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  • feedwordpress 00:19:11 on 2016/09/22 Permalink
    Tags: AARON RENN, , business, , , , , , , environment, , innovation comes from the edges, james clear, John Carpenter, john hagel, Katy Lynch, metaphors, pearls of wisdom, peter thiel, , Roosevelt University, Scott Kleinberg, Shia Kapos, silicon valley, , stategy, strategy, , texas, the edge of innovation, thiel   

    Dear Chicago: Embrace the Edge 


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    Dear Chicago: Embrace the Edge

    Last week, Peter Thiel casually and brazenly denigrated Chicago, hyping Silicon Valley while speaking at a Roosevelt University Chicago event:

    In Thiel’s own words: “If you are a very talented person, you have a choice: You either go to New York or you go to Silicon Valley.”

    Chicago has reacted with numerous self-depricating or defensive articles.

    Buck up, Chicago.

    According to the IRS, Five MILLION people have left California in the past decade. The exodus equates to a whopping net loss of $26 billion in annual income for the state. The majority headed to one of five states: Texas, Oregon, Nevada, Arizona, Washington.

    The reason for the California exodus is no secret: exorbitant housing costs, a housing shortage, the second lowest home ownership rates in the country, high taxes, statewide unemployment higher than the national average, low wages, fiscal instability, systemic gender/race discrimination, increasing business regulation, not to mention a dearth of companies solving *actual* problems, severe droughts, a water shortage, earthquakes, dry lightning, and accelerating ozone pollution levels (also among the highest in the country).

    Peter Thiel paints a rosy picture of Silicon Valley. Meanwhile Silicon Valley’s restaurant industry is literally starving.

    Location is everything. Research has proven that environment has a surprisingly strong influence on success. Unless you fit the Silicon Valley’s very narrow niche “mold for success” (read: white, educated, technology-savvy males under age 40 — age 50 if you are lucky enough to be a VC — with money and family connections), look elsewhere for opportunity. The folks in Silicon Valley are not more talented; they’re merely more insular, provincial, protectionist, and elitist with regard to membership in their private club.

    Remember folks: DIVERSITY DRIVES INNOVATION and INNOVATION COMES FROM THE EDGES. In the words of brainy entrepreneur James Clear: “Life is a game; if you want better results over a sustained period of time, play the game in an environment that favors you.” James also wisely once advised: “worry not — aim for the subtle art of not giving a f*ck.”

    Embrace the edge, Chicago. Don’t kow-tow to Silicon Valley pundits and bullies. You’re better than that.

     
  • feedwordpress 14:34:08 on 2015/12/15 Permalink
    Tags: antitrust, , bumble bee, bumble bee foods, business, business integration, , , chicken of the sea, cooley, , DOJ, flakeboard, gun-jumping, Hart-Scott-Rodino Act, howard morse, HSR Act, , litigation, , , mergers and acquisitions, monopoly power, Rockefeller, tuna   

    AntiTrust Law and M&A Deal Value 


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    AntiTrust Law and M&A Deal Value

    RE:INVENTION, inc. helps companies with pre- and post-merger (M&A) brand and business integration. The process of combining and rearranging businesses to realize merger and acquisition (M&A) deal value and materialize potential inside-out efficiencies and synergies is complex and riddled with numerous antitrust and other legal issues.

    Because of our understanding of operational integration issues and antitrust risks in M&A transactions, we’re committed to sharing solutions in a forum for your review. Our discussion today involves the antitrust litigation related to Thai Union (Chicken of the Sea) and their recently dissolved M&A deal with Bumble Bee Foods. Bumble Bee Foods offices are located just a stone’s throw away from RE:INVENTION’s HQ in downtown San Diego.

    Our interview that follows introduces Cooley LLP AntiTrust Practice Leader, Howard Morse, one of the country’s leading antitrust lawyers.

    ************************************************************************

    RE: Can you tell our readers a little bit about yourself and your background in antitrust law with respect to company mergers and acquisitions (M&A)?

    Howard Morse, Cooley

    Morse: I am a Washington, DC-based partner and chair of the antitrust practice at Cooley LLP, where we represent clients, particularly in high-tech industries – including tech, life sciences and telecom companies – as well as automotive parts and consumer product companies.

    Early in my career I spent 10 years at the Federal Trade Commission (FTC), where I was a staff attorney, deputy for policy and assistant director of the Bureau of Competition, and was responsible for more than 50 merger enforcement actions under the Hart-Scott-Rodino (HSR) Act.

    For the last 15 years, I have been guiding mergers and acquisitions through the regulatory approval process at the Department of Justice (DOJ) and FTC.

    RE: Can you provide a basic overview of the nature/concept of “antitrust” for our readers?

    Morse: The term “antitrust” was coined at the turn of the 20th century, as the government established laws to counter the “trusts” or holding companies of the day, such as John D. Rockefeller’s oil trust (Standard Oil) and J.P. Morgan’s steel trust (U.S. Steel), which were recognized to have gained monopoly power.

    What we call “antitrust law” and much of the rest of the world calls “competition law” restricts agreements in restraint of trade, monopolization or abuse of dominance, and mergers and acquisitions that may lessen competition.

    The goal of antitrust is to prevent conduct, including mergers and acquisitions, that is likely to lead to higher prices – or lower quality, reduced service or less innovation – to the detriment of customers and consumers. It is not, as some mistakenly believe, aimed at protecting competitors from competition.

    RE: When is a merger or acquisition likely to run into antitrust concerns?

    Morse: The government focuses its attention on mergers and acquisitions among the largest competitors in concentrated markets, say when #2 and #3 of 4 major firms in a market propose to combine.

    The key question that the government asks is will the merged firm raise prices, compared to likely prices if the merger were not to take place, either unilaterally because the merging firms’ products are close substitutes or the merged firm will dominate the market or through coordinated interaction or tacit collusion among remaining firms.

    RE: When announcing the recent abandonment of the Bumble Bee / Thai Union deal, the US Department of Justice (DOJ) declared that “that the parties knew or should have known from the get go – that the market is not functioning competitively today, and further consolidation would only make things worse.” What do you make of that specific statement from DOJ Assistant Attorney General for AntiTrust, Bill Baer?

    Morse: Public reports indicate that the DOJ has issued subpoenas and is conducting a criminal investigation into whether the ‘big three’ canned tuna producers – Bumble Bee, Chicken-of-the Sea and Starkist – fixed prices. While the DOJ has not commented specifically on that investigation, there have been a number of civil lawsuits filed since the announcement that Thai Union was suspending its offer to acquire Bumble Bee in July.

    Companies considering a merger or acquisition with a competitor in a concentrated market ought to recognize that proposed transactions and the companies’ internal documents will be carefully scrutinized by antitrust authorities. If there are suggestions of price fixing or market division in company documents, the companies may find not only that they can’t complete their proposed deal but also that they become the target of a criminal investigation, which can mean large fines and even jail time.

    RE: To wit, Del Monte Foods originally considered selling Starkist to Bumble Bee before selling to Dongwon Industries back in 2008. Pre-deal information sharing has obviously already happened – with great frequency – in the tuna industry. At this point, is any merger and acquisition (M&A) in the tuna industry bound to be riddled with antitrust issues?

    Morse: Transactions involving smaller firms in a market – even deals in which they are acquired by one of the big firms – are likely to be looked at quite differently than those combining two of the big three players.

    RE: The Hart–Scott–Rodino Antitrust Improvements Act of 1976 (Public Law 94-435, known commonly as the HSR Act) guides the premerger notification and merger review process. Can you tell our readers a little bit about the Act and the waiting period?

    Morse: The HSR Act requires notification of proposed transactions that meet specified thresholds to the DOJ and FTC to allow the antitrust authorities to investigate whether they may lessen competition before they are consummated.

    Most deals are subject to an initial 30-day waiting period. If the authorities believe a thorough investigation is warranted, the reviewing agency will issue a so-called “Second Request” requiring the parties to produce additional data and documents before they can proceed with the deal.

    During FY2014, HSR filings were made for 1,663 transactions and 51 second requests were issued, in 3.2% of all transactions.

    The HSR rules are complex – much like the tax code – so firms are advised to consult with counsel but generally need to consider whether they have to make an HSR filing when they make an acquisition or will hold securities of the target company, valued over $76.3 million.

    Some transactions that firms may not even think of as M&A, such as entering into an exclusive license, may require an HSR filing if thresholds are met.

    RE: Due diligence and integration planning are vital for M&A deal success. But companies need to avoid unlawful premerger coordination. What are some of the things that a company can do to avoid antitrust issues during the HSR waiting period?

    Morse: The HSR rules prohibit firms not only from consummating deals but also from exercising control over the other party before the waiting period expires. And since the firms remain independent, allocating customers or coordinating prices can violate antitrust law.

    During due diligence, competitors need to consider antitrust issues when exchanging competitively sensitive confidential information. For example, they should ensure that they only share information required for due diligence and take steps such as restricting personnel that have access to information and limiting use of information shared, and in some cases setting up “clean teams” to review the most sensitive information.

    Firms can plan integration but cannot actually integrate during the HSR waiting period. Firms have gotten themselves in trouble when they started answering phones and handing out business cards at the target with the acquiring firm’s name, have had personnel report to managers at the other firm, or have sought approval from the other firm before giving discounts to customers.

    RE: What are some of the consequences or penalties companies face when their merger deals are scrutinized by the DOJ for HSR Act antitrust violations?

    Morse: A transaction may be delayed for months by a government investigation, even if the government never takes enforcement action. Keeping language out of offering memoranda, management presentations and other documents that must be provided to the government with HSR filings that may be misinterpreted by government can avoid such delay.

    If the government does conclude that a transaction will lessen competition, the typical remedy is divestiture of competing product lines. Where that is not possible deals may be blocked altogether or abandoned in the face of threatened enforcement, as we have seen recently with GE/Electrolux, Sysco/US Foods, and Comcast/TimeWarner.

    RE: Companies in a concentrated market with three or fewer competitors seem particularly susceptible to potential antitrust violations and tacit collusion. When companies are considering a merger or acquisition in a concentrated market, what if anything can they do to pre-empt collective dominance and collusion issues?
    HS
    Morse: Defending every case requires a careful examination of the facts. In some cases, one can argue the definition of the product or geographic market is broader and so not concentrated; in others one can argue that new entry will prevent anti-competitive effects; and in others one can argue that small fringe competitors or power buyers will constrain the merged firm. In dynamic, high-tech markets one can argue that the products are highly differentiated and rapidly changing, making collusion among remaining firms unlikely. In any case, it is important to consider the efficiencies that may result from the transaction, lowering costs or resulting in improved products to customers.
    RE: If companies in a concentrated market set the same prices for similar products does that always indicate an agreement to fix prices?

    Morse: Absolutely not. Two gas stations across the street from each other may well sell gas at the same price, posting their prices on a sign and their tanks for all to see, without fixing prices. Price fixing requires an agreement, though not an agreement in writing.

    RE: Originally there were rumors that Bumble Bee and Thai Union received subpoenas from the DOJ but Starkist didn’t, suggesting that Starkist may have been a whistleblower. Can you speak a bit about amnesty/corporate leniency for the first co-operator in an antitrust lawsuit?

    Morse: In order to encourage self-reporting of price fixing cartels, the government provides immunity or leniency to those that self report.

    The first company to report a cartel will be entitled to immunity if it does so before the government begins an investigation, it cooperates with the government, it was not a ringleader, it promptly ends its involvement in the cartel, and it makes restitution. Leniency may be available to the first company to come forward even after the government has begun an investigation.

    RE: Could seeking leniency for price fixing be a good alternative strategy for companies opposed to a proposed merger among competitors?

    Morse: For sure, it is a good bet the government will be skeptical of a merger in a concentrated market where there is a history of recent price fixing.

    Of course, while the first company to file for leniency may avoid criminal charges, it may still find itself liable for damages in civil antitrust suits. While in most antitrust cases, plaintiffs can recover treble damages, Congress in 2004 created an additional incentive for companies to report cartels, limiting civil damages recoverable from a corporate amnesty applicant to actual damages.

    RE: You provided expert commentary on the DOJ’s enforcement action against Flakeboard. What similarities or lessons learned (if any) do you see between the Bumble Bee / Thai Union DOJ investigation and the Flakeboard/Sierra antitrust lawsuit?

    Morse: DOJ obtained a $1.9 million civil penalty from both Flakeboard and Sierra Pine for violating the HSR Act, and they agreed to disgorge $1.15 million in “ill-gotten gains” for gun jumping.

    After announcing their merger, in the face of a labor dispute arose at one of the firm’s facilities, the firms consulted and reached agreement to close the facility and transfer customers to the other firm’s nearby facility, while the transaction was still being reviewed.

    DOJ alleged that conduct, which was undertaken without any assurance that the underlying transaction would be consummated, was per se unlawful under the antitrust laws, as well as gun jumping under the HSR Act.

    Whether what is at issue in the Bumble Bee / Thai Union matter is similar “gun jumping” activity, price fixing that pre-dated the merger, or lawful activity remains to be seen.

    RE: We’ve addressed what companies can do DURING the merger process and HSR waiting period to avoid anti-trust issues, Howard. Are there any steps pre-acquisition that companies can take to avoid running into problems with the DOJ? Meaning, as companies are considering an acquisition, what are the do’s and don’ts they should take to avoid running into problems later?

    Morse: Companies should avoid language in documents that suggest a deal is anti-competitive, for example, projecting that the deal will lead to price increases. At the same time, is important that companies consider, analyze and quantify efficiencies that will result from proposed transactions, and be able to explain why the deal will be good for customers. Certainly, companies should avoid writing documents that are a red flag for scrutiny, like I saw in one deal, when I was with the government, that said the proposed acquisition would allow the acquirer to “monopolize the industry … in an expeditious and timely manner.”

    RE: Are there any other Cooley anti-trust resources you can point our readers to for reference?

    Morse: Sure. Here’s a link to Cooley’s “How to Avoid Gun-Jumping” Article, a practical how-to for companies considering M&A opportunities.

    We hope RE:INVENTION’s interview with one of the nation’s leading M&A antitrust lawyers sparks thought and discussion among curious readers. We invite you to share your thoughts and stories in comments below. Many thanks to Howard Morse for sharing his insights.

     
  • nmw 08:09:36 on 2014/12/10 Permalink
    Tags: business, , communications, , life, narrative, narratives, stories, story, storytelling, ubuntu, user experience, UX, webdesign   

    From Conversation to Conversion 


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    Why does this matter? Because “users” may not be ready to step into your “funnel.” Being intuitive only gets you so far. Remember, it’s emotion that shapes behavior. Your customers’ expectations from a digital experience are different today. Dare to not delight them at your own peril.

    http://adage.com/article/digitalnext/storytelling-user-experience-a-collision/296037/

    Adam’s story about storytelling dovetails quite well with something I wrote yesterday on a similar topic:

    You can enrich your story by weaving other people’s stories into your own (whether or not they reciprocate by weaving your story into theirs). Be willing to tell other people’s stories: They will love it!

    http://remediary.com/2014/12/live-to-make-love-life-stories/

     
  • feedwordpress 11:38:19 on 2014/02/11 Permalink
    Tags: , business, business failure, , , change managment, , donald sull, , , , , , , innovation barriers, innovation management, , london business school, Michigan, , mudhole, passive resistence, South Carolina,   

    Crummy Implementation Cripples Companies, Not Inertia 


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    Crummy Implementation Cripples Companies, Not Inertia
    Image credit: www.atvcourse.com

    Many business experts will tell you that inertia kills companies. That the biggest barrier to innovation is inertia – paralysis or passive resistance prevents innovation from getting started.

    IN REALITY….

    Few companies, if any, suffer from inertia. Executives, managers, and employees rarely are too paralyzed to take any action. They are always doing *SOMETHING* even if only to justify their job. Alas, they are often accelerating the wrong activities and they aren’t doing the right activities well. They spin their wheels like a car stuck in mud.

    My family hails from Michigan and South Carolina, a state that boasts its own Mud Run Guide. Here’s what I know: when your car gets stuck in mud, you are almost always better off if you stop digging your wheels into the ground and turn off your engine. To get out of a mudhole, you need to add traction or use a winch.

    In 1999, London Business School Professor Donald Sull also questioned the incidence of paralyzing business inertia and coined the alternative term “active inertia.” Sull suggested that active inertia — responding to market shifts by accelerating activities that succeeded in the past rather than ceasing activity altogether — causes business failure.

    Sull is partially but not completely correct.

    Inertia doesn’t kill companies; there is little to no evidence of companies being too paralyzed to take any action at all. And active inertia is rarely a company’s problem; faced with mounting competitive pressure, most companies get desperate and unleash a flurry of new, oft ill-conceived initiatives to try to stop the bleeding. What causes companies to fail nearly every time is crummy (or sloppy) execution.

    CRUMMY IMPLEMENTATION CRIPPLES COMPANIES, NOT INERTIA

    In my humble opinion, the biggest barrier to innovation is EXECUTIONAL EXCELLENCE.  The world is littered with great ideas, poorly implemented.

    Take for instance, Kodak. Contrary to media reports, Kodak didn’t suffer from inertia (“paralysis”) OR active inertia (“relentless pursuit of the tried and true”). The company was never short on new ideas. Kodak developed countless technology innovations over the years including the digital camera in 1975 but they failed to successfully commercialize it. They held $3 billion worth of patents, valued at more than five times the company itself. They suffered from numerous reorganization efforts — CEO after CEO — making it incredibly difficult to implement smart long-term strategy. Their eager and rash M&A and alliance deals — from Scitex to Imation to Verizon and Creo — lacked strategic due diligence and led to integration headaches. Kodak was undeniably IN MOTION, spinning its wheels like a car stuck in mud.

    ARE YOU SPINNING YOUR WHEELS?

    Are you in an innovation rut? Instead of spinning your wheels and digging a deeper hole, get better at business execution. Create sound action plans but remember that execution and making strategy work is more difficult than the task of strategic planning (developing the strategy is never more important than the results). Hold people accountable, involve the right people in decisions, build “change readiness”, practice the 12 C’s of Commercializing Innovation. In other words: figure out a way to add traction or find a winch. It starts with analyzing and improving your internal innovation processes and your go-to-market strategies.

    Editor’s Post Script: No intended offense to Dr. Sull. He’d be an excellent thesis adviser were I ever to pursue a PhD.

     
  • feedwordpress 18:07:46 on 2013/11/12 Permalink
    Tags: , , business, , , idea generation, , , , metrics, reinventing research, , reinventiveness, Steve Jobs   

    Market Intelligence: Steve Jobs vs. the Rest of Us 


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    Market Intelligence: Steve Jobs vs. the Rest of Us

    Most of us have heard about the aversion of Steve Jobs to marketing research, who felt that it limited true innovation. He had an unwavering confidence in his own opinion and instinct over what marketing research might tell him – an approach that obviously served him extremely well with Apple and Pixar. Jobs, like Edison, Disney and other famous innovators of that breed, possessed an uncanny ability to conceptualize beyond the present and take
    society to new unimaginable frontiers. Unfortunately, the rest of us need to innovate and reinvent with strong empirically derived insights about the marketplace. So, with all due deference to Steve Jobs, I would like to express my respect and thanks for the discipline of marketing research, and the extensive tool chest that comes with it – a tool chest that has become amazingly expansive with digital technologies.

    Well-conceived and executed marketing research enables the rest of us to make smart, fact based decisions, and reduces the risk associated with introducing faulty products, services, market penetration strategies and campaigns. I have been frequently confronted with the challenges posed by marketing research skeptics: “It takes too long.” “It is too expensive.” “Am I just going to learn something I already know?” The fact of the matter is that well conceived and designed marketing research does not have to be any of these, especially today with the digital capabilities available.

    Let’s consider secondary research. The Internet enables marketers to efficiently conduct competitive assessments at little or no cost. Prior to the Internet, a business would have little choice but to purchase either a stock or customized industry report to capture information about the competition. Now, competitive websites tell us a great deal. We can also employ social listening tools that allow marketers to monitor consumer chatter occurring about competitors as well as their own company. Search engines quickly point us in the direction of the statistics and market intelligence we need on target markets for a new innovation or business reinvention endeavor. Big companies and start-ups alike need this information to develop addressable market assumptions for business plans and to obtain funding.

    Primary research (e.g., surveys, focus groups, diary panels) has received an incredible boost from digital formats. Most marketing research agencies today offer online services, which allow for very cost efficient sampling, surveying and data capture. Also, this data can be quickly uploaded into sophisticated modeling designs to forecast marketplace uptake. Additionally, companies, such as Survey Monkey, have grown in popularity because they allow virtually anyone to conduct a survey, with a sample provided by the marketer or purchased at a very low price from the provider. Survey Monkey automatically loads the data into easily understood tables and graphs and information is available on a 24/7 basis.

    Marketing research in the digital age is faster and more economical than ever. Not unlike research conducted prior to the digital age, it needs to be conducted with a plan, the knowledge of how to ask the right questions to address the problem, and the ability to build insights from the data that lead to actionable and sound strategies. Sound marketing research helps us to avoid the pitfall of bringing to market an offering that may otherwise be destined for failure. So, give thanks for a discipline that can give you peace of mind and a good night’s sleep.

     
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