Communicating Vision

A common vision is the key to a productive, efficient and highly motivated team. But communicating a vision to the team is often challenging. The following story, quoted from Annette Simmons' excellent The Story Factor: Inspiration, Influence, and Persuasion Through the Art of Storytelling, helps explain the succinctness of a vision:

A man came upon a construction site where three people were working.

He asked the first, "What are you doing?" and the man answered, "I am laying bricks."

He asked the second, "What are you doing?" and the man answered, "I am building a wall."

He walked up to the third man, who was humming a tune as he worked [not sure why this is relevant, lol...] and asked, "What are you doing?" and the man stood up and said, "I am building a cathedral." (p. 16-17)



The vision brings all of the elements of a project - or of one's work in general - together, providing employees with the roots of their effort. Without vision an employee or team member is much like a tree without roots. I have found the bricks-to-wall-to-cathedral metaphor to be particularly powerful.

Perspectives on the Death of Capitalism - Part I

Following are some notes on the death of capitalism -

+ Marx was first to call for the death of capitalism – The Communist Manifesto (1847), Das Kapital (1867)
+ Herbert Stein, a former chairman of the President’s Council of Economic Advisers and an American Enterprise Institute fellow, claims that capitalism died with the advent of federal taxes (Stein, 1992). Using this rationale, one could date the death of capitalism to 1862, when the first federal income tax was imposed (during the American Civil War). However, this first tax was later repealed.
+ In 1913, Congress passed the 16th amendment to the constitution, authorizing the federal government to impose income taxes (Stein, 1992). Stein fervently believes that this was the beginning of the end of capitalism. Note that the first income tax was a paltry 2% and was applied only to the wealthiest Americans – a far cry from today! According to Stein, capitalism in the US died with Bush’s tax increase in 1990, a tax increase that was equivalent to 0.5% of GNP and led the country into recession. Stein equates federal taxation with totalitarian communism, and says that (today) ”It is taxes that make the world go round – or keep it from going round.”
+ In 1996, Lester Thurow, a widely respected economist and a Professor at MIT’s Sloan School of Business, published “The Future of Capitalism” (Thurow, 1996). Thurow does not so much call for the death of capitalism as much as for the end of capitalism as we know it.
- According to Thurow, there are five fundamental macroeconomic forces that will shape world markets in the 21st century –
* The end of communism – and the need to digest about one-third of humanity into a mostly capitalist system
* Shift to the information economy – and the geographical freedom “Man-made brainpower industries” allow for
* A new demography, characterized by two major trends:
> Massive migration from poor to rich countries, exactly when non-skilled labor is no longer needed
> New, very large class of elderly retired people in capitalist economies who depend on government payments for most of their income
* A global economy – “anything can be made anywhere on the face of the earth and sold anywhere on the face of the earth” – national economies less important, global conglomerates more important
* No dominant global power – “unipopular economic world dominated by the United States is over” (not sure I agree with this one, though)
* The two – conflicting – trends Thurow feels will bring about a massive change in capitalism as we know it are technological and ideological in nature –
* As far as technology is concerned, skills and knowledge have become the only sources of sustainable strategic advantage
* But ideologically, people are increasingly seeking to satisfy a need for short-term individual consumption maximization
* The development of skills and knowledge requires massive investments in infrastructure and education that are long-term in nature

(more to come)

Myths and Facts About...Venture Capitalists

For some more myths and facts about venture capitalists see:

Article in the Israeli business daily

See also my own...

Interesting Facts About Venture Capitalists

ragingacademic

The Speed of Progress in Mobile Technology

The mobile phones of the not-so-distant future are expected to have as much functionality as an advanced laptop has today (Upton and Steel, 2006). In early 2001, one could not hold an operational 3G phone in the palm of their hands for more than 10 seconds without receiving severe burns; technology has advanced so much since that 3G phones are now as common as pagers used to be just a decade or so ago. A 2003 handset exceeded 20mm in thickness and could accommodate dual bands, a single radio and one antenna, and was capable of transferring data at speeds of 70 to 80 Kbit per second with no capacity for memory storage. In contrast, 2008 handsets will be less than 15mm thick, and within the confines of this smaller footprint will be able to accommodate up to four bands plus a variety of wireless technologies such as Bluetooth and wifi as well as three or more simultaneously operating radios, five or more antennas, transmitting at between 100 and 480 Mbit per second with several gigabytes of storage to boot… (Upton and Steel, 2006, p. 23). Following in the footsteps of Moore’s Law, Kryder’s Law, Hendy’s Law, and other guidelines that predict the speed of development of technology, advances in information technology and communications are expected to continue at an accelerated pace for the foreseeable future.

101 Dumbest Moments in Business

Business 2.0's 7th Annual 101 Dumbest Moments in Business - Hindsight's 20/20, isn't it? :-)

ragingacademic

Some Comments on the "Entrepreneurial Type"

According to Kaplan (2003), entrepreneurial types share a number of characteristics; they actively seek out opportunities, always on the look-out for the chance to revolutionize a business model in order to more effectively profit from a given market segment; they are disciplined in their pursuit of opportunities; they have an aptitude for pursuing the best opportunities; they execute rather than leading to “paralysis by analysis”; and, they develop and draw on a network of contacts in order to achieve their goals (p. 13). Stevenson and Gumpert (1991) delineate the character of the entrepreneur along two dimensions ; on the one hand, entrepreneurs have “self-perceived power and [the] ability to realize goals,” while on the other hand they are determined to reach a “desired future state characterized by growth or change” (p. 11).

In an extremely interesting paper, two scholars with completely unpronounceable names…Beugelsdijk and Noorderhaven…set out to show, empirically, that there is a significant difference in the psychological profile of the entrepreneur vs. that of a typical member of the population at large (2005). They find that “…entrepreneurs can be characterized by an incentive structure based on individual responsibility and effort, and a strong work ethic” (p. 160).

Kaplan provides a useful framework within which the degree to which the characteristics of the entrepreneur influence managerial action can be assessed (p. 13). An entrepreneurial manager’s strategic orientation is driven by the perception of opportunity; his commitment to such opportunities is revolutionary rather than evolutionary, and can frequently be of short duration; his commitment of resources utilizes a multi-stage approach which provides for minimal exposure at each stage of the process; resources required for the completion of tasks are more typically rented or leased than owned to allow for flexibility in future action; and such a manager will maintain a flat managerial structure, intertwined with multiple informal networks which extend beyond the manager’s immediate organization.

References

Beugelsdijk, S., and Noorderhaven, N. (2005). Personality Characteristics of Self-Employed; an Empirical Study. Small Business Economics, 24, pp. 159-167.

Kaplan, J. M. (2003). Patterns of entrepreneurship. New York: John Wiley & Sons.

Stevenson, H. H., and Gumpert, D. E. (1991). The Heart of Entrepreneurship, in The Entrepreneurial Venture, Boston, MA: Harvard Business School Publications.

Venture Capital and the Structure of the Venture Capital Environment

Venture capitalists are professional investors who manage private equity, investing in young companies at an early phase of their corporate existence and nurturing such companies over the long term with the goal of gaining abnormal returns on their investment. Such investors organize in firms (henceforth VC firms). A VC firm (e.g. Kleiner Perkins Caufield & Byers) is a partnership between individual venture capitalists (the "general partners") that organize for the purpose of managing one or more venture capital funds (e.g. KPCB Java Fund).

A venture capital fund manages assets invested by the general and the limited partners. Typically, the general partners contribute about one percent of the total fund's assets and manage the fund's day-to-day operations. The limited partners, who invest the balance of assets, are passive participants (In order to retain limited liability, the law restricts limited partners from taking an active role in the day-to-day management of the fund.). As compensation, the general partners receive an annual management fee that ranges from one percent to two-an-a-half percent of the fund. In addition, they receive, on average, about 20% of any distribution. The limited partners receive the balance of the distributions.

A 1988 Venture Capital Journal Study found that the majority of limited partners are institutional investors. Of the $2.95 billion raised in 1988, 46% came from pension funds, with an additional 12% from endowments and foundations and 9% from insurance companies. Corporate venture capital subsidiaries accounted for 11% of investments, individuals and families for 8%, and foreign contributions totaled 14%.

The venture capital fund is set up as a limited partnership with a predefined lifetime, usually ten years with an option to extend the fund for up to three additional years. For a VC firm to remain active, a new fund is raised every three to six years - therefore, VCs are repeat players in the investment arena. New funds make most major investments (The companies in which a VC invests are called portfolio companies) within the first four to five years so that investments can be exited and gains distributed within the appropriate timeframe (Gompers 1996). At any given time a VC firm will have a number of funds under management ongoing concurrently.

ragingacademic


Reference

Gompers, Paul A.(1996). Grandstanding in the venture capital industry. Journal of Financial Economics, 42, 133-156.