Who You Need to Run a Company

I have heard it too many times to even know if this needs sourced, but you need three things to run a successful company:

1. The Right People
2. Product(s)/Service(s) that Customers Want
3. Customers

Although all three are worthy of a blog post (and have been written about ad nauseum) I want to write my current ideas on the 1st one. Who are the Right People?

I believe that every company really needs people who fill these five roles:

• Idea Guy
• Legal Guy
• Numbers Guy
• Sales Guy
• Get Stuff Done Guy

Now, I don't believe these need to be five different guys (or even "guys" at all, so don't get hung up on the gender-specific pronoun, obviously these can be girls, too). What I DO believe is that these skill sets need to be represented in the company leadership or out-sourced to someone that can handle it competently. Here is what each role should be bringing to the table:

Idea Guy needs to have strategic long-term thinking. This would be a Marketing or Strategic Planning title at a big company. Someone with vision and lots of imagination. He sees opportunities in places that other people haven't even thought to look. When you're like, "What about an online video contest?" he's already saying "And they can call in on their mobile phones and vote for their favorites-- for $1.99 per call. Bam! Digital revenue stream."

Legal Guy needs to love the law. He gets fired up about reading contracts, licensing, intellectual property ins-and-outs and any print smaller than 10 point font. Legal documents, IP/patents, and law suits are a common part of business today, so someone at your company needs to love it. LOVE IT!

Numbers Guy should also be Spreadsheet Guy. He doesn't just like tables, charts and numbers, he has general ledgers printed on his bedsheets. This guy understands that money is making money even when it isn't creating revenue from assets. He does percentages and long-division in his head, can give your company's current cost per sale ratio in his sleep, and feels physical pleasure when the monthly account balances just right.

Sales Guy is your best friend and your worst enemy. He knows everyone and would rather be on the phone or in a meeting than working alone on his projects. Don't ask him to do paper work, just let him create relationships and get other people excited about what your company does. The people who are best at this are True Rainmakers, not salesman-types looking for a quick deal or taking advantage of customers.

Get Stuff Done Guy is the Executor. It needs done, he finds a way to get it done. He is to a Gantt Chart as a 13-year-old girl is to WhateverLife. Put him in charge of your projects, your staff or your whole company and he will make sure it all gets done within scope, on time and under budget. Do you need to have a presence at a trade show in Albuquerque in 3 days? Give it to this guy and get out of the way.

In this essay by Paul Graham, he refers to Good People as "Animals" and illustrates them as: "A salesperson who just won't take no for an answer; a hacker who will stay up till 4:00 AM rather than go to bed leaving code with a bug in it; a PR person who will cold-call New York Times reporters on their cell phones; a graphic designer who feels physical pain when something is two millimeters out of place."

I think he's on the right track. I would call these people Passionate, but that's because I'm a soft/squishy Idea Guy and not a hardline Sales Guy or a straight-shooting Numbers Guy.

Shawn's Graduation Speech

Shawn’s Graduation Speech for the GSU
Global Partners MBA Class of 2008

The four things I learned from my MBA program.

1. I’ve developed a physical dependency on PowerPoint.
2. I learned a new language.
3. I learned that anything worth learning can be conveyed in a chart
4. I learned to take existing models, charts, concepts and ideas and apply them to new sets of data.

I have elected to not simply tell you about these new competencies, but also to demonstrate them to you during the course of this speech. Item number one, my adeptness at PowerPoint that has been carefully honed over the course of the program, is best illustrated by the creation of this presentation. Number two is that I have learned a new language. To enter the global partners program, it is a prerequisite to know another language besides English. We were told that this was so that we would be able to quickly adapt and understand in the cultures and countries that we visited as part of the program. But we were lied to.

The REAL reason is that our professors wanted to make sure we would be able to learn a brand new language: the language of business. As MBA students, we have learned a brand new language, complete with its own vocabulary. I apologize to those who are in attendance who have not yet learned this language, because I would like to deliver the next segment of my speech in b-school-ese.

“4Q and 1600 ICH ago,
We determined that the FV of our WACC
Could be improved by exchanging CA for FA
and leveraging our IP.

After a SWOT analysis of our OTB,
We chose an MBA with GSU in the program called GP.
In Oct. 07 in CS 600, the Cof’08 began.
We met P-Y and KDL. And also Robin M.

We learned Econ and Pol Strat, Comm Dip and Int Bus,
Bus Law and Bus Mark, and Cost and Info Sys
In our IT class we read how HDVD
Would go DOA thanks to PS3
And in P-Y’s Ops class at IAE
We learned to streamline Mfg using JIT

We saw RDJ and flew to CDG
We changed our USD into RMB
In PRC we toured the BOG,
Then grabbed some US food at MickeyD’s

After all that, we’re back at GSU
Here in ATL with 1 thing to do,
To cross the stage and receive our degrees
And add 3 new letters to our CVs.”

The third thing that I learned was that anything worth learning can, and SHOULD, be communicated quickly and easily with a graph or chart. I would like to demonstrate the truth of that too you with a few examples.
· A Pie Chart About Pie
· A SWOT Analysis of the SWAT
· The f(x) = excitement x effort
· The Brown Cloud and
· The Classic Marketing Matrix

The fourth thing that I learned was how to apply existing models and analysis to new data sets to reveal new patterns and models. I feel that this skill can be accurately demonstration by taking the comedic model of Jeff Foxworthy’s “You Might Be a Redneck” and applying it to our own particular data set.

You might be a GPMBA…
1. If you’ve ever tried to calculate your student loan debt in Euros.
2. If you know the right way to pronounce “Strategy” and “Tactic”
3. If you’ve ever used the word “widget” to describe a theoretical product line.
Or if you’ve ever looked up the translation for “widget” in French or Portuguese.
4. If you’ve ever checked with a fellow student to know not only what class you have tomorrow, but what country it’s in.
5. If you’ve ever sat in a class taught in English and had to think “What language am I hearing?”
6. If you’ve ever lost 150 thousand dollars in a virtual margin call on the virtual stock market.
7. If you’ve ever accidentally started a nuclear war in Brazil or depleted the world’s oceans of their fish population.
8. If you’ve ever spent more than 8 hours in the DC airport. Twice.
9. If you’ve ever begun a question with the phrase “I was reading in the Wall Street Journal…”
10. If you’ve ever bragged that your new suit was made in China
Finally, If you’ve studied 20 subjects across 4 continents and traveled around the entire world in 432 days as part of your international business education…

What Brand Authenticity is Not

A magical lesson in Brand Authenticity was learned this week by Johnson & Johnson: You can't fake it. My takeaway from this weekend's Twitter-Fueled Motrin Massacre over the "We Feel Your Pain" Ad is that people know when you don't know anything about them. The ad is here. More on my thesis below.

My wife, an official "baby-wearing" mother and Assoc. Editor at Pregnancy & Newborn magazine, saw the ad and laughed. She thought it was not very sensitive and not very well presented, but she could appreciate what they were going for.

J&J is a huge company with decades of experience in marketing. They helped create the system of running campaigns in front of test audiences and focus groups, so what happened this time? As Seth Godin points out, they treated this ad different because it was viral. Companies look at ads differently for the web than they do for broadcast media. And they should, but they don't know why...

Another case-in-point, a company called Celebrity Smile is trying to use viral to attract potential customers to their website. They created a fake blog about a mother who Wants to Whiten her Teeth that is so coated with insincerity that it is an insult to the internet-using populace. Faking a blog to draw "word-of-mouth" traffic to your site is a fast way to destroy any trust that could have been engendered by the idea of a real blog. It's like copying off the dumb kid in class, you're cheating and you're still going to fail.

An example of a really bad answer on a test question. Funny, but wrong.

And, just for laughs, here is the (fictitious) List of Ideas that Motrin Ditched before Going with the Baby-Wearing Ad.
I'm cutting and pasting my favorite...

3. I’ve always been a staunch supporter of abstinence as a birth control method. Then, right after I decided to run for Vice-President, my 16-year old daughter told me she was pregnant. Motrin: We Feel Your Pain.

The trick with viral is you have to be SO in touch with your audience, you have to already have SO much "authenticity," that your customers hear your voice as their own voice. Your audience has to know that you get them, otherwise they will suspect that you are mocking them or worse, condescending and alienating them. A company with strong branding does NOT own its brand, instead it recognizes that its brand is the property of its customers.

Brands that have done this right: Nike Sports, Mac, Converse Shoes, Weezer, Target

Brands that have failed to do this: Hurley, Microsoft, New Coke, Southwest Airlines, and now, Motrin. Feel free to add your own examples...

The Job Search: Lessons from Booksellers

What You Can Learn about Job Searching from the Publishing Industry

When you are job searching, it's easy to get caught up in the process and overlook the big picture. So, let’s look at the way YOU will look to your future empoyer by examining the old adage

YOU CAN'T JUDGE A BOOK BY ITS COVER.

“The bookstore browser averages less than eight seconds looking at the front cover and fifteen seconds reading the back cover. You must hook them immediately and keep them reading the back cover or they will put the book back on the shelf.” [1]

The 5th “P” of marketing is “Packaging.” How’s your Appearance? In our society where book covers are the #1 indicator of book sales, you cannot overlook the importance of your own packaging. A career change is the perfect reason to go out and spend some money on a nice haircut and updated professional clothes. Get a good night’s sleep. Use your free time to exercise and eat well. Just because you're Job Searching is no reason to LOOK unemployed! If you feel good about your appearance, then others will see that you have poise, confidence, and value.

“Book publishers spend more than $50 billion on product packaging design. $50 billion, not for the products or even for the wrappers, but $50 billion just for the design of the wrapper.”[1]

What is your wrapper? Or what is the first thing that an employer will see about you that will formulate his decision to Buy or Keep Browsing. A key part of your wrapper is your Resume. Update it with all new things. Don’t just add your most recent position; update your skills, recognitions, awards and accomplishments. Add any new groups you’ve joined. No new groups to add? Quick, go out and join a group. I mean, you’ve got some free time right now, huh? Then, add it to your resume. Also, breeze back over the years of experience you’ve had and do some re-write to touch up those tired histories through the lens of your greater life experience. Add or update your value statement and 2 key accomplishments right up at the top under your name and contact info, like the headline of a newspaper:

Extra! Extra!

Here’s why you should read about this guy.

Remember, this is your leave behind, so in most cases, may be the last thing a potential employer sees. Make sure it gets them excited about what you can do for them.

With your packaging covered, it’s time to get started. Create your list of contacts and your list of companies you’re interested in. These are organic lists, which means they WILL keep changing! Each contact has a network that they can lead you to, the goal is to get the names of decision makers, their titles and their business addresses. Then you’re going to write them a letter. Not an email. Write them a letter.

The letter should say:
I’m this guy, I know this person that you also know. I am interested in your company because … (“It is the top performer in the industry”, “It fits my values and interests,” stuff like that. Just communicate that you know the company.) You’d be interested to know that in my past, I have done these things and would like to help your company do these things. Please feel free to reach me by phone or email at your convenience. Or, I will call your office on this day.

Really, write that stuff? Yes. Employers get upwards of 125 emails a day. They read about 20%. They also return about 20% of phone calls. The question you are answering for them is this:

“How Determined are You to Get This Job?”

Ready for the key secret to this process? Make the Call! Writing the letter already set you apart from every other person that just hit “Apply” on monster.com. Now, when you said you would call about 4 days after you send the letter, you MUST pick up the phone and make the call. Call early in the morning (Before 8:30 or 9:30). Call again at lunch time. Call again after work hours. This way you have a better chance of getting someone who is not the professional Gatekeeper. Or perhaps even getting the person you’re looking for! Be prepared to leave a professional message.

“Hi, I’m this guy. I sent you a letter regarding my interest in coming to work for your company. I think you would be excited to hear how I could help (company’s name).”

If you get the gatekeeper, you can simply say: “I’m calling for whoever.” And when they ask what it is regarding, you can say: “I am following up on a correspondence he and I had last week.” Or even, on a good day, “He’s expecting my call.” Sales people use this technique all the time. Warning: don’t make the Gatekeeper think you’re a salesperson!

So When Do I Use Email?
Emailing your resume is your closing tool. It is your leave behind. You did not include it in your first letter, therefore, it is important that after you have talked on the phone to the person and they have requested your resume, that you get their email address. Ask them if they would like you to include references, and then tell them that you will email it to them. And then of course, you follow through with that . --Shawn Butler
[1] http://www.parapublishing.com/files/articles/ArticleAB-202CoversSellBooks.pdf

Balloons, Popcorn, and Snow Cones

A Little about Cost Markups: What do Balloons, Movie Theater Popcorn, Snow Cones and Starbucks Coffee have in common? They, along with Cotton Candy and Fountain Drinks are on the list of

the Consumer Products with the Highest Markups

But what is a “Markup?” and "What does this mean to us?" Markup, or Margin, is a marketing term for the price that a business puts on a product above what it costs to produce and deliver the good, usually determined as a percentage. In other words: the part that is straight profit.

Certainly there are more expensive items than coffee, cotton candy and popcorn --like porsches, condominiums and golf resorts-- so what makes these items special? What kind of a markup would cause such a big deal?

How about this: No matter what a company sells, their price is a combination of two numbers: the cost of making and transporting the good they are selling (COGS) and the margin of profit (Markup).

COGS + Markup = Price

COGS is a set cost determined by the various expenses, fixed—such as overhead and insurance, and variable—such as raw materials and employee wages, that go into producing the product. Companies can do very little to affect this aspect of price, or at least that’s how I see it from the marketing side of the fence. The second part of price, however, the markup, can be shifted easily—this has no basis other than the price your customer is willing to bear.

For most consumer products, the average markup ("Retail") is about 30%. For commodities --sugar, soap, pillowcases-- markup is closer to 10%. But for "Premium" products --retail items aimed at the very rich, or the very demading (this is where we talked about Porsches, but also includes watches, Italian shoes, and vodka)-- markups often approach 200% of Cost. And then "Ultra Premium" --products called by names like Mikimoto, Piaget, and Alfa Romeo-- enjoy 400 and 500% markups. People gladly paying $750,000 for a car that costs around $20,000 to produce. For more on this, here is a great link.

But these don't touch the 99.9% profit margins of the products mentioned above-- the less than 1/50 of a cent that it costs to produce the .5 grams of a latex balloon that is filled with a burst of helium valued at 1/80 of a penny and sold for $3.00 at fairs and circuses across the US. This equates to a 1000% markup above COGS. Similar equations can be run for cotton candy, snow cones, your super-value bucket at the movie theater and your double iced caramel machiatto.

Imagine paying a 1000% markup on your car or your next burrito. That would be a $20,000,000 Altima or an $850 dollar Carne Asada bowl.

Room to Grow

I am going to share with you today’s observation of China. Close your eyes and envision a map of the United States. Okay, now open your eyes and keep reading… You’re going to point on that map to these locations as I list them: New York, Los Angeles, Chicago, Houston, Philadelphia, Phoenix, San Antonio, San Diego, Dallas, San Jose. These are the Top 10 U.S. Cities by Population and Rank. You may have noticed your finger stopped in about every major region of the country and crossed the continent at least 3 times. Further down that list you’d touch Detroit, Memphis, Jacksonville and Seattle at 23.

Now, the Top 10 Cities in China are Shanghai, Beijing, Shenzhen, Guanzhou, Tianjin, Nanjing, Dalian, Hangzhou, Shenyang and Harbin. If you were to do the same mental map-pointing with this country, you’d find your finger never strayed from the east coast. In fact, you’d find that most of these cities, 8 out of 10, cluster like shotgun fire to within 2 hours of each other.

China is a huge country, roughly the same area as the United States, but with more than four times the population. Across such a broad expanse of people and geography, one expects the country to have developed several distinct and unique cities and cultures. In the US, for example, we have Northerners and Southerners, we have City People and Country People, but we also have Suburbanites, Rednecks, New Englanders, Westerners, Mid-Westerners, Snow Birds, Beach Bums, Grunge Rockers, Cowboys, and Californians. There are lots of different lifestyles with different cultures and values, but these groups are dispersed across the length and breadth of the country. From what I can tell, China does not work this way.

In China, the businesses, industries, infrastructure, government, and foreign political influence—not to mention the wealth and leading founts of culture—are all located on a stretch of the country’s east coast spanning from Beijing down to Shanghai, the rough equivalent of the state of California. Meanwhile, the western portion of the country, perhaps 90% of the land area, is occupied by about 60% of the population and responsible for less than 25% of the GDP.

So, why does this strong disparity between East and West exist in China? Similar to that of the industrial North and agrarian South in the antebellum US, the cause is the drastically different cost of doing business in the regions. “The government is doing things to move China west,” said Randy Creel, a logistics expert at a major MNC in China. “The hesitation is the lack of infrastructure and its effect on logistics costs.” Effects on logistics costs that work out to about 200% more investment per mile for companies to run their businesses in Western China. China is on a self-perpetuating cycle of eastern growth and western lag that will require more than government incentives to Western businesses and FDI spenders. It may require an all-out reallocation of infrastructure build-up that the country has never before undertaken. At least not until the 2008 Beijing Olympics. --Shawn Butler

Alibaba’s Forty-four Hundred

We arrived at the world headquarters of Alibaba.com in Hangzhou to a fanfare of music--music that could have come from the soundtrack to the original Super Mario Bros. Across the less than 1,000 sq. foot office floor, the 115 employees stood inside their 4x4 ft. cubicles and stretched their arms in the air. Then, in unison, the entire mass of twenty-somethings began doing jumping jacks. They continued their group exercises while our group of MBA students was escorted past the cube-clusters into a large meeting room.

The calisthenics are but a small, visible piece of the unique corporate culture of Alibaba Group, an English language web-based business-to-business eCommerce and eAuction service specializing in connecting international buyers and small- to medium-sized Chinese sellers. Our guide quickly made us aware that the company knew it was unique. “For most companies,” he said, “employee culture is like a cliché or a joke.” Well, it is not that way for the employees here. “Everybody is happy,” he continued. “It is our environment.”

We were then given a rough translation of a company joke that concerned a stubborn donkey in a mill that refused to work for his master. The master enticed the donkey to do his work at the mill by threatening to send him to work for Alibaba.com. “Here we all work like donkeys!” he announced as the punch line. Indeed, the word “work” actually appears in 2 of the 6 points of their printed company motto. So, are hard work and teamwork the strong points that make Alibaba such a successful company? Or is there more to this unique start-up’s corporate culture?

The lobby of HQ is decorated in orange scarves and bright orange hanging plastic fruit. And one other ubiquitous decoration—photos of company founder, Jack Ma. Ma is the poster-child of the New Chinese, the modern entrepreneurial self-made success story that this newly-capitalistic nation adores. And he is on posters. Giant reprints of the man’s photo adorn 2 out of every 4 walls in the building and line the staircase up to the top floor. In ’88, Ma was an English teacher fresh out of college. 11 years later, after a visit to Seattle and a crash course in computers, Ma was founding his own eBay-esque business. Then, 8 years later, he took his company public on the HKSE to raise $3 billion USD and become the IPO with the greatest increment in stock price at first trading in 2007.

Jack Ma’s influence is everywhere and his success is a model to the employees of his company. “He has us call him Kwai Chang, from the TV series Kung Fu,” our guide told us. During our tour, every action and idle quip of the 43-year-old founder was revered as holy writ, and even offered as justification for the “spirit” that prevailed there at the company. When asked what he thought Alibaba would do to maintain its growth and close the gap on rival companies Google and Baidu, our guide’s response, stars nearly visible in his eyes: “I can’t answer that. I’m not Jack Ma.” --Shawn Butler

Alibaba.com's oddly unrecognized logo, and CEO/Founder Jack Ma

My First Day in China

Well, it is a beautiful morning here in Shanghai and crowds of nearly-identical brown-haired and beige-skinned people pass below my second-story window of the Charms Hotel in cars, bikes and mopeds. Just as our professor told us, there is English—-or attempts at English-—written all over the place, but there are still plenty of unintelligible signs that feature characters made up of dashes, lines and boxes with no translation at all. This is definitely the most "foreign" of any country I have visited.

There are twenty-two of us including my program director and international business professor. We travel on a chartered bus and remain fairly sheltered from the realities of this, the most populated city in the most over-populated country in the world. We arrived after an 11 hour flight from Paris, on Sunday morning and cleared customs around noon. The time change was six hours from France, but a more convenient 12 hours from EST. Monday morning, at our first company visit with US Commercial Services of our own Nat'l State Dept., our guest speaker told us that Shanghai's population of 20 million people was like fitting the population of Texas into the state of Delaware. He said that this is a problem that many non-Chinese companies have when they come here, that all they see is a bubble of untapped population or an open market of 1.3 billion potential consumers. They don't see the reality that over 3/4s of this giant population is living on around $1 a day. The savage need for survival overshadows the wants for the people of most of this subcontinent.

On that note, we enjoyed a quick lunch at McDonald's; Big Mac, fries, and Sprite for under $2.00, thanks to the PRC's valuation control of the RMB, keeping the Chinese currency's exchange rate artificially low. And MickeyD's proves its core-competency of reproducing consistent "quality" in every venue worldwide. I can attest that the sandwiches served up in cardboard boxes are just as bad in China as they are anywhere in the States.

Yesterday afternoon's schedule took us to a field trip of Shanghai Krupp Stainless Steel, a Joint-Venure of ThyssenKrupp and the Chinese government that manufactures flat-rolled stainless steel for all sorts of stuff, knives, pots, car exhaust systems... Their British GM gave us an overview of how the German company was sorting out issues with Chinese government regulations and the oddly over-priced yet inexpensive Chinese labor. They are some of the lowest paid nationals in the developed world, but they work a full week and require 3 times pay for overtime and holidays. It's definitely an interesting system.

It was during our tour of the pounding and thrumming steel presses on the factory floor at about 3:30pm local time that the earthquake hit. And being less than 100 miles away from the epicenter of a 7.8-measured earthquake, it is lame to report that we didn't feel a thing. The news told us that "Skyscrapers swayed in Shanghai," and there are skyscrapers a-plenty in this city, but we were not in one at the time of the quake. So, sorry, not much to report there. The tour did get exciting when they used an overhead crane to haul a two ton roll of steel past us to load it on the press. I thought, "Hmmm, Jeff might have really enjoyed this little tour." My friend in the program, Jaime LaTorre, a GT engineering grad., said he thought it was a great factory tour. I admit I was rather bored.

Last night, we went to dinner at another Chinese food place that served us stir-fried vegetables, pork and rice that tasted like anything I could have ordered up from any mall-chinese restaurant in the US, but I did drink a delicious lemon-watermelon juice with it. So how's that for exotic Far Eastern cuisine? I’ll have to push my little horizons a bit further for meals tomorrow. --Shawn Butler

The Pearl Tower in Pudong District and Shawn Butler at People's Square

A Small World

This is a quick interim blog just to keep up a with the world from here in Paris. My daughter and I celebrated our birthdays last month in our own pseudo-European style, inviting about 15 people over for a party and birthday crêpes.

asmallworld.netshawn butler

After 5 weeks in France, I've decided that I'm pretty much exactly the kind of person that should be doing the Euro scene. To prove that I am now a jet-setting elitist, I am joining the exclusive group at aSmallWorld dot net, where I will be rubbing "virtual elbows" with supermodels and James Blunt. See you when you get there... shawnpbutler@gmail.com

Brazilians are like Chinese

Shawn and family stand in the shadow of the 130 foot O Cristo Redentor statue on Corcovado mountain.

Today we leave Rio to return to the United States. I'd like to conclude my four part series of Observations of the Brazilian People and Culture with this final conclusion: The Brazilian people are like the Chinese.

This may sound surprising, or even blaringly incorrect as it follows the other observations I have made, but they are like the Chinese insomuch as their culture exhibits the behaviors of a highly collectivist society. Brazil has one of the highest international rankings for Long Term Time Orientation, scoring 6th out of the 23 countries tested. Compare this to the number 15 rank of the United States' culture of independent living and short-term thinking. Interestingly, Brazil is the first of the non-asian countries to appear on the list.

Having a long term time orientation means that Brazilians value things like persistence, relationship orders determined by status, thriftiness, and having a sense of shame. These contrast starkly with the time-constrained structures of Americans. During my time here, I recognize that Brazilian collectivism and time perspective, although similar in their symptoms, differ greatly in their motivation from that of Asian collectivism.

Whereas Asian cultures seem to pursue collectivist behaviors in order to not stand out, to not draw attention to themselves or to engender unwanted notice, Brazilians observe collectivist behavior in search of a sense of unity. If one Brazilian is uniting with fellow Brazilians, it is not to escape notice or blend together. It is the stemming forth of a shared sense of brotherhood and patrimonio, the recognizing of a kindred spirit, and it is not quiet or subdued. Brazil's version of collectivist behavior is chanting at a fútbol game, loudly sharing a few drinks, or dancing samba with a very large group of friends.

In many regards, Brazil is exactly what others told me to expect. Brazil is the country described by paradoxes in many of the tour guidebooks. It is busy without seeming fast-paced. There is everything to do here, and plenty of nothing to do here. The beaches are covered with people, and the people are not covered with anything. The locals love the tourism and tolerate the tourists. But in so many more ways, the people, culture, and experience of Brazil defied or redefined the expectations that I had arrived with last month when I stepped off the plane at Galeão International Airport. I am thankful to the thousands of people that I have met here, that have offered me help, told me hello, or pinched my baby girl's thighs. I am thankful that they let me share a few moments of their time and see them as they experience life, their own daily lives, without any effort to be more like the Brazil defined by Frommer's Guidebook. --Shawn Butler

A Little About Brazilians

Shawn and Charlotte experience Futbol the Brazilian way at Maracanã Stadium

First of all, the country of Brazil is about the same size as the continental U.S. They are the largest country in South America and walk a fine line of being very typical of and also very distinct from the rest of the continent. They have the Latin American sense of time and relaxed schedules, being Polychronic in their sense of time stresses involvement with people and completion of transactions rather than adherence to a preset schedule. For the people of this continent, the future is not firm and therefore cannot be planned. Appointments can be broken and plans may be changed right up to their execution. They are interested in nature and clapping at the sunset. These are commonalities they share with other Latin American countries. At the same time, they seem intent on remaining unique and apart from the Spanish-speaking world. Brazilians are very proud of their country and find unity in their common patriotism.

A man we encountered in Jardím Botánico, Manoel Amorím, who spent 10 years in the U.S. where he attended Harvard Business School and then became Country Manager for Proctor & Gamble Venezuela, and is the current CEO of Ponte Frio, told us that Brazil was too big and Brazilians were too diverse to try and label them all. He said that there are 3 things all Brazilians everywhere have in common.

Number one was soccer. “If there is a World Cup or National Team game playing,” he promised us, “You can go to the busiest street in town and lay down in the road without any fear.” Unfortunately, club teams are just beginning their regular playing seasons right now, so we will be unable to test his assertion during our stay in Rio.

Number two was national pride. He said that all Brazilians agree that they are part of a great country with an exciting culture. Just don’t force them to define which culture that is.

Number three was not given to me by sr. Amorím during our discussion, but I have used my intuition to deduce what it could be: Brazilians love babies.

At the end of my first week in Rio de Janeiro, my wife and our 8-month-old baby girl flew down and to join me for the rest of our residency. During my first week here, I had only limited interactions with the local residents. By “limited” I mean they spoke to me when they were spoken to. The Brazilian people never initiated conversation with me and seemed content to let me wander their country in my own Gringo universe.

This all changed when I was carrying my chubby-thighed, blonde-haired and blue-eyed little girl. People came from half a block away sometimes, children dropped what they were doing, old women crossed the street, and parents of other babies were drawn to us as if by a magnet. We had no lack of attention when we had our baby with us. On more than a few occasions, as I waited to cross the street, I found the person next to me holding onto the hand of or squeezing the little thighs of my daughter while she hung against me in my arms.

I embarrassed myself several times by attempting to respond to an enthusiastic “Oi!” from a local, only to realize that the greeting was not directed at all to me, but to the baby in my arms who is yet to say her first word in English, let alone make any reply in Portuguese. A favorite episode of our experience here in Brazil will be the lady in the Hippy Fair that labored to find a translator when we were unable to understand time and time again the words that she was saying to us about our baby. An exhaustive and stressful search finally yielded an individual capable of translating her missive. And what was this all important, cross-cultural communique? “Your daughter should be on the cover of a magazine." --Shawn Butler

This is Tiny Baby Charlotte in Rio saying, "Well, Of Course I Should."

Clapping At the Sun

I believe that the Cariocas (what the people here in Rio de Janeiro call themselves) epitomize the Hispanic idea of polychronic time. Hoffstede’s cultural dimensions study places Brazilians on a par with the Asian cultures for long-term time orientation. It can be commonly observed that these people take the long-view time perspective rather than allowing themselves to be confined by things like schedules and apparently clocks.

The people of Rio de Janeiro have a custom which perfectly illustrates this distinction. Each evening, be it a work day or weekend, thousands gather on the beach and the small stone hill in Parque Garota de Ipanema and stand in silence to watch the sunset. At the completion of this event, the audience erupts in applause. It is a sign of appreciation, like the close of an opera or the finale of a symphony performance, where the people express gratitude for the talents of great artists through collective applause. Standing together in their timeless and clockless ritual, the people collectively take in the splendor of nature’s artistry and together celebrate the end of another day.

Hearing of this quaint and poetic ritual, we made our way down the beach as the sun fell into the ocean. We climbed to a nice point on the short hill to watch the setting sun. There was a considerable mass of people already gathered, so I assumed that the moment of “spontaneous” applause at nature’s wonder was near at hand, but as any of you who have taken the time to watch a sunset already know, a sunset will be held to no one’s schedule. We shifted restlessly on the hillside, moving locations three different times to get a better view. I didn’t like the man in the meditative stance, his feet interlaced lotus-style, ahead of me blocking my view of the horizon. I didn’t like being so close to the straight-haired girl and bandana-ed boy playing a recorder and dancing. After a few minutes, maybe twenty in all, I was pretty bored with the sun and the big rock. I admitted to myself that the clouds and the colors were nice. The whole scene was admittedly nice. I looked around at my business school friends and said, “Alright, let’s go. We’d better leave now so we can beat the crowds.” I lead us back down the hill, cutting across the entranced gazes of the rapt nature-viewers and onto the road up towards the hotel. Behind us I heard a bunch of people clapping. One of the students walking behind me commented, “That was nice, somebody ought to video tape that. Then we could watch it all in fast forward.” --Shawn Butler

Uma Ausência de Relógios

Rio de Janeiro is everything I was told to expect. There is, however, one factor in the everyday life of Rio that bothers me. Everywhere I go, stores, bus stations, sporting events, places that one would expect might benefit from keeping track of the time, I find the exact same thing: An Absence of Clocks.

Time-tellers of any sort are no where to be found. Many South American countries, and most of the Spanish-speaking world, are pretty relaxed on time. But they at least seem to consider it important enough to merit placing a clock in the bedroom of their hotel guests. In 2006, California-based Hilton Hotels Corporation believed that their innovative new guestroom alarm clock would have such an impact on customer preference, it was made the focus of a year-long multi-channel media campaign.

The five room suite I’m in at the Ipanema Tower in Rio has not even one clock anywhere in it. Correction, there is apparently a clock on the microwave, but it is flashing 12:00 and I can only see it if I am directly in front of the cupboards against the kitchen wall. Neither is there a clock in the gym, the lobby, or the dining area. There are actually three (3) clocks at the reception desk; however, being that they give the hour in Rio de Janeiro, New York, and Rome, I have determined they are more for decoration than actual time-telling.

My own cultural distinction becomes very apparent to me in that I feel completely lost without knowing what time it is. I find myself constantly reaching for the cell phone that has doubled as a watch for me since its inception in 1999. Imagine my frustration now that, since my cell phone can neither send or receive calls, I have ceased carrying it with me to serve in its time-keeper capacity, but have now, instead, left it on the hotel nightstand by our bed. Where the clock should be. --Shawn Butler

Digital Convergence

In the years of Thomas Edison, the business model of the motion pictures industry was vertically integrated and tightly controlled among a very few. The original inventors of the technology joined together and created a single trust called the Motion Picture Patents Company (MPPC) in 1908. From this time up until the Paramount Decision of 1948 when government regulatory forces broke up the tight vertical integration between content production and distribution, the industry was dominated by a few giant corporations exercising oligopolistic powers.

The Value Chain for this industry was a closely controlled, proprietary vertically-integrated monopoly. All the components: production, distribution, and exhibition were under the control of the studios themselves. This allowed them to engage in several practices including block and blind booking before these were deemed illegal in regulatory decisions by the federal government.

The introduction of Television had a powerful effect on the Business Model of the Movie Industry. Initially, television broadcasting was seen as a threat to the Movie Industry and its programming was a new competitor for the already declining attention of the film audience. However, by the early 1950s, the film studios recognized that the new technology was benefitting them. Past opinions aside, they did not hesitate to take advantage of a secondary market for their products, selling their extensive libraries for Television exhibition.

The arrival of the Videocassette Recorder (VCR) created another lash of retaliation from the Movie Industry. The technology, both Betamax and Video Home System (VHS), was met by a vehement lawsuit which, although taken all the way to the Supreme Court, proved ineffective. The Betamax Case of 1984 essentially paved the road for the introduction of new distribution technologies that were to come. As with television, the existing industries quickly realized that rather than fighting the technology change, they could have been profitting from it. Again they had found themselves in a legal battle against an alternative, and lucrative, new distribution channel. Direct sales of films to VCR owners quickly gave way to video sales to Rental Stores, creating the two-tiered pricing system that is still utilized with the introduction of DVD technology. With a 40 to 60 percent split of the rental revenues, the Home Entertainment category is now the most profitable segment for the Motion Picture industry.

The internet was met with similar trepidation. As though struck with the same inexplicable amnesia that repeatedly appears in their plotlines, the Film Industry completely ignores their history and continues to view technological advancement as a threat. The big 6: Disney, Sony Pictures, Paramount Viacom, Fox News Corp, NBC Universal and Time Warner, joined together to form the Motion Picture Association of America (MPAA). In an organization that bears the very same traits that led to government antitrust intervention a century ago, the major Hollywood studios have again united to create closed standards that hinder competition. Together with a similar organization in the music industry, the Recording Industry Association of America (RIAA), the MPAA exerts a concerted effort to find and prosecute internet-based piracy and file sharing. In place of embracing these technological advancements and evolving complementary technologies to generate greater profits, like the billion dollar online film business being operated by early-adapter Blockbuster.com, the motion picture industry is again seeking legal insulation against the natural progress of their industry.

I see two possible scenarios for the Motion Picture Industry in the next 5 years. One, it will succeed as it has never before in controlling the distribution and exhibition of its products. This will undoubtedly follow a multi-year court hearing and perhaps several appeals that will be costly not to the media corporations, but to the consumers who are subpoenaed for testimony for or against the practices condemned. Afterwards, movie industry products like HD DVD and Blu-ray will have multiple layers of encryption to prevent copyright infringement. Movie theaters will be equipped with state-of-the-art biometric security to prevent movie-goers from “movie hopping” within the theater. Blockbuster will require a password, DNA sample, and a large cash deposit prior to releasing any media for rental. The internet will be laced with information-eating viruses that seek out unlicensed copyrighted materials on civilian computers, erasing it and signaling the Ministry of Truth to prevent any further crimethink. Meanwhile, independent filmmakers will capitalize on the benefits of unsolicited word-of-mouth product marketing facilitated by a peer-driven audience base of information sharers to create the future blockbuster films with zero dollar marketing budgets.

Or the second scenario, where the lessons of cooperation and compatibility push the Motion Picture Industry to adapt to a digitally enabled consumer society. They evolve their product offerings into a format that takes advantage of the rapid file sharing capabilities of the continually broadening internet. The MPAA will pioneer the technology of degradable digital, where all digital files have a shelf life before evaporating into zeroes and ones. This becomes the new standard format for movie viewing, people watching degradable digital on their cell phones, ipods, laptops, and home theaters. Independent filmmakers and Hollywood studios both make giant amounts of money from the now much larger consumer pie as we watch the multiplex theater go the way of the opera house, becoming a quaint experience where parents take children for a night of nostalgia and pay premium prices. A new market of Film Viewing Houses emerge after the pattern of IMAX theaters, targeting the Audio/Videophiles who are seeking the “Ultimate” in film-viewing experience. Formal Standard Setting becomes secondary to a spirit of innovation so that the “Best” technological advancements can come to the forefront, with the understanding that the whole industry will benefit from an increased interest facilitated by an improved customer experience. Movie-making will follow in the direction that television and internet are now going. The consumer, not the seller, determine the content and usage practices.

These ideas may be a little far-fetched, but they stem from lessons that history has taught in the areas of electric current, telecommunications, and long-distance travel. Businesses that will continue to succeed are businesses that focus on the benefits they are providing to customers and which are capable of adapting their own business model to follow the advancement of technology as it realigns itself with that overarching goal. Media and delivery channels will continue to change, but creating a relationship of trust with your customer base will assure financial success and maximize long-term shareholder value. --Shawn Butler

DC versus Lou Dobbs

Washington, DC has a new opponent, and it’s not drugs, terrorism, or even Iraq. In three separate venues: the US Dept. of Commerce, a US Senator’s office, and a DC law firm, CNN anchor Lou Dobbs was vilified by name for his confrontational stance on US foreign outsourcing as enumerated in his 2004 book Exporting America.

Dobbs has increased viewer share for both his cable and radio shows by becoming the self-appointed champion of US manufacturing jobs. And he is an unlikely hero. Dobbs stepped into his media career directly from his college years at Harvard and a bank job in LA. Notwithstanding, it is with homespun fervor that he crusades against the decade-long trend of outsourcing US jobs to foreign markets.

Dobbs said this in an interview: “The principal issue I have with outsourcing is that American companies -- based in the United States, providing goods and services to the U.S. consumer economy -- are killing jobs in this country and sending them overseas to provide the same goods and services back to the U.S. economy.”

Other experts corroborate Dobbs’ anxiety. Christian E. Weller of the Center for American Progress said, “Manufacturing has experienced an unprecedented decline for the past three and a half years … [T]he decline in manufacturing jobs explains the bulk of the overall employment loss during the recent recession and recovery.”

Since 2000 we have lost over 3 million jobs in the manufacturing sector of this country. But is that giving us the whole picture? Washingtonians in key positions that I spoke with this week say “No.” Within the Dept. of Commerce, Erin Sullivan, Senior International Trade Specialist for US Commercial Service, said, “The fallacy of Lou Dobb’s argument is that it is focused on manufacturing.” Sullivan’s program offers aid to US companies expanding into foreign operations, providing contacts and even on-the-ground consulting to American business owners.

“America is moving away from manufacturing into an intellectual property and branding based economy,” said Mark Kresloff, a patent attorney for intellectual property and technology. He sat with us across a long table in the DC office of McKenna Long & Aldridge, where he was joined by Jeffrey Li, a Chinese-American attorney and Qilan Jin, an attorney for the PRC Supreme Court. Li continued his colleague’s analysis of America’s economic development, agreeing “For America, this is a good thing.”

This sentiment was echoed in a meeting room of Senator Saxby Chambliss, R- Ga, where his current chief of staff told us that those in agreement with Lou Dobbs should do nothing, but if people disagree with his ideas, we need to pick up the phone and talk to our representatives. I was puzzled by this comment, but after three references in as many days, I determined to look into Dobbs’ argument.

According to the Dept. of Labor, the US is at a 4.7% Unemployment Rate in Oct. 2007. To Dobbs’ credit, that is up from 4.6% last year, an increase of 38,000 unemployed. However, we are well below the 6% we reported during the same month 4 years ago, and 1.6 percentage points down from the 6.3% high in June 2003. So, if all our jobs are going overseas, why are we seeing a decline in unemployment?

Other sources, including our interviewees in Washington, propose that these US workers are not losing their jobs for good, but are instead being reallocated into jobs that are more fitting with the new US economy. Am I saying that we are moving away from being a nation of factories and manufacturing? Yes. It appears so. And I welcome the progress that has led us from the industrial age into the information age. The new export of the US is our knowledge, ideas and leadership. It is time to give other countries' economies the chances we've had. --Shawn Butler

Why Get an MBA?

I just read an article entitled Why Go to B-School? by Brandon Cornuke. I did not love it, but it has propelled me to articulate my own perspective. Cornuke narratively conveys his fairly ambiguous decision-making process as a function of padding his resume and killing some free time. I believe that these dispassionate motivations will not be sufficient to spur Cornuke through the intellectual and emotional gauntlet of an MBA program, even with his 720 GMAT.

The reason to get an MBA... in fact, the ONLY reason to get an MBA as I see it ...is a passion for learning about business.

No one gets a law degree just because it would "help their resume." It would be ridiculous to expect someone to labor through med school because they had 8 years of "extra time on their hands." If I were getting my Masters in Entymology and you asked me if I liked learning about bugs, you have my permission to punch me in the throat if I respond, "No, I just really like the way Entymologists talk. And I think it will look great on my resume."

I understand that going to college (undergrad) has now become something you do after high school. But graduate degrees should still be reserved for those who have a passion (at least an interest) in gaining more knowledge about a particular topic. Cornuke seems to fail to recognize that he will spend the next two years STUDYING BUSINESS before he gets those 3 initials added to his resume. He'll probably do fine, it just bothered me that he alludes to no epistemological drive towards the subject for its own sake.

Wanting to Learn About Business is a great reason to get an MBA. Anything less will not have the power sufficient to generate the motivation to complete all the course work, projects and case studies that stand between a new student and his or her degree. If you watch MSNBC, read the Economist, WSJ, and books by Kottler, Keller and Hayes, or think you would like to read anything by the HBS, then you are the right person for b-school.

Here, as I sit typing in my 2nd month of classes, I would add:
A healthy dose of masochism doesn't hurt. --Shawn Butler