Monday, September 24, 2007

GM continues on its slide to death

I have stated here before that GM is dead even though the body moves on. The latest strike is yet another nail in its coffin. Yet, neither GM nor the UAW have much choice. Since GM has not succeeded in designing enough cars which consumers prefer to Toyota cars, it has to reduce costs. Yet, one of its largest costs, accounting to, by its own calculation, $1700 per car, is the cost of health insurance. Given the inefficient and expensive system used in the US, this is inevitable. However, reform of the healthcare system, while necessary, would not save GM for long as the company still cannot make cars which are in sufficient demand.

Tuesday, September 18, 2007

Is anything too extreme to save humanity?

I am not optimistic that humans will be prepared to make the changes required to ensure the continued survival of the human race. While environmental and global warming concerns are accepted as real by the majority of scientists, there are other concerns too. For example, we are rapidly approaching the stage when the global consumption of oil exceeds our ability to extract oil from the earth. We are using up the natural resources, and this is still accelerating. Currently, a small part of the world's population consumes the majority of natural resources, and as others become richer, this will only accelerate and all the negatives will increase.

How can we achieve change? Only by the most strenuous means possible - after all the survival of the human race and our children's children is at stake. Should we be genteel and moderate, or strident and demanding? I suppose it all depends on how urgent we think the problem is.

"Times Select" another failure to make revenue from content

The New York Times has stopped its effort to charge for content. Following on from failed attempts by the Los Angeles Times and others, it suggests that Internet readers are not willing to pay for content. With the growing ability to block advertising through software such as Ad-Block, it does make one wonder how online news will be financed.

Some form of micro-payments system is inevitable as it cannot be financed by subscriptions in most cases and advertising is unlikely to be sufficient.

Saturday, September 15, 2007

Pros and Cons of Regulation

Regulation is not a simple thing. Having seen it on the outside and inside in several industries, I know you cannot generalize. In most cases regulation of health and safety has been beneficial to consumers and employees. It has even been helpful to corporations as it shields them from lawsuits to a large extent.

On the other hand regulation of prices and capacity rarely benefits consumers. It transforms the regulators and legislators into the "target market" for the company. Price "collusion" becomes mandatory, and the law of unintended consequences leads companies to become inefficient as that is rewarded.

Each instance of regulation has to be evaluated and "quis custodiet custodies" will probably apply, in that regulators and legislators need to be supervised.

Tuesday, September 11, 2007

Let's talk Strategy

I love Business strategy. One of the fundamental moves I always enjoy is to force my competitors to drain their resources while I spend sparingly. The United States lost that game in Vietnam, and seems to be losing it again. As a result of an expenditure of a few $'00,000 to fly planes into the World Trade Center and Pentagon, the US has spent approaching $300 Million in Afghanistan, and much more in Iraq. That is not to speak of the lives lost, and disabilities suffered (at a rate of almost ten for each death). I wonder how we keep on failing over many years to learn that basic strategic effectiveness is not dependent on spending levels.

Has LinkedIn peaked already?

Few businesses last very long these days. In the Online Social Networking space a number have been and gone - Tribe, Friendster, Ryze, were all strong for a period of time. AOL, with AIM pages, missed the opportunity. Orkut waited too long. Bebo became a geographically limited one, as are so many of the foreign language ones. At the start of the year, MySpace and LinkedIn seemed unassailable, with FaceBook in a very secure niche.

Now, increasingly, in a world where change is critical, LinkedIn seems static, and even boring,while FaceBook has acquired more adult users and allows them to have a window into the life of the people to whom they link. The acceptance of third party Widgets is allowing them to avoid the mistakes which others have made. No one company can develop all the cool widgets which people want, so by opening up the environment, it can ensure that it always stays at the leading edge.

It may not last, but FaceBook has the best strategy for now.

Monday, September 10, 2007

People think they are more ethical than they are

Research at Harvard Business School has found that people predict that they will behave more ethically than they so, and that they look back on past behavior and think of it as more ethical than it was.

This is an important lesson for companies which want to make sure that they behave ethically. The detailed rules of behavior have to be laid out, not just a pious intent.

Sunday, September 09, 2007

Is the CFO missing the valuation of the company?

An article in today's New York Times pointed out that there is nothing immutable about the way a company values its assets. Even today many will recognize that it misses intellectual property such as technology and brand value.

Friday, September 07, 2007

Are most companies unethical?

It is typical these days for many companies to delay payment of invoices to smaller suppliers as long as they they can. They do this thinking it is simply being clever. However, a few years ago many companies thought that backdating stock options was being clever. Others thought that null trades, where nothing really changed hands, but revenue was booked in both directions, was exceptionally clever. So how clever is it to avoid paying legitimate debts until you have gone past agreed terms?

One of the Principles of Mars, Inc., a company which is a passionate believer in ethics, is prompt payment of suppliers. In fact, it is also good business since other companies want to do business with such a company. Therefore, the manager who initiates a policy of slow payment is not only acting unethically, but is doing his or her company a disservice.

Sunday, September 02, 2007

Why are the people who know the least, the least likely to ask?

As someone who has spend all his career moving between line management and consulting, I have seen again and again, that the really capable individuals have the self confidence to admit when they do not know something. This means that they will ask for help and learn. No one knows what they do not know, but the smart people will recognize that there is a lot which they do not, and will check to find out. As both a participant and an observer, I have become fairly good at predicting which managers will fail, and which will succeed, simply based on their attitude to learning.