegated charter, although they could still earn profits while fulfilling it. Over time, however, corporations came to be chartered without any public purpose, while being legally bound to the singular purpose of profit-maximization for its shareholders.

Advocates of Benefit Corporations assert that this singular focus has resulted in a variety of societal ills, including the thwarting of democracy, diminished social good, and negative environmental impacts.  By law, the mission of a corporation is to maximize profit for shareholders, and the totality of a corporation’s activities must serve that single end.

Should a corporation fail to conduct themselves in that manner; fail to fulfill what is called its ‘fiduciary duty’, they may be held legally liable and face civil penalties.  By contrast, the ‘fiduciary duty’ of Benefit Corporations must include non-financial interests, such as social benefit, employee and supplier concerns, and environmental impact.

Chartering as a Benefit Corporation allows companies to distinguish themselves as businesses with a social conscience, and as one that aspires to a standard they consider higher than mere profit-maximization for shareholders. According to Yvon Chouinard who authored the book  ‘Let My People Go Surfing’ writes; the Benefit Corporation, usually referred to as a ‘B Corp’, creates the legal framework for firms to remain true to their social goals.

To qualify as a B Corp, a firm must have explicit social or environmental mission, and a legally binding fiduciary responsibility to take into account the interests of workers, the community and the environment, as well as its shareholders. It must also publish independently verified reports on its social and environmental impact alongside its financial results. Other than that it can go about business as usual.

The B Corp is a deliberate effort to change the nature of business by changing corporate law, led by ‘B Lab’, a non-profit organization. The idea of a legal framework for firms that put profits second is not confined to the U.S. Britain, for example, has since 2005 allowed people to form ‘community interest companies’. Similar laws are brewing in several European countries.

The impetus for all this comes from people who believe that existing laws governing corporations and charities are too restrictive, and they claim that existing laws for co-operatives and mutual companies are inadequate. Hence, the need for B Corps and other novel structures; such  goes their argument. There is no tax advantage for being a B Corp…

In the article “S Corps, C Corps, and B Corps, Oh My! Corporate Structure Matters” by Eric Friedenwald-Fishman writes: The basic structure for corporations is myopic; it focuses on maximizing profits to shareholders. Whether we are protesting the power and greed of corporations or defending them as drivers of the economy, we share the same basic expectation; that a corporation’s job is to maximize profits to shareholders.

This basic expectation is damaging to people, communities, the economy, and ultimately to the companies themselves. There is a better way: There’s an opportunity to make a paradigm shift that harnesses the incredible power of companies to benefit society and the economy; the Public Benefit Corporation.

For those unfamiliar, this structure requires three key elements: purpose (create a material positive impact to society), accountability (consider nonfinancial interests in decision-making), and a fair return to all shareholders with transparency (open disclosure of social performance using third-party standards). In other words,

Benefit Corporations are legally chartered both to consider and to benefit diverse stakeholders (shareholders, employees, the environment, and so on), and are held accountable for doing so. This shift in the corporate form has the potential to drive tangible positive impacts including; increased health and prosperity of the workforce and their families, improved air and water quality, community stability, and ultimately stronger companies that can compete for the long-term.

In the article “Adam Smith Was Not Schizophrenic” by Kyle Westaway writes:  Adam Smith, the father of modern economics, was the first to assert the concept of free market capitalism. In his most popular work, ‘The Wealth of Nations’ he wrote about the often-quoted ‘invisible hand.’ But in his first work, ‘The Theory of Moral Sentiments’, which he considered to be his most meaningful contribution; he writes about our duty to fellow members of society.

Given the gap between modern capitalism and the morals-based approach from his first book, one can’t help but wonder if Smith was an intellectual schizophrenic, essentially promoting two competing theories. I don’t think he was. In fact, I see his two preeminent works amounting to a unified theory, a blueprint for a more stable and sustainable version of capitalism; a conscious capitalism.

‘The Wealth of Nations’ presupposed that the capitalist system would operate on the moral framework he laid out in the ‘Theory of Moral Sentiments’. He was seeking to create a system defined by efficient allocation of resources driven by self-interest, but guided by self-restraint. However, the current version of capitalism’s guidance has the legal duty to maximize shareholder value.

Many are seeing the need for a new legal structure that embraces conscious capitalism by broadening the fiduciary duty from maximizing shareholder value to maximizing stakeholder value.  That is the legal mandate to make decisions that pursue not only a positive benefit on the bottom line of the shareholders, but also the positive benefits for the community, environment, employees and suppliers.

This broadening of fiduciary duty is a fundamental shift at the very core of the existing corporation. This new type of corporation that embraces both conscious capitalism and self-interest by broadening the fiduciary duty is known as Benefit Corporation…

In the blog B Corp is Not a New Legal Form by Ellis Carter writes: Although the terms B Corporation (B Corp) and Benefit Corporation may sound the same; they are distinctly different concepts. ‘B Corp’ formally known as a ‘Certified B Corporation’, is not a legal form, whereas the Benefit Corporation is a legal form.

The ‘Certified B Corporation’ is a label given by ‘B Lab’ (independent not-for-profit organization) to businesses that pass a ‘socially responsible certification’ process.  There are 3 key differences between B Corp and Benefit Corporation structures, and they are:

  • B Corporation (B Corp) is a voluntary certification.  ‘B Corporation’ certification recognizes companies that are purpose-driven and which create benefit for the community, the environment, and employees–as well as for shareholders. ‘B Corporation’ status is conferred on companies that apply with a passing score on the ‘B Rating System’ and that agree to take steps to legally expand their fiduciary duty beneficiaries beyond shareholders.  The certification is granted by an advisory committee from ‘B Lab’–a non-profit organization dedication to ‘B Corporation’ certification.
  • Benefit Corporation is a legal corporate structure.  You’ve likely heard of corporate structures such as; a ‘C Corp’ or an ‘S Corp’, similarly ‘Benefit Corporation’ is a another class of corporation that serves society and the environment, as well as shareholders.
  • Becoming a ‘Certified B Corporation’ is one way to meet statutory requirements for Benefit Corporation status. This is true for states that have passed ‘Benefit Corporation’ legislation.

A growing number of business people say that another kind of corporate legal structure is needed; a structure that requires companies to operate for the good of society, not just for their shareholders. According to Marc Gunther this vision is simple, yet ambitious; creating a corporate structure that uses the power of business to solve social and environmental problems. The B Corporation (B Corp) is a corporate structure that has the rigor and independent standards for meeting the requirement of social and environmental performance, accountability, and transparency.

According to Jay Coen Gilbert, a founder of ‘B Lab’: We can’t have a new economy unless we have a new type of corporation: Current law, he argues, require company executives to put shareholder’s interests ahead of everyone else’s and that is not socially responsible; we need a different structure. On the other hand, Marc Gunther says; the ‘B Corp’ concept is great in theory but the problem is that the majority of the world’s large corporations will not re-incorporate as a ‘B Corp’.

Thus, the idea of ‘business for the public benefit’ is not going to get big enough or important enough to make a real difference. It will just sit on the sidelines of ‘shareholder capitalism’. There are many existing corporations that are making the world a better place; by serving their customers, enabling their workers to flourish, and giving back to their communities. Even with the good deeds of many existing corporations; there’s no doubt that some key corporation reforms are needed; for a kinder gentler social conscious capitalism

Together, we can establish a 21st century corporate structure that provides returns to society, for granting its charter, while creating strong stable and responsible businesses. ~ ‘B Lab’

Business Outlooks Forecasts Predictions for 2012: Global, U.S., China, Japan, Germany, India…; Rethink, Reflect, Recharge–Hazards Caution…

“Never predict anything, especially the future” ~ “Fasten your seatbelts, it’s going to be a bumpy year!”

Business Outlooks Forecasts Predictions for 2012: It’s often difficult to see clearly through tough times, but a new year encourages reflection and rethinking. Some of the most experienced and innovative minds probe deep into the key business and economic issues and provide their insight for 2012.

The Wall Street Journal on December 23, 2011 headlined; ‘Risks Cloud Outlook for Economy in 2012’, saying: “The economy is poised for another year of muddling through. Most private economists forecast a modest 2% growth rate for the U.S… A pace subdued by housing woes, a lackluster job market, and cuts by government.  They also warn of potential spillover from weakness abroad, including a mild recession apparently under way in Europe”.  

The consensus view of concerns and uncertainties highlighted, in the article, included: global weakness, threatening U.S. exports; weak housing demand with foreclosures affecting prices; protracted unemployment and weak job creation; and government belt-tightening.  However, “when all the experts and forecasts agree – something else is going to happen,” says Bob Farrell.

In other words, when mainstream consensus forecasts one way, expect another. On December 28, 2011, ‘Financial Times’ contributor Mark Mallock-Brown headlined:The downward slide continues…” saying: “Next year (2012) is not going to be better….Whatever temporary economic fixes are applied to the euro-zone, U.S. deficits and unemployment, the overheated Chinese real estate market, petering Indian reforms or stalling Brazilian growth,” expect more slide.  There are clouds on the horizon that are likely to slow U.S. economic growth to 2% for the year as a whole”, says Jerry Jasinowski.

The biggest problem facing the global economy will be a major credit crunch and recession in Europe. This is all part of a global slowdown in growth; as India, Brazil, South Korea, and even China are seeing growth slow from the 2011 pace. India has been particularly hard hit by inflation, tightening credit and an emerging currency crisis. China’s growth has slowed enough to cause Beijing to lower its reserve ratio to ease monetary policy…

In the article “Global Economic Outlook 2012” by ‘The Conference Board’ writes:  Until at least the middle of the next decade, global growth is likely to slow to approximately 3% per year on average–a rate somewhat below the average of the last two decades. A recovery in the advanced economies will be more than offset by a gradual slowdown in the emerging economies as they mature, with the net result that global growth will slow.

But the biggest risk ahead for the global economy is not this slower overall growth in output but a slowdown in average output per capita, which will determine how fast living standards can be supported and raised. Main results:

  • Global growth is projected to grow at 3.2% in 2012.
  • Advanced economy growth is expected to slow down from an already meager 1.6% in 2011 to 1.3% in 2012.
  • In 2012 emerging economies will slow in growth by 1.3 percentage points on average, going from 6.4% growth in 2011 to 5.1% in 2012.
  • The greatest challenge for the global economy in this slow growth environment is to raise productivity without losing job opportunities for the millions who are looking for reasonably paid jobs to support their living standards.

In the article Warren Buffet and 69% of CEOs Cautiously Optimistic for 2012” by ‘ChiefExecutive.net’ writes:  Warren Buffet’s actions in 2011 positioned Berkshire Hathaway to benefit from improved overall business conditions in 2012. In the first quarter of 2011, Buffett told shareholders that he was ready to put his firm’s more than $40 billion in cash to work. Our elephant gun has been reloaded, and my trigger finger is itchy,” said Buffet back in February 2011.

Though 2011 was a tumultuous year for business, Buffett signaled that conditions were ripe for acquisitions, positioning his firm to profit from macro improvements in the coming year. And acquire he did; Buffett spent more in Q3 than any other quarter in 15 years. Nine billion in cash went to acquiring chemical giant Lubrizol, and then Buffett took an $11 billion stake in IBM. He also gave a struggling Bank of America $5 billion in cash. Buffett’s willingness to drop so much cash indicates that he anticipates an upswing in the economy and business conditions in 2012 and beyond.

Buffett’s confidence seems a bit higher than ‘Chief Executive‘s’ readership, who were optimistic, but still cautious heading into 2012. Though the ‘CEO Confidence Index’ (gauge of CEOs’ perceptions on overall business conditions) did take a hit during the middle of the year; the fall 2011 brought a renewed optimism to the table.

The Index levels are still moderate, and a bit tempered, but preliminary results for the ‘January 2012 CEO Confidence Index’ indicate that expectations for business conditions is continuing to rise. In 2012, just fewer than 69% of CEOs expect to see increased revenues, and 42% expect that they will increase capital expenditures. CEOs are investing in their businesses and are making acquisitions...

In the article “Can We Trust the Moderate Growth Forecasts?” by James Picerno writes: Another day, another economic forecast. The 35 economists polled for the latest ‘Livingston Survey’ via the ‘Philadelphia Fed Project’ looking ahead to 2012 “see the growth rate of economic output slowing to 2.1% (annual rate) in the first half of 2012, and they predict that it will then increase to 2.5% (annual rate) in the second half of the year.” The economists also expect “a slow recovery in the labor market, with the unemployment rate at 8.9% in June 2012.”

Those unemployment predictions are up slightly relative to the June 2011 forecast. Forecasts are made to be broken, of course. Reality is never quite what it seems until it arrives. What events might conspire to knock moderate expectations off the pedestal? One risk that’s surely on the short list for monitoring is the potential blowback for emerging markets from the various ills infecting the developed world.

‘International Monetary Fund’ deputy managing director Min Zhu, in a speech, explains: Major ‘advanced economies’ seem to have entered a vicious cycle of weak economic activity, financial distress, and high public debt and deficits. Emerging economies, by contrast, show stronger fundamentals that have underpinned global economic growth so far. But these economies are not immune. In fact, vulnerabilities are increasing, and potential spillover from advanced economies are weakening their economic outlook…

In the article “Economic Turbulence Forecast for 2012” by Mil Arcega writes:   There are serious challenges for policy makers in 2012, including; the slowdown in China, Europe’s debt crisis… Reflecting on the global uncertainty, World Bank President Robert Zoellick urged Europe and its biggest trading partners to act responsibly. “Europe has to rescue Europe, and it’s very important. If there’s any message when I’m asked; ‘Well, what can the U.S. do and what can China do?’ The best thing they can do is clean up their own act at home, be a source of growth at home, and, secondly, be a source of confidence to the market.” 

Zoellick is encouraged by ongoing reforms in China aimed at reducing the country’s reliance on exports, but he warned U.S. lawmakers against further delays in dealing with the nation’s rising debt, now close to $15 trillion. Unless leaders are willing to make the tough decisions needed to stabilize the global economy, Zoellick and many leading economists say problems in Europe, U.S., and China could coalesce into a ‘perfect storm’ in 2012 that could rival the financial crisis of 2008.

Japan’s Economic Forecast, 2012-2013: Japan has had some difficult times, but its economy is still vitally important to many U.S. businesses. Japan’s economic growth took a dive because of the natural disasters, but 2012 will clearly be a bounce-back year, fueled by rebuilding as well as the general economic strength of the areas not directly affected by the earthquake and tsunami.

In subsequent years, growth is likely to taper down to Japan’s sustainable long-term growth rate of just over 1%.  Rolling all the issues together, U.S. companies selling into Japan should plan on better sales in 2012 and 2013 than they had in 2011, with especially strong sales for products used in rebuilding…

South Korea Economic Forecast, 2012-2013: The outlook for South Korea’s economy is positive, if the two greatest risks are avoided: European collapse and conflict with North Korea. U.S. companies doing business in South Korea should establish plans for moderate growth, with contingencies for the downside possibilities.

In this country, however, contingency planning for a recession is probably different from contingency planning for armed conflict. The former is absolutely vital for companies selling to South Korea, and the latter is important to companies with physical facilities in the country…

German 2012 Economy Forecast: A leading German economic think tank says it is lowering its 2012 growth estimate for Europe’s largest economy to 0.6%. The DIW think tank said that the German economy would likely slide briefly into recession before recovering by mid-year. DIW previously had forecast 1% growth for Germany in 2012 but says; “ongoing problems in other European Union countries will likely hurt German exports”.

It says it expects the economy to recover with 2.2% growth in 2013, but only if the euro-zone debt crisis stabilizes. Other German economic think tanks are forecasting 2012 growth between 0.4% and 0.8%. The government’s independent economic advisers are predicting 0.9% growth…

India Business Forecast Report Q1 2012:  India’s cyclical growth slowdown is likely to be deeper and more protracted than previously expected given the higher cost of capital and deterioration in global external conditions. The RBI’s ‘Survey of Professional Forecasters on Macroeconomic Indicators’ in August 2011 put median expectations at 7.9% and 8.3% for FY 2011/12 and FY 2012/13, respectively.

Faced with a slowing economy, and in the absence of major one-off windfalls, the government’s nominal fiscal balance in FY 2011/12 will come in wide of the mark, with FY 2012/13 unlikely to prove much better. They are penciling in central government deficits worth 5.8% and 5.5% of GDP in FY 2011/12 and FY 2012/13; accordingly, they believe it to be only a matter of time before the authorities admit defeat and down-grade their current targets of 4.6% and 4.1%…

China’s Economic Forecast, 2012-2013: The IMF’s forecast for China is reasonable at 9% inflation-adjusted growth. That forecast, however, assumes no collapse in Europe, which is a pretty big assumption. The consensus forecast now is that 2012 growth will be right in line with the country’s long-term growth potential of about 9% per year. However, there issues to consider: Housing prices are thought by some to be bubblicious.

Export market weakness is the greatest risk to China right now. The European Union accounts for about 20% of China’s total exports. Finally, the value of the yuan continues to trend upward, which will limit export growth. U.S. companies selling to China should be prepared both for continued growth and for a markedly slower pace.

According to a survey released in December 2011 by Bank of America/Merrill Lynch; CFOs give the U.S. economy an average score of 44 on a scale of 0-to-100, down from 47 at the beginning of 2011. The “2012 CFO Outlook” survey indicates that this score is equal to the 2010 score, which was the lowest in the survey’s 14-year history. The global picture looks just as bleak: the global economy now rates lower than the U.S. at 43, down from 51 at the beginning of 2011.

Meanwhile, only 38% of CFOs expect the U.S. economy to expand in the coming year, down from 56% in the 2011 survey. Although CFOs hold a fairly pessimistic view of the economy, 56% expect their corporate revenues to grow in 2012, although that proportion is down from 64% a year ago. Similarly, while 41% are forecasting profit growth, that proportion is also down from 55% one year ago, and a significant 15% of respondents predict declines in the year ahead. Half of the CFOs surveyed intend to increase the prices of their products in 2012, while 44% will keep them steady and only 4% will lower them.

On a brighter note: 46% expect their companies to hire employees, unchanged from last year, while only 7% anticipate work-force reductions. The leading economic concerns among CFOs are the effectiveness of U.S. government leaders (70%), the U.S. budget deficit (63%), and healthcare costs (60%). In addition, 58% list unemployment levels and 55% see consumer confidence as concerns…

The world won’t end in 2012, but at times it will feel as if it is about to. That is, the western economies will flirt with disaster, thanks to the indecisiveness of politicians on both sides of the Atlantic. The euro-zone could head back into recession because it dithered too long over the debt crisis in the single currency’s periphery. The high-flying emerging market countries — the BRICs: Brazil, Russia, India and China — are collectively down more than 20%.

India being the worst with its stocks losing 25% of their value. These major emerging markets are likely to all continue slowing in 2012. In 2010, China’s economy grew at 10.3%, it slowed this year 2011 to 9%, and next year 2012 it will be lucky to get 8%. China will get closer to overtaking U.S. as the world’s biggest economy (pencil in 2016 as the likely year); the ‘redback’ (yuan) will make faster-than-expected strides towards joining the ‘greenback’ (dollar) as a global currency.

Economic and market forecasts presented herein reflect the judgment of experts and the forecasts are subject to high levels of uncertainty that may affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes.”

Sales Leadership: World Class (Heavy-Hitter) Sales Leadership Traits as Inspired by Sun Tzu’s The Art of War…

“People should not be unfamiliar with strategy; those who understand it will survive; those who do not understand it will perish” ~Sun Tzu

Sales Leadership: Developing and managing a world-class sales team requires more than just measuring the teams monthly sales achievement. It requires guts, wisdom, analytical skills, the correct temperament, good management, motivational skills, and much more. 

According to Sun Tzu in ‘The Art of War’; “if you fail to plan, you have planned to fail” or “strategy without tactics is the slowest route to victory and tactics without strategy is the noise before defeat”. While most sales managers do implement some level of planning and strategy, most sales leaders are preoccupied with achieving today’s sales numbers.

Sun Tzu’s treatise and keen observations of warfare in the 6th century BC are lessons that are relevant today in business and leadership, and the ideals of character, morals, and strategy are the foundation for world-class  sales leadership...

In the article “Sun Tzu and the Art of Sales Leadership” by CJ Ng writes: CJ Ng In business, many companies have used lessons from the ‘Art of War’ in business strategy, and more importantly, in leadership. The biggest misquote of the ‘The Art of War’ is “Know yourself and know your enemy, a hundred battles fought with a hundred victories gained”. The quote according to the original text is actually “Know yourself and know your adversary, a hundred battles fought and not be imperiled in any”.

If you were to ask any sales person who he thinks is the adversary or enemy, chances are the answer will be the competitor. The adversary in sales is actually the customer. Think about it. Before you make your sale, your customers may have their reservations about buying from you: Your aim is to optimize your profits and fetch a good price. Their goal is to save money and cut unnecessary spending. Both parties started off as adversaries, initially.

The second most frequent quote from Sun Tzu is probably, “The best victory is the one that’s wins without fighting.” This couldn’t have been more apt for dealing with customers, as your goal is to win them over without conflict. It’s quite clear that many customers are indeed waiting for some enlightened sales people to win them over!

If you know your customers’ business, and you know how you can add value to their business, you would probably have won them over. To win over customers sales people must plan more, before communicating with customers… According to studies conducted by HR-Chally, some of the key customers’ demands of sales people include:

  • Sales people ‘must’ understand our business.
  • Sales people ‘must’ be our advocates.
  • Sales people ‘must’ provide (innovative) solutions that work!

In the book “Sun Tzu and Art of Business” by Mark McNeilly writes: Focus on the competition’s weakness, which maximizes your gains while minimizing the use of your resources. To find and exploit your competitor’s weakness requires a deep understanding of their executives’ strategy, capabilities, thoughts and desires, as well as similar depth of knowledge of your own strengths and weaknesses.

Sun Tzu states that ‘you must be able to act with blinding speed’: To move with speed does not mean that you do things hastily. In reality, speed requires much preparation. Reducing the time it takes your company to make decisions, develop products, service customers are critical. Shape the competition; meaning changing the rules of the contest and making the competition conform to your desires and your actions.

It means taking control of the situation away from your competitor and putting it in your own hands. One way of doing so is through the skillful use of alliances. By building a strong web of alliances, the moves of your competitors can be limited. Also, by controlling key strategic points in your industry, you will be able to call the tune to which your competitors dance.

It takes special kind of leader to implement these strategic concepts and maximize the tremendous potential of employees. Sun Tzu describes the many traits of the preferred type of leader: The leader should be wise, sincere, humane, courageous, and strict. Leaders must also always be ‘first in the toils and fatigues of the army’, putting their needs behind those of their troops. It is leaders with character that get the most out of their employees.

These principles have been utilized throughout time in both the military arena and the business world to build creative strategies and achieve lasting success. If you use them properly, they will bring you success as well…

However, there are other views about ‘the art of war in business’, Ryan Allis, ryanallis.com, writes:  For decades, there has been a working assumption in business; that sports and war offer a language of common understanding that supports a business culture that values winning above all and sees it as a zero-sum-game: That is, our gain is necessarily someone else’s loss. 

The truth is that business is not a zero-sum-game. Yes, it’s often very competitive, but success doesn’t always have to be measured by someone else’s failure. This kind of thinking is toxic, and it is ultimately not beneficial. When people are conditioned to view competitors as the enemy in war, they are closed off to new ways of thinking, including partnering with competitors where it makes sense, or viewing what they do as growing the pie for everyone, rather than preventing someone else from having a slice. In most fields, there is enough business for more than one competitor to thrive, and taking a broader, less combative approach may serve you better in the long run…

In the article “Sales According to Sun Tzu’s The Art of War” by Chin-Ning Chu writes:  A winner must experience triumph in body, mind, and soul even before he goes forth to fight his battle. You cannot make a sales call in the hope you might make a sale; you must already have sold your product or idea in your own mind before you can expect to sell it to another.

Listen, and tune into your buyer’s heart and mind. The new sales strategy is not about how much you can talk, it’s about how you listen, it’s about what you say, and how you say it. Use words efficiently with intention, sincerity and power.  Let people use you—but this does not mean let them abuse you.

You become their strategic partner; not their personal valet and gopher. As a leader, you must generously reward the superior performers on your team with recognition and respect… The eight essential elements of winning are:

  • Tao: Moral standing, ethics, righteousness. The product and the company culture need to be in line with Tao, righteousness. Without Tao, a short-term profit is attainable, but long-term success is not possible.
  • Tien: Timing of your products and your marketing strategy needs to be in line with the social timing and the universal timing.
  • Di: Utilize your company’s assets and liabilities, as well as, each individual understands their everyday work and quality of life.
  • Jian: Leaders relate to their staff, customers and suppliers according to five qualities: wisdom, trustworthiness, benevolence, courage and discipline.
  • Fa: Effective executive’s actions will result in keeping the revenue coming in rapidly.
  • Xu, Shi: Paradox of the real versus the unreal.
  • Qi, Zheng: Innovation and tradition.
  • Know thyself, Know others: Essential elements of a salesman; know yourself, your product, and your customers–in equal measure.

In translation, Sun Tzu’s ‘The Art of War’ reads like a collection of vague military aphorisms. In the original Chinese, it is a series of detailed competitive rules in the formulas of ancient Chinese science. According to Gary Gagliardi, Sun Tzu teaches that our success depends on our individual decision-making in interacting with other people. Sun Tzu taught a new way for us to see competition.

Sun Tzu teaches that competition is not conflict between enemies: Competition means a comparison among alternative positions. We create our positions while evaluating the competition’s positions; and likewise, they will create their positions based on ours. This creates a dynamic environment of complementary opposing relationships. To reach our goals in this adaptive process, we avoid costly conflict and, instead look for openings to build positions.

Sun Tzu teaches us how to make productive decisions in competitive situations…  According to Steve Martin, all sales leaders must play three completely different roles to succeed. First, they must be ‘generals’ who create a strategy to win their wars long before the first battle begins. Second, all sales leaders must be professional persuaders.

Finally, successful sales leaders must be oracles who predict their chances of winning based upon their common-sense judgment. When a sales leader has mastered these three roles; strategist, persuader, and common-sense sage, then he has attained sales wisdom, and thus they become a ‘heavy-hitter’. Heavy-hitters are truly great sales leaders who have acquired prominence through their accomplishments, expertise, and judgment…

”Leadership is the lifeblood of a company, a matter of ‘life and death’, survival or extinction. Indeed, something that needs to be studied, applied and re-modified consistently” ~Sun Tzu

Business Risk Management: ‘Protect Against Unthinkables’–Loss Due to Damages, Legal Liabilities, Fines, Crime, Strategic Relationships, Disasters…

“The first step in the business risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning.” ~Charles Tremper

Business Risk Management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.

An ‘Inc. Magazine’ article writes: Every business encounters risks, some of which are predictable and under management’s control; others are unpredictable and uncontrollable. Risk management is particularly vital for businesses, since some common types of losses—such as theft, fire, flood, legal liability, injury, or disability—can destroy in a few minutes what may have taken years to build. In the early 2000s, the role of risk management expanded to protect entire companies during periods of change and growth.

As businesses grow, they experienced rapid changes in nearly every aspect of their operations, including production, marketing, distribution, and human resources. Such rapid change also exposes the business to increased risk. In response, risk management professionals created the concept of ‘enterprise risk management’ (ERM), which was intended to implement risk awareness and prevention programs on a company-wide basis. The main focus of ‘enterprise risk management’ (ERM) is to establish a culture of risk management throughout a company to handle the risks associated with growth and a rapidly changing business environment.

Writing in ‘Best’s Review’, Tim Tongson recommended that businesses take the following steps in implementing an ‘enterprise-wide risk management program: 1) incorporate risk management into the core values of the company; 2) support those values with actions; 3) conduct a risk analysis; 4) implement specific strategies to reduce risk; 5) develop monitoring systems to provide early warnings about potential risks; and 6) perform periodic reviews of the program.

In the articleWhat is Business Risk Management? by Business risk management.org writes: The goal of business risk management is to detail what kinds of risks exist in your specific business and figure out how to prevent them entirely, or minimize their impact on the business as a whole.

To do this, most risk managers take a five step approach. First, identify the risks involved in all aspects of the business. Second, review the probability of the negative events occurring. Third, come up with a plan, a way to decrease the risk. Fourth, put plan into action. Last, monitor the situation to see if the plan is effective or if it needs to be altered. Risk management includes risks that are a part of the industry the business serves, and the way in which it does business.

Because of this, business risk management is a way of codifying the way decisions are made and guiding those decisions in the future.  Relationships with customers also can be risky, especially if a company comes to rely on one customer too much. A business risk management process or plan should cover these kinds of risks, as well as how decisions should be made. In other words, it should say how much risk is too much in a financial relationship. While these may include physical risks, business risk management should also take into account how to prevent theft, fraud, and other crimes.

Another risk to a business caused by employees is simple human error, where even a tiny mistake in entering data or in the manufacturing process can have huge and sometimes devastating consequences. Having a ‘risk management plan’ in place not only can help in the event of an emergency, it can also help guide the way the company does business. It will help to organize allocation of resources and capital by helping to regularize the way that priorities are set.

This will help with decision-making and planning, as well. Since risk management requires the anticipation of potential problems, it can help the business prevent a disaster or at least mitigate the impact of the disaster on finances and other assets…

“The global financial crisis in 2008 demonstrated the importance of adequate risk management. Since that time, new risk management standards have been published, including the international standard ‘ISO 31000 Risk management – Principles and Guidelines’. This guide provides a structured approach to implementing ‘enterprise risk management’ (ERM).

Organizations need to understand the overall level of risk embedded within their processes and activities. It is important for organizations to recognize and prioritize significant risks and identify the weakest critical controls. A successful enterprise risk management (ERM) initiative can affect the likelihood and consequences of risks materializing, as well as deliver benefits related to better informed strategic decisions, successful delivery of change and increased operational efficiency.”

In the article Risk Management Principles and Concepts” by David Campbell writes: Risk management is an integral part of business governance. Risk may have positive or negative outcomes, resulting in either an opportunity or a loss for a business. Risk management is the way in which adverse effects from risk are managed and potential opportunities are realized.

Therefore, risk management involves: Minimizing those things that may negatively impact upon a business, and identifying and harnessing those things that will help to achieve the goals and objectives of a business. Every risk has its own distinct characteristic that requires particular management or analysis. An emerging concept in risk management is that there are three types of risk:

  • Opportunity-based risk.
  • Uncertainty-based risk.
  • Hazard-based risk.

Risk analysis assists in determining which risks have a greater consequence or impact than others. This will assist in providing a better understanding of the possible impact of a risk, or the likelihood of it occurring in order to make a decision about committing resources to control the risk.

Risk analysis involves combining the possible consequences, or impact, of an event, with the likelihood of that event occurring. The result is a ‘level of risk’. That is: “Risk = Consequence x Likelihood”.

In the article “How Managing Political Risk Improves Global Business Performance” by PwC writes: Companies doing business internationally are grappling with political issues that sometimes surprise even the most experienced. A new study by ‘PwC and Eurasia Group’ shows that despite current efforts, a high percentage of multinational companies believe they are not doing all they could to manage political risk effectively: PwC and Eurasia Group believe that more effective management of political risk can help companies protect their investments and take advantage of new opportunities, thereby improving global business performance.

When it comes to improving global business performance, managing political risk helps in two fundamental ways. First, it protects new and existing global investments and operations by helping management anticipate the business risk implications of political change or instability.  Second, for a company constantly on the lookout for new opportunities, monitoring political risk within target regions or across continents can help management hone in on political developments that foretell a business boom, beating competitors to the punch.

Businesses face many risks, therefore risk management should be a central part of any business’ strategic management. Risk management helps you to identify and address the risks facing your business, and risk assessments will change as your business grows or as a result of internal or external changes. This means that the processes you have put in place to manage your business risks should be regularly reviewed.

Such reviews will identify improvements to the processes and equally they can indicate when a process is no longer necessary. There are four ways of dealing with, or managing, each risk that you have identified. You can:

  • Accept it.
  • Transfer it.
  • Reduce it.
  • Eliminate it.

Traditionally, risk management was thought of as mostly a matter of getting the right insurance. However, this impression of risk management has changed, dramatically. With the recent increase in government rules and regulations, employee-related lawsuits and reliance on key resources, risk management is becoming a management practice that is every bit as important as financial or facilities management. 

Organizations should regularly undertake comprehensive and focused assessments of potential risks to dramatically reduce its chances of experiencing a catastrophic event that could ruin or severely impair the organization.  According to ‘Risk Management Insight’ management doesn’t really care about security… they care about risk.  They want answers to questions like:

  • “How much risk do we have?”
  • “How much more (or less) risk, will we have if…?”
  • “What am I getting for the money I’m spending on security today?”
  • “Which risk issues are most significant, and how do they compare to the other business issues I have to deal with?

When we are able to describe the value of security in terms of; ‘how it affects risk’ (the frequency and magnitude of loss), management listens more carefully because we’re speaking in terms that they understand and care about…

“Risk management should be an enterprise-wide exercise and engrained in the business culture of the organization.” ~Julie Dickson

Workplace Conflict is Inevitable: Managing Outcomes– Constructive vs. Destructive; Costs vs. Benefits; Clash vs. Collaboration…

Conflict and disagreement offer wonderful opportunities to learn and grow. As long as, you respect others’ differences and things don’t get personal, and you question the idea and not the person, then there will be room for discovery and movement toward the best solution. ~Matthew Gilbert

Workplace Conflict. Most of us are surrounded by conflict in some form or another every day. Some of this conflict involves us directly, while some we may simply observe. But all of it affects us in some way, just as it affects the organizations we belong to.

Conflict at work is inevitable and, the best way you can deal with it, is learn how to manage it. Robert Ramsey, a contributing editor at ‘Supervision Magazine’, reports that a survey of 150 executives found that they spend an average of about 18% of their work time ‘acting as a peacekeeper, referee, and mediator’ for employees engaged in conflict.

Other studies estimate that figure to be as high as 30%. That means managers are spending between nine and fifteen weeks a year dealing with conflict in the workplace. A recent study by ‘Integra Realty Resources’ reported that 42% of the workers surveyed have witnessed yelling or other verbal abuse at work, and 29% of those surveyed admit to having yelled at coworkers themselves. What are the causes of workplace conflict?

An uncertain economy, threats of downsizing, competition for promotion, misplaced loyalties, finger-pointing over mistakes, and job-related stress are all contributors to workplace conflict. The changing landscape in the modern workplace has brought with it new challenges for keeping peace. Dictionaries and management texts offer a range of synonyms for Conflict: (1) to clash, disagree, (2) a battle or struggle, (3) antagonism or opposition, (4) incompatibility or interference, and (5) a mental struggle. Social scientists who study conflict often take a more detailed approach to the subject.

Scientific literature offers, among others, this descriptions: Conflict is a situation in which interdependent people express (manifest or latent) differences in satisfying their individual needs and interests, and they experience interference from each other in accomplishing these goals.

In the article “The Nature of Conflict” by Cengage Learning writes: Perhaps the most universal reason for workplace conflict is simply that people are different. When people work together, it is inevitable that they will sometimes disagree over things like goals, the way to achieve goals, or whether or not one party is capable of achieving a goal, and the like. No doubt, we all know the consequences when managers do a poor job of dealing with conflicts.

When employees clash, it’s tempting to wait it out and hope the problem will go away. After all, most managers don’t like to interfere in their employees’ lives and many feel ill-equipped to cope with employee conflict.  Furthermore, sometimes a conflict actually will go away on its own, adding to the appeal of the ‘do nothing’ approach. In one study of how employees respond to conflict at work, more than 86% of those surveyed said that they discuss it with a coworker.

Conversations of this sort can quickly spread conflict through an organization, disrupt harmony and morale in the workplace, and impede work performance. Daniel Dana, author of Conflict Resolution, estimates that 65% of performance problems result from conflicts between employees, which represents a huge expense for organizations. Dana says,Unmanaged employee conflict is perhaps the largest reducible cost in organizations today—and probably the least recognized.”

The focus on preventing conflict has given way to the notion that conflict can be constructive, and there is an optimal level of conflict in an organization that is better than no conflict at all.  Constructive conflicts, also known as cognitive conflicts, or substantive conflicts, are characterized by arguments about facts, information, ideas, or plans. The benefits of optimal levels of constructive conflict include better decisions and innovative approaches to solving problems.

The challenge is to manage the conflict so that it stays at an optimal level and is not handled in a dysfunctional way.  Healthy relationships will experience conflict. The difference between healthy and unhealthy relationships is not whether conflict exists but how conflict is handled. Furthermore, not all conflicts can, or should, be resolved. In some cases, managing a conflict effectively is really the best that you can do.

In the article “The Two Sides of Conflict” by Susan Gerke writes: There is the growing realization that teams can actually excel in the presence of certain types of conflict.  If your teams are arguing over things such as the best way to go about cost cutting, how to counter a formidable competitor or how to make the work force more productive, then they will probably find a terrific solution. The conflict is a difference of opinion on the right course of action which can foster productive discussion.

This is called a ‘task led conflict’. Task led conflicts can have a positive impact on team output and need not be shunned.  If, on the other hand, team members display open dislike for each other and are having a ‘war of words’ over matters such as why certain information was not shared or why a certain tone of voice was used, then this is not good news.

This type of conflict is a relationship conflict. Conflict of this nature is predictably bad for business. Intervention becomes a necessity to restore the team’s equilibrium and performance levels.  Experts in the field of psychology world-over are reaching one profound conclusion on the issue of performance and conflict. The complexity of the task and the resultant conflict within the team during the course of performing that task can have a combined positive bearing on the team’s performance.

However, the conflict has to be task led and has to evolve from the complexity of the task. Here’s what well-known researcher Professor Stephen Wood writes about conflict in teams: Task conflict has generally been found to have a positive effect on task performance, provided that the level of conflict is appropriate to the complexity and uncertainty of the team’s work.

For example, a strategic management team may need high levels of disagreement to facilitate the critical evaluation of decisions; conversely a production team following routine procedures may find that even a relatively low-level of disagreement interferes with their work’.

In the article “Fundamentals of Conflict for Business Organizations” by Lawrence Kahn writes:  Every conflict holds the opportunity for creating improved processes and developing innovative procedures. We are all familiar with the negative attributes of conflict; e.g., avoidance, immobility, violence, inertia, and maintenance of the status quo. However, conflict has a positive side brimming with opportunities. Conflict has the ability to foster creativity, higher thinking, better listening skills, and change.

It’s inevitable that we will run into conflict. How we can choose to deal with it, in a negative or positive manner, is key to long-term growth and success.  Successful organizations generally deal with conflict in a positive, proactive manner. Understanding the fundamental causes of conflict, makes it significantly easier to find creative solutions.  Too often the response to conflict is to deal with the symptoms.

We see the strife between individuals or departments, but fail to focus on the underlying dilemma. As a result, we attack the problem by seeking ways to make the participants work together nicely, while leaving the core issue unresolved. These solutions become patches that often don’t hold. Locating the core conflict helps management begin looking for resolutions that work.

When the spotlight is put on the core issue, opportunities become apparent. Management can concentrate on developing innovative structural and procedural changes that encourage communications and a broad corporate focus…

In the article “The Cost of Conflict in the Workplace” by James A. Cram and Richard K. MacWilliams write:  Although conflict is a normal part of life, learning how to resolve conflict effectively can be a daunting task, particularly in the workplace. Addressing conflict should be viewed as an important element in achieving organizational effectiveness and enhancing productivity.

Many organizations, however, suffer chronic patterns of unresolved conflict that are costly and often symptomatic of serious organizational dysfunction. In fact, some experts believe that unresolved conflict represents the largest reducible cost in many businesses, yet it remains largely unrecognized. Without a clear picture of the real costs associated with conflict, the priority for developing healthy resolution strategies is likely to remain low. 

Unresolved conflict can create serious and quite varied consequences. For example, employee conflicts often create project delays that can result in missed market opportunities. Customer relations can be damaged when conflict results in confused communication or inconsistent information.

The development of effective work groups and teams can fail as a consequence of disputes between members. Companies with chronic conflict often find it difficult to attract and keep good people…

Conflict happens on the job, between groups, within families, and right in the middle of our most personal relationships. The challenges of dealing with differences have rarely been greater. While scholars study conflict management in a variety of contexts (intimacy, work, education, intercultural, organizational, war and peace…), the basic elements or variables of conflict remain stable across contexts.

On the job, “conflict is a stubborn fact of organizational life” says Kolb and Putnam.  One study surveyed workers and found that almost 85% reported conflicts at work. And with an increasing awareness of cultural diversity and gender equity issues, it is imperative that we become familiar with issues surrounding promotions and harassment.

Ongoing, unresolved workplace conflict also has negative impacts that reach far beyond the principal parties. Ignoring workplace conflict sets destructive forces in motion that decrease productivity, spread the conflict to others, and lead to lessened morale and productivity; on the other hand, constructive conflict can stimulate the organizations to reach the higher-levels of performance, productivity…

“While substantive conflict, if handled correctly, can be very productive, whereas, personalized conflict is almost never a good thing. There are several reasons: Personalized conflict is fueled primarily by emotion; usually anger, frustration, and perceptions about someone else’s personality, character, or motives.” ~ Robert Bacal