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Tuesday, August 25, 2009

The Spider’s Strategy

“The Prisoner’s Dilemma is played repeatedly in business; companies working together individually make rational decisions that collectively produce bad outcomes. They do not convey they true inventory levels and experience the so-called ‘bullwhip effect.’ They don’t tell their customer the better way of doing a job, and both see the business shift to an overseas company that has a lower cost structure. They don’t send their best engineers into a joint venture, and then they wonder why it failed. They don’t let their suppliers earn reasonable profits, and then they wonder why their competitor gets preferential access to a new technology. In each situation, the decision is rational. Extra inventory provides a buffer in tough markets. Not telling the customer the better way protects today’s margins. Not sending the best engineers protects the base business. Extracting the last cent from a supplier improves today’s profitability. Yet each decision hurts both parties.”
“Companies fall into the Prisoner’s Dilemma trap because their people lack critical information about the consequences of their decisions.”
(Amit S. Mukherjee in ‘The Spider’s Strategy,’ p. 103 Landmark)

Senna Versus Prost

“Bernie Ecclestone has been the most influential man in Formula One for more than three decades. He is the president and chief executive of Formula One Management (FOM), which, in simplest terms, makes him the paymaster of grand prix racing. At the last estimate, his private fortune totalled in excess of £2 billion. His vision brought Formula One from a small-time entertainment for petrol heads to a global audience of billions, as he understood the power of television. He took the financial risk in the earliest days of expansion, which is why he received – and still does receive – most capital gains from the commercial rights of Formula One. He is the Cecil B. DeMille of the pit lane. Like the Hollywood filmmaker, all Ecclestone touched made brilliant returns at the box office. He has not entirely escaped scandal, however. His £1 million donation to New Labour before Tony Blair entered No. 10 Downing Street coincided with Formula One fearing that a ban on tobacco advertising would have a profound impact on teams’ budgets. Ecclestone’s donation was returned – but only after F1 had been exempted from a tobacco-advertising ban. Privately, Ecclestone considers the episode as one of the few actions of his life that he has any regrets about.”
“To Ecclestone each day is a challenge to broker the next deal, even as he edges nearer his eightieth birthday. Heart bypass surgery in 1999 has not slowed him for a moment. ‘I’d rather have heart surgery than go to the dentist,’ said Ecclestone in a tone that implies he isn’t joking. No sport has ever had such an autocrat in charge, or one with as much charisma.”
(Malcolm Folley in ‘Senna Versus Prost,’ p. 115 Landmark)

Primal

“Driven by thirst, the rest of the group arrived from South Bay. The sight of them was a shock to Ysan. The night before in the moonlight, bodies had been seen but not seen, as if wearing body stockings. Now, in the clearing in daylight, bodies shone in sharp relief. Ysan was so absorbed in the novel pageant she forgot her own bright nakedness for while. It was the sheer variety that intrigued her most: Rose’s dark skin and Alexi’s pale brown amongst the many shades of pink; Clarabel’s and Jill’s curvaceousness alongside Alexi’s and Maisie’s boyishness; Dingo’s muscularity against Ian’s feebleness; Clarabel’s sprawling mahogany carpet compared with Alexi’s neat little black triangle…”
(Robin Baker in ‘Primal,’ p. 113 Landmark)

The Genie in the Machine

“Traditionally, computer programmers have been trained either directly in computer science or in some combination of computer science and electrical engineering. In recent years, an increasing number of programmers have fashioned successful careers solely on the basis of knowledge of programming, without any understanding of the hardware that makes their creations possible. Very rarely do you find a computer programmer with expertise in both computer science and biology.”
“This situation presents a valuable opportunity for inventors in the Artificial Invention Age, because knowledge of both computer science and biology is particularly useful for developing and using many kinds of artificial invention technology. Two of the most common technologies – evolutionary algorithms and neural networks – are modelled on biological systems (namely, biological evolution and the human brain). Although early incarnations of these technologies mimicked real-world biological systems only crudely, more recent work has striven to make digital biology imitate its real-world counterparts more accurately in an attempt to emulate the ability of natural systems to solve complex problems. The success of these efforts will depend on the ability of tomorrow’s inventors to understand the natural world and translate their understanding into improved artificial invention technology.”
(Robert Plotkin in ‘The Genie in the Machine,’ p. 181 Landmark)

Knots and no Crosses

“He set off at eight in the morning, with a faint flicker of hope that he might bump into Eva at the florist. ‘I’ll wait for your call’ she whispered in the blank halls of his mind. In his mind’s eye, she was still waiting for him to call. And he was proving to be efficiently dumb at procuring one number.”
“The last time he had felt something like this was, when he was a teenager and was thinking of ways to let his crush know that he had a crush on her. He had fumbled and bumbled when he had come face to face with her. And thus, the entire world other than the woman concerned, seemed to know that he had a crush on her. That was then and this was now.”
(Hitesha Deshpande in ‘Knots and no Crosses,’ p. 119 Landmark)

Truth, Lies & Advertising

“I once had to brief a creative team at BMP for a campaign for a new Sony camcorder. Prior to doing so, I was taken through a three- or four-hour technical briefing at Sony’s office on the new features that the advertising needed to highlight. Two of these features in particular seemed to differentiate the camera from its competitors. It had a very powerful zoom lens and also a new CCD imager with many thousands more pixels than any other nonprofessional camcorder on the market. The pixel discussion alone took more than two hours. For those of you who are wondering, a pixel is a dot of light or colour that makes up a video image on television or in print. Pixels are like the dots that make up pictures in newspapers; the greater the number of dots in a given space, the sharper the picture.”
“I had to find a consumer-friendly way of describing or showing how that worked. In an attempt to make both the zoon lens and pixels merge into one overall benefit, I said: ‘The powerful zoom lens allows you to spot a bee’s balls from ten paces. And the x-thousand-pixel CCD imager gives you a picture so sharp that you can’t just see his balls, you can count the number of hairs on them.’”
“Okay, so it was a little irreverent, but my client, who always insisted on signing off on the brief before I spoke to the team, was horrified that I could be so frivolous with this sophisticated, innovative piece of technology that was the cornerstone of Sony’s video strategy. The bee’s balls had to go.”
“Now I don’t even know if bees have testicles, but that’s hardly the point. I was using them as a metaphor…”
(Jon Steel in ‘Truth, Lies & Advertising,’ p. 145 Landmark)

Fuelling Success

“Often people without any marketing background would throw deep insights into customer psyche, which helped shape competitive edge. Ideas like a clean washroom and toilets as a necessity at HPCL highway retail outlets came from an officer in finance. She said with the construction of golden quadrilateral progressing at a rapid pace (a National Network of good highways), there would be several times more families travelling on the highways and requiring clean toilets for their use. This was accepted by the SBU and care was taken to build all modern highway outlets with the facility.”
(Ashis Sen, Dr Darwin Nelson, Surya Rao A in ‘Fuelling Success,’ p. 53 Landmark)

Why Your World is about to get a Whole Lot Smaller

“The 13 million barrels of oil burned every day in the North American vehicle fleet contain a lot of energy. If we want to charge up those cars with electricity, we are going to need as much power each day as nearly 2 million North American homes would use in a year. Yes, electric motors are much more efficient than internal combustion engines, but the power plant that generates the electricity is not that much more efficient. Or necessarily cleaner when it comes to greenhouse gas emissions.”
(Jeff Rubin in ‘Why Your World is about to get a Whole Lot Smaller,’ p. 135 Landmark)

Eunuch Park

“It all began with a late night phone conversation when she told him she liked Abhishek Bachchan’s shoulders. That was just the beginning. She also told him about other parts of a man’s body that she had found sexy in the past – Salman Khan’s back, a South American tennis player’s fit thigh, a labourer’s sweaty arms as he laid tiles on a sloping roof. But it was the wrist that really got to Ravi. The dark, sweaty, muscular wrist and veiny hand clutching a bus handrail in Bangalore. She had found that sexy. When she said this Ravi couldn’t help but look at his own instinctively – they were pretty and slender and bony, like his first girlfriend’s.”
(Palash Krishna Mehrotra in ‘Eunuch Park,’ p. 161 Landmark)

How the Mighty Fall

“Not all companies deserve to last. Perhaps society is better off getting rid of organisations that have fallen from great to terrible rather than continuing to let them inflict their massive inadequacies on their stakeholders. Institutional self-perpetuation holds no legitimate place in a world of scarce resources; institutional mediocrity should be terminated, or transformed into excellence.”
(Jim Collins in ‘How the Mighty Fall,’ p. 111 Landmark)

Monday, August 24, 2009

Counterknowledge

“The reason unorthodox medicines, supplements and therapies so often match the placebo effect is simple: they are placebos. If a man takes a pill containing powdered rhino horn for erectile dysfunction (a traditional African remedy) and ends up with a rhino-sized erection, it is his brain that has done the work, not the ingredients. If, however, he gets the same result after taking Viagra, that is almost certainly because the drug sildenafil citrate has increased the blood flow into his penis. Viagra works, and Pfizer, who make it, can justifiably say so. The rhino pill manufacturers can only truthfully say that their product may possibly have a beneficial effect – but not as a result of anything that the product contains. And the same goes for the manufacturers of thousands of herbal remedies and food supplements.”
(Damian Thompson in ‘Counterknowledge,’ p. 93 Landmark)

My Story

“It was then that I first started thinking seriously about leaving England, leaving the UK, to live abroad. A lot of people had told me it was the best thing to do as most Formula One drivers move abroad anyway. I would not be in the papers all the time if I were not there to be photographed. It was quite exciting in a way, the idea of living abroad. It made me feel quite free just to think about it. I knew I could go anywhere I wanted and, heeding a lot of good advice, I finally reached my decision: I would move to Switzerland.”
“Despite what has been said in the newspapers, moving abroad is not about tax. I love England and I am happy to pay my tax if I live there. Obviously there are places that are better for tax reasons: places where a lot of Formula One drivers live like Monaco, Dubai or Switzerland. But money is not the decider in my life – quality of life is. I would happily move anywhere in the world to regain some quality of life.”
(Lewis Hamilton in ‘My Story,’ p. 204 Landmark)

Chaotics

“When attacked by a disrupter, the first reaction by executives in incumbent technology companies is usually to protect their high-paying positions and their well-worn, comfortable business models. The typical response: Close your eyes and maybe it will go away. Occasionally it does go away, but usually it does not, and then the chaos really kicks in: Scramble to cut staff. Argue and debate. And make it as difficult as possible for the customer to actually adopt the new technology. Incumbents typically do everything in their power to put off the day of technological reckoning because their biggest problem is that they must bear the burden of supporting the older technology and the business model built around that technology, while at the same time experimenting with, building up, and transitioning into the new business model structures. Meanwhile, the technological disrupters do not bear this double-cost burden. For disrupters, everything is fluid and relatively low-cost. And while the incumbents are fighting to make sense of the chaos in which they are so deeply mired, the disrupters are aggressively plowing forward with the winds and waves of turbulence at their backs.”
(Philip Kotler and John A. Caslione in ‘Chaotics,’ p. 25 Landmark)

From Acorns: How to build a brilliant business

“The reason we don’t like selling is that we don’t like personal rejection. Psychologists reckon we take around 50 per cent of our sense of identity and self-worth from what others around us tell us – no person is an island. If you are selling, you’re going to encounter a fair bit of rejection. If you keep getting knocked back, you are going to feel miserable after a while. Except for sociopaths, we all have a certain level of self-esteem – mojo if you like – and this goes up and down depending on feedback from others.”
(Caspian Woods in ‘From Acorns: How to build a brilliant business,’ second edition p. 117 Landmark)

Financial Planning for Doctors

“When Sachin Tendulkar is out for a duck, does that make him a bad player? Most of us would think not. But when it comes to equity investments, one or two bad years or innings or losses and we lose hope in equities and resolve never to dabble in the stock market. Just like Sachin’s long-term average is excellent, the long-term average of equity as an asset class across the world in the past 200+ years has been stellar.”
“If you had invested money in the equity market every time Sachin played a match in the past 15 years, instead of trying to time the market, I believe that the results would have been excellent and you would have been laughing your way to the bank.”
“The markets are volatile but it’s the rational investor who will reap the rewards of this volatile time. The dance of stock prices and NAVs might be seductive but it does you no good besides giving you a higher level of anxiety…”
“Always keep an eye on the bigger picture. We are living in a time of the greatest economic prosperity in Indian history. Favourable demographics, high domestic consumption, soaring infrastructure spending, innovation and political stability to a certain extent will continue to enhance the standard of living throughout India. This will keep the economy growing and profits increasing, which will eventually reflect in higher share prices.”
(Amar Pandit in ‘Financial Planning for Doctors,’ p. 242 Landmark)

When Bubbles Burst

“Even if the economic downturn can be limited, the outlook for house prices seems generally bleak to me. Mortgage financing is set to stay much tighter than before, with larger downpayments required and tighter limits in relation to incomes, especially for the self-employed and business owners who cannot show a salary. Even though mortgage rates should come down as central banks lower official interest rates, high unemployment will keep people cautious. But also, once a bubble deflates, it tends to overshoot on the downside as the ‘bubble mentality’ of the boom years gives way to expectations of further price falls. Bear markets in housing usually last three to five years and peak-to-trough declines of 30-50 per cent or more in real terms have been common in the past. With consumer price inflation now lower than for most of the last 50 years, and possibly at risk of going negative, the decline in real terms this time will show up almost fully in nominal terms. In the end, though, the extent of the fall will depend on how bad the economic downturns become.”
(John P. Calverley in ‘When Bubbles Burst: Surviving the financial fallout,’ p. 202 Landmark)

Life Inc.

“In the Age of Cathedrals, even small towns invested in tremendous architectural projects to generate tourism spending by pilgrims. Cathedrals were not funded by the Vatican Bank; they were local bottom-up investments made by farmers and other labourers on behalf of future generations. This was the medieval equivalent of establishing an inheritance – but because the money had to be spent instead of saved, it promoted collective investment rather than private hoarding.”
(Douglas Rushkoff in ‘Life Inc.,’ p. 165 Landmark)

Advanced Banter

“The test of a good teacher is not how many questions he can ask his pupils that they will answer readily, but how many questions he inspires them to ask him which he finds it hard to answer.” (Alice Wellington Rollins)
“I taught Bill and Hillary Clinton when they were at Yale. Let me rephrase that. Bill and Hillary Clinton were in the room when I was teaching at Yale.” (Judge Robert H. Bork)
“Technology is the knack of arranging the world so that we don’t have to experience it.” (Max Frisch)
“The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to stop the man touching the equipment.” (Warren Bennis)
(Ed: John Lloyd and John Mitchinson in ‘Advanced Banter: The QI book of quotations,’ p. 326 Landmark)

The Storm: The world economic crisis & what it means

“Mass hunger in poor countries cannot simply be left to the process of market adjustment. This is a matter of basic humanity and ethics. Aid agencies understand, from past errors, that the best way to counter starvation or severe malnutrition is not to shower the poor with food from elsewhere – though properly managed food aid has a role – but to provide cash for social protection programmes and food-for-work schemes. The World Food Programme and other agencies are struggling at present to raise sums that are trivial when compared with the subsidies given to farmers in rich countries. There is a need for help with long-term investment, especially in rain-fed, developing-country agriculture, with technology comparable to that of the green revolution (which may include genetic modification). But the problem of malnutrition is not an easy one to resolve. It reaches into healthcare and education, both in general and specifically in relation to diet and hygiene, and requires the provision of advice, credit and comprehensive schemes for distributing seeds and fertilisers to hundreds of millions of small peasant farmers in order to raise their productivity.”
(Vince Cable in ‘The Storm: The world economic crisis & what it means,’ p. 87 Landmark)