C'est une belle mise en abyme à laquelle nous ne pouvions pas rester insensibles. Relire son histoire, appuyer sur le bouton "rewind", remonter le temps sont des expériences étranges et enthousiasmantes à la fois.
Etrange, car le regard (académique) de l'autre sur une histoire qu'il n'a pas écrite mais qu'il tente de décoder agit comme un révélateur photographique. C'est une photo dans laquelle les détails fourmillent, détails qui ont parfois fait la différence alors qu'ils n'étaient pas perçus comme tels sur le moment. C'est une photo qui invite comme toute photo du passé à la nostalgie: on y revoit des visages, des lieux, des moments que le temps avait injustement ensevelis.
Enthousiasmante, car l'entrepreneur s'il recherche avant tout la sanction entrepreneuriale de ses pairs et de ses clients n'en est pas moins sensible à l'exigence du regard académique, surtout lorsque, comme Cyberlibris, il opère une partie importante de ses activités commerciales dans le monde académique.
Merci au professeur Laifi pour ce pari académique qui a débuté sous la forme d'une thèse de doctorat : il fallait une bonne dose de bravoure académique et de conviction personnelle pour embrasser un sujet aussi pétri par l'incertitude, pour s'attaquer à une aventure dans laquelle la chance ou la malchance peuvent jouer un rôle aussi fort.
Cyberlibris et le Groupe Express-Roularta s'associent pour offrir aux lecteurs de L'Expansion, de l'Entreprise et de Mieux-Vivre Votre Argent un nouveau service de bibliothèques numériques.
La première bibliothèque est plus particulièrement destinée aux lecteurs de L'Expansion et leur permet d'accéder aux meilleurs ouvrages de management francophones et anglophones. Les aficionados du management y découvriront une riche littérature dédiée au coaching, au leadership, au management international, à la Chine, au changement etc..
La deuxième est dédiée aux entrepreneurs, fidèles de l'Entreprise: du business plan, à la fiscalité en passant par le contrat de travail à un clic de souris!
Enfin, toutes les personnes soucieuses de la gestion de leurs finances personnelles trouveront réponses à leurs questions grâce à une bibliothèque numérique couvrant la co-propriété, l'investissement locatif, les SCI, l'impôt, les viagers, le droit etc...
2008 is about to close: Another year of intense collaboration with publishers (both sides of the ocean), academic institutions, commercial partners and, last but not least, thousands of individuals who have collectively expressed their interest and trust in what we have been crafting step-by-step since 2000.
The community of subscribers using one of the many Cyberlibris (www.cyberlibris.com) digital libraries span a wide range of countries and continents: France, Belgium, Switzerland, Czech Republic, Algeria, Morrocco, Senegal, Congo, Brazil, Haïti, French West Indies etc... It is always a good feeling when you see that books are digitally travelling reaching people in remote places who more often than not have a limited access to bookstores, print books, libraries.
The feeling is exactly the same when you see French or Belgium students interacting digitally with books and with each other and, for that matter, spending less time in front of photocopiers. It is also a privilege when faculty members revert back to us to tell us that they have discovered books in their respective fields which they did not know about. It is even more rewarding to see faculty members' bookshelves shared with students who are no longer restricted to a single required text. No more text rationing for odd and undefendable reasons: The diversity of opinions, expert knowledge, reading styles is now a common currency traded by professors, students and librarians.
In this (re)discovery process predicated on a no-brainer subscription model, publishers are in an ideal position to observe that the classical (physical) best-seller hierarchy is more often than not turned upside down. Subscribers vote with their mice and in the course of doing so books and authors that had been crushed by the physical system regain a lease of life. A lease of life that has led in many cases to new editions of their books which were not supposed to take place to say the least. Another great feeling indeed!
2008 has been a great year not only for pure academic reasons. Thousands of individual subscribers, individuals, families, kids, public library patrons, have communicated their enthusiasm for this very simple notion of having access to a digital library (too) from home or from wherever they are. A fascinating move indeed from institutions with a clear agenda to individuals charactererized by their diversity of tastes, horizons, opportunities, constraints etc... And a rewarding one which has enabled us to spread the gospel abroad.
In 2009 Cyberlibris will launch (fully localized) in Spain and Sweden. South and North! Spanish and Swedish publishers have joined the hundreds of French and international publishers who endorse Cyberlibris business proposition. Again, this is a great motive of satisfaction to see that something that was conceived and built "locally" is about to fly under different latitudes: After all, attitude beats latitude!
This does not mean of course that homeland has been neglected or forgotten. In 2009, new services and new applications will be launched spanning many publishers, many territories and, of course, many people: litterature, novels, essays, theology, science etc...
2008 has been a very rewarding year. We learnt a lot and still are. We listened a lot too. And, we know all too well that each day is another day. No, we don't know whether or not 2008 has been the year of the e-book, whether or not 2009 will be. And, frankly, we could not care less: We do not believe in universal schemes, one size fits all proposition, consultants predictions and the whole (tech) shabam. Forecasters cannot even explain the past...
To all our (institutional and individual) users we want to express our deepest gratitude. Without them 2008 would not have been what it turned out to be, a year where the dream we had in 2000, namely to let subscription-based digital libraries inside each home, came true.
We are also grateful to the publishers community who has ventured with us to an unchartered territory that the music industry, among other content rightholders, did not want to explore: That of a different and complementary business model whereby, among other things, rich and varied collections of books can be accessible under a simple, flexible, subscription based and reasonably priced formula. This is the same model that will apply in Spain and Sweden.
I just bought a new book (quite heavy by the way, see picture) entitled "The Art of Looking Sideways" (by Alan Fletcher, Phaidon Press). When I was in the bookstore, I could not get the book off my hands. Every page was like a magnet. I had to buy it. This book is not designed to be read in the usual way from beginning to end though. As the ttitle suggests, you have to read sideways.
This is an incredible piece of work which somehow should be required reading in many places including business schools. This is a tribute to the art of gazing. It is inspirational, recreative and full of useful, unexpected references.
In my view, it beats by a fat margin all the hype business books that are supposed to teach CEOS, managers, leaders, businesses how to be great, lasting etc...
I subscribe 100% to Roy R. Behrens, a professor of art at the University of Northern Iowa, when he gives his answer to the traditional question:
"If you were marooned on an island, what book would you want to have with you? ..... I would not hesitate to name Alan Fletcher's The Art of Looking Sideways, which is magnificent stimulant for creative thinking, designing, and teaching."
Many people fall victim of the sunk costs fallacy.
In short, a sunk cost is an expenditure made in the past that cannot
be modified. Neither now nor in the future. A sunk
cost is a cost that cannot be recovered. The English language has a nice expression to describe it in plain words: "There is no use crying over spilled milk". The milk won't flow back into the saucer pan. Many people nevertheless behave as if there was a hope that the milk would go back where it was.
A prime example is that of capital budgeting. Capital budgeting is the field that deals with the evaluation of investment decisions, that is whether one should buy a new piece of equipment, invest in a new factory etc... The usual treatment of such a decision is to carefully identify ingoing cash-flows and outgoing cash-flows over the investment lifespan. But not any kind of cash-flows though. Only those that are unambiguously triggered by the new investment. The economists call them marginal cash-flows.
This is generally where the sunk cost fallacy strikes back. People are for instance tempted to include past cash-outlays and to allocate existing overheads. Including past cash-outlays is somehow a way to try to recoup the cash lost from past mistakes. Well, this is the best way to loose money twice! It does not make any sense to overburden a project with costs that have nothing to do with it. Cut your losses first and then figure out whether some new venture is worth investigating.
Allocating existing overheads to the project is even worse and, sadly enough, quite common practice. Anybody who has taught capital budgeting rules knows that his or her audience insists on including a percentage of existing overheads into the outgoing cash-flows of the project. The usual argument goes on like this: "Well, if you don't do it who gonna cover them?".
There are different ways of addressing this objection. First, assume that an ideal world where everything can be processed just-in-time. Such a question would not arise. No fixed costs would have to be pre-committed. Only when a project would require a given amount of costs to be implemented would these costs be taken into account as they are indeed triggered by the project.
Now, we know that just-in-time is a fiction and that some costs have to be pre-committed. If every new project is charged by some overhead allocation, one ends up with the rather unfortunate result that "the fatter the better". Again, this is not because one may have too fat a legal department within the corporation that one must try to recoup this expense through wrong overhead allocation decisions. The bad news is that the wrong decision was made at the time when corporate money was allocated to legal. It would have been wiser to wait, namely not to exercise one's allocation option to soon.
If it turns out that legal is too fat, the best way out is not to try to justify its existence by allocating the fat to new investment projects but to take the brave decision to downsize it!
There are for sure a host of good reasons why some costs must be precommitted (signalling, contract obligations etc...). Nobody denies them. Hopefully all the options have been carefully looked at before leaping. Once these costs are incurred they won't change whether or not some new projects happen or not.
The key step then is obviously to go hunting for good projects and create new wealth opportunities. This hunt is not like horse racing: If you find a fast horse, ride it as fast as possible and don't let them make you believe that this horse needs handicapping!
Peter Drucker's intellectual production is amazing by any standard. He is a gifted observer of organizations and one of the most prolific writer on management. In a recent issue of the Wall Street Journal (Download Drucker_on_CEOs.pdf), he embraces the task of "Defining the Duties of the American CEO." Tough task indeed as the acronym these days can not only stand for "Chief Executive Officer" but also for "Chief Everything Officer", "Chief Enabling Officer" or "Chief Everything Oracle" etc...
Drucker proposes a definition of the CEO: "The CEO is the link between the Inside, i.e., "the organization", and the Outside -- society, the economy, technology, markets, customers, the media, public opinion." He then procceeds to explain what he means by Inside and Outside. "Inside, there are only costs. Results are only on the Outside." Somehow, and other things being equal, a very Coasian view of the world.
Drucker assigns the CEO the first task of defining the Meaningful Outside, which, he admits, is not an easy one. My pinch of salt here is that Drucker seems to take the set of Outsides as a given among which the CEO has to choose. Nothing in my view is less sure. Indeed, as University of Chicago Luigi Zingales has it, "the boundaries of the firm are in constant flux" (see in_search.pdf ). The economic definition of the firm differs more and more from its legal counterpart. This observation has given rise to a whole literature dealing with the firm as a nexus of contracts, implicit contracts (think of suppliers...) and corporate governance. Even the answer to the "what business are we in?" question is not enough. It is a good start but it does not tell you much about the boundaries of the firm. Drucker's view on the Inside/Outside delineation seems to be very much predicatd on what IMF Raghuram G. Rajan and Luigi Zingales call the "old corporate framework":
Rigidity: The firm was rigidly defined by the legal ownership of a large set o unique assets,
Heavy outside ownership: The firm has to rely on outside investors to finance sizeable assets and to bear risks,
Top-Down Management: Concentration of power at the top and legal claims over assets are the most important source of power.
But, the good old days (were they really?) are over. Now, with the paramount importance of human capital (high mobility) and the financial revolution (easier access to financial means), power has shifted away from the top of the organization. It is thus rather strange that Drucker makes the implicit assumption that the top (CEO) is still the top. Interestingly enough, he does not even mention the board of directors and the role it should or should not play along with the CEO.
Management, these days, is full of corporate metrics (otherwise called buzzwords) that managers are urged to follow, to maximize or to minimize: EVA, CFROI, shareholder value, costs of some sort etc... to name a few. Sometimes, the metric is a bit more involved but follows the same vein or puts some constraints on them: balanced scorecard, sustainable development etc...
In any case, the theory around these catch-all metrics boils down to the idea that following them is good for the corporation as a whole, that the corporate decisions should always be benchmarked against them. For instance, what is good for shareholders is also good for the firm as a whole.
Surprisingly enough, the discussion around the true relevance of these benchmarks is rather tenuous. Yes, market imperfections are discussed and principal-agent models, game-theoretic-models have been crafted to accommodate them.
However, it seems rather puzzling that a principle known under the name of "Goodhart's law" is hardly mentioned in business books. The law is named after Professor Charles A. E. Goodhart, Norman Sosnow Professor of Banking and Finance at the London School of Economics, who crafted with central banking in mind (see Download Goodharts_Law.pdf
). Here is what the University of Cambridge has to say about it:
"The original form of Goodhart's law arose in
economics. According to the 99th edition of Pears Cyclopaedia
(1990--1, pp. G 27, G31), the law states that
`As soon as the government attempts to regulate any
particular set of financial assets, these become unreliable as
indicators of economic trends.'
This, of course, is because `financial institutions can... easily
devise new types of financial assets.'
Professor Charles Goodhart FBA
was Chief Adviser to the Bank of England.
The Bank used to have a web page about him
at www.bankofengland.co.uk/cvs/goodhart.htm, giving
his own statement of the law, as published in
his book Monetary Theory and Practice, page 96:
`Any observed statistical regularity will tend to collapse once
pressure is placed upon it for control purposes.'
`When a measure becomes a target, it ceases to be a good measure.'
Goodhart's law is a sociological analogue of Heisenberg's uncertainty
principle in quantum mechanics. Measuring a system usually disturbs
it. The more precise the measurement, and the shorter its timescale,
the greater the energy of the disturbance and the greater the
unpredictability of the outcome."
The last re-phrasing of the law is clear: Too much emphasis on a measure as a target kills the measure that may have been a good one in the first place.
Moreover, in economies like our today economies which are highly non-linear (knowledge-based economies, complex systems, winner-take-all etc...), it is not even clear that any such measure does exist. More often than not, obliquity is at work and single metrics are very poor at capturing the richness and complexity of the economies and societies in which we live. They may simply defeat their own purpose!
The recent business history is full of cases that illustrate the perils of putting too much emphasis on narrowly defined corporate metrics: Stock-options, Enron, Adelphia etc... The more distant history is also quite rich in such stories, chief among them that of former USSR and its obsession for production targets (yielding the results that we all know about).
So, why is that most business books authors and professors forget about Goodhart's law as if they were petrified telling students that, indeed, the world outside is awfully complex?
Marc was kind enough to comment on the post related to the Business 2.0 article. Here is his opinion on Business 2.0 current views on VCs:
"Forget the VCs: They're still stingy these days...
where should i start
1) not every business should be VC funded
2) should should put as litle money as need in a business, not more, stingy is good
3) we (VC) invest in business to build, not in business to be flipped (even if we all dream of quick exit at night)"
Sounds reasonable to me. The only point, Marc, that may deserve a bit more explanation for those who are not familiar with the Venture Capitalists world is your first point: Do you suggest there is a "business profile" that does qualify for VC funding? What is that profile then? Would be nice to see, if any, a typology of business profiles/financing vehicles and to get a sense of the risks (on both sides) of an improper match.