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China’s fiscal stimulus will have permanent, negative, consequences
By September 23, 2016 Read More →

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 […]

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Wells Fargo provides amazing example of red line management
By September 23, 2016 Read More →

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 […]

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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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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 […]

S&P Cuts France’s Credit Rating by One Notch to Double-A – WSJ.com
By November 8, 2013 Read More →

S&P Cuts France’s Credit Rating by One Notch to Double-A – WSJ.com

S&P Cuts France’s Credit Rating by One Notch to Double-A – WSJ.com. It isn’t a great surprise to David or I that France’s credit rating is being downgraded yet again. And this won’t be the last time either. As the French government resists ongoing re-allocation of resources (i.e., people) away from what they’ve done in […]