Sleep with One Eye Open

Up until recently, I had thought that the Zuckerberg stint with Facebook was by far the greatest rip-off in business history; a man who practically stole an iconic idea, kicked out the bearers, credited it to himself and then went on to create a multi-billion brand all for himself! Sure, many people share with me the sentiment that he was a je** for flipping against the people who trusted him and hired him; while others might argue that Kudos to him, he saw an opportunity and grabbed it and made the best of it; after all it’s all a matter of perspective! Well if you are or let me rephrase “were” like me then I suggest you reconsider your stand on this point and take a look at the “McDonald’s” story.

As a foodie, I was never interested in their food and I very rarely had it but as a business professional I was always intrigued by their successful business model starting from the real estate part of it, going through the “McCafe” and how they attracted the previous biggest customer base of the likes of “starbucks” which are the mommies and not ending with their most recent foray into the gourmet “burgers”. Having said so, I admit that I had never before known their story or how had they become the biggest burger chain in the world by massive lead on their nearest competitor although he is a king let alone being the largest real estate company in the world as well. Call it “luck” or call it my addiction to movies that led me to watch the recent movie “The Founder”. Over the span of almost 2 hours I sat there mesmerized on how a sales man with a wacky attitude drove for miles and miles and spent years on expanding a brand that 2 “kind hearted” brothers grew by tear and sweat and then had the guts to call himself the creator! The guy was rude enough not to only steal a business but also to dump a loyal and quiet wife and move on to steal his second trophy the wife of one of his “franchisees”! I guess one rip off was just not enough for him.

In the movie, the lead character used a famous tagline “the concept of the egg and the hen” which ironically applies to him as well: did he create the legend of McDonald’s or did McDonalds create him as one of the most notorious business men out there?

The cases of Facebook and McDonald’s are not the only cases, for the late Steve Jobs saw himself kicked out from Apple a few years luckily for him he was persistent enough to come back and take back what was “unrighteously” taken from him. Again, that depends on your perception of things. Things brings us back to an important concept in the movie and in Zuckerberg’s story: “persistence”; in the movie Ray Kroc (impersonated by one of my all-time favorite actors Michael Keaton) attributed his success with McDonald’s to being persistent. Sure enough that man was persistent! Even before he landed with the gem of McDonalds this guy was always persistent. He nagged on and on on every idea he had until he had found his next great idea! Persistence is also what made Zuckerberg hang on till the end that Facebook was his own offspring and he challenged the world with that and eventually won (some might argue that he had enough money to win but that once again is a matter of perception). The mistake that the McDonald’s brothers did and then the Winklevosses followed their lead was being lazy. Sure enough they had a great idea, and sure enough they worked on implementing that idea but they were lazy enough not to follow through till the end. They stopped short of being persistent and of following up till the end; instead they handed out the idea, and the secrets freely to someone else while they went along to do what they were doing. You see, other creators of great ideas, followed through to the end with their ideas and did not trust anyone else; Bill Gates hired people but he shared the same office with them; Jeff Bezos is all about hands-on and Richard Branson started his first business as a one-man show.

A couple of days ago, The Economist magazine posted their quote of the day “If honor were profitable, everyone would be honorable.” Not sure if it signifies that the “end justifies the means” but it seems to perfectly fit both cases above; I’m not saying that everyone else is honorable but I guess they were blunter with it than anyone else. They used to say “if you don’t build your dreams, then someone someday will hire you to build theirs.” Personally, I’d rather put it this way: “if you ever hire someone to build your dreams, you better sleep with one eye open….”

The “Tuna Can” strategy

 “The key to a man’s heart is his stomach” is a well-known Arabic proverb that essentially narrows down a woman’s duties to the kitchen. As degrading as this may be to women, one can’t ignore the fact the food essentially takes up the most important moments of the day and if you are acquainted to the Lebanese cuisine then these moments will become almost “sacred”

I recently got married and my wife moved with me to KSA and since she is in a “transitionary phase” she needed a hobby. Having lived on her own since she went to college and then joined the work forces right after graduation let’s just say that cooking was not her greatest feat. So and in order to fill up a part of her time my wife decided to take on cooking and started preparing our lunch home! Yes feel free to feel sorry for me for being a guinea pig.

In theory, my wife is a great cook because of her mother’s tips and instructions. And although she did some “training” before marriage, her mom was always there to save the day in case something went wrong so you can say so she has never tested her wings on her own.

On the eve of the first “training” day we struck a deal between us. My wife isn’t the biggest fan of tuna but if left without any other option she can accept it for a meal. The deal was as follows: whenever she started cooking a new and complex meal she would keep a tuna can on the sink in front of her. The “tuna can” served 2 purposes: 1- it was enough motivation for her not to fail because otherwise she will have to eat something she doesn’t like. 2- In case her project failed, there will always be a backup plan. Needless to say, the strategy is a fruitful one! Sure enough she sometimes forgets the salt or is stingy with the seasoning and spices but overall it can be considered a success.

The” Tuna Can” strategy can work for you as well in any business situation; in fact, it is a must. The purpose is to always push an individual or a business to try something new or try doing things “differently”. Being skilled at 1 thing will not last forever neither will it help you in all the situations. You may be extra good at something but if you fail to develop it or build a new skill you might fall off the grid. Take Nokia or Kodak for example who were not only good in their industries they were the leaders yet they painfully fell off of the peak in no time. Had they had the courage to challenge themselves and try new strategies they might have stayed in the front seats.

Any skill you might have will never blossom unless fully put to test; and although the most challenging part is moving out from the comfort zone you do not necessarily have to entirely go out of that zone and this is where the “tuna can” comes in. The purpose of your “tuna can” is to act as a cushion for you whenever you leave your zone to try something new yet it should be something you strongly dread. This back up strategy should be simple as well and not complicated in order to be a temporary “fix” and at the same time not to consume much of your efforts as you fall back to bounce forward again to a different strategy. For Example, Nokia could have used the Android OS on their phones for a period of time until they had finalized one of the 2 OS systems that they were trying to build in-house rather than being stubborn and falling short of materializing any of those 2.

As much as the “tuna can” meal is easy and fast to prepare so should be your back up strategy just squeeze some “lemon, olive oil and a pinch of salt” and off you go!

As a procurement professional, I started implementing the “tuna can” strategy to my approach with existing and potential suppliers, I have trained my team on it as well and the results have been encouraging! This was a much needed step as we steer towards 2017 in a very challenging economy that requires us to change from “this is how it has always been done” to “this might actually work!”

If you are reading this, then this means I have survived both my wife’s cooking and her feedback on this article! Take your time to find your “tuna can” although I warn you, your spouses might not be as forgiving as mine!

 

 

The “Brangelina” Story as a Business Model

The story of Angelina Jolie and Brad Pitt can be compared a lot to that of Daimler-Benz and Chrysler merger although the first one lasted 3 years longer than the later. At the time it happened, it was considered a merger made in heaven between 2 big superpowers and at the time it was over it was deemed worthless. For the sake of our story we will consider Brad Pitt to be Daimler Benz and Angelina to be Chrysler.

When Brad “merged” with Jolie he had a small foothold in America (Jennifer Aniston) which was somewhat not fully satisfying him. Brad (Daimler) wanted to expand his reach in America and he came across Jolie (Chrysler) a luxurious, flashy and highly in demand brand at the time and they both clicked. During the years that ensued, Brad went on to strengthen his foothold in America (Daimler building factories in the USA) while Angelina drifted away from her core business (less movie appearances) and did not increase her territory (Chrysler failed to expand into Europe at the same pace that Daimler expanded in the USA). During that tenure Brad was rumored to have had some flings (Daimler’s stake in Mitsubishi and Hyundai motors) but both were ended or denied. Trouble kept coming with Angelina (Chrysler) suffering the most – nervous break downs, double mastectomy and eating problems (Daimler Chrysler merger came to an end in 2007 just one year before the financial crisis when Chrysler took bailout money from the US federal government)

So now what?

For Brad: He will probably keep moving along and searching for bigger and smaller stakes here and there to try to polish his image (Daimler has a small share in the Nissan Renault alliance to help the German manufacturer in building small cars and EVs) Ironically he is rumored to have cheated on Angelina with a French actress (anyone else sees the humor here?) or to increase his reach in unexplored territory (50% stake in the Chinese automaker BYD and 12% in Chinese BAIC as well). He is unlikely to find another “Chrysler” or to settle back to a “small foothold” but he will be “everywhere” (Daimler has operations in 16 countries!)

For Angelina: the “old” lady will have to wait for a Sergio (CEO of FIAT) to come along; someone who wants her for her great past and who hopelessly believes that this past will push him forward to grandiosity; he will be happy enough to carry her big debt (6 children) but unfortunately he won’t get anything. Sure enough every now and then she can give him a “jeep” but that won’t cover the investment. She will drag him in to what she has always done and he will fumble along still thinking that he can get a bigger foothold in America (Sergio Marchionni still hopes he can revive FIAT in USA through Chrysler.)

In the world of business, mergers in the “same line of business” either face spectacular success or fail spectacularly. Unfortunately the 2nd option prevailed for our 2 actors in this case just like the Daimler Chrysler case; and as in most failure cases one gets out damaged more than the other and so far it seems that Angelina has had the shorter end of the stick. As the wise man once said “if it is too good to be true, then it probably is!”

#GREXIT And The #IRANDEAL

July seems to be so generous this year because in one week Greece saved its behind, Iran struck a deal with the “Greater Devil”, New horizons sent us live pictures of Pluto and Bastian Schweinsteiger became a red devil (this last piece of info can be a source of conflict though!).

If anything, the Greek and Iranian deals are purely business driven. Make no mistake, no party involved in any of both deals struck a “yes” purely because of goodwill or good citizenship. A Greek exit from the EU would have signaled the beginning of the union’s end and would have opened the door for other less convinced members to leave the group (Britain comes right on top of my head) and the domino would have rolled and although France and Germany seem somewhat eager to trim off the extra fat, deep down they knew that they had to keep Greece tucked in.  Perhaps the biggest catalyst for the Greek deal came from Russia; it was more than enough for President Putin to hint in one of his press conferences that a Greek exit meant more currency freedom for the country and meant that they were acquitted from all agricultural quota agreements with the EU to make all members eager to solve the situation. Last year’s EU’s sanctions against Russia have hurt both the EU’s and Russia’s economies and Putin might have seen in an independent Greece a possible ally especially that Russia lost important agricultural suppliers in Europe.

On the surface, one might think that Putin was dealt a hand, but the truth is that comrade Putin was a winner because he was smart enough not to slide in the Greek mud while successfully pushing the troubled EU further deep inside.

On the other hand, Putin’s real trophy was the Iranian nuclear deal; and I’m not talking in the political terms but rather in the economic terms. You see, Iran has tons of cash stacked in banks all over the world and years of sanctions have created a very thirsty economy that is ripe to use these funds in attracting investors and in investing heavily in the country. On the other hand, all the global economy is suffering and they are all in dire need for new markets and new money sources. These were the exact reasons that forced USA to restore diplomatic relationships and of course business with CUBA and they were also the reason here. Even France, the biggest ever opponent of the deal was the first country to announce that French companies might still get a chance to invest in Iran despite France’s official stand on the deal and French foreign minister Laurent Fabius has already announced that he will be visiting Iran next week (wait a minute dude, did you consult with your Israeli friends before taking such a hasty decision?). It’s very strange how the slight notion of money and profit can make one turn against their closest allies – just like the current situation of France and Israel.

But before everyone starts drooling over the Iranian pie, take a minute to remember that this is Iran – the country which until recently has been considered the heart of axis of evil and was named all sorts of names and remember that they are not known to be forgetful, so if anything then the biggest chunk will go to their staunch ally – yes you guessed it, it’s comrade Putin again. Russia has already announced that there will be deals that involve planes and if the sanctions are lifted then this will definitely mean both civilian and military planes. In addition, the country that has been for the longest time ever suffering from oil shortages will be able to fulfill its needs both in production and consumption with all the ramifications that will come from such a thing.

Iran might not really replace the EU in terms of trade size with Russia but Putin will definitely benefit the most especially that Iran has high agricultural production which Russia can definitely benefit of. On the other hand, Poor Obama has worn himself out to get that deal done and it so far seems that the Americans will not benefit financially whatsoever despite Obama’s relentless offers to market the deal in USA as a means to prevent war and promote peace, not unless Iran decides to lure them in even more.

A few years ago, Britain released the Lockerbie bomber who was Iranian; the official reason back then was humanitarian – the man was supposedly suffering from terminal cancer. The real reason though was to allow BP to strike a deal in Iran and that was what happened exactly. In 2015, the same is going to happen and nuclear Iran will be allowed to become so in return for financial benefits that the whole world desperately needs.

A lot can be said about diplomacy, about peace, about war and negotiations; a lot has been said about these in the last few weeks but the truth is it was all purely business; the country that until recently represented radicalism and extremism has become the world’s sweet heart and Israel which also until recently was Europe’s and America’s protégée has been shoved aside because it is not economically interesting anymore. For after all, and as one of my MBA finance professors used to frequently say: “It is not unethical, it is just business.”

Microsoft’s “Strategic” Mistake

Nokia’s life and death in the mobile devices industry is that of a fairy tale gone bad. After dominating the global market in the 90’s and mid 2000’s, a series of bad business decisions led to its dramatic downfall and demise. And although the climb was slow and painful, going downhill was as fast as a free fall. Nokia’s failure to remain competitive can mostly be attributed to failing in predicting the market trends, its slow reaction to technology and customer preference changes and the lack of an effective leadership to steer company ahead.

By 2013 it was obvious that Nokia needed  a savior; its global market share in the smart phone market had slipped to 1% or less, to add to that the company was facing fierce competition from local phone makers in both China and India which were once the company’s stronghold in the low end cell phone market. At this point, the company had only two options either to shut down the mobile device department or find a possible partner/buyer.

When Stephen Elop joined Nokia as CEO in 2010, the company was not in its best shape and form but also at the same time it was no secret that Microsoft was expressing interest in entering the smart phone market and it was no secret also that they wanted to do so through an acquisition. During that time, Nokia was struggling between two in-house operating systems instead of focusing on exclusively one so when Elop joined his first decision was to kill both systems in favor of windows OS. At the time, he justified his choice by claiming that he was seeking “differentiation” but soon after the first windows phone were rolled out Nokia announced that they will also produce android phones (how does that really differ from having two in-house OS?)

Turns out, all this was made in the purpose of setting the stage to ripen an acquisition by Microsoft. Elop did his job, Microsoft bought Nokia and all lived happily ever after….. Well not really because the story has just begun. No matter how great an idea is, if the execution does not rise to the occasion then the whole idea is just a big failure and this is where Microsoft seems to be headed to. Microsoft made two strategic mistakes in a very short period 1- They announced that they will remove Nokia’s from all their mobile devices. 2- when signing the deal with Nokia, there was a penal clause that forbid Nokia from independently producing cell phone devices before the end of 2016. Really now? Only 2016? You do not forbid such a strategic player from re-entering the market for such a short period only! Because despite all of Nokia’s failures in the recent years, the name alone was a leverage and Microsoft underestimated the power of the brand name and here are two big examples for why is that.

Example 1:  Back in the 90’s IBM was leading the market of personal PC’s with its legendary Think Pad laptops which dominated the business world but towards the end of the decade, IBM had decided to divest this department in order to focus on its core business. Lenovo, an up and coming Chinese manufacturer and seller saw the opportunity and jumped to it and they were able to acquire the division. Inside the corridors of Lenovo there was a debate on whether to keep the name “Think Pad” or kill it, eventually the proponents of keeping the name won and it turned to be a winning strategy since people related to the name and the confidence in the laptops was not lost despite being bought by a Chinese company which at that time still meant that Chinese products were substandard and not of a good quality.

Example 2: Nissan Motor Company is a remarkable car maker and one of the market leaders these days but they were not always that successful… nor were they always called Nissan…. The company that will soon celebrate its 100th anniversary changed hands of ownership many times in its early periods and just like any Japanese industry they focused on efficiency and reliability, two features that earned them the hearts of many car enthusiasts around the globe but under the name Datsun and not Nissan. So when the top management decided to kill the name in 1986, it proved to be an almost lethal mistake. The company went in a downward spiral because the confidence and familiarity that came with the Datsun name were lost by Nissan and people were not so welcoming of the new name so in addition to the rebranding costs and the marketing campaign to change the names, the slipping sales of Nissan nearly brought the company to its knees and led to drastic measures including hiring the first ever non-Japanese CEO to a Japanese company – The Lebanese Mr. Carlos Ghosn, and also hundreds of lay-offs, a decision that until that date was unheard of in the Japanese culture. 12 years after that, Nissan revived the name Datsun and is reaping the benefits of such a decision.

A third indirect example can be derived from the stories of BMW and Mercedes Benz, both car makers own or “owned” luxury brand cars and compact cars. BMW owns Rolls Royce and Mini Cooper while Mercedes owns the struggling Smart and until recently they produced the now defunct Maybach luxury cars. The reason why the first is successful with both brands and the second is failing is very simple: “differentiation”. BMW differentiated both brands and gave them a separate identity while Mercedes tried to associate them with its brand as much as possible just like Microsoft is doing so with the smart phones unit. Sometimes imposing a successful brand name on a different product can have a reverse effect and instead of acting as a leverage it would drown it….

A short while ago, Nokia announced that they were planning a comeback to the smart phone which poses a real and direct threat to Microsoft. When Microsoft purchased the cell phone division, they neglected the Nokia maps software which turned out to be one of the most valuable assets which is currently the target of many companies from cell phone companies to car makers. This alone can help in marketing and selling the new Nokia phones. The re-entry can be cheap for them and they can opt on choosing android OS just like the tens of cell phone makers in the industry. Along  with their maps and other solutions that Nokia is famous for it can prove to be a winning combo. Moreover, they might come back to their senses and work on redeveloping  their in-house software because the world might be ready for a new breakthrough.

Both companies are treading a fine line here because a comeback in the tech world is almost impossible and none has been able to do it so far. But in Nokia’s favor there is a remarkable brand name………..

As Oil Profits Decline, ISIS Taps Into A New Resource: Archeological Artifacts

ISIS top man is almost a ghost, a man of very few appearances and whenever he does show up he makes sure that all the 6 billion inhabitants of the planet know about it. In one of his staged appearances, the whole wide world seemed to ignore all what he said and focused on one thing: The Rolex watch in his hand. After all the guy does have an exquisite taste but it’s not his taste what matters here, what matters is the fact that traditionally Rolex watches have been linked to the big money owners, the affluent and successful business leaders and this here is the core of the issue.

Since its debut, ISIS has shown business skills as equally as military skills and although one would question how can you form a well trained and highly occupied militia in a fortnight, some sorts of business successes can be done in such a short time especially when the resource is strategic, offers high returns and the competition is virtually non-existent. All these apply to oil so it was normal and understandable that the first thing ISIS did after invading parts of Iraq and Syria was to control oil resources; they even advertised a job opening in November 2014 for an oil field manager to manage their valuable asset, and put it back on the right track all the while pushing competition out of the market by turning to the black market to sell their oil for prices as low as $20/barrel and sure enough there was never any shortage of customers. But that was just a short lived phase because the world which was happy with the low prices at the beginning quickly realized that the negative effects reached as far the shale oil rigs in North Dakota. That was when the US led a coalition in order to presumably stop ISIS and they started their air raids and soon enough it was obvious that those raids where just orchestrated to prevent ISIS from entering certain areas of interest; for example the raids were really effective and served their purpose when ISIS threatened the federal state of Irbil yet not even one plane left base when the Yazidis were being slaughtered and pushed to extinction.

With oil profits drying up, the rolex-wearing business man had to tap into another resource that is abundantly available in the area he controls (and no I’m not talking about dates); actually this area is extremely rich in archeological ruins and artifacts that are valued in many millions of dollars and which have a buyer base that is as enthusiastic and deep pocketed as the oil clients ( just today I heard that someone paid $187 million for a Picasso painting, so can you imagine how much they would pay for a 4000 year old statue?)

And as any smart investor he first tested the grounds and he did so in Mosul. People sat horrified in front of their tv screens as they watched ISIS fighters tear down and break apart statues that were almost older than humanity itself but then they all sighed in relief after archeologists came to say that most of the statues on display were dummies and replicas and that the real ones were hidden. Great news, now instead of having to tour all the sites, ISIS can go to one central warehouse and find all what they need to sell (that’s how you cut your supply chain costs and increase profitability, told you this guy was a business man in a previous life!)

A few days ago, the US military euphorically announced the killing of a top ISIS oil expert along with 40 aides (maybe that was the dude who replied to their 2014 ad and got hired) yet they sat and watched as the militia entered the 4000 year old Palmyra which we call Tadmor; again no planes flew over that area (starting to sound a bit eerie no?) there also is a great historical reserve and while after the attack on Mosul ISIS videoed how they were destroying the ruins, nothing has come out of Palmyra yet and I don’t think anything will because  the guys will be busy making deals to sneak as much as they can out of the country and sell for whatever prices they can get – after all they need the money and the same parties that had no problem in buying ISIS oil have no problem buying those valuable ruins and historical artifacts either. UNESCO has confirmed it and EBAY as well – you can find many valuable coins on e-bay and for relatively low prices.

ISIS seems to be investing heavily in 3 things that are highly profitable, oil, the trade of rare artifacts and prostitution – 3 commodities and services that has been sought out since the oldest time and although they claim that prostitution and all what is related to tourism are against their dogma it seems they have little trouble when it comes to making money of them for after all and like one of my MBA professors used to constantly state “It’s not unethical, it’s just business.”