Monday, February 29, 2016

How to Build a Culture of Originality
Adam Grant

Good thought provoking article

Fresh, innovative thinking is essential for business growth, and most people—not just a few gifted “visionaries”—are capable of it. So says the Wharton School’s Adam Grant, whose research shows that you can develop this skill in your organization by creating a culture of nonconformity. 
Start by giving employees license to let their imaginations run wild: A large quantity of diverse ideas will ultimately yield the highest-quality ones. To help people dream up a multitude of new products, strategies, or solutions, encourage them to adopt the mindset of a competitor, for example, and have them generate ideas privately (group brainstorming tends to conform to the majority’s taste).
  • Think like the enemy. Research suggests that organizations often get stuck in a rut because they’re playing defense, trying to stave off the competition. To encourage people to think differently and generate more ideas, put them on offense.
  • Solicit ideas from individuals, not groups. According to decades of research, you get more and better ideas if people are working alone in separate rooms than if they’re brainstorming in a group. When people generate ideas together, many of the best ones never get shared. Some members dominate the conversation, others hold back to avoid looking foolish, and the whole group tends to conform to the majority’s taste. 
  • Bring back the suggestion box. It’s a practice that dates back to the early 1700s, when a Japanese shogun put a box at the entrance to his castle. He rewarded good ideas—but punished criticisms with decapitation. Today suggestion boxes are often ridiculed.
Once lots of ideas are in, get feedback on which one to pursue from the right people: other innovators with a track record of spotting winners. You might even stage a contest to find the best ideas, and have peer judges and other subject-matter experts vet the submissions and suggest improvements. 
Sustaining a culture of originality is as important as building it. So focus, too, on balancing cultural cohesion (which can improve decision making) with creative dissent (which prevents a strong culture from becoming a cult). Long-term, it’s the combination of the two that brings great ideas to the table.
  •  We used to blame conformity on strong cultures, believing they were so cultish and chummy that members couldn’t consider diverse views and make wise decisions. But that’s not true. Studies of decision making in top management teams show that cohesive groups aren’t more likely than others to seek consensus, dismiss divergent opinions, and fall victim to groupthink. In fact, members of strong cultures often make better decisions, because they communicate well with one another and are secure enough in their roles to feel comfortable challenging one another.

Monday, February 22, 2016

Every Company Needs a Growth Manager
•  Jeff Bussgang
•  Nadav Benbarak

Very interesting article

Growing revenue and profits is a core objective of most companies, and it is the responsibility of every function to contribute to the pursuit of this goal. Yet, in recent years technology startups have embraced a new role, Growth Manager — alternatively Growth Hacker, Growth PM, or Head of Growth — that focuses on it exclusively. By viewing product development and marketing as integrated functions, not silos, leading tech companies like Facebook and Pinterest are rethinking their approach to driving growth and achieving breakthrough results.Yet, the Growth Manager role remains poorly understood, especially outside Silicon Valley… 
…The Growth Manager function typically lives at the intersection of marketing and product development, and is focused on customer and user acquisition, activation, retention, and upsell. The Growth Manager usually reports either to the CEO, the vice president of Product Management, or the vice president of Marketing. They work cross-functionally with engineering, design, analytics, product management, operations, and marketing to design and execute growth initiatives. 
The growth manager needs to: Make sure the right data infrastructure is in place. Help the company define its growth objective Provide customer insight Be responsible for prioritizing growth initiatives and product changes Design and implement tests.

Monday, February 15, 2016

Johnson Controls, Tyco to Merge in Inversion Deal
Merger will place combined companies’ headquarters in Ireland, Tyco’s home


I have mixed feelings about these moves. With the context of our last posting on redefining capitalism (;postID=2016076399125449012;onPublishedMenu=allposts;onClosedMenu=allposts;postNum=0;src=postname),
 if these mergers in fact better enable the combined companies to : “transform ideas into products and services that solve (customer) problems” then they will work. If it is just to cut costs or improve tax rates, I believe they will fail in the long run. Being very familiar with DuPont, I believe the new companies can truly add value per the concepts of the last posting IF and only if they innovate more deeply and richly in each of the three new, more focused businesses than before -- per the last posting: “ providing them (investors) with a return that is competitive compared with the alternatives is a boundary condition for a successful business; it is not the purpose of a business”

Johnson Controls Inc. and Tyco International PLC agreed to merge in a $14 billion deal that creates a new giant provider of commercial-building systems and reflects a growing push by some executives and shareholders toward companies that are bigger but more focused. 
The deal, announced Monday, would combine Johnson Controls’ business selling heating and air-conditioning equipment for skyscrapers, schools, hospitals and other structures with Tyco’s lines of security and fire-suppression gear into a company with more than $30 billion a year in sales…. 
….. Those changes reflect, in part, a broader dissatisfaction among shareholders—especially some activist investors—with the concept of sprawling conglomerates that have tentacles in widely arrayed industries. At the same time, executives still see value in combining businesses in the same or similar industries to give them greater market clout.Similar dynamics have been evident in some other big recent deals. In November, PfizerInc. and Allergan PLC agreed to combine in a $155 billion deal, then promptly announced that it was considering splitting the final company. Last month, Dow Chemical Co. and DuPont Co. agreed to combine into a chemical giant worth more than $120 billion before splitting up into three companies focused on three separate sectors…. 
…. (AS LONG AS THIS IS THE REAL REASON) The combination would allow Johnson Controls to offer building owners and managers a more complete suite of equipment along with data-collection services to analyze and manage power consumption and predict maintenance requirements (AND NOT)… As a result of Johnson Controls’ inversion, the company’s effective tax rate will be 18% or 19%, said people familiar with tax structure. Tyco paid 12% of its profit in taxes over the past three years, versus an average 29% by Johnson Controls, according to S&P Capital IQ. Johnson Controls said its effective tax rate before certain items was around 19% over the past two years ended Sept. 30.

Tuesday, February 09, 2016

Redefining capitalism
Despite its ability to generate prosperity, capitalism is under attack. By shaking up our long-held assumptions about how and why the system works, we can improve it.

September 2014 | byEric Beinhocker and Nick Hanauer

This may be a bit ethereal, but I believe it is critical to future innovation in our global economy.

Capitalism is under attack. The financial crisis of 2008, the stagnation of the middle class in many developed countries, and rising income inequality are challenging some of our most deeply held beliefs about how a fair and well-functioning society should be organized…. 
…. This article will argue that while we have been correct to believe that capitalism has been the major source of historical growth and prosperity, we have been mostly incorrect in identifying how and why it worked so well…. the conventional economic theories we have relied upon for the past century have misled us about the workings of capitalism.. 
… neoclassical economics—has painted a narrow and mechanistic view of how capitalism works, focusing on the role of markets and prices in the efficient allocation of society’s resources. The story is familiar: rational, self-interested firms maximize profits; rational, self-interested consumers maximize their “utility”; the decisions of these actors drive supply to equal demand; prices are set; the market clears; and resources are allocated in a socially optimal way…. utility; and that is problematic because it has long been the device economists use to show that markets maximize social welfare. Empirical economists have identified anomalies suggesting that financial markets aren’t always efficient. And the macroeconomic models built on neoclassical ideas performed very poorly during the financial crisis…. 
…. our perspective on how and why markets work from their allocative efficiency to their effectiveness in promoting creativity…. The genius of capitalism is that it both creates incentives for solving human problems and makes those solutions widely available. And it is solutions to human problems that define prosperity, not money…
Prosperity redefined
… This is why prosperity in human societies can’t be properly understood by looking just at monetary measures, such as income or wealth. Prosperity in a society is the accumulation of solutions to human problems…. 
Growth Redefined 
… In our view, the biggest problem with GDP is that it doesn’t necessarily reflect how growth changes the real, lived experience of most people. In the United States, for example, GDP has more than tripled over the last three decades. Although those increases have been concentrated at the top of the income spectrum, people across the board have benefited from improvements in technology (say, safer cars, new medical treatments, and smartphones)…. 
… If the concept of growth is to have significance, it should represent improvements in lived experience. ….it must be a measure of the rate at which new solutions to human problems become available.
… Growth is best thought of as an increase in the quality and availability of solutions to human problems….
…. Can the rate at which solutions appear and their availability be measured? While such a measure has not been tried yet, we believe it is possible. Inflation is measured by looking at changes in the prices of goods and services in a “basket” typically consumed by households. Similarly, it’s possible to look at how the actual contents of such a basket are changing across time or how they differ across countries or levels of income. What kind of food, housing, clothing, transport, healthcare, education, leisure, and entertainment do people have access to?... 
Capitalism redefined 
… Capitalism provides incentives for millions of problem-solving experiments to occur every day, provides competition to select the best solutions, and provides incentives and mechanisms for scaling up and making the best solutions available. Meanwhile, it scales down or eliminates less successful ones. The great economist Joseph Schumpeter called this evolutionary process “creative destruction.”… 
… The orthodox economic view holds that capitalism works because it is efficient. But in reality, capitalism’s great strength is its problem-solving creativity and effectiveness. It is this creative effectiveness that by necessity makes it hugely inefficient and, like all evolutionary processes, inherently wasteful…. 
… Every business is based on an idea about how to solve a problem. The process of converting great ideas into products and services that effectively fulfill fast-changing human needs is what defines most businesses. Thus, the crucial contribution business makes to society is transforming ideas into products and services that solve problems…. 
… But some argue that elevating the creation of shareholder value to the status of primary objective is based on a faulty assumption—that capital is the scarcest resource in an economy, when in reality it’s knowledge that’s the scarce, critical ingredient in solving problems.5 It has also led to a myopic focus on quarterly earnings and short-term share-price swings, to say nothing of a decline in long-term investment….. This is not to say that shareholders or other owners are unimportant. But providing them with a return that is competitive compared with the alternatives is a boundary condition for a successful business; it is not the purpose of a business…. 
Government redefined 
… solving people’s problems—has, by necessity, a dark side: the solution to one person’s problem can create problems for someone else. This is the age-old puzzle of political economy: how does an economic system resolve conflicts and distribute benefits?... It can be challenging to distinguish between problem-solving and problem-creating economic activity. And who has the moral right to decide? Democracy is the best mechanism humans have come up with for navigating the trade-offs and weaknesses inherent in capitalism. Democracies allow its inevitable conflicts to be resolved in a way that maximizes fairness and legitimacy and that broadly reflects society’s views.
Seeing prosperity as solutions helps explain why democracy is so highly correlated with prosperity. Democracies actually help create prosperity because they do several things better than other systems of government. They tend to build economies that are more inclusive, enabling more citizens to be both creators of solutions and customers for other people’s solutions. And they offer the best way to resolve conflicts over whether economic activity is generating solutions or problems. Many (though not all) government regulations are created to do just that—to encourage economic activity that solves problems and to discourage economic activity that creates them—thus fostering trust and cooperation in society.
Business people often complain about regulation—and indeed many regulations are poorly designed or unnecessary—but the reality is that solving capitalism’s problems requires the trust and cooperation that good regulation fosters. It is notable that the most prosperous economies in the world all mix regulation with free markets, while unregulated and anarchic economies are universally poor