Financial Rumblings (Biz Case)-July 7, 2016

Game of Thrones Script: The Winds of Winter Episode (Season VI, Episode X)

From the Winterfell-Dining Hall.

Slow zoom out from JON SNOW’s face. JON SNOW is sitting at high table. SANSA sits beside him. Representatives from Northern houses, the Vale, and the wildlings are gathered in the dining hall. TORMUND and DAVOS sit among the wildlings. PETYR stands off to the side, watching.

VALE KNIGHT: You can’t expect Knights of the Vale to side with wildling invaders.

TORMUND: We didn’t invade. We were invited.

VALE KNIGHT: Not by me.

JON SNOW stands.

JON SNOW: The tree folk, the northerners, and the Knights of the Vale fought bravely, fought together, and we won. My father uses to say we find our true friends on the battlefield.

One of the houses’ representatives stands.

MAN: The Boltons are defeated. The war is over. Winter has come. If the masters are right, it’ll be the coldest one in a thousand years. We should ride home and wait out the coming storms.

JON SNOW: The war is not over. And I promise you, friend, the true enemy won’t wait out the storm. He brings the storm.

The men begin to murmur. LYANNA MORMONT stands.

LYANNA: Your son was butchered at the Red Wedding, Lord Manderly. But you refused the call. You swore allegiance to House Stark, Lord Glover, but in their hour of greatest need, you refused the call. And you, Lord Cerwyn, your father was skinned alive by Ramsay Bolton. Still you refuse the call. But House Mormont remembers. The North remembers. We know no king but the King in the North whose name is Stark. I don’t care if he’s a bastard. Ned Stark’s blood runs through his veins. He’s my king from this day until his last day.

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The most difficult thing for people in power- be they politicians, business leaders, managers, etc. – to realize is when to change their tack against headwinds in order to continue to progress forward toward their goal. The Brexit vote is an example, where those in favor of staying argued points which really didn’t register with the masses: 1) to vote to leave the European Union would be a disaster for free trade within the EU; 2) England’s status as one of the world’s financial centres would be diminished if it is no longer was seen as a gateway to the EU for the likes of U.S. banks; and, 3) the GDP would fall. In essence, the citizens of England who were in favor of leaving the EU were like Lyanna- trying to rouse the political officials to act on what they saw was was wrong with England’s involvement in the EU: lack of sovereignty on immigration and to a lesser extent court rulings that can be overturned by an EU central court; and, the despair that the working class felt as their own financial goals were fading as a result of lack of wage/career growth. In business, the constituency (consumer) cast their ballots with their wallets/clicks/follows, and they vote as frequently as they do in Chicago elections: often.

Business leaders, like lobsters, are often too slow to realize what is occurring before it is too late. Businesses need to be anxious, paranoid, and scan the horizon for new competitors, while making sure the product/service offered is the best; no one buys a crappy product for very long once they realize it is a crappy product and your competitor’s product is better or at least not as crappy as yours. H&M is growing big time, but their quality, or lack thereof, is a bit concerning. It is true that fashion trends change quickly, but, when a shirt fades and the thread in the shirt becomes less taught, it is enough for one to really question the underlying value of an item that will not last beyond the current season. H&M clothing fits a fashionable and value customer, but in order to maintain its reputation, it does need to increase the thread count/quality such that their products do have some longevity- even if it goes out of style.

Business leaders need to be empathic because when they aren’t, they sound just as clueless as those  in the Winterfell-Dining Hall arguing against supporting John Snow in his battles to come. Technological companies can be poor at not understanding their consumers, because often they are mesmerized, like the songs of the Sirens, by the “coolness” of the technology that they are providing. The wireless companies at first had unlimited data plans-which was fine when you didn’t have data hog applications like streaming video, movies, and social sites, but they were slow to address the needs of the consumers when the “unlimited” data plan became too costly to promote; thus the wireless companies started to have tiered pricing dependent upon usage-which also became obsolete due to the increased bandwidth flow because of 4G, etc. Thus, you have Verizon, increasing its prices and having roll over minutes, which is similar to offerings by AT&T. Another complaint that people had was the outsourcing of call centers to outside the U.S., which at times was challenging, which resulted in returning some of those jobs stateside/bettor training.

Winter is coming and like John Snow and Lyanna and the other houses that swore their allegiance to the House Stark, need to be in unison on how to tack to reach their goal of defeating the outside invaders -White Walkers; businesses need to tack to reach their goal of providing the best product/service/value for the consumer, which leads to increased market share and earnings (EBIT and EBITDA).

Financial Rumblings (Biz Case) – April 29, 2016

Ozzie Silna, former owner of the American Basketball Association (ABA) Spirits of St. Louis, passed on April 26, 2016. He is what everyone in business strives to be: visionary. Silna and his brother, Dan, dissolved the Spirits of St. Louis, according to the ESPN. News services, “when the ABA merged with the NBA after the 1975-76 season.” The brothers agreed to dissolve their team in exchange for a small percentage of the NBA’s future broadcast revenue. That amount increased with the growth of the NBA and the television market; the NBA estimated the amount to have been collected by the brothers to be about $750 million, which included a $500 million dollar payout in 2014 to the Silna’s in order for the NBA to minimize future financial exposure.

Ozzie Silna believed that in the 1970’s there was much room for growth in the NBA’s TV deal, though, he later conceded “we had no idea it would grow this much.” How could have the Silna brothers had known or anyone had known, the NBA would grow so much, especially, since the finals were still tape delayed up until 1981.

It did take NBA Commissioner David Stern’s brilliant marketing campaign of its stars, which were at first  Magic Johnson and Larry Bird, and later Michael Jordan (yes, he did play basketball and is not only brand of shoes) to raise the interest and entertainment value of the NBA.

In business it takes a long range view of the market as well as a viable product in order to succeed. The ABA had great players such as Moses Malone, Rick Barry, George Gervin, David “Skywalker” Thompson, Dan Issel, and Julius Erving (Dr. J); the league was entertaining and innovative (3 point line and Slam Dunk Competition during the All-Star game); and, they were mostly in cities where the NBA wasn’t: Baltimore, St. Louis, New Jersey, Virginia, San Diego, Minnesota, Indiana, Utah, San Antonio, Florida, and Denver. Businesses need to have the following questions answered-yes, it’s a simplistic list, but isn’t business:

  • Is your product better than anything currently available?
  • Is your product innovative?
  • Is there growth in the market your product is entering?
  • How will the other players in the market react to your new product?
  • Do you have the capital you need to sustain this business until it is profitable or until people stop believing in what you’re doing and the funding stops?
  • Is your belief in the product based on your hubris?
  • Why do you believe your product will succeed?
  • Is there someone who can manage the business better so that you can focus on the product?
  • What is your time horizon for success? Define success?
  • Would you be crushed if someone told you your product was crap?
  • Would you realize your product was crap before being told it was?
  • Your product is successful, now what?
  • Is your new product better than anything currently available?…etc., etc.

The ABA maybe a distant memory, but the Silna’s belief in professional basketball isn’t. The Silna’s viewed their product of professional men’s basketball to be one which had room for growth and that the growth of the NBA, which would include four of the ABA teams, would rise given the almost non-existence presence of the sport on TV. Obviously, they couldn’t have envisioned that NBA games would be streaming on phones, etc., but they did believe in their product’s entertainment value, and that demand would grow. Everyone should be thanking former Commissioner David Stern for his marketing skills as the NBA reached new heights under his leadership.