Author Archive: S. David Young

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Beware of overvalued equity–it can kill your company
By December 20, 2013 Read More →

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 […]

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McKinsey quote of the day
By December 20, 2013 Read More →

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 […]

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A savior is born every minute
By December 19, 2013 Read More →

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 […]

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McKinsey and Enron
By December 19, 2013 Read More →

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 […]

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Value creation — home building edition
By December 17, 2013 Read More →

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 […]

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Incentives matter — medical testing division
By December 17, 2013 Read More →

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 […]

Posted in: Incentives
Empirical support for Blue Line Management
By December 13, 2013 Read More →

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
By December 12, 2013 Read More →

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 […]

User numbers do not equal tech profits, warns SEC
By November 6, 2013 Read More →

User numbers do not equal tech profits, warns SEC

From today’s FT: The top US securities regulator has warned that technology companies with lots of users will not always translate them into large profits, in comments that appeared to be timed to coincide with the eve of Twitter’s much-anticipated initial public offering. Mary Jo White, chair of the Securities and Exchange Commission, questioned whether […]

Posted in: Valuation
Red line management — Cancer treatment version
By November 6, 2013 Read More →

Red line management — Cancer treatment version

According to Sky News: A hospital trust could face a police investigation over allegations staff were “pressured or bullied” into falsifying data relating to cancer patients. A number of cancer patients suffered “undue delays” at Colchester Hospital University NHS Foundation Trust, the Care Quality Commission (CQC) said. CQC inspectors found that there were “inaccuracies” with […]