We are pleased to bring you this article by Devin Cabanilla, who is a Lean practitioner in Healthcare, working at a large hospital system in Washington State. Devin’s previous article on shmula is his 7 Wastes of Medical Billing.

His article highlights an observation regarding standards and room for error, as it pertains to medical documentation and medical coding. What he uncovers is an interesting commentary on basic human behavior – do strict guidelines that are designed to save lives not in alignment with the basic human behavior to cut corners?

His advice and answer?

Don’t Give Out Fudge.

Enjoy this article and learn more about Devin Cabanilla in his author bio at the end.

The opportunity to talk about healthcare and standards doesn’t present itself frequently in public. I was in attendance at a nice wedding recently out in the countryside. My wife and I found ourselves at a round table with strangers in a converted barn. The older couple closest to my wife and I were very friendly and warm. We counted ourselves lucky.

We made our introductions, talked about how we knew the couple, and had chocolates together. As the event continued the older gentleman leans over to me and asks,

“Your wife says you do computer work at a hospital?”

Sometimes I’m in the mood to talk about work at these events, and other times I’d rather just enjoy the event. I relent and mention the obscure topic of Electronic Medical Records (EMR/EHR). So, I let him know that healthcare organizations everywhere are getting into EMR/EHR upgrades right now because by next year all medical diagnosis coding will need to be converted into newer standard called ICD-10. Pretty boring, we can move on to talk about something else. All of a sudden our good wedding company went into dispute mode.

My fellow wedding guest starts to get into this sound off with me how this is likely

“…another move to a Nanny State,”

And begins to politicize the topic. I’m not making a point for government or anyone in our conversation. I try to put the pause button on right away because I’m thinking to myself:

1. Standards are necessary
2. Patient Safety is essential
3. Transparency is a benefit

I sidetrack a little bit and explain it’s important for doctors to be accurate in their notes for the benefit of patients. I let him know several things. You wouldn’t want to have a generic diagnosis listed of just plain cancer. Hopefully, your doctor is noting explicitly you have a malignant neoplasm of the pancreas with the corresponding diagnosis code. It would be unsafe if you were referred to another doctor and the documentation of your condition was poor.

Additionally, having accurate information allows for the patient and all those involved knowing exactly what’s going on. The newer ICD-10 coding gives more diagnosis and problems that weren’t available before. Suddenly I’m wondering when I became an apologist for ICD-10?

Strangely, his response becomes,

“Well you gotta give doctors a little room to fudge!”

It becomes apparent to me that in general, people are concerned when levels of control are too strict. Having a little deviation is acceptable. To err is human, right? We can’t totally alleviate the tension that politics has put on operational improvements in healthcare. Yet, there is a responsibility for those in healthcare to be better.

We have to save lives, not give out fudge. Whether this is in software records, or how doctors treat others, the bar should be set high. Even good fudge has its taste because of a recipe and quality ingredients.

About Devin Cabanilla

Devin Cabanilla conducts continuous improvement activities in insurance enrollment and billing database areas at Virginia Mason Medical Center in Seattle.

He applies the principles of Lean Management (also known as Lean Manufacturing) to his work in healthcare. Outside of work Devin enjoys BBQ, Starcraft, reading, and spending time with his wife and two toddlers.

Table Conversations: Fudging Healthcare is a post from: Lean Six Sigma Consulting

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Thanks to Shmula’s Sponsors is a post from: Lean Six Sigma Consulting

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First, a warning: To those that read my blog and are typically interested in posts on Lean Manufacturing and Change Management, this article is not on either of those topics. Okay, read on. I concede: I know almost nothing about SEO, but other publications I read have been discussing this “Panda” update or “Farmer” update that Google rolled out recently. So, I decided to read-up and learn about what’s going on. Furthermore, I don’t know jack about Google. Other than my 2006 job interview with Google, I am simply a user of Google search. I don’t have any insider dealings. I’m just another guy. When the first major algorithm update came out, many in the SEO world dubbed the update the “Farmer” update because the aim of the update was to devalue content farms and, by doing so, increase the value of high quality sites by reducing the value of low quality sites.

I guess a bunch of websites got affected by the update – big sites too. That’s pretty much what I know. But, what got lost in all the debate was this important question: Who the heck is Panda?

Who is Panda?

Well, we know that Panda is a Google engineer, as explained by Matt Cutts in this interview with Wired Magazine:

Wired.com: What’s the code name of this update? Danny Sullivan of Search Engine Land has been calling it “Farmer” because its apparent target is content farms. Amit Singhal: Well, we named it internally after an engineer, and his name is Panda. So internally we called a big Panda. He was one of the key guys. He basically came up with the breakthrough a few months back that made it possible.

Here, Amit Singhal, who I guess is an important person in the SEO world, verifies that “Panda” is a person – yeah, a real human being with a pretty cool name. And, the update was based on his breakthrough. So, if Panda is a person, whose recent breakthrough led to a massive change in how websites are valued in the eyes of Google, what we can know about him might help the largely confused world regarding the Panda or Farmer or whatever update. So, what do we know about him? And, can some knowledge of his background, research interest, or whatever give us a hint as to how one can survive the dreaded Panda or Farmer update? Can our knowledge of Panda’s background help Black Hat SEOs better game Google? Obviously I’m not the best person to answer those questions, but here’s what we know about Panda, taken from a simple search on Google, Linkedin, Facebook, and Twitter.

Who is Navneet Panda?

Based on his homepage, his resume, his facebook profile, google buzz, and his linkedin profilewe know a few things:

• Navneet Panda studied at the Indian Institute of Technology in Kharagpur in the Department of Mathematics and earned a MSc in Mathematics and Computing ( Integrated 5-year course )
• Navneet Panda then went on to the University of California Santa Barbara, where he earned a Ph.D in Computer Science. His advisor was Edward Y. Chang.

It appears that before he worked for Google in 2007, he did a summer internship at Intel and at the IBM T. J. Watson Research Center in New York. Navneet Panda has filed 2 patents, and they are described below:

• Learning Concept Templates from Web Images to Query Personal Image Databases, Navneet Panda, Yi Y. Wu, Jean-Yves Bougueti, Ara Nefian (Filed with Intel, June 2007)
• Fast Approximate SVM Classification for Large-Scale Stream Filtering, Navneet Panda, Ching-Yung Lin and Lisa D. Amini (Filed with IBM, Sep 2005)

Below are a list of his publications followed by a short abstract, which might give us a sense of what might have been behind the Google Panda Update:

• Efficient Top-k Hyperplane Query Processing for Multimedia Information RetrievalAbstract: A query can be answered by a binary classifier, which separates the instances that are relevant to the query from the ones that are not. When kernel methods are employed to train such a classifier, the class boundary is represented as a hyperplane in a projected space. Data instances that are farthest from the hyperplane are deemed to be most relevant to the query, and that are nearest to the hyperplane to be most uncertain to the query. In this paper, we address the twin problems of efficient retrieval of the approximate set of instances (a) farthest from and (b) nearest to a query hyperplane. Retrieval of instances for this hyperplane-based query scenario is mapped to the range-query problem allowing for the reuse of existing index structures. Empirical evaluation on large image datasets confirms the effectiveness of our approach (link).
• Concept Boundary Detection for Speeding up SVMs: Support Vector Machines (SVMs) suffer from an O(n2) training cost, where n denotes the number of training instances. In this paper, we propose an algorithm to select boundary instances as training data to substantially reduce n. Our proposed algorithm is motivated by the result of (Burges, 1999) that, removing non-support vectors from the training set does not change SVM training results. Our algorithm eliminates instances that are likely to be non-support vectors. In the concept independent preprocessing step of our algorithm, we prepare nearest-neighbor lists for training instances. In the concept-specied sampling step, we can then effectively select useful training data for each target concept. Empirical studies show our algorithm to be effective in reducing n, outperforming other competing downsampling algorithms without signicantly compromising testing accuracy (link).
• KDX: An Indexer for Support Vector Machines: Support Vector Machines (SVMs) have been adopted by many data-mining and information-retrieval applications for learning a mining or query concept, and then retrieving the “top-k” best matches to the concept. However, when the dataset is large, naively scanning the entire dataset to find the top matches is not scalable. In this work, we propose a kernel indexing strategy to substantially prune the search space and thus improve the performance of top-k queries. Our kernel indexer (KDX) takes advantage of the underlying geometric properties and quickly converges on an approximate set of top-k instances of interest. More importantly, once the kernel (e.g., Gaussian kernel) has been selected and the indexer has been constructed, the indexer can work with different kernel-parameter settings (e.g., and ) without performance compromise. Through theoretical analysis, and empirical studies on a wide variety of datasets, we demonstrate KDX to be very effective (link).
• Exploiting Geometry for Support Vector Machine Indexing: Support Vector Machines (SVMs) have been adopted by many data-mining and information-retrieval applications for learning a mining or query concept, and then retrieving the “top-k” best matches to the concept. However, when the dataset is large, naively scanning the entire dataset to find the top matches is not scalable. In this work, we propose a kernel indexing strategy to substantially prune the search space and thus improve the performance of top-k queries. Our kernel indexer (KDX) takes advantage of the underlying geometric properties and quickly converges on an approximate set of top-k instances of interest. More importantly, once the kernel (e.g., Gaussian kernel) has been selected and the indexer has been constructed, the indexer can work with different kernel-parameter settings without performance compromise. Through theoretical analysis, and empirical studies on a wide variety of datasets, we demonstrate KDX to be very effective (link).
• Hypersphere Indexer: Indexing high-dimensional data for efficient nearest-neighbor searches poses interesting research challenges. It is well known that when data dimension is high, the search time can exceed the time required for performing a linear scan on the entire dataset. To alleviate this dimensionality curse, indexing schemes such as locality sensitive hashing (LSH) and M-trees were proposed to perform approximate searches. In this paper, we propose a hypersphere indexer, named Hydex, to perform such searches. Hydex partitions the data space using concentric hyperspheres. By exploiting geometric properties, Hydex can perform effective pruning. Our empirical study shows that Hydex enjoys three advantages over competing schemes for achieving the same level of search accuracy. First, Hydex requires fewer seek operations. Second, Hydex can maintain sequential disk accesses most of the time. And third, it requires fewer distance computations (link).
• Active Learning in Very Large Databases: Query-by-example and query-by-keyword both suffer from the problem of “aliasing,” meaning that example-images and keywords potentially have variable interpretations or multiple semantics. For discerning which semantic is appropriate for a given query, we have established that combining active learning with kernel methods is a very effective approach. In this work, we first examine active-learning strategies, and then focus on addressing the challenges of two scalability issues: scalability in concept complexity and in dataset size. We present remedies, explain limitations, and discuss future directions that research might take (link).
• Formulating Context-dependent Similarity: Tasks of information retrieval depend on a good distance function for measuring similarity between data instances. The most effective distance function must be formulated in a context-dependent (also application-, data-, and user-dependent) way. In this paper, we present a novel method, which learns a distance function by capturing the nonlinear relationships among contextual information provided by the application, data, or user. We show that through a process called the “kernel trick,” such nonlinear relationships can be learned efficiently in a projected space. In addition to using the kernel trick, we propose two algorithms to further enhance efficiency and effectiveness of function learning. For efficiency, we propose a SMO-like solver to achieve O(N2) learning performance. For effectiveness, we propose using unsupervised learning in an innovative way to address the challenge of lack of labeled data (contextual information). Theoretically, we substantiate that our method is both sound and optimal. Empirically, we demonstrate that our method is effective and useful (link).
• Formulating Distance Functions via the Kernel Trick: Tasks of data mining and information retrieval depend on a good distance function for measuring similarity between data instances. The most effective distance function must be formulated in a context dependent (also application-, data-, and user-dependent) way. In this paper, we propose to learn a distance function by capturing the nonlinear relationships among contextual information provided by the application, data, or user. We show that through a process called the “kernel trick,” such nonlinear relationships can be learned efficiently in a projected space. Theoretically, we substantiate that our method is both sound and optimal. Empirically, using several datasets and applications, we demonstrate that our method is effective and useful (link).
• Speeding up Approximate SVM Classification for Data Streams
• Improving Accuracy of SVMs by Allowing Support Vector Control

Here are what he lists as Research Projects on his resume: Machine Learning:

• Development of indexing structures for support vector machines to enable relevant instance search in high-dimensional datasets
• Speeding up SVM training in multi-category large dataset scenarios
• Speeding up approximate SVM classification of data-streams
• Improving concept identification and classification for personal image retrieval
• Using idealizing kernels to develop distance metrics incorporating user preferences for high-dimensional data
• Design of a real time web page classifier for text and image data

Grid Computing and Distributed Systems:

• Development of scheduling strategies for numerous large jobs in a grid environment under heavy load conditions using the Network Weather Service and Globus
• Development of scheduling strategies for executing compute-intensive jobs in a dynamically evolving simulated market of servers providing priced slots of CPU time for process execution
• Development of a distributed dictionary enforcing causal ordering
• Development of dynamic peer to peer system with query lookup modeling the CAN architecture

Computer Architecture:

• Design of a snoopy cache for a multiprocessor system
• Design of a superscalar instruction dispatch unit

Now What?

I don’t know. I’ll leave it to the SEO people to decide. I just write and don’t pay much attention to SEO because I don’t know much about SEO. But, at least now we can put a face to a generically named Google algorithm update called “Panda”. Now, when someone references a Google algorithm update as “Panda”, we can all, under our breath say, “Yeah, that Navneet Panda guy”.

Who is “Panda” in The Google Panda Update? is a post from: Lean Six Sigma Consulting

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Note: This is a sponsored post from Project Templates Inc., which is a product for those in the project management field. For a low price, you can get instant access to over 100+ Project Management Templates.

Read more below, and thanks to all the sponsors that make shmula.com possible.

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Project Management Templates is a post from: Lean Six Sigma Consulting

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We can find lean thinking almost everywhere – yes, even from the Old Spice Guy. Below are 5 lessons that all lean thinkers, six sigma practitioners, or folks in lean manufacturing can learn and apply in their work.

No Explicit Invitation

That’s right, at no time that I can remember does the Old Spice Guy tell us to buy Old Spice or offer us a coupon. But, he makes watching him enjoyable, laughable, and memorable.

But, the fun the audience has most likely will lead to different marketing experience the next time we’re at the store in the fragrance or the deodorant aisle. We’ll remember the Old Spice Guy and how he made us laugh and our decision to purchase Old Spice will not be driven by price or a discount, but by memory and by our internal voice saying to us “That Old Spice Guy was funny” and then reaching out and buying Old Spice instead of another brand.

Lesson: Add value to your internal and external customers immediately, in a memorable way – and remember that value is always defined by the customer. The invitation, if compelling enough, will be accepted – even though it is implicit and not explicit.

Keep it Real

By commercial production standards, the Old Spice Guy commercials are not the best produced videos – but that’s the point and the real-ness of the videos and their imperfection is part of the story.

Lesson: In your Lean Implementation, things don’t have to be perfect, but they need to be genuine and they need to be real.

Old Spice has 71 years of experience helping guys improve their mansmells with deodorant, bodywash, antiperspirant and fragrances.

A Person is More Memorable than an Idea

What does Old Spice stand for? Do you know their mission statement? Do you know their product vision? Do you know their brand promise? Yeah, I don’t either.

But, I sure remember the Old Spice Guy and his funny commercials. We’ll remember his persona – the Old Spice Persona.

Lesson: embody the values and promise and vision and mission – in the person. We’ll remember the person and what the person stood for more easily than the ideas themselves.

Have Courage

Proctor & Gamble is a very old company; while they are known for innovative products, by and large, they are conservative in their approach. Their departure from that with the Old Spice Guy shows courage and, it’s courageous effort that worked.

Lesson: Have Courage.

Teach Them and Let Them Govern Themselves

While the Old Spice Guy didn’t necessarily teach us anything, he gave us memorable, funny content that was shareable. And, that’s exactly what happened – millions of people shared the Old Spice Guy’s content – everywhere. And, no effort was made to stop the sharing – instead, it was encouraged.

Consider these statistics from YouTube, Twitter, Facebook:

1. Youtube – Channel Views: 11,634,739
2. Youtube – Upload Views: 138,504,501
3. Youtube – Subscribers: 166,425
4. Twitter – 117,495 Followers
5. Facebook – 821,102 Friends

Lesson: In your Lean Implementation, give those you teach and mentor something to talk about and something to share – and allow them to share freely and take on a movement-type quality.

Consider the social media impact – it is huge. Viral, indeed. Here’s some data on the Old Spice videos – consider the Old Spice videos in relation to other historical viral videos within 24 hours below (source: Visible Measures):

We want our Lean efforts to take on a “viral” component, where lean becomes a movement of its own.

Old Spice Videos

Below are a few of the memorable Old Spice Videos that will entertain you and make you laugh.

Old Spice | The Man Your Man Could Smell Like – we’re not saying this body wash will make your man smell into a romantic millionaire jet fighter pilot, but we are insinuating it.

Old Spice | Did You Know – don’t smell like sunsets and baby powder. Smell like jet fighters and punching.

Old Spice | Boat – use Old Spice and get ready for a manly moustache surprise.

Old Spice | should your man smell like an Old Spice Man?

Old Spice Products Through History

Viewed from a historical context, the Old Spice brand is over 50 years old. Below are some Old Spice products through time.

• Old Spice Brass Razor Handle: This solid brass razor handle came as a gift set with Old Spice after shave cream, circa 1985.
• Old Spice Razor and Brush Stand: This porcelain rack held a brush and a razor – the Old Spice logo is on both the holder and the brush. The razor brass-plated heavy cast metal, circa 1980.
• Old Spice Razor and Travel Case, circa 1989.
• Old Spice Shaving Brush, circa 1970.
• Old Spice Leather Cologne, circa 1985 – 1991.

Old Spice Guy: 5 Lean Thinking Lessons is a post from: Lean Six Sigma Consulting

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This post shows merger and acquisition (M & A) activity of Google, Amazon, Microsoft, and Yahoo. I attempt to do this in a nice scrollable javascript timeline.

To view google acquisitions, microsoft acquisitions, yahoo acquisitions, or amazon.com acquisitions, please scroll on the timeline and click on the dots; when you do, a bubble will render showing some details of the acquisition.

Go here If you’re interested in reading my job interview with google

Alternatively, below the M&A timeline is also a table showing the acquisitions.

Google, Microsoft, Yahoo, Amazon Acquisitions is a post from: Lean Six Sigma Consulting

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A new site gives perspective on the British Petroleum (BP) Oil Spill Disaster ¹  in the Gulf of Mexico. This site overlays the BP Oil Spill over your home state. If it were in Utah, the BP Oil Spill would look like this:

I want to be really clear here, I’m not against British Petroleum (BP) or any oil company. I care about our environment, but I’m not a huge environmentalist either. I have nothing against BP – I don’t know enough to make a judgment.

There are good people that work at BP and I feel bad that they have to deal with the mistakes of the company, though they were not involved in the oil spill. All I know is that this is a terrible disaster for America and the World.

And, from the perspective of Lean Thinking, we know that it is usually processes and systems that are broken, not usually people. So, if anything is to be blamed, it is processes and human systems that didn’t prevent this disaster from happening.

The map above with the BP Oil Spill overlaid on my home state gives perspective on how big this is, how much bigger it is going to get, and how much this is harming our environment.

BP Oil Spill

For review, this is what we know of the BP Oil Spill:

On April 20, 2010, a semi-submersible exploratory offshore drilling rig in the Gulf of Mexico exploded after a blowout and sank two days later, killing eleven people and causing a massive oil spill threatening the coast of Louisiana, Mississippi, Alabama, Texas, and Florida. The rig is owned and operated by Transocean Ltd on behalf of BP, which is the majority owner of the oil field. The company originally estimated the size of the leak at about 1,000 barrels a day but later accepted government estimates of a leak of at least 5,000 barrels per day (790 m3/d).

On April 30, BP stated that it would harness all of its resources to battle the oil spill, spending $7 million a day with its partners to try to contain the disaster. BP was running the well without a remote control shut-off switch used in two other major oil-producing nations, Brazil and Norway, as a last resort protection against underwater spills. The use of such devices is not mandated by U.S. regulators. The U.S. Government gave the responsibility of the incident to BP and will hold it accountable for costs incurred in containing the situation.

On May 11, 2010, Congress called the executives of BP, Transocean, and Halliburton to a hearing regarding the oil spill. When probed for answers regarding the events leading up to the explosion, each company blamed the other. BP blamed Transocean who owned the rig, who then blamed the operators of the rig, BP. They also blamed Halliburton, who built the well casing. Scientists have been requesting the right to monitor the amount of oil that is actually being released per day, but “‘The answer is no to that,’ a BP spokesman, Tom Mueller, said on Saturday, May 15. ‘We’re not going to take any extra efforts now to calculate flow there at this point. It’s not relevant to the response effort, and it might even detract from the response effort.’” Steven Wereley, an associate professor of mechanical engineering at Purdue University, analyzed videotape of the leak using particle image velocimetry and estimated oil flow rates at between 56,000 to 84,000 barrels per day (8,900 to 13,400 m3/d), or equivalent to one Exxon Valdez spill every 3.5 to 2.4 days. A second, smaller leak has been estimated to be releasing 25,000 barrels per day (4,000 m3/d) by itself, suggesting that the total size of the leak may well be in excess of 100,000 barrels per day and became the largest oil spill in US history.

This is not the first Oil Spill Incident ² that BP has been involved in.

This teaches us several obvious lessons ³, from the perspective of Lean Thinking:

1. Stop at First Defect – pull the andon when we notice problems.
2. Create an open culture – not a culture of fear: when people are safe to express their feelings, then defects and disasters like this might have been avoided.
3. While this falls squarely on the shoulders of BP, this becomes all of our problem.

From a historical perspective – say, twenty years from now – I’m hoping it’ll show that America⁴, the World, and – yes – even BP were contributors to good and, that together, this mess was cleaned up and future disasters like this don’t happen anymore.

Oil Spill, My Home is a post from: Lean Six Sigma Consulting

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I’m very selective about what I read and what I do with my time.  So, when I get forwarded email from most people – including family – I’ll either archive it or just delete it.

But, this time my father-in-law sent me something interesting and funny (thanks, dad).  I thought you might find it funny too; if not, then thanks for the short visit and I encourage you to happily move on to more important things.

Here’s a funny list of “The Law of…”.  If you think about each one – they will most likely ring true to you also as they rang true for me.

1. Law of Mechanical Repair – After your hands become coated with grease, your nose will begin to itch & you’ll have to pee.
2. Law of Gravity – Any tool, nut, bolt, screw, when dropped, will roll to the least accessible corner.
3. Law of Probability – The probability of being watched is directly proportional to the stupidity of your act.
4. Law of Random Numbers – If you dial a wrong number, you never get a busy signal & someone always answers.
5. Law of the Alibi – If you tell the boss you were late for work because you had a flat tire, the very next morning you will have a flat tire.
6. Variation Law – If you change lines (or traffic lanes), the one you were in will always move faster than the one you are in now (works every time).
7. Law of the Bath – When the body is fully immersed in water, the telephone rings.
8. Law of Close Encounters – The probability of meeting someone you know increases dramatically when you are with someone you don’t want to be seen with.
9. Law of the Result – When you try to prove to someone that a machine won’t work, it will.
10. Law of Biomechanics – The severity of the itch is inversely proportional to the reach.
11. Law of the Theater & Hockey Arena – At any event, the people whose seats are furthest from the aisle, always arrive last. They are the ones who will leave their seats several times to go for food, beer, or the toilet & who leave early before the end of the performance or the game is over. The folks in the aisle seats come early, never move once, have long gangly legs or big bellies & stay to the bitter end of the performance. The aisle people also are very surly folk.
12. The Coffee Law – As soon as you sit down to a cup of hot coffee, your boss will ask you to do something which will last until the coffee is cold.
13. Murphy’s Law of Lockers – If there are only 2 people in a locker room, they will have adjacent lockers.
14. Law of Physical Surfaces – The chances of an open-faced jelly sandwich landing face down on a floor, are directly correlated to the newness & cost of the carpet or rug.
15. Law of Logical Argument – Anything is possible if you don’t know what you are talking about.
16. Brown’s Law of Physical Appearance – If the clothes fit, they’re ugly.
17. Wilson’s Law of Commercial Marketing Strategy – As soon as you find a product that you really like, they will stop making it.
18. Doctors’ Law – If you don’t feel well, make an appointment to go to the doctor, by the time you get there you’ll feel better.  But don’t make an appointment, and you’ll stay sick.

Anyway, I hope you enjoyed these.

The Law of is a post from: Lean Six Sigma Consulting

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You are cordially invited to a pretty cool Lean Six Sigma Summit (PDF Brochure Download) to be held on April 28 – May 2, 2008.   There will also be a behind-the-scenes tour of United Airlines and a peek into their Lean Deployment.  I’m really looking forward to that.  I’ll be speaking at the event, along with other, much-more distinguished folks, whose names are below:

Richard P. Miller
President and CEO
VIRTUA HEALTH

Lee Cockerell
Former Executive Vice
President of Operations
THE WALT DISNEY WORLD RESORT

Russell W. Ford
President and CEO
PRESTOLITE ELECTRIC INCORPORATED

Craig Long
Vice President, Quality and Six Sigma
MILLIKEN AND COMPANY

Roger Myers
Vice President Process Improvement (GIS)
COMPUTER SCIENCES CORPORATION

Nancy Pratt
Senior Vice President, Clinical Effectiveness
SHARP HEALTHCARE

Michael G. Winston
Managing Director and Chief Leadership Officer
COUNTRYWIDE FINANCIAL

Ellen Domb
Founding Editor
THE TRIZ JOURNAL

Debra Levantrosser
Executive Director, Lean/Supply Chain
JOHNSON & JOHNSON

Pete Abilla
Head of Process Improvement for Customer Service, North America
EBAY

Betsi Harris Ehrlich
Director of Six Sigma and Master Black Belt
TYCO INTERNATIONAL

Adam Hjerpe
Senior Director of Quality, Programme Management
UNITED HEALTH GROUP

Gregory Robertson
Director of Six Sigma
BLACK & VEATCH CORPORATION

Martina Kuhlmeyer
Executive Vice President of Six Sigma
TEXTRON FINANCIAL

Jeff Johnson
Master Black Belt
TEXTRON FINANCIAL

Anthony Orzechowski
Director of R&D Quality Engineering
ABBOTT DIAGNOSTICS

Bruce Bryant
Senior Management Analyst and Lean Six Sigma Master Black Belt
DEFENCE INTELLIGENCE AGENCY

Brian Geschwindt
Managing Master Black Belt
QUEST DIAGNOSTICS

Nathan Guerdet
Operations Manager
WELLS FARGO FINANCIAL

Praveen Gupta
Six Sigma Author & President
ACCELPER CONSULTING

Alex Bellabarba
Head of Process Improvement for Customer Service, Europe
EBAY

James Warner, P.E
Director Industrial Division
MINNESOTA POLLUTION CONTROL AGENCY

Tony Coomer
Vice President of Continuous Improvement
LEAR CORPORATION

Dr Stephen Hoover
Vice President Xerox Research Center
XEROX CORPORATION

Patricia Atkins
Lean Six Sigma Director
SHARP HEALTHCARE

Teresa Hay McMahon
Performance Results Director
STATE OF IOWA DEPARTMENT OF MANAGEMENT

Paul Pfeiffenberger
Master Black Belt and Global Continuous
Improvement Manager
AIR PRODUCTS & CHEMICALS

Steven Lesser
Vice President, Supply Chain North America
ORICA

Mike Shuck
Manufacturing Specialist
CHICAGO MANUFACTURING CENTER

Brent Tadsen
Master Black Belt – Lean
GE RAILCAR

Ronnie Pate
Director of Six Sigma Initiatives, Global Supply Chain
CINTAS CORPORATION

Jerry Bussell
Vice President of Global Operations
MEDTRONIC ENT/NT

Dr Michael O’Connor
Director of Global Lean Deployment and Master Black Belt
UNISYS

Richard Lam
Lean Six Sigma Corporate Deployment Leader
BMO FINANCIAL GROUP

James Wasiloff
Master Black Belt and Lead Deployment Advisor, TACOM Life
Cycle Management Command US ARMY

Srisu Subrahmanyam
Vice President, Continuous Improvement
UNITED AIRLINES

Prof. Deborah J. Nightingale
Director
LEAN ADVANCEMENT
INITIATIVE, LAI

Please come.  It should be a fun event.  There will also be a behind-the-scenes tour of United Airlines and a peek into their Lean Deployment.  I’m really looking forward to that.

Lean and Six Sigma Summit is a post from: Lean Six Sigma Consulting

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Later this week I’ll be traveling to Berlin, Germany and then to Dublin, Ireland.  I used to travel a lot, so that’s not the exciting part — in addition to being excited about meeting co-workers and being together to work as a team, I’m also looking forward to racking up points on my Marriott Card and also on my Delta Sky Miles — Yes, you’ve got it right: I’ve fallen for the most obvious marketing ploy — I’ve fallen for the Perceived Value versus the Actual Value Strategy.

To me, the perceived value of becoming a Gold Marriott Rewards member is kind of exciting (I’m just a few stays away from Gold).  Yes, I need to get out more but, seriously, I’m pretty stoked about it.  What benefits do I get from becoming a "Gold Elite" Member — I have no idea.  But, it sounds cool.  I have a ton of points already, which means that I could stay at any Marriott Hotel for, probably, 2 weeks for free.  The free stay at Marriott is beside the point — I’m talking about the "Gold Elite" designation — now that is rewarding. 

In all seriousness, how have I, an otherwise non-gullible person, to fall so heavily for these reward ploys like Marriott Rewards and the Delta Sky Miles?  It’s an old marketing strategy that works well and, boy, has it worked on me. 

The perceived value here is two-fold:

1. First, there’s a social aspect of the "Gold Elite" designation, as if I belonged to some special club of special people.  In all reality, I really belong to a club of people that, pretty much, live in hotels.  Who wants to belong to a group like that?  When you step back from the hype, the hotel-fancy-rewards group is really not a group anybody wants to be a part of — it’s a group of people that live in hotels, which is not really cool, fancy, or a club that anybody should ever want to be a member of. 
2. Second, the points — the part that has value insomuch as those points can buy free stays, requires that one stay at Marriott several times until one can qualify for a free stay.  The first free stay occurs at 17,000 points, which means that one, on average, has to spend about 21.5 nights, assuming 800 points per stay.  Let’s further assume that a night’s stay at a Marriott is ~$80.00 USD.  This means that one has to spend about $1,700 to qualify for $80.00 USD.  Herein lies the truth: the Actual Value is trivial, whereas the percived value is large. 

Now, the same argument goes for the Delta Sky Miles — the valuable part is the miles, but the designation really is a label for people who fly a lot — who wants to be part of that group? 

Here’s another way to think about things:

The matrix above shows 4 quadrants against the labels of Perceived Value and Actual Value.   The bottom left quadrant shows items that are low-perceived and low-actual; the bottom right quadrant shows items that are high-perceived, low-actual; the quadrant on the top left shows items that are high-actual, low-perceived; the items in top right quadrant are items that both high-perceived, high-actual; other junk mail offerings fall under this category also.

In my opinion, products such as the Marriott Rewards, Delta Sky Miles, and other products like that belong to the High-Perceived AND Low-Actual quadrant.  Other items that might belong to that quadrant might be items such as job titles, designations, and more tangible things such as cars, clothes, or other items that give us the feeling of being "better", but are, in reality, not.   Credit Card offers often fall under the category of high-perceived, low-actual. 

From a relationship perspective, some acts of kindness might have a low-perceive value but have a very high actual value.  Here’s an example: some acts of kindness might be small and have a low perceived value, but to the recipient, the actual value is actually very high.  For example, today I encouraged my wife to take a nap for several hours while I spent time with the kids.  To me, it was my way of letting her get some well-needed rest and my way of spending time with the kids.  For me, it was really no big deal (low perceived value).  But, for my wife, the recipient of the act, it was an act that had a very high actual value.  She was very thankful for the chance to sleep and rest. 

This is what I believe to be true: small acts of kindness have a very high actual value for the recipient, but a low perceived value for the doer of the act. 

Can you think of the important things, people, or activities in your life.  Can you cleanly place them on the matrix above?  Are there any surprises or "A-Ha’s", where you thought something was very valuable, but turned out to be a high perceived but low actual value?  Any surprises?

Perceived Value versus Actual Value is a post from: Lean Six Sigma Consulting

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I normally and quickly delete my Spam box, but today I thought of checking it out to see what spammers were up to. To my surprise, I found the Spam almost inspiring; fulfilling some deep human need.  Okay, not quite, but here are some nuggets from the Spam I’ve received today for your enjoyment.

Spammers are very poetic. Here is one that wreaks of confusion, but could be considered poetry:

Old enough and bright enough, maybe, to spill some kerosene around a cheap liquor bottle, then light a candle, and put the candle in the middle of the kerosene.

Here’s one from an alleged stock broker, pitching a stock:

WEXE is showing signs of making a huge leap in the coming days. It appears that a major announcement would catapolt the companies stoock to over 2.00 per share. This undervalued symmmbol is currently trading at approximately 0.55 and we predict that it will break 1.30 by next monday. We are recommending a buy and hold on this one – Call your stock broker now to get more information on WEXE.

Sounds pretty convincing to me.

Here’s more poetry, but this one wreaks of confusion, passion, and a sense of longing:

below; and this is so, because nothing is farther from the obtain. Yet when one of the two contraries is a constitutive or affection. To sketch my meaning roughly, examples of substance the two contraries, not one or the other, should be present in the no name assigned to them. In this, the inborn capacity is distinct same time both white and black. Nor is there anything which is modification, but because this modification occurs in the case of that is not a derivative. For instance, the upright man takes his the word, is that which is neither predicable of a subject nor present have to admit that such parts are not substances: for in explaining predicated of the lesser, so that all the differentiae of the disposed, we may say, either better or worse, towards knowledge.

Of course, your typical Spam products, but this one has a nice footer in the email:

Good day,

Viagra $1, 80
Cialis $3, 00
Levitra $3, 35

Out of the way, Arthur, said a cold, curt voice.
It was Mr. Crouch. He and the other Ministry wizards were closing in on
them. Harry got to his feet to face them. Mr. Crouchs face was taut

Here are some really good deals on software — a Christmas sale, even:

Christmas discounts! Special New Year offers! OUR TOP 1O ITEMS!

$79 Microsoft Windows Vista Ultimate
$79 MS Office Enterprise 2007
$79 Adobe Acrobat 8 Pro
$49 Windows XP Pro w/SP2
$99 Macromedia Studio 8
$59 Adobe Premiere 2.0
$59 Corel Grafix Suite X3
$59 Adobe Illustrator CS2
$129 Autodesk Autocad 2007
$149 Adobe Creative Suite 2

And, last but not least, some final words of wisdom, left to the reader to decipher the non-sensical:

For instance, a mountain is called small, a grain large, of which it is a half. Similarly the existence of a master Thus, man is predicated of the individual man; but animal is double and triple have no contrary, nor indeed has any such term.

Here’s a lesson-learned: before you habitually clean out your spam box, check it out once in a while.  You’ll never know what you’ll find.  If nothing else, you’ll get a laugh out of what you find there.

Random Selections from Everyday Spam is a post from: Lean Six Sigma Consulting

I’m not sure if this actually means anything, but it’s nice to see Chicago Graduate School of Business ranked higher than Harvard, Stanford, Wharton, and Dartmouth for once.

On a related note, I looked through some Christmas cards the other day and found one from Chicago that said this:

Dear Pete,

From the bastion of cold hard facts, we wish you a warm holidays.

Sincerely,

The Place Where Fun Comes to Die, The University of Chicago

Nice.

Chicago is ranked #1 is a post from: Lean Six Sigma Consulting

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Here is the ajaxified timeline of Mark Cuban NBA Fine History. Enjoy.

I was amazed to learn that Mark Cuban’s cumulative fines from the NBA are currently at $1,455,000 USD. That is a lot of money that he could’ve avoided paying if he excercised some self-control.

Another way to think of Mark’s fines is in terms of opportunity costs: suppose that $1.4 Million was the amount he wanted to make as a charitable donation, instead of penalties given to an already wealthy organization — the NBA. Below are the top ten things that Mark Cuban’s fine money could have gone towards:

1. Assuming $25,000 per child to adopt from China, Mark Cuban could have adopted 58 children from China and given them better lives in America.
2. Mark’s fine money could have supported a staff of 405 doctors in assisting Darfur Refugees and Vaccinating close to 200,000 people.
3. $1,455,000 could have gone to support Mothers Without Borders’ 3828 volunteers to Zambia, Africa to build wells, teach in schools, build-up farms, assist in HIV/AIDS Awareness, and many other positive ways.
4. Assuming $60,000 per home, Mark’s fine money could have built 24.5 homes in the United States for the needy through Habitat for Humanity.
5. Assuming a GDP of 239,419 for South Africa, Mark’s fine money could’ve increased the South Africa’s GDP six-fold (6x).
6. Through Unitus, Mark Cuban’s fine money could have helped 14,550 entrepreneurs in third-world countries through innovative and entrepreneurial microfinancing, each typically take on a loan of $100.00 USD.
7. Through Books for Soldiers, Mark Cuban’s fine money could’ve have purchased 97,000 donated units of books, DVD’s, or other supplies, at an estimated $15.00 per donated unit, to our soldiers in Iraq, Afganistan, and elsewhere in the world.
8. Mark’s NBA Fine could have helped to support 1 facility relocation for USAID, enabling hundreds to volunteer and contribute to disaster relief and help the lives of people in places such as Africa, India, Tunisia, and others.
9. Mark Cuban’s NBA fine money could have purchased 2 year’s worth of supplies for The Boys and Girls Clubs of America.
10. Mark Cuban’s NBA fine could have provided 121 uninsured americans with healthcare, at an estimated ~$12,000 per year.

Again, I have nothing against Mark Cuban — I actually like the guy. It is a shame, though, all that good money could have gone to something good, instead of to the NBA.

Also, if Mark Cuban does, indeed, match his fines and donates that to a charity, then great job. I don’t know if he does or not and haven’t found evidence of that. I have a commenter below that claims that, but has not provided evidence of it.

Here is the ajaxified timeline of Mark Cuban NBA Fine History. Enjoy.

Mark Cuban, NBA Fines Ajaxified is a post from: Lean Six Sigma Consulting

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The premier of “The Apprentice” last week was pretty cool. Given my interest in people like Donald Trump, I decided to check out what I could learn about him on LexisNexis.

I found several hundred lawsuits with the phrase “Donald Trump” or “Trump Hotels and Casino Resorts” or “Taj Mahal.” From what I understand, he has personally bankruptcy two times: in 1992 and in 2004.

Below is a subsequent bankruptcy filing from 1992; one of Trumps debtor’s is suing him for some money. I’m still searching for the actual 1992 and 2004 bankruptcy filing — just out of personal interest. The data below is taken directly from LexisNexis and is public record:

+++++

In re: DAVID POSKANZER and DAVID POSKANZER MORTGAGE COMPANY, Debtor. TRUMP PLAZA ASSOCIATES, d/b/a TRUMP PLAZA HOTEL & CASINO; Plaintiff, v. DAVID POSKANZER, Defendant. TRUMP CASTLE ASSOCIATES, d/b/a TRUMP CASTLE CASINO RESORT; Plaintiff, v. DAVID POSKANZER Defendant. BOARDWALK REGENCY CORPORATION, d/b/a CAESARS ATLANTIC CITY and DESERT PALACE, INC., d/b/a CAESARS PALACE, Plaintiffs, v. DAVID POSKANZER, Defendant.

Case no. 90-24943, Adv. No. 91-2104, Adv. No. 91-2228, Adv. No. 91-2093

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF NEW JERSEY

143 B.R. 991; 1992 Bankr. LEXIS 1251

May 28, 1992, Decided
May 28, 1992, Filed

COUNSEL: [**1] COOPER, PERSKIE, APRIL, NIEDELMAN, WAGENHEIM & LEVENSON, P.A., 1125 Atlantic Avenue, Third Floor, Atlantic City, New Jersey 08401-4891, By: Charles A. Matison, Esquire, Attorneys for Trump Castle Associates.

SLATER, TENAGLIA & HELMER, P.A., 26 West Main Street, Marlton, New Jersey 08053, By: Richard L. Vitali, Esquire, Attorneys for Trump Plaza Associates.

PITNEY, HARDIN, KIPP & SZUCH, P.O. Box 1945, Morristown, New Jersey 07962-1945, By: Timothy R. Greiner, Esquire, Attorneys for Boardwalk Regency Corporation and Desert Palace, Inc.

GROSS & GROSS, 14 Route 4, River Edge, New Jersey 07661, By: Michael Gross, Esquire, Attorneys for David Poskanzer.

JUDGES: TUOHEY

OPINION BY: WILLIAM F. TUOHEY

OPINION: [*993] OPINION

TUOHEY, Judge William F.

These consolidated adversary proceedings came before the court for trial on February 25, 1992. The issues raised involve the administration of the assets of the bankruptcy estate and the determination of the dischargeability of certain claims. As such, these are core proceedings as set forth by Congress in 28 U.S.C. §§ 157 et seq. The within opinion constitutes findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052.

FINDINGS OF FACT [**2]

1. The debtor filed an individual voluntary petition for relief under chapter 7 of the United States Bankruptcy Code on November 7, 1990. The debtor has indicated that he and his daughter prepared this petition, without the assistance of counsel. (See Trump Castle’s Designation of Defendant’s Deposition to be Offered into Evidence as Admissions, inclusive of pp. 27-28.)

2. The trustee subsequently moved to convert the chapter 7 case to a chapter 11. This action was approved by an order of this court filed on May 17, 1991. n1

- – - – - – - – - – - – - – Footnotes – - – - – - – - – - – - – - -

n1 An appeal of this decision was made to the United States District Court for the District of New Jersey. In a letter opinion, filed with this court on May 20, 1992, the conversion of the case to a chapter 11 was affirmed by The Honorable Nicholas H. Politan.

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3. According to the debtor’s bankruptcy petition, he is engaged in the business of commercial real estate development and ownership. He lists his business names as Poskanzer Tulp Co., Fort Lee Executive Park, and David [**3] Poskanzer Mortgage Co., located in Fort Lee, New Jersey.

4. The debtor indicates that during the 1970′s and 1980′s, he amassed a personal fortune.

He developed hundreds of properties throughout the northeastern part of the United States valued at more than three hundred million dollars. By the mid-1980′s he was celebrated as an icon in the real estate business in New Jersey. His name appeared on buildings and billboards, in newspapers and on television.

(See debtor’s Trial Brief, filed February 19, 1992, p. 1.) By all counts then, it is undisputed that the debtor is a experienced businessman, presumably familiar with financing and credit transactions.

5. The debtor admits to having incurred several large gambling debts at various casinos in October, 1990. (See debtor’s Trial Brief and answers to verified complaints.) These casino creditors have filed adversary complaints against the debtor regarding the dischargeability of certain debts.

6. On October 2, 1991, the court entered an amended pretrial order which consolidated adversary proceedings 91-2104, 91-2108, and 91-2228. These are complaints against the debtor made by: Trump Plaza Associates d/b/a Trump [**4] Plaza Hotel & Casino, (“Trump Plaza”); MGM Desert Inn, (“MGM”); and Trump Castle Associates d/b/a Trump Castle Casino Resort, (“Trump Castle”), respectively, as well as adversary proceeding 91-2052, a complaint made by Trump Castle against the trustee and the bankruptcy estate. n2

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n2 Certain adversary complaints also named the bankruptcy trustee, inasmuch as they sought the surrender of casino gaming chips which were in the possession of the bankruptcy estate. These matters were all resolved prior to trial.

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7. The October 2, 1991 order also directed that related adversary proceeding 91-2093, a complaint filed by Boardwalk Regency Corporation d/b/a Caesar’s Atlantic City, (“Caesars A.C.”), and Desert Palace, Inc., d/b/a Caesar’s Palace, Inc., (“Caesars Palace”), (collectively “BRC”), be tried before [*994] this court simultaneously with the aforesaid consolidated adversary proceedings.

8. The consolidated and related adversary proceedings were tried before this court on February 25, 1992, at the conclusion of which this [**5] court reserved its decision. n3 The parties were represented by the counsel of their choice, submitted pleadings and relevant evidence, and were allowed to supplement the record with additional briefs. Further, the parties stipulated on the record to the facts of the cases, with few exceptions, as submitted in their pleadings.

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n3 Those counts of the adversary proceedings which were brought against the trustee seeking the surrender of casino gaming chips were settled prior to trial.

Trump Castle’s case against the trustee, number 91-2052, sought the surrender of some $ 10,000 in Trump Castle casino chips, which had previously been turned over to the trustee by the debtor. (The chips were apparently the remainder of some $ 200,000 worth of Trump Castle chips received by the debtor on or about October 13, 1990. Cross-reference case number 91-2228, infra.)

MGM’s case against the debtor, 91-2108, was settled by a consent order, pending MGM’s acceptance of the debtor’s eventual proposed plan of reorganization.

Caesars A.C.’s case against the trustee, 91-2093, contained in count 3 of its Amended Complaint, was settled by the payment of $ 75,000 for the surrender of $ 395,000 in Caesars A.C. gaming chips.

- – - – - – - – - – - – End Footnotes- – - – - – - – - – - – - – [**6]

9. The findings of fact for the remaining adversary proceedings are discussed seriatim.

TRUMP CASTLE

10. Trump Castle is a hotel-casino located in Atlantic City, New Jersey.

11. On April 17, 1991, Trump Castle filed a complaint against the debtor objecting to the discharge of its claim, designated as adversary proceeding number 91-2228. The debtor filed an answer on May 13, 1991. The facts underlying the complaint are as follows.

12. On or about October 13, 1990, the debtor went to the Trump Castle casino and obtained $ 200,000 worth of casino chips on credit. (See Trump Castle’s Complaint and debtor’s Answer, paragraphs 1-3.)

13. More particularly, the debtor signed five separate markers in varying denominations which totaled $ 200,000, in favor of Trump Castle. (Id.) These five markers were submitted into evidence at trial as exhibit TC-2.

14. On the face of each check, the following language was pre-printed:

I represent that I have received cash for the above amount and that said amount is on deposit in said bank or trust company in my name. It is free from claims and subject to this check.

(See Trial Exhibit TC-2.)

15. The markers [**7] were drawn against the account number 101023456 at Midland Bank & Trust, (“Midland Bank”), information which was provided to Trump Castle by the debtor to supplement a credit application. (See debtor’s Answer, paragraph 2, Trump Castle’s Supplemental Trial Brief, p. 4, and Supplemental Trial Exhibit Affidavit of Stan Pienta, paragraph 8. See also Trial Exhibit TC-1, the debtor’s Trump Castle credit application.) However, when Trump Castle attempted to negotiate the markers, they were returned by the drawee bank because there were insufficient funds in the account to cover the demand. (See Trump Castle’s Complaint and debtor’s Answer, paragraph 6.)

16. During the Rule 2004 Examination, the debtor stated that there were insufficient funds to cover the credit extension by Trump Castle at the time it was made:

Q. [by Mr. Matison] On October the 13th, 1990 when you signed the marker and it had the Midland Bank & Trust Company on it, did you have money in that account to cover, you had $ 10,000 in chips, let’s use $ 190,000 in that account?
A. [by the debtor] No.
Q. Did you take any steps after October 13 to pay Castle back the $ 200,000 that you [**8] owed them?
A. I don’t know what the question means.
[*995] Q. Did you contact Castle either orally or in writing regarding paying back any of the $ 200,000 that you owed them?
A. No.
Q. Did you take any steps to write out checks or any other financial documents to pay back any of the money that you owed them?
A. I went to other casinos and attempted to win.

(See Trump Castle’s Designation of Defendant’s Rule 2004 Examination to be Offered into Evidence as Admissions, inclusive of p. 71, lines 1-19.) It is additionally noted, though, that the debtor claims to have unsuccessfully attempted more conventional methods of raising capital to pay off these casino debts. (Id., inclusive of p. 90.)

17. The debtor indicates that he lost most of the $ 200,000 worth of gaming chips while gambling. However, some $ 2,000 to $ 3,000 worth of chips may have been cashed on that date, a portion of which the debtor utilized to purchase a dress from a casino shop for his daughter. (Id,. inclusive of pp. 78-79.) Additionally, the debtor took some $ 10,000 worth of chips with him when he left the casino. (Id., inclusive of p. 89.) n4

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n4 The $ 10,000 worth of Trump Castle chips was ultimately surrendered to the casino by the trustee in exchange for a cash payment of $ 5,000. (See footnote 3, supra.)

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18. Trump Castle therefore seeks to have its claim for $ 195,000 n5 declared nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A), (B), and (C).

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n5 This sum is derived from the original extension of credit by Trump Castle in the amount of $ 200,000, less the $ 10,000 worth of chips surrendered by the bankruptcy estate, plus the $ 5,000 cash payment required for the surrender of the chips. (See Trump Castle’s Supplemental Trial Brief.)

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TRUMP PLAZA

19. Trump Plaza is a hotel-casino located in Atlantic City, New Jersey.

20. On February 15, 1991, Trump Plaza filed a complaint in objection to the debtor’s discharge of its claim, designated as adversary proceeding 91-2104.

21. It is stipulated that on October 19, 1990, the debtor went to Trump Plaza and received some $ 200,000 worth of gaming chips on credit to enable him to gamble at the Trump Plaza casino. (See Trump Plaza’s Complaint and debtor’s Answer, paragraphs 2-5.)

22. The debtor had been a credit patron of Trump Plaza since 1986. [**10] (See Trump Plaza’s Supplemental Trial Exhibit, Affidavit of Michael R. Marcynyszyn, paragraph 3.)

23. More particularly, the debtor executed ten markers, each in the amount of $ 20,000, drawn against his account at Midland Bank, account number 101023456. n6 It is stipulated by the debtor that the Midland Bank account number was provided to Trump Plaza during a visit to the casino in October, 1990. (Id. at paragraph 3.)

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n6 These ten markers were submitted at trial as exhibit TP-2.

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24. The debtor admits that he gambled and lost many of the gaming chips. However, the debtor also contends that he may have taken with him approximately $ 100,000 worth of chips when he left the casino and later turned them over to the bankruptcy trustee. (See Trump Plaza’s Designation of Defendant’s Deposition to be offered into Evidence as Admissions, inclusive of p. 121, lines 12-18.)

25. When Trump Plaza attempted to negotiate the checks, the drawee bank dishonored them because of insufficient funds in the debtor’s [**11] account. (See Trump Plaza’s Complaint and debtor’s Answer, paragraphs 6-7.)

26. The court further notes the following exchange during the Rule 2004 Examination,

Q. [by Mr. Vitali] At the time that you signed the markers to Trump Plaza casino, was it your belief that there were sufficient moneys [sic] in account 101023456 at Midland Bank & Trust to cover the $ 200,000?
A. [by the debtor] No, I knew there wasn’t.
[*996] Q. At the time you signed the markers to Trump Plaza casino, were you aware of the fact that you were already indebted to any other casinos?
A. Yeah, I might have been.
Q. Isn’t it a fact that you were already indebted to Trump Castle for the sum of $ 200,000?
A. Yes, I think that’s true.

(See Trump Plaza’s Designation of Defendant’s Deposition to be Offered into Evidence as Admissions, inclusive of p. 124, lines 11-25.)

27. Trump Plaza alleges that the debtor executed the credit slips knowing that there were insufficient funds in his bank account to honor the checks; that the debtor never intended to repay the debt; and that this was the result of false pretense, false representation, and actual fraud committed by the debtor.

28. Trump Plaza [**12] therefore seeks to have its claim in the amount of declared nondischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (C), as well as interest and costs.

CAESARS PALACE

29. Caesars Palace, is a hotel-casino located in Las Vegas, Nevada.

30. On February 13, 1991, Caesars Palace filed a joint complaint, with Caesars A.C., objecting to the dischargeability of its claims against the debtor. The debtor filed an answer to the complaint on March 7, 1991.

31. The casinos filed an amended complaint, with the leave of the court, on November 12, 1991. The debtor filed an answer to the amended complaint on November 19, 1991.

32. It is undisputed that on October 25 and 26, 1990, the debtor went to the Caesars Palace casino obtained $ 75,000 worth of gambling chips on credit. (See BRC’s Amended Complaint and debtor’s Answer, paragraphs 9-10.)

33. More Particularly, on October 25, 1990, the debtor ascertained that he had a line of credit available at the casino. n7 The debtor then signed two counter checks payable to Caesars Palace, each in the amount of $ 20,000. In return, the debtor received $ 40,000 face amount of gaming chips for use in Caesars Palace casino. ( [**13] Id. at paragraph 9.)

- – - – - – - – - – - – - – Footnotes – - – - – - – - – - – - – - -

n7 This line of credit was based in part on the debtor’s bank accounts which were on file with Caesars Palace: (1) United Jersey Bank, account number 226303209, and (2) Midland Bank, account number 10-102345-6. (See Trial Exhibits DP-3 and BRC-6, respectively.)

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34. On October 26, 1990, the debtor executed two additional counter checks payable to Caesars Palace, in the amounts of $ 25,000 and $ 10,000, and received in exchange an additional $ 35,000 face amount of gaming chips for use in Caesars Palace casino. (Id. at paragraph 10.)

35. No Portion of the $ 75,000 debt to Caesars Palace has been repaid to date — the chips were apparently lost by the debtor while engaged in gambling activities at the casino. (Id. at paragraph 11.)

36. The debtor stated on pages 90-91 of the Rule 2004 Examination he attempted to raise capital to pay back monies owed to the various casinos. (See debtor’s Supplemental Trial Brief, p. 5.)

37. However, the court also notes the following [**14] exchange, which appears on page 52 of the 2004 Examination:

Q. [by Mr. Greiner] Between October 26 and November 7 did you take any steps to make deposits to either Midland Bank or the UJB account to cover the $ 75,000 that you owed to Caesars Palace under the markers that have been designated –

A. [by debtor] Yeah, I went down to Atlantic City and tried to win again.

Q. Was that your best available source of funds?

A. At the time I felt it was the only source of available funds I had.

(See BRC’s Designation of Defendant’s Deposition to be Offered into Evidence as Admissions, inclusive of p.52, lines 4-14.)

38. Caesars Palace indicates on page 5 of its trial brief that it was unable to attempt to negotiate the counter checks by [*997] operation of the automatic stay, which became effective on November 7, 1990, and that the obligation remains due and owing.

39. Caesars Palace therefore seeks a determination that its $ 75,000 claim be nondischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A), (C), and (a)(6). Caesars Palace also seeks compensatory damages in the amount of $ 75,000, exemplary damages, interest, and the cost of the suit.

CAESARS A.C.

40. Caesars A.C. is [**15] a hotel-casino establishment located in Atlantic City, New Jersey.

41. Caesars A.C. filed a joint complaint with Caesars Palace on February 13, 1991. n8 (See paragraphs 30-31, supra.)

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n8 BRC further sought to compel the trustee to surrender to it some $ 395,000 worth of Caesars A.C. gaming chips, which were in possession of the bankruptcy estate. This count of the complaint was subsequently settled on the record before the court on January 7, 1991. Through this agreement, BRC agreed to pay the trustee $ 75,000 in exchange for the chips, but retained its claims against the debtor.

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42. On October 30, 1990, the debtor went to Caesars A.C. and obtained $ 400,000 worth of casino gambling chips on credit. (See BRC’s Amended Complaint and debtor’s Answer, paragraph 20.)

43. More particularly, the debtor executed ten separate counter checks in favor of Caesars A.C. in the amounts of $ 40,000 each. The counter checks were drawn upon Midland Bank, account number 10-102345-6. (Id. at paragraph [**16] 20.) These counter checks were admitted into evidence as Trial Exhibit BRC-5.

44. In exchange, the debtor was provided with a total of $ 400,000 in Caesars A.C. gaming chips. (Id.)

45. It is further stipulated that Caesars A.C. subsequently attempted to negotiate the counter checks, but that they were dishonored by the drawee bank because there were insufficient funds in the debtor’s bank account. (Id. at paragraph 22.)

46. An abstract of the debtor’s Midland Bank account, number 10-102345-6, submitted to the court at trial as exhibit BRC-6, indicates a balance of less than $ 20,000 at all times between 9/29/90 and 11/20/90.

47. The court notes that the debtor did not lose all of the Caesar’s A.C. chips — a fact evidenced by the debtor having turned over some $ 395,000 worth of the BRC chips to the trustee after filing for bankruptcy.

48. Caesars A.C. therefore seeks to have the $ 400,000 debt declared nondischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A), (C), and (a)(6). Caesars A.C. also seeks compensatory damages in the amount of $ 80,000, n9 plus interest and costs, and exemplary damages.

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n9 This sum is derived from the original $ 400,000 debt, less the $ 395,000 in gaming chips received from the trustee pursuant to settlement (cross reference footnote 3, supra), plus the $ 75,000 paid to the trustee for the return of the chips.

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49. Therefore, between the dates of October 13, 1990 and October 30, 1990, within thirty days prior to the filing of the bankruptcy petition, the debtor received extensions of credit from numerous gambling casinos totaling $ 875,000. n10

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n10 This figure does not include the claim of MGM, which was settled prior to trial. (See footnote 2, supra.)

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50. In the background of this conduct, the debtor admits to having consulted with attorneys regarding his filing for bankruptcy as early as fall of 1989. (See BRC’s and Trump Castle’s Designation of Defendant’s Deposition to be Offered into Evidence, inclusive of pp. 25-26.) n11

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n11 Additionally, the debtor admits to having considered filing a bankruptcy petition on a daily basis since fall of 1989. (See 2004 Examination, p. 111.)

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51. Further, the debtor admits to having solicited and obtained [**18] a bankruptcy petition form from an attorney a month or more before his filing date of November 7, 1990. (Id., inclusive of pp. 26-27.)

BRC’s Motion for Reconsideration of an Evidentiary Ruling

52. On April 3, 1992, this court also heard BRC’s motion for reconsideration of an evidentiary ruling which was made during [*998] the trial, at the conclusion of which the court reserved its decision.

53. Specifically, at trial the BRC plaintiffs had contended that the court should have drawn an adverse inference from the debtor’s failure to appear to testify in his own defense. The court ruled that there was no obligation for the defendant to be present at trial and that no inference would be drawn.

54. During re-argument, BRC contended that because it established a prima facie case, and the debtor failed to testify in his defense, the court was required to draw a negative inference. (See BRC’s Memorandum of Law for Reconsideration of Evidentiary Ruling, Preliminary Statement.)

DISCUSSION

With respect to BRC’s motion for reconsideration of the evidentiary ruling, the court finds no authority cited by BRC which requires this court to draw adverse inferences [**19] from the debtor’s failure to testify at trial. BRC’s memorandum of law cites a line of cases which “do not preclude the inference . . . .” E.g. Baxter v. Palmigiano, 425 U.S. 308, 318, 47 L. Ed. 2d 810, 96 S. Ct. 1551 (1976), (citations omitted). These opinions are illustrative of the authority of the court to make permissive findings in such circumstances.

The debtor, who was not subpoenaed to appear at trial, has been an active participant in these bankruptcy proceedings. His presence in the courtroom had been noted on a frequent basis in the weeks preceding the trial. Further, the parties have all had the opportunity to question the debtor in the 2004 Examination, and submit portions thereof at trial. BRC’s motion for reconsideration of the evidentiary ruling is therefore denied.

With respect to the remaining issues, the court notes that traditionally, the public policy behind the discharge of debts in bankruptcy is to give the overburdened debtor a “fresh start.” In re Graham, 111 Bankr. 801 (Bkrtcy. E.D. Ark. 1990). But this policy of a fresh start is not unrestricted:

In the same breath that we have invoked this “fresh start” policy, we have been careful to [**20] explain that the Act limits the opportunity for a completely unencumbered new beginning to the “honest but unfortunate debtor.”

Grogan v. Garner, 112 L. Ed. 2d 755, 111 S. Ct. 654, 659, 70 A.F.T.R.2d (P-H) 5639 (1991), (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 54 S. Ct. 695, 699, 78 L. Ed. 1230 (1934)). Consequently, pursuant to code section 524, the debtor is released from personal liability on discharged debts. In re Lembke, 93 Bankr. 701 (Bkrtcy. D.N.D. 1988). However, in an effort to discourage fraudulent conduct and to ensure that relief intended for honest debtors does not inure to the benefit of the dishonest . . .,” Congress adopted 11 U.S.C. 523. In re Hunter, 771 F.2d 1126, 1130 (8th Cir. 1985), (quoting In re Wilson, 12 Bankr. 363, 370 (Bkrtcy. M.D. Tenn. 1981)).

The casino creditors have sought to have their claims determined to be non-dischargeable pursuant to various provisions of 11 U.S.C. §§ 523(a) et seq. Section 523 states in pertinent part that:

(a) a discharge under [11 U.S.C. §§ 727, 1141, 1228(a), 1228(b), or 1328(b)] does not discharge an individual debtor from any debt — . . .

(2) for money, property, services, [**21] or an extension, renewal, or refinancing of credit to the extent obtained by–

(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s . . . financial condition;
(B) use of a statement in writing–
(i) that is materially false;
(ii) respecting the debtor’s . . . financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; or
(C) for purposes of subparagraph (A) of this paragraph, consumer debts owed to a single creditor and aggregating more than $ 500 for luxury goods or services [*999] incurred by an individual debtor on or within forty days before the order for relief under this title . . . are presumed to be nondischargeable; “luxury goods or services” do not include goods or services reasonably acquired for the support or maintenance of the debtor or a dependent of the debtor . . . .

11 U.S.C. §§ 523(a)(2)(A),(B), and (C).

Section 523(a)(6) holds as nondischargeable those debts resulting from “willful and malicious injury by the debtor to another entity or [**22] to the property of another entity . . . .” 11 U.S.C. § 523(A)(6).

A. Analysis under Section 523(a)(2)(A)

In order to have a debt declared nondischargeable under § 523(a)(2)(A), a creditor must show:

(1) the debtor obtained money, property or services through a material misrepresentations;
(2) the debtor, at the time, knew the representation was false or made with gross recklessness as to its truth;
(3) the debtor intended to deceive the creditor;
(4) the creditor reasonably relied on the creditor’s false representations; and
(5) the creditor sustained a loss and damages as a proximate result of the debtor’s materially false representations.

In re Ritzer, 105 Bankr. 424 (Bkrtcy. S.D. Ohio 1989), (citing Coman v. Phillips, 804 F.2d 930, 932 (6th Cir. 1986). To meet this burden under § 523(a), creditors must prove their cases by a preponderance of the evidence standard. See Grogan, supra.

The casino creditors have individually substantiated their levels of proof by a preponderance of the evidence. To wit, it is undisputed that the debtor incurred significant casino debts on the eve of his bankruptcy, and [**23] without any clear knowledge as to how he would repay the debts. This is evidenced by the debtor’s pattern in October, 1990, of personally traveling to casinos in Las Vegas, Nevada, and Atlantic City, New Jersey, and obtaining hundreds of thousands of dollars in credit based upon records which reflected a bank account which had insufficient funds to repay the obligations that were incurred.

To compound this material misrepresentation, the debtor admitted that he knew at the time he obtained credit from the casinos that the bank account had assets therein which were grossly inadequate to meet his newly incurred casino debts. Furthermore, this scienter was amplified on each subsequent occasion when the defendant provided the same credit information to obtain casino credit after having previously lost thousands of dollars on the same account. It is therefore noteworthy that “debtors in bankruptcy are presumed to intend the natural consequences of their acts. Thus, a debtor who makes a false representation is presumed to have intent to deceive.” In re D’Ettore, 106 Bankr. 715 (Bkrtcy. M.D. Fla. 1989).

The debtor, who is an experienced businessman, engaged in this [**24] casino gambling spree without revealing his true financial status to any of his other casino creditors. They were notified only by filing of a chapter 7 petition. The record reflects that the debtor considered filing for bankruptcy more than one year prior his actual filing. Further, the debtor solicited a bankruptcy petition form approximately one month prior to his actual filing. Such conduct may only be construed as nondischargeable when viewed in the context of the debtor’s financial condition. See In re Schlesher, 80 Bankr. 121 (Bkrtcy.E.D.Ark. 1987); In re Lacey, 85 Bankr. 908 (Bkrtcy.S.D.Fla. 1988).

The creditors reasonably relied upon their established credit procedures in concluding that the debtor warranted an extension of credit. The casinos have produced evidence sufficient to prove to the court, by a preponderance of the evidence standard; that their acceptance of the debtor’s new account information with its implied veracity, as well as the debtor’s established history of satisfying his gambling debts, as well as other evidence and affidavits, was reasonably relied upon.

Finally, the casino creditors have sustained ascertainable [**25] monetary damages as a consequence of the debtor’s actions.

[*1000] B. Analysis under Section 523(a)(2)(B)

Trump Castle alone has raised a challenge to the dischargeability of its claim under 11 U.S.C. § 523(a)(2)(B), supra, misrepresentations of a written nature. Based upon the stipulated facts, it is this court’s conclusion that the Trump Castle claim is also nondischargeable pursuant this section. The Trump Castle credit markers were prepared at the debtor’s instructions, using information provided by him. Although the markers bore language certifying the availability of collateral funds, the debtor signed these markers knowing that the account did not have enough money therein. The court notes that,

the writing required by § 523(a)(2)(B) is sufficiently broad enough to include any statement made by the debtor, not just formal financial statements and documents in a bank or commercial setting.

In re Howard, 73 Bankr. 694, 710 (Bkrtcy. N.D. Ind. 1987). These totality of these express acts is indicative of the debtor’s intent to deceive. See Schleser and Lacey, supra.

C. Analysis under Section 523(a)(2)(C)

The casino creditors [**26] join in alternatively moving under 11 U.S.C. § 523(a)(2)(C) to have their claims deemed nondischargeable. It is undisputed that the acts complained of all occurred within forty days of the filing of the bankruptcy petition and involve amounts exceeding $ 500. Moreover, the debtor has argued neither that he utilized the casino chips for support and maintenance nor that the casino credit does not constitute a luxury good or service.

While definitive caselaw which classifies gambling as a “luxury good or service” is lacking, the court notes that the § 523(a)(2)(C) does not provide an exclusive definition other than to indicate that such goods or services are not those used for support or maintenance. Indeed, persuasive scholarly authority states that,

while nothing in the Code, as amended, expressly prohibits discharging indebtedness incurred through speculation, the fact that the debtor incurred obligations with the intent to gain all of the upside if successful and none of the downside upon failure might be enough to convince a court of abuse. Thus while not enumerated in sections 523 or 727, gambling debt is of such a character that the debtor should continue to be obligated [**27] to repay that debt.

See, Karen Gross, Preserving a Fresh Start for the Individual Debtor: the Case for Narrow Construction of the Consumer Credit Amendments. 135 U.Pa.L.Rev. 59, 107 (1986), (citations omitted). This court is therefore satisfied that the casino creditors have alternatively proven their claims as nondischargeable pursuant to § 523(a)(2)(C) by a preponderance of the evidence.

D. Analysis under Section 523(a)(6)

BRC has additionally sought a nondischargeable judgment for punitive damages. Sitting as a fundamental court of equity, this court concludes that the debtor’s conduct failed to rise to the level of a “willful and malicious injury” which would warrant the award of punitive damages under 11 U.S.C. § 523(a)(6). BRC’s claim for punitive damages is denied.

The claims of the casino creditors are therefore held to be nondischargeable under section 523. Judgment is entered in favor of the plaintiffs as follows: n12
TRUMP CASTLE $ 190,000

TRUMP PLAZA $ 200,000

CAESARS PALACE $ 75,000

CAESARS A.C. $ 5,000

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n12 The court has rejected the arguments of Trump Castle and Caesars A.C. that the costs of their separate settlement agreements with the trustee should be included in the amount of the judgment entered against the debtor and declared as nondischargeable debts. In denying these costs, the court notes that the plaintiffs accepted settlement terms in lieu of prosecuting their complaints against the trustee to trial. These complaints were filed by Trump Castle and Caesars A.C. to recover gaming chips which were in the possession of the bankruptcy estate. (See footnotes 4, 5, 8 and 9, supra.)

The court further notes that the award to Trump Plaza does not reflect any adjustment which has been or may potentially be derived from the recovery of approximately $ 100,000 in Trump Plaza gaming chips alleged by the debtor to be in the possession of the trustee. (See paragraph 24, supra.) Any action to recover these chips shall be tied to the amount of this judgment such that the total award to Trump Plaza will not exceed the original $ 200,000 debt.

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[**28]

William F. Tuohey
United States Bankruptcy Judge

Dated: May 28, 1992
Newark, New Jersey

Donald Trump’s 1992 Bankruptcy is a post from: Lean Six Sigma Consulting

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Google came out today with a click-fraud report, claiming that less than 2% of all clicks on both adwords and adsense are considered click-fraud. Shuman Ghosemajumder, Product Manager on Google’s Trust and Safety Team, claims that this is true because of Google’s 4-step filtering system.

According to Ghosemanjumder, below is an accurate picture of click-fraud and invalid clicks based on Googler’s internal data:

Google uses a 4-step filtering system, as pictured below:

In Ghosemajumder’s words:

The first layer is purely automatic and is used to filter clicks from both “search” and AdSense partners (contextual ads). This filter is able to detect invalid clicks in real-time, with the goal of removing them before they ever show up in the AdWords console.

The second and third layers are aimed at filtering only AdSense clicks. The second layer is what Google calls its “flagging system” and is an automatic process to remove invalid clicks from the AdWords system. The third layer of filtering is a “manual review” process with more than two dozen Google employees manually reviewing and removing any suspicious clicks.

Google’s goal is to have the first three layers of filtering identify 100% of all invalid and fraudulent clicks. Those clicks that manage to escape Google’s filters are what causes many advertisers to raise concerns and has spawned the growth of many so-called click fraud detection companies. The fourth layer of click fraud detection falls to these advertisers and detection companies and is what Google calls “requested investigations”.

Ghosemajumder goes on to explain that not all click-fraud is a bonafide click-fraud, citing examples from multiple clicks from the same IP Address might be from a corporate site, etc. He concludes that the current numbers of 20% or above click-fraud are inflated and untrue.

Google & Measurement System Analysis (MSA)

I have several friends working at Google; I believe that they hire smart people. But, a blanket percentage number for this type of phenomena is insufficient. These types of scenarios are subject to intra-subject and inter-subject variability. That is, how does one know that a click is valid or invalid? That question alone points to the need of additional metrics such as specificity and sensitivity:

Specificity = [(number of true negatives) / (number of true negatives + number of false positives)]

The specificity metric gives us an idea of how accurate the testing measurement tool is — in this case, the accuracy of declaring a click is not an invalid click; without that metric, blanket percentages declared by Google don’t have much meaning.

Another metric that is important to know is the sensitivity of the test:

Sensitivity = [(number of true positives) / (number of true positives + number of false negatives)]

The sensitivity metric gives us an idea of the accuracy of the test for demonstrating true click-fraud. Again, without this measurement, blanket percentages purported by Google don’t carry much meaning.

The two measurements above give rise to 2 more metrics that will give us a better picture into the true Click-fraud rate and the accuracy of the measurement system in question:

False Positive Rate = (Number of False Positives / Number of True Negatives)

This metric gives us an idea of the proportion of negative instances that were incorrectly reported as positive. On the other side, we can also derive the following:

False Negative Rate = (Number of False Negatives / Number of Positive Instances)

That metric gives us an idea of the proportion of positive instances that were reported as negative. Below is a helpful table for reference:

Without the reporting of the 4 measurements above, it is truly difficult — if not academically possible — for Google to claim very much.

Google, Click-Fraud, and The Liar’s Paradox

Because Google really didn’t present much today in terms of meaningful data to help the audience reach a conclusion the the accuracy of the measurement system or the true numbers that make up invalid clicks and click-fraud, Google is reduced to the Liar’s Paradox.

Following my previous post on axiomatizing majority rule, I present how Google claim today is a Liar’s Paradox:

With the absence of meaningful data, Google claims:

Statement One: 2% of clicks constitute click-fraud.

Statement Two: Statement One is False.

Statement Three: Statement Two is True.

Statement Four: Statement One is both True and False

Statement Five: Statement Four is a contradiction

QED

I’m stretching the Liar’s paradox here a little bit, but I do it to demonstrate that Google’s statement today, without the metrics I described above, presented us with nothing meaningful.

Google, Click-Fraud, Insufficient Metrics is a post from: Lean Six Sigma Consulting

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The Business Plan Archive has some really interesting information. In concert with the Library of Congress, the Archive collects old business plans and items related to entrepreneurship. In their words:

In partnership with the Library of Congress, the Center for History and New Media, and the University of Maryland Libraries, the Archive collects and preserves business plans and related planning documents from the Birth of the Dot Com Era so that future generations will be able to learn from this remarkable episode in the history of technology and entrepreneurship.

I poked around the Archive tonight and found some really interesting companies, most of which aren’t around anymore, but their memory is preserved in their business plans, executive summaries, and other artifacts relating to the company.

One company I found interesting and funny is Funeral.com, founded in 2000 and, at that time, they were seeking a $10,000,000 series A round of funding. They didn’t get it and they’ve folded. Below is their elevator pitch:

Although I didn’t read this document thoroughly, I have to admit that I have no idea what this business does. Maybe I wasn’t the only confused one, since they have since folded. But, the domain name still exists, and is probably worth some decent cash.

Below was their executive team:

• Chris Brown, CEO. The current owner and President of the largest Wilbert-brand burial vault (largest U.S. market share) franchisee in the U.S. based in St. Paul, Minnesota with manufacturing plants in three states.
• Dan Garrity, EVP of Sales. A licensed funeral director who is also the former Regional Sales Manager for the third largest casket manufacturer in the U.S.
• Bruce Bratton, CFO. A licensed funeral director who is also a former funeral home owner with experience in operating 40 funeral home locations in four states, is a nationally recognized expert on funeral home valuation, and holds and MBA in Finance and Marketing from The Wharton School, The University of Pennsylvania.

I’m sure the funeral industry is a stable and growing industry, but all of this talk of caskets, funerals, and burial sites feels creepy.

Anyway, check out The Business Plan Archive. There are some nuggets there, and a great place to learn about what does and what doesn’t work.

Nuggets from The Business Plan Archive is a post from: Lean Six Sigma Consulting

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Previously in Part 1 and Part 2, we discussed the possibility of Jack Welch acquiring The Boston Globe. We’ve discussed several things Jack might do, if the deal goes through. All of which, has to do with the Profit Tree model, which is below:

We know that the Globe’s circulation recently dropped by as much as 25%. I introduced the idea of Root Cause Analysis to find the drivers for the drop in circulation. This is important because, as can be seen above, circulation is the main driver for Ad Rates, which then drives Revenue.

In this post, I just want to introduce one basic framework and suggest some market research to identify why circulation might have dropped.

In business, there are basic frameworks that are pragmatic and helpful. The Profit Tree is one (see above). Another one, that might be helpful for this case is the what is known as the 3 C’s, developed by Kenichi Ohmae, a Japanese Strategist. The 3 C’s stands for the following: Company, Competition, Customer.

Company

The firm aims to maximize its strengths relative to the competition in the functional areas that are critical to success in the industry. Broken down, it helps to think of the Company in the following ways:

• Selectivity and sequencing: In order to win the corporation does not need to have a clear lead in every function from sourcing to functioning. If it can gain a decisive edge in one key function, it will eventually be able to pull ahead of the competition in other functions that may now be no better than mediocre.

• A case of make or buy: In case of rapidly rising wage costs, it becomes a critical decision for a company to subcontract a major share of its assembly operations. Its competitors may not be able to shift production so rapidly to subcontractors and vendors, and the resulting difference in cost structure and/or in the company’s ability to cope with demand fluctuations could have have significant strategic implications.

• Improving cost-effectiveness: This can be done in three basic methods. The first is by reducing basic costs much more effectively than the competition. The second method is simply to exercise greater selectivity in terms of orders accepted, product offered, or functions to be performed which means cherry-picking the high-impact operations so that as others are eliminated, functional costs will drop faster than sales revenues. The third method is to share a certain key function among the corporation’s other businesses or even with other companies. Experience indicates that there are many situations in which sharing resources in one or more basic sub-functions of marketing can be advantageous.

Competition

According to Kenichi Ohmae, proper analysis of the firm can be constructed by looking at possible sources of differentiation in functions ranging from purchasing, design, and engineering to sales and servicing.

• The power of an image: Both Sony and Honda outsell their competitors as they invested more heavily in public relations and promotion and managed these functions more carefully than did their competitors. When product performance and mode of distribution are very difficult to differentiate, image may be the only source of positive differentiation. But as the case of the Swiss watch industry reminds us, a strategy built on image can be risky and must be monitored constantly.

• Capitalizing on (profit/cost-structure) differences: Firstly, the difference in source of profit might be exploited, for e.g. profit from new product sales, profit from services etc. Secondly, a difference in the ratio of fixed cost to variable cost might also be exploited strategically for e.g. a company with a lower fixed cost ratio can lower prices in a sluggish market and win market share. This hurts the company with a higher fixed cost ratio as the market price is too low to justify its high-fixed-cost-low-volume operation.

• Tactics for flyweights: If such a company chooses to compete in mass-media advertising or massive R&D efforts, the additional fixed costs will absorb such a large portion of its revenue that its giant competitors will inevitably win. It could though calculate its incentives on a graduated percentage basis rather than on absolute volume, thus making the incentives variable by guaranteeing the dealer a larger percentage of each extra unit sold. The Big Three, of course, cannot afford to offer such high percentages across the board to their respective franchised stores; their profitability would soon be eroded if they did.

• Hito-Kane-Mono: A favorite phrase of Japanese business planners is hito-kane-mono, or people, money, and things (fixed assets). They believe that streamlined corporate management is achieved when these three critical resources are in balance without any superfluity or waste. For example cash over and beyond what competent people can intelligently expend is wasted. Again too many managers without enough money will exhaust their energies and involve their colleagues in time-wasting paper warfare over the allocation of the limited funds. Of the three critical resources, funds should be allocated last. Based on the available mono-plant, machinery, technology, process know-how, functional strengths and so on-the corporation should first allocate management talent. Once these hito have developed creative, imaginative ideas to capture the business’s upward potential, the kane, or money, should be allocated to the specific ideas and programs generated by individual managers.

Customer

Ohmae once said that “There is no doubt that a corporation’s foremost concern ought to be the interest of its customers rather than that of its stockholders and other parties. In the long run, the corporation that is genuinely interested in its customers is the one that will be interesting to investors”. This is a very Japanese statement to make — in the world of Lean Manufacturing, which I fully endorse, it is about the customer and the thinking is very long-term, not short-term gain thinking, which most American companies are apt to do. Ohmae argued the following in regards to the Customer:

• Segmenting by objectives: Here, the differentiation is done in terms of the different ways different customers use the product. Take coffee, for example. Some people drink it to wakeup or keep alert, while others view coffee as a way to relax or socialize (coffee breaks).

• Segmenting by customer coverage: This type of strategic segmentation normally emerges from a trade-off study of marketing costs versus market coverage. There appears always to be a point of diminishing returns in the cost-versus-coverage relationship. The corporation’s task, therefore, is to optimize its range of market coverage, be it geographical or channel, so that its cost of marketing will be advantageous relative to the competition.

• Resegmenting the market: In a fiercely competitive market, the corporation and its head-on competitors are likely to be dissecting the market in similar ways. Over an extended period of time, therefore the effectiveness of a given initial strategic segmentation will tend to decline. In such a situation it often pays to pick a small group of key customers and reexamine what it is that they are really looking for.

• Changes in customer mix: Such a market segment change occurs where the forces at work are altering the distribution of the user-mix over time by influencing demography, distribution channels, customer size, etc. This kind of change calls for shifting the allocation of corporate resources and/or changing the absolute level of resources committed in the business, failing which severe losses in the market share can occur.

The framework above is very helpful. Most likely, if done sufficiently well — it doesn’t have to be done perfectly, but sufficiently well — some critical insights will come from the analysis and action items that will help the firm improve can be generated, structured, and planned.

Five or so years ago, I worked as a software engineer and database marketing analyst for a Chicago firm. One of our clients was the Chicago Tribune. We were tasked to learn more about the general demographics of the Tribune and their cross media partners (TV Stations and Radio) — basic market awareness and also buying or subscription behavior from the database. One item that came from that study was a general segmentation of the subscribers. This segmentation was done through analyzing the data in the very large subscription datastore as well as through a survey instrument. Using both helped our team “bucketize” (not a technical term, but descriptive) or segment the customers based on helpful factors.

Once we had a helpful segementation available, we then suggested very targeted means at marketing to each segment — with specific and targeted messaging that will speak to that segment, not generically, but very specific. Results? Revenue increased by 30% several months after implementing the targeted marketing messaging.

Conclusion

I have no idea what Jack might if The Boston Globe gets acquired. But, this has been a fun excercise in turnaround and basic business frameworks. No doubt, If Jack does acquire the Globe, he will probably cut costs using Six Sigma and Lean Manufacturing methodologies, as he has done at GE. Business frameworks such as the ones discuess in this series are easy to understand, somewhat easy to implement, but will undoubtedly help the firm become better, more competetive, and more customer-centric.

Jack Welch & The Boston Globe, Final Chapter is a post from: Lean Six Sigma Consulting

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This is part 1 of a 3 part series. The other parts can be found here: Part 1, Part 2, Part 3.
Previously in Part 1, we discussed the Profit Tree for the newspaper print industry, which is shown below:

From the very little data we have, we know that Sunday circulation has dropped by 25%. Why? One effective way to arrive at the root causes as to why circulation has and is dropping is to conduct a root cause analysis, effectively communicated with an Ishikawa Diagram:

Once potential root causes are identified, it’s important that those potential root causes are tested. This will be our initial hypothesis, further refined and validated with testing — either statistical quantitative testing, or qualitative testing. Once root causes are identified and validated, Jack Welch might want to implement effort to eliminate or reduce the root cause for why circulation is dropping.

Next, Jack might want to stratify the Ad Rates by size or some other appropriate attribute. He might want to identify the 80/20 split to show that, perhaps, 80% of the revenue come from 20% of the ads, or some other attribute. He will want to do this also for the sales team. Processes like this almost always follow Pareto — that is, most likely 80% of the sales will come from 20% of the sales force (or some close approximation). This data can be best visualized with a Pareto Chart, an example of which is shown below:

Given this data from the Pareto Analysis, Jack might want to cut costs by laying off staff that aren’t producing. He might also want to eliminate ad sizes that are taking inventory space, but aren’t as profitable as other ad sizes. He might want to look at other media groups, such as The Boston Globe’s online properties. Perhaps he might want to push more ad sales toward that venue instead of print media, if it makes sense to do so.

Summary

Using a few simple but effective tools, we can drive toward the Root Causes for why Circulation is dropping and gain a better focus on which ad sizes makes sense to continue selling. Also, the same Pareto Analysis excercise on the sales force can give us an indication of sales force effectiveness and allow us to make decisions based on what and who is effective and who is producing.

Jack Welch & The Boston Globe, Part 2 is a post from: Lean Six Sigma Consulting

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This is part 1 of a 3 part series. The other parts can be found here: Part 1, Part 2, Part 3.
There’s a rumor that Jack Welch and his private equity partners might acquire The Boston Globe. When I heard this, I immediately thought of the following: if Welch bought it, how would he add value to the Globe and, consequently, how would he add value to the shareholders?

Given his background, I’m willing to bet that his worldview and approach to bringing value to the Globe’s shareholders will be informed by his background in Six Sigma, Lean, and Process Improvement. Jack would probably look at the metrics that drive the top-line and what the cost structure looks like. Then he would implement an effort that will improve those metrics and subsequently increase revenues and drive down costs. Pretty basic turnaround stuff, I know; but, I think his approach will be to use the tools of Lean and Six Sigma to really drive growth and bring down costs.

This is all speculation, of course; there is no bid on The Boston Globe and the deal may not go through. But, it’s fun and interesting to see how one might turn the Boston Globe around. Also, this article is not an exposition on Lean or Six Sigma, but some of the tools will be employed to show how one might turnaround the Globe’s operations.

Apparently, the Boston Globe’s revenues are not well; according to PaidContent.org:

The Globe has been a poor financial performer, even by the standards of big-city dailies. Sunday circulation has plunged 25 percent since the Globe’s acquisition by the New York Times, according to the paper’s account. Advertising revenue at the paper’s New England Media Group is down 10 percent as of September.

Someone like Jack with a root cause worldview, might ask: what is driving down circulation? To begin answering this question, it’ll help to first understand, generally, the (Cost/Revenue) framework we call the profit tree.

The model above is simple, yet powerful. Simply, when (R > C), the firm is profitable. For a newspaper, we can use the general Profit Tree model; more appropriate, however, is the more specialized Newspaper Boy model to show what drives the top-line. Revenues are driven by the following:

Before explaining the Newspaper (Cost/Revenue) model above, first some definitions: Circulation is defined as the number of atomic copies the firm distributes on an average day. Readership is a similar metric, but that number will be slightly higher than the Circulation numbers, because there’s an assumption that a copy will be read by more than one person (think of a newspaper left in the bathroom or in the lobby of your office).

Now, explaining the tree above, circulation and # of inventory spots drive the Ad Rates; Ad Rates and the number, size, and placement of ads drive revenues. When Revenues are greater than Costs, the firm is profitable.

In the next part of this series, we’ll look at how Jack might approach increasing the top-line.

Note: I concede that Jack is not known for his love or good treatment of people and employees. Yes, I concede — hands down. But, his business acumen is top-notch.

Jack Welch & The Boston Globe, Part 1 is a post from: Lean Six Sigma Consulting

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I’m interested in the Deal Flow community of where ever I’ve lived.  I’ve followed Deal Flow in Chicago, where we lived for a few years while I was in graduate school and in Southern California, where we just moved from 10 months ago.

I recently obtained access to a pretty accurate Deal Flow database for Utah.  From time to time, I’ll highlight deals from that database.  Here’s an interesting deal that closed in September 2006:

Batteries & Bands Inc., is a company that sells watches, bands, and provides watch repair service. This company has operations in over 50 locations and in 12 states in the U.S., mostly located in shopping malls.  But, it’s headquarters are in Utah.  We don’t know how they are doing financially, but we know that they raised $10,000,000 in venture capital from undisclosed investors and took on an additional $1,400,000 in debt.  The company was founded in 2000 and has over 250 employees.

It’s interesting to see what types of companies money is actually flowing in to.  This company was one that I wouldn’t have suspected to be receiving such a substantial investment.  These types of deals also reveal a little bit about the general interest of Utah investors — true, investors will almost jump at any good financial deal, but most are restricted by industry or by some other criteria.  Interesting.

Utah Deal Flow is a post from: Lean Six Sigma Consulting

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Even though I submitted our phone number and mailing address to the FTC’s “Do Not Contact” list, I still get a lot of junk mail. As I sift through the mail, it dawned on me that the people behind the mailings aren’t trying to bother me — no intentionally anyway, but that they are trying to make money. The second I mentally placed myself in the enterprising perspective, which is where I feel pretty comfortable, I wasn’t so annoyed anymore.

So, how do direct mail companies make money?

In direct mail campaigns, costs are response rate are critical factors. For direct mail, cost can be comprised of the following: print on the material and any associated creative fees, material costs, and postage. Pretty simple. Response rate is defined as actual people responding to the campaign.

So, the break-even model is pretty standard. It follows the profit tree model I wrote about several months ago. Here’s the model for a direct mail campaign:

Break-even model is,

((R) revenue per mailing) – ((C) cost per mailing) = 0

But, response rate (rr) is critical here, so

(rr)*(R) – (C) = 0

Let’s assume that JunkMail Vendor decides to engage in a junk mail campaign. JunkMail’s costs are .30 per mailing and they decide to mail to their target demographic. Their revenue per postive response is $20.00 — what is the response rate needed for JunkMail to break-even?

20rr – .30 = 0

.30 / 20 = rr

rr = 1.5%

So, given the example above, only 1.5% of those that received the junk mail need to respond in order for the firm to break-even. Given the low risk and massive upside, no wonder junk mail is such a prevalent and annoying marketing tactic. By the way, the inverse is true also: if Cost Per Acquisition (CPA) were higher than the expected revenue, the model still works — the campaign would just require a higher response rate or profit wouldn’t come until the second year, perhaps, it it’s a subscription model.

The enterprising me say’s “wow, it doesn’t take much, really, to make money from this marketing strategy.” The consumer me says “I hate junk mail and email spam. I hate ‘em.” But, one can’t argue that it’s an easy and relatively cost effective way at increasing revenue, winning customers, and increasing brand awareness. No wonder credit card companies like Discover Cards, American Express, Chase Cards, and Capital One Credit Cards spam the crap out of people like me; and others outside the credit card industry love to send junk mail too — it’s a cash cow for them.

The Junk Mail Business Model is a post from: Lean Six Sigma Consulting

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Wired Magazine editor Chris Anderson’s new book The Long Tail is hot. It is a provocative and innovative book that attempts to show an economics that the web has created, where the sales of “non-hits” can cumulatively be larger than the sales of hot selling items. While his ideas are germane to many areas of business, such as the dessimination of information and, perhaps other areas as well, it has also wagged the tail of many “new economy”-type people and has inflated the personal bubbles of many web 2.0′ers. In what follows, I will respond to one of the main themes in the book, in which Anderson uses Amazon as one of the examples.

Anderson claims that products in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers or ‘hits’.  Put simply, the demand for the items in the Long Tail — both content and products — is getting bigger.  But, in order to satisfy the Long Tail demand, the distribution channel has to be large and broad enough and overall fulfillment cost has to be low such that sales of Long Tail items is still profitable — cumulatively.  In other words, as things move online, sales of misses will increase — so much so that they can equal or exceed sales of hits. Anderson emphasizes, however, that the cumulative effect of items in the tail and its equivalent sales percentage and absolute sales numbers might take time to be cumulatively larger than the head (“hits”). By “hits”, he is speaking about blockbusters or bestsellers or items with high demand.

Anderson uses forensic economics via a research team at MIT to conclude that the Amazon.com Book Category Tail is 57%. This claim was met with much response from the readership community and after some journalistic firefighting by Anderson, he decided to speak with Jeff Bezos who provided a rough swag at some numbers and suggested that 25% of Amazon’s book sales are from its tail. Below is his graphic to demonstate the decomposition of Hits vs Non-hits [source: page 5, ChangeThis.com, PDF File, The Long Tail]:

First, in all due respect to Jeff Bezos, whom I admire, was the wrong person to ask. The person that should’ve been asked was Jeff Wilke.  Jeff Bezos is great, but he’s not that involved on the fulfillment and distribution side, which is also the side that cares about inventory and the breakdown of that inventory in the context of sales and revenue.

Moreover, if Anderson is going to use the work of MIT professors, he should have known that there are professors much more intimate with Amazon than Brynjolfsson, Hu, and Smith. Amazon has had a long, close partnership with the MIT-LFM program and I’ve personally worked with several professors from that program (and I managed a few interns from there as well) while I was at Amazon. But, even if Anderson contacted professors from the MIT-LFM program that in fact have a direct affiliation with Amazon, he might not have gotten much in terms of data or opinion due to Amazon’s intense secrecy. So, in all fairness to him, Anderson used the best data available.

Second, why use just books as the sample category? Was it because that was the best available data he had? If so, I understand and I concede that that approach is academically decent but insufficient. You see, Amazon does do analysis at the granular category level, but cares more about the level above that: Books, Movies, Videos, and DVD’s (BMVD‘s) and everything else as Hardlines.

When I left Amazon.com in 2005 after 3 amazing years, there were more BMVD’s than Hardlines, but Hardlines represented a higher percentage of sales and recognized revenue. In fact, there was a nice seperation of data, such that an 80/20 was not met, but it’s still a nice looking Pareto. If Anderson had a more reliable data source, perhaps he could have looked at the Amazon business this way, instead of just books. Looking at one category — books — provides an incomplete view of the Amazon business; it’s not a reliable sample and hence the results from that analysis are insufficient to use to extrapolate or support the long tail thesis.

From my experience, I can say that the tail of BMVD’s and Hardlines — both — represented less than 20% of worldwide sales and recognized revenue. Perhaps that number has increased since 2004.

Anderson is correct in his analysis on Hit-driven Economics and the Economics of Abundance: the reason for the hard-to-find, non-blockbuster products at Amazon is to provide Selection for the customers. It’s difficult to predict what may or may not be in demand — current or future. A response to this fact is to stock some of everything. This only works if overall fulfillment cost can be minimized. In Operations, this approach is an Inventory Strategy for Multi-Echelon Systems. Internally, this approach and support for SELECTION has since been dubbed “Bezos’ Flywheel” and goes something like this:

[Price]->[Selection]->[Convenience]->[Customer Experience]->[Return Customer]->[...]. In other words,

 The Flywheel analogy is meant to show that Price, Selection, and Convenience RESULT in a great Customer Experience and DRIVE Return Customers. Drawing is one of the things I do poorly, so my diagram above might not capture the point of the Flywheel. Please forgive me on that, but understand that Price, Selection, and Convenience RESULT in a great Customer Experience and DRIVE Return Customers.

So, in a way, Bezos’ motivation for providing Selection is almost benevolent: money is not really made on the non-hits, but by providing non-hits or an increased selection of niche items DRIVES a good Customer Experience and, Bezos is very focused on Customer Experience. But, while Selection supports demand, SALES are from items on the head, not the cumulative sum of the tail.

Anderson also explains, in a soft way, that low fulfillment and distribution costs make way for Long Tail businesses. He claims that this is why Amazon can provide such a large selection. Anderson doesn’t provide any numbers, however, to show that this is true. Are Amazon’s fulfillment and distribution costs low such that Selection is a supportable and profitable effort?

Well, fulfillment costs are getting lower. Amazon hires a lot of Operations Research, Optimization Experts, Six Sigma, Lean Manufacturing, and other Operations Experts to help drive cost our of Fulfillment and Operations. But, at least in 2004, fulfillment costs as a percentage of an average order was still in the order of 20% – 25% for both sortable and non-sortable orders. Sortable are items you can put on a conveyor; non-sortable are items too big for a conveyor. Non-sortable items can be referred to as full-case-non-conveyable also. That percentage used to be much higher, but Amazon — Jeff Wilke — especially, is relentless on driving costs out of Operations. I expect Fulfillment Costs to reach a floor, where no further marginal effort will reduce fulfillment costs. I don’t know what that number is, perhaps Amazon has already reached it.

One thing Amazon is doing to further reduce fulfillment costs while providing a Long Tail Selection is its entry into the on-demand printing business and on-demand video business. Last year, Amazon acquired BookSurge and CustomFlix so that warehousing costs for Long Tail items can be further reduced via on-demand printing of the non-hit items. This was a very smart move on Amazon’s part.

In conclusion, I don’t doubt the power of the web, nor do I wholly disagree with the Long Tail thesis. Anderson has written a very good book, whose ideas are germane to business and explain a phenomena that Google and Overture has capitalized on. My objection is around his use of Amazon as an example. Anderson uses books to support the Long Tail thesis; I argue that the use of Book data is insufficient.  To Anderson’s credit, he recalibrates his estimate of Amazon’s Long Tail for Books by speaking with Jeff Bezos, but I argue that that number is still high, from my experience.  Additionally, Anderson softly comments that minimizing Fulfillment and Distribution costs allows for Long Tail businesses to thrive.   I agree, but to make that happen is not as easy as Anderson makes it out to be. There are many, many Ph.D’s, Operations Research, Lean Manufacturing, and Six Sigma folks in Amazon’s fulfillment arm to do exactly that — help reduce fulfillment costs and maintain a delightful fulfillment experience for the customer.  It is difficult work and it takes many years of work and innovation to even arrive at the fulfillment costs that Amazon has arrived at.  Nevertheless, Anderson’s book is relevant for our day, and I applaud his effort to explaining the Long Tail phonomena.

Shameless Plug — for more on shmula on Amazon, go here.

The Long Tail Debate Blogosphere

Foremski discusses where the profits are in the Long Tail

Lee Gomes questions Anderson’s Thesis

Anderson responds to Gomes

Gomes writes letter to Anderson

Business 2.0 asks “How long can the tail get?” — this is an unthoughtful question: for items that require physical space, the constraints are, well, space, labor, and process. For digital items, the corollary is similar, space for digital items is hardware and bandwidth. This question can only be asked by someone who does not have an Operations background. Business 2.0, I still dig you, but that question was a poor one.

BusinessWeek scrutinizes Anderson’s thesis; so does O’reilly; so does Kazwell and Anderson comments

TexasVC puts the debate in perspective

BeyondVC blogs about the Long Tail

SeekingAlpha chimes in

My Asian Brotha, Guy, loves the Long Tail

“The Long Tail” Ad Nauseum is a post from: Lean Six Sigma Consulting

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Continuing the series on the 33 Strategies of War, I’ll be summarizing the 2nd Strategy: The Guerilla-War-Of-The-Mind Strategy.

Greene begins by stating that often the biggest contributor to failure in strategy is our past — our previous successes and failures.  He recommends venturing forth into new ground:

Sometimes you must force yourself to strike out in new directions, even if they involve risk.  What you may lose in comfort and security, you will gain in surprise, making it harder for your enemies to tell what you will do.  Wage guerilla war on your mind, allowing no static lines of defense, no exposed citadels — making everything fluid and mobile.

He continues by providing 2 examples: Napoleon and Musashi.

Napoleon

Napoleon is heralded by many as a God of War; a genius.  But, he also had his doubters.  One of those was a Prussian General named Friedrich Ludwig, Prince of Hohenlohe-Ingelfingen (1746 – 1818). 

For Hohenlohe, success in war depended on organization, discipline, and the use of superior strategies developed by trained minds.  The Prussians exemplified all of these virtues.  Prussian soldiers drilled relentelessly until they could perform elaborate manuevers as precisely as a machine.  Prussian general studied intensely the past victories of Frederick the Great; war for them was a mathematical affair, tha application of timeless principles. 

To the Prusssian Generals, Napoleon was an unuducated and uncontrolled hothead, leading an unrly army.  The Prussians believed that with their superior knowledge of war tactics, they would crumble the Napoleon and the French armies.   Finally, Hohenlohe got what it wanted: on August 1806 King Friedrich Wilhelm III of Prussia declared war.

But, several days later, after war was already declared, the Prussians discovered through a reconaissance mission that Napoleon and his army had broken off into several groups and marched east, merged, and was massing deep toward Berlin, the heart of Prussia.  It was further reported that Napoleon’s army had backpacks, instead of the traditional wagons that carried provisions.  Backpacks allowed Napoleon to be quicker and more mobile.

Because Napoleon caught Hohenlohe with surprise, the Prussian army didn’t have time to react well.  Finally, Napoleon met-up with the Prussian army at the battle of Jena, close to Berlin:

Never had Hohenlohe seen such an army.  The French soldiers were like demons.  Unlike his disciplined soldiers, they moved on their own, yet there was method to their madness.  Suddenly, as if from nowhere, they rushed forward on both sides, threatening to surround the Prussians.  The prince ordered a retreat.  The Battle of Jena was over. 

Greene continues with his interpretation:

What limits individuals as well as nations is the inability to confront reality, to see things for what they are.  As we grow older, we become more rooted in the past.  Habit takes over.  Something that has worked for us before becomes doctrine, a shell to protect us from reality.  Repetition replaces creativity [...] every battle, every war is different, and you cannot assume that what worked before will work today.

Musashi

Miyamoto Musashi was a samurai who lived in 1600′s.  At only age 21, he had made a name for himself as a swordsman.  Consequently, he was challenged to a duel by many in Japan. 

First, Matashichiro challenged him.  At Musashi’s previous fight, Musashi arrived hours later than the agreed fight time.   Knowing this, Matashichiro decided to arrive on time, with friends for an ambush.  When they arrived, Matashichiro and his men lay down for a nap.  To their surprise, Musashi had arrived much earlier than expected — he was there before Matashichiro — but, he was hiding behind some trees, waiting for the right moment to attack.  As Matashichiro and his men rested, Musashi leadped out of the tree and killed Matashichiro and his men with ease. 

Then, Musashi fought several more times.  He fought Baiken, a warrior who fought with a chain attached to a spiked ball.  To that fight, Musashi arrived with 2 swords, which was unlike him.  Musashi was also a counterstriker, but at this fight, he charged first, throwing Baiken off guard and eventually killing him. 

Later, Musashi fought Ganryu, a samurai who fought with a very long sword.  At that fight, Musashi arrived very late, armed with a long, sharpened wooden oar, much longer than Ganryu’s long sword.  Surprised and offended that Musashi was late and arrived with a wooden oar, Ganryu swore to kill Musashi quickly.  But the wooden oar was too much for Ganryu and he, too, was killed. 

According to Greene –

Miyamoto Musashi won all of his duels for one reason: in each instance he adapted his strategy to his opponent and to the circumstances of the moment [...] the greatest generals, the most creative strategists, stand not not because they have more knowledge but because they are able, when necessary, to drop their preconcieved notions and focus intensely on the present moment [...] knowledge, experience, and theory have limitations: no amount of thinking in advance can prepare you for the chaos of life, for the infinite possibilities of the moment.  We must learn to think in the moment and to adjust.

This chapter was a little long and drawn-out for me.  But, I did take away some key points:

1. Adjust your strategy to the present; don’t rely on the past
2. and repeat (1).

Greene’s writing style, I think, gets in the way of his message: he is verbose and flowery; not to the point and precise.  Despite his shortcomings, I still appreciate the main points of his message.  Getting through his flowery writing style is a challenge, but continue to learn more about the strategies of war.

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The Guerrilla-War-Of-The-Mind Strategy is a post from: Lean Six Sigma Consulting

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Last week a few buddies and I watched The Ultimate Fighting Championships 61. It was pretty good. A few featured fights were Tito Ortiz vs Ken Shamrock and others. One of the fights was between Andre Arlovski vs Tim Sylvia. During the Arlovski vs Sylvia fight, the announcer made a comment that Arlovski’s chin has been criticized for being weak (he was knocked out by Tim Sylvia a few months ago). We all thought that was funny – what a phrase “his chin was criticized” – ha!

I am a blue belt in Jiu-Jitsu under the Carlson Gracie School in Northern California. But, it’s been about 10 years since I’ve done anything with it. I still love martial arts, but I spend my time doing other things now. Maybe someday I’ll start again.

Hitwise announced some statistics this week on The Ultimate Fighting Championships with MMA Gloves that I thought was interesting. During the week of July 9, The UFC ranked 121 by market share of visits among all sites. This was interesting.

The UFC demographic was also analyzed and it’s summarized below:

Young & Rustic – 6.1% of UFC traffic, 2.7% of Internet population

Like the soap opera that inspired its nickname, Young & Rustic is composed of young, restless singles. Unlike the glitzy soap denizens, however, these folks tend to be lower income, high school-educated and live in tiny apartments in the nation’s exurban towns. With their service industry jobs and modest incomes, these folks still try to fashion fast-paced lifestyles centered on sports, cars and dating.

They are more likely to go to auto racing, watch professional wrestling, watch soap operas, and live in rural communities in Georgia and Kansas than the general population.

Red, White and Blues - 4.3% of UFC traffic, 2.1% of Internet population

The residents of Red, White & Blues typically live in exurban towns rapidly morphing into bedroom suburbs. Their streets feature new fast-food restaurants, and locals have recently celebrated the arrival of chains like Wal-Mart, Radio Shack and Payless Shoes. Middle-aged, high school educated and lower-middle class, these folks tend to have solid, blue-collar jobs in manufacturing, milling and construction.

They are more likely to order from HSN, go horseback riding, and own an outboard motor than the general population.

Crossroads Villagers – 3.8% of visitors to UFC, 2.6% of Internet population

With a population of middle-aged, blue-collar couples and families, Crossroads Villagers is a classic rural lifestyle. Residents are high school-educated, with lower-middle incomes and modest housing; one-quarter live in mobile homes. And there’s an air of self-reliance in these households as Crossroads Villagers help put food on the table through fishing, gardening and hunting.

Market segmentation is very interesting and being able to do this for your website visitors is fascinating and incredibly pragmatic: knowing your audience can help target your message, finding affiliates, and establish relevant advertising partners. Bottom line — it’s good all around to know your customers and market segmentation is a tool to help us better understand the customer.

Back to fighting really quickly: there was a small point of contention during one of the fights — the announcer was confused on whether one of the fighters was doing a Kimura or an Americana. This is an easy confusion: they are both arm locks and the goal is to manipulate the elbow joint to make your opponent submit and tapout. But, there’s a slight distinction — Americana has the arm hyperextending toward the head whereas a Kimura has the arm hyperextending toward the hip. Below are some pictures:

Americana

Kimura

His Chin was Criticized: Market Segmentation is a post from: Lean Six Sigma Consulting

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. . . or, how to ensure that nothing gets done in your organization.

1. Make sure that your organization has an unbalanced number of ex-management consultants who have mastered the art of business-speak, have never managed an operation or people, are greasily good at selling an idea but are completely inept at execution.
2. Concensus — yes, build concensus and ensure a zealous focus on concensus because this just might lead to paralysis and then nothing will get done in your organization.
3. Grandiose quotes framed on every employee’s wall proclaiming belief in something that is worthy and true but made very cheesy by that framed quote — make sure all your people have one — no, two, of these.
4. Must Have: Amorphous and generic mission statements — these are great and are meaningless. Make sure your organization has one or several and make sure that each department has one too — and spend days or several hours with dedicated FTE’s to create one.
5. 3/4 or more of your organization should be Business Development folks — this way, everyone can focus on growing the business instead of running the current one.
6. Pedigree — yes, not the dog-kind, but the school kind. Make sure the people in your organization rely on their pedigree instead of accomplishment. Quotes like “I’ve never managed an operation but I learned about it at b-school at [name drop here]” is what you want to hear to ensure zero gets done in your organization.
7. Retreats and Gratuitious Offsite Meetings — yes, hold several of these over the fiscal year — 2 or 3 per month is ideal. I’m not talking about the fun, go-to-a-movie kind, but the full-blown, emotional, facilitator-led kind with highly paid facilitators that tell great stories, make you laugh, but leave you and the team empty: a twinkie-like experience — twinkies taste good, but have no substance.

There are more . . . from your experience, what are some of yours?

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Cumbaya Management Essentials is a post from: Lean Six Sigma Consulting

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We recently finished landscaping our yard — front, side, and back. We’re really happy with how things turned out. Before landscaping, we had HUGE wheat-looking weeds all over the place, which hid the basketball-sized rocks beneath. Now, we have grass, trees, curbing, and a nice cement pad to BBQ and entertain. I’ll explain the whole landscaping process later — a lot of lessons learned. Today, however, I just want to share about the 14 trees we bought.

We bought the following trees:

My wife designed the placement of the trees and she did a great job. We bought 14 trees — they were pricey, but worth it. We’re stoked to have the yard done so that the kids can have some place to play and our family can now fully enjoy being in our house.

Landscaping and Trees is a post from: Lean Six Sigma Consulting

Product Management is often confused with Product Marketing and Technical Program Management. At some companies, all of the above are actually seperate delineated positions. At Amazon, however, they are pretty much the same job entitled: Technical Product and Program Manager (TPPM). Funky, ain’t it?

Actually, there’s very good reason why Amazon has done it this way. Amazon is really big on small teams. A concept at Amazon is the notion of the 2-Pizza Team. Every team at Amazon, no matter how large the project is, is comprised to 2-Pizza Teams. A 2-Pizza Team (2PT) is — a team where the team size is no larger than 2 pizzas can feed. This approach to team size works really well and produces more agile development and release and deployment.

I spent a short time on the merchants@ group at Amazon — the group responsible for the partners (Best Buy, Polo, Toys ‘r’ Us, etc.). Product Management is an exciting area of business and has the potential to touch the customer more than most functions in business.

In this post, I want to quickly define standard Product Management, then in succeeding posts, tweak the standard definition a little bit and show how it works at Amazon. The following is a great breakdown of Product Management:

Market Research:

This refers to the activities of studying a market to understand the customer needs, competitive landscape, and market forces – with the ultimate goal of uncovering opportunities for creating product enhancements as well as new products.

This is done via conversations with customers or potential customers, talking to customer-facing teams such as sales and support, studying reports and articles on the marketplace, test driving competitive products, keeping tabs on customer behavior, and other such activities.

This culminates with the PM preparing a business case, product strategy and/or business requirements document (BRD) detailing how to capitalize on the uncovered opportunities.

Product Definition and Design:

a) Product Definition refers to the activities of specifying what a product needs to do. This is usually done via what is referred to as Market Requirements Document (MRD) or Product Requirements Document (PRD). This document may include information such as product vision, target market, competitive summary, detailed description of product features, prioritization of features, use cases, system requirements, performance requirements, sales and support requirements, etc.

b) Product Design refers to the activities of specifying the look and feel of the product including the user interface (UI) and the user interaction with the product – covering the whole spectrum of user experience. In larger companies the PM works with UI designers or interaction designers to create this, while in startups the PM may do all of these.

I consider this to be the most valuable among a PM’s activities – so much so that I actually think product manager jobs which don’t include this responsibility are really not product manager jobs at all!

Project Management:

This refers to the activities of leading cross-functional teams including engineering, QA, UI design, marketing, sales and support to develop and launch the product on-time and on-budget. This may include securing resources, creating project timelines, tracking progress against timeline, identifying critical paths, getting additional resources when needed, and communicating status to the executive team.

In larger companies, Project Managers actually perform most of these activities with the support of PM’s. In very small startups, the PM may be asked to do these by herself. In some companies, the Engineering Lead may do most of these activities as well.

Evangelizing the Product:

This includes the activities of communicating the product benefits, features and target markets, and in general championing the product to internal teams such as sales, marketing, support and executives. This also includes evangelizing the product to external audience such as press, analysts and customers.

In larger companies, the PM is supported by the Product Marketing, Marketing Communications (MarCom) and/or Press Relations (PR) teams in evangelizing to external audience.

I consider this to be the second most valuable among a PM’s activities – especially evangelizing to the sales & marketing teams, and the executives to create excitement around the product.

Product Marketing:

This refers to the activities of outbound messaging – telling the world about the product. This includes creating collateral such as datasheets, brochures, website, flash presentations, press packages, trade shows and more.

In larger companies, the product marketing activities are almost always separated from the PM. They’re instead performed by the Product Marketing Manager. The biggest shortcoming of this arrangement is the resultant inefficiencies in communication and the weakening of outbound messaging.

In some companies the terms ‘Product Management’ and ‘Product Marketing’ are used synonymously and one person is responsible for all activities. In companies where there are separate ‘Product Management’ and ‘Product Marketing’ groups, the latter group performs all the activities mentioned in this category.

Product Life Cycle Management:

This refers to the activities of managing a product as it goes through its life cycle from ideation to launch to growth to maturity, and eventually to decline.

This includes tasks such as product positioning, pricing and promotion, product portfolio management, competitive strategy, making build/buy/partner decisions, and identifying and developing partnerships. The PM works with Product Marketing, Business Development and MarCom teams on many of these activities.

In later posts, I’ll focus a little bit on Product Managment for software, which will include requirements gathering, and UML related stuff. Pretty much, the Amazon approach to Technical Product and Program Management and how Product Design and differentiation becomes a focus when entering a new market.

Customer-focused Product Management is a post from: Lean Six Sigma Consulting

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Jason Calacanis is clearly customer focused.  He’s using the interactivity of the web as a real-time focus group.  This does several things: For AOL, it helps them improve quickly and creates a TON of goodwill with its customers.  For the customers, it helps them to feel listened to and that their thoughts and ideas are important.

This is a great example of Customer Obsession, which I spoke about several weeks ago.  Great job, Jason!  You’re setting a whole new standard for communicating with customers, building goodwill, & improving business, by using the social web.

Customer Obsession: In Real Time is a post from: Lean Six Sigma Consulting

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I am reading Robert Greene’s 33 Strategies of War. It’s a good book and I’ve learned a lot already. From time to time, I’ll summarize a strategy that I’ve learned from the book and provide examples. Today, I’ll be talking about the Polarity Strategy.

As an introduction, Greene says this about Strategy:

Strategic warriors operate much differently. They think ahead toward their long-term goals, decide which fights to avoid and which are inevitable, know how to control and channel their emotions. When forced to fight, they do so with indirection and subtle manuever, making their manipulations hard to trace. In this way they can maintain the peaceful exterior so cherished in these political times.

[...] the word “strategy” comes from the ancient Greek word strategos, meaning literally “the leader of an army.” Strategy, in this sense, is the art of generalship, of commanding the entire war effort, deciding what formations to deploy, what terrain to fight on, what maneuvers to use to gain an edge [...]

The Polarity Strategy is based on the fact that people are seldom directly hostile. The rules of engagement — social, political, or otherwise — have changed, and so must our notions of the enemy. The definition for the word “enemy” has been demonized and politicized over the years, according to Greene. In truth, it means “not a friend.” Given this definition and the fact that people are more subtle now in their attacks, we must be more careful than ever:

[...] Although the world is more competetive than ever, outward aggression is discouraged, so people have learned to go underground, to attack unpredictably and craftily. Many use friendship as away to mask aggressive desires: they come close to you to do harm. Or without actually being friends, they offer assistance and alliance: they may seem supportive, but in the end, they’re advancing their own interest at your expense.

Without getting paranoid, you need to realize that there are people who wish you ill and operate indirectly. Identify them and you’ll suddenly have room to maneuver.

Greene uses several examples to support the Polarity Strategy. In particular, he uses the example of Mao Tse-tung and Lin Biao, a high ranking member of the Politburo. In the late 1960′s, Mao detected a change in Lin. He noticed that Lin had become unusually friendly and praised Mao more than he had. To Mao, this meant something was wrong. To expose Lin, Mao exposed Lin by getting him emotional — this strategy works well, according to Greene. To expose your enemies, provoke tension and argument. This strategy works well and exposes people’s true feelings and overcomes courtship and the peacemaker default. In Greene’s words:

[...] People tend to be vague and slippery because it is safer than outwardly committing to something. If you are the boss, your subordinates will mimic your ideas. Their agreement is often pure courtiership. Get them emotional; people are usually more sincere and honest when they argue. If you pick an argument with someone and he keeps on mimicking your ideas, you may be dealing with a chameleon, a particularly dangerous type. Beware of people who hide behind a facade of vague abstractions and impartiality: no one is impartial. A sharply worded question, an opinion designed to offend, will make them react and take sides.

Greene closes the chapter by explaining that the goal of the Polarity Strategy is clarity, not paranoia.  Not everyone is out to destroy you, but we want clarity to know who our true friends are and who our enemies are.

The Polarity Strategy is a post from: Lean Six Sigma Consulting

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Update: After I posted this, I was Spinged 22 more times. That brings the total to 52 Spings in 3 hour period. I need to look at implementing captcha for my comments.

More Update: I installed Akismet and I added a math question for comments to prevent bots from comment spamming me — and, I am no longer getting any comment spam at all.  Good stuff!

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Shmula was attacked by 30 Spings today. I’ve previously wrote about Splogs and Spings here, here, and the splog bait is here. Splogs and Spings put an undue burden on the blogosphere by eating up resources that should be used for genuine blogs and genuine comments. Moreover, Splogs really jeopardizes the advertising model of the internet, especially contextual ads like adsense, chitika, and others.

The difficulty, that I’ve talked about before, is accurately distinguishing something that was written by a human versus something that was written by a bot. There are great, novel approaches that I’ve talked about in my previous posts on Splogs. The neural net approach, where we train a system to learn based on a training set of authentic Blogs and a set of genuine Splogs, then making future decisions based on what was learned seems like a good approach. But, we’re playing with Turing here — I’m not bullish on neural net approaches becaue I learned first-hand from my Master’s Thesis that strong AI, as Searle calls it, just doesn’t work. I love Yahoo’s human-aided approach to the web — theirs is a strategy that I believe will work in the long run.

There are characteristics of Splogs that are not found in authentic Blogs. There’s more to come also, as research gets better in this area. For now, it’s mostly a manual deal. My friend, Greg, the founder of Findory tells me that when Blogs are submitted to Findory for indexing, he says they cull through the submissions manually. That’s too bad. We’ve got to get better in this area.

I was Spinged 30 times and from the same domain:

http://cms.po-hosting.com/

Spings Attack Shmula is a post from: Lean Six Sigma Consulting