The Global Marketplace

Are emerging markets and Americans a fit?

One of the reasons that I have a job, or even a career, is the difficult time that Americans have understanding foreign cultures.  The stereotypical answer is that we are not sophisticated when compared to other cultures; this is what I heard while living in Europe.   I disagree, and believe that our difficulty stems from one of our strengths as a nation:  the openness and transparency of our culture.

The U.S. is a rules based society for getting ahead.  If you get good grades and are involved in many activities as a high school student then you will gain admission to a good university.  Thus it starts and continues through the working world.  We live in a world that is very predictable which is a great statement about the strength of our society.  Unfortunately the rest of the world is not quite so organized, nor is it predicable in the ways we would like.  Many countries in emerging markets are not so lucky, as people try to survive with rules that change for reasons which rarely get predicted.

How have I seen this noble quality trip us up in emerging markets?  Sometimes we don't understand power relationships which don't follow org charts.  We mistakenly identify organizations which do not exist, while ignoring those that do.  Somethings can only be seen and learned the hard way, on the ground.

Cyberwar: A scary word for a scary world

I have started a new project working on cyber threats for a variety of clients with potentially sensitive exposures via the internet.  This should be an interesting project as several fascinating points have already jumped out at me.

Everything can be at risk.  This sounds like stating the obvious, but not in the way you might think.  We all know about hacking and viruses.  What is not clear are the different ways your IT structure connects to the internet for updates and information.  For example, some software you may run may collect data from places not connected to the internet yet funnel it out during normal operations.  This is not an IT class; my point is don't be overly confident with what you know about your system and its vulnerabilities.  These systems are not static.

The great equalizer.  The internet allows smaller organizations to take down larger ones by acting as a force multiplier.  Large and expensive servers (or other devices) are not needed to bring down complex systems.  Your threats need not be similar organizations with similar resources, but may in fact be quite smaller and less sophisticated.

It ain't easy.   Hollywood aside, mounting a cyber attack is not easy and can rarely be mounted without human assistance.  The inside man, facilitating the technical attack, is clearly vital.  As such looking for potentially exploitable employees could be the key to avoiding these attacks.

Theory and Reality

I recently evaluated a company in an emerging market as a potential investment for me and my partners.  We will turn away because of one fundamental problem:  they cannot execute their business plan with their current workforce.  Why?

Vision:  The leadership team has a clear and accurate vision of where their market is going and where their company needs to be in the future.  They articulate this perfectly and calmly, and (unusually) do not let egos affect this vision.  This last point is very rare and usually something I like to capitalize on as a competitive advantage.   Growing a business is hard enough without trying to make yourself look great in the process--you should let the business speak for itself.  Not my subject today.  Anyway, this firm almost had me fooled with their vision and articulation, and we would have jumped in had we not spoken with their employees.

Reality:  the company's employees who will develop and build the new products mean-well, but cannot produce what the leaders want.  The disconnect stems from the leaders' unusual background:  the architect of the strategy never worked in operations or sales but has instead been a consultant for many years.  While he understands the market he does not know how to assemble the right team to actually make and sell something.  In a weird way he seems to work in his mind with virtual human employees and not real ones.

Lessons:  Be thorough in your research and don't allow yourself to be fooled.  All of us can make mistakes, and working an organization from top to bottom will give you the information you need to avoid costly mistakes.

Can you fix and rebuild at the same time?

I have recently been involved as a potential investor in a company where a new management team was brought into to restore order to a chaotic situation.  The old team was burning through money, projects were not well-coordinated and a strategic vision was nowhere to be found.  The new team of two managers focused on implementing their vision of the company's future and it has been quite the learning experience.  A couple of points worth noting.

You have to tear down before you can build up.  These new managers intended to eliminate the problems while at the same time instituting new programs and objectives.  This has not happened, as they have been forced to spend all of their time dismantling the old regime.  Human nature being what it is, I believe this was bound to happen.  The managers were forced to go through each old project and process item by item to educate the workforce on what was wrong with the old ways.  Sometimes this did not work and employees left.  Gradually the employees came to understand the problems with the old order and why it was no longer working.  This was necessary and I believe it would have been too much of a mental strain to have at the same time introduced new growth strategies.

Personality characteristics:  The two members of this management team are by nature inclined to taking apart broken organizations.  Each idea that comes to them is thoroughly scrutinized along the lines of the strategy employed above to take apart the failing projects.  I have noticed that these mental tendencies are inherent to these two individuals--by nature they look for problems and not possibilities.  As such I have concluded that they are not the type to grow a business.  Not only do they lack the vision required to do so but their ruthless questioning also tends to discourage subordinates who may have new ideas. 

Conclusion:  If you are dismantling a failing business bring one team into to stop the bleeding and another to grow in the right direction.  I am sure you can find individuals who can do both but this above experience has shown me that two fundamentally different types of people perform these functions--don't take the chance by putting the wrong sort in the wrong position.

Evelyn Waugh, again

For at least the fifth (or is it the sixth?) time in twenty years I read Waugh's trilogy, The Sword of Honor, followed by Scoop.  What is so enjoyable about Waugh's writing?  What draws me back, time and again, to these enjoyable works?  I think my current crisis, trying to live a life in the modern world, is part of the attraction.  Let's save that for another day and focus on the literature.

City of God, City of Man:  Waugh's biggest attraction to me is his clear grasp of the challenges a Christian faces living in the world, a challenge which evolves but never changes.  He takes Augustine's great work to literature by using a tremendous sense of irony to describe the modern world.  In so doing he writes as a true Christian (I state this knowing little to nothing about his personal life) confronting the fundamental challenge of the modern world:  how to live by God's law in the world, knowing that the world always wants that much more of us.  This challenge, in a world that makes us treat our fellow man as a customer or vendor, is one I struggle with constantly.  Thankfully I have Waugh and his fine sense of irony to show me the way.

Next, the challenges of a worldly life.