Really funny story from Barry at his BigPicture blog:
http://bigpicture.typepad.com/comments/2003/11/a_funny_thing_h.html
I really like the utterly gracious comment by Prof. Engle
“I catch myself being a moron again, and hasten to add: “Not that 5 minutes on Fox compares to a Nobel.”
Again, utter graciousness from the (Prof. Engle) gentleman: “It just shows how people overemphasize perceived expertise.”
I am reading through the book
Some Discussions/topics:
Regret Aversion
As John Greenleaf Whittier wrote: “For all the sad words of tongue or pen, the saddest are these: ‘It might have been!’ “
Mark Twain: “20 years from now you will be more disappointed by the things you didn’t do than by the ones you did do”
Endowment effect at work
Return policies in stores — “May be you can return it back, and maybe you can’t!”
One of the better indicators of statistical significance is the so-called ‘interocular trauma test.’
It’s only satisfied when you have results that are so glaringly obvious that they hit you between the eyes.
Or stated another way: Plot the data. If the result hits you between the eyes, then it’s significant.
Excellent article by Dr. Atul Gawande in the New Yorker:
Talks about how recency bias (”The Checklist”) can be used to save lives.
“The researchers found that simply having the doctors and nurses in the I.C.U. make their own checklists for what they thought should be done each day improved the consistency of care to the point that, within a few weeks, the average length of patient stay in intensive care dropped by half”.
“The checklists provided two main benefits, Pronovost observed. First, they helped with memory recall (recency bias at work!), especially with mundane matters that are easily overlooked in patients undergoing more drastic events. (When you’re worrying about what treatment to give a woman who won’t stop seizing, it’s hard to remember to make sure that the head of her bed is in the right position.) A second effect was to make explicit the minimum, expected steps in complex processes.” (emphasis mine)
[…]
” But this time he found few takers.
There were various reasons. Some physicians were offended by the suggestion that they needed checklists. Others had legitimate doubts about Pronovost’s evidence. So far, he’d shown only that checklists worked in one hospital, Johns Hopkins, where the I.C.U.s have money, plenty”
[…]
“The fundamental problem with the quality of American medicine is that we’ve failed to view delivery of health care as a science. The tasks of medical science fall into three buckets. One is understanding disease biology. One is finding effective therapies. And one is insuring those therapies are delivered effectively. That third bucket has been almost totally ignored by research funders, government, and academia. It’s viewed as the art of medicine. That’s a mistake, a huge mistake.”
My friend, Victor introduced me a book on Value Investing by Seth Klarman.
There was an article in BW on the book about 2 years back:
http://www.businessweek.com/magazine/content/06_32/b3996085.htm
I quote from the Seth Klarman’s book:
Value Investing is about …
“always buying at a significant discount to underlying business value, and giving preference to tangible assets over intangibles”
“By replacing current holdings as better bargains come along. By selling when the market price of an investment comes to reflect its underlying value and by holding cash, if necessary, until other attractive investments become available.”
Underlying Value = “that’s shorn of intangible assets such as goodwill. “Since investors cannot predict when values will rise or fall valuation should always be performed conservatively, giving considerable weight to worst-case liquidation value as well as to other methods.”
I had mentioned earlier that I will be commenting about the book Coopetition as I read through it, so here it goes:
I think, this book is best read along with the book (as suggested in my ESB class at CBS too!)
Largely influenced by Greenwald’s ESB class at CBS.
Competitive Advantages (CA) are really just the barriers to entry (B-to-E).
If there are no CAs then you are better off just focusing on efficiency and cost — and these are not easy to do at all!
Sources of Competitive Advantages:
Note that running efficient operations is not a CA, since first, this can be easily replicated by others and second, CAs are usually outward looking (related to customers, competitors, etc.)
Myth: Differentiation is a sustainable CA.
Reality: Differentiation alone does not help in creating a sustainable CA at all. Think of the luxury car market!
B-to-E are easier to maintain in local markets (product or geography). Large & global markets are very tough to dominate (Death by thousand cuts more likely).
Myth: Proprietary technology provides sustainable CA
Reality: Easily copied over time by the competitors. Besides, technology is also a moving target, unlikely to be dominated by the same company.
Economies of scale in markets of restricted size + Some (even trivial) customer captivity => Sustainable CA.
Why small local markets:
Learn to avoid competition with an entrenched local competitor, especially when you have no CA!
Local market focus and strategies should also improve the chances of cooperation across the market & product boundaries and avoid costly price wars.
So, today I was able to convince Pawel (a fellow UMBA at CBS) to start blogging his ideas about CPM.
Check out his “Holy Grail” blog.
Neumannsol TBP Giga OM Tech Crunch Venture Beat