Category Archives: Business Strategy

Business Strategy, Decisive Management and Success

Plato, many centuries ago, said, “Nothing endures but change itself “. What is different in our era is not the presence of change but its pace—the rapidity with which ideas arise, are developed and applied, and the immediacy and degree of their impact in our lives. Let me illustrate.

When I were a student at MIT in the 50′ s, it used to take five to ten years for an idea or research result from a University to become reality in the market and in our lives. Today it is almost simultaneous. This drastic change has fundamentally altered how we manage business and how the universities relate to the society at large and to the economic development demands more-specifically. In the long past corporate strategists could rely on the likelihood that things would not change for a relatively long time. Long term periods were identified as ten year long, while a short term plan  was for a three year time. Today these expectations are tossed out of the window. There is no “static” period to plan within. Things are ever changing. We live in a time phase when strategies must be dynamic, flexible and responsive to the ever changing conditions around us.

The success of a business depends, even more so today than ever before, on a well-defined flexible, proactive strategy implemented by decisive management. Decisive management comes from well-trained persons that understand the process of management and the basic elements of competition within a free market economy. Continue reading Business Strategy, Decisive Management and Success

What Do General Partners in Private Equity and Venture Capital Funds Bring to the Table: Intellectual Capital and Value Generation

Dr. Tamir Agmon is an invited contributor to The Business Thinker. He is a Professor of Financial Economics at the School of Business, Economics and Law at Gothenburg University in Sweden.

Much of the value in the world today is generated from intellectual capital (or intellectual assets). Intellectual capital is human made, based on ideas and is expressed as capabilities, systems, organizations, and other non-physical and intangible structures within firms that generate future cash flows. The growing industry of private equity funds and venture capital funds is one place where specific intellectual capital owned by the general partners is applied to generate value. The difference between physical (tangible) assets and intellectual (intangible) assets can be observed and measured in two dimensions; the past, how the asset was built using primary factors and labor, and the future, how the market evaluates the future stream of cash flows from an asset. The discussion of the difference between intellectual and physical assets is done in the paper in the context of an incomplete market with imperfect competition. Where the general partners of a private equity fund add intellectual capital to the existing assets in place in a target company, they do so in the expectations of generating additional value. The process by which additional value is generated by employing specific intellectual capital is demonstrated in the context of valuation model as practiced by private equity funds. Continue reading What Do General Partners in Private Equity and Venture Capital Funds Bring to the Table: Intellectual Capital and Value Generation

Improving Trust for Leaders

Dr. Stewart L. Tubbs is a contributor to The Business Thinker magazine. He is the Darrell H. Cooper Professor of Leadership and Former Dean of the College of Business at Eastern Michigan University.

On April 10, 2010 Poland’s president Lech Kaczynski and 96 other top Polish officials were killed in a plane crash in Smolensk in western Russia. They were coming to commemorate the massacre of Polish military officers by the Russians in World War II. The massacre had been denied for decades byofficials in the former Soviet Union. The crash occurred in the thick fog, and despite strong warnings from the air traffic controllers not to land. Cockpit recordings confirmed that Gen. Andrzej Blasik, was in the cockpit with the door open. Although we may never know, there was speculation according to the Wall Street Journal and the New York Times,* that the Polish president ordered the pilot to land because he did not trust the Russians who had told the pilot to divert the landing to another airport.

In another case closer to home, the UAW elected Bob King as president to replace Ron Gettelfinger in June, 2010. According to the Detroit Free Press, one of the key issues facing King is to reduce 2,000 page labor agreements, which limit flexibility and retard productivity by spelling out every possible issue in great detail, and replacing them with briefer, more broad-based agreements. Tom Walsh, writes, “Trust and shared goals must replace adversarial relations. No other viable options remain.”

The common denominator in these two cases is that the lack of trust often leads to undesirable consequences. So what do we mean by trust? One definition from The Academy of Management Journal is, “A psychological state of individuals involving confident, positive expectations about the actions of another.”* Continue reading Improving Trust for Leaders