Tuesday, August 30, 2011

Does the US need to make things?

Yes, says MIT president Susan Hockfield

Maybe not, says Ryan Avent in The Economist

I think these two articles present both sides of the ongoing debate - not really about whether the US needs to make things, but how important growth in manufacturing will be to an economic recovery. The articles don't entirely disagree; both acknowledge the importance of investing in R&D and education. The big question seems to be whether innovation follows manufacturing abroad or whether innovation moves abroad because the US doesn't offer the right incentives to keep it from moving abroad. Is invention and manufacturing a virtuous cycle, as the first article says, or can you continue to invent and innovate in one place and produce in another?

I agree more with first article. But it's a really interesting question, and it probably comes down to an industry-specific conclusion. I think if you're referring to advanced technology industries, as President Hockfield is doing, then innovation and manufacturing go hand in hand.

In any case, I like that this is a very prominent discussion right now.

Friday, August 26, 2011

Groupon: the ultimate case study

If you haven't been following all the Groupon drama lately, it's been pretty awesome. The story in a nutshell - the company filed for an IPO, but critics say that they created this accounting metric called "adjusted consolidated segment operating income (ACSOI)," which excludes certain marketing and other costs, to intentionally mislead potential investors about underlying profitability. The company stopped using ASCOI but still defends it. The latest is an internal memo from the CEO defending the company.

In following the story, I can't help but think about how useful a case study this will be for business schools for a long, long time - in accounting, communications, marketing, and pricing. I'm also realizing that taking all of these classes has made me think about this situation very differently than I would have prior to going to school. I think that given my background, I probably would have focused solely on the accounting/valuation issues surrounding the IPO, and not really thought about other aspects of the business.

This is probably one of the under-appreciated benefits of some of the core b-school classes. They weren't all great classes, and I was disappointed in what I ended up getting out of a couple of them, but I'm pretty sure they are helping me think about businesses more holistically than I would have previously.

Monday, August 15, 2011

Implications of "Made in China"

While doing some research for my internship, I came across this study that was published last week. It's not really relevant to my project but I think it's probably worth reading for people interested in global supply chains.

There are two surprising findings - first, Chinese imports account for less than 2% of all US consumer spending. That's a much lower number than I (and probably most people) would have guessed. Second, more than half (55%) of US spending on products labeled "Made in China" actually goes back to US companies. The authors claim that this suggests that the effect of domestic inflation in China should be negligible in the US. Seems to make sense to me.

I think there are a lot of ways to look at this data, but my key takeaways are -

1. For all the talk about globalization and in particular our dependence on China, the US is more of a closed, self-sufficient economy than most people think (granted, the 2% figure is slightly misleading because it includes spending on services, the vast majority of which are produced in the US of course).

2. Understanding global supply chains and where different companies add value is so much more complicated than it seems.

Wednesday, August 10, 2011

Data > Analysis?

Here's a good article by Daryl Morey, Sloan alum, GM of the Houston Rockets and co-chair of the Sloan Sports Analytics Conference on the importance of data versus analysis.

I agree with him for the most part, but I think there's a finer line between data and analysis than is implied by the article. For example, in the case of Amazon that he refers to, I imagine that the way the company is able to use the vast data set it can collect given the breadth of its portfolio in product and pricing decisions is as important as the data itself. Also, unique analysis can often produce differentiated data, or maybe help discover what additional data is important.

In any case, I think he makes a good point - often times people take data sets as given and immediately begin to think about how to best analyze the data, when a better approach might be to question whether more comprehensive or even different data is more appropriate to use.

Tuesday, August 9, 2011

Sicily trip

A few of us went to Sicily this past weekend. The routine there was pretty simple - eat, beach, nap, eat, party, sleep... repeat. It's really a beautiful island - lots of history, nice towns, good beaches.

The highlight was definitely the food. The first couple of meals were home-cooked at my classmate Leonora's family's beach house. We also tried out a few restaurants. Overall, the food was fantastic. People hype it up, and I can see why. I think it's primarily two things - one, the pasta was always incredibly fresh and cooked perfectly; two, there's something about the olive oil. They use a lot of it in everything, and it was delicious.

A few pictures -
inside the Teatro Greco in Taormina


best dinner ever - great wine, food and laughs


Esther and Mike in front of the Spanish fort in Milazzo (a small town where Mike's great-grandfather was from)


view from Teatro Greco in Taormino overlooking the city

Wednesday, August 3, 2011

LGO-fest in Switzerland

This past weekend, most of the Europe LGO interns got together in Basel, Switzerland, where 3 of my classmates are doing their internships. It was awesome to see everyone again and catch up on each other's internships and our lives in Europe so far. It was my first time in Switzerland - what a beautiful country.

Highlights of the trip:

Fireworks for Swiss National Day: We camped out all day on Sunday along the Rhine River in Basel to watch the show. Since we were all in Europe on July 4th, we missed out on Independence Day festivities in the US. This definitely made up for that. It was a gorgeous day, and it was nice that the Swiss celebrate their independence day very similarly to what we're used to in the US - grilling, drinking beers and watching fireworks. The fireworks started pretty late - around 11:15 pm, as scheduled but a good hour and a half after it got dark. It was a long and impressive display, as expected I guess for a country that has money to spend.

the spread

Rheinschwimmen: The Rhine River flows through Basel with a surprisingly strong current. Apparently the thing to do is jump in and float/swim downstream. So on Sunday, prior to watching the fireworks show, a bunch of us walked about a mile upstream from where we had camped out and jumped into (or slowly entered) the river. It's a pretty cool experience floating down with the beautiful city on either side. The water is cold, having just melted from the snow-covered Alps a couple of days ago, but the weather was nice enough that it wasn't really an issue.

a group of Rheinschwimmers

Lake Constance: On Saturday during the day, a few of us went out to Lake Constance, which is surrounded by Germany, Austria and Switzerland. We hung out around the town and took a low-power motor boat on to the Lake for about an hour. The trip included a short swim in the lake, but it was slightly too cold for that. We also came across this rotating statue of a woman holding the pope in one hand and a king in the other which none of us knew what to make of. It turns out that the statue is called Imperia and refers to an interesting (disturbing?) short story.

Linkcool rotating statue

I have to give props to my classmates in Switzerland for being awesome, accommodating hosts. Hopefully I'll be able to return the favor when they come visit Helsinki in a few weeks.

Next up: Sicily this weekend. Looking forward to the beaches of the Mediterranean Sea and some awesome food.