David Jacobson's External Insights

Carnival of articles about business and economics

The internet has a huge resource of interesting discussions on business-related topics. How do you find articles of reasonable quality? Look for a respected writer who has done the hard work and reviewed recent blogs.

David Maister hosts this week's edition of Carnival of the Capitalists — a collection of blog articles about business and economics.

I usually see articles I have already read and enjoyed (Australian Anecdote's post on story telling and knowledge) as well as writers new to me  (Australian actuary Penguin unearthed, who discusses the different approaches taken in different countries to major catastrophe insurance).

I also keep in touch with law-related articles through Blawg Review. This week's Blawg Review # 92 has productivity articles (yes, lawyers are concerned about productivity!) as well as 15 Rules for clients.

Most likely you will find some writers that you wish to read regularly.

Business and Corporate Blogging

The ARC Centre of Excellence for Creative Industries and Innovation and the Queensland University of Technology will host the Australian Blogging Conference on Thursday 8 March 2007 at the State Library of Queensland in Brisbane.

The program includes a session on business and corporate blogging. Registration is free so if you're wondering how blogging can affect your business, come along.

More

UPDATE 4 February: Conference postponed

What can you be best at? Using a Venn diagram (3 circles)

Since Good to Great by Jim Collins was published in 2001 it has become one of the most popular business management books. I'm re-reading it and finding lots of things to think about.

One of the characteristics of sustainable great companies identified by Collins is their ability to identify what they can be best at and to focus on that goal. He calls it the Hedgehog Concept expressed in 3 circles. It identifies what you should put your resources into as well as identifying what you should stop doing.

The 3 circles (called a Venn diagram) is a useful tool to identifies linkages and relationships between different groups of things.

You can create your own 3 circles using this interactive tool.

If you're observant you'll have noticed that I adopted the 3 circles as my logo in 2004.  I did not have Collins' example in mind when I did so as I had seen it used in many other contexts.

For example, Stephen Covey in The 8th Habit uses 3 circles entitled knowledge, skill and attitude: where they intersect is labelled "habit".

It's a powerful tool and Collins' arguments are persuasive.

UPDATE: A wonderful video Le Grand Content using 3 circles (via Presentation Zen)
 

Understanding Enron

Whilst  I have read a lot about the Enron collapse and the subsequent litigation, I have just seen the movie Enron: The Smartest Guys in the Room.

The movie makes much of Enron's mark-to-market accounting system and the internal structures which enabled Enron to show large artificial profits. I did not know about (or had forgotten) their creation of a market for trading broadband surplus. The movie emphasises Lay and Skilling's arrogance and Lay's ties to the Bush family.

The movie was made before Andersen Consulting's successful appeal against their conviction and Chair Ken Lay's death after being convicted, before his appeal was heard.

In an article in the January 2007 New Yorker, Malcolm Gladwell argues that Enron did not hide anything but that financial analysts took too long to understand the mass of information disclosed by Enron.

His interesting article poses the problem that regulators face: if consumers can't understand the information disclosed, is the disclosure adequate? Are long disclosure documents used to obfuscate investors? Is for example a 10 page disclosure document more helpful than a 100 page document? But what is left out in simplifying information for consumers?

Listening to stakeholders: Home Depot

The Board of Directors of The Home Depot and Bob Nardelli have announced that they have mutually agreed that Nardelli would leave his position as The Home Depot's chairman, president & CEO and as a Director. The Home Depot is the world's largest home improvement specialty retailer.

Nardelli's sudden departure follows strong criticism of his performance by investors and his alienating of employees and customers. (Seth's Blog)

The controversy over his remuneration package (reportedly US$250 million) was to have come to a head at the company's shareholder meeting in 2006. What did Nardelli do?

He ran his company's annual meeting in less than one hour with none of his directors present!!

In this interview he said he made a mistake but is otherwise unapologetic.

In a further sign that the company's board is out of touch Nardelli will receive a severance package worth approximately $210 million.

The US system of combining Board Chair with CEO shows its weakness in this example. But for a Board to not be present at an annual meeting seems remarkable.

More (SignOnSanDiego)

Out at Home Depot: Business Week Online

New Year Reflections: learning from experience

Ideally you should regularly reflect on your experiences and the lessons you have learned. But if you do not have a process for this, our calendar provides one in the form of the New Year.

In business, waiting for the New Year (or your annual holiday) may be sufficient to "recharge your batteries" but your learning and improvement cycle needs to be much shorter: you need to learn from each project or encounter with a customer.

There are different techniques for this including:

• The ADRI model used in the Australian Business Excellence Framework: It evaluates how key criteria are achieved by "exploring how the organisation puts its plans and structures into place; deploys those plans and structures; measures and analyses the outcomes; and learns from its experience. These are known as the “Assessment Dimensions” of Approach, Deployment, Results and Improvement (ADRI)."
• Action learning: Action learning can be defined as a process in which a group of people come together more or less regularly to help each other to learn from their experience.
• After Action Review , developed by the US Army. It essentially asks four questions: What did we expect to happen? What actually happened? Why was there a difference? How could we do it better next time?

The common element in these techniques is that you have to look back and learn before you can improve in the future.