One of the valuable things for us in writing a blog about a book, what we are doing at "A Dash", is that we can see what is working and what is not. By "working" we mean helping readers to understand something important that will be profitable in their investing. This is not strictly a function of popularity of the article. Reader comments are especially valuable.
It is a bit tricky, because the current audience in the investment blogosphere is much different from the one we will see in a year or so, when many new investors will turn to the Internet. We are writing to the future readers, the audience for the book, where we will review many of the current blogs. By contrast, the current roster of most popular blogs is aimed at the present.
Our purpose here is to illustrate something important, a concept which would have helped individual investors and traders alike last week. To do so, we must find a different starting point. So let us talk about three real public companies and important decisions they made. All three companies are big names that you know.
The first company was engaged in a market share battle with a competitor. Within the company came an idea for a new product that moved closer to the competitor's product in characteristics. The idea was to skew toward a younger demographic and win market share.
Company A conducted field studies in the heartland, went through internal debate, and did extensive planning. It worked up an advertising campaign. With much fanfare, the product launch took place.
Company B was also fighting for market share. Company B stimulates ideas from within, launching many of them as "beta tests." Some work, some do not. Those that work get further development. Those that do not are dropped. There is some internal planning and decision making, of course, but the hurdle for trying something is relatively lower.
Company C is in a business with some domestic competition and a lot of foreign competition. The established business is threatened by changing circumstances, so it is in a struggle to maintain market share, revenues, and profits.
Company C was presented with an idea that might provide an immediate boost to sales. The company did not know, of course, whether the idea would work. Since the idea came from outside the company, it was subjected to many meetings and reviews, including representatives from many different departments. At each meeting, questions were raised from a variety of perspectives. The company considered both the merits of the idea and whether it needed to use the outside source.
When the idea reached the key decision maker, it was presented not by those who proposed it, but by an internal manager who listened to the meetings and conveyed the ideas.
We could have chosen many cases for each of the three examples. Readers are invited to nominate situations that they think might fit. While we will reveal specific examples, there is no single right answer.
Here is the key questions:
Which method do you think works best? Which approach is used by the most successful corporations?
Which method do you think best describes the behavior of major corporations?
We shall return to this topic to show the relevance to current stock market issues. The key idea is that understanding organizational behavior is important to successful investing.