Social Media is Changing Balance of Power in Advertising: Publications–Dying? Social Media–Rising? It’s All About Community… Connections…

Social media is an ideal tool for moving people up the ‘fan’ ladder, from being a casual ‘fan’ of a brand to a loyalist, because the communication channels allow people to build stronger emotional connections with brands.

Social media advertising is the trend… and the future of advertising is social, which is very exciting. With the popularity of Facebook and Twitter, social media advertising surely has taken a new turn in the recent years. Studies show that every person (on average) has a network of around 6 to 14 people, and they share ‘ads’ with their community.

Social networks are ‘social’ and therefore respect and empathy are the minimum price necessary to earn attention… Without a genuine intent to offer value, trust is elusive.  It’s the difference between shouting ‘at’ people and speaking ‘with’ someone. Before you’re a marketer or advertiser, you’re a consumer. Bring that perspective to the marketing table is the difference between social network advertising and traditional online campaigns.

According to G. Melanson; Social media advertising is very targeted and based on information supplied by members of a social media service. While social media advertising has been hailed by some as a revolution in direct marketing, it has also brought about many privacy concerns.

The first step in social media advertising is acquiring members by encouraging people to sign up for a particular social medium, such as a social networking site. The more information the member provides, the easier they are slotted into a specific demographic for data aggregation, and subsequently targeted social media advertising.

Social Media Statistics: ‘By-the-Numbers’ by Banking.com Staff writes: Interesting statistics on social media usage:

  • $400,000,000 in ad revenue is projected for Twitter by 2013, up from $139.5 million in 2011 (eMarketer)
  • 7,432,307 job changes have been tracked by LinkedIn since 2009 (LinkedIn)
  • 68% of social media users go to social networking sites to read product reviews (Nielsen)
  • 59% of B2B purchase decision makers use a smart-phone to research potential purchases (eMarketer)
  • 58% of social media users go to social networking sites to learn about or research products (Nielsen)
  • 1,600 advertisers are now using the Twitter platform for advertising (Twitter)
  • 53% of active adult social networkers follow a brand, while 32% follow a celebrity (Nielsen)
  • 40% of social media users access social media content from their mobile phones (Nielsen)
  • $1.23 billion will be spent by US advertisers on mobile advertising this year, up from $743 million in 2010 (eMarketer)

In the article “Social Media Advertising: Does It Work… or Doesn’t It?” by Paul Chaney writes:  The term ‘social media advertising’ is, to some, an oxymoron. They will tell you it doesn’t work for the simple reason that people don’t visit social networks to view advertising, but to interact with their community. It’s a mindset issue. You may be familiar with the recent report by ‘Knowledge Networks’, which found that less than 5% of social media users say they regularly turn to social media for guidance on purchase decisions, and only 16% say they are more likely to buy from companies that advertise on social sites.

However, for every person who says it doesn’t work, there is one who attests that it does. Yet, there is empirical evidence that it is working for some. So, does social media advertising work or doesn’t it? Yes, “if you know how to use it”. According to Dana Larson: Successful social commerce marketing is about soliciting structured feedback relevant to shopping and buying, and making this feedback available to customers making these purchase decisions. It does works when the right factors are in place, and here are four key elements:

  • Understand your targeted social media channel.
  • Target the correct users with your message.
  • Ensure the advertisements are supplementing the content on the social site.
  • Have a social networking presence.

In the article Measuring The Value Of Social Media Advertising” by Robin Wauters writes:  Nielsen and Facebook recently joined forces to develop ‘ad’ effectiveness solutions to determine consumer attitudes, brand perception and purchase intent from social media advertising. According to Nielsen, the report leverages six months of research consisting of surveys of more than 800,000 Facebook users and more than 125 individual Facebook ad campaigns from some 70 brand advertisers.

Nielsen looks at advertising from a ‘paid’ and ‘earned’ media perspective, whereby the second is considered advertising that is passed along to or shared among friends. The company took a look at 14 Facebook ad campaigns that incorporated the ‘Become A Fan’ engagement unit and sliced the effectiveness results three different ways, by each of the types of ‘ads’ available on Facebook:

  • ‘Lift’ from a standard ‘Homepage Ad’.
  • ‘Lift’ from an ad that featured social context or ‘Homepage ads with Social Context’.
  • ‘Lift’ from ‘Organic Ads’, news-feed stories that are sent to friends of users who engage with advertising on a brand.

Nielsen found that the first type of ‘ads’, on average, generated a 10% increase in ad recall, a 4% increase in brand awareness, and a 2% increase in purchase intent among users who saw them compared with a control group with similar demographics or characteristics who didn’t.

According to Nielsen, that increase in advertising recall jumped to 16% when ads included mentions of friends who were ‘fans’, and 30% when the ‘ads’ coincided with a similar mention in users’ newsfeeds. Intent for purchase climbed 2% higher among viewers of ‘homepage ads’ vs. ‘non-viewers’, but went up 8% either from ‘social ads’ or when ‘ads’ appeared alongside organic mentions of the brand in the news-feed.

Brand awareness went up 2% from just a ‘homepage ad’, 8% with a ‘social ad’, and 13% when a ‘homepage ad’ appeared along with a mention of friends who were ‘brand fans’ in the users’ newsfeeds.

In the article “Getting Started Social Media Advertising on Facebook, YouTube, and LinkedIn” by Lee Odden writes:  For marketers just getting started with advertising on social media sites, here’s a quick primer on ‘ads’ for Facebook, YouTube, and LinkedIn.  As with organic social media marketing, each is appropriate according to your own goals…

 Facebook: Best practices ads:

  • Set goals.
  • Target your audience.
  • Make the product/service stand out.
  • Keep the ad simple.
  • Have a strong call to action.
  • Make sure ads point to relevant landing pages.

YouTube: Best Practices ads:

  • Keep it short; 60 seconds is a good benchmark.
  • Keep it engaging; Entertain, inform and be relevant.
  • Inspire, don’t just educate; Avoid focusing solely on being educational.
  • Deliver key messages early; Plan for user tune-out near the end of the video.
  • Include a call to action.

LinkedIn: Best Practices ads:

  • Create relevant ads.
  • Create multiple ads for each campaign.
  • Target the right audience.
  • Set an appropriate daily budget.
  • Understand how bidding works.
  • Improve performance; monitor click-through-rates,  experiment, then refine.

Twitter & LinkedIn: Continue to see strong advertisement growth, with Twitter’s revenue expected to nearly double between 2012 and 2014, according to a report by eMarketer. Twitter gets 90% of its revenue from U.S. advertisers, while LinkedIn depends more on foreign advertisers, with just 68% of its 2012 ad revenue expected to come from U.S. advertisers. eMarketer is projecting 83% revenue growth for Twitter this year, down from 233% growth in 2011, and 46.1% revenue growth for LinkedIn, down from 95% growth in 2011.

In the article “A Look At Trends in Social Advertising” by Lauren Fisher writes: We’re starting to see some really exciting and mind-blowing things being done through social advertising. I’m a huge advocate of companies combining their advertising and social media efforts, because it just makes good marketing sense.

A recent report by eMarketer looks at the renewed interest in social advertising – it comes in cycles – and finds that in the U.S. 6.7% of all online ads spending will go towards ‘social’. While the interest in social media has really been growing among companies for the past 2-3 years, the budgets have been slow to follow. This report is encouraging and shows the serious investments are being made. In another report by BIA/Kelsey; social media advertising revenue will go up to $8.3 billion by 2015, while revenue spent on social media advertising was $2.1 billion, in 2010…

The rise in social advertising, also has huge implications for companies that invest in social platforms and build their entire products around it – with the likes of gaming platform Zynga being a good example. Their ‘ads’ campaign with Microsoft certainly proved the case for innovative online advertising. It’s not about sticking in Google ‘ads’ anymore, or even leaving sections of your site open to sponsorship. Companies have to work harder to get in front of their customers, as they battle for a complete turnaround in user behavior: The future of advertising is social and the opportunities are huge…

The way corporate entities approach social media is shifting. According to Amy Jo Martin: The social media landscape will continue to evolve, as should your strategies for success… Many companies are beginning to realize that setting up Twitter, YouTube, and Facebook accounts as their only social media strategy is not going to cut it . Brands will need to seriously shift their perspective by treating social channels more like communication channels and less like an advertising channels in order to make a difference.

The year 2012 will be the year for brands to go beyond cookie cutter campaigns and really determine how it not only adds value to their company, but how it adds value for their customers. This year will be crucial for companies and social media. According to Gartner, more users will turn to their mobile devices for online purposes… It’s already happening more consumers are using their smart-phones, than laptops and desktops.

With the launch of Facebook’s ‘Ticker’, Twitter’s ‘Promoted Tweets’, and Google’s ‘YouTube’ for ‘ads’ in 2012, they will show how social platforms can capitalize on their biggest asset, which is user data. Social media advertising has gained momentum and with almost a quarter of the planet hooked-on social networking, you are bound to be noticed. According to Donny Gamble; advances in niche targeting and segmentation will increase the potency of social advertising to an excess of $10 Billion by 2013”.  Social media advertising compliments ‘brand’ and ‘brand’ sells, but only if it manages to meet the consumer’s expectation. There’s no doubt that social media advertising works, but caution is essential…

Know your market, get a strong understanding of the online social behavior of your potential customers, and communicate compelling and relevant information… don’t just rely on one network, but rather use a whole range of channels together and make sure that you are covering all the bases…

As more marketers incorporate social networks in their business, they will no longer look at them as silo destinations. Instead, they will look to increase the impact of their social network presence by linking it to other marketing initiatives, both online and offline ~Debra Aho Williamson

U.S. Higher Education is Failing: Universities & Colleges Are Failing to Educate, Wrong Priorities, Wasting Money– Its Education Adrift…

A university…educates the intellect to reason well in all matters, to reach out towards truth, and to grasp it. ~John Henry Cardinal Newman

The U. S. has over 5,700 higher education institutions, an average of more than 115 per state. As of 2010, the U.S. had 20.3 million students in higher education, roughly 5.7% of the total population. About 14.6 million of these students were enrolled full-time. The ‘2006 American Community Survey’ conducted by the ‘United States Census Bureau’ found that 19.5% of the population had attended college but had no degree, 7.4% held an associate degree, 17.1% held a bachelor’s degree, and 9.9% held a graduate or professional degree.

Only a small gender gap was present: 27% of the overall population held a bachelor’s degree or higher, with a slightly larger percentage of men (27.9%) than women (26.2%). However, despite increasing economic incentives for people to obtain college degrees, the percentage of people graduating from high school and college has been declining as of 2008.

According to Anthony Grafton; ‘much has been written about the state of the American university painting a chilling portrait of what the university has become and the results are sobering’. The ‘Collegiate Learning Assessment’ reveals that some 45% of students in the sample had made, effectively, no progress in critical thinking, complex reasoning, and writing in their first two years.

More depressing; vast numbers of students come to university with no particular interest in their courses and no sense of how these might prepare them for future careers. For most of them, what the university offers is not skills or knowledge but credentials: A diploma that signals employability and basic work discipline…

In the article “Universities are Failing to Educate” by Kathleen Parker writes: We often hear lamentations about declining educational quality, but missing from the conversation is the quality of what’s being taught. Meanwhile, we are mistakenly wed to the notion that more people going to college means more people will find jobs. But there’s more to the story. Fundamentally, students aren’t learning what they need to compete for the jobs that do exist.

A study by the ‘Association of American Colleges and Universities’ found that 87% of employers believe higher education institutions have to raise student achievement, if the U.S. is to be competitive in the global market. Sixty-three percent say recent college grads don’t have the skills they need to succeed. And, according to a separate survey, more than a quarter of employers say entry-level writing skills are deficient. 

Something is wrong with higher education, and the consensus is growing that young adults aren’t being taught the basic skills that lead to critical thinking. Most universities don’t require the courses considered core educational subjects; e.g., math, science, languages, government, economics… The nonprofit ‘American Council of Trustees and Alumni’ (ACTA) rate schools according to how many of the core subjects are required.

A review of more than 1,000 colleges and universities found that 29% require two or fewer of these core subjects. Critics of ACTA’s findings insist that the core curriculum is outdated, and some also insist that such ‘old-fashioned’ curricula merely encourage memorization and rote learning, rather than critical thinking. A recent ‘Roper Organization’ study found that nearly half of recent higher education graduates don’t think they got their money’s worth. The problem with education isn’t money, but quality…

In the book Academically Adrift: Limited Learning on College Campuses” by Richard Arum and Josipa Roksa write:  More than a third of American college seniors are no better at crucial types of writing and reasoning tasks than they were in their first semester of college: Four years of undergraduate classes make little difference in their ability to synthesize knowledge and put complex ideas on paper: We didn’t know what to expect when we began this study. We didn’t walk into this with any axes to grind. But now that we’ve seen the data, we’re very concerned about American higher education and the extent to which undergraduate learning seems to have been neglected said Richard Arum.

In the study the authors tracked a nationally representative sample of more than 2,000 students who entered 24 four-year colleges in the fall of 2005. The scholars do not name those 24 institutions, but they say they are geographically and institutionally representative of the full range of American higher education. In the study, the students were asked to take the ‘Collegiate Learning Assessment’ (CLA), a widely used essay test that measures reasoning and writing skills; three times in their college careers– in the fall of 2005, the spring of 2007, and the spring of 2009.

Thirty-six percent of the students saw no statistically significant gains in their CLA scores between their freshman and senior years… David C. Paris at ‘New Leadership Alliance for Student Learning & Accountability’ says; “Many of our institutions really aren’t set up to make undergraduate education a priority. The organizational systems and structures that we have really aren’t set up for 21st-century challenges.”  

In the article The Failure of American Higher Education by Dr. Robert D. Atkinson writes: Attend any policy discussion in Washington that deals with education and the standard line you will hear is the American K-12 system is a failure, but thank God we still have the world’s greatest higher ed system. Let me suggest that this is fundamentally wrong. Higher education is failing almost as much as K-12. Strikingly, among recent graduates of four-year colleges, just 34, 38 and 40% were proficient in prose, document, and quantitative literacy, respectively.

Just to be clear, these are among 24 year olds who have graduated from college. As the report from the ‘Secretary of Education’s Spellings Commission, noted:There are … disturbing signs that many students who do earn degrees have not actually mastered the reading, writing, and thinking skills we expect of college graduates. Over the past decade, literacy among college graduates has actually declined”.  In our knowledge-driven global economy, high-quality higher education is an important driver of economic competitiveness.

Students need to know; how to think, how to write, how to speak intelligently, how to find information and make sense out of it, how to argue coherently, and how to do basic math. Most colleges aren’t interested in teaching these skills for the simple reason that most faculty aren’t interested in teaching them. A few years ago, the ‘Olin Foundation’ endowed a new kind of college to fundamentally change how engineering is taught. And by all accounts, it’s a great success. Let’s create new colleges focused on teaching the kinds of skills young grads actually need…

In the article Students Give Higher Education a Failing Grade by Carol Phillips writes:  Today the challenge of choosing and starting a professional career feels more like staring into an abyss.  If you know a college bound high school junior or senior, chances are that when you ask them what they want to do after college they will reply ‘I have no idea’. A lucky few say they have found their calling, but they are in the minority.

Recently, the Gallup Research revealed that less than half (44%) of Americans believe today’s youth are ‘likely or very likely’ to exceed their parents living standards.  The figure is a record for the trend since it started tracking in 1983, and for comparison the figure was 71% in December 2001. At the same time, the cost of an education continues to soar.  Relative to 1980-81, the cost of tuition at a four-year private school has nearly tripled, and the cost at a four-year public institution has more than tripled.

On average, four-year public schools graduate only 37% of their students within four years.  The story at community colleges, which account for 46% of all undergraduates, is even worse; just 25% of those at 2-year colleges graduate within three years of the time they start. In a study sponsored by the ‘Gates Foundation’s Get Schooled Program’ found that young adults do not think the education system is aligned with their wants and needs.

While 72% agree college prepares you ‘for a better life’, exactly how it prepares you for it isn’t as clear. In higher education costs have escalated rapidly, and 60% rely on student loans to fund all or part of the cost; nothing could be worse than getting ‘stuck’ with the wrong college education, while facing a pile of debt…

The U.S. is at a crossroads with respect to the future direction of higher education. It is imperative to recognize that the world and the labor force of today is much different from the one of a century ago when much of the traditional higher education system was established, or even several decades ago when the U.S. was the world’s manufacturing powerhouse.

According to the ‘World Economic Forum’s Global Competitiveness Report’, the U.S. has lost its number one competitive ranking in the world.  The U.S. higher education system is critical for the nation to remain competitive in a global economy and regain its standing as a leader in education.  Unfortunately, the country faces numerous challenges in achieving these goals. According to Professor Jane Robbins, who studies the development and societal role of the university in the U.S., “there’s just been enormous changes [in the structure of the university] – not [ones that were] necessarily chosen, but rather accepted, allowed, and evolved”.

She added that such reactionary change has led to higher education’s unmitigated, unexpected, and often unexamined growth. She says, this type of unintentional growth has led to a system that is both rife with inefficiencies and extremely powerful.  When several professors specializing in problematic areas in U.S. universities and colleges were asked  to identify the main problem with higher education and to offer a possible solution, they said that this was impossible – the system is too large and the complications too intricate to pare down to one cause.

The future is unfolding in front of us as companies in far less developed countries are beginning to outpace the U.S. in key technical fields. U.S. companies aren’t just leaving the country for cheap labor; they are leaving the country for skilled labor.

The U.S. must shift its educational priorities, quickly; or it will be buried by the wave of skilled laborers in China, India… who will possess the world’s great intellectual capital.  The U.S. education system doesn’t lack for good ideas, it lacks for the courage to get good ideas into action…  

The U.S. is grappling with the challenge of how to grow jobs, skills, and opportunity. The issue can’t be wished away by fanciful talk about higher education bubbles and whether college is still worth it. U.S. needs more creative college graduates – it’s the only route to economic prosperity for both individuals and the nation.

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

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

‘National debt’ and ‘national deficit’ are tossed around – often interchangeably – and confuse rather than clarify an understanding of the U.S.’s ‘national debt’ status.  In simplest terms, the federal budget is the amount of money set aside to finance government’s operation for one fiscal year. The budget can be viewed as a two column sheet. One column represents the revenue collected to finance the budget’s expenses.

The second column represents the expenditures the government makes. Ideally, at the end of the year there should be more money left in the surplus column, or revenue exceeded expenditures. At least, revenue should equal expenditures for a ‘balanced’ budget. Unfortunately, during the past decade expenditures have exceeded revenue to create deficits.

A ‘national deficit’ or ‘budget deficit’ is considered part of the ‘national debt’ and is added to the debt each year that a deficit occurs. The effect is cumulative. The total ‘national debt’ is a combination of the debt held by the public or all federal securities held outside the government, and intergovernmental debt or treasury securities held in accounts and administered by the federal government.

One of the troubling aspects of the debt held by the public is that it includes debt owed to foreign countries; roughly 32% of the national debt. In essence, this borrowing from other countries’ governments is borrowing from their citizens to pay for programs for our citizens. The solution to reducing the growing ‘national debt’ is less spending and more revenue…

In the article “Scary Debt Facts for 2012” by Jill Schlesinger writes: As the President unveiled the 2013 fiscal year budget, the nation’s financial situation came back into sharp focus. Experts say partisan gridlock in Washington means the budget will probably go nowhere. Considering this is an election year, however, expect politicians to harp on facts, figures and terms that most Americans weren’t taught in high school.

To help out, it’s time to dredge up lots of scary facts to make you pay attention. Before we get going, a quick primer on the number ‘TRILLION’: $1 trillion = $1,000 billion or $1,000,000,000,000 (that’s 12 zeros). How hard is it to spend a trillion dollars? If you spent one dollar every second, you would have spent a million dollars in 12 days,  it would take 32 years to spend a billion dollars, and more than 31,000 years to spend a trillion dollars. Some facts about the national debt and the deficit:

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

A few historical facts:

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

In the article The 2013 Budget and Corporate Taxes” by Jonathan Masters writes:  The release of the 2013 White House budget willprovide fresh grist for the fiscal policy debate in Washington as lawmakers look to balance short-term stimulus measures and the economic recovery with long-term deficit reduction and a spiraling national debt. One issue where Republicans and Democrats may be able to find common ground, analysts say, is on corporate tax reform.

Both parties have acknowledged shortcomings in the current corporate tax code and support a reduction in the U.S. statutory rate as a way to increase the global competitiveness of U.S. corporations. Lowering the corporate rate and closing loopholes, or base broadening, may also provide a higher level of federal revenues. But disagreement remains on several issues, including the way U.S. multinationals are taxed on foreign profits.

Corporate taxation is currently the third-largest source of federal income, fluctuating around 10% of all revenues, or 2% of GDP, in recent years. Tax breaks enacted to help drive the recovery have kept corporate income tax receipts at unusually low levels for the past three years, averaging just 1.2% of GDP– although the Congressional Budget Office expects this number to more than double by 2014.

The United States has a comparatively high statutory corporate tax rate–39.2% (including state taxes) versus a OECD weighted average of 25.5%. But the effective corporate tax rate–the ratio that companies actually pay after leveraging a myriad of tax ‘loopholes’ will soon average around 26%, up from a forty-year low of 12.1% in 2011, due to new regulations.

Still, business groups contend they are at a disadvantage in the global marketplace because they often face a higher effective rate than foreign competitors.The U.S. also taxes the foreign income of its firms, unlike most other large economies, encouraging many U.S. companies to keep their profits overseas to avoid the cost of repatriation. A high U.S. rate may incentivize U.S. firms to move operations overseas altogether, taking valuable jobs with them.

The White House supports deficit-neutral policy proposals that reflect cutting the statutory rate while broadening the corporate tax base. President Obama’s 2013 budget specifically calls on Congress to immediately begin work on corporate tax reform that will close loopholes, lower the overall rate, encourage investment here at home, and not add a dime to the deficit.

In his 2012 ‘State of the Union’, the president also proposed that every multinational corporation pay a basic minimum tax that would prevent some companies from avoiding most of their tax burden. Republicans support a cutting and base-broadening strategy, but would also like to move the U.S. to a territorial tax system and exempt U.S. companies from paying taxes on overseas earnings. Critics of this policy contend it would preference foreign over domestic investment and effectively export U.S. jobs overseas.

Any cut to the statutory rate should be tied to inducements for firms to invest rather than simply pocket the profit, writes Bruce Stokes for the National Journal. “Incentivizing companies to invest some of their tax savings into bonds issued by a national infrastructure bank would do so and help rebuild the nation’s eroding roads, rails, and water systems”, Stokes writes.

A policy brief from the ‘Peterson Institute for International Economics’ recommends the implementation of a broad-based consumption tax to replace the high statutory corporate tax rates. Such a tax would be akin to the value-added tax or the goods and services tax used as the primary means of taxing consumption in every OECD country except the U.S. “Lawmakers should exempt U.S. firms from paying taxes on profits repatriated from foreign countries with an effective corporate tax rate of 20% or higher”, writes Harvard’s Robert C. Pozen for Bloomberg.

According to Pozen, such a measure would encourage the payment of reasonable taxes and limit companies’ ability to exploit tax shelter countries like the Cayman Islands. In the New York Times, David Leonhardt says;the U.S. corporate tax code is ‘the worst of all worlds’, with its high rate and numerous loopholes”. He argues the system makes compliance inefficient and expensive, and ultimately slows economic growth.

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

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

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

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

Last year, Standard & Poor’s cut the outlook on the U.S.’s long-term credit rating from stable to negative for the first time since World War II. While the impasse is frustrating, it is important to understand that the real hurdles are more political than philosophical. Raising the federal debt limit without first agreeing to a sweeping plan to reduce the $14.2 trillion national debt is irresponsible.

According to the Congressional Budget Office, in fiscal year 2011, the U.S. budget deficit amounted to $1.3 trillion, with federal receipts amounting to $2.3 trillion and government spending to $3.6 trillion. In short, the U.S. borrowed about 36 cents for every dollar it spent. That is lower than the 40 cents borrowed in 2009, but still very unsustainable if continued.

According to the article; ‘Blueprint for Reducing Debt Lies in Cuts and Revenues’ by Mario Belotti and Chase Thomet write: It is time for the president and Congress to get together and reduce government deficit to a more sustainable level. For example: Bush tax cut should be allowed to expire for all income levels, dividend and capital gains tax rate should be increased to 20%, and most carried interest income should be taxed at the personal income tax rate.

On the spending side; apart from some defense cuts, real cuts in spending must come from greater government efficiency, the elimination and consolidation of government offices, and cuts in entitlement programs. In the long run, Congress should modify the tax and spending laws in line with the proposals of the ‘Simpson-Bowles Commission’. The longer Washington waits, the higher the revenue increases and the deeper the spending cuts that will be required in future years.

According to the ‘Government Accountability Office’, the U.S.’s unrestrained spending ‘will ultimately affect every citizen in the nation’. In his testimony before Congress, Congressional Budget Office Director, Peter Orszag noted; under any plausible scenario, the federal budget is on an unsustainable paththat is, the federal debt will grow much faster than the economy over the long run. Therefore, though the decisions will be difficult, the deficit and the debt cannot continue to grow uninhibited.” From an economic standpoint, time simply is running out, and to continue to borrow at these levels is ‘utterly unsustainable and irresponsible’.

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

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

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

Women are transforming the face of business and society, moving into leadership roles as business owners and corporation executives. The business case for gender diversity is tangible and straightforward, and it is a platform that should resonate with all executives.

A study titled “The Bottom Line: Connecting Corporate Performance and Gender Diversity” by Catalyst, examined 353 Fortune 500 companies and proved the correlation between increased gender diversity at highest levels and improved financial performance. The findings assert that “the group of companies with the highest representation of women on their top management teams experienced better financial performance than the group of companies with the lowest women’s representation”, with a 35.1% higher ‘Return on Equity’ (ROE) and 34% higher ‘Total Return to Shareholders’ (TRS).

Another study reported in the Harvard Business Review; 215 Fortune 500 firms were evaluated for their support of women executives and respective profitability. The results of this survey demonstrated that Fortune 500 companies with a higher number of women executives outperformed the median firms in their industry. Other studies have found a correlation between gender diverse boards of directors, particularly boards with female directors, improved performance, including higher revenues.

Women currently earn more than one half of all bachelor’s and master’s degrees in the U.S. (57.3% and 58.5%, respectively), nearly one half of all doctorates and law degrees (44.9% and 47.3%, respectively), and comprise about one half of the U.S. paid labor force (46.5%).  However, women are under-represented in business leadership throughout the U.S. Women hold only less than 20% of board seats for U.S. Fortune 500 companies.

Women are also under-represented in executive positions, representing less than 20% of Fortune 500 executives. These statistics suggest that although women are viewed as an important factor in an organization’s success, their limited advancement into executive and director roles indicates that barriers continue to exist.

In the report “Women and the Paradox of Power” by Dr. Anne Perschel and Jane Perdue write: Many women relate to power in ways that prevent them from attaining senior level positions, be it lack of confidence; cultural conditioning; or simply not understanding what power is. In comparison, interviews with women in senor business leadership roles at the highest levels of corporations, reveal that they have a different understanding of power and use different approaches to gain more of it.

They then use their power and influence to make important changes to culture and to leadership practices. Reshaping a male-dominated business culture, changing the ratio of women to men, and thereby improving bottom line results; requires a very specific set of actions by those currently in leadership positions, as well as by women themselves. The authors identify the key issues and solutions:

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

In the report “Global Gender Gap Report” by ‘The World Economic Forum’ measured the performance of 134 countries on gender-equality by looking at gender disparities in access to resources and opportunity over-time along economic, political, education, and health-based indicators. Iceland, Norway, Finland and Sweden maintain top rankings closing over 80% of their gender gaps, and the U.S., Mali, Pakistan, Chad, and Yemen taking the lowest rankings with around 50% of their gender-gaps yet to close.

New quota requirements in Europe are placing more women at key leadership levels in European companies; reports ‘Corporate Women Directors International’ (CWDI), a non-profit research organization on women directors.

In its latest report, CWDI examines the gender-diversity on corporate boards of Fortune Global 200 Companies. In Europe; Norway, Spain, France, the Netherlands, Iceland, Italy and Belgium currently uphold government-issued quotas mandating the number of seats reserved for women on corporate boards. France and Italy are showing strong gains in women’s boardroom representation with women directors comprising 20.1% and 9.2% of seats on corporate boards, respectively.

In the article Why Women Leaders Need Self-Confidence by Leslie Pratch writes: I headed research at the University of Chicago investigating the longer-term personality predictors of leadership. Among the relationships examined were those among gender; coping and motivation, in the evaluation of leadership effectiveness. Among the particularly striking findings of this research were the differences between men and women on measures of active coping. In a nutshell, we took measures of; coping, motivation, and intelligence at the beginning of the study.

At the end of the study, we assessed the ability of these measures to predict leadership effectiveness as evaluated by peers, superiors, and subordinates. We found that the only measure that predicted leadership for men and women alike was an overall measure of active coping, which  indicates the ability to respond adaptively to stress and to grow. Gender-based expectations for behavior, influence the styles and evaluations of leaders.

Women are expected to display high levels of social (communal) qualities, including; needs for affiliation, a tendency to be self-sacrificing, concern with others, spontaneity, and emotional expressiveness. Men are expected to display high levels of agentic qualities, those associated with acting or exerting power, including; independence, assertiveness, self-confidence, and instrumental competence.

The correlation between self-confidence and leadership effectiveness was also overwhelmingly statistically significant. As a whole, these findings indicate that women have to have high self-esteem and high self-confidence while leading in a communal style, in order to be perceived as effective leaders. In short, they must be stronger copers in order to transcend the constraints placed on their business leadership style.

In the articleAs Leaders, Women Rule by Rochelle Sharpe writes:  New studies find that female managers outshine their male counterparts in almost every measure. That’s the essential finding of a growing number of comprehensive management studies conducted by consultants across the country for companies ranging from high-tech to manufacturing to consumer services. By and large, the studies show that women executives, when rated by their peers, underlings, and bosses score higher than their male counterparts on a wide variety of measures; from producing high-quality work to goal-setting to mentoring employees.

Using elaborate performance evaluations of executives, researchers found that women got higher ratings than men on almost every skill measured. Ironically, the researchers weren’t looking to ferret-out gender differences. They accidentally stumbled on the findings when they were compiling hundreds of routine performance evaluations and then analyzing the results. The gender differences were often small, and men sometimes earned higher marks in some critical areas, such as strategic ability and technical analysis.

But overall, female executives were judged more effective than their male counterparts. ”Women are scoring higher on almost everything we look at,” says Shirley Ross. Women think through decisions better than men, are more collaborative, and seek less personal glory; says the head of IBM’s Global Services Div., Douglas Elix.

Instead of being motivated by self-interest, women are more driven by ”what they can do for the company”,  Elix says. Professor Rosabeth Moss Kanter, Harvard Business School, author of the 20-year-old management classic book, Men and Women of the Corporation’, says; ”Women get high ratings on exactly those skills needed to succeed in the global Information Age, where teamwork and partnering are so important.”

The concept of business leadership is changing; however, there is a clear double standard: Studies show: Male CEOs and senior vice-presidents got high marks from their bosses when they were forceful and assertive and lower scores if they were cooperative and empathic. The opposite was true for women: Female CEOs got downgraded for being assertive and got better scores when they were cooperative’. Concluding that at the highest levels, bosses are still evaluating people in the most stereotypical ways.

That means that even though women have proven their readiness to lead companies into the future, they’re not likely to get a shot until their bosses are ready to stop living in the past. But if women are so great, why aren’t more of them running big companies? According to ‘boomerdivanation.org’; there’s still a pipeline problem: Most women get stuck in jobs that involve human resources or public relations; posts that rarely lead to the top.

At the same time, female managers’ strengths have long been undervalued, and their contributions in the workplace have gone largely unnoticed and unrewarded. Companies are now saying they want the skills women typically bring to the job, but such rhetoric doesn’t always translate into reality. These under-currents of bias are forcing many women to seek other career opportunities, such as, starting their own businesses.

As of March 2011, there were 10.1 million businesses owned by women, making up 40% of all private businesses. Many women admit that because they spend so much time focusing on getting results, they don’t think enough about strategy and vision; qualities that Harvard’s Kanter says, are still the most important in a top executive. ”If women are seen as only glorified office facilitators but not as tough-minded risk-takers… they will be held back from the CEO jobs. says Kanter,

In the end, it takes a lot more than competence to make it to the top. Getting the best performance evaluations in the company’s history may not be nearly enough. ”When you actually sit down in a selection committee to choose the CEO, lots of subtle assumptions come into play, said Deborah Merrill Sands. Companies may say they want collaborative leaders, but they still hold deep-seated beliefs that top managers need to be heroic figures.

The bottom line is that the business case for diversity is strong. Companies with gender diverse leadership teams have seen the positive results and are outperforming those without women at the helm. The prospect for improved financial performance is a business case that cannot be ignored.

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

Think Outside The Box– Doesnt Work: Think Inside The Box for Innovation, Transformation, Change… Stay In the Box and Get Results…

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

Think outside the box, think beyond the box, think out of the box…  is to think differently, unconventionally, or from a new perspective. This phrase often refers to novel or creative thinking. The catchphrase, or cliché, has become widely used in business environments… To think outside the box is to look further and to try not thinking of the obvious things, but to try thinking beyond them.

What is encompassed by the words ‘inside the box’ is analogous with the current, and often unnoticed, assumptions about a situation. Creative thinking acknowledges and rejects the accepted paradigm, and to come up with new ideas. According to Christopher Peterson: We’ve gotten so accustomed to thinking that ideas need to come about in new and exciting ways that we often neglect the utility of established paradigms.

When crafting your ideas, first think inside the box before you look outside. Most who think seriously about creativity agree that it entails not only novelty (that outside the box stuff) but also utility, and in order to be useful, it has to go above-and-beyond what is already known (that inside the box stuff). This is not a new idea, but that’s kind of the point. It’s about embracing what’s been done before, because it’s practice that gives us the capacity to build on the old ideas to make the new:

Psychologists who study prodigious accomplishments, in science, music, or art, speak about the 10,000-hour rule, meaning that in order to do something notable in some field, one must devote 10,000+ hours to mastering the discipline in question. Practice, practice, and practice; and appreciate that much of this practice needs to be done inside the box.  If you never venture ‘outside the box’, you will probably not be creative. But if you don’t get ‘inside the box’, you will never get ‘outside the box’.

In the article “Thinking Inside the Box” by Naomi Karten writes: The problem with urging outside the box thinking is that many of us do a less than stellar job of thinking inside the box. We often fail to realize the options and opportunities that are blatantly visible ‘inside the box’ that could dramatically improve our chances of success. Often we fall victim to familiar traps, such as doing things the same old (ineffective) way or discounting colleague and teammate ideas.

Thinking outside of the box can generate innovative and ingenious ideas and outcomes, but the results will flop when teammates ignore the ideas ‘inside the box’. If I had a doughnut for every time someone advocated thinking outside the box, I wouldn’t be able to squeeze ‘inside the box’ to point out the flaws in this idea.  Outside the box thinking can generate ideas for processes, techniques, and outcomes that are innovative, and WOW-generating.

But the resulting ideas will flop in a climate in which the people involved ignore the ‘inside the box’ ideas.  The next time you hear someone urge outside the box thinking, see if the situation is one in which those involved have overlooked the possibilities ‘inside the box’. And whenever you hear a claim about someone having done outside the box thinking, see if you agree. Or might the thinking have actually taken root well within the box?   Our challenge is to look around from our perch ‘inside the box’ and ask: What options and opportunities are right here in the box for the taking?

In the article “Think Inside the Box” by Fred Nickols writes: What’s wrong with what’s ‘inside the box’?  How would you know if you did get ‘outside the box’? My answer is that you wouldn’t. You couldn’t. All you can recognize is what your box will let you recognize. We’re talking about learning, growing, improving, changing and being open to new ideas and ways of thinking. We’re talking about your mind– and mine– and everyone else’s. But we can’t get outside our minds.

However, we can do something about what goes on in there.  The best thing you can do is open the box. You see, the stuff in a closed box is fixed, static, unchanging, and quite literally in the dark. If you open the box, you can let new stuff-in and that new stuff will interact with the old stuff and create some more new stuff ‘inside the box’. Then, you can change what the box has in it and what it can do, but you don’t need to get ‘out of the box’ to do that; you just need to let more stuff-in.

Another thing we can do is bring together a bunch of different boxes and let their interactions generate stuff that’s not to be found inside any one of the boxes. Once that’s done, this new stuff is now ‘inside the box’. (Well, it makes its way inside the ones that were open. The closed ones don’t change.) So, the next time someone starts blathering and babbling to you about the importance of thinking outside the box, just smile and say,  That sounds like a really good idea. Just exactly how do you do that?  If you get some good answers, let them ‘inside your box’ and make use of the ideas.

Focus on keeping the box open and keep-on putting more good stuff into it. Then just maybe, the box will be satisfied with all the good stuff inside, and ignore all that advice to think outside.

In the article “Thinking Inside the Box” by Henry King writes: Boundaries help focus attention on problems, and help limit the process of finding solutions. In this case limit is not a bad thing…there are so many possibilities; we can make ourselves dizzy just thinking about the next option, the next change. Without boundaries, we can keep thinking forever. For innovation to materialize, we need to get beyond the thinking phase and into the ‘doing’ phase.

Of course the flip side of the argument is that if we never break the rules… if we keep the blinders on… we risk making only incremental innovation, and not game changing advancements. Boundaries are useful for adding efficiency to the innovative process. In this way boundaries serve as inspiration, until we learn what we need to change.

In the  article “Stop Thinking Outside the Box” by Dan Pallotta writes: The exhortation to think outside the box has become ubiquitous in business. So much so that it has become the new box inside of which everyone thinks. It pays lip service to the notion of transformation without really understanding difference between transformation and change, and often without tolerance for the real thinking that must occur for an idea to be truly outside the existing paradigm.

But worse than that, the advice is backwards. You cannot possibly think outside the box unless you understand the nature of the box that bounds your current thinking. You must come to know that nature deeply. You must have real insight into it. You must accept it, and embrace it at some level, before it will ever release you.

There’s a Zen saying, “What you resist persists, and what you allow to be, disappears.” Thinking outside the box without understanding the box is a petulant exercise in resistance; every idea that comes from the process has the box written all over it. It’s a reaction to the box. It’s fighting the box. It’s a child of the box. So figure out the box you’re in. If you try to get out before you understand the box’s parameters, you’ll just stay stuck inside of it. And that’s exactly what it wants.

In the article “For a Creativity Boost, Think Outside the Box… Literally” by Kate Shaw writes:  It happens in schools, cubicles, and boardrooms everywhere: someone working on a project hits a mental block. A boss or teacher might resort to a cliché like think outside the box or put two and two together, encouraging a creative solution to the problem. As it turns out, this isn’t just abstract advice.

According to an article in Psychological Science it says; ‘that literally working outside of a box or putting two halves of something together just might help those creative juices start flowing again’.  Since physical metaphors regarding creativity are so common and appear in several different languages, a group of researchers hypothesized that they may extend beyond mere clichés.

Their study showed that metaphors really affects how our minds work, and thinking outside the box does encourage creativity. Acting out metaphors linked to creativity really can help us think creatively. In fact, it does more than just let us access the knowledge we presently have; it encourages us to come up with new, unique, and creative ideas. Next time you’re stuck on a problem, take a minute to ponder– or even act out– your favorite metaphor, and you might happen upon a creative solution.

In the article “Think Inside the Box” by Tim Sanchez writes:  Think outside the box is a just another way of saying, ‘we need to be creative, innovative, and find new ways to increase market share.’ It’s fun to say, but the reality is that parameters and constraints are necessary in nearly every business decision you’ll ever make. They provide limits, guidelines, budgets, goals… all of the things that wise decisions typically require.

Here’s the trick: The ‘box’ can get bigger… much bigger. Change is hard, but often a necessary evil when tackling things; such as, customer experience initiatives… I think our job is to push the parameters of the ‘box’ until we can attack and accomplish what needs to be done. The more the box expands, the more innovative we can be with our customers.

Think out of the box has come to mean thinking of a solution that is somehow outside of what you already know and do, coming up with something wholly new. Sounds great, but does it work? According to Andrew B. Hargadon: Pushing people harder to think out of the box doesn’t work. Many of the revolutionary ideas in the technologies and arts don’t come from the person who solves the problem by thinking out of their box. It comes from the person who has seen the right solution already somewhere else; who has other boxes to think in.

People don’t think out of the box. They think in other boxes. The difference is that the new market hasn’t seen those other boxes before. If a manager pushes employees, or we push ourselves, to come up with something new, to think out of the box, we won’t get the results we want.

So instead of thinking out of the box you ask them to analogize: Think of other boxes that are similar. Think of other places where this might have been done before. The farther afield you go the more revolutionary will be the ideas you find…

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

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

Informed decision making comes from a long tradition of guessing and then blaming others for inadequate results. ~Scott Adams

Globalization creates a need to know how managers in different parts of the world make decisions: Business leaders, globally, have a distinctive prevailing decision style that reflects differences in cultural values and the relative needs for achievement, affiliation, power, and information.

The decision making process and value systems influence the overall approach of decision makers from various cultures. The relative level of utilitarianism versus moral idealism in any society affects its overall approach to problems. Generally speaking, utilitarianism strongly guides behavior in the Western world. In fact, research has shown that U.S. executives are more influenced by a short-term, cost-benefit approach to decision making than their Asian counterparts. U.S. managers are considerably more utilitarian than leaders from China, who approach problems from a standpoint of moral idealism; they consider the problems, alternatives, and solutions from a long-term, societal perspective rather than an individual perspective.

Another important variable in companies’ overall approach to decision making is that of autocratic versus participative leadership. In other words, who has the authority to make what kinds of decisions? A country’s orientation whether it is individualistic or collectivist influences the level at which decisions are made. In many countries with hierarchical cultures: Germany, Turkey, and India, among others, the authorization for action has to be passed upward through echelons of management before final decisions can be made.

Most employees in these countries simply expect the autocrat, the boss, to do most of the decision making and would not be comfortable otherwise. Even in China, which is a highly collectivist society, employees expect autocratic leadership because their value system presupposes the manager to be automatically, ‘the most wise’. In comparison, in the Scandinavian countries, decision making authority is decentralized and built on consensus.

Americans talk a lot about the advisability of participative leadership, but in practice they are probably around the middle between autocratic and participative management styles. A country’s culture affects how fast or slow decisions tend to be made. The pace at which decisions are made can be very disconcerting for outsiders. North Americans and Europeans pride themselves on being decisive; managers in the Middle East, with a different sense of temporal urgency, associate the importance of the matter at hand with the length of time needed to make a decision.

For example, a hasty American would insult a Middle East customer by pushing for a quick decision; it would reflect a low regard for the relationship and the deal.

Under the European model, decision making is typically done in groups reaching consensus, rather than by single manager commands. According to Andrew Kakabadse, Cranfield University Professor and his colleagues; they identified four basic European styles: consensus (Finland, Sweden), managing from a distance (France), working towards a common goal (Germany, Austria), and leading from the front (UK, Ireland, Spain).

Executives from Finland and Sweden use consensus to manage their workforce. In England, decision making is slower than in the U. S., therefore it is unwise to rush the English into making a decision. In Germany, personal relationships are not needed to do business. The Germans are more interested in your academic credentials and the amount of time your company has been in business. Germans display great deference to people in authority, so it is imperative that they understand your level relative to their own.

Following the established protocol is critical to building and maintaining business relationships. Germany is heavily regulated and extremely bureaucratic. Decision making is held at the top of the company. Final decisions are translated into rigorous, comprehensive action steps that you can expect will be carried out to the letter.  Avoid confrontational behavior or high-pressure tactics. It can be counter productive. Once a decision is made, it will not be changed.

In the article “Comparing the Decision Styles of American, Japanese and Chinese Business Leaders” by Maris G. Martinsons writes:  A survey of Japanese and Chinese managers found that they perceived Western (particularly American) thinking to differ vastly from their own way of thinking. They characterized Western thinking as; objective, analytic, cerebral, and impersonal, as opposed to a self-perception of; subjective, synthetic, emotional, and personal thinking.

The Western distinction between the rational and the irrational may also contrasted with the Japanese concept of  ‘omoi’, which bridges the two. In this study; American, Japanese, and Chinese business leaders were each found to have a distinctive national style of decision making. The American decision style reflects a comparatively higher need for achievement. Business leaders in the U.S. tend to make decisions that either respond to challenges or create opportunities for their efforts to be recognized and praised by others.

More generally, American managers have a tendency to ‘analyze’ situations and/or ‘conceptualize’ potential solutions. This mindset encourages a structured and formalized decision making process. In contrast, Japanese and Chinese decision styles reflect comparatively high needs for affiliation and personal power, respectively. Japanese business leaders tend to favor decision making outcomes that preserve already established relationships or help to cultivate new ones.

Meanwhile, the strong Japanese need for affiliation also limits management’s ability to change the social structure of a business network in response to a competitive challenge. The ability to maintain and exercise power was found to be a key factor for Chinese business leaders. In a China-U.S. joint venture, their desire to maintain a high degree of control could become a source of conflict. American managers will likely try to change the organizational power structure in order to improve business performance.

Enduring differences in decision making tendencies continue to hinder the global transfer of management knowledge. Business leaders who prefer to make decisions in different ways are unlikely to accept a universal set of management principles or ‘best’ practices. International business people must thus be able to accommodate different decision making styles in order to be successful.

In the article “Cultural Differences in Decision Styles” by Brittany Goss writes:  Different cultures utilize different decision styles. There are many different ways in which individuals come to a decision, but there are also differences in decision styles between cultures. Companies, managerial systems and governments make decisions differently in different cultures. It is important to understand and respect these cultural differences in decision styles in order to foster positive cross-cultural communication.

U.S. culture operates on debate and discussion between opposing parties that leads to democratic decision making. Americans also tend to utilize a hierarchy, whereby someone in a management position can occasionally overrule the vote or make a decision without consulting a team. Japanese citizens will often make a decision by consensus rather than majority.

This means that everybody in a group has to agree on an idea before the group takes action. Japanese style decision making focuses on understanding multiple alternatives rather than a single ‘right’ answer. Chinese managers tend to be more hierarchical in their decision making processes. They tend not to ask employees for their ideas, but to make the decisions themselves.

The power distance between employer and employee is significantly larger in China than it is in either American or Japanese managerial systems. The Chinese typically seek to maintain social order through a harmony-within-hierarchy arrangement.

In the Middle East, as a region, it is important to bear two things in mind. First, the Middle East is not a homogenous region. The area is not solely populated by Arabs but also Kurds, Turks, Iranians and more. In addition, it not only inhabited by Muslims. There are many manifestations of Islam across the region that lives alongside Christianity, Judaism and Zoroastrianism.

In the Middle East, Arab managers have long traditions of consultative decision making, supported by the Koran and the sayings of Mohamed. However, such consultation occurs more on a person-to-person basis than in group meetings, and thus diffuses potential opposition.

While business in the Middle East tends to be transacted in a highly personalized manner, the final decisions are made by the top leaders, although there is a level of consultation with others called ‘shura’. It’s important not to only concentrate on building relationships with decision makers, but also those that advise them. Relationship driven cultures usually have the following traits:

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

In the articleInfluence of Chinese Culture on Decision Making Styles & Processes by Natalie Smith writes:  China is home to many skilled businessmen and politicians. To the uninitiated, Chinese decision making can seem mysterious, or even, for some Westerners who rely on scientific thinking, erroneous. However, decision making in China has logic of its own, and this logic is based on several factors.

These factors include the Chinese preference for ‘inductive reasoning’, and to look at the big picture when making decisions. Inductive reasoning starts with general observations and uses these observations to form a conclusion. On the other hand, Western thinking is based on ‘deductive reasoning’, in which a hypothesis or idea is proposed and then evidence is gathered and a decision is made based off the evidence.

Neither way is correct or incorrect; the two styles of reasoning are just different. Then there is ‘guanxi’, which is based-on the Confucian principle of caring for family and close friends. Under the principle of guanxi, there is no black and white answer based on the context of the situation. The Chinese are very oriented toward the long-term, and persevering and considering the long-term implications of a decision are very important.

Confucianism still influences Chinese decision making in many ways, and it considers the welfare of society as a whole, rather than the happiness or needs of individual people or families.

According to ‘Rowe & Boulgarides’; the process of decision making depends on many factors, including; ‘the context in which a decision is made, the decision maker’s way of perceiving and understanding cues, and what the decision maker values or judges as important’. Two significant influences on decision making are values and cognitive perception. Both affect how a decision maker interprets and responds to particular stimuli and conditions.

However there is a dilemma; with all of these cultural differences in decision-making styles, how are people going to work together? It is important to build knowledge and respect for cultural differences when working across cultures. Managers and teams can learn from the decision making styles of other cultures, enabling them to try new approaches. None of the decision styles are the ‘right’ way to make a decision; they are only different.

Styles can be combined for a variety of purposes in different situations, fostering flexibility and cross-cultural understanding. The existence of different decision making approaches is widely acknowledged, but remains poorly understood.

As global interactions increase, there is a growing need to know how managers make decisions in different parts of the world. ‘Rowe & Boulgarides’ assert that: “Knowing an individual’s decision style pattern, we can predict how he or she will react to various situations.”

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

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

Companies are born, companies fail, capitalism moves forward; ‘creative destruction’, they call it, and what Paul O’Neill, former U.S. Treasury Secretary, called ‘the genius of capitalism’. There is a myth, a misconception, floating around the universe that companies fail for millions of reasons”, says Mark Stevens. “That every death of the entrepreneurial dream is the result of a separate and distinct story unrelated to any other.

But the fact is, every company I have ever worked with that is dysfunctional, bleeding, damaged and en route to a head-on collision with disaster lacked basic fundamentals…”  In the writings of Gary Hamel he says; most businesses were never built to change; they were built to do one thing exceedingly well and highly efficiently, ‘forever’.

That’s why entire industries can get caught by change. In a world where change is shaken rather than stirred, the only way a company can renew its lease on success is by reinventing itself root and branch, before it has to: A feat that even the smartest companies have trouble pulling off.  Without doubt, the greatest threat to success is success itself:

Success corrupts. Hamel continues, saying; given enough time and enough incrementally myopic decisions, companies will eventually run out of momentum. Strategies start to die the moment they’re born. While death can be delayed, it can’t be avoided. Autopsies reveal three primary causes of death.

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

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

In the articleWhy Companies Fail by Ram Charan and Jerry Useem write:  CEOs offer every excuse but the right one; their own errors. Corporate collapses involve many breakdowns, including; ethics, trust, common sense, and that’s just to name a few. But perhaps the most troubling breakdown is in corporate oversight: Directors, senior executives, and Wall Street analysts all failed miserably by missing–or concealing–danger signals until it was too late.

Regulators will no doubt have plenty to say on the issue, but the most zealous reformers should be the companies themselves. They can begin with three changes that, taken together, will provide a better early warning system against failure:

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

In the article Why Companies Stagnate and Fail by John W. Davin writes: Success breeds arrogance. Caretaker executives who’ve never been entrepreneurs and have never built something out of nothing are prone to view success as an entitlement, rather than the result of innovation, gut-wrenching decisions and perseverance. Isolated from the bleeding edge of change by subservient minions, they start believing their own speeches.

Unlike Andy Grove, Intel’s former CEO, they aren’t perpetually paranoid. Instead, they’re naively confident and therefore prone to under-estimate threats and discount new competitors. These aren’t the only things that can turn leaders into also-ran, but they’re the ones I’ve encountered most often.

To the question; “can an organization die an untimely death?” an economist would answer ‘no’: “Institutions die when they deserve to die, that is, when they have shown themselves perpetually incapable of fulfilling stakeholder demands”. There are many causes why companies fail or stagnate, but four reasons continue to come up in almost all cases.

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

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

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

According to statistics from the Association of Insolvency and Restructuring Advisors (AIRA), the majority of business failures (67%) are caused by internally generated problems within the control of management; not by bad luck or external events like an economic recession.

Being accountable is a crucial step to overcoming the obstacles that face management.  Without someone taking ownership of a problem, nothing changes. Waiting for an external factor, outside of your control, in order to have a reason to change is a sure-fire recipe for business failure.  

According to Gary Hamel: “To thrive, in turbulent times, organizations must become a bit more disorganized; less buttoned down, less uptight, less compulsive, less anal.” Strategies get old and, in recent years, strategy life cycles have been shrinking and, sooner or later, every strategy dies.

The signs of advancing age are always visible; if you’re looking for them. As William Gibson once said, “The future has already happened, it’s just unequally distributed.” To see it coming, managers have to pay attention to nascent technologies, unconventional competitors and un-served customer groups.

The future will sneak up on you unless you go out looking for it. It’s not enough to spot trends, you have to think through their implications and how they’ll interact; and then develop contingency plans appropriate to each scenario. The more time a company devotes to rehearsing alternate futures, the quicker it will be able to react when one particular future begins to unfold.

In the April 16, 1999, an issue of the ‘Informant’ writes: An organization is like a tree full of monkeys, all on different levels, some climbing up, some falling down, most just swinging round and round. The monkeys on top look down and see a tree full of smiling faces. The monkeys on the bottom look up and see nothing but ass-holes.”  

Too often CEOs succumb to an undisciplined lust for growth, accumulating assets for the sake of accumulating assets. Why? It’s fun. There are lots of press conferences. It’s what powerful CEOs do. No one likes a good growth story better than Wall Street…. When companies run into trouble, the desire for a quick fix can become overwhelming.

The frequent result is a dynamic that Jim Collins describes in his book ‘Good to Great’; “vacillated, shifting from one strategy to another, always looking for a single stroke to quickly solve its problems. [It] held pep rallies, launched programs, grabbed fads, fired CEOs, hired CEOs and fired them yet again.”

Lurching from one silver bullet solution to another, the company never gains any traction. Collins calls it the ‘doom loop’, and it’s a killer.  Company failure has many parents, but the most critical of these is a breakdown in how executives perceived reality for their companies, how people within an organization faced up to their reality, how information and control systems in organizations were mismanaged, and how organizational leaders adopt spectacularly unsuccessful habits. Most companies don’t change until they are in pain… on the verge of dying… then, it’s too late… Companies must be truly proactive and adaptive to succeed…

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

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

Leaving aside the question of whether economics has ever accurately predicted anything, the argument that ‘the more significant the theory, the more unrealistic are the assumptions’ is simply bad philosophy. ~Steve Keen

The World Economy in 2010 was worth $74.007 trillion in GDP terms, using the Purchasing Price Parity (PPP) method of valuation. This is expected to grow to $78.092 trillion in 2011. Fueled by the rapid growth of mobile Internet access, the value of Web Economy will nearly double, from $2.3 trillion to $4.2 trillion in G20 countries by 2016, in a report by the  Boston Consulting Group (BCG). “If the report’s predictions are correct, then speaking of a ‘web economy’ will soon become redundant terminology, and this could be reached as early as 2020” says David Dean, managing director at BCG.

The Web is the largest human information construct in history. The Web has transformed the way we live, communicate, entertain, work, and doing research. Nowadays, more than 2 billions users, worldwide, are accessing some trillion web pages, spending 700 million minutes per month in Facebook, ordering 73 items per second in Amazon, and sending 1.3 exabytes from mobile Web devices.

During the last decade, the Web has been metamorphosed from an information software system to a major socio-technical  ecosystem and this has transformed and transforms human societies. Web technologies have been proven to be an enormous stimulus for market innovation, economic growth, social discourse and the free flow of ideas. After the hard lesson of the dot-com bubble in early 2000’s, the Web economy is now an important part of the real economy, bigger and more robust with new services ranging from search to social networking, virtual entertainment and giant multi-stores.

But this also raises concerns, notably in the area of reliability, scalability, security and openness of access. If global supply chain management depends on the Web, then a breakdown or security breach could cause major economic damage. If people’s personal data are compromised online, it may breach their privacy or affect many other aspects of their lives. Looking forward, the Web is poised to connect an ever-greater number of users, objects and information infrastructures.

This means that policy framework governing its use and development also needs to be adaptable, carefully crafted and coordinated across policy domains, borders and multiple stakeholder communities…

In the report The Digital Manifesto: How Companies and Countries Can Win in the Digital Economy” by Boston Consulting Group (BCG) writes: Businesses will be fundamentally transformed over the next five years. “No company or country can afford to ignore this development. Every business needs to go digital. The ‘new’ Internet is no longer largely Western society, accessed from your PC. It is now global, ubiquitous, and participatory said David Dean, coauthor of the report. Consumers are starting to derive extraordinary value from the Internet, according to the BCG report.

The uninterrupted growth of the Internet economy is not a foregone conclusion and businesses need to take an adaptive approach to strategy: Managing their legacy businesses while creating new ones, developing new capabilities, organizational structures, and cultures. “We are still only at the beginning of realizing the potential of the Internet. To compete, companies need to strengthen what we call their digital balance sheets by building their digital assets and reining in their digital liabilities to create digital advantage” said Paul Zwillenberg, coauthor of the report.

The report also urges that governments must take actions that support rather than impede progress. “In setting policies, government should be guided by what is needed to encourage growth, innovation, and consumer choice rather than by dogma. In most areas, governments should let the market sort out the winners and losers” said Zwillenberg.

The biggest drivers are; dramatic increase in the number of users around the globe, rise of emerging markets, increasing popularity of mobile devices–especially smart phones, and growth of social media. The economic impact of the Internet will grow from 1.9 billion users in 2010 to a projected 3 billion users in 2016, about 45% of the world’s population.

In the article Understanding the Economic Potential of the Web Economy” by Tim Weber writes: The Boston Consulting Group (BCG) report’s projected numbers look impressive, but they are still just a fraction of the global economy.We don’t fill empty holes on websites any more, we engage customers” says Michael Lazerow, CEO of Buddymedia.  In 2010, the internet economy in the G20 group of leading nations was worth $2.3 trillion, but a mere 4.1% of the total size of all G20 economies.

The Boston Consulting Group researchers speak of the emergence of a ‘new internet’ where: web access will not be a luxury any more, and the majority of web users will live in emerging markets (within four years, China is expected to be home to 800 million people using the Internet; that is more than the United States, India, France, Germany and the UK taken together) about 80% of all Internet users will access the web from a mobile and the Internet will go social and allow customers and companies to engage with each other directly.

This trend will be coupled with another huge technology shift that will fundamentally change the nature of how to run a business – the rise of the so-called ‘internet of things’, where all kinds of devices, widgets, sensors… will be connected to the web. “Understanding the economic potential of the web should be an urgent priority for leaders… [with] a powerful case for countries and companies to get online and reap the rewards of an age of data says Patrick Pichette, Google CFO. IBM estimates that by 2015, one trillion devices will be internet-connected.

However, what the BCG research fails to capture is the balance of employment between new, more efficient digital companies and old-style businesses. A problem with BCG’s research is that it’s difficult to define the actual digital economy: “During the research we discovered very quickly that there is no approved way of measuring the Internet economy” says David Dean. Official statistics simply do not capture the sideways move of old technologies into the digital world; for example, when a widget maker starts upgrading its devices so that they can be hooked up to the internet…

In the article The Great Transformer: The Impact of the Internet on Economic Growth and Prosperity by James Manyika and Charles Roxburgh write: The Internet is changing the way we work, socialize, create and share information, and organize the flow of people, ideas, and things around the globe. Yet the magnitude of this transformation is still underappreciated. The Internet accounted for 21% of the GDP growth in mature economies over the past 5 years.

In that time, we went from a few thousand students accessing Facebook to more than 800 million users around the world, including many leading firms, who regularly update their pages and share content. While large enterprises and national economies have reaped major benefits from this technological revolution and individual consumers; small upstart entrepreneurs have been some of the greatest beneficiaries from the Internet’s empowering influence. If Internet were a sector, it would have a greater weight in GDP than agriculture or utilities.

Yet, we are still in the early stages of this transformations that the Internet will unleash and the opportunities it will foster. As a result, governments, policy makers, and businesses must recognize and embrace the enormous opportunities the Internet can create; even as they work to address many of its risks…

The Internet is a vast mosaic of economic activity, ranging from millions of daily online transactions and communications to smart phone downloads of TV shows. Little is known, however, about how the Internet in its entirety contributes to global growth, productivity, and employment. According to new McKinsey research that examined the Internet economies of the G8 nations (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States), as well as Brazil, China, India, South Korea, and Sweden.

It found that the Internet accounts for a significant and growing portion of global GDP. The extensive study “Internet matters: The Internet’s sweeping impact on growth, jobs, and prosperity” by the McKinsey Global Institute (MGI), includes these findings:

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

All these numbers sound amazing, except that they still only represents a tiny proportion of the World Economy: It’s around 5% of the total world economy; yes, we have ways to go. While the BCG’s Web Economy projections sound like a major shift, they’re actually slightly more conservative than other estimates…

A report from Ericsson, for example, predicts mobile data subscriptions will hit five billion in 2016, 10 times larger than the current figure. However, the big takeaway for worldwide businesses is pay more attention to the Web; it’s critical for the survival and growth of the business…

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