NBA Strike

Many people like myself are questioning why the NBA continues its strike/lock out. Basketball is the fastest growing sport in China and other Asian countries. It is a popular Olympic sport with high international visibility. There are changes in the technology of sports broadcasting and consumption making it possible for fans all over the world to follow their favorite players and teams. Yet players, owners, and even fans do not realize what a big mistake it is to continue the strike. Major League Baseball has a history of combative labor relations between its owners and players. The players regularly threaten to strike for more money or hold out for more money or free agency. The owners claim they are not making money yet no MLB team has true open book accounting. This combative relationship is what led to a diminished fan base in the 1980’s and a surge in popularity for the National Football League.

Currently, there are more appealing sports and entertainment options for Americans to spend their money and time and the longer the NBA strike persists the more likely those fans will never come back. Examples of other attractions include NCAA basketball, football, soccer, baseball, movies,  music, and many others. Additionally, Americans now spend less money and leisure time (as a percentage of their income) attending sports compared to Europeans or Latin Americans.

Unfortunately, as with any sport, the nature of the game itself is not enough to attract the interest of the mass public. Professional basketball must develop and promote players and coaches who embody the personality traits and style that fit the fan’s tastes. This has been a problem in the NBA, which is often connected to fighting or promoting the ultra rich lifestyle of its most successful stars. It appears as if ego is preventing the NBA players from agreeing to a salary cap which is essential for the leagues survival.

In summary, the key issues preventing an NBA labor agreement are the addition of a “hard” salary cap and open book accounting. Owners must be willing to open their books and share profits, so if the league grows through expanding its fan base in China and other markets, the players can earn a percentage of those profits. Players should be willing to take a smaller percentage in guaranteed  compensation and be willing to profit as the NBA pie grows internationally. Let’s hope the level heads succeed and convince a majority to put their disagreements and grudges aside for the good of professional basketball.

Five Forces

Two well-known models in use for strategic planning have their roots from the Harvard Business School. The analysis of strengths, weaknesses, opportunities and threats (SWOT) was a popular Harvard model from the early 1980’s . It is the most commonly used model for identifying the key advantages and disadvantages of products and services. It is also helpful in analyzing competition.

Michael Porter’s Five Forces is another useful model by whichcompanies can analyze their market position within an industry. The Five Forces model goes beyond the typical Strengths, Weaknesses, Opportunities and Threats analysis and  identifies ways in which the market is susceptable to change from external forces such as technological advances. It forces institutions to predict or explore substitutes .

Porter’s thesis with Five Forces is that the level of competitive rivalry is paramount to how to best strategically plan.With the Porter model, outside influences such as buyer’s power are considered along with other key questions not included in a SWOT analysis. Porter, who hails from the Harvard Business School, first developed the Five Forces Theory as part of his strategy treatise, “The Competitive Advantages of Nations (1986). Porter’s Five Forces theory provides an alternative framework to analyze markets beyond the strengths, weaknesses, opportunities and threats paradigm and is highly recommended for new ventures or start ups.

Welch on People Management

Jack Welch, former CEO of General Electric said “ Look, in a time of drastic cutbacks, spending money on anything can set off a deafening sound and fury. But don’t let the noise overwhelm you. In fact, try to break through it to get your people to listen as you talk about down-the-road ideas.

The future you describe will need to be exciting and promising to overcome organizational fear and cynicism. You just have to help people understand that someday the organization will be different—and better—with everyone’s determination and buy-in” . Welch understood that in both small and large companies, who is “on the bus” is as important as thinking of a more propsperous future. Being on the bus meant aligning your personal goals and objectives with those of the new venture.
Welch was famous for instituting a system at GE where senior managers ranked their employees 1, 2, or 3’s. If you were a 1, you were considered a top preformer. The rating of 2 meant you were considered more of a marginal employee in some ways, but a solid contributor overall. The “3” rating meant you were out of a job at GE. This system kept people contributing at a rate that produced some of the best productivity in the history of GE.
Many people were highly critical of Welch and his management style, calling it “draconian”. However, his philosophy of keeping a rewarding the 1’s has been duplicated by many successful companies.

Occupy Wall Street

If you have not read Atlas Shrugged by Ayn Rand you might want to take a look at her economic scenario by reading the book. It is prophetic in how it describes the economic challenges our country faces today. My last reading helped me better understand the Occupy Wall Street movement too. This movement is a blatantly anti-capitalist group.

According to many academics, Occupy Wall Street finds their inspiration from the philosophy of anarchy.  Anarchists do not believe in a strong central government. Although many anarchists appeared happy with the election of a liberal president, they quickly became annoyed when the redistribution of wealth didn’t happen fast enough.

The rhetoric we hear most often from the Occupy movement appears to match the public sentiment described by Rand in the pages of Atlas Shrugged. In her book every profitable railroad (based in the 1930’s) or steel company was taxed or regulated out of business so the entrepreneurs set up a private state in Colorado outside the control of the federal bureaucracy.

Entrepreneurs were the real heroes according to Ayn Rand. Entrepreneurs lay the foundation for real freedom and choice. Government only helps with enforcing basic rules of law and does not get in the way. Entrepreneurs spread their wealth among those who are the most gifted and willing to risk their time, wealth, and reputation to grow the venture. And yes, those people that help them become rich and prosperous too.  Capitalism helps our economy grow.

How should our system work? Anarchists have a hard time describing their utopia because it does not sound good to most people. Chaos with clans ruling themselves? Anarchists claim it has never been tried “in the right way”. What about the cultural revolution in China or the establishment of Leninism in the old USSR? Wasn’t that a reordering of property rights and the rule of law?

On the other hand, entrepreneurs create jobs. Entrepreneurs are driven to fulfill consumer and business needs and benefit via profits.

Yes, the capitalist system is driven by the profit motive. Ideally, government provides both legal and police protection of private property but “gets out of the way of innovation and progress”. Capitalism may not be ideal, but there is no better system that has proven to work. Anarchy or Utopian societies did not work successfully on a large scale–period.

Capitalism is the engine that powers innovation and change according to Joseph Schumpeter. The reason businesses are willing to invest their savings into new ventures and hire people is make more more money (as evil as that sounds). Without government, entrepreneurs must police and protect of their own real and intellectual property.  That protection can be expensive and increase risk significantly.

Anarchists claim property rights are evil and prevent the “fair ” distribution of wealth, even if it is intellectual property or a patent.

One example of the difference between economic systems is job creation. Entrepreneurs create job opportunities for much less than the government ever could. Liberals believe government should create jobs because they can do it in a “fair” way.

As I understand it, Occupy Wall Street is all about choking off the sources of investment capital that fuel entrepreneurs and less a viable alternative to capitalism. Ayn Rand would be smiling if she could see our economic chaos today. She would not be happy to see the sympathy the Occupy Wall Street folks receive, but happy to see her predictions as played out in Atlas Shrugged nothing less than prophetic.

Global Entrepreneurism

U.S. Chamber of Commerce President Tom Donohue, recently said:“95 percent of the people we want to sell something to live somewhere other than the United States.” For Midwest Entrepreneurs going global is not a choice, it’s the road to prosperity.

Victor C. Johnson said the following in yesterday’s edition of The Chronicle of Higher Education: “American competitiveness depends on success in a world of which most of us are remarkably ignorant, and on selling things to people whose languages we don’t speak.

The competitiveness conversation must shift from “STEM” to “STEM-internationalized”— or STEMi”– a phrase commonly used to encompass all of the international aspects of learning that are available to our students today: foreign languages, curricula with global content, study abroad, foreign students on campus, academic partnerships and research collaboration across borders, and more.

This is why we created the international business major at Monmouth College. It may seem out of place to have international business at a liberal arts college, but we believe it is exactly what business students should be learning about so I continue to preach the mantra to anyone that will listen.  Johnson goes on to say “International education’s goal is–or, properly thought of, should be—to graduate “globally literate” students from our schools and colleges. Most political and opinion leaders can articulate that this is important, but it usually doesn’t make it into the competitiveness conversation. It’s as if international education were something different from competitiveness—something we might get to later once we get the important stuff done. But this is important stuff. It is simply not possible to imagine, in today’s world, a country succeeding in global competitiveness in the absence of a citizenry equipped with global knowledge.”

With the international business majors our goal is to graduate internationally –literate citizens and workers that can thrive working with colleagues from other cultures. Johnson concludes “our biggest national problems are global, and indeed knowledge is global—[all] education is international. It must be central to our competitiveness strategy to ensure that by 2020, all of our college students graduate with basic international knowledge, including knowledge of at least one foreign region, and with the ability to converse in a foreign language.”

Remember the prediction:95 percent of the people we will want to sell something to now live somewhere outside the United States. For Midwest Entrepreneurs going global is not a choice, it’s the road to prosperity.

Teaching to the Test

One of the biggest criticisms of the US education policy is success in the “No Child Left Behind” testing program does not necessarily improve that school’s performance in preparing future college students. There is a huge financial incentive for teachers and principals to raise test scores by teaching to the test. Essentially the instructor feels good when their students can “cram” all kinds of facts and figures in long enough to recall them on then exam. Then all of the “crammed” material is forgotten. Another strategy has been to commit fraud or cheat to obtain the federal funds.

What is the difference from gaining real knowledge and memorization for a day or two?Humans have two types of memory: spatial and rote. We understand best when facts are embedded in natural, spatial memory. Most educators fall into the trap of teaching to the test since accounting instructors are evaluated by their ability to help a greater percentage of their students pass the certified Public Accounting Exam or law programs are evaluated by the percentage of graduates that pass the bar exam.

Rote memorization is practiced more often than educators will admit. I spent three years living in Japan. During my stay in Tokyo, I became intimately involved in the Japanese education system both as a teacher on the undergraduate level, and as a parent with three children in Japanese public schools.

The Japanese put great emphasis on preparing high school and junior high students for the entrance exams for top universities such as Tokyo, Waseda, and Keio Universities. To the degree that a high percentage of its students pass the entrance exam, that high school will be praised as an excellent institution. The institutions that continually send a higher percentage of their graduates to these schools are able to raise tuition–the sky is the limit!

Overall, Japanese students excel in many areas because of their strong motivation to succeed and ability to transfer facts memorized in a rote fashion to spatial memory. The best students apply the knowledge and can understand how it fits into a larger scope of disciplines. That is how students can successfully tackle complex problems. They integrate the knowledge and lessons from say marketing and art to create appealing advertising. Or the drug company makes a compelling video about how their anti-depressent can change your life. They combined good science with marketing and communication techniques to create a campaign that moves doctors to prescribe the drug and those suffering with depression to request it.

Traditional schooling in Japan, however, appears to inhibit many student’s learning by discouraging, ignoring, or punishing the brain’s natural learning processes. This weakness is most evident in English instruction. Japanese students have more difficulty than their Asian neighbors in China and South Korea despite spending more time and resources on English curriculum. In order to improve education, we must address policies and ideas such as teaching to the test. Teaching to the test is often a shortcut for real knowledge and deep learning.

It is a shame our government places so much emphasis on the exam scores rather than looking at the number of graduates who successully tackle college assignments or graduate in science, math or business related subjects. This approach would allow schools to take a more holistic approach and stop teaching to the test.