Archive for the ‘Executive Leadership’ Category
Investing and Healthcare — The Quality and Learning Link
A couple of years ago, my colleague Jim Porto at UNC Chapel Hill asked me to teach a two-day seminar on performance psychology, and I loved it. My students, on the other hand, initially evidenced a normal distribution, with agnosticism as the mean. In other words, a small number loved it, a small number hated it, and most figured it was a necessary block to check before moving on to more productive things. As I continued to teach it and my skills presenting the materials became better, the response improved, and, because the materials were taken from research rather than the self-help section at Borders, the impact has been rewarding (and the student evaluations would make my mother proud).
Well, I no longer teach the seminar (having handed it to others who are every bit as capable), but I’ve retained interest in the topic. Over the winter holidays, I read Malcolm Gladwell’s Outliers and Geoff Colvin’s Talent is Overrated. While both are interesting (Colvin’s is better, despite Gladwell’s higher standing on the New York Times Best Seller list), I decided to apply Jacobi and invert – looking at the causes of failure.
Update on the Market and Other Musings — 10/18/08
It has been two weeks since my last update on this blog. Since then, the market has undergone gyrations that are unprecedented. While I can’t imagine that anyone is following this blog closely enough to mirror my investments, doing so would have significantly outperformed the S&P 500 – even in this dramatic environment. Since the market highs of October 2007, my portfolio is down 12.43% versus the S&P 500s decline of just under 40%. This is largely due to the recommended short position (of the S&P 500), but the long positions in my portfolio have strongly contributed to these favorable results, as well. Even during a market crash, owning value stocks is its own reward.
With this update, I would like to address several new items at this point in the market’s life. Longer than most postings, it looks at the current investing environment, considers international opportunities (first-world and emerging-market), addresses the Bretton Woods II proposal, considers the regulatory pedullum shift, provides a loose model for identifying winning and losing markets in the future, and ends with a non-partisan plea for political change in the US.
Cash Return on Invested Capital and Weighted Average Cost of Capital Calculations
Over the last several weeks, I’ve been asked about my calculations for Weighted Average Cost of Capital (WACC) and Cash Return on Invested Capital. At some point, I’ll run through the specific calculations and logic behind them. Until then, allow me to provide the calculations which appear on the spreadsheet used for equities analysis postings.
CQI In Complex Industries
The distinction between Total Quality Management and Continuous Quality Improvement is that CQI has been modified for healthcare environments. While earlier postings discuss the success of TQM on the factory floor and in production operations, it may be helpful to contrast that side of industry with something more akin to healthcare, such as information technology (especially, software design and development).
Reversion To The Mean
The question had to do with “Reversion to the Mean” in investment settings, but, in fact, it extends to management of firms, in general. Simply put, it sought a defense of reversion to the mean as a reliable and actionable model. The answer, in my view, requires an understanding of physics, psychology, philosophy, economics, and management. Here is the original question and my response.
Like a Hamster on a Wheel — Time Management Versus Innovation
Reference: High School’s Worst Year?; For Ambitious Teens, 11th Grade Becomes a Marathon Of Tests, Stress and Sleepless Nights. Jonathan Kaufman. Wall Street Journal. (Eastern edition). New York, N.Y.: May 24, 2008. pg. A.1
I often wonder whether the “Life-Long Learner” is a conceptual myth. It isn’t that we can avoid intellectual growth as we age – it is all but compelled by the speed of change. Nor is it sustaining the love of learning that has me uncertain about whether the life-long learner remains viable. Instead, as the father of a high school junior, a teacher of undergraduates and graduate students, and as a consultant working with physicians, I see the problems from several informing perspectives.
Balance Billing — Grief for Everyone
The practice of balance billing is increasing, according to this Los Angeles Times article.
Balanced billing is defined as “billing beneficiaries for amounts not reimbursed by payers (not including copayments and coinsurance amounts); this practice is prohibited by Medicare regulations,” according to “Understanding Health Insurance: a Guide to Billing and Reimbursement”, ninth edition, by Michelle Green and JoAnn Rowell.
Computer Simulation Lessons Learned
In previous postings, the names Kahneman and Smith have been referenced – Daniel and Vernon, respectively. Jointly, they won the Nobel Prize in economics (2002); although, their work was conducted separately. http://nobelprize.org/nobel_prizes/economics/laureates/2002/index.html .
In the case of Kanneman, the award was “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty,” and for Smith “for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms.”
Both focused on investor psychology and the use of simulations to study investor and market behavior, response to new information, reactions to uncertainty, and the speed with which markets achieve equilibrium.
I mention this because the use of simulations may strike some as fundamentally different than fully competitive markets, but the research was validated as accurately mirroring typical market responses under an assortment of scenarios.
Why mention it here? Well, I use a computer simulation with my marketing class, and, yesterday, the four competing teams gave their end-of-semester “lessons learned” presentations. As usual, the results were interesting, and I thought you might be interested in some of the more significant realizations.
The Strategic Helix of CQI — Sherika Hill
As time permits, I am posting final exam papers written by selected students of mine (with their consent, of course). In each case, they have addressed the question of whether the tools and techniques of continuous quality improvement work in healthcare settings. This seemingly simple question is abundantly difficult. My students, however, are brilliant, and I am frequently rewarded with “mind candy” such as that provided by Sherika Hill, who posits that the continuous improvement of Shewhart’s and Deming’s PDCA cycle is not necessitated by perfection’s impossibility but, instead, by the changing forces and influences of the informing environment.
Is It Time to Stick Your Head Out Of the Office?
When I was a lieutenant in the military, we were told that no other combat arms position is more dangerous when riding around in a tracked vehicle. The reason is that the lieutenant is the “track commander.” Now, the track commander is in constant communication with the driver, and the track commander reads the map, gives the driver directions, and is responsible for the tactical decision-making for that vehicle (which may have as many as six or seven other soldiers/lives inside). To do all of this (especially, the tactical decision-making), the lieutenant has to stick his head outside of the track. This is necessary to see the terrain, the other vehicles in the convoy, and, unfortunately, the enemy. The head of the lieutenant, sticking out just above the top of the track, therefore, is akin to the Apple sitting on top of the son of William Tell, and the lieutenant’s head is a tasty target for the enemy.
This ability to survey the battlefield and acquire the information it provides is known as “situational awareness.” It is situational awareness that prompted George Patton, even as a three-star general, to lead from the front. And, it is why senior leadership in any organization needs to spend more time at the front lines than in meetings and in the board room. In fact, when we were in Garrison and I was a section leader, I didn’t have a desk to speak of. Five of us shared a single desk, with each of us getting one drawer. When we complained, we were told that, if we didn’t like it, we could simply head off to our offices — to which we responded, “what office?” The answer was “the motor pool.” That, we were told, was our place of duty — at the front lines, in the company of those we were privileged to lead.
