Mindblown: a blog about philosophy.

  • China’s fiscal stimulus will have permanent, negative, consequences

    In a recent report, “The Long Shadow of Fiscal Expansion,” by Chong-En Bai of Tsinghua University, Chang-Tai Hsieh of the University of Chicago, and Zheng (Michael) Song of the Chinese University of Hong Kong, we see evidence that an extraordinary misallocation of resources caused by the combination of well-intentioned government efforts to stimulate the economy (unfortunately in […]

  • Wells Fargo provides amazing example of red line management

    Wells Fargo’s experience with the consequences of paying people to hit targets on indicators, in this case, employees were paid based upon how many new customer accounts they opened which resulted in millions of accounts being opened without the knowledge or consent of the customers in whose names they were opened, is a perfect demonstration […]

  • Beware of overvalued equity–it can kill your company

    In writing about McKinsey alum Jeff Skilling and his tenure as the CEO of Enron, Duff McDonald (The Firm, p. 247) draws an interesting comparison between Enron and Goldman Sachs in discussing Enron’s elevated share price: Goldman Sachs, the longtime darling of the financial services community, usually traded for sixteen or seventeen times earnings. At […]

  • McKinsey quote of the day

    From The Firm, Duff McDonald writes about McKinsey’s decision after 2000 to get back heavily into government consulting. To gain a foothold in China, the firm lowered its usual “sky-high” fees. But when it came to the U.S. government, no discounts. According to public disclosures on McKinsey’s government contracts, it cost taxpayers $164,165 a week […]

  • A savior is born every minute

    I don’t know what this story has to do with blue-line management, but I couldn’t resist. According to research just published in the British Medical Journal, roughly 1 in 200 pregnant young American women claim to be virgins. At least that’s how Slate is reporting it: Researchers looked at a study from the National Longitudinal […]

  • McKinsey and Enron

    This fascinating quote comes from Duff McDonald’s excellent  history of McKinsey: In just six years, the McKinsey Quarterly mentioned Enron 127 times. Here’s much McKinsey loved Enron. He then goes on to explain that Enron endorsed every key aspect of Enron’s strategy (apart from the accounting fraud, of course), including the company’s extensive use of […]

  • Value creation — home building edition

    As we say often in The Blue Line Imperative, value creation occurs when more happiness is delivered to people than alternative uses of the same resources, or the same happiness is delivered using fewer resources. An example of the latter appears in the latest issue of Popular Science. Journalist Rupert Goodwins writes of ongoing efforts […]

  • Incentives matter — medical testing division

    A study at the Duke University Medical Center finds that physicians with financial interests in magnetic resonance imaging (MRI) equipment are more likely to suggest MRI scans for their patients. As reported in Men’s Journal: … out of 700 MRIs conducted on people who had no previous MRIs or surgeries, one-quarter of the scans ordered […]

  • Empirical support for Blue Line Management

    Jilian Popadak is a PhD student at Wharton. Employing an interesting and innovative research design, she has produced a working paper (link is here) which tests one of the cornerstones of the blue-line argument: namely, that companies that focus management efforts on indicators (the red line) and not on intrinsic value (the blue line) will […]

  • The Deep Dive — Innovation and hierarchy at Ideo

    When Kevin and I talk about WL Gore, one of our favorite companies, many of the participants in our programs wonder how such a non-hierarchical firm works in practice. Our friend and colleague Ben Bensaou turned us on to this fascinating video about Ideo, one of the world’s leading design firms. One of its most […]

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