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Showing posts from September, 2017

Toy Story

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Charles Lazarus founded Toys R Us in 1948.
During the 1980s and 1990s, Toys R Us was the undisputed top toy retailer in the U.S.
Last week, the company filed for bankruptcy protection.
How did this happen?
One of the key factors in failure is inertia. Toys R Us, just like many leading companies in other industries, simply failed to see the relentless assault of technology, the transformation from real toys to virtual toys, and online retailers bent upon rendering traditional retailing redundant. On top of these, it would also appear that the leadership suffered from arrogance – we are too big to fail syndrome.
Faced with ever-mounting problems, the company took the leveraged buyout route to go private in 2005. Private equity firms Bain Capital and KKR & Co. lent a huge amount to convert equity into debt. At the time, both Toys R Us and the buyers made tall claims about making the stores a better place to shop and work.
Finance 101 says that debt is the cheapest form of capital. It is n…

A different Irma and Harvey

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The destruction caused by the two hurricanes is beyond words, beyond imagination. Reports suggest that it might take months for electricity to be restored. Reconstruction may take several years. Who can estimate the costs? How do you determine the “cost” of a rain forest destroyed? Of millions of people whose lives will probably never be the same again?

When the super-typhoon Haiyan hit the Philippines in 2013, I was in China. I remember the same people covering Harvey and Irma traveling to the Philippines to provide an “on the spot” account. A natural catastrophe of unprecedented proportions was “milked” for what it was worth 24 x 7 – never mind the trauma of those directly affected, with no water and no food for weeks.
The Oracle of Omaha, speaking earlier this week, proclaimed that anyone who was pessimistic about America was “out of his mind.” Maybe. Maybe not.
Professor Stephen Hawking warns that the way we are growing and recklessly using up scarce resources, we may not survive as …

Death by PowerPoint

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The typical human brain can hold about seven pieces of new information for less than 30 seconds!”
Dr. John Medina, Brain Rules.
Long before PowerPoint became an inevitable part of corporate and academic life, I had
the good fortune of attending a memorable training program. The Professor was one of the great thinkers of the time. Each day we were given a case study at 4 in the afternoon and were required to make a presentation the next morning at 8. The tools at our disposal were acetate sheets and marker pens in different colors. We had tight budgets and to make the best use of each sheet, we wrote as much as we could on a single sheet. The moment we placed the sheet on the projector and switched on the light, the screen was filled with text, numbers, and calculations. Before the presenter could start, the Professor would ask the presenter to stop, take a seat in the front row, and tell the presenter:” Come over here and sit next to me. We will read it all together.”
In the initial sta…

The Ambidextrous Leader

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Conference Board (https://www.conference-board.org) reports an alarming churn at the top of the largest corporations. In the first fifteen years of this century, almost 25% of CEO departures from the Fortune 500 companies have been reported as being involuntary.
A PwC report on the 2,500 largest companies denotes the huge cost of forced turnover – a mind-boggling $112 billion loss in market value annually.
Leaders today are under enormous pressure to perform. Short-term orientation is all pervasive, and no one appears to have the time to think about the long-term. Activists and major investors want to see the performance on a daily basis. Even a little deviation from the projections can have catastrophic consequences. Whistleblowers appear to have found a new voice and also the media to spread the message like wildfire. Sometimes, the distinction between the messenger and the message is blurred to the point of irrelevance. Add to all this the constant search for breaking news, the ever…