Tom Spencer(Source: Techworld) Phil Libin, founder and CEO of Evernote, was one of the guest speakers during Silicon Valley Comes to Oxford which was hosted at Oxford’s Said Business School a fortnight ago. As part of the conference there was a debate held at the Oxford Union, the world’s oldest debating society, the motion being “This […]
(Source: Flickr) Seven senior FIFA officials were arrested on Wednesday at a high end Swiss Hotel as part of a larger two decades long investigation by the FBI into corruption at FIFA. The alleged wrongdoings include racketeering, wire fraud and bribery to the tune of more than $150 million. The arrests occurred just prior to […]
(Source: Flickr) This is the tenth instalment of my conversation with Nigel Lake, CEO of Pottinger, a global corporate advisory firm based in Sydney, Australia. Nigel is the author of The Long Term Starts Tomorrow, a must have book “for any manager, leader or Minister.” The Hon Mike Baird MP, Premier of NSW Tom: There has been […]
Price and value, there is a difference. Price is what you pay for something; the number of dollars that you need to part with in order to obtain it. Value is what you receive; the positive feelings or practical utility that the object or the experience imparts. I recently had my birthday, and I was delighted to […]
(Source: Virgin.com) It was very sad to hear about the eight people executed by firing squad by the Indonesian government, including two Australians. The death penalty is cruel. People who traffic drugs may be desperate, reckless, foolish, greedy or a combination of all of these things, but they are still people. And killing people is barbaric. The […]
(Source: Flickr) Anchoring is a common psychological effect whereby people tend to rely too heavily on readily available information (the “anchor”) when making decisions involving uncertainty. To illustrate the point, let me ask you two questions: Is the population of Argentina greater or less than 80 million? How many people do you think live in Argentina? Write […]
(Source: Flickr) Traditional strategic thinking, the kind championed by HBS Prof Mikey Porter, says that real economic value is only created when a company can sell a product or service to customers at a price that exceeds the cost of producing it. In other words, companies are entities that sell products or services, and strategic thinking is […]
OVER the past weeks we have been reaching out to various university career services teams to let them know about the free consulting resources that we have produced for students. If you missed this development, you can access all the resources here. The interesting thing about this process of reaching out to different universities is the vastly different responses that we have received. […]
Where do you place value? (Source: Flickr) ONE of our heroes, New York based consultant Alan Weiss, has a unique perspective on wealth. He regularly shares the view that “wealth is discretionary time”. The reason his approach to wealth is so striking is that most people, at least those of us living in Western market based economies, tend […]
WILLIAM Black, former bank regulator and Professor of Economics and Law at the University of Missouri, witnessed first hand how banks took control of the banking system to commit fraud on a colossal scale. In his TED Talk from last year (watch it below) Black talks about “liar’s loans” and other tactics that the banks used to bring […]
THE Emperor’s New Clothes, the famous fairy tale by Hans Christian Andersen, tells a story of a vain Emperor who enjoys parading his fine clothes around town. One day a pair of swindlers promise to weave a magnificent suit of clothes for him which are so fine, they tell him, that they are invisible to anyone who is unfit for […]
Australian Senator David Leyonhjelm makes an impactful speech about the risks of being cavalier with other people’s money, of valuing everything and understanding nothing about the cost
A natural and unstructured process that results from doing the work LAST week we looked at the value of breaking with experience, which followed on nicely from our initial article on the Experience Curve. This week we focus on learning from experience. What does it mean to learn from experience? And what role does management have to […]
Innovation involves breaking with the past to create something even more remarkable (Source: Flickr) THE traditional Experience Curve focuses on increasing production experience which leads to predictable cost reductions. This kind of experience is relevant in industries that are relatively stable, competitive, and production-intensive. (Source: Wikipedia) But what about high tech and creative industries where the lifecycle […]
The Experience Curve captures the relationship between increasing production experience and declining costs (Source: Flickr) Background The Learning Curve, the concept which predates the Experience Curve, was first described by German psychologist Hermann Ebbinghaus in 1885 as part of his studies into human memory. In 1936, T.P. Wright described the effect of learning on production […]
If you were playing Monopoly, Quantitative Easing would be the equivalent of helping yourself to a $100 note every time you rolled the dice and never having to pay it back (Source: Flickr) CENTRAL banks continue to finance government spending by easing monetary policy in order to help economies get back to “potential output”. (It […]
Understanding the mechanism that underlies intelligence could have big implications for economics, business and finance. The below TED Talk is worth watching.
How can you get what you ask for? How can you significantly increase the chances that another person will say yes to your request? ROBERT Cialdini, best-selling author of Influence: The Psychology of Persuasion, gives an insightful talk on how you can persuade people to do what you want. As a tenured professor, Cialdini jokes […]
“Everything is relative in this world, where change alone endures” (Leon Trotsky) IF you were offered the chance to win or lose $100 on the basis of a coin flip, would you take the bet? If you are like most people, you would probably decline the wager. Even though the gamble offers an even chance […]
Loss aversion is a widespread behavioural trait which causes people to experience the suffering from a loss much more deeply than the joy from a commensurate gain Background Everyone knows that people don’t like to lose things. People are reluctant to give their old clothes to Vinnies, to leave dysfunctional relationships, or to throw away […]
Bailouts: a band-aid solution for continuing sovereign debt crises BAILOUTS were the band-aid solution prescribed for the Greek sovereign debt crisis. And every indication suggests that Greece will require another band-aid early next year. In this context, Clarke and Dawe raise an interesting and often carefully overlooked question. Where does the money come from to bail out basket […]
“I would like to live in a world where it’s all rainbows and unicorns, and we could make Krugman the President … And then reality sets in” ~ Kyle Bass KYLE BASS founded and runs Hayman Capital Management, a Dallas-based hedge fund. He is a successful investor who is well known for predicting and profiting […]
Stable growth is often more important than fast money SINGAPORE is on the rise as a wealth management hub with funds under management growing by 22% in 2012 compared with around 5% for Western Europe as a whole. The disparity in growth rates is large, and the FT has attempted to narrate a story that fast […]
Scale improves productivity but also increases bureaucracy Scale can help a company to produce more output at lower average costs. However, production at scale also leads to unhelpful bureaucracy. As production rises, more employees are needed and executives implement more rules to keep things under control. Increasing production tends to lead to higher cash flows, and managers […]
This guest post is by a PhD student in philosophy from the Australian National University. THE FUTURE presents a paradox: no one can predict it but we are told to plan for it anyway. It is a tricky problem for individuals wanting to make provision for their retirement and for the vicissitudes of their health […]
TODAY is the four year anniversary of the collapse of Lehman Brothers. At the time of its bankruptcy, Lehman Brothers was the fourth largest investment bank in the world. How could it run out of money? And, why did this disrupt the global economy? Lehman Brothers and other investment banks went down in part due […]
Your circumstances may matter less than how you perceive them
Applying Philosophy to Business (and vice-versa) This guest post is by a PhD student in philosophy from the Australian National University. DEATH AND TAXES, the adage goes, are life’s two certainties. One might add commerce and philosophy to this list, for the trade of goods and services and the trade of ideas also seem to […]
An explanation of Basel III for non-specialists BNP Paribas Fortis provides a short 10 minute animated presentation on Basel III. For normal people like you and I, this is a nice, accessible and informative summary of how the Basel III framework actually works.
Society has lost its trust in the financial sector. Should we overhaul LIBOR? IN A RECENT article by Bloomberg Businessweek, assistant managing editor Brian Bremmer reports that investigators in America, Canada, Japan, the UK, and the EU are trying to determine whether a handful of brokers and traders have manipulated LIBOR. At this stage, it is […]
The unemployment rate tends to understate how many people are actually out of work A PREVIOUS POST looked at the reasons why the reported unemployment rate in the USA tends to understate the “real” unemployment rate. To understand why this happens, here are a few equations which show how the formula for the unemployment rate […]
THIS is a very humorous and instructive (albeit PG rated) overview of economics. Here are the super-summary notes: 1. Microeconomics: The price of sh*t is determined by supply and demand. 2. Macroeconomics: Oh, sh*t! 3. Keynesian economics: Sh*t happens because of animal spirits. 4. Neo-keynesian economics: This sh*t is sticky. 5. Neo-classical synthesis: Sh*t happens in the […]
A picture says a thousand words BACK IN 1995, which country had the second highest 10 year government bond yield? As Europe’s third largest economy, Italy is too big to bail out. Past performance is not a predictor or future performance. However, if historical bond yields provide us with any insight about the Europe’s future, […]
Recent improvements in the unemployment rate have come from people dropping out of labour force THE unemployment rate in the US has dipped to its lowest level in more than 2 years (source: NYT). Is this good news? Before answering this question, it would help to understand exactly how the US Bureau of Labor Statistics […]
Monkeys learn to use money – what can we learn? ASSOCIATE PROFESSOR of Economics Keith Chen taught a bunch of monkeys to use money. What he discovered was that not only could the monkeys learn to understand the value of money and how to use it, they were also very good at changing their consumption behaviour […]
RECENT falls in the officially reported US unemployment rate are an optimistic sign. That said, it is worth remembering that the official US unemployment rate (currently around 9.1%) systematically understates the “real” unemployment rate. This is not a new phenomenon, and occurs because of the particular way in which the US Bureau of Labor Statistics chooses […]
Inflation erodes the value of real currency ECONOMISTS tend to favour a small positive rate of inflation, and there are 4 reasons why this makes sense: Labour market flexibility: inflation allows relative real wages to adjust even if nominal wages do not move. A company that tries to pay workers less money is likely to meet […]
Europe may not go to rehab before it is too late THE US Federal Reserve took steps yesterday to make it easier for European banks to borrow and lend dollars. The Fed is now providing such cheap money to Europe that the European Central Bank can borrow from the Fed at lower interest rates than American banks. The […]
EUROPEAN leaders have tried to characterise the October writedown of Greek debt as “private-sector involvement”. While the writedown would appear to be a default in all but name, efforts to maintain investor confidence have so far been surprisingly successful. Yesterday, US stocks and Asian stocks rallied amid optimism that European leaders are taking steps to […]
THE MARKETS have been temporarily buoyed amid optimism that European leaders will find a solution to the debt crisis. Unfortunately, the optimism is likely to be short lived because the problem with Greece is not just that they owe everyone a lot of money. Greek debt is a symptom of a more endemic problem rooted in the […]
WITH the Occupy Wall Street movement still in full swing, we have to stop and think for a moment about the distribution of wealth in the world. One of the slogans of the Occupy Wall Street movement is “we are the 99%”, which is a reference to the fact that the top 1% of households […]
Whatever you say it is, it isn’t ~ Alfred Korzybski IN OCTOBER 2011, private banks accepted a 50% writedown on Greek debt. European leaders negotiated the writedown to avoid a technical default. It is surprising that ratings agencies did not classify the writedown as a default when you consider that S&P defines sovereign default as […]
ON WEDNESDAY November 23rd, an auction of German government bonds (known as “Bunds”) managed to sell only €3.6 billion out of a total €6 billion worth of Bunds on offer (source: Economist). Germany is one of the most financially stable countries in the Euro-zone, so its failure to sell all of its Bunds is worth […]
IN THE WAKE of the global financial crisis, there has been a backlash against the mainstream school of economic thought, of which Greg Mankiw is a proponent. Mainstream economists did not predict the global financial crisis and notable commentators, including Steve Keen, single out the narrow minded and simplistic ideas put forward by mainstream economists as the […]
Economics is about decision making in situations of scarcity ECONOMICS is the study of how individuals, firms and government make decisions to manage scarce resources. What does this mean exactly? Professor Greg Mankiw teaches economics at Harvard University and is the author of a popular economics text book called Principles of Economics which is used at many Ivy League […]
Economies of scope exist where a firm can produce two products at a lower per unit cost than would be possible if it produced only the one ECONOMIES OF SCOPE is an idea that was first explored by John Panzar and Robert Willig in an article published in 1977 in the Quarterly Journal of Economics […]
TOMORROW, SEPTEMBER 15th, at various public locations worldwide, people will hand out their own money to complete strangers, two coins or notes at a time, asking the recipients to pass one of these coins or notes on to someone else. The aim is to raise awareness and start conversations about the benefits of economies based […]
When the economy slows, you’re likely to get RAPED, SHAFTED or SCREWED Due to the current financial situation caused by the slowdown in the US economy, Congress has decided to implement a scheme to put workers of 50 years of age and above on early, mandatory retirement, thus creating jobs and reducing unemployment. This scheme […]
Printing money is the last refuge of failed economic empires and banana republics QUANTITATIVE EASING is a monetary policy tool sometimes employed by central banks to stimulate the economy when conventional monetary policy becomes ineffective. To stimulate the economy, the central bank normally carries out expansionary monetary policy by lowering short-term interest rates through the […]
Subtitle: The battle between John Maynard Keynes and F.A. Hayek DURING THE global financial crisis, we were told by governments that the best way to fix the world economy was to increase spending. This sounds simple enough given that increased government spending and lower interest rates can be used to boost output, but it is […]