Monday Sep 10, 2007

"Core" Competence

Here, the experts remind us what the phrase "core competence" really stands for:

[T]here is a difference between "necessary" competencies and "differentiating" competencies. It makes little sense to define a competence as core if it is omnipresent or easily imitated by competitors ... A core competence is truly core when it forms the basis for entry into new product markets. In assessing a competency's extendability, senior management must work hard to escape a product-centric view of the firm's capabilities [and focus on a skill-centric view].

That should be a simple enough recipe to remember.

Wednesday May 02, 2007

Narrow Strategy

Narrow strategy understands the world in terms of conflicts and opponents.

In this narrow view of the world, relationships are rarely built. They are more often broken or leveraged against each other.

Broad strategy understands the world as communications and commerce among interdependent parties in relationships that can always be conceived to exist for mutual benefit.

In this broad view of the world, relationships are not only sought but also fostered. They are nurtured with care to be embedded in networks of value for all.

Tuesday May 01, 2007

Dow Jones, Wall Street Journal and News Corp

Financial Times has several stories about the recent News Corp bid for that American tradition of a newspaper, The Wall Street Journal. (Earlier I wrote about the Journal's recent redesign here.) Perhaps, now, some folks will put greater value on the independence of the Reuter's board.

The Business of Software

After the usual foreword, Michael Cusumano opens his book, The Business of Software, by outlining the main chracteristics of that business:

In how many businesses does making one copy or one million copies of your product cost about the same? How many businesses have up to 99 percent gross profit margins for their product sales? In how many businesses do many products companies eventually become services or hybrid companies (that is, providing some customization of product features and technical services such as system integration and maintenance), whether they like it or not? In how many businesses is there frequently a ten- or twentyfold difference in productivity between your best employee and your worst one? How many businesses tolerate some 75 to 80 percent of their product-development projects routinely being late and over budget, with "best practice" considered to be 20 percent on time? How about a company where people who build products often consider themselves artists rather than scientists or engineers and have the mercurial temperament to go with it? In how many businesses are customers "locked in" to a particular vendor because of product decisions someone made a decade or two ago that can't easily be reversed?

…[G]et the strategy and the management side right, and the software business can be like having a license to print money…But get the business model wrong, and—to borrow a metapor from Frederick Brooks's The Mythical Man-Month—software companies can resemble dinosaurs futilely trying to escape the death grip of an ancient tar pit. The more you struggle—that is, the more time, money, and people you pour into product development, sales, and marketing in the hope of a turnaround—the deeper you sink and the quicker you die. In the software business, this is not only because the more people you add to a late software project, the later the project can become—a rule of thumb now described as "Brook's law" (and not always true). But the broader downward spiral can accelerate for a whole company and become self-fulfilling as present and potential customers flee from software producers unlikely to survive long enough to deliver, support, and upgrade their products.

Cusumano's summary strikes all the important chords when it comes to describing the characteristics of commercially produced software. It misses some important characteristics of open-source software communities and economic networks dependent on them.

In an open-source, community project, which (company or private) participant is the producer? Who is paying the production cost? Who is reaping the benefits?

However, when it comes to a business built on bundling of open-source software or on applying such software to solve specific problems through various kinds of software extensions and customizations, we return to the general laws described by Cusumano.

Then, there are a whole set of companies that may appear to some as software companies, say Google, but they are in fact not software companies at all even if they may produce a great deal of software.

This class of companies are indeed more like modern-day AT&Ts or Sprints. Modern day equivalents are web service (e.g. Google Search) or content (e.g. YouTube, Orkut, etc.) or Internet communications (e.g. Skype) concerns. Cusumano's description does not really apply to these companies either. These companies are not in the business of selling software but rather in the business of selling service for a fee (subscription or advertisement). They do software to the extent it helps them to render their services useful and appealing.

Thursday Apr 26, 2007

Self-Expression and Leadership

Business leadership books often contrast leadership with management. While managerial skills might prove useful for certain kinds of leadership, leadership involves something else. As Warren Bennis notes, "No leader sets out to be a leader. People set out to live their lives, expressing themselves fully. When that expression is of value, they become leaders."

Tuesday Apr 10, 2007

English and Business

English may be the language of business today but many know that there are no guarantees it will remain the language of business tomorrow. In fact, more business was conducted among nations (per capita) prior to World War I, when there was no uniform business language, than around the late 1990s, at the height of the .com boom and when English was the lingua franca of business. (See Robert Barro's Getting It Right: Markets and Choices in a Free Society.)

Friday Feb 16, 2007

Maturity and Interest Rate Risks

China seems prepared to deal with some interest rate and maturity risks.

Thursday Feb 01, 2007

Business Predictions

Financial Times' mutli-media program View from the Top provides an intelligent collection of business interviews. For example, there is a recent interview with Robert A. Iger, President and CEO of Walt Disney focused on new digital platforms for content generation and distribution, including comments on "user-generated content," locally-generated content (with the Disney name) and content consumption in general.

An interesting feature of these Financial Times' interviews is the prediction delivered at the end. Here's Igor's prediction:

I predict that the internet-enabled computer media experience will be the primary media experience for our children’s generation as they grow up.

Monday Jan 29, 2007

Growth Path

Financial Times on video and film downloads: (a) Growth from now until 2012: 10 folds. (b) Worth in 2012: $6.3 billion. Chad Hurley at Davos: YouTube will share advertising revenue with video uploaders.


Monday Jan 22, 2007

Solaris Deskop + Sun-Intel

I don't know what the default Solaris ("Nevada," Solaris 11, build 55+) desktop is made of but whatever it is made of, it looks and works great. I've only begun exploring it, and it is proving very sticky, meaning that once you start working on it, it is hard to let go. In terms of look-and-feel and real-time user-level performance (not to mention other measures), it competes extraordinarily well with the very best Linux desktops I've ever used, including the ones I'm using now. In my environment, i.e. a 2003 two-CPU Gateway desktop located in building 17 of MPK, it is blazingly fast, and it is not even the latest Xeon. Little wonder: Check out the Sun-Intel announcement coming soon here. The WSJ report on the deal, based on analysts' predictions, can be found here. Sun's CEO, Jonathan Schwartz, has just posted about the announcement.

Wednesday Jan 17, 2007

Mobile Ads

A recent Wall Street Journal article by Amol Sharma features AdMob's system for placing ads on content directed to mobile users. (Subscription may be required to view this article.)

AdMob connects content providers and advertisers. Since advertisers cannot negotiate with individual operators or content providers for ad placements, AdMob has a market position well-suited for growth.

Under AdMob's system, as with Google's on the Internet, advertisers pay only when a user clicks on the link. Advertisers go to AdMob's Web site, fill out a form, and make a bid for a click in one of several categories, such as news, entertainment or communities. The bids for a click generally range from five cents to a dollar.

Surveys show that reception to mobile ads remains mixed even when some benefits accompany an expressed willingness to view the ads. Consumer studies completed in August of 2006 show that some 51% of mobile users do not want to receive any ads at all even if they can get free applications for their mobile devices.

Monday Jan 08, 2007

Shifting Transaction Costs

Regulatory measures can impose, shift or reduce transaction costs for business operations.

For example, the Committee on Foreign Investment in the U.S. (Cfius) has recently moved to impose security requirements on the proposed Nokia Siemens venture.

It is not clear whether Cfius is going beyond its mandate by imposing such requirements. "The process has become a tool for Cfius to impose security requirements on foreign companies, while government lacks the legal authority to impose them on U.S. companies," a U.S. business lawyer David Marchick told Financial Times. (Reuters cites the FT report in its own story on the same subject.) 

Saturday Dec 23, 2006

A Transaction Cost Economics View of the Bullwhip Effect

I'm posting another one of my papers form the Haas years: "A Transaction Cost Economics View of the Bullwhip Effect." It was written in May of 2004. It does need another good round of editting. So, I might edit and repost it at a later time.

In short, this paper gives a TCE assessment of the bullwhip effect observed in supply chain systems. It was written as part of an independent study with professor Oliver Williamson, who was kind enough to review the work and provide some very valuable suggestions. It was an honor to learn a few things about TCE from him, and of courses, errors in this paper, including the typos and techincal ones, are all of my own.

Tuesday Dec 12, 2006

Marsh's Harsh Review

Rob Marsh writes a harsh review of Paul Arden's Whatever You Think, Think the Opposite. I did read the book last week and found it had some redeeming qualities. Marsh may be expecting too much, and Arden may be delivering on something other than what Marsh seems to be expecting.

Monday Dec 04, 2006

Strategy and Commerce

Where commerce takes hold, strategy finds its limits.

When an opportunity for commerce surfaces itself, a fair deal grounded in reality can always be found to work for all parties. Even if not globally optimal for any individual party, the deal may be composed to be locally optimal and it will always be better than no deal. Of course, all deals happen in a temporal scope and while some can last for long periods, no worldly deal can prove to be an eternal giving away of rights. (All deals involve giving away some rights in exchange for receiving some other rights.) History shows that commerce needs a convincing regime of peace to conclude, not the guise of forced power differentials extracted by strategy nor the shadow of costly battles filled with empty hallucinations of stratagem.

Tuesday Nov 14, 2006

Reuters Plucks Pluck

Reuters, the innovative newswire service famous for its bylaws and independent board, "plucks" Pluck, a blog syndicator for news outlets, through a $7 million investment. 

Sunday Nov 12, 2006

Watch It

Watch for Java news as "Sun Opens Java"!

Related reports: Wall Street Journal

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