Tuesday, May 29, 2012

What We Can Learn From Lewis Carroll's Red Queen

In Lewis Carroll's epic story Through The Looking Glass, the Red Queen character remarks, "It takes all the running that you can do to keep in the same place."

Her statement has become a metaphor for evolutionary change in which species evolve in an ecosystem at the same rate so that no species dominates the other. The rabbits get faster and faster, but so do the foxes, so both species are kept in check.

I think the theory of the Red Queen, played by Helena Bonham Carter in the 2010 remake of Alice in Wonderland, has profound implications for small business owners, consultants, and competitive athletes.

I once heard Larry Christiansen, who won the U.S. Chess Championship in 1980, remark that he was very frustrated with chess because he worked very hard on his game but his results never seemed to improve. But when Larry said that, he was already in the top 100 players in the world. And all those players were working hard on their games too. In fact, it probably takes working on chess ten hours a day just to stay in the world's top 100. So all those players are running super fast to stay in the same place. If they want to rise in the world rankings, they have to do something that their opponents are not doing.

Which is why, on whatever your competitive chess board is, if you want to succeed, it may not be enough to work hard. Sometimes you have to work smarter.

The good news for business owners, consultants, athletes, and those who compete in the corporate world is that you can win more customers, get promoted, or improve at your sport if you integrate Lateral Thinking into your strategic plan. It is often easier to out-think and out-innovate your competition than it is to out-hustle them.
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Wednesday, May 23, 2012

A Decision Making Rule Set That Can Put $1000 Per Year in Your Pocket.

Have you seen the TLC show "Extreme Couponing"? It's an awesome show in which coupon fanatics develop advanced strategies to maximize discounts, sometimes buying several hundred dollars worth of "stuff" for just a few dollars.

I admit I was really amazed by this concept, so a few months ago I started to clip coupons to see how much I could save. I have to tell you it was a a real adrenaline rush of sorts to stand in the grocery line and have the cashier take twenty dollars off my bill simply because I handed him/her a few little slips of paper that I had clipped. But it wasn't long before I realized my couponing wasn't working well. My son complained that we had enough Johnsonville Chicken Sausage to feed an army. Also, I learned that when I grocery-shopped with my kids (to save time by having them hunt down some of the items) that an enormous amount of junk food gets plopped in the basket when I'm not looking. And when I gave coupons to one of my children and asked them to find an item, I sometimes got the wrong stuff. California Pizza Kitchen makes some darn good frozen pizzas, but when I got home I realized that my son had picked out a pizza that really offended my Sicilian heritage - Barbecue Chicken Pizza. Yuck!

Also, after watching the extreme couponers a few more times, I realized that many were just buying stuff that they really didn't need and giving it away or stockpiling it. Since there is no utility in buying something that you don't need no matter how cheap you get it (and everything we buy contributes to our carbon footprint), it seemed to me that one could be much more strategic, purposeful, and responsible about using coupons.

 I decided to practice what I preached in my book and developed an algorithm for determining what coupons to use. Remember in The Naked Portfolio Manager, I presented the case that decision-making can be improved if the decision-maker creates a rule set that can be used in lieu of applying his judgement. So I created a rule set for using grocery coupons that can be applied in 15 minutes per week. Here are my rules :
  1. Spend three minutes reviewing each insert from Kroger and Martins.
  2. Before clipping any coupon, ask these three questions:
    • Do I use this product?
    • Will the coupon provide savings over store brands?
    • Am I likely to use the product in the next thirty days?                                                
 The next steps are:
  1. Shop in larger stores to maximize the chance that they will have the product in stock and you can use the coupon.
  2. Throw away unused coupons. (There will be more next Sunday)
  3. Shop alone.
When I applied this strategy, buying only things that I would use in the next thirty days, I saved almost $12 on a purchase that was under $30. Had I purchased another Sunday paper, I could have bought twice as much and saved $24. Basically, this is a triage system for the busy person who does not want to spend hours preparing to go shopping like the people on "Extreme Couponers." You just pick the low-hanging fruit - the most valuable coupons to you. The reason that you throw away the unused coupons (a cardinal sin for extreme couponers who save them until they expire in case that can get a really good deal somewhere) rather than cataloging them and indexing them by expiration date is to save yourself time in the long run.

With the Memorial Day holiday coming up the newspaper will be filled with coupons. Give my rules a try. Feel free to modify them to better suit your needs. I think you will find that investing a minimum amount of time and applying a rigid discipline to your decision-making can save you $10 to $20 a week on groceries if you buy only stuff that you use. I think you will get a kick out of watching $10, $15, $20 come of your check when you are in the grocery line. Let me know how it works!

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Monday, May 21, 2012

Relaunching the Blog

I have some news to share. . . I'm relaunching my blog! As many of you know, the last year was a very trying time for me personally, which made it difficult to be consistent with my blogging. As many of you may also know, I work in a highly regulated industry, which made my "Naked Portfolio Manager" blog problematic.

I'm very happy to report that I have resolved these issues and will once again be blogging on a regular basis on The Virginia Institute for Effective Thinking website. This blog will discuss innovation, creativity, thinking, and decision-making. "The Naked Portfolio Manager" will be maintained as a static blog and I will update that only when I have a radio interview or podcast available regarding my book of the same name.

At the Virginia Institute for Effective Thinking website, I will review books on the aforementioned subjects of thinking and creativity. I will also profile interesting thinkers and decision-makers, share stories of innovation from my thinking clients, and also report on my own innovations in thinking - all to help you live and work better and smarter.

The best way to know when I have new posts up on the blog is to sign up to have it delivered by email. I know you are going to really enjoy what I have planned. As always, please feel free to share your thoughts in the comments section or shoot me an email at Bob@thenakedportfoliomanager.com.
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