Critical Insights Vol. 1 Issue 10

ECONOMICS & MACRO MARKET

Dow Jones Industry Average has been very volatile recently. Although it may come back and test the recent high at 11308.95 as its intra-day high set on April 26, it is on its journey to the previous bottom around 6,500. From longer term point of view, we are yet to finish cycle beginning in 1987 follow the crash in July that year.

While Import Price index – both including and excluding fuel price – has been on the rise, Consumer Price Index excluding fuel and food has been in decline in the past year, reflecting weak demand in marketplace. The current concern should not be inflation. It should be deflation instead. Should the deflation accelerate, it is possible that the economy will enter a round of negative spiral.



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STRATEGY & MARKETING

Can You Describe Your Business in a Few Words?

If you ask people what their businesses are or sit in a presentation, you will likely to find that many companies have hard time to describe their business. People often try to cover every area of their businesses’ expertise, all of their industry experience and each qualification they have attained in an effort to paint the full picture of what makes them stand out. Consequently, the messages are diluted, sounding like everyone else, and audience is confused. A process of distilling the essence of your business from various aspects is mind-wrenching. What you gain from going through the process, however, are a crystal-clear understanding of the business in your own mind and clean, exciting message in the minds of your customers and staff. Meredith Vaughan, president of Vladimir Jones, introduces her agency as “an agency of exciting minds.”

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Giving Customers License to Enjoy Luxury

Many consumers hesitate when it comes to spending money on luxury items. The feeling of guilt, conscience and sub-conscience, plays a significant role in purchasing decision-making. Furthermore, the financial crisis and economic downturn transformed consumers’ mindsets and in the process of turning luxuries into socially discouraged opulence. Research at MIT suggests that people will spend more freely if you first help them feel more virtuous…

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Google Fails to Revolutionize the Cellphone Market

Business model is one of the critical elements in business success. An effective business model is dictated not only by the grand strategy of the business but also by the key attributes of the product and the key preferences of the target customers. Google’s decision to bring an end to its online sales of its Nexus One handset shows how a poorly-configured business model led to a failure in marketplace…

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INNOVATION IN BUSINESS & TECHNOLOGY

Do You Have to Ask Your Customers to Pay for Your Products and Services?

One of my former students is in a process of building a new online business. When it comes to the question of business model, I suggested that she validate her assumption that the online users will indeed be willing to pay for her services. If her customers are not willing to pay for the services, she does not have to squeeze money out of their wallets. Innovation in business models has made it possible to separate the users and payers, allowing the users to enjoy the services for free, the advertisers to reach their target audience and service providers get paid through ad revenues. Horizon Air started to provide ad-support foods to its passengers now…

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Is Your Advertising Not Working? Try Games

Traditionally, sellers push their advertising messages to customers. The problem with this approach is that people don’t want to be sold to and they usually resist the selling unless the offerings are overwhelmingly attractive. Consequently, messages of many good products fail to get across. If people instead pull bits of information into their lives through a game, they are more likely to feel a sense of ownership. And, if the game is cool enough, it can bring you the viral success like the ones achieved in social media…

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Is Rheumatoid Arthritis Linked to Mutation of Genes?

Researchers conducted studies involving thousands of patients in Europe and North America and the results show that mutation occurred in at least 10 genes leads to higher risk of rheumatoid arthritis…

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LEADERSHIP & ORGANIZATION

Giving a High Performer Productive Feedback

Giving feedback, particularly constructive feedback, is often a stressful task. As counterintuitive as it may seem, giving feedback to a top performer can be even tougher. Top performers may not have obvious development needs and in identifying those needs, you can sometimes feel like you're being nitpicky or over-demanding. In addition, top performers may not be used to hearing constructive feedback and may rankle at the slightest hint that they're not perfect. Amy Gallo, who writes at Harvard Business Review, suggests that, to high performance producers, managers should give both positive and constructive feedback on regular basis, identify development areas, even if there are only a few, and focus on the future and ask about motivations and goals. The expert also advice managers not to presume that a start has reached the limits of her performance, leave the top performers alone, or assume that they know how appreciated they are. ..

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Learning When to Stop Momentum

In May 2000, events overwhelmed a fire crew working to burn out an overgrown 300-acre area at the Bandelier National Monument in New Mexico. A tiny patch of flame, which kept flaring up every time firefighters thought they had put it out, eventually escaped and grew into the Cerro Grande wildfire, one of the most devastating in our nation’s history and the cause of $1 billion in damages to the city of Los Alamos and the adjacent Los Alamos National Laboratories. Eighteen thousand people were evacuated; and two weeks later, by the time the fire was finally stopped, some 47,000 acres had been consumed and 300 homes and laboratory buildings destroyed. Michelle A. Barton and Kathleen M. Sutcliffe at MIT call this failure “dysfunctional momentum,” which occurs when people continue to work toward an original goal without pausing to recalibrate or reexamine their processes, even in the face of cues that suggest they should change course. They suggest that managers who had experienced projects spiraled out of control to look back and ask questions: How did we get there? How did we miss the cues that might have signaled huge problems ahead? Or, if we did see the cues: Why didn’t we change the course?

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Five Key Strategies for Making Metrics

Innovation has become increasingly important in terms of competitive advantage. Initiatives to encourage innovation won’t be effective unless they are operationalized. Operational success, on the other hand, depends largely on implementing appropriate metrics. Dev Patnaik, who writes at Business Week, lists five key strategies for developing useful metrics: 1) use people, product, and process metrics; 2) connect the metric to the rhetoric; 3) start with incentives instead of control; 4) set up multiple tracks; 5) beware of false precision.

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Critical Insights Vol. 1 Issue 9

ECONOMICS & MACRO MARKET
In the week just past, the Dow Jones Industry Average (DJIA) dropped over 1,000 points during the trading session. The decline indicates a significant profit taking, which could no longer be compensated by the new entrants. The lack of significant improvement in unemployment figure and the news about street battles by those who should have been working on the credit issue of their nation triggered the free fall of the price. The profit taking does not seem to be finished and any negative news in the future could lead to further decline of stock prices, sending DJIA back down to 6,500.

STRATEGY & MARKETING

Back to the City

Business success depends highly on discovering and seizing opportunities. Opportunities, on the other hand, are associated with events, changes and trends. If someone tells you that he is going to move to an urban area, it is not an isolated incident (event); it actually represents a change in mentality and a trend of urbanism. Young workers and retiring Boomers are actively seeking to live in densely packed, mixed-use communities that don’t require cars – that is, cities or revitalized outskirts in where residences, shops, schools, parks, and other amenities exist close together. Prudent executives are adjusting their strategies and market focuses accordingly…

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Why Consumers Spend Their Precious Resources on Lavish Purchases during Recession?

Feeling powerless is an aversive psychological state that people try to eliminate or diminish. Behaviors such as associating oneself with figures of power, wealth and fame and emulating what they do are driven by the desire to build status and compensate their feeling of lack of power, although they usually leads to decline in self-confidence. Researchers found that, in a time of economic downturn, consumers are more likely to feel powerlessness and, therefore, spend beyond their means to purchase status-related items. Their experiments showed that subjects who experience a sense of low power 1) were willing to pay a higher price to acquire status-oriented items, like silk ties and fur coats, but not regular products like minivans and dryers; 2) expressed increased willingness to pay for a picture of Northwestern University, but only when it was portrayed as an exclusive item providing high status, rather than a mass-produced item available to anyone; 3) were more likely to perceive status-oriented products as providing a sense of power. As marketers determine target market segment and develop persona, they need to take the compensatory consumption into consideration…

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Five Steps for Consumer Brands to Earn Social Currency

Consumer brands can earn social currency. Launching promotional campaign using social media is, however, just the beginning. Effective social media campaigns are achieved by acting upon five key fundamental themes: 1) advocates trump followers – building promotions around turning real people into online celebrities and then endorsers; 2) the social context during consumption matters – creating relevance in consumer's daily life; 3) not every brand should be social – distinguishing those which can have upside in social currency, 4) social tools are a means, not an end – converting viewers into evangelists; and 5) gimmicks marginalize trust – focusing on present true values to consumers…

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INNOVATION IN BUSINESS & TECHNOLOGY

Intel launches First Smartphone Chip

Recently, Intel announced its long-awaited entry into the smartphone market with the launch of the Atom Z6xx series processor – codenamed Mooretown – which is the first Intel processor low-power enough to be used in handheld devices. While innovative products such as iPhone, Android and iPad are selling well, people are wondering whether we really should have multiple devices. Intel’s Atom Z6xx can turn smartphones into mini PCs, potentially eliminating the needs for PCs – you can have a docking station and external monitor at home and work…

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iPad DJ Rana Sobhany Gets in Touch with Music’s Future

iPad is cool, Right? Take a look at this video. The touch screen of the tablet allows you to do way more than you could imagine…

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New Blood Tests for Early Diagnosis of Osteoarthritis

Arthritis is a common category of diseases. In some cases, chronic joint inflammation may lead to destruction of the structure and crippling. Scientists at King’s College London discovered biomarkers associated with osteoarthritis, allowing early diagnosis and monitoring the progress of the condition…

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LEADERSHIP & ORGANIZATION

Empowering Your Employees to Empower Themselves

Many executives are used to provide directions or instructions to his or her subordinates. Research shows that executives’ opinions are not all right. Even the opinions that are right on are not all worth it. More importantly, employees follow executives in details, they become passive. Here are the things that leaders can do to build an environment that empowers people: 1) give power to those who have demonstrated the capacity to handle the responsibility; 2) create a favorable environment in which people are encouraged to grow their skills; 3) don’t second-guess others’ decisions and ideas unless it’s necessary; 4) give people discretion and autonomy over their tasks and resources…

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Discover Your Leadership Blind Spots

When I read a research article published several decades ago, I found interesting observations that worth to mention here. Researchers conducted a survey among managers of organizations to uncover motivational factors relevant to the performance of R&D employees. In this survey, the respondents rated the importance of relations with subordinates at 2.7 while that of relations with superiors at 3.7 (maximum score at 5.0), indicating that managers tend to put more weight on their relations with their superiors and fail to see their subordinates’ desire to build good relations with them. Too often, leaders demonstrate behavior that sabotages their success and undermines both their team and their organization. To succeed as a manager, an author suggests, you need to learn how to recognize your blind spots and overcome them…

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Pimco’s Battling Brains

Mutual fund giant Pacific Investment Management Co. has $1 trillion under management. The company credits its outstanding performance to an environment where its staff is constantly expected to challenge each other's investment ideas and assumptions. This article highlights how you regularly need to evaluate and challenge business assumptions to ensure their continued relevance and to force the necessary discussions around them. You better be philosophical and have a thick face…

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