Modern business, lifestyle, and culture are creeping into the mainstream in Laos. The country is changing fast and in the face of enormous economic change, great opportunities can be created. I can relate to a story of how a Lao girl react to economic change in her local turf.

In Vientiane, Laos, where I worked, there is a strip of land by the Mekong River known as the Mekong Promenade (or Fa Ngum) where traditional streetside food vendors set up makeshift stalls selling delicious Lao food.

In recent years new beer gardens and riverside restaurants have opened up in the area. Mekong Deck, one of the newer modern beer gardens with a stylish modern decor opened for business in around September 2007. I visited Mekong Deck a lot while I was working in Vientiane since my roommate and I knew the people who own the bar. Honestly, Mekong Deck is a wonderful place to nurse a glass of Beer Lao and enjoy the evening tropical breeze by the Mekong River.

Whenever I was at the Mekong Deck, I saw this little girl, about 12 years old, with nice complexion and beautiful eyes selling inflatable figures. Every night, she would walk from one end of the promenade where the streetside food vendors are located to the other end where the chic bars and restaurants are. She would hold these inflated figures usually of animals and sometimes of super-heroes, like Spiderman, while making rounds on the circuit selling toys to patrons there. Regretfully, her business hasn't been doing well. I have never seen a sellout of her inventory. Some nights, I see her getting mad by stomping her feet and yelling at customers for not being able to sell her toys. And then there are nights when she was just sad and disappointed. Ally, a girlfriend of my roommate, and I sympathized with the girl. We really wanted to do something to help her out. One doesn't need an MBA to realize that this is a classical example of adapting to the market and selling the right product. In business lingo, what she needs is the 2 Ps (out of 4) of marketing: placement and product. In terms of placement, we need to recognize that the market is changing at the Mekong Promenade. The demographic trend is towards a younger, affluent, and sophisticated crowd. More importantly, most people go to the Mekong Promenade at night to drink. So she needs a product that specifically targets these people. And what better way to entice a drinking crowd than peanuts. Since I can only speak "baby" Lao (a level of mastery where I can "get by," ie. ordering food and getting around town), I had Ally to speak to the little girl in their native language. We didn't baffle her with the Ps of marketing. Our message was direct and simple. We simply told her: "Go sell some peanuts. Everyone at this beer garden wants peanut." She first reacted by shrugging her shoulders and then asked if we want to buy an inflatable figure from her. We repeated our message to her. She then stared at us for a good 2 seconds before walking away looking disappointed that we didn't buy a balloon from her. Sigh... Maybe I should have bought a toy from her just to get her full attention. In any case, I hope she took our advice and is successful in what she does. I hate seeing her feeling, frustrated and disappointed every night.

2/14/2008 2:31:26 AM (Eastern Standard Time, UTC-05:00)

Comments [2]

Business

Wikipedia offers the following description of the classical prisoner's dilemma:

Two suspects, A and B, are arrested by the police. The police have insufficient evidence for a conviction, and, having separated both prisoners, visit each of them to offer the same deal: if one testifies for the prosecution against the other and the other remains silent, the betrayer goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must make the choice of whether to betray the other or to remain silent. However, neither prisoner knows for sure what choice the other prisoner will make. So this dilemma poses the question: How should the prisoners act?

The dilemma can be summarized thus:

Basically, each prisoner has only two choices:

1. Betrays or defects
2. Cooperates and stays silent

Moreover each prisoner must choose without knowing what his accomplice has chosen, thereby making the situation more interesting. But for any prisoner, the dominant strategy is to defect. If the prisoner B stays silent, it would be better for prisoner A to defect. Even if prisoner B defects, it would still be better for prisoner to defect as he/she will be serving 5 years instead of 10. But here's the rub: since all rational players will defect (all things being equal), each prisoner will end up serving 5 years in prison. The system optimal solution is for both to cooperate so that if both prisoners stay silent, they each serves 6 months. In other words, cooperation is the way to go.

What makes prisoner's dilemma even more interesting is how it can be used to explain the one of the behaviors I commonly witness when I was traveling in Asia: the lack of cooperation. I have observed that the lack of social cooperation (sometime it is just downright selfishness) is pervasive in many Asian societies (there are exceptions but the attitude of "everyone for him/herself" seems to be most entrenched in most developing Asian countries). Try taking the subway in China or driving in India, and you will know what I mean. I am no saint myself. Within hours of assimilation in a new city in Asia, I, too, think "If everyone is looking out for him or herself. Why shouldn't I?" That said, my argument isn't a moral diatribe or even a criticism of any sorts. But rather how I can explain traffic gridlock in China and India using the concepts of the prisoner's dilemma.

I have seen it so many times in China and India, people there love to run the red light and most often than not, creating a gridlock that looks like this:

I was traveling on a taxi from New Delhi to Jaipur two months ago. Halfway through the journey, J.K. the taxi driver and I, came to an intersection in a town where the traffic was heavy. As we were about to cross the intersection, the red light came on. Even though there was simply no room to maneuver ahead, every driver in the moving traffic including J.K. floored the pedal and raced ahead as if stopping behind a red light was a death sentence. But in doing so, we actually created something that very much looked like the scene in the picture above. We wasted a good 3 minutes as drivers rushed to untangle the mess they had created. So I asked J.K. whom I had got to know very well by now why he and everyone around him did this even though it doesn't serve anyone any good. With a thick Indian accent, he answered: "We always have to get ahead." I said: "But J.K. there's a reason why we need to stop at the red light." He responded: "No sir, you won't survive if you play nice."

I disagree with J.K. I don't think cooperation is a sign of weakness or niceness. If J.K. was the only person running the red light, that's fine by me since the traffic would still flow. But if everyone is doing it, that's a different story. On the contrary, when drivers actually cooperate and observe traffic rules (a system optimal solution for everyone involved), we can all get through it a little faster by avoiding a traffic carnage. Indeed, I read it from somewhere before that selfishness can go hand in hand with cooperation. So I think the lesson of the prisoner's dilemma in real life is: whether you are altruistic or selfish, the best strategy over the long term should be mutual cooperation.

2/12/2008 11:58:41 AM (Eastern Standard Time, UTC-05:00)

Comments [1]

Business

One of the classes that I am taking this semester is ESD.103 - Science, Technology, and Public Policy, a course that applies theories of political economy to explore the issues at the intersection of technology, public policy, and business. This course is taught by Prof. Ken Oye who is very articulating and has been providing great cases and examples in class. I find this class very insightful although I wish he could structure his frameworks with the cases in a more concise and coherent way.

Yesterday, Prof. Oye made an interesting case in class on how regulation can actually improve on competitiveness in the economy. As someone who is keen on apply public policy and economics in the private business sector, I find this case very intriguing. In particular, Prof. Oye mentioned that regulations can increase the value of proprietary intellectual properties of private firms. Here is the case, which we discussed yesterday: suppose company X developed and patented methods to improve its products as a matter of good corporate citizenship and to get a head of anticipated regulatory standards. Its competitors, mostly from overseas, found it difficult to meet the new tightening standards although they have been enjoying high profit margin on their products because of lower costs. It now seems likely that the regulators will raise standards and require every manufacturer to produce products that meet this new standards. If you were in company X situation, what would you have done?

A. Resist tighter standards.
B. Indifferent about the whole matter.
C. Support more stringent standards.

Choice C is the rational choice. In reality, however, most companies tend to support status quo industry association position and resist tighter standards.

10/6/2006 6:08:08 PM (Eastern Daylight Time, UTC-04:00)

Comments [2]

Business

I get to hear more and more of the term Long Tail these days. Chris Anderson first coined the term in this article in Wired magazine. Recently, Lee Gomes of the Wall Street Jounal wrote this article to criticize Anderson's thesis on the Long Tail. Even Harvard Business School Working Knowledge recently started a forum where you will find some interesting contributions from readers on this subject.

8/8/2006 12:31:27 AM (Eastern Daylight Time, UTC-04:00)

Comments [2]

Business

The phrase The Long Tail was coined by Wired Magazine writer Chris Anderson who observed that the future of Internet business is selling of less of more. Such effect has been studied and well documented in academia, and Anderson attributed to several key academic papers in his article. Nonetheless, it was interesting to listen to the discussion of The Long Tail on NPR earlier today. An archived of the radio segment can be found here.

The notion of the The Long Tail is based on a statistical distribution called Pareto distribution, which starts off from high-frequency population from the left of the chart, then drops off quickly to a very low-frequency population with a long, gradual decline to zero - the shape is similar to the exponential decay. In terms of ecommerce business, the more popular goods (top hits and such) that sell a lot are on the left of the curve and less popular goods that sell little are on the right. Traditionally, with limited shelf space, the few things that sell a lot dominate. So not so long ago, big hits rule. Well not any more. With a huge virtual shelf space, online stores can offer much wider variety of things, including many low demand items, to consumers (aka niche markets). When this happens, the tail end of the curve stretches out and the resultant accumulation demand of less popular goods can outnumber that of more popular goods. What does this mean? From the introduction of the radio program: "shop online and everything becomes available to anyone, no matter when it was made and where. Top ten hits whether they are on the radio or TV or on the bestseller books list are giving ground to a universal ground of more obscure music, films, and books." Well... that pretty much describes the business model of iTunes, Netflix, and Amazon.

7/18/2006 11:56:38 PM (Eastern Daylight Time, UTC-04:00)

Comments [2]

Business

Yesterday in my System Dynamics class, I heard Prof. J. Bradley Morrison mentioned the acronym MBWA, an enormously popular buzzword in the early 80's (according to the professor) that is short for management by wandering around. Intrigued by the term, I did a search on it and found a slew of articles written about MBWA. Make no mistake, MBWA is a non-sophisticated virtue that advocates business leaders to engage actively with the employees to make things happen, much like Alexander the Great who personally led his troops to the battlefield. Speaking of the military, I think that MBWA comes more naturally with people who have military background. As a sergeant in the infantry many years ago, I was taught to practice participatory leadership with my troops. We didn't use the term MBWA, instead we use a less catchy phrase called leading by example. Throughout my career in the military, I have witnessed a difference troops' morale and performance whenever I rolled my sleeves up and got involved with them in the tasks that I asked them to do. Ultimately great teamwork was fostered through my active engagement with the people that I supervise.

But is MBWA still relevant in today's business context? Personally, I think that it is needed more today than ever before. In my humble opinion, I feel that today's business leaders are just too fixated on interacting only with people whom they have direct relationships with - direct reports, customers, shareholders, and investors. Worse, in the advent of video conference, email, and web cast, it has become ever easier for business leaders to appear as remote figureheads, further alienating them from their organization. Instead of showing the employees a video cast of their CEO presenting the company's quarterly earning announcement, the CEO should personally be on site and address the company's rank and file. Be genuinely interested in what people do and learn about what they do and feel. If nothing else, share your vision with them. Read this article for more details on MBWA. Anyway, it is getting a little touchy-feely already (yikes ); but my point is that business leaders can't afford to be out-of-touch with the realities and the people who make up a major portion of an organization.

7/7/2006 8:06:48 PM (Eastern Daylight Time, UTC-04:00)

Comments [1]

Business

These days, we hear the term "globalization" mentioned frequently in almost aspect of our life. But has anyone wondered about the originality of the term. Well, as reported by the Boston Globe, Theodore Levitt, who coined the term, has died. According to the article:

"Levitt first used the term 'globalization' in a 1983 Harvard Business Review article about the emergence of standardized, low-priced consumer products. He defined that globalization as the changes in social behaviors and technology which allowed companies to sell the same products around the world."

7/6/2006 6:08:53 PM (Eastern Daylight Time, UTC-04:00)

Comments [1]

Business

This is not going to be another long winded essay on business strategy but rather a quick blog entry to capture a recent thought of mine.

I remember hearing this being mentioned in one of my classes before (probably Prof. Tom Allen's class): "Before you can build world class innovations, you need to build a world class organization." When I look at the Internet today, I see the success of MySpace, Wikipedia, and Del.icio.us (just to name a few). Yet all these sites share one thing in common, which is: they all have a rich community of users and contributors. Indeed, web sites can no longer compete solely on content alone, especially single source content. In the world of Web 2.0, websites are becoming more social-centric. Users are drawn to web sites that offer rich social interaction with like-minded people. From my observation, almost every new site that debuted in the last two year or less have grown significantly when it has a rich component of social interaction or social networking feature. In other words, the competitive advantage of a web company, especially a startup, may indeed lies in the community that it builds and the people that it attracts. Maybe the new pointer, appropriate for today's Internet business environment, should say: "Before we can build world class websites, we need to build a world class community."

6/30/2006 12:24:28 AM (Eastern Daylight Time, UTC-04:00)

Comments [2]

Business

To me, the whole notion of System Thinking is motivated by the phrase: "The whole is more than sum of its parts." In other words, System Thinking seeks not only to understand the parts that make up the system but also the interactions that bind these parts together to become the whole system. I will talk more about System Thinking later in my blog since I will be writing a thesis on applying System Thinking to gain additional insights to a Disruptive Technology phenomenon.

One of the challenges of my thesis is to tackle the question on why so many business strategies generate disappointing results or failure? Sometimes, well-intended policies lead to results that differ drastically or are often opposite from their original objectives. Furthermore, in a business environment or in a public policy context, organizations need to embrace change in order to be competitive or successful. Only by understanding how changes take place can we prepare for the consequences and to generate sensible strategies and policies. This is where System Dynamics, a version of System Thinking, comes into play by providing a set of frameworks and tools that examines feedback loops in a dynamic system, be it social, economic, organizational, or business.

This summer, I am taking a course on System Dynamics at MIT. The course is taught by Prof. J. Bradley Morrison, an adjunct professor at MIT Sloan and an assistant professor at Brandeis Univesity. I took the same course last summer before I dropped it by the third week as I couldn't stand sitting through the entire three hour long class session. Even though I have written very positively about System Dynamics in this blog entry, the subject is nonetheless dry and mechanic. To get me through a System Dynamics class, I need someone who is not only animated and articulated, but engages actively with the class. Prof. Morrison does all of the above very well. He doesn't speak in a monotonous voice (a good start) and engages in lively discussions with the class with keen interest in listening from students on how System Dynamics relates to their professional experiences. In comparison, I like this year's System Dynamics course much better than last year's course. Besides, how can I go wrong in taking a class that has direct relevance to my thesis.

6/20/2006 12:41:07 AM (Eastern Daylight Time, UTC-04:00)

Comments [0]

Business

I just read EMI's announcement on the release of Qtrax - an ad- and subscription-supported peer-to-peer music distribution service. Let's analyze this announcement piece by piece.

"Qtrax will offer two tiers of service: the first is a free, advertising-supported tier designed to work with and filter copyrighted content from existing peer-to-peer networks. The second tier is a premium subscription service which will require a monthly fee."

Alright, so far so good. Despite my dislike for advertisements in software, the music service sounds good so far.

"In the ad-supported, free tier, users will be able to search the network for specific tracks, and those tracks registered with Qtrax will be made available for download in Qtrax’s proprietary “.mpq” file format. Users will then be able to play the downloaded .mpq file in full-fidelity sound quality for a pre-defined number of times."

Oh no!!! Not another proprietary file format. This means that I will need to use a proprietary program to listen to downloaded music and that I can't play them on my iPod. Worse, you can only play each downloaded music for limited number of times.

"The premium subscription service tier uses Microsoft’s Janus DRM technology, which allows consumers to pay a monthly fee for unlimited access to music in the Qtrax network. Subscribers will also have the ability to transfer content to Windows Media enabled portable devices for as long as the subscription stays active."

Let me get this straight... I don't own the music but rent them? In other words, the downloaded music is only good as long as I keep paying for them.

I am also curious if I can burn my downloaded music to a CD so that I can listen to it on my CD player in my car? If the service is peer-to-peer, does it mean any songs that I am looking for are subjected to availability of these songs from peers who share them?

A week ago, I made a brief assertion that convenience is an impetus for the adoption of a technological innovation or product. Certainly, any product that makes life easier for the consumers will most likely be successful. After reading the article, I can't help but to think that Qtrax business model is doomed for failure. Why so? It seems more trouble than it is worth.

6/8/2006 4:34:29 PM (Eastern Daylight Time, UTC-04:00)

Comments [6]

Business

Wow... According to the AP, China trade surplus surged to $101.9 billion in 2005. Also from the report: "With total global trade of $1.42 trillion, China is now the world's third-biggest trading nation." The trade deficit between the U.S. and China will most certainly cause a backlash on Capitol Hill. The question is: will China further adjust the value of its Yuan in the light of its robust economic growth? There are other economic concerns as well. The fiscal deficit is looming the U.S. economy. Currently, the U.S. account deficit can be maintained at the current interest and exchange rates - thanks largely to capital that is pouring into the U.S. from Asia and China. But the way that most of these Asian countries are doing to sustain their economic growth is by undervaluing their currencies. It all comes full circle. The fact is that U.S. and China has become more interdependent of each other. Any drastic change in trade policies probably cause more harm than good to the U.S. economy.

I think that China does have an unfair advantage with its artificial currency valuation. However, the U.S. is simply importing too much from other countries and not exporting enough to substitute for the goods it imports. Think about it, 20% of all U.S. imports are oil. With oil price still high (and likely to go higher), the U.S. import figure (in dollars) is likely going to go up. With an insatiable appetite for consumer goods, cheaper imports are likely not going to ease up anytime soon. On the side of export, even if the dollar were to depreciate I don't think exports will offset imports anytime soon since the U.S. is so overly dependent on imports and most U.S. trading partners, like the E.U. and Japan, won't have huge appetite for American goods anytime soon due to the slowdown in their economies. Anyway, I don't claim to be an expert in economics (especially macroeconomics) nor have researched much in this topic. I am just thinking out loud on the issues of the American economy this morning.

1/11/2006 7:02:28 PM (Eastern Standard Time, UTC-05:00)

Comments [1]

Business

In our iTeams class yesterday, we had a panel of VCs and entrepreneurs who led an open, interactive Q/A style discussion about their experience in the VC world. Here are the notes that I took from the session:

• What are VCs looking for people in a team?
  It takes a deep understanding of the technology to bring it to the market and presented in a way that people in the market may care. For a high-tech startup, the people need to be deep in the underlying technology and still be broad to know how business can be generated. (I realized VCs in the high-tech sector value technologists who are business savvy than pure MBAs who maybe know something about technology. At the end of the day, it's really the technologist's idea that is going to bring value to the firm and business people can always be replaced by people of the VC's liking).
• On sustainability...
  It is the job of the CEO to make the startup stay alive long enough to get lucky. Have confidence in yourself. Entrepreneurs who mess things up are the ones who worry too much. Don't do it for money, do it for business and the money will come.
• On startup team dynamics...
  There is a lot of smart people, don't over analyze.
• On funding...
  If you can stay away from VC, do it. Get funded by other means, like government SBIR. VCs are awful to deal with. Don't take money from VC without calling the CEOs who deal or had dealt with them before. If you hear hesitation from CEO, that is enough to tell the entrepreneur what the CEO thinks about the VC. Without a doubt, non-diluted funding is wonderful.
• On strategies...
  Staged business models are great. Getting into a market is the best way to understanding a market, but may also be the riskiest especially without funding. Find markets that technologies can solve the problem completely.
• On the roles of the founders...
  Keep an open mind, do what best for the company. Be thoughtful. Make mistakes a lot and quickly, then stop. As a founder you will be bombarded with endless day-to-day activities so do things that have value-added. Also, you want to establish good rapport and trust with investors.

12/6/2005 6:54:56 PM (Eastern Standard Time, UTC-05:00)

Comments [0]

Business

If you haven't been following news on technology recently, there has been a public outcry over Sony's use of a controversial anti-piracy technology called XCP that installs spyware on users' computer without their knowledge or consent. In the beginning, Sony had defied public protest insisting that the use of such technology was justified and worse did little to rectify the situation. Finally, with the threats of class action lawsuits and with almost every security firms issuing warnings against viruses exploiting the security flaws in XCP, Sony made the following announcements:

• Sony will recall all its copy-protected CDs from the stores.
• Sony will allow customers who have purchased CD that uses the controversial First 4 Internet copy protection software to exchange for new CDs and MP3s.

The recall of millions of CDs and exchange of CDs are an expensive operations for any company. But, the longer term costs of this debacle are Sony's damaged reputation and litigation costs from angry customers. For customers who actually bought the CDs, they feel that Sony is punishing the people who have actually chosen to buy the product.

I agree with Bob Fahey who wrote an excellent article on the Sony debacle. He said the bigger problem with Sony is that they have not embraced the open-standards by integrating them into their media business model. Fahey wrote:

"The essence of this struggle is that while some elements of Sony understand the need to embrace open standards, coexist with competing systems and give consumers some degree of freedom in terms of how they use the products they have paid for, there are clearly factions at the corporation who don't grasp how crucial that approach is, and wish for a more tightly locked down, proprietary future."

Open-standard and open-source have become prevalent paradigms in today's world. Sony missed the opportunity to compete head-on with Apple iPod perhaps with reasons that they see MP3 as a threat rather than an opportunity for their core business.

Next, Sony's thuggish attitude and draconian protection scheme only serves to alienate itself from its customers. In an age of open information flow and diverse consumer choices, customers can always look for an alternative solution. Again, Fahey articulated this point well:

"However, this may well be the difference between life and death for Sony, because users are no longer happy with the idea of being locked into what they can and can't do with media they've acquired. Sony's competitors understand that, at least to a certain degree. They understand that the music business wasn't damaged by evil pirates sitting around plotting their downfall, it was destroyed by the failure of the music industry to offer a legal, sensible alternative to an entire generation of people who wanted their music on their PCs, streamed over their networks and loaded onto their miniscule flash memory players - and for whom the only route to that desired result ended up being peer to peer networks. They understand, at least partially, that if you lock down what a legitimate user can do with media so tightly that he can't acquire it, watch it, play it or listen to it where he wants and when he wants, he'll become frustrated and may well turn to the pirate version - which carries none of the restrictions that you unfairly impose on your paying customers. They understand that if you treat customers like criminals, you'll turn them into criminals."

I used to be a big fan of Sony products and I didn't mind paying premium prices just for the brand name. These days, however, Sony products have terrible quality and aren't cool anymore. Personally, this whole Sony fiasco left a really sour taste in my mouth. Why would I trust them now especially when I don't have loyalty to their products anymore?

11/19/2005 1:48:45 PM (Eastern Standard Time, UTC-05:00)

Comments [3]

Business

I had lunch with one of my friends yesterday. He voiced his dissent that he has been receiving either a 3% or no raise in the last few years. He said that he is a hard working person and that he is getting really discouraged because he wasn't properly compensated. I understand and empathize his frustration because I consider him not only a diligent but a good performer in what he is doing.

I thought about his issue on wage raise after lunch and this was my initial reaction. For the past 2 years, 3% is generally considered the inflation rate in this country. The economist in me is saying that if someone is given an annual 3% raise, he/she isn't getting any raise at all because despite the 3% wage increase, his/her wage was adjusted sorely for inflation and not for his/her performance or even extra workload. In other words, real wage for my friend has remained unchanged and in the years when he received no pay raise, his real wage has actually gone down. Worse, my friend has been filling in the jobs of people who were let go due to corporate downsizing a few years ago. With his above-average performance, proven experience, and added responsibilities, shouldn't he deserve a raise that is beyond a mere 3%?

11/18/2005 1:35:27 AM (Eastern Standard Time, UTC-05:00)

Comments [1]

Business

The last few lectures in our class, Introduction to Technology and Policy, was given by Prof. Dan Roos, a co-author of the "Machine that Changed the World." Overall, I really enjoyed his lectures on the automotive industry. One item from his lectures that I found interesting was that in terms of labor rate, there are 2.5 retirees for every worker at GM. This number prompted me to think... What this means is that an average worker is indirectly responsible for paying the retiring pension cost of 2.5 retirees. On top of that, GM pension funds are still under funded by a few billions dollars!!! Actually, according to statistics that I saw in one of my readings, GM is being competitive on wages with the rest of the automotive industry. But on a whole, the labor cost at GM is just astronomically high due in large part to legacy cost. There are other factors that contributed to GM's current woes, and legacy cost is definitely one of them.

11/15/2005 11:50:19 AM (Eastern Standard Time, UTC-05:00)

Comments [1]

Business

Yesterday, we had Prof. Don Lessard as guest speaker in our System Project Management (SPM) class. He spoke about managing risks in projects at all levels, from 1-person to large-scale enterprise-level. He mentioned the following story to illustrate a point in his lecture:

Two guys are out in the woods hiking. Suddenly, a bear started chasing them. The first guy took his pair of sneakers out of his backpack and started putting them on. The second guy asked: "What are you doing? You can't outrun a bear." The first guy, at this point, said, "I don't have to outrun the bear. I only have to outrun you."

Prof. Lessard said that the point he was trying to make with his story is this: In a competitive business context, you just have to "outrun" the other competitor. To do so, we have to create value, but value brings risk. Don't try to minimize risk because you won't get any value from it. Instead learn to manage risk. I like that advice.

11/2/2005 9:58:43 PM (Eastern Standard Time, UTC-05:00)

Comments [1]

Business

I saw a post on Slashdot earlier today with a reference to a WSJ article about company executives getting more actively involved in communicating with their employees. Personally, I think that this is good trend and that every manager should adopt an "open door" policy. Speaking from my own personal experience, all the companies that I have worked for do not have such a policy. "My way or the highway" style of management simply doesn't work in corporate environment anymore, in today's competitive environment, open-communication is of the essence.

10/10/2005 9:29:20 PM (Eastern Daylight Time, UTC-04:00)

Comments [2]

Business

I went to the Sloan Convocation early today. The morning sessions were presentations/discussions of various management topics by Sloan faculty. But the highlight of today's convocation is the keynote addess by Morris Chang, Chairman and CEO of TSMC. Being in semiconductor industry myself, I find Chang's insights on business innovation and the semiconductor industry to be valuable. Here are the notes from the talk:

Chang on innovation, business models, and business model innovation

• Innovation often fails. Even when it doesn't, the benefits are often incremental.
• Practice aspect is important, an idea is not enough. You need to practice to gain benefits.
• Build a company infrastructure that rewards successful innovations without punish the failed ones. Failed innovators are punished enough by their failure and loss of time. Chang postulated that younger people are more innovative than older people because older people have less time to lose.
• Business model is a new term. No one talked about it in 80's. It only became popular in the late 90's. Back then companies link their business performance to products and services.
• These days, all we hear about in the business world is business model.
• Business model as defined by Chang as how a company conducts its affairs with its customers. Customer interface is an important element in today's business.
• Technology innovation has become too common.
• 50's to 80's were about technological innovation.
• Business model innovation dominates from 90's to present.
• Business model innovation is actually harder to emulate.
• Another good example is Starbucks, they basically make a $3 coffee out of a $0.50 coffee.
• Dell has no innovation in technology, but they have have innovation in business model.

Chang on TSMC and the semiconductor industry

• When the semiconductor industry started, every company share the same business model. They did the same design and production, and have the same customers.
• Semiconductor IC design is technology intensive but not capital intensive.
• Semiconductor manufacturing, on the other hand, is both technology and capital intensive.
• When TSMC started in 1987, foundry business was a new business model.
• A new business model, however, does not have a market - thus there's were no customers.
• Then in 1992, a number of startup design companies (or fabless companies in semiconductor lingo) surged and they became TSMC new customers. TSMC reputation became reliable and these new companies started pitching their business to VCs by mentioning their relationship with TSMC.
• In manufacturing, TSMC has to be competitive. So the company has to evolve. For example, today 1/3 of Ebay's business is not in the auction business. But evolving is difficult, because as you grow the company becomes burden with the old model.
• At TSMC, they don't evaluate their managers based on the amount of money they make (or in semiconductor terms cycle-time, yield, etc) but the level of customer satisfaction (how many problems they solve for their customers).

Chang on Leadership

• Chang has 2 simple principles on leadership
1. The leader needs to know what direction he is taking his followers. A leader who doesn't know the direction, leads in circle.
2. A leader needs to have a following.
• In politics, totalitarian usually works. But in business, totalitarian won't work.

10/8/2005 9:54:20 PM (Eastern Daylight Time, UTC-04:00)

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Business

Last week, Robbie wrote a blog about a talk by Henry Mintzberg, a professor at McGill University and a critic of today's MBA program. From the blog entry, Robbie reinforced one of Mintzberg's beliefs that "MBA programs should be part-time. The education should go hand-in-hand with your work experience."

But detractors abound. According to this blog entry from a fellow blogger, Ian, it seems that part time and even executive MBA programs are getting little respect. There is a stigma attached to students who attend part time MBA programs. Ian echoed some of my thoughts in his article; however, I am baffled by the fact that Executive MBA programs, too, receive little respect from recruiters. Also, I have to point out that most colleges that offer part-time education program in business or any other disciplines are not top or upper tier schools. I wonder how the others, especially recruiters, would perceive part-time education programs if top schools start offering them to the public?

10/5/2005 1:34:24 PM (Eastern Daylight Time, UTC-04:00)

Comments [1]

Business

Last night's guest speaker in Innovation Teams was Ken Morse, Senior Lecturer and Managing Director of MIT Entrepreneurship Center. As usual, Morse with his highly animated presentation style engaged the entire class with his pitch on successful entrepreneurship and sales in the hi-tech business. Here are some notes on entrepreneurship:

• One of the most important constituents in starting a company is the people
• Recruit people with ambition not ego
• Installed base is a barrier to market entry - consistent with the business adage "Find a niche, build a barrier (or FANBAB)

Notes on sales:

• Any important person is busy. The thing they hate most is wasting their time. So make economic use of their time with you
• Along the same note, always follow up with a "thank you" note but make it short
• Start with Mr. or Ms. and let them them decide to let you use their first names or nicknames
• 6 ways to make people like you:
1. Be genuinely interested in other people
2. Smile
3. Remember your customer's name
4. Be a good listener. Encourage others to talk about themselves
5. Talk in terms of other person's interests
6. Make the other person feel important

10/4/2005 8:02:25 PM (Eastern Daylight Time, UTC-04:00)

Comments [4]

Business

Last night's guest speakers in Innovation Teams were Sam "Bo" Pasternack, an IP partner at Choate, Hall & Stewart and Charles Cooney, Faculty Director of the Deshpande Center. They led a very interesting discussion on patents and other intellectual property (IP) issues.

Notes from the talk:

1. The patent does not give you the right to sell but the right to exclude others from selling or from producing. For example, if you are not awarded with a patent in Japan you can still sell in Japan as long as no one is excluding you from the marketplace
2. If there's a conflict of patent, the first inventor gets the patent not the first to file
3. In order to get a patent, the invention has to have novelty, usefulness, and non-obviousness (prior use or documentation).
4. Patents are issued for four types of inventions: machines, process, man-made products, and compositions of matter
5. In U.S., you get 20 years of patent rights from the day of filing, not the day of patent grant
6. The best approach to filing a patent is file first and then disclose
7. There's other instruments other than patent to protect and extend IP
8. Trade secret is one of them as long as the IP is kept a secret
9. Obviously, the biggest risk to trade secret is that the secret gets out. For example, some disgruntled employee decides to steal the trade secret
10. Worse, this disgruntled employee can file for a patent on the trade secret and prevent a company from using the trade secret
11. Someone in the class asked "But this case seems to violate the statute of granting patent to first person who invited the idea." Sam's response was: "The statute stands only if the inventor doesn't actively abandon and conceal the invention"

9/27/2005 8:20:52 PM (Eastern Daylight Time, UTC-04:00)

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Business

At least according to Ray Stata, the founder of Analog Devices, in a recent interview with EE Times (registration required):

EETimes: Let's talk about the state of the engineer in North America.


Stata: For whatever reason, engineering as a profession has never garnered the kind of prestige [here] that it has in other parts of the world. There's a certain breed of people who get interested in math and science, but are there enough of them? Clearly, there aren't. In Massachusetts, had it not been for the in-migration of engineers from other parts of the world, the engineering population would have declined.

I don't think anybody has got it figured out. I went to my 25th reunion [at MIT], and they had a questionnaire: "Would you send your kids to MIT?" The answers predominantly came back "No." The [respondents would] say, pardon my English, "I worked my ass off when I was there. Why would I want my kids to go through that, when at the end of the day it was the lawyers and the Wall Street guys who made all the money?"

When you're studying it, you work twice as hard as anyone in any other classes, and when you get out you work day and night and you don't make that much money. So you have to do it for love, not for money.

The one place where we haven't lost it is the whole notion of entrepreneurship, creating companies and things that are new. There's a lot of excitement there.

9/26/2005 1:14:11 PM (Eastern Daylight Time, UTC-04:00)

Comments [6]

Business

Perhaps one of the best blog entry from Robbie is his documentation of a recent talk by Henry Mintzberg, a professor of management at McGill University, about the limitations and over-hyping of today's MBA programs. Here are some of the highlights:

1. Can't create a manager in a classroom.
2. MBA programs don't create managers.
3. Should earn managerial stripes, not get it because you have an MBA.
4. Shareholder value is not a value.
5. We almost never consult the people who have been managed by the candidates we evaluate

Read here for more information...

9/23/2005 1:07:56 PM (Eastern Daylight Time, UTC-04:00)

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Business

Robbie Allen, a fellow classmate of mine, had posted links to 2 wonderful essays written by Paul Graham's on entrepreneurship a few weeks. Graham has once again intrigued us with a new thought-provoking essay about Open Source. The essay covers not about Open Source products like Firefox or Linux but highlights why the underlying processes and the people in Open Source are often more successful and less costly than those in some professional environments. This essay isn't about IT or computer programming, it actually has a lot of relevance in building successful creative, innovative enterprises by applying some of the observations and best practices in the Open Source environment. I find the following paragraph in the essay most very relevant to my career path that I currently taking:

Hackers tend to think business is for MBAs. But business administration is not what you're doing in a startup. What you're doing is business creation. And the first phase of that is mostly product creation-- that is, hacking. That's the hard part. It's a lot harder to create something people love than to take something people love and figure out how to make money from it.

8/4/2005 11:13:13 AM (Eastern Daylight Time, UTC-04:00)

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Business

Just to follow up on Yoav's comment on System Engineering (the class) for being too focused on process and repeatable results. So far, the lessons that we learned from SysEng are about quality and productivity. While Six Sigma, Robust Design, and TQM are yesterday's ideas, they are by no means obsolete. I think that both SysEng (the practice) and innovation can coexist together. With a growing number of companies striving to build more innovation in their organization. However, I think that SysEng should include more materials on innovation and creativity thinking. In other words, we need to develop leaders for growth and if innovation is one area where the economy is going. So from an SDM perspective, I think it is a great idea to include an extended or more advanced version of Prof. Eric von Hippel's excellent class in Innovations in the Marketplace to the SDM core curriculum.

Going back to the special report titled "Get Creative! How to Build Innovative Companies" that appears on the latest issue of Business Week, there's a section in the special report that talks about how some business schools are already redesigning their curriculum to meet the growing demand for creative, innovative managers. Traditionally, business schools have introduced electives in product design into their curriculum, with mixed results. And now, a few schools are starting to experiment with integrative programs that foster design thinking that can be applied to product and business design. For example, the Joseph L. Rotman School of Management at the University of Toronto will soon offer such program that will lead to a Master of Business Design (or MBD).

7/26/2005 1:26:28 PM (Eastern Daylight Time, UTC-04:00)

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Business

I have just finished reading special report titled "Get Creative! How to Build Innovative Companies" that appears on the latest issue of Business Week (or BW). This report is well articulated and provokes thoughts that supplemented well to System Engineering, a class I am currently taking at MIT. I only wish that our readings for that class would have included something like the highlight Business Week article.

There are several key points to take from this special report. Basically, BW argues that as technology and information become commoditized and globalized, a new corporate model that focuses on creativity and innovation is beginning to emerge from the industry and could provide new growth avenues. It is the creativity economy, stupid. The knowledge economy has now been replaced the creativity economy. As manufacturing outsourcing to China, India, and Eastern Europe becomes more prevalent, the key management principle is no longer Six Sigma or even Total Quality Management but Design Strategy. Companies with rich culture of innovation and creativity stands to win.

As I look in the featured poll: The Top 20 Innovative Companies in the World, it is no surprise why Apple and Microsoft are in the top 3 positions. But if you think that innovation is only about creating insanely products, you are wrong. Innovation and creativity can be applied to wide spectrum of corporate competences, from supply-chain to brand marketing to manufacturing. So is creativity and innovation the next big thinking in management science? I'll continue to think critically about this.

7/25/2005 1:21:55 PM (Eastern Daylight Time, UTC-04:00)

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Business

After reading an old article from Harvard Business Review and a special report on Creativity from Business Week the past weekend, I maybe wrong about HP cutting down on R&D in my last blog entry where I alluded to R&D as the main source of a company's innovations. In the grand scheme of things, innovative ideas can be created or sought from other sources both inside and outside the company. Drawing from what I have learned from school, academic business papers, and my own observations and reflections innovations transcend R&D, its no longer just designing products based on new technologies and sell them to customers. There's a new emphasis on creativity and how it can create competitive advantage for companies. I am going to elaborate more on this on my subsequent blog entry...

7/25/2005 1:18:11 PM (Eastern Daylight Time, UTC-04:00)

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Business

I had dinner at Penang with Camille last night and as usual our conversation included a good dose of office politics and high-tech business trends. We speculated that in the light of the massive layoffs at HP, other companies (including the company that we work for) are likely to follow suit in order to save operating cost. There was absolutely no basis in our statements, just pure speculation.

Earlier today, I read from Good Morning Silicon Valley that HP has announced the disbandment of not 1 but 4 of the company's advanced development group in the wake of retrenching 14,500 employees off its workforce. Quoting an excerpt from John Paczkowski's blog:

"In disbanding the last group, HP is bidding adieu to legendary Silicon Valley technologist Alan Kay. A founder of Xerox's Palo Alto Research Center, Kay - who once said, 'The best way to predict the future is to invent it' - was instrumental in the development of the windowing GUI and modern object-oriented programming. He envisioned a laptop computer long before the first ones rolled out and won a Turing Award in 2003 for his work on Smalltalk, the dynamic object-oriented programming language on which Sun Microsystems' Java is modeled. Hard to believe HP's cutting him loose. But it is. According to the company, his research doesn't jibe with HP's new focus.

Let's analyze this announcement from several perspectives. From a public relations point of view, the disbandment of several research facilities and departure of a legendary technologist will likely send a wrong message to its customers and investors that research is no longer an important activity valued at HP. From an accounting perspective, HP maybe in deeper financial trouble than we knew when CEO Hurd took over the company. The shakeup may be inevitably and justified. In strategic terms, how would this move affects HP's competitive advantage? HP has always prided itself as an innovator and inventor of many technologies, the word "Invent" is even written distinctively below the company logo. Visit their website and see for yourself. The knowledge lost from the closure of research facilities and departure of experienced engineers is likely going to impact HP's ability to create and deliver innovative products in the long run. On the other hand, if those R&D facilities aren't aligned well with HP new corporate strategy or producing results that add value to the company, then reduction in R&D activities in HP makes sense. In conclusion, I think that the financial state of HP may require the managers to act quickly to realign its resources and imperatives. But, regardless of HP's new focus, R&D is still and should continue to be HP's core competence for a while. I feel that the magnitude and extent of the recent cut in R&D may actually undermine HP's long-term growth.

7/22/2005 2:06:00 PM (Eastern Daylight Time, UTC-04:00)

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Business

Today, we had Professor Olivier de Weck as guest lecturer speaking our System Engineering class. He is engaging and his lecture on Isoperformance was interesting. In short, Isoperformance is a concept conceived by Prof. de Weck, in which he argues that the goal of any system (or product) development project is not seek for a solution that produces the optimal performance. Because of resource constraints, solution leading to optimal performance will usually end up being over-designed and often costing too much and being too narrowly focused. A better approach is to define a set of desired performance targets and work backwards to discover a set of acceptable solutions.

Two interesting questions were raised in the lecture. First, Uday asked the question: "If safety is a critical requirement of a product, shouldn't engineers strive to optimize safety in their design." This question wasn't adequately answered in today's session but it was argued that Isoperformance still has its place in the design process as long as we can define the desired level of safety performance. I am not too sure if this is true, after all this argument works only if we assume that such desired level is known at design time. So here's my question, how safe is safe? Can there be too much safety available in a product?

In the next question, Joe asked the question that alluded to how Isoperformance may stifle innovation in the design and development process. I respectfully disagree with Joe on this one. I believe that innovation and Isoperformance can co-exist harmoniously in engineering environments. Drawing, once again, from my professional experience, I remember that the lofty goals of a particular project at my company have undermined the company's ability to release the product on time to the market. The designers were simply fixated in delivering the highest performing products and neglected other aspects of the process, such as lead time, manufacturing cost, etc. Innovation isn't about optimal design but rather the introduction of new concepts that have positive impact on the product, and its users and producers. I believe that Isoperformance can help to achieve a balanced system by using a set of pre-defined expected performance while still allowing innovations to flourish under these conditions.

7/19/2005 11:35:15 PM (Eastern Daylight Time, UTC-04:00)

Comments [2]

Business

Prof. de Albeniz lectured about Kaizen or the English term: "continuous improvement" and how it has greatly benefited Toyota and other Japanese automakers in today's lecture. While I don't question the merits of Kaizen, I am cynical about the way Kaizen is implemented at my company where I still work on a part-time basis. In my humble opinion, there has been a divergence of perception and expectation on the execution of the Kaizen program between management and the employees. It has become apparent that the goal of the program has become nothing more than posting fancy powerpoint slides on bulletin boards than to really use the concepts of the program to solve problems or improve processes. To most employees, the program has become just another fad and despite enormous amount of resources that have been invested in the program. To management, it serves no more than a public relations tool by window dressing the program as the panacea of solving any of the company woes. Sadly, the program that was designed to reduce Muda (Japanese for waste) has itself become muda.

7/18/2005 2:11:15 PM (Eastern Daylight Time, UTC-04:00)

Comments [3]

Business

I have advocated the benefits and importance of networking a few times in my blog in the past. In fact, business schools and professional business seminars have been promoting the adage of "It’s not what you do but who you know." But there is also an ugly side of networking, specifically the superficiality and spuriousness of networking. Has business cards and v-cards become trophies, and the mere possession of them is simply to satisfy an ego and bestow some recognition of how big one’s network has become? Anyway this article explores more on this issue in more detail. Thanks to Siobhan for the article.

7/14/2005 11:42:32 AM (Eastern Daylight Time, UTC-04:00)

Comments [11]

Business

On Friday, I attended the "Networking & Interview Workshop" organized by Helen Trimble - the SDM career placement officer. The person who presented the workshop was Dan King, a career development consultant with Career Planning & Management. It is no surprise that the theme of the workshop is networking, in particular Dan urged everyone that the key of finding in one's ideal job and consequently getting hired is networking. In all, I walked away from the workshop with some new ideas and inspirations. The most interesting data that I found in the workshop is that today, 70% of the professionals found their jobs through networking and only 5% of the pool found their jobs through job postings. I am still not buying King's questionable figure, but I do agree that networking is significant in landing someone his/her dream job. In any case, John, a fellow classmate has effectively summarized King's prominent ideas in his earlier email:

1. Always prefer networking methods to getting a job over “open, public knowledge” methods: you’re in more control when networking.
2. Always be on the lookout for networking contacts, even at the barber, hairdresser, or donut shop. But never ask your networking contacts directly for a job, that's a NO-NO.
3. Never, in an interview, climb up on the table with your elbows and get too "in-your-face," or conversely, slouch way down and adopt an "I don’t care" posture.
4. Never let your leg get to rockin’, or shuck and jive, bip and bop, keep your limbs relaxed instead of communicating nervousness. Fold hands in lap if necessary.
5. Never lick your palm and shake hands like a wuss. Conversely, do not “bone crush” your interviewer in an annoying display of male dominance.
6. Always have an answer to the most common interview question: “Tell me about yourself.”
7. Always have an answer to the most common “gotchya” question and its variants: "What is your weakness?"

Well John, thanks for the summary. Of course, these are some of the highlights of Dan's workshop.

7/11/2005 11:27:45 PM (Eastern Daylight Time, UTC-04:00)

Comments [16]

Business

I was going to end being one of