Tuesday, January 31, 2012

Lie Down Mr Goodwin

Arise Sir Fred, the Queen of England said in 2004 after tapping the kneeling Fred Goodwin lightly on the shoulder with her sword. This archaic ceremony is the conferring of knighthood by the Queen of England. If you are a citizen of the UK or one of its dominions then you can call yourself  "Sir".

Fred Goodwin was the CEO of the Royal Bank of Scotland in its boom years. An unknown, middling bank in Scotland (where's that for Gods sake), he took it to become one of the largest banks in the world. First the acquisition of Natwest, a big British bank much bigger than RBS. And then the mega takeover of ABN Amro, just as the financial crisis was unfolding. The bank was growing wildly through mega acquisitions and was cheered on by all and sundry - the shareholders, the market and even the government, including Gordon Brown, the then Prime Minister of the UK. Hence the knighthood. Sir Fred could do no wrong.

Of course the party couldn't last. It came crashing down with the financial crisis. Sir Fred was axed after the bank reported a loss of £24 bn - the largest in UK corporate history. The UK government had to inject £45 bn to bail out RBS. The public was baying for his blood. He compunded his misery by trying to keep his £16m pension pot - for the years of service he had rendered. Public outcry forced him to give up part of this, although that's an unfair step - if you have to give up your accumulated PF because of a mistake you made, how unfair would it be for you.

Now the UK government has decided to withdraw his knighthood. This is very rarely done. He has for company, Anthony Blunt (a spy), Nicoale Ceausescu, the notorious dictator of Romania and Robert Mugabe, the tyrant of Zimbabwe who were all knighted and the knighthood subsequently withdrawn when it was realised what scoundrels they were. Fred Goodwin is however no scoundrel. The withdrawal was the result of a baying mob (otherwise called the British tabloid press) just wanting to inflict its own brand of punishment.

Fred Goodwin wasn't the first, and certainly won't be the last, to mistime a huge acquisition (ABN Amro) and get killed in the process. He made a bad misjudgement of the extent of the financial crisis - after all who didn't. But he did no crime. He hasn't even been charged, let alone convicted of any wrong doing. If business misjudgement was a crime, each one of us is a criminal. At that time, the shareholders of RBS enthusiastically supported his every move. There are many others who have been conferred knighthoods and were equally in the mess of the financial crisis.

The British are justifiably famous for their sense of honour and fair play. In this instance however, that noble quality seems to have deserted them. Punishing Sir Fred, with Mr Goodwin isn't cricket, old chaps !

Monday, January 30, 2012

The Business LA Friday Feb 10th 2012: Kinane & Katz!

Sup LA? How you been, girl? See you missed us real bad. Well, dry those eyes Shygirl because The Business LA is back Friday February 10th at 8pm! We're starting this year off right: a month and ten days after it started! Helping us usher in this year of Dragons and Mezo-Apocalyptic Mysteries is none other than Kyle Kinane and Louis Katz!

Tickets are $10 at the door BUT...
They are only $8 online with NO SERVICE FEE!


The show is at 8pm at Meldown Comic's Nerdist Theater in Hollywood.

As you may remember, we had a rendezvous with Kyle Kinane way back in of 2011, but he caught the Demon Flu and disappeared into a fever dream of Dorrito farts. But we're cashing in our rain-check (Kinane-check, if you will) and using hand sanitizer to ensure he'll come give you the laughfluenza (ok, I'll stop). You should know take the time to know Kinnae if you don't but here is a starting point: Last year he was named one of Paste Magazine’s 10 Best Comedians of 2011 & he took a limo full of Coors Light to a Bob Seger show. Now go Google the rest.

Louis Katz joins us from New York to talk dirty flavor in your ear. Louis triumphantly returns to SoCal, the place of his dirty birth, to make everyone laugh at animal farts and show off his pointy shoes. He has a new album out on Comedy Central records and can't be stopped. He is also a cast member of the web series Elevator To: Space, and his evening will mark his reunion with other cast members Alex, Chris and Sean. One small step backwards for mankind.

What are you waiting for? GET IT GIRL!

The Business February 1st 2012, "Sheng Wang Time!" Edition

Surprise! Sheng Wang is on The Business this week. Fresh off a weekend of dominant performances at Sketchfest, Sheng Wang returns to The Business this week. You may have seen him at the Punch Line, at Kevin Allison's RISK! storytelling show, or in line at Arinell's Pizza. Mr. Wang is a native of Houston, Texas, but came of comedy age in the Bay. His Comedy Central half-hour special premiered last year, and he's also appeared on Live At Gotham and toured with the Comedians of Comedy. He's a frequent guest to the Business, where he has also exhibited his photography. Is there anything this dude can't do?

We've also got Chris Garcia, Caitlin Gill, Sean Keane, and Bucky Sinister rounding out the lineup. Admission is still five dollars, and you can bring in your own burrito if you like - I'm pretty sure Sheng will be bringing in his.

Saturday, January 28, 2012

The breaking in of a newbie

Newbies have to be broken in. If you throw them at the deep end, they'll simply die of shock. This blogger has a substantially inflated opinion of himself and proclaims expertise in matters that he knows precious little about. But even he readily admits to being a complete newbie in one matter . And he was very privileged to be broken into the said field by two acknowledged experts.It must be clarified right here that this blogger has not indulged in this activity for some 30 years and therefore approached it with some trepidation.

They were very kind. They chose the shallow end of the pool for the first dip of the toe. Apparently this specimen which I was introduced to is not "typical".  But was sufficient to give a good general idea. They prefaced the experience, by a good nourishment of the body (otherwise called lunch) in preparation for nourishment of the mind.

As it started, they very helpfully explained who was who. I was advised that the sum total of people in the city who did not recognise the main protagonists  was one - that specimen being yours truly. But they didn't rub it in. They kindly explained the antecedents of the worthies. They however drew a line, when on being told that the chief was titled "Young Thalapathi", I respectfully asked who was the older version !

Matters went on predicted lines. I stared rather open mouthed. I fancy my  minders were trying to observe me with the corner of their eyes rather than staring straight ahead. There was whistles and oohs when the gentleman with the title previously referred to appeared . He , alas, was not tall, dark or handsome - in fact he looked rather like my neighbourhood Romeo. I had mistakenly assumed that there would be many gorgeous women I could at least ogle at. Unfortunately I was advised that there was just one in this example they had chosen for me and that I would have to wait a while before feasting my eyes - to be fair, the lady was worth the wait.

The start was "electric" if you will pardon the pun. Dropping of pants and a lesson on conductivity of liquids was not what I had expected. After some inanity, the time came for breaking into song and dance. The flower train rather boggled the mind. I chuckled at some outrageous costumes and gyrations, but I couldn't help guffaw loudly at the sight of Tamilians trying to do the Bhangra - there are some things Tamilians can't do and imitation of  Bhangra is certainly one of them.  When a  break came, I thought the experience was over until my advisers informed me that it was only the first instalment. More was to come. I had presumed that the moment was usually a call to fortify oneself with exotic preparations of the cola nut. However the experts were somewhat wary of the possibility of their subject bolting through the door - they wisely suggested that quenching of thirst be somewhat deferred and that being glued to wherever one was , was a safer course of action.

More did come. Another song and dance which morphed suddenly from an attempted kiss featuring rather scantily clad foreign beauties gyrating to forgettable music. Some lessons on the causes and effects of bodily activities best left unmentioned. Some incredible Tamilian names that would even flummox the most creative of new baby names handbooks - Come on; have you ever heard anybody named PP and KP. Also featured was a very detailed primer on innovative obstetrics. An elaborately worked example of how to snatch the bride from the altar. And an answer to the eternal dilemma facing mankind - can you kiss without bumping noses !

All was well that ended well. The beauty and the "beast" finally got together and presumably lived happily ever after. The breaking in was successful. To my eager experts, I opined that the experience was "not bad" and that an encore might even be a possibility. After which the two sorely tried champions, the wise one and the breezy one, to whom I am eternally grateful,  shooed me off . Thereafter, I am told, they retired to a vegetarian version of the proverbial watering hole !

Monday, January 23, 2012

Coffee, wine or me

Remember the old book series "Coffee Tea or Me" - well readers of this blog are probably too young to remember it. Maybe now its time for Coffee, Wine or me !

Why does a coffee chain want to serve alcohol ? Starbucks wants to try out having wine and beer on its menu in a few outlets in Seattle and Portland. At first sight it seems an odd combination. Why would Starbucks want to do that ??

The problem, as always, is growth. Starbucks hit a rough patch, if you remember, in 2008 which prompted the founder Howard Schultz to retake the reins as CEO. Currently it is doing well. Revenues in 2011 grew 9.3%. But how do you keep on growing the revenues. After all, how much more coffee can you stimulate your patrons to have. You  can push the "eats", but that's a limited range. They are trying to enhance that with an offering of " premium foods" - whatever that means. And now alcohol.

But is Starbucks a bar ? No serious drinker will go to Starbucks for a pint or two. So the only opportunity is to attract a a mixed group of whom some want a cup of coffee and some want a glass of wine. How much is that opportunity ? Can't be really a growth driver. And what would happen to the brand - Starbucks is synonymous with coffee now. You want to dilute that ?

Of course the company is no fool. Its dotted with marketing types spewing Kotlerspeak. The trouble is that marketing types are often wrong. For the moment, Starbucks is only testing. If the test bombs - they'll quietly bury the idea.

An obvious avenue for growth is geography. Expand overseas - Starbucks is pretty much ubiquitous in America. Go abroad. Especially to magnetic China. They have actually started to become quite widespread in Chinese cities. China is a tea drinking country, but there are enough youngsters willing to swill coffee. Especially an American brand which carries a halo in that country. But the problem is that the Starbucks formula in the US is a disaster in China - free wifi, stay as long as you want ..... That's taken literally in China and giggling girls , four of whom sharing a cup, sit there all day. I hated going to a Starbucks outlet in China simply because I could never find a seat as "long term residents" had made themselves comfortable everywhere. Instead when I wanted a coffee I went to McDonald's where the coffee was superb , they served it within 20 seconds, and I could find a place to rest my bum - all at half the price of Starbucks. Screw the ambiance - the taste of great coffee drowned everything else. Global formulas don't always work.

So Coffee Wine or me ? I would stay with the coffee, thank you.

Fraud and the Road to Abilene

Over the weekend, an (anonymized) interview was published in a Dutch national newspaper with the three “whistle blowers” who exposed the enormous fraud of Professor Diederik Stapel. Stapel had gained stardom status in the field of social psychology but, simply speaking, had been making up all his data all the time. There are two things that struck me:

First, in a previous post I wrote about the fraud, based on a flurry of newspaper articles and the interim report that a committee examining the fraud has put together, I wrote that it eventually was his clumsiness faking the data that got him caught. Although that general picture certainly remained – he wasn’t very good at faking data; I think I could have easily done a better job (although I have never even tried anything like that, honest!) – but it wasn’t as clumsy as the newspapers sometimes made it out to be.

Specifically, I wrote “eventually, he did not even bother anymore to really make up newly faked data. He used the same (fake) numbers for different experiments, gave those to his various PhD students to analyze, who then in disbelief slaving away in their adjacent cubicles discovered that their very different experiments led to exactly the same statistical values (a near impossibility). When they compared their databases, there was substantial overlap”. Now, it now seems the “substantial overlap” was merely a part of one column of data. Plus, there were various other things that got him caught.

I don’t beat myself too hard over the head with my keyboard about repeating this misrepresentation by the newspapers (although I have given myself a small slap on the wrist – after having received a verbal one from one of the whistlers) because my piece focused on the “why did he do it?” rather than the “how did he get caught”, but it does show that we have to give the three whistle blowers (quite) a bit more credit than I – and others – originally thought.

The second point that caught my attention is that, since the fraught was exposed, various people have come out admitting that they had “had suspicions all the time”. You could say “yeah right” but there do appear to be quite a few signs that various people indeed had been having their doubts for a longer time. For instance, I have read an interview with a former colleague of Stapel at Tilburg University credibly admitting to this, I have directly spoken to people who said there had been rumors for longer, and the article with the whistle blowers suggests even Stapel’s faculty dean might not have been entirely dumbfounded that it had all been too good to be true after all... All the people who admit to having doubts in private state that they did not feel comfortable raising the issue while everyone just seemed to applaud Stapel and his Science publications.

This reminded me of the Abilene Paradox, first described by Professor Jerry Harvey, from the George Washington University. He described a leisure trip which he and his wife and parents made in Texas in July, in his parents’ un-airconditioned old Buick to a town called Abilene. It was a trip they had all agreed to – or at least not disagreed with – but, as it later turned out, none of them had wanted to go on. “Here we were, four reasonably sensible people who, of our own volition, had just taken a 106-mile trip across a godforsaken desert in a furnace-like temperature through a cloud-like dust storm to eat unpalatable food at a hole-in-the-wall cafeteria in Abilene, when none of us had really wanted to go”

The Abilene Paradox describes the situation where everyone goes along with something, mistakenly assuming that others’ people’s silence implies that they agree. And the (erroneous) feeling to be the only one who disagrees makes a person shut up as well, all the way to Abilene.

People had suspicions about Stapel’s “too good to be true” research record and findings but did not dare to speak up while no-one else did.

It seems there are two things that eventually made the three whistle blowers speak up and expose Stapel: Friendship and alcohol.

They had struck up a friendship and one night, fuelled by alcohol, raised their suspicions to one another. And, crucially, decided to do something about it. Perhaps there are some lessons in this for the world of business. For example, Jim Westphal, who has done extensive, thorough research on boards of directors, showed that boards often suffer from the Abilene Paradox, for instance when confronted with their company’s new strategy. Yet, Jim and colleagues also showed that friendship ties within top management teams might not be such a bad thing. We are often suspicious of social ties between boards and top managers, fearful that it might cloud their judgment and make them reluctant to discipline a CEO. But it may be that such friendship ties – whether fuelled by alcohol or not – might also help to lower the barriers to resolving the Abilene Paradox. So perhaps we should make friendships and alcohol mandatory – religion permitting – both during board meetings and academic gatherings. It would undoubtedly help making them more tolerable as well.

Saturday, January 21, 2012

Shampoo for lunch

It must have happened to you too. Standing in a long checkout line in an Indian "supermarket". Rajalakshmi , in front of you, has 742 items to bill. You wait patiently (as if you can do anything else). The bloke behind you is poking at your spine as he wills you to advance. Rajalakshmi is intently watching the  amount totalling up on the display. It now stands at Rs 3742.50. After 18.5 minutes when all the 742 items have been billed (and not one second before), she digs into her purse and comes out with three fat wads of Sodexho coupons. All in denominations of Rs 5. And then proceeds to count them out laboriously. Being mathematically challenged, each time, she comes up with a different answer. 14 minutes later she discovers that she is Rs 5 short in coupons. She then proceeds to dig in to packed bags, go to the bottom, remove an item and ask the checkout guy to deduct that from the bill. She is now Rs 7 excess. She wants change back. He refuses ........You can do precious little but curse at the injustice in the world.

Forget Foreign Direct Investment. The biggest change required in Indian retail is the banning of Sodexho coupons. I don't mind Walmart not being there. I just want Sodexho to disappear.

For those unfamiliar with the Sodexho problem in India, this is a by product of feeding the thousands of coders who throng Indian cities. The office canteen providing free meals was always a part of the corporate landscape. But when the IT lot descended on the scene, they brought with them the Sodexho coupon. Each employee is given a thick wad of these blasted coupons. She's supposed to exchange them when buying lunch . Of course she does no such thing -she either starves, or has a banana or brings a tiffin box. Saves these coupons which then can be used to buy grocery in shops.

This is tax evasion on a grand scale by the relatively well to do. Food coupons are tax exempt with the ostensibly laudable objective of feeding Rajalakshmis. They are meant to be used to buy food when in office. Not to buy toilet paper for home. By Indian standards, coders are well paid. Their effective rate of taxation is usually low at 10 or 20%. This is blatant tax evasion which everybody indulges in. Before throwing mud at politicians, one should ensure that one's own shirt is white.

The problem has grown into an epidemic. Apparently there are 300,000 people using Sodexho coupons like this. Nobody knows the value , but the speculation is some Rs 3000 crores. This is parallel currency sloshing around along with the rupee. I have sometimes been offered these coupons as change. The look I give the retailer who suggests this, gives meaning to the term kolaveri !

Pre budget consultations are currently going on in India. Here's a free suggestion to the Hon'ble Pranab Mukherjee. Remove the tax exemption on Sodexho coupons. And just watch them disappearing at lightning speed. I shall cheer mightily if Dada would do that.

Tuesday, January 17, 2012

The Business January 18th 2012, "Attack of the Killer Tobe-Natos!" Edition

I say Tobe-Nato, you say Tobe-Nahto. Well, you're wrong, because it's Nato! As in Nato Green, doing a hot six minutes at The Business this Wednesday, along with Joe "Smokey Joe" Tobin doing an extended feature set. This show was certified 96% fresh on Rotten Tobe-Natos, and the National Weather Service issued a Tobe-Nato warning for most of Northern California! Are we mixing up our puns? Maybe!

Joe Tobin is a writer, comedian, and Flyers enthusiast. He performs at comedy clubs all over the land, and he's received critical acclaim for his work with The Joe Tobin Orchestra. He's never booed Santa Claus at a sporting event, but he would understand if you did.

Nato Green is a co-founder of Laughter Against The Machine, the creator of Iron Comic, and was recently voted San Francisco's Foodiest Dad!

We've also got Chris Thayer, Caitlin Gill, Sean
Keane, and fresh off a sold-out tour of Los Angeles, Chris Garcia! As always, admission is just five dollars. Bring your own burrito! Or, if you're Nato, your own home-cured bacon. See you there!

Advance tickets: http://www.brownpapertickets.com/event/222361

Sunday, January 15, 2012

Can we win ?

Down and out is one of the worst moments in life. It comes to everybody at some time or the other, save for the blessed few that God has chosen to spare. It comes to businesses, it comes to sports teams, it comes to people, it comes to you and me. The Indian cricket team is in that situation now. British Petroleum and Lehman Brothers faced it not so long ago. To many in Greece or Portugal, it might be that way at this moment. It all appears bleak. There is much darkness and little light. Even the air seems suffocating. The world seems to be an approximation of Hell.

This is the moment when strength of character shows out and is sorely needed. The strength to struggle and stand up despite the ferocious battering. Perhaps with a few more ingredients that might help enlarge the glimmer of light, such as it is.

Hope , of course. If you look at it,  Pandora did humanity a service, releasing all the evils, but also releasing Hope. For an utopian world with no evil, but also no hope, does not seem to be an attractive version of Paradise.

Perhaps something to lean on. A friend perhaps. Or a family. Or one's faith. Just to provide an anchor. A support, as strength is gathered for the long climb out of the hole.

Steely determination surely. The past is past. Tomorrow is another day. The Phoenix can rise from the ashes.

Action for sure. Moping is natural, but action is better. Not the plodding along as of old, but bold new action. Decisiveness, discipline, and energy. Small milestones that get larger and larger. 250 next time. 300 thereafter. Each one achieved with no quarters asked or given. Easily said; tougher to do of course.

Belief. That's a difficult one when in the bottom of the hole. Especially as everybody peering from the top is nodding their head at the futility of it all. But the spark should not be allowed to die out. It is what will light the fire along the way.

And above all some compassion as the climb is begun. For some unfortunate soul further down and struggling, a helping hand perhaps.

Why this touchy, feely, vague post in an ostensibly hard headed business blog ?? Don't ask. To quote William Cowper - Variety's  the very spice of life, That gives it all its flavour".

So the response to the rhetorical question at the title of this post. Of course, yes we can. Even if the voice is squeaky and barely audible, the throat with a lump and perhaps a tear shining at the corner of the eye.

Wednesday, January 11, 2012

Bias (or why you can’t trust any of the research you read)

Researchers in Management and Strategy worry a lot about bias – statistical bias. In case you’re not such an academic researcher, let me briefly explain.

Suppose you want to find out how many members of a rugby club have their nipples pierced (to pick a random example). The problem is, the club has 200 members and you don’t want to ask them all to take their shirts off. Therefore, you select a sample of 20 of them guys and ask them to bare their chests. After some friendly bantering they agree, and then it appears that no fewer than 15 of them have their nipples pierced, so you conclude that the majority of players in the club likely have undergone the slightly painful (or so I am told) aesthetic enhancement.

The problem is, there is a chance that you’re wrong. There is a chance that due to sheer coincidence you happened to select 15 pierced pairs of nipples where among the full set of 200 members they are very much the minority. For example, if in reality out of the 200 rugby blokes only 30 have their nipples pierced, due to sheer chance you could happen to pick 15 of them in your sample of 20, and your conclusion that “the majority of players in this club has them” is wrong.

Now, in our research, there is no real way around this. Therefore, the convention among academic researchers is that it is ok, and you can claim your conclusion based on only a sample of observations, as long as the probability that you are wrong is no bigger than 5%. If it ain’t – and one can relatively easily compute that probability – we say the result is “statistically significant”. Out of sheer joy, we then mark that number with a cheerful asterisk * and say amen.

Now, I just said that “one can relatively easily compute that probability” but that is not always entirely true. In fact, over the years statisticians have come up with increasingly complex procedures to correct for all sorts of potential statistical biases that can occur in research projects of various natures. They treat horrifying statistical conditions such as unobserved heterogeneity, selection bias, heteroscedasticity, and autocorrelation. Let me not try to explain to you what they are, but believe me they’re nasty. You don’t want to be caught with one of those.

Fortunately, the life of the researcher is made easy by standard statistical software packages. They offer nice user-friendly menus where one can press buttons to solve problems. For example, if you have identified a heteroscedasticity problem in your data, there are various buttons to press that can cure it for you. Now, note that it is my personal estimate (but notice, no claims of an asterisk!) that about 95 out of a 100 researchers have no clue what happens within their computers when they press one of those magical buttons, but that does not mean it does not solve the problem. Professional statisticians will frown and smirk at the thought alone, but if you have correctly identified the condition and the way to treat it, you don’t necessarily have to fully understand how the cure works (although I think it often would help selecting the correct treatment). So far, so good.

Here comes the trick: All of those statistical biases are pretty much irrelevant. They are irrelevant because they are all dwarfed by another bias (for which there is no life-saving cure available in any of the statistical packages): publication bias.

The problem is that if you have collected a whole bunch of data and you don’t find anything or at least nothing really interesting and new, no journal is going to publish it. For example, the prestigious journal Administrative Science Quarterly proclaims in its “Invitation to Contributors” that it seeks to publish “counterintuitive work that disconfirms prevailing assumptions”. And perhaps rightly so; we’re all interested in learning something new. So if you, as a researcher, don’t find anything counterintuitive that disconfirms prevailing assumptions, you are usually not even going to bother writing it up. And in case you’re dumb enough to write it up and send it to a journal requesting them to publish it, you will swiftly (or less swiftly, dependent on what journal you sent it to) receive a reply that has the word “reject” firmly embedded in it.

Yet, unintended, this publication reality completely messes up the “5% convention”, i.e. that you can only claim a finding as real if there is only a 5% chance that what you found is sheer coincidence (rather than a counterintuitive insight that disconfirms prevailing assumptions). In fact, the chance that what you are reporting is bogus is much higher than the 5% you so cheerfully claimed with your poignant asterisk. Because journals will only publish novel, interesting findings – and therefore researchers only bother to write up seemingly intriguing counterintuitive findings – the chance that what they eventually are publishing is BS unwittingly is vast.

A recent article by Simmons, Nelson, and Simonsohn in Psychological Science (cheerfully entitled “False-Positive Psychology: Undisclosed Flexibility in Data Collection and Analysis Allows Presenting Anything as Significant”) summed it up prickly clearly. If a researcher, running a particular experiment, does not find the result he was expecting, he may initially think “that’s because I did not collect enough data” and collect some more. He can also think “I used the wrong measure; let me use the other measure I also collected” or “I need to correct my models for whether the respondent was male or female” or “examine a slightly different set of conditions”. Yet, taking these (extremely common) measures raises the probability that what the researcher finds in his data is due to sheer chance from the conventional 5% to a whopping 60.7%, without the researcher realising it. He will still cheerfully put the all-important asterisk in his table and declare that he has found a counterintuitive insight that disconfirms some important prevailing assumption.

In management and strategy research we do highly similar things. We for instance collect data with two or three ideas in mind in terms of what we want to examine and test with them. If the first idea does not lead to a desired result, the researcher moves on to his second idea and then one can hear a sigh of relief behind a computer screen that “at least this idea was a good one”. In fact, you might only be moving on to “the next good idea” till you have hit on a purely coincidental result: 15 bulky guys with pierced nipples.

Things get really “funny” when one realises that what is considered interesting and publishable is different in different fields in Business Studies. For example, in fields like Finance and Economics, academics are likely to be fairly skeptical whether Corporate Social Responsibility is good for a firm’s financial performance. In the subfield of Management people are much more receptive to the idea that Corporate Social Responsibility should also benefit a firm in terms of its profitability. Indeed, as shown by a simple yet nifty study by Marc Orlitzky, recently published in Business Ethics Quarterly, articles published on this topic in Management journals report a statistical relationship between the two variables which is about twice as big as the ones reported in Economics, Finance, or Accounting journals. Of course, who does the research and where it gets printed should not have any bearing on what the actual relationship is but, apparently, preferences and publication bias do come into the picture with quite some force.

Hence, publication bias vastly dominates any of the statistical biases we get so worked up about, making them pretty much irrelevant. Is this a sad state of affairs? Ehm…. I think yes. Is there an easy solution for it? Ehm… I think no. And that is why we will likely all be suffering from publication bias for quite some time to come.

Monday, January 9, 2012

Newspapers increase use of co-opetition practices

U.S. newspapers are increasing their use of co-opetition practices, that is, cooperating with competitors to reduce costs, create synergies, or reduce risk in new markets. Such activities are permissible if they are not designed to create cartels or control prices for advertising or circulation.

The latest example occurred this week when the Boston Herald announced an agreement with the Boston Globe for its competitor to print and deliver the Herald. The move creates cost savings for the Herald by allow it to cut printing, trucks, and delivery personnel, while simultaneously creating production and distribution economies and an additional revenue stream for the Globe--a win-win for both companies.

Such service agreements do not violate antitrust laws because the papers remain independent, set their own prices, and create their own content. If papers were to engage in such actions they would have to apply for an antitrust exemption under the Newspaper Preservation Act (see John C. Busterna and Robert G. Picard, Joint Operating Agreements: The Newspaper Preservation Act and its Application. Ablex, 1993), but those agreements have not proven successful in the long run.

The Boston agreement comes on the heels of numerous printing agreements, including that of the Chicago Tribune and Chicago Sun-Times, that have been made among publishers in the last couple of years.

Another example of co-opetition is seen in the 59 newspaper and information companies—including New York Times Co., McClatchy Co., Washington Post Co., E.W. Scripps Co., A.H. Belo, and Associated Press—that have now banded together to create NewsRight to track use of digital content and ease its licensing. By cooperating with each other, the companies have brought more than 800 content sites into the operation and created a significant player in the digital industry.

Daily newspaper companies have historically disliked cooperation unless it was absolutely necessary—as in the case of news services. The new types of cooperation emerging show that the preference to go it alone is being eroded by contemporary financial conditions and the difficulties of operating independently in the digital environment.

The Business January 11th 2012, "Featuring Clare O'Kane & George Chen" Edition

The Business welcomes two first-time guests to the show, and welcomes two new Businessmen to our regular lineup. Or should we say - BusinessWOMEN. Well, a Businessman and a Businesswoman - Caitlin Gill and Chris Thayer! And our two guests are Clare O'Kane and George Chen.

Clare O'Kane is a rising comedian and actress making her way on the scene. She often performs with the infamous Sylvan Collective, and has acted at the Edinburgh Festival. She starred in the film "Bloodrape" as "Evelyn," and IMDB credits her as a Researcher for "An Audience With Elton John," a TV special produced when she was eight years old.

George Chen is a Bay Area bred writer and musician. His credits for talking at you include Porchlight Storytelling Series and the Living Room Salon at SF MOMA. He organized a comedy show on a bus and in a comic book store. He's writing this while watching a Species marathon.

Chris and Caitlin have performed on The Business many times in the past, and we're excited to have them on board from now on. Chris has performed at SF Sketchfest and the Bridgetown Comedy Festival, and produced his own show NERVES! Caitlin founded the Ladies Room comedy showcase, remains the longtime dirty haiku champion of Tourette's Without Regrets, and has performed at poetry slams and inside boxing rings.

They've been guests, but come Wednesday, we'll see how they hold up to the pressure of being a regular. Heavy is the hand that holds the microphone, though light is the finger that administers the Facebook invite. And heavy is the tummy that orders the super burrito from Cancun, available just across the street. 8 PM. Five bucks. No Chris and Alex, but we'll have memories that will last a lifetime.


Sunday, January 8, 2012

OMG; Where did Friday go ?

How would you feel if you fell asleep on Thursday night and woke up on Saturday morning. No No; you didn't oversleep like crazy. Somebody moved the clocks. This is exactly what happened on 30th December if you were a Samoan - actually there was no 30th December. The world magically went from 29th to 31st. The reality behind the magic is quite prosaic. Samoa simply decided to come "this" side of the International Date line from "that".

The international date line is an arbitrary line that dictates where the easternmost and westernmost part of the world is. As you can see from the picture below it is not a straight line at all - quite arbitrary. If you fancy  such things, you could have celebrated New Year's day in Tonga ; hopped across on a short plane ride to Samoa on the west of the line and celebrated New Year's day again. Alas, no longer.

Samoa does such things. Sometime ago they moved from driving on the right of the road to the left of the road - chronicled in this post. Now they have made everybody older by a day by just a wave of the wand. Such are the serious issues that the government of Samoa tackles.

The official explanation is that Samoa is on the side of the time zone which makes it one of the last countries to finish the day. That way they are on the same date as Hawaii and the rest of the US. But their biggest trading partners are now New Zealand and Australia - Kiwibloke, a regular commentator here has helpfully pointed out that there are more Samoans in Australia than there are in Samoa itself. But the time zones are such that Samoa is never on the same day as Australia - so when the Samoans are working (presumably) on a Friday, it is already the weekend in Australia (every sensible Aussie is on the beach ogling at Sheilas) and when the Samoans are "resting" on a Sunday, the Kiwis are already working on their Monday. This mismatch is apparently hurting the Samoans economically - hence this move !! Its amazing what you can justify on the grounds of economics these days.

We can hereby grant Samoa the title of the most entertaining and quixotic country in the world.

Wednesday, January 4, 2012

Eyes left : Look towards Nigeria

There is endemic corruption that beggars belief. There is a highly educated, superb English speaking elite and large masses of illiterate poor. There is insurgency and terrorism around the edges. There is organised loot of the country's finances with a few getting extremely rich and the lot remaining dirt poor. Misguided subsidies are ruining the state finances. There is a thriving film industry that churns our the second largest number of movies in the world and provides opium to the masses. No this is not India. Welcome to Nigeria.

Nigeria is an oil producing country. You would expect that to be a huge blessing, right ? Wrong. It has proved to be a curse. Nigeria is suffering from an unsustainable petroleum subsidy burden. So unsustainable that this week it announced abolition of the subsidy. Predictably there will be chaos on the streets as large scale protests have commenced.

The petroleum subsidy case in Nigeria is a textbook case of how pathetic government policies can ruin a country. Nigeria is an oil producing nation. However it has not set up refining capacity. It therefore exports crude and imports refined products. It then massively subsidises petroleum prices. A litre of petrol costs Rs 20 (US$ 0.40). The government spends some $1bn a month in subsidies. This is simply unsustainable. 

Subsidies like this distorts every economic activity. There is, of course, large scale smuggling into neighbouring countries where the prices are four times higher. The largest per capita incidence of petrol pumps in the world is in the border towns like Idiroko - organised smuggling designed to fill the coffers of the masters in Lagos.

From the perspective of the poor, the subsidy is the only thing the government does for them. It is otherwise almost a failed state. The government says the money wasted on the subsidy will be used to build infrastructure, schools, hospitals, etc - things that the government ought to be doing. The trouble is that nobody believes them. Given the highly sophisticated levels of organised corruption, few doubt where the money will land up.

Replace petroleum subsidy with colour TVs or colossal statues or free power and you'll look at a country, readers of this blog are more familiar with.

India often likes to compare itself with China. It should instead look up to Nigeria. That is the true role model - of how bad things can become if the deterioration in governance and the state continues in its present trajectory.

Tuesday, January 3, 2012

The Business January 4th 2012, "Kirshen and The Gill" Edition

HAPPY NEW YEAR EVERYBODY! As we charge into 2012, great and mighty changes approach from all directions. Come meet them head on with us this Wednesday for the first Business of the new year.

Joining us this week will be visiting comedian Matt Kirshen and Business regular Caitlin Gill!

You may have also seen Matt on Last Comic Standing, The World Stands Up, Ferguson or Fallon. You may have. But have you seen one of his many solo shows at the Edinburgh Fringe Festival? You may have. But have you seen him bring his wit to our stage? No, you have not. Well, here is your chance.

There is good reason Caitlin Gill is a Business favorite, having graced our stage many, many times. She's funny and smart and you love her. We do too. In fact, we're thinking of just absorbing her into the organization outright...

...BTW, this will be the last Business featuring original businessman Alex Koll for quite a while, so get your fill of him at this show. It'll have to last you a bit.

Also on hand will be Sean, Bucky and Chris, of course. Only $5 for all that! And burritos and drinks so close near by! Let's do this 2012!

Sunday, January 1, 2012

Yes, we can

To many, the year gone by was a bad year. Natural disasters took their toll - the earthquakes in Japan & New Zealand, the floods in Thailand, Brazil and the Philippines,  Irene slapped the US earlier in the year, and just as the year was slipping by, Thane kicked Tamil Nadu. Unemployment remained rampant in the developed world ; there is nothing more demoralising than losing your job and not having a hope of getting another one. Large parts of Europe are in crisis. Austerity measures are hurting badly, especially in Greece, and now Italy. Inflation has hurt people in China and India and growth slowing down in both countries is ominous. The Arab world had a new spring, but winter seems to have set in somewhat prematurely.  You could be forgiven for ushering in the new year in a somewhat sombre mood.

But there is every reason to look forward with hope. Adversity often brings the best in man. We can find strength that we did not even know we possessed. The Euro zone will hold together and the crisis will pass. Belt tightening will be required, but with courage and fortitude, there will be less suffering. Joblessness in the developed world will start to reduce as a slow recovery happens . There is no better a mood lifter than getting and holding a job. Inflation will ease in India and China - signs are there already and more and more people can lift themselves out of poverty. An encouraging part of the world is Africa. Long abandoned as a basket case, many countries are showing good growth and the Asian achievement of lifting people out of poverty is slowly, but surely, being replicated in Africa.

The year ahead is going to see significant elections in France and the US and a generation change in leadership in China. Each one of these is going to be momentous - none more so than the change looming in China where for the first time, such a change is going to happen without a strongman like Mao or Deng lording over it. Perhaps a leadership change might happen in India too.

We can look forward to 2012 with hope. I am surmising that the worst is over economically. The upturn might be slow, but upturn it is going to be. We can do much better this year and when the time comes to ring out the year, we can be in a much more cherful mood than we are today. Yes , we can.