Many of you have seen articles about this general theme recently – in part a function of "The No A**hole Rule" published last year by Dr. Robert Sutton of Stanford University. Lars Dalgaard, President of Success Factors, a company with whom I have an affiliate relationship, spoke recently about his…
I must admit that's a new phrase to me ... but it's a kissing cousin to "Death by PowerPoint", it seems. You'll enjoy the recent NY Times article about the U.S. military use of PowerPoint slides and how numbing it's become ... witness the slide that accompanies the article and…
When someone tells you no one saw it coming ... you can usually assume they mean "I" didn't see it coming. By now, many of you are familiar with the story about Michael Burry, the Stanford Hospital surgeon who uncovered the flailing mortgage market and made a fortune betting against…
Someone recently told me that they’re bored by finance. “Don’t distract me with strategic finance stuff, just let me run my business the way I know how.”
“No problem,” I said, “if you’ll just answer one question. What if the way you’re running it is causing increasing strain on your financial resources, cash flow is dwindling and you’re destroying market value every year. Do you care about any of that?”
“Of course, I do, but when sales start picking up again, all of that will go away and my EBITDA will return to normal levels.”
“Really?” I said. “How do you know that?”
“That’s the way it’s always worked.”
“Have you had any problems with your banking relationship?” (more…)
Many of you are familiar with my interest in the Corner Office articles appearing in the New York Times on a regular basis. These articles, by Adam Bryant, focus on varying approaches taken by CEOs to lead their organizations.
A recent interview with Fuse founder, Bill Carter, reminds me of two critical variables that are easily lost in our haste to always move to the next issue. First, above all, having the best people is the only antidote to business mediocrity. I’ve said it time and again, and virtually everyone knows this deep down (but very few put it into practice) … that the organization that excels identifies the best people, makes certain they are properly rewarded, and never stops looking for top talent. (more…)
Will Rogers was fond of saying, “Buy low, sell high … and if it doesn’t go up, don’t buy it!”
That’s a whimsical sentiment, but I wonder what’s in the air when I read about the alleged fraud by Goldman Sachs described in the civil complaint filed by the SEC, referenced in the recent article here. I wouldn’t jump to conclusions too quickly. In too many ways, this episode is reminiscent of earlier 1980s battles with Michael Milken. Notwithstanding Milken’s misdeeds, my vivid memory is that there were accredited investors and savvy buyers on both sides of those transactions perfectly capable of making independent decisions. Some of them were wrong and they lost money, but in virtually every case, they were well-equipped to make sound decisions … if they did their homework.
These challenges typically arise when people lose money … and there’s no question a lot has been lost. But, to assume that people who lose on one side of a transaction, are incapable of making prudent independent decisions and were sold a bill of goods , is the flawed argument that often pervade these matters. (more…)
“Incentives are the cornerstone of life.” Remember that phrase?
Many of you have read my posts, or heard me discuss the fascinating insights of Freakonomics, the best-selling book by Steven Levitt and Stephen Dubner about the power of incentives and how often they produce unexpected and unwanted results. The sequel is called Super Freakonomics.
For those of you who may be cast members in the diorama described by the article, “Is Google Making Us Stupid“, you should be thrilled to learn that Freakonomics is coming out soon as a documentary film. Should be pretty cool.
While we’re waiting, try this exercise in your organization. (more…)
“If I am through learning, I am through.”– John Wooden
Some of you will remember – back in the day – the E. F. Hutton commercials that intoned, “When E.F. Hutton speaks, people listen.” (Some of you are probably wondering – who is E.F. Hutton in the first place?) These days, the Sage of Omaha has taken their place and has the ear of many. When I finished re-reading Warren Buffett’s Annual Letter to Shareholders, it resonated with similar messages in a number of recent articles.
From a Wall Street Journal article on March 25 discussing Conoco/Phillips’ future plans: “We asked ourselves, ‘What is growth?’” an executive said. “Growth could be viewed as just growing absolute volumes, but we felt that in this challenging environment what’s really important is to grow the value of the company.”
Or this one, from an article in the April 5 edition of Business Week about the Sears/K-Mart merger: “Simplistic analyses … ignore the fact that negative or below-market returns on invested capital are as harmful to creditors as to shareholders.”
Finally, in Warren Buffett’s shareholder letter, (more…)