Buying Facebook Fake Friends, Twitter Bogus Followers: Big Business of Buying Social Media Metrics– Do They Add Value…

Buying fake Facebook friends, bogus Twitter followers, false LinkedIn connections… they don’t contribute anything… they don’t add value… but, increases social media metrics, if that’s important to you…

Buying Facebook fake friends, Twitter bogus followers… and other social networking site metrics– increases popularity: Or, do they?

According to wikihow; the practice of buying followers, friends… is fairly simple. Using most any search engine, just type-in ‘buy Twitter followers’ and it produces pages of website links where you can buy thousands of Facebook, Twitter… friends, followers… Then, simply key in information and within a matter of hours, days… see the number of your friends, followers… increase by hundreds, thousands… Although, having fake followers does not necessarily mean that they were bought, and unlike Facebook friends that need to be approved, anyone can follow a user on Twitter, from a close relative to a spammer…

According to Lee Stacey; growing an ‘engaged followers base’ is essential for using Twitter to get your message out there... and it’s common practice for measuring a brand’s popularity, i.e., popularity is a measure of success. But, what if that measure isn’t real? What if those followers had been bought, rather than earned. Does it change things? From outside looking in, new followers are just incremental change to the popularity meter and your followers count.

However, fake followers have zero engagement value; even though it’s widely believed that increased numbers will increase engagement just through a belief of popularity. However, Google may be on to the scheme– it appears that inflated Twitter follower counts actually have a negative effect on search engine ranking, and even Twitter is talking about using other measures to indicate genuine social influence.

A recent study revealed that increasing the Twitter follower count by 1,000 would lead to more than a 1 place drop in Google search ranking… Since the fakes are often quite obvious it’s pretty easy to see who is buying followers. Also, the practice of buying fake followers has become such widespread, that London-based social media company developed  a web tool, named the ‘Fake Follower Check’ that can detect the number of fake followers that a user or their friends may have accumulated on their Twitter account…

According to Barracuda Labs; it’s worth bearing in mind that the fakes could have been bought by a savvy opponent that is aware of the negative impact that this could have in search results and with the press, when word gets out... Looking at all evidence, it would appear that the negatives outweigh the positives. With no engagement, fake followers provide very little value in themselves.

In the article The Business of Buying Social Media Followers by educationpr writes: There are two types of followers that industry recognizes, and they are ‘targeted’ followers, and ‘generated’ or ‘bots’ followers. ‘Targeted’ followers are retrieved using software that recognizes similar interests (with that of a user) and follows them on Twitter, and they may in turn follow the user back. ‘Generated’ followers are retrieved using accounts that are inactive or from spamming to generate followers.

Many online websites, such as; ‘Fiverr’, ‘InterTwitter’, ‘USocial’…  are offering the sale of Twitter fake followers, online. Also, people can buy fake Twitter followers for a friend… For example, Fiverr offers the sale of up to 3,200 followers for only $5.00. ‘InterTwitter’ offers for sale up to 1,000 Twitter followers for $14.00 and 2,500 followers for $26.00… ‘Followersale’ offers up to 15,000 followers for $39.00 and 25,000 followers for $69.00… So why do business buy fake followers?

New online business such as ‘MyTab’ bought 2,500 followers on ‘Fiverr’ for $5.00, and subsequently saw their actual members increase by thousands in their Twitter and Facebook accounts. The company got the popular boost that they wanted… Also, followers are usually bought by; celebrities, rock stars, stand-up comedians, actors/ actresses, even politician, and anyone who would benefit from having a wider social media footprint, without actually having to keep up their social network ties…

In the article Buying Facebook Friends: Should You Do It? by Eric Yaverbaum writes: In the age of social media, brands are willing to go to great lengths to improve their online clout. But is there any real value to ‘buy’ friends in the form of likes on Facebook? There are several Web sites with offers to buy likes for the brand: Just pay a fee that varies depending on how many fans you want to add. These services provide Facebook users with shopping coupons, games, other offers in exchange for liking the page. People like the page in exchange for something free, which seems like an effective, creative marketing ploy. But, the users have to do something in order to get the free item, and that free item has absolutely nothing to do with the person or the brand.

According to Cindy Morrison; I don’t suggest taking this route for a variety of reasons. First of all, social media is all about engaging and reaching the target audience. Going willy-nilly just to get bigger number of followers defeats the purpose. It’s better to grow your audience by giving something of value… Morrison has a valid point: Paying for likes may not get you clout or influence you seek at all. It may just get you ‘empty clout’. You’ll end up with a high number of likes on the page, but they’ll be from people who don’t actually like you.

So, while you can brag about having 2,000 followers on the page, in reality, those people have absolutely no intention of engaging with you or the brand… If all you want is a higher number of followers, fine. But, if you want people to actually care about the brand, then you should probably think twice before paying for likes. It’s important to remember Facebook measures clout with a thing called the ‘EdgeRank Score’. When you buy likes for the page, those fans will probably never engage with the content, i.e., commenting, sharing… it. When no one engages with the content, it actually lowers the ‘EdgeRank Score’, meaning that the brand is unlikely to be featured in a ‘news feed’, which means the only way a person sees the content is by going directly to the page.

The point is you should measure your social media strategy against what is realistic and achievable. Morrison adds; I’ve had social media strategy clients request that I buy them fans. But I’ve always resisted. When you look at analytics (Insights on Facebook), it just looks less than honest. Ten thousand fans in a month? Come on! I want real results that prove we’re gaining ground with new followers, building a great relationship with current customers and letting people develop true brand loyalty. People want to do business with those they know and trust. Fake fans will do neither. In sum, you may spend $300 for 10,000 Facebook likes, but ‘return on investment’ (ROI) may actually be very low– because none of those fans really like you at all…

In the article How To Buy A Ton of Twitter Followers by Sam Biddle writes: Search for ‘Twitter’ and you’ll find accounts across the globe offering to set you up with– hundreds, thousands, tens of thousands of Twitter followers. All for five bucks a pop. It may vary from day-to-day, but at $5 via PayPal will net you anywhere from 400 to 80,000 new followers after a few days, hours… of processing: That’s a lot of followers! With that many followers, what could stop you in life?

But, let’s make one thing clear: These aren’t real followers. They don’t actually exist… they’re robot accounts, automatically herded toward your username via software. They won’t retweet, favorite, reply, or make a single Twitter ripple. They’re inert– mere numbers on a page. The best have awesome-obvious fake names like; ‘Demeulemeester Omayr’, ‘Bumford Rahmel’… And, the worst are gibberish, for example; ‘DiofghdfhuuIudf is now following you’. So, how does it work?

According to reputable hackers: Generally, they are compromised twitter accounts acquired with botnets, where they run script to make the accounts follow the profile in question. Not very complicated… For some businesses, people, celebrities… a large bulge in the online numbers is very important: Whether its views on YouTube video, Facebook likes, Twitter followers It’s shameful, but Twitter followers translate into something vaguely impressive. Should it? No, not really– who you truly are online should be the ‘quality’ of followers, not ‘quantity’… And yet– we like big things, and Twitter followers are an increasing barometer of influence.

If prospective employer looks you up and sees your big-shot Twitter stats, you might even land a job. Can I get in trouble: No. There’s nothing illegal about this, and doesn’t appear to violate Twitter’s terms of service. Since the accounts aren’t actually spamming anyone, and it’s doubtful Twitter has reason to go after this kind of operation. But, it’s fun to buy hordes of followers for unsuspecting friends…

Every social network site has metrics which can be misinterpreted, over emphasized and false measures… On Facebook it’s likes and friends and on Twitter followers is the lowest hanging vanity metric. According to postjoe; buying Twitter followers is a ‘black hat’ social media tactic and of particular interest because of its multi-faceted negative impact. If traffic is the goal, then buying Twitter followers is counter productive: Twitter is aware of the practice and able to tell real from robot. Google likewise can easily sniff out bogus followers. Google already weighs social media for SEO rankings. And with ‘Panda’ Google is obviously aware of bogus/spam account holders and is actively lowering the Google Page Rank of content farmed accounts. Seeing value of social media requires looking beyond simple metrics…

The key is to understand the social media ecosystem. Twitter users who are actively engaged can identify fake users in seconds, e.g., an account with 10K followers, 35 tweets, 3 retweets, 4 mentions, is not an account to follow. It’s an account to avoid. Not only will Twitter users be inclined to avoid bogus account and it’s army of robot followers it also diminishes your credibility: Credibility is trust. But credibility is also culture (taste).

Being credible, trusted, and tasteful is essential at every level of business… and, engaged employees will recoil from being represented online with bogus social media tactics. Also, consider the fact that social networks are quickly gathering a level of garbage that must be sorted and discarded to get to the real value… and not only will real engaged Twitter users not appreciate bogus followers, but fake followers don’t add value. Fake followers don’t contribute anything, and ultimately fake followers don’t buy products…

According to Nik Hewitt; there are many services that sell just about anything to boost the ranks of the social channels-followers, friends, likes, views, connections… if numbers are all you care about…

twitter imagesCA043RHI

Sharing Economy–Collaborative Consumption–Peer-to-Peer: Next Big Business Model–Access Vs Own–Disruptive or Fad…

Sharing economy is here… it’s no longer just emerging… the sharing marketplace accommodates consumers that simply want nimble; quick-easy-cost effective… access to things, instead of outright ownership of them… ~Lynn Franz

Sharing economy or also known as collaborative consumption or peer-to-peer is a growing trend in the overall economy… Sharing is an old idea, but its potential to generate economic opportunities is only just beginning… it’s a new type of enterprise that strives to make it easy for people to share resources. The sharing economy is an economic model based on accessing resources rather than owning them. For example, if you need a pickup truck to move stuff– neighbor lends his truck, or if you need a place to stay for a few days– friend has an extra room…

Now, extend that model to anything and use web-based social networking to connect with the entire world – not just your neighborhood. That’s the sharing economy. According to Erica Swallow; it’s getting to the point where access to goods-skills is more important than ownership of them… and the benefits are hard to argue– lower costs, less waste, and the creation of global communities with neighborly value…

According to Joe Kraus; the sharing economy is a real trend… and the sharing concept has created markets out of things that were not considered monetizable assets before… Forbes researchers estimate that the revenue flowing through the share economy directly into people’s wallets will surpass $3.5 billion this year, with growth exceeding 25%. At that rate peer-to-peer sharing is moving from an income boost in a stagnant wage market into a disruptive economic force.

According to Lisa Gansky,  we are moving from a world organized around ownership to one organized around access to assets… However, economists remain perplexed as to how to measure all this activity, according to Arun Sundararajan; we’re going to have to invent new economics to capture the impact of the sharing economy… The big question is whether this all creates new value or just replaces existing businesses. The answer is surely both. It’s classic creative destruction...

In addition, there are regulatory issues, for example; New York and San Francisco, fueled by pressure from annoyed neighbors, have enacted laws that try to crimp short-term house rentals. Also, California has cited ride-sharing services for operating without a taxi license. And there are all sorts of tax questions such as; whether an overnight stay should be hit with a local hotel tax… However, some experts believe that it’s just a matter of time before regulators catch up to innovation…

According to ‘The Economist’; the sharing economy is definitely a movement that will grow by orders of magnitude in the future, so get ready to share!

In the article We’re Entering A New Trust Economy by Scott Annan writes: The idea of spare capacity is not a new one. A factory that can produce 100 widgets but that only has current demand for 80, then can rent out spare capacity to another company for the production of 20 extra widgets, thus enabling the factory owner to maximize its resources and optimize its ROI. But applying the notion of spare capacity to an individual is more novel. More individuals are viewing themselves as businesses.

Take the Airbnb model, for example; it’s a site that allows owners of homes to rent out spare rooms, apartments, or entire houses when they are not being used – in effect, creating a whole class of business owners whose main asset is its spare capacity. Lyft is another application that enables owners of cars to rent out rides when they have availability.

The ability to provide the use of an otherwise depreciating asset for the purpose of capitalizing on spare capacity is a significant development in the economy. Moreover, the ingredient that makes the share economy that much more potent is the way that we have commoditized trust – in essence, turning it into a currency. Welcome to the share economy – the marketplace that takes spare capacity and injects it with instantaneous demand…

In the article The Sharing Economy by Danielle Sacks writes: The central conceit of collaborative consumption is simple: Access to goods and skills is more important than ownership of them. According to Rachel Botsman; this world has three neat buckets: first, product-service systems that facilitate the sharing or renting of a product (i.e., car sharing); second, redistribution markets, which enable the re-ownership of a product (i.e., Craigslist); and third, collaborative lifestyles in which assets and skills can be shared (i.e., coworking spaces). The benefits are hard to argue — lower costs, less waste, and the creation of global communities with neighborly values.

The earliest of these marketplaces, e.g., Freecycle and CouchSurfing, encouraged the exchange of goods among peers for free. But the latest sharing platforms are anchored in commerce. They have the potential to amass a new ecosystem of entrepreneurs, just as eBay aggregated fragmented buyers and sellers into a global online marketplace. Gartner Group researchers estimate that the peer-to-peer financial-lending market will reach $5 billion by 2013. Frost & Sullivan projects that car-sharing revenues in North America alone will hit $3.3 billion by 2016.

Also, Botsman says; consumer peer-to-peer rental market will become a $26 billion sector and believes the sharing economy, total, is $110 billion-plus market… The sharing economy is at an interesting junctures where no one knows how big it might get or how many industries-companies it might affect…

In the article Is Sharing Illegal? by Lonnie Shekhtman writes: Governments have their work cut-out in keeping pace with innovation, especially as mobile, social, and cloud technologies allow for new business models that, in the eyes of regulators, threaten consumer safety and incumbent industries. The most poignant current-day example of tug-of-war between government and technology entrepreneurs is the legal quagmire many ‘sharing’ or ‘collaborative consumption’ companies face in the cities they operate.

The problem, at least for home- and car-sharing services, is multifaceted: they’re agitating dozens of stakeholders, operating in uncharted territories and legally indefinable. And, indefinable is hard to regulate. The problem for sharing companies is municipal laws are outdated, forcing regulators to squeeze square pegs into round holes.

Government is usually the last one to pick-up on innovations… For example, anyone in San Francisco who’s renting out their home for less than 30 days is doing it illegally… And, people renting out a secondary residence on the short-term will need to get a bed-and-breakfast license. While home-sharing services work to untangle the home-rental web, ride-sharing is grappling with its own set of legal woes… where the big problem (besides an enraged taxi and limo industry) is that the California Public Utilities Commission (CPUC) is relying on laws that have been in place since the 1970s, classifying companies as limousine services.

According to CPUC; effects of this new business model and its level of activity on public safety are unknown… Some experts say; the lesson is where you’ve got fast-moving dynamic sector that doesn’t fit into regulatory framework, do not rush to regulate until you understand what you’re dealing with…

In the article Share Everything: Why the Way We Consume Has Changed Forever by Emily Badger writes: The so-called sharing economy is described as being about many things, for example; millennial rejecting car ownership, environmentally conscious glooming onto the latest eco-trend, broke urbanites who will want all their own stuff again as soon as the economy recovers…

Sharing is an old idea. We’re used it in sharing– libraries, public parks, train cars… But in many ways American culture has drifted away from sharing as a value when people spread out from city centers into suburbs. People came to prize personal ownership– multiple cars, large homes… But today people are undergoing a cultural shift-transitional change in traditional paradigm. The last few years much has changed: the economy, technology, allure of cities… Also, we are witnessing a paradigm shift toward sharing in the offline world because of the online technology that enables it.

None of technology, including; Internet payment models, network search tools, identity verification systems… make trust in people at least somewhat possible… and trust is cornerstone for sharing. The Internet has essentially allowed us to expand the circle of people with whom we share… But fundamentally, the open-source culture of the www has taught us how to share and made sharing default of social interaction. According to Lee Rainie; there’s some pretty good empirical evidence that people can get in a habit of sharing…

The emerging marketplaces of sharing or collaborative consumption is redefining the ways goods-services are exchanged and valued. Habits of sharing that have existed in small, informal networks for most of human existence is beginning to blossomed into a market for micro-entrepreneurship that spans the globe.

This enterprise is fundamentally capitalist, yet simultaneously more socially and environmentally conscious, and it’s made possible by the emergence of new networked social tools and  cultural shifts toward peer-to-peer commerce that makes trust and efficient exchange between strangers possible.

Sharing is a major economic, social, and cultural shift. However, despite the excitement surrounding the new ventures; this emerging industry faces significant challenges… For example, when a new industry or technology emerges, government frequently relies on past models as it figures-out how to regulate the new enterprises…

Companies within the sharing economy need realistic government regulations that allow them to operate… they need protection from established companies that use government to kill competition… they need tax structure that does not penalize sharing… The sharing economy is taking shape within both; for-profit businesses and nonprofit mission-driven organizations…

According to Erica Swallow; the common theme– sharing is, for the most part, about value. While there are a number of non-financial reasons for participating in the sharing economy, most people agreed that the number one driver is cost savings. However, people in the sharing economy are not driven by the ethos of sharing, but by the fact that they are making real money… Even though most people are talking about sharing as a movement, most sharing enterprise people don’t care about movements– they care about real results… they care about convenience, savings, environment… people use ZipCar because it’s convenient.

According to Jonathan Clark; whether sharing is truly a shift in consumer behavior or just a glitch on the radar at the very least it has shifted the mindset of many people. People have a new space in which to reallocate resources and lessen waste. People have been sharing for ages, but the Internet is making the sharing economy, collaborative consumption… marketplaces– larger, easier, simpler, more profitable…

Hoarding Cash– Corporations Stashing Billions: Accumulating Massive Amounts of Cash Reserves– Caution, Fear, Greed…

Hoarding cash: Billions-Trillions in cash that are socked away are a good measure of what global business thinks about our times: It isn’t pretty… despite what some suggest it doesn’t appear to be guided by greed or complacency… John Bussy

Hoarding cash is the practice of companies holding large amount of cash (‘cash reserves’)… cash held in anticipation of facilitating company initiatives, for example; acquisitions, expansions, investments… Analysts often speculate about the purpose of corporations’ large cash reserves, i.e., act of accumulating assets, especially cash… over and above that is needed for immediate use…

According to ‘Federal Reserve’, as of third quarter of 2012, non-financial corporations in U. S. held $1.7 trillion of liquid assets; cash, securities… One explanation for higher cash holdings is uncertainty of the economic environment… or, they may also face greater difficulty in getting credit on short notice, and need to hold more cash as precaution.

A 2011 study by ‘International Monetary Fund’ suggests; higher cash holdings by corporations are simply a sign they plan new investments in the near future. It says, this is a ‘good omen’ that indicates investments can increase significantly over the next year or two. However, the dominant explanation for increased liquidity of non-financial corporations appears to be the growing role of multinational corporations and profits of foreign operations.

According to Kevin Warsh, ‘Federal Reserve Board’; higher corporate cash holdings are dominated by those with foreign operations… the ‘ratio of cash to assets’ at domestic-only businesses increased 20%, while it increased 50% among multinational businesses. While this may indicate multinational corporations expect better growth potential among foreign subsidiaries, and planning for additional offshore investments; however, some believe a more likely explanation is tax-based… That is, under U.S. tax law corporate profits generated offshore are taxable with tax credit for taxes paid in foreign jurisdictions.

But, U.S. taxes don’t apply unless and until such profits are repatriated. A study in ‘Journal of Financial Economics’ found; among multinational corporations, those facing higher repatriation taxes tended to hold more cash abroad than those facing lower tax burdens. Moreover, cash holdings tend to be higher in countries with lower taxes than those with high taxes. Further more, tax sensitivity appears to be greater in technology-based companies…

According to Michael Mandel; lagging business investment is one of the chief problems slowing down  the recovery. Companies are letting money sit idle, accruing minimal interest, rather than spending it on new equipment, investments… and that’s not even touching research and development (R&D), new employees… 

So how can corporations be coaxed to invest more? Some suggest enforcing tax penalties on companies that hold excessive cash reserves… In the meantime, companies are going to keep stuffing cash into their mattresses until the economy calms down…

In the article Hoarding Cash Is Nothing New by Tom Lindmark writes: So why have firms opted to accumulate cash over the past two decades. Here are a couple of ideas. According to Timothy Taylor; broadly speaking, there are two reasons for firms to hold more cash; ‘precautionary motives and repatriation taxes’. ‘Precautionary motives’ refers to notions that firms operate in situations of uncertainty, for example; uncertainty about what stresses-opportunities might arise, and whether they can get a loan, on favorable terms, when they want it: Cash offers flexibility. ‘Repatriation taxes’ refers to taxes that are due to the U.S. government from corporations operating abroad… such taxation only takes place when earnings are repatriated…

Typically, business decision-makers react to uncertain market conditions with the most natural, intelligent, and rational human response imaginable: Caution. Failure to invest under conditions of economic malaise, recession, or disruption is not cowardly, stupid, irrational… it’s often just plain common sense. Furthermore, executives and directors of corporations owe a fiduciary duty to their stakeholders to make rational and prudent decisions. If prudence dictates caution, who will gainsay CEO’s or board’s decision to defer that new manufacturing line, acquisition… until conditions become clearer?

So what do we know: Well, there’s nothing new about U.S. companies accumulating cash, they’ve been doing it for a long time. U.S. tax policy most likely contributes to the practice of parking excess cash overseas, and may also stymie the distribution of profits to shareholders... and technology firms seem to lead the hoarding pack. I suppose this last fact has something to do with knowledge that any given technology firm is just one invention or innovation away from extinction. That does tend to focus one’s attention and perhaps lead to an abundance of caution…

In the article Cash Hoarding Stunts Europe by Stephen Fidler writes: Across Europe corporations are sitting on a mountain of cash. The trouble is they aren’t spending much of it. It’s not only in Europe that companies are hoarding piles of cash. According to ‘Institute of International Finance’; corporations in U.S., euro zone, U.K., and Japan hold some $7.75 trillion in cash or near equivalents, an unprecedented sum. In Europe, the problem is particularly acute.

According to Simon Tilford; the ‘ratio of investment’ to ‘gross domestic product’ in Europe is at 60-year low even as companies pile on cash. Corporate cash holdings are now €2 trillion ($2.64 trillion) across the euro zone and extraordinary £750 billion ($1.19 trillion) in the U.K.  Companies are piling up cash for combination of reasons; one is reaction to financial crisis.

Companies that built excessive debts before the crisis are paying them down. Firms also are hoarding cash because of a broken banking system: Banks have retreated from lending and companies are building cash buffers to compensate. For continental Europe, where companies still draw a majority of their finance from banks rather than from the capital markets, the retreat of bank lenders is significant.

Mr. Tilford argues; another reason is government policies. Excessive fiscal austerity, he says, has snuffed-out Europe‘s tentative economic recovery and threatens a swath of the euro zone with a slump… another factor helping to build corporate cash piles is distorted incentives for senior executives… Firms are being run for cash rather than growth, with damaging implications for economic activity…

In the article Previous Corporate Hoarding Of Cash by Sy Harding writes: For a number of years politicians and analysts have bemoaned the fact that U.S. corporations were hoarding cash to an unprecedented degree, refusing to invest it for future growth that might have helped the economy recover from the back-to-back recessions of 2001 and 2008.

Lagging business investment has continuously been tagged as one of the major factors stifling the economy. Depending on whose numbers you believe, corporations are sitting on a record $2 trillion to $4 trillion in idle cash, earning only today’s minimal interest. It’s my expectation that the economy and stock market face one more setback at some point, which will be created by the next step in returning to normal; the belt-tightening austerity measures that will have to be imposed on the country to tackle the major remaining problem– bringing down the record government debt level

However, the next set-back is not likely to be anywhere near as severe, and the hoard of corporate cash is one reason for that expectation: Corporations are planning ahead…

In the article Myth of Corporate Cash Hoarding by Alan Reynolds writes: U.S. non-financial corporations were sitting-on $1.93 trillion in liquid assets at the end of last year’s third quarter, according to the ‘Federal Reserve Board’. This has become one of the most frequently echoed statistics, viewed as indisputable evidence that U.S. business leaders are unduly timid or evil.

More recently, ‘Washington Post’ columnist Harold Meyerson opined that; U.S. corporations can’t sit on their nearly $2 trillion in cash reserves forever, but that doesn’t mean they’re going to invest their stash in job-creating enterprises within the U.S. The chorus of media outrage about supposedly excessive corporate cash reveals nothing about the financial health of any U.S. business. It simply reveals ignorance of elementary accounting…

In fact, U.S. corporations are increasing investments in plant and equipment at same time they are increasing investments in so-called ‘liquid’ assets (e.g., bonds, time deposits, mutual funds…). The widely repeated notion that prudent corporate investments in liquid assets have somehow reduced real investments is nonsense…

There is no reason or advantage for companies to hoard cash (i.e., excessive cash reserves)… companies that do not invest their cash in income-producing assets do not grow: It’s that simple. While a stagnant company can survive for a while by sitting on a stash-of-cash might seem safe; it’s a false sense of security. Companies that hoard cash– don’t invest or don’t plan to invest on business growth initiatives are doomed to fail… investing in business growth is an imperative…

According to ‘Fortuna Advisors LLC’; companies that hoard cash beyond a certain limit actually deliver lower returns to shareholders… In an article in CFO magazine writes: Investors are growing restless, and in some cases furious, about what they see as ‘inefficient balance sheets’ that are building large cash balances. They often demand fat share repurchases to disgorge cash cushions that they claim erode management’s accountability to the capital markets and reduce the company’s ‘return on capital’.

Cash balances are, to be sure, clearly on the rise. Analysts  examined the largest non-financial U.S.-domiciled companies, eliminating those without adequate accounting and share-price data for the last 10 years. At the end of 2010 those 885 companies held almost $750 billion in cash and equivalents– nearly four times the level of 10 years earlier. This represents a doubling of the ‘ratio of cash to assets’ from 3.7% to 7.3%, over that period. Although most of the companies now hold less than 15% of their assets in cash, some hold as much as 40% or more.

Do such large cash balances have a negative impact on ‘expected share price’ performance as investors claim? To answer this, a group of companies were defined as ‘cash hoarders’ that had over 15% of their ‘total assets’ in cash and cash equivalents on average over the last 10 years. Research of the period from 2001 to 2010 shows that the cash hoarders deliver median ‘total shareholder return’ (TSR) about 4.6% lower per year in comparison with the companies that hold less cash.

Holding cash doesn’t seem to affect TSR as much until it exceeds 10% of assets, but then it seems to have fairly strong negative effect once cash is above 15% of assets. Excessive cash hoarding is destructive to business… Companies unable to deliver a higher rate of return by deploying excess cash– must return cash to shareholders and not squander it.

Dunbar’s Number– Meaningful Social Networking Connections: Facebook, Tweeter… Oversimplification, Irrelevant, Unrealistic…

Dunbar’s Number is the theory that one person can only manage a limited number of social relationships due to limitation of the human brain, but with emergence of social networking sites, such as; Facebook, Twitter… we might want to question-rethink this limit…

Dunbar’s Number says that one person can only have 150 friends, connections… at most– and even Facebook, Tweeter… cannot expand the true social circle: Because the human brain isn’t big enough to cope...

Robin Dunbar, British anthropologist, used correlation observed for non-human primates to predict a social group size for humans. Dunbar noticed that there is a tight correlation between the size of primate’s brain and the size of the social group its species generally forms. On this basis humans should only live in groups of around 150. The neat thing about this prediction was the way it seemed to fit the number of good friends most people have, as measured by– length of address books, size of hunter-gatherer bands…

Apparently, we-humans fit in a pattern; we have social circles beyond it and layers within – but there is a natural grouping of about 150… Also, recent  studies have suggested that Dunbar’s number is applicable to online social networks, as well. According Drake Bennett; Dunbar’s work has helped to crystallize debate among social media architects over whether even the most cleverly designed technologies can expand the dimensions of a person’s social world…

According to Duncan Watts; just as simplicity popularized Dunbar’s ideas, it also opened him to charge of reductionism. We want to apply this single monolithic idea that reduces all the complexity of the world to just one dimension, and just one number… According to Drake Bennett; Dunbar’s model of friendship is a series of circles of intimacy, which is a massive oversimplification: In real life, people don’t have better friends and worse friends, they have different sorts of friends

Researchers that used different methods to measure the size of a person’s social circle have come up with numbers that don’t match Dunbar’s. One set of studies by the anthropologist Russell Bernard and the network scientist Peter Killworth found a mean social network size of 291. Another paper, published in Journal of American Statistical Association, came up with 611… Among social network architects, some see Dunbar’s number less as a wall and more as a hurdle.

According to Cameron Marlow, at Facebook; the topic of Dunbar’s number comes-up often… and in a lot of contexts it’s a compelling framing of some data that we have about people’s relationships… Although Facebook’s limit on the number of friends is a generous 5,000, the average user has about 190… Also, research found that on Twitter the average number that a user regularly interacts with is between 100-200 people…

Bottom line, according to Nick Humphrey; humans evolved big brains not to understand the world but to understand each other… the more fellow apes you need to understand, the bigger the mental engine you need…

In the article You’ve Got to Have (150) Friends by Robin Dunbar writes: More than anything since the invention of the postal service, Facebook has revolutionized how we relate to one another. But the revolution hasn’t come in quite the way that the people behind it and other social networking sites assume. These sites may have allowed us to amass thousands of ‘friends’ but they have not yet devised a way to cut through the old-fashioned nature of relationships themselves.

Our circle of actual friends remains small, limited not by technology but by human nature. What Facebook has done is provide us a way to maintain our circles in a fractured, dynamic world. Social networking and other digital media have long promised to open up wonderful new vistas, all from the comfort of our own homes. The limitations of face-to-face interaction that have until now bound us to our small individual worlds– the handful of people we meet in our everyday lives– would be overcome.

However, the critical component in social networking is the removal of time as a constraint. In the real world, according to research, we devote 40% of our limited social time each week to the five most important people we know, who represent about 3% of our social world, and a trivially small proportion of all the people alive today. Since the time invested in a relationship determines its quality, having more than five best friends is impossible when we interact face-to-face; it’s one person at a time.

Instant messaging and social networking claim to solve that problem by allowing us to talk to as many people as we like, all at same time: We can broadcast, literally, to the world. I use ‘broadcast’ because despite Facebook’s promise– that is the fundamental flaw in logic of the social-networking revolution.

Developers at Facebook overlooked one crucial component in the complicated business of how we create relationships– our mind, our brain.  Put simply, our mind is not designed to have more than a very limited number of people in our social world. The emotional-psychological investments that a close relationship requires are considerable, and the emotional capital we have available is limited. Indeed, no matter what Facebook allows us to do, I have found that most of us can maintain only around 150 meaningful relationships– online and off– and this has become known as Dunbar’s number.

Yes, you can ‘friend’ 500, 1,000, even 5,000 people with your Facebook page, but all accept the core 150 are mere voyeurs looking into your daily life… Furthermore, and contrary to all hype and hope, the people in our electronic social worlds are, for most of us, the same people in our offline social worlds. In fact, average number of friends on Facebook is 120 to 130, just short enough of Dunbar’s number; which allows room for grandparents, babies… people too old or too young to have acquired digital habit. This isn’t to say that Facebook and imitators aren’t performing an important even revolutionary task– namely, to keep us in touch with our existing friends…

In the article Dunbar’s Number: Reinvent Social Connections? by Russell C. Smith writes: In the ever accelerating information age, it’s easy to think the sky’s the limit. Facebook lets you have up to 5,000 friends, you can collect millions of Twitter followers, and new social media platforms are emerging, each wanting to be next big breakthrough platform. But according to evolutionary anthropologist Robin Dunbar, our meaningful social circle can’t ever exceed between 100 and 230 people (with an average of 150 people).

How did Dunbar’s number come about? Robin Dunbar figured-out that there’s a direct relationship between the size of human brain and size of our social group– that this is both a social and cognitive number… And, that there’s a ‘set number’ of people that we can maintain stable and meaningful social relationships. However, having thousands of social media ‘friends’ isn’t the same as having ‘friends’ with meaningful personal interactions…

Also, ‘loose’ friends, connections… matter more than ever… there are people on far-fringe of an established social circle that might be very important, e.g.; the ‘loose’ friends may see opportunities, possibilities, contacts… that your ‘close’ friends may not be able to imagine. For example, you’re more likely to hear about a next job, new apartment, cultural or social opportunity from a ‘loose’ friend, connection… who might be better informed, connected… than from your ‘close’ connections.

Moreover, we don’t generally interact with 150 people in a given week or sometimes even within a month’s time, but we will easily interact with 150 people over the course of months, year… Especially when you consider the cross-over between business-personal contacts, and ways social interactions overlap into many other areas. So, think about your connections, grow your network, and realize the fluid world of social networking is an evolving concept, but also that there might already exist a defined number built into it…

Facebook itself did a survey of its accounts about a year ago and found that the average number of friends was between 120 and 130… However, there are some people who really do number their friends in the thousands, but they are few and far between. In fact, many of these cases are actually professional accounts held by writers, journalists, celebrities… that use Facebook… as a fan base.

According to gregmeyer; I’m not sure Dunbar’s number has same meaning in the age of the Internet in describing ‘loose’ connections, friends… that we form with people we meet on Internet. Consider this oddity– you may meet people for the first time online that may have some of the same your interests and find that the connection(s) is like a real ‘friend’.

The meaning of ‘friend’ in a social media sense– clearly range from an ‘acquaintance’ to actual ‘close’ friend– and that is not exactly what Dunbar is getting at when describing sizes of social groups as defined by biology. He acknowledges  that community size has grown over time, and I would argue that social networking has– for at least some of us– increased our Dunbar’s number in ways we don’t yet understand… 

When you think of the ability to reach out to people you know (either passably or reasonably well) on a given subject or topic and get a response, you realize that Dunbar’s number may need rethinking. According to Chris Gayomali; team of researchers at Indiana University decided to test Dunbar’s theory on Twitter. The researchers looked at over 380 million tweets to find patterns in user behavior, and they concluded that there was indeed a finite limit to the number of Twitter users we could follow before becoming overwhelmed: somewhere between 100 and 200…

According to Seth Godin; humans just aren’t cognitively organized to handle-track large numbers of new people easily, without external forces… human tribes tend to split in two after they reach Dunbar’s number of 150. That’s why, for example; WL Gore Company limits size of their offices to 150 (when they grow larger, they build a whole new building). Facebook, Twitter, blogs… fly in the face of Dunbar’s number to become connected, friends… with tens of thousands of people at one time; and, guess what? It doesn’t scale. You might be able to stretch to 200 or 400, but ‘no’, you can’t effectively engage at a tribal level with a thousand people… the nature of the relationships change…

 

Managing: New Face of Management–Leadership in the Digital Age: Dawning of Peter Drucker’s– Managing in the Next Society…

Managing in the digital age: Times are changing and leaders must have a clear sense of mission about where they want to take the organization and the results they want to achieve… They cannot do it alone; they must do it through their team ~Darron Cash

Managing in the digital age has changed the way business leaders– lead and manage– people; especially, with Internet, mobile, social media… it has changed consumer buying behavior, global markets, shortened the life-cycles of products, services… it has reshaped perspectives, knowledge, lifestyles…

According to Amdria Seymour; leaders must become more agile in their thinking and their actions… they must teach, share, inspire, and encourage team members– to be the best they can be, regardless of function or role in the business… leaders and team members must have shared vision.

According to Seth Godin; you will find tribes of people everywhere, congregating around compelling ideas and causes, however, what is often missing are true leaders that have courage to step into the limelight and influence, even if it’s not popular course of action at the time…The ‘digital age’ has made it easier to motivate, engage, and initiate new direction in business through people.

Internet has opened-up new horizons for knowledge, communication…  ‘power’ in the digital age is all about influence. Leaders and their teams must make a difference in organizations… power of connections and mutual trusts are the important differentiators. The more connected the more successful… connections, leadership, trust… are enablers in the digital age…

According to Malcolm Netburn; Peter Drucker’s theories laid foundations for management in business spanning decades… Although Drucker is considered the ‘father of management theory’, one of his toughest strategies; purposeful abandonment, will arguably find its greatest relevance in the today’s digital age. According to Peter Drucker; first step in a growth policy is not to decide where and how to grow. It’s to decide what to abandon. Abandon the past in favor of the future?

This Druckerism is a modern business’s recipe for survival: Interpreting ‘abandonment’ as ‘failure’ is a deadly trap that can steer managers on a road of delusional thinking. Accepting ‘purposeful abandonment’ as being, as Drucker states; other side of the same coin as ‘improvement’ and allows for agility in business. Drucker’s ‘abandonment’ lends business the ability to recreate itself… As Jeffrey Krames so aptly affirms in his ‘Inside Drucker’s Brain: Abandon All but Tomorrow’; the most effective managers learn to read the tea leaves and prepare their organizations to exploit new opportunities created by new realities.

Unfortunately, according to Drucker; too many managers hold on to yesterday for too long, and their businesses suffer as a result. Businesses stick with their cash cows until they are made irrelevant by competitors. Management in the digital age is interesting times, and it’s wise to heed Drucker’s timely advice; we must abandon outmoded ways of making a profit in order to make room for an aggressive and preemptive pursuit of the future. The old rules of management-leadership no longer apply…

In the article Managing Einsteins in Digital Age by John Ivancevich, Thomas Duening,  Dr John Ivancevich write: Today’s new breed of technologically gifted employees often think and respond differently than their more traditional counterparts did. According to Ken Jones; attracting and keeping ‘Einsteins’ on staff is a must.

Managing knowledge workers is a major challenge for even the most gifted managers. The Einsteins are ­the intelligent, curious, and technologically proficient knowledge worker who has the know-how to keep everything operating without costly delays, breakdowns, crashes­­… and the individuality to drive managers insane. Picture the workforce, even for a second, and the Einsteins are immediately identifiable.

They’re the lifesavers who hammer through the impossible problems, keep the essential operations running by any means necessary, and consistently find answers when others scarcely understand the questions. And, as valuable and essential as they are to the organization, these curious and brilliant employees can also be the most frustrating, aggravating, and difficult to manage.

In today’s increasingly technical, specialized workplace; Einsteins are as valuable as diamonds­­ and as fragile as glass. Their anything-goes brainstorming and authority-flouting approaches can be both critical for innovative, out-of-the-box thinking and a nightmare for management. Every day sees another Internet start-up, and every day sees a ‘dot.com’ company succeed – or fail. What makes one company successful and others unsuccessful?

Yes: Management. Thousands of people are flocking to the Internet for the growing number of skilled jobs. Many knowledge workers are often quickly moved-up the career ladder without any management skills – they’re ill-prepared and unskilled and they can make or break a business. Technology has triggered the new economy, breaking all the tried-and-true rules of management…

In the article Smart Organizations in the Digital Age by Erastos Filos writes: The concept of the smart organization arose for the need to respond dynamically to changing landscape of the digital economy. Smart organizations are both– Internet-worked and knowledge-driven and they are able to adapt to new challenges, rapidly… they are sufficiently agile to create and exploit knowledge in response to opportunities…

Managing knowledge is a core competence of the smart organization. In the digital economy knowledge becomes the primary raw material and result of economic activity. The initial challenge in moving towards organizational smartness and leverage the power of knowledge, one must know where to find it and once found, know what to do with it… It’s interesting to note that most organizations are not designed-developed, they evolve. This is why biological analogies may provide an appropriate means to describe organization phenomena.

But not all organizations adapt equally well to the environment within which they evolve. Many are like dinosaurs, great size but with little brains; remain unchanged in a changing world. Organizations in the digital age, unlike industrial age ones, do not seek to control their environments instead they adapt to it… since it’s recognized that any attempt to control would at best, fail, and at worst, stifle the creativity and imagination necessary to support innovation. In a globally networked economy participants are free to focus and re-focus their commitment as they see fit.

With this in mind– management style is evolving from one that placed emphasis on planning, organizing, controlling… to one that emphasizes; vision, motivation, inspiration… Also, in Internet-worked economy the roles of ‘superior’ and ‘subordinate’ are becoming blurred, and management is becoming fuzzy, i.e.; trust-based, less controlling, …

In the article WoT’s Hot and WoT’s Not: Leadership in the Next Millennium by Richard Aldersea writes: The agenda for leadership development has shifted drastically during the past decades. The 1980s was an era of radical restructuring, spurred by many mergers and acquisitions, and the decline of many leading companies. The idea of developing leaders seemed to fade in face of fear of the future and pursuit of quick fixes.

The early 1990s will probably be remembered for management fads that emphasized processes and culture over leadership. Now, central challenge for senior executives is to create a company that wins continuously…

According to Noel M. Tichy; in the future the real core competence of companies will be the ability to continuously and creatively destroy and remake them to meet customer demands. Everyone in the organization must take responsibility for taking responsive actions. This means that a company needs leadership everywhere in the organization. Leadership is the ability to see reality as it really is and to mobilize the appropriate response… 

According to Richard Beckhard; truly effective leaders in the years ahead will have personas determined by strong values and belief in the capacity of individuals to grow. They will have an image of the society in which they would like their organizations and themselves to live. They will be visionary, they will believe strongly that they can and should be shaping the future, and they will act on those beliefs through their personal behavior… 

In the article Managing in the Next Society by Richard Straub writes: Modern business is made up of institutions and organizations that need highly skilled ‘managers’, who achieve their objectives with others, and through others. Thus management becomes a generic function in modern societies – not only for business but also for government, education, society… As decision-makers, managers wield significant power-influence their choices have direct impact on people’s lives, which means responsibility and accountability.

In a Gallup poll on honesty and ethics among workers in 21 different professions; a mere 12% of respondents felt business executives had high-very high integrity – an all-time low. In a recent study about happiness; Richard Layard showed that the ‘boss’ came last among people who employees would want to interact with… It’s obvious that the management excesses in business have further tainted the reputation of the profession.

Yet those who rightly condemn management tend to forget that management is a vital profession, permeating all institutions of society: There is no alternative to ‘management’. According to Peter Drucker; management-managers are the central resource; generic, distinctive, constitutive organ of society…and the very survival of society is dependent on their performance, competence, earnestness, and values of managers…

According to Craig Barrett; we must innovate, yet innovation must include more than products, services… Innovation needs to comprise business models, organization processes, public-private partnerships, government services, and the social sector. Ultimately we must ‘innovate innovation’ itself. A combination of productivity increases and incremental and game-changing innovation will be the ingredients for growth and future prosperity…

This might be called ‘Innovation 3.0’ and includes; system-level transformation taking into account the increasing interdependence and complexity of companies, economies, and social systems. Innovation 3.0 is not just a quest for competitive advantage by individual institutions, strategy game, or sand-table exercise for business and policy makers – it’s the lifeline for 21st century society… this is a moment of truth for management.

Transforming, managing and accompanying the profound change in organizations and reinventing the institutions of society are an unprecedented challenge. Can it be done? Is there a realistic chance to make the 21st century an age of pervasive and systemic innovation and of deep transformation?

The slowness and inertia that resist change is major obstacle to confront. Business is struggling to become more nimble under the pressure of unforgiving markets – in particular with regard to big increase of volatility, complexity... However, there is a silver lining… the new generation of knowledge workers are digital natives who have grown-up with technology, spirit of entrepreneurship, creative curiosity…

They have the essentials to effectively compete and excel in the highly competitive global economy… This is perfectly in line with Professor Drucker’s famous quote: ‘The best way to predict the future is to create it’, which summarizes the challenge for management in the digital age–next society…

Organization’s Performance Indicators– Leading, Lagging..: Foresight-Key Drivers and Hindsight-Outcome Measures…

Performance indicators: Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted. ~Albert Einstein… What gets measured gets managed. ~Peter Drucker

Performance Indicators are agreed-upon measurements that reflect your organization’s critical goals for success– a snapshot. They are measurable, objective, and actionable. Think of it this way: there are dozens of metrics that let you know how things are running on a daily basis, but you elevate a few of the most important metrics to become strategic touchstones for the organization, team, service…

They are quantifiable measures that can be expressed in either financial or non-financial terms and reflect the nature of the organization… Sometimes success is defined in terms of making progress toward strategic goals but often success is simply the repeated, periodic achievement of some level of operational goal; e.g., zero defects, customer satisfaction, revenues, profit… whereas, performance indicators for non-profit organizations are often less-quantifiable and more subjective.

Accordingly, choosing right indicators relies on clear understanding of what is important to the organization; e.g., indicators for finance will be quite different from indicators assigned to sales… Simply stated, performance indicators are measures of accomplishment… tools used by organizations to track progress and success in achieving the objectives of the organization. However, according to Karin Hunt; one of the biggest management mistakes is talking about performance indicators instead of the behaviors needed to achieve them.

A focus on indicators versus behaviors (without an underlying change in behaviors) can lead to useless outcomes… Performance indicators are often defined as either, leading or lagging: Where leading indicators gives a foresight-signal before the new trend or reversal occurs, whereas lagging indicators gives a hindsight-signal after the trend has started or occurred…

According to Drs. Kaplan and Norton; the concept of leading and lagging indicators has firmly entrenched itself as best practice. The difficulty, however, is that the inherent definition of leading and lagging is confusing and completely based on one’s own perspective of a strategic objective.

According to Douglas Wick; most successful growth companies measure and monitor both leading and lagging indicators… since using only lagging indicators is very much like trying to drive your car using only the rearview or side mirrors. It’s great for backing out of driveways, but moving forward is difficult if not impossible. Some of the most important information needed to successfully navigate-avoid peril is information that gives foresight…

According to Daryl Mather; performance measurement is at the heart of propelling an organization towards breakthrough performance, and the old adage; ‘if you can measure it you can manage it’… but, before you think about how to measure it, first work out what it is you want to manage…

Performance indicators-measures are just tools: Measuring and managing performance is critical for organizational success and leading and lagging indicators represent a way to understand issues and make decisions. Performance indicators must be rationally chosen… gaps honestly discussed… root causes pursued… only then can performance indicators serve their true purpose, which are mechanisms for insight, learning, decision-making...

In the article What are Leading and Lagging Measures? by systemwise writes: A simple way to understand leading and lagging measures is to use the metaphor of a stream or river to imagine how work flows through your organization. When you think about where to measure organizational performance, you can look both upstream and downstream.

A leading measure is ‘upstream’ in a work process. The lagging measure is ‘downstream’ in the same process. The job of leading measures is to be an early warning signal of process performance– in time to adjust the work-in-process to achieve the desired result on the lagging measure. If managers rely only on lagging measures to manage performance, it could be too late to do much if the downstream measure shows that performance is not satisfactory.

For leading measures to do its job there must be a real and direct relationship between the performance attribute it’s measuring, and the performance attribute the lagging measure is measuring. Here are examples of leading and lagging measures for different work processes:

  • In sales, a leading measure can be the number of prospecting calls made. A lagging measure can then be the number of sales made.
  • In production, a leading measure can be the amount of product produced. A lagging      measure can be level of inventory.
  • In customer service, if leading measures are employee satisfaction and product quality, then a lagging measure can be customer satisfaction with the product.
  • In employee training, leading measures might be the number of employees trained and percent of trainees giving positive ratings to the training. Lagging measures can then be the degree of improvement in work processes due to training.

In the article Lead vs. Lag Indicators by Ian Seath writes: The difference between  leading and lagging indicators is important, but what really matters is that lagging indicators without leading indicators tell you nothing about how the outcomes will be achieved, nor can you have any early warnings about being on track to achieve your strategic goals.

Similarly, leading indicators without lagging indicators may enable you to focus on short-term performance, but will not be able to confirm that broader organizational outcomes have been achieved. Leading indicators should enable you to take pre-emptive actions to improve your chances of achieving strategic goals. Implicit in the design of any balanced performance management framework is the ‘cause and effect’ chain of goals and strategies.

So, investment in organizational capability leads to efficient and effective processes, which deliver products and services that satisfy customers and ultimately lead to profit in private sector, or positive stakeholders in public sector. Due to the ‘cause and effect’ chain, there is a corresponding chain of ‘leading and lagging indicators’…

In the article Look Ahead with Leading Indicators by Heather Smith writes: Just as you can’t drive with your eyes only on the rear-view mirror, you can’t drive organizations forward by focusing on the past. Yet that’s what you’re doing if you’re relying solely on lagging indicators, such as; revenue, profit… to manage organization’s performance.

These lagging factors are important, but once they’re calculated, it’s too late to impact them. Whereas, good leading indicators allow you to spot trends and see issues before they balloon into real problems. Leading indicators are early predictors and in combination with lagging indicators give a holistic view of the organization’s performance.

Lagging indicators depict trends-measurements, such as; revenue, sales, expenses, inventory turnover… that help management understand whether or not certain objectives have been met. On the other hand, leading indicators pinpoint the source of future problems and help predict whether or not target values for the lagging indicators will be met. Leading indicators enable organizations to avoid problems and operate more cost-effectively…

In the article Lagging vs. Leading Indicators by Pamela Jett writes: We have all been taught that we can’t change the past; we can only impact the future. And, most managers understand that communication that focuses on the future as opposed to being trapped in the past sends a powerful-positive message. One way to focus on the future and to present a ‘forward thinking mindset’ is to understand and utilize the difference between lagging and leading indicators.

Lagging indicators are those things which capture and summarize the past. For example; quarterly sales reports, customer satisfaction reports are lagging indicators… they summarize what has already occurred. Leading indicators are considered ‘drivers’ of lagging indicators. A savvy communicator will focus his or her communication on ‘leading indicators’: For example; when pitching proposals to management, spend time talking about leading indicator data…

Find out what the ‘drivers’ are for management’s top lagging indicators, and focus efforts and energies on creating ways to impact those specific leading indicators. Sophisticated business people spend less time talking about what was and more time focusing on what can be.

In the article Leading and Lagging Indicators—Making Sense by Phil Jones writes: The debate about whether an indicator is leading or lagging is one of perspective in the sense of who is looking at it. You have to ask: From whose perspective? Otherwise the conversation is meaningless. For instance, a ‘signed sales contract’ is a lagging indicator for the sales team, whereas a ‘signed sales contract’ is a leading indicator for finance, since no money has been received; revenue has not being realized.

So, leading indicators for one part of the organization can be lagging indicators for another, vice versa. Then, what leading-lagging indicators should ‘I’ use? The answer is simple: It depends who ‘I’ is. It also depends what you are trying to achieve…

Performance indicators provide information that helps management respond to changing circumstances and take action to either; achieve desired outcomes or avoid unwanted outcomes. Their role is to promote action that corrects potential weaknesses without waiting for demonstrated failures. This ability to influence-improve future performance by guiding current actions is important characteristic of successful organizations.

According to Douglas Wick; for every one lagging indicator, there should be two leading indicators. Leading indicators are used in forecasting, predicting… where the organization is going... According to Ray Baird; lagging indicators are simply a measurement, whereas leading indicators are a measurement tied to a hypothesis, which can be tested-refined in order to explain or predict behavior. The point is that you learn nothing by observing the result– only by understanding the process that leads to the result.

All measures are not created equal: It’s critically important to measure performance using combination of both leading-lagging indicators, since they are a distillation of the desired outcomes… According to Robert; a system of metrics will objectively show your progress and success each step of the way. It’s essential to follow a course of action that produces ongoing improvement, sustainable and repeatable innovation…

According to Avinash Kaushik; without a clearly defined list of indicators-objectives you are doomed, because if you don’t know where you are going than any road will take you there. The indicators must be ‘DUMB’: Doable, Understandable, Manageable, Beneficial. The beauty of indicators is that they reflect specific strategies. They are really DUMB… they are the priorities. They are things almost everyone in the organization will understand…

Managing organizations with the most relevant performance indicators will lead to better decision-making, fewer losses, and more timely improvements… According to Linda Williams; implementing a well thought out and comprehensive set of performance indicators is the first step to a more proactively performance-based organization…

Scenario Planning– Thinking Future-Uncertainity-Unexpected: Strategic Playbook-Plans to Navigate Tomorrow and Beyond…

Scenario planning is discipline for discovering the entrepreneurial power of creative foresight in contexts of accelerated change, greater complexity, and genuine uncertainty. ~Pierre Wack…

In preparing for battle, I have always found that plans are useless, but planning is indispensable. ~Dwight D. Eisenhower…

Scenario Planning, in simple terms, is a strategic planning method expressly developed to test the viability of alternative strategies… a process that stimulates imaginative, creative thinking to better prepare an organization for the future. To flourish in today’s volatile business environment, decision-makers must have vision to evaluate what may lie ahead and identify the best course of action.

Scenario planning allow organizations not only to avoid dead-ends but, more important; ensure equilibrium in off-balance economy, think through change, choose the way forward with quicker, more complete, accurate decision-making for success.

According to Caspar van Rijnbach; scenario thinking is not primarily about planning, it’s about learning (that’s why I refer to scenario thinking instead of scenario planning). It’s about teams working together, discussing, sharing… It’s about connecting with experts that are able to provide insights about economic, social-political trends, raising questions and provoking insights. Also, it helps to mitigate the dogmatic ‘true view’ group thinking by the management team… Instead, it instills a fresh strategic thinking awareness for creating new innovative insights…

According to Kay Sargent and Peyton Pond; through scenario planning, a firm’s stance is proactive-optimistic, yet also defensive and even preemptive. Scenario planning takes into account the many forces driving change in the current business environment… According to Rob Willey; scenario planning is described as a way of rehearsing the future to avoid surprises by breaking through the ‘illusion of certainty’.

However, unlike traditional strategic planning, which assumes that there is usually just one best answer to strategic question; whereas, scenario planning entertains multiple possibilities. Also, unlike contingency planning that normally focuses on a single uncertainty, scenario planning investigates several simultaneously. According to Ross Dawson; the greater the uncertainty, the greater the value of scenario planning– and, in most industries today uncertainty is increasing. In fact, engendering scenario thinking among executives is far more important than scenario planning itself; however, scenario planning is often the best route to that outcome.

According to Global Business Network; scenarios are not predictions; rather, they are plausible accounts of how relevant external forces might interact and evolve in future. In scenario planning, typically, organizations create three-four scenarios that capture a range of possibilities; examines the opportunities and threats that each may bring; then makes short- and long-term strategic decisions based on these analyses.

Although scenario planning has gained much adherence in industry, its subjective and heuristic nature leaves many academics uncomfortable, for example: How to know what are the right scenarios? How to go from scenarios to decisions? Furthermore, significant misconceptions remain about its intent and claim… but, to take the scenarios too literally as though they are static beacons that map out fixed future is a mistake. However, scenario planning is important tool for examining  uncertainties, framing perceptions, collective learning… In actuality the aim is to bind the future, in a flexible way– such that it permits learning and adjustments as the future unfolds…

In the article Secret Of Successful Scenario Planning by David Niles writes: In business, as in life, real outcomes often don’t follow the averages. Yet much of corporate strategy is planned as if they always did. Far too many companies make strategic planning a routine exercise. They take last year’s budgets and results, and assume some modest variation from last year’s mean (average).

By relying on simple variations on the mean, companies effectively homogenize data and miss crucial key information. When you average-out the customers’ demand, you lose sight of the customers’ key decision thresholds. For example; Which ones will buy tomorrow and why? What does that say about their changing needs? Similarly, when thinking about competition, you just can’t model where the competitors were last year; in terms of pricing, service…

You must discern where they’ll be in future… These ideas may not sound revolutionary, but very few businesses show discipline to create scenarios and measure probabilities for unexpected market changes. However when you do, you can better evaluate possible outcomes, probabilities, underlying drivers… and greatly improve the company’s ability to see around corners and prepare for the future.

In the article How to Build Scenarios by Lawrence Wilkinson writes: Scenarios are specifically constructed stories about the future, each one modeling a distinct, plausible world in which we might someday have to live and work. Yet, the purpose of scenario planning is not to pinpoint future events but to highlight large-scale forces that push the future in different directions.

It’s about making these forces visible, so that if they do happen, the planner will at least recognize them. It’s about helping make better decisions today. This all sounds rather esoteric, but according to Peter Schwartz; scenario making isn’t rocket science… scenario planning begins by identifying the focal issues or decision factors… Ultimately, the power of scenario planning helps us understand the uncertainties that lie before us and what they might mean… It helps us ‘rehearse’ our responses to those possible futures… it helps us spot them as they begin to unfold.

In the article Ways to Apply Scenario Planning by Paul Schoemaker writes: Whenever you face high uncertainty, you need to be creative as you navigate uncharted waters. But you also need a prepared mind. Many organizations use scenario planning to test robustness of their current strategic plans against a wide range of alternative scenarios. Its equivalent of putting an airplane wing in a wind tunnel to see at what point it fails as pressure builds up. Stress-testing helps companies minimize potential negative consequences and be better positioned to seize opportunities.

Companies on the move often use scenario analysis to expand their geographic footprint, explore adjacent markets, invest in new technologies, reach beyond their industry boundaries… considering a wider range of futures that might bring new opportunities… However, don’t think of scenario planning as just a corporate activity conducted by futurists and staff people.

Savvy organizations translate and adapt the scenarios to multiple management levels to connect with those managing functional and business strategies… Agility requires that your strategic intent is flexibly combined with actions that will make your strategy happen, which requires adaptive leadership as well as a good strategic radar… sharing views, discussing trade-offs and building support for key strategic initiatives. Use scenarios to explain strategic choices and build support inside the company, and well beyond.

Planning is all about getting to where you want to go, while scenarios are about getting there on the best available road. Making decisions based on prior events can be dangerous and counterproductive for thriving-surviving in these uncertain times. Scenario planning answers: ‘What if’ questions– that involve important issues and large external influences.

Unlike strategic planning that postulates single anticipated future, scenario planning looks at alternative versions of the future without trying to predict it. The goal is to work laterally and consider unexpected surprises that undo most extrapolations…

According to King Whitney; we all adapt to change in a variety of ways. The most detrimental is getting stuck in the past. It’s easy to fall into the trap of running your business while looking in the ‘rear-view mirror’... However, despite the growing popularity of scenario planning a number of misconceptions remain, for example; all too often, scenario approaches deteriorate into little more than a conventional forecasting effort that involves assigning explicit probabilities to potential outcomes.

Or, at the other extreme, scenario planning devolves into loosely grounded futurist musings with little if any relevance to current circumstances. Another common mistake is casting scenario planning as an abstract exercise that may provide value in the distant future but has little or no practical application for immediate decision-making. But, on the contrary, scenario planning provides leaders with a better understanding of the world and the macro drivers of change that are at work…

The art of scenario-based strategic planning is to connect the world of ‘what ifs’ with down-to-earth decision-making process. Necessarily, that suggests the requirement to translate 50,000-foot concepts into clear-compelling implications for markets, companies… When done effectively– creative, rigorous manner with engaged, open-minded stakeholders– scenario planning is invaluable tool for gaining immediate impact and longer-term advantage…

According to Peter Drucker; most common source of mistakes in management decisions is emphasis on finding the ‘right answer rather than right question’. This highlights one of the challenges that business leaders face; an overriding desire for greater certainty and precision at time when certainty and precision are increasingly elusive. In practice, as we know, the future is never certain: Consider, for example, the long list of ‘unknown unknowns’…

According to Michael Litchfield; the value that a properly executed scenario planning exercise delivers is not to predict best or most likely future, but to uncover wide range of possible situations and develop range of associated strategic responses. Perhaps even more valuable, however, is the development of a sense of risk awareness and disaster readiness within an organization…

However, despite widespread use of scenario planning there are those who criticize the method, and mostly challenge the subjective nature of the process, and inability to quantitatively measure its effectiveness…

According to Pierre Wack; the future is no longer stable; it’s a moving target. No single ‘right’ projection can be deduced from past behavior. The better approach is to accept uncertainty and try to understand it, and make it part of our reasoning. Uncertainty today is not an occasional, temporary deviation from a reasonable predictability; it’s a basic structural feature of the business environment.

The methods used to think-plan about the future must be appropriate for a changed business environment. Scenarios planning starts by dividing our knowledge into two broad domains: (1) things we believe we know something about, and (2) elements we consider uncertain or unknowable…

The art of scenario planning lies in blending the ‘known and unknown’ into a limited number of consistent views of the future that span a very wide range of possibilities. The real value of scenario planning is that it allows policy-makers the opportunity to ‘rehearse the future’ and, in this sense scenario planning is much about– the journey as the destination.