Category Archives: Miscellaneous

Three Easy Steps to Winning a Recession

    1. Get Operationally Efficient This is not about cutting costs, but cutting fat and spending strategically on quality and performance. If a product, service, or piece of software improves productivity by 30% and reduces operating costs by at least 3X its annual cost, you buy it, even if it costs six or seven figures. But if all a product does, like an online T&E application that your employees rarely use, is save you 50,000 a year for it’s 30,000 price tag, you eliminate it and invest the 30,000 somewhere else where you’ll get a return.
    2. Increase the R&D Budget Your prosperity depends upon your ingenuity. That will require innovation, which requires top talent and the resources they need to break through traditional barriers. That requires that R&D have enough money to support pure research in addition to product development and day to day support. And in R&D, a little investment can go a long way. It only takes one breakthrough product to make tens, if not hundreds, of millions (or billions) of dollars of revenue down the road.
    3. Invest for the Long Term as well as the Short Term

This is the real reason most companies fail. Simply put, failure to invest for the long term means that when a new innovation is needed to maintain or secure new market share, it’s not there. Failure to invest beyond the next quarter means that instead of working on new products, the company is focussed on extending the life-cycle of existing products which have sold well, trying to eek out every last penny. The problem with this strategy is that as the market gets closer and closer to full saturation, the profit per sale drops exponentially. In comparison, if the company shifted focus to a new, promising, product, around the 70% saturation point, by the time the market reached the point where the profit per sale was unattractive (which usually happens around the 80% saturation point), the new product would be well into it’s growth curve and profits would hold steady.

That’s it. If you don’t believe me, you can read the very well written, but very lengthy, article on “roaring out of recession” in the Harvard Business Review, but winning a recession is very simple. Stop focussing on cutting costs and start focussing on improving the value you bring to the market. Even in a recession, people still want, and need, to spend. The only difference is that they’re more reserved and willing to hold out for products and services that provide great value at a great price. The first company to offer them the first great product or service they want at a great price typically wins. It’s as simple as that. (And that’s one of the main reasons why 85% of market leaders get dislodged during a recession … they fail to understand that value trumps even long term loyalty when money is tight, giving you an opportunity.)

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AMR Reads the Supply Chain Tea Leaves …

… and probably proves that that they have not yet mastered the art of tasseomancy because, if I was going to bank on any predictions on who will rise in the coming year, I’d rather take my advice from a cartoonist than bank on their supply chain top 25 predictions.

Of their seven “rising” predictions, I wouldn’t bet on the following four:

  • Research in Motion (RIM)Apple & Droid are both taking the market by storm, taking turns leading the monthly sales numbers … and neither are fans of Microsoft (Apple is a direct competitor and Google has banned windows from its campuses), who continues to take a beating in the marketplace; in contrast, RIMs back-office integration is Microsoft (Exchange) heavy
  • Hewlett-Packard (HP)HP might be doing well in the enterprise (server) market, but it faces tough competition from IBM, Dell, and Sun, which now has the financial clout of Oracle behind it; on the consumer side, it’s Windows-centric, and Apple keeps rising while Microsoft keeps falling
  • NokiaWith six of the top ten cell phone manufacturers in Asia (3 in China, 2 in Korea, and 1 in Japan), and with the output of the Chinese manufacturers rising rapidly with a rapidly increasing local market size, how much longer do you think Nokia is going to retain top spot?
  • Johnson Controls (JC)This kind of says it all: the company dropped like a stone this year, as the weak economy hammered its financials. It’s unlikely this US-based company is going to see a quick recovery.

And while I expect the following two to hold rather steady, I don’t see a rapid rise:

  • KraftKraft is solid, but given their primary vertical, I don’t see a rapid rise in demand for their products.
  • General MillsGeneral Mills is also solid, but given their primary vertical, I don’t see a rapid rise in demand for their products either.

    Plus, both these companies are heavily dependent on retailers, whom AMR expect, as a group, to fall this year!

In fact, the only “rising” prediction I’d agree with is:

  • LG Electronics (LG)This Korean electronics giant is currently the third largest producer of mobile (smart) phones in the world and is aggressively pushing its way across the electronics vertical(s), backed up by a serious effort to revolutionize its supply chain.

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Eight Things Good Bosses Do

A recent article over on the HBR blogs covered the “12 things that good bosses believe” which, while important, don’t necessarily help a new boss understand what she has to do to be a good boss. So, in this post, I’m going to tell you the eight things that good bosses do. In time, you’ll understand why and adopt the same beliefs, but when you’re new, sometimes actions have to come first. So, without further ado, here they are:

  • Human ShieldThey protect their people from intrusions, distractions, and idiocy of every stripe and shade.
  • EmpowerThey empower their people to make decisions and take charge, they don’t micro-manage every little detail.
  • Manage the MundaneThey do the distractive busy work and fire fighting that would keep their people from accomplishing their jobs.
  • Give Away the GloryNot only do they enable their people to win, but they credit their people with the win.
  • They ListenThey don’t assume they have all the answers. Moreover, they assume that the answers they do have come with an expiry date — an expiry date that activates as soon as a subordinate gives them a better answer.
  • They Accept MistakesThey know that sometimes their direct reports will make mistakes and use it as a learning opportunity to create a better employee.
  • They Take, and Encourage, Managed RisksThey know you can’t win big if you don’t take a risk once in a while.
  • They Make Decisions and Follow ThroughThey understand that their employees will come up with a number of approaches to solve a problem, some good, and some not so good, and that they will have to make the final decision. They do it with confidence, and, for better or worse, follow through and get it done. And if they make a mistake, they admit it, post-mortem it, and use it as a learning opportunity.

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The Hammer Will Fall!

Remember that before you take the summer off and spend yet another quarter in a holding pattern … you can prepare for it, or join your colleagues in bankruptcy and unemployment.

While you ponder that, here’s a classic from Queen:

Are Chinese Christians Buying Themselves a New Vacation Home on the Aegean Sea?

While many people may still think that the majority of Chinese are Buddhist or Taoist, a large number of Chinese actually follow the “minority” religions of Islam or Christianity — and the number of people who follow the minority religions are significant as estimates put the number of followers of Islam at 20 Million to 30 Million and the number of followers of Christianity at 40 Million to 55 Million, or 3% to 4% of the population.

This is a very significant number, as it’s roughly four times the number of orthodox Christians in Greece (which account for roughly 97% of the population) — a country that China is in the process of buying piece by piece. According to this recent article in the Washington Post on how Greece is tapping China’s deep pockets to help rebuild it’s economy. Greece, which had to turn to the European Union and the IMF in April for a 140 Billion payout to stay afloat, is taking on the powerful unions in an effort to ensure that the Chinese can introduce dramatic changes as they invest in major projects, such as the 700 Million transformation of the Mediterranean port of Piraeus that will create a modern gateway that links Chinese factories with consumers across Europe and North Africa.

Greece is courting China for a bevy of other projects, including a sprawling new distribution centre in the industrial wastelands west of Athens, a monorail line, five-star hotels and a new maritime theme park — everything you’d want in a vacation home — or a wedding location! (The island of Santorini has started selling itself as the perfect location for “Big Fat Mandarin Weddings”.) And China is buying.

This will obviously improve port productivity and give those who are shipping into Europe more options, but is there a downside from the Chinese turning Greece into their vacation home?