You are currently browsing the monthly archive for May 2010.
Global Crisis Blog
Spain — Could You See It Coming?
By Shlomo Maital
There is a powerful domino effect in global markets. One nation dives into crisis, and as it solves its problem, crashes into another country, which in turn dives into crisis. Since 1994, the list of dominos falling has been: Mexico (1994), Thailand (1997), (Indonesia, and much of Asia), Russia (1998), Brazil (2000), Argentina (2001), U.S. (2007), now Greece (2010), and perhaps, next? Portugal? Spain? Greece is a small country, with only 11 m. people. Spain is a huge country, and if it goes into crisis, the magnitude of the problem will be orders of magnitude bigger. Spain has 40 million people and a GDP of some $1.5 trillion.
The basic problem with the European Union is that it has no non-crisis mechanism to help member countries in trouble — only emergency bailouts. Monetary policy is made for the whole EU. That leaves individual governments only with fiscal policy. But when deficits soar, that too is effectively neutralized, leaving no real way to stimulate the economy. With the EU very slow to engineer bailouts, largely because of German reluctance, crises become full-blown before the EU takes action.
This year, 2010, Spain’s GDP will decline, at a time when most countries are experiencing renewed growth. Spain’s budget deficit will remain at 10-11 per cent, its level in 2009. In the first quarter of this year, Spain’s unemployment rate topped 20 per cent, the highest it has been in 13 years. Like Greece, Spain’s government is socialist. Its socialist Prime Minister Zapatero has been slow to react to the crisis and to take the painful measures needed to address it. As a result, Standard & Poor slashed Spain’s credit rating on April 28, making Spain’s debt servicing costs even higher. You could see it coming.
Global capital markets are quick to punish countries unable to restore fiscal stability by inflicting pain. Like dominos, one country falls after another. This is especially true in the post 2007-9 global crisis, when owners and investors of capital are hyper-sensitive to risk. Governments must realize that unless they run their countries’ budgets in a sound and responsible way, unless they treat their country as a business and engineer turnarounds (as companies do when their revenues slump), they will face rapid flights of capital and soaring risk premiums.
Innovation Blog
Anthora Cup: WE ARE HAPPY TO SERVE YOU!
By Shlomo Maital
You know those paper coffee cups that are ubiquitous and so taken for granted?
If they could speak, they would tell an interesting story. The inventor, Leslie Buck, has just passed away. According to the New York Times (April 28):
It was for decades the most enduring piece of ephemera in New York City and is still among the most recognizable. Trim, blue and white, it fits neatly in the hand, sized so its contents can be downed in a New York minute. It is as vivid an emblem of the city as the Statue of Liberty, beloved of property masters who need to evoke Gotham at a glance in films and on television. It is, of course, the Anthora, the cardboard cup of Grecian design that has held New Yorkers’ coffee securely for nearly half a century. ….The Anthora seems to have been here forever, as if bestowed by the gods at the city’s creation. But in fact, it was created by man — one man in particular, a refugee from Nazi Europe named Leslie Buck.
Who was Leslie Buck? He was born Laszlo Buch, in 1922, to a Jewish Czech family. His parents were killed by the Nazis during WWII. Laszlo survived Auschwitz and Buchenwald. After the war he made it to New York, and started an import-export business with his brother, Eugene, who had also survived the death camps. They started Premier Cup, a paper cup manufacturer, in the late 1950’s. Buck joined Sherri Cup, a startup company, in the 1960’s, and for a time was its entire sales force.
Sherri wanted to crack New York’s hot-cup market. At the time, many of the city’s diners were owned by Greeks. Buck had the idea of a Classical Grecian cup, with the drawing of a Greek vase called the “amphora” on it, in the colors of the Greek flag. Buck called it “Anthora”, which his son said is how “amphora” sounds when spoken with a Czech accent. Buck had no training in design — but designed the cup himself. It was a huge success. Hundreds of millions were made every year. Buck got no royalties for his design, but became wealthy through sales commissions. He retired from Sherri in 1992.
The key to the cup’s success, apart from its functionality? Its motto, written simply, in a Classical font, as:
WE ARE HAPPY
TO SERVE YOU
I have long believed that product design should be done in teams with sales persons playing a key role. They know the soul of their customers intimately, because their income depends on it. Lesley Buck/Laszlo Buch is a strong example.
Innovation Blog
Tough Mudder: You Thought Your Idea Was Wild?
By Shlomo Maital
Today’s Global New York Times (John Branch, “An idea hatched in business school takes running amok to the next level”) offers encouragement to all those who have wild ideas and despair of seeing them implemented.
A British MBA student studying at Harvard Business School named Will Dean submitted an idea to a business plan contest — persuade 500 people to run a grueling race through mud and man-made obstacles. Great idea? Sure money-maker? Professors thought not, though the plan did make it to the semi-finals.
Well, this Sunday, Tough Mudder will conduct a race for 4,500 people (!). Each participant pays about $100 for the privilege to negotiate a 7 mile course, with muddy hills, cold water and flaming bales of straw, at a ski resort near Allentown, Pennsylvania. The company Tough Mudder has six employees and two interns, all in their 20’s. It plans to hold three more races around the US this year, and 10 next year. Some will have as many as 20,000 participants.
Marketing? Advertising? Tough Mudder announced itself with $8,000 worth of Facebook advertising and a Website (toughmudder.com). The idea was imported from similar events in Great Britain (the Strongman run).
Tough Mudder has a value system. Participants recite a prerace promise to help others and not to whine.
The principle here is clear. Find an unmet need. Meet it. Don’t be afraid to think wild.
Unmet need? Running through the mud, through cold water, through burning straw ? Apparently, many people do need to do this. How do you know? Well — float it, put it up there, run it up the flagpole — and see. Tough Mudder’s founders are amazed. And frankly, so am I.
Innovation Blog
New Approach to Cure Cancer
By Shlomo Maital
A new treatment for prostate cancer has been approved by America’s FDA. Prostate cancer kills some 25,000 American men annually, the second highest death toll for cancer. Once cancer spreads beyond the prostate gland, it is virtually untreatable.
According to the BBC:
Provenge – which is designed to be used in men with advanced prostate disease – is the first of its kind to be accepted by the Food and Drug Administration. Each dose has to be individually tailored and it is an expensive treatment at $93,000 per patient.
Provenge is a kind of vaccine. White blood cells from each patient are removed, treated, and then re-injected. They are ‘persuaded’ or ‘tricked’ into attacking the prostate cancer cells all over the body.
Provenge is huge good news, but also bad news.
The good news is that this approach to treating cancer — getting our own immunity system to attack the cancer — has been studied for 50 years, and at last, scientists have managed to get it to work. It could be a promising new avenue for cancer treatment, for cancer of all kinds.
The bad news? Of course, the cost. According to the FDA, untreated men in clinical trials lived an average of 20 months. Treated men, who received Provenge, lived for an average of 24.5 months. That means that this costly drug, which cost nearly $100,000 per treatment (and whose cost cannot be reduced, because it must be tailored to each individual person), can prolong life for 4.5 months. For those with prostate cancer, these are of course precious months.
But can society afford to invest $100,000, to prolong life for 4.5 months? How much, indeed, is an added month of life worth? And what is the opportunity cost — how many lives could be saved with the resources used to prolong life for those 4.5 months?
Innovation, especially in cancer treatments, always and unavoidably confronts prickly ethical questions that cannot be evaded.
TIMnovate 
