Plan To Soar!

Rick's New Book Airms to Demystify Investing

Common Sense Investing: Ten Simple Rules to Finance Your Dreams is an easy-to-read book offering practical advice whether you are just starting out or planning your retirement.

Some of our dreams need money. Yet most of us are bombarded with an overload of financial information that sounds like confusing mumbo-jumbo. We are also victims of our human emotions that often cause bad investment decisions. The solution is to learn and apply ten simple rules. It’s not rocket science. They are: (1) Develop a workable plan, (2) Invest early and often, (3) Never bear too much or too little risk, (4) Diversify, (5) Never try to time the market, (6) Use index funds when possible, (7) Keep costs low, (8) Minimize taxes, (9) Keep it simple, and (10) Stay the course.

Common sense investing principles are something we all need to know, but are rarely taught. All too often we are persuaded by people who are attempting to sell products and services, or the media which is selling advertising. Wisdom gets drowned out by the noise. Warren Buffett, John C. Bogle, and most professional investors all very publicly recommend that the majority of investors should use low-cost mutual funds called index funds. But how do we go about doing that?

This book encourages us to put in writing a simple one-page investment plan for the financial goals associated with our dreams, and then to stick to that plan and get on with our lives—free from financial stress. It first teaches readers why these ten rules have prevailed, and then offers some practical tips for getting started, creating a plan that works, and dealing with the inevitable changes that life brings us.

We find ourselves learning exactly what we wanted to know, and wish we had learned a long time ago.

Find it on Amazon here: http://www.amazon.com/dp/1466204516

Watch it as FREE bite-size videos here: www.FinancingLife.org

Read some strong endorsements by experts:

"Here are 10 simple, easy to follow, and proven investing rules. Investing an hour reading this short book will make you a better investor."
– Burton G. Malkiel, Princeton University, Professor of Economics
Author: A Random Walk Down Wall Street

"If you follow his rules you are virtually guaranteed to outperform the majority of investors, both individuals and professionals alike."
– Larry Swedroe, Principal, Buckingham Financial Services
Author of eleven books on investing

About the author

Rick Van Ness is a private investor and retired executive who provides investor education through online videos, short books, and workshops. Rick has an engineering degree from Cornell University and a MBA in Finance from New York University. Rick began his foray into writing by conducting workshops at local universities. To reach more people, he produced bite-sized explanatory videos—now available free at FinancingLife.org. This paperback puts well-honed, long-proven wisdom in yet another format that is easy to access.

First release Paperback: (US $8.95)

ISBN-13: 978-1466204515 

ISBN-10: 1466204516       

Set Bold Goals and Measure Progress

Reading the State of the Microcredit Summit Campaign Report 2006 reminds us of the importance of strategic planning by a leadership team for any field, or to any social movement.  This particular organization has helped transform millions of lives.  The components of the campaign include: 1) setting bold goals for microcredit, 2) measuring progress, and 3) removing barriers to achieving those goals.  Here's an excerpt from that report:

Setting Bold Goals

"Be outrageous.  It's the only place that isn't crowded."  -- by Anonymous

New York Times columnist Thomas Friedman described the power of setting audacious goals in a piece about Texas Instruments, a U.S. corporation that had embraced bold goals for making its operations more environmentally friendly.  Friedman quotes Shaunna Sowell, the company's Vice President for Worldwide Facilities as saying, "I think you do first have to set an impossible goal.  Amazing things happen when people claim responsibility for creating the impossible."

"They sure do." Friedman replies, "In 1961, when President Kennedy called for putting a man on the moon, he didn't know how - but his vision was so compelling that [it] drove the moon shot well after he died."

The phrase BHAG - Big Hairy Audacious Goal was proposed by James Collins and Jerry Porras in their 1996 article entitled Building Your Company's Vision. A BHAG (Bee-HAG) is a form of vision statement "...an audacious 10-to-30-year goal to progress towards an envisioned future." 

"A true BHAG is clear and compelling, serves as unifying focal point of effort, and acts as a clear catalyst for team spirit. It has a clear finish line, so the organization can know when it has achieved the goal; people like to shoot for finish lines." (Collins and Porras, 1996).  Collins and Porras also used this concept in their book Built to Last: Successful Habits of Visionary Companies.

In the Microcredit Summit report, Harvard Professor Jim Kim, a major figure in international health and co-founder of Partners in Health with Dr. Paul Farmer, described how the late-Dr. Jong-wook Lee, past Director General of the World Health Organization, adopted the "3 by5" campaign in 2004, a campaign to provide three million people living with HIV/AIDS with life-prolonging antivetroviral treatment by the end of 2005. 

Everyone counseled Dr. Lee against adopting such an audacious goal out of fear of failure.  But Dr. Lee committed himself and the World Health Organization anyway.  When Dr. Lee was asked, "What will you say if you don't achieve the goal?" he would answer, "Blame me."  Dr. Lee and the World Health Organization promoted the goal relentlessly and measured progress every six months.    Even though the goal wasn't reached, their efforts resulted in a commitment to universal access to antiretroviral treatment by 2010 by leaders at the 2005 G-8 Summit in Gleneagles, Scotland.

Bold goals are not for the faint of heart.  Expect many to respond that while it's good to be ambitious, a particular goal might be unreachable or possibly unstrategic.  However, as Grameen Foundation President Alex Counts reminds us, "There were similar arguments made in 1996 that setting a goal of reaching 100 million of the world's poorest families with microcredit was unrealistic and/or poor strategy, since progress was unlikely to be that fast and the tools to measure progress unreliable or too expensive to be practical across thousands of institutions.  Those fears have proved to be unfounded in the case of the 100 million goal--indeed, the goal catalyzed accelerated progress and innovation..."

Measuring Progress

A vision without a task is but a dream.  A task without a vision is drudgery.  A vision with a task is the hope of the world.

- from a church in Sussex England

Setting bold goals without making a credible effort to measure progress is, at best, a meaningless gesture.  But there are other advantages to goal setting and measurement, not the least of which is bringing obstacles into clear view.

Removing Barriers

Another key to a good strategy is to identify the Key Success Factors.  Look at each of these and determine which of these areas are being insufficiently addressed and require breakthrough thinking and action to bring your vision to fruition.  Then identify initiatives, set goals, and measure progress.  The important benefit of making metrics very visible is that it keeps everyone focused on the critical few things that need to be done well.  Human nature tends to pull us towards the trivial many things that we like doing, or that we are good at, or that give us a sense of accomplishment but are not essential to moving us closer to achieving our goals.

Take the time to write the short one.

Mark Twain famously said, “I didn't have time to write a short letter, so I wrote a long one instead.”  Doug Brown reminded everyone at Entrepreneur University this year, that your operational plan needs to be the short letter.  It takes a great deal of effort to write a good one.

Doug is president of All Star Directories and I especially liked his comments because he successfully injected process maturity into a startup environment where they have grown tenfold in 4 years and can attribute their sustained rate of growth to three key planning elements: process, collaboration, and work product.

The foundation to their business planning is the strategic elements, including Purpose, Vision, Mission, Value Proposition, and Strategy.  No surprises here, and I have written much about these.  These are inspirational, help create alignment, and makes it clear how the team is expected to collaborate.

Doug defined collaboration as "aggressive behavior in a cooperative environment".  I liked that.

Their strategic intents are articulated as initiatives (how strategy will be accomplished), each supported by a business case.  These become projects and individual action items.

Everyone can spend their time wisely when you generate such clarity.  You always know whether what you are working on is part of (1) the critical few, (2) the functional mandatory, or (3) the trivial many.

Bravo Doug and the whole ASD team!  My personal experience is that time spent providing clarity and purpose pays dividends because everyone wants to make a difference, everyone wants to do a good job, and everyone makes decisions all day long (consciously and unconsciously).  Whether you are going to the moon, rowing crew, or building a new company, those companies that succeed in planning and communicating that plan throughout the company outperform all others.

More expert tips from Cornell's video library

My previous post mentions the excellent video collection at Stanford as a resource for entrepreneurs and the business community.  Cornell University, my alma mater, also has an extensive and valuable collection.  I would be remiss if I did not give you their link. (And I understand that Harvard has a collection as well.)  These as complementary collections in that they draw from different people, but all are experts and industry leaders. 

The Cornell eclips project has hundreds of nicely cataloged video clips.  They require registration to view these but this is a tiny hurdle.  This is their way to get you to agree not to use these for commercial purposes.  The videos are excellent, and they are available for you to view FOR FREE!

http://eclips.cornell.edu/entrepreneurs.do

You can also subscribe to their blog if you want to keep up with their constant additions.

http://cornell-eclips.blogspot.com/

Video library of entrepreneurs offers expert advice on innovation

Stanford Technology Ventures Program has a great resource open to all entrepreneurs:

Free expert counsel awaits online from such pioneers as the founders of PayPal, Google and Facebook. Anyone interested in turning their passions and interests into a financially rewarding venture can consult hundreds of industry executives without paying a dime for their time. Videos and podcasts sharing their wisdom are only clicks away ... http://edcorner.stanford.edu/.

The site includes topically arranged video clips, podcasts, book lists and links to direct the curious visitor to additional resources.

The brief video clips are introduced with succinct descriptions and captivating titles, such as "Five Biggest Mistakes That Entrepreneurs Make" or "Top 10 Things You Must Have to Start a Business." For example, Larry Page, co-founder of Google, in less than five minutes shares five tips for entrepreneurs, with the number one recommendation being "just don't settle." Guy Kawasaki, founder of Garage Technology Ventures and former Apple Fellow at Apple Computer, shares how the key to a successful company is setting out to make a positive change in the world. He then gives three examples of ways to imbue your pursuits with meaning.

I selected a sample of their 800+ videos for you:

Title	Author/Speaker	Length	Organization
The Best Money: Customer Money	Heidi Roizen	1 min. 8 sec.	Mobius
Make a Plan	Randy Adams	2 min. 57 sec.	AuctionDrop

Make Meaning in Your Company

Guy Kawasaki

2 min. 37 sec.

Garage

Five Biggest Mistakes That Entrepreneurs Make

Jerry Kaplan

7 min. 56 sec.

Winster

Tips For a Good Pitch

Heidi Roizen

3 min. 39 sec.

Mobius

The Biggest Successes are Often Bred from Failures

Randy Komisar

8 min. 0 sec.

Virtual CEO

The Importance of Vision

Jeff Raikes

3 min. 46 sec.

Microsoft

Role of Market Research

Jeff Hawkins

3 min. 49 sec.

Handspring

Entrepreneurship in Established Companies

Carol Bartz

1 min. 42 sec.

Autodesk

Innovation and Inertia

Geoffrey Moore

1 min. 44 sec.

MDV

Measuring Outcomes for Non-profit Orgs

Jane Reisman presented an overview workshop on outcome-based evaluation for non-profit organizations this week in Seattle.  Her methodology makes sense at the enterprise level and is different from the metrics we often use to measure individual, team, or business unit performance.  Both are important.

Jane asserts that to evaluate the success of a non-profit program an assessment must move away from a focus on activities, or what staff members do (e.g. number of counseling hours provided, number of workshops delivered, etc).  Now, outcome-based evaluation focuses on these key questions: "How has a program made a difference? and "How are the lives of program participants better as a result of the program?"  In other words, "So what?"

For me, a specific example comes to mind from the annual Microcredit Summit report where they make a healthy introspection of whether their aggressive goals to eliminate extreme poverty are appropriate.

There are two primary questions in measuring progress. One is whether it can be reliably said that change has occurred and the other is the more difficult question of causality. It might be determined that a certain number of families have moved above the US$1 a day threshold, but was microfinance a primary cause of this positive change? The idea of setting aside the question of causality was clearly articulated by New York University professor Jonathan Morduch who wrote the following in a longer message to the Campaign:

"In the perfect world, we could set goals where we could really nail causality and say that microcredit would be the cause of the improvements sought. Here, though, I think it would be enough to put causality aside in terms of setting goals. It would be a major step simply that 100 million households who are microfinance customers move from being under $1/day to over the line—even if microfinance is only 50% responsible or only 5% responsible. Setting the goal in terms of making progress (but not specifying that the progress would necessarily be due on net to microfinance) would still have the role of placing an emphasis on the very poor and on raising living standards. In short: your wording of Goal 2 makes sense. In the end, what matters is sustained poverty reduction, not the spread of microfinance per se or of particular microfinance strategies."

At first blush, accountability might seem to be sacrificed as causality is relaxed.  Afterall, the goals of outcome-based evaluation are:

• To provide accountability
• To improve program quality
• To support decision-making about resource allocation
• To help programs market themselves

This makes developing a "logic model" the essential foundation for any program.  A logic model ties together these relationships in explicit ways:

Resources -> Activities -> Outputs -> Outcomes -> Goals

Jane points out that non-profit agencies cannot do almost any outcome you might wish for!  They can influence a change.  They cannot control that change.  With the foundation of a logic model you can then move to identify simple "indicators" of success and then to the tools to measure them.

For more information about outcome-based evaluation, you can contact Jane here:
Jane Reisman, Ph.D., Organizational Research Services

Tips for Creating Vision Statements

Toward what reality do you want to drive your organization?

A vision statement is a compelling description of how "a day in the life of the customer" is improved by enjoying the benefits of your products and services.

This is like painting a picture with your words. It brings a company's mission to life, with words that carry a clear and forceful image that motivates all employees.

Every manager has the capacity to be visionary.  There is nothing mystical or super-human about it.  A true visionary is someone who recognizes a need or opportunity and, regardless of conventional wisdom and skeptics, does something about.  Vision isn't forecasting the future; it is creating the future by taking action in the present.

Visualization can be helpful but it is not required.  Words alone can suffice.  However, the ability to communicate a vivid, imaginative conception of what you want to see happen can be powerfully motivating.  Communicating in ways that instinctively appeal to people is an important part of turning your aim into reality.

My favorite technique is to use a vision statement to describe a day in the life of your target customer enjoying the benefits of your product or service.  Discussions around this exercise tend to clarify the value proposition.  And casting this story into the customers framework helps establish the magnitude of the value created if the alternatives are apparent.

Vision Statements don't need to be short.  They are not tag lines.  They can be a story with details.  Keep it manageable.  Use what works for your situation.  A pictures can be a valuable way to communicate detail with few words.  The most elaborate (and expensive) vision statement I saw was a 10 minute video depicting a desired future in the health care industry -- cool, but not necessary.  Most organizations can be very successful with a well written paragraph.

I concede that sometimes alternate definitions for vision statements can be helpful.  When I help all key managers in an organizations make One Page Business Plans for themselves or their teams, I sometimes use vision statements to describe how their team or department might change as a consequence of the strategy.  While this can be helpful, customer-centric vision statements are still of primary importance.  Without that fundamental value creation, there is no company.

There is no magic formula for creating such a vision, but authors Collins and Porras suggest that there are three conditions necessary for an overall aim to take root in an organization.

1. An overall aim must be a reflection of the inner personal needs, values, and motivations of members of the organization.
2. There must be an authentic personal commitment.
3. Communication and reinforcement are vitally important.

In summary, a Vision is

• "An image of our desired future"
• A vivid description of what things will be like once we have attained the Mission
• Compelling, tangible and immediate
• Described in the present tense
• A richly detailed and visual image

Putting it All Together:

A compelling Vision and Mission can be translated into Goals which are realized through Strategies implemented as Initiatives to generate Results.

Resources:

"Purpose, Mission, Vision", James C. Collins and Jerry Porras, July 1989 Stanford Business School Magazine.

"Organizational Vision and Visionary Organizations", by James C. Collins and Jerry I. Porras, California Management Review, Fall 1991.

Tips for Creating A Mission Statement

Purpose and Mission statements can be powerful tools for achieving motivated, creative, empowered employees.
   
This page makes a distinction between both purpose and mission statements and provides you guidance for constructing them.  Sounds easy.  It's tough to do well, but worth the effort.  A galvanizing mission can be of immense value.

What is a Mission Statement?  (from James Collins and Jerry Porras)

A true mission is a clear and compelling goal that focuses people's efforts.  It is tangible, specific, crisp, clear and engaging.  It reaches out and grabs people in the gut.  Example:

"This nation should dedicate itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to Earth."

Like the moon flight, a good mission has a clear finish line -- you should be able to tell when you've done it -- at which point, you need to create a new mission.  "We're going to climb Mount Everest" is a mission; the more general, "We're going to climb the Himalayas" is not.

And, like the moon flight, a good mission is risky, falling in a gray zone where reason says, "This is unreasonable"; and your intuition and drive say, "But we believe we can do it anyway."

Good Mission Statements are very powerful and motivating.  There are abundant jokes about MBAs and bad mission statements.  Don't be swayed!

Good Mission Statements don't need wordsmithing -- people "get it", no matter how you say it.

In summary, a mission is

• "What we are here to do"
• A clear and compelling goal that serves to unify an organization's efforts
• Crisp, clear, engaging, verging on unreasonable

Several approaches can be useful to defining a mission:

• Targeting: set a clear, definable target and aim for it (e.g. NASA moon mission)
• Common Enemy: create a goal focused on defeating a common enemy (e.g. Pepsi: "Beat Coke!")
• Role Model: select a well-known success and emulate it (e.g. Giro Sport Design: "to be to the cycling industry what Nike is to athletic shoes and Apple is to computers")

Some people apply the label "Mission Statement" to a Purpose Statement but that loses the opportunity to clarify a short-term objective.  I like the military connotation.  It's a clear, definable and motivational point of focus.  It's an achievable goal, a clear finish line to work towards, the next short-term milestone, the next "hill to take".

That's what has worked best for me, but here's my advice: Don't get hung up on competing alternative definitions for Purpose and Mission statements, or even Purpose and Vision statements!  Choose whatever moves your organization forward and go with it!

Getting a team in alignment is a very powerful thing.  Consciously and unconsciously, people are making decisions all day long.  It is human nature that people want to do the right thing.  A clear mission statement empowers people to set the correct priorities and make the correct decisions.

What is a Purpose Statement?  (from James Collins and Jerry Porras)

Purpose is the fundamental set of reasons for the organization' existence -- in the broadest, most enduring sense what people in the organization want to contribute to the external world.  In an ongoing organization, such as a corporation or an educational institution, purpose is continually pursued, but never fully achieved.  It is not a specific objective that you accomplish and then say, "We are done."  Effective purpose is broad and inspirational, something that strikes a basic chord and provides a clear sense of direction for the organization and its members.

In the case of the space program, Kennedy's purpose was not to put a human being on the moon by the end of the decade (again, this was a mission).  Rather, it was to work toward making the United States the greatest and most respected nation in the world, and Kennedy viewed a manned moon landing as a necessary step in that direction.

If you ask your management team to define your company's purpose and they say something like: "We exist to maximize shareholder wealth."  Tell them that's not good enough.  It does not inspire anyone and provides precious little guidance!

Instead, say authors Collins and Porras, ask these questions:  "If you woke up tomorrow morning with enough money in the bank to retire, what is it about this company that would make you want to continue working here?  What deeper sense of purpose would motivate you to continue to dedicate your precious creative energies to this company's efforts?  As a helpful exercise they suggest that you start with a descriptive statement.  "We make X products." or "We deliver X services," and then ask, "Why is that important?"  Ask it five times.  After a few whys, you'll find that you're getting down to the fundamental purpose of your organization.  You will start to articulate the very soul of your organization.

Here’s a look at some core purpose statements for some successful companies.* Notice, none of them say: To maximize shareholder value!

3M:  To solve unsolved problems innovatively.
Fannie Mae: To strengthen the social fabric by continually democratizing home ownership.
Hewlett-Packard: To make technical contributions for the advancement and welfare of humanity.
Mary Kay Cosmetics: To give unlimited opportunity to women.
Merck: To preserve and improve human life.
Nike: To experience the emotion of competition, winning and crushing competitors.
Wal-Mart: To give ordinary folk the chance to buy the same things as rich people.

In summary, a purpose is

• "Why we exist"
• Should be succinct; 1 or 2 sentences at most
• Should quickly and clearly convey how the organization fills basic human needs
• Should be simple enough to pass the grandmother test:  if you can explain it to her so she can understand it, then maybe you're on to something
• Should tie products/services to a more fundamental need, rather than simply mentioning the products/services
• Should be broad, inspirational, enduring, compelling and flexible enough to last 100 years
• Only needs to be meaningful and inspirational to people inside the organization; it need not be exciting to all outsiders
• Purpose is a motivating factor, not a differentiating factor

Putting it all together:

A compelling Vision and Mission can be translated into Goals which are realized through Strategies implemented as Initiatives to generate Results.

Resources:

"In Pursuit of the Big Hairy Audacious Goal", James C. Collins, www.jimcollins.com

"Purpose, Mission, Vision", James C. Collins and Jerry Porras, Stanford Business School Magazine, July 1989

“Building Your Company’s Vision,” by James C. Collins and Jerry I. Porras, Harvard Business Review, September-October 1996

Built To Last by James Collins

The Mission Statement Book by Jeffrey Abrahams

The Mission Primer: Four Steps to an Effective Mission Statement by Richard O'Hallaron and David O'Hallaron

China Rising. China Burning.

China is visible to us everywhere—in the news, in every trip to the store, and in many of our business plans, either as a partner or a competitor.  Yet it is hard to grasp the enormity of the numbers associated with China.  After all, it has never happened before, and it is happening on the other side of the globe.  What does it mean that it is growing three times faster than the United States? That China uses 40% of the world’s concrete and 25% of its steel?  That a rural population equal to the entire US population is migrating from their farms to their cities in the greatest migration in human history?  Here are some impressions from my first trip to try to understand the country that is poised to dominate the world scene for at least the next 50 years.

What we saw was both staggering and frightening.  China, once hobbled by poverty and Communist ideology, is rapidly progressing towards its goal of transforming a nation of peasant farmers into a modern, urban country. 

Our tour was run by a joint venture with the China government, so I am aware that much of what I saw and learned was selected to create an impression of a rapidly developing country that I could feel quite comfortable in.  To be sure, all the people we met were warm and friendly and we felt very safe wandering around in all the cities we visited.   We met many people who know English as a second language (now mandatory in schools beginning in primary grades).  Many of these look forward to visiting the USA someday when we begin to offer them tourist visas.

The nation’s new face

There is great pride in what they have accomplished – and what fascinates me is that this has all happened in my lifetime, much of it in the past 16 years.

Newly minted cities can reach the size of Chicago or Los Angeles in just a few years, and small farms and rice paddies lie just beyond.  This photo shows the bottom half of their TV tower as seen from a night cuise in Shanghai.  This city currently has one of the five tallest buildings in the world and have an even taller one under construction.

It was much heralded in the U.S. when our population reached 300 million a month or two ago.  China is nearly five times that.  And while China’s size may be the best-known fact about the country, the human scale of those numbers is still the hardest to grasp.  The numbers are so staggering that it is best to get calibrated.  One of the books I’ve been reading, China Inc., tells the amazing story of how “the slumbering Red giant woke up and at warp speed, transformed itself into the greatest superpower of the (near) future—with the biggest, tallest, longest, and fastest of just about everything there is.”  Here are some highlights:

• Three hundred million rural Chinese will move to cities in the next fifteen years.  China must build urban infrastructure equivalent to Houston’s every month in order to absorb them.
• 220 billion text messages were sent over mobile phones in China last year.
• General Motors expects the Chinese automobile market to be bigger than the U.S. market by 2025.  Some 74 million Chinese families can now afford to buy cars.
• China has more speakers of English as a second language than America has native English speakers.
• China has more than 300 biotech firms that operate unhindered by animal rights lobbies, religious groups, or ethical standards boards.
• There are 220 million “surplus workers” in China’s central and western regions.  The number of people working in the United States is about 140 million.
• Apparel workers in the United States make $9.56 an hour.  In El Salvador, apparel workers make $1.65 an hour.  In China they make between 68 and 88 cents an hour.

China today is happy as well as proud.   Their happiness is founded in having plenty of food, as well as enjoying modern conveniences.  They are very proud of their skyscrapers, neon-lit cities, and a magnetically levitated high-speed train that runs from Shanghai to the airport.  This photo shows my wife Jennifer pointing to the speedometer at 430 km/h (approx. 260 mph).

   

China today is happy with both good spirit and laughter, which understandably was missing a few decades ago.  Many of us still remember the older China where millions of children were starving (early 1960s), the population was peasant farmers wearing common gray uniforms and most books, other than The Little Red Book, were banned.

Mao Zedong’s picture still hangs in Tian Amen Square and is on some of their paper currency.  He is revered as their “first president” much as George Washington is for us.  Yet it is perplexing to understand how they revere the man who was responsible for the disastrous Great Leap Forward and Cultural Revolution.  They seem to look over this and say that “70% of what he accomplished was very good for them.”  They have not been in a war since 1949 and now enjoy many modern luxuries.  One of our tour guides had a marvelous way of depicting both the magnitude and rate of change by describing the three things every Chinese bride wants:

In the 1960s, a wrist watch, sewing machine, and a bicycle.
In the 1970s, a radio, electric fan, and a 12” black and white TV.
In the 1980s, a refrigerator, color TV, and a washing machine.
Early 1990s, a home phone, VCR, and an air conditioner.
Late 1990s, a cell phone, computer, and a digital camera.
Today, brides want a car, apartment, and a credit card.

Oddly, one of our guides cited bottled water as evidence of their progress.  Tap water is clean but must be boiled before drinking.

China Burning

Pollution is accepted as a consequence of developing.  Water is scarce in the regions with the greatest population and the rivers are highly polluted.

China is second only to the United States in carbon-dioxide emissions, the root cause of global warming.  Our first few days were spent in a fog-like smog in Beijing where coal is used for both generating electricity and for heating homes.  It soon got much worse as we took a 2-hour ride through a cloud of smoke in the countryside caused by burning of the straw off the rice fields at the end of the season’s harvest.  Part of me wonders whether this enormous country is investing its money to race us to the cliff.  The US is the dominant consumer of the world’s products and resources, so it’s difficult to own the moral high ground.

This photo shows coal stacked outside a home we visited.

While pollution is a huge problem, it is of little concern compared to their top priority which is earning money.  Older generations pin their hopes on the children, and also depend on them for support.  Interestingly, with the one-child policy, ultimately each child must support seven: four grandparents, two parents, and self.  Both parents continue to work when a child is born.  The child is raised by the grandparents.  When old enough, it is the children who migrate to the cities where wages are higher and some earnings can be saved and brought back to the family.

Sixty percent of their population are still farmers.  Here wages and education is the lowest and opportunities the most bleak.

Many of the factory workers today are earning 1,000 yuan per month, or about $125.  So within a half century, this country has changed from a culture where being poor was a noble pursuit, to a culture that aspires to the luxuries of wealth.  This is still a communist country, and while there is freedom of speech (except in Tien Amen Square), there is not freedom in writing.  Will the vast economic disparities evident today continue to peacefully exist? Or will China’s peasants and the working poor ultimately rebel?  And, what is my position on this as I type today wearing a pair of 40 cent socks from China?

Under the new economic freedoms after Mao first floor housing was converted into shops for private enterprise.

A great number of jobs in the U.S. risk being outsourced.  The size and costs give China has an exceptionally strong hand for labor-intensive products.  At what cost should we try to protect these U.S. jobs?  A lot of questions remain unanswered (for me) from this first look at the implications of China’s development.

It’s impossible to see how the future will unfold, but it is clear that China does not need to boom indefinitely in order to both supply the world with competitive factories and provide a large middle class population (market) for the rest of the world to chase.

Notes:

1. Our trip was by Citslinc International which is a joint venture with the China government to promote positive economic growth between countries.  In the US they organize trips for Chambers of Commerce.  Twice a year (during Nov and March) they bring about 5,000 U.S. visitors to China.  Total cost of trip was $1299 and included air travel, one domestic flight within China, 4 or 5-star hotels, and all buses, food and guides.  It is hard to say no to this price but you must be prepared for a very structured tour that includes many stops to many factories where shopping is encouraged.

UPDATE 23Nov06: The price of our tour was so outstanding that we didn't explore alternatives (plus we wanted to join some of our friends), but here are some tours that already temp us to go back!  http://www.chinafocustravel.com/index2.html

2. A good book regarding the implications of China's development for American business is The World is Flat by Thomas Friedman.

Do You Need a Business Plan? Yes!

Existing companies need planning too.  I've also heard them called a strategic plan, annual plan or operational plan.  The name is not important.  A business plan is the roadmap between where you are now and your vision.  Developing this roadmap provides you with important benefits.  Entrepreneur.com emphasizes their importance, saying that with an annual strategic plan you can:

• Guide your growth. Your business will grow or not depending on a lot of different factors, including overall economic trends, location, specific market needs, hard work and other elements. Businesses that plan do it to guide and influence their growth so they move proactively toward defined objectives rather than just reacting to business events.
• Manage priorities. Strategy is focus. Allocate resources where they'll do the most good. Work toward your strengths and away from your weaknesses. Develop the company by doing the most important things according to your long-term objectives.
• Assign responsibilities. A plan gives you a place to develop organizational responsibilities.
• Track progress. Think of a plan as a business-positioning device. With a plan you can track your progress toward goals, measure results and manage the business. Without a plan, how do you tell whether or not you're moving in the right direction? What do you measure against?
• Plan for cash. Profits aren't cash, and cash isn't intuitive. You spend cash--you don't spend profits. However, businesses don't plan well for cash, and they need to. That may not sound strategic, but it is. It's also the core of an operations plan and an annual plan. Whatever else, you have to plan for cash.

In addition, a business plan provides a way to communicate your operations, goals, and business philosophy to personnel, suppliers and your other business contacts.

Finally, a plan helps you attract and retain talent.  When a prospect asks to understand your business, you can hand them a plan that gives them an entire overview.  Their reactions tell you something about how quickly and thoroughly they can think through your business's key issues.  Moverover, the written record of your goals coupled with a track record of delivering against those goals sends a message loud and clear.  You understand your business and can deliver the results you promise.  Great employees will respond to that message--as will banks and investors the next time you need to raise money.

The plan improves your chance of success by identifying a strategy and all key assumptions.  Importantly, it identifies market trends and explicitly calls out the bets that the company is making about the future.  If more businesses did better planning, failures would be fewer.