ET CITINGS

Break from the pack

Posted on October 29, 2010 | Author: Oren Harari | View 7

Welcome to the Copycat Economy, where everyone has access to the same resources and talent, where the web is the great equaliser, and where the market’s twin foundations are imitation and commoditisation.

It’s a world marked by the ‘me-too’ syndrome, where competing vendors benchmark, imitate, and build off each other, offering customers an ever-increasing array of choices, most of which lookpretty much the same.

First of all, keep in mind that it’s not only stickers that become commodities.

Every organisation faces the challenge.

IBM is discovering that even its traditional discrete consulting services are slowly becoming commoditised, a term IBM itself uses.

Companies like Wipro — based in Bangalore, India — are replicating some of IBM’s consultative offerings at much lower prices, which is why, to IBM’s chagrin, companies like Louis Vuitton and Target are turning to Wipro for basic IT and datamanagement expertise.

When I consulted at a major mutual fund a few years ago, I was told at the first meeting, “Oren, the first thing you have to know is that MFs are commodities.”

The company vice president said, “There are thousands of MFs that compete directly against ours, and over the long haul, we pretty much have the same yields and performance, so our main job is to figure out how to differentiate ourselves so that investors will choose our products.”

Twenty years ago, not many people even knew what MFs were, much less invested in them.

Amazon link for the book ( 5 star rating)

http://www.amazon.com/Break-Pack-Compete-Copycat-Economy/dp/0131888633/ref=sr_1_1?s=books&ie=UTF8&qid=1288547863&sr=1-1

Wharton on CWG.

Labels: Knowledge at Wharton

The Coming Meta-Boom and Meta-Bust -- One Economist's View

Simon Johnson, a former chief economist for the International Monetary Fund and author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, says the recently passed Dodd-Frank Financial Reform Act does little to prevent the biggest financial risk of our time -- banks that are becoming "too big to save," either because potential losses could overwhelm government resources, or the public will refuse to sanction another large bailout. Either way, the world economy could crash. But preceding any crash, watch for a worldwide "meta-boom." Following a recent talk Johnson gave at Wharton, he discussed this and several other issues with Knowledge@Wharton, including how shrinking big banks could ward off financial meltdowns, Ireland's solvency-threatening debt burden and the implications of Basel III.

Knowledge@Wharton: The other interesting stat in the book, I think I've seen this elsewhere also, is the percentage of corporate profits that the financial industry represents. I might be off a little, but I think this is roughly right: that up through the beginning or middle of the 1980s, or maybe even a little bit later, the most the financial system ever took up in total corporate profits in the U.S. was about 15%. But just prior to the crash, it was up to 41%. In other words, the financial services industry was earning 41% of all profits in the U.S. That's something that we never even got close to in the past. It suggests that maybe something was out of whack. Why didn't anybody see that? Well, I know some people did. Where are we now and how long do you think it might take before we get back up to that, according to your view of what's likely to happen?

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Knowledge@Wharton: The other thing that's interesting -- and you talk about a number of different problems with "too big to fail", such as taxpayers ending up on the hook for all the money -- is this idea that because of the backup, the backstop, the implicit guarantee, the moral hazard is basically there, but only for the very largest banks. The next tier down, say large regionals and so forth, are actually put at an unfair disadvantage competitively because they don't have that subsidy, and therefore they can't operate in the same way. So it's not a level playing field. And yet we don't see too much opposition from them either. You just talked about the corporate sector in general, what's going on here?

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. But "too big to fail" is not the worst of our potential problems. That would be Too Big to Save. Think about Ireland.
Knowledge@Wharton: Too Big To Bail.
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Knowledge@Wharton: Can you define moral hazard for those people who aren't clear what it means?

Johnson: Moral hazard is very simply that when I give you insurance, you're going to be a little bit less careful.
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But in essence, I think Eve is right. The essence is, if the media doesn't get it, if the smartest journalists whom you respect and read every day who write on the front page of major newspapers and on leading analytical serious websites run by those papers, if they don't get it, if they don't understand what the financial sector is doing, why and how, then that definitely contributes to the problem.

With reference to :

http://www.nakedcapitalism.com

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Knowledge@Wharton: And talking about concentration, after this crash, it turns out that -- I don't know if that was 13 banks that you were referring to in 13 Bankers -- some of the bigger banks, in an effort to salvage the system, took over competitors. And so now there are really six large banks. Could you talk about them, just how much they control and some of the points you make about them in your book?

Johnson: Sure, well the six banks are, I think, the heart of the problem. Those six banks control, have assets -- the size of the banks and balance sheet -- of roughly 63%, maybe 65% of GDP right now. Before the crisis, they were 57% or 58% of GDP. And if you go back to the early to mid 1990s, that same group of banks and the other banks that they gobbled up along the way, that same group was 16% of GDP. So they have become much larger relative to the economy. There's a very important point, that the U.S. is not a country based on big banks. We don't have a big banking tradition relative to other countries. We don't have a tradition of bank concentration or of concentration relative to the size of the economy.

There are no benefits that anyone can point to from a broader economic point of view of this increase in bank size. So at the very least, we should roll the banks back to where they were before this merger movement, before many of the barriers on their activities were taken off. And we should also consider very seriously putting other controls and restrictions on the ability of those banks that are essential to our credit system, essential to our payment system, to take huge amounts of risk should be severely curtailed.

( to be continued)

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Labels: Knowledge at Wharton

Execution: The discipline of getting things done
Posted on October 5, 2010 | Author: Ram Charan | View 2

If you don't get the people process right, you will never fulfill the potential of your business.

The people process is more important than either the strategic planning and decision-making or operations management
processes.

After all, it’s the people in an organisation who make judgments about how markets are changing, create strategies based on those judgments and translate strategies into operational realities.

A robust people process does three things.

It evaluates individuals accurately and in depth. It provides a framework for identifying and developing the different types of leadership talent the organisation will need to execute its strategies down the road.

It also fills the leadership pipeline that is the basis of a strong succession plan.

Very few companies accomplish all of those objectives well.

One of the biggest shortcomings of the traditional people process is that it’s backward-looking, focused on evaluating the jobs people are doing today. Far more important is whether the individuals can handle the jobs of tomorrow.

We have seen many people who led business units well but who did not have the capability to take the business to the next level. Companies often wait until the financial results are in before making corrections in key leadership positions...

It’s not hard to identify the person who is wrong for a job because of his behaviour, but it’s better to make sure such a person doesn’t rise to a critical job in the first place.

Labels: Citings

The happiness transformation
Posted on October 2, 2010 | Author: Andrew Lawrence |


PART of true happiness involves being of service.Being of service to others.Being of service means helping others.Without being of service and helping others,you will never feel totally happy,you will always feel incomplete and somewhat unfulfilled,as if something is missing from your life.

There are many ways you can help others.Being of service to others can take many forms and can be active or passive.Active service can be volunteering or donating your time through organisations that help others.You could volunteer at your local Red Cross,hospital or one of the many charitable organisations in your area.Or you could donate money.Or you could make an effort to help people directly,by being available to people who need help and could benefit from your talents and experience and expertise.Lawyers do this when they supply their legal services pro bono,for free.Each of us has a unique and special talent for something.Each of us has something that we love to do,that we do exceptionally well.That something,that natural talent and ability,is a good thing to use in helping others.

And,in doing that,in helping others,you will be fulfilled,you will fulfil your higher purpose in life.It's not always about having professional experience and expertise or special education in a given field (such as law,medicine,finance,etc.),it's about helping others.Being of service to others,helping others,can make you happy.And it can change the world.

Labels: Citings