Seeing Clearly

"Ye shall know the truth, and the truth shall make you free."
(Jesus of Nazareth in John 8:32)

Step back, step away, re-create, re-treat, re-new, re-turn.
All the best to you, and see you again in the new year!

Perpendicular Perspectives & Alternate Realities

"When Alan Meckler, the CEO of IT and online imagery hub Jupitermedia was accepted to Columbia University in 1965, the dean's office told him he had some of the lowest college boards of any student ever admitted. 'I got a 405 or 410 in English,' he recalls. 'In those days you got a 400 just for putting your name down! Yet I was on the dean's list every year I was there, and I won a prize for having the best essay in American history my senior year.'

"It wasn't until years later, at age 58, that Meckler learned he was dyslexic. He struggles with walking and driving directions, and interpreting charts and graphs. He prefers to listen to someone explain a problem to him, rather than sit down and read 20 pages describing it…

"Many of the coping skills dyslexics learn in their formative years become best practices for the successful entrepreneur. A child who chronically fails standardized tests must become comfortable with failure. Being a slow reader forces you to extract only vital information, so that you're constantly getting right to the point. Dyslexics are also forced to trust and rely on others to get things done—an essential skill for anyone working to build a business…

"Paul Orfalea, who founded the copy-and-graphics chain Kinko's 37 years ago, has both dyslexia and attention-deficit hyperactivity disorder. He proudly attributes much of his business success to an inability to do things most others can. 'I would always hire people who didn't have my skills,' he says. 'My secret was to get out of their way and let them do their job.' …

"Cisco Systems CEO John Chambers says dyslexia helps him step back and see the big picture… 'Dyslexia forces you to look at things in totality and not just as a single chess move. I play out the whole scenario in my mind and then work through it. … All of my life, I've built organizations with a broad perspective in mind.'

"Of course, being a misfit often lends itself to great entrepreneurship. Health-care entrepreneur and real estate magnate James LeVoy Sorenson has more than 40 medical patents to his name… He also dropped out of community college at 18, and was told by grade-school teachers he was either 'slow-witted or developmentally disabled.'

"At 86, Sorenson says overcoming dyslexia trained him to be persistent and solve problems in new ways: 'I like to add one word to the end of many sentences: yet. Instead of saying, I can't do it, I say, I can't do it—yet'."


(“Why Dyslexics Make Great Entrepreneurs.” Gabrielle Coppola. Business Week online. December 12, 2007.)

OBJECTIVE, SCIENTIFIC REALITY once again yields to subjective personal perspective. How we see and feel are the hinges upon which the tangible world swings to and fro.

Opportunity for Whom?

“The corner offices of corporate America are increasingly being filled from every corner of the world.

“Citigroup, the world's largest bank, named Vikram S. Pandit, a native of Nagpur, India, as its chief executive on Tuesday. Mr. Pandit joins 14 other foreign-born chiefs who are running Fortune 100 companies.

“The head of the Altria Group was born in Egypt, for example. PepsiCo's is from India, the Liberty Mutual Group's is a native of Ireland and Alcoa's was born in Morocco.

“Their numbers have jumped from roughly a decade ago; there were nine foreign-born chief executives on Fortune's list of the 100 largest companies in 1996. But the size of the new group does not reflect a noteworthy change -- they come from more far-flung countries now than then, when they were more likely to hail from Canada or Europe…

“Many of these foreign-born chief executives were recruited by companies like General Electric and Procter & Gamble in the 1970s and 1980s for their overseas operations. Now they hold top positions at companies that also include Chiquita Brands International, the Eastman Kodak Company and the Kellogg Company. Chief executives at Dow Chemical, Altria and Alcoa started in foreign units of their companies.

“‘Even though they're based in the United States, companies are less and less thinking of themselves as American companies,’ said Michael Useem, a management professor at the Wharton School…

“M. Farooq Kathwari, chief executive at Ethan Allen Interiors, said he had been shaped by his experience moving on his own at age 21 from the Kashmir region of India to the United States.

“‘A foreign-born person is by nature an entrepreneur,’ Mr. Kathwari said. ‘When you leave your home, leave your family and come to a different country, you have had the instincts of an entrepreneur.’ …

“Howard M. Anderson, a professor of entrepreneurship at the Sloan School at M.I.T., said change in the executive suite has come more slowly than companies' sales growth abroad. He said that some corporate boards may still not be comfortable with foreign-born chief executives because they feel they have more in common with another American.

“‘It's prejudice, but remember, when you're picking a C.E.O., it's not an equal opportunity job,’ Mr. Anderson said.


(“Seeking Leaders, U.S. Companies Think Globally.” Louise Story. The New York Times: December 12, 2007. pg. 1)

HOW AM I ADDING VALUE? Is it distinctive, or common? Am I expanding my horizons so that I can expand the horizons of others? Am I resting on my favorite assumptions? What would be the implications of change?

Discernment & Focus

“Valero Energy Corp. is considering an overhaul of its portfolio of refineries to prepare for a time when the once-flush refinery industry faces greater pressure on its bottom line.

“Bill Klesse, the 61-year-old chief executive of the largest U.S. refiner by output, has identified a group of 10 core refineries on which it will focus its investment and attention…

“‘Some of the plants that we have in this portfolio are probably worth more to other people,’ Mr. Klesse said.

“The intent: Valero hopes to be a more-efficient refiner in a time of high and volatile oil prices and rising global competition…

“Valero hopes to focus on refineries mainly on the U.S. coasts, giving them greater access to oil from more sources, and that are set up to handle oil that is tougher to refine and therefore cheaper to buy. Focusing investment on those refineries also could help reduce downtime and improve reliability…

“Valero's shift could leave it with a better portfolio of more valuable assets. ‘Our strength needs to be that we have very good, very safe, and reliable assets in this marketplace,’ Mr. Klesse said.”


(“Valero May Sell Some Refineries as It Hones Focus; Bid for Efficiency Comes as Industry Faces New Pressures.” Jessica Resnick-Ault. Wall Street Journal: December 11, 2007. pg. A.20)

UNCERTAINTY CALLS FOR both broad discernment and sharp focus. Are we in a cyclical turn, or a new trend? or both perhaps? Breadth in scale, and depth in scope may allow for penetrating insight here... Or, it may turn into escalating commitment to a failing course of action.

Execution -- The Beginning of/or The End?

“Google is a company convinced of its own brilliance and its clear vision of the future. Being a hotbed of Mensa members will do that to you. As will stumbling early onto an obscenely lucrative business model. The same thing happened to a company called Microsoft.

“But that doesn't mean that the fundamental rules of the universe don't apply -- immutable things like Newton's gravity or Murphy's Law. I bring this up because Google has just announced two extraordinarily ambitious strategic gambits in the span of a week…

“First the company announced OpenSocial, a hasty attempt to smother social-network phenom Facebook by pulling together an alliance of more than 50 of that upstart's peers and competitors…

“Then Google took the wraps off something even bigger: a grand plan to redefine the cellphone. Through the so-called Open Handset Alliance, Google will provide software and programming protocols for others to employ in building a new class of smartphone handsets and cellular information services. Once again, the unspoken goal is to create handheld billboards for blasting even more ads at us.

“Those initiatives are both what Silicon Valley calls ‘platforms’ -- standards for independent developers to write programs that extend the utility of a device or service. Ever since Microsoft and Intel defined the architecture of the PC, establishing a platform has been the holy grail of ambitious high-tech companies.

“But in reality there aren't that many genuine computing platforms around, because it is extremely difficult to design and support them in a way that pleases all constituencies. Apple has managed to establish its Macintosh platform by keeping the options for independent developers rather narrow… and is being extremely careful as it turns the iPhone into a genuine platform. Microsoft, which has huge built-in advantages because it has by far the most experience with platforms, has been working for more than a decade with only mixed success on its Windows Mobile platform for handheld computers and smartphones…

“As capable as Google is, the company has never really masterminded a platform before…

“It all sounds great... But as even Microsoft could tell you, neither platform gambit is a sure bet. Google doesn't seem to take into account the most fundamental rule of high tech: Don't mistake a clear view for a short distance.”

(“Is Google Spinning out of Control?” Brent Schlender. Fortune: December 10, 2007. Vol. 156, Iss. 12; pg. 58)


IF IT CAN BE CONCEIVED, it can be done? If I can do something marvellously well, I can do anything else? If I went where no one else had gone before, I rewrote the rules? Executing or executed?

The Art of Insight -- The Science of Oversight

“On Tuesday, Boeing Co. will give Wall Street a progress report on its 787 Dreamliner, as it scrambles to overcome a six-month delay in producing the new jet. A look inside the project reveals that the mess stems from one of its main selling points to investors -- global outsourcing.

“When the Chicago aerospace giant set out four years ago to build the fuel-sipping jet, it figured the chief risk lay in perfecting a process to build much of the plane from carbon-fiber plastic instead of aluminum. Boeing focused so hard on getting the science right that it didn't grasp the significance of another big change: The 787 is the first jet in Boeing's 91-year history designed largely by other companies.

“To lower the $10 billion or so it would cost to develop the plane solo, Boeing authorized a team of parts suppliers to design and build major sections of the craft, which it planned to snap together at its Seattle-area factory. But outsourcing so much responsibility has turned out to be far more difficult than anticipated.

“The supplier problems ranged from language barriers to snafus that erupted when some contractors themselves outsourced chunks of work… The first Dreamliner to show up at Boeing's factory was missing tens of thousands of parts…

"Boeing overestimated the ability of suppliers to handle tasks that its own designers and engineers know how to do almost intuitively after decades of building jets. Program managers thought they had adequate oversight of suppliers but learned later that the company was in the dark when it came to many under-the-radar details.

“‘In addition to oversight, you need insight into what's actually going on in those factories,’ says Scott Carson, the president of Boeing's Commercial Airplanes unit. ‘Had we had adequate insight, we could have helped our suppliers understand the challenges.’ …

“Boeing… has responded to bottlenecks by throwing both money and people at them, parachuting in dozens or hundreds of its own employees to attack problems at plants in Italy, Japan and South Carolina…

“Many of these handpicked suppliers, instead of using their own engineers to do the design work, farmed out this key task to even-smaller companies. Some of those ended up overloading themselves with work from multiple 787 suppliers, Boeing says.

“The company says it never intended for its suppliers to outsource key tasks such as engineering, but that the situation seemed manageable at the time. ‘We tended to say, They know how to run their businesses,’ says a Boeing executive familiar with the company's thinking…

“Despite the start-up problems, Boeing and its suppliers still say they believe this new method of developing planes is the model for future projects.”


(“Jet Blues: Boeing Scrambles to Repair Problems With New Plane; Layers of Outsourcing Slow 787 Production; 'Hostage to Suppliers'.” J. Lynn Lunsford. Wall Street Journal: December 7, 2007. pg. A.1)

FOCUSING TOO HARD on the science of management leads to neglecting the art of managing. A model for the future... ?

Counterintuitive -- Contrary to Intuition

“Over the next few years, the pharmaceutical business will hit a wall.

“Some of the top-selling drugs in industry history will become history as patent protections expire, allowing generics to rush in at much-lower prices. Generic competition is expected to wipe $67 billion from top companies' annual U.S. sales between 2007 and 2012 as more than three dozen drugs lose patent protection. That is roughly half of the companies' combined 2007 U.S. sales.

“At the same time, the industry's science engine has stalled. The century-old approach of finding chemicals to treat diseases is producing fewer and fewer drugs. Especially lacking are new blockbusters to replace old ones like Lipitor, Plavix and Zyprexa.

“The coming sales decline may signal the end of a once-revered way of doing business. ‘I think the industry is doomed if we don't change,’ says Sidney Taurel, chairman of Eli Lilly & Co. …

“The rise of generics wouldn't matter so much if research labs were creating a stream of new hits. But that isn't happening. During the five years from 2002 through 2006, the industry brought to market 43% fewer new chemical-based drugs than in the last five years of the 1990s, despite more than doubling research-and-development spending…

“It has never been easy to take a drug from the lab, through animal testing and into human trials. The industry estimates only one out of every 5,000 to 10,000 candidates makes it to human trials…

“But those odds seem to have worsened in recent years, prompting debate about whether the cause is government regulation, corporate structure or an excessive scientific reliance on chemicals rather than biology…

“Some say the industry's ballooning research budgets may be working against productivity. Most companies use a centralized system to allocate research money, and the growing budgets have left the decision making to too few people who are too far removed from the research.”


(“Big Pharma Faces Grim Prognosis; Industry Fails to Find New Drugs to Replace Wonders Like Lipitor.” Barbara Martinez and Jacob Goldstein. Wall Street Journal: December 6, 2007. pg. A.1)

AS UNCERTAINTY INCREASES, centralization and automation ascend; touch, feel, sense and insight decline. As discovery has been relegated to mass-produced, technology-driven search, innovation has withered.

AS IT GOES in Big Pharma, so it goes in learning everywhere. Institutionalization is a heavy-handed benefactor.

Are We Learning?

“Three scenes from the new battle for global economic supremacy:

“King Abdullah of Saudi Arabia, the country that sits on 25% of the planet's oil, knows that oil is not his country's future. That's why he's spending $12.5 billion to found a graduate research university, which he'll endow with $10 billion -- as big an endowment on day one as MIT has built in 142 years. The point of this project, on a grand scale even by Saudi standards: to attract the best researchers in science and technology.

“The European Union has proposed new rules to attract the world's most highly skilled workers. If they can show that they're well educated and hold an offer of a lucrative job in Europe, they can get a two-year renewable permit to live there. The problem Europe is trying to solve: 85% of emigrating unskilled workers from developing countries go to Europe, but only 5% of skilled workers do so.

“HCL Technologies, an Indian infotech services firm, has noticed a major change in its best young employees. Until two or three years ago, few of them would work for it unless they were promised an overseas assignment. Now it's just the opposite: They see India as the most compelling source of excitement and opportunity, and they don't want to be sent away…

“Companies have been battling for years to attract and keep the best people. Now countries are engaging in the same fight…

“Since this is a fundamentally new fight, no one is sure what will win it. But we can already identify some fairly deep and difficult questions the fight raises. How countries answer them will help determine national wealth and power.

“How long will any country tolerate Info Age protectionism? … No country can have world-class workers if it continually protects them from world-class competition…

“Why isn't the U.S. more serious about the key competitive advantage of the Info Age, education? How to make human capital more valuable is no mystery, yet the world's richest country still has nowhere near the world's best education system…

“This international fight for talent will get much more serious. With luck, it will lead to something new: a free market in brainpower. That may not come to pass -- but wise nations will prepare for it.”


(“The Battle for Brainpower.” Geoff Colvin. Fortune: December 10, 2007. Vol. 156, Iss. 12; pg. 34)

INVEST in your self. Invest in others. Invest in the future. Somebody else is.

Competitive Advantage

“One myth dogging the immigration debate is that employers are fibbing (or grossly exaggerating) when they claim that hiring foreign professionals is unavoidable because U.S.-born Ph.D.s are hard to come by. But a new report on doctorates from U.S. universities shows they're telling the truth, and then some.

“Foreign-born students holding temporary visas received 33% of all research doctorates awarded by U.S. universities in 2006, according to an annual survey by the National Opinion Research Center at the University of Chicago. That number has climbed from 25% in 2001. But more to the point of business competitiveness, foreign students comprised 44% of science and engineering doctorates last year.

“‘China was the country of origin for the largest number of non-U.S. doctorates in 2006,’ says the report, followed by India, Korea, Taiwan and Canada. ‘The percentage of doctorates earned by U.S. citizens ranged from lows of 32% in engineering and 47% in physical sciences, to highs of 87% in education and 78% in humanities.’ Given this reality, is it any wonder that 40% of Ph.D.s working in U.S. science and engineering occupations are foreign-born? …

“Earlier this year Microsoft, which is the third-largest sponsor of H-1B visas, announced plans to open a new software development center near Vancouver. The decision to locate the facility in Canada was based in part on the fact that it doesn't have access to enough foreign workers state-side.

“‘We currently do 85% of our development work in the U.S., and we'd like to continue doing that,’ says Jack Krumholtz, the company's director of government affairs. ‘But if we can't hire the developers we need, … we're going to have to look to other options to get the work done’."

(“American Brain Drain.” Wall Street Journal: November 30, 2007. pg. A.16)


IN OUR WORLD, in our fields, in our organizations, in our lives, what is our nation, our industry, our company, and our selves -- what are we doing to enhance the value that we offer the world? If we are not adding value, someone else is.

PROGRESS is an uphill climb. So either we are moving forward, or we are slipping back.

Great Manager, Poor Leader?

“Morgan Stanley ousted Zoe Cruz, its co-president and heir apparent, yesterday after the firm suffered more than $3.7 billion in mortgage-related paper losses.

“The departure of Ms. Cruz, one of the highest-ranking women on Wall Street, was a surprise. While Ms. Cruz, 52 years old, had oversight of the part of the business that had suffered losses, it appeared she had survived the bloodletting brought upon by the credit crisis.

“Apparently, Ms. Cruz suffered not only from the mortgage losses but from criticism of her leadership style, which many colleagues said could be difficult, and from lingering wounds from a bruising 2005 battle for control of the firm. During that struggle, she played a polarizing role, remaining loyal to Philip Purcell, an unpopular chief executive who later was ousted. John Mack, who succeeded Mr. Purcell, stood by Ms. Cruz, but the trading losses gave him a reason to question her leadership...

“Her ascent after Mr. Mack was installed as CEO was remarkable, given the polarizing role she played in 2005…

“She was so unpopular with a number of high-profile Morgan exiles that they refused to return after Mr. Mack became CEO if she remained co-president. They included Vikram Pandit, now a candidate to lead Citigroup Inc., and star banker Joseph Perella.

“Mr. Mack, a longtime supporter of Ms. Cruz in his early days at Morgan Stanley, said he didn't want to put the firm through more trauma. While he praised her for recent positive results, he was unsure she was the right person to continue leading the firm, people familiar with the matter said, partly because some people found her hard to get along with.”


(“Subprime Sword Claims Morgan Stanley's Cruz; Heir Apparent Joins List of Wall Street Casualties; Was Polarizing Style a Factor in Her Ouster?” Randall Smith and Ann Davis. Wall Street Journal: November 30, 2007. pg. C.1)

THE WORK OF A MANAGER is the task. The work of a leader is their people. Managers work on the task through people, while leaders work on their people in the context of the task.

Opposition in All Things

“Little over a year ago, ethanol was winning the hearts and wallets of both Main Street and Wall Street, with promises of greater U.S. energy independence, fewer greenhouse gases and help for the farm economy. Today, the corn-based biofuel is under siege.

“In the span of one growing season, ethanol has gone from panacea to pariah in the eyes of some. The critics, which include industries hurt when the price of corn rises, blame ethanol for pushing up food prices, question its environmental bona fides and dispute how much it really helps reduce the need for oil.

“A recent study by the Organization for Economic Cooperation and Development concluded that biofuels 'offer a cure [for oil dependence] that is worse than the disease.' A National Academy of Sciences study said corn-based ethanol could strain water supplies. The American Lung Association expressed concern about a form of air pollution from burning ethanol in gasoline. Political cartoonists have taken to skewering the fuel for raising the price of food to the world's poor.

“Last month, an outside expert advising the United Nations on the ‘right to food’ labeled the use of food crops to make biofuels ‘a crime against humanity,’ although the U.N. Food and Agriculture Organization later disowned the remark as ‘regrettable’ …

“Now the fuel's lobby is pleading with Congress to drastically boost the amount of ethanol that oil refiners must blend into gasoline. But formidable opponents such as the livestock, packaged-food and oil industries also have lawmakers' ears. What once looked like a slam-dunk could now languish in pending energy legislation that might not pass for weeks, if ever.

“Ethanol's problems have much to do with its past success. As profits and production soared in 2005 and 2006, so did the price of corn, gradually angering livestock farmers who need it for feed. They allied with food companies also stung by higher grain prices, and with oil companies that have long loathed subsidies for ethanol production.”


(“Ethanol Craze Cools As Doubts Multiply; Claims for Environment, Energy Use Draw Fire; Fighting on the Farm.” Lauren Etter. Wall Street Journal: November 28, 2007. pg. A.1)

TREND OR BLIP? The push and pull of competitive forces in a free marketplace cause considerable dislocations as resources naturally would move toward their highest and best use. Yet what of resources for which multiple markets exist? What of resources for which externalities counter natural market forces?

FOLLOW THE MONEY, yes; and follow too the politics of power.

DISCERNMENT of new trends versus blips along the way may rest upon our ability and willingness to use paradoxical logic along with foundational truths.

Longitudinal Latitude?

“On a recent fall day the two new bosses at Chrysler traveled to the company's test track in Chelsea, Mich., an hour's drive west of Detroit. The two -- Chief Executive Robert Nardelli and Vice Chairman James Press -- were to spend the entire day poring over every vehicle in Chrysler's lineup. It wasn't pretty. There was the cheap-looking plastic on the dash of the Dodge Caliber. A poorly placed cruise control switch on the Chrysler 300. Windows that rolled down herky-jerky on the Jeep Grand Cherokee. But what was remarkable about this visit was that by the end of the day Nardelli had ordered more than 200 engineering changes to fix the array of problems and make improvements, at a cost of at least $100 million. The armrests and door grips would feel softer. Electronic windows would get one-touch switches. And yes, that cruise control button would be relocated. No lengthy meetings. No black-bound briefing books. Just get it done…

“As a private company Chrysler has the latitude to make long-term decisions that would have been difficult, if not impossible, to justify in a world where shareholders punish companies for missing earnings projections by a penny per share …

“At Chrysler, Nardelli started immediately poking his nose everywhere. He drives a different car to and from work each day, and meets one of Chrysler's chief engineers in the company garage each morning ‘to go over a few items.’ He asks piercing questions that put employees on the defensive, often challenging the status quo. Why, for example, he wants to know, aren't we improving the air-conditioning systems in all our vehicles, rather than chasing complaints on one model? His probing style grates on some. ‘You start to wonder, Is anything okay with this guy?' said one senior manager. ‘This is a guy who could find a better way to create the earth.’

“‘With me, it's either a quick yes, or a quick no -- never a slow maybe,’ Nardelli says.”


(“Chrysler's Last Stand.” Joann Muller. Forbes: November 26, 2007. Vol. 180, Iss. 11; p. 168)

DO YOU WONDER how the market will answer -- with a quick yes, a quick no, or a slow maybe... ? At Home Depot Nardelli got a pronounced "No thank you" from his supposed "troops."

SO ON THE ONE HAND the market is demanding real action now, while on the other the culture of Chrysler is in the hands of long-term managers and workers.

Not Customers, Raw Materials

“Give Rupert Murdoch his due. When the News Corp. chairman approved a $580 million deal to acquire MySpace in the summer of 2005, he was way ahead of the pack… But now the pressure is building for MySpace to prove it can be the cash cow that Murdoch and others are betting on. MySpace, still by far the largest social network, has lost some of its mojo lately as competing networks spring up like dandelions after a rain shower, crimping its growth.

“Most important, social networks have yet to figure out a business model. Advertisers, for instance, aren't sure that social networks can become a great platform for their pitches. ‘Social-network advertising is still a work in progress,’ says Debra Aho Williamson, a senior analyst with research firm eMarketer.

“Murdoch's challenge is to transform the Web phenom into a digital media powerhouse capable of richly monetizing eyeballs without driving off the very users who made it popular. Even MySpace executives concede they're winging it. 'I don't think our monetization strategy will be a prize-winning Harvard Business School study,' says Jeff Berman, general manager of a new MySpace TV unit…

“Social networks have put most of their faith in advertising. But people don't go to MySpace to find products or information. Users are so engrossed with talking to friends and posting party pictures that they pay little or no attention to the ads. So ad rates on social networks are much lower than prices for search keywords or traditional ads… ‘Standard display ads -- and I don't care how much targeting you do -- it's not working well,’ says Ian Schafer, president of online ad firm Deep Focus.

“Media giants such as Warner Bros. and NBC have set up sites on MySpace to promote their content. But ad providers say some big consumer brands are leery of running ads beside material created by users. ‘Almost every single client we have says, “Do not run my ad on a social network”,’ says Tim Vanderhook, CEO of ad network Specific Media.

“MySpace is working to change that perception. It is rolling out a new system with computer algorithms that glean data about its users. That should produce ads that are more closely targeted to users' interests and make advertisers more eager to spend money on the site…

“Loading up on ads can backfire, though. MySpace already turns off some members by putting as many as nine ads on a page. ‘I really hate it,’ says Vinh Pham, a 24-year-old Web developer who now spends more time on Facebook than MySpace because of the ad deluge. ‘You have to see, like, 100 ads just to do anything on MySpace’."


(“In Search Of MyProfits; The pressure is on for Murdoch to turn MySpace into a cash machine.” By Spencer E. Ante, Ronald Grover, Heather Green, with Catherine Holahan in New York. Business Week: November 05, 2007. , Iss. 4057; pg. 23)

FOCUS: Customers pay you money; raw materials don't. Raw materials must be care-fully tended indeed. As you do so, customers pay for you to convert raw materials into something of value for them. What customers are willing to pay for is Priority One, not what the raw materials might become.

THE TEMPTATION here is to confound and reverse the two. Focus.

Competent Distinctiveness

“Chipotle Mexican Grill has arguably become the country's most successful fast-food chain in recent years by rejecting almost every major technique on which the industry was built. Not only does it not show the product, it doesn't advertise on television. It doesn't franchise. It has some of the highest ingredient costs in the industry. And its executives aren't especially concerned that customers wait as long as 10 minutes in lines that routinely stretch out the door.

“Nonetheless, Chipotle's shares have more than doubled in the past year, making it the best-performing publicly held U.S. restaurant chain. And while traditional fast-food chains are posting same-store-sales growth in the low single digits, Chipotle has increased its same-store sales at a double-digit rate each year for almost a decade…

“Of course, consumers are fickle when it comes to restaurants, making it difficult for chains to maintain success over time. Chipotle's narrow menu could make it hard for the chain to hold customers' interest…

“Chipotle knows it has a problem with long lines at peak times. The chain has videotaped as many as 50 people walking away from a single location in one hour because they weren't willing to wait.

“Chipotle's president and chief operating officer, Monty Moran, says the company has been trying to speed up the lines by installing automatic change machines at cash registers and using handheld credit-card devices to take orders from customers in line. It also is placing greater emphasis on its restaurant managers, paying them annual salaries and bonuses that total in the six figures.

“But executives say that while the lines are long, they move quickly. And, ‘we don't ever want it to be speed over great service,’ Mr. Moran says.”


(“Burrito Chain Assembles a Winning Combo; Ignoring Fast-Food Formula, Chipotle Promotes Service, Costly Natural Ingredients.” Janet Adamy. Wall Street Journal: November 23, 2007. pg. B.1)

WHY AND FOR WHAT are customers are paying upwards of $6.00 for a burrito? Is it fast service? Is it quality service? Is it socially responsible ingredients? Is it flavor and freshness?

SO AS COMPETITIVE pressures appear to push management toward non-core competencies, and as operational pressures push costs upward, what needs to be the focus?

ARE YOU COMPETENTLY DISTINCTIVE and distinctively competent?

Real Value Creation

“As the Big Board's chief for nearly four years, John Thain engineered two big deals that helped significantly increase the value of New York Stock Exchange members' stakes.

“Mr. Thain, Merrill Lynch & Co.'s new chief executive… may need to resort to those deal-making skills -- and make some tough decisions.

“Such moves, Wall Street executives say, could include separating the firm's pieces…

“The reason for some deal making is that Wall Street is valuing Merrill at $49 billion. That is less than what some analysts and investors believe Merrill's pieces are worth. One analyst estimates the value of Merrill's brokerage business, with its 16,000 brokers, at $36 billion…

“BlackRock Inc., the asset-management firm in which Merrill has a nearly 50% stake, has a stock-market value of nearly $23 billion, making Merrill's stake in that alone valued at $11.5 billion. Analysts say Merrill's stake in Bloomberg LP, which isn't publicly traded, is valued at an additional $4 billion.

“That adds up to nearly $52 billion. And that doesn't include the institutional-securities business, which generated the mortgage losses but which has in the past few years reported higher profit than the brokerage arm and will likely make good returns in the future.”


(“At Merrill, Thain Faces Tough Calls.” Randall Smith and Aaron Lucchetti. Wall Street Journal: November 16, 2007. pg. C.1)

SYNERGIES come in two types: the most exciting are seeming revenue synergies -- where grand schemes project novel combinations yet untried. The more mundane are cost synergies -- where routine operations are melded into economies of scale. The former destroy value; the latter may create value. Focus! and the deconstruction likely will be greater than the sum of the parts.

Know Thyself

“Though the luxury sector is expected to put in another strong performance this season, the lower end of that market -- selling so-called affordable luxury to aspirational buyers -- is starting to feel the pinch of the weak economy... Only the most elite brands and the retailers catering to the richest customers are likely to escape unscathed…

“The outlook is very different from the past several years, when sales of all sorts of luxury goods exploded, boosted by a rising stock market and strong fashion trends that spurred purchases. The boom led marketers to broaden their target audience from the super-wealthy to include the growing ranks of upper-middle-class consumers…

“For some brands, the strategy involved going slightly more down-market, tempting mid-income consumers with relatively affordable entry-level luxury products like Chanel sunglasses, Coach wrist purses or silver jewelry at Tiffany & Co. -- while still selling ‘extreme’ luxury products such as designer watches and handbags costing thousands of dollars. The new less-affluent customers are now proving vulnerable to a variety of economic factors that don't appear to faze the very rich.

“As a result, some brands may soon retreat from the affordable-luxury strategy and begin emphasizing their more elite or customized products as a way to reach the wealthier consumers…

“Some top-tier brands already appear to be trying harder than usual to distance themselves from the masses. Robb Report, a magazine for the super rich, is joining with Rolls-Royce, Audemars Piguet, Louis XIII de Remy Martin and Wynn Las Vegas, among others, to market a series of ultra-custom products and experiences -- among them, a $1.5 million Wynn Las Vegas vacation package that includes a round of golf with course designer Tom Fazio, $150,000 in jewelry and a Ferrari 599 GTB Fiorano.

“‘The top end of the market has a ton of vitality,’ says Frann Vettor-Gray, senior vice president, multimedia at Robb Report…

“Bain & Company divides the global luxury market into three layers, each with its own dynamics. At the top tier, brands such as Hermes, Loro Piana, Van Cleef & Arpels and Harry Winston, targeted to the super-wealthy, account for nearly a quarter of luxury spending. The next tier, representing 36% of spending, is the aspirational market, which blossomed during the late '80s and early '90s as brands like Gucci and Louis Vuitton expanded around the globe and introduced smaller, more affordable leather goods that became status symbols. Bain defines the remaining 40% as ‘accessible’ luxury -- brands such as Coach, Burberry, Hugo Boss and Tiffany, which specialize in luxury accessories for the affluent middle-class.”

(“'Affordable Luxury' Stores Feel Economy's Pinch.” Vanessa O'Connell. Wall Street Journal: November 9, 2007. pg. B.1)


AREN'T DEFINITIONS SLIPPERY and elusive creatures? Beware of how you define yourself. Beware of trying to be "all" things to "all" people. Focus.

Some Good News!

“Calling someone an optimist these days may be the polite way to say he's a sap. Optimism often occupies a second-class compartment in the train of human values, and is derided as a naive, soft-soap disposition that distorts the realities of life.

“Yet, in the palette of human temperament, a rose-colored view of the future is the dominant hue, regardless of culture or nationality…

“Two research teams exploring the anatomy of expectations offer a new perspective on the power of a positive outlook…

“Far from deforming our view of the future, this penchant for life's silver lining shapes our decisions about family, health, work and finances in surprisingly prudent ways… 'Economists have focused on optimism as a miscalibration, as a distorted view of the future,' said Duke finance scholar David T. Robinson. 'A little bit of optimism is associated with a lot of positive economic choices' ...

“Optimists, the Duke finance scholars discovered, worked longer hours every week, expected to retire later in life, were less likely to smoke and, when they divorced, were more likely to remarry. They also saved more, had more of their wealth in liquid assets, invested more in individual stocks and paid credit-card bills more promptly.

“Yet those who saw the future too brightly -- people who in the survey overestimated their own likely lifespan by 20 years or more -- behaved in just the opposite way, the researchers discovered.

“Rather than save, they squandered. They postponed bill-paying. Instead of taking the long view, they barely looked past tomorrow. Statistically, they were more likely to be day traders…

“The influence of optimism on human behavior is so pervasive that it must have survival value, researchers speculate, and may give us the ability to act in the face of uncertain odds…

“All in all, Dr. Seligman said, optimists tend to do better in life than their talents alone might suggest.

“Except lawyers.

“Surveying law students at the University of Virginia, he found that pessimists got better grades, were more likely to make law review and, upon graduation, received better job offers. There was no scientific reason. 'In law,' he said, 'pessimism is considered prudence'."


(“Except in One Career, Our Brains Seem Built for Optimism.” Robert Lee Hotz. Wall Street Journal: November 9, 2007. pg. B.1)

ISN'T IT NICE to see the bright side of things once in awhile? In the face of possibly daunting uncertainty, why not juice our survival odds in any little way that we can? Let's all go tell a lawyer, or an economist, to have a great day!

Efficiency Above All

“One morning in August, Robin Dayer arrived at Abbott Laboratories' headquarters to interview for a financial-analyst position. By nightfall, she was hired.

“Ms. Dayer, 45 years old, was one of four candidates who interviewed for the job. They were part of a program, begun in July, to accelerate the pharmaceutical company's recruiting process, which had required two or three interviews over several weeks.

“Welcome to the world of speed interviewing, a growing phenomenon in corporate America. The strategy, which helps employers lock in top candidates before they explore other options, reflects companies' growing concerns about meeting staffing needs. They face a looming shortage of skilled workers as baby boomers retire and employment expands in areas like health care, finance and technology.

“Much like speed dating, the idea is to meet with multiple job hunters for a position in a matter of days or even a single day. Some companies extend job offers to the top candidate within hours of meeting him or her, while others conduct follow-up interviews with their top picks within a few days and then select a winner.

“Speed interviews can involve as many as 200 candidates for entry- and midlevel positions. For the most senior jobs, only a handful of professionals might be invited. The job hunters have usually been prescreened, and some have had successful phone interviews.

“Greg Schwartz recently interviewed about 50 prescreened candidates for sales jobs at Zillow.com… He met with roughly a dozen a day for a half-hour each at hotels in New York, Chicago and Los Angeles, with the top candidates being asked back the following day for hour-long meetings. Then a select few were flown to Zillow's Seattle office for a final interview…

“Speed interviewing can also help employers eliminate candidates who are a poor cultural fit early in the recruiting process. Zappos.com, an online retailer… hosts private job fairs for accounting, call-center, merchandising and product-information positions. The daylong events usually draw as many as 200 job seekers who meet individually with four recruiters for about five minutes each.”


(“Speed Interviewing Grows as Skills Shortage Looms; Strategy May Help Lock In Top Picks; Some Drawbacks.” Sarah E. Needleman. Wall Street Journal: November 6, 2007. pg. B.15)

I AM IN SUCH A HURRY I can't even comment on this. I'm turning over my thinking to Jack Welch: "We spend all our time on people. The day we screw up the people thing, this company is over."

ABOVE ALL, surround yourself with great people. Invest in people; they are your most vital asset.

ISN'T IT FUNNY how we ignore tired old cliches at our peril?

One Kind of Miracle

PetroChina Co., the main oil and gas producer in China, became the world's biggest company in the course of a few hours of trading yesterday. Or did it?

PetroChina's stunning debut on the Shanghai Stock Exchange again demonstrated the force of China's bull market, which has more than doubled its benchmark stock index so far this year…

“By some measures, PetroChina could now be valued at more than $1 trillion, which would make it by far the world's largest company by market capitalization.

“Yet the soaring valuations put on PetroChina and other Chinese-listed companies seem to say more about the problems and idiosyncrasies of China's market than the performance of the companies themselves.

“In fact, it is difficult to determine the real value of Chinese government-controlled companies like PetroChina… They have complicated corporate structures that keep most of their shares locked up in government hands, with the few that are publicly traded spread across different markets. The scarcity can drive up prices. And the problem is compounded by China's capital controls, which can cause domestic prices to differ greatly from those on other markets…

“Whatever its prospects, PetroChina is also benefiting from the overall enthusiasm of Chinese investors, whose unchecked eagerness to put money into stocks has drawn increasing official concern. The seemingly unstoppable rise of China's stock market has drawn worrisome comparisons to the bull markets in Japan and Taiwan in the 1980s, and to the U.S. technology-stock bubble.

“‘It's very difficult, almost impossible, to predict bubbles. But what we can say is that, based on historical examples, this kind of miracle is never sustainable,’ says Zuo Xiaolei, chief economist for China Galaxy Securities in Beijing. ‘Whether foreign investors believe in this or not is up to them’.”


(“Moving the Market: How Big Is PetroChina? Market Cap May Exceed $1 Trillion -- or Not.” Andrew Batson and Shai Oster. Wall Street Journal: November 6, 2007. pg. C.3)

THE REAL VALUE of any thing is what the next buyer is willing to pay for it, not what the former buyer paid. It is up to us to invest meaning into whatever we wish. Depending on where we stand, we will perceive our real dreams and fears.

Ingrained in the Popular Mind

“Ben Bernanke is a married man. But if he weren't, there's at least one woman who wouldn't want anything to do with the Federal Reserve Chairman's policy charms: Gisele Bundchen. The Brazilian supermodel is reportedly now insisting that she be paid in a currency other than the U.S. dollar.

“‘Contracts starting now are more attractive in euros because we don't know what will happen to the dollar,’ the model's twin sister and manager in Brazil, Patricia Bundchen, told Bloomberg recently. The ubiquitous runway diva even demanded payment in euros when she signed a contract in August to promote Pantene hair products for Procter & Gamble Co., according to a Brazil magazine. Think about that one: She's willing to sell a U.S. product, but she won't accept payment in U.S. currency.

“It's one thing to be rejected by Warren Buffett, who's been predicting the dollar's demotion for years. But it's an ominous sign when dollar weakness becomes ingrained enough in the popular mind for the currency to be spurned by runway models. At least Gisele hasn't yet declared that she prefers the Canadian loonie, which would really be humiliating. That's like being dumped by your date for the PC geek in those Apple Macintosh ads.

“This is what happens when the Fed and U.S. Treasury give the impression that the dollar's decline is no big deal, and that a little devaluation might even be useful. Nations start to de-peg from the dollar standard, and people around the world start to dump the greenback. We hope the Fed shapes up before Tom Brady, the New England Patriot quarterback and Gisele's boyfriend, starts demanding that he be paid in euros just to keep up.”


(“Gisele Dumps Ben.” Wall Street Journal: November 6, 2007. pg. A.18)

TRUE AND FALSE, accurate and distorted, whole and partial, factual and perceived, socially constructed (un)certainties are the reality from which we act, and thus the world in which we live.

Sterile Hybrids

“Credit turmoil has claimed two scalps on Wall Street in a week -- and exposed the shortage of talent for the biggest jobs in finance.

“Both Citigroup Inc. and Merrill Lynch & Co. saw troubled chief executives hastily depart as write-downs fueled by losses on mortgage- related securities spiraled near $10 billion. Neither had a ready replacement, forcing them to get by with interim arrangements as the search for successors is conducted.

“The dearth of CEO material owes much to the Wall Street culture in which executives are pushed to maximize profits and quickly get axed if they fail to deliver. That sullies the resumes of many would-be chiefs. What's more, most Wall Street firms are now global publicly held companies, not the private partnerships of yore, meaning a CEO must be skilled both in presenting the public face of a company and understanding the nitty-gritty of finance.

“‘It's a weird state of affairs that these phenomenal global companies can't self-reproduce executives,’ says Glenn Schorr, a financial services analyst at UBS AG. ‘It is a function of the culture and the leadership or lack of leadership’ at each firm, he says.

“Boards at Citigroup and Merrill are likely to look outside their firms for successors.”

(“In Citi Shake-Up, Broader Troubles; Perform-or-Die Culture Leaves Thin Talent Pool For Top Wall Street Jobs.” Aaron Lucchetti and Monica Langley. Wall Street Journal: November 5, 2007. pg. A.1)


PHENOMENAL complexity certainly leads to unprecedented uncertainty, and incredible impotence. We reap what we sow.

Less is Indeed More

"Mary Mooney and her husband were soaking up the sun in Florida when they saw a Buick Enclave… and decided they just had to have one. But when the couple called two dealers back in Michigan, where they live most of the year, the model they wanted was sold out at both.

"So instead of flying home, the Mooneys bought an Enclave in Florida and drove it 1,300 miles back to Michigan…

"The tight supply of Enclaves… is no accident. Bouyed by a new labor contract that reduces its costs, GM is keeping a tight rein on production of the Enclave in an effort to avoid past mistakes that forced it to offer discounts and cheapened the image of the company's brands.

"'We want to keep [the Enclave] hot,' says GM Vice Chairman Robert Lutz. 'Nothing destroys the value of a new product faster than over producing.'

"In the past, when GM had hot models, it usually built as many as it could, and almost always ended up with lots filled with unsold vehicles. For example, the Chevy HHR, a retro-styled wagon launched in 2005, sold briskly at first, often at full sticker price. But after cranking up production and offering discounts to boost sales, GM had a glut. Fifteen months after the HHR was introduced, Chevy dealers had enough in stock to last almost five months without ordering more. Since then, GM has had to continue discounting and dump thousands of HHRs into rental fleets, which eroded the margin on the car, and badly watered down its cachet…

"It's a risky move. The crossovers… make a lot of money for GM at a time when sales of its highly profitable trucks and SUVs are falling. GM is also struggling to produce steady profits in North American and needs every dollar it can bring in.

"The need to maintain revenue means GM can't apply the tight-supply approach to all of its models, their best-selling cars and trucks…

"Meticulously controlling supply takes a page out of the playbook used by many of GM's more profitable foreign rivals… Both Toyota Motor Corp. and Honda Motor Co. ratchet production levels up or down to stay in line with demand and minimize the need for discounting."

(“How GM Handles a Hit: Build Fewer; Wary of Repeating Mistakes, Car Maker Cuts Production To Keep the Enclave Hot.” John D. Stoll. Wall Street Journal: October 31, 2007. pg. B.1)


THE TAO SAYS, "One gains by losing." And, "If you want to become whole, let yourself be partial." To everything there is a season.

Failing Forward

“America is supposed to be a great country for second chances. Historians relish the roller-coaster careers of Abraham Lincoln and Richard Nixon -- both written off as hopeless losers, only to rise to the presidency a few years later.

“Recent corporate comebacks are just as startling. Wasn't Robert Nardelli portrayed as a pariah for life after losing the top job at Home Depot Inc. in January? Guess again. In August, he resurfaced with a dazzling new job: running Chrysler LLC.

“All of which invites outsiders to keep a keen eye on the eventual destiny of Stan O'Neal, who stepped aside yesterday as chairman and chief executive of Merrill Lynch & Co. During the final weeks of his tenure, Merrill posted a $2.24 billion third-quarter loss, fueled by an $8.4 billion charge for problem loans. Mr. O'Neal fared somewhat better; his retirement package totals $161.5 million.

“Merrill's dismal performance means that even Mr. O'Neal's defenders don't expect him to attract new CEO offers right away. The banking and brokerage company's stock has skidded 30% this year, while its credit ratings have been downgraded. It may take years to mend the firm.

“What's more, Mr. O'Neal became known at Merrill for his tough, brittle style and the rapid turnover among his lieutenants. Firms that want a charming boss are likely to look elsewhere.

“Yet with the passage of time, Wall Street tends to forgive high achievers with one dreadful year blighting their resumes…

“Ousted CEOs who have bounced back, like Chrysler's Mr. Nardelli, benefited greatly from continued support by their friends and mentors. Networking can't rescue everyone; if fraud or personal misconduct led to a CEO's firing, that's almost always the end of the story. But in many cases, recruiters say, it's white male executives who mingle on the golf course, work their college networks and benefit from apprenticeships at giant companies such as General Electric Co. who are most likely to have strong booster networks…

“Mr. O'Neal's Merrill Lynch payout is big enough that he needn't ever work again. Yet at age 56, he is young enough to tackle another big project. And it's a good bet that he will look for a way to vindicate himself. Who knows -- he may even write a book.”


(Business: Is There a Second Act for O'Neal After Merrill?” George Anders. Wall Street Journal: October 31, 2007. pg. A.2)

STAY CLEAN; never give up; learn from all that you do; forge strong bonds; build upon your successes, and never look back.

Critical Success Factors

“Donald J. Trump says being known as a billionaire is ‘critical’ to his business, a major reason he's suing for libel over author Timothy L. O'Brien's TrumpNation: The Art of Being the Donald. That 2005 book suggested Trump was worth $250 million tops. Trump says he's now worth $7 billion (FORBES figures $3 billion). In a court filing Trump's lawyers contend his success ‘depends on the accurate recognition and appreciation… he is a billionaire.’

"O'Brien, New York Times Sunday business editor, and publisher Warner Books are fighting a New Jersey judge's order that O'Brien name the ‘three people with direct knowledge of Donald's finances… who had worked closely with him for years,’ the book's sole sourcing for the low valuation. Defendants argue a net worth estimate is merely unactionable opinion. Trump says his honesty was impugned by the entire book and its marketing, including O'Brien's comments at public appearances.”

(“Billionaire as a Job Title.” William P. Barrett. Forbes; October 29, 2007, Vol. 180 Issue 9, p. 38)

ONCE YOU KNOW who you are, you must carefully discern the factors that are critical for success in your domain. Doing all that you can to align the two is a dynamic balancing act that is never fully achieved.

What Matters Most

“Google is the elephant in nearly every corner of the Internet, from search and advertising to web-based e-mail, online mapping, and home-brewed video. With its share price setting new highs this fall, its market cap ($188 billion) is now large enough to buy the New York Times, the Washington Post, Gannett, and Time Warner -- twice. Or Facebook many, many times over.

“The problem is, Facebook's not for sale. And that's got Google running scared. It's an open secret in Silicon Valley that the company has been shopping around a nondisclosure agreement outlining its plan to create its own massive social network -- and asking anyone with a pulse to sign it.

“Google has to do something fast, because some of its best talent is starting to head for the exits. In July, Gideon Yu, finance chief at Google's YouTube, left for Facebook. Now other Google guys, stuck in the Googleplex and smelling a Facebook IPO that could turn early employees into early retirees, are also jumping ship. The latest defector: Benjamin Ling, the top engineer at Google Checkout, its online payment service. A Stanford comp-sci Ph.D., Ling will be overseeing Facebook's entire software platform. Losing finance types is one thing. But smart engineers are the lifeblood of a great tech company, and Ling was worth a pint, insiders say.”

(“Look Who's Worried Now.” Josh Quittner. Fortune: October 29, 2007. Vol. 156, Iss. 9; pg. 74)

YOUR BEST PEOPLE always have another offer, or they could. Growth and challenges, then relationships, and money far behind are the tipping points for most of your best.

Pick & Choose

“Stanley O'Neal's credibility just suffered a major blow. It isn't only that Merrill Lynch, the Wall Street firm he runs, took $7.9 billion of write-downs just on subprime mortgages and collateralized debt obligations for the third quarter, more than any of its peers. What is worse is that the hit is a lot larger than the $4.5 billion Mr. O'Neal recently warned of.

“How could things change so drastically? After all, the write-downs are tied to a specific point in time, Sept. 28, so market fluctuations since then shouldn't have changed anything. Merrill says it just decided to use ‘more conservative assumptions.’

“That might sound wise, but it actually raises concerns. It confirms market worries that investment banks are able to pick and choose how they price their assets -- and that could erode any tentative attempts to rebuild confidence in the market.

“More worrying for Merrill's investors, it reeks of dilettantish risk management. There have been more than enough signs this year that mortgage markets were cratering. And Merrill was arguably in a better position than most of its peers to judge the extent of the wreckage.

“After all, it owns a mortgage lender, First Franklin… The business -- especially its loan-servicing unit -- ought to have provided exactly the kind of information on the subprime market that Mr. O'Neal needed to stay ahead of the curve. Merrill also was the top CDO arranger in 2006 and is in second place this year. That should have given it a bird's eye view of the market…

“It seems irresponsible that Merrill wasn't much better prepared for the ensuing rush for the exits.

“Instead, it appears it was simply too deep into a market that its executives didn't fully understand.”


(“breakingviews.com / Financial Insight: Implausible Deniability?; Merrill and Mr. O'Neal Should Have Been Atop Credit-Market Problems.” Wall Street Journal: October 25, 2007. pg. C.14)

WE SEE what we choose to see. We read, and watch, and listen to that which comforts us in confirming what we want to believe. Deeper and deeper we dig into that until we may be over our heads. Watch out outward.

Tuition

“Microsoft Corp.'s $240 million investment in Facebook Inc. -- a three-year-old company with more promise than profit -- represents a huge bet that the online advertising boom will continue and the popular social networking site will be among the biggest beneficiaries.

“The software giant said yesterday that it will buy a 1.6% stake in Facebook, beating out Google Inc. after intense lobbying. The deal places a $15 billion valuation on the closely held Palo Alto, Calif., start-up. Facebook… expects to break even this year, on a cash-flow basis, with revenue of $150 million, according to people familiar with the company.

“The high valuation for Facebook is the latest sign of a renewed exuberance in Silicon Valley over Internet companies with lots of users -- even if those users haven't yet translated into much revenue -- and is reminiscent of the Internet bubble that ended in 2000. Microsoft and Facebook say the valuation is justified and that Facebook is starting to find ways to monetize its rapidly growing user base.

“‘We're pleased with the economics of this deal,’ said Kevin Johnson, president of platform and services at Microsoft, adding that Microsoft and Facebook have ‘both learned a lot’ from their experience with Facebook ads.

“The deal is rooted in an online-advertising boom that has turned Facebook into the newest Internet darling…

“Winning Facebook's hand could help lift morale at Microsoft's struggling online business. Over the past four years the software giant has invested heavily into building its own Internet search and online advertising services but has failed to keep pace with the growing online ad market and its leader Google.

“Microsoft fought hard and lost to Google a string of deals with companies including Time Warner Inc.'s AOL unit and DoubleClick Inc., which Google earlier this year agreed to buy for $3.1 billion. Those losses and the steady growth of Google's share of online advertising have irked Microsoft Chief Executive Steve Ballmer, say people familiar with the company.

“As a result, Microsoft scrambled to keep Facebook from falling into Google's hands.”

(“Microsoft Bets On Facebook Stake And Web Ad Boom.” Robert A. Guth, Vauhini Vara and Kevin J. Delaney. Wall Street Journal: October 25, 2007. pg. B.1)


"BET... EXUBERANCE... REMINISCENT... valuation... economics... darling..." The rules have changed? Things are different this time?

Yang and Yin?

“The gap between No. 1 and No. 2 in a company is often bigger than many realize. CEOs not only perform different tasks from their second-in-commands -- who commonly focus on running operations -- they have to act differently, too. That means the two roles often demand very different personality traits, say people who have been there.

“CEOs talk about getting acclimated to the limelight. Longtime chief operating officers say they are used to working behind the scenes and submerging their egos. Their jobs focus them inward on the company's problems, while CEOs spend much of their time convincing outsiders of the company's strengths.

“The very talents that make a great chief operating officer -- like finicky attention to detail -- can get in the way when you are in the top seat. CEOs are supposed to strategize, not micromanage…

“The Chief Operating Officer Business Forum… this month discussed with its members the pros and cons of moving up to CEO. About half of the 40 members present at the discussions said they didn't ‘want the headache’ of the top post, says William E. Shepard, founder of the Forum…

“As CEO, ‘you have to have the fearless willingness to put yourself out there. Some people said, I don't want to do that. It's not who I am’ …

“CEOs and operating officers can, of course, have traits in common. Both jobs call for a high degree of leadership skills, intelligence and business smarts. A company might work to make the two jobs more in sync, to smooth the way for a move up the ladder.


“In that case, the deputy executive would be given the kind of strategy-setting responsibilities more commonly associated with CEOs, and pushed into external roles, talking to the company's board and investors. That was the case with Autodesk's [Carl] Bass, who became operating chief in 2004.

“But even Mr. Bass says he didn't covet the CEO role before he was tapped… He tends to be more interested in products than public relations, yet he must be a cheerleader for the company in front of analysts, shareholders and the community. It's vital that a CEO consistently project a positive attitude to help keep up morale. In the No. 2 role, it was OK ‘to be more curmudgeonly,’ he says.”

(“A Different Animal Seeks the No. 1 Post; Often, It's Not No. 2.” Phred Dvorak. Wall Street Journal: October 22, 2007. pg. B.1)


HOW DO YOU balance strategy and operations, public and private, cheerleader and curmudgeon, in your development? Perhaps we can work toward bringing together both sides...

From Psuedo-science to Gospel

“Counterfeit and pirated goods are a big problem for global business, costing hundreds of billions of dollars, according to manufacturers and trade groups. But their estimates tell more about how difficult it is to assign a value to lost sales than about the actual size of the counterfeiting problem.

“Washington business groups such as the U.S. Chamber of Commerce and the International AntiCounterfeiting Coalition calculate that global counterfeit sales equal $600 billion to $650 billion a year -- numbers parroted in news releases by companies claiming to fight piracy. They build on the often-cited claim that counterfeit goods represent 5% to 7% of all world trade. That claim got its official launch in a 1997 report by the International Chamber of Commerce, which cited these percentages as only a ‘general assumption.’

“‘It is virtually impossible to find accurate statistics to substantiate these perceptions’ that counterfeiting is on the rise, the ICC author wrote.

“The barriers to accurate data on piracy are clear: It's a shadowy business run by criminals.

“Yet from these shaky foundations, a new gospel was born: 5% to 7% became the ubiquitous estimate. It was used in a 1998 report by the Organization for Economic Cooperation and Development and is often attributed to that group – ‘unfortunately,’ OECD Deputy Director for Science, Technology and Industry John Dryden wrote earlier this year, because the number is based on methodology that is ‘not clear’ …

“The OECD's recent attempt to improve on the guesstimate put all counterfeit trade… at $200 billion at the high end, extrapolating from customs seizures and guessing at how many illegitimate goods are missed at border patrols. But the OECD acknowledges in a report to be published soon that the number is based on incomplete information. Researchers asked countries to submit data on seizures of counterfeit goods; just 45 countries did, and only 15 of those offered details beyond broad categories about which products were fakes.

“Moreover, the data were extrapolated to the countries that didn't respond. Researchers then guessed at a factor that would reflect the rate of counterfeiting for the most-pirated goods in the most-pirate-prone countries. They decided 5% was the most likely figure, but they were seeking a ceiling, so they doubled it, got a total of $100 billion, and doubled that again to account for ‘statistical variability’ in their model…

“Such numbers fill a vacuum.”

(“The Numbers Guy: Efforts to Quantify Sales of Pirated Goods Lead to Fuzzy Figures.” Carl Bialik. Wall Street Journal: October 19, 2007. pg. B.1)


WE FEEL COMPELLED to rely on numbers. So, in the absence of validity, we manufacture phony numbers, purge them of assumptions, instill them with authority through repetition, and now know the unknowable.

Distinctive Competence

“One new start-up airline offers in-flight music videos, purple and pink mood lighting and flight attendants clad in chic all-black outfits. Another rolls up staircases to planes instead of covered jet- bridges, charges for water and puts its flight attendants in T-shirts advertising destinations.

“Together, high-brow Virgin America Inc. and low-brow Skybus Airlines Inc. show how the low-cost airline industry is maturing in the U.S. Once, start-up airlines all tried to fly a similar path: just copy Southwest Airlines Co., with its short, frequent flights, open seating, simple pricing and friendly staff. But now being a Southwest clone isn't enough.

“Like the retail industry, discount airlines are getting more specialized, trying to find niches that appeal to a certain type of customer, not to all customers. If Southwest is the Wal-Mart of the skies, new competitors now try to be the dollar store or wholesale club undercutting Wal-Mart. Others want to outdo Wal-Mart by being higher quality, like Target or Kohl's. Bottom line: It's creating more choice for consumers.

“‘Low-cost or new business models can come in amazing different variations and forms,’ says airline consultant Patrick Murphy, a former senior Transportation Department official. ‘I think there will be lots of new variants we haven't seen yet, for domestic and international service.’

“Low-cost airlines now carry more than 30% of domestic traffic in the U.S., and Mr. Murphy notes their growth rate has accelerated since 2000…

“With so much discount-airline capacity in the skies, new entrants have to find a way to stand out -- either by offering fancy service at relatively cheap prices, or bare-bones service at ridiculously cheap prices.

“‘You either need to compete on price or compete on product. You can't do both,’ says B. Ben Baldanza, chief executive of Spirit Airlines.”

(“The Middle Seat -- From Luxury to Bare-Bones: Discount Airlines Specialize; Travelers' Choices Multiply As Carriers Carve Out Niches; Meal Orders on Touch-Screens.” Scott McCartney. Wall Street Journal: October 16, 2007. pg. D.1)


TO BECOME OUTSTANDING, you must stand out. To become distinguished, you must become distinctive. To become competent, you must focus. There are no two ways about it.

Better Before Bigger

“At lunch time on a recent day here, Khamzat Khasbulatov sat in the world's second-busiest McDonald's and watched as dozens of people lined up at its 26 cash registers.

“‘I have too many customers,’ said Mr. Khasbulatov, chief executive of McDonald's Russia, as workers scrambled to assemble Big Macs and stuff french fries into red cartons.

“Of the 118 countries where McDonald's Corp. does business, none can boast more activity than Russia. On average, each location serves about 850,000 diners annually -- more than twice the store traffic in McDonald's other markets.

“That has presented the world's largest restaurant chain with an unusual dilemma. Russia, with its burgeoning middle-class and consumer appetites for all things American, is a jewel in the McDonald's system. But the company is being prudent about expansion here…

“Aggressive growth plans at McDonald's backfired badly in the past. During the 1990s, the company was fixated on adding restaurants throughout the chain -- as many as 2,500 stores a year. But by 2000, the condition of its existing locations, as well as the appeal of certain menu items, deteriorated. Two years later, the company's flawed expansion strategy was hammering its profits and stock price.

“Aiming then to be ‘better, not just bigger,’ the Oak Brook, Ill., company reined in expansion. In 2003, when McDonald's reported its first-ever quarterly loss, it opened a net of 21 new stores -- down from 1,015 in the previous year.

“New emphasis was placed on improving signature products… Executives also called for an aesthetic overhaul, using more muted colors and lighting schemes in the stores. The changes helped lift sales and profits, ushering in one of the company's most successful performance streaks to date. In the past twelve months, McDonald's shares have shot up 33%.

“Now that the company has improved operations, it is preparing to gingerly pick up the pace of store building.”


(“Steady Diet: As Burgers Boom in Russia, McDonald's Touts Discipline; To Maximize Potential, Chain Rations Growth; Trimming Wait Lines.” Janet Adamy. Wall Street Journal: October 16, 2007. pg. A.1)

BECOME YOUR BEST where you are today, then strive to grow. As we reach into new domains, we will naturally lose focus on what allowed us to move there in the first place. Return, refresh, renew -- grow and then recycle. This is nature's way.

Who Saw It Coming?

“Your money is at risk… Anyone who would tell you otherwise is either a fool or a huckster. Then there are those who do warn of risk but package it into a simple numerical measure that seems to put it within manageable bounds. They're even more dangerous.

“Your mutual fund's annual report, for example, may contain a measure of risk (usually something called beta). It would indeed be useful to know just how risky your fund is, but this number won't tell you. Nor will any of the other quantities spewed out by the pseudoscience of finance: standard deviation, the Sharpe ratio, variance, correlation, alpha, value at risk, even the Black-Scholes option-pricing model.

“The problem with all these measures is that they are built upon the statistical device known as the bell curve. This means they disregard big market moves: They focus on the grass and miss out on the (gigantic) trees. Rare and unpredictably large deviations like the collapse of Enron's stock price in 2001 or the spectacular rise of Cisco's in the 1990s have a dramatic impact on long-term returns – but ‘risk’ and ‘variance’ disregard them.

“The professors who live by the bell curve adopted it for mathematical convenience, not realism. It asserts that when you measure the world, the numbers that result hover around the mediocre; big departures from the mean are so rare that their effect is negligible. This focus on averages works well with everyday physical variables such as height and weight, but not when it comes to finance…

“Today Google grabs much Internet traffic, and Microsoft represents the bulk of PC software sales. Out of a million submitted manuscripts, a handful account for the bulk of book sales. One percent of the U.S. population earns close to 90 times what the bottom 20% does, and half the capitalization of the stock market (close to 10,000 companies) is in fewer than 100 corporations…

“The economic world is driven primarily by random jumps. Yet the common tools of finance were designed for random walks in which the market always moves in baby steps. Despite increasing empirical evidence that concentration and jumps better characterize market reality, the reliance on the random walk, the bell-shaped curve, and their spawn of alphas and betas is accelerating, widening a tragic gap between reality and the standard tools of financial measurement.”


(“How the Finance Gurus Get Risk All Wrong.” Benoit Mandelbrot, Nassim Nicholas Taleb. Fortune: July 11, 2005. Vol. 152, Iss. 1; pg. 99)

LULLED BY THE CONVENTIONAL, dulled by the narcotic of normal science, trapped in the norm, we should have seen this meltdown coming. Blinded in the fluorescent light of hopeful greed, it is so easy to be seduced by the dominant illogic of analysis without thought. (See Andy Grove below... )

Ancient or New Sophism?

“Twenty years ago, investors relied on what they considered to be sophisticated strategies to try to avoid big stock-market losses. On ‘Black Monday,’ as the stock market plunged 22.6%, they found their safety nets had huge holes.

“Today, investors can much more easily and effectively hedge their exposure to the market. ‘With each successive crisis, the industry gets better and better; it's significantly better prepared than before 1987,’ says Pavandeep Sethi, global head of volatility trading at Chicago's Citadel Investment Group… ‘Risk management is more sophisticated, and good managers have a game plan’ to prepare for deep jolts to the market.

“But some worry that today's improved and sophisticated hedging techniques have created a false sense of security among investors, and that a dramatic market collapse is still possible if issues arise in areas where there is little transparency, such as the world of derivatives.

“Although there is a ‘richer menu’ of tools for investors to hedge their portfolios, there remains the possibility of ‘the same cascading effect as the sellers of the hedge have to move to protect themselves from a falling market, and everyone runs for the door at the same time,’ says Robert Glauber, a former U.S. Treasury undersecretary for finance…

“In many ways, risk management and hedging techniques have improved since 1987, and larger investors have many more-sophisticated tools available, analysts and academics say. For example, credit-default swaps, which essentially are insurance policies that pay off if a company looks more likely to default, give investors a way to hedge their exposure to specific companies and sectors.

“But many of the hedging products are new and relatively opaque, raising questions about how they will hold up in a market crisis…

“Recent losses also demonstrate that even large investors continue to be caught off guard by market moves, raising questions about their ability to hedge their risks…

“‘People have been lulled,’ says Nassim Nicholas Taleb, a former trader who made big money in 1987 and is the author of ‘The Black Swan’."


(“The More Hedges the Better, Right?; Blind Spots, Bottlenecks Lurk Among New Ways Of Preventing a Crash.” Gregory Zuckerman. Wall Street Journal: October 17, 2007. pg. C.1)

ANCIENT GREEKS saw Sophists as Wisdom's elite. Today we generally equate sophistry with trickery and deceit. When I dine from a "rich menu" of sophisticated delights, I normally walk away with a bad case of indigestion and regret. (Are we reminded of Enron's market magicians -- "The Smartest Guys in the Room"?)

Opposites -- Upside-down & Inside-out

“Classical music hardly seems like a growth business. We're forever reading about how concert audiences are graying, and new artists must flounce around fiddling in tank tops and platform heels to get attention… In fact, classical music is doing a lot better than you might think. Although total sales in all music categories… fell 5 percent last year, classical sales grew by a whopping 22 percent. ‘When I talk to people in the industry, everyone is making money,’ says Klaus Heymann, chairman of Naxos, the world's biggest independent classical-music company, based in Hong Kong.

“Why are Heymann and his peers singing such a different tune? Because classical retailers have been the best at exploiting the potential of online revenue. The biggest companies of the classical genre are now earning about 20 percent of sales from digital music, double or triple the average for other categories. This is a tremendous advantage for them, since selling music in the digital format can be twice as profitable as it is offline due to the extremely low costs of digitally producing, storing and distributing music. The bottom line: while this may well be one of the worst years for music sales in general since charts were started in the 1960s, most classical labels expect revenue to continue to rise.

“Musically speaking, the classical genre has proved to be ideal for a digital era. The classical customer is technologically savvy and more likely to buy in bulk, and the viral nature of the Net has allowed the music to be heard by new audiences, fueling overall sales. ‘The classical-music sector has done a very good job of maximizing the opportunity of the Internet,’ notes Mark Mulligan, a digital-music analyst at Forrester Research.

“It's a great example of how companies are putting the ‘long tail’ theory of cybercommerce into action. In his 2006 best-selling book ‘The Long Tail,’ Wired magazine editor Chris Anderson explored how the Web helps some industries boost revenue by selling a few units of many things. That strategy is a sharp contrast from the traditional ‘big hits’ model common in the publishing, movie and music businesses. When 80 percent of revenue comes from 20 percent of inventory, media companies rightly focus on their hits; that's why record labels generally push a few artists very hard…

“The lesson for labels is that prepackaging global pop stars isn't the only way to profitability.”

(“Beethoven Goes Digital; Classical music is making money again, thanks largely to online downloads. It's a great example of how the 'long tail' theory is changing an industry.” Alexandra A Seno. Newsweek: September 17, 2007. Vol. 150, Iss. 12; pg. E.22)


PUT IT ON THE AGENDA. Consider doing just the opposite of what has worked for years. “When everyone knows something to be true, nobody knows nothin’.” (Andy Grove) To be outstanding, you must stand out.

A Trend Too Far

“When Univest Chief Executive William Aichele wants advice, he doesn't call consultants or read management guru Peter Drucker. Instead, he visits an 18th-century farmhouse in Bedminster, Pa., and chats on a sun porch with his financial-service company's oldest director: 93-year-old Charles Hoeflich.

“In popular culture, we adore elderly mentors. Look at movies such as ‘The Karate Kid’ or almost anything with Morgan Freeman in it. Or consider ‘Tuesdays With Morrie,’ the best-selling book about a sportswriter's reunions with a dying college professor.

“But in boardrooms these days, it is rare -- perhaps too rare -- for old-timers' voices to be heard. Many boards now require directors to retire at age 70 or 72. The Corporate Library, a Portland, Maine, research group, recently calculated that the average American director's age has dropped to 59, down from 61 just four years ago. As modern directors get swept up with late-night conference calls, torrents of email and six-hour audit-committee meetings, it is easy to see why youthful stamina is prized.

“Among the experts who think this antiseniority trend has gone too far is R. Glenn Hubbard, the 49-year-old dean of Columbia Business School in New York. ‘There are so many retired CEOs aged 72 to 80 with all this experience,’ he says. ‘What's more, they've got time available, which active executives don't. It's a shame to lose their expertise’."

(“Business: Recognizing the Value of Older Directors.” George Anders. Wall Street Journal: October 10, 2007. pg. A.2)


TRENDS and trendy: To discern a trend, one needs perspective. To forge a new trend, one may call upon the trendy. The wisdom of the ages; the vigor of youth.

Vision and Discernment

“The contract agreement the United Auto Workers struck with General Motors Corp. after a two-day strike last month freezes union members' base pay for four years. It shifts $51 billion in health-care obligations for retirees from GM to a union-run trust fund. And it pays new UAW workers lower wages for the same work as veterans.

“Yet, to Dave Green, a local union leader at GM's Lordstown, Ohio, plant, this deal for lower pay and higher risk is ‘awesome.’ It's ‘huge.’ It ‘sells itself.’ …

“That willingness to exchange ever-expanding wages and benefits for job security is the culmination of a two-year effort by Ron Gettelfinger, the UAW's president, to set realistic expectations for members on a new contract amid mounting financial woes at Detroit's Big Three auto makers.

“In the summer of 2005, as GM was spiraling toward a $10.6 billion loss, former UAW President Doug Fraser warned Mr. Gettelfinger and other leaders in a speech at a union celebration that the problems facing unionized U.S. auto makers were deep-seated and not the result of cyclical forces soon to change…

“Mr. Gettelfinger seized on the idea, according to people familiar with the events, and made it a theme of his effort to move the UAW's 180,000 members toward agreements that would allow auto makers to be more competitive with foreign rivals…

“The problems at Detroit's auto makers were worse than the union had ever seen, Mr. Gettelfinger said. The Big Three ‘faced a structural change, not a cyclical one ... which could require far-sighted solutions by our membership,’ he said, echoing Mr. Fraser's words.

“The terms ‘structural change’ and ‘far-sighted solutions’ were picked up by UAW local leaders in the run up to this year's contract talks.”

(“How Less Pay, More Risk 'Sells Itself'; Job-Security Promises Have Auto-Workers Union Poised To Ratify GM Deal Today.” Mike Spector in Lordstown, Ohio, and Jeffrey McCracken and John D. Stoll in Detroit. Wall Street Journal: October 10, 2007. pg. B.1)


A GENERATION is often required to pass before new paradigms are fully adopted -- true in technology, true in society, true in our institutions. The strategic leader helps us detect discontinuities ("Is this shift structural or is it cyclical?") by disrupting our thinking.

Captivating -- Liberating

“A growing number of employers, including U.S. Cellular, Deloitte & Touche and Intel, are imposing or trying out ‘no email’ Fridays or weekends. While the bans typically allow emailing clients and customers or responding to urgent matters, the normal flow of routine internal email is halted. Violators are hit with token fines, or just called out by the boss.

“The limits aim to encourage more face-to-face and phone contact with customers and co-workers, raise productivity or just give employees a reprieve from the ever-rising email tide...

“And one-third of users feel stressed by heavy email volume, according to a 2007 study… by the University of Glasgow and Paisley University in Scotland. Many check email as often as 30 to 40 times an hour, the study showed.

“Managers complain that rather than confronting problems, employees use email to avoid them by passing issues back and forth in long message strings, like a hot potato. Email reduces face-to-face contact among co-workers and clients; terse, poorly phrased messages further strain those relationships. And it is spilling into weekends, chaining employees to computers when they should be relaxing.”

(“A Day Without Email Is Like...” Sue Shellenbarger. Wall Street Journal: October 11, 2007. pg. D.1)

WITHOUT email, without Blackberry, without IM, without chat, without iPods, cell phones, text messaging, all we would have is human touch. Go for a visit; look them in the eye; hear them breathe. Peace. Be still. Listen.

Connectivity & De-integration

“Back in 2000, Steve Ballmer, Microsoft's chief executive, described a grand vision for the future of health care. One day, he said, everyone would have a secure and private website on the internet on which their doctors could post their 'scans, lab results, test results, visit minutes' and the like, and to which the owner could grant certain people access, to view some or all of that information.

“His ideas met with guffaws from the old lags of the industry, who have seen many fancy schemes for electronic medical records fall flat. America's health sector is simply too balkanised and too paper-based to stitch together easily in digital form. Google, Intel, Revolution (a firm started by Steve Case, a founder of AOL) and other Silicon Valley firms have all tried to do this, with little success. Even Mr Ballmer conceded back then that he was searching for the "holy grail" of healthcare.

“And yet, after years of frustration and furious development work, Microsoft now believes it has realised Mr Ballmer's dream. On October 4th… the software giant was poised to unveil its new health-information product at a big event in Washington, DC. It is called the Health Vault, in keeping with Microsoft's promise to make storing data on the internet just as secure as keeping it in a bank.

“Health Vault will store all its customers' health data, ranging from test results to doctors' reports to daily measurements of weight or blood pressure, online. Individuals then have access to those records any time, anywhere, via the internet--a great boon for those who travel a lot. Medical offices and hospitals who sign up for the service could easily send test results in digital form to the vault, and patients could authorise them in turn to have access to various, carefully circumscribed bits of their personal data.

“Microsoft was also set to announce this week that several dozen manufacturers, hospitals and charities have signed up for Health Vault. Big names including the American heart, diabetes and lung associations, the New York-Presbyterian Hospital, and Omron and Texas Instruments, in addition to various firms devoted to the craze for ‘wellness,’ are all now on board, and are expected to announce products and services shortly.”

(“Business: The vault is open; Health care.” The Economist: October 6, 2007. Vol. 385, Iss. 8549; pg. 89)


PARADOXICALLY, as linkages proliferate, independence and atomization are unleashed through a web of networked interdependence. Information is the latch; insight is the lock, and wisdom is the treasure. People are the key.

Logically Contrary

“We hate to be the bearers of good news, but someone's got to do it: The Congressional Budget Office has released its preliminary estimates for Fiscal Year 2007 that ended September 30, and the federal budget deficit fell again, this time by 35% to $161 billion.

“There's more to applaud, if you can stand it: Since 2004, deficit spending has tumbled by $251 billion, which is one of the most rapid three-year declines in U.S. history. The deficit as a share of the economy is down to 1.2%, or about half the average of the last 50 years. This improvement is especially remarkable given the $150 to $200 billion a year of post-9/11 expenses for homeland security and the wars in Iraq and Afghanistan.

“Americans coughed up a record $2.568 trillion in taxes to the IRS in 2007, or 6.7% more than in 2006. This means federal receipts have climbed by $785 billion since the 2003 investment tax cuts, the largest four-year revenue increase in U.S. history. Income, dividend and capital gains tax rates were all cut in 2003, but individual income tax receipts have soared by 46.3% in four years, with payments by the wealthy accounting for most of the windfall. Last year's increase in individual income payments was 11.3%, or more than double the rate of growth in nominal GDP…

“Overall federal revenue is now 18.8% of GDP, compared with the 18.2% average of the past 40 years…

“The overriding lesson here is that the best antidote for deficits is faster growth, not tax increases. The budget deficit has declined more rapidly this decade in the wake of the Bush tax cuts than it did in the 1990s in the wake of the Clinton tax increases.”

(“The Shrinking Deficit.” Wall Street Journal: October 9, 2007. pg. A.16)


CONVENTIONAL MATH is trumped by human behavior just as conventional wisdom is upended by simple facts. How yin and yang!