marți, 29 iulie 2014

Seth's Blog : The easy ride

 

The easy ride

We know what you want to accomplish. We know how you'd like everything to turn out.

The real question is, "what are you willing to push through the dip for?" What are you willing to stand up for, bleed for, commit to and generally be unreasonable about?

Because that's what's going to actually get done.

       

 

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luni, 28 iulie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Calling All Munitions and Fighter Plane Experts: Is German Pilot Claim "Air-to-Air Attack" Brought Down MH17 Credible?

Posted: 28 Jul 2014 03:56 PM PDT

Peter Haisenko, a German aviation expert made a claim yesterday that air-to-air fire brought down MH17.

The above link is to a translated page.

As a lay person, it's easy to be persuaded by such arguments. Moreover, even if Haisenko is an aviation expert, one has to wonder about his munitions expertise.

I have some questions later, but first let's take a look at some images and a translation of Haisenko's thesis.

Haisenko provides this High-Res Image of MH17 Cockpit.



Click on chart for sharper image, or click on the preceding link for an even bigger image.

Haisenko Notes

  • Cockpit shows traces of shelling, clean round hole, about 30 mm caliper.
  • Some holes are bent inward, some outward
  • Rivets bent outward
  • Moreover, small cuts can be seen, all bent outward, which hint at the fact that fragments have penetrated the outer hull from the inside of the cockpit.

Bullet Holes in Shell




Now the Controversy

The rest of what Haisenko has to say is quite controversial. Here is my modified translation (corrections welcome).
So what can be happening? Russia has published radar recordings, that show at least one Ukrainian SU-25 in close proximity of MH17. This corresponds with the statement of the lost Spanish controller who claims to have seen two Ukrainian fighter aircraft in the immediate vicinity of MH17.

Consider the armament of the SU-25: It is equipped with a double-barreled 30-mm gun, type GSh-302 / AO-17A, capable of firing 250 rounds anti-tank fire or splinter-explosive projectiles, in a defined order. The cockpit of the MH17 has been fired from two sides: the entry and exit holes on the same page. [Mish Note: Reader John points out that a SU-27 has a service ceiling of 62,523 feet and that the Ukrainian army has that aircraft.]

Now just imagine what happens when a series of armored fire and splinter-explosive projectiles, designed so that they can destroy a tank, hit the cockpit. The shells partially escape across the cockpit from the other side, slightly deformed again.

The splinter-explosive projectiles will explode inside the cockpit, as designed.

Because the interior of a commercial aircraft is a hermetically sealed chamber, the pressure inside the aircraft in a split second will rise to extreme levels by these explosions. But the aircraft is not equipped. It will burst like a balloon.

Coherent Picture

The largely intact fragments of the rear sections are broken at the points that are based on the construction breakup most likely under extreme pressure. The image of the widely scattered debris field and the brutally damaged cockpit segment fit to do so. Furthermore, a wing segment shows traces of a grazing shot, which directly leads to extension to the cockpit.

Interestingly, I found that both the high-resolution photo of the cockpit as the segment are also now been removed from the grazing shot on the wing from Google Images. One can find virtually no other pictures of the wreckage, except smoking ruins.
Accident?

Even if Haisenko is correct, the image presented does not rule out an accident.

For example, it is conceivable Ukrainian military aircraft thought they were firing on a Russian plane. Notice I did not say likely, I said conceivable.

Regardless, if plane damage rules out a Buk, then the air-to-air thesis that remains, however unlikely initially, must lead to the truth.

By the way, one of my contacts (Not Dreizin) assures me that an SU-25 can get high enough, not for prolonged periods of time, but long enough to make such an attack. I do not know if that claim is credible, but a SU-27 certainly can hit that altitude.

Six Questions

  1. Is the MH17 damage consistent with either a buk or an air-to-air attack?
  2. Does the damage assessment favor one type of attack vs. the other?
  3. Could a Buk reasonably have only hit the cockpit?
  4. Could multiple Buks be in play to cause both input and exit holes as show?
  5. If so, could multiple Buks have only hit the cockpit?
  6. Could the flechettes (dart-like or ball bearing-like projectiles) launched when the buk exploded simply have traveled completely through the cockpit leaving both entry and exit holes?

Three Scenarios

  1. If the damage is only (or primarily) consistent with an air-to-air attack, we have a new ballgame.
  2. If the damage is consistent with either a Buk or an air-to-air attack, with roughly equal probability, we have not learned much.
  3. If the answer to number 6 is yes, and the rest of the damage is also consistent with a Buk, and the damage is inconsistent with an air-to-air attack , then it is safe to rule out the latter.

For now, I would like some military fighter-plane and munitions experts to assess the damaged parts and make a yes-no-maybe type of assessment on Haisenko's analysis, not on who did it or why, but rather on an assessment of the images shown (and what type of weapon did the damage).

Meet Elena from Sloviansk

Finally, even if it was a Buk, please consider this Video of Militia Soldier - Elena, from Sloviansk with English subtitles.

Posted on June 18, 2014



Partial Transcript

Good day. My name is Elena. I am in the city of Sloviansk. I am native to this town. I have joined the military ranks. I cannot bear this anymore. We are being bombed every day by Ukrainian army, on orders from Junta, Artillery, Air Force. And they drop bombs not on check-points. They drop bombs on people's houses. People live in cellars with their children. How long are we to bear this? How is it that government sends mercenaries on their own people? The people are fighting from here, in defense of their own city. They want to live, not merely exist. Terrible things are happening. For example: An incident that happened recently. A passenger plane was flying by, and Ukrainian attack aircraft hid behind it. Then he lowered his altitude a bit and dropped bombs on the residential sector of Seminovka. They wanted to provoke the militia to shoot at the passenger plane. There would have been a global catastrophe. Civilians would have died. Then they would say the terrorists did it. There are no terrorists here. There are regular people here, that came out in defense of their own city. ... Don't you have any humanity left?

Believable?

Easily. Please note that video came out one month prior to the MH17 crash. It was not a made up story afterwards to fit what happened. And it fits numerous other reports none of which appears staged. 

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

IMF Warns Pound Overvalued; What About Other Currencies?

Posted: 28 Jul 2014 12:26 PM PDT

Is the British pound overvalued? What about the Euro? The US Dollar? The Yen?

Curiously, economists make that case for all of those currencies.

And today, the IMF is pounding the drums with this proclamation "Overvalued" Pound Prevents Rebalancing.
The International Monetary Fund warned on Monday that the pound was "overvalued" and preventing the rebalancing of the economy away from a reliance on spending and imports.

In its annual assessment of the UK economy, the fund said sterling was between 5 and 10 per cent overvalued because of a "lack of competitiveness and limited export diversification".

"Staff estimates that the current account balance is 2.6 per cent weaker than its equilibrium level, and that the real exchange rate is overvalued by about 5–10 per cent," the IMF said.
Equilibrium Level Madness

Apparently the IMF is the arbiter of the "equilibrium level" of any and every currency. A few examples will prove the point.

New Zealand Dollar Overvalued by 20%

On April 10, 2014 the IMF warned New Zealand Dollar May Be Overvalued.

Canadian Dollar Overvalued by 10%

On March 2, 2014 the IMF Warned Canadian Dollar Overvalued by 10%" despite recent depreciation, thus the Bank of Canada should wait before hiking rates..

Australian Dollar Overvalued by 10%

On November 21, 2013 the IMF Stated Australian Dollar Overvalued by 10%.

US Dollar Overvalued

This dates back a while but on October 28, 2010 the IMF said US Dollar 'Overvalued' On Currency Markets.

Swiss Franc Overvalued

Returning to this year, on March 24, 2014, IMF Suggests SNB Use Negative Rates if Franc Pressured because the "franc remains moderately overvalued."

Euro Overvalued

As shocking as this may seem, I cannot find a recent IMF opinion on the Euro, but on May 8, 2014, Mario Draghi, president of the ECB discussed the Pernicious Effects of an Overvalued Euro.

I am pretty sure the IMF would agree.

Yen and US Dollar Overvalued

On October 12, 2012, the Wall Street Journal proclaimed If Yen Overvalued in IMF View, So May Be Dollar.
Japan's finance minister may have breathed a sigh of relief Thursday when the International Monetary Fund chief reaffirmed the yen is "moderately overvalued," a phrase traders believe is supportive of potential market intervention to weaken the currency against the dollar.

Not so well-known in the market, however, is that the 188-member international lender also sees the dollar as "moderately overvalued," a view that makes it harder to conclude the IMF would endorse future intervention by Tokyo in the dollar-yen market.
Yuan "Moderately" Undervalued

On May 29, 2013, and contrary to sentiment in Washington DC that says the Yuan is massively undervalued, The IMF Seeks Flexible Chinese Yuan, Says "Moderately Undervalued".

US Dollar Index



click on chart for sharper image

Summary

Note that the US dollar is about where it has been since the beginning of 2012, but higher than it was in October of 2012 when it was judged to be "overvalued".

Is it more overvalued today? 

Apparently the British pound, New Zealand dollar, Australian Dollar, the US dollar, the euro, and the yen are all overvalued.

The yuan is the one major currency that is allegedly undervalued, but only "modestly".

Mathematics

IMF overvalued-undervalued judgments are generally on a basket of currencies basis.

However, it is not mathematically possible for all those currencies to be 5-20% overvalued against all the other currencies in the same basket.

Even if it was possible, based on precise timings and currency fluctuations, the idea that the IMF can fine tune currency valuations to the nth degree as it has done is absurd.

All Currencies Overvalued

Nonetheless, the IMF appears to be on target with all those "overvalued" assessments, not against  other currencies in the basket or against each other individually, but against gold, and by far greater percentages.

If you agree with my assessment, and perhaps even if you don't, please consider How Much Gold Should Someone Own? Where and How To Own It?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

No BBC Video Removal Scandal After All; Evidence of Military Planes Shadowing MH17 Mounts

Posted: 28 Jul 2014 12:24 AM PDT

On July 23 the BBC deleted a video report from correspondent Olga Ivishina regarding the crash of MH17. This has caused quite a stir in the blogosphere because the deleted video contained eyewitness reports of military aircraft flying on the same day, shadowing MH17.

Here is the deleted video from cache: Катастрофа рейса MH17 Би би си в поисках Бука 23 07 2014, LQ 



Global Research Canada has some interesting translation clips in Deleted BBC Report. "Ukrainian Fighter Jet Shot Down MHI7″, Donetsk Eyewitnesses.

BBC's Initial Response

I found dozens of references to the removal, but to find BBC's reason for removing the video, I had to search the BBC website. It's in Russian.

Jan Leder, managing editor of Russian BBC Service explains Why Bi-bi-si Material Removed From Site.

Video Reposted

My initial reaction was that Leder's response was disingenuous.

However, the BBC has since re-posted the video.

Reader Jacob Dreizin, a US citizen who speaks Russian and reads Ukrainian, went over the original and now re-posted videos and it appears the BBC was telling the truth all along.

From Dreizin
Although it's not entirely clear, the managing editor says that the intent from the get-go was to fix the material and put it back up as soon as possible.

I have reviewed the original version side-by-side with the new one. And I can see what she's talking about. The new video still has all the eyewitness ladies that everyone has focused on.

The new video removed a somewhat irrelevant lecture from the VItalii Naida, the Ukrainian counterintelligence chief. Instead, it has a Ukrainian official claiming that no combat flights take place over rebel areas, followed by a local resident making a mockery of that claim.

It also has a segment where a BBC aviation expert is quoted as giving his rebuttal to a rebel's claim that Ukrainian warplanes have used civilian flights as cover.

The expert says that while he can't rule it out, it seems very unlikely to him, for various technical reasons. However, I don't think he quite understands precisely what the interviewees are saying.

All in all, there's no BBC scandal here.  But if you just want to focus strictly on what the eyewitness ladies said I've improved it a bit.  Here goes...

Eyewitness #1:  There were two explosions in the air.  This is how it [the plane] tore apart. And it [the remains of the plane] flew off to the sides [gesturing with hands in two opposite directions]. 
Eyewitness #2:  And nearby there was one other airplane, a military one, everyone saw.
Eyewitness #1:  Yes, yes. It was going lower, because it could be seen. It was going below the passenger plane.
Eyewitness #3:  There were sounds of an explosion. But they were in the sky.  Then this plane turned around sharply like this [gesturing with her finger], changed trajectory, and flew in that direction [showing the direction with her hand].
Mounting Evidence

  1. Credible eyewitnesses saw multiple planes.
  2. Russia claims radar picked up multiple planes
  3. Russia claims Ukrainian Buks in Eastern Ukraine
  4. Plane moved from original flight path in mysterious circumstances

Russia gave a detailed report on numbers 2 and 3 (See Russia Claims Photos of Ukraine Deploying BUK Missiles in East, Radar Proof of Warplanes in MH17 Vicinity)

Ukraine denies all of the above, and of course the rebels deny having Buks. It's quite possible, and in fact likely, that both sides are lying about multiple things.

That said, Russia has at least come out with some of its evidence. The US and Ukraine have little to offer but hype and reports that appear fake, coupled with over-reliance social media.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

What's an inversion, and what's it costing you?

The White House Monday, July 28, 2014
 

What's an inversion, and what's it costing you?

Last week, President Obama called attention to one kind of corporate tax loophole in particular -- called an "inversion" -- a word you might be seeing in a lot of news headlines lately.

It's not the most intuitive name for a corporate tax loophole, so we're breaking it down for you.

Click here to find out what it is, how it's costing you, and how to fix it.

Learn more about what inversions are.

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Another Win for the Affordable Care Act

 
Here's what's going on at the White House today.
 
 
 
 
 
  Featured

Another Win for the Affordable Care Act

Today, the Medicare program's Boards of Trustees released their annual report -- and it's certainly good news: The Medicare Trust Fund will last until 2030.

Just five years ago, in 2009, the Trustees predicted that the Trust Fund -- which helps pay for Medicare benefits and administration -- would become insolvent in 2017. Since then, the life of the Trust Fund has been extended an additional 13 years, thanks to the Affordable Care Act and other reforms.

See what this all means for you, and learn about how the Affordable Care Act is continuing to improve the lives of many Americans.

Facts on the Medicare Trust Fund


 
 
  Top Stories

Boosting Our Global Competitiveness: It's Time to Invest in America's Roads, Rails, and Bridges

Jeffrey Zients, the Director of the National Economic Council and Assistant to the President for Economic Policy, makes the case for investing in our nation's infrastructure.

READ MORE

Weekly Address: Closing Corporate Tax Loopholes

In this week's address, the President continued his call for our nation to rally around an economic patriotism that says rather than protecting wasteful tax loopholes for a few at the top, we should be investing in things like education and job training that grow the economy for everybody.

READ MORE

Weekly Wrap Up: Astronauts, "Inversions," and the VP and a White Board

It was a busy week at the White House: some astronauts stopped by the White House (hint: think 1969), we talked about "inversions," the President awarded the Medal of Honor, and the Vice President got a marker and white board and gave us a little bit of history on our nation's infrastructure.

READ MORE


 
 
  Today's Schedule

All times are Eastern Time (ET)

11:10 AM: The President participates in a town hall at the Summit of the Washington Fellowship for Young African Leaders

1:00 PM: Press Briefing by Press Secretary Josh Earnest

3:05 PM: The President awards the 2013 National Medal of Arts and National Humanities Medal; the First Lady also attends

4:15 PM: The Vice President meets with Foreign Minister Pavlo Klimkin of Ukraine


 

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Here's Your Syllabus: Everything a Marketer Needs for Day 1 of an MBA

Here's Your Syllabus: Everything a Marketer Needs for Day 1 of an MBA


Here's Your Syllabus: Everything a Marketer Needs for Day 1 of an MBA

Posted: 27 Jul 2014 05:15 PM PDT

Posted by willcritchlow

A few years ago, I wrote a post on my personal blog about MBA courses. I have a great deal of respect for the top-flight MBA courses based, in part, on how difficult I found the business-school courses I took during my graduate degree. I'm well aware of the stereotypes prevalent in the startup and online worlds, but I believe there is a lot of benefit to marketers having a strong understanding of how businesses function.

Recently, I've been thinking about how to build this into our training and development at Distilled; I think that our consultative approach needs this kind of awareness even more than most.

This post is designed to give you the building blocks needed to grow your capabilities in this area. Think of it as a cross between a recommended reading list and a home study guide.

Personal development: a personal responsibility

I've written before about the difference between learning and training, and how I believe that individuals should take a high degree of ownership over their own development. In an area like this, where it's unlikely to be a core functional responsibility, it's even more likely that you will need to dedicate your own time and effort to building your capabilities.

Start with financial basics

I may well be biased by my own experiences, but I believe that, by starting with the financial fundamentals, you gain a deeper understanding of everything that comes afterwards. My own financial education started before high school:

  • My dad used to give me simple arithmetic tasks based around the financials of his own business before I was old enough to be allowed to answer the phone (when my voice broke!)
  • At college, I took some informal entrepreneurial courses as well as elected to study a few hardcore mathematical finance subjects during grad school
  • After college, I worked as a "consultant" (really, a developer) for a financial software company and got my first real introduction to P&Ls, general ledgers, balance sheets, and so forth
  • Before starting Distilled, I worked as a management consultant and learnt to build financial models and business cases (though the most memorable lesson of this era is that big businesses just have more zeros in the model – at a certain point it doesn't matter whether you're working with $, $k, $m or $b)

So, where should you start your financial education?

I'd begin by learning how to read a balance sheet (which will quickly lead you to a load of ratios) and how to read a P&L (profit and loss statement). From there, you can get to cash flow.

In order to take this all in, you will need to set aside some time to work through a few examples and to dig into the definitions, acronyms, and concepts you haven't heard before. These are not the kinds of post you can simply skim.

This may also be a good time to revisit some basics:

While working through all of this, you should be aiming to:

  • Become comfortable with the language and terminology
  • Understand the connections between cash, profit and assets
  • Begin seeing the sensitivities in how timing, margins, and business models impact outcomes

Since all of this is pretty dry, be sure to add in some human interest by reading about business models in 'the wild' and applying your new-found knowledge to some real-world examples. Amazon is a great place to start because of its unusual focus on free cash flow over profit (for longer reads, I also recommend Bezos' shareholders letters and The Everything Store).

Management: structures and methodologies

When you're trying to get things done, it pays to understand the context of the people you're seeking to influence. Whether you're an external consultant or embedded in the organisation, the people you're dealing with will have their own priorities, incentives, and worldview.

Above all, you need to get close to people in order to understand what truly makes them tick.

You can spend a lot of time digging into dry tomes on organisational design if you wish, but I've learned a lot of things from reading business biographies in order to understand the thinking of senior management at big business. Here are some of my favourites:

  • I already mentioned The Everything Store about Amazon in general and Jeff Bezos in particular
  • In the Plex (relevant to our interests: about Google) has all kinds of interesting anecdotes and management challenges
  • I am a massive fan of The Hard Thing About Hard Things by Ben Horowitz that documents a lot of the interpersonal and management challenges he has seen and faced over the years
  • I was recommended The Five Dysfunctions of a Team by a client-turned-friend who has led large engineering teams – its language of "conflict and commit" quickly became part of my personal thinking
  • In a variety of ways, I've learned interesting things even from books that I found difficult to read or where I felt as if I wouldn't like to work for the individuals (including Winning by Jack Welch, Steve Jobs by Walter Isaacson, Who Says Elephants Can't Dance by Lou Gerstner, and the epic Warren Buffett biography, The Snowball by Alice Schroeder)
BenHorowitz081513_076BSheehan_crop.jpg

Ben Horowitz
Image source: developers.blog.box.com/

6629275_c179a0dc20_z.jpg

Jeff Bezos
Image source: James Duncan Davidson, Flickr

The way I work is to highlight sections of a book as I read it (the Kindle is a godsend for this) and then, if I found it interesting enough, to write up a brief book report for my team. This should be somewhere between enough information to persuade them it would be an interesting read and enough to impart its key lessons.

See my write-up of "Only the Paranoid Survive".

Strategy: the interesting parts

For me, all of this forms the basics of what you need to think about the interesting parts. I'm fully aware (and glad!) that some people become specialists in the details above and enjoy working in them. For me, they serve as tools to understand and to communicate about the way that companies and markets function.

I find that the most interesting learning has elements of storytelling, timeliness, and humanity. During my university studies, I was most excited when I got to hear about theorems developed in the last few years. In corporate strategy terms, it's important to know your history, but it's also exciting to realise that we can read the history that's happening all around us right now.

In rough chronological order, here is some reading material I've found interesting recently:

  • Only the Paranoid Survive is the story of how Andy Grove chose to lead Intel through the almost complete disappearance of its multi-billion dollar core business in just a few short years. See my notes
  • The Innovator's Dilemma by Clayton Christensen – I've written about this before here on Moz and over on our own site
  • In writing about The Innovator's Dilemma, I've talked before about the influence Mark Suster has had on my thinking. I find the vast majority of his writing very thought-provoking. I particularly enjoyed his recent presentation on Why it's Morning in VC which included some great stats about the growth in market opportunity for businesses that think 'online first'
  • For the most cutting-edge thinking about the evolution of strategy in a connected world, I haven't come across a better thinker than Benedict Evans. His newsletter is one of a handful that I read religiously

Putting it together

Different people learn in different ways, but I thought I'd close with a few ideas for more structured ways of learning:

  • Work through the basics by recreating some of the analysis linked to above. Build the Excel, learn the terminology, etc.
  • Read a book from the list and write a book report
  • Form a study group to discuss a Harvard Business Review case

Further reading

The more you get into reading about business, the more you'll realise what a rabbit hole it truly is. I'd love to hear some recommendations in the comments section. I've also included a few more resources that didn't fit into the flow above but that I thought people might like to check out:

  • MBA Mondays from Fred Wilson (I recommend you start at the end and work forwards through time). I've liberally pulled individual posts into the writing above, but there's a wealth of further information in this series
  • Harvard Business Review produces an incredible amount of content, so you'll have to pick and choose, but there's something there for everyone – from written content and video, to deep financial analysis to inter-personal management advice
  • I have had The Personal MBA recommended highly to me – though I have to admit that it's still sitting in my wishlist

When I first pitched this post idea to the Moz editors, they were keen that it contain actual insight itself rather than just links to a bunch of books – something I wholeheartedly support. So, I thought I'd include my notes on Andy Grove's Only the Paranoid Survive. Here you can see what I meant by taking notes and highlighting sections of a book to discuss with a group. This is a great way of digesting the ideas of a book, especially if they are particularly complex.

8267616249_0bf5b1b597_z.jpg

Andy Grove, Robert Noyce and Gordon Moore (1978)

Image source: Intel Free Press, Flickr

Only the Paranoid Survive: my notes on a business classic

Documenting his time at Intel, Andy Grove's book provides a fascinating insight into how he led the company out of the memory business and into the microprocessor business. He details his approach for dealing with what he calls "strategic inflection points" which are those times in the life of a business when its fundamentals are about to change. As he says, this "can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end."

It's an incredible story of leadership, management, and strategy, and I highly recommend you read it (even though it's unfortunately not available on the Kindle – a criteria which is fast becoming my top priority for which books I'll read).

Written in 1996, the book looks pretty dated (in parts) almost twenty years later. But to illustrate the power of the insights from the man that Fortune magazine called "The best manager in the world", I wanted to kick off with some quotes from the final chapter of the book. These detail Grove's support of Intel post-retirement – guiding them on the changes he thought the internet would bring to their business. It highlights the value of the rest of the book by proving that he is capable of applying his theories to the future (which is always the hardest part of making predictions).

Highlighting the era in which the book was written, it starts with a section entitled:

What is the Internet Anyway?

Grove immediately lays out his stall:

I felt that the Internet was the biggest change in our environment over the last year.

And then goes on to predict a number of the disruptions that subsequently came to pass – starting with the effect on advertising:

To do that on a big scale, you have to "steal the eye-balls," so to say, of the consumer audience from where they get those messages today … to displays on the World Wide Web.

Publishing:

We may be witnessing the birth of a new media industry.

And even mobile (though he doesn't call it that):

Such an Internet appliance could be built around a simpler and less expensive microchip. Clearly, this would be detrimental to our business.

His presentation, to a group of senior managers at Intel in the mid-90s, clearly met a mixed reception – and I love how much the quotes could be an indictment of my entire career:

Comments on my presentation range from "This was the best strategic analysis you've ever done" to "Why the hell did you waste so much time on the Internet?"

Rather than just pointing out problems, he clearly outlines a set of solutions – starting with embedding the internet at the top level of strategic direction:

Intel operates by following the direction set by three high-level corporate strategic objectives: the first has to do with our micro-processor business; the second with our communications business; the third with our operations and the executions of our plans. We add a fourth objective, encapsulating all the things that are necessary to mobilize our efforts in connection with the Internet.

...and hedging with a deliberate attempt to check his hypotheses to make sure they are correct:

So I think there is one more step for Intel to take to prepare ourselves for the future. And I think we should take it now while our market momentum is stronger than ever. I think we should put together a group to build the best inexpensive Internet appliance that can be built, around an Intel microchip. Let this group try to derail our strategies themselves.

Having set the scene, rather than rehash the story itself, I want to jump to the second half of the book. Here Grove details the general lessons he learned and the approaches he has taught since his retirement as a professor at the Stanford University Graduate School of Business.

So many of the lessons concern the ways that senior managers can make sure they stay abreast of the lessons their teams are learning at the coalface. But learning the lessons are so rarely enough in themselves. Grove details a conversation he had with Intel's Chairman and CEO at the time – Gordon Moore:

I looked out the window at the Ferris wheel of the Great America amusement park revolving in the distance, then I turned back to Gordon and I asked, "If we got kicked out and the board brought in a new CEO, what do you think he would do?" Gordon answered without hesitation, "He would get us out of memories." I stared at him, numb, then said, "Why shouldn't you and I walk out the door, come back and do it ourselves?"

Knowing is not sufficient. It's clear that you still need to work up the courage to make a change somehow. Early on, Grove dedicates a chapter to the necessary methodology of gathering information from the people he calls "Cassandras" who help funnel knowledge of impending changes to senior management:

The Cassandras in your organization are a consistently helpful element in recognizing strategic inflection points… Cassandras are usually in middle management; often they work in the sales organization.

He then goes on to address two potential objections to the particular kinds of action needed at this stage – by middle and senior management. I particularly like the second part – exhorting 'armchair quarterbacks' to get out of their comfy seats:

If you are in senior management, don't feel you're being a wimp for taking the time to solicit the views, convictions and passions of the experts. No statues will be carved for corporate leaders who charge off on the wrong side of a complex decision...If you are in middle management, don't be a wimp. Don't sit on the sidelines waiting for the senior people to make a decision so that later on you can criticize them over a beer -- "My God, how could they be so dumb?"

Continuing the theme that it's necessary, but not sufficient to know what's going on, Grove calls out common behaviour among senior people who (consciously or subconsciously) know what they need to be focusing on, but continually find themselves drawn in other directions. It reminded me of the adage that your calendar never lies:

At such times, senior managers often involve themselves in feverish charitable fundraising, a lot of outside board activities or pet projects...Frankly, as I look back, I have to wonder if it was an accident that I devoted a significant amount of my time in the years preceding our memory episode, years during which the storm clouds were already very evident, to writing a book. And as I write this, I wonder what storm clouds I might be ducking now.

In this theoretical section that comes after many of the personal stories of his own challenges, Grove lays out some mechanisms for coping with and dealing with strategic inflection points once you've seen them coming. In particular, he focuses on clarity of communication:

But when the structure of the industry changes, all of these elements change too. The mental map that you have been carrying with you all these years and relied upon in charting your company's course of action suddenly loses its validity. However you haven't had a chance to replace it with a new mental map. You haven't made the explicit substitutions about how things are done now versus how they were done before, or who matters now versus who mattered then...If senior managers and know-how managers share a common view of the industry, the likelihood of their acknowledging changes in the environment and responding in an appropriate fashion will greatly increase. Sharing a common picture of the map of the industry and its dynamics is a key tool in making your organization an adaptive one.

...and clarity of purpose:

Management writers use the word "vision" for this. That's too lofty for my taste. What you're trying to do is capture the essence of the company and the focus of its business. You are trying to define what the company will be, yet that can only be done if you also undertake to define what the company will not be.

...and he addresses head-on the obvious counter to some of his simple examples by saying that he believes oversimplification is a risk worth taking in pursuit of extreme focus:

But the danger of oversimplification pales in comparison with the danger of catering to the desire of every manager to be included in the simple description of the refocused business, therefore making that description so lofty and so inclusive as to be meaningless.

Just before we get to the final section on the internet that I started with to make my broader point about the usefulness of Grove's framework, he talks about some of the personal pitfalls of leading in the way he describes. I found these two passages to have echoes of 'the hard thing about hard things' that I referenced above. First, leading when you can't know if you're right:

I can't help but wonder why leaders are so often hesitant to lead. I guess it takes a lot of conviction and trusting your gut to get ahead of your peers, your staff and your employees while they are still squabbling about which path to take, and set an unhesitating, unequivocal course whose rightness or wrongness will not be known for years.

...and second, the loneliness of this course:

When I started on this software study, I had to take the time I spent on it away from other things...This brought with it its own difficulties because people who were accustomed to seeing me periodically no longer saw me as often as they used to. They started asking questions like, "Does this mean you no longer care about what we do?"

I hope you've enjoyed this little tour through my ways of learning about business. I think an awful lot of learning comes down to curiosity and, in my experience, business is an endless source of fascination and things about which to be curious. I look forward to hearing your best links and book recommendations in the comments.


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Seth's Blog : Doing the hard things

 

Doing the hard things

One model of organization is to find something that you're good at and that's easy and straightforward and get paid for that.

The other model is to seek out things that are insanely difficult and do those instead.

Dave Ramsey does a three hour radio show every day. He books theaters and has a traveling road show. He has the discipline to only publish a new book quite rarely, and to stick with it for years and years as it moves through the marketplace. He has scores of employees. And on and on. By doing hard work that others fear, he creates unique value.

Rick Toone makes guitars that others would never attempt. Rollin Thurlow does the same with canoes.

Henry Ford did the same thing with the relentless scale and efficiency he built at Ford. Others couldn't imagine raising their own sheep to make their own wool to make their own seat fabric...

"How do we do something so difficult that others can't imagine doing it?" is a fine question to ask today.

       

 

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