Pandemic Crisis and Business Continuity: Management Planning and Preparedness– Critical…Waste of Time…

Pandemic crisis: The goal is to get through it– meaning stay alive. Staying alive requires planning even for an event that many think is unlikely; but it’s happened and it will probably happen again… so, it’s important to be prepared…

A pandemic is an epidemic of infectious disease that spreads through human populations across a large region, continents, worldwide… Throughout history there have been several  pandemics, such as; smallpox, tuberculosis… Recent pandemics include; HIV, H1N1… However, disease or condition is not pandemic merely because it’s widespread or kills many people– it must also be infectious. For instance, cancer is responsible for many deaths, but is not pandemic because it’s not infectious or contagious.

According to Dr Keiji Fukuda; an easy way to think about pandemic is to say: a pandemic is a global outbreak. Global outbreak means that we see both– spread of the agent and disease activities in addition to the spread of the virus. For example; HIV spread to U.S. and much of the rest of the world beginning around 1969. According to projections by U.N.; HIV, the virus that causes AIDS, is currently pandemic, with infection rates as high as 25% in southern and eastern Africa, and its death toll in Africa may reach 90–100 million by 2025. AIDS could kill 31 million people in India and 18 million in China by 2025…

Then, there was the ‘Great Influenza Pandemic’ of 1918-1919; global disaster that was caused by a novel and deadly strain of avian influenza virus; and responsible for millions of deaths. In contrast to 1918, today we know what causes influenza (virus) and how it’s transmitted, and we know how to produce vaccines, though it takes time to manufacture and administer them. Current models of possible impact of a flu epidemic in U.S. suggest that between 15% and 35% of the population would be affected and 100,000 to 200,000 would die (medium-level case). Rates of infection and mortality would probably be similar in other developed economies. In poorer countries impact would be greater.

The World Health Organization predicts— 2 million to 7.5 million deaths worldwide. Political and economic effects would be severe… All companies, especially energy and communications, have responsibility to be prepared and continue their operations in crisis. Planning for pandemic crisis can also help prepare businesses for other emergencies, such as; natural disaster, terrorist attack…

The potential impact on business can be significant; quarter-or-more of working population would have to take days-off because of sickness or caring for sick family member. Some businesses are more important for economic stability and community well-being than others; food stores, banking services, medical supply delivery… Each pandemic is different and the impact on businesses and overall populations will only be known and fully understood as pandemic evolves– but, business must be prepared…

In the article Economic Cost of Flu Pandemic by Mike Moffatt  writes:   A few times each decade the world is gripped by fears of pandemic, such as; the H5N1 bird flu of 2006 and the H1N1 swine flu of 2009. During each outbreak there are legitimate fears that the outbreak may morph into a flu pandemic of the likes not seen in the Western world since 1918-1919. Needless to say the possibility of pandemic that could cause loss of hundreds of thousands of lives is bound to get people’s attention…

Disease control researchers tend to talk about ‘when’ the flu pandemic might hit, not just ‘if’. Beyond terrible cost in human life, economies would take a severe hit, hurting the livelihood of billions.

According to Milan Brahmbhatt, World Bank; most immediate economic impacts of pandemic might arise not from actual death or sickness but from the uncoordinated efforts of private individuals to avoid becoming infected. This at least was experience during SARS, when people tried to avoid infection by minimizing face-to-face interactions, which resulted in severe demand shortage in business services sectors, such as; tourism, transportation, retail sales, hotels, restaurants…

Also, severe supply shortage due to workplace employee absenteeism, disruption of production processes and shifts to more costly procedures. This led to an immediate economic loss of perhaps 2% of East Asian regional GDP in second quarter of 2003, even though only about 800 people ultimately died from SARS. Note: 2% loss of global GDP during global influenza pandemic would represent around $200 billion in just one-quarter (or $800 billion over a whole year)…

In the article Businesses Must Prepare for Pandemic Outbreak by Scott Mugno writes: Pandemics are inevitable and businesses must be prepared by developing continuity plans… Pandemics will happen and have happened regularly throughout history. For examples; the 1918 Spanish flu, responsible for 40 to 50 million deaths worldwide and 675,000 deaths in U.S.; the 1957 Asian flu that caused one-to-four million deaths, 70,000 in U.S.; and the 1968 Hong Kong flu responsible for one-to-four million deaths, 34,000 within U.S.

Not to mention increasing cases of avian bird flu developing worldwide. It’s necessary for businesses to have a continuity plan in place before the next major pandemic outbreak. The key is for businesses and public to stay informed… and take precautions… The message from U.S. government is; given magnitude of a severe pandemic influenza; individuals, families, businesses and local and state governments must prepare for pandemic and not count on federal government for significant portion of support and relief: Stay informed and communicate, communicate, communicate…

The economic and human impact of pandemic is costly. According to ‘Trust for America’s Health’ Analysis; pandemic could cost U.S. economy about 5.5% decline in annual GDP…

In the article Business Plan for Pandemic by David Brown writes: In a recent survey, more than half of U.S. companies think there will be a global flu epidemic in near future. Two-thirds think it will seriously disrupt their operations, as well as, foment social unrest. But two-thirds also say they aren’t prepared. One-third of executives surveyed say nobody in their organization has been appointed to plan for pandemic; another one-quarter couldn’t or wouldn’t answer the question. 

According to Tommy G. Thompson; corporations are looking at this like deer in headlights, they don’t know which way to go… they are hoping it’s not going to hit them. Pandemic influenza is latest imponderable facing businesses, a form of unwanted globalization that threatens life and health of even smallest companies in the most literal way. Several surveys show that small but growing number of companies is convinced– as are many epidemiologists– that global flu outbreak is inevitable. But, how ready is the business world? For example; governments don’t require companies to have pandemic response plans and most ‘boards of directors’ doubt that they are even necessary.

According to Thompson; only one-in-five U.S. companies are in good position, in terms of having a plan and being able to react effectively– and even those will need continual update and improvements. Current models based on seasonal influenza and three 20th-century flu pandemics; suggest that new and highly contagious virus strain would spread across U.S. in about five weeks. At least one-third of the population is likely to become ill with peak absenteeism about 40% of the workforce. Depending on strain’s virulence, 900,000 to 10 million people might be hospitalized, and 200,000 to 2 million might die.

Given this scenario, companies should expect that a pandemic will kill some employees, temporarily cripple workforces, sow confusion and fear, and force people to make harrowing decisions between allegiances to work or family. Communication will be difficult; threaten supply chains, interrupting production of goods, delivery of services…

Experts say that operational decisions are most important and will have greatest impact, for example: Who can work at home? Who needs IT upgrades in advance to make that possible? Who needs to come in? What lines of production or service can be shut down without jeopardizing entire enterprise? Who are designated back-ups for key management positions? Here are few pandemic planning tips for business preparation:

  • Crisis management plan tailored to pandemic.
  • Plan for alternative workforce in event that large portion of workforce is impacted by pandemic. Estimates are for potential absenteeism rates of 10 to 25%, with larger rates in metropolitan areas.
  • Emotional impact of such events as death and potential of death on workforce families, as well as, the workforce in general.
  • Contingency plan for reduced production or services based on reduction of customer demand, labor force, raw materials, energy resources… needed for operation.
  • Work cooperatively with other companies for  critical business services.
  • Tele-working, telecommuting, videoconferencing and part-time shifts.
  • Capacity of Internet connectivity and information security protection.
  • Customer engagement plan and outreach programs.

Businesses that are not prepared could suffer devastating financial and human losses. As predicted by some business and health experts, a severe influenza pandemic could cause the demise of two-of-five businesses. Of three that survive, one will close within two years. It’s the self-interest of all businesses to take measures to insure their survival in the event of a crisis.

Business has responsibility to provide safe work environment and precautions to protect the health of its employees, customers, or other visitors, under all situations. Failure may not only result in financial and human losses, but also potential lawsuits from those who are harmed. Publicly-held companies have either, implied or explicit obligation to see that business continuity plans are in place that will insure viability of the business, and protect the interests of stakeholders.

Most major industries have specific regulatory bodies with strict laws that require protection, including; banking, health care, insurance, securities, telecommunications… According to I.M.F.; potential disruptions to trade and payment systems could expose financially vulnerable firms to possible bankruptcy.

Many business-specific precautions must be taken, in advance, to minimize devastating effects of pandemic. As with any catastrophe, contingency plans must be in place and continually reviewed and updated to insure that they stay current. The plan must address how to keep the business functioning at an acceptable level during the crisis, considering that as much as forty percent of the work force could be affected.

A pandemic could last for months at a time and come in several waves… When it comes to pandemic, we’re all in this together. Sick pigs and sick people… a virus in Mexico… an infection in New Zealand– in globalize world, microbial threats that seem far away can be on doorstep in hours.

According to CDC; as a global community, we are only as strong as our weakest link, and if we want to prevent the next pandemic– or at least survive it– we all, and especially business, need to plan for it…

Rethink and Reinvigorate Marketing: Maximize Impact– Paradigmatic Shift in Marketing Strategy… Market Trends…

Marketing: It’s the people who figure out how to work simply in the present, rather than the people who mastered the complexities of the past, who get to say what happens in the future. ~Clay Shikry

Competitive marketing means staying ahead of the curve. In the wild world of marketing, the last mile is the most critical and often the most overlooked. Global brands will spend millions on traditional advertising and related marketing infrastructure, but spend little or nothing on making a smooth handoff to sales. The marketing world is constantly shifting and changing, and to stay ahead of the game, you need to be on top of – if not ahead of – the latest marketing trends. Sure, the methods you use are worth continuing, but you need to keep your eye on the ball…

According to Chris Marentis; based on current data and trends, you should see innovation, expansion, automation, and refinement across the entire marketing industry, including; delivery mechanism, cross-channel marketing, email marketing, mobile marketing and social media marketing… According to Sid Shah; next year will be eventful for digital marketing, for example; mobile traffic will continue to sharply rise; cross-channel and cross-device measurement will be paramount; marketing will become even more granular; marketers will understand true value of social.

According to Vishal Sankhla; social outreach and analysis are important components for making marketing campaigns successful, and should garner just as much time and preparation as traditional campaigns. As more social sites emerge– further fragmenting the landscape– using the right technology to locate, monitor, analyze, and engage audiences will make or break marketing programs…

According to Audrey Howes; This year marked by quickly changing marketing landscape, for example; mobile will surpass desktop, visualization will reign supreme, personalization will become even more important, and local marketing will be the new, old thing… According to Rob Eleveld; this is a year of content marketing, mobile usage, and email marketing. Marketers will look for more efficiency and utilization of multi-channel tracking, reporting  for integrated channel campaigns to deliver real-time results at a lower cost…

Lines between traditional media and new content formats will continue to blur as journalists and bloggers will be distinguished by the content they create and their influencer reach… In search of optimization, more companies will move select sales responsibilities ‘up-funnel’ including; CRM operations, lead and opportunity qualification– into the marketing department… According to Richard Hanna, Andrew Rohm, and Victoria Crittenden; marketing can no longer be about solely– capturing attention via reach; instead, marketers must focus on both; capturing and continuing attention via engagement.

This calls for a blend of both traditional and social media, which requires new approaches to media strategy– media that does not simply replace traditional media, but rather expand media choices so as to capture– reach, intimacy, and engagement. Social networks aren’t about web sites: They’re about experiences. The ever-changing and evolving marketing best practice continues to show that the right mix and blend of traditional and new media is the best approach to branding… The parallel worlds of marketing— blogs, podcasts, e-marketing, mobile, text and social media platforms…– provide an overwhelmed variety of choices and challenges for the year ahead…

In the article Social Media Strategy: Marketers Need to Revisit by Tricia1000 writes: Social media marketers need to reflect more on current social networking practices in terms of– value, grabbing attention, and future prospective… It’s interesting to note how fast new social media sites are being adopted, but just as interesting is how many of them eventually disappear.

The keys marketing priority must include; rethinking current social media networking practice and how social media networks can better meet the needs of their customers… A social media strategy should focus on at least these three aspects:

  • Value: People visit social media sites to gain something from the experience. This can be to socialize with online friends, getting the latest news and resources playing games, to name but a few. By providing value to its customers; the business reinforces brand and creates loyalty.
  • Attention-grabbing: The social media network must also grab and keep the attention of its users. A social media site must offer something different to its users so it can continue to grow.
  • Future prospective: It’s important to sustain the business’ presence on a particular social media network. A social media site must be relevant to the business’ target audience, both today and planned strategy for the future.

In the article Digital Trends You Need to Embrace by Kent Lewis writes: Digital marketing trends that no marketer can afford to ignore include; social media, video, search engines, mobile, and marketing automation. Key strategies and trends are:

  • Evangelizing your brand via social media marketing: The current thinking regarding how your business should interact with customers via social media is already becoming outdated. The old mode of one person, one voice does not offer the depth and breadth of a multi-faceted approach which involves all employees. I recommend turning social roles upside down, focusing on integrating social media throughout your organization, driven by a social media evangelist. In the evangelist model, the role is that of chief brand officer/ CMO/ editor-in-chief/ director all wrapped into one.
  • Maximizing your media via video marketing and YouTube: Video provides the ultimate storytelling medium; if a picture is worth a thousand words, then how many words is a 30-second video at 30 frames per second worth? According to eMarketer; U.S. online video advertising spending will grow 52.1% to $2.16 billion in 2011, before reaching $7.11 billion in 2015. In terms of social media platforms for video, YouTube is the 800 pound gorilla and the second most popular search engine by volume. A few YouTube stats: 60 hours of video are uploaded every minute, over 4 billion videos are viewed per day, U.S. consumers exposed to a YouTube homepage ad are 437% more likely to engage in a key brand activity on the same day than those unexposed, and 70% of YouTube traffic comes from outside the U.S. As such, you cannot afford not to create your own channel. To be truly effective, a YouTube channel should contain videos for all four stages of the sales cycle: awareness,  interest, intent, and purchase..,
  • Penguin-proofing your search engine optimization efforts: Over the past two years, Google has made a series of updates to  its algorithm, collectively known as Panda and Penguin. Most business owners felt the impact of penalization immediately, but it is important to confirm that your  poor-quality content and suspect inbound links. To solve the problems, once identified, simply reverse or de-optimize  the elements and resubmit to Google once you have 100% confidence the website is clean.
  • Mobilizing your marketing: Marketers have scrambled the past year or two in order to find a solution to the mobile challenge. After years of hypothesis, mobile is finally upon us, and there are a variety of elements to consider when developing a mobile marketing strategy. Before you get started, however, conduct the necessary research up front to minimize your investment and maximize your ROI. Don’t forget to develop KPIs, embed necessary analytics, and start small with limited testing before committing significant resources. The three key mobile strategies: mobile-friendly websites, mobile ads, and SMS and email messaging.
  • Automating your marketing: A marketing automation platform helps develop and analyze marketing campaigns and understand prospects and customers. While core functionality focus on automating marketing campaign development, management, and reporting, these platforms also offer critical lead management capabilities, including; lead scoring and nurturing.

Marketing leaders are asking questions about how to effectively attract, influence, and retain customers in this age of increasing media options and decreasing customer attention spans. According to Shelley West; four topics we hear most often include: Omni-Channel Customer Experience: How do I create a seamless experience that is relevant and engaging across channels – including; digital, social, traditional media, and bricks and mortar? Integration of Tech and Marketing: How do I effectively leverage and integrate the new technology available today, such as; customers listening tools, marketing automation, and ROMI attribution?

Understanding the Customer Journey: How do customers travel the path to purchase in this age of digital, social, and mobile and where are the points of drag along the way? Marketing Talent for the Future: What skills and capabilities do I need to hire for and develop to ensure our function is properly equipped to deal with the rapid pace of change in the marketplace?

When taken together, these questions paint a picture of world in which the only constant is change: New technology, media options, new customer segments – all of which need to be identified, understood, worked into a marketing plan, and executed expertly. Certainly it was easier when all marketing leaders had to do was chose which of four big networks to run advertisements and then calculate the GRP. But we are finding that ‘big is making way for small’, reach for depth, and mass for personal. And that means many marketers need to rethink things all together…

According to SmartMediaTips; last year was the year of the social network. Pinterest has become the third biggest social network in the U.S.; Twitter surpassed 140 million users by its birthday; and Facebook brought Instagram for a cool $1 billion. Everyone from B2B right through to B2C has embraced these social media powerhouses, and rightly so.

Search engines are starting to place more relevancy on socially generated content. So if you’re not getting social – you should be. In 2013, your online marketing strategy will rely heavily on social sharing and content generation. To be seen as an industry expert, your social media presence will become more important, and networking will drive more traffic to your site…

A recent study reported that worldwide tablet traffic will far exceed mobile traffic in 2013. New wave of ‘mini tablets’ hitting the market means– tablet strategy– making sure your websites are properly built for devices, and tailoring your marketing to the users… Marketing must implement effective strategies that target these audiences. The web is changing and marketing must lead the change…

Integrated marketing is nothing new; we have been combining our marketing strategies for years. But in 2013, digital marketing will play a bigger role when combined with more traditional campaigns. For example, networking events have been a strong tactic for many years.

But next year, we will begin to see a rise of the digital event. Webinars are commonplace and easy-effective way for reaching out to customers and peers all over the world. In terms of your marketing strategies, this is one trend you should be keeping an eye on. Participating in digital meetings, Twitter chats, and Google+ Hangouts will become the new way of communication with customers…

According to Kate Freeman; probably the biggest error brands have made as they venture into mobile is that they think mobile is the same thing they’re doing for the website, just down to a 4-inch form. Mobile is an entirely different medium…

Marketing on mobile devices must be– timely, personal, contextual relevant (people expect their phone to be customized to them), in order to work…  Marketing must get smarter– listen, learn, understand– who, why, what, where, how much… Now, take a step back, and get to know the customers… they are different, global, personal…

Leader, Power, Treachery, Greed– Machiavellian: Precepts for Success in Business, Government… Game Changing?

A genuine leader is not a searcher for consensus, but a molder of consensus ~ Martin Luther King, Jr.

Beware of modern-day Machiavelli! We all know them– sly ones, cunning, manipulative… Modern workplaces provide a wealth of opportunities for the ambitious and unscrupulous. The sad fact is that very few people are leaders. A leader channels the energies of people toward a common goal, tempers self-interest, and build networks, rather than fortresses. However, instead many people; cajole, criticize, threaten… which is not leadership; it’s bullying, and it’s the only strategy they know. What’s wrong with today’s leader?

Can the writings of Machiavelli provide the keys for being an effective leader? The application of Machiavelli’s principles to today’s leader raises issues that are generic to migration and transformation of ideas created in one specific historical and social context to another time periods. Although, many experts says that there are basic human behaviors that transcend historical time… According to Machiavelli; nothing defines human beings better than his willingness to do irrational things to survive the jungle of greed, treachery, and if left unchecked places private interest above public interest… 

According to Alistair McAlpine; natural human corruption takes two forms: Ordinary citizen– tendency to be lazy; and for active aspiring citizen– tendency to be ambitious. Machiavelli sees successful leader as one that seeks– fame and greatness by governing well, which means two things; first, securing prosperity for the enterprise and its citizens; second, creation of an enterprise that transcend the term of the leader– that is, securing the survival and success of the enterprise for generations to come… Machiavelli was a student of political strategy and tried to change the way– games of politics and life is played….

In the article Machiavelli: Elements of Power by Dr. Mike A. writes: Machiavelli thoughts on the ‘rules of power’ encompass the struggles at every level of power from worker to the strategies of the world leader… His philosophies have been viewed as evil throughout the centuries, but as most business leaders and politicians agree Machiavelli has only defined the ‘physics of power’

Machiavelli set the precedent for the cold and calculated leader regardless of the century they live in. He was in the business of power preservation not piety, and frankly discussed the necessity of cruel actions to keep power… For example, he said; the leader must ‘stick to good’ so long as he can, but when compelled, he then must be ready to ‘take the way of evil’… 

Machiavellianism implies that in the arena of power– the end justifies the means. The priority of the leader is to keep security of the enterprise regardless of the morality of the means. However, Machiavelli did not believe in pursuing evil for evil’s sake, but when the only way to keep power is to act evil, then one must: Good and evil are equal in the contest for power… So then, under what circumstances would a leader call for amoral or evil actions in the modern society?

Henry Kissinger said: There are situations when survival is threatened, and the narrowing of choices for pursue of marginal means; unless you would rather have your society destroyed… Are there such threatening situations in the modern world that made it necessary to resort to marginal means? For example, looking back in recent history; what caused U.S. to drop the atomic bomb on Hiroshima and Nagasaki?

The casualties reached approximately 120,000 with the extending effects of radiation. To quote Henry Kissinger: Was survival of the U.S. so threatened that the use of such ‘marginal means’ was necessary? It has been stated that the strategies of Machiavelli show no prejudices for good or evil means. The U.S. used Machiavellian principles to support democracy, but others have used his tactics for other ideals. For another example, Vladimir Lenin used

Machiavellian tactics for a communist revolution in Russia… However, according to Alexandre Solzhenitsyn; the line between good and evil cuts through the heart of every human being– no matter the intention… Machiavellian was not only interested in the survival of the leader, but also the way the leader acquired power. Most (all) human struggles boil down to the struggle for power: It’s the basis of social Darwinism

In a n article Machiavelli Art of Management byShyamal Majumdar writes: It’s easy to dismiss the Machiavellian approach for running organizations in today’s kinder, gentler world of new-age, team-based management. It’s wrong to assume – as Machiavelli did – that it’s a jungle of greed and treachery in the world of business, government…

But the fact is, however, as devious as his principles may sound to the moral brigade, a careful reading of his ideas shows that he was essentially trying to develop the concept of the ideal leader to forge a humane and stable government. Interesting to note; Machiavelli was motivated in his philosophy by the same goals as Confucius– both had a deep underlying concern for the good of people through stability in government. And, ideas have applications in modern organizations even more than 500 years later.

But, why did he recommend that a leader must be ready to be cruel and devious? He himself gives the answer: A leader who wishes to make a profession of goodness in everything must be prepared to deal with so many that are not good. Therefore, it’s necessary for a leader that wishes to survive– he must learn how not to be good and use this knowledge according to the necessity of the case...

According to James O’Toole; the operative word here is ‘according to the necessity of the case’, which in other words means; ‘it all depends’. A leadership style cannot be straitjacketed… and must change as the situation demands; after all, expediency is name of the game in effective leadership. For example, pundits derided one great business leader – GE’s Jack Welch – as a modern-day Machiavelli.

Listen to Machiavellian ring in Welch’s own words: Managements that hang on to weakness for whatever reason–  tradition, sentiment, goodness or their own weakness–  won’t be around…  But while adopting this seemingly ‘cruel’ style of management advocated by Machiavelli, Welch didn’t forget the thinker’s advocacy of the ‘human’ face. Welch believed that victims of layoffs deserved compassionate treatment– generous financial settlements and humane consideration of their feelings.

He personally answered letters of complaint from laid-off employees, and directly intervened in cases of injustice that came to his attention, and executives who mismanaged corporate downsizing felt his wrath… The past and present Machiavellians  are only practicing a dictum that has now become an all-too-familiar phrase: Reform with a human face…

In the article Machiavelli and Modern Business by Peter J. Galie and Christopher Bopst write: Machiavelli’s thoughts have been subjected to more interpretations than any other political thinker. The many interpretations include; teacher of evil, supreme realist, political pragmatist, dispassionate scientist, anguished humanist

According to Isaiah Berlin; Machiavelli’s ‘originality’ lies in the notion of a two-world view: There are two ethical codes; one of ‘ethics’ another of ‘politics’, but they are two conflicting systems of value… According to Machiavelli; it’s not possible to build a successful enterprise and remain consistent with the ideals of traditional ethics. The application of Machiavelli principles to modern corporate world would suggest that one cannot be a decent human being and simultaneously build a successful enterprise.

However, Machiavelli argues that a leader should only resort to immoral means when it’s needed to preserve the enterprise, and also that an ambitious leader must create and maintain a strong and well-governed enterprise. The ideal Machiavellian leader must exercise what he called– virtue (i.e., inner strength, vigor, shrewdness…) in service of– security, power, glory, and expansion of their enterprise.

However, realistically, these two systems of values are incompatible; they represent two different views of the ideal social order: One must choose good or virtuous in traditional sense, or good or virtuous in Machiavellian sense… The implications of adopting Machiavellian ethics in modern corporate world are as profound as they are disturbing…

Machiavelli is not out of fashion, because power is not out of fashion. His teachings seem as relevant today as they were a half-millennium ago. According to John J. Mearsheimer, in his book ‘The Tragedy of Great Power Politics’ writes: Machiavelli’s ideas about power and leadership, though rooted in a specific time and place, are being  reformulated and reinterpreted by contemporary business executives.

According to James O’ Toole; there is merit in timeless rules and stratagems penned by Machiavelli, but most of his principles are outdated in the present context. For example, when Henry Ford set up his first plant, he was generous in providing; free schools, hospitals, subsidized food for workers… which was unheard of at the time. His labor welfare measures were termed revolutionary and progressive, but Ford’s approach was essentially Machiavellian (manipulative) in nature.

His purpose was that his workers should have more disposable income so that they could turn out to be potential and captive buyers of the cars he produced. This met with some success. But to Ford’s utter surprise, one day the workers went on strike as they found their owner (Ford) was trying to be too much of a ‘paternalistic’ manager by trying to control their lives through dictates, such as; no worker’s children could study in any other school but the one he had set up...

According to Borger; essence of Machiavelli’s message and the cornerstone of his philosophy of leadership are revealed by his many expressions of admiration for the leader that– ‘boldly seize the day’, and his expressions of contempt for a leader that– ‘timidly drift along’, allowing events to control them rather than other way around… Machiavelli’s most important principle is the need for the leader to be proactive and seize the initiative…

Christmas Ambivalence and Business Reality: Christmas Price Index– Scroogenomics, Santanomics, Grinchnomics…

Christmas– Dear Santa, I’ve been good all year… Well, most of the time… Okay, once in a while… Ugh! f*** it… I’ll buy my own s**t~ D Sam.

Christmas is one of those holidays which mean very different things to different people. It can be spiritual time, family time, time for giving, time for partying, or time for just over-eating… Most people (in those countries where it’s the main religious festival of the year) find something to enjoy about Christmas, whether they are Christians or not. But hasn’t Christmas in the consumer age become just bit too big, and much too commercial? There’s much about Christmas shopping that doesn’t make any sense. Wouldn’t we be much happier if we bought what we wanted when we wanted it?

Wouldn’t stores have smoother earnings and more confidence to hire and expand if their income were spread evenly across the year, rather than just exploding every Christmas holiday season? These are just some of the reasons why Christmas ‘brings out the Grinch’ in economists.

According to Mark Whitehouse: In the latest Wall Street Journal forecasting survey, more than two of three economists opined that if Christmas ceased to exist as a holiday, consumers would either spend more on themselves or spread their gift purchases more evenly across other events such as birthdays. That, in the view of some academics, would put more goods into the hands of people who truly value them and improve social welfare as a result. But, ah the gifts: Sweaters, ties, slippers, microwaves, picture frames… that you truly ‘do not’ need.

According to Joel Waldfogel, in his classic paper ‘The Deadweight Loss of Christmas’; calculated that between 10% and third of the value of gifts is waste, or what economists call– deadweight loss.  If one-third of gifts are unwanted and waste, then simply giving ‘cash’ to your friends and relatives to let them buy what they want would introduce tens of billions of dollars worth of satisfaction. In a weird way, the inefficiency of gift giving might be good for a weak economy.

But a weak economy isn’t concerned about efficiency. It’s concerned about activity. For example, if I get $100 worth of ‘channukah’ gifts this year and hate all of them, I’ll either re-sell them online (another round of economic activity) or I’ll buy the things I want on my own (yet another round of activity). The upshot: Christmas is no economist’s idea of an ideal holiday, but Santa can be stimulative…

IBIS-World Forecasts: Holiday spending to grow 3.7% in 2012, from last year to $69.2 billion… Higher disposable income levels will allow consumers to spend more freely on food, decorations and gifts during the winter holiday shopping season, from Nov. 1 to Dec. 25. But 2012 holiday spending will grow at a lower rate than the 4.9% rise in 2011 due to the approaching ‘fiscal cliff’. Nonetheless, retailers are forecast to see expanding holiday sales.

IBIS-World expects consumers to spend a total of $50.8 billion on gifts in 2012, up from $49.0 billion in 2011. The fastest-growing gift segments continues to be electronics and jewelry; electronics are forecast to grow 7.2% to $7.7 billion and jewelry is projected to rise 6.3% to $5.1 billion. Tablet computers, in particular, are expected to be popular gifts with electronics sales accounting for 15.1% of total holiday gift spending. According to Olivia Tang; surge in new products will help this segment capture more holiday spending with releases, such as; Apple’s iPad Mini, Amazon’s Kindle Fire HD, Google’s Nexus 7, Microsoft’s Surface…

Even Leapfrog’s LeapPad2, for children, is already on parents’ radars do to retailers’ early promotions.  Ultra-luxury items are forecast to perform particularly well this holiday season. High-end jewelry, in particular, is expensive but sentimental gift that forms a major sector of the quickly growing luxury market. Cloths remain the largest gift category at 17.6% of total gift, and is anticipated to grow 2.9% to $9.0 billion in 2012.

Most clothing gift will be high-end brand names do, in part, to convenience of shopping at luxury retailers’ online stores. Although home and garden gifts are forecast to increase only 0.9%, and the $5.9 estimated spending for category represents about 11.6% of total gift sales… According to MarketLive; faced with economic uncertainty, online spending is projected to climb 17% to $54.47 billion…

‘Christmas Price Index’ is tongue-in-cheek Christmas economic indicator published by PNC Wealth Management Bank, which tracks the cost of the items in the Christmas song ‘The Twelve Days of Christmas’. The Christmas Price Index was conceived by the bank’s chief economist as a humorous commodity price index to measure the changing cost of goods over time.

Commodity price indices, as compiled by economics, use ‘market basket’ of certain goods and then measure the cost of goods from year-to-year to gauge inflation in different sectors of the economy. The Christmas Price Index chose items in the popular Christmas song ‘The Twelve Days of Christmas’ as its ‘market basket’, includes;  partridge in pear tree, two turtle doves, three French hens, four calling birds, five gold(en) rings, six geese, seven swans, eight maids, nine dancing ladies, ten leaping lords, eleven pipers, and twelve drummers.

The ‘Christmas Price Index’ is calculated by adding the cost of items in the song, and then calculated as instructed in the song, for example; buying partridge in pear tree on each of the twelve days, buying two turtle doves from second day onward, for total of 22 turtle doves, thus complete set of 364 items. As an annual tradition, PNC Wealth Management also tabulates ‘True Cost of Christmas’, which is total cost of items gifted by ‘True Love’ who repeats all of the song’s verses. This holiday is most expensive year ever: Very thoughtful ‘True Loves’ must fork over $107,300.24 for all 364 gifts, an even more generous jump of 6.1% increase compared to last year…

In the article Scroogenomics by Jason Zasky writes: For many people, the holiday season is the most wonderful time of the year. According to Joel Waldfogel, economist; it’s the most wasteful. The problem is in the gift-giving, says Waldfogel, who highlights the fact that gifts frequently ‘leave recipients less than satisfied, creating what economists call a ‘deadweight loss,’ (defined: loss to one party that’s not offset by benefit to another).

In other words, from the standpoint of economic theory, gifts are often poorly matched with recipient’s preferences, so Christmas gift-giving results in what Waldfogel calls– ‘an orgy of value destruction’. However, before you label Waldfogel a ‘grumpy economist’ or decry him for waging war on Christmas, understand that he merely hopes to prompt people to reconsider their gift-giving habits, and reclaim the true spirit of the holiday season. So hold off on buying that present, and resist temptation to bestow an ugly Christmas sweater on that special someone…

In the article Demise of the ‘C’ Word by Jacqueline Wilson writes: Blink and Poof— just like that; Christmas is gone from our vocabularies. Now, we are only allowed to say ‘holiday’. It’s sad: Christmas clearly has a deeper meaning– you know, the celebration of the birth of Christ. Although, I would be lying if I said that even some Christians (like me) don’t get caught up in commercialization of the holiday. I totally do that, too. However, I do try to balance its real meaning by helping others less fortunate…

But, you can’t deny commercialization of Christmas, and this is where I start to get confused about taking the word ‘Christmas’ out of seasonal commercials, ads, conversation… For many, the season is about commercialization and nothing about religion. In fact, there are people of many different religions celebrate Christmas. For example, Jewish people celebrate Hanukkah, but also put up a Christmas tree.

There are people who would never set foot in a church who happily string lights on a prickly tree to the tunes of religious Christmas music… For those people, Christmas is just about– gifting, eating, socializing… But, is it such a bad thing that we can’t even whisper the word ‘Christmas’ in public anymore– no matter your belief? That’s sad…

Is Christmas the spirit of giving? Many will agree that this practice has gotten somewhat out of hand. Christmas is over commercialized and the ‘spirit of indulgence’ has become the rule, with credit card bills to prove it. Christmas is the ‘merchants delight’ and the ‘clerk’s despair’, not to mention the post-Christmas return rat race! $billions will be spent for over 1 billion gifts, plus $millions worth of wrapping paper. Don’t even ask about the booze that will be bought and consumed between Christmas and New Year’s Day.

Strip off the day, the name, Santa and the reindeer, the tree, mistletoe, Yule logs, cards and all the commercialization and what do you have left? Some would say; just one big Excedrin headache... According to Marc Lallanilla: Christmas sucks… But how, you may wonder, can any sensible person dislike a season that’s devoted to peace on Earth and goodwill toward men? You might be surprised to learn that there’s a huge underground of people who all agree that we should just cancel Christmas…

But, until we destroy the monster that Christmas has become, I fear we’re doomed to repeat it, year-after-year, life-after-life, debt-after-debt, suicide-after-suicide… So, why not chuck the whole mess in trash can?  The reason is simple: Christmas is more than day of tradition, commercial, and material indulgence: For millions of people, worldwide, Christmas revolves around the person– Jesus Christ…

Leadership is Value Creation — Value Creation is Leadership: Connecting; Ideas, People, Passion, Results– Maker vs. Taker…

The role of leadership in business is value creation for all stakeholders– customers, employees, investors… as well as, recognizing that the interests of these groups are inextricably linked...

Leadership is value creation and value creation is leadership— they are inseparable, they are one and the same… they are the objective in an enterprise. According to ‘Economist’; value creation is raison d’être of any business entity. Many analysts use a broad definition of value creation, and they include; financial factors (e.g. financial statement analysis, cash flow, profit…), internal capabilities (e.g. innovation, leadership, people, brand reputation, customer base…), future potential of the company (e.g. growth, revenue forecasts, risk assessment…)…

According to Paul O’Malley; there are three measures of value creation; customer, employees, and investors. Creating value in a firm is an enormously complex endeavor. Yet, despite its complexity, value creation is the objective of every enterprise, every worker, and every leader. All employees should be judged by their ability to create value. Traditionally, value creation is defined in terms of financial measures– profitability, revenue increases, cost savings… However, by considering only the financial part of value creation, it’s similar to the simplicity of the novice. It’s accurate but incomplete. Business  leadership knows that value creation is more complex than just a few financial indicators…

In the article Creating Real Value by ‘Inam Ul Haq’ writes: For decades, businesses have been involved in value creation; and many think of value as maximizing profits and minimizing costs. But, there is a limit to how much a business can maximize profit and minimize cost…  Focusing just on profits and costs is unsustainable value creation, purely because of its limitations.

Too many managers have a myopic and self-centered view of value, and this is where the problem of sustainability arises. Creating only shareholder value is not sustainable. Shareholder value is not real value; it’s only a part of real value. Real value is about going beyond trade-offs, it’s about creating shared value.

Shared value is composed of a set of different values bundled together, and shareholder value is just one of them. Shared value has four arms; employee value, customer value, shareholder value, social value. The current depressed global economic climate is evidence that there is too much focus on just shareholder value… this must change; we must build tomorrow on all four arms of value, and by creating shared value; it’s the best way to ensure shareholder value.

In the article Creating Shared Value by Michael Porter and Mark R. Kramer: Companies are trapped in an outdated approach to value creation, which has emerged over the past few decades. Companies continue to view value creation narrowly; optimizing short-term financial performance while missing the most important customer needs and ignoring the broader influences that determine their longer-term success.

How else could companies overlook the well-being of their customers, depletion of natural resources vital to their businesses, viability of key suppliers, or the economic distress of communities in which they produce and sell? How else could they think that simply shifting business activities to locations with ever lower wages is sustainable solution to competition? Governments have often exacerbated the problem by attempting to address social weaknesses at the expense of business.

Companies must exercise leadership to bring business and society together. The solution lies in principle of shared value, and that involves creating economic value that also creates value for society… Businesses must connect company success with social progress. Shared value is not just social responsibility, philanthropy, or sustainability, but a new way to achieve economic success. It’s not on the margin of what companies do, but at the center. We believe that it can give rise to the next major transformation of business thinking.

The concept of shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing economic and social conditions in communities… The concept rests on premise that both economic and social progress must be addressed using value principles. Value creation is an idea that has long been recognized in business…

However, businesses have rarely approached societal issues from a value perspective, but have treated them more as peripheral matters. This has obscured connections between business and social concerns. In the social sector, thinking in value terms is even less common. Social organizations and government entities often see success solely in terms of the benefits achieved or money expended.

However, a growing number of companies are embarking on important efforts to create shared value… Yet the recognition of the transformative power of shared value is still in its genesis: All stakeholders must begin to realize it requires; leadership, new skills, deep appreciation of societal needs, greater understanding of the true basis of company productivity, and the ability to collaborate across profit and nonprofit boundaries

In the article How Leaders’ Values Shape Value Creation by Scott Lichtenstein writes: We’ve been practicing leadership for over 6,000 years: The Pharaohs managing the work teams that built the pyramids understood leadership. The Imperial Emperors knew how to lead the Chinese civil service that held China together for thousands of years. The Moguls of India and their administrators understood how to lead. The Roman Empire needed no leadership books or journal articles. More recently, the rise of professional management in Western economies has perpetuated a plethora of lessons in leadership.

From Al Dunlop to Jack Welch; they all knew about leadership and they all had same basic approach to leadership. Their sentiment can be summed-up by stating: It’s my way or the highway.  By any measure of success this system has worked, and in so doing has created the basis of our modern world… If the ‘my way or the highway’ school of leadership has worked for thousands of years, why is the subject of leadership under such scrutiny?  

A major reason is due to changing employees’ values, and in aggregate, societal values… Leadership is not solely about making people feel good, profit and loss responsibility… it’s also about the recognition that primary task of leadership is value creation. And, stakeholders are much more active today, and questioning:

Value creation for whose benefit? Leadership must recognize that their values shape and influence the business culture, as well as; shaping goals and strategies that motivate employees… By understanding the forces of values, leadership can implement their value creation strategies… further-faster throughout their organizations…

In blog Be Seed Planter not Bean Counter by Ron Eccles writes: I have met only 3 types of people: First, there are those who spend their lives, taking inventory of what others get in comparison to what they get in life: They keep score. In their mines it’s all about them, getting their fair share. For the most part they are moving through life passively, always coming up short and letting the world around them know it. This group, I call the ‘bean counter’.

Second, there is the ‘seed planter’. They are by far the minority and they have discovered that to be truly rich, you learn to create value and to sow richness; wherever you go or whatever you do. When you plant enough seeds, over time, you reap a bountiful harvest…

Third, there are those in the middle and they spend a lot of their time as ‘bean counter’; but they also ‘plant seed’, occasionally. Once they make the connection that being a victim (‘bean counter’) is wasted energy, then they rapidly focus their energy on being a ‘seed planter’... OK, it’s time to choose… power of choice is yours. Choose wisely, either you are; ‘seed planter–value maker’ or ‘bean counter–value taker’.

One of the best ways to understand leadership is by connecting it to value creation. For example, leaders who comprehend value take into consideration the needs and values of all stakeholders. They balance the interests of each stakeholder when making a decision– what’s best for maximizing value for everyone. This tends to contrast sharply with non-value based leaders who are overly bottom-line driven, who focus on select group of stakeholders and fail to recognize– how decisions can have positive impact on one group at the expense of another.

According to ‘exinfm.com’; leadership creates value through the ability to bring about change. Perhaps the best definition of leadership is: The capacity to make change in order to create value. One important challenge confronting leadership is bridging gaps between strategy and getting people to execute. When leadership bridges the gap, then they are able to create real value. When leadership fails to engage people in strategic execution, then value creation is difficult… As well as, recognition that without leadership, nothing changes. 

However, there are new emerging philosophies of leadership and value creation that are based on shared value and community… The assumption is that most people have leadership qualities that can be pooled and drawn upon for creating value…

The traditional system of company-centric value creation is being replaced with a new frame of reference for value creation. This is centered on personalized co-creation of value, resulting in value that is truly unique to each individual.

This new frontier in value creation is emerging because of changing role of customers and employees– from isolated to connected, from unaware to informed, from passive to active. The emerging reality of value creation is value co-creation, which is the new mandate for leadership…

Sloppy Selling Basics– Mistakes, Blunders, Bungles…Comedy of Errors, Missteps– Primary Reason for Lost Sales…

Have heart selling! The truth is, those that embrace their blunders, mistakes… have much more success in life, business, selling… than those who don’t.

Unintentional blunders, mistakes, errors… happen in selling, and they can cost the sale, and in some situations the company. Even the very best sales professionals make selling mistakes, blunders… from time-to-time. There are many reasons for bungling… but, think about this: Do those reasons simply become excuses for sloppy selling basics or are we just lean on selling basics… 

When we blunder in selling we lose opportunities, we lose sales, and we lose customers. Mistakes in selling are common, for example: Not being prepared. Talking too much. Giving customers information that’s irrelevant. Neglecting to ask for the sale. Failing to prospect for new opportunities…

According to Kelley Robertson; there are four common errors made by sales people: Pitching too soon: Showing-up and throwing-up is not an effective way to sell, yet many sales people still launch into a pitch without fully understanding the customer. Whereas, a few thought-provoking questions quickly help determine if and when a pitch is appropriate. Poor pitches: Make sure that every sale presentation is accurately targeted to each customer– focus on customer’s issues… Poor communication: Communicate the real value proposition in terms that resonate with the customer. Lack of Focus: Laser-sharp attention on relevant customer issues. 

Although mistakes will happen, most can be avoided with a little planning, forethought, and focus. Don’t let sloppy mistakes jeopardize sales. According to Charles Cooper; even seasoned professionals make mistakes from time-to-time, but they learn from their blunders…

According to Kelley Robertson; I still remember the first two sales calls I made, although they were almost two decades ago. One was a cold call and the other was a face-to-face meeting. I think I made every mistake in the book, but these are the two that stand out the most.

Sales Blunder #1: I was new at selling and had to make sales appointments, but never cold called before, so I read the book ‘Cold Calling Techniques That Really Work’ and studied the principles, then made a first call. It was disaster! After stumbling through my opening statement– the prospect growled and said: What are you selling? Where upon, I threw away my script and quickly launched into my natural voice… Then, after a few seconds of silence the prospect yells-out: Not interested! And, I hear a loud click in my ear…

As I hung up the telephone, I thought: This book is crap! But, I re-read it again, and eventually realized that I had overlooked a key point… It said: Verbally practice and rehearse the opening so it sounds natural and comfortable. Duh I had mentally thought through the opening, but when the prospect answered the phone, it was the first time I actually had verbalized the opening, aloud. No wonder I stumbled and sounded like an idiot– practice, practice, practice… Sales..

Blunder #2: Later that week I managed to secure a face-to-face sales appointment. I was prepared– nice glossy presentation and I arrived for my appointment a few minutes early. Now, again– I made another ‘big’ sales blunder. After initial introductions, I sat down with the manager and spent 5 minutes telling her about– my business, background, products…

I talked non-stop for about 15-20 minutes (it quite possibly could have been longer but that’s what I recall!)– I walked her through each and every page of my slick presentation… I didn’t ask any questions. And, that wasn’t all– I hate to admit; once I finished the pitch I just sat there wondering– what to do next. Then, the prospect said: This sounds good, and she didn’t say anything else…

After several moments of uncomfortable silence, I gulped and meekly asked: So, would you like to go ahead with this? Her response was: I will get back to you! Needless to say that was the end of it… Now, when I look back on these situations I realize how much I have learned since then. Here are my five lessons: 1. Be prepared. 2. Focus on the customer. 3. Spend less time talking and more time asking questions. 4. Ask for the sale– it sounds simple but I am continually surprised how few sales people actually do. 5. Be ready for next steps. The school of hard knocks is a great teacher and I firmly believe that everyone can improve their results if they take the time to learn the lesson contained in each bungled sales call.

In the article Top Sales Mistakes by allbusiness.com writes: Sales can be a tough game even in the best of times. And with the recent economic downturn, it has been tougher than ever to get your foot in the door with sales prospects. Every salesperson, regardless of his or her industry, product, or skill level, makes mistakes from time-to-time. To keep from missing out on sales opportunities, avoid these basic sales blunders:

  • Not Listening: Do not just listen to what the customer is asking for; look past that to find out what they need. Listen to your customers, identify their specific needs– fill them if you can, and tell if you cannot.
  • Overselling: Eagerness and determination are important traits for a salesperson to have, but you must learn how to temper this energy with an awareness of when– too much is too much. A nonstop sales pitch leaves your potential customer with no room to make an intelligent decision. Know when to stop selling.
  • Being Unprepared: When you are making a sale you must know and understand details about– what you are selling and what the customer might need.
  • Jumping Straight to the Sale: Do not rush the sale. Educate the customers about what you are selling, and educate yourself about what the customer is looking to accomplish.
  • Not Closing the Sale: This is flip side of the previous mistake. It’s important to guide the customer from start-to-finish when selling, and closing the sale is the key final step.
  • Going Off Topic: Some salespeople overdo the need for relationship-building with excessive chatter. Others spend an inordinate amount of time on irrelevant information. While you do want to build a relationship, the goal is to make the sale.
  • Judging Books by Their Covers: Salespeople routinely miss sales because they prejudge their customers. Do not let your preconceptions about– race, creed, gender, ethnicity, or appearance stand in the way of making a sale. The customer you were quick to dismiss may surprise you by becoming your top customer.
  • Not Following Up on Leads: Just because someone does not buy immediately, doesn’t mean they will not be interested later. Follow-up is a critical aspect of sales that is often neglected.
  • Failing to Prospect for New Customers: Even when sales are at their peak, you must  devote time to looking for more customers. No company can survive without a constant influx of new or repeat customers…

In the article Deal-Killing Mistakes by Mark Stevens writes: Everyone in every career makes mistakes and salespeople are no different. Sales blow-up for many reasons, but there are three reasons that top my list. Understand these ahead of time will increase your performance exponentially: Guaranteed. The deal-killers:

  • You Ask For The Business: Old school, ‘Willy Loman-style’ sales hack– advice says; you should ask the customer or the prospect for the business: No. No. No… You are not a peddler. You are not a beggar. You are a problem solver, solution provider, advisor, consultant, expert and educator. Does your lawyer get on his hand and knees for your business? Does your doctor? ‘No.’ And, neither should you. This isn’t a matter of ego or pride. It’s about being a sales professional. When you ask for the business: You appear desperate and unprofessional– relying on stunts as opposed to creating a compelling value proposition. When you instill trust, you don’t have to ask for the business; your customers will ask you… Reminding yourself of your customer’s ‘patterns’, before you  go in the room is critical. Replay– the movie of your last meeting in your mind– before you enter the room. These Zen-like mental  exercises provides you strong and reliable signals and patterns for how to conduct yourself this go-round. For example: Three times a year, I have lunch with the CEO of a major insurance company. I never bring anything to sell; there are no proposals in hand, no hidden agenda. Sure, I would love to walk away with a commitment for a major project, but that’s nowhere near top of my mind. The CEO will ask me what is new at my firm, what interesting things are we up to… He always starts off that way. So, armed with the knowledge of his patterns, I prepared myself to talk about the most compelling, innovative and intriguing work we are doing. These lunches may not be the biggest engagement or most profitable, but they are the most captivating. It’s a dynamic that the ‘ask for the sale’ hustlers don’t comprehend, once you captivate customers, they begin selling themselves on you. They’ll think: Well, why don’t you do the project? In essence, they do the selling for you…
  • You Set An Annual Sales Goal: From the standpoint of conventional wisdom, this goal-setting exercise makes sense. But look at it closely and you will see it is self-defeating. Here’s why: It puts an artificial ceiling on your expectations. Why aim for $500,000, $1 million, $10 million in sales when you can shoot for the moon? It puts  pressure on you, leading to desperation. You’ll force the issue with customers, and no one wants pressure from a salesperson. I have witnessed this scenario hundreds of times: a salesperson sets a personal quota, starts falling short and its desperation time in Dodge City. Desperation is a virtual assurance you will fall short. Far better to go out everyday with a goal– to educate, influence, and build trust. Then, dollars will come.
  • You Rely-On Referral Sources: Here, I said ‘rely-on’. Building a network of referral sources and having them recommend you to their friends… these are always good things. But, relying-on them is a big mistake. That’s because you pass control of your own destiny on to others, who ‘may or may not’ act on your behalf. There’s too much at stake for you to risk the ‘may not’.

The sad thing about selling is that so many people do it the wrong way. The great thing about selling is that so many people do it the wrong way. Avoid the killer blunders, mistakes… and you will excel…

Internet Governance– Who Owns, Rules, Controls the Internet– Does It Really Matter: Illusions of Borderless Internet World…

The Internet has thrived under decentralized, bottom-up, multi-stakeholder governance model… why change it now?

The Internet exists to allow information to be distributed freely, and while there isn’t one gatekeeper there are certainly many who are trying to control it. Conflicts are playing out across the globe. The ‘International Telecommunication Union’ (ITU), a UN agency, is hosting ‘World Conference on International Telecommunications’ (WCIT) in Dubai, United Arab Emirates, December 3-14, 2012.

The purpose of this conference is to reach consensus among 193 ITU members on updating 1988 ‘International Telecommunications Regulations’ (ITR) governing international telecommunications and issues relating to Internet governance…

According to Jemima Kiss; Russia and China have been explicit in their goal of taking control of the Internet away from U.S. while developing countries feel western technology hegemony is limiting their economic opportunities. With world’s Internet population predicted to reach 3.4 billion by 2016, much is at stake…

According to Dr. Hamadoun Touré, Secretary General of ITU; when an invention becomes used by billions across the world, it no longer remains the sole property of one nation, however powerful that nation might be. There should be mechanism where many countries have an opportunity to have a say.

According to Vint Cerf, Google; it’s absolute antithesis of the Internet where the participating parties on the edge of the network pay for access to it… Freedom to innovate on the network has been largely a consequence of its economic model and its openness. The ad-hoc coalition lobbying against ITU proposals is made up of Google, Microsoft, Cisco, Comcast, AT&T and 10 others.

Western dominance is one of the biggest challenges for developing nations, says Alice Munyua, representing Kenya and Africa; it’s a big concern for African governments and stakeholders, and not just because of how the Internet is governed, but how it’s developed from a commercial and technical perspective. There is feeling that we are not able to participate-contribute effectively because of the lack of capacity, skills and resources, so there’s a digital divide in terms of access, but also in appropriating the Internet for our development.

Elsewhere in the ITU, the battle for control is more like a cold war. Russia, backed by several Middle Eastern countries and China, has pushed for cyber-security regulations and ITU control of domain names. Recently, Vladimir Putin, Russia president, said; we must establish international control over the Internet using the monitoring and supervisory capabilities of the ITU...

According to Milton Mueller; We’re all prepared to fight the ITU – but, we’re ignoring threats that come from ICANN, U.S. government, and nation states. We’re not building the kind of new institutions that we need to govern the Internet and keep it free.

The Internet is a globally distributed network comprising many voluntarily interconnected autonomous networks. It operates without a central governing body. However, to help ensure interoperability, several key technical and policy aspects of the underlying core infrastructure and the principal namespaces are administered by the Internet Corporation for Assigned Names and Numbers (ICANN), headquartered in Marina del Rey, California. ICANN oversees the assignment of globally unique identifiers on the Internet, including domain names, Internet Protocol (IP) addresses, application port numbers in transport protocols, and many other parameters.

This seeks to create a globally unified namespace to ensure the global reach of the Internet. ICANN is governed by an international board of directors drawn from across the Internet technical, business, academic, and other non-commercial communities. However, NTIA agency of the U. S. Department of Commerce continues to have final approval over changes to the DNS root zone.

This authority over the root zone file makes ICANN one of a few bodies with global, centralized influence over the otherwise distributed Internet. The definition of Internet governance is contested by differing groups across political and ideological lines. One of the main debates concerns the authority and participation of certain actors, such as; national governments, corporate entities and civil society, to play a role in the Internet’s governance.

In the article Who Controls the Internet? by Marta Cooper writes: There are huge decisions at stake over the future of Internet governance, with the battle lines being drawn between governments that see the access to information as a matter of human rights, and others that consider the control of information to be an issue for the state. Russia and China have been putting forward proposals to regulate certain areas of the web — citing the axioms of crime and security, for one.

These are areas that are currently unregulated due to, as Rebecca MacKinnon writes; lack of international consensus over what those terms actually mean or over how to balance enforcement with the protection of citizens’ rights. Of course, this is not first time these two nations have banged that drum against Western domination over such institutions or asserted their national sovereignty over cyberspace. Nor is it just authoritarian regimes with patchy human rights records that are citing these as justification for national control of the web.

A year ago, Brazil and South Africa called for a global Internet governance body to be located within the UN system. Opponents believe such proposals encroach upon the free and open nature of the Internet. Some believe that if governance of the Internet were in the hands of a UN body, this trend of individual nations exerting overt censorship will be strengthened… Russia’s creation last month of a blacklist of websites that promote drugs or suicide or contain porn or ‘extremist’ materials is just one example of trend in which free expression is continually chilled. China, country of 500 million Internet users, also finds sophisticated ways of censoring the web.

Yet the multi-stakeholder approach is not without problems. As Katitza Rodriguez, ‘Electronic Frontier Foundation’, noted; large part of world’s population feels excluded from Internet policy making venues. While this is certainly the case, this exclusion is exacerbated when restrictive Internet policies are imposed on the world by handful of governments pursuing a national agenda. A major challenge will be diversifying the multi-stakeholder model to include more voices that are not only the most affected by but also vulnerable to repressive Internet policies.

According to John Kampfner; this is just the start of the battle between those who wish to keep the Internet (relatively) free and those who will do everything in their power to reverse the process.

In the article Shut-downs Counter–The Idea Of World-Wide Web by Tom Gjelten writes: The pattern seems to be that governments (e.g., Egypt, Syria…) fear mass movements on the street, and realize that they might want to be able to shut-off Internet communication, in the country, and have started building the infrastructure that enables them to do that…

The key to shutting down the Internet is building that infrastructure in such a way that the Internet service is provided by government-owned firms, subject to government orders. You could also have the service providers housed in facilities where the government could shut-off the power. Technically, it’s not hard…

The whole idea of the global Internet has always been ungoverned space, where people around the world can share information freely. That principle is challenged at the ‘World Conference’ in Dubai. Among the agenda items at the conference is the notion that governments should have the right to control the Internet.

According to Leslie Daigle; there are proposals on the table from nations that are actively calling for the right to be able to ‘shut-down’ their Internet infrastructure in the case of threats to national security or whatever. What is at stake here is the principle of a global Internet, as opposed to separate national Internets that governments can manipulate.

We certainly fully respect the right of nations to protect their citizens… but, at the same time, I think that we wouldn’t see the full potential of the Internet if we drive towards imposing national boundaries on the Internet.

It’s a bit chaotic but sometimes chaos, even one that adherents like to claim somewhat disingenuously, as a multi-stakeholder approach is not disastrous. The Internet mostly works… it may be messy, but a lot better than the alternative, which means governments bringing the Internet under their control. The Internet’s openness fosters two of its great virtues.

First, it has encouraged innovation. Second, since nobody controls the Internet, it has proved hard to censor. And despite (or perhaps because of) this lack of governance, the network has proved surprisingly resilient. More than two billion people are connected to the Internet. The many predictions of collapse have not proved correct. However, some governments are uncomfortable with the current Internet set-up. There is growing sense–and not just among the usual authoritarian suspects– that the Internet is too important, politically and economically, to continue to operate beyond remit of governments.

Some governments are pushing to be more than mere stakeholders and want– the final say on important matters. China and Russia want the UN to adopt ‘International Code of Conduct for Information Security’. India, Brazil and South Africa have called for a ‘new global body to control the Internet’. Other countries want to give the UN’s agency– ITU, a supervisory role. Even Western governments, which usually favor the multi-stakeholder system, would like to rein in the ICANN, whose board decides which top-level domains to add (e.g., .com or .biz).

 Governments have a role to play– such as defending their citizens’ interests– but, they should not be allowed the final say over matters that would suffocate the Internet. At its base level, the Internet is run as a series of private agreements among companies. For example, businesses have all agreed that the Internet numbering system will be run by a group of regional naming entities and governed by a non-governmental entity, ICANN. Which, until relatively recently, saw little influence from non-business groups.

While there are some historical exceptions to this…, the Internet has largely been governed by the businesses that run it. This has created a very libertarian governance structure in which businesses essentially negotiate to ensure that their interests are maintained in the Internet’s operation… This is an interesting time to participate and observe Internet governance.

Regardless of your views of how, or if the Internet needs more regulation, it’s highly likely that, in next two years, Internet landscape will be much different than it is today… A working group established after a UN-initiated ‘World Summit on Information Society’ (WSIS) in 1988, proposed this definition: Internet governance is the development and application by governments, private sector, and civil society, in their respective roles– shared principles, norms, rules, decision-making procedures and programmes– shape the evolution and use of the Internet.

 

 

All the Angst about- Fiscal Cliff- is Creation of Media– Lots of Bull: Actually Its More Like– Fiscal Slope or Austerity Gridlock…

Fiscal cliff has nothing to do with a cliff or slope or butte or any other kind of geological formation… more like ‘fiscal folly’ or ‘taxmageddon’ or ‘debt reckoning’ or ‘fiscal deadline’

Fiscal cliff is deeply misleading term and actually it’s more like a fiscal slope, or better yet austerity gridlock. According to Edward Krudy; the fiscal cliff sounds like a scary place with headlines about taxmageddon are flashing on TV screens, next to clocks ticking down to January 1.

The Dow Jones Industrial Average has skidded over the last month, largely due to concerns about the standoff in Congress over– how to stop a barrage of tax hikes and spending cuts. But some major investors say the doomsayers are getting too much attention and cliff watchers should relax a bit. These investors argue that the U.S. economy does not face immediate disaster even if lawmakers can’t reach a deal by the end of year. There is time for lawmakers to come up with a deal before major damage starts to be done, in early 2013.

According to Warren Buffett; the fact that [lawmakers] can’t get along for a month or so is not going to torpedo the economy. In short, what has been dubbed ‘cliff’ is more like a fiscal ‘slope’ that gets steeper as time goes on: How far the U.S. economy slides down the slope depends on how quickly lawmakers take to do a deal. The problem is that if no agreement is reached, current law will slash deficits by sharply raising taxes and gutting spending…

In the article How Important is the Fiscal Cliff? Hint: Not Very by Barry Ritholtz writes: The fiscal cliff paranoia continues unabated. Just search the Internet with the term ‘fiscal cliff ‘ and the term’s appearance simply goes ballistic. But, what does the fiscal cliff mean? Let’s start with a definition: The term refers to the deal that Congress made in late 2011 to temporarily resolve the debt ceiling debate. The sequestration, as it’s known, calls for three elements: tax increases, spending cuts, and an increase in payroll tax (FICA).

The Washington Post’s Wonkblog has run the numbers and finds: $180 billion from income tax hikes, $120 billion in revenue from the payroll tax, $110 billion from the automatic spending cuts and $160 billion from expiring tax breaks and other programs. That is a not-insignificant amount of money, but it is hardly end of the world. To put this into context, it’s little less than the TARP bailout for Wall Street in 2009 and somewhat less than the American Recovery and Reinvestment Act (stimulus package).

An educated guess puts this at about $600 billion to $700 billion out of $15 trillion (size of U.S. economy). I’d ballpark that at about 4% of GDP or 0.50% of forecasted GDP growth of 2% for calendar 2013. The term fiscal cliff is really misnomer, as several analysts have correctly observed, and the effects of sequestration are not a Jan. 1, 2013, event. The impact of the spending cuts and tax hikes would be phased in over time. Additionally, as students of history have learned, single-variable analysis for complex financial issues is invariably wrong…

In the article Big Business of the Fiscal Cliff by Anna Palmer and Kate Brannen write: The fiscal cliff is big business in Washington, DC: Lobbyists, grassroots firms, accountants, lawyers… are raking in cash as Congress and the White House argue about how to avoid a fiscal calamity at the end of the year– threatening spending cuts, tax hikes and changes to entitlement programs.

It’s a classic Washington, DC phenomenon: Ahead of major deals, corporate clients and other groups pay a premium to Washington influence machinery to make sure their interests are protected. Republican and Democratic consultants say the recent surge in newly inked contracts is particularly good news, since the presidential election had meant a slow six months in town. Now, it’s springtime in Washington, DC in January, said Rich Gold, head Holland & Knight’s public policy practice. Everybody has their nose under the tent surrounding the fiscal cliff…

In the article How Far Over the Fiscal Cliff Could They Go? by Connie Cass writes: The dealmakers who warn that a year-end plunge off the fiscal cliff would be disastrous don’t seem to be rushing to stop it. Why aren’t they panicking? For one thing, Dec. 31 deadline is more flexible than it sounds. Like all skilled procrastinators– from kids putting off home work to taxpayers who file late– Washington, DC negotiators know they can finagle more time if they need it.

That doesn’t mean delay would be cost-free– stock markets might tank if 2013 dawns without a deal; however, pushing deadlines too far is a risky strategy… The Congressional Budget Office (CBO) predicts that fiscal cliff policies, if left unchecked, would spark a recession later in 2013 and send the unemployment rate above 9% by fall. How long could negotiators balk and bicker before putting U.S. economy in jeopardy? The calendar becomes less and less forgiving as the weeks pass. Here is a procrastinator’s guide to pushing the deadline:

  • DECEMBER: Democrats and Republicans say it’s critical to reach a deal this month. Yet both sides appear dug-in over taxes. A good chunk of the fiscal cliff–the automatic spending cuts known as the sequester is an artificial deadline created by Congress in hopes of forcing itself to come up with a deficit-cutting plan.
  • JANUARY: If there’s no deal in December, the economy won’t fall off a cliff on New Year’s Day. But it probably will begin a bumpy downhill ride. The new Congress that convenes Jan. 3 won’t look much different, divided between Republican-controlled House and Democratic-dominated Senate. However, lawmakers will feel more heat… According to Mark Zandi, chief economist at Moody’s Analytics; thinks the economy could weather a few more weeks of uncertainty as long as negotiators appeared to be working toward an agreement.
  • FEBRUARY: What might finally get procrastinators moving if nothing else does is the ‘fear’ of U. S. defaulting on debts for first time ever. Unless Congress acts, government is expected to hit its legal borrowing limit of $16.39 trillion by the end of December. In the last debt limit showdown, the government came within a whisker of default, in August 2011, before a compromise was reached. At that time, Standard & Poor’s down-graded the nation’s credit rating. Like wise, if again we come to edge of default, then that would probably send the stock market plummeting, and for sure finally shake-up the lawmakers…

In the article What If the Fiscal Cliff Is the Wrong Cliff? by Robert Wright writes: One premise of the people who instigated the fiscal cliff, in effect; committed Congress to either make big inroads on the deficit or have big inroads made automatically– meat-cleaver style. But is government debt the central economic problems. What if, they’re wrong? What if, public debt isn’t the main problem? What if, the public debt is such a small part of the overall problem that we’re setting ourselves up for disappointment? What if, we make lots of budget cuts only to find that the long-term benefits, while real, are dinky in the scheme of things, and there’s a much bigger problem that’s been left unaddressed?

That’s the view of some analysts whose voices aren’t getting much airtime amid all the freaking out about the fiscal cliff. They say, private debt, e.g., mortgages, credit card bills, business loans… is much bigger problem than public debt… and, we’re going to have to confront it before we truly recover from the recession.

According to report by Steve Clemons and Richard Vague; private debt is higher as a share of America’s GDP than anywhere in Europe. So what do you do when your economy is burdened by a huge debt overhang? How about we just forgive the debt? That may sound simplistic, but, actually, there tends to be an element of out-and-out debt forgiveness, for example; debt restructuring’ or debt relief.

People are starting to talk about doing this sort of thing on large-scale, for example; Martin Wolf, chief economist at the Financial Times, agrees with Vague and Clemons that– the private debt problem dwarfs the public debt problem, and something must be done about it in form of debt relief. Obviously, debt forgiveness is more popular among debtors than among creditors.

An According to Martin Wolf and Richard Vague; we’ve got to help people get out from under the mountain of debt that looms, barely seen, beyond the fiscal cliff…

In an article by Sarah Michael and Chris Paine writes; fiscal cliff sounds like a banjo player from a long-forgotten bluegrass band. But, the global economy’s term du jour is serious business. At the simplest level, there are a lot of spending cuts and tax hikes that will come into effect– at midnight December 31, or January, or February, or some time soon…

Many people are worried that if they all take place at once U.S. economy will slide into recession. It boils down to this; U.S. is in lot of debt: It makes about $US2.3 trillion/year, but spends about $US3.6 trillion. So, somehow, it has to slash $1.3 trillion. But if all the scheduled changes happen together, the Congressional Budget Office predicts the GDP will drop by 0.5% next year, plunging the U.S. into recession, which means unemployment rate may rise to 9.1%.

That’s loss of about two million jobs– not good. So, what are Democrats and Republicans planning to do about all this? Well, there is a lot of arguing: Republicans want to slash spending but avoid raising taxes. Democrats are looking to raise taxes and avoid too many spending cuts. What happens now? According to some experts, there are three main options:

  • They [lawmakers] can let all the planned changes come into effect.
  • They [lawmakers] can cancel some or all of the tax hikes and spending cuts.
  •  They [lawmakers] can agree on a middle ground.

The latest news– talks over a compromise are frozen… Yikes. That’s not good…

Reviving the Conglomerate– Corporate Diversification– Growth: Evolving Into a New Breed of ‘Quasi’ Conglomerate…

Warren Buffett’s ‘Berkshire Hathaway’ is an example of a successful conglomerate that used capital from its insurance subsidiaries to invest in other unrelated businesses…

Revival of the business conglomerate– A business or corporate conglomerate is a large, often multinational, corporation that owns companies in several different industry sectors. Conglomerates gained popularity in the 1960s as companies that generally engaged in one line of business, then began diversifying the business models through leveraged buyouts, mergers, acquisitions…

The concept of conglomerate or multi-industry corporation is not new and the business model has become common worldwide. At best, the conglomerate is excellent way to maximize profits (and growth) while building protection against economic and other shifts that could weaken a given market or industry. However, the conglomerate experienced turbulent times over last quarter of 20th century and it’s been substantially replaced by newer ideas, for example: Focus on a company’s core competency…

During this era ‘Tom Peters and Robert Waterman’ encapsulated this thinking in book ‘In Search of Excellence’ that encouraged  companies to ‘stick to their knitting’; do what they are good at rather than try to create and manage diverse businesses.

According to Paul Simmonds; undoubtedly conglomerates were a product of the prevailing times when management teams became convinced that they could manage ‘any’ business regardless of its– products, services… and the lack of experience in those sectors. Newly empowered– skilled, successful, confident– management teams were looking to make acquisitions and add-value to their companies; also, there were many companies that were willing targets.

According to Michael Jensen; diversification is way for managers to build empires rather than way to create value… The case against conglomerates is summed up in two words: size and complexity. Size slow decision-making. Complexity creates confusion. These two factors make it hard for even good managers to cope with the challenges of specialized markets and rapid change. In contrast, breaking companies into constituent parts allows managers to focus on business they know something about.

To say that a well-run conglomerate can sometimes succeed is hardly proof that conglomeration is a sound principle. Look behind many apparently diversified successes and they include either or both of the following: First, some degree of focus; e.g., manufacturing, customers-served, technology… Second, rare business minds; e.g., Jack Welch, Richard Branson, Warren Buffett…

In the article Conglomerate Makes a Come-Back by Prof. Shlomo Maital writes: A column in the Financial Times asked: Is the time right for the return of the conglomerate? In the 1960′s, and later in the 1990′s, it became fashionable for large companies to diversify their businesses by acquiring companies in a wide range of different industries. The idea was based on financial diversification, spreading risk. If retailing did poorly, well, perhaps media and entertainment would offset it.

The core of idea came from a Harvard Business School proposition that– management is management– if you could manage an oil business; you could also manage a movie studio, because the basic fundamental principles were the same. This hubris (excessive pride) proved inaccurate. Management is not management universally and there is a core competency of understanding deeply the industry in which one operates, based on long experience.

Many conglomerates failed for this reason. Exxon, for instance, expanded into non-oil industries like– high-tech and failed…  But, is it time to revive the conglomerate business model? And if so, what is the rationale? The reason is simple. A key constraint limiting growth and expansion today is credit and finance. Banks are reluctant to lend, and even when the recovery picks-up, banks will likely be far more stringent with their loans than in past.

The conglomerate, because of their size, clout, and ability to generate cash, will be able to surmount this constraint and supply credit to their constituent businesses. This may prove a key strategic asset. Consultant ‘Ian Harnett’ noted; companies that generate free cash flow for their group can provide risk capital for more widespread investment, when banks’ risk appetite disappears. Look for the conglomerate to return. If it does, it will be a wise reaction to the paradigm shift in finance and financial services that suddenly make companies become their own financiers.

In the article Case for Conglomerate by Randy Myers writes: Corporate landscape is littered with failed mergers and acquisitions, it’s getting hard to argue the advantages of operating in diverse lines of business. Even if you pull it off, numerous academic studies conducted over the past decade suggest you’ll pay a penalty in the stock market; so-called diversification discount relative to more highly focused companies.

No wonder countless firms have sought to ‘unlock’ the value of important subsidiaries by spinning them off as separately traded entities, leaving both parent and child to operate with a more narrow focus. Yet diversification continues to exert an alluring appeal. Why? Done well, it can help to smooth financial results for companies in cyclical industries. More broadly, it can allow firms in mature markets to grow revenues far more rapidly than they could by hewing to their existing lines of business.

According to Larry Shulman; companies that quickly shy away from diversification opportunities may be short-changing themselves and their investors–especially if they are led by executives who are proficient in strategic thinking and capital allocation, and emphasize performance and accountability... Although conglomerates may seem to operate in businesses that have no common thread, Shulman says; the successful ones typically focus on no more than two strategic types of businesses.

By doing so, managers are able to clarify the management process, and improve their odds of success. However, most diversified companies get that way through acquisitions. Few have the patience, breadth of management, manufacturing skills to allow them to branch out into businesses where they have no track record. Yet given enough time, companies can diversify organically…

In the article Who Owns What? Today’s Major Conglomerates and Subsidiaries by Amy Swanson writes: If you wait long enough, history will repeat itself in broad brushes and themes, and even through specific crazes. Lately I’ve been noticing one business fashion, conglomeration, which seems to be returning in a new form: The e-conglomerate.

An e-conglomerate is a high-tech company whose lines of business move increasingly further afield of each other. For example; Microsoft makes money with desktop operating system, servers, and office productivity software — and loses it in their online and entertainment/ gaming divisions. Amazon makes 97.4% of its net sales from media, electronics, and other general merchandise. And yet, the company is investigating other arenas, such as; online payment service provider for other companies, selling Kindle e-book reader, outsourcing software development, cloud-computing.

Then, Google with search engines, advertising, mobile phone design, advertising, user productivity software, enterprise software, clean energy technologies… The company does say that it devotes 70% of its resources to search and advertising, 20% to related businesses that include the apps, and ten percent to areas that are farther afield but have huge potential, such as Android…

Traditionally, high-tech companies are not shy about diversification. HP has enterprise storage, services, software, personal systems, imaging and printing, financial services… IBM might have been the prototypical e-conglomerate, before Lou Gerstner started to change the focus to services and the company began to shed many of its non-core activities… E-conglomeration is possible because the technology needs of so many business areas are similar, lowering the cost of adding a new one.

However, the markets, customers, needs, and practices can completely differ. Just as the dot-coms failed to redefine the basic rules of business, e-conglomerates are not necessarily good for business and shareholders. Money isn’t the issue so much as distraction. Softening management focus, politics, bureaucracy, and an unproven assumption of competency in new areas causes poor forecasting and planning.

I think Microsoft has demonstrated these signs for some time, and Google and Amazon are beginning to as well. Because these companies are so respected, there’s a good chance that others, emulating them, could also start to diversify beyond their ability to control the results. At such times, there’s nothing like a little dose of historic reality to remind us all that the most important rule of success is keeping your nose to that same grindstone.

The case for conglomerates can be summed up in one word: Diversification. According to financial theory, since business cycles affects industries in different ways, diversification can result in a reduction of investment risk. A downturn suffered by one subsidiary, for instance, can be counterbalanced by stability, or even expansion, in another venture.

The case against conglomerates according to Peter Lynch uses the phrase ‘diworsification‘ to describe companies that diversify into areas beyond their core competencies. No matter how good the management team, its energies and resources will be split over numerous businesses, which may or may not be synergistic. However, diversification strategies are essential to expand firms’ operations by adding markets, products, services, or stages of production to the existing business.

According to Joe G. Thomas; ‘diversification’ is a growth strategy. Many organizations pursue one or more types of growth strategies, and a primary reason is the view that ‘bigger is better’. One of the most common reasons for pursuing a conglomerate growth strategy is that opportunities in a firm’s current line of business are limited; requiring consideration of  alternatives in other types of businesses.

For example, Philip Morris’s acquisition of Miller Brewing was a conglomerate move: Products, markets, and production technologies of the brewery were quite different from those required to produce cigarettes; however, both products serve the consumer…

Firms may also pursue a conglomerate diversification strategy as a means of increasing the firm’s growth rate. A study by ‘Marlin, Lamont, and Geiger’; found that a diversification strategy must be well-matched to the strengths of its top management team; to be successful. For example, success of a merger may depend not only on how integrated the joining firms become, but also on how well top executives are suited to manage it.

Diversification can put the business on fast track to growth, but if the strategy fails– it can also be the down fall of the business. It’s vital to thoroughly research new strategies before diversifying. Look carefully at your existing business. Do you have the right managers to cope with a divaricating strategy?

Should you integrate the diversified business into one company or fence the new operation as a business in its own right? Is your organization strong enough to be an umbrella brand, where your core values resonate across the group?

Think hard– understand risks and rewards– good governance and management is about ensuring a brighter future…. diversification, in all forms, must be an ongoing consideration…

Open-Book Management: Framework of Inclusion for Business Success– Paradigm Shift in Business Management Thinking…

Open-Book Management is a way of running a company that gets everyone to focus on helping the business make money: Nothing more, nothing less.

Open-Book Management (OBM) is a framework for managing businesses… it’s a process… it’s a way to unleash entrepreneur spirit inside every employee… it’s a way to get everyone informed, involved, and engaged in making the company successful. Quite simply, change through Open-Book Management is focused on responsibility. Open-Book Management wasn’t born in prestigious think-tank or Ivy League business school or fancy consultants… It was born in the Ozarks in 1983 out of sheer necessity.

Jack Stack and 12 other managers at Springfield Remanufacturing Co. (SRC) had a choice… either teach everyone to think like business people, or lose 119 jobs… Open-Book Management is a unique and well-proven strategy based on a very simple belief; the best, most efficient, most profitable way to operate a business is to educate everyone on the business, give them a voice in saying how the company is run and provide them a stake in the financial outcome, good or bad.

Open-Book Management is not about just sharing numbers or data. There are no super-managers that decide how things must get done, no finance department gurus to watch the performance of every operator and operation to ensure profitability…

According to OBM, those responsibilities are best handled by those who have the most direct impact on them, and who are taught to make sound business decisions. It’s the individual workers that make important decisions and contributions that drive the well-being of the business. Open-Book Management was coined by John Case at ‘Inc Magazine’ and began using the term in 1993. However, the concept’s most visible success was by Jack Stack and his team at SRC…

Open-Book Management involves four basic practices; (1) training employees so they become business literate and can understand financial statements, (2) empowering them to use that information in cost cutting and quality improvement, (3) trusting them as business partners on equal footing, (4) rewarding them fairly for firm’s success.

According to Donald Barkman;  OBM is not a panacea. It doesn’t make things easier. It makes them better. It’s simply another  approach for managing the business. In the end, Open-Book Management is about informed and passionate workers tackling challenges, making-decisions, and adding-value to their lives, their business, and to the world around them…

In the book The Great Game of Business by Jack Stack writes: The true success of Open- Book Management is when companies allow ‘performance numbers’ to come ‘bottom-up’ (as opposed to traditional top-down management). While employees need to training to understand income statements and balance sheets; open-book’s true triumphs are when workers know and understand the ‘numbers’ to a level that they are able to report their meaning to upper-management. In order to motivate workers to strive for change,

Open-Book Management focuses on this ‘critical number’ for their business: The ‘critical number’ is mostly different for every business, but it’s a number that represents the prime performance indicator for the business, e.g., profitability, break-even point… Discovering ‘critical number’ is a key component of creating an open-book company. Once discovered, then a ‘scoreboard’ is developed that brings together all the numbers needed to calculate the ‘critical number’.

The ‘scoreboard’ is open for all to see, and meetings take place to discuss how individuals can influence the direction of the ‘score’ and therefore, ultimately, the performance against the ‘critical number’. Finally a ‘stake in the outcome’ is provided, e.g., bonus plan, equity share… which is tied to ‘critical number’ performance. The basic  rules for Open-Book Management are:

  • Know and teach the rules: Every employee should be given the measures of business success and taught to understand them
  • Follow the Action & Keep Score: Every employee should be expected and enabled to use their knowledge to improve performance
  • Provide a Stake in the Outcome: Every employee should have a direct stake in the company’s success-and in the risk of failure

In the article Introduction Open-Book Management by Harrington Group writes: Open-Book Management is a process that motivates employees to help improve the business bottom line. However, there is a catch: you have to open-up. Open-Book Management is information received by employees that should not only help them do their jobs effectively, but help them understand how the company is doing as a whole.

According to John Case, a company performs best when its people see themselves as partners in business rather than as hired hand. The technique gives employees relevant financial information about the company so that they can make better decisions. This information includes, but is not limited to; revenue, profit, cost of goods, cash flow, expenses…

As employees learn inner workings of business, they align their daily activities accordingly. By sharing information, you give workers the ability to leverage their knowledge. As result, managers gain insight, interests align, trust grows, and everyone wins…

In the blog What is Open-Book Management? by Jonathan Goldhill writes: Open-Book Management has two critical elements: sharing business information (open-book) and developing a process that enables everyone to use information to improve the company (management). It’s about running your business in a strategic, forward thinking fashion.

Employees are taught rules of business, enabled, and expected to improve performance based on that knowledge and given a ‘stake in the outcome’– good or bad. Business is a game, after all. It’s a competitive undertaking with– rules, keeping score, elements of luck and talent, and winners and losers. It can be as exciting, challenging, interesting and as fun as any game– provided that you understand the rules and are given a chance to play. The difference in business– the stakes are higher, much higher.

How do you teach people the business and make it understandable, interesting, meaningful, and maybe even a little fun? That’s the challenge, and that’s ‘The Game’… What if we could approach the day-to-day business activities with the same state of preparation, same level of knowledge, same enthusiasm, and most importantly, the same desire to win as we do with any competitive endeavor we pursue? ‘

The Game’ is strategy and management practice that takes the basic components of any game, applies them to the challenge of running business, and provides employees (the players) a way to understand, participate, and contribute in the overall performance of the business. ‘The Game’ levels the playing field and gives everyone the opportunity to act and take responsibility for the success of the company…

In the article Beyond Open-Book Management by Jeff Metzger writes: Companies that experience the real power behind Open-Book Management go far beyond simply opening up the books. People are not handed the numbers, they’re asked to help create them and improve them. They’re given a chance to act and take responsibility for the success of the company and rewarded for it, rather than just ‘doing their job as hired hands’. If you approached an everyday employee from any company and asked them; who creates the financial numbers in your company?

Nine times out of ten they would tell you it’s the financial guy… When in all reality they do! Working people create the financial numbers– by the decisions they make and the actions they take every day. Open-Book Management is just plain common sense. It wasn’t theorized in a business school or dreamed up at some consulting think tank. It was created by everyday business people… The pioneers of Open-Book Management didn’t always share the same language or use the same techniques, but they do operate according to some remarkably similar principles.

They discovered first hand that when you harness the collective wisdom of your people, great things can and do happen. If you have something to hide, or want to use numbers and information to manipulate and control people, then find another approach. If you are not prepared to learn, teach, share and be involved, then Open-Book Management will not work for you. However, if you are interested in making more money while improving the lives of the people who help you drive those results, then Open-Book Management is the answer…

In its simplest form, Open-Book Management is a way of running a company that gets everyone’s focus on building a better business– helping the business be more successful. It teaches all employees the goals of the company and how they can make a difference – both individually and as part of a team. Open-Book Management works because workers get a chance to act– to take responsibility…

According to Joy Maitland; if OBM appears at first to be unlikely strategy for achieving employee buy-in within your organization, you’re not alone. The model does require shift in thinking about the dynamics of the employer. The number one reason that businesses are reticent to implement OBM is lack of trust. Workplace distrust is common and somewhat disturbing:

Employees distrust employers; employers distrust employees… certainly not an ideal breeding ground for sharing sensitive information. Distrust runs deep, and can lead to disloyalty. There are, needless to say, pros and cons to the approach. According to Jack Welch; the more data and information you share with employees about costs and other competitive challenges, the better.

When people know what they’re up against, they can feel a greater sense of ownership and urgency, often sparking improvements in processes and productivity… And, the sense that– we’re all in this together– can certainly jump-start teamwork and innovation. But, go slow… Welch warns that there are real perils involved with opening the books… 

The key to any successful Open-Book Management system is to design it to fit an organization’s particular business needs and corporate culture… According to Carl E. Frahme; to unleash some real power in your company, then give some serious thought to Open-Book Management. It could unlock a lot of profits and growth. But it takes an honest, open approach to employees, and a great deal of hard work and trust-building…