EconAir

Positive Externality You need to know three things about management and corporate finance: 80/20 Rule Opportunity Cost Compound Growth 80/20 Rule (Also called Pareto’s Law) This idea says that a relatively small percent of actions account for a relatively large percent of outcomes. Find and concentrate your efforts on the important influences on your business (and life). The percentages aren’t always 80/20. Some examples: 20% of your customers account for 80% of your sales. McDonald’s accidentally learned that 10% of its customers accounted for 60% of its daytime sales. And it was an identifiable group that they had never aimed its massive advertising at. 20% of your product line accounts for 80% of your sales and profits. Often, companies with a large product line with many variations find that 50% of their products account for over 90% of sales. An even smaller percent usually account for most of the profits. 20% of your SKUs account fo...

Alan Turing Alan Turing developed many of the basic concepts for digital computers in the 1930s. In 1943, he came to the United States to exchange ideas and experiences with scientists and engineers at Bell Labs. He spent a great deal of time talking with Claude Shannon, the father of modern information theory, about their mutual interest in digital computers. One day while having lunch in an AT&T executive dining room, Turing was describing his ideas about what a “thinking machine” could do. "His high-pitched voice already stood out above the general murmur of the well-behaved junior executives grooming themselves for promotion within the Bell corporation. Then he was suddenly heard to say: 'No, I’m not interested in developing a powerful brain. All I’m after is just a mediocre brain, something like the President of the American Telephone and Telegraph Company.'" (Andrew Hodges, Alan Turing: An Enigma , p. 251.) Given the abysmal record of...

  Strategic and Tactical Planning For thirteen years, I was a corporate economist and a corporate planner manager for three Fortune 500 companies.   I discovered that I could do my job as a corporate economist while ignoring all but the simplest of economic concepts.   As a corporate planner, I learned that the planning processes of large corporations were, at best, mostly a waste of time and resources, and at worst, contributed to the relative demise of the companies.   Of the three companies I worked for, one has been sold three times, one has gone through a bankruptcy, and the other merged with (actually sold to) A Brazilian company.   This is becoming typical; the failure rate of large corporations is accelerating. Other disciplines in business are no better.   Marketing is still based on ideas, usually summarized by the four P’s, that are a formula for stagnation at best and decline at worst.   Mass-media advertising, born at the beginn...