May 2016

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New economic data show opportunity for real innovation

Thursday we learned that new orders for nondefense capital goods (excluding aircraft) in the US fell for the 3rd straight month, to 5 year lows. What do we mean by nondefense capital goods? All kinds of industrial machinery and equipment. Basically, things we would buy to maintain or upgrade the capabilities of a lot of
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An executive's preposterous statement on Microsoft's mobile failure

I found a truly fascinating quote in an article from The Wall Street Journal on Wednesday. The quote is from Terry Myerson, executive vice president of Microsoft’s Windows and Devices Group. Here it is: “When I look back on our journey in mobility, we’ve done hard work and had great ideas, but haven’t always had
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Working backward helps you solve problems and create forecasts

Justin Bariso published a fun article in Inc. He wrote about chess grandmaster Maurice Ashley’s favorite approach to problem-solving: working backward. In other words, Ashley recommends envisioning what you want the chess board to look like near the end of the game. Then, you choose moves that steer you toward that destination. Note, this approach
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GE is helping Saudi Arabia transform its economy

The Wall Street Journal reported Monday that General Electric is planning to invest $1.4 billion in Saudi Arabia. GE is joining with other investors to pursue opportunities in energy, water, and aviation. I find this news particularly interesting when I contrast it with Jeff Immelt’s commencement speech last week. Immelt, the GE CEO, noted that
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On Jeff Immelt's embittered but correct rant about protectionism

Jeff Immelt, the CEO of GE, gave the commencement speech recently at NYU’s Stern School of Business. His speech was mostly about the dangers of the world’s newly resurgent taste for protectionism. This topic is front of mind for a lot of people. We often hear about it in the context of jobs. You’ll hear
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LendingClub shows the corrupting power of debt

LendingClub is a peer to peer loan broker. In other words, LendingClub helps connect people who need loans (borrowers) with people willing to offer loans (investors). LendingClub’s CEO, Renaud Laplanche, resigned last week under pressure. Bloomberg published an article on Thursday with some of the details. In short, Laplanche was an investor in a hedge
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Reorgs are common for a reason. They're difficult to get right

Corporate reorganizations are a fact of life. Reorganizations come around for many different reasons: A turbulent market A new leadership team A changing strategy A revamped Wall Street narrative I heard a funny quote about corporate reorganizations once. “If you don’t like the reorganization, don’t worry. Just wait 18 months for the next one.” Sounds
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The Black Swan tells you why network television sucks

The Wall Street Journal published an article on Sunday about how networks test new TV series. Basically, they pick fifty or so people, ask them to watch an episode of a new show, then have them rate the show as they watch it. And then network executives are surprised that their shows suck? Here’s a
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What's the difference between assets and capital?

Assets and capital are two terms you’ll see endlessly in the financial literature. They’re used by all kinds of people in all sorts of ways. In many cases, they’re used interchangeably. In other cases, they have distinct meanings. In this post, we’ll zoom in on one key difference between assets and capital.   Start with
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Department stores are failing. Executives don't know why

Bloomberg published an article on Friday about department stores’ recent horrible quarter. Specifically, the article quoted top executives trying to explain what was happening. The backstory is that the Commerce Department released data showing that retail sales climbed in April by the most in 13 months. Against this backdrop of increased consumer spending, department stores
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