• Is Honesty only for people who are naive?

    Is honesty the best practice for everyone? In this day and age, does the practice of Enlightened Egoism (that balances self interest with the needs of others) mean that the practitioner will miss out on bonuses and windfalls? How do short term and long term decision making inform this issue?

    The articles in the linked "Room for Debate" section in the New York Times touch on several viewpoints on this topic. Some of the points raised were:

    • Executives (real people) make decisions on behalf of their corporations to deceive the public about emissions (VW), or manipulate the value of currencies (big banks, in the May 2015 scandal). Before they get found out, they make money. And almost no executives end up in jail, no matter how much money they have obtained through deception.
    • In 1964, only 29% of the people believed that "government is a few big interests looking out for themselves"; in 2013, 79% believed that.
    • When the system seems to be rigged in favor of people at the top, others tend to justify and perpetrate smaller instances of dishonest behavior.
    • The cumulative effects of dishonesty have major consequences for the economy : rules are tightened; more money and time is spent on security; the supervision mistakenly implies to the people being watched that anything that isn't caught is OK; time thievery is rampant when workers see the time wasted on security checks.
    • "The real threat to capitalism is no longer communism or fascism but a steady undermining of the trust modern economies need for growth and stability." (Reich)
    • The poor and the rich have different outcomes for dishonest behavior--exacerbating the income divide in the U.S.as one consequence.
    • Honesty works for those who think about the long term, or social good, or how their "brand" is perceived.
    • Just like overeating and texting while driving might seem like a good idea at the time (in the short term)--the long term consequences are not in our best interests. Cheating in business works the same way. Eventually the business will get caught, or will do enough harm that the model no longer works (WorldCom, Enron, the mortgage crisis in 2008)

    We all have to make daily choices about honesty at home and at work. But we each have to live with ourselves in the long run. It might be worth it to consider the issues raised in these essays.

    Sources: "Is Honesty for Suckers?" or "The System is a Con Game, with most of us victims," by Robert Reich, et. al., Room For Debate--New York Times, September 29, 2015.
    "Dishonesty Only Provides Short Term Benefits," by Dan Ariely, part of the "is Honesty for Suckers?" debate, above. 
    ....and others weighing in on the same topic.

    Follow up:

    • Read some of the other articles as part of this debate. Which ones spoke to you most meaningfully and why?
    • Does practicing dishonesty affect the poor differently than it affects the rich? How about practicing honesty? Explain.


  • Applying behaviorism to operating efficiency and increasing revenue

      A 1972 film published as a YouTube video (Oct 2013): BF Skinner on behaviorism and business

    Last year, using advice from behavioral psychologists, the federal government made a change to a reporting form used by vendors selling everything from office supplies to complicated equipment to the government. The forms are used to report rebates owed by the vendors to the government. These rebates are similar to discounts based on the volume of the previous period's sales. 

    Instead of having the vendors sign the reporting form at the end, government experimenters moved the signing (i.e. the attestation of correctness) from the end of the form to the very top of the form.  The result?

    Vendors were more honest, and reported more rebates owed to the government. An extra $1.59 million in revenue was received as a result--a 6% increase.

    Typically, systems are set up--by governments and by businesses--assuming that people are rational. But the psychologists have argued that not only are people irrational--they are irrational in ways that can be predictable. Projects are set up to "nudge" people to act in a certain way--increasing the behavior that the government or business wants.  A few of these projects:

    • Laws were passed to allow businesses to set up automatic (by default) retirement savings plans that people had to opt out of instead of filling out paperwork to set up.
    • A British project to urge folks to register their cars was successful by sending people a picture of their car--beside a notice that said their car could be towed away. 
    • Insurance companies had clients sign forms reporting their mileage at the top instead of the bottom and found that the insured reported an average of 2400 more miles driven per year. 

    Since all marketing and efforts to increase revenue or decrease costs involve modifying the behavior of others, it makes sense that behavioral scientists are being employed based on research studies. 

    Sources: "Behaviorists Show the U.S. How to Improve Government Operations," by Binyamin Appelbaum, New York Times, September 29, 2015.

    "Signing at the beginning makes ethics silent and decreases dishonest set-reports in comparison to signing at end," by multiple authors, and delivered at a conference held by the Proceedings of the National Academy of Sciences (PNAS), published by Harvard Business School, July 23, 2012. 

    Follow up

    • Read the article. In what situation, paralleling a British experiment, did the "nudging" experiment in the United States NOT work as planned? Describe the situation and explain why you think it did not work in the United States.
    • What is the primary complaint AGAINST these "nudge" projects, made by free marketers?


  • Chick-fil-a to expand to New York City

       YouTube video on how to pronounce Chick-fil-A

    Chick-fil-a--in case you haven't read any of the stories about its owners' controversial political positions--is a privately held fast-food restaurant. Before the controversy, I used to think it was pronounced "Chick-Fill-aah"...accent on the "Fill." Wrong. It is more like "chick filet." Its signature product is a breaded piece of chicken in a soft bun with pickles.

       from the NYT article linked below.

    The news this week is that it is expanding to New York City--an interesting move, given its "Southern Hospitality" reputation. Its cow commercials might also not appeal to the typical New Yorker:

    Chick-fil-A cow commercial

    One thing that sets Chick-fil-A apart from many fast food chains is that it is "privately held." This means that its stock does not trade on a public stock exchange: there has been no IPO. It is held by a limited number of people, who are restricted from selling the stock widely.  If you go to its website, you will see no "investor relations" tab with financial statements. It is privately held, so it does not have to publish that information to the public, like corporations that are publicly traded must. 

    How can those owners afford to open new stores, then, if they don't sell stock to others to raise the cash to build and expand? They do it by having franchisees, most of whom operate just one store. The revenue model is that the owners of the Chick-Fil-A stock split profits with the franchisees 50-50.

    Even though the company is privately held, its public relations team makes sure that there is some financial information available concerning the company. For example, last year individual stores posted 8% growth, and this year Chick-fil-A expects double-digit growth. This is in a period where other fast food companies are not doing as well as they have in the past. 

    Chick-fil-A expects that their New York City location will produce the highest number of sales of any of the 1900 stores franchises. 

    Source: "Chick-Fil-A Brings its Sandwich, and Its Values, to New York, by Stephanie Strom, New York Times, September 30, 2015.

    Follow up:

    • What is a franchise? What is an IPO?
    • What other big companies are privately held?
    • Do you think Chick-fil-A will succeed in New York City? Why or why not?


  • Corporate "mindfulness" used to increase worker productivity

       photo from Huffington Post

    Mindfulness in the workplace has become quite popular. Time magazine did a cover story on the practice. More importantly for this course, note the following:

    Nevertheless, observers who understand the principles behind mindfulness argue that corporations have adopted a "take what you like and leave the rest" attitude toward the buddhism-based mindfulness practices. From the secular web source Wikipedia, we find this definition:

    Mindfulness...is the intentional, accepting and non-judgmental focus of one's attention on the emotions, thoughts and sensations occurring in the present moment, which can be trained by meditational practices that are described in detail in the Buddhist tradition.

    For example, the Buddhist principle of "Right Speech" might apply among co-workers at a lower level, but managers, VPs and marketers may have different standards that apply to them. "Right Livelihood" may not apply at all to a corporation that fights against labeling for genetically modified food products. From the corporate standpoint, mindfulness practitioners are less likely to be reactive and angry. They are more likely to consider things thoughtfully and respond with equanimity. According to the article linked below, corporations have an interest in adopting practices that mitigate the following:

    • Stress-related absences totaling $300 billion a year 
    • Productivity losses due to lack of employee "engagement" totaling $550 billion a year

    NYT writer David Gelles, in his book "Mindful Work" blames the employee's own thinking patterns on the stress that leads to these losses. However, a Stanford-Harvard study suggests just the opposite: "A meta-analysis of 228 studies showed that employee stress is not self-imposed nor due to a lack of mindfulness." Stress among workers, according to a synthesis of all of these studies, is due to these corporation-caused stressors: 

    • Lack of insurance
    • Shift work
    • Long hours
    • Job insecurity
    • Work-family conflicts
    • Low control over their work parameters
    • High job demands
    • Low amount of corporate social support...and lack of time for other social support
    • Organizational injustice

    David Gelles and the Stanford-Harvard study come to very different conclusions. Other observers mentioned in the Salon article have other interesting theories on this topic.

    What do you think?

    Source: "Corporate mindfulness [...]: Zen or no Zen, you're working harder and being paid less," by Ronald Purser and Edwin Ng, Salon.com, September 27, 2015.

    Follow up

    • Do you think David Gelles is correct about worker stressors--and mindfulness as a solution to curing employee stress? Why or why not?
    • What are your thoughts about the Stanford-Harvard study? What might be the flaws (if any) in this study?
    • Read the article linked above: What do you think about the "Trojan Horse" theory? What about the conclusions of other observers?
    • Might you use mindfulness as a tool if you were a manager? What would you expect the results to be?


  • Pumpkin flavored treat season

       a parody of the pumpkin spice craze from imgflip.com via the Satellite Sisters Facebook page

    What a marketing triumph!  Starbucks Pumpkin Spice Lattes are in their 12th year, the webpage PopSugar is once again ranking the pumpkin products for this season...and the seasonal institutionalization of this marketing idea has become so entrenched that it is now being parodied.

    Here is a video via Huffington Post:

    Additional parodies (or are they real products??) are HERE.

    What do you think?

    All of this attention probably brings additional sales to the grandmother of all pumpkin spice products: Starbucks Pumpkin Spice Latte. 

    Source: "The pumpkin spice latte officially returns September 8th" by the Starbucks Secret Menu website, September 7, 2015.

    Follow up:

    • Research and list real pumpkin products and the parodies.
    • Which of the real products are the most successful? What is the limited time period in which they are available?


  • Family togetherness: the new mortgages

    For many twenty-somethings, home ownership seems impossible--many can't afford to move out of their parents' homes to get their own (high-priced) apartment. Also--many older home-owners can no longer afford to pay their mortgages--unless they have the help of their kids or other family members, who may or may not live with them. 

    Fannie Mae has created a new mortgage plan that addresses this reality. It is called the Fannie Mae Home Ready Loan. In approving the loan, Fannie Mae takes into account the incomes not only of the home owner whose name is on the title, but also of the others who are contributing to the mortgage payments. This allows people to stay in their homes, and allows family members to contribute to the main household expense. It will allow more people to legitimately qualify for mortgages. The Vice President of Single Family Analytics and Affordable Housing Strategy at Fannie Mae, Jonathan Lawless, relates this research:

    "Fourteen percent of households that have a mortgage have an income-earner of significant income living in the same household," Lawless says. "That percentage is 19 percent for African-American households and 24 percent for Hispanic households."

    This new plan may help everyone in these extended families. 

    Source: "All in the family: the new mortgage math," by Noel King,  American Public Media: Marketplace Morning Report, September 16, 2015.

    Follow up

    • What is your experience with a mortgage application? Are you in a situation where this type of "mortgage math" would apply?
    • Why haven't banks come up with a plan like this? Wells Fargo or the Bank of America, for instance? Do some research about Fannie Mae and extrapolate from their mission statement.


  • Boo Hoo! Banks are disappointed in the Fed

      CNN via YouTube: Janet Yellin annouces rate increase to be 0%

    It is no surprise that banks are not happy about the Federal Reserve not raising interest rates. Some observers have commented that Janet Yellin doesn't have the nerve to make a change. But who is helped and who is hurt by the Fed's decision?

    • Potential borrowers (for mortgages, small business loans and remodels) are helped by the decision not to raise rates. 
    • Banks are hurt (because anticipated increases in revenue will not materialize). And their investors are also hurt.

    Here's where it makes a difference: an increase in the Federal Reserve interest rate would allow banks (working on a cost-plus model) would RAISE RATES FOR BORROWERS.  But....THAT DOESN'T MEAN THEY WOULD RAISE THE RATES THEY PAY TO DEPOSITORS

    Right now, bank deposits are very high--so banks don't want to pay out more interest across the board.

    Here's another thing: When the Fed announced there would be no increase in interest rates, investors sold their bank shares. Banks stocks declined. No wonder banks are disappointed! 

    Source: "Why Banks Are Disappointed in the Fed," by Tracey Samuelson, American Public Media: Marketplace, September 18, 2015.

    Follow up

    • Does the Federal Reserve interest rate have any effect on your life?  Think again: do you have a student loan? Do you pay credit card interest? Have money in a savings account? Want to get a mortgage? 
    • How could banks have profited by an increase in interest rates? Why might that matter to a middle class wage earner? Discuss the positives and negatives.
    • What are the downsides of a too-low interest rate?
    • What are the plusses of keeping interest rates low?


  • Fear of craft beers prompts mega-merger

      SABC on YouTube: an international take on the proposed merger

    The market share of different types of beer has changed over the last five years. There are the classic beers, whose market share is shrinking. There is a growing market segment of craft beer aficionados. To gain control of the market, the big beer companies have been on a buying binge (Anheuser Busch InBev owns over 200 brands)...and this is the latest and biggest buying move yet. Just so you know who-owns-whom at this point, here are the top brand line-ups for the two major beer "powerhouses." These two companies each own many other brands, but these are some of the best-selling.

    First,  Anheuser-Busch InBev:

    • Budweiser
    • Bud Light
    • Busch
    • Corona Extra
    • Stella Artois
    • Beck's
    • Leffe
    • Hoegaarden
    • Skol
    • Brahma

    The top brands of the other big company, SABMiller :

    • Carlton
    • Coors Light
    • Blue Moon
    • Bulmers Original
    • Foster's
    • Grolsch
    • Hamm's
    • Henry Weinhard's
    • Mickey's Malt Liquor
    • Miller Genuine Draft
    • Olde English 800 Malt Liquor
    • Peroni

    This week, Anheuser-Busch InBev proposed buying SABMiller. In response, SABMiller's stock rose 20% to $56.47 per share on September 16, 2015. As I said before, this merger is in response to the disparate growth between the Big Beers and craft beers. Over the last five years, the annual growth between the two groups has been:

    • Big Beers: 5.6%
    • craft beers: 18.5%

    The big brewing companies don't want to see their market share and their profits eroding at this rate. We'll see if the sale goes through; some observers see hurdles. Analysts predict that if it does happen, the mega-company will be able to reduce costs, but they won't be able to change the artisanal-trending consumer preferences. 

    You don't have to drink beer to be fascinated by the changing market. 

    Source: "Beer-brewing giants prime for mega-deal," by Samantha Musunaga, Los Angeles Times, September 16, 2015.

    Follow up:

    • What is a merger? Make a list of several reasons why a companies might want to buy up other companies in their industry.
    • What is a monopoly? What is an oligarchy? What issues are raised in the video about a monopoly in this industry?


  • "HQ" testing: judging job candidates with Big Data

     sample question from Optimize Hire Questionnaire

    The question above seems like a practical question to ask a candidate for employment. But much of the new "Human Quality" testing of job applicants asks questions that seem not to be related to the job. Here are some questions (with comments from Eliza Gray) from the article in Time:

    The article poses a question that came to my mind, as well: What do these questions have to do with how a person will perform on the job?

    It turns out that the way employers are often using this data is by correlating answers to the answers that known successful people might give--when all of their responses are aggregated together. Individual questions may be analyzed separately, so the person is not evaluated as a whole human being . An individual might be eliminated because he or she just doesn't answer a certain question or questions like long-term successes might answer them.  Here are some additional example questions that might give a distorted picture of an individual's potential (from Time):

    "When I was young, there were times when I felt like leaving home."
    "I dislike the high taxes we pay in this country.”
    Sometimes I’m not sure what I really believe."

    Time found that employers and testing companies were unwilling to give out test samples, as they feared that potential applicants might learn to "game" the questions. And hiring candidates might really want to study for these exams: 457 of the Fortune 500 companies are using Gallup’s StrengthsFinder (a supposedly similar test can be found HERE). Some companies give tests where employees have to respond to over 95 questions such as these.

    The theory is that the tests provide an "objective" look at hiring candidates, and can be an easy tool for screening a large pool of applicants. But there are good employees who may have special qualities needed in the new workforce, but that are not supported by the Big Data algorithms.

    As students look to get their first career-level jobs, or switch jobs...or even come up on an annual review--they should be prepared to face tests similar to these.

    Sources: "Questions to Answer in the Age of Optimized Hiring," by Eliza Gray, Time Magazine, online edition, June 15, 2015; cover story of magazine published June 22, 2015.

    Test HQ

    Follow up

    • Who might be excluded by this type of testing, according to the article?
    • If the users of the data are comparing the responses to the responses of those who may have been successful in place for decades,how might those correlations influence the demographics of new hires?



  • Exit Strategy and financial decision making

    Paddy Hirsch on YouTube via Marketplace, linked below...but be alert for the ad in the middle

    Paddy Hirsch's video above explores exit strategies for financial investments...not the "exit strategies" that might be pondered in relationships or social gatherings. But the principles are the same: maximizing the outcome for oneself. In Hirsch's example, an investor in a start up company has three exit strategies, or opportunities where she might be able to sell her stock at a profit:

    • Best case: an IPO (Initial Public Offering) where the original investors may be able to parlay their shares into thousands more shares in a new offering to the general public
    • Also great: an Acquisition, where another company sees the potential of the start-up and buys up a controlling interest (or the whole company) at a substantial profit to the original investor.
    • Iffy: a sale of the stock. This might be at a profit, but a company that is not traded on a major public exchange may have a limited market of potential buyers for the stock, and therefore less of a chance for a large profit. 

    Investors who are already invested in a publicly traded stock, may also want to develop an exit strategy for when to sell in a falling market...or in a bull market, when one imagines that the stock may have reached its peak price.

    Decisions, decisions, decisions. 

    Source: "Exit Strategy," by Paddy Hirsch, American Public Media--Marketplace Whiteboard, May 15, 2015. 

    Follow up

    • What analogy does Paddy Hirsch use to illustrate exit strategies? Why is this metaphor apt?
    • What are the dangers of NOT having an exit strategy? Consider a straightforward example like owning a stock option.


  • IPOs 2015

      image from the Forbes article linked below

    Initial Public Offerings (IPOs) can capture the attention of the media. Curiously, the stock sales that result from them are the ONLY stock transaction that the corporation records for stock issuance. The subsequent sales, at a loss or profit, are in the "secondary market" and do not affect the financial statements of the issuing corporation. They do not see the gains that the stock investors reselling the stock see. 

    IPOs are a way for a growing company to raise money for expansion.

    Forbes Magazine, on a periodic basis, creates a list of IPOs that are upcoming...and potentially interesting to investors (descriptions in "quotes" are from Forbes): 

    • Uber: "Headwinds from consumer and regulatory backlash probably aren't going away, but if Uber's recent fundraising is any indication the financial community loves its business model. The question is whether the valuation will be too high to entice the same type of clamor from public-market investors."
    • Shake Shack: "The chase for the next Chipotle has had its high-fliers and its flops in the past few years, but with a valuation said to be in the $1 billion range and an aggressive expansion plan, a strong appetite is expected for this burger chain."
    • FitBit: "The maker of fitness-trackers is said to be prepping a 2015 deal that could help measure the market's appetite for wearable tech. If Fitbit doesn't get there first, it might be rival Jawbone, which makes the Up brand of fitness wristbands."
    • Ferrari: "Fiat Chrysler has already announced it will spin off the luxury brand in 2015 in a move to spin the unit out from the parent company by CEO Sergio Marchionne. The question is what will be the better buy, a share in the automaker's stock or one of its sports cars?"
    • First Data: "The payment processing firm is one of the few remaining members of the mega-buyout class of the pre-crisis era. KKR paid $29 billion to take the business private in 2007, and most recently led a group of investors that pumped in another $3.5 billion this June. A debt restructuring has left the company on sounder footing and ready for a 2015 return to the market."
    • Airbnb: "The lodging face of the sharing economy has been staunchly resistant to an IPO, but at some point a public listing may be the only way to keep its rapidly-rising valuation moving in the same direction. If that doesn't happen in 2015, it probably won' be too much longer."
    • Appnexus: "The digital ad tech player spent more than $200 million on acquisitions in 2014 and says more could be on the way as it barrels down the chute towards an IPO."
    • Box: "Maybe the second time will be the charm for the cloud storage firm, which filed for an IPO in 2014, but wound up raising money privately instead. Investors are getting more discerning on companies bleeding red ink, but Box and rival Dropbox could still find the public market their most receptive exit if valuations rebound."
    • Honest Company: "Jessica Alba is the public face of this maker of environmentally-friendly baby products, and after a $70 million funding round led by Wellington Management this year at a valuation near $1 billion it could one of 2015's most-hyped  consumer deals (at least from a star power perspective)."
    • Square: "With Apple Pay ramping up and PayPal about to split with eBay, 2015 looks like a transitional year for the payments business. That might leave an opening for Jack Dorsey's Square, which has been dancing around IPO rumors since Twitter went public in 2013."

    We'll see how these IPOs play out...or if they are delayed due to market conditions. 

    Source: "The IPO class of 2015," by Forbes editors, 2015.

    Follow up: Which of these IPOs are most interesting to you and why?

  • Business Best Sellers--Sept 2015

    The New York Times best seller list for Business books has several titles on it that were on it last Spring when I last did this list. 

    Here are the top ten:

    1. Outliers, by Malcolm Gladwell, (2011): paying attention to the backgrounds of famous, successful people
    2. Get What's Yours, by Laurence J. Kotlikoff, Philip Moeller and Paul Solman (2015): maximizing Social Security benefits.
    3. Thinking, Fast and Slow, by Daniel Kahnman (2011): Decision-making
    4. Elon Musk, by Ashlee Vance (2015) a biography
    5. The Power of Habit, by Charles Duhigg; (2014) (see this blog): why we do what we do and how to change it
    6. Money: Master the Game, by Tony Robbins (2014): a blueprint for personal finance
    7. Freakonomics, by Steven D. Levitt and Stephen J. Dubner (2006): personal finance, finance and economics.
    8. Think Like a Freak, by Steven D. Levitt and Stephen J. Dubner (2015): freakonomics folk offer to "retrain your brain"
    9. Team of Teams, by General Stanley McChrystal with Tantum Collins, David Silverman and Chris Fussell (2015): merging big and small business leadership qualities for success
    10. This Changes Everything, by Naomi Klein (2015): a disruptive book about the need to abandon capitalism to heal the climate crisis. 

    What is interesting is that some of the business books have such "legs"--or the ability to sell books long after the publishing date. I guess that would speak to timeless wisdom. 
    I'd like to recommend a few other titles to add to this list:

    Steve Jobs, by Walter Isaacson--a not-too-positive take on the career of Steve Jobs--and an adaptation is soon to be in theaters near you (in case reading a book is beyond what you can schedule in at this point).
    Becoming Steve Jobs, by Brent Schendler--said by some observers to be a more cogent and straightforward tale of the CEO's uneven but enviable career. 
    How to Win Friends and Influence People, by Dale Carnegie (1937; reprinted 1998); "Changed my life" said Warren Buffett.

    Source: The New York Times, Book section, September 13, 2015.

    Follow up:

    • READ something. It will make you more interesting in an interview...and it will make you more effective on the job.
      Seriously, I was asked what I was currently reading in two of my job interviews for accounting positions.
    • Why did I put the Dale Carnegie book on my personal recommendation list? Read about it on the internet and comment.
    • Which of these books would you like to read?

  • 9/11 tribute/advertisement: aired only once



    This Budweiser ad aired only once. It was intended as a tribute to the victims of 9/11. The company chose to air it just one time (though it cost thousands to produce) with the stated intention of showing respect for those who died in the tragedy.

    Reaction to the ad was mixed, however. Here are some opposing viewpoints from the YouTube page: 

    "This was the perfect commercial in giving giving respect to fallen on that tragic day.  Budweiser had proven themselves to not only produce a great Beer but have writers that can create Heart breaking, funny and warm hearted commercials for the Superbowl, keep up the great work guys."

    "WOW that was soo offensive. To exploit a National tragedy just to get people to buy beer. It makes sense why it only aired once. Its totally disrespectful to those who died even though the commercial pretends not to be but when it comes down to it , its a f***ing beer ad."

    What do YOU think?

    Source: YouTube

    Follow up:  

    • Considering both the number of "hits" to this ad, and the variation of response to this ad, how effective do you think this very limited ad campaign was? What do you think was the revenue impact to Budweiser of producing it and airing it only once? Name the marketing strategies that may have been employed.
    • If you remember the Kohlberg moral inventory blog from June of this year, at what stage of morality do you thing Budweiser was acting in producing this ad? Note that this moral strategy is commonly used in advertising campaigns. Name a few other instances where it had been applied.


  • Thwarting optimism: the Prudential Magnet Commercial

     The Prudential Magnets Experiment--which aired during the 9/10/15 NFL game Patriots/Steelers

    A slightly disturbing commercial aired during the Thursday night season-starting football game between the New England Patriots and the Pittsburgh Steelers. The experiment had people using yellow magnets to indicate positive life experiments and blue magnets to indicate negative experiences.  The magnets were posted on two walls: one for the past, and one for events anticipated in the future.

    When they were done, the mosaic of magnets showed the past as an almost even mix of blue and yellow--with maybe the blue (negative) predominating. 
    The future was predominantly yellow. 

    The "teaching moment" spokesperson, Dan, chose to point out to the crowd that they were optimistic about the future...but their past experience showed they bad things happened at least equally as often. Dan even got them to acknowledge that "there would be down times."

    In other words, people shouldn't be so optimistic. The implied take-away was that folks needed to buy more insurance. 

    This marketing approach was a different take on the often-used advertising technique of making a person feel bad about themselves. A person might be depicted as too smelly (buy our soap/deodorant/perfume) or too fat (buy our low-calorie treats) or too out-of-it to get the best deal (on their new car, on their phone plan...or on their insurance policy). The overall message of this type of advertising is, "Maybe you didn't know this about yourself or what you are spending your money on, but I'm pointing this out to you so you can fix it and still look good in your circle of friends."

    This "magnet experiment" is different. It gets into participants' inner lives, asking them to call up emotional experiences and reveal themselves. Then, Dan, the person in charge, points out that their feelings (their hopes and dreams--their optimistic outlooks) are--quite obviously--wrong. The camera pans out to reveal how completely wrong they are--clear to everyone at home looking at the balanced bad/good wall on the left and the almost entirely yellow (good) wall on the right.  The message: It's just wrong to be optimistic because so many bad things happen. 

    While perfume might make a person smell better, or switching a phone plan might actually save a person some money...buying insurance is NOT going to change the fact that bad things will happen in the future. 
    I'm wondering if viewers were moved to buy more insurance...or if they just wanted to "shoot the messenger" that reminded them that it was wrong to be optimistic. 

    Source: "Prudential Magnet Experiment", originally aired February 2015; aired during the NFL game on September 9, 2015.



  • Narcissists in the Workplace

    graphic from blog.melanietoniaevans.com

    Accusing a "bad boss" of being a "narcissist" is an unskillful and too-casual use of a word that can describe a serious personality disorder. Nevertheless, there is a spectrum of narcissistic qualities. Most of us exhibit some of them, at least occasionally. Some of the negative aspects of narcissism include:

    Some of the most successful CEOs have been given this label--notably, Steve Jobs. Two positive qualities that might be present in narcissistic executives might mitigate the negatives: empathy and humility. Having these qualities means that--at least some of time--the leader is able to listen to others and understand what they want. Steve Jobs clearly could do this on a broad scale, but he gained some of his reputation as a narcissist from exhibiting the negative qualities with his work associates. 

     trailer for the 2015 movie Steve Jobs

    One of the reasons that narcissists (the ones who can mitigate their extreme negative qualities) are successful, is that they attract a certain type of very productive, loyal, and curiously co-dependent employee (Mary A. Ross, linked below). This type of employee: 

    • has a warped sense of responsibility--and can believe that they really are to blame for things that go wrong, even if what happens is outside of their sphere of actual influence
    • has a lack of objectivity and tries to gain control by satisfying the needs of the workplace to maximize their own feeling of safety
    • often feels guilt, loneliness and isolation, leading to more dependency on the workplace to raise their self-esteem
    • does not seek help outside of the workplace, and lives with secrecy and denial, unwilling to get an objective opinion
    • works until they "burn out"

    A loyal, co-dependent employee is unlikely to confront a difficult boss, and is likely to work hard to satisfy him or her. Until the employee reaches their breaking point, this kind of dedication can produce results.

    This simplified model of a psychologically dysfunctional but financially successful workplace is presented as a cautionary tale to those entering the workplace and those working as managers. Narcissists function best at the very top of an organization. They are not team players, and can make life difficult for their co-workers and underlings. They are a destructive force in middle-management, so human resource managers might consider screening for narcissistic tendencies in the hiring process.

    Maybe more importantly, each individual might consider looking at how he or she might fit into an organizational structure. If one finds oneself miserable at work, it is worth examining whether the narcissism/do-dependency model might inform the situation. Awareness is a helpful step in examining possible courses of action and either avoiding a difficult situation or making changes if one recognizes an intractable work pattern.  

    Sources: "Bosses Who Love Themselves," by Phyllis Korkki, the New York Times, March 7, 2015.

    "'Humble Narcissists' like Steve Jobs make the best business leaders, study says" by Justin Wm. Moyers, The Washington Post, March 27, 2015.

    "The Dark Sides of Leadership and Loyalty: Exploring the relationship between Narcissism In the Workplace and Organizational Co-dependency: A Review of the Literature," by Mary A. Ross, Regent University School of Global Leadership and Entrepreneurship, May 2008 and 2010.

    Follow up

    • To find out if the "narcissist in the workplace" might be you, take an online narcissism assessment. If you resist the idea (as though it couldn't possibly apply to you), you might want to read up on what that might mean. Share your results with someone else you trust to have a reality check about whether the results fit.
    • See the movie Steve Jobs. Or read Walter Isaacson's book. What conclusions can you draw about the workplace at Apple depicted therein? What are the plusses and minuses of working in that environment? How would you manage as a Human Resources professional there?


  • Risky Business: Los Angeles bids to host the 2024 Summer Olympics

    The US Olympic Committee makes its decision: Los Angeles is the U.S. contender to host the 2024 Summer Olympic Games. 

    CBS-LA : Boston drops out  in July and Los Angeles becomes a front runner for Olympics 2024

    Having the Olympics in your home city sounds pretty exciting...unless you have to plan for it and pay for it. There has been a lot of news lately about how much trouble Rio de Janeiro is having getting ready for the Summer 2016 Olympics. They aren't on schedule and they don't have enough money to speed things up.  They can't raise it from local business partnerships--businesses that theoretically might profit from a city full of visitors. When politicians want to lobby for their city to be an Olympics venue, they have to sell it to the business community--as well as the taxpayers that elect the City Council--that it will be worth the costs--both monetary and non-monetary.

    A big event like the Olympics is a risky business venture...and the city that hosts only gets one chance to make money or break even. Here is a rendering of the general locations of venues on the plan submitted by Los Angeles:


     from the bid put together by the Southern California Committee for the Olympic Games

    The 1984 Summer Olympics was in Los Angeles. And it made money. It was the first Olympics not sponsored by the U.S. government, so it had to raise its own money. The 1984 Summer Olympics was run "like a business" by Peter Ueberroth--and it made a profit of $232.5 million. From Alissa Walker's article linked below:

    "He (Ueberroth) organized a committee that functioned more like a corporation, dubbing it LA84 and creating a board consisting of entrepreneurs and other financially savvy leaders. Accordingly, the games would be funded by unprecedented corporate sponsorships, impressive private fundraising, and, for the first time on U.S. soil, television deals. The committee sold the television rights to the broadcast to ABC for $225 million, raising a large amount of money far in advance of the games. Leave it up to the entertainment capital of the world to strike such a smart deal."

    I worked in Internal Audit for the 1984 Olympics--not as a volunteer, but as a well-paid employee. Our duties continued for more than six months after the Olympics were over. Over the time period when LA84 was collecting deposits from countries and sponsors, the WSJ Prime Interest Rate ranged from 11% to 13%--and some investment returns were much higher. (Now that rate is 3.25%). LA84 collected the money early and paid the deposits back late, earning interest all the while.  From the same article:

    "In 1979, the L.A. organizing committee had made a deal. If the games saw any profits, LA84 would give 60 percent back to the U.S. Olympic Committee and keep 40 percent for Southern California. At the end of the games, the total expenditures came in at a respectable $546 million, but even more impressive was the profit: A surplus of $232.5 million, meaning $93 million would stay in the region."

    Can this happen again?  It is not likely. The International Olympic Committee (IOC) now has more requirements regarding what has to be built and provided as infrastructure. A larger population means that logistics hurdles are more significant. Interest rates are low, so the opportunity to invest cash-on-hand at a high profit doesn't exist. In addition, the way the Olympics are televised has changed so revenues adjusted to current dollars might not be as high.

    At any rate, there are also several European cities in contention to become the 2024 summer venue for the Games.  And the IOC won't make a final decision until September 2017. A lot can change in the business environment between now and then. 

    Sources: "Los Angeles to Be U.S. Bidder to Host 2024 Olympics," by Ian Lovett, the New York Times, Sept 1, 2015.

    "The 2024 Summer Olympics," Wikipedia.

    "How LA's Summer Olympics Became The Most Successful Games Ever," by Alissa Walker, GIZMODO, February 6, 2014.

    Follow up

    • Read the articles above and do additional research on the 1984 Olympics. How were they run differently from other Olympic games? (In other words, how were they run in a more business-like fashion?) Is there a way to increase the chances that these Olympics will also be profitable for the region?
    • Read "A Case for Moving the 2016 Olympic Games to Los Angeles,"--a response to the panic many people feel about Rio de Janeiro's unlikelihood of being ready to host next summer's Games. What do you think?


  • Malala: Turning fame into a sustainable business

        a trailer from the upcoming documentary about Malala's story and her work

    Malala Yousafzai gained world-wide fame as a survivor of a gunshot wound to the head--and the Taliban violence against women that it represented. Instead of feeling sorry for herself, or hiding in fear, she continued to speak out about the need for education for women, world-wide. 

    Malala has used her fame to build a non-profit business--The Malala Fund--which raises money (as well as awareness) to fund school-building projects and to spread information about the need for education in countries that limit opportunities to learn. Its mission states these activities:

    • "WE AMPLIFY Malala's work by championing the voices of other girls, highlighting what works in girls' education and calling on leaders to do more.
    • WE ADVOCATE at the international, national and local level for policy and system changes that give girls access to a high quality education at a community level.
    • WE INVEST in local and national nonprofit organizations delivering quality secondary education for girls in the most vulnerable communities." 

    A nonprofit organization uses business principles to build a brand, and expand its customer base. The difference is that the excess revenues--rather than being distributed to passive investors, must be used to further the mission of the organization. 

    Malala's success in building her "brand" can be an example for all entrepreneurs, both profit-motivated and mission-driven.

    Source: "How Teenage Activist Malala Yousafzai Is Turning Her Fame Into A Movement," by Jessica Lieber, Fast Company/Co.Exist, September 1, 2015. 

    Follow up:

    • Read up about nonprofit organizations at the link above. How are they the same as profit businesses? What makes them different?
    • Read about non-profit business plans HERE. Write a business plan for Malala, or for a cause that you support.