Recent View from the Prairie Articles

October 2024

Creating Business Value

In many a presentation to venture capitalist by people wanting investment, they present optimistic forecasts of lots of money some time down the road. These are so common that it is even called a "hockey stick" financial presentation. The vast majority will fail. When these forecasts fail repeatedly, they generate a series of financials that can be called a "hairy back." They fail both in making lots of money and in creating value. It is time to look at creating value in business. Making lots of money is not necessarily creating value.

Data is cheap, Information costs

Do you remember every detail of your latest drive? Nobody can. Often, we drive almost on "auto-pilot" with eyes seeing things that we forget, ears hearing sounds we forget, and thinking about other issues while navigating through traffic. We get flooded with data that we throw away. We quickly evaluate it and throw most away. The same is true with electronic data. Most of that data needs to be discarded because it is noise and we have to extract information out of that noise. Determining which data is noise and which is information is an expensive action. We want information to be free. It can't be.

Truth Detection Skills Needed

For thousands of years, written material was so expensive that people could basically trust what was written. When Gutenberg invented movable type, books and propaganda became cheap and people fought wars over competing claims. For years, TV news was trustable but today, "news" stations have people stating things that they know to be false. For years, we have been trained to trust what the computer told us but today, with AI, we can't trust what the computer gives us. A very important skill today is the ability to find truth amid competing claims. Our "untruth" detectors need to be on high alert especially when hearing something that we want to be true.

Go For Quality

Back during the Great Depression, auto sales dropped hard. The result was that automakers tried to out innovate their competition. A simple picture comparison of cars before 1930 and after 1940 shows vast changes in the "standard models". When a business is suffering, focusing on innovation and quality is a better survival strategy than cost cutting.

Building the Remote Team

The "Return to Office" didn't fully work. There are some people still fully remote. Others are "quietly hybrid." Now, what to do? It is time to focus on how to manage remote teams and teams that are partially remote. It takes effort to make a mix of in office and remote people into a team. It takes a commitment to make everyone on the team have the tools, equipment, communications channels, and opportunities to fully participate. This is different from simply hiring a bunch of people who work remotely. A team is built upon mutual respect, mutual trust, communication and mutual purpose.

Sleep Deprivation

A truck driver pushing the limits almost falls asleep at the wheel. A famous boss has texted managers at 2 AM demanding immediate responses and claims that sleeping at the factory will make things better even though there are quality problems. Any newborn father knows of the many sleep interruptions. Many people chasing the money often do not get enough sleep and their mental acuity suffers. Some studies claim that many people in our modern world are operating on a sleep deficiency. Books of ancient wisdom long knew that we need rest.

Businesses Need Policing

The East India Company, once one of the most powerful English corporations, cost England the American colonies, plundered India, created the opium fields in Afghanistan, smuggled opium into China, and caused two wars with China which still have repercussions today. When it appealed to the government for a bailout, its actions came to light and the English government eventually took over its operations. Many businesspeople want less government, but to protect our national interests government needs to be policing businesses.

Burn to Prevent Wildfires

Wildfires burning out west leaving black stumps, burned out vehicles, and only foundations from where houses once stood. We can prevent these, but it requires frequent small scale burning which clear out small trees and brush. A landscape that is fire resistant looks far different than the dense greenery that we love to look at. The same is true for business. A business that is resilient to troubles operates differently than one that is optimized for profit and doesn't give the CEO the same opulent salary, benefits, and office building.

Four Lessons from Good Governments

Smooth running business in clean modern buildings. The image of success is what we want. And then, we look at the mess in City Hall. "Can't government run like a business?" is a common cry. Often, when people will say that they wish government would work like a business, what they really mean is that they want the government to be as successful as the best businesses are. What if there is something that businesses could learn from good governments? There are four lessons businesses can learn: to not let CEOs be kings, have a board to kill ideas, spread power around, and accept community judgement.

Gold Rush Lawlessness

In the old west gold rush, many acted as if there were no laws and they could grab as much as they could. Mining claims were violated. People got into fights over where claim boundaries were. A "claim jumper" could get swift and harsh judgement. Today, data to train AI systems is the modern gold. People are acting like they are in a gold rush and that there are no boundaries. People are taking your data and photos without paying you.

One Mistake Away from Disaster

Just as many families are one mistake away from homelessness, many companies are one mistake away from bankruptcy. The more challenging the environment, the more likely that companies will make that fatal mistake. It is vital to identify mistakes as quickly as possible. We need to learn from both success and failure. The future will not look like the past. It may rhyme, but not repeat.

Imbalance of Power

Ever since the first cities were built, there have been imbalances of power and knowledge. No matter how much a culture wants to have equality, inequality will develop. And there will always be those who take advantage of any imbalance of knowledge. The only long-term solution is to spread knowledge and have multiple ways to verify knowledge.

Chat AI isn't the Answer

Chat AI is solving the wrong problem. While there is a lot of hype about AI, we have yet to see the AI that will have the most impact. The current AI tools are only increasing the productivity of creative folks. The AI that will have the impact is the one that transforms how we do business. It will be the AI that changes how CEOs operate that will change our world.

The Speed of Change

For thousands of years, humans lived by the cycle of the seasons, planting in the spring, harvesting in the fall, and change happened slowly. Many want to continue to have slow change. But complex societies can change rapidly. We need resilience to cope with rapid change.

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