April 28th, 2009: "Groupthink" & Business Decisions
The cartoon strip 'Dilbert' is immensely popular, despite it's gross exaggeration of characters, because every comedian and writer knows that for every jest, lay the seeds of truth. Put another way, it is irony, two opposable but indestructible truths, which form the basis for our laughter and why "All the world's a stage."
Boss: Dilbert, put together a team to decide who’ll be on the strategy council.
Dilbert: You want me to form a committee to create a committee that will produce a document that will be ignored?
Boss: No, it’s a team to create a council.
Dilbert’s colleague: Can I be on the team that ignores the document?
And of course, the irony of the two truths; business decisions are associated with credibility if they pass the Groupthink process, and history is littered with the debris of corporations completely destroyed by groupthink. By making the transition from humor to grave and dire consequences, this is more relevant today than ever before; Citibank, Merrill Lynch, Enron, GM, AIG, are just a few examples.
The most fascinating aspect of all of these examples are the educated, intelligent individuals, of whom sitting at the helm of the largest, Titanic sized corporations in the world, failed and sank the most powerful business entities in history. They come from Harvard, Yale, Wharton and others, and when placed together within the same group, the unthinkable actually happens.
This is a fascinating study and an opportunity to glimpse into an aspect of human psychology that profoundly affects the rise and fall of organizations and nations. Groupthink was first studied back in the 1950's by the American Gestalt psychologist Solomon Asch, a pioneer in social psychology. These are his famous "Asch Conformity Experiments" with a reenactment apparently filmed in the 1970's. (gee...can'ya tell?)
The most important segment here, as applied to business, is that the pressure of normative conformity, or groupthink, can be reduced if either two or more people in the room have an alternate and similar answer, or even more reliably reduced if all answers are given in written form thereby protecting the anonymity of the subject from their colleagues.
I'd like to tie this into another idea, which is that as one deals with a room full of highly credentialed professionals, normative conformity or groupthink is actually amplified, given an environment in which the participant's careers are based upon their credentials and consulting expertise.
The bottom line I am driving at is that innovation and independent thinking are less likely in highly credentialed group sessions and more likely in environments where isolation from one's colleagues lowers the risk of perceived discordance. If management seeks the most accurate and insightful information possible, the initial gathering of ideas should be collected and re-evaluated through one-on-one sessions first, and delaying the pier review process until the later stages of the evaluation process.
As a final note, just remember, if you find yourself surrounded by groupthink, don't be an Asch! (a little humor) :-)
April 23rd, 2009: India investments available to American investors.
I've completed a quick investigation into the investment options for Americans wishing to invest in India. When I say quick - I mean in the last hour. I encourage my readers to email with any others I have missed.
There are three categories available to Americans with regards to India:
You can find Indian ADR's with P/E ratios calculated > here. It is important to value ADR's as one values Stocks and a low Price to Earnings (P/E) ratio is helpful to identify potential candidates, but be weary of *very* low P/E's; it may indicate a problem, so do your research.
There is only one available for India, The iPathService Mark MSCI India Index > INP
April 22nd, 2009: The Jury is in: India could be the best investment for 2009-2010
In my last post (April 8th) I was mentioning that a potential democratic economy I was investigating for growth was India. I also said the Jury is not yet out... until now:
WASHINGTON (Reuters) - The International Monetary Fund on Wednesday slashed growth forecasts for every major country and urged governments to take forceful action to ensure the world economy's recovery from a severe recession.
In its latest World Economic Outlook, the IMF said the global economy would likely contract 1.3 percent this year in the deepest post-World War Two recession by far.
Growth is set to re-emerge at a sluggish 1.9 percent next year but the pick-up depends on aggressive measures to repair a poorly functioning financial system.
What intrigues me about the Indian economy is the smaller dependence on exports to the USA than, say, China. When a recovery does take place, economies not strongly tied to the US exports will likely recover faster.
IMF Sets Meager Global Output Targets For 2009 & 2010
...If you look at the table, you will see that the only growth prospects are being seen in China and India. The IMF sees 6.5% growth in 2009 and 7.5% growth in 2010 in China; and it puts India’s growth at 4.5% in 2009 and 5.6% in 2010.
And so my final conclusion is the data is now out that confirms the only two real prospects for growth for investors for 2009 and 2010 are the economies of India and China. My Next entry will address how Americans can take advantage of the latest news for the growth prospects of India.
April 8th, 2009: Sketchy Economics
When ever I look at a complex system, I like to make a quick sketch of the major relationships to help me identify cascading effects and potential feedback loops within a system. To get a quick high level view of the situation, here is a very simplified flow of what is going on at the moment:
My impressions are:
As the Baby Boom generation deflates the stock market balloon by moving from growth stocks to retirement income investments (such as tax free municipal bonds), being in any non-income investment is probably a bad idea for the next decade. The tiny wave of Generation X investors cannot inflate the stock balloon fast enough to make up for the difference until the massive wave of Generation Y begins their peak investment years (in 2020? or maybe not...) I do want to be fair and say that good "day traders" and "swing traders" (holding a few days or weeks) can always make money in any volatile market, but "buy and hold" strategies will not be favored.
The fate of our devalued dollar is now sealed. The interest on our national debt has already surpassed our national GDP by more than 3 to 1. Unless this curve begins an unlikely rapid reversal, trying to preserve your wealth by holding it in US dollars is a very bad idea.
My initial thoughts are: Preserve your wealth with sound assets not held in the US Dollar and seek out the next waves of growth within healthy, growing democratic economies. My jury is not out yet, but India is making the top of my list. I'll talk about it next time. Until my next blog, keep your spirits high... we're all in this together.
April 3rd, 2009: Embrace the Chaos and Make it Work for You.
What can people do to thrive in a country where industry and labor has been outsourced? The answer is to innovate and invent. There are many forms this can take, but the golden rule is that your creation must always solve someone else's problem. Choose your customers wisely and you will all reap the benefits.
Look at the state of the world today, with all of the problems needing solutions, and you will rejoice at all of the opportunities abounding. For example, businesses need more sales, people need more income and/or time to get things done, and everyone needs to reduce costs and identify areas of economic / educational / personal / spiritual growth.
This is an opportunity of a lifetime for inventors and innovators. Solve their problems, and they will gladly pull out their wallets to reward you for it, but far more valuable is the trust you will have earned, for it opens doors in the future that no one can know where they will lead you.
A great transformation comes from within you when you realize that you can create your own opportunities instead of waiting for the world to hand them to you on a silver platter. Reverse the roles and hand it to them for a change.
Everyone reading this knows of something they can do exceptionally well. This is your call to identify those who can benefit from that and for you to take it to the next level. Outsourcing cannot replace a truly talented person. You must now live a double life - that of the inventor and the promoter. By beating the competition with your talent AND announcing your gift to the world, you will thrive.
Make contact with those who can benefit from your gifts and cultivate your network. Ask them how you can exceed their expectations. And most importantly - follow through and DO IT! You may blow their minds for the first time.
Now that you have the momentum and credibility on your side, find ways to do it smarter - not harder. Utilize automation or extra help so you can take on additional responsibility and volume without burning out. If corporations are hiring extra help for ridiculously low wages, why shouldn't you? Can you afford to hire someone part-time for just a bit higher than Walmart? Many young people complain that employers want experience but are not willing to give it. Can you spare a few dollars x 20 hours for a student to help you out and rise above your competition? I bet you can and that student will be grateful for the experience they cannot get anywhere else. Always ask yourself if there are ways you can continue to exceed expectations without working harder and then implement your plans.
Think of how many people need extra help for their job search. How many people need someone to take good care of their kids while they are at work? How many people need to have errands done while they put in long hours just to keep the jobs they have? How many people need items to be fixed, cleaned, maintained? Opportunities are everywhere. The trick is you don't have to work hard, you just have to work smart and bring the right people together with the right jobs. THAT is your job as an innovator and inventor.
Don't forget to make it easy for people to do business with you. How can you save your customers time, make information more accessible, or simplify a process?
Remember - the more you seek opportunity, the more likely it is that you will achieve the security that you desire. If you serve many, many will serve you. Let that be your guiding light in these chaotic times.