Saturday, March 31, 2007
In recent years, banks have been putting a big emphasis on cross-selling: ie, persuading customers to buy multiple products from the same bank. Cohen Brown Management Group recently conducted a study to see how this is working out in practice. The results are reported at bankstocks.com.
We sent our researchers to 615 branches at 33 banks, and we made 374 calls to 35 call centers, all among the top 60 North American banks. (We purposely omitted our own clients.)
The researchers appeared to be affluent, professional, and in their peak earning years. Each gave generous clues on three areas of immediate need: personal banking, business banking, and mortgage. I mean clues on a silver platter like, “I’m arranging to meet our realtor to look at office space. We are moving here…” Verbal clues were reinforced by visual clues like brochures taken from kiosks, and so on.
The results were dismal. Read the whole sad story here.
Why such poor performance? I have my own ideas, centering around bad incentive system design, excessive scripting/micromanagment of individual behavior, and inappropriate use of IT technology...but will look forward with interest to future columns by Martin L Cohen on the reasons for these failures to pursue revenue opportunities.
Wednesday, March 28, 2007
Financial Times ((3/17-18) has an editorial, written by FT's energy editor, supporting the banning of the incandescent light bulb in favor of the more-energy-efficient fluorescent. The article fails to mention last month's announcement by General Electric that it has developed a new incandescent bulb technology, which combines energy efficiencies 2X better than the existing incandescents (expected to reach 4X) with a higher quality of light than the fluorescents, a better form factor, and faster start-up when turned on.
Shouldn't the energy editor of the FT be aware of an announcement like this? He might choose to like the technology or dislike it, but surely he should be aware of it, and share that awareness with his readers. People who subscribe to FT do so largely, I suspect, to gain information relevant to their investing decisions. Isn't the development of the high-efficiency incandescent something they would want to know about?
The editorial also says that "the demand for incandescent light bulbs is based on customers' confusion between up-front capital investment and the whole-life cost of a project." This is hardly the whole story. There are a lot of people who prefer incandescents, particularly in particular applications (in certain rooms, for example) because of their superior light quality. Indeed, some people claim the fluorescents give them headaches--see the Asymmetrical Information link at the post referenced above.
If someone is proposing to override personal preferences via legislation, shouldn't he at least be aware of the realities on which these preferences are based, rather than putting them down to unreasoning prejudice?
Disclosure: I'm a GE shareholder.
UPDATE: Same publication, different subject. Financial Times has what I think is an extremely irresponsible article on the Iranian hostage grab. Roger Simon responds.
Monday, March 26, 2007
THE NATURE OF OUR ENEMIES
This story is from March 20:
Insurgents in Iraq detonated an explosives-rigged vehicle with two children in the back seat after US soldiers let it through a Baghdad checkpoint over the weekend, a senior US military official said Tuesday.
The vehicle was stopped at the checkpoint but was allowed through when soldiers saw the children in the back, said Major General Michael Barbero of the Pentagon's Joint Staff.
"Children in the back seat lowered suspicion. We let it move through. They parked the vehicle, and the adults ran out and detonated it with the children in the back," Barbero said.
"It killed the two children inside as well as three other civilians in the vicinity. So, a total of five killed, seven injured," the official said.
When confronted with an atrocity such as this, I think people will tend to react emotionally in one of two very different ways:
1) "These people are really scary. We'd better give them what they want so they don't do it to us."
2) "These people are really evil. We'd better destroy them as rapidly as possible."
Obviously, there are many practical considerations involved in the making of policy decisions, and in individual opinions on foreign and military policy. But the fundamental emotional reactions are important, and where an individual's reaction falls on the continuum between the extremes above will likely have a substantial influence on his opinions on the practicalities.
Friday, March 23, 2007
ANTI-AMERICANISM, 1940s STYLE
The United States, as portrayed in a Nazi propaganda poster from WWII.
A slightly different version of the same poster, this one in Dutch, at Wikipedia. Includes translations of the text and an analysis of the symbolism.
Wednesday, March 21, 2007
Certain "animal rights" activists are insisting that this baby polar bear be killed.
It seems to me that the attitudes at work in this case have some relationship to to those that led to this.
Saturday, March 17, 2007
NEW FRONTIERS IN HELICOPTER PARENTING
For quite a few years now, university professors and administrators have been plagued by "helicopter parents" who demand excessive involvement in the campus lives of their children--arguing about grades, insisting on attending campus functions they are not meant to attend, etc etc. (One university even had to station security guards outside freshman orientation sessions to keep anxious parents out.)
A couple of articles in the business press last year (see my posts here and here) reported that when the kids graduate and go to work, many of the parents are seeking the same kind of involvement in the workplace that they sought (and often achieved) in the academic environment. For example:
A 22-year-old pharmaceutical employee learned that he was not getting the promotion he had been eyeing. His boss told him he needed to work on his weaknesses first. The Harvard grad has excelled at everything he had ever done, so he was crushed by the news. He told his parents about the performance review, and they were convinced there was some misunderstanding, and some way they could fix it, as they'd been able to fix everything before. His mother called the human-resources department the next day. Seventeen times. She left increasingly frustrated messages...She demanded a mediation session with her, her son, his boss, and HR--and got it. At one point, the 22-year-old reprimanded the HR rep for being "rude to my mom."
A recent Wall Street Journal article (3/5) reports that some companies have decided to go along with parental involvement--viewing the development of positive attitudes on the part of parents as a useful recruiting tool. Employers are taking the attitude that "if we can't beat them, we might as well join them," according to the director of career services at the University of North Carolina at Chapel Hill. Merrill Lynch, for example, has invited the parents of some summer interns to visit its offices, while Ernst & Young plans to distribute "parent packs" to students during information sessions at schools. (Interestingly, all of the companies cited in the article are either in the financial industry or are consulting firms.) According to Ernst & Young's director of campus recruiting for the Americas: "Our candidates and our interns increasingly look more and more to their parents when they're making career decisions." (Which prompts me to the thought that maybe E&Y needs to broaden its candidate pool.)
It's natural for parents to want to help their children, and good advice can certainly be very useful. But when parental involvement goes beyond advice--when the parents begin to direct the process and even inject themselves into negotiations--they are doing harm to their children's development as independent human beings and to their long-range career potential. (Why would I want somebody negotiating on behalf of the company if he can't negotiate on his own behalf?) I suspect that students with overly-involved parents, while they might do well in the very early stages of their careers, will also plateau early. They are likely to find themselves in staff jobs, in which they are valued for specific skills and expertise but are kept away from real decision-making authority.
Fortune (5/11/06) did an interesting profile of John Rowe, CEO of Exelon. Rowe grew up on a dairy farm in Wisconsin, and one of the formative experiences of his life was reading (when he was in the seventh grade) Richard Halliburton's Book of Marvels...resulting in a lifelong interest in history. If he had been subjected to today's forced-draft approach to college and career preparation, would he have ever had time or the inclination to pick up this book? Would he have developed into the individual who today occupies the CEO's office at Exelon?
A Wall Street Journal article summarized the attitude of many parents in referring to them as "the panicky classes." In my post on this article, I wrote:
I think there is indeed a strong element of panic in the approach many parents are taking to education; the WSJ writer's phrase "the panicky classes" is an apt one. But panic is rarely if ever an effective way of dealing with things. In the name of developing a paper trail of credentials, all too many parents are preventing their kids from developing their own interests, stifling their sense of initiative and responsibility, and inculating a sense of entitlement which is likely, sooner or later, to prove harmful or even disastrous to its intended beneficiaries.
Friday, March 16, 2007
I prefer the company of peasants because they have not been educated sufficiently to reason incorrectly.
--Michel de Montaigne, quoted in IBD (3/7)
Previous Worth Pondering
Thursday, March 15, 2007
UNINTENDED CONSEQUENCES, EXAMPLE #43434421
Various states, including New York and California, have "item price laws" requiring most products sold at retail to have individual price stickers attached to each item--rather than a single sticker on the shelf. These laws are intended to prevent overcharges to consumers.
Obviously, though, putting stickers on each individual item is a labor-intensive process. Paul Rubin, an Emory economics and law professor, has analyzed the effect of the item-pricing laws, focusing specifically on grocery stores. He concludes that the individual-item labeling raises the price of a typical item by 20 cents--which doesn't sound like much until you compare it with the average price per item purchased, which is quoted by Prof Rubin at $2.50. Thus, he concludes that item-pricing laws act to increase the average grocery bill by almost ten percent. This is far greater than the amount saved by avoiding overcharges, which he puts at less than one cent per item.
From The Wall Street Journal, 12/10.
Tuesday, March 13, 2007
Every morning I wake up and I feel like I'm pushing a little girl out of the way of a bus..
--a U.S. Army company commander in Iraq
UPI defense correspondent Pamela Hess went to Iraq to answer this question: Why is there more confidence and committment among American officers serving in that country than among the American public at large? Her conclusions here.
(via Trying to Grok)
Saturday, March 10, 2007
BUSH IN SOUTH AMERICA
Numberous anti-Bush rallies have accused the President of being a fascist. At one of these rallies, in Buenos Aires, a banner was prominently displayed honoring Juan and Eva Peron. Power Line points out the historical irony:
Peron actually was a fascist. During World War II, he openly admired and supported Adolf Hitler. Now, at left-wing rallies in Latin America, they wave Peron banners, cheer Hugh Chavez, and draw Hitler mustaches on President Bush. The convergence of the far left and the far right is complete, and they don't make any more sense together than they did separately.
INTERESTING DATA POINT
In today's Financial Times, John Authers suggests that while stocks may be somewhat overvalued, their prices are at least within the level of sanity. But:
That cannot be said for the credit market, where valuations look as over-stretched as equity valuations looked several years ago. Until the recent turbulence, the extra "spreads" in interest that the risky loans had to pay compared with relatively safe treasury bonds were at all-time lows.
Authers cites research by Jim Reid of Deutsche Bank, which concludes that:
The valuations of low-quality "single-B" bonds are currently such that they will lose money compared with Treasuries unless their default rate over the next five years is better than for any previous five-year period over the past 30 years.
As always, nothing on this weblog should be considered as an investment recommendation.
PRETTY GOOD CARTOON
There have been cartoons in the business media for a long time...but it seems like over the last couple of years there is a trend toward more cartoons that are actually funny.
Tuesday, March 06, 2007
AN ELEGANT SKEWERING
..of a column by a professor of Design, by the inimitable James Lileks. Here's a great sentence:
It’s a safe bet that people who use the words “empowered,” “community” and “meaningful” in close proximity do not produce anything you can hold in your hands.
(via Trying to Grok)
THOUGHTS ON THE CHINESE AND INDIAN ECONOMIES
...from financial writer Jim Jubak, who observes that in China, tremendous amounts of capital are being wasted on ill-thought-out projects that will never pay for themselves--but are rather driven by the creation of employment and by prestige considerations. He mitigates this concern somewhat by pointing out that tremendous capital waste also occurred in earlier stages of the U.S. economy, specifically during the canal and railroad-building booms of the 19th century. But:
Developing economies with the advantages of the U.S. or China produce such a high rate of return on the capital that does get properly allocated that it overwhelms the waste. The gutting of the Erie Railroad is an insignificant waste of capital compared with the profits that resulted from the build-out of the transcontinental railroad system in the years after the Civil War.
A good point, although the general degree of government involvement in Chinese economic decision making--particularly by local governments--seems to be considerably higher than it ever was in the U.S. (For the implications of this, imagine the current situation at Airbus transposed to a much larger arena.)
Jubak goes on to argue that the earlier U.S. experience may not be a good guide to the Chinese future because of demographic differences--starting in 2015, China will see the leading edge of a vast wave of retirees, and the ratio of workers to nonworkers will shift dramatically.
He also has thoughts on the Chinese stock markets here. See also this article, reporting that there is great pressure in China to spend money locally--on education, for example--rather than investing it in U.S. securities. This is more easily said than done: for China to spend the money locally, it would have to sell dollars and buy yuan, thereby driving up the yuan's exchange value and making Chinese exports less competitive. Alternatively, China may decide to invest more of its dollar holdings in American stocks, corporate bonds, commodities, etc--rather than U.S. Treasuries--in an attempt to get higher returns on this money.
Jim Jubak also has thoughts on India. For the short term, he has concerns about inflation and high asset prices--he thinks Indian stocks may lose another 30%. For the long term, though, he believes India has a lot going for it, including: a favorable demographic structure, companies that are profitable and not overleveraged, and a business culture devoted to shareholder value. I would also emphasize the point that India is a democracy and has a relatively objective legal system.
As always, nothing on this weblog should be considered as investment advice.
Monday, March 05, 2007
TECHNOLOGY AND EDUCATION
Some snarky thoughts from Peter Berger, who observes that "Gutenberg’s press only made it easier to print books, not easier to read and understand them."
Related: Michael Schrage fears that we are creating an educational environment which is "all Rousseau and no Epictetus."
Berger post via Newmark's Door.
Thursday, March 01, 2007
Creating Passionate Users is about...software, and customer service, and management, and creativity, and...all kinds of stuff. Be sure to check out these posts:
Too Many Companies Are Like Bad Marriages
When Only The Glib Win, We All Lose
Re the subject matter of the second post, see also my post on The Smart-Talk Trap.
Two Cambridge University students are facing possible prosecution on what is effectively a blasphemy charge.
When Brits fought for freedom in two World Wars, I don't think this is the kind of thing they had in mind.