• Investing in...forever stamps?

    image from moneysavingmom.com

    The new price to mail a letter is 49 cents. A week ago it was 46 cents. That 3 cent difference represents an increase of over 6.5%. This might not mean much to you and me, with a few books of stamps sitting in our drawers...but to big retailers who sell stamps at the current rate, it represents a substantial return. Some retailers who may have benefited from this include Staples and Office Depot...as well as any large companies who send mail at first-class rates.

    Source:  "If you bought Forever stamps forever ago, you are getting a good return," by Allan Sloan, Marketplace, American Public Media, January 29, 2014.

    Follow up:

    • Do you have any Forever stamps in your drawer? Count them and calculate your return on investment (ROI) in dollars and as a percent (if you bought the stamps before the price increase.) Note which number you use in the denominator (46 cents or 49 cents) when you are calculating a percentage change or ROI.
    • What businesses are most affected by changes in postal rates?
  • "Fragile Five"...what does THAT mean?

    Image from money.cnn.com

    The "Fragile Five": Turkey, Brazil, India, South Africa and Indonesia.  These are emerging-economy nations that have become too dependent on investments from foreign countries. The recent change in the U.S. government's stimulus policy has resulted in less availability of investment money. Much of this money flowed into these fragile emerging economies.

    The most recent event that has caused concern among global economic observers occurred this week: Turkey raised interest rates by 4.25%.  This was followed by an interest rate increase by India...and then another by South Africa. The higher rates are meant to attract foreign investment. But now that investment funds are not as available as they were, the underlying value of the business investment becomes a more important factor in determining where an investment might be made.

    Sources:  "‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil" by Landon Thomas, Jr., New York Times, January 28, 2014.

    "South Africa joins battle against sell-off"by Alanna Petroff, money.cnn.com, January 29, 2014.

    Follow up:

    • Research another important acronym for global business observers: BRIC.  What countries does that acronym stand for?  How have the economies of those countries fared?
    • What does the bar graph in the attached article from the New York Times indicate for the Fragile Five versus the BRIC countries?
  • Nintendo and the State of the Union

    Link to audio from the Marketplace Website

    On the same day that President Obama was expressing optimism about the economic future in the State of the Union address, Nintendo was announcing its dismal third quarter profits. Nintendo is facing a flex point in its product cycle.  For its business life so far (about 30 years), Nintendo has made games that have to be played on Nintendo hardware.

    image from geekswithwives.com

    The problem is that in 2014--every smart phone is also a mobile game-playing device. The convenience of carrying around a game station in the same device as one's phone might trump the bells and whistles that can be experienced on a dedicated device.

    Not to mention that at least some version of many game apps is FREE.

    It is probably time for Nintendo to re-think its business plan.

    Source:  "Will Nintendo Ditch Hardware?" by Kate Davidson, Marketplace--American Public Media,  January 29, 2014.

    Follow up:

    • What are Nintendo's options in terms of product mix and marketing?
    • What are your personal game playing habits? How have they shifted over the past 5 or 10 years? How do you think they will change in the future?
  • Your reputation: how do you manage it online??

    image from www.almostsavvy.com

    According to Cheryl Conner, in an interview in Forbes magazine, "Fake Internet reviews and attack websites are becoming more and more common.... 'Ex-file' attacks are appearing on websites ranging from ripoffreport.com, thedirty.com, Yelp.com, to Google Places."

    In addition, businesses are also vulnerable. "Reviews" on various sites can be skewed in a small population of reviews by one or two negative reviews. Medical professionals as well as restaurants can be affected.  Three strategies to protect a business reputation were suggested:

    • Protection: encourage happy customers to write positive reviews. Preventing negative cyber-press is easier than fixing damage after-the-fact.
    • Monitoring: Doing a complete review of your online reputation weekly can help nip problems before they go viral.
    • Defense: When your reputation has been harmed, you need to take action to correct the situation.

    Dr. Chris Anderson of Cyber Investigation Services suggests these possible responses to defend against negative press:

    • Doing nothing
    • Crafting a polished written response
    • Trying to resolve the issue with the poster
    • Asking the website to step in
    • Identifying an anonymous poster
    • Using legal letters to threaten the poster
    • Filing a lawsuit to seek damages and force removal

    Sources:  "Managing an Online Reputation" by Kermit Patterson, New York Times Small Business, July 29, 2009.

    "Protecting Your Online Reputation: 3 Key Tasks Your Business Must Complete in 2014," by Cheryl  Conner, Forbes, December 9, 2013.

    Follow up:

    • Has your email or social networking site ever been hacked?  Have you ever done an internet search on yourself and found information that was incorrect? What have you done to correct the situation? If it was not resolved promptly, did the information online do harm to your reputation, either private or public?
    • What steps have you already taken to protect your online reputation?
  • Bull Market's 5th Birthday

    image from STAN HONDA/AFP/Getty Images: on Wall Street

    The stock market has been doing well for almost 5 years now. What a surprise! The Dow Jones Average is three times what it was in March 2009 (6,447). As usual, observers are predicting a decline...or a "correction"--which would mean a drop of 10% or more. Since the Dow usually has a correction about every 18 months, and we haven't had one since 2011...some think that we are 2 years overdue.

    Part of the reason that the market has done well, is that Federal monetary policy has reinvested in the bond market and kept investment money in circulation. When the Fed pulls back on its stimulus policy, observers will be able to analyze whether it has been public policy or the business entities themselves keeping value in the market.

    Nevertheless, Gary Thayer, Chief Macro Strategist, Wells Fargo Advisors, feels that the correction would not be a "crash," and would be only temporary.

    Source:  "Happy 5th anniversary, bull market?" by Stacey Vanek Smith, Marketplace, American Public Media, January 22, 2014.

    Follow up:

    • If you have current stock investments, do you plan to hold them over the long term, or sell in anticipation of a stock correction? Explain your rationale.
    • What is a stock market correction? When, historically, have they occurred?
  • Income inequality

    video from mediaMatters. com

    Income inequality may be the greatest problem that current and future generations of Americans face. It matters little who is to blame. It is important to identify and act on the what can be done about it. It is interesting to see how one's perspective can change when one's circumstances change. If a person is doing really well, sometimes they think that income inequality is not an issue. But if they lose their job, or become disabled or...like all of us who are lucky to live so long...grow old--the principle "I've got mine...too bad if you don't have yours" doesn't seem to be the best way to go.

    Source:  "Fox Doesn't Believe In Income Inequality But Still Blames Obama For It," by Tyler Hansen, Media Matters.org, January 14, 2014.

    Follow up:

    • What are your thoughts about income inequality? Are you a "have" or a "have-not"? What about your parents or grandparents?
    • Do you think that solutions to this perceived problem should be implemented? Who should be in charge? What should the governing values be?
  • Most expensive cell phone service...can you hear me now?

    image from phandroid.com

    What are you spending on your smartphone and wireless internet service? Is it the best price that you can get?  A recent survey by Cowen and Company reported that Verizon Wireless customers may pay the most.

    Verizon has no intention of reducing their prices.  So why are Verizon customers willing to pay more?

    Maybe it is because, in many markets, Verizon service covers more areas. But a savvy consumer needs to research whether or not the increased coverage area actually affects their particular market.

    The survey found that:

    • Verizon bills averaged $148 per month;
    • Sprint bills averaged $144 per month;
    • AT&T averaged $141 per months;
    • T-Mobile bills averaged $120 per month.

    Can you hear me now?

    Source:  "Guess which wireless carrier has the biggest bills in America" by Zach Epstein, BGR: Boy Genius Report, January 17, 2014, from a story picked up by Ars Technica.

    Follow up:

    • What were the major and minor factors that influenced your personal choice of smartphone service?
    • What is an oligopoly? Does that term apply to the wireless service market? How does that affect consumers?
    • Where does the phrase "Can you hear me now?" originate? Why is it notable?
  • Target: too little, too late?

    This letter was in my personal email Inbox this morning...several weeks after the cyber-crime event:


    Dear Target Guest,

    As you may have heard or read, Target learned in mid-December that criminals forced their way into our systems and took guest information, including debit and credit card data. Late last week, as part of our ongoing investigation, we learned that additional information, including name, mailing address, phone number or email address, was also taken. I am writing to make you aware that your name, mailing address, phone number or email address may have been taken during the intrusion.

    I am truly sorry this incident occurred and sincerely regret any inconvenience it may cause you. Because we value you as a guest and your trust is important to us, Target is offering one year of free credit monitoring to all Target guests who shopped in U.S. stores, through Experian’s® ProtectMyID® product which includes identity theft insurance where available. To receive your unique activation code for this service, please go to creditmonitoring.target.com and register before April 23, 2014. Activation codes must be redeemed by April 30, 2014.

    In addition, to guard against possible scams, always be cautious about sharing personal information, such as Social Security numbers, passwords, user IDs and financial account information. Here are some tips that will help protect you:

    • Never share information with anyone over the phone, email or text, even if they claim to be someone you know or do business with. Instead, ask for a call-back number.
    • Delete texts immediately from numbers or names you don’t recognize.
    • Be wary of emails that ask for money or send you to suspicious websites. Don’t click links within emails you don’t recognize.

    Target’s email communication regarding this incident will never ask you to provide personal or sensitive information.

    Thank you for your patience and loyalty to Target. You can find additional information and FAQs about this incident at our Target.com/databreach website. If you have further questions, you may call us at 866-852-8680.

    Chairman, President and CEO

    I read the letter carefully, noting the apology and the offer to do credit monitoring. I also had a chuckle at the fact that Target was offering ME advice on how to protect my online identity...when Target was obviously not an expert. 

    Source:  email dated January 17th at 8:00 am, sent to the email associated with the Target credit card account of Teri Bernstein.

    Follow up:

    • Do you think that Target's apology letter and offer are adequate compensation for this breach in their security system? Research the time and costs that may be incurred by an individual when they are a victim of identity theft.
    • Would you take Target up on its offer? Check out the Experian link and evaluate the offer. Are there any potential hidden costs to the person enrolling in the Experian program?
  • China way ahead of U.S. in stimulating the economy

    image from www.economist.com

    "Move over, Janet Yellen and Ben Bernanke. Step aside, Mario Draghi and Haruhiko Kuroda. When it comes to monetary stimulus, Zhou Xiaochuan, the longtime governor of the People’s Bank of China, has no rivals."

    This is a quote from the NYT article about how the Chinese government's uses of economic stimuli have strengthened the Chinese economy at a far higher level--and more effective level--than the U.S. government has helped U.S. businesses.

    China has pumped 300% of the money that was available in 2006 into the Chinese economy in 2013. No wonder Chinese production and sales have had such a growth spurt!

    Nevertheless, there are differences in the ways that this stimulus works. In the U.S. the government pumps money into the economy by buying bonds.

    In China, government pumps money into the economy by "issuing more renminbi to bankroll its purchase of hundreds of billions of dollars a year in currency markets to minimize the appreciation of the renminbi against the dollar and keep Chinese exports inexpensive in foreign markets." That amounts to considerable support.

    However, now, there is talk of reining in that support...and doing so without damaging the economy. The People's Bank of China and the Chinese government are moving slowly on this one.

    Source:  "With China Awash in Money, Leaders Start to Weigh Raising the Floodgates," by Keith Bradsher, The New York Times, January 15, 2014.

    Follow up:

    • What are your thoughts about government stimulating the economy? Support your position with multiple internet sources.
    • How has government stimulus helped China? Would that approach have worked the same way in the U.S.? Why or why not?
  • Tin foil hat wards off surveillance

    image by the.joberg/Flickr ...and reproduced in the article linked below

    Will this new product sell? Does it meet a need that cannot be satisfied elsewhere? Does it attempt to create a need that does not yet exist? Or is its creation just performance art?

    In any event, an Italian company has come up with a hat that claims to scramble brain activity if any scanning of that brain activity is detected--thus protecting the wearer's privacy.

    Anti-NIS Accessories from Caitlin Morris on Vimeo.

    Source:  "This is not your grandfather's tin foil hat...," by Ben Johnson, Marketplace: American Public Media, January 15, 2014.

    Follow up:

    • Answer the questions posed above.
    • What product might you be interested in...to protect you from, specifically, what kind of surveillance?
  • Job creation in North Carolina

    image from www.greenwichcitizen.com

    "Promise Zones." The phrase implies hope and focus. The new initiative was presented at North Carolina State University, which is leading a group that hopes to "reinvigorate the nation’s manufacturing economy." The intention of the program is to bring manufacturing jobs back to America. The new program redirects existing funding, rather than requiring additional tax dollars.

    Deciding when and where to create the manufacturing institutes has required a lot of planning. A competition will be held to decide which proposals will actually be funded. According to the article, "This is the first of three such institutes the White House plans to announce in the coming weeks. It will be financed by a five-year, $70 million grant from the Department of Energy, which will be matched by funding from the consortium members, including the equipment maker John Deere and Delphi, an auto-parts maker."

    This specific initiative will focus on advanced semiconductor technology in order to create energy-efficient devices for various industries.

    Source:  "Obama Announces Institute to Create Manufacturing Jobs," by Mark Landler, The New York Times, January 15, 2014.

    Follow up:

    • Is "Promise Zones" an effective name for marketing this new initiative? In what ways does it "work"?
    • Can you think of a better name to describe this effort?
  • Soft Skills: Expert advice from a twenty-something

    image from blog linked below

    Soft skills are where it's at. The advisory boards to our college's Business Department say it over and over again: "If only young people knew how to act with real human beings in a real business environment!" Here is a source that helps "twenty-somethings" understand the social order--and explains it in a way that other twenty-somethings can relate. 

    Today's "society manual" topic is about "giving and receiving." When a young person is out with someone of greater wealth and means, sometimes the natural urge is to take advantage of the wealthier person's greater resources. But look at the situation from their perspective...Isn't it lovely to be treated? If you are very wealthy, it is possible that few people think to treat you.

    This piece points out that making yourself "stand out" in a situation often means to do what doesn't seem to be the normal course of things. Choosing a course of action that honors a basic human need to be taken care of might make sense in the long run."Do unto others as you would have them do unto you."

    I have to admit that the blog does a better job of explaining this than I can. Just check out the link to Society: an Operating Manual.

    Source:  "On Giving and Receiving," by Rose Barrington and Hannah Bernstein, Society: an Operating Manual, January 13, 2014.

    Follow up:

    • Have you ever been in a situation where you were sharing a meal with someone who had far more personal resources than you had? Did you expect them to treat you? Split the bill? What was the outcome?
    • What do you think of Society: an Operating Manual's idea of "treating" the wealthy person instead of letting the wealthier person treat you? What are the pros and cons, as you see it? Consider this in terms of long and short term goals.
  • Small business opportunities for 2014

    image from www.webparx.com

    Thinking of starting a small business in 2014? Here are fields where some experts think there are significant opportunities:

    • Social Media Consultant--Since many companies want to get on the social media bandwagon, but few have the skills to set up and manage social media, an opportunity exists for individuals who know social media advertising techniques.
    • Application Engineer--or "App creator"--These professionals can design small single-function programs to be used on various mobile devices.
    • Green Living Adviser--Companies and individuals need help to learn the skills of living and working in line with sustainability principles.
    • Personal Coach--no kidding--this can be a lucrative career for those who truly enjoying seeing the strengths in others and helping them reach their life goals--and people are willing to pay others to help them.
    • Professional Organizer--The TV program "Hoarders" has help boost business for professional organizers, who help people sort through their belongings and organize their lives and the spaces they live in.
    • Retirement Services Provider--Many service opportunities exist for helping the "active" retiree who wants to learn new skills, or travel on trips that cater to their needs, or rent property in an up-and-coming retirement community.
    • Elder Services Provider--As the baby boom generation ages beyond the "active retiree" stage, they will need more help with "activities of daily living" such as grocery shopping, driving to appointments, paying bills, pet care, food preparation...or help organizing a move to an assisted living situation.
    • Personal Concierge--Busy lives mean that people are willing to pay others to do their personal business--shopping, errand-running, setting up appointments--whatever comes up.
    • Specialty Food Supplier--A person who knows about food and logistics can either market online or provide help to smaller groceries who want to provide gluten-free or other allergy related foods for their customers.
    • IT consultant--More businesses are going fully digital, so the need for professionals able to maintain and debug systems will continue to grow.

    I haven't personally researched most of these suggestions as a market analyst, but I have personally hired individuals working in 5 of the fields mentioned...

      "Top 10 Small Businesses To Start In 2014" by Amber Rose, Empowered Ezine, January 9, 2014, picked up by PRNewswire.

    Follow up:

    • Do any of these suggestions look like a good fit for you? If so, research the start up costs and possible revenues.
    • Which of these jobs seems to have the most potential--either in terms of money or in terms of personal fulfillment?
  • Body parts: an entrepreneurial business opportunity?

    image from blog.mannequin.com

    OK...These are mannequin body parts. So I guess it isn't quite as gruesome as real body parts. But who knew they would represent an entrepreneurial opportunity?

    Actually, the business--Mannequin Madness--has been in existence for 15 years. The revenues are modest but not inconsequential: they range from $500,000 to $800,000 annually...and the work involves selling, renting and recycling mannequins. The entrepreneur, Ms. Henderson-Townsend, says that she was perusing Craigslist one day...and came upon a person selling mannequins and parts.  She bought the entire inventory for $2500. She first ran a rental business part time, but, when her employer went bankrupt in the following year, she pursued the business full time. She found that it was moderately easy to accumulate the non-biodegradable mannequin parts as inventory...which she then recycled to Sears, Nordstrom, Ralph Lauren and Kohl's.

    The Environmental Protection Agency gave her an award for recycling more than 100,000 pounds of mannequin in a year.

    She hopes her newly independently-contracted "controller" can help her figure out how to manage and control her business and her profits. In addition, she has been reading:
    How Rich People Think” by Steve Siebold. She is trying to develop her "million dollar mindset" in order to maximize her business potential.

    Sources:  "Turning Body Parts--Mannequin Body Parts--Into a Business," by Coleen DeBaise, The New York Times--Small Business, January 9, 2014.

    How Rich People Think” by Steve Siebold, published by London House Press, July, 2010. 

    Follow up:

    • What wacky business opportunity can you brainstorm, given that this one was viable?
    • Check out the book How Rich People Think” by Steve Siebold. Do you think it will help Ms. Henderson-Townsend achieve her goals?
  • Greatest Business Card Ever !

    Check out the details on this English-language business card of a Chinese entrepreneur. This card first caught my eye when I was perusing posts in Facebook, but it turns out that Guangbiao Chen is actually a serious contender for fame. His "flashy philanthropy" and his recent interest in buying the New York Times has brought him notoriety in many circles.

    I don't know about the veracity of the claims he makes on his business card, but third party sources can verify that Guangbiao Chen is one of the 400 richest people in China.

    Sources:  "The Incredible Business Card Of The Chinese Millionaire Who Wants To Buy The New York Times." by Adam Taylor, The Business Insider, January 8, 2014.

    Follow up:

    • What does YOUR business card look like? Design a card for yourself with the same kind of hyberbole regarding your achievements that Guangbiao Chen has shown on his card.
    • What are the pros and cons of exaggerating your experience and accomplishments? Perhaps you can list some unforeseen consequences.
    • Can you debunk or prove any of the claims on the business card posted above?
  • Should bicyclists and hybrid drivers pay more taxes?

    image by Justin Sullivan/Getty Image

    Fuel tax revenues help fund road maintenance and expansion...but if a person is biking or driving an electric car--they aren't paying as much in fuel taxes. So much for the "unforeseen consequences" of a decision to be more sustainable.

    How can a tax loss like this one be replaced? 

    ...Maybe by creating a new tax on mileage, or on bike usage?  It may be hard to measure, but the use of roads by vehicles possibly could be a tax that is shared equitably...or should it? Should gas-guzzlers pay more than the energy efficient? Do bikes "use" roads at the same rate that cars do? Should trucking for business logistics be stuck with all of the liability for road maintenance?

    There are so many questions regarding the equitable distribution of taxes, but there is no question that cities and counties responsible for road maintenance are feeling the effects of the shortfall in tax revenues. .

    Jay Friedland (Plug In America's legislative director) has remarked that several states are imposing special fees on electric cars and hybrids.

    It will be interesting to see how manufacturers of electric vehicles and other business advocates for sustainable transportation respond to the intent to raise taxes or fees for those opting for "the high road" with respect to energy consumption.

    Sources:  "Bicyclists and hybrid drivers should pay more taxes,"by Queena Kim, Marketplace--American Public Media, December 31, 2013.

    Follow up:

    • Do you think bicyclists should pay more taxes? Why or why not?  What about drivers of hybrid vehicles?
    • Are you a cyclist or hybrid-driver? Does your own situation influence your opinion? If so, how could you use your own perspective to influence a marketing campaign, one way or the other with respect to energy-saving transportation alternatives?
  • Paradise hides Chinese corruption scandal

    Image by Gilles Sabrie for The New York Times

    The Jiuzhai Paradise... It is a 1,010 room, 7-building hotel in a Tibetan area of China...a mountain resort on the edge of a wilderness similar to Yosemite in the US. How did such an extravagant hotel space get built at the edge of a pristine wilderness?

    Deng Hong, a Sichuan Province billionaire and businessmen is the force behind the building of this "paradise." Observers say that his success may be due to his close relationship to Li Chuncheng, a Communist party official who is currently the object of an anti-corruption investigation.

    image from the Jiuzhai Paradise site

    According to the New York Times article, "On Nov. 8, Xinhua, the state news agency, posted on its website an article from Beijing News that said Mr. Deng had been formally arrested. Police officers in the city of Xianning, where Beijing News said Mr. Deng was being detained, declined to comment, as did representatives of Mr. Deng’s company...[Deng] has an ambitious list of projects, including the New Century Global Center, a mall and hotel complex in Chengdu that is the world’s largest building, but Jiuzhai Paradise is the one most dear to him. A painter and calligrapher, Mr. Deng designed the hotel and often stayed there with his family."

    This corruption investigation may be tied to a larger one involving Zhou Yongkang (another party official), and Deng may be involved because, as a businessman, if he confesses to bribery, his testimony can be used to build a case against the political officials.

    While the investigation goes on, however, the hotel remains open, offering many amenities. It remains popular, usually selling out on holidays.

    Sources:  "Fog-Wreathed Paradise, Built by a Billionaire Under a Cloud" by Edward Wong, with contributions by Mia Le and Ye Fanfei, New York Times JIUZHAIGOU JOURNAL, January 5, 2014.

    Follow up:

  • Outside the box: high pay for workers increases profits

    "The Good Jobs Strategy" TEDx at Cambridge 2013

    Zeynap Ton, an MIT professor, has studied retail sector jobs and profits, and has found that companies who pay workers well are more profitable in the long run. She found that, initially, cutting jobs and hiring minimum-wage workers produces short term gains, but when customer satisfaction decreases, sales and profits suffer.

    Originally writing in the Harvard Business Review, Ton noted that companies that offer high pay, flexibility, advancement opportunities and personal autonomy were also profitable. She profiled four companies in particular: Costco, Trader Joe's, Quiktrip and Mercadona (a Spanish company).

    photo taken by Wilfredo Lee for AP photo

    These were some of the practices employed by those companies that helped the human resource plan work:

    • simplification of the product offerings and fewer sales promotions;
    • training of employees in mastery of a wide range of tasks;
    • letting employees make minor decisions (enriching individuals' expertise and job buy-in, as well as lessening the need for management time)
    • elimination of waste in all other areas but staffing--such as advertising and logistics management.
    Adam Davidson's article in the NYT Magazine delineates his personal experience with the furniture retailer IKEA. IKEA changed their human resource strategy between one visit by Davidson and a second visit. Davidson's first experience was terrible--lost in the huge store, and unable to find staff capable of helping him, he vowed never to return. When he reluctantly DID go back--the experience was totally different (he was even greeted at the door by someone who pointed him directly to the area he needed to go to).  What had happened in the meantime was that IKEA had hired an "operations management" firm named Kronos, who helped them set up a system along the lines of Ton's research.

    Sources:  "Thinking Outside the (Big) Box," by Adam Davidson, New York Times Magazine, January 5, 2014.

    "The Good Jobs Strategy," by Zeynap Tom, published by New Harvest, January 2014.

    Follow up:

    • Check out the stock prices for Walmart and Costco from 10 years ago, five years ago and today. What conclusions can you draw from an analysis of stock prices, compared with human resource policies?
    • According to the NYT Magazine article, what other researcher backs up Ton's claims, and how many dollars in increased sales can be obtained for every dollar spent on workers? 
    • What does the field of "operations management" or "workforce management" entail?
  • Netflix HR philosophy: Freedom and Responsibility

    When a company has been as surprisingly successful as Netflix was in 2013 (its stock price more than tripled this year)...everyone gets interested in what may have made them successful. One key element in Netflix's success is described in the "Netflix Culture: Freedom and Responsibility" slideshow that was originally made available about five years ago. According the the Harvard Business Review article, "Sheryl Sandberg has called it one of the most important documents ever to come out of Silicon Valley." 

    The two main tenets of the Netflix human resource philosophy are:
    • Hire only  "A-list" employees...and be willing to not only let excellent employees have significant responsibilities...but also let them be free from having to deal with employees and colleagues who are not functioning at a high level of ability and effectiveness.
    • Because the "A-list employee" philosophy involves the need to get rid of "deadweight" and to be re-evaluating company needs with a zero-base budgeting philosophy:  Create very generous severance packages when laying off no-longer-needed employees.
    It sounds brutal, but it has been effective, and the approach is influencing other companies.

    Sources:   "Netflix Culture: Freedom and Responsibility," by Reed Hasting, Netflix, originally published in 2009.

    "How Netflix Reinvented HR," by Patty McCord , Harvard Business Review, January-February 2014. 

    Follow up:

    • What do you see as the pros and cons of the Netflix human resource philosophy?
    • What is zero-base budgeting?
    • Read the HBR article. Paraphrase the two employee stories that illustrate the two tenets of the Netflix HR philosophy.