Monday, January 31, 2011

Real Life Business Education: Too Many Internets

Last Year, author Ray Bradbury famously said that there are "too many internets". This was part of a crazy rant that he recorded on this blog. I'm not exactly sure what Bradbury meant by too many internets, but it turns out he was right... sort of. We actually have too many registered internet addresses.

This is a strange concept. We often hear about the capacity limiting constraints of legacy hardware or fiber, but addresses? It seems like they should just be able to add a digit or something. Unfortunately the current IP naming conventions were developed over thirty years ago when the internet was still just a closed experiment accessible only to US government agencies and a few Universities. And now... in 2010, we experiencing a famine of IP addresses.

According a Wall Street Journal article, help is on the way. Apparently help, is a new naming system call IPv6, which will allow a "near infinite" number of internet addresses. The catch is that most of the hardware out there that is more than just a few years old isn't compatible. So begins the long upgrade. I guess the one positive thing is that internet hardware and devices are typically upgraded often.

So, will we run out of IP addresses? The techie folks say that it's unlikely, however, that is only because companies began to prepare for the end of addresses a few years ago. Thanks companies- your making us all realize that Ray Bradbury's comments were just as dumb as they originally sounded after all.


Saturday, January 15, 2011

Real Life Business Education: The State of the Union

Unlike most people, I actually enjoy watching politicians give speeches. But, it' not for the speech itself. I think what I enjoy is thinking about all of the work that went into a speech behind the scene. Let me explain...

In President Barack Obama's latest State of the Union address, he talked a lot about things that democrats would normally shy away from- things like tort reform, lowering the corporate tax rate, and spending cuts. You see, Obama and his staff know that they cannot continue to push a democratic agenda when they don't have a majority in the house and senate as well as the presidency. So, instead they are shifting the administration's stance to a much more moderate one. In doing so, they are offering to go after some traditionally conservative ideas to send a message to the republicans. That is- if you don't play nice, the public is going to see you as the bad guys. Why? Because we have already brought up several ideas that are catered to the right. So, if we can compromise, you can too- right?

It's the messaging. Messaging is a core business principle. Companies message customers with their pricing and customer service message. Companies even message each other with their sales. You know the "low cost guarantee"? It's just a message to the competition that lowering their price won't win them any business- it's just a way to avoid a price war.

So, from the president of the US to Wal-Mart, the speeches and actions all contain hidden meanings. Now that you know, maybe you will enjoy listening to politicians talk as well.

Monday, January 10, 2011

Real Life Business Education: Healthcare

Now that I am finished with my Business Education I have begun to seriously think about what kind of career I would like to pursue. It seems strange to still be talking about "what I want to do when I grow up" at age 30, but here I am. Getting your MBA makes you feel like the possibilities are endless, like you could join any company or industry and add value- that they would be lucky to have you. Not because your something special, but because you have taken the time to learn and understand the core principles of what makes a business tick.

While contemplating my future, the thought of working in healthcare has often crossed my mind. You can actually get an MBA in Healthcare management, but the Business Education I received is enough to consider joining this industry as well.

So why is it attractive?

Two reasons:

1) Healthcare is growing - with the passing of Obama's Healthcare Bill, there are certainly going to be many jobs being created in the coming years. These new employees will need leaders and managers to... well lead and manage them.

2) The greater good. One of the hardest thing about my current job is that it has no real moral value. At the end of the day I am helping a company increase it's profits so people holding it's stock can be a little richer. I don't think there any shame in that, but there isn't an extreme amount of pride either- don't get me wrong... I love my job and the company I am employed with. But to know the work that I did enabled the healing of the sick would be pretty cool.

So, we'll see. I have a lot of thinking to do and with today's norms in employment, I have a few more careers ahead of me :)

Wednesday, January 05, 2011

MBA Degree - Check!

First, let me apologize. My entries have been fewer than I normally like-hopefully that will change soon.

You see, I have been given a gift of time. About 15-20 hours a week to be exact. I have this time because just a few weeks ago I attended the last class required to obtain my MBA degree. Yes, that's right! I have graduated! It seems like just yesterday I was writing my description for this blog "applying, attending, and one day graduating from Business School". Well, I'm happy to say that day has come. I am done.

It's funny though, it still hasn't sunk in. I'm still extremely protective over my free time and I have that eerie feeling that I am forgetting to do something. But I'm not. Now I can spend my time doing home improvement projects, catching up on the mail, and hanging out with my dog... and wife.

People keep asking me what I am doing that I have all of this free time. The truth is that I now play 5-10 hours of video games a week and get 1-1.5 hours more sleep per night- I think both of these are very positive things.

...meanwhile on the job front, I was promoted just days after graduating. I don't think it had a whole lot to do with finishing school, but I'm certain that school allowed me to get to a position to be promoted. Yes, I am definitely enjoying the fruits of a very laborious 2.5 years. And soon I will begin paying for that fruit (tuition) at a very reasonable interest rate.

But, it has been worth it. Along with my latest promotion came an increase in salary equal to my monthly student loan payment. What an amazing thing in the current economy- I am truly blessed.

Monday, December 13, 2010

Verizon is using their MBA

I recently noticed that Verizon Wireless applied some typical MBA know how to their pricing scheme for smart phones. The old data options from Verizon were to either buy an unlimited everything (data, text, pix, and flix), or a multimedia package (text, pix, and flix). The former was $29.99, while the latter was $9.99. What this essentially did is charge light users of data the same as very heavy users and there was no difference in speed that was offered.

Verizon’s latest pricing includes differentiation in price for total data used for a month and connection speed. The premium is for faster service and/or greater data usage.

This is a concept affectionately referred to as price discrimination. They figured out that different folks are using their bandwidth differently and thus value that bandwidth differently. Now, its not pure discrimination because VZW is actually offering slightly differentiated products, but they are essentially charging different customers different prices based on their willingness to pay.

Other examples of price discrimination include a student or senior discount, in-state college tuition, and corporate discounts. In all of these situations businesses are trying to increase their overall profitability by selling to people at the maximum price they are willing to pay.

Obviously Verizon has a few MBA graduates on their payroll. Nice work VZW.

Tuesday, December 07, 2010

Lessons from Business School - Economic Value Estimate

The Chevy Volt was recently released for mass production and will soon be available at a Chevrolet dealer near you. This car has been released to much fanfare and is being hailed as the first electric car that he general public will purchase. The biggest reason for this is the vehicle’s range on a single battery charge.

About a year ago, I read about the Volt and was very excited about the prospect of a legitimate electric car. After reviewing the specs and the range, the first thought I had before I could decide if I would purchase pone is “how much is Chevy going to charge?” A year later Chvy announced a price of approximately $40,000 for the vehicle (depending on options). The announcement of the price was timed very well with the pricing class that I began back in September. One of the very first concepts that we learned will allow me to share a very valuable Business School lesson with you…. The EVE (Economic Value Estimate).

The framework is actually pretty simple. You just take the price of the closest alternative, add the difference in benefit (positive or negative), and adjust for qualitative factors such as a fast adoption product strategy. Here’s a quick back of the envelope on how the Volt may have been priced…

Folks who buy the volt are probably the same people who bought a Toyota Prius, Civic EX, or Focus Ltd. So let’s tak the value fo these cars on average… say $24,000. Now add the cost savings that an owner would experience using electricity instead of gasoline over the expected useful life the car (Let’s say 10 years at $1,000/year). So now we have $24,000 + $10,000. Finally, add in the reduced maintenance costs and some amount for the novelty of owning the first mainstream electric vehicle. Let’s say that amounts to ~$8,000 over the life of ownership. The grand total is $24k + $10k + 8K… $42K. $42K is the price ceiling (the highest price that should be chosen for the vehicle based on the value it represents to a potential owner. The floor is the cost of the next best alternative, or $24,000 in this case. Chevy should then choose a place in this spectrum depending on their strategic goals. Since Chevy is just recovering from bankruptcy and the popularity of the Volt is high, the price they chose seems reasonable. If they wanted to push inventory a bit more to gain some sales momentum, the may have priced $2k, $4k, or $6k lower.

It will be interesting to see how the Volt does… about 1 year from today, we will see if the Volt’s pricing analysts got their money’s worth from their respective business schools.

Friday, December 03, 2010

Real Life Business Education: China & Hong – Finally, Hong Kong

A group of four of us left our hotel with a driver and a guide named Sunny. It wasn’t very long that we realized Sunny was probably just as excited to be going to Hong Kong as we were – I don’t think she actually gets over there much.

It was starting to get dark as we approached the border. 30 minutes later it was pitch black as we made our way from the boarer into Hong Kong. We arrived in the city and finally landed in Lan Kwai Fong. We spent the first 30 minutes exploring the general area before we finally found an outdoor courtyard with a few different restaurants. As we walked into the courtyard, several restaurant owners/workers met us with menus and began attempting to persuade us to eat at their respective establishments. We settled on Thai and enjoyed a nice meal for only about $10 per person. The food meal I ordered ended up being some of the best Thai curry I’ve had.

For the rest of the night, the group of us hopped through a few bars, explored a few streets, and tried to stay dry. Did I mention it was raining?

The night actually ended pretty early… at around 10PM everyone in the group headed back to the JW Marriot and I checked into the Metro Park hotel in Kowloon Hong Kong. I spent the next day there as well before catching an evening flight out of HKG. With a full belly from all the bakeries and restaurants I visited in Hong Kong I rode the hotel shuttle back to the airport. I got there with plenty of time to spare and boarded the plane for home.

On the way home, I couldn’t help but to be excited about all I had learned. This trip truly was a real life business education. From my time in Beijing to the rainy streets of Hong Kong, I had the opportunity to entrench myself in a new culture and business on a continent that a week earlier had seemed light years away. This was a very valuable trip.