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82 results found.
Every time I take a walk around a company that I’m working with and talk to employees I hardly know, I discover something interesting about the business. As often as not, that something is a problem.
Some of the problems are small. Some are serious. Many of them are years old. What’s shocking is that they almost always come as a surprise to the CEO.
On a recent walk around, for example, I discovered that there was a glitch in the way orders were processed. (And we’re talking thousands of orders every day.) Not only was it causing week-long fulfillment delays, a shocking number of orders were simply dropping out of the system.
Since the problem had developed over a long period of time, the decrease in revenues looked like a gradual decline in sales that upper management was attributing to a weak market.
After alerting the CEO to the problem, it was solved in less than a month. But during the investigation, it was discovered that at least half a dozen line workers had tried to contact management about it. Somehow, their concerns never reached anyone that paid any attention. I would estimate that the total loss in revenues had been millions and millions of dollars.
I discovered a less-dramatic example earlier this week. When the receptionist in one of the company’s buildings has to leave her desk, she asks the people in the mail room to back her up. But the people in the mail room can’t always hear the doorbell ring. So if you ring the bell when the receptionist is gone (as I did), you are likely to stand there for a very long time.
This isn’t the sort of problem that can (usually) stop your business cold or whose cost can be calculated in dollars. But it can damage your business in small but significant degrees. (In this case, if you consider the fact that it was going on in the building that houses the company’s top brass, you can imagine the impression it was having on VIPs that came by for appointments or meetings.)
Many senior executives I know pride themselves on being “big picture” people. They rely on subordinates to identify problems and solve them. Or at least bring them to their attention if an easy solution isn’t available. That only increases the risk that such problems will arise all over the place and go unnoticed for who knows how long.
When you’re at the top, it may feel like everything is going smoothly. But down below, there could be dozens or even hundreds of flawed processes and protocols that are eating away at your business like termites in a wooden building.
This should not be a new idea to anyone with even limited experience in management. Experts call it “incremental degradation.” It’s a term that’s usually used to describe the process of gradually degrading product quality by chipping away at production costs. However, entropy operates at every level and in every part of every business: customer service, production, fulfillment. Even sales and marketing.
Business termites are a fact of life. And unfortunately, there is no sure-fire, one-step way to identify and exterminate them. But there are several things you can do to keep them to a minimum.
I asked Bismarck, the resident director of FunLimon, our family’s community center in Nicaragua, how that “whacky solar power experiment” was going.
He said the panels and related equipment were installed and that the system had been active for nearly two weeks.
“Do we know how well it’s doing?” I asked. “Like how much of FunLimon’s energy it’s going to be supplying?”
“I just got a report from Alan V,” he replied. (Alan V is Rancho Santana’s chief engineer.) “He said that it will be supplying all of it.”
“All of it? Really?”
My longstanding impression of solar energy was that it was costly and inefficient. I knew that progress was being made. But I never expected that these panels, located on top of the roof that covers the basketball court, would be sufficient to power the classrooms, administration buildings, gymnasium, and irrigation system.
Bismarck and I went over the numbers…
It cost $45,000 to install the solar system, including the panels and the batteries and all the equipment. We’ve been spending about $800 a month on electricity at FunLimon. So if the system does indeed provide all the energy we need, the payback will take about five years. After that, the cost of our power will be de minimus– only what it takes to maintain the equipment.
I contacted Alan directly, and he reminded me that the system he had installed a year earlier was now powering most of our company’s buildings at Rancho Santana, including the hotel, clubhouse, restaurant, and a dozen related structures.
I did more research. And it turns out that solar power has come a long way from its crude beginnings 40-odd years ago. Back then, it was, as is often the case with new technology, not just inefficient but very costly. So costly that many predicted it could never compete with fossil fuels. It took almost 30 years to bring the cost down to $8 per watt in 2010. Today, it’s dropped, on average, to about $3 per watt, with some systems producing energy at half that cost.
This astonishing reduction is the result of making solar panels more efficient while, at the same time, reducing their costs. A parallel advancement was made with the batteries that store the energy produced by solar panels.
I saw a PraegerU presentation recently that argued against the effort towards alternative fuels. Fossil fuels, it said, provide 99% of the energy in the world today, and that percentage will not drop by more than a point or two over the next 50 years.
But based on what we are actually experiencing in Nicaragua, I find that hard to believe. If solar panels can pay for themselves in five years at FunLimon and at Rancho Santana, why can’t they do the same for millions of businesses all over the world?
If you are interested in an explanation of our system, you may find the following edifying:
The attached picture is a screenshot of the solar system application at 9:25 a.m., local time.
As you can see on this picture attached the icon means as below:
1) The solar panels are producing 6.91 kw at this time and delivering that power to the facility (FunLimon), see the upper left icon at the screen.
2) The facility is demanding or consuming 10.39 kw of power at this time, see the icon at the center of the screen.
3) The public power company is supplying 0.05 kw, see the icon at the right side of the screen.
4) In order to minimize the utility power consumption, the solar system is providing 3.43 kw to the facility from the battery (see the lower left icon at the screen, the battery charge state at this time is 22%) at this time to compensate for the demand, so if we add 6.91 kw from the panels and 3.43 kw from the battery we get 10.34 kw plus 0.05 kw from the utility power company for a total of 10.39 kw (see item 2).
In other words, right now (at the time of the screen shot) FunLimon is only using 0.05 kw out of total power consumption of 10.39 kw from the public grid, that is only 0.48%. The system is very dynamic and it changes slightly about every 5 seconds as the sun’s intensity and power demand varies….
The protocol is that when the solar panels are producing less than the power demand, the system uses the battery charge to compensate and minimize the use of the public grid. When the solar panels produce more than the power demand the system takes that excess of power and starts charging the battery. The idea is that at the end of the day on a normal sunny day the power consumption during the day from the public grid is going to be minimum and the battery state of charge is going to be 100% to be used at night until it gets 90% discharge….
One of the most commonly debated topics in direct marketing is how much and how often one should market to a customer or potential customer. The most common answer is: Enough to make sales but not so much as to become annoying.
This is not true. More importantly, it is the wrong question.
Like every other semi-science, direct marketing is awash with “proven facts” that are bogus. One of these is that information publishers should give their customers at least as much non-promotional education as advertising.
You can find studies that support this position, but they are almost always small and specific. And that means they are unreliable.
I was once in love with marketing “rules” and tested every one that appealed to me. What I found out after thousands of tests to millions of customers was that there are very few rules that you can rely on. And even those, you cannot rely on 100%. But one of the rules I believe you can trust is that there is no limit to how often you should market to your customers.
For some, this defies logic. Advertisements are inherently annoying, their thinking goes. So if you want to have good relationships with your customers, go easy.
There is a simple fact that undermines their reasoning: The average American consumer sees more than 500 ads a day. (That number must include billboards and radio and television ads, as well as every internet ad that pops into view.) The number of ads that they actually notice might be 20% of that… but it’s still 100 a day!
Think about that. And let me ask you this: How many of the ads that you see every day do you remember? READ MORE
My first real job was as “backseat wiper man” at the Rockville Center Car Wash on Long Island. I was 14 and happy with the $1.25 an hour they paid me. A couple of years later, when I had a summer job as a housepainter’s assistant in swank Hewlett Bay Harbor, I became an “entrepreneur.”
What happened was this. My friend Peter and I were scraping the shingles on a big yellow house when the lady of the house, a Mrs. Bernstein, came out and asked for Armando, our boss. Armando’s routine was to drop us off at the work site at 7:00 a.m. and disappear until 5 or 6 in the evening.
We were left to do the work, with virtually no experience and only Armando’s advice on watering down the paint and “dry rolling” the second coat to guide us. (Dry rolling is when your painter pretends to be giving you a second coat when, in fact, his roller is dry. This allows him to get the job done twice as fast and save a bundle on the cost of paint.)
“I’m onto your boss, Mrs. Bernstein said. “How much does that cheap bastard pay you?” We told her. She harrumphed and disappeared inside. When she came out, she announced, “I just fired that good-for-nothing. But if you know what’s good for you, you’ll be here Monday morning. I’ll pay you an extra dollar an hour to finish this job properly.”
The point of this little story is to illustrate how I accidentally started working for myself. (Some other time, I’ll tell you what happened when Armando discovered our duplicity.)
I just fell into it. And I loved it. I although I didn’t stay in the painting business very long, the experience of having my own business became a habit that continued, with a few brief exceptions, for the rest of my life.
The stories that are told about entrepreneurs are about men and women with dreams. People who imagine building and selling better mousetraps, who risk all their money and time to make those dreams come true.
My story is not nearly as dramatic. And that’s probably why it’s seldom told. But it’s not a bad way to begin.
What Peter and I did, unwittingly, was to start a business by “knocking off” the business we worked for.
And this is not a terrible idea. (Well, that depends on how you do it.) In fact, it’s probably the easiest and surest way to become an entrepreneur. And I’ll bet it’s the most common way as well. Way more common than having the dream.
Last week, I suggested that it takes more than an idea – even if it’s a really fantastic idea – to attract potential investors. You need to prove that your idea has legs by turning it into a working model.
But then what? Once you’ve got a working model, where do you go for the money you need to turn it into a business?
In general, there are four sources of capital: venture capital firms, government agencies, commercial banks, and private investors or partners.
If you think your idea might be of interest to venture capitalists, check out the National Venture Capital Association (nvca.org). But for the average entrepreneur, venture capital isn’t a possibility.
As Paul Lawrence explained in his article “Raising Capital for Small Business Ventures”:
Yes, some venture capital firms will invest in new businesses, but such businesses are usually involved in technology or some other high-growth area. Frankly, for most small businesses, venture capital isn’t even an option. It’s rare for a small-business concept to have the kind of mammoth payoff venture capitalists look for.”
Plus, the cost of doing business with these companies is high. It’s basic economics. Their risk is high, so their reward must also be high. Even if you were to interest a venture capital company in your business, you’d be aghast at what they’d want in terms of their ownership position.
What about government grants? Tim Berry, author of Hurdle: The Book on Business Planning, points out that government funding agencies usually have “social” agendas. Grants and loans are available to minorities – especially minority businesses engaged in education, antidiscrimination projects, community services, fine arts, and other politically popular objectives.You can find out if your business idea might be a candidate for government money by checking into any of the government agencies whose purpose is to stimulate entrepreneurship. The best known is the Small Business Administration.
I wouldn’t advise taking this route, though. It requires too much bending to bureaucracy. Too much artificiality. Too much red tape. Getting these loans and grants takes months (or years) of filling out forms. And there are all sorts of reporting and regulatory requirements – enough to slow down even the most patient person. Plus, government-funded business projects have an extremely high failure rate once the funding is withdrawn. That’s because they begin with an idea, not a working model. And the idea isn’t good to begin with because it is based on social policy instead of being connected to profits – which is, after all, what fuels a business.
As for getting money from a commercial bank, I can make this short: Forget about it. The only way a bank will lend you money these days is if (a) you have excellent credit and (b) you can collateralize your loan with assets. If you have good credit and tons of money, you don’t need a bank loan. You can loan yourself the money.
This brings us to the fourth and final option…
“I come from a poor family. I want to start a business and make money to help them. But when I see successful businesspeople depicted on TV and in the movies, it seems like lying and cheating and screwing people is the way to go. I’m worried. Is that what I’m going to have to do?”
This question was posed just after I had given a presentation on entrepreneurship to a group of MBA candidates at Florida Atlantic University. I was momentarily startled by it. I was sure I hadn’t said anything that suggested success in business requires a cutthroat approach.
Still, the question was understandable. When Hollywood shows us business and businesspeople, it is more often than not in a negative light. And when Wall Street, the banking community, and the insurance industry screw their clients – as they’ve done so notoriously – how could any young person think differently?
So I told the young people in my audience what I’m about to tell you.
“I believe in innovation, and the way you get innovation is you fund research and you learn the basic facts.” – Bill Gates
Even Less Positive
JM is negative. So are PR, RT, and SC. K is positive. So is PB, my trainer.
PB’s result was not a surprise. In the week between contracting the virus and having symptoms, I trained with him three times. That was three hours of proximity when I was breathing heavily indoors. So that makes two positive, four negative, and eight that are currently asymptomatic but waiting for results.
I’m back to reading the most recent studies, trying to answer the questions everyone is asking:
* How deadly will the current surge be?
* How close are we to herd immunity?
* Is the current strain of the virus less virulent than the older ones?
It’s now six months since we had our first confirmed case of COVID-19 in the US. Back then, the facts were very few and the models for predicting the infectiousness and lethality of the virus were very poor. Some of the important speculations made at the time were scarily wrong.
Today, there is loads of data to look at.
The problem is that the Corona Crisis has become so politicized that it’s impossible to gather the information you need from press reports. The left-leaning media reports almost exclusively findings and conclusions that are frightening. The right-leaning media reports almost exclusively findings and conclusions that are optimistic.
So what I’m doing is looking at as many studies as my research assistant and I can find, note the results, ignore the conclusions, and focus on the facts.
How deadly will the current surge be?
Here are the facts:
As I said on Monday, the current surge began a month ago. On June 8, there were 21,269 new cases and 908 new deaths reported in the US. As I write this, on July 7, the number of two-week-average new cases in the US is 44,343 with 705 two-week-average new deaths. The number of two-week average new cases two weeks ago was 25,274, while the two-week-average new deaths was 675. That represents a surge of 75.5% in new cases, but an increase in average new deaths of only 4.4%.
Here’s an example of the bias you’ll see in interpreting the facts. While the right-leaning media was pointing out the “good news” that the rise in the death rate has been very small, the left-leaning media was reminding us that there is an average two- to three-week lag time between symptoms and death. “Expect to see a surge in deaths soon,” they said.
That didn’t happen.
So the left-leaning press moved on to scarier stories (like the diminishing ICU bed capacity in Texas and Florida). And the right-leaning media has been reporting on studies that suggest the current strain of the virus might be less virulent than what we experienced in March and April.
Whatever the reason for the currently low death rate, the fact is that new cases are still climbing. And they are likely to keep climbing until social distancing becomes widely practiced among the younger populations.
My guess is that the current surge in new cases will peak soon, probably in the next week or two, and then it will fall, almost as fast as it climbed. But then we will have a second wave in September or October, unless, by some miracle, we can achieve herd immunity before then.
So, how close are we to herd immunity?
Viruses don’t extinguish themselves. They proliferate until their basic reproductive rate (R0) drops below 1. And that happens only when the percentage of the population that has achieved immunity reaches a certain threshold.
The classical model that epidemiologists use to predict herd immunity estimates that the threshold for COVID-19 is around 60% of the population. But the model assumes that a population gains immunity due to a vaccination program, rather than as a result of infection during an outbreak.
Meanwhile, mathematicians at the University of Nottingham in the United Kingdom and Stockholm University in Sweden realized that different groups of people within a population spread infections at different rates. And when they updated the classical model to take into account rates of transmission in different age groups and among people with varying levels of social activity, the threshold for herd immunity was way below 60%.
The new model suggested that herd immunity would be achieved once 43% of the population had contracted the virus. At that point, the infection would stop spreading and the outbreak would come to an end.
Two other studies have suggested that the pandemic could be over sooner and be less lethal than feared.
One, conducted by the Karolinska Institute in Sweden, found that the prevalence of immunity to the coronavirus that causes COVID-19 might be much higher than indicated by previous research. And a study by researchers associated with the University Hospital Tübingen in Germany found that people who have been previously infected with versions of the coronavirus that cause the common cold also have some immunity to the COVID-19 virus.
In the Swedish study, researchers performed two tests. One was meant to identify the presence of antibodies produced in response to COVID-19 infections. The other was to check for T-cells, another virus-fighting component of the immune system.
“One interesting observation was that it wasn’t just individuals with verified COVID-19 who showed T-cell immunity but also many of their exposed asymptomatic family members,” said one of the researchers. “Moreover, roughly 30% of the blood donors who’d given blood in May 2020 had COVID-19-specific T-cells, a figure that’s much higher than previous antibody tests have shown.”
In the German study, researchers analyzed blood samples of 365 people, of which 180 had had COVID-19 and 185 had not. When they exposed the blood samples to the COVID-19 coronavirus, they found, as expected, that blood from those who had had the illness produced a substantial immune response.
More significantly, they found that 81% of the subjects who had never had COVID-19 also produced a T-cell immune reaction. This would suggest that earlier common cold coronavirus infections might provide about eight in 10 people some degree of immune protection from the COVID-19 virus.
These were not huge studies. They have to be tested again. But if they prove out, it would be very good news.
Is the current strain of the virus less virulent than the older ones?
I haven’t found the answer to this question yet.
I have read about several studies that suggest it might be true – that the strain of coronavirus that currently affects about 70% of those that are infected is less virulent than the strain that killed so many people in March and April. But I haven’t yet found those studies, so I’m going to have to report on this again when I do.
For now, I can say this: The people to whom I gave the virus and I have had minimum to moderate symptoms. That’s too small a sample to draw conclusions from, but it’s enough for some hope.
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Not So Positive
“Just as despair can come to one only from other human beings, hope, too, can be given to one only by other human beings.” – Elie Wiesel
In Friday’s blog post, I told you that I had contracted COVID-19 from someone that was, at the time, asymptomatic. So that answers one question: Yes. Asymptomatic carriers can be infectious.
But my contact with this person was not casual or brief. I spent an hour wrestling with him. As I said in an earlier essay on the virus, I can’t imagine a more efficient way of transferring a virus than by wrestling with someone for an hour.
Well, I can – which brings me to this: K tested positive. This was hardly a surprise to either of us. We had been sharing the same bed before I discovered I was infected. She, like me, has had only mild, flu-like symptoms. And yes, she’s not happy with me. She’s staying at the beach house. I’m still in the doghouse.
I’m not worried about her health. She’s youngish and super-healthy. As I said on Friday, I’m worried about the people on my “contact list.” Three, in particular, would be categorized as vulnerable. Two with a compromised immune system and one an octogenarian.
One of them got results yesterday. He was negative. He’s someone I exercise with, so I was relieved. All of which brings me to a question about the current surge in cases.
There have been several reports that these new cases are caused by a strain of the virus that is slightly different from the strain that was dominant in March and April. This new strain, some researchers are saying, may be more contagious but less virulent. If that is true, it would explain why we’ve seen such a sharp rise in cases nationwide (really, worldwide) but have not seen a rise in average death rates.
We have to be careful about comparing current cases with current deaths because of the lag time between symptoms and death. I was unable to find exact numbers, but the estimate that has been repeated is three weeks.
The current surge began on June 8, about a month ago. That’s more than three weeks. On June 8, there were 21,269 new cases and 908 new deaths reported in the US. As I write this, four weeks later, the number of new cases in the US is over 40,000 with 737 new deaths. That’s encouraging news, but it’s nothing to feel good about. The current two-week average death count has not climbed much, but it has climbed a little. My guess is that the primary reason the death count is not rising sharply is because such a high percentage of recent cases are young people. And their chances of dying from COVID-19 are relatively low.
If this trend continues, we could see the surge as a positive development in that it would be getting us closer to herd immunity. And that, as I’ve pointed out previously, is the only way COVID-19 can be eradicated. (An effective vaccine, widely distributed, is the fastest and safest way of achieving herd immunity.)
Which brings us to another question that I’ve been trying to answer since I got the bug:
Do the antibodies produced by a person who has been infected with coronavirus protect them from becoming infected again?
Here again, I rely on the best report I’ve seen on the virus recently, from Harvard Health Publishing:
Most people who are infected with the COVID-19 virus, whether or not they have symptoms, produce antibodies (proteins that fight infections). New research published in Nature Medicine looked at how long those antibodies last.
Results from this small study suggest that levels of one type of antibody dropped sharply within two to three months. However, the decrease in neutralizing antibodies, which target the spike protein on the coronavirus and can help protect against reinfection, was much smaller.
Whether or not the remaining antibodies protect against reinfection, and for how long, is still unclear. It’s possible that even low levels of neutralizing antibodies may be able to protect against reinfection. On the other hand, the presence of antibodies does not guarantee immunity.
Another consideration is that antibodies are only one part of the body’s immune response. Memory B cells, for example, can quickly generate a strong antibody response to a virus that the body has encountered before.
So that’s something to hope for.
More on Wednesday…
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June 29-July 3, 2020
a look back at this week’s essays…
Investment Real Estate Outlook for the Rest of 2020 and Beyond
I am concerned – very concerned – for two reasons…
Click here to read more.
Found Poem: In the Basement of OK Cigars
I’ve been writing poems for years. Hundreds and hundreds of them. A small percentage get into print. And most of those, when I reread them after a year or two, are disappointing.
This one was not. I like it as much now as when I wrote it…
Click here to read more.
I’ve written at least a half-dozen essays on the coronavirus and COVID-19 since the beginning of April…
On Wednesday, I found out that I was positive.
Click here to read more.
* hospitality (6/29/20)
* fugacious (7/1/20)
* portentous (7/3/20)
* “The most reliable way to forecast the future is to try to understand _____.” – John Naisbitt (6/29/20)
* “_____ is when an emotion has found its thought and the thought has found words.” – Robert Frost (7/1/20)
* “Accept the terrible _____ of life with eyes wide open.” – Jordan Peterson
* Pierre Boulle, author of The Bridge Over the River Kwai, was held in captivity by the Japanese during WWII. (6/29/20)
* According to the Becker Friedman Institute for Economics, one-third of jobs in the US can be done at home. (7/1/20)
* The US isn’t the only country to celebrate the 4th of July. America’s Independence Day is also celebrated in Britain, Portugal, Sweden, Denmark, Norway, Ireland, China, and Australia. (7/3/20)
recommended links from this week’s blog
* An amazing display of beauty, strength, flexibility, and grace…Here
* The latest issue of Independent Healing – What medical care is safe during the pandemic? Click here to read the July issue.
* Good advice from the FTC on shopping online…Here
* If you like language you will love this guy… Here
I’ve been reading a lot about entrepreneurship lately, including lots of your essays and a few of your books. I’d love to have a business of my own, but I have family to support and I’m working full-time just to make ends meet. I have zero savings, and student loans to pay. I’m not in a position to make any risky moves. People that I love and feel responsible for depend on me. What can I do?
I hear you. I was in very much the same situation in 1982 when I took a new job as managing editor of a start-up publishing company in Florida. I had, like you, zero savings, and a family to support.
There are several things I could suggest – things that involve working 20 to 40 hours a week on the side, earning extra income and learning about entrepreneurship. But that’s not what I did back then. So I’ll tell you what I did. I put off my plans to be an entrepreneur and worked like mad to become the next best thing – an intrapreneur employee working for a growing company.
I define an intrapreneur as an employee that makes himself financially invaluable to the company – so much so that he earns his way into a profit-sharing compensation plan.
Back then, as I said, I was working as an editor. I was making $35,000 a year, which was enough to pay the bills and as much as I was worth to the company. I couldn’t ask for more money for doing the work I was doing because my boss could have said “No thanks” and hired another managing editor at the same salary.
Instead, I decided to become the most important employee my boss had, which meant that I spent evenings and weekends learning the marketing game and writing advertising copy. When my first promotion was mailed and brought in a million dollars, my boss took me aside and said, “Keep that up and I’ll cut you into the business.”
Years later, after failing to retire for the first time, I took a consulting position with the business I work with now. The job I asked for was to help grow sales and profits. I accepted a modest monthly fee for working 60 to 80 hours a week. But I also got a modest percentage of profits.
That was pretty fair money as sales edged up from $8 million to $24 million to $50 million and then to $100 million. Today, profits are more than 10 times greater than they were back then.
That’s what I did. It worked out for me. If it feels like a direction you’d like to go in, the key is to work for a fair-minded boss in a fast-growing company.
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