By James Santagata
Principal Consultant, SiliconEdge

Ebola in the US?

You've had to have been living in a cave not to have heard about the unfolding ebola situation that has now reached the US, in Dallas, Texas, via index patient Duncan Hunter.

There's been potentially deadly bungle after deadly bungle starting with a visa issuance system which allows an entrant to self-administer their own questionnaire about their exposure to ebola to a horrible misdiagnosis and mishandling of the index patient at a local Dallas hospital which was later blamed away on "electronic record keeping"  and a "miscommunication" between hospital staff and the attending doctors.

Beyond this, there are even more questions about the mechanics of dealing with ebola. For example, it's one thing to say that hospitals need to be on the outlook for ebola both by profiling a patient (recent travel to West Africa, in particular, Sierra Leone, Liberia, Guinea? Any contact with a person, living or deceased with ebola or suspected  of ebola?) and also by looking for indicators of ebola (temperature, unexplained bleeding, diarrhea, etc.) but it's quite another thing to say what to do when you have a confirmed case on your hands.

Specifically, there seems to be a dearth of information (from all of the reading I have done and that is quite extensive) about specifics such as:

• How to handle soiled bed sheets, clothing and waste? 
  
• What is the decontamination protocol for hospital staff? 
  
• How to deal with human waste and disinfecting hospital and hospital room surfaces?
  
• How to safely draw blood (e.g, use plastic, avoid glass)?.
  
• And so on.
  

And there are critics within the medical community:

"I don’t care how advanced any industrialized nation is, there is a threshold where we will outstretch the resources and it becomes uncontrolled.”
  
Through all of this, we can see that the medical system from the CDC on down appears to be completely leadership and that's about the nicest thing I can say. Oh sure, we've gotten boilerplate statements about this ebola incident being a "one-off" situation and that there's nothing to worry about as well as statements from the CDC and other's about their confidence in our medical system "containing this before it becomes an outbreak" but the actual execution of this by the so-called medical profession has been a sideshow if not a freak show.

How could this handling be improved? Well, it first entails an understanding of what's missing. And specifically the missing pieces include:

1. Leadership
2. Communication

"The major flaws that we really found were about communication".

A leader is someone willing to step up and take charge and responsibility while also being able to handle the arrows fired into his or her back, because in a situation like this, it boils down to heavy politics and political correctness. Those persons in a position of power who take the path of inaction, will continue to be inactive until they finally see a benefit to be active or until the hits being inactive are greater than the risk of acting.

A person who is a true leader will step up immediately to the plate. In fact, any person looking for huge political gain (including a scoundrel), on either or any side of the aisle could gain enumerable benefit and power by doing so, though they would have to have a strong constitution and be street smart to stand up to the continuous volley of blackened arrows fired by the other political players.

The benefits, though, that would accrue to the savvy leader would more than offset the negative hits incurred.

The other point is that of communication. It is very clear that true communication as well as clear step-by-step planning on the very  nuts and bolts of what should be done at a hospital or medical facility either suspecting or confirming an ebola patient has not occurred or is severely lacking.

So what can we learn from this for business? What are the takeaways?

Simple.

Most persons in a position of power, including in business, cower in fear or reel from having to make real, hard calls. At the same time, those that may be willing to make hard call are often hamstrung from acting by political opponents.

However, a true leader who understands how to step in to the leadership or power vacuum and how to lead will reap untold benefits and profits while doing good.

Steve Jobs was a master of this as he demonstrated at Pixar and at Apple during his second tour of duty with the development and release of the iMac, iPod, iTunes and then the iPhone.

We need to understand that while other incumbents fought and blocked each other internally (from Nokia to Sony to name just two), Apple, with Steve Jobs' steady leadership at the helm (along with his iron fist) simply engaged in a massive land grab in numerous key market spaces.

As always, any company's greatest weakness is poor leadership and heavy politics while any company's greatest advantage is a field full of competitors who, themselves, are leaderless or otherwise engaged in heavy, destructive politics.

By James Santagata
Principal Consultant, SiliconEdge

The Sun Also Rises (陽はまた昇る ||  Yō wa mata noboru), starring Ken Watanabe (foreigners will know him from his appearances in The Last Samurai and Inception) is a riveting drama that captures the development in Japan of the nascent and soon to be ubiquitous VHS video format.

Starting as a stealth or more accurately, an unapproved Skunk Works projects within JVC (Nihon Victor Corporation) it culminated in 
the development and release of the new VHS standard to the industry.

On top of that, JVC's new format was royalty-free and competed directly against Akio Morita and his uber-powerful Sony Corporation (when you think of Akio Morita, think  about Steve Jobs before  Steve Jobs was even on the scene) and their Betamax.

Lots to takeways from this movie in terms of government pressure and cronyism in the form of MITI (Ministry of International Trade and Industry / 通商産業省 / Tsūshō-sangyō-shō) officials who had backed Betamax and, therefore, wanted JVC to deep-six their VHS format. 

Other key takeways:
- Intrapreneurship
- No Box Thinking
- Technical Innovation 
- Market-Focused Feedback Loops to ferret out new Use Cases
- Tenacity / Being Relentless
- True Leadership
- New Business Models (royalty-free industry standard)

In summation, this docu-drama really demonstrates Japanese business ethics, working styles, attention to detail and cultural expectations.

By James Santagata
Principal Consultant, SiliconEdge


"October: This is one of the peculiarly dangerous months to speculate in stocks in. The other are July, January, September, April, November, May, March, June, December, August, and February."
- Pudd'nhead Wilson's Calendar


There is no doubt that the stock market can be a very unforgiving institution but does the SEC's tactics if not self-described mandate of breaking the legs of Entrepreneurs and rolling over little Retail Investors make it any safer?

This is highly doubtful as the SEC has arguably become a poster child for the economic concept of regulatory capture, having moved from their initial role of investment information disclosure in the 1960's to their current role of supposedly "protecting investors" since the 1990's. There is also the issue that the existence of the SEC and what I term to be their "SEC-anointed" stocks injects moral hazard into the system.

But who, prey tell (spelled as intended), is the SEC protecting? 

Surely it isn't the little retail investor who has had to contend with the like of SEC-anointed fraud stocks and scammers like Enron, Global Crossing, the Steve Jobs Options Backdating Scandal and, of course, the Big Daddy himself, Bernie Madoff.

What's most amazing about Bernie Madoff's fraud is not just that he got away with it, but that the SEC had no intention of stopping him!

That may sound like an outlandish or unsubstantiated allegation until one considers the documented facts. Starting in 2000 then again in 2001, and 2005, a forensics accountant by the name of Harry M. Markopolos repeatedly notified the SEC of Bernie Madoff's fraud both verbally and in writing.  Markopolos provided detailed supporting documents only to be ignored by the SEC again and again.

Here is Markopolos' complaint to the SEC regarding Madoff where he identifies 29 Red Flags:

• The World's Biggest Hedge Fund Is A Fraud (slideshare)
  

Now it appears that the SEC is continuing their assault on both individual investors who want better returns than are available through the retail market or whom just want to invest their own money as they see fit (if they can blow their money in Vegas or on penny stocks, smokes or state sponsored lotteries why not stocks?) as well as entrepreneurs looking to raise funds for their companies.

The SEC is doing this by considering to raise the financial requirements for being designated an accredited investor. Currently, an individual accredited investor is defined as follows: 

1. a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;



2. a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or

Apparently, too many Americans have now become cashed up and have too easily overcome this financial hurdle. In the last go round, the  SEC changed the rules so that an individual's home was excluded but apparently that wasn't enough to keep out the amount of new individuals looking to invest wholesale (as opposed to retail).

To remedy this our  "protectors", the SEC,  now want to index the SEC's individual accredited investor's  financial requirements to inflation. 

Here is a comparison of the current requirements and what the future requirements would mean:

An individual accredited investor is now defined as someone with $1 million in net worth, minus the value of their primary residence, or with annual income of $200,000 in each of the two most recent years and with a reasonable expectation to bring in the same income level in the current year..

The inflation indexed requirements would be about $2.5 million of individual net worth while the annual income requirement would rise to $450,000.

The SEC is offering some protection no doubt, but for whom? It seems this protection is more likely to benefit fraudsters and incumbent wholesale investors than entrepreneurs looking to raise money and the little retail investor.

http://m.bizjournals.com/sanjose/news/2014/05/20/more-than-half-of-angel-investors-could-be-barred.html

By James Santagata
Principal Consultant, SiliconEdge


With Apple's rumored acquisition of Beats Electronics for up to $3.2 billion USD it begs the multi-part question:

Is this something that Steve Jobs would have done during his tenure, is this good for Apple or does it suggest that Tim Cook is simply a corporate lackey?

Looking at the M&A transaction history for Apple, even when adjusted for inflation, we see that Apple has never made an acquisition approaching this size, not even the acquisition of Next Computer.

Why is this?

Well, for one, Steve Jobs had massive business acumen, he apparently understood that in these large acquisitions there are two main risks.

First, is the integration risk of corporate cultures. 

Second is the fact that in many cases companies are just paying for goodwill that never existed or quickly evaporates once the acquisition is completed.

$500 million USD is a good chunk of change. $3.2 billion USD is even larger. With that kind of money, a stud like Steve Jobs could have built something from scratch and then owned the market.

Evidently, Tim Cook can't create or drive organic growth; he seemingly can only acquire and focus on accretive growth.

Nothing wrong with that, if it works and that's Apple's new "strategy" but it would be a massive departure from Apple under Steve Jobs since firms like Google and Microsoft are the ones who buy billion dollar businesses; Steve Jobs is the one who creates them.

And what exactly makes Beats Electronics so valuable to Apple? This reader comment found on the Register website didn't seem to think there was much there:

By James Santagata
Principal Consultant, SiliconEdge


If it seems that we're under a constant barrage by the Western Media Myth (WMM) that (a) Japan is "failing" and that (b) this "failure" of Japan's is primarily due to Japan's "talent problem", it's because we are.

We're also told through this WMM that Japan's supposed "lack of talent" has further manifested itself in such as way as to be responsible for Japan's supposed "lack of creativity" and "lack of innovation", thus, contributing to again, the so-called "Lost Decade".

However, just when the WMM would have us give up all hope that Japan can saved, the WMM preaches that these "unique problems" that Japan faces can simply and quickly be solved by (a) increasing the number of English-speaking Japanese and (b) internationalizing the apparently "backwards" Japanese-only speaking speakers and/or (c)  increasing the number of immigrants  Japan accepts. Apparently, the WMM proponents believe that even a US-Open Border policy would "help" the Japanese economy if not "save" it.

To support such silly myths, memes and the previously proposed "solutions", the Western Media often holds up statistics showing Japan's lack of internationalized workers (however you define this), Japan's relatively low TOEIC and TOEFL scores compared to other Asian countries as well as the dearth of Japanese college students now studying overseas compared to the figures thrown up by countries such as India and China (for the record, the Japanese figures are low even when comparing this on a per capita basis, but this begs the question -- so what?).

As I have argued for over a decade now, these claims and even statistical comparisons by the Western Media are not only useless but downright dangerous to those that want to fully understand Japan's current situation as they ignore the real root causes of Japan's underperformance.

And note that I say "underperformance" here and not failure. As the third largest economy in the world (behind China that has ten times the population along with zero controls on economic externalities), it's pretty silly to continue to paint Japan as an economic basket case or the "sick man of Asia".

The key to all of this is to understand that Japan lacks leadership. That is what is hampering Japan.

Japan doesn't lack creativity, Japan doesn't lack innovation, Japan doesn't lack talent and Japan doesn't lack  English-speakers, although Japan could improve in all of these areas. 

The Western Media's arguments or framing of these issues, especially in terms of Japan's supposed lack of  "English-speaking" talent becomes even sillier when we consider that it ignores what I have deemed the "tip of the spear" or "tip of the sword" strategy.

As I have stated many time before, business is warfare, the only difference being that in business there is no Geneva Convention and prisoners aren't routinely taken.

In a war, it is considered completely unwise to judge the strength of an army solely by the total number of troops. One must judge an army by its effectiveness in killing and maiming people as well as smashing, burning and breaking things. One would also be well advised to measure an army's effectiveness in terms of its ability to project power. Again, the number of troops is mostly irrelevant.

This becomes even clearer when we analyze a war dominated by air power,

In such a case you don't measure a military's effectiveness by the number of pilots deployed in theater or even the total trained (and active) pilots but rather you measure a military's effectiveness (related to these air campaigns) by the efficacy of the pilots that are deployed and the results which they attain.

For instance, even on a conventional basis, one pilot and perhaps one navigator can wreak enormous havoc on an enemy force, and yet, this one pilot and navigator are backed up by thousands of others ranging from ground crews that handle maintenance, fueling and ordnance. Air traffic controllers to mid-air refuelers (who in turn are supported by their own ground crews) and this ripples through the entire supply chain from the men and women who cut the paychecks, the cooks, the water purification teams, the truckers, the doctors and dentists to the nurses and so on. 

Thousands and thousands of non-combatants are involved to support a relatively small group of pilots and this doesn't even include all of the time and effort that went into designing and producing each plane and each weapons systems, all to support one pilot and perhaps one navigator.

And yet it works because that plane and that pilot are, indeed, the tip of the spear.

You can see this as well in a US Navy Carrier Task Force when you consider how many personnel are on one aircraft carrier -- mutiple thousands. And this one carrier in turn supports a relatively small group of pilots. But it goes far beyond this, because that one aircraft carrier is in turn supported by a group of other ships - submarines, cruisers, destroyers and so on.

All of these assets and personnel are supporting this one aircraft carrier which in turn supports her air crews who are, by definition, the tip of the spear.

Unsurprisingly, businesses and economies work in the same way. This should be common sense and yet evidently the Western Media still doesn't get this nor does most of the Silicon Valley "Cheerleader Press".

In concrete terms, what does this mean for Japan?

Well, this means that in Japan not every person or employee needs to speak English or be internationalized. It's a silly notion to assume that they do. Moreover, even if each Japanese worker did have these skills there is no guarantee that the Japanese economy would stronger since there is a huge opportunity cost to skill-up in these areas which could, in fact, dampen Japanese creativity, innovation and productivity.

In any event, today I was back on site at a client (a Japanese domestic firm), running interviews for 2015 college graduates. I had eleven Japanese and several foreign student candidates lined up for today. This was in addition to the 15 Japanese candidates I had interviewed for the same client the week before.

And once again, I am and have been extremely impressed with the quality of all candidates, both Japanese and foreign candidates.

This simply adds more empirical evidence to my long made argument that Japan doesn't suffer from a lack of talent, creativity or innovation.

No. 

Japan suffers not just from a lack of but a dearth of aggressive, quality leadership which is able to effectively and profitably deploy and monetize the outstanding domestic and international talent that is already onboard or can be readily acquired.

To counter balance this lack of leadership and the resultant underperforming or ossified firms it produces, Japan must create and maintain a very healthy entrepreneurial ecosystem.

An ecosystem that can continually challenge, engage, kill and compost underperforming  incumbent Japanese corporations, especially ossified incumbents, wherever they may be found.


Related Background Articles:

• Japan's Problem: Severe Lack Of Leadership Not A Lack Of Innovation Or Creativity (Full Interview) (The Globe & Mail)
  
• The Truth About Japan: Can Japan's New Startup Spirit Revitalize The Japanese Economy?
  
• Can Japan Compete Globally? You Betcha And Here's Why
  
• Japan May Be Able To Compete Globally But Not Yet
  
• Can Japan Compete Globally? You Betcha And Here's How
  

By James Santagata
Principal Consultant, SiliconEdge


Former Wall Street Journal technology reporter Yukari Iwatani Kane has published a new book entitled, "Haunted Empire: Apple After Steve Jobs" and I'm here to posit, that without even having cracked open one page of this book she is spot on, at least with regard to her provocative title.

"But wait, what? How could she be right?" 

"How could that title be right?"

"How can you, James, be such a pompous ass to think you know anything about Apple let alone judge Kane's book by its cover?"

"Doesn't Apple create magical products? It's true that Steve Jobs has passed on but the same great staff, the same great workers remain!"

And all of that is true.

However, to understand why the title of the book is right and why I'm right we need to honestly and objectively understand who Steve Jobs was and what made him so successful and Apple so successful under his leadership.

And leadership is an operative word here.

At the same time, we need to understand that competition doesn't operate in a vacuum so we must ask, "What made Apple's and Steve Jobs' competitors so timid? Why didn't they respond and counterstrike?  Better yet, why didn't they create the iPhone type phone, the smartphone first?!"

And the answer is simply it goes back to the structure and dynamics of office politics and power within a company. The real shock should not be that Apple, with zero experience within the mobile phone industry, built and released the blockbuster iPhone but that none of the incumbent handset makers did!

Where was Nokia and their smart phone? In fact, where were the rest of the handset makers?

And that is the real shock. Not that Apple made a smartphone but that the 800-pound Gorillas gave them an opening and then didn't pounce and kill or even defend their territory.

However, if you've taken one of our related coaching or training sessions (How To Beat Silicon Valley's (and other) Fast-moving Startups At Their Own Game) or just intuitively understand Office Politics and Power (aka Organizational Politics & Power - OPP) this not only comes as no surprise but rather it both predicted and expected. And once you understand Office Politics and Power, you can quickly see and understand why and how Apple under Steve Jobs beat Sony to the next iteration of the Sony Walkman which became known as  the Apple iPod. 

It helps one also understand why and how Larry Ellison discussed the Net PC (in the mid-1990's) but Apple built it (the iMac), and why Apple could add some basic design features and colors to it to make a hit while intra-company rent-seeking behavior at the competition prevented them from responding or competing let alone getting that to market first.

OPP also explains why and how Jobs could do the same with Pixar while a former Disney employee, John Lasseter, who suggested as much years before Jobs ever thought about animation or rendering farms was let go (or summarily fired depending on the source one references) from Disney, only to have it all come full circle again with Disney acquiring Pixar. 

Go figure! 

And, of course, it explains some of the biggest daddy ball drops in history such as Xerox PARC and their full blown PC and related projects (which later became reflected in industry leaders like Apple, Adobe, SGI and 3Com) and Kodak with their digital camera years before the competition had one...that all went to waste...

I've talked about that in detail here, about the Myths About Steve Jobs and how is personality and ethos, while celebrated within Silicon Valley (and beyond) is actually completely anathema to traditional Valley ethos.

Reference: Steve Jobs: The Man Who Broke Every Myth & Meme In Silicon Valley & Become A Legend

The problem then, is that a company (any company, including a post-Steve Jobs Apple) needs a strong leader who is unafraid to break eggs to make omelettes and unafraid to slaughter sacred cows for burgers or even just for fun. They also need a leader who is not just unafraid but actually enjoys and even thrills in steamrolling the competition and taking the troops straight up the middle as Alexander the Great did to Darius during one the Macedonian-Persian wars.

As a further piece of evidence, one only needs to consider that the Akio Morita, the founder of Sony, was Steve Jobs while Steve Jobs was still in diapers. Moreover, Akio Morita was extremely aggressive, even actively counterattacking industry special interests who tried to have the courts block the Sony Betamax recorder. Morita was successful in defending this and in ultimately escalating this to the US Supreme Court  with Sony (and consumers) coming out as the victor.

• U.S. Supreme Court: SONY CORP. v. UNIVERSAL CITY STUDIOS, INC., 464 U.S. 417 (1984)
  
• U.S. Supreme Court decides Universal v. Sony, as VCR usage takes off
  

Tim Cook being the nice great guy and "steady, paint by number operator" he is (certainly he's the first guy that I would hire or consult with to determine what color doilies to lay out for my dinner party), shares none of those characteristics with either Steve Jobs or Akio Morita.

So now lets move on to more questions regarding Job's selection of Cook as his successor.

• Did Jobs not know what made Jobs so successful?
  
• Did Jobs think that Cook had what Jobs did to keep Apple thriving? 
  
• Did Jobs think that Apple now needed a "steady, paint by number operator"?
  
• Did ego get the best of Jobs and he wanted to forever ensure and enshrine his legacy by making sure that his successor could only perform to a level that would make people wish that and wonder what Steve Jobs would have accomplished or would be accomplishing if he were still alive?
  

By James Santagata
Principal Consultant, SiliconEdge

Well, if you haven't heard the news yet the Valley M&A buying spree continues unabated, this time with Facebook snapping up mobile messaging company WhatsApp for a hefty $16 to $19 Billion USD (depending on which news source you reference).

• Facebook Enters $16 Billion Deal for WhatsApp (New York Times)
  
• Facebook Buying WhatsApp For $19B, Will Keep The Messaging Service Independent (Tech Crunch)
  

There are many lessons and takeaways from this acquisition but allow me to focus on just a few.

1. Ignore The Cheerleader Tech Press:
WhosWhat? WhatsWho? WhatsApp! Personally, I wasn't aware of WhatsApp before this acquisition as I don't use the app and I'm mostly a user of Viber and Skype so I can be forgiven. However, within the Silicon Valley Cheerleader Press, especially Tech "Apple-Twitter-Quora" Crunch and even Pando Monthly and VentureBeat, I'm sorry but even as frequent if not habitual reader, I just didn't see the coverage. How could this be, how could they miss it, a huge multibillion dollar company? 

The answer is simple: Why would you expect the Cheerleader Tech Press to get it?

2. Companies Can't Pick Top Talent: 
It turns out that before co-founding WhatsApp, Brian Acton formerly worked at Yahoo in a quite senior / important position. After over a decade at Yahoo, he left to take some time off and then applied for a new position landing interviews with at least a few major valley tech companies such as Facebook and Twitter. However, he was rejected at both. Perhaps these rejections were due to Action being incompetent. Or perhaps Action interviewed poorly and no communication skills? Or is it perhaps more likely that these companies or at least the hiring authorities at these companies either (a) don't know how to select top-shelf talent and/or (b) allow office politics and threats to an incumbent employee's ego or career path to dictate who gets hired and who doesn't? Examples are where a senior person with top skills scares a younger or less experienced manager from making the hire -- doubt that? It happens all the time. All the time. And it costs companies millions if not billions per year.

Oh and it makes you wonder, if Facebook had hired Acton, would they have gotten him to build WhatsApp for a lot less than the $19 Billion USD they paid for it? Or would WhatsApp never be built and fall into the "Innovation Lost" point below?

3. Leaderless Rather Than Leadership and Innovation Lost:
Perhaps the biggest lesson is why Yahoo, which had him onboard for over 10 years didn't extract this value, this innovation  It's possible that Yahoo was simply so completely leaderless and rudderless that they didn't even know what to have him do. Or perhaps he tried to be innovative and got his hands slapped.  Whatever the reason, it's clear that Acton had some innovative ideas inside of him and more importantly he had the confidence and motivate to start and execute. But it's clearly not just a shame but a multi-billion dollar tragedy that Yahoo had him on the payroll all those years, had him suited up and yet would let him get in the game and swing for the fences.

If you can create a company with the proper culture that has strong leadership, embraces innovation, empowers employees and hires top talent or solid talent, especially talent that either scares other firms (because it's too good) or is good inside but is a bit dinged on the outside, you're firm will do very, very well.


http://techcrunch.com/2014/02/19/how-things-change/

By James Santagata
Principal Consultant, SiliconEdge

Over the last twenty years, and accelerating in the last 7 years, not only Japan but the entire world has begun to question Japan's ability to innovate and create as companies such as Apple and Samsung rule Japan's former stomping grounds and gleefully gorge themselves on Japanese companies' bento boxes on a daily basis.

Meanwhile, once mighty and innovative Japanese firms like Sony and Panasonic bleed red and constantly try to slough off workers while peddling a staid if uninspiring set of "me-too" and "also-ran" product lines.

How far has Sony fallen? Well, it's gotten to be so bad that if Sony founder, Akio Morita, were to magically re-appear today and venture over to the front entrance of Sony Japan, he wouldn't  recognize the place.  Worse, if he then decided to apply for a position, not only wouldn't they hire him, they'd most likely call security and have him escorted off the premises.

But all is not lost. 

In our No Box Thinking™ (Volume 3), entitled "How Struggling Japanese Companies Can Beat Silicon Valley's Fast-moving Startups At Their Own Game" we go through exactly what has happened, what has changed and how, in a short time and by using some talent management adjustments, Japanese firms can again perform at our above that of their competitors.

By James Santagata
Principal Consultant, SiliconEdge

“Core competencies are different for every organization. But every organization needs one core competence: innovation.”
   - Peter Drucker

By James Santagata
Principal Consultant, SiliconEdge


Business Is Simply Warfare Without The Pleasantries and Veneer of the Geneva Convention