You are currently browsing the monthly archive for April 2014.

 How to Fix America’s Health Care Problems: Experiment!

By Shlomo Maital

                                            DouglasTommy Douglas: He Stood Alone

President Barack Obama: I apologize. In this space, I criticized you fiercely for incompetence, for the inability to even set up a simple website. Sorry. Turns out it wasn’t so simple. Reforming health care, within a completely broken existing system, is tough. You now have 7 million people signed up for ObamaCare. This is a big achievement.

But it’s only a start. America still spends 18 % (!!) of its GDP on health care, a vastly inflated sum, with little to show (life expectancy is below that of countries that spend less than half that).

   In today’s New York Times, Molly Worthen describes an experiment in Vermont (Live Free!), the state of independent-minded voters. It’s called Green Mountain Care. The idea came from a third party, the Vermont Progressive Party. It’s a single-payer system, which regulates doctor’s fees (translation: keeps doctors from inflating them) and covers all Vermonters’ medical bills. The system could spread to other states.

   This is how to resolve social problems. Let each of the 51 American states try its own system. Check which of them work and then replicate them across America.

   How do I know this works? It worked in Canada. I grew up in Regina Saskatchewan. In 1959 Premier Tommy Douglas proposed a medicare plan to give all residents of Saskatchewan free medical care. Douglas was a socialist, head of the CCF party. He was tiny, a boxer, a fighter, and my family knew him personally – his daughter Shirley went to high school in Regina with my sister Estelle. In July of 1962, the Saskatchewan doctors all went on strike, to protest. It was a bitter strike. Imagine – no doctors, no medical care. The strike lasted three weeks. Douglas fought hard and even began importing doctors from Britain.  Douglas stood alone, against fierce attacks from doctors, hospitals, federal politicians, Saskatchewan voters.  He persisted.

    Tommy Douglas won. The strike ended around July 21, 1962, with the doctors’ submission. And the idea spread from Saskatchewan across Canada, with the federal government mandating national health insurance – a program America needs but somehow cannot seem to attain.  It is thanks to little Tommy Douglas that Canada has a workable, effective health insurance system that America needs so badly but can’t seem to attain. 

    Many Americans are scornful of Canada – but they would do well to look North and benchmark.  Canada does have ideas that work, that America can use.  It’s worth a try.   If there were more social experiments in America, there might be more wellbeing for its citizens.

 

Advertisements

         How IBM’s Executive School Fostered Creativity

by Shlomo Maital

   MobleyLouis Mobley

Almost 60 years ago, in 1956, Louis R. Mobley built the IBM Executive School to make IBM senior managers more creative. He used 6 key principles. They are highly relevant today – they made IBM a great company. I found this on a blog called Creativity at Work, in turn citing a Forbes article by August Turakk.

     Try these principles on yourself. Build your own personal Executive School.

   1. Traditional teaching methods (reading, lecturing, testing, memorizing) are worse than useless; they are counter productive, they build ‘boxes’.

2. Becoming creative is an UNLEARNINg process, not learning – you need to abandon, discard, destroy and trash beloved assumptions.

3. You don’t learn to become creative. Instead, you BECOME a creative person behaviorally, by your actions. You transform yourself. By action learning, constant effort and practice, you find solutions to problems that are totally unobvious. You become a creative person through practice, like a piano player learning to play the Minute Waltz.

4. The fastest way to become creative is to hang around with creative people. Creativity is infectious. If you hang around dullards, you will soon be one.

5. Creativity is highly correlated with self-knowledge. If you don’t know what your own inner biases are, you cannot overcome them. Mobley’s school was one “big mirror”.

6. Creative people give themselves permission, and others, TO BE WRONG.   Fail fast to succeed early, is the principle. There are no bad ideas, only building blocks to good ideas, as Edison believes and practiced.

Jeff Bezos Follows the Money

By Shlomo Maital

 Bezos

 Have you been following Jeff Bezos’ remarkable reinvention of Amazon? Ignore his purchase of a new toy, The Washington Post – that isn’t part of the reinvention.

   Bezos is doing what many successful companies fail to do.   As Peter Drucker explained decades ago, companies fail not because they do things wrong, but because they do the wrong things… they do the right things for too long until they BECOME wrong. Amazon became a market leader in on-line book sales, then broadened to selling everything, was highly successful – and while it was successful, Bezos is reinventing it, a highly difficult task. (“If it ain’t broke, why fix it? How many CEO’s believe that, and die with their company).  

   According to David Streitfeld (NYT April 4, p. 15), Amazon Fire TV “is part of a multi-billion-dollar effort by Amazon to move from selling goods produced by others, (low margin), to presiding over the entire process of creation and consumption (downloads and streaming).”  

Amazon is now selling a device, Amazon Fire TV, that lets consumers watch Amazon’s video library, as well as play games, on their TV sets.

   Recall that very quietly, Bezos positioned Amazon as a major supplier of cloud services, leaving Microsoft, IBM and other huge technology companies behind.

   Bezos is using what Bain & Co.’s Orit Gadiesh called “profit pools” – a tool that shows profit margins at each stage of the value chain, and asks senior managers to ask, ‘where is the money [today]?’ and ‘where will the money be in 5 years?’?   This is precisely what Bezos asked. His answer: creating download content. And he is able to move Amazon, with alacrity and skill, to where the money will be.

     Bezos may well slip and fall in future. But until now, his strategic moves have been alacritous and visionary. And risky – he is not afraid to risk billions.

     He’s worth watching carefully, to learn how to innovate tomorrow even when what you innovated yesterday is a big success.

Can We Feed 9 Billion People?

By Shlomo Maital

hunger  FAO Food Price

The new United Nations report on climate change * is very disturbing. It shows climate change is far worse than we had feared, with average temperatures liable to rise by as much as four full degrees, flooding coastal cities and creating turbulent weather.

   Today, in the New York Times, Eduardo Porter invokes the ghost of Thomas Malthus, who wrote two centuries ago that population growth would generate famine, starvation, plagues and war. It didn’t happen – yet. Could it?

   In case you haven’t noticed, the FAO global food price index rose from 100 in the year 2000 to 160 today, 2014. This is nearly as high as it was in 1970, when the world faced rapid food price inflation.  

   The IPCC report refutes the idea that climate change will help food production by making food-growing areas warmer. Apparently, faster photosynthesis caused by more carbon dioxide in the area helps weeds more than crops, while ozone and high temperatures actually reduces yields of major grains, according to the report.

   To feed over 9 billion people worldwide in 2050 will require 70 per cent more calories than the world consumes today. That’s a huge increase. Where will it come from? Or will we see growing numbers of hungry people?

   We’d better tackle the problem right now. Because, Malthus forecasted in 1800, hungry people go to war, desperately, to feed their kids. Especially when half the world overconsumes and grows obese, while half the world goes hungry. There must be a better way.


* U.N. Intergovernmental Panel on Climate Change (UN IPCC), report issued Monday.

* Eduardo Poter, “a forecast of famine, revisited”, International NYT April 3, p. 16.

   

How High Frequency Traders Ripped Us Off:

Michael Lewis Exposes Wall Street – Again!

By Shlomo Maital

Flash Boys

I should always read a book before I blog about it, and generally do. But permit me, just this once, an exception. Michael Lewis’ new book Flash Boys is just too important.

   Lewis is an author, age 53, whose books (Liar’s Poker, The New New Thing, Moneyball: The Art of Winning an Unfair Game, The Blind) expose Wall Street. He worked on Wall St. in the 1980’s, made a big salary, thought the salary was unjustified, quit, wrote a book about it exposing Wall St.’s fraudulence in the 1980s, — and it became a best-seller, as all the MBA students bought the book not to understand the fraud but to learn how to make big bucks fraudulently.

   Flash Boys exposes how ‘high frequency trading’ rips us off. Here is how Michael Baram explains it, and links it to ‘dark pools’ [off-stock-exchange markets] (in the International Business Times website):

   “High-frequency trading is the controversial practice in which firms use sophisticated computer algorithms to trade securities in milliseconds. On Wall Street, information is the coin of the realm and anyone who has an inside track on a large fund’s trades can exploit that knowledge — a pension fund trying to buy 100,000 shares of Microsoft at a certain price range may prefer to hide that order inside the dark pool instead of trading it on a public exchange such as the Nasdaq. But by paying for a special connection to the dark pool, high-frequency traders are able to find that pension fund’s order, go over to the Nasdaq and buy it at a lower price, and then quickly sell it to the buyer in the dark pool at a higher price.”

   For years, I have known that foreign exchange traders do this practice, also known as front-running.   A big client asks to buy 100 m. yen. The trader buys the yen for his own ‘nostrum’ account at a cheap price, the price of yen (in terms of dollars) rises,   he buys the yen for the client at a higher price, then at once quickly sells the yen he bought and ‘flips’ a quick profit. If you do this daily, hourly, soon you make billions, for your bank and for your bonus. It’s unethical, immoral, maybe illegal, but – who knows? And who can prove it? Nobody ever went to jail for front-running.

   Now Michael Lewis and his quality research show us that high-frequency traders are doing the same thing. They use their inside information to make money at the expense of pension funds and the public. Dark pools account for 12-15 per cent of all stocks trade in the United States.

     As Lewis writes:   “The hidden passages and trapdoors that riddled the exchanges enabled a handful of players to exploit everyone else…   [Like casinos] You invite a few to start Texas Hold ‘Em by telling them that the deck doesn’t have any jacks or queens and that they won’t tell that info to other people joining the game … By 2013, the world’s financial markets were designed to maximize the number of collisions between ordinary investors and high-frequency traders – at the expense of ordinary investors.”

   There seems to be no end to the Wall Street perfidy. The regulators are always a dozen steps behind. If and when the high frequency ‘dark pool’ loophole is closed, by then there will be a new and profitable one.   Lewis cites a Royal Bank of Canada employee, Bradley Katsuyama, who fought back by trying to create an honest level-playing-field stock exchange.

     The big central stock exchanges, like NYSE, have broken up into many smaller electronic exchanges. This has made it far easier to hide unethical practices that rip us off. Lewis has exposed them. But as we speak, count on it, they’re working on new and better ways to steal. Because, it’s all about money, and for those involved, doing the right thing is for dumb suckers, like you and me.  

How to Choose People to Hire

By Shlomo Maital

evangelist

   Hiring people for either a startup or established company is one of the most crucial decisions senior managers make. And in my experience, many mistakes are made.

   Whom should you hire? How should you hire? David Brooks writes about it in his New York Times column today, “the employer’s creed”.  

   Here are some of his rules, and I’ve added a few of my own.

   Avoid people with “a high talent for social conformity”. You want to have people to tell you what you DON’T want to hear, not what you do want to hear. There are enough of the latter already.

   Don’t favor people with high GPA’s.  I’ve found that the grade-grubbers (hey, I WAS one once, damaged my brain permanently) are not the creative mavericks you want to hire.

   Reward honesty.  Choose people who write honest applications, rather than sugar-coated ones with chocolate icing. You want honesty above all. Beware of the liars, even little white lies.

   Hire infected people – evangelists. This comes from Guy Kawasaki, the Macintosh guru. He was a psychology grad, jewellery business person, no tech experience – and he made the Mac a big success. Why? Because he was ‘infected’, an evangelist (in Greek – someone who brings the good news). Hire people who share your passion, not those looking to flip their options. 

   Hire diverse people. If you have a diverse workforce, you are more likely to get good ideas. Your range of people, their personalities, skills, passions, need to be wide, so that you can do ‘zoom out’ on new ideas far wider and better.

   Invest a lot of time and effort in hiring. I know a CEO of a Canadian company, who hangs out with potential management hires for a whole day, lunches with them, plays squash with them…   to get to know them. That will save you a whole lot of trouble in the future. If you make a bad hire, by the time you realize it much damage may have happened.

   Never ever abandon hiring solely to your HR people. They hire according to the book they learned in college. Sometimes, when you hire, you need to throw the book away. Make hiring your own key responsibility.

From Idea to Product: Crossing the Chasm

By Shlomo Maital

Noceramatroshka

    When I teach entrepreneurship and innovation, I do a bit of theatre. I show my class a ‘matryoshka’ Russian nested doll set, and one by one assemble each doll, nested inside a larger one. I do this until I have 9 dolls on the table, down to the tiniest one. Then, I tell the story how one year, a sharp-eyed student asked, why nine? Instead of ten?, and I discovered a tenth tiny-tiny doll, much smaller than a pinky fingernail.

      I had been unaware of its existence, inside the 9th doll, for years.    See this? I hold it up to the students. This is the idea. This is the fun part. This is the easy part. The hard part? Implementing the idea. Building a business around it – the other 9 dolls. Without that, that tiny ‘idea doll’ is of no value.   

    Prof. Daniel Nocera, Harvard University, is an example. He has developed an artificial leaf. It’s an invention that generates energy the way a tree or a plant does. “Light strikes a container of water, and out bubbles hydrogen, an energy source, as the light breaks H2O into hydrogen and oxygen.” How does this work? Writes Jack Hittmarch (NYT March 29): “A silicon strip coated with catalysts breaks down the water molecule [using sunlight].”      Wow! Hydrogen! You could use all that hydrogen to power fuel cells, which are devices that convert the chemical energy from a fuel into electricity through a chemical reaction with oxygen or another oxidizing agent. Hydrogen is the most common ‘fuel’ for fuel cells.   

    Big wow! But the discovery was made years ago. Nocera says his system is very safe. “My system is based on water, so if there was a catastrophe we’d just need a mop.”   However, hydrogen is highly flammable, and highly explosive.    So turning the Artificial Leaf into usable energy means surmounting many obstacles. Create viable fuel cell technology. Solve safety issues, in storing hydrogen. Get consumers accustomed to using fuel cells. There are many cheap reliable nonpolluting energy sources. The issue, it seems, is not the invention. It’s how to make it desirable and usable for consumers. And THAT is a huge problem.   

   Nocera says that fracking and cheap natural gas is “killing” his artificial leaf invention.   But one day fracking may actually help. Fracking can produce hydrogen, at a cost of carbon dioxide. If such hydrogen production becomes widespread, so will the infrastructure to use it. And then, Nocera’s artificial leaf will be popular, because it can produce hydrogen (to feed the infrastructure) without generating carbon dioxide. It will defeat fracking.    To sum up: There are loads of great new technologies that ‘solve’ our problems. But there is a lack of wise capable entrepreneurs who know how to commercialize them fast, cheap, good, friendly, easy…. And governments willing to supply the needed infrastructure.  

    Innovators should bone up on these technologies and invest creativity not in new ideas but in how to implement old ones and diffuse them widely.    Long ago, Geoffrey Moore taught us how important it is to ‘cross the chasm’ between early adopters of innovation and mass-market buyers. There is a different chasm, equally hard to cross – the chasm between a great idea based on sound technology, and a widespread commercial product or service used and loved by all. There is as much or more need for creativity in crossing this chasm as there is in inventing new technologies.

How America Buried Its Future in Its Defense Budget

By Shlomo Maital

USS NEw Mexico

   In Thomas Friedman’s New York Times column, March 31, he writes about his cruise on the U.S.S. New Mexico, a modern nuclear attack submarine, underneath the Arctic ice cap.

   He describes: “Excellence…if anyone turns one knob the wrong way on the reactor or leaves a vent open, it can be death for everyone. …As one officer put it: ‘You become addicted to integrity’. There is zero tolerance for hiding any mistake. The sense of ownership and mutuality and accountability is palpable.”

   How many American companies would LOVE to be able to describe themselves as Friedman describes the U.S. Navy submariners? How many would LOVE to have world-class cutting-edge technology, like the U.S. Navy, far beyond that of other companies?   Why don’t they? Because the U.S. defense budget in 2014, despite cuts, will total $526.6 b., or 4 per cent of America’s GDP. This is fully one-third of all the world’s defense spending in 2014, or $1.538 trillion, up from $1.538 trillion in 2013, the first rise in global defense spending in a decade. America is burying its economy in those costly nuclear subs.  

   Years ago, I visited an aircraft carrier, the U.S.S. Theodore Roosevelt. 11 decks of amazing technology and 5,000 superbly trained 18-year old or 20-year-old sailors. Planes launched and retrieved, at night, in darkness, simultaneously. Microsoft, IBM, eat your heart out.

   America’s chief rival, China, spends only $132 b. a year on defense, or one-fourth that of America. And NATO? The 28 NATO nations have agreed they should spend 2 per cent of GDP on defense (half of America’s level), but none except the U.K. (2.4 per cent) actually do.  

   And Russia? Russia will boost its military spending by 44 per cent in the next three years, to fulfill Putin’s vision of a Great Russia (“bring back the U.S.S.R.!”).

   So to sum up: The world is again in an arms race, defense spending is rising, and we are wasting huge sums on things like nuclear subs. Europe, as always, is sheltering under America’s defense spending, and has nothing to face Russia with. America has sunk its economy in military technology, which despite myths does not translate into cool civilian technology, for the most part.

   * What purpose do those superb Navy subs and aircraft carriers serve, when the main threat to America is Taliban terror, al Qaida fighters armed with AK-47’s and home-made improvised explosive devices?  

   * Would the world be a better place if America’s economy were made stronger by diverting defense spending into infrastructure and civilian technology and education?

   * Should Europe quit sponging off America and spend to defend itself?

   * Is Russia again going to impoverish itself by putting billions into defense rather than rebuilding its flagging civilian economy, just as the U.S.S.R. did, fatally? Russia’s Siberia oil production is declining because Russia simply is not maintaining its oil infrastructure there – this, despite piles of cash in the bank. Simple incompetence.

   Stay tuned.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
April 2014
M T W T F S S
« Mar   May »
 123456
78910111213
14151617181920
21222324252627
282930  

Pages

Archives

Advertisements