Oregon's economy and the wine industry

In February, the Oregon Wine Board released an industry economic impact study done by Full Glass Research. On the surface, the figures look impressive but when taken in context and proportion, they diminish considerably.  Continue »

Adaptable Strategy

Strategic plans probably fail more often than they succeed. Perhaps the most prevalent reason is the practice of starting from the numbers and working backward toward strategy, a tendency common to financially driven companies that set their goals for revenue and earnings growth then cast about for a strategy to underwrite those goals.  Continue »

The Silicon Valley Bank State of the Industry Survey: How Reliable are its Responses?

Too often, desired conclusions skew analysis to produce self-fulfilling results. While keeping faulty data from contributing to sampling error is simply a matter of objectivity and basic arithmetic, more subtle are the subjective factors that yield non-random samples. In the case of the Silicon Valley survey, the psychological disposition of the respondents is a significant distorting factor.  Continue »

The Capital Shell Game: Liquidity & Value

A principal tenet of shareholder wealth theory is that excess returns beyond those necessary to operate the business and fund capital expenditures should be returned to the shareholders who will most optimally reinvest. In a goods and ideas producing economy, this mechanism worked reasonably well. Shareholders would reinvest dividends and capital gains in companies that innovated and produced high quality products at competitive prices. This very much characterized the American economy from the end of WWII until late in the last century.  Continue »

The Evolution of Industries

Industries tend to develop in four stages. While the particulars vary from industry to industry, there is nevertheless a common warp and weft on which the designs are woven.  Continue »

What Business Are You In: Part II

With respect to the wine industry, the answers are widely divergent. As recently as thirty years ago, such was not the case. As late as 1980, winemaking knowledge was a competitive entry barrier in itself. In Europe, that knowledge was largely passed down through generations. In the 50’s and 60’s, Emile Peynaud, at the University of Bordeaux, pioneered the science of winemaking but traditionalists eschewed his methods.  Continue »

What Business Are You In: Part I

In the Spring of 2008, David Collis, then of Harvard, and the late Michael Rukstad, coauthored an article in the Harvard Business Review titled Can You Say What Your Strategy Is? Professors Collis and Rukstad challenged executives to distill the objective, scope and advantage of their business to 35 words or less. In the research leading up to the article, they found that few people could and offered the obvious conclusion that if they couldn’t, neither could anyone else.  Continue »

Failure by Committee

Albert Einstein once defined insanity as “doing the same thing over and over while expecting different results.” A marketing organization with which I am familiar recently averred this maxim in its search for a new director.  Continue »

Cult and Culture

Every year, The Wall Street Journal features a contest called Winning Workplaces to highlight outstanding small companies. When one reads profiles of the winners, the criteria for selection focus on such things as training, a hands-on work ethic, wellness programs, open book policies and sustainability. Rarely, if ever, is the overall culture addressed.  Continue »

Return on Ideas

In the 70’s, Harvard Business School professor, William E. Fruhan, advanced the postulate that the single, overriding obligation of a business is maximization of shareholder wealth. Under this theory, the corporation is not responsible for social or environmental costs beyond those incurred as a result of unavoidable regulation or those that can somehow be justified as increasing the return on capital. As the corporation is supposed to be socially agnostic, discretionary investments are choices left to be made by shareholders with their returns.  Continue »