Steve Shu's Blog

What Role Does Brand Name Play In Terms of Past Experiences?

This post was triggered by a current MBA student at my alma mater. I really should get some recruiting dollars from my former employers. It's amazing how many questions I get about my past, as a direct result of this blog.

Unfortunately, I won't be able to cover all of the ground as suggested in the title, but one item that came up from the soon-to-be grad was weighing the tradeoffs of going to one of two management consulting firms. One of the firms in question clearly had a better brand name (in terms of general recognition) than one of the firms I worked for, PRTM. One item of importance to this person was opportunities for advancement, potentially post-employment at one of the consulting firms and potentially as connected to brand strength.

In my opinion, brand name can play a role with future employers and with colleagues in an organization. This is just a fact of life. As a simple example, when I look through resumes, if it easier for me to identify with the companies that a person has worked for, I can often get a better sense of the context associated with that person. It's just a matter of instant name recognition. Of course, when I spend more time on due diligence, I try to cut through all of that so that it doesn't matter whether a person has past experience with a well-known brand or unknown brand company. All that matters is whether the person can do the proposed job, mix with the team, and flourish.

But fact of the matter in professional situations, like when I'm in a room introducing myself and there are brand names like Booz Allen and McKinsey at the top of people's minds and perhaps sitting at the same table, people will often give me less attention until I back up my pedigree with actual experiences. Only then am I able to get myself ahead or on level ground. In some ways, it's another level of explanation that I need to get through before I can get across the message of the "real me". Note that I'm not emphasizing ego here - simply the observation of how much communication time one may be allocated by others depending the initial impressions one makes based on brand name of past (or current) employers.

My original question was how much does brand name matter though? In worlds where first impressions matter more (which is not every world by any means), where there are numerous one-off interactions before people start formulating opinions or working relationships, where other people may talk about you (e.g., your boss' boss) without having much direct working experience with you, I believe that brand weighs more strongly. So I have tendencies to believe that in things like startup and engineering environments, where relationships are more closely knit, organization structures are small, and where interactions are more frequent between people, the notion of brand name will not matter so much. In a larger company, however, there may be many more one-off interactions (in certain areas of a company like business development or consulting), and brand name of your past employers may matter "more".

But to put this in context, one does not have to use the brand of the employer to put forth one's own brand. This was one of the reasons I was comfortable enough to take employment with a less well-known management consulting out of business school. It was easier for me to focus on fit, experiences that I desired, etc. as opposed to getting concerned with what company name was going to be on my resume.

When I sat down to write this post, I thought that I was going to conclude that people should put forth their own brands. At least I find that this seems to work for me, and it is probably the method I would suggest by default. But I have tried to open my mind some, and I have observed that there are some people that do quite well advancing the brands of their past employers before they advance their own brands. I have tried to think about why this may be so, and I tend to believe that the optimal path may depends on the environment in which one plays (e.g., as defined in terms of number of cold people-to-people interactions on a daily basis, the timeframe of an average interaction, the size of the organization, and the basic goals of an average interaction).

Random Thoughts on Enron Movie

This weekend I had a chance to see HDNet Film's movie/documentary, Enron: The Smartest Guys in the Room. Great movie. Helps puts some perspective on the role of vision, morals, big business, and government. Now I want to read the book.

A few things that kind of surprised me about the movie:

• I expected to see something about McKinsey per this story by Gladwell.
• It was interesting to see the breadth and depth of connections of Enron to the power troubles in California.
• The movie seemed to portray the accounting related to "mark-to-market" as evil - clearly the Enron interpretation of the technique was way too aggressive, but it strikes me  (on first blush) as incorrect to call the techniques used at Enron as mark-to-market. For Enron, it seemed more like something like "mark-Enron-assets-to-future-market-in-my-dreams".
• The movie portrays the financial analysts on Wall Street as a bunch of idiots that cannot see through the tradeoffs of accounting techniques. But this is odd to me because, at many b-schools, one is trained to adjust for things like LIFO/FIFO inventory liquidations, restructuring/"big bath" one-time accounting charges, off-balance sheet items, etc. Investment bankers are trained to walk on water to be able to see through accounting stuff and boil things down to true economic impact. Now outright deception (by the company doing the financial reporting) is something that one can't always control for, but it seems that there must have been something externally visible ...

At least for some of these points, I reconcile it all in my mind that greed can drive people to be blind.  The reference in the movie to the Milgram experiment is also very noteworthy, but I tend to prefer the temptation explanation over the more pessimistic "we just do as we're told"-Milgram explanation.

Central Banker Heaven and the U.S. Economy

Last Friday I attended the Business Forecast Luncheon in Dallas, sponsored by the University of Chicago Graduate School of Business. Guest speakers were Dr. Robert Aliber, Professor of International Economics and Finance (Emeritus) at the University of Chicago and Dr. Harvey Rosenblum, Executive Vice President and Director of Research, Federal Reserve Bank of Dallas. The talks were excellent as they were last year.

What really drives me to write this post is that we are seeing Alan Greenspan retire. When I think about things, he’s close to the only central banker that I have experienced during my entire adult/business life, where Greenspan has reigned for some 18+ years. Central banking has an important effect on business and the health of the economy, and this something that the luncheon speakers are renowned experts on.

The general consensus was that Alan Greenspan will go to “Central Banker Heaven”. More on this later.

While last year’s forecasts focused on the deficit and the exchange rates, what came to the forefront this year were three things that will impact the economy for the next twelve months. These are: the (deflating) housing bubble, term structure of interest rates (and the inverted yield curve), and the philosophies and makeup of the new chairman (Ben Bernanke).

Although I will gloss over the individual perspectives of the two speakers, my general takeaways on the three areas were the following:

• Housing bubble is deflating – Apparently in the areas of concern (e.g., Boston, Southern FL, CA), prices are starting to fall 10%ish. Well-known builder, Toll Brothers, has had its stock price fall some 50% (note I have not verified), plus they have cut back their forecast on building out. More generally beyond Toll Brothers, housing inventories are starting to build up. If one subscribes to a doom-and-gloom forecast, housing bubbles have historically demonstrated price declines of an additional 40%.
• Inverted yield curve is disturbing – In 8 of 9 times when the yield curve inverted, the economy had slumped into a recession within one year.
• New chairman philosophically tends towards being a price-level setting person, as opposed to one that takes a long-term view of the economy first – Price-level setting philosophies involve having a target inflation rate in mind and then setting the interest rates to obtain that rate. In some countries, this policy is taken to an “extreme” where concern for other factors, such as unemployment rates, are ignored. Wild cards in the U.S. include the fact that the international world is less stable, and that long-term energy/oil impacts associated with unstable countries (which may each comprise 5% to 6% of supply) should not be ignored when pursuing price-level setting at the central bank.

So all-in-all, the forecast for the U.S. economy over the next twelve months was mildly positive, with some areas for attention. The March meeting for the central bank will be key, as this will shed some light on how the new Fed chairman handles his new role.

Which brings me to my earlier about getting into Central Banker Heaven. Greenspan has been praised by having all of the key skills and a proven-performance record:

• an ability to show independence from the administration and partisan views
• deep knowledge of history and economics (which both Greenspan and Bernanke share)
• inflation-fighting skills with a long-term view.

But in some sense, while Greenspan has had all of these skills, it could be argued that he also got lucky (being good and lucky is the best of all worlds). During Greenspan’s tenure, he did not have to deal with chronic problems. Now, Ben Bernanke has a tough and important job ahead of him. He has a chronically unstable international world to deal with, and he has to show his inflation-fighting abilities with a long-term view that people like Greenspan so carefully considered.

I thank Alan Greenspan for his service. I wish Ben Bernanke the best of luck for our people and future generations.

Update (2/16/06): Bernanke addresses Congress just yesterday.

My Brief Notes On The Avian Flu

This past week I was researching some telecom reports, and I happened to run across an outlier in the corporate mix that caught my eye. It was a Gartner report, entitled "Prepare for Avian Influenza: Our Interview With the World Health Organization's Dr. David Nabarro" (sorry - subscription required).

Now I don't follow the management consulting and other firms that specialize in risk management and human resources that closely, so I thought I would check their sites out for a peek. Marsh has some information on the avian flu here. AON has something over here.

Companies and organizations do not seem prepared. A survey by the Deloitte Center for Health Solutions appears to indicate that 66% of companies do not feel adequately prepared (poll of 179 companies). Instapundit points out how hospitals could barely keep up with the normal flu here. When I step back from the business aspects and whether companies can withstand prolonged labor shortages of 30%+, etc, I am a bit more concerned that communities and families may not be prepared. At least I find myself not quite fully informed to a level that hits close to home, despite all of the press.

So I have started to make some mental notes from research reports, like those from Gartner, that hit close to home. Maybe readers will have other sources of info to share.

From the Gartner report (note Dr. Nabarro is the highest medical authority, the U.N.'s top official for global pandemic response planning), here are my key notes:

• "in the last 200 years, there have been pandemics at intervals of every 30 to 40 years, on average" - so if even if one doesn't have to be concerned about it, there could be an impact on one's children or their children
• "modellers are [saying] that it may be as few as 21 days from the initial appearance of the virus to it being a full-blown pandemic" - note that the increased mobility of people shortens the cycle-time of viruses spreading ; I ask myself, how and how fast would I personally react once something hit the continent, country, or city I live in?
• Dr. Nabarro indicated he is not sure (because he doesn't know enough about how corporations work) whether corporate CEOs should assign senior executives to coordinate their response to avian flu

It seems the World Bank estimates economic damage from an avian flu pandemic could cause $800 billion in economic damage. To put that number in perspective, Hurricane Katrina damages were estimated at $125 billion. A sickening of 90 million Americans as stated here - gee, that would be out of a population of 296 million Americans according to the CIA World Factbook. My wife and I can barely control flu in the household between kids let alone if one of every three people in the entire US is sick. What would you do?

I suppose after writing all of this down, I am not more prepared for an avian flu pandemic than I was before, but I do find myself at a heightened level of awareness. That's probably at least one step forward.

Update (1/29/06): As an aside, raders have choices of stockpiling N95 masks approved by the CDC or apparently, Kimchi (which I despise the smell and taste of).

Vintage Matters

1991 was not a great year for engineering graduates. During 1991, many engineering graduates were lucky to have any job offer in hand upon graduation. Things got better though as the years passed. 1999 was a great year for graduating b-school students that went into mangement consulting, where many got hefty signing bonuses and/or full tuition paid for. That same year, however, was a pretty bad year for associates entering the venture capital space. With the bubble, many of those vintage 1999 venture capital folks got toasted a few years later - some left the space not having closed a single deal. Some watched their firms implode after having long histories in the business. 2001 to 2002 was also a bad year for startups drawing venture capital - many venture lawyers were reporting 2x to 4x ratchets on deal terms, not to mention the bankruptcies.

In business, the "business cycle" matters quite a bit. One needs to be very sensitive to it and try to work with the trend. I feel fortunate for taking leave from the telecom space in 1999 and shifting to the software sector. I've been shifting back my focus as of recent, but the telecom and software markets are converging. While those in telecom and media may refer to Web 2.0 as broadband and Web 3.0 as 10 gigabits a second whereas by contrast those in the software industry may characterize Web 2.0 and Web 3.0 as a collaborative and interactive eras of the Internet, deals like Cisco acquiring Scientific Atlanta will likely affect how people both communicate and use the Internet. Vintage 2005 and 2006 software & communications mergers will be memorable.

Changing gears a bit, only in the past year have I started to better appreciate how important year/vintage affects wine. In retrospect, this almost seems obvious as weather affects grapes which affects wine quality. Nevertheless, in the past I have often selected wine primarily based on grape type, geography, or past experience with a wine maker and largely ignored vintage.

Well, my wife found this very cool 2-page chart for selecting wines based on vintage and region (and ignoring wine maker). This may be an easier task for some as compared to trying to remember individual wine makers, doing a lot of guessing on wine quality based on bottle art, etc. I have not verified the accuracy of the chart, but its gives a snapshot view why more knowledgeable wine enthusiasts like 2003 Rhone wines, 2000 Bordeaux wines, etc. and avoid 2002 Rhone wines (my wife and I became a bunch of winos over the Thanksgiving holiday) ...

Forget The Cluetrain, Return To Seminal Works Of Information Theory Of The 40s

Posts by Umair Haque, Fred Wilson, and Jeff Nolan are all talking about the looming attention crisis (see here & here) related to information overload and the blogosphere. Wilson captures Umair's words:

Herbert Simon said it in 1971, which is that "What does an abundance of information create?" A scarcity of attention basically, right?

It's funny that blogging is starting to replace email conversations (based on ROI), yet we are still in overload. I, for one, peaked out at reading between 50 and 100 feeds, and I needed to start to drop some and add others as my work balance shifted.

For those may not know, blogging was heavily influenced the seminal blogging work, "The Cluetrain Manifesto". The takeaway saying from that work has been "markets are conversations".

But I think with the doubling of the blogosphere hand over fist (with no end in sight on the graphical charts) we are starting to see some limits as to what people can process.

That is why I think we will see a return to works that preceded the Cluetrain by 50-60 some years in the 1940s. These are the seminal works of Claude Shannon on information theory, and much of his work was written in plain English without having to be decorated with tons of mathematics. We may find inspiration in solving some of our new problems from the information theory and related fields.

Some key items from the field of information theory:

• The essence of information can only be reduced so far before the content is distorted. This concept became known as the entropy bound. Entropy can be thought of as an energy-level contained within a message.
• Smart guys like Huffman (at Stanford when he did his master's thesis if I recall correctly) developed algorithms for organizing information so that it could be reduced using probabilities. More frequently occuring information or data patterns (i.e., higher probability items) would be encoded using short patterns (likely shorter than their original length). Less frequently occuring data patterns would be encoded using longer patterns, perhaps even longer than their original length. The net effect of structuring things in total around a probability-oriented tree was to increase efficiency of information transfer (e.g., compress information sent over a modem).
• A channel (such as a data pipe into the home, or perhaps likened to that of a blog reader's maximum ability to process information) had to have as much capacity as the entropy.
• No message could be compressed beyond the entropy bound or it would be distorted (i.e., data lost).
• But a new field grew out of this area, called rate distortion theory. Rate distortion theory enabled people to compress (and hence, process) information even better. The side effects were that one needed to control where distortion occurred. For example, much of the music contained on an iPod is not an exact reproduction of the bits and bytes on an original compact disk. At risk of trivializing the process of getting that information onto an iPod, data and information has been thrown out or trimmed from the song. That said, the audio folks try to use knowledge of the ear, hearing, music reproduction, etc. to shape the noise and distortion into an area where people don't care (e.g., in some audio processing systems, perhaps where the average person can't hear imperfections, such as above 15kHz frequency where certain cymbal overtones occur).

The blogosphere faces similar challenges in terms of capacity limitations, means for improving efficiency, and information distortion.

Feedreaders can speed the process of reading blogs. I'm guessing my efficiency in reading news went up 50%+ after shifting to a feedreader.

At some point though, I ran out of channel bandwidth using this method. What to do then?

Well as folks like Andrew have pointed out (as does Jeff Nolan in his post), people do a lot of linking to the same posts. Good case for unsubscribing to A-list blogs because you get the same information everywhere. But I suppose that the unsubscribing method for reducing information may create some distortion. One is not getting info straight from the horse's mouth so to speak.

Other methods, such as using web services to aggregate tags (as recently contracted by Nivi) are also a way to reduce information. But I suppose that this method could create distortion in that one is seeking information that tends to be the same as what you've always sought out in the past.

Another area of interest is around blog communities (as I mentioned before here in the context of BusinessWeek's b-school community developed by 21Publish), and how the dialogue surrounding these types of structures seems different to me.

I do not know the answer to the general question of how to reduce information overload most effectively (I have resorted to dropping feeds and adding new ones). But I will say that I suspect the blogosphere (and the web in general) does not pay enough attention to holes and gaps in information (e.g., can we create maps of worlds readers are missing). We also tend not to pay enough attention to distortions created by circular linking, information reduction, reinforcing lists, etc. Perhaps not mainstream concerns in the blogosphere, but I know that these types of pitfalls have to be avoided in business in general. Why should use of the blogosphere be any different?

Technorati Tags: blog, blogging, tagging, RSS, feeds

Update (11/1/05): Bill Burnham has a post on Feed Overload Syndrome.

Musings On The Initial Federal Response To Hurricane Katrina (Operations and Leadership)

Caveat: not fully thought through but based on digesting information passively over one week since Katrina hit.

I'm not sure that I've ever blogged about a public issue before, but the US response to Hurricane Katrina at the federal level touches on two areas that I have strong opinions on in the business world: these are roles of operations and leadership. There is another level to this that I am always at a heightened sense of awareness to - notably cases when an organization tries to effect change to both operations and leadership at the same time.

Operations structure plays a crucial role in the ability of an organization to respond. If there are too many layers or too many players that need to be involved, the cycle-time to respond will surely go up. Sometimes the response time can be part of an organization's product or service by design. As an example in the business world, take Pearle Vision versus a high-end glasses manufacturer. Pearle Vision markets one-hour turnaround times from order until the customer has glasses. As a consequence of a strategic goal of a one-hour turnaround time, the operations are designed to facilitate speed. Put every type of glasses frames, lens, etc. (all the inventory and lab equipment) in all of the outlets so that everything can be done on the spot. This type of operations looks quite different from a high-end, customized glasses manufacturer that may have to send things out to a centralized laboratory with centralized, high-grade inventory and lab equipment. The high-end manufacturer will unlikely be able to service one-hour turnaround times.

What has been disturbing to me about the initial response to Katrina, while it has been truly a very difficult thing to respond to (no question), is that I cannot understand regardless of the operations structure as to how the initial response could have been so poor. Thousands of people in immediate need. Chaos everywhere. Looting. Shootings. Then, after what seems like an unacceptance response time later, the federal government sends in one boat. Surely you must be joking. Maybe I'm ignorant about how military responses would be off of our homeland, but it seems if this type of situation would have happened in a war zone, we would have been much quicker to respond. But even if we weren't able to respond more quickly, surely we would have sent more resources in than one boat, right?

Now, as my wife reminds me, there are laws that separate military forces and the National Guard to prevent the occurence of coups, whereby a general could use the military to take over the US. OK. Let's presume that operations and structure weren't in our favor then. One has to fall back on the role of leadership. Only leadership and communication are left, right? So maybe that's where the breakdown occurred.

But it seems like by the recent news to dismantle FEMA and turn things over to the Department of Homeland Security, we are changing both the operations structure and leadership. Sure. Maybe both are broken. I don't know. But when you change both variables as opposed to changing one variable and holding the other constant, there's an increased level of risk, risk that we'll never know what was wrong about the past, or whether we are moving to something that is more right.

Sometimes when things are broken, you need to change everything. Gut the thing, change all the parts, etc. There's little time for engineering. Get out the machette and triage. Desperate times call for desperate measures so to speak.

In business situations, before a team ever suggested something like a full changeout either in a management consulting engagement or with an internal management situation, we made sure to think things through (even with the Board) and that that process was transparent to the parties that needed to know. This becomes even more important if the person to be delegated to is not a proven rock star.

Hopefully we will be moving in the right direction with the forthcoming changes, but I have to say that as an outsider to this and whether the new steps are right, it seems like we may be skipping some steps in our appetite for change.

Outsourcing CIOs

Debra Chamra has a good article at Local Tech Wire on outsourcing CIOs. If your organization hasn't thought about this before, perhaps a snip from the article's section entitled, "Renting, Not Buying" provides good backdrop:

And why not?  It is no secret to small and mid-size businesses that good tech help is not only hard to find these days, but potentially, hard to afford on a full-time basis.  Known for creative solutions, these organizations have decided to rent rather than buy Chief Information Officers (CIOs).

According to Aberdeen Group senior analyst Stephen Lane, “The idea behind CIO outsourcing is that you’re renting an officer of the company.  Ideally, that’s someone who has the experience to get your company started with IT while you’re building your own organization.”  This movement goes beyond standard project-based outsourcing – an outsourced CIO becomes a member of the senior management team.  Rest assured – while the role of CIO is relatively new, executive outsourcing is not a new endeavor. CEOs and CFOs have been outsourced successfully for years.

My First Amazon.com Book Review: "The Virtual Handshake"

I reviewed the book, "The Virtual Handshake" by David Teten and Scott Allen. My review is listed below and is also at the Amazon site. The American Management Association will publish "The Virtual Handshake: Opening Doors and Closing Deals Online" on August 30, 2005. Nice job by David and Scott.

As a person that sidewinded professionally into the social networking and blogging space over the course of a couple years, I wish I had the Virtual Handshake when I started my journey because it would have cut down the learning curve by orders of magnitude. The book provides a terrific overview of online and virtual networking technologies through detailed accounts of personal and business cases from around the world. Having a personal online presence has never been more important, and this book can show business people why it matters, how it matters, and where one can go to get started (in more areas than most can imagine). I have the Virtual Handshake as part of the required reading list for new employees not only because it's the best concrete book on online networking in the market but also because I want people I work with to have a leg up in the world as individuals.

It Will Be Made In India

I just put up a post over at the CIO Weblog entitled, "OEM Software Supplier Balance To Shift Towards India". The shifts occuring with India have really peaked my interest from at least two areas: 1) how the changes will affect my children, and 2) how the changes will affect the business school communities.

Although it's hard to read the tea leaves on this stuff, here's a summary of some of the forces:

• financial skills and other skills getting commoditized
• offshoring to India growing
• offshoring of business skills to India growing
• offshoring of IT to India changing from offshoring to original manufacturing
• lower, historical concentration of management skills in India
• demand for MBAs in the US in decline
• concentration of the best business schools remains in the US
• US business schools under pressure (e.g., enrollment) and in decline
• MBA want to do management
• Signs of MBAs forgoing Wall Street for India internships (NY Times article)

To put light on the difference in demand, my sources tell me that MBA recruiting in India is very, very hot. As I understand it, MBAs go through an intense one day of recruiting, and at the end of that one day each person has 5-6 offers in hand. Compare that recruiting environment to the MBA environment for US students. No comparison.

So what are the opportunities? Probably any of the following:

• Opening of satellite campuses for US b-schools in India
• Maybe some entrepreneurs will start some new universities in India (like the venture when starting the INSEAD b-school)
• Growth of executive housing and relocation services for India
• High-end real estate targeted at international executives