Review Category : Legal

Evidence of Strategy Everywhere: “The New Entrepreneurial Spirit: Bypass”

You might think I’m announcing that today there is strategy in the United States. Such a discovery would indeed be welcome but it’s not what I mean. I mean that you can see strategy in almost every newspaper article. All you need is to want to see it!
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In Disruptive Innovation versus Old-Fashioned Strategy I admired the smart strategy of Elio Motors in bypassing some regulatory costs. It seems that type of entrepreneurial thinking is becoming a major theme of entrepreneurial strategies.

USA Today reported on the success of Uber and Lyft, startups that use smartphone apps to connect passengers with private drivers. In just four years Uber expanded to serve 128 cities in 37 countries; Lyft serves 67 cities. The companies’ strategies depend directly on skirting government regulations: they claim not to be taxis and therefore not subject to taxi regulations.

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Pay Attention to Economics Professors in Bars

Business strategy that results in lower ROI to stakeholders is an example of bad business strategy. Business strategy that results in lower ROI to a country is the result of bad politicians. In both cases some decision makers seem to not understand the second law of economics. Recent M&A activity by Pfizer and mega law firms tell it all. 
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There’s a story about an economics professor who went into a bar. The local crowd, intellectually curious after a few drinks, asked the professor to explain economics in two sentences. “First, there is no free lunch,” he said. “Second, incentives work.” We must wonder about this professor, though. He should have said a free drink would give him a mighty incentive to answer.

Economics has strayed far from its days as the study of human behavior. The tenure process has transformed economics into a branch of mathematics, quite irrelevant to today’s world. What we must remember is the hugely relevant second law of economics, described so aptly by the sober (?) professor.

Here are a few examples of this second law in action.

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First Conviction Ever Under the 1996 Espionage Act

Competitive intelligence, trade secrets, and Oreos: Learn how a Chinese company tried to gain a competitive advantage from an American competitor using a twisted market strategy that led all parties to fail at competing. Clearly, taking risks does not guarantee a competitive advantage. 

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A short news item in USA Today on March 6, 2014, reported that a San Francisco jury found two men guilty of stealing trade secrets from DuPont. Stealing trade secrets intrigues me since I am in competitive intelligence (CI), and CI has fought for decades against the idea that we’re corporate James Bonds spying on competitors.

We won the battle. The only people now who consider CI to be as exciting as industrial espionage are those who haven’t left their caves since Y2K. Today’s misconceptions are too sad even for Austin Powers. CI today is misconstrued as fishing online for competitor data, mischaracterized as trolling social media for customers’ view of competitors, or misunderstood as sniffing financial reports. But this is another subject. At least it is no longer espionage. At last the world realized we are boring.

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The Denial Tree

By Mark ChussilBen Gilad

In a recent episode of CBS’ legal drama “The Good Wife,” a client of the law firm at the center of the show faces a tough business decision. He is the CEO of a fictional “power drink” company and a 16-year-old girl has died after guzzling several of his company’s beverages. The family sues. The law firm repre­senting the company offers to settle for $800,000. The family’s lawyer demands $14 million.

The law firm’s senior partners recommend going to court. If the senior partners spoke decision trees instead of words, this is what they would say:

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