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How to Change Your World With Ideas
By Shlomo Maital

Kavala Greece
During the week of May 13-20,  2018,   I will offer a course on “How to Change Your World With Ideas”,  at a lovely spot,  Kavala Greece.   I would be happy if you would join me there.   Check it out at this URL:   unboundprometheus.com
Here is a short description of my proposed course:  How to Change Your World With Ideas
Consider this.  Some 98% of five-year-old children score “genius level” on a standard creativity test.   At age 10, only 32% reach ‘genius’.  At age 15: 10%.  At age 30:  2%.     Creativity-driven Apple has created more wealth (over $1 trillion) in 40 years than oil-based Exxon Mobil has in 90 years.   Why then is  society destroying what may be its main resource – ideas?
I believe most adults perceive that their creative juices have diminished since childhood.  But few of us know why, or how to remedy this.  There is an internal paradox in creativity.  Generating ideas demands that we smash all constraints and employ soaring head-in-the-clouds imagination. Yet unless we have an orderly feet-on-the-ground process for doing so,  we forego the second half of the definition of creativity:  “novel” and “useful”.   Creativity requires ideation, validation,  and actuation.  Each of these three steps employs a different mindset.
This course begins with the proposition that “everyone can” – everyone can generate an endless stream of creative ideas.  The brain is a kind of muscle – it gets stronger with exercise.   In this 5-day course, I will offer participants a variety of components, that together can be assembled into a ‘personal creativity machine’ (PCM) – a highly individualized process that produces a stream of highly creative ideas,  ones that  change your own world and possibly change the whole world.  Like fingerprints, no two PCM’s are identical.
Our 12 hours together will end with each participant constructing his or her PCM – and turning it on, with no ‘off’ button.

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Govt. Pays Taxes to Corporations: Why??

By Shlomo Maital

presentation1

     Once corporations paid taxes to governments. It made sense. Companies benefit from services and infrastructure, so they should pay taxes, like everyone.

       But then, countries discovered they could play a win-lose game by offering corporations tax breaks (like Ireland’s 12.5% corporation tax) to lure them to come. We win, you (other countries, e.g. U.S.) lose.   Soon many countries were offering such tax breaks. And corporations grabbed every one. Legally. It is almost true that governments now pay taxes to corporations.

       Writing in the Oct. 5 New York Times (“Dealbook”), Russ Sorkin cites a study just released, that found that “73 per cent of Fortune 500 companies” (that is, 365 of them!) maintained “subsidiaries in offshore tax havens”. Apple alone holds $214.9 billion abroad and would owe $65.4 billion in taxes if it brought that money back to the U.S.

       The study shows how companies set up small subsidiaries, small enough to avoid reporting offshore profits; “27 companies reported 16,389 total subsidiaries (!) and 2,836 tax haven subsidiaries to the Federal Reserve – but only a small fraction of those were reported to the Securities Exchange Commission”.

         A furor arose over Donald Trump’s failure to pay income tax. But compared to the legal tax avoidance of companies sending money offshore, it’s a drop in the bucket.

         America could use a big dose of capital investment. But the money that could pay for it is sheltered abroad. How much? 58 Fortune 500 companies alone would owe $212 b. in federal taxes, if they were taxed properly.

         My questions: Who created these loopholes in America’s tax law? And why can’t legislators fix them?   Are Republicans so enamored by wealth that they approve this? Are Democrats so helpless they can’t take on tax reform?

             The Europe Union is trying to collect $14.5 b. in taxes from Apple. Apple CEO Tim Cook calls this effort “total political crap”.  

             The place to start is simply to require transparency. Nobody really knows how much money is sheltered abroad. Start by making companies report offshore holdings. And then – figure out how to make them pay taxes on them, no matter where they are.    

      

Xiaomi: From Nowhere to #4

By Shlomo Maital

Xiaomi

   Xiaomi may be the biggest, bounciest startup many never heard of. It is China’s biggest smartphone seller, 4th largest in the world, founded in 2010 and growing by leaps and bounds. It makes beautiful, cheap, simple smartphones, sold nearly everywhere but in the U.S., and sold only on-line until recently. Xiaomi means, in Mandarin, “millet technology” or “grain technology”. I’m not too sure why they chose that name. But Innovators can learn a lot from its story.

 Xiaomi was founded by 8 entrepreneurs, Hong Feng, Zhou Guangping, Li Wanqiang, Huang Jiangji, Lin Bin, Liu De, Wang Chuan, and Lei Jun, with the latter as the driving force. It is based in Beijing.

It now employs some 8,000 and has annual revenues of some $20 b.   It is widely regarded as the high-tech startup with the highest current market value.

   An HBR Ideacast podcast by Clay Shirky reveals some of its break-the-rules innovations.

* Simplicity:   Xiaomi smartphones are beautifully simple. Why? Android-based, Xiaomi chose 100 sophisticated smartphone users and interviewed them intensively, realizing that the company itself could never fully test ALL the permutations and combinations that smartphones enable, but users could and did.

* Customer-focus: Many companies claim that, but few really do it. Xiaomi does.   Fully one-third of Xiaomi new features on their phones come from their users. They truly do practice ‘open innovation’.

* Samsung, once market leader in China, has very short battery life. Xiaomi found ways to lengthen battery life, and thus replace Samsung as China’s market leader.

* Xiaomi is now expanding from Internet sales, to open its own retail stores, somewhat like Apple.

   But the main lesson from Xiaomi:   China’s 5-Year Plan, “Made and Invented in China”, is no dream. Xiaomi has proved capable of competing head-to-head with giants like Samsung, LG and even Apple, both designing and manufacturing in China. And it is now aggressively invading the Indian market, which is huge.

     We all knew Apple was vulnerable in the low-end smartphone market. Xiaomi saw that early on, and moved quickly to capture it.

      

Guy Kawasaki’s 10 Innovation Rules

By Shlomo Maital

Kawasaki

Guy Kawasaki is the psychology grad, in the jewelry  business, who became the marketing guru for Apple’s Macintosh and led it to massive success.  He has since become a successful venture capitalist and author, (“Art of the Start”) and speaks effectively on startup entrepreneurship.

   Here are the 10 rules for successful innovation, given in an address to a conference of educators in Boston, Nov. 16-18:     Innovator – on a scale of 1 to 5 (1 = out to lunch on this one,   5 =   implement it always and with perfection), score yourself on each of the 10. 35-40 points gets you a high success rating on the Kawasaki scale.

  1.  Make Meaning – Great innovation is motivated by the desire to make meaning and to change the world. Companies that are successful started because they want to make the world a better place. If you are just trying to make money, then you attract the wrong kind of people.
  2. Make Mantra – You should have a two or three word explanation of why your school or class should exist.  Mission statements are too long and not memorable
  3. Jump to the next curve – The problem with most businesses is that they define innovation as what they do in their business. Define yourself not as what you do, but as the benefit you provide. Great innovation begins in jumping or creating the next curve. Kawasaki cited Western Union as an example of a company that did not do this by refusing to see the benefit of telephones. There are certainly a large number of companies that became irrelevant due to their failure to see the next curve.
  4. Roll the dice – Don’t be afraid to take a chance and put out something unique to your market. Kawasaki cited Ford’s My Key that allows you to program the top speed into the key.
  5. Don’t Worry Be Crappy – Kawasaki who was a member of the development team for the first MacIntosh computer, admitted the first MacIntosh was a piece of crap, but he added that it was a revolutionary piece of crap due to some of the revolutionary aspects of the device. “Ship stuff that jumps to the next curve,” he encouraged. If you wait until it is perfect you may miss your opportunity.
  6. Let 100 Flowers Blossom – As an innovator you may think you have an exact customer and an exact use for what you do. You may encounter a situation where unintended people use your product in unintended ways. If this happens we need to embrace it and let this unintended use blossom.
  7. Polarize People – Great innovation polarizes people , it is one of the consequences. Anyone who has asked teachers to make the switch to Google docs can identify with this one. (If you have people who truly HATE your product, but also those who truly LOVE your product – your polarized, and you’re on the right track).
  8. Churn, Baby, Churn – This is the hardest thing about innovation, you need to be in denial and refuse to listen to naysayers.
  9. Niche Thyself – If you are designing a new product then you need to make sure that what you are doing is both unique and valuable. Find your niche. Be the best in it.
  10. Perfect your pitch – Customize your introduction to show that you know where you are and who you are talking to. Find out information about who you are talking to.

Hold Stocks?   Time to Sell?

By Shlomo Maital

stock market crash

 

There are a thousand good reasons why I never give advice on the stock market, and why, if I did, you should ignore it.  I myself hold no shares at all, in anything. 

   But here are some facts worth pondering.  Thanks to New York Times journalist Gretchen Morgenson for her insights.  Note that the NASDAQ exchange is reaching new record highs.

    “This is the third longest bull market in 80 years, and we are starting to see some deterioration develop.” (a money manager Morgenson quotes).

   “We are at an inflection point.”  (co-chief investment officer).

  “Many investors may be quick to sell their shares in a swoon, amplifying a downturn… [especially] investors who have bought shares on margin, using borrowed money, and those who have been pushed into the market in search of returns because of low interest rates.”  (Note: The bull market is fueled almost exclusively by the latter two groups).

    “Money borrowed to buy stocks tends to be nervous money.”

   “The Federal Reserve will always be there to save the day”.  This is a wrong assumption.

   “Apple shares have lost 11.3 per cent despite the fact that earnings per share were up 45 per cent over last year”. 

    Morgenson counsels, “It’s probably not a bad idea to be watchful for [distinct market shifts]…”.    I agree.   Be careful!

How to be an Evangelist:

From Guy Kawasaki

By Shlomo   Maital  

Guy Kawasaki

Guy Kawasaki is the legendary marketing guru for the Macintosh computer.  Apple hired him, even though he was in the jewellery business at the time, had a psychology degree from Stanford, and knew next to nothing about personal computers. 

  Why did Apple hire him?  Because – he believed.  He felt that MS-DOS, and Microsoft in general,  were “crimes against humanity”.   He felt that “Bill Gates brought darkness to the world.”  He set out “to right a wrong”.    He was in his words – an evangelist. 

    The Greek roots of the word evangelist mean “one who brings or proclaims good news”.  The word has come to mean someone who preaches the Christian gospels. 

    Kawasaki became a VC (garage.com), and how is Chief Evangelist for Canva, a startup whose mission is to democratize design.  In the latest issue of Harvard Business Review, Kawasaki sets out the rules for becoming an evangelist.  Here they are:

  1. Schmooz. Build social connections. It’s easier to evangelize people you know.
  2. Get out of your cubicle. Network. Talk to people.
  3. Ask questions. Initiate a conversation, then – shut up and listen.
  4. Follow up. Make sure that you follow up on a meeting, within a day.
  5. E-mail effectively: Optimize your subject lines, and shorten your text. Always respond quickly.
  6. Make it easy to get in touch.
  7. Do favors. If you do things for others, they are more receptive to listen to you.
  8. Public speaking: An evangelist must master the art of public speaking.  Kawasaki says it took him 20 years to master the art and get comfortable. 
  9. Deliver quality content. 80% of the battle is having something worthwhile, interesting, perhaps novel,  certainly meaningful, to say.  It is NOT just about how you say it, but what you say. 
  10. Omit the sales pitch. If people think you are pitching, you’re dead. Don’t.
  11. Customize. Use the first few minutes to directly address the audience, show them you’ve done your homework, know who they are and what they seek.
  12. Focus on entertaining. If people are entertained, they are more receptive to the information you bring.
  13. Tell stories. Make it personal. Tell stories about yourself and others, that support your message.
  14. Circulate in the audience beforehand. Make contact with them, especially with those in the front rows.
  15. Control what you can. Try to speak at the beginning of an event; choose a small room, if you can. A packed room is better than a half-empty one.
  16. Practice. You need to give  a speech 20 times to get good at it.

 

Rules for Social Media:

  1. Offer value. Share good stuff – of four kinds:   information, analysis, assistance, entertainment.
  2. Be interesting.
  3. Take chances. Don’t be afraid to take strong stands, express feelings.
  4. Keep it brief.
  5. Be a mensch.
  6. Add drama.
  7. Tempt with headlines. How to…   top 10, etc.
  8. Use hashtags.
  9. Stay active: 3-20 different posts a day. 

  “Evangelism is not about self-promotion. It’s aobut sharing the best of what you, your team and your organization produce with others who can benefit. “

Obama – Bring the Money Home!

By Shlomo  Maital    

       money abroad

Two reports in today’s Bloomberg Business Week and  Global New York Times are closely connected.

 Floyd Norris reports that after six years of economic crisis and stagnation, the level of employment in the U.S.  has at least returned to its level in 2008. 

  And Bloomberg reports that American businesses, which recovered far far faster than us ordinary working people, have piled up nearly 2 trillion dollars (!) in retained profits abroad, which they choose not to repatriate and bring home to America, in order to avoid the 35 per cent corporate income tax. 

   General Electric alone has $110 b. locked up abroad; Microsoft, 76.4 b.; Pfizer, $69 billion; Merck $57 billion;    and Appel $54 billion.   Overall,  only 22 big companies hold half of the ‘locked earnings’ abroad, or $984 billion. 

   In the past, economic recoveries occur when businesses start investing again, in capital formation, using their retained earnings.  But this cannot happen in America when businesses are sitting on their money abroad. 

   It’s not as if America doesn’t need investment. It needs infrastructure, new airports, fast trains (Amtrak’s ‘fast’ Boston to Washington train is a disgrace, compared to Japan’s and France’s bullet trains), new roads, new bridges, new schools, new factories…in short, everything. 

   So President Obama —  why not declare an amnesty?  Tell the giant businesses, if you  bring your money home and use it – or even just bring it home, and make it available in capital markets for OTHERS to use it —  we’ll offer you an Irish rate of tax, about 12 per cent, rather than the American one, 35 per cent.   Do it because it makes good business sense, and besides, your country needs it – and it is your country that gave you the innovation and creativity that made you the profits in the first place. 

      It’s pretty likely the Republicans, who are pro-business, will support such an amnesty.  And President Obama —  after your dismal performance for six years, this may be your last chance to actually do something creative and productive.    Do something for America’s workers.  Renewed investment will create jobs more than anything.  Until America’s businesses stop sitting on their piles of money abroad and start using it at home, employment cannot recover strongly.

  Why Money Should Be Like Manure – But It Isn’t!

By Shlomo  Maital   

                  manure pile 

   Money, it is said, is like manure.  To do any good, it has to be spread around widely.

   But in today’s screwed-up post-global-crisis world,  it isn’t.  Money is increasingly concentrated in a very few hands.  And as a result it just sits there.   This is the nub of the problem.

   Consider these two pieces of data.

   *  A new study by Oxfam, the British philanthropic NGO, claims that  85 super-super-rich individuals in the world hold wealth worth $1.65 trillion!   This amount of wealth, held by fewer than 100 individuals, is equal to the value of all the wealth held by the poorest half of the whole world – 3.5 billion people.   The average wealth of the super-super-rich 85 is $19 b. per person. 

     Try this imaginary exercise.  Suppose, tomorrow, these 85 super-super-rich followed Warren Buffett and Bill Gates and gave away their wealth (gradually selling assets, in order not to depress the prices of stocks, bonds and real estate) and handed the proceeds to the world’s 3.5 billion poor people.  Each poor person would get $471.   This is a paltry sum. But it would change the lives of the poor.  They could start businesses, buy small pieces of land, buy a home.  And this spending would generate income for other poor people, who in turn would spend it…and end the global economic stagnation. 

     Imagine, as John Lennon says.. Imagine.  But it’s just a pipe-dream.  The wealth of the super-super-rich is the opposite of manure.  It sits in their safes and living rooms,  instead of spreading around the world.

   *  According to the Financial Times, Jan. 22,  “the pile of unspent corporate cash that has built up since the start of the financial crisis is being held by an increasingly concentrated pool of companies that will be crucial to hopes of a pick-up in business investment to stimulate the world economy.”   A study by the consulting firm Deloitte shows that globally,  “about a third of the world’s biggest non-financial companies are sitting on most of a $2.8tn gross cash pile of unspent corporate cash (retained earnings) !  And of that sum, fully 5 per cent is accounted for by Apple alone, with $150 b. in unspent cash! ”   “Looking ahead, the wave of cash [spending] that many are expecting will depend on the decisions of a few, rather than the many,” a Deloitte expert said.

  Why aren’t corporations spreading around their cash, like manure?  In a risk-averse world, with sluggish economies, there is no need to invest in more productive capacity.  Better to hold on to the money and play with it than invest it in real industry, in real job-creation, in real innovation.  This is what the handful of rich corporations believes.

    Why not impose a tax on unspent retained earnings, to create an incentive to invest it?  Why reward Apple for holding its cash abroad, instead of investing it in America? 

     So there you have it.   Billionaires and rich corporations. Both sit on huge piles of money.  And the money just sits there.  Until it starts to move, we won’t see true global economic recovery or more new jobs for those who really need them.  

Blog entries written by Prof. Shlomo Maital

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