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Reuters: No Thanksgiving rest for retailers in sales race (read article)

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Before you read this blog post…

…snag a napkin and write down answers to the following. How close did you get? Hint: you better know scientific notation.

1) # of Web sites

In 1994 there were approximately 5,000 Websites. How many times more Websites are there today?

2) # of Blog posts per day

On December 7, 1997 the term ‘Weblog’ was coined. How many blog posts are there per day now?

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Stan Christensen, partner at investment banking firm, Arbor Advisors interviews former Secretary of State George P. Shultz on negotation. Christensen teaches a course on negotiation at Stanford University and is a member of the Council on Foreign Relations.

My take

I haven’t watched the entire video yet. The speaking is a bit slow and you’ll have to work to take away usable lessons. Nonetheless, it almost always interesting to listen to how major events unfolded and what the players perceived as being the critical factors involved.

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In his biggest bet yet, Warren Buffet (via Berkshire Hathaway) is buying a 77% stake in Burlington Northern Santa Fe (a railroad company). Do the purchase price and long-term financials make sense? I have no clue . One assumes they do unless Warren’s lost his mind.  The basic argument for rail makes sense:

• American’s buy stuff
• Stuff has to get from manufacturer to marketplace
• Pending any breakthroughs in teleportation, rail is going to be a big part of that moving stuff

So it’s an industry with a long-term future. The long-term outlook for oil and coal probably played a part investing in rail, too. But, I still have to ask…

Has Warren Lost His Mind?

This is a semi-serious question. Or is he telling the whole story?

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“Should you stay or should you go?”

In tough times, Boards ask this about CEOs and CEOs ask it about their teams. This article from McKinsey does a reasonably good job of framing the problems and pitfalls (e.g., getting rid of people too quickly) and the direction of a solution.

The direction, simply put, is for CEOs to manage, including managing their team’s emotional states. As much as we all hate to admit it, our states of mind are what lead to bad, blind or brilliant decision making. The idealized rational man –homo economicus–  is as elusive as the mythical sasquatch, even in the halls of executive power.

Denial!

My favorite part of the article is a review of the “cognitive errors underlying denial…”

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In Part 1 (Toyota is Dead? Part 1) I quoted a recent blog in BusinessWeek that suggested because Toyota had it’s FIRST quarterly loss in 70 years they needed to “…rethink supply chain technology…” A sub-heading in the same post reads, “The Limits of Lean: Why Technology Is Now a Must”.

Huh?

Anyhow…read my prior post for my opinion about this conclusion. Whatever anyone’s opinions numbers ultimately tell the story. Today Toyota announced a return to profitability in the latest quarter. I doubt new supply chain technology had anything to do with the return to (quarterly) profitability, just as a lack of technology had nothing to do with the previous (quarterly) loss. Both the recent loss and recent-er gain were driven by unique events (government programs helped this quarter, while crashing auto sales hurt the previous quarter).

Einstein famously said… ‘make things as simple as possible, but not simpler’. As humans and Americans in particular we’re constantly pinning ‘simpler than possible’ conclusions and solutions on problems that are warranted by the facts on the ground (i.e., when in doubt, computerize something).

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Steve Jurvetson, partner at Draper Fisher Jurvetson, offers perspective on the market opportunities in innovation and technology. Topics discussed include the necessity for utter market disruption, interdisciplinary solutions, and advice for those interested in working in the venture capital arena.

Almost everyone says they are in favor of “good” (not many people raise their hands to the question, ‘who’s in favor of evil’). But few people give much thought to what being in favor of “good” really means, and especially what it means if everyone can define good and evil, right and wrong, for themselves. As I recently commented on Facebook, I don’t agree with everything said in this book but I don’t know how one can logically get around the (scary) conclusion in the last paragraph:
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According to this post on Business Week, the fact that Toyota experienced it’s “…first quarterly loss in 70 years suggests a need to rethink supply chain technology… ‘. The post concludes that “…a tech-free Lean gospel just can’t hack it anymore.”

Whoa.

A QUARTERLY loss and Toyota should deep-six 70 YEARS of finely-tuned practices? AND…technology–supply chain technology–would have prevented the QUARTERY loss?

Not only does a rising tide lift all ships, but all ships de-rise [sic] when the tide goes out. No auto maker is immune or could have immunized itself from the massive, relatively sudden changes that have taken place in the global economy and consumer auto purchases in particular.

Even if there is an “…exploding level of risk…” in supply chaims, it’s by no means clear (a) technology CAN dramatically reduce that risk, (b) that said risk was a factor–let alone a major factor–in the quarterly loss, or (c) that the ever-illusive pot of gold promised by the rainbow of technologies wouldn’t cause bigger problems than those it solves.

Solving difficult problems is rarely so simple as automation…

I confess I’m skeptical of “brain studies”, but this one seems to match common experience: When an expert starts talking, people stop thinking (critically).

The study entitled “Expert Financial Advice Neurobiologically “Offloads” Financial Decision-Making under Risk” and summarized by Robert Cialdini claims that

“Our results demonstrate that financial advice from an expert economist, provided during decision-making under conditions of uncertainty, had a significant impact on both behavior and brain responses…these results provide significant support for the hypothesis that one effect of expert advice is to ‘offload’’ the calculation of expected utility from the individual’s brain. “

In short, when someone you perceive as an expert starts talking, the part of your brain where critical thinking takes place shuts down (or at least activity in that region decreases). Once you understand this phenomenon you see it play out almost everywhere–work, home, the news. The problem of course is that many times those perceived as experts aren’t, or being an expert experiences what I call “expert blindness” where their deep knowledge of a particular area causes them to mis-perceive or just miss critical changes or opportunties.

In any event, it’s an intersting paper well worth reading. Just don’t buy everything is says just because the authors are “experts”. :)

Citation: Engelmann JB, Capra CM, Noussair C, Berns GS (2009) Expert Financial Advice Neurobiologically ‘‘Offloads’’ Financial Decision-Making under Risk. PLoS ONE 4(3): e4957. doi:10.1371/journal.pone.0004957