Advantages of Poverty – Book Review

Andrew Carnegie was an American industrialist who amassed a great fortune toward the end of the 19th century and then gave most of it away. Many American cities still have a Carnegie library donated by this philanthropist. By the time he died in 1919 he had given away millions of dollars. He had long held that it was a disgrace to die rich.

Carnegie did not start off rich however. He came to America as a small poor immigrant boy from Scotland. His family lived in poverty, first in Scotland, and then in Pittsburg. As a small boy he had to drop out of school and work long hours six days a week to help support his family.

Over time he worked his way out of poverty and became a multi-millionaire. In his later years he wrote a number of essays and books. Among them was his Gospel of Wealth. In this essay he opined that a man had a duty to earn as much money as he reasonably could. He then had a duty to care for his family and dependents. Finally, he had a duty to responsibly give away all his wealth before he died, and that is what he in fact did.

Among these various writings Carnegie penned one called the Advantages of Poverty in 1898. In this essay he repeats much of his Gospel of Wealth but in particular makes clear that in his experience a poor child has the advantage of having to work his way out of poverty . A child born in poverty takes nothing for granted and expects nothing he does not himself earn. He learns discipline and the value of work. He learns how to build wealth for he must do so or be condemned to remain in poverty. For Carnegie poverty was the great teacher.

He wrote that while it was proper to give alms to alleviate the most terrible suffering and deprivation of the most poor, it was a disservice to give them too much. He firmly believed that it was much more helpful and even more morally defensible to help others help themselves than to simply help them.

Carnegie's philosophy of wealth and poverty was informed by the social Darwinists of the late 19th century. It was common among men of that thinking to believe that men who grew rich had evolved to do so and those who were poor were equally evolved to such a state. However Carnegie had some more compassion and understanding than many of the rich of his time.

In fact, having been both very poor and very rich he may have been uniquely equipped to preach the truth about wealth and poverty. Whether or not you agree with Carnegie's entire gospel, there is much wisdom in what he said. Poverty can be a good teacher in many instances.

You can find Carnegie's essay on the Advantages of Poverty in the small book of that title which also includes his writings on How to Die Rich and The Best Gift. The entire small book is a mere 49 pages in length. It can be read in an hour but will instruct for much longer.

Advantages of Poverty
Andrew Carnegie
© 2004 Executive Books
Rating: Over all this is a good book and very interesting. I recommend it.

Branding Strategies – When a Bargain-Brand Attacks a Premium-Brand

When I was ten years old at a summer camp I was leading in the potato sack race. To check on my competitors I looked over my shoulder and suddenly tripped and fell. I came in last place. Even the slowest person, Marsh Mellow Matt beat me. It was humiliating. But in the end I gained a good learning experience.

When a bargain-brand product attacks your premium-brand space, is it still healthy to look over your shoulder? Will you trip over too?

In a robust economy it's relatively easy to maintain profitable growth of a premium-brand product. Conversely, in today's economy, the competitive forces are testing the best of us. We are entering a new paradigm of business and the days of conspicuous consumption are quickly receding. Since 2007 over 8 million jobs have been lost. We have chronic unemployment at 10%, or in reality its 17% when you add the people who gave up looking for a job. As fear, insecurity, and the need to be frugal enter the consciousness of consumers, companies are responding by introducing lower price bargain-brand products. What's a premium-brand to do?

There are three strategies a premium-brand can consider; (1) Introduce your own bargain-brand, (2) Innovate a new value product category (3) Or, maintain status quo. Let's consider the ramifications of deploying your own Bargain-Brand.

As Jacqueline Kennedy once said, "I do not react, I respond."

There's a saying, "Never fight a pig because you'll get muddy and the pig will enjoy it." The same goes for a premium-brand looking to protect its market share against a bargain-brand. Every day we see new bargain airlines, bargain consumer products, bargain cars, bargain food, and bargain electronics. Be careful of the panic reaction when you deploy short term tactics in price discounting and couponing. It may only deplete profits. You can hold the line, but can you afford customers who defect to lower price brands. As Jacqueline Kennedy once said, "I do not react, I respond."

Seek your uniqueness

There are no right answers, but a journey of discovery will help determine your strengths, weaknesses, and uniqueness. In a recent book by Dr. Caroline Leaf, called, The Gift In You, this PhD. Researcher discovered there are seven layers of thinking processes in our minds. The seven layers of thinking processes are: Intrapersonal, Interpersonal, Math / Logic, Visual / Spatial, Music, Kinesthetic, and Linguistic. Starting from the most dominant thinking process, when a new thought enters our mind it will loop into the seven layers in a different sequential order. For example, someone who thinks first in music will be able to read between the lines to give meaning to it. While a logic / math dominant thinker performs pattern recognition in huge numbers and reasons in a precise order. We all see the world differently and think differently. We are all unique and so are our companies and the way we collective process our thinking. As such it's fruitless to be like someone else such as Steve Jobs. None of us can think like him and nor do we want to. We must learn to be ourselves by knowing our uniqueness and using it to your advantage.

Are you an elephant or a cheetah?

As Shakespeare once said, "To thine own self be true." In other words, do you have the competencies to compete as a Bargain-Brand?

When launching a new product you'll have to adjust and adapt quickly. Is your company a cheetah that can move quickly and adapt to consumer and market changes? Or, are you a slow moving elephant that makes decisions at a sluggish pace? A slow moving elephant should think twice when competing against fast moving bargain-brand cheetahs.

GM was slow to introduce Saturn to compete against the Japanese, but Intel was quick to respond to constant AMD attacks. At first, Intel's bargain-brand chips (Celeron) performed poorly, but they responded quickly to the market and beat AMD at their own game.

Will you divide and conquer yourself?

Julius Caesar's strategy to overcome the enemy was to divide and conquer. When launching a Bargain-Brand, you might be dividing your resources and placing your entire organization into a weak position. Without sufficient resources, people, and focus, both your premium and bargain brand products could become diluted and fail. If the Bargain-Brand fails then you'll have the added cost and time of cleaning up plus the cost and time to rebuild the Premium-Brand.

It cost GM $ 15 Billion to launch and maintain the Saturn division. Delta Airlines launched Ted Airlines and lost billions too. These two elephants did not understand their uniqueness nor able to response quickly to market changes. Rather they copied the competition thinking that would satisfy the market.

On the other hand, fifty years ago, Anheuser-Busch was facing a low-price assault from regional players which opened up a whole new market category. Anheuser-Busch responded by opening up another company that was completely separate from the parent company; perhaps you've heard of Busch Beer.

Are you looking at your customers or just your competition?

The famous basketball coach John Wooden won more college basketball championships than anyone else. Part of his success was to never allow one player to be compared to another. Rather, each player was judged by his own skills, performances, and productivity. Companies trying to copy Bargain-Brands do not have the same competencies, people, collective thinking processes, and experiences like their competition. Look at Steve Jobs and his string of successful products; iPod, iPhone, iTunes, etc. Therefore, do not copy your competition, rather seek what is good for the customer and use your uniqueness to develop your product.

Know thy customer

This is a key time to study your customer to determine their true needs and the perceived value of your offering. Advances in Neuromarketing have discovered that traditional marketing research can fall short in truly understanding how a customer receives your message. Each year billions of dollars are spent on traditional market research and still 80% of new product launches fail. Neuromarketing will give you insight on the emotional needs of your audience and how they will perceive your messaging and marketing.

The power of Neuromarketing starts with the engagement of our seven senses; (1) Taste, (2) Smell, (3) Hearing (4) Touch, (5) Sight, (6) Humor, and (7) Intuition. To make it all work one must understand the power of association that directly impacts our emotional brain and how past experiences are recalled when we encounter a brand experience. Walk into a Whole Foods Store and you're bombarded with a cornucopia of beautiful food, fresh baked bread, brewed coffee, and desserts turned into art. You're flooded with emotions of mom, home, security, abundance, and happiness. The experience is frequently joyful and you're willing to pay premium prices for their products.

The power of association will engage our senses to recall positive experiences that we will tie to the brand. Called somatic markers, they represent a total compilation of emotions, negative associations, and positive associations. When a woman is given a light blue box with a white ribbon, the Tiffany brand and blue color evoke strong feminine emotions. When we think of a well branded product, such as Coach, Chanel, Harley Davidson and Tiffany, many of us experience an emotional and somewhat sensual positive response. A good brand tied to Neuro-marketing should offer:

o A great experience that exceeds customer's expectations
o A clarification of the value of the product
o A decision by the prospect to consider purchasing it

How we associate products with past experiences can determine our purchasing considerations. Mr Lindstrom in Buyology highlighted a few examples such as;
o Light blue for a woman can be associated with engagement, marriage, babies, and fertility. Pink is associated with luxury, sensuality, and being feminine.
o Color will increase brand recognition by 80% and represents up to 50% in the decision making process to choose a brand product.
o People will buy more out of love (53%) versus sex (26%).
o Be authentic, transparent, and real. We buy from people we can relate to.

Do not let your Bargain-Brand cannibalize the profits of your Premium-Brand.
If you decide on launching a Bargain-brand be sure you are capturing the right revenue. If one part of your target audience is not profitable with your premium-brand and your bargain-brand can capture that profit, then go for it. On the other hand, if your Bargain-brand is going to cannibalize your premium-brand profits then reconsider your options.

It's essential that your bargain-brand have a different perceived value, messaging, and pricing. Years ago Kodak came out with a bargain-brand film that had little distinction from the premium brand. Customers went for the lower price product cannibalizing profits from the premium-brand. On the other hand, when P & G purchased Luv's Diapers brand, it repositioned it as a bargain-brand. Their Pampers brand was given greater features and advertising thus creating a higher perceived value.

Must Develop a Difference in Perception and Value
If you offer a bargain-brand, then your goal is to offer two products with much separation in value and messaging. You'll want to consider using Neuromarketing research techniques. It is essential that the premium product maintain its true value benefits while the lower-price brand act and look like a bargain-brand one. By acting like a bargain-brand, you'll be able to cut costs on marketing, support, operations, and production and thereby creating the gross margin to compete effectively on price. You may want to use a hot button here to connect people to your article on Neuromarketing.

When Anheuser-Busch rolled out Busch Beer they created a whole new company and identity. They invested in new distribution, new trucks, and new sales people to ensure that the Premium-brand and Bargain-brand were not confused but optimized.

Do not recreate the wheel or build a new organization unless there's a market for it
GM invested $ 15 Billion in Saturn and it failed. Is your goal to market a Bargain-Brand or build a new company?

Consider your resources, sales volume, and gross margins. Your goal is to make a profit. If your Premium-brand can not serve another large market, then a new organization, such as starting up a discount airline division or Busch Beer may be an answer. On the other hand, if your premium-brand can cover the market then re-consider your options. As I mentioned earlier, GM spent $ 15 Billion on the new Saturn division, when their existing product lines at Buick and Chevy reached the same target audience.

The Final Strategy to Consider: Innovate a new product category
A recent book called Blue Ocean Strategy stated that it is sometimes better to innovate a new product than to compete in blood thirsty waters or Red Ocean. Look at the crowded fields of electronic consumer products, automobiles and food. When you launch a new product in these categories how do you stand out?

Conversely, companies will innovate new products developing a new category where there is no competition; hence Blue Ocean. Years ago Sony launched the Walkman. Apple introduced the iPod and iPhone. An example in Blue Ocean Strategy was the Casella Winery from Australian who wanted to launch a new wine in a very crowded and snooty category.

A strategy based on innovation will look at different customers with shared commonalties. In the crowded wine business, more wineries did not think of looking for low budget beer drinkers. The Casella winery saw things differently and believed beer drinkers would want wine if the purchase decision was made simple and fun. Out came Yellow Tail wine in simple red and white versions.

A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. The innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market.

The lesson I learned in the potato sack race was easy, keep your eye on the goal line not what your competition is always doing. John Wooden's success was doing the best he could possibly do every day. As you consider your premium brand, think about the best you can do every day with it. As any typical SWOT (Strengths, Weaknesses, Opportunities, Threats) and PESTEL analysis (Political, Economic, Social, Technology, Environmental, Legal) you should consider:

Are you an elephant or a cheetah organization?
Will your Bargain -Brand cannibalize your Premium -Brand profits?
Do you have the resources to run two brands simultaneously at a profit?
Are you able to clearly define and communicate the different unique selling proposition for each brand?
Will the customer perceive the differences?
Will your current Premium-Brand cover this market? Or is the Bargain-Brand a new demographic?
Lastly, do you innovate a new product to create a new category and target audience?

As Jacqueline Kennedy once said, "I do not react, I respond." Panic and fear should not be part of your tactics, but a well thought out response that optimizes your resources, strengths, and uniqueness in meeting the needs and wants of your customer.

Understanding Creativity – Person, Place, Product and Process (Part 1)

What do person, place, product, and process (the 4 P's) have in common? According to creativity researchers, these are the four generally accepted facets to creativity. Additionally these facets are interrelated, which makes creativity complicated to understand and to cultivate, especially in organizations. Understanding its multiple aspects, however, is a critical first step in bringing more creativity, and hence innovation, into a corporate environment. Creativity is generally considered to be a new idea or insight that is recognized by experts in that field as having value. Creativity is the necessary first step to fueling innovation. This first article, in a series of articles about the facets of creativity, will present an overview of the 4 P's of creativity and how they are interrelated.


Stories about modern eminent creatives such as Steve Jobs and IM Pei and past creatives such as Thomas Edison, Madame Curie and Michelangelo warp our image of the creative person. We tend to think of people as being either creative or not creative, like it is a fixed attribute such as one's height or eye-color. Creativity is not unique or mysterious; we are all creative to different degrees. Creativity has little to do with IQ. It is our usage or under-usage of our ordinary thinking processes that impact our creative output. Creative thinking approaches can be learned by all individuals. Research has shown that the use of creative thinking techniques reduces costs, increases efficiency and positively impacts ROI.


Our families, schools, community, religion, and workplace as well as the overall culture in which we live have major impacts on creativity; this is referred to formally as the press of the environment, which I refer to simply as 'place.' The values ​​and norms of our upbringing and current environment dictate whether we are encouraged or discouraged from being creative and whether our ideas or products are recognized as being creative. Mihaly Csikszentmihalyi, Claremont professor and creativity researcher, says that the environment has more of an impact on creative outcomes than an individual intent on creativity. Interestingly, studies have shown that creativity tends to thrive during times of political unrest, civil disturbance, and intellectual diversity. For example many young people were motivated to become artists and architects during the Renaissance. Teresa Amabile, Harvard professor and organizational creativity researcher says that our social environment can significantly affect intrinsic motivation, both positively and negatively. We often become motivated to think and act creatively when we become personally interested in or curious about a new technology, research data or trend. Working on something imposed on us by outside sources, without being personally interested has negative effects on our creativity. For example, the proliferation of the Internet has laid the foundation for an increase in artists and designers. This new surge in visual images has contributed to the current trend in businesses to utilize design thinking in addition to analytical thinking.


Can you make money from it? Do your peers and society admire you because of it? In our Western, materially focused culture, a physical product or outcome is typically the only facet of creativity that is recognized. We look at the finished product and forget there was a process of multiple creative failures that happened first. We may disregard the environment or the team of people that encouraged the development of the product. New products and ideas often have a difficult time getting past the 'gatekeepers' who determine the idea's value, sometimes arbitrarily or with limited foresight. A person known in the field or from a field predisposed to creativity, such as advertising is likely to have an easier time getting past the gatekeepers than an unknown or someone from a 'non-creative' industry. Occasionally the product or idea is so radical and ahead of its time, it gets ridiculed or goes unrecognized for years. The concept of Federal Express is a well-known story of a ridiculed idea; van Gogh was considered a sociopathic recluse rather than a genius, and died alone and penniless.


What must occur in order for us to produce a creative idea or product? There are potentially exponential trials of creative processes compared to final products. Edison tried thousands of times to produce an electric filament for long lasting electric lighting. Should not all those failed attempts be considered creative? Our culture, however, tends to label only the one successful outcome as creative.

Each of us goes through four stages during our creative process. Preparation, incubation, illumination, and verification were originally introduced by Graham Wallas in 1926 in his book "The Art of Thought." In the first stage, preparation, we set ourselves up for creative success by acquiring some skill, gathering data, or understanding the basic problem that needs to be addressed. This is perhaps the most difficult stage as suggested by Edison in his famous line, "Genius is one per cent inspiration and ninety-nine per cent perspiration." In the next stage, incubation, our brain is working on things in the background. It is the time away from conscious thinking. This is the most powerful of the steps and the one that probably gets overlooked most often. It is hard not to consciously and continually work on a problem to conclusion, since we all have a tendency to want to solve problems as soon as possible, and are often pushed by our organizations to do so. The 'aha' or illumination stage, however, can only occur after an incubation period.Sometimes we do not get a solution – but another way to approach the problem. But when we get that 'aha,' we know with certainty that we are on the right path. Finally, we need to be able to recognize when a solutions fits the problem. In the last stage, verification, we try and test the solution. We often go back and forth rapidly between the stages. The ability to shift between stages is important to the creative process.

How we think, how the gatekeepers respond to what we produce, the environment in which we live, and the processes we follow all combine to impact the production and acceptance of new ideas, insights and products. It is impossible to consider any one of these facets in a vacuum. We can not separate the person from their environment, the idea from the person, the process from the environment, or the product from the process. It is complicated, but not impossible, to address all of these facets within an organizational setting. In the next series of articles, I will go into each of the four facets in more depth.

Enhancing Business Acumen – The Five Essentials

In order to run an effective, dynamic, and successful organization, leaders must possess sound business acumen. Unfortunately, we are not born with this vital leadership skill, it is cultivated over time. When asked to define business acumen, the response of senior leadership is basic and straight forward. Most believe that business acumen means having financially savvy; but that my friend is only one element of business acumen.

There are five essential components that make up sound business acumen: Intelligence, Strategy, Communication, Innovation, and Accountability. As you review the qualities of each, assess yourself as well as other leaders on your team to see where strengths and weaknesses exist within your organization. Then start on an action plan to close those identified gaps and drive organizational success to the next level.

# 1 – INTELLIGENCE: Yes, leaders possessing this component of business acumen are skilled at creating, reading, and analyzing financial reports and budgets. However, they are also at ease when it comes to explaining this sometimes complex information to others. This is a quality that most senior leaders admire and think of when they envision someone with great business acumen. Along with financial savvy, leaders possessing this component of business acumen have an immense hunger to learn more and increase their knowledge and intellect. They not only read business books, magazines and white papers to gain knowledge, but also to glean skills and techniques that can be applied in their line of business and daily work.

# 2 – STRATEGY: Leaders possessing this component of business acumen know the key priorities (business objectives) of the organization, and have proactively formulated a written action plan to get the team there. They do not wait for the strategic plan to come down the pike from corporate, as soon as they get wind of the key business objectives they begin focusing on how their team will contribute to and impact it. Again, having business intelligence is not enough, leaders must also be able to turn all that wealth knowledge into actionable behaviors that will engage an entire workforce or team and drive positive results.

# 3 – COMMUNICATION: Leaders possessing this component of business acumen are excellent communicators, both verbally and in writing. They know that simple, clear communication is the key to achievement of the key business priorities and strategy. If you ever observe leaders with great communication skills, you will notice that they communicate clearly up and down the organizational ladder. They can get a point across with finesse at the executive level, and simplify the message with ease to relate it to the day-to-day activities of line staff.

# 4 – INNOVATION & RESOURCEFULNESS: Leaders possessing this component of business acumen have the keen ability to work with little, and produce much. They are not limited by a lack of resources, but innovative enough to create new ways of getting the job done effectively and efficiently. While having all of the tools at their disposal to do the job properly would be great, they do not allow the lack thereof to create team dissension or negativity. Their greatest joy comes from being able to overcome barriers and obstacles to create a product or service that is exceptionally better than they ever expected. Leaders who possess sound business acumen are not wasteful, but innovative and resourceful.

# 5 – ACCOUNTABILITY: Leaders possessing this final component of business acumen understand the importance of employee accountability in optimizing productivity to achieve success. Without accountability none of the other components that make up sound business acumen (intelligence, strategy, communication and innovation) will be of any worth. In order to hold employees accountable for driving the key priorities of the organization the leader must set the standard or expectation, communicate it to enlist employee buy-in, integrate it into every aspect of the work environment, evaluate employee performance against it, then reward and recognize those who consistently meet and exceed the expectation or standard.

Just like a waterfall, business acumen starts at the top and trickles down throughout the entire workforce. If senior leadership does not possess these essential components, organizational effectiveness and success is not sustainable. Now that you've been equipped with some level of clarity concerning business acumen, the next step is to work toward closing your professional gaps. Bottom-line, developing sound business acumen does not start or stop with becoming skilled at analyzing financial reports; developing sound business acumen is multi-dimensional.

The Importance of Business Acumen Training For Managers and Employees

The message to CLOs is becoming clearer and clearer. Company leaders want them to align educational offerings with the organization's strategic objectives.

That's not an easy challenge. They must ensure that education and communication initiatives reinforce the company's goals. They must help employees understand these goals and develop the skills and motivation to contribute to them.

And at the most basic level of alignment, they must make sure that every employee understands how the company makes money. That includes understanding how profitability is driven, how assets are used, how cash is generated and how day-to-day actions and decisions, including their own, impact success.

Developing business acumen is fundamental to business alignment . Consider Southwest Airlines, which was founded in 1971. With 33 straight years of profitability, the airline has become widely recognized for the motivational culture it creates for employees and its extraordinary dedication to customer service.

Much of the industry has suffered during the years of Southwest's growth, including many airlines that have merged or declared bankruptcy. Southwest buys the same planes and the same jet fuel as other airlines, and pays its employees competitive wages and benefits. What's the difference?

Unlike some of its competitors, Southwest's management team involves employees in the company's financial results, explaining what the numbers mean and, more important, helping to link everyone's decisions and actions to the bottom line. The airline has an open culture, one of inclusion at all levels, and employees understand their roles in providing great service and keeping costs in line.

Certainly there are other factors that contribute to the success at Southwest, but it's difficult to ignore the positive impact of an approach that develops the business acumen of all employees and managers so that they can contribute to the airline's success.

An Educational Challenge

Unlike those at Southwest, individual contributors and managers in many organizations today have not been educated about the big picture of their businesses. They have a narrow focus on their own departments and job functions and are not able to make the link between their actions and the company's success. Multiplied by hundreds or even thousands of employees, this lack of understanding – the lack of true business acumen – means that too many decisions are being made and too many actions are being taken that do not align with business objectives.

How can training help bridge this knowledge gap? For many companies like Southwest, implementing learning programs designed to develop a strong foundation of financial literacy and business acumen has made the communication of financial results to employees easier and more effective.

Business Acumen: A Definition

Very simply, business acumen is the understanding of what it takes for a business to make money. It involves financial literacy, which is an understanding of the numbers on financial statements, as well as an understanding of the strategies, decisions and actions that impact these numbers.

Someone with financial literacy, for example, would be able to "read" the company's income statement. This employee or manager would understand the terminology (revenue, cost of goods sold, gross margin, profit, etc.) and what the numbers represent (ie, gross margin equals total sales / revenue less the cost of goods sold).

With business acumen, the individual would be able to "interpret" this same income statement, taking into consideration how company strategies and initiatives have impacted the numbers during specific periods of time.

Consider a simple comparison: In football, it's necessary for players to know how the game is scored as well as how to play the game to change the score. In business, financial literacy is understanding the "score" (financial statements) and business acumen is understanding how to impact it (strategic actions and decisions).

Asking the Right Questions

When business acumen spreads through an organization, employees and managers begin to ask questions. These questions are directed not only at the organization, but also at themselves and their departments – questions about processes, products, systems, staffing and more that can lead to necessary and innovative decisions and actions.

Business acumen helps everyone understand that it's not enough to ask, "How do we cut costs?" or to say, "We need to increase sales." Digging deeper, employees with higher levels of business acumen will ask questions that take into consideration the far-reaching impact of potential decisions and demonstrate a greater ability to make the connections between performance and results.

Questions that could get to the root of disappointing operating ratios:
• Have production costs gone up? If so, why?
• Have we changed prices? If so, how has that affected our margins?
• Are there any competitive issues impacting our performance?
• Have there been any customer requirement changes?
• If our costs per unit produced have gone up, can we better control the efficiency of our production or service delivery?
• Is there a way to produce a greater product volume at the same cost?
• Can we raise prices, still provide value to the customer and remain competitive?

When questions become more specific, the right decisions can be made.

Business Acumen for Managers

Managers at all levels need a high level of business acumen to do their jobs. Every day, they make decisions about employees, projects, processes, expenditures, customers and much more – decisions that ultimately roll up into larger organizational results. Managers who make these decisions while looking through a departmental lens only, with a limited understanding of how these decisions affect financial results or how they are tied to the organization's goals and objectives, are working in silos that can ultimately damage the company.

Managers are often promoted to their positions of responsibility because of their "technical" expertise. They've been successful customer service representatives, great salespeople, innovative researchers or well-respected IT professionals. They are now entrusted with decision making, budgets, projects and people. They often do not have financial literacy, nor have they developed a higher-level perspective about the business. Over time, especially if they move up the managerial ladder, they may develop these. Or they may not.

Organizations need managers who operate as part of the management team, taking accountability for their own results as well as the results of the entire company. Therefore, more and more organizations have built financial literacy and business acumen into managerial competency requirements and have integrated business acumen training into management curriculums.

Business Acumen for Employees

Although there is little debate about the need for managers to develop business acumen, organizations sometimes question the need for this understanding at employee levels. But frontline contributors, those who are most directly involved with production or customer service, for example, take actions every day that impact business results.

Consider the salesperson who discounts products, or the service representative who deals with an unhappy customer, or the maintenance person who notices a problem. The actions each of them takes might erode profit margin, lose a good customer or allow safety issues to escalate. Without an understanding of how their actions impact the company's results, they might not have the context to consider alternatives.

Many organizations have determined that financial literacy and business acumen are not just for managers anymore. They have decided to develop a company of people who understand the business; who know what return on assets and return on investment mean; who know how inventory turnover rates affect results and the importance of positive cash flow; who see the connection between the company's financial success and their own health benefits, 401 (k) plans and more. In other words, they need people who understand the "business" of the business.

In his book Good to Great, Jim Collins says, "We found no evidence that the 'good-to-great' companies had more or better information than the comparison companies. None. Both sets of companies had virtually identical access to good information. The key, then, lies not in better information, but in turning information into information that can not be ignored. "

With an increased level of business acumen, managers and employees can better interpret information, making the connection between their actions and the company's results.

Another Reality of Today's Business World

A public company's operating results are well known at the end of each quarter. Analysts, investors, the media, employees-everyone has access to a company's financial results. With a significantly increased focus on accounting improprieties over the past few years, senior management has become highly conscious of the need to provide accurate and timely financial information. And employees have become much more likely to wonder about these numbers. "Is my company being honest? Are the numbers telling the whole story?"

Without a fundamental understanding of financial results and an ability to interpret them, employees may become suspicious and, ultimately, disengaged. Disengaged workers, in turn, negatively impact productivity and profits.

CEOs of public companies, then, must ensure that managers and employees are able to understand the numbers and have confidence in them. That means effective business acumen education as well as ongoing and open communication from the top.

Former GE chairman Jack Welch said in his book Straight from the Gut, "Getting every employee's mind into the game is a huge part of what the CEO job is all about … There's nothing more important."

The Big Picture

As we have become a nation of specialists, armed with new information technology and enterprise-wide operating systems, it has become easier for managers and employees to become myopically immersed in their own jobs. This immersion can have the effect of obscuring their view of the big picture. They may not consider the cumulative effect of wasted assets. They may have little regard for the objectives and responsibilities of other team members, departments or divisions. They may lack the motivation to invest personal energy in critical project work.

Organizations that engage in developing business acumen provide a clearer vision and an overall context within which employees can work, while creating an environment that is more likely to break down internal barriers. There is less waste and less ambivalence. There is increased innovation. Employees are more engaged, they understand their role and its impact on business results, and they are more likely to believe that their efforts really matter. They are more likely to think like a business owner.

Think Like an Owner

To be successful, business owners must be able to helicopter above day-to-day issues and see the big picture. They must understand how the pieces of the business fit together to impact profitability and cash flow, and they must be able to assess the risks and rewards of potential decisions. The best business owners study the numbers, ask themselves tough questions, analyze their mistakes and take decisive action.

To truly understand the business, owners have to understand how that business makes money – in other words, how it produces sales, profit and cash. Organizationally, they know that it's about people, processes and productivity. On the customer front, it's about satisfaction, loyalty and market share. Ultimately, every action taken and every decision made in any of these areas will impact sales, profit or cash.

When managers and employees begin thinking like owners, they, too, look at the big picture, understand how all the pieces fit together, and assess risks and rewards. They understand, like an owner, how the company makes money, how it stays in business and how they contribute to its success.

The benefits to an organization of engaging managers and employees in this kind of ownership thinking are obvious. So how can a company develop the business acumen of its people?

Developing Business Acumen: Two Stories

Entrepreneurs are generally forced to develop business acumen on their own. They are hands-on with their businesses and have to make all the decisions as they go along, whether good or bad. They either learn from their mistakes or fail.

It's very different for managers and employees in an organization.

They are not involved in all aspects of the business, and they make decisions primarily within their own areas of responsibility. Since seeing the connections is not easy, they need to learn in some other way.

Books and lectures can help. But business acumen is best developed experientially. Learners must be able to analyze situations, ask questions, discuss issues with other learners, consider options, make mistakes and see results.

Although there are a variety of ways to accomplish this kind of experiential learning, many companies have found that simulations, which mirror reality and allow learners to experiment in a safe environment, are one of the best ways. Here are the stories of two companies who chose to educate their learners with business simulations.

Comcast Cable Communications

The NorthCentral Division of Comcast – one of the country's largest entertainment, information and communications companies, specializing in cable television, high-speed Internet and telephone service – set out to ensure that managers and employees throughout the organization had the financial acumen required to make good decisions. A companywide survey had clearly demonstrated this need – especially for managers of employees who had direct contact with customers.

For example, if a customer calls with a service problem, frontline employees and their supervisors can issue credits to the customer's account in an effort to resolve the issue. Although this may be exactly what is needed for the situation, Comcast realized that employees making these decisions did not necessarily understand that a $ 10 credit could ultimately require more than $ 100 in revenue for the company to break even. Similarly, a service technician's visit to a customer's home might cost $ 50 directly, but the company might have to sell an additional $ 500 in services to cover the cost.

"The lack of financial acumen among supervisors and employees was largely understandable," says Mark Fortin, senior vice president of finance for Comcast's NorthCentral Division. "Almost 75 percent of the company's employees are on the front lines in roles such as call center personnel or field technicians. They are trained to be good at what they do, but their backgrounds typically do not include emphasis on financial literacy."

Comcast human resource executives determined that a fundamental approach to the development of business acumen was needed. However, this approach also would need to be fast, engaging and job-relevant. Expanding upon its already robust Comcast University management curriculum, the executives chose to integrate a high-energy, tailored learning experience that would provide the "basics" and, at the same time, deal specifically with Comcast terminology, concepts and strategic imperatives.

As they participated, learners made decisions about products, processes, pricing and more, and they saw how those decisions impacted financial success. In the end, it became easier for them to make sharper day-to-day choices.

"The thing that sticks out for the frontline leaders, the field technicians, and the call center supervisors and managers who attend, is the high cost of sales in our business," says Sophia Alexander, senior manager of curriculum and metrics for the division. "It's like a bell goes off in their heads when they realize what it costs for us to earn what we need to earn to run the organization."

Attending the learning session is not mandatory for supervisors and managers. However, there is an unwritten expectation that they will participate in business acumen training as well as other Comcast University core programs, according to Jan Underhill, senior manager of leadership development for the NorthCentral Division. That expectation, coupled with the fact that manager compensation has recently become tied to meeting specific financial goals, has kept attendance high.

Senior executive support also has been an important factor in creating interest and awareness around financial literacy. "Getting people to sign up is much easier when senior executives like Mark Fortin are strong advocates for the program," says Underhill.

Feedback has been resoundingly positive. On average, for example, Level 1 feedback about the discovery learning based business acumen sessions has been 4.5 on a 5-point scale. That means that the program has exceeded expectations. Better than that, says Sophia Alexander, senior manager of curriculum and metrics for the NorthCentral Division, is the empirical evidence that the new insights and knowledge have made a difference. For example:

• Participant self-evaluations indicate that financial literacy has increased by at least 25 percent as a result of the business acumen training.
• After the training, there was a 20 percent increase in the participants' ability to use basic financial terms and concepts on the job.
• Almost 45 percent of supervisory participants report that they are using their business acumen knowledge in daily communications with staff and peers.

"Some people, particularly in big companies, feel like there is an open checkbook. They think … I do not own the company. It's not my problem. Somebody will pay the bills. But in today's environment, with some very large companies in trouble, everyone needs to be part of the solution. Business acumen education for managers and employees helps the company as a whole, but it also helps employees. it's about self-preservation to some extent. " comments Fortin.

Southwest Airlines

Southwest Airlines is one of the consistently profitable companies that makes "business literacy" a core component of its employee training programs. Every employee has a solid understanding of what a new customer, and new revenue, means to the company. Employees also know how the loss of a customer can impact the business.

According to Elizabeth Bryant, director of leadership training at Southwest Airlines, "Our training covers how the financial ratios such as return on assets and various margins are determined. Knowing that team managers, supervisors and all employees have this knowledge enables the company's leadership to present detailed financial reports and explain to the teams where the margins need to be. Management can speak more in depth to all the employees, and the employees understand what the objectives are. "

Bryant added, "Because we do not waste the little things, because we track every penny and every activity, we've all come to know the importance of each cent. With the pennies in hand, we spotlight the idea of ​​compound interest- for example, how the small savings help us by year's end and how small amounts of waste can conversely add up to hurt us. "

Consider the importance of a key operating metric for the airline industry – operating cost-per-seat mile. This is how much it costs an airline to fly one seat one mile. All the operating costs are divided by the total number of seat miles (the total number of miles of all the seats that were flown for a given period, whether a passenger was in the seat or not). Much of the industry has had cost-per-seat mile results at or over 10 cents. Southwest Airlines' cost-per-seat mile is about 6.5 cents. The lowest cost-per-seat mile in the industry almost 25 years ago was just over 5 cents.

How do they do it? Certainly there are a number of factors that lead to success. However, one of the key influences is Southwest's ongoing training in business acumen. This training ensures that employees know:

• How challenging it is to ensure ongoing profitability; making a profit can never be taken for granted
• The importance of utilizing the benefits of the good years to prepare for the tough years
• The impact of individual actions and decisions to the bottom line

In other words, Southwest invests in training to help employees think like business owners. This, in turn, produces real results, like its consistently low cost-per-seat mile. When Southwest's learning team decided to implement a business acumen simulation several years ago, there was some initial concern about how well it would be received.

Bryant explained, "Some people, especially those without financial training, were nervous about the topic. We are such a people-oriented company that we did not want people to think that now we're just a financially oriented company and everyone will be judged purely on financial performance. But we positioned the need for the business literacy training as another way to prove that we actually care tremendously for each employee. We explained that if you understand what the numbers mean then you can better understand how your work provides an integral contribution to the business. "

Southwest Airlines, according to Bryant, has never had a layoff – a rarity in the airline business. The more their employees understand the challenges of the business, the better they appreciate the importance of making smart decisions every day.

Bryant concluded that the discovery learning techniques in a robust business simulation work well in the Southwest culture because of the team orientation. "All the participants learn that they can not individually make it all happen," said Bryant. "They learn that they have to look beyond themselves, act and think like an owner, and realize that our efforts and financial results here are not just for a career, but for a cause. It's this cause-oriented philosophy toward delivering a low- cost, high-quality service that allows people the opportunity to travel. our success at achieving positive results translates to individual opportunities to work, to grow and to continually think of innovative ways to improve our business and serve our customers. "

The Classroom Advantage

These two companies chose to develop the business acumen of managers and employees by using a classroom-based simulation, facilitated by instructors at company sites. Although online options were available and were used in some cases to supplement the instructor-led training sessions, they decided that there were significant advantages to tackling this subject in a "live" session where they could leverage the power of:

• SHARED KNOWLEDGE AND EXPERIENCE: Learners bring their own perspectives and issues to the session.
• TEAMWORK: Learners work together, make decisions together and rely on each other as they learn.
• COMPETITIVE FUN: Small teams "play" against each other and enjoy a competitive environment.
• COMPANY-SPECIFIC DISCUSSIONS: The learners' common interest in their own company's financial and strategic issues allows for greater analysis and depth of discussions and a true "connection" between the learning simulation and the organization's reality.
• LEARNING MOTIVATION AND COMFORT: Learners who may not be comfortable with the subject of finance find themselves playing a game in the comfort of a team environment.

Although there are a number of educational approaches available to organizations in the area of ​​business acumen, classroom-based training that brings together teams of learners can help ensure that learning occurs and that connections to the business are made in ways that prompt action back on the job.

The Bottom Line

More than ever, successful companies will need to focus on developing the business acumen of managers and employees. These companies will realize that when their people understand the numbers, when they understand how their departments contribute to the company's objectives and when they see how their own decisions and actions make a difference, they will begin to operate as part of a team rather than in a departmental or personal silo. And a critical piece of the alignment puzzle will be solved.

With widespread business acumen, companies can have a powerful asset – educated, knowledgeable and motivated employees. And with this asset, those will be the companies best positioned to succeed.

Hong Kong Clothing Industry


Textile quotas were eliminated among WTO members at the first day of 2005 in accordance with the Agreement on Textiles and Clothing (ATC). However, resistance to quota removal spread in the US and EU. Subsequently, China reached agreements with the EU and the US in June and November 2005 respectively. The China-US agreement, effective from January 2006, governs the exports of a total of 21 groups involving 34 categories of Chinese textiles and clothing products to the US during 2006-2008. The China-EU agreement, effective from June 2005, covers 10 categories of Chinese textiles and clothing exports to the EU during 2005-2007.

On the other hand, the mainland and Hong Kong agreed in October 2005 to further liberalise the mainland market for Hong Kong companies under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Along with other products of Hong Kong origin, the mainland agreed to give all products of Hong Kong origin, including clothing items, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin , will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met.

Hong Kong clothing companies are reputable for ODM and OEM production. They are able to deliver quality clothing articles in short lead time, as foreign importers and retailers request clothing suppliers to tighten up supply chain management to ensure the ordered merchandise reaching the store floor at the right time. Increasingly, Hong Kong clothing companies, the established ones in particular, have shown enthusiasm for brand promotion.

Hong Kong's total exports of clothing rose year-on-year by 9% in the first 11 months of 2005. While Hong Kong's re-exports of clothing rose by 20%, domestic exports fell by 14%. In the first 11 months of 2005, Hong Kong's clothing exports to the US and EU rose by 11% and 18% respectively. While Hong Kong's clothing exports to Japan levelled off, those to the Chinese mainland declined by 11%.

Industry Features

The clothing industry is a major manufacturing sector of Hong Kong. Its gross output is one of the highest among all manufacturing sectors, amounting to HK $ 35.9 billion in 2003. It is the largest manufacturing employer in Hong Kong, with 1,673 establishments hiring 28,752 workers as of June 2005. It is also the leading earner in terms of domestic exports, taking up 40% of the total in the first 11 months of 2005.

Hong Kong's geographic boundary has never constrained the development of the forward-looking clothing industry. The majority of clothing manufacturers have set up offshore production facilities in an attempt to reduce operation costs. Relocation of production facilities offshore has however resulted in a steady decline in the number of clothing manufacturers in Hong Kong.

Hong Kong is not only a leading production centre but also a hub for clothing sourcing globally. Companies doing garment trade in Hong Kong are experienced in fabrics procurement, sales and marketing, quality control, logistic arrangements, clothing designs and international and national rules and regulations. The professionalism that they command and the combined services offered are not easily matched elsewhere. With a total of 15,190 establishments hiring 95,889 workers, they form the largest group involved in import-export trade in Hong Kong.

Performance of Hong Kong's Exports of Clothing

Hong Kong's total exports of clothing rose year-on-year by 9% in the first 11 months of 2005. While Hong Kong's re-exports of clothing rose by 20%, domestic exports fell by 14%. The contrasting performance of Hong Kong's re-exports and domestic exports was basically ascribed to the increasing relocation of garment manufacturing to the Chinese mainland, resulting from the removal of quotas under WTO's Agreement on Textiles and Clothing (ATC). But the declining trend of domestic exports has been reversed somewhat in recent months, due to the re-imposition of quantitative restraints on mainland-made textiles and clothing by the US and EU.

Retail sales in the US held firm in the first 11 months of 2005, rising by nearly 6% from the same period in the previous year. In the first 11 months of 2005, Hong Kong's clothing exports to the US rose year-on-year by 11%.

In the first 11 months of 2005, Hong Kong's total clothing exports to the EU surged year-on-year by 18%. Clothing exports to major EU markets like France, Germany and Italy recorded growth rates in excess of 20%.

On the other hand, Hong Kong's clothing exports to Japan levelled off in the first 11 months of 2005 partly due to the trend of direct shipment. On the back of the rising income however, Japanese consumers tend to resume their spending spree on premium clothing items. Meanwhile, Hong Kong's clothing exports to the Chinese mainland dropped by 11% in the first 11 months of 2005, compared with the same period last year.

Product-wise, Hong Kong's exports of woven wear rose by 12% in the first 11 months of 2005. While woven wear for women / girls grew by 13%, those for men / boys recorded a growth of 8% from the same period in the previous year. Knitted wear grew by 2%, with women / girls and men / boys rising by 1% and 6% respectively. While clothing accessories declined by 3%, other apparel articles, for their part, increased by 13%.

Sales Channels

Hong Kong's clothing manufacturers have forged strong relationships with their customers. They are able to understand and cater for the preferences of very broad customer bases. Exporters also have good knowledge of international and national rules and regulations governing clothing exports, such as rules of origin, quota restrictions, tariff rates and documentation requirements. Cut, make and trim (CMT) arrangements are common although many Hong Kong manufacturers have moved to higher value-added activities such as design and brand development, quality control, logistics and material sourcing.

A few well-established local manufacturers have entered into the retailing business, either locally or in overseas markets. Many of them have retail networks in major cities around the world including Beijing, London, New York, San Francisco, Shanghai, Singapore, Sydney, Taipei and Tokyo. Some well-known manufacturing retailers include Baleno, Bossini, Crocodile, Episode, Esprit, G-2000, Giordano, JEANSWEST, Moiselle and U-2.

As a global sourcing hub in Asia, Hong Kong attracts a number of international trading houses and major retailers. Buyers sourcing from Hong Kong include American and European department stores (eg Macy's, JCPenney, Federated, Karstadt Quelle, C & A), discount stores (eg, Sears, Target and Carrefour), specialty chains (eg, The Gap, The Limited) and mail order houses (eg Otto and Great Universal Stores). Many international premium designer labels – such as Calvin Klein, Donna Karen, Ralph Lauren, Tommy Hilfiger and Yves Saint Laurent – source clothes in Hong Kong through their buying offices or other intermediaries.

Hong Kong's fashion designers have been gaining worldwide reputation for their professional expertise, sensitivity to current trends and ability to blend commercialism with innovation. Medium to high-priced fashion clothing bearing Hong Kong designer labels is being sold / have been sold in renowned department
stores overseas such as Bloomingdale's, C & A, Harrod's, Isetan, Macy's, Marui, Mitsukoshi, Nieman Marcus and Seibu.

Trade fairs and exhibitions remain common places for buyers and suppliers of clothing to congregate. To establish connections and explore market opportunities, Hong Kong manufacturers and traders have involved themselves actively in international shows led by the Hong Kong Trade Development Council (TDC), including the ones in Beijing, Chengdu, Dalian, Dubai, Dusseldorf, Hong Kong, Moscow , Mumbai, Paris and Tokyo. 'Hong Kong Fashion Week' is organised twice a year and attracts international suppliers and buyers to participate in the exhibition. Organised by TDC, 'World Boutique, Hong Kong' is the first independent event in Hong Kong dedicated to promoting designers' collection and brands from around the world.

Industry Trends

Changes in retail landscape: In the US and EU, large-scale retailers are undergoing drastic restructuring and consolidation, in particular, the growing prominence of hypermarkets such as Wal-Mart. To strengthen competitiveness, Sears and Kmart have merged to form the third largest retail group in the US.

Growing importance of private labels: Private labels, in essence, have become an increasingly effective marketing tool among garment retailers. In order to differentiate as well as upgrade the image of their products, major retailers have started to put a stronger emphasis on their own labels. According to Cotton Incorporated, private labels accounted for 45% of total US apparel sales in 2003, up from 39% in 2001. In some adult apparel categories, such as skirts, private labels accounted for as high as 76% of the total sales. It is also estimated that 45% of products sold in the EU are sold under private labels. Renowned retailers such as H & M, Marks & Spencer, Orsay, Palmers, Pimkie, Springfield and Kookai have owned their private labels. As consumers desire to have private labels on everyday garments like jeans, accessories and T-shirts, the doors are also open to the supply of these clothing items to private label owners.

Growing interest in China's domestic market: The rapid expansion of mainland's economy has attracted great interest of Hong Kong clothing companies to explore its clothing market. A TDC survey on mainland's garment shoppers indicates that Hong Kong brands are ranked number one by the respondents in the mid-range segment. While international brands are most preferred in the high-end segment, mainland brands dominate the low-end. In addition, the same survey finds out that in the eyes of mainland consumers, Hong Kong companies are very strong in casual wear, as they are generally of good design and quality. In essence, many mainland consumers have developed a stronger awareness of Hong Kong brands through tour to and shopping in Hong Kong. Therefore, Hong Kong's casual wear has successfully projected a positive image to mainland consumers.


On 18 October 2005, the mainland and Hong Kong agreed to further liberalise the mainland market for Hong Kong companies under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Along with other products of Hong Kong origin, the mainland agreed to give all products of Hong Kong origin, including clothing items, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin , will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. But non-Hong Kong made clothing products will remain subject to tariff rates of 10-25% when entering the mainland.

The promulgated rules of origin for clothing items to benefit from CEPA's tariff preference are basically similar to the existing rules governing Hong Kong's exports of these products. Generally speaking, the principal manufacturing process of cut-and-sewn garment is sewing of parts into garments. If linking and / or stitching is / are required, such process / processes must also be done in Hong Kong. For piece-knitted garment, if it is manufactured from yarn, the principal process is knitting of yarn into knit-to-shape panel.

If the piece-knitted garment is manufactured from knit-to-shape-panels, the principal process is linking of knit-to-shape panels into garment. If stitching is required, it must also be done in Hong Kong.

Trade Measures Affecting Exports of Clothing

According to the ATC, textile quotas were eliminated among WTO members at the first day of 2005. However, resistance to quota removal spread in the US and EU. Particularly in the US, China-specific safeguards on 10 categories of clothing items from China were invoked. Against this background, China reached agreements with the EU and the US in June and November 2005 respectively.

The China-US agreement, effective from January 2006, governs the exports of a total of 21 groups involving 34 categories of Chinese textiles and clothing products to the US during 2006-2008. It allows an annual growth of 10-15% in 2006, 12.5-16% in 2007 and 15-17% in 2008. The China-EU agreement, effective from June 2005, provides for an annual growth of 8-12.5% ​​in 10 categories of Chinese textiles and clothing exports to the EU during 2005-2007. In addition, both EU and US agreed to exercise restraint in invoking China-specific safeguard against Chinese textiles and clothing that are not covered in the agreements.

Product Trends

Formal Dressing: While casual wear accounts for the bulk of clothing sales, a general trend towards stricter corporate dress codes has led to a rising demand for formal dressing, particularly suits. According to a survey by Cotton Incorporated in late 2004 / early 2005, 38.5% of respondents believe that people dressed too casually at work. This is a 6.5 percentage point increase over the same year-ago.

Teenager: One of the major driving forces of clothing market appears to be the teenagers in the coming years. The number of teenagers in the US expects to increase from 31.6 million in 2001 to 34.1 million in 2010. A recent survey by Teenage Research Unlimited found that teens are saving money by value shopping. While JCPenney is their favourite department store, Target and Wal-mart are their favourite hypermarkets. In addition, Old Navy is their choices among specialty apparel stores.

Silver Market: Ageing population becomes a common phenomenon in many developed countries in Europe as well as Japan and the US. Elderly people constitute a major market segment called 'silver market'. Supported by savings, social security benefits and pensions, many elderly people have rather strong spending power. It is estimated that the age group of 65 year and above accounted for about 21% of Japan's consumption expenditure in 2000. A survey conducted by the Japanese government also shows that people who are 60 years old and above possess almost three times the financial assets of those in the 40-50 age group. In the US, those aged at or above 65 amounted to 18.1 million in 2001, and the number is expected to swell to 26 million in 2015.

Plus-size Market: The plus-size market has been an area of ​​growth for many years, and the trend is expected to continue in the coming future. It is estimated that 65 million women in the US wear size 14 or above. This group represents one-half of the US female population. It is reported that some renowned brands have already responded to the trend by offering merchandise of larger size; these companies include Liz Claiborne, Ralph Lauren and Tommy Hilfiger.

Easy-care Clothes: Clothes made of stain-resistant and wrinkle-free fabrics are well received in the market. It is estimated that about a quarter of apparel is now made of easy-care fabrics, and its popularity is expected to continue in the next few years. While major apparel brands like Dockers and Liz Claiborne have already marketed extensively easy-care clothes, major hypermarkets, like Wal-Mart, also offer more merchandise of such quality.

Source: Hong Kong Trade Development Council

Forces Reshaping the Process of Management

An understanding of organizational behavior is important to managers, who have the responsibilities of improving organizational effectiveness, the ability of an organization to achieve the goals. A goal is desired future outcome that an organization seeks to achieve.

In the last 10 years, the challenges facing managers in effectively utilizing human resources and managing organizational behavior have increased. These challenges stem from changing forces in the technological, global, and social or cultural environments.

Organization can obtain a competitive advantage, a way of outperforming other organizations providing similar goods and services. They can pursue any or all of the following goals: increase efficiency, increase quality; increase innovation and creativity; and increase responsiveness to customers.

Organizational efficiency is increased by reducing the amount of resources, such as people or new materials, needed to produce a quality of goods or services. Organizations try to find better ways to utilize and increase the skills and abilities of their workforce. Cross training workers to perform different tasks and finding new ways of organizing workers to use their skills more efficiently improve efficiency. The global competitive challenge facing organizations is to invest in the skills of the workers because better-trained workers make better use of technology. Increased competition has also put pressure on companies to increase the quality of the goods and services they provide. One approach to increasing quality is called Total Quality Management, a technique borrowed from the Japanese. Total Quality Management involves a whole new philosophy of managing behavior in organizations and includes elements like giving workers the responsibility for finding ways to do their job more efficiently and ways to improve quality.

An organization's ethics are rules, beliefs, and values ​​that outline ways in which managers and workers should behave when confronted with a situation that may help or harm other people inside or outside an organization. Ethical behavior enhances the well-being of individuals, groups, organizations, and the organizational environment. Ethics establish the goals and behaviors appropriate to the organization. Many organizations have the goal of making a profit, to be able to pay workers, suppliers, and shareholders. Ethics specifies what actions an organization should take to make a profit and what limits should be put on organizations and their managers to prevent harm.

The challenges managing a diverse workforce increase as organizations expand their operations internationally. There are several issues that arise in the international arena. First, managers must understand cultural differences to interact with workers and associates in foreign countries. Understanding the differences between national cultures is important in any attempt to manage behavior in global organizations to increase performance.

Second, the management functions of planning, organizing, leading, and controlling become more complex in a global environment. Planning requires coordination between managers in the home and those abroad. Organizing, the allocation of decision-making authority and responsibility between headquarters and the foreign country is a significant function of global managers. Leading requires tailoring their leadership styles to suit differences in the attitudes and values ​​of foreign workers. Controlling involves establishing the evaluation, reward, and promotion policies of the organization and training and developing a globally diverse workforce.

Strategic Positioning From Point to Point

To formulate and deploy strategy, the management of an enterprise must develop aspirations that establish direction for the long-term, and a reasonably achievable vision for the near-term. Even the achievement of near-term vision has both short-term and long-term components. Short-term components consist of "quick hits" that can be addressed immediately. They are consistent with the vision, even though some rework may be required in the future. Therefore strategy is not just about the long-term, but also about positioning that can make a difference over time.

Values ​​and guiding principles should always be developed first because all downstream activities are dependent upon them. Values ​​provide the basis for how the employee, customer, supplier, investor, regulator, and competitor constituencies are to be treated.

In entrepreneurial enterprises, a vision statement is developed as the ideas for products and / or services emerge. A mission statement may be developed later as the emerging products and / or services are transformed into the enterprise. Value proposition statements for both the enterprise and its products and / or services add specificity as to the benefits and features offered.

Institutional enterprises have a track record. Therefore, the development, enhancement, or maintenance of a mission statement will usually precede the development of a vision statement. It is a long process for an institutional enterprise to change its mission, and extensive planning, policy development, and communications are necessary.

For example, IBM has made a transition over time from being a "computer company" to a "provider of business insight and information technology solutions, which include hardware, software, and services."

The aspirational statements provide the foundation for industry position and posture. Thus the competitive position and posture in selected markets with specific products and / or services can be determined. The performance improvement component of strategy sets the agenda for continuous improvement between breakthroughs through repositioning, restructuring, and reengineering activities. These activities address both revenue increase and cost and expense reduction opportunities aimed at excellence. Strategy is further elaborated in constituency-based objectives, goals, and strategic initiatives that form the basis for collaborative and cooperative relationships.

Strategic plans are translated into tactical functional plans that lay out the steps for the achievement of both short-term and long-term vision.

Breakthroughs arise from cultivating innovation. They rarely result from planned events, but rather unexpected events including competitive moves. In fact, breakthroughs often occur right after the strategic plan has been finalized, when the planning team steps back and looks at its work holistically. Hence the plan is a living document, and must include a process for updates.

The time frame required for new innovations and technologies to fully mature and be common in the marketplace is about ten-to-fifteen years. For example, debit cards, mobile phones, personal computers, and even the internet have taken at least a decade to become widely accepted and used.

Hence aspirations should be set over ten-to-fifteen years, with a near-term vision over a three-to-five year period for the achievement of realistic and reachable results.

When management divides time frames for strategic plans into three-to five-year chunks, the likelihood of success increases. With technology rapidly changing the methods by which business is conducted, even five years can be a long time. Therefore one-to-three years may be best in highly technological environments. However, management may be surprised at how long it really takes to develop new products and / or services, and for the marketplace accept them.

Most major product development projects run behind schedule. For example, the projects to develop the Airbus A380 and Windows Vista both delivered results much later than anticipated. Both the projects and the products were extremely complicated. Many software products have to migrate through several rewrites until they are usable by the community-at-large. These rewrites are necessary because of the difference between the process-orientation of the developers and the people-orientation of the users, which affects usability.

The strategy formulation process begins by rolling back the aspiration to the present. That means starting with the end-game – the aspiration itself, and management's first thoughts on getting there from the present.

Starting from the first point of departure, a strategic plan targets a point of arrival three-to-five years out. Quick hits should be identified from the point of departure to one-to-three years out.

The actual point of arrival will most likely differ from the planned point in terms of what is delivered and when. However, management can determine from that point of departure what the characteristics of the next point of arrival will be.

As new information about constituency preferences emerges, and as high order effects kick-in, mid-course corrections will be necessary, sometimes causing the original point of arrival to be abandoned. Therefore the strategy has to be enhanced or maintained, and perhaps even redeveloped.

Higher order effects are events or situations that could not have been envisioned or anticipated at the point of departure, but impact the point of arrival. They arise from competitive, economic, environmental, political, regulatory, social, and technological issues. Higher order effects often reveal where the real opportunities or threats lie.

For example, in the financial services industry, changes in regulation have enabled what was North Carolina National Bank to become one of the largest financial institutions in the world, now as Bank of America Corporation. It traveled from point-to-point through time, taking advantage of changes in the economic and regulatory conditions. It had a breakthrough when it found a way to enter the Florida market, thus opening possibilities that led to national expansion over time.

Formulating and deploying strategy from point to point is an enterpriship (entrepreneurship, leadership, and management) competency.

Never Run Out of Altitude, Airspeed, and Ideas at the Same Time: Lessons From the Vietnam POWs

Bosses can not control many things at work. In fact, they probably can not control most things, but they can control their own reactions to unfortunate events, and they can help their direct reports feel authority over their reactions to unpleasant and unexpected changes. When hard times rear their ugly heads, the boss has to be a kind of hero, the rescuer who looks after others and helps them keep from losing their perspective and their coping resources. Becoming aware of the value of humor can increase our understanding of the powerful role mirth and laughter can play in helping us bounce back from hardships, and in turn, help others cope with adversity. In other words, humor can give us a bit of control in situations when we would otherwise feel as though we had no power over our destiny.

The Vietnam POWs:

Why do some people conquer adversity, and others are immobilized by it? The Vietnam POWs offer some answers. In 1973, 566 Vietnam POWs were repatriated to the United States. Evidence from prior captivity situations indicated a high incidence of Post-Traumatic Stress Disorder. Fifty to eighty-two percent of the WWII POWs who were studied, particularly those who were imprisoned in the Pacific Theatre, have had a diagnosis of PTSD. Forty-seven to ninety percent of the Korean POWs who were studied have received a diagnosis of PTSD. Because of these staggering numbers, in 1976, the Navy started to study 138 repatriated Vietnam POW. In 1996, they reached surprising conclusions. In their 20-year follow-up, they found that only about 4% of the Vietnam prisoners of war had received a diagnosis of PTSD.

This is astonishing when comparing the Vietnam group to the other captivity situations, but it is also shocking in light of the implications of these numbers.

To give a frame of reference for understanding this, at any given time in a metropolitan area, about 1-4% of the population is walking around with PTSD because of violent crime, natural disasters, or other kinds of trauma. In other words, this group of people, who was imprisoned at least 5 years and as long as for seven or eight years, who was tortured, isolated, and beaten, had no higher incidence of PTSD than the average people in the average city in america. How can that be?

The study participants indicated that there were four main forces in the POWs' lives that helped them remain resilient: a belief in God, patriotism, a dedication to something bigger than they were, and a sense of humor. These men personified the importance of never losing altitude, airspeed, and ideas at the same time, and humor played a huge role in their ability to keep all three.

Even though their captivity indicated that they had all run out of altitude, airspeed, and ideas at the same time in a realistic sense, in a metaphorical or psychological sense, they were able to sustain all three. Great bosses are people who do not run out of altitude, airspeed, and ideas at the same time; they are people who can stay resilient in difficult times and help their direct reports do the same.


People want power and authority over their futures. When we perceive that our actions will make an outcome likely, we feel optimistic and secure. When we do not, we feel insecure. We feel like victims. Sometimes people stay in a victim's frame of mind after a loss or disappointment. They doubt their capacity to make their lives happen according to their own aspirations, so they wait to be rescued or blessed by good fortune. They start to feel undermined and overwhelmed; and they can become totally immobilized.

But the VPOWs were not victims. They were certainly victimized by their captors, but they never saw themselves as victims, no matter what was done to them. They were not victims because they took control of the few things they could control. They were told when and what and if they could eat; they were told if and when they could shower, sleep, and use the toilet. They had no say about parts of their lives that people normally take for granted. But they did have control over one thing, and that was their humor perspective, a way of looking at things that allowed them to keep their "altitude."

In a physical sense, altitude is the elevation of an object above a certain level, usually the earth. Therefore, "altitude" as it applies to leadership, is a global perspective, a realization that there is a bigger picture and no one person is the center of the universe. When bosses indicate that they have altitude, they usually exhibit these behaviors:

· Vision, an ability to see the future and to anticipate consequences.

· Critical thinking – the capability to go into uncharted territory. Managers have the ability to do the right thing well; leaders have the ability to figure out what the right thing is.

· The ability to prioritize, to do first things first and to separate important from unimportant uses of time.

· The motivation to look beyond the obvious.

· The skills to paint credible pictures of possibilities.

· An eagerness to create competitive strategies.

Admiral Stockdale was one of the senior leaders of the POWs. He had the Code of Conduct to rely on to help him keep his global perspective, but no prisoners had experienced what these men were suffering. So, he issued orders for them to resist but not to risk permanent physical or psychological harm. He thought he'd be court marshaled. Instead, he will live in military history as a hero who was responsible for saving the lives of many and ensuring the resilience of hundreds of others.

"Leadership" does not always come from the leader, however. One of the stories that lives in the POW histories and clearly illustrates the importance of keeping altitude involved a lieutenant who had been shot down in an F-4 Phantom. He was tortured to force him to give the maximum airspeed of the F-4. He told them the top speed of the F-4 was 500 knots, a number that is much lower than the actual maximum speed. The captors said they knew he was lying because a major had just told them that the speed was closer to Mach 2. Thinking quickly, and trying to avoid torture for himself and the major, he said, "Well, that guys is a major. I'm only a lieutenant. They do not let lieutenants fly as fast as they let majors fly. "

By keeping his wits about him, this young lieutenant was able to anticipate the consequences of his answer and to venture into uncharted territory, something that training had not prepared him for. He was not trying to be funny, but stories of his quick wit soon spread throughout the POW community and validated their awareness that through humor, they could claim some control over what was happening. Aviators understand altitude in a real and a metaphorical sense, and bosses can learn to too.
During times of adversity, there is much we can not control, but our global perspective, our altitude, is one thing we can take charge of.


Airspeed is velocity, the force that make us go forward. Relationships are one of the main sources of fuel that helps successful bosses accelerate their productivity and that of others. The boss who avoids running out of airspeed tends to have these traits:

· A knack for building relationships

· A strong motivation to follow through

· A willingness and availability to listen

· A genuine interest in people

· The capacity to convey respect for people and their ideas

· The confidence to tell people what they need to know, not just what they want to hear.

Communication is the primary tool that helps us form relationships and develop closeness in our personal and professional lives. For the VPOWs, however, communication was difficult and sometimes nearly impossible. Yet, it became a priority.

In 1965, a man named Bob Shumaker realized that the POWs were going to need a communication system. Bob Shumaker had gone 133 days without face-to-face contact with another American. For over four months, Bob Shumaker was in solitary confinement, but he knew there was another American in the complex, because he had seen him: Hayden Lockhart. All of the POWs emptied their waste buckets in the same latrine area. Through the cracks in his walls, Bob Shumaker had seen another American there, and he knew he needed to make contact with this other American. But he was not sure how he wanted to do this. Finally, he decided that he would write a note on toilet paper.

Bob Shumaker decided to write a three word note on a scrap of toilet paper and hide it behind a piece of cement in the latrine. He had to be very careful about what he wrote on this piece of toilet paper-it could not be very much and it had to be the exact words that he needed to say. On this scrap of toilet paper Bob Shumaker wrote three words, three words that in essence said, "scratch your area where your mother specifically told you not to scratch in public."

His thinking was two-fold. First of all, he wanted to write something that an American would know only another American would write so that the person receiving the three word note would not suspect duplicity. Second, he wanted to devise a signal that would not arouse suspicion in the captors.

He wrote the note on the scrap of toilet paper, and day after day, he stood peeking through the cracks in his room, and day after day, Hayden Lockhart came out of the latrine and made no signal. Finally, one day, Hayden Lockhart came out and made a huge display of scratching the region in question and facing every part of the compound. The communication system was born. However, even though they had created a way of communication, they realized its limitations and knew they would have to have other ways of communicating.

Shortly after this, Bob Shumaker was given some roommates. One of them, Smitty Harris, remembered the "tap code" that he had learned from a survival school that he had attended. Because they could tap almost all of the time, the Tap Code became the most sophisticated communication system that they had. Originally, this was devised to be a communication system for getting policy throughout the POW camp, but it quickly became a way for staying connected to one another, keeping morale up, and for sharing jokes. The Tap Code is a 25-letter alphabet that uses the "C" and "K" interchangeably. It was an arduous task to tap a message one letter at a time, but they quickly became proficient at the code and spent hours each day committed to staying in touch with each other.

The captors soon realized there was a communication system, so they tortured Stockdale to give up the system and the players in the system. They tortured him one day almost to his breaking point with the promise that if he did not tell them what they wanted to know the next day, they would do it to him again. Knowing that he was close to capitulating, Stockdale went back to his cell that night, broke a window, took a shard of glass, and cut his wrists. He had been willing to die to protect the communication system. The next morning, the captors found him in a pool of his own blood, unconscious, and they never tortured him again. Stockdale knew that he was protecting something vital when he attempted to end his life for the sake of a communication system that the POWs would need to stay resilient and hardy.

Relationships, communication, closeness, and humor, all of these are fuel for us, airspeed that keeps us going through adversity and helps us help others too. The Vietnam POWs literally risked their lives to stay connected to each other, but how often do we walk past the desk of a co-worker, too busy to even risk losing a minute of our day to stay connected? A global perspective helps us realize that we are not the center of the universe and that our problems pale in comparison to those of some others, and communicating with those that we care about helps us keep this perspective. Altitude and airspeed are two critical elements for success, but there's one more: Ideas


Creative problem solving is probably one of the most essential talents a leader can possess. Bosses who can look at diverse information and see relationships, who can reason abstractly and make logical connections, and who can think of the future as open and malleable bring an invaluable asset to their organizations: ideas. When leaders have ideas, they can solve the unfamiliar problems they encounter and make decisions that are in the best interest of their direct reports and the organization because of these skills:

· An openness to brainstorming and creativity

· The motivation and enthusiasm to challenge existing processes

· A knack for inviting input from a variety of perspectives

· A willingness to experiment with novel approaches and champion innovation

The POWs found themselves in an drastically altered world, one that they had never encountered before and, in spite of some training, one for which they were ill prepared. But like great leaders throughout history, they had the ability to engage in creative problem solving. They had ideas.
One of the classic stories of the POWs that illustrates this willingness to experiment with novel approaches involved Jerry Venanzi and his motorcycle, a story that quickly became a legend in the POW community. One day, Jerry Venanzi was outside when he noticed some of the other POWs were staked out and being treated miserably. He did not have any control over how he could help his fellow POWs, except he thought he might be able to make them laugh, so he decided to try that.

Putting his brilliant idea into action, he created an imaginary motorcycle, which he got on and rode around the compound. His fellow POWs started to laugh. Being somewhat of a ham, Jerry Venanzi realized that this idea was indeed funny, so he'd stage a spill, feign an injury, and limp. He'd hobble over and show somebody how he'd gotten a burn or some other kind of injury from the motorcycle. His act was so convincing that some of the POWs started to tap to one another, "Has Venanzi lost it?"

One of the things that the POWs found most humorous, however, was that the commander of the compound finally called Jerry Venanzi in and told him that he had to get rid of the motorcycle. As the commander pointed out, it was not fair. All the POWs could not have motorcycles so; Jerry Venanzi should not be able to have a motorcycle either. So, he reluctantly got rid of his imaginary motorcycle.

However, since he was disappointed about the loss of the motorcycle and since he was in solitary confinement, Jerry Venanzi decided to create an imaginary companion, a monkey that he called Barney Google. The stories of Barney Google went like wildfire through the community because Barney became the voice of the POWs. Jerry Venanzi would take his imaginary monkey into what was called an interrogation, and, as he was being asked questions, he would turn to the imaginary monkey and say "NO! I'm not going to tell them that! Because, if I tell them that, they'll beat the hell outta me! You're just going to have to shut up. " The interrogator would then say, "What did he say?" Who was in charge of this interrogation? Jerry Venanzi would seize this opportunity to say, "He's sick of the food. It's lousy food and he's tired of it. We do not have enough blankets, we're freezing to death," Whatever their complaint was, Barney said it on their behalf.

During one interrogation, the camp commander offered Barney tea, which Jerry Venanzi declined on behalf of Barney, pointing out that Barney did not like tea. This ruse continued for quite a some time, all the while fueling the POWs' feelings of having some degree of control, if only to their reactions and their openness to finding way to be connected to one another.
Finally, one day, the captors once again called Jerry Venanzi in and said that he would have to get rid of the dirty animal because he was getting some roommates. They were certain the roommates would not like the dirty animal. Of course Venanzi disagreed, but he finally capitulated and let Barney go on to another life outside the walls of the Hanoi Hilton, but Venanzi's idea lived on ideas are certainly critical for leaders, but leadership is not only about position, experience, knowledge, and education. It's also about the willingness to experiment with ideas to help solve problems that no one has encountered before. Certainly Jerry Venanzi was a person who assumed this leadership function. Doug Hegdahl was another, but he was barely old enough to be considered a man.
Doug Hegdahl was a 19-year old seaman who, in violation of policy, went out on a ship during a thunderstorm and was washed overboard. A Viet-Cong fishing boat picked him up and took him to the Hanoi Hilton. However, he was not like the other prisoners that were there. He was the only non-aviator, and he was only a teenager. He quickly realized that he could trick the captors into thinking he was dim-witted or stupid because he could not have answered any of the questions they asked him, even if he wanted to. He did not know about flying; he did not know about targets; he did not know the answers to any of their questions. Since his captors were confused about this very different kind of prisoner, Hegdahl had an idea.

To create more confusion for the guards, he started sucking on a pen and getting ink all over himself. When they asked him to write a propaganda statement, he would ask them how to spell a word, such as "American." Hegdahl's ruse had immediate and enormous implications. The captors underestimated him and made the tactical error of putting him a cell of one of the POW leaders, Dick Stratton.

Dick Stratton groomed Doug Hegdahl, and Stockdale, the acting senior leader, ordered Hegdahl to take the early release the Vietnamese had offered this seemingly simple-minded child. As the only person who was authorized to accept early release, Hegdahl returned home with 200 names, went to the Paris Peace talks, and told about the mistreatment of the POWs. In the archives of military history, a 19-year old Navy Seaman is one of the most heroic figures. This 19 year old teenager never ran out of ideas, but neither did he run out of altitude or airspeed. Through his involvement in a well-defined system, he was able to remain resilient and healthy and to ensure the safe return of many of his fellow POWs.


The need for control served as a framework for the VPOWs who created and maintained a system of strong interpersonal relationships and group affiliation that helped them survive over seven years in captivity and thrive during the years since repatriation. Humor was one of the elements of this system. The VPOWs taught each other how to use humor as a weapon for fighting back and as a tool for building cohesion.

To prevent a disjunction of the self and to find meaning in a situation void of meaning, the VPOWs relied on resources many of them did not know they had. Their internal sense of mirth and humor, their reliance on one another, and their group interactions all combined to create a system for survival. Their humor perspective provided the framework for discovering how to cope with their captivity, and their commitment to one another other gives an important perspective about what coping is made of. The role humor can play in bouncing back from adversity, especially when we are linked to others who will help us laugh, seems critical.

Because they were cemented in a strong social structure, they had a buffer against fragmentation of self or of the system. The VPOW accounts indicate these men formed a system that defined and encouraged humor among the group's members. These men relied on humor not in spite of the crisis but because of it. The VPOWs' system was a powerful civilizing force that discouraged any antisocial slip into a kind of jungle mentality. Control is central to individuals' health, their personal benefits, and in the case of the Vietnam POWs, their actual survival.

The "Jen Ratio" – A More Nuanced View of Emotional Intelligence

Think of the jen ratio as a lens through which you might take stock of your attempt at leading a meaningful life.

— D. Keltner, Born to Be Good: The Science of a Meaningful Life

Did you know that if you engage in five acts of kindness a week, you can elevate your personal well-being in lasting ways? You might think this is obvious. Try doing it while coping with the real world of chaos, much uncertainty for many, and news that is more bad than good. It's a job to be kind and compassionate.

Think of how any organization would benefit from acts of kindness coursing through it hourly and daily. The rise of its positive emotion quotient would directly affect the quality and quantity of innovation!

"Jen" science, the study of positive emotion, has been hinted at for centuries by various philosophers and scientists such as Confucius, Socrates, Plato and Darwin. But "jen" has only come into its own recently in the shadow and dying embers of the industrial revolution.

As elite athletes have known for some time, we do not rise to our best through fear. The latter helps us survive under dire circumstances but it is not sustainable as a way of being.

The latest financial global crisis has demonstrated that Adam Smith's "Homo economicus" has its limits. The pursuit of self-interest which does not focus on bringing out the good in others can lead to serious destruction. As Dacher Keltner, author of Born to be Good reiterates, self-interest, competition and vigilance have been built into our evolutionary makeup in order to survive, but these tendencies are only "half the story". "Homo reciprocans" is a more apt description of our reciprocating nature and the importance of emotions when making economic or any other kind of decisions.

The good emotional side of humanity, called "jen" by Confucius, has always been with us. It is gaining ground in our consciousness globally as we become more connected and better informed. We were reminded of our good side by Henry Patch, the last surviving soldier to have fought in the trenches of the First World War, who died at age 111 on July 25, 2009. In his memoirs, written after he turned 100, he described the pact he and his fellow soldiers made: avoid killing the enemy if possible. Aim for the legs instead. Academics have picked up on this theme of our good emotional side for a number of decades.

In the 1990's, Daniel Goleman and other researchers revived the rightful place of emotional intelligence as a driver of great leadership-the higher you go in an organization, the more important it is.

Not long after, Marcus Buckingham through his Gallup research of over 80,000 managers found that building on strengths of employees is a faster route to a positive climate and employee success than trying to change what is not there (transforming weaknesses).

Of late, even strategic planning has had a facelift with the introduction of the process called "Appreciative Inquiry" or "AI" for short. Like elite athlete practices, AI takes the high road by working on creating more of the exceptional performance of an organization through aspirational discovery, dreaming and design.

Since the late 90s, Martin Seligman, who became famous for his "learned helplessness" theory in the 1970s and 80s, started a growing worldwide movement called "positive psychology". It builds on the works of famous humanistic psychologists such as Abraham Maslow, Carl Rogers and Erich Fromm.

Recently, neuroscience is lending credibility to the value of "jen" (meaning "humane"), long ago advocated by Confucius. We are hard-wired to give to others and to act cooperatively. When we do so, the reward centers of our brains dense with dopamine receptors light up and hum with activity. Confucius recognized that cultivating "jen" developed character in self and others, led to the meaningful life and offset violence, materialism and needless hierarchy.

What is the "jen ratio"? The numerator refers to acts of kindness, compassion, awe, love, gratitude and even embarrassment. The denominator embodies the "bad" action when instead of establishing one's own character by bringing the good of others to completion, a person is disdainful, critical, condescending and contemptuous (all the elements that make for "bad" relationships). It is well-documented that these actions do not lend a helping hand to anyone anywhere.

Researchers are now taking stock of the "jen ratio" of individuals, married couples, nations, cultures and different age groups. As Keltner remarks, "nations whose citizens bring out the good in others to completion thrive" as "trust (a key result of" jen ") facilitates economic exchange with fewer transaction costs, adversarial settlements, discrimination and economic inequality".

Winners of a number of Nobel prizes in Economics concur. Cooperation beats cut-throat, winner-take-all competition in a complex societal system where trust ultimately must be a guiding principle. New research from the Center for Neuroeconomics further substantiates the value of trust to yield economic and well-being benefit.

Scandinavian and East Asian countries fare better in this regard than those in South America and Eastern Europe. Even poorer nations like India generate a higher trust level than wealthier nations like the United States. "Jen" trumps money!

The "jen ratio" is a simple measure and another tool for leader-managers. Of Acts "jen" and "not jen" can be counted (see Buddhist "Pebbles in a story A Bowl at Http:// ). With some deliberate practice, managers can the generate higher "jen" ratios leading to higher performance all round – hard and soft – underpinned by the increasing momentum of the "flywheel of progress" through good acts.