Episode #115: Free-rider Friday - October 2016

Warning and Ed's Note: This show got overly wonky (even for us) and is overly focused on issues related to the Presidential Election in the United States. We will resume our regular commentary next month. 

Ed’s Topics

Poverty on the decline

There are fewer people in absolute poverty today the there were in 1820. While this does not mean the problem of poverty can be ignored, it does mean we should celebrate more our human accomplishments over the last two centuries. 

Ron added statistics from The Economist, October 8, 2016, How the other tenth lives.

Ballot selfies

The laws against taking a selfie with your voting ballot. No really there are! Article: In these states, taking a selfie with your ballot could get you arrested

Joe Buck’s dumb-ass commentary

The worse part of watching the World Series is having to endure the droning on of Joe Buck. Article: Joe Buck's 15 Lamest On-Air Moments

Here are some samples of things he said thus far during the Series:

• "Good swing by Soler, he'd like to have that back."

• "If he gets that down, you can't defense it..........uh, there's no defense against that play."

• "That will make Tomlin have to swing that bat. And he shows right there he knows how to do that." As Indians pitcher swings way late on the first pitch he sees. He went on to whiff on three pitches.

Ron’s Topics

Gamblers getting old

Casinos customers are aging, and they are having a difficult time attracting the millennial generation, as explained in Putting it all on grey, from The Economist, Oct 8, 2016.

TSOE Guest Rabbi Lapin on self-driving cars

Rabbi Daniel Lapin’s thought-provoking Thought Tools edition, Strike Them Down.

Lapin discusses the ethics of the self-driving car, and how as an orthodox rabbi he would never buy a car that was programmed to make ethical decisions.

In the comments section, he also discusses the morality of governments invading other countries to feed or protect its people, and the Just War doctrine.

Intellectual Idiot

A tirade from Nassim Nicholas Taleb, author of The Black Swan and AntiFragile, entitled The Intellectual Yet Idiot, September 16, 2016.

More on driverless cars

Is Apple teaming up with McLaren, a British maker of sports cars and Formula 1 racing team? Ford announces it will launch a fully autonomous car in 2021, without steering wheel or pedals, for car-sharing schemes.

The Economist, September 24, 2016, Who’s self-driving your car?, and Look, no claims!, for the impact on the auto insurance market.

Episode #114: Reflections on The Post-Professional Society

Ed and Ron reflected on the lessons from the two-day workshop, The Post-Professional Society, they led in Niagara Falls for Strategic Leadership Association. If you are interested in joining this organization check them out. 

We discussed the Question Formulation Technique exercise, developed by The Right Question Institute, and how powerful it is to think in questions rather than brainstorming ideas.

There’s much less anxiety; good questions can come from anyone; and everyone tends to agree on what a great question is, as opposed to an idea that can be challenged.

We also discussed the books: A More Beautiful Question by Warren Berger, and Kevin Kelly’s latest book, The Inevitable, where he lists his eight types of Generative Value.

Here is a copy of the slide deck we used with the topics discussed above.

Reflections on the post professional society from Ed Kless

Listener Email

We received the following email from Mark, who suggests a topic we will address in a future show:

I'm working here in my office today listening to you and Ed in the background.Just finished your conversation with Thomas Sowell--wow, outstanding. 

As a CFO, my biggest frustration is the 25 flavors of strategic planning. Too much, too many connect-the-dots, too unproductive.  So the brainstorm is to have a show about building off-site planning (if any) about what the customer values most. One of my clients is going through Verne Harnish's Scaling Up. One is going through Wickman's E.O.S. But the focus is on internal factors, not what matters to the customer. 

I would love to hear your perspective on planning (short, mid, long-term). And just for fun, pick up Stacy Barr's book on Performance Measurement as an example of how these strategy planning processes are too extreme. 

Thankfully, Dan Sullivan of the Strategic Coach (I'm in year 4) gets this right through his lingo - Front Stage, Back Stage. So he's making sure our planning is always with the customer and what they value at top of mind.

One last comment. I read the Firm of the Future back in 2004 thanks to a recommendation by Gary Boomer. It ranks right up there with The Goal.   Keep writing!! You guys rock.  Mark

Thanks, Mark, we think you and all our listeners ROCK! 

Episode #113: Interview with Dr. Timothy Chou

About Dr. Timothy Chou

Timothy Chou has been lucky enough to have a career spanning academia, successful (and not so successful) startups and large corporations. He was one of only a few people to hold the President title at Oracle. As President of Oracle On Demand he grew the cloud business from it’s very beginning. Today that business is over $2B. He wrote about the move of applications to the cloud in 2004 in his first book, “The End of Software”. Today he serves on the board of Blackbaud, a nearly $700M vertical application cloud service company.

He most recent book is Precision: Principles, Practices and Solutions for the Internet of Things to introduce the basics of the Industrial Internet of Things (IoT). You may not be sure why your coffee pot should talk to your toaster, but precision technology powering an Internet of Things has the potential to reshape the planet. 

Interview Notes and Questions

What was it like working for Larry Ellison?

Tim's Three fundamental differences between things and people

• A lot more things than people

• Things can be were people are not

• Things can “talk” constantly

AI has been around for years, why is it gaining more traction lately?

Are you optimistic or pessimistic about the AI transformation? Why?

What about Stuxnet? Are IoT devices secure?

Ed just saw the movie Sully, the drama in the movie was about the NTSB and their simulations that said they could get back to LGA, but when human decision factor was added (35 seconds) they could not. Would it be a good idea to give computers the final say? One the one hand, there is no creativity. On the other there is no “human factor” or delay. Thoughts?

Tim's IoT Framework 

Some articles by or about Tim's work

• Beyond artificial intelligence 

• Instant diagnosis by smartphone

• What promise does IoT hold for business (first of a three part article)

And two videos

And, of course, Tim's new book

Precision: Principles, Practices and Solutions for the Internet of Things

$25.57

By Timothy Chou

Buy on Amazon

Episode #112: Interview with Reginald Tomas Lee

Biography

Dr. Reginald Tomas Lee is an advisor and researcher in the areas of cash flow, capacity management, and profitability. Using a deep background in engineering and math, he has created tools and models that have helped executives in businesses of all types improve the management of cash flow and other financial data.

Professionally, Reginald has worked in industry, academia, and consulting including leading global companies such as EY, GM, IBM, and Oracle.

He has advised many marquee names such as Bristol Myers Squibb, Disney, DuPont, Home Depot, Lockheed, Office Depot, Raytheon, Toyota, and United Healthcare.

Reginald has a PhD in mechanical engineering from the University of Dayton, and is the author of three books and over 40 published articles and white papers. He is a feature writer for Journal of Corporate Accounting & Finance and a contributor to the Cincinnati Business Courier.

Resources by and about Dr. Lee

Lies, Damned Lies, and Cost Accounting: How Capacity Management Enables Improved Cost and Cash Flow Management

$34.95

By Sr. Reginald Tomas Lee

Buy on Amazon

Lies, Damned Lies, and Cost Accounting: How Capacity Management Enables Improved Cost and Cash Flow Management, 2016

Explicit Cost Dynamics: An Alternative to Activity-Based Costing, 2001

Article: Three steps to improving project ROI performance

Article: Making technology pay

Dr. Lee’s Website, The Cash Innovation Lab

Discussion Topics

Three reasons cost accounting is a bad practice

1. Creates and forces math and relationships that don’t exist

2. You lose touch with operations

3. Creates meaningless numbers that people consider gospel

Accounting reports financial performance, they doesn’t model cash flow

• Cash flow is most important

• Accounting not good proxy for managing cash flow

• Idea and importance of capacity

Capacity = Largest Expenditure

• Hotels, Airlines, Cruise ships, don’t do cost accounting

• They invest in yield management—value/pricing side

You can calculate different costs from same data, and it has nothing to do with cash

• Standard, ABC, Lean, Full-Absorption, Marginal costing, all lead to different results

• Yet all methods are sanctioned by GAAP

• Segal’s Law: a man with a watch knows what time it is. A man with two watches has no idea.

• A single representation of an artificial reality

Companies are spending a lot of money managing costs that have nothing to do with money

• Dr. Lee distinguishes between: Cost C (cash) and Costs NC (non-cash)

• Cost is an opinion; cash is a fact!

Costing and cost accounting create false relationships and inappropriate use of math

• No relationship to buying time and what you do with it

• Cheaper to make 20 pens than 5? How?

• Economies of scale?

Capacity modeling: unifying concepts of finance, accounting, and operations

• Contribution margin analysis won’t predict need for additional capacity

• Overstate ROI because of Costs NC—hospital example

Other resources

In his seminal book, Profit Beyond Measure: Extraordinary Results through Attention to Work and People, H. Thomas Johnson revels how Toyota doesn’t use standard cost accounting.

The Goal: A Process of Ongoing Improvement, by Eliyahu M. Goldratt. He is another critic of cost accounting, as seen in this Youtube video: