SOPHISTICATED FINANCE

Teaching at MIT Sloan School

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For the second year I will be teaching a course in social entrepreneurship at the MIT Sloan School of Management beginning January 23. I am planning to use the first half of my new book as part of the teaching materials. Will be very interesting to get feedback from the students.

The first half of the book deals with:

• Why social entrepreneurship emerged as a new business model at the end of the 20th century
• Discusses entrepreneurial and non-profit business models as major influences on social entrepreneurship
• Defines social entrepreneurship
• Describes the three business models for social entrepreneurship

For the sake of completeness, the second half of the book deals with how to successfully scale a social entrepreneurship venture. Many of the points are illustrated by examples from OLPC.

Anybody who wants to meet up in Boston should let me know.

The Convergence of Human Behavior, Design and Branding

DESIRE!

 

UX Magazine had an interesting post today,"Desire is a Universal Language". Take a ways from the article:

• "Half of our waking cognition is purely unorganized, emotional thought". Desires play a much greater role than rationale in all activities including decision making. 
• "Dr. Steven Reiss, an Emeritus Professor of Psychology at The Ohio State University studying intrinsic motivation, has identified 16 basic desires that guide almost all of our meaningful behavior." 
• Brands that engage one of these basic desires make more powerful connections with customers, e.g. desire for knowledge explains the popularity of the Discovery Channel.
• "We make decisions based on predictions of pleasure", the satisfaction of desire.
• "Once we establish the pleasure–desire relationship ... create the symbolic language that helps people predict the pleasure of using a product or service".
• "We can design in desire, forming powerful and often intangible connections between a brand and the people it serves.

The intrinsic motivation of desire(s) for the customer serves as the universal theme that may enable design, engineering and sales and marketing to share a universal product vision. Every business decision would revert back to whether it enhanced the motivation or desire of the customer. Such an approach would perhaps simplify the use of value creation-value capture framework.

 

IBM's Strategy

I often wonder whether the CEO's of large Fortune 500 companies create much additional shareholder value or basically just benefit from the strategy they inherit. This story in the NYT discusses the ten year period in which Samuel Palmisano was CEO at IBM. During that period he added $40 billion to market value, an increase of approximately 29 percent. 

Palmisano's success was achieved by recasting IBM's strategy in terms of four questions, according to the NYT:

1. Why would someone spend their money with you — so what is unique about you?
2. Why would somebody work for you?
3. Why would society allow you to operate in their defined geography — their country?
4. And why would somebody invest their money with you?

These four simple questions frame the key issues for any company and their strategy

1. Customer value proposition
2. Employee development
3. Contribution to society
4. Shareholder return

I would also point out that these themes are in order of priority. 

Probably the most elegant lesson in corporate strategy I have seen.

The Truth in Jokes

A friend sent me this joke.

Son: Father, I am going to pursue a career in organized crime

Father: In the private sector or in government?

 

"Justice and power must be brought together so that whatever is just may be powerful and whatever is powerful may be just"

                                                                    Blaise Pascal

The Best Idea to Guide You in 2012

The blog Curiosity Counts had this interesting quote from Marshall McLuhan:

"When any new form comes into the foreground of things, we naturally look at it through the old stereos."

Trying to understand McLuhan's idea better I clicked through to this post on Brain Pickings, where I found this quote by Evgeny Morozov:

"Our Internet intellectuals lack the intellectual ambition, and the basic erudition, to connect their thinking with earlier traditions of social and technological criticism. They desperately need to believe that their every thought is unprecedented. Sometimes it seems as if intellectual life doesn’t really thrill them at all. They never stoop to the lowly task of producing expansive and expository essays, where they could develop their ideas at length, by means of argument and learning, and fully engage with their critics. Instead they blog, and tweet, and consult, and give conference talks—modes of discourse that are mostly impervious to serious critique.”

I have been advocating for greater public intellectualism since I started this blog. This post from January 2008 is the first on the subject and captures many of the same ideas as Morozov. 

In 2012 perhaps we should resist a bit the tendency for short superfluos publishing made possible by FB, Twitter and other digital technology. Perhaps we should rather develop more in-depth thoughtful written pieces or put the energy into book writing. That's the idea to guide you in 2012.