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Archive for the ‘management’ Category

Five Questions

In a short book, Peter Drucker and friends pose 5 questions for organizations to pose for their own self-assessment:

  1. What is our mission?
  2. Who is our customer?
  3. What does the customer value?
  4. What are our results?
  5. What is our plan?

I’d ask the same questions of myself.

Copyright (c) 2008 by Waiming Mok

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Just finished reading Nassim Nicholas Taleb‘s Fooled by Randomness, 2nd Ed.  Taleb illuminates simply, with stories, that reality is embedded with randomness (not predictable), nonlinearity (not easily forecasted using past data assuming a straight line) and skewness (not symmetrical), yet we humans often get confused by our biases and mis-apply statistics to describe reality.   Experts could be multiply fooled by the same biases and mis-applications.  

We confuse what’s noise and what’s signal; and our news and social sciences (in attempts to apply scientific methods incorrectly) inject more noise into the system.  On top of these are rare events, some black swans, that are rare and happen unexpectedly.  The bad ones cause havocs in the “normal” progression of life, while the good ones could reap great benefits to those who could catch them.  But these rare events could not be foreseen.

We don’t know “what we don’t know”, whilst we think we know.  According to Taleb, success is often the result of luck, or randomness, but we attribute success to one’s skills.  This is especially more prevalent with professions that involve randomness, like securities trading, or upper level management (big decisions are make infrequently and the consequences of the decisions are not seen until years later).  Even a streak of successes could be the result of randomness if the sample size of people in the profession is large.  Only repeated actions over a long time would one really distinguish between luck and skills.  Such is the distinction between a securities trader and a dentist.

Biases:

  • hindsight bias – overestimating what one knew at the time of a rare event due to subsequent information:  “I knew it all along”, when we did not see the rare event coming
  • selection bias – misinterpretationof the statistics from sample selection
  • attribution bias – cognitive bias that affects the way we determine who or what was responsible for an event or action
  • survivorship bias – the tendency to excluded failed companies from (finance) performance studies because they no longer exist

As Taleb is a voracious reader and reads in many fields, he injects lots of ideas into the book.  Most notable is that Taleb reveals himself to be a disciple of Sir Karl Popper, who challenged the singular reliance on observations and inductions to form scientific theories — any theory could be overturned by just observing a counterexample that was not previously observed. This last point hints at Taleb’s Black Swan, described in another book of his.   There is much to grasp as one reads Fooled by Randomness.

I highly recommend this book, as Taleb challenges us to be vigilant of what we don’t know, and maybe on occasions, be less a fool to randomness.  Very insightful, yet readable.

Copyright (c) 2008 by Waiming Mok

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Warren Buffet wrote an opinion column in the New York Times.  The essential message is:  convert cash to US equities, as equities would appreciate from today’s low prices, whereas cash would depreciate due to inflation.  He wrote in the paper:

  • “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful,”
  • “if you wait for the robins, spring will be over.”
  • “Today people who hold cash equivalents feel comfortable. … They have opted for a terrible long-term asset, one that pays … nothing and … depreciate in value. … the policies that government will … prove inflationary … accelerate declines in the real value of cash accounts. …Equities will almost certainly outperform cash over the next decade…”

Copyright (c) 2008 by Waiming Mok

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Kai-Fu Lee, 李開復, spoke to over 280 people at the Google Crittenden campus today.  He spent two hours talking and answering questions about what Google China is doing. 

 Some highlights:

  • Google strategy in China:  5,000 years–patience; humility– understand the users, Chinese internet user behaviors are different those in the US; build local expertise; advertising based business model
  • China might be more advance in development and application of cloud computing because of software/media piracy
  • Google creating Chinese specific tools, e.g. Google Chinese input IME that uses search results and latest search data to improve selection of Chinese words with same sound
  • KFL’s advice to those who want to do a startup:  be hungry, i.e. you’ve no safe alternatives and it’s live or die.
  • He mentioned his blog

Copyright (c) 2008 by Waiming Mok

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Honest Signals

Waiming's interpretion of the article

Waiming's interpretation of the article

Unconscious, automatic mimicry (listener emulating the speaker’s gestures and facial expressions) in salary negotiations and sales have shown to improve financial results by 20%-30%.  Mimicry is a form of Honest Signals, which are unconscious human behaviors that show the rhythms of interaction in a group of people.  According to Alex Pentland and Tracy Heibeck in SMR, Fall 2008 (pp. 70-75), these signals can be measured with a “sociometer” device.  The measurements can predict accurately the results of job interviews or salary negotiation or sales success.  Honest signals include influence, mimicry, activity, consistency and these have associated brain structures and biology.  The authors postulate that with more sophisticated statistical models and sensor capabilities, we would see the creation of a quantitative, predictive science of human organization, leading to the possibility of social engineering.  Farfetched?  Controversial?  Maybe that’s why I do not see the article mentioned in the SMR web site.  In any case, more info are here:

Copyright (c) 2008 by Waiming Mok

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Think Small

“Think Small” is the advice Milton Chang gave to aspiring entrepreneurs.  Focusing on a niche and delivering value there, tend to result in minimizing resources, competition, burn rate, and risks and maximizing potential.  Once there is success, then expand and grow.  This philosophy applies to new products entering new markets as well.  This is the same message in Susan Friedmann‘s “Riches in Niches”

She references the following authors:

The rest of her book spoke about 7 strategies for experts to establish themselves for consulting businesses:

  1. Naming your business
  2. Building your media muscle
  3. Getting involved with the industry
  4. Catching writing fever
  5. Producing products and systems
  6. Teaching:  workshops, webinars, and more
  7. Offering services

She also refers to mastermind groups, which are helpful for entrepreneurs.

Copyright (c) 2008 by Waiming Mok

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Quotes from HYSTA

HYSTA held its annual conference today.  Some quotes:

Milton Chang:  “Give, to take.”; “Business is about relations.”

HP Jin:  “In time of turbulence, stay calm, see the opportunities.”

Bill Huang:  “Time … to incubate:  cost to start business is low”; “Information industry is going thru huge shift in technologies (web, …, cloud)”

Ping Wu:  “If yon have money, you can buy a business.”

Hong Chen:  “(Now is) best time to get people to join you.”
“(If you’re going to China,) sharpen your Chinese communication skills-Chinese have confidence now, …”; “When the storm comes, the stronger survives.”; “Business owner: be stingy; cash is king today.”

Copyright (c) 2008 by Waiming Mok

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