Relationships

So here is the position I've found myself in recently. I'm going to keep it as vague as possible wrt to details. This comes on the tail of discussions about agent duties in my law class.

One of the things I do is manage an enterprise support relationship with one of our vendors. We pay them a big sum of money, and in return we get access to a variety of support resources, including some guys who come in and help us out for a limited number of days. The latter are contracted by the vendor to provide support.

A couple of months ago, I had a couple of projects going. I talked to the vendor about one, and to the contractor about the other. Ultimately, we later learned that the second impacted the first. Unfortunately, neither party brought it up, and after completing the second project, we found that in order for the first to be completed, we would have to redo the second. This was all completed using days on that contract.

So, I'm asking for my days back. I've gone back through emails, stamped my feet, and said, basically, give me back my days, or I'll find someone else and next year, we won't use their services. But now the vendor is going back to the contractor and pressing them to cough up the days. I shouldn't care, but I do, because the contractor is who I work with regularly, and I also think that the communication and management is the vendor's responsibility.

So, now there's this tension as I go about my business. I don't doubt my position, but I need the help to get this all sorted before I can go any further.

Law

Well that was kind of a surprise. My law professor encouraged me to retake the LSAT up to two more times, with some prep, to get my score up. He said I could probably get in to a top 20 school. I'd love to but man, the opportunity cost, on top of an MBA.

In any case, the last two weeks of the semester is NOT the time to think about more school.

Round Two

The spring semester is drawing to a close, and I welcome it. While I have really enjoyed my classes this term, the combination of work, school, volunteer work and improving weather have steadily derailed my resolve. I need a break.

In some ways, I get that break either sooner or later. Classes end the first week of May, and in the third week of May I will be studying abroad in a program in Koblenz, Germany. It is a two week program that ultimately counts as a single course credit. Having lived in Germany as an adolescent, in the days before the Euro and the unification of Germany, I am truly looking forward to this opportunity to see firsthand how Europe has changed, and learn about Eurozone approaches to regulation, marketing, and monetary policy. Especially now, monetary policy.

I have greatly enjoyed my law class, though it has only clarified how deep the law goes, and how little we MBAs will understand it compared to a lawyer. Contracts, torts, Intellectual Property, and a bevy of legal terms (promissory estoppel and respondeat superior vie for my favorite) have been thrown at us for almost ten weeks now. Is it seeping in? Yes. Will it seep out? Yes, until of course it matters.

I have also enjoyed my strategy class, in particular the turn it took this week. After a semester of studying frameworks and case studies, this week we talked about how to engage non-market forces, such as the government and "activists". We studied the case of Shell's disposal of an oil terminal in the early nineties, and came up with a few alternate strategies that might have ended better for Shell and for the environment.

This summer, after a few weeks off after returning to the US, I'll be studying emerging markets. I notice a lot of references to the Long Term Capital Management crisis, and it turns out the prof worked for LTCM at the time of that event. Suggested reading includes FA Hayek, who is already on my long-term reading list. Maybe I'll catch up on the plane.

Too Big to Fail

Here is what I have learned from listening to the audiobook edition of Andrew Ross Sorkin's, "Too Big to Fail", along with continuing coverage of the financial apocalypse:

The use of "Fuck", "Asshole", and "Bullshit" are endemic to the profession.

Dick Fuld is alternately associated with one of the above three terms, and is, ultimately, a tragic figure.

People complain about the crisis for all the wrong reasons: Regulation, Hubris, Government Bailouts, Collusion.

I tend to favor regulation. At the very least, I tend to favor regulators doing their jobs. But as is becoming abundantly clear, no one was outright breaking any laws.

Lehman's own auditors signed off on the use of repurchasing agreements, whereby the firm basically sold obligations for cash on hand just before quarterly earnings report, knowing they would buy them back. This made their balance sheet look much stronger than it actually was.

Even mark-to-market accounting, which came out of the Enroll and Worldcom debacles, played a part. Mark-to-market basically means you have to value your assets at what you could get for them if you sold them right now, not further down the road. With housing, in particular, it means that if housing prices collapse you can't say, "yeah, but ten years from now the market will bounce".

Listening to the games of telephone between the government, the banks, and other banks, it's remarkable that everyone was doing their job. Maybe they were doing it badly (i.e. Fuld) but still - there wasn't any outright illegal behavior. There was no real malfeasance. Hubris, yes, incompetence, arguably, but the system was working the way it was set up to work.

Some Thoughts on eBook Readers

Lately I've been doing some research on eBook readers: The Kindle, the Nook, the Sony varieties. I'm not going to write about them here, because many others have already written comparisons of the readers themselves.

What I'm more concerned with, as an aspiring Strategy MBA, is finding the missing bits of logic in discussions of eBook readers. There has been a great deal of press lately on the supposed victor of some publishers in demanding variable pricing from Amazon for Kindle editions of their books, and much of the industry leverage is attributed to Apple's pending entry with the iPad, and their 'iBook Store', or whatever they are calling it.

So much of the digital media debate is focusing on pricing digital equivalents of old product bundles, no one discusses how these devices might result in a different bundling altogether. The "book" or single, or album, or TV season, is still the baseline. Selling a familiar product digitally is just the tip of the iceberg.

With eBook readers, what the vendors really want to do is define a platform. They want to define the new Windows for eBooks, or the high-def DVD format. Sony's had a dog and a horse: where they failed with Betamax, they succeeded with Blu-Ray.

The point isn't how much an eBook costs; it's what an eBook is, and that is defined by the platform. If Amazon wins, and their format is the standard, then they win the long game - they can license their format to other manufacturers. If ePub readers - the Nook and Sony products - win, then that format defines what people develop for.

Since the iPad uses the ePub format, I'm going to guess there is a lot more leverage for that open standard than for the Kindle, unless (and I am uncertain) the Kindle can use that format.

Where consumers win is where the format leads to new kinds of books. The current bundling of test prep books with DVDs will seem like 18th-century hornbooks compared to what an open format with interactive elements, tied to a national or global data network, can do.

The News Market

Something I've been meaning to comment on for a while is the news market. Fox News gets a lot of criticism for catering to a specific population; MSNBC is criticized for catering to the opposite population. I've often wondered why that is; each side accuses the other of being propagandists, but they are, in the end, businesses. They have to make money.

I think that deregulation, as is the case with many industries, led to this kind of very specific, niche identification within the news industry. When news programs were no longer required to give 'equal time', they were free to program however they wanted, and thus discover their markets.

To be clear, news events are fairly non-partisan. Events occur, and the story must be told. However, how a story is told, and what questions are asked, can vary in tone. Some people prefer stories with one tone or another, or with political views that support their own.

Wo what happens when the news media becomes a market? How does one compete? Timeliness? Done. Quality of coverage? Subjective, but no matter what, something your competitors can do. Find an audience? What do they like to be told? What kinds of stories get the most coverage?

And so, news outlets begin catering to their audiences, telling them the same news stories, but in very different ways.

One might argue that this is how things should work - the marketplace of ideas. However, from a public service perspective, this is a dismal failure. Audiences self-select into their markets and do not pay attention to opposing views. Some people prefer chunky peanut butter over creamy peanut butter, and it's hard to get them to even bother trying what they don't like. The same holds true in a news market.

Of course the most sensible people realize this and sample from multiple outlets. However, most people are not so sensible.

The Road Ahead

I acknowledge that I am copying the title of Bill Gates' book from about ten years ago. I'm halfway through my degree, and considering my own road ahead. Since it's the start of a new calendar year, I'm going to make some wild guesses about the future of two firms I work with quite a bit, Apple and Microsoft.

Both are hardware companies. Microsoft may not manufacture computers, but they do make the Xbox and Zune, as well as a handful of peripherals. Both companies make operating systems, and both companies make application software.

Apple is run like a startup. Steve Jobs is entrepreneurial; after he was ousted from Apple in the 80s, he went on to start NeXT and run Pixar. Microsoft is turning into a growth company; they have their hands in many pies, and have a stable of goods and services that, for the forseeable future, provide steady revenue and growth.

Apple has a reputation as a warm and fuzzy company, while Microsoft has a reputation as an 'evil' company, based largely on their business practices in the 90s. Apple is not your friend; I say this having interacted with the company over many years in my career. They do not share information, they provide limited options to the enterprise space (and education, as well, educators just don't realize that). The company has had its share of failures, and they take their time to acknowledge and resolve them. This doesn't make them worse than Microsoft, or any other company, for that matter.It just means that they are a large corporation, and the notion that they are somehow nicer or cooler or better than other firms is laughable. They are very good at what they do; that is as far as it goes.

Microsoft has made some missteps. They had a huge manufacturing error with the Xbox, resulting in a $1BN charge to pay for defective units. That alone should knock out any profit they might have obtained from the Xbox, yet it is worthwhile to them to stay in the game console space - a space Apple has avoided. Their ties to Netflix, Facebook, LastFM, and licensed products sold via Xbox Live represent a multi-threaded approach to generating revenue from services. The Xbox is the razor; Xbox Live and various games are the blades. I would argue that the Xbox and Xbox Live are Microsoft's iPod and iTunes Store.

So where are these two firms headed in the near future? Everyone is certain Apple will be coming out with a tablet or netbook soon. Apple is known as a media company, and with the iTunes Store, they are establishing a strong presence as an e-tailer. Microsoft seems to be repairing its image and trying to stay warm and fuzzy in the consumer space; this is a departure from their previous attempts to become integrated with new services, ala operating systems for cable boxes. I'm not sure this is the best bet, unless they really have got all of the market they are going to get in their original markets, or are willing to cede it to other operating systems.