This is just a quick exchange with a reader of one of my books ...
He wrote:
By the way, I'm amazed at the life you've lived. If I am your mentee, what's the best advice can you give me to "succeed" in life, and I mean not only financially.
I responded:
You are already successful… you can read, you have access to internet, you can type, you speak the language of opportunities: English.
If you think about how far you’ve come since you were a crying baby, you’ve realized how successful you already are. The main problem today is that we have an external locus of control. We compare ourselves to others, that way we loose the capacity to do amazing things. You don’t have to be better than anyone else, you just have to be better than yourself. If you do that you always win…
How is that for a start?
...
What do you think???
Wednesday, July 29, 2009
Friday, July 24, 2009
the right incentives
I was reading Sway, by Ori and Rom Brafman, cousins, not partners. Sway is a book about irrational behaviour. It introduces some mind blowing concepts and research results, somre more known than others.
I found particularly interesting two, in this wealth drop I will talk about one: incentives. Next week I'll cover the second one: a sense of justice.
Ori and Rom explore several experiments about incentives. I've known for ages the love-hate relationship most people have with wealth. There are many explanations to it, one is that we perceive the full pie of wealth as a static figure and whatever we take out comes from someone else's wealth. It is what is called zero sum game in economics. You win, someone loses. it is the basis of socialism, yet it is not the basis of capitalism.
The experiments described in Sway show how we - people - can make decisions against monetary compensation.
One experiment was carried out in Switzerland, where the residents of a town had to approve or reject a nuclear waste disposal facility. Researchers posted a couple of surveys to evalute the responses. One survey considered the greater good of the population, the other survey had a minor change, it added a monetary compensation. Contrary to what economists would have believed. Monetary compensation had a negative impact in the accetance of the facility. Even when the compensation was increased, the results were worse than when no compensation was offered.
A second experiment involved students in Israel, taking a test to enter Universities, the GMAT. Researchers wanted to test the impact of a monetary compensation on good answers. Although the students knew this was a test, when offered a small prize for correct answers, the overall score dropped! The 2.5 cents reward per correct answer was enought to actually detter them!
It seems that involving monetary compensation throws people off.
What do you think?
I found particularly interesting two, in this wealth drop I will talk about one: incentives. Next week I'll cover the second one: a sense of justice.
Ori and Rom explore several experiments about incentives. I've known for ages the love-hate relationship most people have with wealth. There are many explanations to it, one is that we perceive the full pie of wealth as a static figure and whatever we take out comes from someone else's wealth. It is what is called zero sum game in economics. You win, someone loses. it is the basis of socialism, yet it is not the basis of capitalism.
The experiments described in Sway show how we - people - can make decisions against monetary compensation.
One experiment was carried out in Switzerland, where the residents of a town had to approve or reject a nuclear waste disposal facility. Researchers posted a couple of surveys to evalute the responses. One survey considered the greater good of the population, the other survey had a minor change, it added a monetary compensation. Contrary to what economists would have believed. Monetary compensation had a negative impact in the accetance of the facility. Even when the compensation was increased, the results were worse than when no compensation was offered.
A second experiment involved students in Israel, taking a test to enter Universities, the GMAT. Researchers wanted to test the impact of a monetary compensation on good answers. Although the students knew this was a test, when offered a small prize for correct answers, the overall score dropped! The 2.5 cents reward per correct answer was enought to actually detter them!
It seems that involving monetary compensation throws people off.
What do you think?
Wednesday, July 15, 2009
Success in SMEs
As promised last week, I wanted to get a bit further into Watson's work on Small and Medium Size businesses (SMEs). This time, I want to expand on the measurement of success.
I actually don't like anything small. I figure that being small is not inspiring, so it does not work for me. Furhtermore in some countries being small is a threat. Yes, a threat. Things are harder when you are small, and more expensive. The power of leveraging does not work, time is less efficient because tasks are not specialized and usually larger investments do not make sense.
But let me go on with Watson before I close up with my own remarks.
SMEs success depends pretty much on the intention of the owners. Unlike large corporations that have a clear intent of creating shareholder value -in dividends or resale value- SMEs can be used, for example, to support a hobby, to support a small community, and to create personalized services. I don't mean the ones that are plugged into a databased so you can fit profile 134z so the solution is tailor made. I mean Trevor my hairdresser and Steve the post man, and Jenny at the grocery store and Amanda, the niece of the owner o the newsand who is studying law. How do I know? because she is 'personal'.
When Watson analyzed how business owners defined success and accounted for it in his data, he found out that the success rate was very high. Indeed SMEs were made to create the results the owners wanted, profits came second, almost always.
There was the case of a couple who came as immigrants and did not speak the language. They had a small stand, he worked fixing watches and organizing the inventory, she worked in the front desk and did sales and admin. They went to raise a family of four and closed the business to retire some 40 years later. They did not sell it, they had enough savings to be ok in their old age. Their business was quite profitable and provided them with a better than a regular salary alternative.
Other cases were aggregated, his findings showed that usually women where less risky and tended to be more efficient in their use of capital. The cost of capital for SMEs is usually higher, banks claiming their risk is higher. Watson also demonstrated that SMEs risk of failure was realated to the firm's age and not size.
after all it seems then than being small is not that bad.
As a customer I think about great corporations and small through a single lense, sorry: are they providing value for me and the community?
and with that in mind, I choose.
All the best, Alicia
next week, wealthingTM
I actually don't like anything small. I figure that being small is not inspiring, so it does not work for me. Furhtermore in some countries being small is a threat. Yes, a threat. Things are harder when you are small, and more expensive. The power of leveraging does not work, time is less efficient because tasks are not specialized and usually larger investments do not make sense.
But let me go on with Watson before I close up with my own remarks.
SMEs success depends pretty much on the intention of the owners. Unlike large corporations that have a clear intent of creating shareholder value -in dividends or resale value- SMEs can be used, for example, to support a hobby, to support a small community, and to create personalized services. I don't mean the ones that are plugged into a databased so you can fit profile 134z so the solution is tailor made. I mean Trevor my hairdresser and Steve the post man, and Jenny at the grocery store and Amanda, the niece of the owner o the newsand who is studying law. How do I know? because she is 'personal'.
When Watson analyzed how business owners defined success and accounted for it in his data, he found out that the success rate was very high. Indeed SMEs were made to create the results the owners wanted, profits came second, almost always.
There was the case of a couple who came as immigrants and did not speak the language. They had a small stand, he worked fixing watches and organizing the inventory, she worked in the front desk and did sales and admin. They went to raise a family of four and closed the business to retire some 40 years later. They did not sell it, they had enough savings to be ok in their old age. Their business was quite profitable and provided them with a better than a regular salary alternative.
Other cases were aggregated, his findings showed that usually women where less risky and tended to be more efficient in their use of capital. The cost of capital for SMEs is usually higher, banks claiming their risk is higher. Watson also demonstrated that SMEs risk of failure was realated to the firm's age and not size.
after all it seems then than being small is not that bad.
As a customer I think about great corporations and small through a single lense, sorry: are they providing value for me and the community?
and with that in mind, I choose.
All the best, Alicia
next week, wealthingTM
Tuesday, July 7, 2009
Demystifying Failure in Small Businesses
I just finished reading a book that will be published in late 2009. What a fascinating read. The author, Dr. John Watson has embarked into a review of success and failure on Small and Medium Size businesses (known as SMEs). Read on to be surprised!
He has spent years evaluating, among other things, the myth of the high failure rate. Someone said a long time ago, that the failure rate of SMEs was 80%. I have heard this statistic in the U.S.A, where supposedly the rumor originated, in Chile, Venezuela, Mexico, Guatemala, Australia and even in Bahrain! So much for globalizing failure rates!
What striked me most was the consideration that a business closure was not a sign of failure. It is one of those reflections where one realizes that common sense is not that common. John found time and again that the closure of businesses could be ther result of many non-failure related decisions: the owners may decide to close a company to retire or to separate pieces of the company to sell separately (I have done both). they might also sell to move on to other ventures or to do something else (been there, done that too). Of the 9 companies that I started, I have sold 5 and I have closed 2 at a personal loss. So, my personal stats are 12% ... I have worked with hundreds of entrepreneurs some in the most uncertain circumstances: taking innovations into markets outside of a corporation, the 80% failure rate is a myth.
John statistics prove that the failure rate of SMEs, at least in Australia using his work and revising many others, is 3-28% with a peak at 3 years, where companies that are less profitable compel the owners to take two actions: either reinvent (aha! I also had to do this) or closed (in my case, one closed one on year 2 and the other on year 4).
Demystifying SME's failure rates is very imporant for entrepreneurs to be, policy makers and for the community in general. With the current economic crisis, chances are that many people will move to start a business, yet, more than ever, we need entrepreneurs, not to form companies, but to create wealth ... right?
That is why we are turning our company to a Wealthing company.... more to come soon...
I hope John's work will help reshape the way you view SMEs, it has changed mine.
Alicia
PD: Next week I'll cover his work on performance!
Alicia
He has spent years evaluating, among other things, the myth of the high failure rate. Someone said a long time ago, that the failure rate of SMEs was 80%. I have heard this statistic in the U.S.A, where supposedly the rumor originated, in Chile, Venezuela, Mexico, Guatemala, Australia and even in Bahrain! So much for globalizing failure rates!
What striked me most was the consideration that a business closure was not a sign of failure. It is one of those reflections where one realizes that common sense is not that common. John found time and again that the closure of businesses could be ther result of many non-failure related decisions: the owners may decide to close a company to retire or to separate pieces of the company to sell separately (I have done both). they might also sell to move on to other ventures or to do something else (been there, done that too). Of the 9 companies that I started, I have sold 5 and I have closed 2 at a personal loss. So, my personal stats are 12% ... I have worked with hundreds of entrepreneurs some in the most uncertain circumstances: taking innovations into markets outside of a corporation, the 80% failure rate is a myth.
John statistics prove that the failure rate of SMEs, at least in Australia using his work and revising many others, is 3-28% with a peak at 3 years, where companies that are less profitable compel the owners to take two actions: either reinvent (aha! I also had to do this) or closed (in my case, one closed one on year 2 and the other on year 4).
Demystifying SME's failure rates is very imporant for entrepreneurs to be, policy makers and for the community in general. With the current economic crisis, chances are that many people will move to start a business, yet, more than ever, we need entrepreneurs, not to form companies, but to create wealth ... right?
That is why we are turning our company to a Wealthing company.... more to come soon...
I hope John's work will help reshape the way you view SMEs, it has changed mine.
Alicia
PD: Next week I'll cover his work on performance!
Alicia
Friday, June 26, 2009
Why Venture Capital is good for you?
It is always so nice when someone captures your thoughts around cyberspace. Tony Malkovic posted a note all the way back in October on Science Voice... and I could not be happier by the way he summarized my words:
“What entrepreneurs get out of venture capital is not the money, it’s the support, it’s the capacity to create wealth. It’s the knowledge of what to do and what not to do, so you can maximise your resources.” - Alicia Castillo Holley, Wealthing Group
Here is the link to the highlights of the event:http://www.sciencewa.net.au/index.php?option=com_content&task=view&id=2320&Itemid=710
Organized last year to foster innovation and investments, the Leading Lights conference was another step in the right direction.
It will take many more to get this trend comming, but we are getting there.
“What entrepreneurs get out of venture capital is not the money, it’s the support, it’s the capacity to create wealth. It’s the knowledge of what to do and what not to do, so you can maximise your resources.” - Alicia Castillo Holley, Wealthing Group
Here is the link to the highlights of the event:http://www.sciencewa.net.au/index.php?option=com_content&task=view&id=2320&Itemid=710
Organized last year to foster innovation and investments, the Leading Lights conference was another step in the right direction.
It will take many more to get this trend comming, but we are getting there.
Wednesday, June 17, 2009
PMU's visit. Dammam, Saudi Arabia
If you want to be inspired by people changing the world, I couldn't but recommend the PMU in Dammam, Saudi Arabia.
The group of people that Dr. Isaa (hey, they go by their first names there) has formed is fascinating. Dr. Nassar, Dr. Zlatica and Dr. Res are establishing a leading organization.
PMU, which stands for Prince Mohammad Bin Fahd University, was created by a vissionary to provide high quality education to men and women in the region. The campus, carefully planned to account for their cultural values, is beautiful. I had the opportunity to visit the auditorium, and get two tours, one with the technology officer, and one with the head of the library. This is not only world class but state of the art.
Keep them in mind... This young university will be one of the top providers of high quality education in the region in no time.
Here is a picture of my meeting with the authorities. Missing fromt he picture is Dr. Nassar. http://www.pmu.edu.sa/enn/ir_dnews.asp?id=31
The group of people that Dr. Isaa (hey, they go by their first names there) has formed is fascinating. Dr. Nassar, Dr. Zlatica and Dr. Res are establishing a leading organization.
PMU, which stands for Prince Mohammad Bin Fahd University, was created by a vissionary to provide high quality education to men and women in the region. The campus, carefully planned to account for their cultural values, is beautiful. I had the opportunity to visit the auditorium, and get two tours, one with the technology officer, and one with the head of the library. This is not only world class but state of the art.
Keep them in mind... This young university will be one of the top providers of high quality education in the region in no time.
Here is a picture of my meeting with the authorities. Missing fromt he picture is Dr. Nassar. http://www.pmu.edu.sa/enn/ir_dnews.asp?id=31
Sunday, June 14, 2009
Tweet, tweet, tweet
We are still working on understanding how do we create wealth.
Basically we can do that two ways: we create new markets or we reduce costs. In both cases, our net profit incresases, allowing us to feed that back into the economy: growing and spending: we then create new jobs, demand new services, pay more taxes. Everybody wins.
We create new markets by finding uncontested market space: in our own industry, in the industry next door, in an industry that is in itself being created.
Let's see a new market: twitter
I just succumbed to twitter, (http://twitter.com/aliciacastillo) thanks to John Kremer, a marketing guru for authors. As I am not to wait until my books sell, I sought his expertise. From twitter, I moved to tweetlater and to postlater and to tweet analytics.... I envisioned there would be at least a hundred companies promoting the better use of tweets.
Chris Pirillo, a well known geek has posted several youtubes on tweets...
Alex Mandossian, another marketing guru, started a group to maximize the use of tweeter, for only $30/ month. I am sure they will be sharing best practices, secrets and so forth.
I laughed at twitter first but I am curious to see where this all would go to.
and well, yes, I tweet, I use tweetlater and I have a life.
I couldn't tweet without tweet later. http://snipr.com/k6rzf
here is to your tweet,
Alicia
Basically we can do that two ways: we create new markets or we reduce costs. In both cases, our net profit incresases, allowing us to feed that back into the economy: growing and spending: we then create new jobs, demand new services, pay more taxes. Everybody wins.
We create new markets by finding uncontested market space: in our own industry, in the industry next door, in an industry that is in itself being created.
Let's see a new market: twitter
I just succumbed to twitter, (http://twitter.com/aliciacastillo) thanks to John Kremer, a marketing guru for authors. As I am not to wait until my books sell, I sought his expertise. From twitter, I moved to tweetlater and to postlater and to tweet analytics.... I envisioned there would be at least a hundred companies promoting the better use of tweets.
Chris Pirillo, a well known geek has posted several youtubes on tweets...
Alex Mandossian, another marketing guru, started a group to maximize the use of tweeter, for only $30/ month. I am sure they will be sharing best practices, secrets and so forth.
I laughed at twitter first but I am curious to see where this all would go to.
and well, yes, I tweet, I use tweetlater and I have a life.
I couldn't tweet without tweet later. http://snipr.com/k6rzf
here is to your tweet,
Alicia
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