Thoughts and Experiences from WFU MBA

The End of a Journey....

2010-05-22T17:19:00.000-04:00

...and the beginning of a new one.

After 225 posts, I've decided that it's time to put an end to this blog. Last week our WFU SOB Exec2009 MBA class had their official "Hooding Ceremony" at Wait Chapel, and with that I'm going to wish a fond farewell to something that truly changed my perspective on work and how I interact with people.

More than anything else, I want to thank my family for the incredible support they gave me over the last two years. We knew it wouldn't be easy, and there were times when we questioned if it made sense. But in the end it turned out to be invaluable in helping my future career, and I am forever thankful to them.

When I started the blog, I had just completing my first semester in the program and I felt like my mindset was too focused on the mechanics of learning, on the results (grades), and not enough on the learning process. It was at that point that I decided that I wanted to make my MBA experience more social, more focused on the application of the learning.

As I look back on the blog now, I'm proud of how it evolved and what it taught me about the use of social media, expressing ideas and concepts succinctly, and making a commitment to using the fundamentals of the program as a model for future learning. If I had to make a list of lessons learned, it would go something like this:

Get in the habit of writing, everyday if possible. Even if you don't post everyday, it forces you to take an idea from a scrambled thought to something that you feel confident communicating in public.
Look for linkages between concepts and ideas. I tried very hard to find examples of topics from one discipline (eg. finance) and show how it was linked to another discipline (eg. marketing). This forced me to put myself in the shoes of the business owner and example how actions in one area effect many other areas of the business.
Look for analogies between industries. Far too often we repeat the mistakes of the past because we only look for answers within our own industry. Often times there are analogies from other industries that can be examined and applied to help solve problems in your industry.
Don't be afraid to explore a "crazy idea", some interesting things might happen. The Internet has become so social (and searchable) that you'll often find complete strangers will offer suggestions or comment about similar thinking they've had. You may also "shelve" the idea now, but find that you come back to it again a few months later after the dynamics of an industry change (or the global economy changes).
Even though it's "just blogging", learn how to use the digital tools of the Internet to measure how your blog is doing. You'll be amazed at what you can learn about your readers using free tools (eg. Google Analytics). So just like a business owner, it's important to listen to and understand what your readers are doing around your blog (eg. commenting, visiting for xx minutes, reading specific topics more than others, visiting because of certain keywords, etc.)
Write about things that you talk about more than once. You don't need a master strategy for blogging or a novel full of ideas. Just write about topics that come up more than a couple times in your life (or MBA experience).
Create your "personal brand". A blog is a great way to show the world your way of thinking, the depth of your analysis, your sense of humor or your interests. It enhances a boring resume and makes you findable by future job recruiters.

Thank you to anyone that has ever read the blog, made a comment, or forwarded it along to a friend. It became an extension of my MBA experience, and I'm glad I took the chance to get started 225 posts ago.

- Brian

Business Models, New Blog and Missing Links

2010-03-16T14:32:00.000-04:00

It's been a few weeks since I've posted any updates here, but for good reason. I'll tackle the title of this post in reverse order, so bear with me on where this is going.

Missing Links - For a while, I was using Fridays to post a set of links that I thought pointed to interesting topics that had relevance back to topics we covered in the MBA program, or pointed out future trends I thought my classmates would benefit from. I've gotten behind on the weekly posts for a couple of reasons: [1] work has kept me busier than normal (not a good excuse, everyone is busy), [2] I'm finding that between Twitter and RSS feeds (mostly blogs) that I am starting to read and consume content in much different ways than just a few months ago and it's not as convenient to aggregate links. Too many concepts and ideas build off the other. I'll do my best to keep the links coming at least bi-weekly.

New Blog - While courses like Organizational Behavior and Leading Change were some of my least favorites during the program because they felt very theory-centric and terminology-centric, I'm finding their applicability to be some of the most important in my current business. For example, in the IT industry there is a significant interest in a new paradigm called "Cloud Computing". Cloud Computing allows companies to continue to utilize computing and application resources to service their business needs, but it offers the ability to migrate IT from a CAPEX burden to a OPEX cost model that better aligns usage with needs. While most of the IT industry is debating the technologies to enable Cloud Computing, very few people are diving into the organizational changes that will be required to make this model a reality. So for that reason, I've decided to start a new blog called "Clouds of Change" to focus on the people and organizational elements required to make Cloud Computing successful for businesses. If you're interested in the discussion, or how it may impact your business, I invite you to visit the site.

Business Models - As I've mentioned before, one of my entrepreneurial projects is a new business called Gracely Girl Designs. This is a business that my wife leads, focused on fun, unique, handmade clothing for children aged 1-10 years. The business is still only 6 months old and is a hybrid between an online eCommerce store and a physical store. 30 years from now, after I've retired, I will remember two distinct things from B-School: (1) In the long-run, it's very difficult to sustainably make $1 in profit (or any amount), (2) There is a HUGE difference between creating a great product and creating (and executing) a great business model.

The reason I bring this up is that we tend to get three types of comments from people at shows we attend. From shoppers we get lots of, "those are so cute, we love your designs". We also get plenty of, "do you think you could make me a ?" From other vendors we often get, "hmm, do you make those yourself?" (wondering if they could make similar items). We love the compliments and do create custom orders for unique sizes and color combinations, but we often find ourselves having to refer customers to other sources (eg. Etsy) for items that are outside of our target market. Those orders don't fit into our business model (for various reasons). And for other vendors we simply say "yes". Being a hybrid (online/physical) may or may not be the optimum business model in the long run, but we're using it today to allow us to build up the customer base in our local market. Our customers are often mother's of small children, a social network that lives to make recommendations to friends and accept new ideas. We also hope to leverage that to expand our footprint over time, which should drive the online portion of our business. We'll see, it may or may not work out as planned, but the size of the business allows us to rapidly experiment and adjust the model as customer demand changes.

Weekly Links (Feb.1, 2010)

2010-02-05T20:29:00.003-05:00

How to Craft a Killer Elevator Pitch - A very good set of tips for an elevator pitch, a new concept/idea pitch, or most presentations.

Crowdsourcing New Product Ideas (Fred Wilson, A VC- For all the people in class that wanted to bring a new concept to market, but were not exactly sure how to bring the right people, skills, technology together. Fred Wilson introduces Quirky, social product development.

What Makes a Great Teacher (The Atlantic Magazine)- This one is partially for Matt Kirk, but it's helpful for anyone trying to leader a teach via education. Some good tips on matching your style of leadership to proven models to teach and lead people.

An Example of Incremental Thinking...

2010-02-01T23:32:00.004-05:00

Three or four years ago, when I was still working at Cisco Systems, I was involved with a number of projects looking at next-generation communications and collaboration. At this point, we were well past the early technologies that we created in 1998. We were spending much of our time thinking about the new ways that people were interacting through Social Media, Interactive 3D worlds, and through Contextual Content. We thought about Mobility and Video and how this would change the thinking about a workspace and interactions with co-workers and customers.

And then one day, we went to a meeting with the group focused on new communication devices. The "next-generation" of IP Telephones. Throughout the meeting, they tried to tell us that they were creating new types of "end-points", but the focus kept coming back to telephone functionality. We tried to tell these engineers, designers and product managers that they needed to stop thinking about the device as phone-centric. We told them to think about it as being a communications portal, where voice was just one of the things it could do. Thinking about it as primarily a phone would only lead to an incremental set of features.

Much to my dismay, I saw this today as I surfed the Cisco homepage. After three years of engineering, and at least two years of watching the iPhone change the communications landscape, they still produced a phone.

Somewhere I'm sure there is a Product Manager with a spreadsheet showing a justification the ROI for making incremental changes. And that spreadsheet is probably right next to this new device that looks eerily similar to my Asus Eee PC netbook. And as Steve Jobs reminded us last week, "a netbook is not better at anything...".

Innovation is difficult. But I've found that breaking the mold of Incremental Thinking is even more difficult.

Thoughts on the iPad

2010-01-28T22:24:00.009-05:00

A few weeks ago, I made some predictions on what might be announced with the Apple tablet device. I tried to include a mix of new technologies, new usage models, and new business opportunities for both Apple and consumers. To a decent extent, I was in the ballpark on most of my predictions, with some of them still being possibilities at a later date.

Like many people, I read the comments from journalists and "experts" after the launch party. I made a mental checklist of items that appeared to be "missing", and features that appeared to be unique. The technologist in me was driving my evaluation. But then I went and watched the keynote by Steve Jobs. As he sat in the chair, surfing the web, it dawned on me that this would actually be the "Internet & media consumption" model of the future. While it was obviously staged, the experience of watching Jobs lose himself while he experienced the world offered a glimpse of the future. The experience appears to be a preview (or 1st generation) of the experience where the activity and the computing device begin to blur, and the computer no longer gets in the way. Marc Cuban seems to agree.

It doesn't do everything that previous devices do, but it does appear to do certain things uniquely well. The definition of a disruptive technology. It will get significantly better over time, just as the iPhone did between the 2G and 3GS models.

Sitting on my couch, typing this blog on my MacBook laptop, I wish I was using an iPad instead. My legs are too warm from the laptop, and the power cord keeps getting in my way. Yes in deed, it's time for a new device and a new paradigm.

Weekly Links (Week of Jan.25, 2010)

2010-01-24T11:13:00.015-05:00

This week's links are somewhat Internet-centric, but I've also tried to mix in some interesting ones on leadership, sustainability, quant/statistics and Internet marketing/measurement.

Role Models - (Fred Wilson, A VC Blog, Jan.2010) - I had a conversation with my wife (@GracelyGirl) the other day, as we're starting to see interests from our daughters in various topics. My point to her was if they are interested in things we don't have expertise in (science, art, etc.), we should find someone that can give them guidance and insight. Giving people a role model early in life is so important, especially someone in a nearby age-group, as it helps them understand that their passions and goals are obtainable.

Will the Internet F* with Wall Street? - (Chris Dixon Blog, Jan.2010) - I haven't written about this theme in a little while, so here goes. This article does a nice job of highlighting the difference between doing things differently with technology, and technology being the differentiator to truly disrupt an industry. The article highlights a company called Square (@square), created by the founder of Twitter, which is focused on creating a new way for SMBs and individuals to conduct monetary transactions. Square doesn't disrupt the previous financial industry, but it's thinking like this that could open the doors to new interaction models for the economy.

Will Amazon be the New Wal-Mart? - (GigaOm - Jan.2010) - while companies like WalMart and Best buy have been highlighted for their sustainability initiatives, maybe the company to begin focusing on is Amazon. With Amazon's revenues growing faster than their competitors, should they be driving the next stages of consumer/retail sustainability? Do they have any inherent advantage in this space because they are fundamentally virtual, as opposed to the huge physical footprints of Amazon and Best Buy?

How to Measure the Internet? - For anyone that is getting involved in a business that may drive revenue from online advertising, or will gain share because of online visibility, here are some interesting reads to get a deeper understanding about how the Internet is measure by external agencies. It also highlights how the measurement of the Internet has moved from a sampling-based model to a more direct measurement model.

How to Measure ROI - (Fred Wilson, A VC Blog, Jan.2010) - A quick Entrepreneurial refresher course for anyone starting a business and having to negotiate with investors (Angel, VC, etc.)

Re-examining the Value Chain - Apple Table (The Logical Idea - Jan.2010) - A nice look at how the recently announced Apple iPad show not be evaluated on it's technology, but on it's potential ability to change buying habits of readers of eBooks (or other reading-centric content). A strategic analysis of how it may help or hinder the publishing industry. (note: Some of my pre-announcement and post-announcement thoughts on the iPad)

Weekly Links (Week of Jan.18, 2010)

2010-01-22T10:59:00.005-05:00

Find a Bright Spot, and Clone it (Fast Company, Jan.2010) - An excerpt from the upcoming book "Switch" by the Heath brothers (authors of "Made to Stick"). I highly recommend the book to all my classmates that are faced with leading changes in their business or their lives.

Shareholders vs. Stakeholders vs. Communities (January, 2010) - A follow-up to a case study in Global Strategy II, looking at the challenge of pharmaceuticals in emerging markets. This specific item looks at the trade offs between shareholder value, crowd-sourcing Intellectual Property and giving back to communities that can benefit from their older R&D.

New Pampers giving P&G Diaper Rash (January, 2010) - Following up to our Crisis Management discussions with Rick Amee, intertwined with the speed and power of Social Media. This looks at the mistakes P&G made in introducing their "new" Pampers without properly communicating to their customers about the changes and benefits. Plus this article seems especially relevant to teammate Portia Mount and her newborn baby :)

Pepsi Brings in the Health Police (Business Week, Jan.2010) - The current Dean of the Wake Forest Schools of Business hired current Pepsi CEO Indra Nooyi. It's interesting to see how an international CEO is taking such dramatic steps to shift the company from US-centric lifestyle foods (soda, chips, pizza), which are less healthy, to a more International-centric approach to nutrition.

Will Walmart's "Sustainability Index" Really Work? (Fast Company, Jan.2010)- An initial look at the impact that Walmart's "Green" initiative is having on their suppliers, their product mix, and the future of supplier relations. It also looks at the difficulties of creating a universal "sustainability index" and labeling model across a breadth of products.

Weekly Links (Week of Jan.11, 2010)

2010-01-15T10:21:00.004-05:00

Tonight our class will get back together to receive our diplomas at a ceremony in Winston-Salem, but before I make the two hour journey west on I-40, I thought I'd post a few links that I found interesting and relevant to recent areas we analyzed in class.

Best Buy Wants Your Junk (Fortune: Dec.2009) - A look at how Best Buy not only leverages the "green" movement as a mechanism to drive reputation, but also offers a glimpse into the concept of companies moving from product-centric to service-centric. Towards the end of the article, Best Buy talks about their vision of being directly involved with the recycling of customers old products as part of the overall "eco-value chain".

Can Farming Save Detroit? (Fortune, Dec.2009) - Having grown up near Detroit, and constantly seeing the abandoned houses (left over from the 1968 riots), I always wondered if that space would ever become productivity or useful again. The signs of problems have been visible in Detroit (and Michigan) for many years, with all their eggs in the automotive basket, but it's still amazing to see how quickly things have declined. While this concept is controversial, I am hopeful that it gets traction and begins to be a catalyst for other positive things in the area. It's going to take radical ideas to change a culture that has been embedded for 75 years, but some many incredible things have come from the area that I still hold out hope.

And in honor of our graduation tonight, I'll end with this link from Seth Godin, highlighting the most important aspect that each of us should have taken from the last 18 months. It seems to touch on one of the critical elements that we'd hear if we had a cool graduation speaker.

Stay hungry, Stay foolish my friends...

Where Middle Age and The Internet Collide

2010-01-11T20:30:00.002-05:00

I've written before that one of the interesting aspects of an Executive MBA program is the challenge that student face between pursuing that "next big idea.." and existing obligations to family, debt, etc. In more cases than not (unfortunately), people tends to stick with something comfortable, a known entity. Forget the fact that the world doesn't reward people for security, and that the world moves faster now than ever before, but it seems to be the nature of many people to take the safe path.

In watching the drama at NBC unfold over their late-night schedule (Jay Leno, Conad O'Brien, Jimmy Fallon), it's interesting to see a similar set of decisions being made. On one hand you have the incumbant, NBC, acting like a middle-aged adult that doesn't want to deal with the new rules of life. Being protective, being predictable. On the other hand, you have newcomer Jimmy Fallon understanding that "Time doesn't matter to me...We're in a different age now." (reference to Internet video, DVRs, etc), being willing to explore the new rules of the game and accepting that things don't need to match the old behavior to be successful.

In a parallel thread, I've just started reading "Linchpin" by Seth Godin. I've written about Seth's influence on me during my MBA many times, but this book is really hitting home for me. The theme of the book is that greatness is the only thing that matters in business anymore. Everything else will be repeatable, and hence replaceable. So each of us need to look at ourselves and find that area of greatness, of passion, or uniqueness and pursuit is with reckless abandon. If you don't, then any short-term security you think you have is probably flawed and could disappear when the next down economy forces your company to rethink your role.

At times I think we all get lulled into thinking that security is good, and that only the little guys need to really be great or innovative. This is a dangerous trap and one that needs to be avoided in order to survive. The Internet only accelerates the pace at which that false sense of security can turn into non-competitive or non-innovative weakness. And besides, life is too short to not be passionate about the things that comsume so much time in our life.

Some Guesses on the Apple Tablet

2010-01-08T21:34:00.005-05:00

This really has nothing to do with our MBA program, but everyone in our class knows that I was an Apple fanboy and spend a reasonable amount of time exploring how their latest strategy was changing various markets (music, communication, mobile computing, application distribution, etc.).

In talking to a colleague at work today, we made some predictions on what might get announced if an Apple tablet does hit the market early this year (rumors of announcements at the end of January). I thought it would be interesting to list some of these for comparison at a later time.

I have a hard time believing that Apple would create a purpose built device (like a Kindle). I suspect they are trying to find the sweetspot between an iPhone and a MacBook. Mac OS / Phone OS has too much R&D to not reuse as much as possible. So a form-factor that is similar to a netbook (8-10"), but multi-purpose.
The device will be more like an iPhone than a netbook in form factor. No need for keyboards, flip tops, hinges, etc. Everything will be wireless (Bluetooth, WiFi and 3G, similar to the Kindle).
It will have two modes. The first (mobility) will be like a big iPhone, where you can sit it on your lap and type directly on the screen. All movement will be via gestures, or voice-recognition or the touchscreen. The second mode will include a docking station, which sits the device at a 45* or 60* angle for viewing, and the virtual keyboard and mouse-pad will be projected onto a flat surface (desk, table, floor, coffee-shop, etc.). All the multi-touch gestures will work on the virtual mouse-pad.
By default it will come with an incredible eReader application (iRead). Beyond the Kindle-like features of great display and easy download, it will make reading a social activity by allowing people to easily discuss sections of a reading with communities of friends and like-minded people. Highlight a passage and see if other people have commented on it, asked questions about it, referenced it in other forums (Twitter, Facebook, etc.)
It will allow you to easily do all the things you can do with paper-based reading material today: Highlight passages, added notes and doodles (via text, voice-recognition, finger-gestures), earmark pages, etc.
The future of education could be significantly changed by the social aspects of iRead, as the discussion of topics could be happening at almost anytime, with the full class or a subset. Teachers could introduce dynamic quizes &/or checkpoints into the readings to validate comprehension, discouraging a student from proceeding if they haven't grasped a basic concept before moving to an advanced topics.
Through iTunes, it will introduce a self-publishing service for authors. Instead of having to use a publisher and pay for their overhead, it will offer a service to allow people to create professional quality content and distribute it through major channels. People already know how to do self-promotion today (blogs, Twitter, Facebook Fan pages, YouTube, etc.), but they may not have access to editors, graphic artists, speakers for audiobooks, etc. By offering an ala carte menu of services to authors, Apple could radically change the value chain for the publishing landscape, cutting out layers between the author and reader.
By leveraging their existing customer knowledge from iTunes, and now location-based information (mobile device), combined with their recent acquisition of Quattro Wireless, Apple could potentially offer Apple tablet specific content to readers from sources like The New Yorker, The Economist, or other outlets committed to great journalism, not just chasing eyeballs. Revenue splits between Apple and the journalists could fund this.
The tablet will have unique peer-2-peer networking capabilities to share gaming experiences with 6-8 other tablets within close proximity. New games will get written that provide shared experiences.
One of the complaints about the iPhone is the lack of peer-2-peer video, similar to iChat or Skype. The Apple tablet will resolve this, as well as being a great form factor to watch TV/Videos on the train or bus.

Since everyone feels the need to give the new device a name, I'll throw my hat in the ring. Let's go with iBook, combining the concept of a netbook size with the incredible new reading experience and social aspects for consuming content.

Weekly Links (Week of Jan.4, 2010)

2010-01-06T17:06:00.009-05:00

During our program, I used to annoy my classmates by constantly sending emails pointing to various links, stories and other content that related to the topics being discussed in class. In hopefully a less annoying manner, I plan to bring that content to this blog on a weekly basis.

One of the things Ram Baliga told us was that analytics would become one of the cornerstone technologies that MBA's should master in the 21st century. Here is a good write-up on the proliferation of data that is now available for analysis and how it will shape the future of business.

With Chet Miller we evaluated various employee evaluation models, including GE's A-B-C player model. This link explores NetFlix model of trying to hire, retain and compensate almost all "A" players and whether or not that is a good thing.

Following up from our case discussion about NetFlix and their eventual migration to a streaming model. Many elements at play here: short-term vs. long-term profits; customer input vs. decisions that lead to eventual business model changes; decisions that could lead to loses due to digital piracy or alternative models solving a customer demand.

This article explore the Nexus One phone from Google, in the context of how it will impact Google's overall strategy. VC Brian Gurley does an excellent job of looking at the broader impact of this device, but more importantly the strategic impact of the new business model. The Nexus One was an area of highlight in the final Global Strategy paper that I wrote with Ric Freeman and Wendy Perry.

Here's another Nexus One link that follows-up some of the cases we analyzed, including strategic challenges for HTC, Taiwan Semi-Conductor and Google. At least within the technology world, the spread of coopetition and partner/rival scenarios will continue to expand as the value chain is twisted in all sorts of new ways.

Stan Mandel taught us the underlying structures for funding and operating and entrepreneurial venture, but more so he focus on the mindset needed to be a successful entrepreneur. VC/Entrepreneur Mark Suster explorers his views of the characteristics of successful entrepreneurs.

Wrapping up the Program - Part IV - "Working harder than ever".....

2009-12-21T22:17:00.010-05:00

On the last day of the program, we had the chance to have an open and candid discussion about the future with Ram Baliga, professor of Global Strategy. Ram is incredibly well respected as both a teacher and strategic thinker. He consults globally with some of the world's largest companies, and amazed us every week by leading lecture and discussion without any notes or slides.

Dr.Baliga's comment which left the most lasting impression on me was, "I am now working harder than ever to keep up with the pace of change, forcing myself to learn the critical skills of the 21st century (technology & analytics)".

Coming from a man who is world-renowned, tenured and vaguely discussing retirement, it was inspiring. It just shows that you can never stop learning, and that the application of knowledge is critical to retention. Dr.Baliga constantly reminded us that concepts need to be internalized and applied.

So it is with that mindset that I have decided not to sunset this blog, even though the program is complete. I will use it to highlight the application of knowledge we gained from our program. To challenge myself to apply theory to real-life, and to challenge the theories and models as the business climate changes in the 21st century.

To Dr.Baliga, I say "thank you" for the inspiration. We learned a tremendous amount from you both in knowledge and character over the last 18 months. I hope to be able to apply it with great efficiency over the next 10-20 years.

Open Technology

2009-12-21T22:17:00.009-05:00

Recently, Google posted a blog where they provided Google's definition of "open". In that post, there was an interesting section about how open systems can be viewed by people with traditional MBA training.

"To understand our position in more detail, it helps to start with the assertion that open systems win. This is counter-intuitive to the traditionally trained MBA who is taught to generate a sustainable competitive advantage by creating a closed system, making it popular, then milking it through the product life cycle. The conventional wisdom goes that companies should lock in customers to lock out competitors...."

Most of my working career has been centered around an "Internet DNA", so maybe I'm overly biased, but this is a comment that I made to my classmates time and time again as we studied different scenarios and cases during our program. The numbers are fine, and thorough analysis is necessary, but too many times it leads to decisions that don't result in driving new customer value. It results in decisions that create short-term advantages, or temporary "wins", but it often misrepresents whether or not a company is truly prepared to be competitive in the market, and how they can position themselves for the next opportunity.

The 21st century is not going to be about long-term sustainable advantages. Advantages will be short-lived, and the companies that survive and succeed will be those with a open mindset that encourages competition. Competition drives innovation.

Competition also makes some people &/or companies uncomfortable because they were built around an inflexible model, or one that doesn't allow for radical changes in the market structure. Google is an excellent example of a company that is constantly trying to change the dynamics of markets. They are not always right, and actually fail quite often, but their culture and business are built on the foundation of competition. Many companies would do themselves a favor by studying Google and adopting their mindset to open systems.

Wrapping up the Program - Part III

2009-12-20T21:02:00.021-05:00

In previous wrap-up posts (here & here) I talked about broad lessons learned and projects that impacted my new ways of thinking about the world. In this post, I'd like to talk about some of the people in our program. Through the program, I've spoken about our collective journey, often highlighting elements of classmates that caught my attention. As the program progressed, I had the opportunity to better understand the strengths and goals of my classmates.

One of the most challenging things for an Executive MBA is to move outside of their comfort zone. They don't lack for great ideas or leadership, but families and mortgages and job seniority can be a difficult elements of life to sacrifice for the next "what if..."

I'd like to highlight some of the projects and "next steps" that graduates of the Executive Class of 2009 will be leading in 2010.

Terra Verde International - After Hurricane Felix ripped through the coastal areas of Nicaragua, much of their forests were downed by the storm. Through a church-mission relationship, Robbie Lee and his partners become involved in a unique situation to create opportunity out of tragedy. Terre Verde was established to clear the downed trees, mill the wood and byproduct, and take it to market. The mill and operations are staffed by the local Mistiko Indian tribes, and funds from the sale of wood are brought back to the village to establish infrastructure and create new opportunities (farms, education, housing, etc.). In addition to the mill, Terre Verde has plans to create an electrical utility that uses the wood byproduct as a biofuel source to power the electrical grid. In the US we take the electrical grid for granted, but for people that have no light in the evenings, the possibilities are endless. The hope is to allow people to go to school in the evenings, or church, or participate in other activities that are driven by electricity.

TPM Partners - After successful careers at Danaher and Que Pasa, respectively, David Ivan and Domingo Isasi saw an opportunity to take their knowledge of process-design and operations to start a consulting company focused on Lean Manufacturing and Six Sigma improvement. By moving quickly to show clients how change can effect their bottomline, TPM Partners has already created hundreds of thousands of dollars of cost-reductions in just a few months.

Precision Farming in India (business name TBD) - Combining his passion for his homeland and expertise in Information Technology, Vish Manickam is creating a new venture to help rural areas in India that are struggling with poverty and limited food supplies. Working with professors in India and Michigan State University, and utilizing the latest Precision Farming techniques to produce vastly better crop yields and a sustainable economy. Vish is not only building a model farm in his home state, but also creating a franchise model to allow others to sell and distribute this technology to other regions of India. By combining technology, government subsidies and market demand, Vish will be able to help a portion of India that rarely see the headlines from the news media.

Commercial Solar Distribution & Installation (business name TBD) - Building on the momentum from the Obama administration and the COP15 talks, Chris Basinger is bringing his passion for building the future to commercial properties in North Carolina. Chris is currently working with several large North Carolina-based companies to design and implement a solar power infrastructure for several hundred facilities. By leveraging national and state credits for solar installations and leading-edge photovoltaic (PV) technologies, Chris has been able to demonstrated positive NPV returns on these upcoming investments. Chris is working directly with VCs to fund this start-up opportunity, with hopes to operationalize it in 2010.

Gracely Girl Design - Highlighted previously as a model for building a completely online business that operates around a part-time or mother's schedule, Gracely Girl has successfully completed 3 months of operations and is now cash-flow positive.

KinderCulture (tentative name) - This is a project that I pitched to the class as part of our Entrepreneurship program. I was humbled when several of my classmates and professor offered to invest or raise money for the idea on the spot. In 2010 I'm hoping to pull together the team to execute on this concept. It would allow me to combine my interests in Social Media and Internet technology, International culture and children's education.

Those are just a few of the projects that I expect to see launched or expanded in 2010. And based on late-night conversations and brainstorming sessions with several other classmates, I wouldn't be surprised to see several more get hatched in some form or another very soon. We were lucky to have such a diverse group of people and backgrounds in our program, and I fully expect them to go on to greater things in the future. My hope is that we are able to continue to leverage the ideas and talents of the group as these new ventures and opportunities arise in 2010 and beyond.

Wrapping up the Program - Part II

2009-12-19T10:12:00.015-05:00

Following up on Part I, I thought I would highlight some of my favorite projects from the program. Some were things that I was a part of, while others came from classmates. I've mentioned some of these before, in previous blog posts.

The first was the summary presentation we gave for Leadership & Organizational Behavior (LOB) class. The 1st semester was an interesting transition for everyone in the class, not only readjusting ourselves to academia but also transitioning into a structure where teamwork and trust were critical factors in success. The focus of the presentation was supposed to be analysis of our personalities against LOB criteria, but what it turned into was a very revealing look into the personalities of our classmates. Their history, their fears, their hopes and dreams, and their ability to trust the people in the room with personal information. For most people in the class, it was the first opportunity we'd had in 3-4 months to really understand who we'd be going through the rest of the journey with. For me personally, I used it as an opportunity to try out a presentation style that I had seen a few times, but had never used before. It's a variation on something called Pecha Kucha, which we eventually used in the 4th semester for our final Leading Change presentation. When I gave the presentation, I think I made some people uncomfortable (less structured, less formal, limited analysis). I was trying to use the style to convey the pace at which my working environment (Internet Technology) moves, and I believe that came across to some extent. Regardless, it was my first attempt at using the MBA program as a vehicle to try new ideas which could be reused in my working world.

BGracely LOB Personality Semester Project 5Dec2008

View more presentations from bgracely.

Our final Business & Global Economics (BGE) project involved a country/region and investment analysis in Emerging Markets. BGE was the 1st semester course that really taught me that I had much to learn about the complexities and inter-dependencies of the global economy We choose to analyze UAE, which at the time of our selection (Aug.2008) seemed like an exciting, vibrant new beacon of the global economy. Our analysis and recommendation highlighted many of the possibilities being created by the massive influx of petrodollars, but it also cautioned against a potential bubble. Having new eyes for UAE, it has been extremely interesting to watch the reports of the demise of Dubai in the early to mid part of 2009, and then the more recent reports of its resurgence towards the end of the year. I believe the stories of Dubai, and its ultimate success or failure are still to be written, with results being somewhat unknown for another 5-10 years.

WFU-MBA-BGE-Team5-UAE-5Dec2008

View more presentations from bgracely.

Towards the end of our 2nd semester, our Managerial Accounting professor (Dr.Bern Beatty) asked Brian Healy (EVP, Kindermusik) to come speak with our class about how they implement Open Book Management. Not only was this an excellent look at how an entrepreneurial company was putting unique leadership styles to work, but it also began a business relationship with Mr.Healy that I hope to leverage for another start-up that I may launch in 2010.

Open Book Management - Critical Number

View more presentations from bgracely.

Another 2nd semester project allowed Portia Mount and I to explore an element of Marketing that gets heavy coverage from the press, but is still not well understood my most of the business world or academia. We explored Social Media and Social Marketing in the context of the Obama Election campaign, but tried to constantly bring the context back to everyday business environments. It was an interesting culmination to our Strategic Marketing course, as each sub-team also created a final presentation that focused on an angle of Internet or Social Marketing. Since that presentation, I've actually had 5-6 companies approach me about training/educating their executive teams about Social Media/Marketing best practices and way they can engage with this new media.

ObamaNation - Lessons from the Front Lines of Social Media

View more presentations from bgracely.

The 3rd semester was all about International Business. We had the option to focus on China, Japan or South America (the India trip was canceled due to the Mumbai bombings). Eight of us choose to spend two weeks in Beijing, Xian, Shanghai and Hong Kong. We chronically our journey on the China Blog. It's still difficult to put the magnitude of that trip into words, but needless to say it completely changed my views on my career and the 21st century.

To conclude our Entrepreneurship course, we were asked to focus on a new business model or idea. I decided to focus on Gracely Girl Designs, which is an online appearal business that I created with my wife in October 2009. The primary motivation for the business was to allow her a creative outlet to coincide with the raising of our children. But what we found in designing the business was an ability to operate almost entirely virtual and with a structure that was incredibly flexible. I presented this business as a model that could be adopted by classmates that wishes to stretch their entrepreneurial legs, but also maintain their existing jobs (at least for a while).

Gracely Girl Design

View more presentations from bgracely.

Our Management Practicum was focused around the theme of Environmental Sustainability, and how we could attack that problem in a way that found balance between environmental challenges and business challenges. Many of my classmates came up with incredible ideas (to be discussed in Part III), presenting ideas to start businesses that will have lasting impacts for thousands of people in the US, Latin America and India. Their work will go beyond business success and will thrive in the future successes of mankind. Our team took a technology focus, looking at ways to more efficiently deploy IT Data Centers, the 21st-century "bit" factories that will drive the output of electronic addictions. Considering that today's Data Centers consume 2-3% of all US electricity, with exponential growth expected as Smart Grids and Electric Vehicles become part of the US economy.

Looking back on the breadth of our projects, I'm still amazed at what can be learned in just 18 months. Not only did we develop domain-level expertise in many areas, but we created a framework of knowledge that will allow us to take on strategic challenges throughout the 21st century.

Wrapping up the Program - Part I

2009-12-18T14:48:00.008-05:00

As of 1pm, barring any last minute disasters (not sure what they would be), my journey through the WFU Executive MBA program is complete. Our final grades were posted today. All that's left now is to receive my diploma at a ceremony in January.

As the last group to ever go through the Executive Program, the ending is somewhat bittersweet (the format was canceled in Fall 2009 due to strategic changes by the WFU Schools of Business). Being EOL brought us closer together as a group, but unfortunately we won't have subsequent classes to build the alumni base. The Executive program was started over 25 years, and was the original MBA program offered by Wake Forest.

Instead of just waving good-bye to this blog, I thought I'd finish it with a series of posts recapping some of the most important things I learned over the last 18 months.

Breadth of Knowledge Matters

Whether you're faced with a Strategy problem, a Marketing problem, a Finance problem or an Organization problem, no decision can be made in a vacuum. Having a fundamental understanding of a breadth of subjects, learned across a wide range of industries (through case studies, classmate experiences, etc.) is invaluable in making executive level decisions. Today's markets move much too fast to build companies that operate in silos, so bringing a breadth of knowledge to daily decisions will make the difference between survival and failure in the 21st century.

The World is Global...and Semi-Global...and Regional...and Local

While the Thomas Friedman's of the world grab many headlines, not every problem today is global. It is invaluable to have the experience of visiting and working in international markets (which we experienced), but knowing when strategy needs to be global is even more valuable. You must be ABLE to step out of your CAGE and see where it makes sense to bring ADDING solutions to market expansion. You must think globally, but act locally.

Create True and Lasting Value

As we saw from the financial crisis of 2008, and in numerous other examples, it is incredibly easy to financially engineer the books or manipulate markets in the short-run in return for near-term profits. But the 21st century, with it's hypermedia cycles, will quickly destroy companies that are not competitive and do not create true value for customers or partners. NOTE: "Lasting" is a relative term. It may only be 3-5yrs, but it's a mindset that should be infected into every company that strives to be competitive and differentiate themselves by creating tremendous value with their products and services.

Think like a CEO

All too often we tend to get caught up in the value of our functional area or market, and fail to see the bigger picture in front of us. Without the correct strategies, financial models and product portfolios aligned to solve customer problems, many ideas are just a set of random details.

Think like a Baby

At times, we plug all the data into our fancy MBA models and answers emerge. But do they always make sense? Have they taken into consideration local factors, or basic inter-dependencies? Have we thought through the simplest of details, asked the simplest of questions? For parents, we're often amazed at the way children are able to ask the most direct questions for complex topics. That type of questioning is valuable for executives as well.

Build Your Personal Brand

The personalization of media and the ubiquity of the Internet allows each of us to be our own Marketing/PR/Ad agency. Companies will come and go, but your personal brand is the one element over which you can have direct control. This blog was created for alternative learning purposes, but it eventually became a foundational aspect of me beginning a journey to better understand how a personal brand is built, cultivated and expanded.

Free'er than Freemium, "hmm....BUT...."

2009-11-04T10:29:00.005-05:00

I've written about Freemium several times before, discussing it's impact on existing markets and incumbent companies in several industries. Brian Gurley (Partner, Benchmark Capital) does an excellent job explaining how Google is further leveraging their mobile services like StreetView to further move into Mobile Advertising.

As an MBA student, Google is an interesting company to study and analyze. On one hand, so many of their projects are difficult to apply typical MBA skills to (NPV, Cash Flow analysis, etc.) because they are fundamentally experiments, and they make not drive direct revenues. On the other hand, their ability to expand upon their core strategy of "organize all the world's information" is incredibly interesting to follow. It is a massive concept that has so many possibilities, but I suspect it only works within a culture that allows large amounts of freedom to explore "crazy" ideas.

Having a cash cow like AdSense or AdWords obviously makes it a little easier to fund and maintain the Google culture, but it still requires employees and managers to take huge risks. Personal risks, technology risks, strategy risks.

I'm trying to imagine what a conversation at Google a few years ago might have gone like:

Employee: Mobile devices are going to take off and people will consume huge amounts of data on them someday.

Manager: Agreed. We should figure out ways to accelerate this, as we could drive ads to their mobile devices.

Employee: My kid was reading about Lewis & Clark the other day. We should try and be the world's source for mapping information.

Manager: But what can we do interesting with maps?

Employee: Eliminate paper maps. Make maps that move with the touch of a finger. Show live traffic overlaid on a map. Street-level views. Open it up to any location-based service (voting, gatherings, flu outbreaks, restaurant listing, etc..)

Manager: How might we do that, besides buying mapping data?

Employee: What if we had a fleet of cars that drove around the country with a camera on the back? We could pay high-school kids, college kids, starving artists, or anyone willing to drive around?

What would your manager have said at that point in the conversation? Would it have started with something like, "Hmm, interesting.....BUT....". I suspect that in most companies it would. At Google, I doubt there are many "hmm....BUT...." moments when ideas are being formulated.

Imagine the possibilities at your company if you had the ability to hire really smart people and not feel like you had to "hmm..BUT..." them all day long.

CAGE, Biomimicry and a big lull....

2009-10-18T23:03:00.009-04:00

For anyone who reads this blog, I have to apologize for the lack of content and ideas recently. Not only has my day job been extremely busy lately (blog hits over there are up 500% Y-over-Year), but this semester has left me in a funk. It has no rhythm to it, and the pending 50-page papers for GSM II, Management Practicum and Entrepreneurship haven't left much time for writing about new ideas (let alone tidbits from class).

One of the important concepts that we discuss quite a bit with Ram Baliga are analogies, and the importance of making connections outside your current view of a problem. He stresses that many problems have already been solved, just at a different time, or in a different industry, or by looking at the problem outside the context of the existing situation.

So in that vain of thinking, I highlight a couple of analogies:

In GSM II (and in International Business), we used a framework called C.A.G.E (Cultural, Administrative, Geographic and Economic) to analyze expansion and M&A activities. I loosely used that framework to analyze a problem happening in corporate IT organizations as technologies like VMware's virtualization are creating organizational problems (although saving companies money). It's not an exact fit for the framework, since we're not really dealing with global expansion, but it seems to have some alignment for groups that speak different languages and have different priorities. Apologies to Dr.Lord and Dr.Baliga for stretching the framework a little more than is probably acceptable in their eyes.
In Leading Change & Entrepreneurship, we often talk about ways to come up with new ideas or sources of new ways to solve problems. This recent article in Fast Company by Dan & Chip Heath highlights the concept of biomimicry to help solve some of your company's most head-scratching problems. Dr.Fogel had given us some papers to read on biomimicry, but not having much in the way of free time, I was highly appreciative of Heath's use of brevity to show examples of a powerful concept.

Analogies can be powerful tools in not only trying to explain new ideas, but also for looking outside your current frame of view for new solutions. Often times an analogy can be the best way to connect you with a customer, especially when you come from different backgrounds and you're trying to find a common language.

A brief look behind the founding of Twitter

2009-09-20T23:37:00.004-04:00

As I've discussed many times before, I'm a huge fan of Twitter and the new forms of communication that it opens to users around the world. I found this brief video showing Twitter creator/founder Jack Dorsey discussing how the company was founded and the ways it has been shaped over the past couple of years. Coinciding with our Entrepreneurship course, it's an interesting look at how to take simple concepts (immediacy, transparency, approachability) and align them with powerful forces to create something great. It also conveys the best idea for any entrepreneur, "start....just get started with something small and see what happens."

I'm looking forward to utilizing many of they valuable ideas in the two start-ups that I'm working on now.

Are MBAs necessary for Start-Ups or VC?

2009-09-09T00:15:00.006-04:00

With our Entrepreneurship course in full swing, and keeping my interest, I thought I'd post another interesting article from one of my new favorite Entrepreneur/VC blogs - "Both Sides of the Table".

I'm not going to get into the argument of whether or not people with MBAs are good fits or not, since that's a generalization and not relevant. People can decide from their experiences if the degree is useful or not. But there were a few points that I found interesting &/or thoughtful:

Curriculum - I would tend to agree that you could learn as much from reading topical books (or internet research) as you do from the topics taught in the classroom. One of the things that I find incredibly valuable in our Executive MBA program is the breadth of experience that I'm able to derive from our classroom discussions and outside discussions. The professors that are valuable to me have been the ones that provided a conceptual framework, but the primary focus of their courses have been the application to our personal experiences or current/future roles.
Colleagues - This is far and away the most valuable interaction from an MBA program, but I believe that if often gets under-estimated if the culture/sub-culture within the program is overly focused on grades/rankings. I've told people many times that I'll be happy if I recall 50% of the coursework concepts in 5yrs, but I'll be extremely disappointed if my work/personal network doesn't include at least 75% of the people from my program in 5-10yrs.
Sales - I completely agree that sales/influencing is a subject that is lacking in most MBA programs. I'm sure it gets neglected (or completely left out) because it's not considered a science or area worthy of academic research, but it is the lifeblood of every company. Not only that, internal selling of new ideas (innovation, change management, etc.) hinges on the ability of leaders to sell. Maybe it needs to be added as an elective. The occasional classroom presentation just doesn't equate to sales.

Some Excellent Entrepreneur Blogs

2009-09-04T10:20:00.005-04:00

Here's a few of my favorites. Some business starters, and some business investors:

Fred Wilson (Union Square Ventures) - A VC

Marc Cuban - Blog Maverick

Seth Godin - Blog

Mike Hirshland (Polaris Ventures) - VC Mike

Marc Andreessan - pmarca

Jeff Pulver - Blog

Tim Ferris - Four Hour Work Week

Phil McKinney - Killer Innovations

Andrew Warner - Mixergy

Mark Suster - (GPR Partners) Both Sides of the Table

10 Characteristics of Great Companies and Great Investors

2009-09-04T09:53:00.003-04:00

As we start to dive into our Entrepreneurship course, exploring new ventures, I thought these were a couple of great lists for people to review as they think about new ideas or new places to invest money.

Fred Wilson's 10 Characteristics of Great Companies
Matt Blumberg's 10 Characteristics of Great Investors

As one of the leading voices in technology and venture capital, Fred's blog (A VC) is a great daily read. Not only does he give great insight into various aspects of the business, but he encourages complete transparency through the comments and on-going discussions. It's an excellent example of realizing that there are 1000s of great ideas out there if you're willing to listen and be open-minded. He also acknowledges that he's been mentored by some of the greats before him, and he encourages giving back to newcomers to the industry.

China -

2009-08-31T21:57:00.003-04:00

[cross-posted from our WFU MBA China Trip blog]

It's been just over three months since we returned from our International Trip to China and it felt like the right time to reflect on how that experience has changed my thinking about the world. This isn't going to be terrible formal, just a list of stuff that I've been thinking about recently:

1 - Sort of like the soldiers that returned to the farms after WWII ("you can't send them back to the farm after they have seen Paris"), it's very difficult to get the allure of China our of your consciousness.

2 - When you're in China, the opportunities feel like they are so close and completely within reach. It's only when you're back in the US do you realize how far away they really are (even with today's communications technologies). The immediacy of opportunity in China is intoxicating.

3 - Like anything else, it takes practice and repetition to get better at China. For the first 45-60 days back, I read the Chinese newspapers online religiously, trying to take in every little nuance. Since then, US life has been creeping back in very quickly and I feel like my China-ese is getting rusty. I need to get back into practice.

4 - Two weeks doesn't sound like a long time, but it provided an incredible foundation for understanding the basics of the complex world of Chinese business and culture. Our summer and fall semesters incorporated International elements in every session, and our trip more than adequately prepared us with the right mindset to have success in doing business with/in China.

5 - I miss the food. I miss the adventure of what it was, what it might be, and only using chopsticks. I never felt like I overate in China, yet I also never felt hungry. They seemed to have figured out the perfect mix of variety, healthiness and entertainment with their meals. The US needs to take a page out of the Chinese cookbook.

6 - I've been thinking about ways to start a business that involves China in some way. I'd say that at least half of the people in our class (from the trip) have been having those same thoughts. I have the skeleton of the business plan in place, and a key first meeting in a couple weeks. It's a great time to be an entrepreneur.

7 - If you are ever part of any of the WFU Business School programs and have an interest in International business, do not hestitate to engage Mike Lord. If you are passionate about International business, Mike will match your passion by 2x.

8 - We have problems here in the US, and they have problems in China too. But their problems just feel much larger in scale. So even if you're not going to doing something China-related or International-related, do something that has some scale to it. Make a difference!!

OK, I'll end it with #8, since 8 is the number signifying good luck and wealth in China. I hope you all get to visit China some day, as it's an incredible country and one of the highlights of the WFU MBA program.

A weekend of Contrasting Viewpoints

2009-08-30T21:56:00.003-04:00

Our first weekend back in the final semester was a showcase of contrasting viewpoints, and some very dire predictions.

Our first session was lead by John Allison, Chairman of BB&T bank. Mr. Allison is now part of the faculty at the WFU Schools of Business, and his talk was on leadership, focused around the 10 core values that he used to lead BB&T. Well known for his affinity for the lessons of Ayn Rand's book Atlas Shrugged, Allison talked about how these values were founded in philosophy and economics and how they guided BB&T to be one of the few US banks that did not "require" TARP funding from the US Gov't. Not only did Allison's talk focus heavily on the strengths of market-based economies and capitalism, but it also highlighted his viewpoints on the errors made both in the present and the past by the Federal Reserve. He spoke about being on committees back in the late 1990s and early 2000s that highlighted flaws in the concept of "expanded home ownership", but he was unable to convince Congress or the Federal Reserve to modify their policies. He also spoke about recent speeches he gave at the Chicago Federal Reserve where he mathematically proved that the US will be bankrupt by ~2025, unless major changes are made to the structure of the US economy.

Our next set of discussions and viewpoints came from our Management Practicum on Environmental Sustainability and Renewable Energy. This session did a pretty good job of dividing the room between "it must be done, it's our future" and "it's too expensive, even though it might be needed". Using a framework from the following books, we began to walk through the challenges, opportunities and existing approaches to the US energy economy.

Natural Capitalism - Creating the Next Industrial Revolution
The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability
Break Through: From the Death of Environmentalism to the Politics of Possibility

Environmental and Energy Sustainability are difficult topics to discuss because not only are they extremely complex technologies and economic models, but they are charged with personal emotions and MBA-learned skills about finding costs (usually near-term costs vs. long-term TCO). I've argued before that it involves massive scope that needs better communication and vision to be successful. And I'm also learning that it very much will require a shift in mindset from Costs of Acquisition to Total Costs of Ownership and Impact. The latter is something that I'm very familiar with from selling large-scale technology solutions in the face of rapidly commoditizing computing devices. And of course all of these discussions were had under the guise that we're reached the level of "Peak Oil" and that many natural resources on earth could be near extinction levels by the end of the 21st century.

Saturday's classes were a contrast in management and leadership evolution between large corporations (Leading Change course) and start-ups (Entrepreneurship course). Using the 8 step framework laid out by John Cotter, we looked at how leadership skills align to different types/levels of changes within large corporations, and how leaders can adapt their skills to these various changes. This framework served as an interesting contrast between larger corporations that often struggle during times of change because they expect their managers/leaders to adapt to ay type of change, and the skills required by start-up entrepreneurs in our Entrepreneurial Essentials course. While it may often be a VC firm that pushes leadership changes at start-ups as they grow (ie. bring in an experienced CEO/President), this seems to better align to the concept that not all leaders have the skills to manage a company through all types of changes. It will be interesting to explore how successful corporations are able to create leaders with these skills, or how they transition in new leaders as the change-management requirements shift.

All in all, it was a very full weekend of new ideas and intense discussion. There is not going to be any let-up in this final semester, and I expect the overall level of discussion to rise quite dramatically as we find the intersections of many of these important topics and how they will shape our world over the next 5, 10, 20 and 50 years.

Twitter Usage Recommendations

2009-08-30T15:50:00.005-04:00

Over the weekend, our Entrepreneurship professor (Stan Mandel, @stanmandel) let us know that he was beginning to use Twitter to comment about some of his entrepreneurial ideas. Since he's just getting started, I sent him along these tips for better Twitter usage:

1) I've written about Twitter quite a bit over the past year, including some usage suggestions and feedback I've received:
http://bgracely-exft2009-wfumba.blogspot.com/search/label/twitter

2) Personalization
- People rarely take you seriously (ie. follow you) if you don't personalize your profile
- People almost always check out your info/background before following you back
- Add a picture. Something that will be easy to recognize amongst all their other tweets (face picture, company logo, etc.)
- Add a profile description; whatever will fit in 160 characters (ie. Babcock Demon Incubator; WFU Professor of Entrepreneurship; Angell Center for Entrepreneurship, etc.)
- Add an interesting background picture/images for your page

3) Lots of great ideas come from other people's tweets. You can look up keywords at http://search.twitter.com, and if you see anything interesting, consider following those people.

4) When you find interesting people to follow, check out who they follow. As you mentioned yesterday, smart & successful people tend to run in the same crowds.

5) It's often useful to add a "hashtag" to your posts, especially if they are about the same concepts. It's a tag that other people can easily search for. Makes it easier for people to find (ie. #entrepreneurship, or #babcockdemon or #wfumba). Just add it to the end of your posts (if you have enough space).

6) Download a Twitter client for your phone (assuming it supports applications), or use the SMS/Text function. This makes it much easier to post, as you don't have to wait to be back at your PC to communicate an idea or ask a question.

http://crackberry.com/twitter-roundup (Blackberry Clients)
http://mashable.com/2009/05/02/twitter-iphone-apps/ (iPhone clients)
http://getsatisfaction.com/twitter/topics/how_do_you_update_twitter_by_sms (updating twitter via SMS/Text)

7) One method of gaining followers (which is very valuable, because they spread your ideas or answer your questions) is to give them background on your ideas. Send out tweets that talk about your goals (ie. find new ideas), your methods (Angell, Babcock Demon), and what you find interesting (URLs)

8) Re-tweet interesting things you find from other people. This is done using a string like this "RT @bgracely ". Many times, you'll find that people you re-tweet will follow you back.

I know that's a lot of stuff, but considering how many people are moving much of their online communication and information finding to Twitter, it's useful to be using some tips/tricks that have been proven to help get you actively involved in the community.

Free vs. Fee - Learning a Foreign Language

2009-08-23T12:09:00.006-04:00

I've written several times about my interest in the nuances of the freemium business model. I've also written about my struggles to learn some basic Chinese (Mandarin) both prior to our China Trip and since then.

So when I came across this article from Bill Gurley (VC) recently, it peaked my interest because of the intersection of these two recent passions. It highlights the differences between Rosetta Stone and Live Mocha, both in their business models (fee vs. free) and their approach to teaching (individual vs. social communities). As Mr.Gurley points out, free or freemium might not be the next generation of business models for everyone, but every company needs to consider how a competitor using those models could impact their business.

Having struggled with the Rosetta Stone model of teaching, I'm going to give the Live Mocha approach a try. I'm intrigued by the community aspects, as I truly believe that the real trick to learning a new language is putting it to use. I was willing to pay for Rosetta Stone in the past, but I truly believe that community-based learning is the way of the future. I hopeful that Live Mocha leads to better success.

The Big Environmental Problem - The First Step to Change

2009-08-22T22:01:00.005-04:00

[Cross-posted to The Environmental Capitalist blog]

One of the major themes of our last semester will be Environmental Sustainability, as it will come into play in our Global Strategy, Leading Change and Management Practicum courses.

As prep work, we're reading:

Natural Capitalism - Creating the Next Industrial Revolution
The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability
Break Through: From the Death of Environmentalism to the Politics of Possibility

I haven't read all of these books yet, but a couple common themes come through in each of them.

The world's current consumption rate of natural resources will deplete the planet by the end of the 21st century (give or take a few years).
Much of the technology needed to solve today's problems exist today. It isn't necessarily ready to be deployed in a "cost effective" manner, but it exists today.
The interconnectedness of many of the problems is extremely complex (ie. Pollution comes from A, affects B/C/D, this depletes E/F/G, causing problems with X/Y/Z, etc.)

Unlike many people that want to bash things like Al Gore's An Inconvenient Truth, turning it into a political debate, or a science debate, or a morality debate, I don't believe it's really a debate about any of those things. This is a marketing debate and it's being lost by everyone that is passionate about the concept.

Let's break this down a little bit and see if we can make a few suggestions:

If the scientists are right and the world (at the current or forecasted pace) will run out of natural resources by the end of the 21st century, almost every person that can influence it (financially, politically, etc.) will be dead before that happens.
As we've seen with things like the Y2K computer bug, or the underfunded U.S. Social Security program, intelligent people don't take action upon well known issues until they are right in front of them and teetering on the edge of chaos.
As I've mentioned before, almost all of the discussions about sustainability are phrased in such massive scope that the average person can't grasp what that means. Is the rise of the ocean by 6" alot? Is a 1* increase in water near the Arctic Circle alot? 200 years of coal reserves available in the US seems like a long time, isn't it?

So essentially they are asking people to take action on things where they will never see the final act (or maybe even the intermission), they can't economically afford them today, and they can't actually grasp the scope of them other than in simple things like the price of gas in the summer.

So if you're selling this at the G8 summit, then it's a political or economic or moral discussion. But for the average person, it's hard for me to look at this as anything more than a massive marketing problem. And like many marketing problems, we need to convince people to make a change, especially the first change.

Let's try a simpler concept -

What if instead of the massive amount of money used for some of the 2008/2009 Gov't bailouts, that money had been focused on something that almost everyone in the US could grasp (since the US is the largest net-polluter in the world)? What if they had allowed GM and Chrysler to fail (real Chapter 11, not gov't bailout version), and completely focused the "Cash-for-Clunkers" program on trade-ins for vehicles that didn't use gasoline? You have a clunker, you MUST trade it in for a non-gasoline burning vehicle within 18 months. And within 5-10 years, all vehicles in the US must run on non-gasoline products. And while the initial price tags on the vehicles will be slightly higher, that can be blurred through subsidies, alternative taxes (sales tax, tire tax, whatever..). We have no idea where all the taxes dollars go today. And it's the law.

It would be the equivalent to the JFK "Man on the Moon" edict. It would focus all the industries surrounding automobiles to focus on green technologies because there is already a consumer demand for transportation, and it's the law. And it would be something that every person could grasp because cars intersect our lives on a daily basis. It's simple, it has a understandable timeline and it has massive scope of impact.

Would it have political and economic ramifications? Absolutely!! Both positive and negative, but at least they would be tangible by everyday people and governments.

Less dependence on foreign oil - lower trade deficits; lower military expenditures to protect sea channels which carry oil; less fear of terrorist bombings
Less pollution - lower healthcare spends on asthma, etc.
Job creation - new distribution channels for the alternative energy mechanisms (refueling stations, repair services, etc.)

And it might be partially impractical (at this point), but that's OK. All change is considered impractical until you can convince someone to do it.

This isn't a tree-hugger vs. non tree-hugger issue, this is a citizens of Planet Earth issue. It's a massive set of issues and it's a long-term set of issues. But people need to do a better job of starting the discussion.

I'd just ask that the passionate people around this industry consider this approach for a second. See if it makes any sense. Maybe you aren't in the automotive sector, but how could this type of thinking be applied to your sector or sustainability. What is the first step you wish you could get people to take, and then how might you force that to happen? Maybe it wouldn't all happen through a new law, but maybe it happens through some other event. What would be your first step to change?

200 Posts!!

2009-08-22T20:59:00.005-04:00

200 is a completely irrelevant number, but I happened to notice it in the blog-log and it made me stop and think about what that meant. I started this blog between the 1st and 2nd semester as an experiment in trying to foster a new type of conversation between my classmates. My hope was that they might extend some of the classroom discussions online. That never really panned out, but I learned a number of other lessons in it's place:

A blog, like anything else, takes practices. A lot of practice. With 200 posts, I've created just under one per day, which isn't too bad. It forces me to find a style (maybe 3-4 paragraphs), but also allows me to try some new things (embed videos, etc.). I am by no means approaching a "moderately average" level for quality, but by making it habitual it does force me to consolidate my thoughts and find ways to communicate them.
I have found that a number of people/classmates do occasionally read the blog, but many of their comments are sent to me via email or verbally (face-to-face). I'm surprised by how many people tell me they don't want to communicate their ideas or feedback in public. I would think that MBA students seeking to become higher-level leaders would welcome the opportunity to practice their public writing or communication, but I vastly under-estimated that element of the blog.
As I've mentioned before, it's been amazing to me how many people from foreign countries have visited. I hope that maybe that means I'm starting to take a more international view of the world and those international posts are somewhat interesting. The international aspect of our MBA program has easily been the most interestng portion for me.

The other experiment with the blog was to gain a much greater set of "hands-on" experiences with social media and online communities. This is becoming such a huge part of marketing, branding, communicating, community building (internally & externally for companies and new ideas), that I felt like I needed to really understanding it from the ground up. Could I do a better job of building my personal brand? Could I effectively communicate new or complicated ideas? Could I foster discussion with new communities of people with common interests? Could I master some of the basic techniques needed to spread content and ideas around the Internet?

The answer to all those questions is still a work in progress, but I definitely know 1000% more now than I did just 12 months ago. I've been able to take the learnings from this blog and turn it into a Social Media strategy for my company that has drawn over 100,000 visits to our company blog, 50,000 visits to our company's YouTube channel, and over 25,000 downloads of collateral that helps to drive new product sales.

So thank you to anyone that has taken the time to read the blog and provide any feedback. I've found it to be a great experiment and a needed outlet for my itch to write. I'll continue with it through our graduation in December, and take the learnings with me to my various other professional outlets. Maybe I'll be able to get to 300 before the program is completed.

The Final Semester Approaches

2009-08-16T22:04:00.008-04:00

While it's still four months away, there is beginning to flicker a small light at the end of this tunnel. This last semester will take us into December, completely the last leg of this 18 month journey. The final semester is a mix of foundational studies, advanced strategic studies, and a deep look at one of the biggest challenges facing our world as a whole.

Here's the line-up for the fall semester:

Global Strategy II - Dr. Ram Baliga expands upon the strategic framework created last semester to explore the next layers of corporate strategy, mergers & acquisitions, and the global thinking required for the 21st century.

Business Law - I don't know much about this course (no syllabus yet), other than it will be taught by Miki Felsenburg from the Babcock Law School. I know the text book should not be dropped on my toes (about 5" thick).

Leading Change - Dr. Dan Fogel will explore how to take all these brilliant ideas people have and get them implemented in small, medium and large corporations.

Entrepreneurial Essentials - Dr. Stan Mandel will provide us the framework for starting new ventures, fostering great ideas and thinking like an entrepreneur whether we're starting a new business or trapped within a larger corporation. I'm hoping he also proves my previous comments about Entrepreneurship in EMBA programs to be badly misrepresented.

Management Practicum - No academic program would be complete without throwing in a couple of $0.25 words like "practicum", so here we go. Our final practicum will be focused on Green Technologies and ways that they can be applied to improve our companies and our world. I'll talk more about my team's project in a later post. Providing us "20% more Dan", Dr. Dan Fogel will be mentoring these projects and bringing his passion for Sustainability to the classroom as we wrap up the program in December.

The workload for this semester is quite heavy, discouraging senioritis from all angles. It should foster some very interesting learning and discussions, especially with the intersection of Global Strategy, Leading Changes, Entrepreneurship and Green Technologies. I know my classmate Gregg Lewis will have much to teach us from his hands-on experience in the Sustainability field.

End of the 3rd Semester

2009-08-16T21:42:00.004-04:00

All the finals and papers are completed and done. There is starting to be a glimmer of light at the end of the tunnel as we move from our 3rd to 4th (and final) semester of the WFU eMBA program. This past semester was easily my favorite so far, but it was obviously somewhat biased by the China Trip, which was a life-changing event for me. I developed a completely newfound appreciation for the challenges of international business, as well as a new passion to become much more of an international citizen (for myself and my children).

Following on the international theme was our Global Strategy course (part I...part II is in the next semester), which was my favorite to-date. Strategy is a fascinating topic to me because it requires a combination of structured thinking/analysis and truly creative thinking to be able to plot moves, plan new products/services, and come up with ways to shift the market in your favor.

One of the takeaways I'll have from this semester is regarding the type of people to look towards as we become a more globalized economy and world. While there are literally thousands of business and strategy books written each year, the ones that are beginning to stand out are from leaders that are either from non-US background or heavily embrace non-US markets and cultures. Whether this is people like Ram Baliga and Michael Lord (WFU professors), or C.K. Prahalad or Gary Hamel or Ram Charan or Umair Haque. By looking at the world from a non-US-centric viewpoint, they are able to understand the pace of change better, as well as understand the flexibility and competitiveness that will be needed by any successful person/company in the 21st century. It's a much bigger picture approach that you see in most classrooms or often US boardrooms.

A Lesson in Permission Marketing

2009-08-09T18:39:00.008-04:00

As an avid fan of Seth Godin and his mantra of Permission Marketing, I learned a valuable lesson this weekend about the cost of attention in the digital economy.

I've mentioned before that I'm somewhat of an information junkie, constantly looking for ways to connect the dots between different concepts and different types of businesses. In my mind, there is a certain level of satisfaction in finding those disconnected snippets and sewing them together. Mistakenly, I also believed that the connected snippets might be of interest to my classmates as we try and apply our learnings to our working environments.

After a Q&A session in class this weekend, a classmate cut one of their questions short and instead tossed out a, "I'm sure Brian will send out something on that.." comment. He was partially joking, but 100% accurate that I had now violated any previous permission that he may have allowing me (regarding the sharing of information) in the past.

Where I made my mistake was ignoring four critical factors:

While the sending of bits (ie. email) is essentially free, the cost of interruption for the receiving party is nowhere near free. And unlike Twitter, where people actively choose to receive your information, email does not easily permit the receiver to filter/ignore your noise.
Managing information is a completely asynchronous process, with each person doing it in their own way. Not everyone deals with information overload in quite the same way, and very rarely do overload or excessive noise result in positive interactions.
Permission is not a one-time event. It's a constantly re-evaluated model, where the the allowance of permission can be a binary decision based on the last interaction or the last level of value (real or perceived) provided to the user.
Permission is not a supply-led function, it's completely demand-based. What's useful (or perceived useful) for me in no way implies that it is useful to anyone else. And this holds true on an interaction-by-interaction basis.

Lesson learned. While their cost of transmission may be the same, not all digital communications mediums are created equal. The same goes for communicating new ideas, or influencing others. It's not always a "lowest-cost provider wins" game.

Once again, it's good to make mistakes in the classroom rather than out in the real world.

The Internet will "Change" your Business &/or Industry

2009-08-09T12:36:00.009-04:00

Following up on our discussion about Gary Hamel's innovation video, I made a comment in class that apparently bothered some of my classmates. It was rather terse, so I can understand the reaction to the tone, but it was needed to simplify the concept. The comment was made in response to a number of people not understanding how to get their company to adopt an innovation culture and seeming to be stuck on the idea that they were a data-driven company and innovation often lacks the necessary data to gain approval.

So I recommended to people to have a discussion within their company on, "How the Internet will "Change" (alternative wording used) their business or their industry?" It was blunt and maybe harsh, but it's the reality of today's compressed-cycle economy.

I thought I'd make a list of where some of those discussions could go for the industries that are represented within my class:

Education - I've discussed this several times before (here, here and here), but the Internet will allow the model for education (at many levels) to become collaborative and global. And if the actual education content becomes free via certain outlets, then what new value will schools provide their customers? Is job placement &/or venture funding (or incubation) the new value to provide? Are silo'd discplines (Liberal Arts, Business, Science) easier to blur with Internet technologies, hence creating new opportunities to create "renaissance majors" which may produce more competitive students?

Manufacturing - We're already seeing what digital technology and fabricated labs can do to initiate "creation" opportunities in emerging markets. Combine this with organizations like Kiva.org that provide funding for entrepreneurs, and you have the potential for radical change in how manufactured goods could be created and sold in emerging markets.

Radio & Newspapers - (see New York Times) - enough said. And if you've got a niche in a local market (ie. Hispanic audiences in North Carolina) and you're able to make that model work, why not look to use the Internet to aggressively license/franchise that to other parts of the country? Even companies like AOL and Google haven't figured out "local" yet, so leverage your competitive advantage as quickly as possible.

Mattresses - I highlight this one separately just because one of my classmates is in the "sleep enhancement" business and has an interest in technology. He mention a few weeks ago that their largest distribution channel was a big-box retailer who sold the mattresses vertically in a rack on the floor. Not a fancy showroom where people come in an "try them out", which is how many mattresses are sold. He then said that one of their competitors just decided to move to an all-online model. He said that his company was taking a wait and see approach to moving online because it could disrupt their existing distribution channels (ie. channel conflict). Let's think about that one:

"Wait and see" on the Internet. How has that worked out for other industries? Maybe those Gen-Y mattress buyers will go against their current buying habits and want to shop in stores (see Zappos).
Their largest distribution channel already sells the product without the "lay on it" option, but you're still worried that online might not provide the options your customers want?

But even if they aren't sure how to deal with the channel conflict that could happen from an online strategy (hint: channel conflict will always be there), what about setting up an online contest or "fan" page on Facebook or crowdsourcing community that allows people (all ages, all disciplines) to design your next generation mattresses? We've already heard 3-4 good ideas generated in our hallway conversations, why not open that up to 1000x the number of smart minds that might have a suggestion for using a mattress?

Banking - Why should I pay for high-end financial services advice when I can go to Mint or Motley Fool or eTrade or even Charles Schwab? Why should I trust companies that take my tax dollars and make them their dollars without providing any value? The Internet is making financial information more readily available and more transparent, so where could banks do to create need value-creating knowledge for customers? Charging additional fees on ATMs and Account Management is not the answer. Using Internet technologies to expose customers (not hiding information) to knowledge faster, and more globally is where new value will be created.

Healthcare - What are companies doing to get homes for elderly people wired so that low-cost monitoring equipment can be installed to remotely provide services (refill prescriptions, monitor movement for falls, monitor breathing equipment, etc..)? What are you doing to encourage the use of technology (speech recognition, online communities, etc.) that enhance the quality of life when patients are home alone or away from friends (or other with similar illnesses that want to share stories & support)?

Airplanes and Air Travel - The airline industry is already been radically changed by the Internet (see Travelocity, Expedia, Priceline), but now it faces a threat from technology companies like HP and Cisco with their Telepresence systems. But are the airplane companies working with their technology companies (or creating their own) to enhance the connectedness when people do fly? Are they allowing kids to play video-games against each other (in different rows) to help parents relax? Are they helping business travels stay better connected while flying?

That's just a few industries represented in my class, but each of them will be radically changed by the Internet in the next 5 years (if not already). Getting people to think through the possibilities of what could happen is (imho) an important strategic activity for them to consider

Making Innovation a Process/Culture within your Company

2009-08-09T11:40:00.013-04:00

After 13 months in the program, I'm convinced that experience is the greatest enemy of entrepreneurs. People get comfortable. People change their approach to work/life after one bad experience. People constantly seek balance, or risk mitigation. People get cynical.

This weekend was an interesting microcosm of how E-MBA's see change. It wasn't completely surprising, because the older you get the more data you have to reference, the more past successes you try and emulate.

Dr.Baliga showed us a video (circa 1998) of Gary Hamel giving a presentation at Stanford. The focus of the talk was how business cycles are radically compressing. If companies want to survive they need to stop thinking about innovation as the next great project/product, but rather learn how to make innovation a core part of their business culture. In essence, re-engineer their process for fostering innovation just like they spent the 1970s-1990s re-engineering their operational processes to reduce costs or streamline efficiency.

A couple of quotes from Hamel stood out to me (paraphrased):

Speaking with a hotel CEO, he asked why they didn't allow people to rent the rooms in a more flexible manner. The CEO responded that Hamel didn't understand the hotel business. Hamel responded, "And that's exactly why I have a valuable viewpoint on this subject". He explained that in this new economy, 90% of all innovation will come from outside your industry. Companies have to be willing to look for non-industry analogies.
Following up on those comments, which might have been considered a "dumb question", Hamel stated that, "It's only from "dumb" questions that new value will be created. That new rules will be created. And new rules are what allow companies to gain advantage in any industry."

Following the video, the class discussed the concept. Asked for their thoughts, they responded with things like:

He didn't give out the "how to do it" answers because he's a consultant looking for new business.
He dismissed operational efficiency, but that's still a valuable way to create better profits for a company.
I could never go ask my CEO to start a project like the ones he recommends, I'd get ridiculed for going against the grain.

Granted, Hamel did point out that maybe 3% of businesses today (circa 1998, although probably still true today) have the type of culture that he discussed, so it's not surprising that so many people responded with skepticism. Most companies still attempt to compete in a model that defends their existing business, extends their current models, and exploits their past loyalty from customers. People don't comprehend this because they don't believe they have experienced it. But the reality is they have experienced it, just from the other side of the fence. Their company's competition have implemented it in banking, telecommunications, manufacturing, media, consulting and high-tech.

It's difficult to be a mid-level (or even executive-level) manager and listen to people like Hamel speak, because you can see the future and yet it feels so difficult to obtain because of all the change needed (inside your company) to get there. It might impact your current role, it might impact your future salary/bonus, it might impact your status within a group. But more importantly, and this is the difficult concept to grasp, is that it's not a matter of "if" but rather a matter of "when" a lack of action will result in value destruction by your company. It's a near certainty that failing to implement an innovation culture within your company will result in failures on a massive scale. So if people are worried about risk, this isn't the risk to be worried about (it's almost 100% certainty - "no risk"). The risk to manage or exploit is how to become part of the upside when the innovation culture (that you're driving) takes off and your company starts creating new value for your customers.

As Hamel points out, sometimes it's good to take an "outside the company" (or industry) viewpoint on change. Here's a good quote from VC Fred Wilson's most recent blog:

"Bliss McCrum, one of the two VCs who taught me the venture business early in my career always said, 'if you are going to put more money into a company that is not working, make sure to change the strategy, team, or cost structure, or all three'. It's good advice. You will not get a different result doing the same thing."

The Trade-Off for Free

2009-08-02T20:47:00.004-04:00

Besides this blog, I also write a technology-focused blog for my company. We typically get about 20,000 visits/month, so it does a decent job of sharing information with our partners/customers and creates some interesting conversations over on our community sites. One of the responsibility areas for my group is to create content for our sales team and distribution partners to enhance the sales process. This includes blogs, demo videos, whitepapers, presentations, online tools, podcasts, etc. In almost all cases, we publish all of this content into public areas and encourage its reuse. It's one of the only ways my small group can scale to the thousands of people selling our products.

But as I've experienced on this blog before, we occasionally have our content reused in an inappropriate way. In a recent case, a partner had reused the content (which is fine), but had introduced a bunch of typos and grammatical errors in their version. So not only did it make them look amateurish, but it reflected poorly on the source (my company's blog). They also attempted to claim credit (without attribution) for some video content that we created and they pulled off YouTube.

Not long ago, this would have raised red-flags for Legal and PR/Branding departments. But in today's age, with the free-flow of information being so available (and mostly free!!), individuals and companies need to rethink how they will deal with this reuse.

What was the cost of creating the original content? Is it worth a fight to protect that cost? In my case (both company & personal), the cost was almost zero (other than a minutes of my time), so it's probably not worth a fight.
Did the reuse allow the content/message to spread more virally than it might have otherwise? If the answer is yes, and the message is more important than the attribution, then it's probably not worth a fight.
Did the reuse create an opportunity to forge a stronger relationship with the re-user? In my personal case it didn't, but on the company side it allowed us to have a conversation with a new partner and help them better tailor a message around their strengths, while helping them lower their costs by reusing some of our content.

Now this equation doesn't always work out well, as this Washington Post article highlights for the media industry. But while the media industry complains about the evils of the digital world, the information (from wherever) is getting spread more than ever. So it really should make people question what is important in how information is shared and try and optimize around those areas. In my case it is primarily about digital learning and building my personal brand (both blogs) and driving greater sales (work blog), so reuse is not that much of a concern. If I had revenue streams associated with the work, then it would introduce a whole different set of questions. I don't think the media industry has started asking those new questions yet, as they are too caught up in demanding people play by their old rules. But eventually someone that has to tie revenue to content will ask new questions and maybe their will figure out a new model to create value. The questions and answers are out there, they just need people with a new/different focus to ask them.

Paying More for "Something" Better

2009-07-31T12:14:00.008-04:00

One of the interesting things about MBA programs is that the later stages tend to produce the best thinking. You've been exposed to more concepts, new ideas and new ways of thinking from smart classmates. Here's an example of how many concepts start coming together:

I wrote yesterday about the innovative concept of "Plenty" currency in Pittsboro, NC as they look to encourage local business. In this case, it's local residents making a conscious decision to support the local economy. Whether that is motivated by discounted pricing, or local pride would need to be investigated, but I suspect it's a combination of both.

But what happens when you'd be asked to pay more for something, where the that "something" might not be a physical attribute. For example, take this discussion on Fair-Labour iPod costs from Umair Haque. Initially he lays out some calculations for how much price is affected by an element that some people disagree with, namely Chinese labor*. While not exact calculations, he highlights roughly what the cost differences would be if US labor was used. Then he poses the difficult question, "Would you be willing to pay more for the iPod to give yourself the peace of mind that it was 'built in America'"? In essence he's asking if you're willing to sacrifice you're near-term wallet for the potential of longer-term prosperity (not guaranteed) in the area where you live?

[NOTE: *after speaking with some US companies that use Chinese labor during our trip, it's important to remember that those workers are in those jobs to better their lives and their families. Their perception of the low wages isn't the same as what we have in affluent America. Just noting this for completeness of viewpoints on foreign labor.]

Haque then goes on to talk about the multiplicative effect this type of thinking can have on the overall prosperity of an economy that's built on "creating new value". The difficult piece of his argument isn't that its not possible, it's how to convince the everyday person to make those considerations. It highlights the same types of challenges I'm starting to explore on my Environmental Capitalist blog.

To make this change of thinking possible, it starts getting at the types of things my classmate Gregg Lewis is constantly trying to teach me with regard to Environmentally Sustainable architecture.

It's about trying to break people of the habit of measuring "value" based on 20th century measurements (price/sq.ft, cost on the price-tag, etc.)
It's about helping people understand the broader impact their consumption decisions have on the economy and environment. What does saving $1 on the purchase price translate into for the overall local/state/national economy? What does it translate into for environmental costs (transportation, disposal, etc.)?
It's about helping people understand that the availability of "immediacy" consumption isn't really satisfying the true needs of people, it's just satisfying the immediacy impulses.

Changing behaviors is difficult (see "failed diets" and "lack of savings"), but I believe this type of mindset is going to be critical to adopt as we proceed into the 21st century. Consuming more intelligently forces better designs from manufacturers, as well as forcing us to think about the bigger impact our day-to-day decisions have on our role in the global ecosystem.

"Plenty" currency in Pittsboro, NC

2009-07-30T22:01:00.004-04:00

Innovation can come from anywhere, even tiny Pittsboro, NC (just outside Raleigh, NC). This story talks about how the local community has come up with a creative way to encourage the local residents to shop locally.

If you work out the math behind it, it's essentially just store owners giving a 10% discount to the customers. The trick is in the packaging. If they just printed coupons, residents may just throw them away. But by giving them 10% extra ($100 USD buys 110 "Plenty" dollars), they are incentivized to spent the dollars they have exchanged. The emotional connection and the transactional connection is made. 90% of something is far better than 0% of nothing.

Who knows how long this currency will stay in existence, but it's a nice example of a community pulling together to create something greater for the overall community. I think I'll take the family down to the Pittsboro Soda Shop this weekend and spend a few Plenty dollars.

Some people never learn...

2009-07-30T21:33:00.004-04:00

The Wall Street Journal is claiming that Microsoft has it's MOJO back. Microsoft's Director of BusDev is turning up the PR hype machine. But haven't we all heard this song and dance before, especially after two internet or media giants merge?

SynOptics & Wellfleet

3COM and US Robotics

AOL and Time Warner

Lucent and Alcatel

So why will this one fail as well?

Geographic distance - Seattle and Santa Clara are both in the same timezone, but even technology like Telepresence or Halo isn't going to recreate the impromptu water-cooler meetings where most strategy gets originated.
Cultural differences - An Internet company and an Enterprise (and failed Internet) company. Oil and water don't mix.
Don't buy the Competition - People matter, and people that were competitors the day before don't easily become friends with "the enemy". This is a great way to have the best people from either company leave. And this little tidbit of detail won't make things any easier.
Lack of Innovation - While Bing is new, and contains some interesting technology, it's not a leap forward. It's an incremental difference that isn't sustained by superior scale or cost savings.
Lack of Problem Solving or Value Creation - Microsoft has tons of cash. Yahoo has tons of users. Neither could figure out how to bring new value to the business in the face of Google's growth. Merging the two doesn't create any new value for customers.

I was at Cisco for about 125 acquisitions. We didn't get all of them right (maybe 15-20% were big hits), but we made sure to try and meet each of those criteria before pulling the trigger.

In the digital world of the 21st century, scale is critical, but innovation trumps all. The media loves a big story, but rarely do shareholder benefit long-term when financial engineering replaces innovation.

Some days you're the pigeon, someday days the statue...

2009-07-30T09:33:00.004-04:00

Sometimes it's very easy to tell if you're the pigeon or if you're the statue. The day usually starts out one way, and just keeps going in the same direction.

And then sometimes you get a day like I had yesterday. We received an email from our Global Strategy professor with the details of our final exam. The final is a case analysis, focused on how you'd analyze the current and future strategy of the company in the case.

The company highlighted in the case is VMware. At first I had a rye smile on my face because VMware is one of my global alliance partners, with my team spending about 75% of their time on joint activities. We live and breathe their strategy, and how it interacts with our strategy, on a daily basis. So on the surface, this final should be fairly straight forward.

But then I started thinking about it a little more. How much would I be biased by my existing knowledge and our current company strategy? Are we actually doing the right thing? Quickly this moved from a slam-dunk academic exercise to a real-world activity that has broader implications. On one level, I need to nail the final because it impacts my grade (the least of my concerns). On the next level, I need to determine if my company is making the right strategic decisions, comparing the academic/theory approach to our corporate approach. And finally, if I conclude that the company is making a mistake, I need to figure out the best approach to selling an alternative strategy to our leadership group.

There are times when getting an MBA seems like a long drawn-out process, littered with theories and papers that are sometimes difficult to comprehend how they will be applicable back in the real-world. And then occasionally the starts align and it hits the bulls-eye, making the late nights very worthwhile.

"Inside a Chinese Gadget Factory"

2009-07-27T10:27:00.003-04:00

[cross-posted from our WFU MBA China Trip 2009 blog]

This is an interesting perspective on the Chinese manufacturing industry from a worker at Foxcomm, a electronics company that makes products like the iPhone.

It's sometimes difficult for Americans to reader these and not cry "slave labor" or "sweat shops", but it's probably more important to step back on consider a few additional concepts:

As this person states, there are literally thousands (or millions) of people moving from the farms to the urban areas, and these jobs offer the opportunity for more pay than they have on the farm. So while the working conditions aren't ideal (whatever "ideal" means), they offer the potential to make financial progress for themselves and their families.
While there has been discussion about wage inflation in China in knowledge-worker sectors, there are still waves of workers moving from farms to cities that will allow Chinese companies to retain their cost advantages for potentially a generation. This is why you see the emphasis on the systems for new-hire training.

I highlight this not because I'm trying to justify the actions of Foxcomm, but rather to bring light to the environment in China for anyone that will be doing business over there (your company) or dealing with competition. As our visit with VF highlighted, it's important to disconnect from our Western biases and experiences when doing business in Asia. It's not the same, and the sooner we can adapt to their culture the sooner we will start to understand why they have taking their actions in that manner.

"The Last Inch" (maybe only in America)

2009-07-26T20:38:00.007-04:00

A recent post from SAMBA about trying to close sales. I highlight this post not because I disagree with the concept or the emphasis. It's like the old Glengarry Glen Ross scene with Alex Baldwin about ABC (Always Be Closing). I highlight this post because of a comment made by one of our guest speakers this weekend. I won't disclose their name (due to the nature of their work), but the speaker is a WFU MBA graduate that runs a successful International business with a focus on US-China opportunities.

Our speaker's company often acts an intermediary for US (or Western European) companies attempting to do business in China, often for the first time. He said one of their client's biggest mistakes is often believing that a signed contract is the end of the negotiations. That it actually means something. He cautioned us that this is often not the case. In fact, it often should be considered the first step in the real negotiations. In China, there is a concept called "a chop". A chop is a physical stamp (from a device called a "chop") that is much closer to a valid/legal signature than the one signed on the dotted line on the contract.

It's also worth noting that many deals require more than one chop, just like many projects in the US require more than one license. The bigger the project, the more chops you may need. For example, our visit in Beijing with United Family Hospitals (Chindex) shared a story about starting a second hospital in Shanghai that required 186 chops.

So I agree with the gang over at SAMBA, make sure you're finding ways to get the deal closed. But also make sure you know the context of your environment, so that signature (or chop) actually means something.

The Future of Education, MBAs?

2009-07-26T09:25:00.007-04:00

Recently, there's been a spike in new educational "institutions". Ranging from University of the People to Seth Godin's SAMBA to Jack Welch's Management Institute to Richard Branson's School of Entrepreneurship. Are these fads, since the publishing industry is going under and folks like Welch and Godin need new outlets for their work, or is this another nail in the coffin of the traditional MBA? With BusinessWeek for sale, and potentially no longer existing, will the BusinessWeek rankings for MBA programs continue to be relevant, or will this get picked up by a blog?

Just like every other large institute that was prominent during the 20th century, traditional universities are now having to adopt to greater global competition and distributed/democratized competition. How they adapt to this new environment is a chapter that will be written over the next 5-10 years.

An Indian Feast

2009-07-25T21:48:00.005-04:00

After the Mumbai/Bombay hotel bombings in January, one of the side-effects was the canceling of the India International trip. While our classmates did get to experience China, South America and Japan, we missed out on anyone experiencing India. To give us a small flavor of India and create another great group activity, the families of our three Indian classmates (Vish Manickam, Manoj Kumar, Mohan Sakhamuri) hosted a tremendous feast of Indian cuisine. As we found with all our international experiences, not only was the food excellent, but the friendliness and hospitality of their families was incredible.

We're thankful to the insights into India that we receive from our classmates, and we're especially thankful to their wives for such a wonderful outing.

Saturday Tradition Continues - "WFU SOB"

2009-07-25T21:38:00.004-04:00

Continuing our on-going tradition of Saturday wearables, we unveiled our latest design to commemorate the renaming of the Wake Forest University Schools of Business. This is one of those situations where we're not completely sure that the marketing and branding people thought through all the ways that the new name might be represented. Never the less, the "Executed" Class of 2009 is always happy to rally around a group activity.

Invention vs. Innovation (and thinking differently)

2009-07-22T12:26:00.008-04:00

One of the topics we've discussed recently in our Global Strategic Mgmt (GSM) course is Innovation and how that differs from Invention (or Discovery). Having worked in the technology industry for years, and having been lucky enough to work on innovation-centric teams most of the time, I've seen my fair share of both sides of the discussion.

Several years back, I worked with a group of people looking to radically change the way that companies collaborate (internally & externally). So we kicked off a project called "Emergent Collaboration", focused on how we take all the sources of knowledge that are floating around a company and morph that into something that is useful to huge numbers of people. There are some remnants of the project in these videos:

Part I

Part II

Part III

Ultimately, the project got cancelled because we couldn't sell the concept to our internal business units. Looking back on the project, it's very clear that not only did we not target the "pain points" of the customers clearly enough, but we also got too caught up in thinking about the problem through old lenses. Too often, we used concepts that existed in the previous problem instead of coming up with new paradigms

Recently, Google announced the planned launch of a new product called Google Wave. Not only does it appear to solve many of the same problems that we focused on with Emergent Collaboration, but more importantly, they constantly bypassed previous concepts and came up with new innovate ways to solve customers problems.

Who knows how well Google will do with Wave, they've struggled to monetize some previous non-search projects. But no matter what happens, it is an excellent example of how to think innovatively.

Starting Something on the Side (The Environmental Capitalist)

2009-07-16T13:43:00.004-04:00

Inspiring by an upcoming class project, a few passionate classmates, an Adam Carolla podcast with Ed Bagley Jr, and the horrendous smog in the great cities of China, I decided to start a side project called The Environmental Capitalist. Going completely against everything I've learned about strategy, planning and business models in this MBA program, I'm not exactly sure where it will go. It feels like it needs to be a community building effort, with a few splashes of education thrown in. I have a bunch of ideas, but we'll see where it goes. Check in from time to time to see if anything interesting emerges.

Summary of (SA)MBA Learnings

2009-07-15T14:42:00.003-04:00

This is an excellent summary of the learnings and experiences from Seth Godin's SAMBA program from @BeccaNY. While their program is more condensed than the WFU program, I believe that I've seen very similar changes and learnings from myself and my classmates. If nothing else, an MBA program can be a great excuse to get out of your day-to-day rut and explore what you can make happen based on the trial and tribulations of your classmates and coursework.

NOTE: I just noticed that all of the participants have provided updates on their views on the programs. Lots of interesting insight, and probably some suggestions for institutional MBA programs.

Defining Innovation

2009-07-13T12:51:00.007-04:00

One of the conversations we had this weekend in our Global Strategy course was around the definition of Innovation. In trying to define it, classmates threw out "new technology", "thinking outside the box" and other definitions that sounded close. But Dr.Baliga corrected them by highlighting the difference between Invention/Discovery and Innovation.

Invention / Discovery - these relate to the creation of something new, or expanded knowledge of something in nature.

Innovation - this is the application of that invention / discovery into a product that is successfully deployed to solve a market need.

He was quick to point out that most executives get those two definitions confused. While Invention might seem like the more difficult part (ie. synthesize a new molecule; create a new hybrid engine, etc.), the truly difficult part is creating the system around it (sales, marketing, distribution, etc.) that allows it to be successful deployed by people to solve their problems.

Innovation requires some many things to be aligned and to "go right", including being prepared to act when luck comes your way. That's precisely the reason that so many companies have difficulties trying to be innovative. They have plenty of ideas on the drawing board and in the lab, but they just can't figure out how to get them to market successfully.

Finding New Markets - From the Rest-of-World?

2009-07-13T11:26:00.003-04:00

It's definitely an American bias, but we tend to think that new things get invented here (cars, computers, televisions, etc.) and then foreign markets open to accept those goods. Eventually they get copied for lower-costs overseas, and are exported back the US.

But the world becomes more global, I suspect that we'll see this model begin shifting and more things will take off overseas and then eventually make their way to the US. Not even market will be defined by the tastes or whims of Americans first.

I was listening to a podcast with Bill Simmons and Colin Cowherd from ESPN this morning, two American sportswriters that make their living talking about the Big 4 American sports (football, baseball, basketball and hockey). The conversation moved to HDTV and how soccer was so much more enjoyable to watch in HD, and how both of them were quickly converting into soccer fans. And not just ordinary soccer fans (since the US has had the MLS for many years now), but International soccer fans. They actually went as far as to predict that the World Cup would eventually become a bigger sporting event that the Olympics, and the International soccer (not US-based MLS soccer) would catch on big here too. Soccer! In America!!

I use this as an example because most Americans (up to a few years ago) would tell you that it could never catch on here. But the world is becoming more global. Technology (ie. HDTV, time-shifting DVRs) is having an impact that is shrinking the globe. It's happening in every industry.

So before you make that next assumption about where the next great concept or business model might come from (Silicon Valley, Cambridge, Shanghai), consider that it might just come from completely the opposite direction.

Entering New Markets - Gathering Ground Level Information

2009-07-09T10:39:00.002-04:00

One of the areas that we've been focused on in our International Business course has been the challenges that many companies have when they attempt to move into foreign markets, often assuming that knowledge from their home country will translate into the new market.

As companies send people forward into a country to start doing market research, this is a simple way to get very raw reactions to your concept. The beauty of this is that it's incredibly simple, incredibly inexpensive, and doesn't hide the human element behind a bunch of summarized numbers (or biases). This could be collected and frequently sent back to the product or strategy teams to give them data points to make adjustments to their original plans.

It's Difficult to Focus on Multiple Things at the Same Time

2009-07-08T11:22:00.007-04:00

As the Germans learned in WWII, after bombing Pearl Harbor, it is very difficult to fight a competitive battle on multiple fronts. Valuable resources get spread too thin. The best people aren't all aligned to a common strategy. Communications becomes more difficult.

The recent Google Chrome OS announcement is going to create an interesting battle for a number of reasons:

Technology innovation (Desktop OS vs. an Internet OS)
Freemium vs. Premium Pricing Models
How many battles can either company sustain and still be successful in their core businesses?
How much is Google willing to put into their non-search businesses in order to keep Microsoft from gaining traction in search?
How much is Microsoft willing to put into Core OS (Windows) or the Internet version (lower margins) to maintain those cash flows?

And of course the most important question for MBA students - do each of these projects create a positive NPV? (ok, being sarcastic)

It must be fun to sit in the war rooms of either Google or Microsoft and plot how to block or take the other guys market (on a huge scale). Of course we do need to continually ask ourselves, are any of these actions add real value to their customers, or are they potentially opening themselves up to new competition?

Sign #1 that you work for a Big Company

2009-07-08T09:43:00.004-04:00

We haven't gotten to the formal "How to Manage like a Big Company" course in the program yet, but we've analyzed plenty of case studies that highlight how to quickly identify that a company is in protection mode and no longer intends to add value to their market or for their customers.

Here's a perfect example from the PC / Netbook market, which we analyzed back in ITMgmt last semester. The model for unnovation goes something like this:

New competitor comes out with a new product/concept/service, which initially seems radical or crazy (to your way of thinking).
Big company immediately dismisses the product in public forums.
Big company talks about how that model is bad for everyone in the industry. Essentially creating a negative-sum game.
Big company internally creates a taskforce of people to explore if they could do it. They usually take existing people from their semi-competitive product line to evaluate it, biasing the results from Day 1.
Internal taskforce can't figure out how to make something better, since they are using the new product as a template (to copy).
Internal taskforce decides that it would be better to dumb down an existing product and claim market-share in the existing market.
Company publicly announces that the new market is viable, and one of their growth areas.
VP from a previously failing group gets internally promoted to SVP/GM of the "new" division, because he has experience in new markets. This is sort of like when losing head coaches get recycled in the NFL or NBA.

Hence the unnovation cycle begins and becomes the new strategy for the company. Ignore the fact that their cost structures, market analysis, distribution channels all probably need to change in this new market. Those can all be "fixed" later.

When will things get back to normal?

2009-07-07T21:09:00.008-04:00

In the recent issue of Business Week, in the Welch Way column in the back, a question was asked about when the recession would be over and we'd get back to normal. Jack (or Suzy) responded with an answer, "sometime in 2010."

I understand why they gave this answer. It's vague, but not too vague. It sets reasonable expectations about a foreseeable date in the not too distant future. And it's simple. Unfortunately, it's also terribly misleading. Because what the person is asking isn't, "when will the recession end?", but what they are really asking is, "when will we get back to the normalcy that I had become used to in 2006-2008?"

This is a little bit like a New York Yankees fan asking when things are going to be normal again, with their definition of normal being 1998-2002, when the Yankees were winning all those World Series titles. The Yankees have been over-leveraged for the past few years, just like the US economy. The problem is that the previous normal doesn't exist anymore and probably isn't coming back. Sarbanes-AIG or some other set of new regulations won't allow the uber-leveraging that happened from 2005-2008.

What I can't understand is why so many people are standing still, waiting for the previous normal to return. I suspect it's because they desire to have the comfort and security they had back in 2008. In fact I know it is. But as the old saying goes, "a watched pot doesn't boil". Waiting isn't going to get anybody anywhere expect further behind the rest of the people that are pushing forward, making things happen on their own.

What I'm finding throughout this reseting is that more doors are opening when I go knocking than they might have in the past. People are more open to new ideas and new partnerships, especially if you add some creativity to the relationship (free work for a period of time in exchange for experience; lowering costs via social media; business models that share risk, etc.).

I'm having a lot of fun right now trying to find additional opportunities for classmates. Some of them are simple, such as guest blogger slots on popular websites to gain visibility. Others are relationship building to get new businesses into new markets. I never knew which one will end up being fruitful, but there are definitely opportunities to define the new normal if you're willing to step out and make some things happen.

"Freckle Pony" - American Stampede Mustang National Champion

2009-07-05T14:39:00.004-04:00

Congratulation to classmate (and China trip companion) Wendy Perry and her family. They won 1st place in this weekend's American Stampede Mustang National Show in the Occasionally Driven/Trailered division. This was the first time they have entered "Freckle Pony" in a judged competition.

This 1966 Mustang was a sweet 16th birthday present that has been fully restored by Wendy, her father Buddy and brother Jeff.

Wendy had promised to bring the car to class one weekend and give some of us a ride, but now that it's a National Champion, I suspect that offer may not happen anymore. Cars like that tend to stay in the garage. Maybe we'll be able to talk her into it, if we promise not to let it get scratched or dinged.

The "Gap Theory" of Curiosity

2009-07-03T21:16:00.008-04:00

At the top of my current non-school reading list is Made to Stick (Dan & Chip Heath). For an innovation and ideas junkie such as myself, it's almost impossible to put down. I highly recommend it to anyone that needs to influence people, or drive new ideas. I plan to buy one for each person on my team at work, and probably my MBA team.

[NOTE: I would have much preferred this book to the one we used in StratMktg last semester.]

On page 84 (hardcopy version), they introduce a concept called "The Gap Theory of Curiosity", which was created by George Loewenstein (Carnegie Mellon, 1994). It argues that gains in knowledge causes pain for intelligent people, and that they strongly desire to fill that gap. It's like having an itch that needs to be scratched. Heath & Heath suggest that purveyors of new ideas should use this human behavioral instinct to their advantage when presenting new concepts. The person with the concept should look for ways to present it such that it leaves the audience wanting to ask those questions that satisfy their need to have the gaps of knowledge filled.

I bring up this concept because at this point in the MBA program many of my classmates have reached a level where they have put together quite a bit of knowledge, but now the gaps are starting to become more important than the workload. This creates challenges within team projects, as interest levels vary based on how much of a gap each project fills for each person. Combine this with the willingness (or lack of willingness) of professors to fill gaps during classroom discussions, and you have a difficult situation for any team that is trying to motivate teammates to participate or complete projects.

Understanding (and misunderstanding) how to use Digital Media

2009-07-02T14:27:00.011-04:00

One of the more interesting aspects of the latter stages of an MBA program is that you spend less time focused on the classroom details and more time discussing and applying them to elements of your life. You find yourself looking at even the smallest interaction as an opportunity to analyze and seek improvement. Here's an example from a recent interaction with my roommate from the China trip, Gregg Lewis.

Gregg and his wife work regionally out of Roanoke, VA. He has won national awards for his architectural work, and been recognized internationally for his efforts to push the Cradle to Cradle concept of environmentally sustainable design. Gregg's passion for combining great architecture with eco-friendly sustainability are the foundation for his long term goals to raise awareness of the challenges ahead, and drive the overall building industry to be more responsible.

Over the weekend, I received an email from Gregg saying, "hey - wrote this opinion piece for the Roanoke Times - it'll be published this week." The piece ran on Monday. Overall it was well written and provides some good connectedness between the ideas being fostered by several well known individuals. My comments back to him had little to do with the content and almost everything to do with how he planned to amplify this message.

Is the Roanoke Times offering you a regular column to discuss aspects of environmental issues?
How else do you plan to get this message out to more people?

We had some follow-up discussions about basic things like Blogging, Twitter and other ways to use low-cost digital media outlets to amplify his message and generate some new conversations with people from around the world with similar interests. For now, those are on hold and we'll see if he's willing to put in some time to cultivate those communities.

This afternoon, I finally got around to looking at the piece on the Roanoke Times website. My first search for "Gregg Lewis" turned up this counter-point piece. Opinions aside, it highlights all the reasons the newspaper industry is going out-of-business and clearly doesn't understand the new world we live in. I'll just highlight a few points:

This is a digital piece of information. It is a counter-point piece. But yet it has no URL linkage to the original piece. It forces the reader to search for it, with marginal chance for finding it.
It provides no URL linkage to the associated articles. One again, the reader has no easy way to add breadth to the piece they are consuming.
It provides no mechanism for the reader to comment on the articles. How does the Roanoke Times plan to gather feedback from their customers on whether or not this content is interesting to them? Wouldn't this be helpful to them to better target advertisers? Might their readers enjoy the ability to be part of the discussion?
It doesn't allow the readers to communicate back to the author (email address, Twitter account??), essentially making this a one-way conversation in a world where two-way or asynchronous conversations rule the day.
It hides easy linkage (see "Share it" button at top, instead of icons) to share the piece with other users or services (Twitter, Digg, Facebook, Reddit, etc..). Are they only interested in readers that manually navigate to this page? Do they have no interest in free distribution and possibly national or international readers?

So here we have a global message, one that needs discussions and ideas from many sides to make progress, and the institution publishing the message doesn't seem to understand the fundamentals of facilitating the conversation. They are stuck in a world of local readers, local writers, and paperboys with papers slung over their shoulders in a canvas bag for early morning delivery. They have never been in the conversation business, so it's not surprising that they don't understand even cocktail-party basics.

I hope that my friend's message and future work is able to better take advantage of the digital economy that could allow it to grow and expand. I'm more than willing to help share my experiences.

"Free" - Business Model, Crossroads, or Jumped the Shark?

2009-07-01T22:49:00.009-04:00

My StratMktg professor, Dr. Jim Narus, thought I was crazy to keep talking about strategies and concepts built on free or freemium. None of those fit into the existing models or textbooks, so they can't possibly be viable, correct?

I'm not sure what the world will look like in 5 years, but here are a few other opinions:

Malcolm Gladwell - Priced to Sell
Seth Godin - Malcolm is wrong
The Financial Times - Free does not like up to its billing
Mark Cuban - Free vs. Freely Distributed
Mark Cuban - When you succeed with Free, you are going to die by Free
Chris Anderson - Malcolm, why so threatened?
Squidoo Lens on "Free" - Does Free make sense? (public discussion)
Fred Wilson - Freemium and Freeconomics
A recent digital business example - When SaaS hits Critical Mass, the Game Changes

Whatever the future holds, the concept begs us to ask ourselves if we are being competitive in the market and continuing to add value to customers. Just as I wrote about the impact that China will have on our world, the idea that digital assets, goods and services will change your world is inevitable.

It's now up to each person to decide how they will react to the new rules.

Exploring International Business

2009-06-28T00:11:00.004-04:00

Ever since we retuned from China, I have been exploring ways to expand my international business experience. I have several ideas for new ventures that have an international focus, but I need to find a way to gain some experience in the field to legitimize those potential opportunities.

A few weeks ago, I came across a sister city project between Raleigh, NC and one of Beijing's "star" cities. One of the US principles was Lily Yang of Yang Consulting. I reached out to Ms.Yang to create an introduction, and to explore if there might be ways that I could get engaged in any of her international projects. While I don't have the language skills yet, I believed that there might be some opportunity to offer my experience in strategy, marketing, research/analysis, or social media.
I may not have done this in previous years, but I have been learning a ton about actively networking outside your normal circles from Jack Perez over at Summit Strategy Partners.

I was pleasantly surprised when Ms.Yang offered to meet with me and discuss ways that I could leverage some of the skills and experience I've gained from this International semester towards some of her existing projects. While I don't have very many free hours to offer, I look at this as a valuable internship to get me the international experience that I would not easily be able to achieve in my current position. Just from talking to a few people at school about this, I may have two opportunities to engage new projects with Lily, so maybe I will bring some value to this interaction.

I don't know exactly what to expect from this opportunity, but I feel like it's the first step towards opening some doors that I will need for the rest of my career.

Crowdsourcing - Part VI - Strategy

2009-06-27T23:26:00.004-04:00

Part V - Joint Ventures in the 21st Century?

Part IV - Recognizing Value

Part III - Educating Customers

Part II - Healthy Lifestyles

Part I - The Big Picture

Building on our Global Strategy course this weekend, I have to wonder if Strategy is a crowdsourable activity? On the surface, it would seem to be too complex a task to expect a disconnected group to be able to coordinate. Maybe the high-level strategy needs to be well understood (ie. a framework), and then crowdsourcing could fill in the blanks and shape the direction.

But could the entire strategy for a consumer product be crowdsourced? To a certain extent, this is what happens with consumer surveys, polling and focus groups all the time. But those are typically looking for a level of validation for an existing product/strategy. So how could you interest others to want to create a new strategy?

I'm interested in hearing any and all feedback or experience on this point.

Disruption vs. Shareholder Maximization - Part II

2009-06-27T22:43:00.005-04:00

[With our Global Strategy course this semester, I'm going to highlight a bunch of interesting business models and strategies]

"What's very dangerous, is not to evolve.", Jeff Bezos. In a recent interview with Fast Company, Bezos once again talks about how Amazon is using aspects of their core business to disrupt an existing business model (publishing). This time their Kindle eReader is threatening to reinvent the publishing business.

But Amazon is an online store, a reseller of other company's stuff. Why is it trying to compete in the consumer electronics business with a device? Without a massive quantity sold, how can they possibly achieve the same level of margins that the online business does?

Once again, letting NPV's dictate the business can be dangerous to a company's long-term health. Kindle is an enabler. It enables Amazon to make buying books (from Amazon) easier than ever before. It enables Amazon to potentially disrupt the publishing value-chain. It enables Amazon to accelerate the pace at which costs associated with supply-chain for physical reading materials are reduced or eliminated. And it ultimately enables the on-going evolution of Amazon's strategy to be a critical player in the digital economy.

The Kindle may or may not ultimately be the dominant eReading device. It may fail to pass any litmus tests for success (long-term positive NPV; etc.) but the paradigm it has enabled will position Amazon to be a significant influencer in the digital life of consumers for the next decade. That's a position than shareholders of many other companies would highly desire.

Searching for Real Experiences - The Flipside of Freemium

2009-06-24T00:25:00.003-04:00

I've written about Freemium business models in the past, but this is a continuously evolving model. With Chris Anderson's new book coming out soon, I suspect it will get another round of discussion and scrutiny started since the Web 2.0 world of 2006-2008 is now economically different.

This recent article in Forbes highlights the flip side of freemium that is beginning to emerge as more and more people seek to broaden their experience with the brands they love online. This isn't surprising. Digital connections are about abundance, hence the free price tag. Real connections are about scarcity, hence the price premium. The two models co-exist to provide breadth to the user experience, and in turn they continue to feed both sides of the model.

Just as I believe that the upcoming economy will be filled with 2 Guys and the Internet companies around the edges, I also believe that product-centric companies will be looking for new ways to create the scarcity and abundance models that are highlighted here. It's a natural evolution of brand loyalty, this just extends it to micro-targeting and user opt-in. In the past it was too expensive to allow your customers to associate with the brands they loved (except for fanactics), but now the economics have completely changed.

Not accepting "we've tried that before..."

2009-06-24T00:05:00.009-04:00

Kindle wasn't the first eBook reader. It's just the best eBook reader.

Kindle allows Amazon to cut out a major player in the publishing process, the publishing house. They can pick and choose from the best writers, essentially taking away the money-makers from the publishers. They drive the costs of competition down. They can use their built-in technology (Look Inside; User Feedback, etc..) to preview new authors and determine if customers are interested.

All of this happened because Jeff Bezos didn't give up when somebody told him, "but that eBook concept has already been tried and it failed..."

How many times have you kept pushing an idea when the rest of the room told you that it didn't work before? How many time have you ignored the experience of others than tried to tell you what failed in a previous life (that had different circumstances than the current opportunity)?

It's true that those that fails to learn from history are often doomed to repeat it. But that doesn't mean that yesterday's world is the same as today, and it doesn't mean you have to let someone else's past mistakes impede your next great idea.

Redbox

2009-06-24T00:00:00.004-04:00

[With our Global Strategy course this semester, I'm going to highlight a bunch of interesting business models and strategies]

This concept was created by McDonalds. They didn't put the boxes in their stores, but rather in grocery stores. I would have loved to have been a fly on the wall when thise discussion happened. Why not in McDonalds restaurants? Do they miss out on too many people shopping after 6-7pm (4-9pm is the prime time for renting movies).

Also love that they are filling a temporary niche, until streaming becomes the primary viewing choice. Redbox could be gone in 5 years. Redbox could be the equivalent to dial-in Internet in 5 years (which still exist). But in the interim, they are capitalizing on a gap in the market between the collapse of Blockbuster and the impending rise of streaming video.

Disruption vs. Shareholder Maximization

2009-06-23T21:19:00.004-04:00

[With our Global Strategy course this semester, I'm going to highlight a bunch of interesting business models and strategies]

I don't think I made too many friends in our Strategy class this weekend when I called the b.s. on two of the foundational principles of MBA programs: Accept all positive NPV projects and Shareholder Maximization Theory. I understand the concepts, and I understand the techniques. I'm just not convinced that it's the right guiding culture to build long-term companies. As Dr.Baliga stated this weekend, "too many times, those projects start with budget and then get wedged into strategy after the fact". I couldn't agree more.

Here is a good example from a recent article about Netflix, and how they are once again innovating to change and disrupt the market.But this time, they are not only disrupting the market with streaming video, they are potentially disrupting their current business model. I suspect that Netflix probably has positive NPV projects (today) that have values greater than their streaming projects, but are they aligned to help Netflix avoid the inevitability that all media will move online? The streaming project would eventually get funded using traditional approaches, but they would probably get started two years late and Netflix would be watching a streaming-only company pass them by.

The "E" in EMBA does not stand for Entrepreneur

2009-06-23T11:18:00.009-04:00

I really enjoy the WFU MBA program. The level of learning and discussion is excellent, and the quality of the people (classmates & faculty) is outstanding. But the conservativeness of the majority of the group is one aspect that frustrates me every time I drive back to Raleigh on Saturday evenings.

I understand the root of it - a bunch of successful people that have gotten to a decent level in their companies, have families and mortgages, and are happy with where they are today. So they bring their conservative mindset into the classroom, and it shows in many of the discussions we have about company strategies or business models. From talking to friends in other programs, I don't believe these characteristics are unique to the WFU MBA program.

The white elephant in the room is that almost all of my classmates have another 20-30 years of work left in their careers. And on top of that, most of their companies and industries will either not exist or be radically changed in the next 5 years.

I can't tell anybody else how to think or act. But it seems to me that the classroom would be the perfect place to experiment with thinking about innovation, business disruption, new business models, and new forms of risk. Maybe the downturn in the economy will push some people to consider looking at ways in which they can adapt to the changes that will confront us over the next 20-30 years.

Crowdsourcing - Part V - Joint Ventures in the 21st Century?

2009-06-21T20:43:00.005-04:00

Part IV - Recognizing Value

Part III - Educating Customers

Part II - Healthy Lifestyles

Part I - The Big Picture

I've written several times about my belief that the 2008/2009 econalypse and losses of thousands of jobs will be the tipping point to drive companies to move to a much more distributed model of business interaction. I call it "2 Guys and the Internet", and it's focused on the concept that it has become so easy to interconnect your business with others that have expertise that you do not need to have in-house.

Crowdsourcing Question - If you were starting a new company today, and had the option of creating a joint venture between several smaller (existing) companies, or using the "2 Guys" model, which would you choose, and why? The joint venture would bring together expertise in several critical areas for this market (distribution, sourcing, industry knowledge), but does the value of the JV outweigh the challenge of integrating those management teams? Which way would you go?

Crowdsourcing - Part IV - Recognizing Value

2009-06-21T12:54:00.008-04:00

Part III - Educating Customers

Part II - Healthy Lifestyles

Part I - The Big Picture

How much an ounce of gold is worth is a function of supply and demand at any point in time. You can easily look up the going rate for gold from any financial information source. But what can you create with an ounce of gold? How many bracelets or earrings or electronic connections? Answering those questions is much more difficult unless you specialize in products that include gold.

When jewelers sell gold jewelry, they rarely sell it based on weight. They sell it based on quality or craftsmanship, and appeal to the desires of the wearer to look glamourous.

Crowdsourcing Question - In an industry that sell healthy values by a quantity measuring system, how would you go about changing the rules of the game to better highlight the value of the product to improve healthy lifestyles?

Crowdsourcing - Part III - Educating Customers

2009-06-20T22:38:00.003-04:00

Part II - Healthy Lifestyles

Part I - The Big Picture

Some products, such as wine or art or luxury sports cars, require a sophisticated understanding to truly appreciate the differences between greatness and mass-market products providing somewhat similar utility. The time required to develop these levels of expertise or appreciation can often take years or decades, and require users with deep pockets to continue to fund their trials and experiments to learn the skills required to appreciate the greatness.

Crowdsourcing Question - Without diluting the product or the experience, how might you attempt to reduce the time cycle required to educate your customers about the uniqueness of the experience associated with your product?

Crowdsourcing - Part II - Healthy Lifestyle

2009-06-20T22:23:00.003-04:00

If you're spent any time in Europe or Asia, you quickly realize why the media (and Asians and Europeans) like to portray Americans as overweight. As a whole, America has a tremendous obesity problem. But the lack of a healthy lifestyle has not escaped all Americans, in fact, there are many groups of Americans that are as fanatical about health, fitness and diet as anyone in the world.

So my first crowdsourcing question has to do with healthy lifestyle products. In many instances, healthy lifestyle products (diets, exercise routines, etc.) often struggle because they seem complex to start or maintain. They appear to take quite a bit of time to use properly (ie. additional food preparation or unique food shopping). We live in a culture where speed is everything, and people are already overloaded with activities that compete for their time.

Crowdsourcing Question - Given all the benefits that are associated with healthy lifestyles (physical, emotional, financial, sexual, etc.), what are the main areas you would focus on if you were trying to bring a new product to market that created healthier lifestyles for the consumers?

Crowdsourcing - Part I - The Big Picture

2009-06-20T21:13:00.011-04:00

Before I ask anyone for insight, it would probably help to give some idea of what the big picture is for this project. OK, here goes...

This group would like to bring a new product to market. The product(s) are all about creating a rich, healthy, thought-provoking lifestyle. The high-level belief is that the target customers will not only consume the product, but also adopt various aspect of the lifestyle to broaden the overall effects.

The market for these products exist today. It is an extremely competitive (overall) market, but certain niches of the broader product category have yet to be well developed or well marketed. They plan is to bring these new products to market within one of these under-developed niches.

The product(s) are imported. The importation process is relatively well-known (been done for several years), but it's filled with potential problems that could effect quality, frequency of delivery, fraud.

I'll leave it at that for now. Follow-on posts will dive into specific issues that I'd like to get input from the crowds.

Crowdsourcing a New Project

2009-06-20T20:57:00.006-04:00

I've written about the power of crowdsourcing before, but other than a children's book that I'm trying to get created via Facebook friends, I've never really put this into practice. We do quite a bit of pseudo-crowdsourcing at work for minor ideas and feedback, but nothing that truly goes outside the walls of the existing organization.

One of the projects we have this semester involves some research into an aspect of international business that we could apply back into our existing business, or possibly use for a future business. My project involves potentially two real businesses, neither or which I am directly involved with, but at least one has several elements that would be core to something that I am very interested in starting in the near future.

The challenge of this project is that there are elements where I believe I can bring quite a bit of value and expertise, but other elements where I am really not confident that my instincts are on the right track. My gut tells me that I'm letting some (subconscious) preconceived expectations restrict my ability to see a bigger picture. So instead of making a mistake from lack of exposure, I thought I'd open this up to the Internet and see what comes back. I have no idea what sort of response I'll get back, but maybe 300-500 followers on Twitter, LinkedIn and Facebook can share a few ideas that will point me in directions I had never imagined before. Let's hope so.

The one caveat I have is that I'm under NDA for this project, so I'm going to need to be somewhat vague about certain specifics. I don't think this should be a problem, as most of my questions are broad and could apply to several markets or products. I'm hoping that this doesn't become too restrictive to creative ideas.

All ideas are welcome....

Award-Winning Classmate

2009-06-18T16:15:00.007-04:00

Congratulations to classmate Gregg Lewis and his wife Jennifer, co-founders of SmithLewis Architecture. Their work on Roanoke's Claude Moore Education building was selected from over 2000 finalists to receive the Green Building of America Award.

This is not the first time Gregg's work has received national prominence for Environmentally-Aware Architecture. He first exposed our class to his activities to drive Cradle-to-Cradle principles in the Fall, and continued to enlighten us on architecture as we traveled across China last month.

Reinforcing my "2 Guys and the Internet" model

2009-06-18T11:44:00.002-04:00

A little while back I wrote that the likely outcome of this latest econalypse is that corporate jobs will not return in mass, and that a freelance model ("2 Guys and the Internet") or Hollywood-style coordination model would emerge. A study released today from The Kaufmann Foundation shows data that supports that theory.

It also highlights that the average age of entrepreneurs in the US was 39. This is encouraging news for all the students in the executive program that may not love their current position but are concerned about the safety of leaving the existing paycheck. If you start something now, you won't be alone in taking the risk to start that opportunity which might better align with your passion. And since there are plenty of entrepreneurs out there with distinct skills, there are more opportunities to connect with them to provide a broader range of products or services.

How Media will Impact your International Interactions

2009-06-16T23:10:00.004-04:00

Clay Sharky discusses how Cell Phones, Twitter and Facebook can make History

A lot of this we discussed in StratMktg last semester, but some interesting examples of how some of the usages and shifts are happening from "the simple or disadvantaged" as opposed to from the powerful nations. This doesn't discuss the election in Iran, but it's use of social media and the internet might end up making the Obama campaign's usage look like child's play.

Follow-Up: Failure & Growth in China

2009-06-16T10:35:00.004-04:00

In previous posts, I've written about growth and failure in China and the role that both of them play in their economy and culture. One of the things that Americans tend to do when confronted with the thought that China or India will potentially (or eventually) overtake them as an economic power is to point to their lack of innovation. Mike Lord referenced this during our International Business course this past weekend, but then reminded us that many of the early American settlers made copies of everything they knew from their homeland in Europe. The easiest way to gain expertise in a new area is to copy what others have done. What you do with it from there really determines if you will create a culture of innovation, and hence a culture that can create sustainable value over the long-term.

Maybe another data point to consider is the Israeli technology markets and their level of innovation. He is a highly-educated population, that has expertise in various areas of technology, and considerable need to solve economic and cultural challenges. Put they haven't been nearly as successful as their American counterparts in creating sustainable new businesses. One proposed reason for this is their "failure is not an option" mentality in the Israeli culture. I bring this up not as a way to highlight American success, but to highlight another culture that punishes (or discourages) failure, similar to what has been discussed in the past with China.

The US still has challenges to overcome in their education systems to remain competitive in the global economy, and we should not rest on our past success. But I believe innovation and the culture we have that encourages success, failure and resulting innovation is the strength that we need to enhance. The foundation still needs to be there via math and science and creative thinking, but the culture also needs to be encouraged. It is the strength that we have which gives us the ability to overcome the population numbers that are in India and China's favor (at least in some aspects).

Another Facebook + HS Reunions update

2009-06-15T23:15:00.004-04:00

As part of my How Facebook Could Make Money series, I talked about ways to leverage the nostalgia generated on Facebook for reunions. Well, apparently I've identified another market in transition, Alumni Associations. It's exciting to be ahead of the game at seeing market trends. The fun part happens when trying to come up with ways to be the counter-party that takes advantage of the new rules to create new forms of values.

Still trying to figure out Audience Targeting

2009-06-15T20:43:00.008-04:00

These are some pictures of user maps from this blog, (Top-Bottom) oldest-to-newest over the past 6 months. In terms of density or quantity of visitors, the site has made some progress. It gets anywhere from 5-25 visitors a day. This makes sense to me as I've learned a few tricks about cross-promoting it on Twitter or LinkedIn. But the slight demographic shift from Europe to Asia still has me somewhat confused. Obviously I get a little more traffic because I've been writing so much about our trip to China over the past month, but I'm not sure where all the European visitors came from previously. Other than "WFU MBA" or "bgracely", almost none of my topics or keywords would trend high enough to make the first couple pages on Google.

This is still in experimental mode. It's nice to be able to experiment and learn while doing something you love to do (writing), which is maybe the best lesson I should be learning from this. Find something you love to do, and then figure out if you can earn any money from it. I make nothing from this now, but hopefully I'll be able to translate some of the learnings from this digital identity experiment into something more sustaining over time.

2 Million Minutes

2009-06-14T21:48:00.005-04:00

I had not heard of the 2 Million Minutes project before, but coincidentally for many of the Executive MBA students on the China trip, this was the topic of conversation during many of our bus rides and meals. Seeing the pace of growth in China, it was hard not to envision how much this would effect our young children. Several of the exPats told us stories about how their children spoke multiple languages and how they embraced traveling to various countries in the region, learning about their cultures and differences. That's something that we don't expose our children to enough here in the US.

I plan to watch this documentary soon. I don't know if I'll have much of an opportunity to change the education system presented to our children, but I do have the opportunity to educate them on the world and give them additional opportunities to expand their views of the world.

Business School is like Business Books - Useful in Snippets

2009-06-14T21:00:00.006-04:00

Let me preface this by saying that some (or much) of this may not make sense to many people reading it. I have a strange way of processing information. I'm sure there is a psychological name for it, but I've never found it. It essentially goes like this.

Read a lot, almost anything you can get your hands on, in all formats (newspapers, blogs, magazines, books, etc.). Sometimes read the entire piece, and sometimes scan it.
Listen a lot, to people from many of different backgrounds and social levels.
Ask questions that sound broad, but are typically only looking for a partial answer.
Do not consciously coordinate the things you read or hear or ask.
Periodically have a whole bunch of facts, ideas, concepts, quotes and other relevant pieces come together into ideas or pictures. Scratch your head wondering how they all came together.

This piecing together sometimes happens on purpose, like when it's time to finish a paper or analysis. And sometimes it just "clicks" in the middle of a sentence as I'm talking to someone. The latter are the ones that I can never quite figure out, but occasionally I let it flow and it sounds like a reasonably intelligent set of thoughts (note: that's not bragging...I honestly don't know how it pieces together).

So what's the point? So what? Hang on a second, I'm getting there.

As I mentioned before, I read quite bit. Since I pay my mortgage by doing things that are semi-business related, I often read books on business. I'm currently reading Made to Stick, Innovation that Fits, and Free. I'm also reading Serve the People and The Blue Sweater, not so much for their business content but rather as a way to gain some inside into foreign culture to help augment this semester. Each one of those books is sitting on my nightstand, and each one is somewhere between 10% and 60% finished. I rarely seem to finish the books, but I always find a few interesting snippets from one that relates to one of the others. It's my favorite part of reading these various types of books, when one snippet connects to another and seems to create something new. A new idea, or a bigger concept.

As we've moved farther into our MBA program, we're now at that stage when more and more snippets from various courses or experiences are piecing themselves together in my head. The broader concepts these create are becoming interesting, useful and fostering a bunch of ideas for new businesses.

I'm not sure if this is the case for many (or any) of my classmates, as I often get blank stares when I try and explain some of these conjoined snippets. I'm not sure if they don't see things the same way, or if I still needed to work on explaining the new concepts, or if I'm just off base. Many of them are incredibly knowledgeable about specific topics, so it's quite possible that it could be the latter.

Either way, more and more pieces are starting to connect with each other or are at least in each other's gravitational field. For me, this is when fun stuff happens. Now the challenge becomes not over-thinking things.

Textbook Rant

2009-06-14T20:52:00.005-04:00

Thank you, Seth. I couldn't agree more!! And this isn't strictly a Marketing course problem, it's an issue for 99% of the courses. I have a pile of books that I lug around each semester, and they will eventually take up space in my home office, and I can't remember one moment over the past 12 months when I was class I had a textbook instead of an electronic copy of something. Not once!!

[UPDATE - In all fairness, I need to note that Dr.Iacovou did conduct our ITMgm't course in an all electronic format. This approach seemed to be well received by at least 75-80% of the class, so consider that a step in the right direction.]

International Learnings - Page 2 ("China Growth")

2009-06-14T14:20:00.007-04:00

One of the great things about MBA programs is the opportunity to learn, fail, make mistakes and be humbled without too much loss of political capital. It's even better when you get almost immediate feedback on an area where you missed the mark, or visualize the concepts in the context of the bigger picture.

A couple days ago, I wrote about my initial thoughts about China's Growth and their ability to sustain it over the next couple of decades. Much of it was based on our experiences from our company visits on the China trip, and multiple discussions with classmates on the subsequent bus rides around the country.

Much of class yesterday, in International Business, was focused on analysis of New Ventures and Corporate Expansion into foreign markets. So I went back and looked at some of the analysis models and compared them to what I had written. Needless to say, much of my initial thoughts were predictable and did not look at the connectedness of the bigger picture. Let's highlight a few of them:

Demand for Goods, Worldwide - I said, "...they pay their workers in Mexican plants $13/hr, but pay their workers in Singapore/Taiwan/Malaysia $0.21/hr, so it's hard to make the math of the stimulus work unless people in the US wanted to start paying $200 for a pair of blue jeans." This is a classic mistake of looking at just one element of the end-to-end supply chain for bringing this textile good to market. Stepping back to look at the bigger picture, I may have found that shipping costs from Asia to the US have risen dramatically, or that new plants in the US are taking advantage of tax incentives to educate out-of-work furniture laborers, or some other element that could have made the overall business model work. But instead, I allowed myself to be fixated on a single, seemingly tanglible (and easily understandable) cost element.
Failure to Consider Shifts in Capital & Investment - Nowhere in my analysis did I look at the possibilities that Chinese investment would flow directly into the US to take advantage of low-cost workers, or better environmental conditions, or attempts to gain a foothold within the country like Honda, Toyota, Mercedes and BMW did with plants in the US.
Failure to Consider Shifts in US Opinions - I mentioned that in "Made in China" sometimes carries a stigma, especially when child safety issues arise. But I failed to look at attempts by Chinese companies to reduce any backlash towards a foreign company or brand.

Those are just a few misses. Needless to say, there is a lot that I still don't understand. But the good news is that the learning is in an environment that encourages mistakes. Now it's up to me to figure out when to ask question, what questions to ask, and when to realize when I don't know what I don't know.

This is going to be a fun semester.

Making Sense of the Tremendous Growth in China

2009-06-13T01:10:00.005-04:00

Towards the end of last year, my team wrote a paper about the tremendous growth in the UAE, analyzing the region as a potential location for Foreign Direct Investment. With oil above $120/barrel and tremendous growth in both India and China, it was fairly easy to see that the UAE was well positioned to become a new powerful economic center between Europe and Asia.

Then the econalypse of 2008/2009 happened and the sands that all that growth was built upon quickly shifted, leaving many of those towering buildings in Dubai empty or partially completed. The center of the world for crane rentals suddenly faced the realization that comes with $40/barrel oil and the interconnectedness of our global economy.

Throughout our visit to China, we were constantly stunned by the pace and scope of growth throughout the country. Every city we visited was filled with cranes and construction crews, often working until well into the night (3am in Shanghai). New freeways, subway systems, waterway tunnels. 50, 100 and 150 story office buildings. High-rise apartments packed densely into every corner of the city. And this wasn't just a building here or a building there, this was the equivalent of 10-12 Winston-Salem's being added in all directions of almost every major city.

During our visit with the CITIC Group, their Chief Economist told us that the State Government had set the mandatory GDP growth rate at 8% in order to sustain the level of employment required to meet their goals and sustain a harmonious society. As I've mentioned before, the Chinese economy is still much smaller than the US, but 8% growth is an enormous number for a country of 1.3B people. Over the past decade, the Chinese economy has averaged between 10-11% growth per year. But given the resetting of the global economy, it's worth examining if this rate of growth is realistically sustainable over the next 5, 10 or 20 years.

So where will all of this growth come from? Let's take a look at a few potential areas of growth, as well as some factors that could limit the growth if not addressed and corrected.

Growth Areas

Demand for Goods, Worldwide - While consumer's bank accounts, 401(k)s and home values have all fallen over the last 12 months, it hard to believe that regions with traditionally strong consumer demand (US, Europe) will stop buying goods. If anything, they will continue to move towards low-cost goods, which can only favor Asian manufacturers and sourcers. When visiting one of the Garmet manufacturers during our trip in Hong Kong, someone asked if they expected many factories to be reopened in the US (or North America) given the stimulus from the US Gov't. The response was that they pay their workers in Mexican plants $13/hr, but pay their workers in Singapore/Taiwan/Malaysia $0.21/hr, so it's hard to make the math of the stimulus work unless people in the US wanted to start paying $200 for a pair of blue jeans. At another factory visit in Xi'an, the Operations Manager told us that more and more factories are moving to the western part of China because the costs in the eastern plants are growing too fast. He said that for every 500 miles they move west (with Xi'an being the western gateway today), their labor costs drop by 50%. And China still has 25% of their population (450M people) living in western providences and areas. Many of those people make less than $5/day, with over 100M making less than $1/day. Those types of numbers say that it will be very difficult for the US to get back any of the jobs that have gone overseas in the last 1-2 decades.

Demand for Goods, Domestically (in China) - The GDP of China has risen from $2/person to $2,300/person over the last 20 years, and is expected to rise to $5-6,000/person in the next 3-5 years. After the economic collapse in 2008, the Chinese government quickly realized that it was too dependent on exports, with only 30-35% of GDP going towards internal consumption. With all the growth and opportunities within China, there is quickly developing a growing middle-class that is seeking additional goods, services and comforts in their lives. Many of the changes in the middle class are trending towards Western ways of consumerism. Just as the middle class became the backbone of growth in the US since WWII, there is an excellent chance that this same growth will happen within China over the next 10-20 years. Ironically, one of the things that many people have identified as coming out of the Tiananmen Square incidents in 1989 is the liberalization of China, which is creating greater economic freedoms from small and medium sized businesses.

Innovation - China graduates 600,000 engineers from university programs per year, while the US only graduates 60,000. Its elementary school children are in classes at least 6 days a week and are typically bilingual at an early school-age. While it's true that the US has been the center of 21st Century Innovation by some standards, others believe that the US stumbled or wasted the past decade and is failing behind in driving innovation in key technology areas. But once again, the massive numbers will drive the need for changes and innovation. Cleaner environmental conditions, renewal energy, greater food production, next-generation mobile communications - all of these challenges will spur innovation internally, and it will be subsidized by the State Government who has declared those all to be challenges that could impede China's sustainable future. Does this mean the US will stop innovating? No. But this should be a wake-up call to the US that our ways of looking at superiority or value-creation may need an overhaul. More and more major companies are locating R&D facilities in China, and it's only a matter of time before the innovation created in those labs spurs local entreprenuers and scientists to go out on their own and create the next Google or Genentech or Toyota or Airbus.

Government Influence - It my seem ironic to think that government influence could drive greater economic growth, but it's very possible that the isolationism and single-party system in China could provide the stability between market cycles to help guide China into areas that will allow it to continue to growth at such a rapid pace. Whether this growth is via tax incentives to critical Chinese industries, or through fiscal policy and stimulus, it's very possible that future growth will drive their political policies more so than in the US where party politics and re-election strategies often have more influence that long-term country growth.

Potential Stumbling Blocks

US Consumer Spending - Just as the Chinese are not going to be able to radically shift their culture to become greater consumers of goods overnight, neither will Americans be able to drastically reduce their addiction to consumption. But there is a possibility that the latest downturn, just like a bad result from a doctor's exam, will provide shock treatment to many Americans and begin a cycle of reduced consumption. The days of the House-as-an-ATM are gone (at least for a while) and many people are out of work, so the cash to spend is just not there. Whether this will change long-term is still to be determined. The possibility of a newfound "Buy American" sentiment could also arise and put a dent in Chinese exports to the US.

Rising Environmental Costs - As we experienced in Beijing, Xi'an, Shanghai and Hong Kong, the skylines of these major cities are badly polluted. With the growing presence of cranes driving new buildings and factories, this challenge will only get worse in the near term. The massive use of coal to power the country leads to polluted water, polluted air, and contributes to the loss of "green" space around the country. Finding alternative energy sources is one challenge facing the government, but also taking on the cost of cleaning their environment to sustain food and life will become an increasing burden. These costs will take away from GDP production.

Product Safety Costs - The recent problems with lead paint on toys shipped to the US highlighted another lack of control that could have a long-term impact on their ability to export. When safety issues directly effect children, the sentiment grows loud to associate "Made in China" with potential harm for children around the world. Trust is a commodity that is not easily replicated or imported, so the Chinese will have to increase their adherence to commonly used guidelines for safety and inspection, adding new costs to their products. These additional costs represent capital that will not be available for GDP production.

Growing Population Costs - Similar to the US, China has an aging challenge with it's population. The greying of their population will increase costs for healthcare, home-care, pharmaceuticals and all other aspects of extended life. How these added costs will be absorbed is still to be determined, since China does not provide a public safety-net similar to the US with Medicare, Medicaid and other programs.

The Laws of Big Numbers - 8% growth (or anything near that level) doesn't happen in developed countries. At some point in the near future, China will begin to face the challenge that all large organizations face, trying to navigate a giant ship in an ever-increase competitive world. Changes won't happen as fast. Competition from outside China will learn from their success and improve on their processes. Countries or businesses considered about the growing might of China may look to hedge their futures with goods and services from elsewhere in Asia, Eastern Europe, Africa or South America.

By no means does this short list of possibilities and challenges tell the whole story of what may happen with Chinese growth over the next couple of decades. The growth China is experiencing today is not only massive on a global scale, but its impact on the rest of the world will resonate for generations to come. Will they be able to sustain it in a way that ultimately creates more value than destruction? We'll have to wait and see. But if they can coordinate their economy in a manner that is anything like we saw at the 2008 Opening Ceremonies, the odds of success are a distinct possibility. It will take Olympic-like precision to get past some of their growth challenges, but whatever happens, the world will be deeply impacted.

3rd Semester begins - 6 months to go!!

2009-06-13T00:00:00.003-04:00

The thirty of us remaining in the WFU MBA 2009 program returned last night from our international trips and a couple weeks off. It was good to see everyone again and catch up on their trips. The mood seemed to be slightly less intense than semesters past, partially because the weather is so nice and partially because it's been six weeks since we were here in Winston-Salem and everyone is trying to get back into a groove.

This semester is about all things International. We have three classroom courses and the International Practicum, which included the two week trips to either China, Japan or South America. The classroom courses this semester are all only six weeks (instead of eight), which means they consolidate quite a bit more reading into each session.

International Financial Management is being taught by Dr. Bruce Resnick. The course will focus on FX Markets, differences between Domestic and International Finance, International Strategy and overall International Portfolio Management.

International Business Management is being taught by Dr. Mike Lord. Mike was the lead for our China trip. The course focuses on a broad range of topics (Cultural, Economic, Political, Geographic) that effect how companies engage in international expansion and operations.

Global Strategic Management is being taught by Dr. Ram Baliga. The course focuses on many aspects of strategy as it relates to products, operations, M&A, market entry and competition.

The international trips seem to have changed the overall perspective of the world for many of my classmates. They seem to have a better understanding of how much bigger the world in terms of opportunities and competition. They seem to have a better grasp on how Finance, Culture, Government Policy and Global Economics fit together. And they seem to have a new sense of what to explore and question as they try and make sense of how they are going to fit into the global economy.

We still don't know what we don't know, and but this semester should help to fill in the blanks on a few questions. The courses are all in English, but there is definitely a different set of languages being spoken in class are still a little bit foreign. Hopefully the learning curve moves faster than my attempts at Mandarin.

Value creation through the dip

2009-06-10T09:57:00.004-04:00

Following up on my post yesterday regarding the phases that hype, technology and value-creation go through, I thought it might be useful to dust off the questions I typically use to determine if a new innovation is a fad or if it has a chance to survive long-term. This seems to align to Fred Wilson's take on adoption of new innovations.

1. Can I explain the benefit of the technology (or vision) in 1-2 sentences, or do I need to ramble through some story?

2. If I can explain it in 1-2 sentences, do semi-technical or non-technical people understand it, or at least ask good questions to clarify?

3. If this technology was open-sourced, as opposed to being controlled by a single company (or a small number of companies), are there enough interesting aspects to get communities of developers to engage with it?

4. If it’s not happening already, what is going to be the “ah ha” moment when people will actually start valuing it enough to pay for it, or at least associating valid business models with it? If this is consumer-oriented, why would they include it in their life?

5. If it went away tomorrow, would anyone really miss it within 3-6 months?

We live in a world of Twitter-time value creation

2009-06-09T14:12:00.001-04:00

If you haven't been paying attention, this little thing called Twitter has been generating quite a bit of buzz over the past 6 months. Regardless of if you're a Twitter fanboy, hater or just trying to understand it, it's been incredibly interesting to watch not only the growth of the service, but also the huge range of opinions about whether or not it creates any real value. One day it's a life-changing technology, the next day it's dead!

Twitter has obviously changed the game in terms of how we can now consume information. It's no longer measured in days or hours, but instead it was become instantaneous. But does this create new value? For the average user, it may create more distraction than the value the instant information could bring. But it is starting to bring value to new technologies that are leveraging Twitter APIs to take the feed of information and turn it into something new.

So I have to ask a few simple questions:

Do we have any sense of what value is anymore?
Does long-term value exist anymore?
Is all value going forward going to be measured in Twitter time?
Is technology moving so fast that we won't recognize that we need additional value, or new value, until the technology is upon us?

On our trip to China, our new friend Joost at Volvo mentioned that if we wanted to come do business there, that we'd better have a business model that expected products & services to be copied in 90 days. Maybe that's the new duration of value creation. It's been about 90 days since Oprah first joined Twitter, the user count soared, and now it's coming back down to earth.

Or maybe there will now be phases of value created, like rounds of venture funding. Maybe Twitter has now been through it's adolescence value-creation phase, and over the next 90 days (or maybe 6 months, or maybe 12 months), it will have to decide if it's able to move into it's 20'something value-creation phase, or it's adult-maturity value-creation phase.

We live in interesting times. Fast moving times. Sometimes it's very difficult to not only keep up with the pace, but determine if the thing in front of you is valuable or not. I don't know the answers to my questions, but I do expect that they will flip the business world on its head over the next couple of years. Are you creating long-term value, or Twitter-time value?

China (Overall) Notes

2009-06-08T13:57:00.005-04:00

These were point-in-time notes as we went through various areas of China. Some of them I still believe, while my opinion on other areas was changed as the trip went on. I'm including all of them to help me remember how my mindset changed throughout the trip and after I returned.

Asia - 3B people, 20% of global GDP

Surface tradition; govt or society defined rules; no enforcement penalties; no rules for business in the "get it done" levels

Not about thc great people or ideas, the average / above average people and the masses at the bottom, hungry to get out.

US rules don't apply to business models or practices. One man's profit is another man's business model.

Growth model is not sustainable (questionable) and doesn't create real value, sustainable value (need to dig into these stats). Need to rethink this thought. The pace is face and destructive, but it may be moving value from other parts of the world.

Go back and study the evolutional of American economy (from 1900s) to have a viewpoint on how China & India may evolve.

Remember GaFe's viewpoint, it's about a long-term partnership, not adversarial. Let govt fight about keeping score.

Stop trying to defend why the US is better. Start thinking about better partnerships or ways to succeed within the new rules.

China ambitions are something better every 2 years (promotions), and salary/costs are rising 100% y-over-y. Think about how you'd structure your business within those models.

With China growing this fast, they don't have the legacy technologies...leapfrog to latest stuff.

Little Emperor syndrome, similar to US helicopter parents and Milenials

Go with the flow on new stuff.

SMB is difficult to create because their sense of size & scale is so different. Technology is a possibility, otherwise consider JV.

Just as other countries have strived to speak English to study the US, it's time to begin learning Mandarin to communicate and understand.

Xi'an Notes

2009-06-08T13:55:00.002-04:00

I found these on my iPhone, which I was using as a notepad during the various bus rides and business tours on the trip. I've been reading back through these to get perspective on how my mindset changed throughout the trip and after I returned

Original capital of China
Northwest part of China
8.3M people
No subway system - original line in 2011
Natural gas cabs

Beginning of Silk Road - China to Europe
Terra Cotta Warriors

Well balanced workforce, industry, infrastructure. Gateway to the west. Parallel to US Western expansion?

JV opportunities because of workforce education? Concerns about govt intervenion (IPR issues) because of aerospace industry.

Energy center; Chemical center

Volvo JV: (Joost)
- IPR - copy yourself or done within 90 days
- Supplies from state owned partner
- Top down management (only)
- Prices fall every year - China doesnt follow world market prices (govt subsidies)
- "hourly capital" - lean manufacturing
- 1/3 temporary workers, compete for jobs with others
- Attempts to reduce required floor space by 10% each year.
- Every 1500km west, labor costs drop 50%

Environmental - big difference between regulation & enforcement

Beijing Notes

2009-06-08T13:49:00.008-04:00

15M people; 85% non native to Beijing

City wall - stones for houses - eventually the stones from the City Wall were used to build 1000s of local houses
10,000,000 bicycles - lose one, steal one
4 walls surrounding the city (old)
3.5 M cars (no carpools)
Huge change in Chinese culture in last 20-30 year
Small house destroyed for large buildings
40,000 yuan per 10 sq ft (business center)
1976 earthquake - buildings with white columns - reinforcement
Before 1980 - no buildings above 10 stories
90 universities

80% of trees removed from 1950s to build farms
Renewal of trees with last 10-15year
Great wall of trees - Green Wall

No receipt, don't pay taxes - sometimes you can ask locals for the "no receipt" price to get better deals

Coal mine owners are the riches segment of the country, behind the government
"Managing the Dragon" , "Mr. China" - books that explain this concept

For the good of China...don't harm the environment...use resources from other countries - a comment from CITIC on the State policy of using local natural resources vs. buying them from other countries

No appt. for medical services. Go to hospital (stand in line). Pay service fee. Dr. gets commission from prescriptions, so they typically over-medicate. TCM - Chinese Traditional Medicine. Wholistic medicine. No testing of drugs. Contrast vs United Family Healthcare. Life expectancy is similar to US...walking, biking, green tea. Tamaflu based on TCM.

Disregard for IPR (Intellectual Property Rights) is incredible. No morales for ideas. Copycat culture. Nothing sustainable. 20 international films per year. - later in the trip I learned more about their IPR laws vs. IPR enforcement, as we all the attitudes towards not caring about "YOUR" IPR if a copy can employ 100s or 1000s of Chinese workers.

Greg's analogy of the winding road system to the overall system of controlling the population - these was never a direct path to get between places in Beijing. It felt similar to waiting in line at an amusement park, where they have the long, wrapping lines to better handle crowd control and queuing. Driving anywhere in Beijing felt like this.

FAILURE (or "I Failed")

2009-06-04T00:37:00.006-04:00

In talking to many different people in China, from various backgrounds, one word that I heard quite often was "FAILURE". The context was typically something like this, "Before doing , I worked as a , but I was a failure." The Chinese seem to have a binary view of activities. You're either extremely successful (most popular, most famous) or you failed.

I wasn't exactly sure how to interpret this.

How long do they typically give themselves in a certain activity before it is considered a failure?
Are they better than Americans at getting out of a bad situation? I know plenty of people in the US that dislike their job but stick with it because it pays the mortgage.
Is their concept of failure considered a black mark on their career (or resume), or like a badge of honor, similar to how failed entrepreneurs (or NFL football coaches) are revered in Silicon Valley?
Does their lack of creative thinking (vs. analytic thinking) lead them to consider activities failures earlier than they might if they stepped back and looked at alternative strategies or options more often?

I need to speak to some of my Chinese-American friends about this aspect of the culture in more detail. I need to better understand if this is a widespread mindset, or just a coincidence that we experienced during our two weeks in China.

The Golden Rules of China

2009-06-02T12:14:00.002-04:00

Professor Mike Lord shared various tidbits from his previous travels with us throughout the trip. In an email today, he shared with us a list that he and several other exPats (and MNCs) have been developing since their visits in the mid-1990s.

Golden Rules of China

1. Everything is possible.

2. Nothing is easy.

3. Western business logic does not apply.

4. It is a fun project if there is no deadline.

5. You must persist – things will come your way – eventually.

6. Patience is the essence of success.

7. “You don’t know China” means they disagree.

8. New regulation means they found a new way to avoid doing something.

9. “Internal regulation” means they are mad at you.

10. “Basically, no problem” means BIG problem.

11. When you are optimistic, think about Rule 2.

12. When you are discouraged, think about Rule 1.

Feedback on Netbooks & Mobile Computing

2009-06-02T11:58:00.011-04:00

Before our trip to China, I wrote about the 9" Asus Eee PC netbook that I would be taking to assist with blogging. Having discussed the product in ITMgmt class in the Spring'09 semester, I got a good chance to experience the difference between a netbook and a full-blown laptop.

Here's my thoughts...

Size & Weight - Considering that I carried this around in my backpack for 14 days, the weight and form-factor were perfect. The keyboard took me a few days to master, and it helped that I'm a two fingered typist. My roommate Gregg had a difficult time on the keyboard using traditional typing techniques. The screen size is obviously smaller, but this tradeoff was more than acceptable for the weight.

Usability & Mobility - I opted for the Linux version, instead of the Windows version, to get the true netbook experience. I wanted to focus on using applications that reside in the cloud, as opposed to local apps (MS-Office, etc.). Most of the applications I needed (Firefox, Skype, etc.) come pre-loaded on the machine, and they worked perfectly. Internet from the hotel rooms was decent, not exceptional, which sort of surprised me. What I didn't find much of was free WiFi access in coffee-shops, and netbook did not have any built-in 3G access, so the mobility aspects weren't something I could experience. WiFi worked fine at home in the states, so I'll give that a pass.

Cons - For the most part, it's a very useable machine and a great mobile computing device. But the one thing I truly disliked was the interaction with the mouse and trackpad. It was very inconsistent (mouse and finger-swipe movements) and the click-button was too stiff and very loud. The noise isn't that big a problem, except in quiet rooms. I think I woke up my roommate several times when I'd get up to write in the morning.

While the netbook seemed to be a decent platform for the trip, I eventually had to compare to using my iPhone. It was somewhat of a difficult comparison in China because the international data rate from AT&T were obscene (20Mb for $20). The netbook had the storage I needed to download picture and videos, and supported Flash for applications that required it. But if I could had gotten US rates for 3G data access, I think I could have been just as happy using my iPhone for all my mobile computing except for data storage.

Overall, mobile computing has come a long way in just a few years, with netbooks beginning to fill a niche in size, weight and functionality. The iPhone fills another niche, and I think there may still be room for an in-between form factor (or a storage add-on to the iPhone). I still had to carry my FlipVideo and others used their digital cameras, so the all-in-one mobile device still doesn't exist. And of course, ubiquitous & cost-effective mobile bandwidth still has a little way to go.

The Chinese seem to do everything from their mobile phone, so I wouldn't be against that form factor. A world without wires is critical, and the instant reponse times possible with a phone-like device make business in China move at the pace it does. Innovation in this area still has a alot of potential to drive huge amount of revenues and business opportunities.

Why China isn't the next Silicon Valley!

2009-06-01T21:33:00.003-04:00

This is an interesting article by Sarah Lacy. I'm not sure how many times she has been to China, nor do I claim to be an expert with my visit count at a whopping "1". I find her viewpoint interesting, but not surprising. How could anyone but America, and especially our innovation mecca of Silicon Valley not be the home of the next great invention? I'm ashamed to admit that before our trip a few weeks ago, I would have thought the same thing. China is great at copying stuff. They are great at completing tasks that the brilliant and creative Americans assign to their low-cost workers. They all skipped the creative classes in school to take an extra math class.

Boy was I wrong about that. Its hard to explain without visiting, but there is definitely a culture of innovation in China. You can't build the cities that dominate their landscape without some creativity and strategy. You can't create business models that allow your companies to grow, when faced with a copied product within 90 days, if you don't have creativity and innovation. At this stage the innovation may not all be about new technology, but it is definitely about operational excellence, business model creativity, and a good bit of raw determination. Call it survival innovation. It's what motivates you to move from $1/day to $40/month to a high-rise in Xi'an, to a 100M RMB villa outside Beijing.

I'm looking forward to seeing if China becomes another Silicon Valley. But from the little bit I learned about Chinese culture, I doubt they want to become another anything. They will want to create a uniquely Chinese mecca of technology and innovation, or maybe a half-dozen. I'm hoping to find some ways to be part of that growth. I that for the next 5-10 years (or more), it will be a partnership play for those willing to create win-win situations in both countries. I don't believe it will be a zero-sum game with only one winner. As we've seen from the current econalypse, neither current can succeed if there is only one winner.

btw - kudos to Ms. Lacy for working on her Mandarin. I've been trying for a few months and not having as much success as I'd like. If she needs a study partner, please let me know. Or if she learns any tricks to learning it faster, I'd welcome those as well.

Communism in China - A single party system

2009-05-31T09:16:00.004-04:00

[Cross-posted from our WFU MBA China '09 blog]

While not everyone on the trip remembers the Cold War (Russia), or the falling of the Berlin Wall (Germany), or the beginning of the Cultural Revolution (China), you could definitely sense that everyone on the trip had a curiosity, or concern, about how the Communist Party might effect our trip. Having worked for Cisco for many years, I had heard all the accusations about how our products were used to censor the Internet for Chinese citizens.

So the question remained, how much would the Communist government effect our trip? How much would we be allowed to see? How much does it effect the ability to do business in China and with Chinese business partners.

By no means should this post be taken as a definite answer or viewpoint. We were only there for two weeks, and had limited visibility into any aspect of companies or the Chinese people. But we saw bits and pieces, and that is what I'll share today.

In Beijing, we met with the former Chief Economist of The CITIC Group. CITIC is a mulit-national conglomerate that serves as an investment arm of the Chinese government. With that connection, the views from CITIC and the Chnese Government are obviously fairly well aligned. The views from CITIC recognized some of the huge challenges facing China:

An increasingly growing wealth gap between the richest and poorest people.
Environmental problems (air & water) as a result of all the growth over the past 10-15 years.
The challenge of finding enough natural resources to support their growth, as well as the search for alternative mechanisms (solar, wind) to substitute for those natural resources.
The dependencies on exports to drive their economy (especially the US), and the need to drive consumerism within their country.

These challenges all have a long-term time horizon, and all of them have a direct impact on the overall quality of life for almost all Chinese citizens. They impact the government's primary goal of a harmonious society, and they impact the long-term viability of the country.

At other State Owned Entities, such as Bright Dairy or Xi'an Aircraft Corporation, we saw how the government had identified certain industries or economic areas as critical to the long-term success of the country and was providing them with favorable benefits (ie. limited or no corporate taxes) to help drive growth and employment of Chinese people. While these benefits may or may not have been extended to other competitors in these industries, they did highlight the levels that the govenment will go to create a type of "floor" under parts of the economy to avoid speculation or wild swings that could create broader social problems.

Extending this concept of a "floor" to the financial portion of the Chinese economy, we visited the Shanghai Stock Exchange. The most prominent exchange in mainland China, it employs very rules that attempt to ensure more order in their markets:

No short selling of stocks.
All stocks must be held for at least 1 full day prior to being resold (N+1 rule). This essentially eliminates day-trading.
The variation in any one day can not exceed a +/- 10% band from the original price.

While some of these rules could be viewed as restrictive to efficient markets, especially from a US perspective, they could also be viewed as trying to force some amount of patience or "take a step back" into their markets to prevent extremes reactions to rumors, fear or greed. Whether or not this is a good thing for the SS Exchange or the overall Chinese marketplace will have to be determined long-term, but it does highlight another aspect of trying to maintain a level of harmonious society in various aspects of Chinese business.

As the trip progressed, I asked several of these questions to Professor Mike Lord, who has been leading this trip for 10 years and has extensive business accumine in the region. His response was that it probably makes more practical sense to view China as a single party capitalist country, instead of a Communist state that endorses capitalism. You still have to be aware of the guidelines needed to do business in China surrounding ownership, relationships and competition, but that their inclusion into the WTO had sparked a tremendous understanding that global economic powers can not control markets and that competition and innovation will ultimately determine their success or failure. This made a lot of sense. From an outsiders perspective, it was very hard to see China as being anything but a hyper-competitive capitalistic market. Just the pace of re-engineering of products and creation of companies to sell those would suggest that the government can only extend so much influence.

Don't get me wrong, I'm not trying to suggest that the government is not a prevalent part of daily life in China. I witnessed this first hand. YouTube is blocked. I heard people listening in on my phone calls. I saw soldiers outside of many buildings. I heard citizens tell us stories about their knowledge of Fallon Gong, and their fears of discussing the events of June 1989 in Tienanmen Square. But none of these things seemed to impede the flow of business (except maybe portions of Google's business).

So the conclusions I drew were primary about my mindset about this blend of Communism and Capitalism. For now, it seems to exist in a fairly harmonious state. Could this change in the future? Possibly. Those major challenges I listed above could get more difficult, or the citizens might become less tolerant. But there appear to be (at least surface level) signs that they are being addressed.

My advice to Americans looking at interacting with China is to view their economy as being similar to the US, except with the competition level turned up a few notches. Learn what you can about ownership and relationships with Chinese companies and the government, but don't let the fear of a single party system paralyze your ability to actively engage in the world's largest marketplace. Like anything else, keep expanding your knowledge of the region and it's culture.

Healthcare in China

2009-05-30T17:38:00.002-04:00

[Cross-posted from our WFU MBA China '09 blog]

After meeting with United Family Healthcare, we had the opportunity to speak with several Beijing residents about healthcare in China. Several interesting aspects emerged, which highlighted major differences from the United States.

You don't make appointments with a family doctor or at a local clinic. If you have an issue, you take the day off work and go to the hospital. There you stand in line and wait for a doctor to examine and treat you. The doctors don't make much from a basic visit (fixed fee), but instead make the majority of the money on prescriptions. So most Chinese people are often over-prescribed with each visit, to the point that they feel the doctor has failed them if they don't walk out with a list of prescriptions.
Traditional Chinese Medicine (TCM) is primarily focused on reactive medicine rather that the preventative medicine of the west.
The majority of people in China do not have health insurance. This has resulted in people saving massive amounts of money (50-80% savings rates) out of fear of major medical bills. This is recognized as a major cultural issue by the Chinese government, so effects are underway to consider ways to create a social "safety net" system.
The level of doctor skills in China is excellent, both because many of them have been educated in the US, but also because science is so heavily emphasized in the schools from an early age.
The average lifespan is 71 (Male) and 74 (Female). While the air and water quality have serious challenges, the fact that their diet is low in fat and they frequently exercise (walking, bike riding, kung-fu, tai-chi, etc.) contributes to this longevity.

Just as in the US, China has a growing ederly population and will face similar long-term healthcare issues. Without social security of Medicare / Medicaid type programs, many elderly will potentially move in with their children. While this was traditionally accepted, as more of China becomes westernized and the young families are more focused on careers (with only a single child), this is beginning to cause some culture changes and difficulties across the generations.

Long term the population will face the risks associated with growing pollution problems and water shortages. Combine this with the growing western influence to their diets and China has some potentially large challenges to address over the next 10-20 years of their evolution.

Killing the Trolls of your Past

2009-05-29T16:51:00.005-04:00

Another good find from Seth Godin. I noticed this at the end of the first semester as classmates told us about their background in our LOB class. So much of their decision-making today was guided by one of those "trolls" from their past. As I mentioned in my China Hangover post yesterday, I've been overwhelmed this week by how much of this I hear around the office. "We can't do that because....", it's almost always based on some failed attempt sometime in the past. Nobody seems to remember that today isn't yesterday and the world is not the same.

One of the most powerful sessions we had in China was a meeting with WFU MBA alum GeFei Li, who has bridged his knowledge of both Chinese and American business and culture into an incredibly successful set of companies. He talked about how many business people approach China with preconceptions or as the enemy, most of whom fail. Approaching business in China requires a new open-mindedness and a willingness to look at this as a win-win partnership. Letting the trolls dictate your goals or agenda is a recipe for disaster. It's not easy to let the pains from old wounds impact your judgment, but it's critical to look forward and find a way to view the world from today's viewpoint, with a vision towards the future. The trolls are in the past, and the past can't be changed.

The China Hangover

2009-05-28T22:42:00.005-04:00

About an hour into long international flights, the flight attendants begin to move down the aisles serving drinks. If you're interested in getting some sleep, it's often helpful to have an adult beverage, and soon enough you're nodding off. But occasionally the cart comes by too often, or the turbulence prevents you from sleeping and upon arrival your head feels like the plane just landed on it. Flight hangovers are no fun.

For some of us, we're in the middle of a slightly longer hangover. In this case, we'll call it a "China Hangover" and it has less to do with a headache and more to do with a comparison. The comparison between the freedom and pace that we experienced over the past two weeks in China, and the pace that our world moves here in the United States. Having never experienced this before after international travel, I'm not sure how long it will last. My sleep is constantly interrupted by thoughts of China. I sit at work frustrated by the unnecessary barriers we put up to get things done. My thoughts during my morning and evening commute are filled with concepts for new businesses that either involved China, or adopt their strategies and attitudes towards business.

China is an amazing place. The past two weeks were incredibly eye-opening. This is a hangover that I'm not sure that I want to end anytime soon, because it's forcing me to look at the world in a completely different way. What I do with this new viewpoint will be the most interesting activity I undertake in 2009 (and possibly 2010). Getting back there is now high on my priority list, and probably needs to become an annual event (in some manner) to build my knowledge and contacts.

The Dynamics of the China Trip (Part I)

2009-05-28T22:15:00.008-04:00

Thinking back on the overall trip, there were certain dynamics that stand out as being really important. The first is the order in which we visited the cities, and the second is the breadth of the students on the trip.

I'll start with the ordering of the cities. Coming over from the US, I'm sure we all had pre-conceived perceptions of what we'd experience in this new land. Living conditions, food, the response from the local people, how well we'd adapt to the culture, the role of the gov't, etc.. Beijing exposed us to the crossroads that Chinese culture is experiencing, with the mix of incredible growth and modernization (high-rise, buildings, roads, factories) and the 100s or 1000s of years of culture that still exists in the City Walls, City Moats and neighborhood hutongs and villages. But Beijing is also the center of the Chinese government, and to a certain extent it felt like a giant maze. Trying to get anywhere was cumbersome, there was never a direct path. It constantly felt like we needed to move in concentric circles to eventually reach a destination. And then once we were there, the business meetings often felt like a painful slog of formalities and interpreters. Combined with the newly inhailed pollution, Beijing initially felt like a shiny toy (on the outside), but a visit to a grandparents house on the inside. But then an interesting thing happened, we got outside the shiny parts and were allowed to explore. We sought out the older parts of the city. We sought out the local people and native culture. And we found places like Black Sesame Kitchen and and other places that embraced their past and were combining it with the new.

As we left Beijing and travelled to Xi'an, I sensed that there was some skepticism about the remainder of our trip. There was also a sense that the size and scope of China was so overwhelming that we might be too small to experience enough. Xi'an provided a nice change of pace. While it was a city of 8.3M people (the size of NYC), it didn't feel as dense. It felt more like Chicago. A big city, but further west and away from the crowds of Beijing. Xi'an showed us a new pace of growth. Xi'an is a city steeped in 3000 years of history, the origin of the legendary Silk Road, but here is was trying to become the new gateway to China's west. While Beijing had grown up, Xi'an was adding a new city area the size of Winston-Salem or Raleigh in 10-12 locations. Cranes were everywhere you looked. But Xi'an still had it's history. The Terra Cotta Warriors. The Big Wild Goose Pagoda. The Drum and Bell Towers within the ancient city wall. It had retained it's past, and was trying to build a new set of history. Overall the pace seemed to ebb and flow slightly better than Beijing, but that would all change as we got move on to Shanghai.

Traveling south to Shanghai, it almost felt like we entered a completely different China. Shanghai was new and huge and sprawling. Shanghai was not about history or tourism, it was all about being a center of business and an international metropolitan area. With 35M people, spanning an area the size of Delaware, Shanghai is massive in scope. Shanghai was our first experience of a China that had adopted many westernized ways. Transportation was a free-for-all, but it was fast paced. The business meetings moved to a different level, as the scope of the companies increased and we got insight from exPats on their experiences doing in Asia. The views of the skyline and the water were stunning, especially at night as the Asian obsession with neon was in full effect. The diversity of Shanghai was evident, as many of our group expressed a regret that we didn't have an extra to experience more of this incredible city.

Our final journey took us off the mainland and over to Hong Kong. A British territory in 1997, this felt the most like home. Hong Kong is like NYC with a British (and Cantonese) accent, set along the water and amongst the mountains. Language was no longer a barrier. The business meetings we again face-paced and engaging with exPats or Hong Kong locals.

About halfway through the second week, somewhere between Shanghai and Hong Kong, it started to dawn on us that the trip Mike Lord had created was the perfect blend of experiences for us to truly experience China. It started out slow and formal, highlighting the differences of doing business on the mainline. It showed the importance of local relationships (ours was with Kathy Guan of CITIC Travel), and the customs of interacting with State Owned Entities (SOE). We experienced the challenges of navigating in a country with a massive population and a communist government that needed to manage the growth in a controlled manner. As the trip progressed, we stated to see more freedoms and change, and we continued to see how capitalism and communism were intertwined. By the end of the first week, many of our preconceptions had been proven wrong, and we began to truly understand the incredible energy that was here. If we had experienced the cities in the opposite order, it would have been like driving a Ferrari at 150mph and then suddenly hitting the brakes to go down a one-land road. It would have created frustration. By putting the itinerary in this order, we were forced to experience eastern China first, to get outside our comfort zone and to learn to adapt. Only later woud we partake in the China that had an aspect of comfort for us, and we were all better for it. We had adjusted to the culture, the expectations and the nuances.

The Dynamics of the China Trip (Part II)

2009-05-28T22:15:00.007-04:00

[Part I]

The other critical aspect of the trip was the breadth of viewpoints from the group. Composed of 35 students from 5 different MBA programs (in Winston-Salem and Charlotte), the group had very interesting dynamics.

The spread in age between the youngest and oldest was 25 years.
The mix of men and women was probably 60/40.
The mix of groups was fairly evenly divided amongst the five programs, so there was a level of familiarity but also a desire to meet the other members.
The backgrounds were diverse - Bankers, Accountants, Architects and Engineers. Consumer Products, High-Tech and Higher Education. Small Business Owners, Non-Profit Adminstrators and Real-Estate Developers.
Parents, Husbands & Wives, Expecting Couples and Students heading off to Internships.

With all these viewpoints, there was never a lack of questions, opinions, disbeliefs and curiosity. The older exec students hasseled the younger full-time students about their lack of experience, and then expressed sentiments of jealousy or remorse at how easily they could move their lives to China (if desired) in a heartbeat, without the responsibilities of families or children. The entrepreneurs were constantly taking notes, looking for an angle or an opportunity to engage in these incredible markets. And the professors repeatedly provided a mix of learning, experience and wonderment as they took in new experiences for themselves.

35 people. 35 experiences. All being shared in real-time, all being processed with confusion and wonderment. The diversity of the people was the other critical element to making this such an incredible journey. Those 35 people now have a new bond together, and a foundation for a lifetime of possibilities. What we all do with those experience will each be different, but I expect that we'll all look at life (here in the US or elsewhere) in a new light because of this trip.

Putting Green Computing & Virtualization into Perspective

2009-05-27T15:25:00.002-04:00

[Cross-posted from my work blog]

Having just returned from two weeks of business meetings across China, I came back with a completely new perspective on how the work that we're doing around Virtualization and Green Computing can directly effect emerging economies and the environment.

The picture to the right is from a beautiful, sunny morning in Beijing. What!?!? You can barely see the tops of the buildings and where are the blue skies?

With 15-20M people, 4M cars and 1000s of coal burning factories surrounding the city, Beijing has a well-known pollution problem. This same problem exists in at least 15 other major cities all over mainland China and Hong Kong. With a GDP that has grown over 10% y-o-y for the past decade (even 6.5% this past year), growth comes with a price. To walk around Beijing or Shanghai for several hours can give you red eyes and a feeling that you have smoked two packs of cigarettes.

One of the companies I met with was Beijing Tsinghua Solar Systems, one of the top Chinese manufacturers of solar tube and panel technology. With over 10M customers using their technology for basic functions like heating hot water in commercial and residential buildings, the country is able to offload about 50-65 coal-burning factories per year.

Those solar panels save the need to heat water for a few minutes a day. Imagine what the consolidation from virtualization technologies, and the efficiency from green data center technologies could do to put a dent in those coal-burning factories!! Data centers run hot 24x7x365, generating infinitely more demand for power than people looking to take a shower or wash their clothes. Now combine that with the ever growing increases in mobile computing (cell phones) from the next wave of Chinese farmers moving to the cities and you've got a pollution problem that moves from annoying to potentially deadly. To put this into even more perspective, there are between 100-150M people in China that earn less than $1 per day!! If you don't believe those people, and the Chinese government, are extremely motivated to move them out of extreme poverty, then I don't know what to say. These new workers will continue to drive more need for power in data centers, which puts a greater focus on those of us in technology to find more and better ways to deliver that power, computing and storage capacity in a much more environmentally friendly way.

It's good to be back home near family, but my perspective on the need to create more efficient data centers and building systems is now completely changed. The economies of the US and China are so intertwined that this is a global need. It's good to know that we're in a position to make a difference.

Pictures and Videos from China

2009-05-26T16:23:00.002-04:00

We're still in the process of consolidating the (literally) 1000s of pictures and videos from across the group, but here's a small sampling from across the cities we visited.

Pictures
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http://www.facebook.com/album.php?aid=112243&id=577445773
http://www.facebook.com/album.php?aid=110073&id=577445773
http://www.facebook.com/album.php?aid=112199&id=577445773
http://www.facebook.com/album.php?aid=112034&id=577445773
http://www.facebook.com/album.php?aid=111608&id=577445773
http://www.facebook.com/album.php?aid=109344&id=577445773
http://www.facebook.com/album.php?aid=108892&id=577445773

Videos
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http://www.facebook.com/profile.php?id=577445773&ref=profile#/profile.php?id=577445773&v=app_2392950137&viewas=577445773
http://www.youtube.com/watch?v=txmqgQUt3ok
http://www.youtube.com/watch?v=JnGRRYnvCUg
http://www.youtube.com/watch?v=CMENMmvG604
http://www.youtube.com/watch?v=SXtYaDTPqtA
http://www.youtube.com/watch?v=g9i8x9Yn2HQ
http://www.youtube.com/watch?v=Om9UmGAWW4k
http://www.youtube.com/watch?v=ZWXZioeHnbs
http://www.youtube.com/watch?v=QwEksR5mQIE
http://www.youtube.com/watch?v=AC26UnnT1Js

Back from China

2009-05-26T13:01:00.005-04:00

Now that I'm back from an incredible two week journey through the Middle Kingdom, it's time to start getting some of my learnings down in electronic format. I'll be working through a bunch of posts over the next couple of weeks, but I wanted to make a list of topics that will be coming in future posts. This was a list I made on the plane and during company visits the last couple of weeks:

Making Sense of the Tremendous Growth in China (growth of cities; gov't growth rate requirements; dependence on US consumption vs. Chinese consumption for growth)
The Gov't created "stability" floor for industries
The Chinese approach to control vs. chaos (media, reaction to events, etc.)
Looking at the world from Eastern vs. Western viewpoints
Who defines company strategies (especially in SOE-JV's), the company or the gov't?
SOE vs. Private vs. JV companies - Pros and Cons of each
Opportunities for Americans in China
The need for Americans to better understand China
If China succeeds (but uses all non-China natural resources), can the rest of the world survive?
The big China challenges (population, land, environment, internal consumption, social security)
Cultural Requirements to doing business in China
Are you studying China, the way China studies the US?
The 1.3B person underdog with the huge bankroll