Consultant's View, 2011

January 2011

Betting Against the Crowd

Every January, there are a lot of people making predictions about what will happen in the New Year. Instead of making more of them, it may be helpful to consider the words of one oil man, "This business is the only business I know where you can be sure that every decision you make will be wrong."

Instead of making predictions, it can be interesting to identify what not to bet on.

Why the Wisdom of Crowds fails.

Many people distrust the "Wisdom of Crowds". It turns out that there are good reasons to distrust the process. Part of the reason for distrusting that process is that many people do not properly select their "crowd".

There are several ways that you can defeat the process and wind up with results that are either skewed or even wrong.

Motivation - What can We Learn?

Now that the football season is over, we can look back to see if there are any object lessons that can be learned. One area that sports teams highlight is that of team motivation. In this last year, there were several examples of great and not so great motivating of the team. History has examples of extraordinary team motivation.

Break Away from Good Business Practices!

It is time to get rid of many consultants. They have advised company after company to focus on their "core competencies", listen to their customers, and invest in what will bring the highest returns. Guess what? These proper management techniques actually help a company miss the next "great thing". These techniques keep a company from properly investing in the "game changing" innovations.

Change the System? Or See Opportunities?

Over the last one hundred years, there have been numerous attempts to change our political and economic system. We have seen efforts in the early 1900's, the 1930's, the 1960's, and more. Every time that we ran into any trouble, there has been a push to change the system. A recent book by Umair Hague, The New Capitalist Manifesto, offers more than a simple call to change.

Do you know where the pipes are?

During the Egyptian crisis, the government in Egypt managed to pull down the Internet. The way that they did it is interesting because it illustrates some of the risks that we take without realizing it.

Inflation is back

Everybody but the Federal Reserve recognizes that we have inflation right now. The problem is that by cutting back, we might not get lower gas prices. The demand from the rest of the world and the over stimulation of the money supply means that we may be headed into that situation where we have both a recession and inflation at the same time. Back in the 1970's, we called that "stagflation". If we look back at that time, there are a couple of things to note about the business situation then.

Birds, Reptiles, and Mammals

Business and marketing strategies can be compared to animal strategies for both reproduction and food gathering. The main difference between them is how closely one gets tied to the chosen vendors. In that world, our relationship with our customers is very fragile and we need to constantly trying to get new customers.

Unintended Consequences

Every action we take has consequences. Some are the ones we wanted. Others are "pleasant surprises". Still others are negative and we call them "Unintended Consequences". How we handle these can demonstrate

Predictable Irrationality

As any good car sales person knows, human beings make major decisions based on emotions, not rationality. In business, we do better when we recognize that and plan on this irrationality. A number of experiments are showing patterns to our irrationality.

Why predictions fail?

Now that Harold Camping's prediction of the end of the world has come and gone, it can help to look at why so many predictions are wrong. Businesses constantly are predicting the future (with sales and profit forecasts) and almost always are wrong. Why is that?

Doomsday Predictions Wrong

Human history is full of people who have made "doomsday predictions" and repeatedly, they are wrong. It can be easy to see that something bad will happen, but it is almost impossible to tell when that will happen.

New Alternative Currencies

We are seeing new currencies develop. It is reported that there are over four thousand privately issued currencies around the world. One of the latest entries into this field is the BitCoin. These alternative currencies have a number of problems that have not been worked out.

New Success Paradigm

Now that Bernie Madoff has managed to totally discredit "Greed is Good" as the motto for capitalism, we are seeing a new wave of business books redefining what it means to succeed. What is surprising is how many of these books are defining success in terms that can only be called "spiritual". Is American business turning back to spirituality for its purpose?

New American Business Success

There is a spate of business books redefining what it means to be a successful leader. Most of these books point out that success and leadership are based on factors that are almost impossible to measure. These criteria can be described as "spiritual".

No Privacy on the Web

For a long time, many of us have acted as if we have privacy on the Internet. People have done searches that they would not want others to know about. People have sent messages that they would not want to have other know who sent it. But privacy on the Internet is a thing of the past.

Wishful thinking on Complexity

A recent issue of Harvard Business Review focused on "Embracing Complexity". While the analysis is good, it might be wishful thinking to expect most managers to be able to handle it. The problem is that complexity is not what we expect from the world. As Mark Twain is supposed to have said, "History doesn't repeat itself, but it does rhyme."

Harder, Stronger, Longer

One of the biggest strategic mistakes companies (and generals) make is to rely on tactics that worked in a prior situation but no longer work because of some change in the environment. There have been some spectacular mistakes made in this manner. These changes can be new technologies, new competitive alliances, changes to the population, or major economic changes.

We Want to Believe

One of the most powerful forces in human relations is the "Want to Believe". We see this force operating in Ponzi schemes, startup companies, and companies about to go under. It is the force that keeps many people staying in their position even when things are not very good. One of the hardest parts of the want to believe is

Is your Strategy Statement killing your company?

Companies and many a non profit organization spend a lot of time and effort writing a "strategy statement". Unfortunately, many an effort results in statements that don't help. The resulting statements are full of big, psychological words that people often misunderstand and cause them to operate counter to what what intended.

What can we learn from Pirates?

In the latest Harvard Business Review, there is an article on what we can learn from organized crime. Pop!Tech ran a article on what innovators can learn from pirates (focused mostly on people who pirate your goods). The New York Times ran an article on the plight of a British couple who had been kidnapped by Somali pirates. To lead pirates, we express a vision that they can share and

Unbelievers and Skeptics

As a manager, every time we present the vision of our company, we face some people who don't believe what we say. In a corporation, that unbelief can slow down operations or even totally sabotage our efforts. Some is good, but others

Privatizing the Internet

The Internet started as a government project, and then became an education tool. Later, corporations were allowed to join. Ever since then, corporations have been trying to take control of the Internet. Today, a number of sites such as FaceBook, are working hard to build a system where people can spend their time on the Internet solely within their site. They are trying to privatize the Internet. In the early days of the Internet, CompuServe, AOL, and others tried to do the same. The lessons of the earlier attempts may help us understand the future of the current efforts.

Dangerous Instincts

Every manager knows that we make decisions on "gut feel". In other words, we make decisions based on instinct. That is not a bad thing. However, when we do not "educate our gut" before we make that decision, often it is a wrong decision.

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