YDA's Model of Management

What is management?

Is is a science?

Is it a practice?

Is it an art?

Well, it's nothing but common sense.

It is Thou shalt not treat others in the way thou wouldst not be treated.

It is 己所不欲 勿施於人.

Just put yourself in their shoes to know what your customers want from you!

Simply put yourself in their shoes to know what your employees want from you!

Please refer to the following and the linked for more detail.

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P. Drucker : Management....is a practice, rather than a science or a profession, though containing elements of both…

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H. Koontz : Management is the  art of getting things done through and with people in formally organized groups…

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YDA: (Common sense) Management is all about serving ordinary people through ordinary people by an ordinary person(s). 

Please Refer to the Link

https://docs.google.com/file/d/0B9T6YPq9VqkHZ1NhU216RUwtMkk/edit

Practical Advice to Asian Global Managers

I would name Akio Morita, late founder & CEO of Sony, as the most globalized Asian manager.  According to him, you'd better immerse yourself in the local community when you're abroad, in order to learn the local language and culture and subsequently to become a global manager.

The attachment is more specific suggestions on the basis of my personal experience. To become a global manager, you may want to

1) Globalize your Language, 

2) Globalize your Mind, and
3) Globalize your Name. 

https://docs.google.com/file/d/0B9T6YPq9VqkHTzRDQlpieXhwWTA/edit

Intelligence Curse and Managerial Incompetency

Genius as Business Manager

Management is common sense, because it is all about serving ordinary people through ordinary people by an ordinary person.

Understanding ordinary people's sentiments, emotions and ways of thinking is the first key to the managerial excellence.

Smart people like Aristotle or Edison are less probable to make a good manager, because they are extraordinary.

Most geniuses suffer from intelligence curse. They assume other people are as brilliant as they are. They (mis)understand other people know what they know. They expect other people to be as perfect as they are. Most seriously, they are poor at forgiving other people for errors and mistakes.

What do you think,

If Aristotle ran General Motors?

If Edison had run General Electric?

-> You can answer the first question by reading the book quoted underneath.  

-> Edison created Edison General Electric in 1878, which was acquired by Charles Coffin, an ordinary person like you and me.

P.S. Guess what subsequently happened to the two gentlemen Thomas Edison, the great inventor, and Charles Coffin, the first of eight CEOs (so far) of GE? 

Answer: Edison got his name cut off from the corporate name while Charles Coffin became Dustin Coffin. 

A Test of High Risk-High Return

A Few Words on Risk

1)      Definition

- “Uncertainty” surrounding an event 

  * It does not necessarily mean a loss or a danger. 

2)      Determinants of its effect   

- Expected value of the relevant variable

- Its variance → σ (standard deviation) as the common                      metric for risk

- Exposure: The value of the underlying asset, size of the                    contract for instance

3)      Nature

- Human beings are in general risk-averse.

- Normally, a high return is expected from a high risk.

Þ The principle of “high risk, high return”

4)    Now you can check your own risk-return profile

       and at the same time you can prove the high risk-high          return principle.

     The game: Which bet would you like to take?

       - A fair coin: 50% head, 50% tail

 - The basic bet:

. Tail---You lose $1 million

. Head ---You win the prize in million dollars:

Table of Your Payoff
                                                                      (In million dollars) 

*Expected value (EP, 期待値): Weighted average of all                  possibilities, which you calculate from the probability                  distribution. 

** Variations: 

       - (1/10) x 10 →You take ten bets with the stake of each bet                                    being one tenth of the basic bet. 

       - (1/100) x 100 →You take 100 bets with a 1/100 stake.

       - (1/10000) x 10000 →10000 bets with a 1/10000 stake. 

→ Real payoff from a “Variation” is a probability distribution        whose standard deviation (σ) decreases as you increase the        number of trials. You can have 95% confidence in having a        payoff within (EP±3σ).

        5)   Conclusion 

            I would take the any bet in the shaded area. 

            Your preference would be somewhat similar. 

           →  See, I told you so: High risk high return or more                            precisely low risk low return. 

            For your reference, this conclusion is due to the law of                          large numbers (大數의 법칙). 

Strategic Corporate Social Responsibility

Please Refer to the Linked File. 

https://docs.google.com/file/d/0B9T6YPq9VqkHQ3pETzhHd1NaVzQ/edit

The Magic Wand of the Market Economy

YD Ahn

June 2008

        Revised 2012

Market Economy and the Government

Modus Operandi of the Market

Self-interest ⇒

Desire for wealth ⇒

Competition for resources ⇒

Innovation to win in the competition ⇒

National economic growth and development ⇒

Betterment of the human life all through the world

  

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. (A. Smith. The Wealth of Nations, 1776; Bk I, Ch. II)

Elements in a Free-market Economy

1) Freedom to choose (aka voluntary exchange)

2) Purposeive rules of the game

     - Fair trade and competition

     - Property right

3) Rule of law

    John Locke "No liberty without law." 

    Immanuel Kant "Man is free if he needs to obey no one but the laws."

  

Participants in the Market Economy

     1) Context builder

     - Institutions (rules of the game)

     - Infrastructure (the playing ground)

     - Stability of the environment

2) Players

     - Firms

     - Households (Individuals)

     - (The government)

3) Manager: The resource allocator

     - ?

4) Umpire

⇒ Role division 

     - The private sector:  

     - The government:   

Market Failures

1) Public goods

2) Externalities

3) Imperfect competition

4) Information asymmetry

Roles of the Government in a Nutshell 

1) Context builder

2) Umpire (⇒ rule of law)

3) Prevention of market failures 

On true meaning of "free"

Although many remember Smith today mainly for his brilliant insight into how market forces could support a self-organizing division of labor—the invisible hand—he was anything but a laissez-faire ideologue. Smith spends much of Book V of The Wealth of Nations explaining in detail why the state has powerful responsibilities regarding defense, justice, infrastructure, and education, areas in which collective action is required to complement, or substitute for, private-market forces.  (J. Sachs. The End of Poverty, 2005, p. 348)

Mainly what is required for rapid economic growth is (as Smith himself put it as a young man) "peace, low taxes and a tolerable administration of justice." (D. Warsh. Knowledge and Wealth of Nations, 2006, p. 45)

     ⇒ Friedrich A. Hayek [Laissez-faire a misnomer.] (Road to Serfdom, 1994)

Economic Policies

1) Macroscopic: As the context builder

     - Three objectives: stability in employment, price and balance of                                               payments 

     - Three means: monetary, fiscal and FX intervention

2) Microscopic: as the manager (or player sometimes)

     - Industrial policy

     - Trade policy

     - Financial policy

     - Regional development policy

     - Equal employment opportunity policy

     - And You name it .

Persuasive Writing

YDA / 2008

Persuasive Writing and Speaking

 

Contents

Rigorous reasoning

Relevant (focused, realistic, practical)

Self-contained

Sequence, Balance, Consistency

Expressional Skills

Clear

      Avoidance of redundant words

      Fewest modifiers

Simple

      Short sentences and paragraphs

      Few repetitive expressions

Grammar

 

Formality

Name and date

Paragraphing

Page numbers

Cover sheet

Table of contents

Executive summary

 

Presentation Skills

Speaking not reading

Eye contacts

Time management

Avoidance of distractive visual aids

For more detail:
https://drive.google.com/file/d/0B9T6YPq9VqkHSWFHTUJuVGtYWFk/edit?usp=sharing

Oxymoron

Did you know that

"Ethical Lawyer" was an Oxymoron?

Oxymoron means a paradoxical or self-contradictory expression. Sometimes it makes sense, other times not.

Examples of those making sense:

Benign Neglect

Creative Destruction: By the great economist Joseph Schumpeter

Gratuitous Insult

Forced Choice

Equilibrium Unemployment Rate (aka natural rate of unemployment)

Green Capitalism: Capitalism is all about economic development, which in turn means destruction of the natural environment. Capitalism is anti-green.

Green Consumerism: Same logic as Green Capitalism

Grown-up child: Adult son or daughter

Global Marketing: Marketing is something to localize.

Joyful Scream: Your business is painfully booming.

Mass Customization: Mass production and customization are kind of opposite.

Monopolistic Competition: a mixture of perfect competition and monopoly

Most-Favored-Nation principle at WTO: Never to allow a  special favor to a country.

Protectionist policy: Never to protect the majority (consumers) in democracy, the majority ruling system.

Silent Alarm: Think of Info-Tech security services.

Sustainable Development: Same logic as Green Capitalism

Those making little sense:

Business with Conscience (Paul Hawken)

Corporate Social Responsibility: according to Milton Friedman (Joel Bakan)

Ethical Lawyer: It is said not to make sense in America.

Ethical Tycoon: Think of Lord Acton's famous comment.
<“Power tends to corrupt; absolute power corrupts absolutely. Great men are almost always bad men.”>

Caring Dad: At my home

"[HD] management in an oxymoron": Quoted from D. Kirk Korean Dynasty 1994

Also did you notice that

1) Freer trade was less free than free trade.

2) A high-quality life was of higher quality than a higher-quality one. 

And so on? 



3) A "Trade policy" never promotes trade. 

4) Supranational institutions are inferior to national ones. 

5) Control Paradox: "The more control you seek, the less control you'll have."

6) In economics, all the real variables (real GDP, real interest rate, etc.) are fictitious.

7) In the science of business administration, only one valid answer is "It depends." (Interpretation: "It depends." → "There is no answer.")

8) Keynes was not a Keynesian: J.M Keynes famously commented in 1944 after dining with a group of economists in Washington, "I was the only non-Keynesian there." 

9) (Henry Ford) "Whether you believe you can, or whether you believe you can't,you are absolutely right."

10) (Henry Ford) "You can have any color you want as long as it is black."

11) (Henry Ford) "Our double-the-market-rate wage was one of the finest             cost-cutting moves we ever made." 

12) (Heraclitus) "The only constant is change."

13) (John Elkington) The only certainty about today's business environment is uncertainty.  

14) (Milton Friedman) Moral virtue [corporate social responsibility] is immoral when it does not serve the bottom line [profitability], because a corporation is the property of its stockholders. It can be virtuous if it is used as hypocritical window dressing. 

15) (Peter Drucker) Heresy is often closer to the truth than conventional wisdom.

16) (Principle of the market economy) Competition for profits is to compete profits away.  

17) An (international) sanction is to dis-sanction something of a country. 

18) Mr. (Carlos) Slim from Mexico is anyone but slim.  

19) Alice in Wonderland has to run as fast as she can in order to stand still. 

20) (Paul Cootner) "If you're so rich, why aren't you smart," in response to an anti-economist crack "If you're so smart, why aren't you rich." (Interpretation: Wealth doesn't have anything to do with intelligence, and vice versa.)

21) (Apple Company) Simplicity is the ultimate sophistication.

An author with the name Dr. Mardy Grothe published a book titled oxymoronica (2004), which is full of such funny comments as:

1) (Everett Dirksen) I am a man of fixed and unbending principles, the first of which is to be flexible at all times.

2) (Jimmy Durante) I hate music, especially when it's played. 

3) (W.C. Fields) The best cure for insomnia is to get a lot of sleep.

4) (Kenneth Boulding): We must always be on the lookout for perverse dynamic processes which carry even good thing to excess. It is precisely these excesses which  become  the most evil things.... The devil, after all, is a fallen angel.

.....Think of the global financial turmoil in 2008--All financial excesses!  

.... How about a Confucian teaching:  Excessiveness is no better than      shortness (過猶不及)?

5) (Moliere) A learned fool is more foolish than an ignorant one. 
     (半識者憂患?)

The Perfect is the Enemy of the Good

Never Try to Be an A+

Most everyone wants to become or make good.  That is OK.  And, that is that. Try to be perfect or to become the single best is very risky as well as painful.

        Painful---you know that already.

        Risky---you may fail even to be good.

Why's that? Because we all are human beings --- we cannot do everything well: we cannot be always right. Simply put, you'd better learn to be satisfied with a B+ or Ao, not necessarily with an A+. That is life!

We almost always take the second best in our society, too. And nothing around us is perfect. Refer to the following popular sayings :

1) Every coin has two tails.

       Meaning every one, except for you soul mate, has an ugly (weak, dishonest, shameful, or dark) side as well as a pretty one.

2) There is no alternative aka TINA.

        That's Thatcherite mantra meaning the free-market system is the better choice, not the best. 

3) Democracy is the worst form of government except for all those others that have been tried.

        By Winston Churchill

4) The best is the enemy of the good.

        By Voltaire

5) 孫子曰, 無所不備, 卽無所不寡

To be prepared everywhere is to be weak everywhere."

         By Sun-tzu 

6) 子夏曰, 大德不踰閑 小德出入可也 

Minor errors are acceptable as long as the big picture is in good shape. 

         By a Confucian disciple    

7) 구더기 무서워 장못 담그랴?

Fearful of worms, you cannot make soy sauce. 

        A Korean saw

After all,

- No one, including your mom, is perfect.

- No policy is flawless.-> The law of unintended consequences 

- No theory holds always true.    

- No market is totally efficient.

- Nothing is completely anything. (Eugene Fama, 2010)

Schooling vs. Online Education

On Wisdom

What is the most helpful thing in your life? Answers could be different, and yet "wisdom" certainly is one of them.

Wisdom is different than knowledge. You have better chances of becoming wise through interaction with great masters than through simple acquisition of knowledge like rote learning.

You may need collective schooling however excellent an on-line education system may be. So, you'd better not complain of attending "old-fashioned schools."  The following piece quotes a chain of Socrates-Plato-Aristotle in the West. Likewise, there was a chain of 孔子(Confucius)-曾子-子思-孟子(Mencius) in the East.

What do you think?

  

From Tom Morris. If Aristotle Ran General Motors.

New York: Henry Holt and Co., 1997: pp. 160~1

Have you ever thought about the fact that the great philosopher Socrates had a student named Plato, and that Plato had a student named Aristotle? Is it just an amazing coincidence that sometimes great teachers have great students who themselves turn into great teachers, and so on? A British scientist, physician, and philosopher, Michael Polanyi, thinks it's no coincidence at all. He has suggested that this pattern can be found in many domains of human activity. Given the right context of intimate and sustained association, greatness gives rise to greatness.

        The old master-apprentice model of education captured a powerful truth. You have a much better chance of becoming great if you hang around with great people. Polanyi cites the Nobel Prize winners in science whose students went on to win Nobels themselves. He insists that it's not just politics. Since the published results of the work of these great scientists are available for other researchers all around the world to read, why is it that something special is picked up by the students who actually worked and talked with the master all day in the lab? Polayni suggests that we convey to those around us insights, knowledge, and wisdom that can never fully be put into words. He calls this "personal knowledge" or "tacit knowledge." This kind of wisdom can't always be captured in a catchy aphorism, an epigrammatic witticism, a slogan for living, or a five-second sound bite, but is nonetheless real and powerful.

YDA Synergy

Sick of Synergy?

You may be sick of hearing Synergy.
But, do you really know what it is?

An official definition (?) is
"The whole is greater than the sum of its parts." Or, 1+1>2.

Here-under, I present two rounds of Synergy: one facetious, the other serious.


<Round 1>

What is your answer to the single easiest math problem 1+1= ?

 

Your Answer Tells Who You Are

Question: Simplest in the World

1+1=?

Answer	Most probably you are a
2	Ordinary person
2?	Neurotic
3 period	Psychotic
I I	Pictographer, Roman, Chop-stick maker
10	Computer scientist
0	Infighters/ Duelists
1	Chemist (Amedeo Avogadro)
1	Wedding master
3, 4, 5…..	Anti-contraceptionist
Anything (It depends)	Physicist
Explosion	Nuclear scientist (Enrico Fermi, et al.)
Infinity	Bar tender (cocktail maker)
No idea	Idiot
How could I know that?	Philosopher
Who knows?	Skeptic
Only God knows	Convert
Who cares?	Nihilist
Doesn’t matter	Buddhist
C’mon	No-nonsense
Let me think about it	Second-guesser
Why?	Suspicious-minded
Excuse me?	Absent-minded
?	Narcotic
11	Artist
Window in the making	Architect
Window in the breaking	Vandal
King sidelined	Chinese
Buy one, get one free	Bargain hunter
>2	Synergist

<Round 2>

Now, let's be serious.

What are sources of synergy? There could be many, including the following:

1) Division of labor

As advocated by none other than Adam Smith,

two people working together can become more productive

by division of labor than two working independently.

2) Economies of scale or scope

When you have a fixed cost,

your average cost of production may decrease

as you increase the quantity of production.

3) Network effect

As the number of participants increases in your network,

its effectiveness grows in square of the number.

4) Cross learning

When different elements in an industry of across industries gather together in the same place, they can learn from each other.

5) Cross selling

Now they can sell to each other's customers.

        When is synergy the most often referred to? Probably one of such occasions is when a company takes a diversification strategy. Remember Korean chaebols, Japanese keiretus, or American conglomerates? More often than not, the prime rationale for them is the synergy effect.

         What are you reminded of when you hear the term "conglomerate "?
Two of the most popular candidates may be ITT in 1970s and GE now.
  
        You know what?

1) ITT (International Telephone and Telegraph) 

        Beginning as an international version of AT&T, the company was expanded into a conglomerate of hundreds of companies in 1960s and 1970s under the leadership of Harold Geneen, master, father and godfather of the diversification strategy.

        You may be surprised that Mr. Geneen published his second and last book "The Synergy Myth" months before his death in 1997. Got that? Yeah, you're right.

2) GE (General Electric)

         GE had 12 business divisions under god-like Jack Welch. His sucessor Jeff Immelt consolidated it into six divisions and subsequently into four in July 2008.

         At any rate, GE does not buy in the synergy effect. Each business is supposed to be No. 1, No. 2 or equally excellent on its own. Otherwise, the iron rule "Fix, sell or close" waits for it.

Now, what do you think?
If you'd like to be more serious, please refer to Synergy and Cost Economics (Real)