LyrArc Article Gist
Adam Bryant's exceptional piece that provides the essence of the Qualcomm Way. Qualcomm CEO Steven Mollenkompf, describes the high tolerance for uncertainty in which the company and its managers operate. It is better, says Mollenkompf, to take risks when throwing the ball than when holding it, a piece of advice from his father using a basketball analogy. This mean approaching the fire as he puts it, when opportunities arise but less is known about the details and a high degree of uncertainty prevails. Here he describes how he hires and how he evaluates employees giving them a lot of room to learn, as basically mistakes can be corrected in his experience. It is a culture that encourages and makes sure the A's and B's have what is needed to influence things, not to spend energy on bringing a C to a B level. For this to happen rewards are given for the right kind of behaviours, and there is no tolerance for negative behaviours (jerks for example)- smart people have to get along with other smart people and that is important to get the company moving in the right direction. In evaluating he looks at contributions made over a longer period, doing the right things so that the organization takes opportunities and succeeds 5 years from today. Qualcomm's ability to grow in a rapidly changing tech environment and seize opportunities as they arise, may be attributed to this style of management....

LyrArc Article Gist
IBM's two decade long push into services, software, business solutions and now cloud computing. The process began with the declining demand for mainframe computers in the 1990's. IBM has accomplished this through acquisitions, a shift in internal focus, and building a globalized workforce.

LyrArc Article Gist
Rising wages and rising production costs for Chinese exports of low tech products like shoes, clothing, toys, clothing, furniture, means a lot of these factories will shut down and move to lower wage countries like Vietnam and India or elsewhere. Elimination of rebates on more than 2000 export items raises cost of manufacturing 14-17% according to Guangzhou based American Chamber of Commerce in South China. And the the tough new labor law enforcing worker rights would increase manufacturing costs by 40% according to the Textile Council of Hong Kong. Additional costs would be incurred to meet tougher environmental controls and anti pollution laws and stricter enforcement. As a result of this Adidas wants its suppliers like Taiwan based Apache Footwear with 18000 employees in Guangdong to move as fast as they can to India where it opened a second factory. This process will unfold over several years till India and Vietnam bercome the new sources of cheaper goods because of the large supply of manufacturing labor for lower value added products, as it will take years to build the logistics and infrastructure for these plants in these countries. But because wages will also rise in India and the laws in India are more likely to be enforced than they were in the atmosphere in China where the Communist led government may have turned a blind eye to enforcement and worker rights in the interests of growth, the export of deflation to the west in the way of cheap Chinese products may be a thing of the past. China is doing this as a planned move it appears. Why? On the surface it makes sense that the heavily polluting factories making lower value added products like shoes, clothing, toys, furniture, would not receive rebates from te state and to improve living conditions and promote consumption at home the government woud pass tough new laws to ensure employee benefits and collective bargaining rights, and employee job security. It also reduces trde tensions at a time when the US economy will be in poor shape and jobs lost become a political issue in the 2008 presidential campaign. But there may bigger pressing concern and urgency in these moves after so many years of this being discussed and this may be that China finally may be at a moment when it is confronted with a sober fact that the US consumer is heavily in debt and may not support China's export growth model much longer and with it China faces a really significant slowdown in its growth rate from 11% to maybe half that if China does not develop its own domestic markets for growth. The old foreign investment model may not work anymore. See the link to Ireland where growth is falling off quickly. Higher wages and longer term jobs with benefits would enable a large middle class to develop from this huge manufacturing worker base especially as China moves to more value added products where even higher wages would be paid. This in turn creates a domestic market over time that would insulate China to some extent from the winds that would be blowing from a US economy suffering from a deep recession that may last several years. This may be evident in the words of the Governor of Guangdong when he says that the government is not abandoning the exporters but that selling domestically is good for the country and good for the people. Something deeper is at work here and one would expect an about turn in policy where instead of workers not receiving back wages and lax enforcement that went on freely in the last decade we would see an effort to build the kind of middle class that would provide the market for Chinese goods that would sustain growth at a more modest but sustainable pace. Which means in the short term all those workers at factories that make toys, shoes, clothing and furniture in provinces like Guangdong would be jobless. Some of these factories may move to provinces in the interior like Sichuan and Hunan provinces which may pickup employment. A report by the American Chamber of Commerce in Shanghai written by Booz Allen says that a fifth of the companies surveyed are considering relocating outside China, and that over half of foreign manufacturers surveyed think that mainland China is losing its competitive advantage to places like Vietnam and India....

LyrArc Article Gist
Meg Whitman, H-P CEO, repeated her statements that a recovery was four or five years away. She sees little sales growth till 2015 and predicts losses. H-P's share price fell by 13% on Oct. 3, 2012. Whitman said in an interview that H-P has failed to invest in research and development. She was critical of lack of R&D investment under Mark Hurd. But says many of the problems go back to when Carly Fiorina was CEO in 2005 and made the acquisition of Compaq. The acquisition approach has worked poorly for H-P, with lack of R&D within H-P. H-P's financial position also worsened with the $10 billion paid by Leo Apotheker, Hurd's successor, for Autonomy Corp. Internal software systems disconnected costs from revenue, so that in 2011 field selling costs increased by $1 billion even as revenue decreased by $5 billion. A series of management changes made things worse through poor decisions, inconsistency and lack of focus, all of which will take years to correct.

LyrArc Article Gist
Natarajan Chandrasekharan, CEO of TCS, describes his approach to running TCS so that individual unit managers can use 100% of their processing power, and have the advantage of the scale and initiatives launched by the corporation as a whole. He says he finds people and builds teams and sees the big picture, but lets units operate independently with 100% of their processing power- calling it democratization. TCS stays ahead in new technologies of mobility, cloud, social, big data, analytics and robotics using its innovation labs in Santa Clara and Cincinnati in the U.S. with centers of excellence in India tied ot these labs. About $4-5 billion in new revenues are expected from these new technologies in 3 years. TCS, India's largest IT company, under Chandrasekharan has doubled its revenue since he took over during the financial crisis in 2009.

LyrArc Article Gist
Writing your own narrative when it comes to failures at work is suggested by experts. In the second of a series of Podcasts on How we Work the WSJ looks at failures at work and how they are processed in people's minds. Failures can be seen as experiences that teach, lessons that can be learned from failures so that one can do better next time. In this podcast WSJ gives an interview with Minh Lee, author of Pachinko. The first line of the book is "History has failed us. It doesn't matter." Asked to explain she says the way history is written it simply has winners and losers, but for ordinary people this does not matter as they go on with their lives and try to make the best of things. She also talks about recognition and how important it is. Minh says leaning into ones competence is an easy way to become impervious to failures. It is only when one goes out of one's competence does one experience what is called failure but is really an effort, one effort in a series of efforts, an effort that teaches one lessons that one can apply in the next effort which puts one in a position to gain better results. It is a process of continuous improvement in which one is readily trying new things. Now compare this with one leaning into one's competence and not experiencing what is called failure, yet at the same time not having tried anything new and exciting or feeling the thrill of adventure. Just to take Minh Lee's line one step further. Civilizations fail. How? When a people or society is losing its sense of adventure and severely censors and restricts trying new things you have the absence of a Renaissance. The Renaissance in Europe put it way ahead of Asia, with observation and experimenting above theory and textbooks, and set it up for the Industrial Revolution which started in England. By this time civilizations that never adventured on the seas, never adventured out of their little line of known competence, the civilizations on the Ganges in India and the Yangste in China failed and collapsed. So there are larger lessons to be learned and this also tells us that a lot more is at stake than one's own individual so called failures and so called successes at Work, and in the adventure of life. One ignores so called failure in first efforts because this is what the Renaissance and the Industrial Revolution has taught us to keep trying new things till they work, and to patiently work through these efforts which may take some time, as all good work is arduous and filled with endeavours. In the oceanic adventures of Spain and Britain that discovered  America and Australia there were were difficult voyages that set the path open to those that followed. Captain Cook discovered Australia in his ship "Endeavour" in this way, opening the way to the settlement of a continent. He led the scientific mission for the British Navy on a voyage that lasted 3 years 1770 to 1773 when he returned to Dover from Botany Bay on the Australian mainland.   ...

LyrArc Article Gist
The controversial outsourcing of American jobs at Disney to cut costs, as reported by Julia Preston of the NYT.

LyrArc Article Gist
The impact on ASEAN countries of the monetary expansion policy of the Bank of Japan, Japan's central bank, and the policies of the Abe administration. Infusion of new liquidity into Malaysia, Singapore, Indonesia, Thailand and Vietnam.

LyrArc Article Gist
Frances Haugen testifying in the US Congress says "Facebook products harm children, stoke division and weaken our democracy." This understates the problem which is that over a short period of 5-7 years new tech companies have used capital markets in the US to rapidly take up most of the space in the internet pushing out established news organizations. They have also lobbied hard to prevent new legislation from being drafted to regulate the internet space. They have also rapidly acquired smaller companies to create a monopolistic control over the new internet space. This situation has also led to one where these companies set up in overseas locations such as Ireland do not assume fair responsibilities for maintaining the infrastructure in their home countries by paying their fair share of taxes. In doing so these companies run by persons in their twenties an early thirties are doing the work of established news organizations that have been doing it for most of the twentieth century, without these new tech companies being qualified in any way to do so. The result is distortions spread by internet technologies over a wide space creating a toxic effect for children, women, and the dialogue necessary in a democracy. The perverse effects extend to vaccination where distortions spread by algorithmic and artificial intelligence in selection and dissemination of information has led to negative effects on the vaccination drive. This even created much frustration for president Biden as he watched a stalled vaccination drive in the US and complained about Facebook and social media's ill effects. Ultimately the national interests of the US, European Union, Britain and India are affected because other countries see democracies as being weak and ineffective even in protecting their own citizens, and weak even in the time of the pandemic. ...

LyrArc Article Gist
Founded in 1880, Carl Welcker's company has seen the changing fortunes of manufacturing for over a century, during depression and after the wars. Still the 50% drop in orders for this company, which makes the machines that make 80% of the spark plugs in the world, is like nothing Carl Welcker has experienced. Its a tragedy he says. Its the speed of the manufacturing decline that is causing concern. In Europe where a fifth of GDP comes from manufacturing industrial production is down 12% from ayear ago. In Brazil it is down 15%, in Taiwan 43%. In China exports are down 25%. In the USA, industrial output went down by 11% in February 2009, according to the Federal Reserve. The pattern of this decline recalls the pattern of 1929, as tightening creedit and consumer fear reduces demand for manufactured goods in one country after another, creating a downward spirtal that reduces global trade. And of concern is that trade is declining even faster than manufacturing.German exports are down 20% from ayear ago, Japan's have plunged 46%, and in the USA exports fell at an annualized rate of 23.6% in the fourth quarter of 2008. A company like Schutte in Cologne, Germany, expanded rapidly as globalization opened new markets in Eastern Europe and Asia. Sales more than doubled in 5 years from 58 million euros to 100 million euros. Which suggests that the extraordinarily rapid expansion of the last few years may have its reverse effect heightened in a slowdown, as those additional sales to China and Eastern Europe disappear. For the USA manufacturing accounts for 14% of GDP, for the world 18%, and for China 33%. But this creates a misperception about the importance of American manufacturing exports. First, manufacturing contributed more to GDP growth than any other sector of the US economy, and accounts for two thirds of American exports, says the chief economist for the National Association for Mnaufacturers in Washington. America's share of global manufacturing output, he says, has remained steady at 20 to 23% for the past decade. This covers jet engines, locomotives, pharmaceuticals, and high tech products. For countries like India where manufacturing accounts for 16% of GDP, the last quarter of 2008 saw the first quarterly production decline in over a decade. And industries like handicrafts exports have fallen by 55% to $1.35 billion, and textile makers have cut half a million jobs. ...

LyrArc Article Gist
The WSJ's Paul Sonne gives this exceptional account of how Russians are coping in the economic crisis of 2015-2016, with the twin shocks of the collapse in the ruble and the collapse in oil prices. He does this by looking at the Kaluga region, a provincial city 110 miles south of Moscow that has benefitted from large foreign investment to meet the needs of 20 million consumers in the Moscow region. The governor of Kaluga since 2000, Anatoly Artamonov, worked hard to attract foreign investment that includes VW, Volvo AG, Continental AG, Lafarge, Samsung Electronics, General Electric, and other companies. He ran a collective in the Brezhnev era, and now is energetic in meeting needs of foreign investors. Karmanov says it is stupidity to not say he is talking to business people in other parts of the world because of the political climate in the country. About 42% of the industrial output in Kaluga comes from the foreign automobile plants, including VW. The automobile and light commercial vehicle production in Feb. 2015 dropped by about 39% compared to Feb. 2014, according to the Association of European Business estimate. Only 40% of autombile production cost from assembly lines is sourced locally, the rest is imported at the new value of the ruble which has fallen about 50%, leading to higher prices and slumping demand. Ordinary Russians are feeling the effects of the crisis with higher prices. Consumer price inflation in Feb. 2015 was at 16.7%, with 23.3% increase in food prices. High interest rates to prop up the ruble meant cutting off access to credit to finance consumer purchases. An 8% drop in real wages in Jan. 2015, according to Capital Economics, added to pressures on consumers. With the political and economic crisis following Russia's Ukraine intervention foreign investment in 2014 declined to $18.6 billion in 2014 compared to $61.5 billion in 2013, and the EBRD bank cut financing with the sanctions....

LyrArc Article Gist
Mills and Ottino point out that as in 1912 the U.S. is on the cusp of a revolution induced by new technologies on the horizon. Then it was electrification, automobiles, the telephone and radio. Now it is cloud computing (big data), smart manufacturing and wireless. Ottino is Dean of the McCormick School of Engineering and Applied Sciences at Northwestern University, Illinois. He describes the changes that smart manufacturing and new metal alloys can bring in manufacturing. America's unique advantages- its educational system, its open and youthful culture and better demographics, that position it to realize serious gains through technological change. Similiar advantages exist with educational systems and the spirit of innovation in Europe. On another dimension the huge increases in connectivity, cloud computing, and precise instantaneous language translation have the potential to bring closer the peoples of Asia, Africa, Europe, Latin America and North America, creating a sociological revolution on how people think and act across regional boundaries....

LyrArc Article Gist
How IBM set up an Innovation Network to share costs and add to the brain pool from outside and share the burden of huge new investments needed to buy new plant and equipment. This is the way that IBM revived its chip making operations. By forming a innovation network and pooling together the engineers, scientists and resourtces of several partners- AMD, Sony, Toshiba, Freescale Semiconducor, Albany Nanotech. In 5 separate alliances IBM's partners contributed $1 billion and 250 scientists and engineers who work at East Fishkill, NY chipmaking facilities. The idea is that any time there will be more brains outside the company than inside. So collaboration has big advantages.

LyrArc Article Gist
With the ITU voting to let governments control the internet, the decision of the Obama administration to not renew the Commerce Department agreement with Icann to provide oversight and governance looks increasingly ill advised. China, Russia and other governments lack the same committment to an open global internet that the U.S. has. Esther Dyson, founder of Icann, says this is a bad idea. Icann provides the .com and .org addresses for the internet. For Dyson UN oversight is "a fate worse than death."

LyrArc Article Gist
The Dutch had their tulip bubbble, the Chinese have their Pu-er tea bubble which has just burst. It was a pure speculative bubble with speculators cornering the market and bidding up the price of tea in Yunnan province on the Burmese border. From 1997 to 2007 the price of these green tea leaves from Yunnan- that make a fermented brew called Pu-er- wentup from $15 to $150 a pound. Actually a group of manipulative buyers drove prices up. Production doubled from 2006 to 2007 to 100,000 tons. Unlike other teas this tea is said to grow better with age and is packed into compressed cakes for transport. Now prices of this tea have collapsed to $3 a pound. Russia had its own experiment with unbridled capitalism, now China is struggling with the effects of the aftermath of its own unbridled capitalism.

LyrArc Article Gist
The slow hunch, serendipity, error, inventive borrowing and the collison between order and chaos. Nancy Koehn looks at two new books on innovation.

LyrArc Article Gist
business analytic software is a $23 billion market and is a market that is growing. IDC forecasts growth of 3.45% growth for this market in 2009. It expects 2% growth in the $45 billion analytics consulting business. IBM, HP, SAP and Oracle are dominant players in these areas.

LyrArc Article Gist
The demand for ships went up so steeply that shipping rates hit the roof, and the prices of ships went up accordingly. Between the end of 2006 and July 2008 , shipyards received enough commissions, says the Economist, that this would double the world's fleet. Just as demand has collapsed and international trade has gone down, about 9000 ships are coming onstream. Now 11% of fleet capacity justs sits on the water, in the seas outside the harbors of Singapore, Hong Kong and other southeast Asian ports. A 150 tonne cape class ship that sold in 2003 for $18.5 million in the used market, when rates for charter were $15,000 a day, had risen by summer 2008, to $85 million with rates of $175,000 a day. These rates went up even more to $300,000 a day, which is 20 times what it was in 2003. And rates today are back down to $15,000 a day, where they were in 2003. This ship, cited by a broker, to give some idea of the extent of this boom and its collapse, was sold for scrap at $7 million. And South Korean shipyards are taking this into account, in their pricing and collection of payment, with 20% demanded upfront, 60% during construction, and 20% upon delivery. The backlog in shipyards is estimated by Clarkson Research, a maritime research firm, at $526 billion, even as banks are leery of lending and concerned about the value of the collateral in the event of default. Some smaller Korean shipyards are closing. Steve Mann, analyst at HSBC, says that half of the orders for delivery in 2010 will be delayed, so that there is work for 2011 and inventory or excess capacity does not pile up on the oceans. Even in this situation China, India and Vietnam continue to support the expansion of their own shipyards. This suggests additional losses for shipbuilders, shipping lines and the banks that lend to shipyards. All this also goes to show that the rush to industrialize, once it gets a firm footing- like it has in the Chinese model of increasing investment and local governments pushing infrastructure, industry and export factories with officials judged on GNP growth numbers- can exacerbate a boom-bust cycle. This is one industry, others include machinery manufacturers, commodity producers, and manufacturers of parts that go into finished products assembled in China for export. This means it would take the world economy down with it, if some external factor like the drop in export demand suddenly slows everything down. Machinery manufacturers in Germany, commodity producers in Brazil, Argentina, Chile, Australia, and manufacturers of the high tech parts in Japan and Taiwan that are shipped to China for assembly, all go down in this boom-bust cycle, in a dramatic manner. ...

LyrArc Article Gist
Some of the flaws in China's development model are shown by the Economist. Over half of the economy is dominatd by state run enterprises. And the remainder is also heavily influenced by local government and officials from the government. Financing goes through state run banks which lend to state run enterprises, and only a small fraction of lending goes to small businesses. These busineses are not actively looking to support innovation and new products. The other weakness that the Economist correctly points out, is that by contrast even in the 1960's, about 10 years into Japan's postwar development, quality control was a big thing with companies in Japan. The Deming Prize was seen as the most prestigious prize for Japanese companies, and Japanese engineers tried to learn everything they could about quality control to make Made in Japan mean high quality. They succeeded by the 1980's in making this happen, with leading global brands like Sony, Matsushita, Panasonic, Toyota, Honda, Canon and a host of other brands. If 1980 in China, is where Japan was in 1950, now about 30 years later there is nothing like what was seen happen in Japan in the area of quality and global brands. The area in which the freewheeling culture of capitalism has been most successful is the economic zone, a 2 hour drive between Guanghou and Shenzen. It manufactures mostly low tech goods like toys and apparel and shoes, and these manufacturing facilities are of low quality, with poor conditions for labor. With the efforts by the government to move to higher value added and high tech products these businesses came under pressure by mid 2007, with new labor laws, more enforcement, pollution control laws and resulting higher costs. As they felt the impact by mid 2008 from the higher costs, some businesses disappeared. Then another and even bigger problem hit these businesses. The global economic crisis, the shortage of credit in western countries to sustain import orders, and the rapid fall off of demand from highly indebted consumers in the USA, has led to closure of most of these businesses. The rapidity with which many of these businesses closed is amazing, as row after row of these buildings are now empty in the Guangzhou-Shenzen area. Another development is happening in Taiwanese firms like Hon Hai, that with little disclosure, make IPods, laptops, PC's, and other electronic products in the same area. At one point this firm employed 250,000 people in a industrial city sized factory campus. Now it is shifting production to places like Vietnam. Now Taiwanese reports say that the workforce of Hon Hai in Shenzen area will drop to 100,000. Other Taiwanese firms are also shifting production to other countries. Climate change and the heavily polluting industries that are widespread in China is one of the other flaws in the Chinese development model. Another is the lack of energy efficiency in these industries. With all these changes exposing the deeper flaws in the model China has used for development for the last 30 years, this a time for change in the way economic development takes place in China. ...