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Title: The Challenge: To Create More Value in All Negotiations


1
RECENT READING Tom Peters/11 July 2013
2
FILTER BUBBLE
3
The Filter Bubble How the New, Personalized
Web Is Changing What We Read and How We Think
Eli Pariser
4
bonding capital vs. bridging capital Eli
Pariser, The Filter Bubble How the New,
Personalized Web Is Changing What We Read and How
We Think
5
If youre not paying for something, you are the
product being sold. Andrew Lewis,
MetaFilter.com (from Eli Pariser, The Filter
Bubble How the New, Personalized Web Is Changing
What We Read and How We Think)
6
How much time you take between the moment you
enter your query and the moment you click on a
result sheds light for Google on your
personality. Eli Pariser, The Filter Bubble
How the New, Personalized Web Is Changing What
We Read and How We Think
7
It is hardly possible to overrate the value of
placing human beings in contact with persons
dis-similar to themselves, and with modes of
thought and action unlike those with which they
are familiar. Such communication has always been,
and is peculiarly in the present age, one of the
primary sources of progress. John Stuart Mill
(1806-1873)
8
I believe this is the quest for what a
personal computer really is. It is to capture
ones entire life. Gordon Bell
9
Psychologists have a name for this fallacy
fundamental attribution error. We tend to
attribute peoples behavior to their inner traits
and personality rather than to the situations in
which theyre placed. Eli Pariser, The Filter
Bubble How the New, Personalized Web Is Changing
What We Read and How We Think
10
Some people rush for a deal, others think that
the deal means the merchandise is subpar. Just by
eliminating the persuasion styles that rub people
the wrong way as deduced from prior Web behavior
patterns, the marketer found he could increase
the effectiveness of marketing materials from 30
to 40 percent. Eli Pariser, The Filter Bubble
How the New, Personalized Web Is Changing What We
Read and How We Think
11
With new forms of sentiment analysis its now
possible to guess what mood ones in. People use
substantially more positive words when theyre up
Eli Pariser, The Filter Bubble How the
New, Personalized Web Is Changing What We Read
and How We Think
12
LinkedIn offers a career trajectory prediction
by comparing your resume to other peoples who
are in your field but further along. LinkedIn can
forecast where youll be in five years. As a
service to customers, its pretty useful. But
imagine if LinkedIn offered the data to corporate
clients to weed out people who are forecast to be
losers. It seems unfair for banks to
discriminate against you because your high school
buddy is bad at paying his bills or because you
like something that a lot of loan defaulters also
like. And that points to a basic problem with
induction, the logical method by which algorithms
use data to make predictions. Eli Pariser, The
Filter Bubble How the New, Personalized Web Is
Changing What We Read and How We Think
13
Technodeterminism is alluring and convenient for
newly powerful entrepreneurs because it absolves
them of responsibility for what they do. Eli
Pariser, The Filter Bubble How the New,
Personalized Web Is Changing What We Read and How
We Think
14
ROBOT FUTURES
15
Robot Futures Illah Reza Nourbakhsh,
Professor of Robotics, Carnegie Mellon
16
Analytics can yield literally hundreds of
millions of data pointsfar too many for human
intuition to make any sense of the data. So in
conjunction with the ability to store very big
data about online behavior, researchers have
developed strong tools for data mining,
statistically evaluating correlations between
many types and sources of data to expose hidden
patterns and connections. The patterns predict
human behaviorand even hidden human
motivations. Illah Reza Nourbakhsh, Professor
of Robotics, Carnegie Mellon, Robot Futures
17
Very successful websites send 99 of their
traffic to tried-and-true designs, but risk 1 of
their traffic on new variations to discover ever
better conversion rates from visits to dollars.
When Google was choosing the right shade of blue
for a navigation bar, the company famously
performed A/B split testing across 41 shades of
blue. When numbers are large and hundreds of
millions of people are in play, the tiniest
improvements translate into breathtaking levels
of profit improvement. Illah Reza Nourbakhsh,
Professor of Robotics, Carnegie Mellon, Robot
Futures
18
Robotics will drive this very innovation.
Landing page tuning will bust out of the Internet
and become interaction tuning. Companies will
apply their analytics engines to all interaction
opportunities with people everywhere online, in
the car, in a supermarket aisle, on the sidewalk,
and of course in your home. Illah Reza
Nourbakhsh, Professor of Robotics, Carnegie
Mellon, Robot Futures
19
Human level capability has not turned out to be
a special stopping point from an engineering
perspective. . Source Illah Reza
Nourbakhsh, Professor of Robotics, Carnegie
Mellon, Robot Futures
20
BIG DATA
21
Big Data A Revolution That Will Transform How
We Live, Work, and Think Viktor
Mayer-Schonberger and Kenneth Cukier
22
As humans, we have been conditioned to look for
causes, even though searching for causality is
often difficult and may lead us down the wrong
paths. In a big data world, by contrast, we wont
have to be fixated on causality instead, we can
discover patterns and correlations in the data
that offer us novel and invaluable insights. The
correlations may not tell us precisely why
something is happening, but they alert us that it
is happening. And in many situations, this is
good enough. If millions of electronic medical
records reveal that cancer sufferers who take a
certain combination of aspirin and orange juice
see their disease go into remission, then the
exact cause for the remission in health may be
less important than the fact that they
lived. Source Big Data A Revolution That Will
Transform How We Live, Work, and Think, by Viktor
Mayer-Schonberger and Kenneth Cukier
23
Correlations let us analyze a phenomenon not by
shedding light on its inner workings, but by
identifying a useful proxy for it. Source Big
Data A Revolution That Will Transform How We
Live, Work, and Think, by Viktor
Mayer-Schonberger and Kenneth Cukier
24
Predictions based on correlations lie at the
heart of big data. Source Big Data A
Revolution That Will Transform How We Live, Work,
and Think, by Viktor Mayer-Schonberger and
Kenneth Cukier
25
There is a philosophical debate going back
centuries over whether causality even
exists. Source Big Data A Revolution That
Will Transform How We Live, Work, and Think, by
Viktor Mayer-Schonberger and Kenneth Cukier
26
Unfortunately, Kahneman argues Nobel laureate
Daniel Kahnemans masterpiece Thinking, Fast and
Slow, very often our brain is too lazy to think
slowly and methodically. Instead, we let the fast
way of thinking take over. As a consequence, we
often see imaginary causalities, and thus
fundamentally misunderstand the world. Source
Big Data A Revolution That Will Transform How We
Live, Work, and Think, by Viktor
Mayer-Schonberger and Kenneth Cukier
27
Walmart Using big data, the company noticed
that prior to a hurricane, not only did sales of
flashlights increase, but so did sales of
Pop-Tarts. Walmart stocked boxes of Pop-Tarts
at the front of the store and dramatically
boosted sales. Source Big Data A Revolution
That Will Transform How We Live, Work, and Think,
by Viktor Mayer-Schonberger and Kenneth Cukier
28
Aviva, a large insurance firm, has studied the
idea of using credit reports and
consumer-marketing data as proxies for the
analysis of blood and urine samples for certain
applicants. The intent is to identify those who
may be at higher risk of illnesses like high
blood pressure, diabetes, or depression. The
method uses lifestyle data that includes hundreds
of variables such as hobbies, the websites people
visit, and the amount of television they watch,
as well as estimates of their income. Avivas
predictive model, developed by Deloitte
Consulting, was considered successful at
identifying health risks. Source Big Data A
Revolution That Will Transform How We Live, Work,
and Think, by Viktor Mayer-Schonberger and
Kenneth Cukier
29
Editor-in-chief Chris Anderson authored a Wired
cover story titled The Petabyte Age. The use of
big data (more or less everything, not a
sample) and the attendant primacy of correlation
over causation as the basis for discovery was
described thusly The data deluge makes the
scientific method obsolete. He also called the
phenomenon the end of theory. Source Big
Data A Revolution That Will Transform How We
Live, Work, and Think, by Viktor
Mayer-Schonberger and Kenneth Cukier
30
AUTOMATE THIS HOW ALGORITHMS CAME TO RULE THE
WORLD
31
Automate This How Algorithms Came to Rule Our
World Christopher Steiner
32
April 2011. Prof Michael Eisen goes to Amazon to
buy book The Making of a Fly. Expects price to be
35-40. Follows bid war for 3 days Price hits
23,698,655.93. Culprit Unsupervised pricing
algorithm. (Parallels 5/6/10 Wall Street flash
crash Market dropped 1K points in about 5
minutes.) From Christopher Steiner, Automate
This How Algorithms Came to Rule Our World
33
Algorithms have already written symphonies as
moving as those composed by Beethoven, picked
through legalese with the deftness of a senior
law partner, diagnosed patients with more
accuracy than a doctor, written news articles
with the smooth hand of a seasoned reporter, and
driven vehicles on urban highways with far better
control than a human driver. Christopher
Steiner, Automate This How Algorithms Came to
Rule Our World
34
When you ask Cloudera founder Jeffrey
Hammerbacher what he sees as the most promising
field that could be hacked by people like
himself, he responds with two words Medical
diagnostics. And clearly doctors should be
watching their backs, but they should be extra
vigilant knowing that the smartest guys of our
generationpeople like Hammerbacher---are gunning
for them. The targets on their backs will only
grow larger as their complication rates, their
test results and their practicesare scrutinized
by the unyielding eyeof algorithms built by smart
engineers. Doctors arent going away, but those
who want to ensure their employment in the future
should find ways to be exceptional. Bots can
handle the grunt work, the work that falls to our
average practitioners. Christopher Steiner,
Automate This How Algorithms Came to Rule Our
World
35
Shades of Ned Ludd When Emmy algorithm
produced orchestral pieces so impressive that
some music scholars failed to identify them as
the work of a machine, Prof. David Cope
instantly created legions of enemies. At an
academic conference in Germany, one of his peers
walked up to him and whacked him on the nose.
Christopher Steiner, Automate This How
Algorithms Came to Rule Our World
36
The audience then voted on the identity of
each composition. Music theory professor and
contest organizer Larsons pride took a ding
when his piece was fingered as that belonging to
the computer. When the crowd decided that
algorithm Emmys piece was the true product of
the late musician Bach, Larson winced.
Christopher Steiner, Automate This How
Algorithms Came to Rule Our World There were
three Bach/Larson/Emmy-the-algorithm.
37
Which haiku are human writing and which are
from a group of bits? Sampling centuries of
haiku, devising rules, spotting patterns, and
inventing ways to inject originality, Annie
algorithm took to the short Japanese sets of
prose the same way all of Prof David Copes.
algorithms tackled classical music. In the end,
its just layers and layers of binary math, he
says. Cope says Annies penchant for tasteful
originality could push her past most human
composers who simply build on work of the past.,
which, in turn, was built on older works.
Christopher Steiner, Automate This How
Algorithms Came to Rule Our World
38
Legal industry/Pattern Recognition/Discovery
(e-discovery algorithms) 500 lawyers to
ONE Source Race AGAINST the Machine, Erik
Brynjolfsson and Andrew McAfee
39
Lionbridge/IBM GeoFluent Evaluated as
successful in customer-service transactions
medical diagnosis Medical knowledge from labs,
descriptions, via pattern recognition/intuition W
atson/IBM Beats human Jeopardy players w/ puns,
other idiosyncratic word play Source Race
AGAINST the Machine, Erik Brynjolfsson and Andrew
McAfee
40
StatsMonkey Sports writing (Readers cannot tell
difference) Source Race AGAINST the Machine,
Erik Brynjolfsson and Andrew McAfee
41
REALITY IS BROKEN WHY GAMES MAKE US BETTER AND
HOW THEY CAN CHANGE THE WORLD
42
Reality Is Broken Why Games Make Us Better and
How They Can Change the World Jane McGonigal
43
MMORPG/Massively Multiplayer Online Role-Playing
Game Source Jane McGonigal, Reality Is Broken
Why Games Make Us Better and How They Can Change
the World
44
Why exactly are we competing with each other to
do the dirty work? Were playing a free online
game called Chore Wars and it just so happens
that ridding our real-world kingdom of toilet
stains is worth more experience points, or XP,
than any other chore in our apartment. A mom in
Texas describes a typical Chore Wars experience
We have three kids, ages 9, 8, and 7. I sat down
with the kids, showed them their characters and
the adventures, and they literally jumped up and
ran off to complete their chosen task. Ive never
seen my 8-year-old son make his bed. I nearly
fainted when my husband cleaned out the toaster
oven. Jane McGonigal, Reality Is
Broken Why Games Make Us Better and How They
Can Change the World
45
You get a sense of the scale and intricacy of
the task by considering the sound effects alone
The game contains 54,000 pieces of audio and
40,000 lines of dialogue. There are 2,700
different noises for footsteps alone depending on
whose foot is stepping on what. Sam Leith on
Halo 3, from Jane McGonigal, Reality Is Broken
Why Games Make Us Better and How They Can Change
the World
46
The popularity of an unwinnable game like Tetris
completely upends the stereotype that gamers are
highly competitive people who care more about
winning than anything else. Competition and
winning are not defining traits of gamesnor are
they defining interests of the people who love to
play them. Many gamers would rather keep playing
than win. In high-feedback games, the state of
being intensely engaged may ultimately be more
pleasurable than the satisfaction of winning.
Jane McGonigal, Reality Is Broken Why Games
Make Us Better and How They Can Change the World
47
When we are playing a well-designed game,
failure doesnt disappoint us. It makes us happy
in a very peculiar way excited, interested, and
most of all optimistic. Studies from M.I.N.D.
Lab, Helsinki, in Jane McGonigal, Reality Is
Broken Why Games Make Us Better and How They Can
Change the World
48
It may have once been true that computer games
encouraged us to act more with machines than with
each other. But if you still think of gamers as
loners, then youre not playing games. Jane
McGonigal, Reality Is Broken Why Games Make Us
Better and How They Can Change the World
49
World of Warcraft is the singlemost powerful IV
drip of productivity ever created. Brian,
friend, in Jane McGonigal, Reality Is Broken Why
Games Make Us Better and How They Can Change the
World
50
3-D PRINTING/ FAB LABS
51
Fab Labs/Fabrication Labs/Fabulous Labs/digital
fabrication machine/parts themselves are
digitalized/3-D printer/MIT Center for Bits and
Atoms/ Prof Neil Gershenfeld/ 5K large-format
computer-controlled milling machine can make all
the parts in an IKEA flat-pack box customized
for the individual/Etc./Etc. Source How to
Make Almost Anything, Beil Gershenfeld, Foreign
Affairs/11-12.2012
52
Its Getting a Little Weird Out Bradescos
biometric ATM sensors/blood flow (Economist
0519) Oscar Pistorius sprinting acumen/approved
for London (WSJ 0602) DelFly/lighter than your
wedding ring (Economist 0602) Kurzweils
Singularity is nigh?!
53
RACE AGAINST THE MACHINE
54
Race AGAINST The Machine How the Digital
Revolution Is Accelerating Innovation, Driving
Productivity, and Irreversibly Transforming
Employment and the Economy Erik Brynjolfsson and
Andrew McAfee
55
The root of our problem is not that were in a
Great Recession or a Great Stagnation, but
rather that we are in the early throes of a
Great Restructuring. Our technologies are racing
ahead, but our skills and organizations are
lagging behind. Source Race AGAINST the
Machine, Erik Brynjolfsson and Andrew McAfee
56
Explanations for Slow Recovery Cyclical Stagnatio
n Rise of BRICS End of Work/ Accelerated Pace
of Technological Change The second half of
the chessboard Source Race AGAINST the
Machine, Erik Brynjolfsson and Andrew McAfee
57
Worst in 30 Years! The number of Americans in
the labor force those who have a job or are
looking for one fell by nearly half a million
people from February to March 2013, the
government said Friday. And the percentage of
working-age adults in the labor force what's
called the participation rate fell to 63.3
percent last month. It's the lowest such figure
since May 1979. Source AP/0407.13
58
400,000-2,000,000
59
400,000/-2,000,000new computing
technologies that destroy middle-class
white-collar jobs even as they create jobs for
highly skilled workers who can exploit
themManufacturing jobs added USA
2007-2012White-collar jobs lost USA
2007-2012Source Financial Times, page 1,
0402.13 (Clerical Staff Bears Brunt of US Jobs
Crisis)
60
3 million jobs unfilled/6 unemployment per
se/50 companies with shortfall in skilled
people/college degree not required The numbers
of the undertrained are staggering./MA 100K
jobs _at_ 75K 40 SMEs report difficulty finding
skilled craftsmen to replace retirees Source
Nina Easton/ Fortune/11.2012
61
2nd Half of the Chessboard Squares 1-32 4B
grains 1 large field Squares 33-64 pile
bigger than Mt Everest Source Race AGAINST
the Machine, Erik Brynjolfsson and Andrew McAfee
62
The median worker is losing the race against the
machine. Erik Brynjolfsson and Andrew McAfee,
The Race Against the Machine
63
A bureaucrat is an expensive microchip.
Dan Sullivan, consultant and executive coach
64
The median worker is losing the race against the
machine. Erik Brynjolfsson and Andrew McAfee,
The Race Against the Machine A bureaucrat is
an expensive microchip. Dan Sullivan,
consultant and executive coach
65
breakage of the historic link between value
creation and job creation The median worker is
losing the race against the machine./ Great
Recession lack of hiring rather than increase
in layoffs Source Race AGAINST the Machine,
Erik Brynjolfsson and Andrew McAfee
66
40 Years Median inflation adjusted wages, men
30-50 with jobs, 1969-2009 33K, -27 Source
The Slow Disappearance of the American Working
Man, Bloomberg Businessweek/08.11
67
Post-Great Recession Equipment expenditures
26 payrolls flat/ Great Recession lack of
hiring rather than increase in layoffs/
breakage of the historic link between value
creation and job creation The U-shaped Curve
Phenomenon High-skilled Waaaaay
Up!!! Low-skilled Stable/Up Middle
Down/Down/Down Source Race AGAINST the Machine,
Erik Brynjolfsson and Andrew McAfee
68
Q3 2011/BLS3.1/Non-farm
productivity growth3.8/Non-farm
output0.6/Non-farm hours worked5.4/Manufactur
ing productivity4.7/Manufacturing output-0.6
/Manufacturing hours workedSource Bureau of
Labor Statistics/03 November 2011
69
China too/Foxconn 1,000,000 robots in next 3
years Source Race AGAINST the Machine, Erik
Brynjolfsson and Andrew McAfee
70
SBTC/Skill-Biased Technical Change race between
education and technology Source Race AGAINST
the Machine, Erik Brynjolfsson and Andrew McAfee
71
Fab Labs/Fabrication Labs/Fabulous Labs/digital
fabrication machine/ parts themselves are
digitalized/ 3-D printer /MIT Center for Bits and
Atoms/ Prof Neil Gershenfeld/ 5K large-format
computer-controlled milling machine can make all
the parts in an IKEA flat-pack box customized
for the individual/Etc./Etc. Source How to
Make Almost Anything, Beil Gershenfeld, Foreign
Affairs/11-12.2012
72
Night to Day 6 Years DARPA Grand Challenge
2004 No dice Google 2010 140K miles in
driverless cars Source Race AGAINST the
Machine, Erik Brynjolfsson and Andrew McAfee
73
Lionbridge/IBM GeoFluent Evaluated as
successful in customer-service transactions
medical diagnosis Medical knowledge from labs,
descriptions, via pattern recognition/intuition W
atson/IBM Beats human Jeopardy players w/ puns,
other idiosyncratic word play Source Race
AGAINST the Machine, Erik Brynjolfsson and Andrew
McAfee
74
Legal industry/Pattern Recognition/Discovery
(e-discovery algorithms) 500 lawyers to
ONE Source Race AGAINST the Machine, Erik
Brynjolfsson and Andrew McAfee
75
Bachelors degree, age 25-34 40 F 30
M Graduate degree students 60 F 40
M Source Sydney Morning Herald /26.03.12
76
StatsMonkey Sports writing (Readers cannot tell
difference) Source Race AGAINST the Machine,
Erik Brynjolfsson and Andrew McAfee
77
Standard optimization problem, 1998-2003
43,000,000-fold speed improvement 1,000X
processor speed 43,000X algorithms
better Source Race AGAINST the Machine, Erik
Brynjolfsson and Andrew McAfee
78
China too/Foxconn 1,000,000 robots in next 3
years Source Race AGAINST the Machine, Erik
Brynjolfsson and Andrew McAfee
79
Post-Great Recession Equipment expenditures
26 payrolls flat Source Race AGAINST the
Machine, Erik Brynjolfsson and Andrew McAfee
80
USA/Agriculture 1800 90 1900 41 2000
2 Source Race AGAINST the Machine, Erik
Brynjolfsson and Andrew McAfee
81
The U-shaped Curve Phenomenon High-skilled
Waaaaay Up!!! Low-skilled Stable/Up Middle
Down/Down/Down Source Race AGAINST the
Machine, Erik Brynjolfsson and Andrew McAfee
82
SMEs! Source Race AGAINST the Machine, Erik
Brynjolfsson and Andrew McAfee
83
In the wake of the 2012 presidential election,
some political commentators have written
political obituaries of the "red" or
conservative-leaning states, envisioning a brave
new world dominated by fashionably blue bastions
in the Northeast or California. But political
fortunes are notoriously fickle, while economic
trends tend to be more enduring. These trends
point to a U.S. economic future dominated by four
growth corridors that are generally less dense,
more affordable, and markedly more conservative
and pro-business the Great Plains, the
Intermountain West, the Third Coast (spanning the
Gulf states from Texas to Florida), and the
Southeastern industrial belt. Overall, these
corridors account for 45 of the nation's land
mass and 30 of its population. Between 2001 and
2011, job growth in the Great Plains, the
Intermountain West and the Third Coast was
between 7 and 8nearly 10 times the job growth
rate for the rest of the country. Only the
Southeastern industrial belt tracked close to the
national average. Historically, these regions
were little more than resource colonies or
low-wage labor sites for richer, more technically
advanced areas. By promoting policies that
encourage enterprise and spark economic growth,
they're catching up. Source Joel Kotkin, Wall
Street Journal, 0225.13
84
We are in no danger of running out of new
combinations to try. Even if technology froze
today, we have more possible ways of configuring
the different applications, machines, tasks, and
distribution channels to create new processes and
products than we could ever exhaust. Erik
Brynjolfsson and Andrew McAfee, The Race Against
the Machine How the Digital Revolution Is
Accelerating Innovation, Driving Productivity and
Irreversibly Transforming Employment and the
Economy
85
Muhammad Yunus All human beings are
entrepreneurs. When we were in the caves we were
all self-employed . . . finding our food, feeding
ourselves. Thats where human history began . . .
As civilization came we suppressed it. We became
labor because they stamped us, You are labor.
We forgot that we are entrepreneurs. Muhammad
Yunus/ The News Hour/PBS/1122.2006
86
Human creativity is the ultimate economic
resource. Richard Florida
87
USA 1996-2007Highest rate entrepreneurial
activity (firms founded) Ages 55-64Lowest
rate Ages 20-34Source Dane Stangler, Kauffman
Foundation (Economist)
88
The average age of a startup founder is 40. And
high-growth startups are nearly twice as likely
to be launched by people over 55 as by people
20-34. Vivek Wadhwa, Kauffman foundation
(Time/0325.13)
89
The prospect of contracting a gofer on an a la
carte basis is enticing. For instance, wouldnt
it be convenient if I could outsource someone to
write a paragraph here, explaining the history of
outsourcing in America? Good idea! I went ahead
and commissioned just such a paragraph from Get
Friday, a virtual personal assistant- firm based
in Bangalore. The paragraph arrived in my
in-box ten days after I ordered it. It was 1,356
words. There is a bibliography with eleven
sources. At 14 an hour for seven hours of
work, the cost came to 98. Patricia Marx,
Outsource Yourself, The New Yorker, 01.14.2013
(Marx describes in detail contracting out
everything associated with hosting her book club
including the provision of witty comments on
Proust, since she hadnt had time to read the
bookexcellent comments only set her back 5 the
writer/contractor turned out to be a 14-year-old
girl from New Jersey.)
90
ADDICTION BY DESIGN
91
Machine Gambling 66 revenue 85 profit Source
Natasha Dow Schüll, Addiction By Design Machine
Gambling in Las Vegas
92
Machine Gambling Pleasing odor 1 vs.
pleasing odor 2 45 revenue Source
Effects of Ambient Odors on Slot-Machine Useage
in Las Vegas Casinos, reported in Natasha Dow
Schüll, Addiction By Design Machine Gambling
in Las Vegas
93
When Friedman slightly curved the right angle of
an entrance corridor to one property, he was
amazed at the magnitude of change in
pedestrians behavior (the percentage who
entered increased from one-third to nearly
two-thirds). Natasha Dow Schüll, Addiction By
Design Machine Gambling in Las Vegas
94
THE MYTH OF AMERICAN DECLINE AND THE GROWTH OF A
NEW ECONOMY
95
Daniel Gross, The Myth of American Decline and
the Growth of a New Economy
96
Not Dead
Yet BRIC/2011 11T/4K per capita USA/2011
16T/48K per capita USA/2000 4 population/30
world GDP USA/2010 4 populattion/28 world
GDP USA productivity 07/1.7 08/2.1
09/5.4 10/2.4 11/4.1 FDIC institutions
4Q/2008/-38B 2Q/2011/29B 1/2008 to 9/2011
USA consumer savings 0 to 6/2.1T
saved Foreign Direct Investment 2003 64B
2008 328B 2009 134B 2011
200B Exports/2009 USA 1.53T (1.06T goods,
0.47T services) Germany 1.36T China
1.33T USA/Refined petroleum products/1Q 2011
Imports 2.16M BPD Exports 2.49M BPD New
economy Apple (gtExxon) Google Facebook
1T market cap Source Daniel Gross, The Myth
of American Decline and the Growth of a New
Economy
97
iPad/4 billion of 300 billion negative USA
trade balance with China (2011)
98
Cost/Profit ComponentsTotal labor 7(Chinese
labor 2)Materials 31Distribution
15Profit 47Landed iPad cost 275 Imputed
USA negative trade balance with China(Actual
China cost 10)Source Personal Computing
Industry Centre (Economist)
99
Cost/Profit ComponentsTotal labor 7(Chinese
labor 2)Materials 31Distribution
17Profit 47Landed iPad cost 275 Imputed
USA negative trade balance with China(Actual
China cost 10)Biggest non-USA component
KoreaSource Personal Computing Industry Centre
(Economist)
100
Q3 2011/BLS3.1/Non-farm
productivity growth3.8/Non-farm
output0.6/Non-farm hours worked5.4/Manufactur
ing productivity4.7/Manufacturing
output-0.6/Manufacturing hours workedSource
Bureau of Labor Statistics/03 November 2011
101
Its Getting a Little Strange Out DelFly/lighte
r than your wedding ring (Economist 0602) Oscar
Pistorius sprinting acumen/approved for London
(WSJ 0602) See Ray Kurzweil, The Singularity
Is Near When Humans Transcend Biology
key chapter, GNR Three Overlapping Revolutions
(GNR Genetics, Nanotechnology, Robotics)
102
In some sense you can argue that the science
fiction scenario is already starting to happen.
The computers are in control. We just live in
their world. Danny Hillis, Thinking Machines
103
Unless mankind redesigns itself by changing our
DNA through altering our genetic makeup,
computer-generated robots will take over the
world. Stephen Hawking
104
THE SHAREHOLDER VALUE MYTH HOW PUTTING
SHAREHOLDERS FIRST HARMS INVESTORS, CORPORATIONS,
AND THE PUBLIC
105
Lynn Stout, professor of corporate and business
law, Cornell Law school, author The Shareholde,r
Value Myth How Putting Shareholders First Harms
Investors, Corporations, and the Public
106
The notion that corporate law requires
directors, executives, and employees to maximize
shareholder wealth simply isnt true. There is no
solid legal support for the claim that directors
and executives in U.S. public corporations have
an enforceable legal duty to maximize shareholder
wealth. The idea is fable. Lynn Stout,
professor of corporate and business law, Cornell
Law school, in The Shareholder Value Myth How
Putting Shareholders First Harms Investors,
Corporations, and the Public
107
Courts uniformly refuse to actually impose
sanctions on directors or executives for failing
to pursue one purpose over another. In
particular, courts refuse to hold directors of
public corporations legally accountable for
failing to maximize shareholder wealth. Lynn
Stout, professor of corporate and business law,
Cornell Law school, in The Shareholder Value
Myth How Putting Shareholders First Harms
Investors, Corporations, and the Public
108
What about shareholders rights to sue corporate
officers and directors for breach of fiduciary
duty if they fail to maximize shareholder wealth?
Such a right turns out to be illusory.
Executives and directors duty of loyalty to the
corporation bars them from using their corporate
positions to enrich themselves at the firms
expense, but unconflicted directors remain
legally free to pursue almost any other goal.
Lynn Stout, professor of corporate and business
law, Cornell Law school, in The Shareholder
Value Myth How Putting Shareholders First Harms
Investors, Corporations, and the Public
109
From a legal perspective, shareholders do not,
and cannot, own corporations. Corporations are
independent legal entities that own themselves,
just as human beings own themselves.
Shareholders own shares of stock. A share of
stock is simply a contract between the
shareholder and the corporation, a contract that
gives the shareholder very limited rights under
limited circumstances. In this sense,
stockholders are no different from bondholders,
suppliers, and employees. All have contractual
relationships with the corporate entity. None
owns the company itself. Lynn Stout,
professor of corporate and business law, Cornell
Law school, in The Shareholder Value Myth How
Putting Shareholders First Harms Investors,
Corporations, and the Public
110
a corporation can be formed to conduct or
promote any lawful business or purpose from
Delaware corporate code (no mandate for
shareholder primacy), per Lynn Stout, professor
of corporate and business law, Cornell Law
school, in The Shareholder Value Myth How
Putting Shareholders First Harms Investors,
Corporations, and the Public
111
On the face of it, shareholder value is the
dumbest idea in the world. Shareholder value is a
result, not a strategy. Your main
constituencies are your employees, your
customers and your products. Jack Welch, FT,
0313.09, page 1
112
Too Much Cost, Not Enough Value Too Much
Speculation, Not Enough Investment Too Much
Complexity, Not Enough Simplicity Too Much
Counting, Not Enough Trust Too Much Business
Conduct, Not Enough Professional Conduct Too
Much Salesmanship, Not Enough Stewardship Too
Much Focus on Things, Not Enough Focus on
Commitment Too Many Twenty-first Century
Values, Not Enough Eighteenth-Century
Values Too Much Success, Not Enough
Character Source Jack Bogle, Enough! (chapter
titles)
113
Managers have lost dignity over the past decade
in the face of widespread institutional breakdown
of trust and self-policing in business. To regain
societys trust, we believe that business leaders
must embrace a way of looking at their role that
goes beyond their responsibility to the
shareholders to include a civic and personal
commitment to their duty as institutional
custodians. In other words, it is time that
management became a profession. Rakesh Khurana
Nitin Nohria, Its Time To Make Management a
True Profession, HBR/10.08
114
On the face of it, shareholder value is the
dumbest idea in the world. Shareholder value is a
result, not a strategy. Your main
constituencies are your employees, your
customers and your products. Jack Welch, FT,
0313.09, page 1
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