Weeks 15-16: Conglomerates, Lemmings, Founders’ Dilemmas and Tax Lotteries

Stanford GSB Sloan Study Notes, Week 5-6 (15-16), Autumn quarter

This post consolidates my notes from two weeks instead of a normal one, yet will be a bit more concise than usual too, for a few reasons: I was down with flu for several days and had to miss a few classes and then the midterm exams in Financial Accounting and Organizational Behaviour changed the normal scheduling.

Also, the first session of the latest addition in our core timetable, STRAMGT 259: Generative Leadership by Dan Klein yesterday was too… experiential to take any notes, really. Basically, we did three hours of improv theatre. It was a lot of fun, but instead of getting into the theory here – get the book: Improv Wisdom: Don’t Prepare, Just Show Up by Patricia Madson. And say “yes” more to whatever life throws at you, go with the flow and see what happens.

For additional entertainment, here is an experiment shared by my classmate Marc who is lucky to take a Behavioral & Experimental Economics class by freshly Nobel-prized Al Roth: primatologist Frans de Waal showing how even monkeys reject unequal pay (see especially from 2nd minute).

And now on to the regular programming. Covered in this issue:

  • Why people suck at predicting when they finish a task
  • How overdiversification, and especially uncontrolled aquisitions lead to dysfunctional conglomerates
  • Lemmings following lemmings, but not sheep
  • Predicting future divorces
  • Research from surveying 10,000 founders that quantifies the impact of common “gut decisions” like picking investors or sharing stock between co-founders
  • Guest speakers explaining how they’ve used creative incentive schemes to get more out of porn site classification crowdsourcing and VAT payments in China
  • The impact of investment lags on IP value creation in startups and established companies
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Week 14: Confucius, Shrek, Devil’s Advocates and the Board

Stanford GSB Sloan Study Notes, Week 4, Autumn quarter

Covered in this issue:

  • How Confucius helps the Chinese to consume free MP3s
  • How a CEO is stuck between the Board and his team in a complex matrix of conflicting loyalties
  • How a side-effect of managing a few trillion dollars in your funds is the need to do a lot of board voting for your shares
  • How high-profile VCs can keep your loans in the bank and close your hires
  • How startups should tell their story the way seen in Shrek
  • How to make the devil’s advocate a resident part of participatory decision making culture
  • How citizens should break the government monopoly of environmental and pollution mapping

And here on to the full notes: Read the rest of this entry »

Week 13: Gangnam Style, Fired CEOs and Motivating People

Stanford GSB Sloan Study Notes, Week 3, Autumn quarter

The highlight of this week was of course the Friday our Sloan class owned the GSB courtyard with our little dance act. It took weeks of preparation, late nights and sweaty trainings for many to make Project Chai happen. It would have been too easy to be and remain sceptical of the entire venture from start, given how YouTube is overflowing with Gangnam style flash mobs, but the sensation of the entire class an many of our partners going through this was just amazing. (Mind you, this is not a high school, but perceptionally quite high competition and serious workload business school we’re talking about). Thank you, Herbert, Hans, Cherie, Tracee, Jonathan, Gitanjali and everyone else for pulling people through this.

(As a side remark, keeping this video online is a terrible experience – Youtube is blocking some mobile viewers, Vimeo did a full takedown for a while of our mobile friendly version of this video… We’re trying to talk directly to music rights owners now, but how on Earth are flash mob videos usually distributed?)

On academic side, covered in this issue:

  • Why not drink Diet Coke in Las Vegas?
  • How some penny-pinching retail operations can grow bigger (and more profitable) than most countries.
  • How to fire a CEO.
  • How GAAP accounting discretion in used and abused in public company financial reporting.
  • How charisma can be broken into components and trained.
  • Why reward people with stuff as opposed to money?
  • Why would you still want to correlate the size of codebase to the value of software IP, despite of obvious pitfalls?

And here on to the full notes: Read the rest of this entry »

Week 12: Discounting the Future, SEC Investigations and Visiting Founders

Stanford GSB Sloan Study Notes, Week 2, Autumn quarter

Covered in this issue:

  • Rational decision making. Why and by how much discount the future?
  • In search for a strategic fit – those sweet moments when stars actually align for a while. Resulting competitive advantage that holds due to the complexity of interdependencies. Cases: CapitalOne (data driven mass-personalisation) and Lincoln Electric (super productive manufacturing).
  • Real-Life Ethics: Guest Michael Marks on being bullied by huge OEMs while Flextronics CEO. And should a SEC-inestigated company throw an innocent CFO over board to settle? Role of the board in backing the CEO.
  • Guest selling their story: Smule co-founders Jeff Smith & Ge Wang. Andrew Mason of Groupon.
  • Peer-organized public company valuation training.
  • Analysis of a persuasive argument: 1 man turning 11 jurors around in the 12 Angry Men movie. The case of Silicon Valley’s most effective networker.
  • Cash flow reporting. And intangible assets, especially software.

And here on to the full notes: Read the rest of this entry »

Week 11: Instant Gratification, In and Out of Orgs and Biases

Stanford GSB Sloan Study Notes, Week 1, Autumn quarter

The gearshift to the fall quarter was quite a big one. Going from 13 to 19 units (full schedule here) means days starting at 8am and running straight to 5pm two days a week, leaving slightly more time for prep reading and writing on others. We have been assigned to new study groups (mostly for Strategy, where we need to pick a company and country none of us are familiar with and devise the plans for their entry to that market) and generally get to hang much less with other Sloans due to differing elective schedules.

Pardon for the longest notes yet below. I guess I should become more selective as the courseload goes up? Or maybe not, if the filter remains “write down interesting stuff and aha moments only”… If there is any comfort – there are videos, again.

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Week 6: Torts, the Samurai and Dance of Joy

Stanford GSB Sloan Study Notes, Week 6, Summer quarter

Pages assigned for reading: 157

POLECON239 – Strategy Beyond Markets (prof Jha)

  • Tort anecdotes:
    • The famous 1992 case where jury awarded $2.7M to Stella Riebeck who was burned by McDonald’s coffee she spilled…
      • In class discussion: “This could not happen in Italy. a) espressos are smaller and b) when you spill coffee on yourself, you say “I am stupid” and move on”
    • A Batman costume manufacturer needs to add labels with: “Parents, please exercise caution, cape does not enable users to fly”
    • When Vespa scooters with a storage compartment under the seat are produced, only the ones sent to US market get a warning label: “do not store babies or pets under the seat”

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Week 5: Supply & Demand, Patent Wars & Negotiations

Stanford GSB Sloan Study Notes, Week 5, Summer quarter

Pages assigned for reading: 339

MGTECON209 – Statistics & Economics (prof Oyer)

  • 4/5 cars sold in China in 2011 were to first time buyers.
  • Economists generally study people’s wants, rather than needs.
    • For added confusion, in wealthy countries calling something a “need” is often a value judgement.
  • Talk is cheap because supply exceeds demand 🙂
  • 800(!) occupations in US require a licence issued by local/state/federal government – thus meddling with supply.
    • In 1950s <5% of workforce, >29% in 2008
    • 40% of workers with post-college education also need a licence to work in their field
  • Price sensitivity is a concept, elasticity a mathematical term expressing it
  • Simplifying the elasticity formula
    • (% change in quantity / % change in price) = (change in Q / Q) / (change in P / P) = Slope of Demand/Supply function * (P/Q)
    • important that plugging the slope only works if the graph was drawn the “right” (e.g the unintuitive economist way) where quantity = X axis
  • Elasticity is negative over a products own price, yet positive over direct substitute’s price
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