Silicon Valley

Mount St. Helens, OR

Monterey, CA

With frank and melanie in venice

Greetings from Santa Monica

Before brunch at Rose's cafe

Discover your innter economist

Half moon bay, CA

Our final appartment in Sunnyvala, CA

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My colleagues @ Google

Chin Chin's visit for dinner at my work

Chin chin visiting at Google

Cruising through San Fran

Palo Alto airshow

My desk @ Google

Riding to work :-)

Farewell dinner

Gail, Shawn, Tonya, Karen and Alex were celebrating Alex's and my departure to Rhode Island (Alex) and San Jose, CA (Tobi). Food at Bizou at the Downtownmall in Charlottesville was great and it was a shame that we discovered the place on the last day here.

Temporary Housing (8/24/07 - 9/24/07)

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Process excellence <> Outcome

Bob Bruner, dean of Darden, visited the Boeing factory and reflects on what makes operations successful:

The ingenuity one observes in a visit to a plant like Boeing’s is a reminder that process excellence is a vital driver of high performance. This is a message that we emphasize in our courses at Darden. It is not sufficient to deliver a quality product; it takes quality processes to generate a sustainable competitive advantage.

Source: Bob Bruner, Dean of the Darden school

7.49 < 5.69: The Right Digit Effect

Based on research from Coulter is appears that consumers experience price-discounts greater based on the right digits of the price even in cases where the overall price might be higher:

We use four experiments to examine consumers' processing of comparative regular and sale price information in advertisements. Consistent with our hypothesized right digit effect, we find that, when consumers view regular and sale prices with identical left digits, they perceive larger price discounts when the right digits are "small" (i.e., less than 5) than when they are "large" (i.e., greater than 5). As a result, they may attribute greater value and increased purchase likelihood to higher-priced, lower-discounted items. We examine alternate processing explanations for this right digit effect, as well as the moderating impact of price presentation format.

KEITH S. COULTER, Journal of consumer research

"Illusion of truth" effect

Telling people that a consumer claim is false can make them misremember it as true. In two experiments, older adults were especially susceptible to this "illusion of truth" effect. Repeatedly identifying a claim as false helped older adults remember it as false in the short term but paradoxically made them more likely to remember it as true after a 3 day delay. This unintended effect of repetition comes from increased familiarity with the claim itself but decreased recollection of the claim's original context. Findings provide insight into susceptibility over time to memory distortions and exploitation via repetition of claims in media and advertising.

Source: Ian Skurnik, Darden faculty

House hunting in Silicon Valley

I flew to SFO for a house hunting trip in and around Silicon Valley. There is a myriad of apartment complexes, houses and rental places. Random driving yields great success in finding the bigger complexes, craigslist is the means of choice to find rental places on the open market. Since I won't need an apartments before corporate housing ends in September I'm just driving around stopping here and there, taking a tour of a complex and moving on. It's a lot of fun and I even had the opportunity to stop by at a converted Seven-Eleven that become for a limited time a Kwik-E-Mart, known from the TV show The Simpsons.

Peach picking

The weather was great and therefore Karen and I decided to pick peaches nearby on a farm in Crozet, VA. It's a lot of fun and one can eat as many peaches "on the job" as you can. For economists, this is a nice example of real-life decreasing marginal utility: after 5 peaches one barely has an interest in another one :-)

Cookies and What-you-see-is-what-you-get

Jean Piaget noticed in 1920 that children often fail to distinguish between perception of an object and the object's actual properties. When a two-year old child sees her playmate leave the room, and then sees and adult remove a cookie from a cookie jar and hide it in a drawer, she expects that her playmate will later look for the cookie in the drawer - despite the fact that her playmate was not in the room when the adult moved the cookie to the drawer from the jar. Why? Because the two-year old child knows the cookie is in the drawer and thus expects that everyone else knows this as well. Without a distinction between things in the world and things in the mind, the child cannot understand how different minds can contain different things. Piaget concluded that "the child is a realist in its thought" and that "its progress consists in riddling itself of this initial realism." Children come to realize that perceptions are merely points of view, that what they see is not necessarily what there is, and that two people may thus have different perceptions of or beliefs about the same thing.

Q: Are you aware of different perceptions?

Source: Stumbling on happiness, 2007.

Open Source & The Cathedral

Nicholas Carr distinguishes between the 'Cathedral' and 'Bazaar' model. The former is the traditional model 'from the ground up' for development of product and services and the later describes the 'Open Source' movement. The question is whether the Bazaar model can be used for everything like it was used for the development of Linux.

Carr claims that the bazaar model is most and only useful for actions that are divisible and require little coordination effort. Debugging is a typical tasks that can be parallelized. Like in an easter egg hunt, the bazaar model works best if there is a simple task 'find the easter eggs' and there are many independent participants.

The cathedral method is preferred for other tasks, e.g. product development from the ground up. It would be very challenging to develop a product in this way with so many participants. It should be noted, however, that even in the Linux project there was a tight advisory crowd that coordinated the debugging efforts of all the people. This ensured that the overall project moved into the right direction forward. As a side note, Wikipedia, another bazaar style project, does not have this kind of authority which makes it prone to prone to delays and errors.

In short, peer production works best for:

1. Routine tasks that can be pursued simultaneously by a big crowd

2. Projects in which labor is donated and can be parallelized.

3. Projects that are not totally egalitarian or democratic.

Source: Nicholas G. Carr, The Ignorance of Crowds, Business & Strategy, Summer 2007.

Eric Schmitz's hiring lesson

According to a Stanford video, Eric Schmitz from Google claims that "A" hire "As" but type "B"-leader hire "C".

Countries visited

Decision making @ Starbucks

Five Easy Pieces

Building true teams

The scientists sought to compare successful teams with less successful ones, and figure out exactly how they differed in composition. They focused on a few academic fields, defining successful teams as those whose papers were most frequently cited. They also looked at the annals of Broadway musicals over the past century and studied how the mix of composers, lyricists, directors and so forth correlated with the success of the production, measured in terms of the number of weeks a production ran before closing.

What they found was that the most successful teams did two things right. First, they attracted a mixture of experienced people and those who were newcomers to whichever field they were in. That's not surprising—the need for fresh blood has long been recognized as an important ingredient in success. The second criterion, though, was far less obvious. What successful teams had in common was at least a few experienced members who had never collaborated with each other. "People have a tendency to want to work with their friends—people they've worked with before," says Luis Amaral, a physicist at Northwestern and a coauthor. "That's exactly the wrong thing to do."

Source: True Teamwork, Fred Guterl, Newsweek International.

What is strategy

If you can touch it it's tactics, if you can't it's strategy.

Quote: Tiha von Ghyczy

City for a newspaper

Usually newspaper "circle" around cities. There's the Boston globe, Washington Post, New York Times, etc. The founder of the Wall Street Journal created a 'city of interest' for his paper. He targets readers that are all somewhat interested in business and economic issues.

That's a classic example for changing "the rules of the game". Which rules can you change?

History doesn't repeat...

… itself but it rhymes.

Source: Mark Twain.

Ants & Algorithms

My friend Martin told me about the Ant algorithm that is used to optimize connections on micro chips. It's a fun approach to solve complex issues like the traveling salesmen riddle:

In the real world, ants (initially) wander randomly, and upon finding food return to their colony while laying down pheromone trails. If other ants find such a path, they are likely not to keep travelling at random, but to instead follow the trail, returning and reinforcing it if they eventually find food (see Ant communication and behavior).

Over time, however, the pheromone trail starts to evaporate, thus reducing its attractive strength. The more time it takes for an ant to travel down the path and back again, the more time the pheromones have to evaporate. A short path, by comparison, gets marched over faster, and thus the pheromone density remains high as it is laid on the path as fast as it can evaporate. Pheromone evaporation has also the advantage of avoiding the convergence to a locally optimal solution. If there were no evaporation at all, the paths chosen by the first ants would tend to be excessively attractive to the following ones. In that case, the exploration of the solution space would be constrained.

Thus, when one ant finds a good (short, in other words) path from the colony to a food source, other ants are more likely to follow that path, and positive feedback eventually leaves all the ants following a single path. The idea of the ant colony algorithm is to mimic this behavior with "simulated ants" walking around the graph representing the problem to solve.

Ant colony optimization algorithms have been used to produce near-optimal solutions to the travelling salesman problem. They have an advantage over simulated annealing and genetic algorithm approaches when the graph may change dynamically; the ant colony algorithm can be run continuously and adapt to changes in real time. This is of interest in network routing and urban transportation systems.

Source: Wikipedia

Strawberries in Virginia

Karen and I went strawberry picking with Ashley and Fred in Crozet just 15 miles from Charlottesville. According the "honor code" I checked with the farm in advance (no kidding!) what the corporate policy is regarding eating while being at work. As you can see it's allowed! It's a lot of fun and believe it or not, those berries taste much better than at Harris Teeter!

The diploma

After two years at Darden I'm taking home much more than the MBA diploma. I keep with me an absolutely incredible professional and personal experience and the friendship to many amazing friends. Those characters have enriched my life tremendously and I'm looking forward to continue the rest of my life with them being part of it.

Learned helplessness

Learned helplessness is a psychological condition in which an animal has learned to believe that it is helpless. It has come to believe that it has no control over its situation and that whatever it does is futile. As a result, the animal will stay passive in the face of an unpleasant, harmful or damaging situation, even when it does actually have the power to change its circumstances. Learned helplessness theory is the view that depression results from a perceived lack of control over the events in one's life, which may result from prior exposure to (actually or apparently) uncontrollable negative events.

Are you really tied to something?

Source: Wikipedia

Graduation picture show

Running and strategy

Favorite readings

These are some of my favorite readings and those that I have collected over time:

General readings
American Law in a global context
Bargaining for advantage
Clausewitz on strategy
Cashflow quadrant
Deals from Hell
First things first
Getting to Yes
Good to great
Mergers and Acquisitions (Brunner)

Business readings
Rich dad poor dad
The five dysfunctions of a team
The paradox of choice
In search of excellence
Principles of General Management
The fifths element
The Winner-Take-All-Society
Why smart executives fail

Stimulating readings
A Short History of Nearly Everything
Blink
Driven: How Human Nature Shapes Our Choices
Influence: The Psychology of Persuasion
The Tipping Point
The end of poverty
The elegant universe
The Evolution of Cooperation

Good literature
All I could get
The namesake
Never let me go

Managerial Psychology readings
Authentic Happiness
A user’s guide to the brain
Choice theory
Level three leadership
Man’s search for meaning
Primal leadership
Social Intelligence
The principles of psychology
The evolving self
Why we do what we do
Why we buy

Graduation pictures

Salt the organization

1) Use old staff - only "salt" a little bit with own people
2) This transfers culture
3) Bring people early on together (in seminars, training, leadership development sessions)

Source: Charles Cooley


1) Treat everyone the same no matter how long with the company (10 minutes or 10 years)

Source: Hugh McColl

Identify talent in acquisitions

Charles Cooley:

1) Who is in charge of what?
2) Just a small group discusses (e.g. 4 people)
3) Who is critical in the new organization?
4) Then those people do the same with the people beneath them... (this quickly creates a working team)
5) Do Talent planning (right at signing the deal)
6) Background, results, can they relocate?, interviews with key people
7) Lock people in
8) Don't be arrogant in hiring & firing people

Negotiation

Advice from Hugh McColl:

1) Price is there but its about the positions of directors and board members
2) What can we afford? What does it take to get there?

Tactis:

1) Don't let get Investment Bankers get in between the party
2) Wonder of it all approach: try to figure out what is in for everyone
3) Deal with everything about what they care (price, pride, people, etc.)
4) Don't include an offer
5) Sit next to people not across people (except for lunch and dinner)
6) Use less hostile language
7) Use artifacts (like a baseball hat) to make a negotiation special and to "pitch"

Give and Take

1) Gave up chairmanship title to other and give him the same salary! (= keeps pride)
2) Don't give up CEO
3) Give up all other titles (=costs nothing) but keep the CEO - this removes a barrier
4) Kee Surviving, Control and Profitability
5) If they want higher price then they have to give up something, e.g. have to find more earinings in the target
6) One always has to give up board seats. Have criterias in place for replacement.
7) Grow board members like accordeon but then shrink over time again.
8) Board always grew with more and more mergers

If you have no plan

...any road will bring you there.

Quote from ?