Archive for the 'Business' Category

Dennis Prager is on to Something

December 29, 2009

Dennis Prager’s column, Thank You to These Businesses and Products, is a good reminder that we should be thankful for how good we have it.  As a society, we are excellent at whining about our problems but, not so good at recognizing the things that make our lives better.

Here are some of the things I can about that have helped the quality of my life in the last few days:

  • The Realtime 4-wheel drive on my Honda C-RV made it easier and safer for us to get to and from work and visit family over a snowy Christmas weekend.
  • The local tire store was able to fit us in on short notice and put new tires on my other car right before the snow.
  • Plastic disc sleds and a snow shovel produces hours of entertainment for my family in building a sled run in our backyard.
  • The mapping software on my iPod Touch, connected via wireless to the Internet through my AT&T Uverse service, and a Sprint cell phone allowed me to help my wife find a safe route home during blizzard conditions.
  • Grocery stores open for our convenience, stocked full of food and household items.
  • The Wii game console which has turned my living room into a bowling alley.
  • Band-Aids, a bottle of hydrogen peroxide and anti-biotic ointment that allowed me to administer first aid on a minor break in my skin that was starting to become infected.  Now, a day later, it’s healed.
  • The people who made all of the stuff in my house that makes a much cozier environment that one that exists just a few feet away during a blizzard.   The roof keeps us dry.  The walls keep out the wind.  The insulation keeps out the cold and noise.  The furnace and natural gas extracted from deep within the earth keeps it warm inside.

Those are just a few things that come to mind.  Every minute of my day I come into contact with something that makes my life better.  I like Prager’s resolution to keep that in mind and discuss those things.

Michael Medved on the Dennis Miller Show

December 20, 2009

After Lane Meyer turned me back onto the Dennis Miller Show, I went to iTunes and grabbed a bunch of a recent interviews from the Dennis Miller show.

Miller gives a great interview.

One of the interviews happened to be with another radio show host, columnist and author, Michael Medved.  Medved was plugging his new book, the Five Big Lies About American Business.

Medved hit on a concept that Miller didn’t even seem to understand and I’m not sure he understood after Medved explained about two and half times.

Medved said that many people view business people as greedy and not giving back in the way charity to communities.  But, these business people do contribute to society.  They produce goods that other people value enough to voluntarily buy.

That’s very important.

At the root of capitalism is the idea of voluntary, mutual beneficial exchange.  Mutually beneficial means both sides come out ahead.  Win-win.

By providing one side of those transactions – goods and services that people value enough to buy – they are contributing to society.  They are adding value to society.

I’ve said before that in all of the trade that has taken place between myself and Bill Gates, Bill Gates really got the short end of the stick.  Now, I don’t feel sorry for him in anyway, but the point is to recognize that he has added a great deal of value to my life.  Much of my the livelihood I’ve earned over the past couple decades were based on Bill’s products.

Medved’s point is one that we each experience every day, but very few ever recognize it.  On your next purchase, ask yourself why you purchased it.  Was it voluntary?  Why were you willing to give up some of your hard earned money for it?  What value did it bring to your life?  How much would you have willing paid for it?  How much more of it would you buy if it were cheaper?

Miller heard Medved, but he took Medved’s point to mean that the businessperson contributes to society only by providing jobs.  That’s important too.  But, the value the businessperson provides in his or her products or services was Medved’s point and it’s invisible to most people.

It shouldn’t be.

Really?

September 29, 2009

Russ Roberts at Cafe Hayek posted a link to this story in yesterday’s Wall Street Journal.

The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials.The move would further cement the government’s role in propping up the housing market even as some lawmakers push to curb spending at a time of rising debt.

If this doesn’t cause you to stop and ponder the New Era of Responsibility, you may want to check your pulse.  This one disturbs me on several levels.

  1. This isn’t responsible.
  2. This sounds very much like the root cause of the stuff that got us into the previous mess – making home loans available to people who can’t afford them.
  3. This is a blatant and perfect example of how political pressures limit government’s ability to do stuff that sound politically popular on the surface, but have bad results.
  4. It perpetuates the idea that home ownership is right for everyone, rather than it being right mainly for the people who actually exhibit the responsible behaviors that usually qualifies one to own a home.

Thomas Sowell’s Brainy Bunch

September 29, 2009

Here’s a good read today from Thomas Sowell.  Some key words:

There is usually only a limited amount of damage that can be done by dull or stupid people. For creating a truly monumental disaster, you need people with high IQs.

Such people have been told all their lives how brilliant they are, until finally they feel forced to admit it, with all due modesty. But they not only tend to over-estimate their own brilliance, more fundamentally they tend to over-estimate how important brilliance itself is when dealing with real world problems.

Many crucial things in life are learned from experience, rather than from clever thoughts or clever words. Indeed, a gift for the clever phrasing so much admired by the media can be a fatal talent, especially for someone chosen to lead a government.

Smarts creates a dangerous veneer of legitimacy for many.  I prefer experience, as does Sowell, but I’m also skeptical of that.  I prefer results, but take those with grain of salt.

Back in 2005, Paul Johnson wrote a column in Forbes called Five Marks of a Great Leader.  He had some things to say about smart people too.  Two of the five marks were judgment and sense of priority.

What makes a person judge wisely? It is not intelligence, as such. Clever people with enormously high IQs often show scarifyingly bad judgment. Nor is it education. When I need advice, I rarely turn to someone with first-class honors from a top university. I turn to someone who has knocked about the world and cheerfully survived “the slings and arrows of outrageous fortune.” One man to whom I turned for his judgment was Ronald Reagan. Though not a scholar by any gauge, he almost invariably judged correctly on the few big issues that really matter.

Being able to judge well is often linked to an ability to mix with and learn from other people–not so much from experts but from common people, those who lack the arrogance of power or the desire to show off their intelligence but who nevertheless think deeply about life’s trials. A person of judgment develops the habit of asking questions of such wise people and listening to their replies.

In running a country or a vast business, one is faced with countless problems, huge and insignificant, and has to make decisions about all of them. Clever leaders (I’m thinking of Jacques Chirac) often have a habit of pouncing on minor issues and pushing them at all costs, even to the detriment of their real interests. Sorting out the truly big from the small takes an innate horse sense that’s not given to most human beings. It has little to do with intelligence, but it is nearly always the hallmark of a great leader.

Jonah Goldberg is On His Game

June 19, 2009

Some great sentences from Jonah Goldberg’s Et Tu, Big Business? Some good stuff:

Once-proud companies like GE have become seduced by global warming schemes, because they recognize that there’s more money to be made selling white elephants to Uncle Sam than there is selling competitive products consumers want.

And:

Also this week, the White House announced its plan to deal with “systemic risk” in the financial markets. The basic idea is that big firms — giant banks, insurance companies, etc. — cannot be allowed to fail if their failure threatens something called “stability.” The Obama administration is confident that with its new organizational flow charts and enhanced job description for the Federal Reserve, bureaucrats will suddenly see clearly what they couldn’t see before. These regulators will know exactly when bubbles get too big, when booms last too long, and when tens of thousands of managers, investors, actuaries and bankers make bad or sub-optimal decisions.

And:

While doctrinaire socialists might feel betrayed by liberalism’s cozy embrace of big business, their betrayal pales in comparison to the bitterness of free-marketers who defend big business’s freedom to operate, only to see these businesses use that freedom to hide behind the skirts of the nanny state. Real freedom means the freedom to fail as well as succeed. Big business wants to be protected from the former and deny competitors the latter. And their betrayal, more than anything, disheartens those who would defend both freedoms.

A common misunderstanding is that businesspeople are free market supporters.  Many aren’t.  Most don’t understand the concept.  Others believe that limiting their competition and forcing people to buy their products is a good scenario, mainly because they won’t be held accountable for their incompetence and will get to hang on to their esteemed jobs.

Yet, none of this is surprising in the society of scoreless t-ball leagues.  Results don’t matter anymore.  Politics do.

Any Boards out there looking for ideas on how to get by in a competitive market without being absorbed by the government, give me a call.

Price of Text Messaging

June 16, 2009

What in the world?

Got home from work and saw a piece on ABC News about cell phone execs testifying to the Senate about the prices of text messaging. 

Bad enough the Senate wastes its time on this.  Even worse how ABC News presented the story. 

First, ABC News never mentioned that text messaging is an optional service that users voluntarily and willingly pay to use.  Rather, the cell phone companies “gouge” consumers, because it only costs $0.01 to send a text message vs. the $0.20 “typical” price.  Not once was it mentioned that customers don’t need to use the service.

ABC didn’t mention the fixed costs of building the network to support text messaging, the percentage of text messages that are built-in to service plans and generate no additional revenue and, most importantly, never considering the service in terms of its value to customers.  

They pointed to all the cell phone companies raising prices on text messaging within a short time frame, alluding to collusion, but never considering that it might have been a response to the high demand (Econ 101: High demand drives up price). 

Which, brings us back to the customers’ value.  Customers are perfectly willing to pay the going rate, which means they find value in the service at current rates.

So…. 

WHAT’S THE PROBLEM??? 

If ABC News thinks there’s such a fat margin in text messaging, maybe it should get into the business to increase supply and drive down costs.

How Are GM’s Shares Going to be Distributed?

June 1, 2009

This morning, I received this enjoyable e-mail from a friend who would like to be known as Raoul Lufberry (more on that name later).

So, to my complete shock I wake up this morning to find GM has filed for Chapter 11. I wasn’t aware there were enough people left in that organization to type out, copy, and mail an official document, much less one that should probably be spell checked.

Then I find out that both the governments of Canada and Ontario are both involved. I don’t know what the Canadian word for bankruptcy is, but I’m sure they’ve figured it out.  After all, when you head south in Detroit, you end up in Canada.  Now, both literally and figuratively.

But, what I really want to know is, when do I get my proxy materials.  I was just informed that I am now a proud shareholder in a company that I have avoided investing in for the entirety of my life, until this moment.  Somewhere Markowitz is rolling in his grave, but wait, he is only now figuratively dead.  Anyway, how are the shares going to be distributed?  I suggest a system where every individual tax filer receives shares based on their share of total IRS personal income tax receipts.  In this way, 1% of taxpayers would own more than 40% of the outstanding shares.  My guess is that there would be overlap with the 10% stake owned by the now-fleeced bondholders (who until this morning owned 54% of the company), so those in society with a profit motive could potentially have a majority of voting shares. This could be just the type of governance a turn-around situation like this could use.  And for this reason, it will never happen.

Maybe I could just have that headless chicken from South Park vote my shares.

To say the American people own GM is funny.  Owners usually have a say in how their business is run.   Thanks Raoul for making the truth entertaining.

Billionaires Do Something

May 27, 2009

This post at Cafe Hayek reminded me of a news story last week that reported on a power meeting of billionaires Bill Gates, Oprah Winfrey, Warren Buffett and Michael Bloomberg.  What they discussed wasn’t clear, but the reporters think the billionaires were exploring what they could do with their wealth to help charities in this rough economy.   I believe Diane Sawyer speculated that they were sharing “what worked.”

I’m not billionaire, but I do have thoughts on “what works”, especially with these four.

These four have created tremendous value for the people who choose the products their businesses produce, those employed by their businesses,  those who sell things to these folks and other shareholders of their businesses.

I love charities and if they want to support charity with the private property they’ve earned honestly by producing value through voluntary exchange, that’s their choice.

But, I think the biggest impact these four can have on the economy is to continue doing what they’ve done best: run their businesses well and encourage others to do the same.

I know that doesn’t produce highly visible, tear-jerking Extreme Home Makeover “MOVE THIS BUS!” experiences, but think about it.  Over the last 50 years what’s improved the standard of living for everybody the most?  Charitable organizations or private industry?

Great Mission Statement, Great Pizza

May 22, 2009

Here’s the mission statement of one of the best pizza places in the country, Shakespeare’s Pizza in Columbia, Missouri:

It’s the pizza, stupid. And maybe the beer.
Everything else can go fly.

Have a good time doing it, just wash your hands before and after.

Simple and true.  Part of running a great business is having a good feel for what it is your customers want.  It amazes me how many businesses get that wrong.  Shakespeare’s doesn’t.

Their website says they can help with your mission statement for five figures.  For some companies, that would be money well spent.

Great Book

May 22, 2009

The same friend that sent me the Harvard Business Review article from A.G. Lafley recommended I read The Breakthrough Imperative by Mark Gottfredson and Steve Schaubert. 

I’m glad I did.  I recommend it to the business minded or anyone heading up any type of organization.  This book will give you ideas on how to make it the best it can be.  It’s a steal right now on Amazon.com for $7.99!

The authors work for Bain & Company, but don’t hold that against them.  While at times consultantspeak bleeds through, you can tell the authors benefit from the experience of Bain Capital, which invests in companies it helps manage to make money by increasing the value of those companies. 

In other words, they draw on real world experience influencing a true measure: shareholder value.  This results in very practical insights like:

From a company’s point of view, one of the most significant factors shifting [customer] behavior is simple customer dissatisfaction.

Or:

…a management team must understand which customer segments are most attractive in terms of size, profitability, and growth.  They must also make an honest assessment of their company’s capabilities to meet each segment’s needs relative to the competition.

And:

…in fast changing markets…customers often have trouble articulating or even recognizing there own needs.

To the last quote, I’d expand that to include any market.  Customers often only have vague understanding of why they buy what they buy and aren’t often able to say everything that went into their decisions.