Video on how to write professional slide-reports

Are you busy at work, but passionate about your area? Learn how to make slide reports to save time and get more impact. Much presentation advice assumes that you are available to make an old-fashioned presentation. This is often not the case. Slide-reports are good for such presentations, but can also be fully understood when emailed or printed. You no longer lose control of your message and can safely email your slide-report. Expect to receive positive feedback.

Slide-reports first appeared in the management consulting industry, but judging from many recent consulting presentations, many consultants are no longer aware of how to write clear slide-reports. I believe the video is useful for all consultants as well as executive. Even if you know the basics there should be some value to all.

The video is around one hour, but it is broken into four sections. The videos include short exercises so please make sure you have 30 minutes to complete each of the four sections. If you like the content please subscribe to my youtube channel.

Politics and self interest

Politics is becoming more important for top management. This is especially true for the Silicon Valley software companies. In 1996, Yahoo and its likes received legal protection from being sued. The US law stated that the companies could not be held responsible for any uploaded content. This might have been a good idea during the early commercialization of the Internet, but the companies have since grown to be dominant. Clearly, they do not deserve infant industry protection anymore. New technology Facebook is worth 500B in the stock market and old technology New York Times 5B.

Enter Elizabeth Warren, who wants stricter regulation to avoid monopoly power abuse. US antitrust policy has been severely relaxed during the last forty years. Warren wants to give the regulator more teeth. Mark Zuckerberg dislikes any regulation that would curtail Facebook's profits and the same is true for Google. In the 1960s and 1970s, Facebook would not have been allowed to buy Instagram. The left-wing democrats (i.e. Sanders, Warren, Harris and a few other) are likely to unite under Warren in the Spring. If she wins the presidency, she is likely to try to curtail the power of leading internet companies.

Companies try to get rid of troublesome politicians. This is generally difficult, so companies often resort to supporting other politicians that also want get rid of the troublesome politician. Facebook is powerful so they are now trying the first approach. Facebook announced a week ago that it would not fact-check political ads. It would be up to the politicians themselves to express themselves honestly. An honest political ad is an oxymoron, but Facebook's announcement is only following the practice in other media outlets. Newspapers and television stations do not have to fact-check political ads before they are published. The left-wing Democrats are outraged because they see the potential for several dishonest, hard-hitting Trump ads next year. A fact-checking policy would hit Trump harder than the left-wing Democrats, their thinking goes.

Enter Twitter. CEO Jack Dorsey just announced that it would ban all political advertising. Twitter only has a tenth of Facebook's revenue so it is clearly in its interest to try to curtail Facebook's power. Facebook would be denied revenue and some users might switch to the more "ethical" Twitter. Dorsey wants traffic. Had Facebook banned political ads, Dorsey would have allowed them. Dorsey just wants traffic. When Google states their policy, expect them to follow Facebook's lead. Google has a large market share in online advertising to defend.

I suspect Zuckerberg is hoping for a Trump victory in 2020. He might like Trump for political or pragmatic reasons, but the effect is the same. By relying on policy, Zuckerberg does not have to overtly alienate his customers or employees by coming out as a Trump supporter. In fact, both Facebook and Twitter can clam to take a moral high-ground. Respectively, allowing free speech or not allowing any political ads.

I expect there to be resistance among woke Facebook employees, but Republicans are going to applaud. Facebook will probably ban some right-wing demagogues to appease the Democrats. If they limit speech on some inclusion or civil rights ground in the coming six months, that is strong evidence Zuckerberg is trying to appease his employees. If the overall strategy fails and Elizabeth Warren becomes president, expect Zuckerberg to fully court woke Democratic lawmakers so they become allies in defending Facebook's (and Google's) oligopolistic advertising profits. Sadly, Warren will get nowhere in her attempts to sharpen antitrust regulation. Just like Obama failed to sharpen gun regulation early in his tenure.

Time for retribution

We have become accustomed to hearing stories about banks behaving irresponsibly both prior to and after the great financial crisis of 2008. Regulators have often not prosecuted the banks. Instead the banks have paid "voluntary" fines without admitting any wrongdoing. Left-wing politicians have noted that the capitalist system is prone to crashes. Further, that the banking elite is unfairly taking advantage of the situation for personal gain (e.g. the Fed's low interest policy). Now, these politicians have further ammunition against capitalism: It seems that normal companies producing goods and services are also engaging in fraudulent activities. Just to list two stories that broke this week:.

• Volkswagen has installed a software defeat-device to make its diesel engine appear more environmentally friendly when it is being tested by regulators (here). Apparently the software senses movement of steering wheel, movement of the car, etc. The share price went from EUR 160 to 110 in two days - a 31% drop.
• Google charges fraudulently for advertising. European researchers uploaded videos to Google's Youtube and bought advertising using Google's Adwords. Subsequently, they let robots "watch" the videos. Youtube detected a robot, but Adwords did not detect any robot. So for each time the robot "watched" the video, Adwords charged the customer for advertising (details here). The share price hardly moved after the news broke.

There is something rotten in the state of capitalism. Gone are the days of responsible CEOs that cared about honesty. Well, that golden age never truly existed, but executives did not use to game the stock market. One recent study showed how CEOs of lagging firms manipulated earnings per share by cutting investment and spending the money repurchasing shares (here). The shameless willingness of Volkswagen and Google to deceive its customers is a consequence of bad leadership. In both cases it would have been impossible for one rouge employee to engage in fraud alone. The activities must have been sanctioned by senior management, which has been chosen by the CEO.

What many commentators are missing is the difference between companies and capitalism. That individual companies can get overly greedy is just an extension of human nature. For capitalism to function properly there has to competition, transparency, and accountability. If companies break the law or a commercial contract, there must be consequences (read retribution). Since a large portion of a company's value consists of intangible assets, the value of a misbehaving company should be substantially reduced. During the financial crisis that happened to Lehman Brothers and AIG, but not other banks. This week, the market sent a message to Volkswagen, but not to Google. (While retribution is good, the US government has a tendency to be harder on foreign companies, compared to the European Union policy. This is a problem, but much less important.)

We live in a regime with CEOs being rewarded hundreds of millions irrespective of their performance and institutional shareholders (i.e. fund managers and exchange traded funds) taking only marginal ownership responsibility. Until this is changed, capitalism can still work as long as there is final accountability in the system. Such accountability is currently being being weakened by many governments. It often pays off for companies to not adhere to laws and contracts, and then try to wiggle out of any obligation if their practices are exposed. Lobbying activities in the US help tremendously by letting members of the Congress go hard on the regulators. Where ever US policy goes, European policy follows, but with less retributive power. The "new" company Google is fairly safe in the US, but the "old" company Volkswagen is not. Lobbying in Europe is also helpful. Companies in the diesel-technology eco-system have constituted one of the largest lobbying blocks in Europe. In fact, the European Union had been aware of the defeat-devices for two years. Expect a necessary blame game, which does not result in any EU regulator being fired

Now we can understand why Volkswagen's share price tanked, while Google's share price hardly moved. The US regulator has teeth, when it is not corrupted by lobbying. The European regulator produces reports, but has no teeth. Google is important for the US economy so the US regulator stays away.

Unless the regulators take a hard stance against misbehaving companies, capitalism will suffer. If capitalism suffers we will have fewer, more fraudulent companies and more left-wing politicians wanting to resuscitate socialism. Politicians and regulators must be pro-capitalism and not pro-company. Individual companies must be forced to pay heavy fines for severe breaches of laws or contracts. Capitalism can be what Nassim Taleb called an antifragile system, i.e. a systems that becomes stronger when stressed, but only if politicians stop softening the blows. Currently, we are en route to a more fragile type of capitalism.

53 years ago, Milton Friedman made essentially the same point. His statement is as valid today as it was half a century ago. Many lesser minds deviously only remember the first half of Friedman's sentence.

There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.                                                 (Source: Capitalism and Freedom)

The capitalist society will perform better than alternative systems if companies are held responsible for their actions. However, for a capitalist society to really prosper, the owners need to take a long term perspective. Fund managers (and worse, exchange traded funds) as owners is a very bad choice, but that is another story.

Bargaining power between Lufthansa and Amadeus - who has the upper hand?

Industry supply chains connect different industries through the flow of goods and services. An industry's profitability is partly determined by the bargaining power between the the focal industry and the supplying industries. The scheduled air passenger transportation supply chain is a great example of theory in action.

Sony still has silo divisions

Probably the most common reason for mergers and acquisitions is synergies. Here is a good example of how difficult it is to reap synergies. Sony owns Sony Pictures. Sony Pictures is producing the new James Bond movie. Sony Electronics wants a product placement for the new Xperia mobile phone. With joint ownership of the two divisions this should be a low hanging synergy.

Instead the executives spend countless hours arguing with each other. Sony Electronics is willing to pay $23M but Sony Pictures want more. Whether they pay $1 or $100M does not make any economic difference for Sony group, The key number is the benefit for Sony Electronics of the product placement. How many extra phones are being sold by the product placement? The CEO should step in and find the answer. Then he should set down the foot.

Maybe the benefit is even less than Samsung's offer of $55M. In that case, give the contract to Samsung and accept that the synergies are non-existent. 

No more vision in Sweden

This is a posting about politics. In the future I will migrate such postings to statsvetenskap.blogspot.sg. The current blog that you are reading will be devoted to business strategy.

Left-wing philosophy has invaded the brains of most politicians in Sweden. All the seven established parties, representing 84% of the electorate, have adopted a very dangerous left-wing idea, which is going to have very negative consequences in the coming twenty years. The dangerous idea is that there can be no more grand visions for the future of society.

Swedish election 2014 and a long term forecast

Back in January, I made a long term forecast of the election result in the next four elections until 2026. This is an update.

Accuracy of previous forecast

Compared to my forecast, the left did poorly. I had expected 50% and they received 47%. (I have included V, FI, S, MP in the calculation.) The right (KD, C, FP, M) performed as expected. The nationalists (SD) received 13% compared to an expected 10%. (All data rebased on the share of the top eight parties. All parties are described as left-wing or right-wing. Swedish politics is organised into three camps; the left-wing (socialists), the right-wing (non-socialists), and the nationalists.)

More generic strategies

The objective of the strategy possibility frontier is to graphically show two generic sources of competitive advantage, non-price uniqueness and low cost. By placing all companies in an industry in the chart it is possible to spot weak and strong low cost strategies. However, the model has a problem differentiating between good and bad non-price uniqueness strategies. There are several ways to be unique, but not all unique positions are valued by the customers.

Elliott Jaques's strata theory and politicians

The objective of this post is to introduce an interesting theory about organisations and apply it to political systems. Elliott Jaques was an academic that studied organisational behaviour. Most of his research was done outside mainstream academia, which means that there is not a great deal of high quality published, empirical work validating his ideas. I do not know much about his background, but I am aware that many academics consider his ideas unacceptable on political grounds. That is enough to scare a lot of potential researchers away. His sin was probably to imply genetic differences between individuals and to praise hierarchy. I have always found the theory fascinating for its potential implications.

Postings on industry analysis

Strategy students: This positing contains a summary of my earlier postings on industry structure.

Rant on Swedish politics

The modern world gives proof at every point that it is far easier to destroy institutions than to create them

Roger Scruton

Some people can see fifty years into the future. The founding father of Singapore, Lee Kuan Yew, is such a person. I do not have this ability. However, I have lived long enough to realise that I can see 10-15 years into the future. Nobody can predict the future, but most people can only see a couple of years ahead. The Swedish politicians fit the description. When such people are in charge, the short-term always crowds out the long-term.

The Swedish political establishment's willingness to experiment is mind-boggling. Since 2000, around 90% of the Swedish population increase has come from non-ethnic-Swedes. I am not sure this is a problem, but I am worried that it might be. Will the Swedish institutions survive? Will Sweden continue to have a largely secular, egalitarian, high trust culture in which men and women have equal rights? Human societies are fragile. That is the message from many historians as well as conservative thinkers like Roger Scruton. I wish Swedish politicians would be humble enough to realise that they might be wrong. If they are wrong, the consequences will be dire. Unfortunately, being conservative is an insult in Swedish.

Postings on generic strategies

Strategy students: This positing contains a summary of my earlier postings on generic strategies.

Share price for strategy analysis

It is often be useful to study the historical share price of a company. The historical development can tell us what strategic actions and initiative that are liked and disliked by the investors. We should not assume the investors are always right, in fact they are often wrong, but it is nevertheless important to understand the investor perspective. We can also learn about the mindset of the key executives by looking whether their experience is one of growth or decline. 

For an analysis to be meaningful, the share price cannot be analysed directly. In particular it is important to remove the effect of the general stock market. In finance, the resulting time series is called the company's abnormal return. This post will outline how to describe a company's abnormal returns and what kind of question you can ask yourself when analysing the abnormal returns.

Western companies failing in China

Companies entering foreign markets can make large mistakes by not adjusting sufficiently to the local environment. This is especially the case with Western companies entering China, because the cultural gap is large. This note will focus on failures relating to strategy.

CEO and strategy fit

The chief executive officer is an important person. Can anything important be learnt by watching a video of the CEO?

Cultivate your network

Once you have created a social network, it has to be maintained. In this note I describe three strategies to help you maintain your network. This is part two of three.

Create a network at university

Business schools are ideal places to create and extend your social network. In this note I describe five useful strategies. This is part one of three.

Is the growth-share matrix (aka BCG matrix) useful?

The growth-share matrix was created by BCG, the consultancy, in the late 1960s based on work with a paper mill. Paper manufacturing is dependent on economies of scale and economies of learning, so market share went on the x-axis. Companies want to grow, so growth went on the y-axis. This model turned out to be immensely successful for BCG and it was implemented by many companies in the 1970s. 

Should the international community allow ethnicity to determine country borders as a principle?

The Ukrainian region Crimea is predominantly ethnically Russian (or at least Russian speaking). If the citizens living in this region want to secede and join Russia or form their own nation state, should they be allowed? According to the Ukrainian constitution, secession is not allowed by a plebiscite unless all Ukrainian are allowed to vote. I find this question quite fascinating and we are likely to face many such questions in the future. 

Morphing political parties in Sweden

Sweden has two elections this year, one for the European Parliament and one for the Swedish Parliament. I am going to write a bit about Swedish politics from time to time on this blog. I came across the site Political Compass, which uses a modified version of what is normally called the Nolan chart; consider it the standard map to describe political parties. 

Setting the stage for disappointment in online advertising

This note is about the difficulties of forecasting. The investment analysts are generally very optimistic about the future. When coupled with a focus on individual companies, they can end up forecasting that all companies will increase their market share. I will illustrate with the online advertising industry. The chart below highlights nine important companies in the industry. Google is the leader with more than 50% of the market. Facebook, Baidu and Twitter are the promising up-and-coming companies. Microsoft, AOL, and Yahoo are yesterday's companies.

Synergies

Synergy is a catch-all term used to describe the financial consequences of two business-units belonging to the same corporate parent as opposed to being two independent companies.

Business unit 1  +  Business unit 2  +  Synergy   =  Combined value

What can the resource-based view of the firm teach managers?

A lot of academic writing in management has dealt with the resource-based view of the firm and dynamic capabilities. This short note argues that these two ideas are not very useful to understand strategic management. Instead I argue that the value chain and core competencies are much more useful ideas for managers.

Facebook's acquisition of Whatsapp

This note looks at Facebook's acquisition of Whatsapp. Before writing the note, I was inclined to believe Damodaran's conclusion that the acquisition price was astronomical. However, after running some models I have concluded that the acquisition is okay given Facebook's high current valuation. The key issue for Facebook is to justify its current valuation, not justifying the acquisition of Whatsapp.

The Swedish establishment's schizophrenia

I have lived ten years in multi-cultural Singapore and I thought I should put down my reflections on the current immigration debate in Sweden. This note is written for people that already have some understanding of Sweden.