Principles of Business

As I am trying to write and distill what I learnt so far in business, I have come up with the following principles of business. They are actually pretty common sense but many people do get lost along the way and I thought I will post it here to remind myself. Each principle can easily be expandable and elaborated on but for my current convenience, I will just simply state it first.

1. To be in business, you need to sell things that people want to buy.

2. To make things that people want to buy, your products must be superior to your competitors’.

3. To create people’s desire to buy your superior products, you must first make people aware that your products exist.

4. When the people are aware of the existence of your products, you must make it convenient for them to purchase it.

So as you can see, the principles are pretty common sense and general but each can be further elaborated on. First you need to know what people want to buy. There are a million things that people wants to buy, so how do you decide what to sell? The guiding light will be to sell what you are good at, extraordinarily good at. Not just that you are good, but you are at least the best amongst your family, friends and acquaintances. So what is it? If you cannot figure this out at this point in time, do not proceed.

Next, how to make your products superior to your competitors. The first thing to know here is who are your competitors. Your competitors need not be those who sell the exact same products or service that you sell. Your competitors also consist of people offering alternative solution. For example, the competitor of a burger seller are not just other burger sellers but also the noodle store, the rice stall etc. because they offer the same solution to the problem. For example, in entertainment, the competitor of the TV box are not just merely those other TV channels but also the mobile phone, the iPad, the Mac or PC, etc. So after you figured out what you are really good at, then figure out who will be your competitors if you go into business and how can you be better than them. Even if you cook the best pasta amongst your family, friends and acquaintances, that doesn’t mean your pasta is better than the one across the street if you decide to start a pasta shop.

And then you need to spend a lot of time innovating. Your pasta may be the best now but they may no longer be so 6 months down the road. Look ahead of the curve. Improve your products. Innovate like mad, whether products or processes. Always strive to be better and better, just like a 100m sprinter always working so hard to clock a better time. Listen to customers. Observe behaviors and trends. Make innovation a process so that you can remain the best all the time.

Now, you are really good at something, and you know your pasta is the best in the neighborhood because you have tasted every single pasta shop, you still sell zero if no one knows you exists, that your pasta is the best in town. This is where marketing comes in. You need to shout, make every single person know that you exists and you have the best stuff in town. Do not be shy. Shout. Bang your pots and pans. Make yourself well known. Give no apologies for being the loudest to tell everyone you are the best there is.

And after everyone knows you exists and have the best pasta in town, they must be able to buy it, godamit. What is the use of a line of a hundred people if you can only cook one bowl of pasta every 30 minutes. Or that your stall is so inaccessible, going there is a major chore and hazard. In industry, for example, this is operations and customer service. You must always be contactable, accessible. You must always show your face and make it easy for people to do business with you. You must always be able to offer solution faster than anybody else in business. You must be there.

Push your products. Tell them why your products are so good. Show them that they will never get fired choosing you. Prove to them that you will always be there all the time, anytime. Keep in touch. Send cards. Do whatever it takes so that you will be there when they need you and you can neatly offer a superior solution to their problems, on budget, on time.

And of course, underlying it all, you need to have a great team but that is another major subject which I have touched on in my previous post.

So let’s think about every step in our daily business. Where are you at?

The Business of Management

There are way more managers than entrepreneurs. Management is part of Entrepreneurship but there will be no Management if there are no Entrepreneurs. This post is about Management, especially so Management in a reasonably established and reasonably large enterprise. This is because I have never been an entrepreneur myself, those that starts businesses from scratch. The most part of my working life is spent being an employee, safe from having to burn my own pocket if the business fails and as such cannot really understand the thoughts and decisions that go through an entrepreneur’s mind. Only in the past several years where I begin to have some ownership in a business that these decisions and actions made some sense for me.

But this post is about Management. In my mind, there are two very distinct areas where their failure can be crippling. The first is Human Capital. The second is Growth. The former takes precedence in everything Management and is by far the hardest.

There are many books and courses that talks about that topic, those comes immediately to mind will be Jim Collin’s GOOD TO GREAT (get the right people on the bus), Patrick Lencioni’s THE ADVANTAGE, Marcus Buckingham’s FIRST, BREAK ALL THE RULES, Marc Effron and Miriam Ort’s ONE PAGE TALENT MANAGEMENT, Peter Senge’s THE FIFTH DISCIPLINE, Dave Ulrich’s HR TRANSFORMATION, Jack Welch’s WINNING to name a few pretty good ones.

What I have distilled from these books and courses and from real life experience are as follows:

1. First, you must establish a stable and consistent environment for people to work in. If the company is perpetually in a state of chaos and there exists a sense of uncertainty for the future, it is hard for the company to grow. It is like trying to grow a tree on unstable soil. The tree will never grow to become big and strong.

2. Hand in hand with the above, the people must believe in the future of the company and believe that the company’s future is also their future. The company’s success will be their success. It is important for the leadership team to not only paint the future of the company (many company does this via their mission/vision statements that are sometime so artificial, I believe they do it because of some corporate exercise), but to communicate and live this future. Everyone in the company must be made to know what this future is and how they can contribute to it, and everything the company does, its actions and culture must be aligned to it. The company must walk the talk.

3. Fairness. Animals, not only human beings, have a very strong instinct for fairness. It is ok to suffer together but if it is perceived that some people enjoy and some people suffers, it will turn the company upside down. Compensation and benefits, incentive systems, must be fair. In this sense, fair does not mean same. Fair here means those who works gets fairly rewarded and acknowledged, those who does not contribute are “corrected” or managed out. Rewards and incentives, opportunities to move up the ladder, must be as clear as daylight. Everyone in the company must know what will be rewarded and what will be punished.

4. Candor and transparency. The pre-requisite for fairness is candor and transparency. Without this, no one will believe in the system. This is especially true with the younger generation of employees, the oft-labelled Gen Y. But this is true to all levels of employees, not only Gen Y’s. Candor and transparency is already a pre-requisite before the advent of social media, blogs and such. It is just convenient to blame them. Candor and transparency will bust through gossips, red tapes, fakeness and all those dark evil. Candor and transparency is like the Sun, casting away all evils and vampires.

Contrary to many popular believes, people do not really need a superstar leader. People do not need a rock star CEO. People needs an honest, hardworking CEOs with a vision for the future and the ability to get everyone in the company to work towards that vision of success. People need a CEO or leadership team that they can trust their future on.

Then the Growth Imperative, as coined by Clayton Christensen in his book THE INNOVATOR’S SOLUTION. Philp Kotler’s MARKET YOUR WAY TO GROWTH is another book at sheds valuable insights in this area.

There is no question that growth is important to any company. But really, many company’s problem is not growth itself which in my mind is really a by product. Like money is a by product of great efforts, growth is a by product of great efforts too. Many companies do not grow or even fail because they are stubborn and their execution sucks.

Jim Collin’s GREAT BY CHOICE talks about the 20 Mile March. This disciplined, self-controlled strive towards a set direction and vision, with clear milestone markers really sets those who perform in the long term than those who fails trying too bombastically. It is important to set the company on this path of growth and communicate this clearly downwards. This is true of all execution, from product innovation, mergers and acquisition, entering new markets, business development etc.

There are a few observations that I have made:

1. There are too much emphasis on new products or new product categories. The reality is that improvements in existing products is much more important, and the fact is a lot of sales are still generated by these so-called “old” products. Yes, there may be products that need to be phased out but have you listened to the customers enough? Often, you don’t really need a “wow!” to grow top line revenue. Service, building trust with customers, improving on existing products and service (such as turnaround time), far trumps the birth of “wow!” products or product categories.

2. Once you determine any improvements or new product innovation, your execution must be flawless. If you consistently miss launch times, or when having launch the prototype but takes forever for the product to get out, whether is is mould problems, or tooling problems etc. will diminish a lot of trust from your sales persons (and we are not talking about customers yet because your sales persons are your immediate and first customer!). If your sales people do not believe in you, how would you think they can sell?

3. When entering a new market, you have to be prudent. Many people will advice that you spend big, invest heavily, make a presence. Most often, you will find yourself losing a ton of money before you can even see a cent of return. Making alliances is fine and in many cases the cornerstone of success but you cannot trust them with your farm. You have always to have a watchful eye on their activities with regular reports and most importantly, regular conversations with them and with people in the industry. Stick to your core business. Do what you know. If you open a restaurant, make sure you yourself know how to cook, and cook well. Ultimately, the successful running of a company in a foreign market depends on the strength of your local team. You have got to have a strong local team that is loyal to you and believe in the company. Align their incentives as such. Make them co-owners. No company can be strong if they do not have a strong local team.

Ok, enough ranting in this post. Time to go out and play some Go. In future posts, I may talk about my thoughts on operations and their many practices, e.g. Lean and such but no such initiative is possible if the company does not meet some criteria and no book says it better than Karen Martin’s THE OUTSTANDING ORGANIZATION.

By the way, no Management training is complete if one has not internalized Peter Drucker’s books, most notably MANAGEMENT: TASKS, RESPONSIBILITIES, PRACTICES, THE EFFECTIVE EXECUTIVE, MANAGING ONESELF, MANAGING FOR RESULTS, MANAGEMENT FOR THE 21ST CENTURY and INNOVATION & ENTREPRENEURSHIP.

Books mentioned in this post:

Channel Promotion

I have been avoiding to do this for a long time because in principle I do not like to mix my personal blog with work. But the setting up of the channel website is taking a lifetime for reasons I cannot understand, so maybe once in a while, I can blog about the channel’s programming highlights. There are over 100 movies played on the channel every month, of which about 20% of them are fresh titles and the balance 80% repeat titles. Out of this 20% fresh titles, there is about 4-8 titles every month that is the key highlight and these titles are further programmed in a way that will appeal to a large target market, from the aunties to the young, from urban to rural. So here it is:

A. For those who loves to watch locally made Malay movies:

1. HARU BIRU – a Que Haidar drama action. It didn’t make a lot of money in the box office but this movie deals with the social problems in Malaysia and the spoils of youth in contemporary Malay society. I will consider this a relatively high grade Malay movie compared to some other dumb but more successful movies in the box office.

Premieres 4th May. Repeats: 9, 13, 19, 25,31 May.

2. ZOMBI KAMPUNG PISANG – this is a wonderful movie from director Mamat Khalid. A comedy which is more of a social satire and B-grade movie spoofs, it is a very smart and well made movie with an ensemble cast headed by Awie, who, in my personal opinion, is a more talented comic actor (as seen in BAIK PUNYA CILOK) rather than a macho romantic as in SEMBILU.

Premieres 9pm 18 May. Repeats: 23, 27 May.

I will consider the above two movies the better made of the local Malay movie crop of craps.

B. For those who loves a more “niche” type of movies (which more me means more intellectually stimulating type):

1. SANCTUARY – a movie by Malaysian Ho Yuhang of which I have previously reviewed on my website. Go there to read more. Yuhang is one of the more talented local filmmakers. Although sometimes loud-mouthed, he is smart, intellectually disciplined and has some sense of humour that is lacking in many other filmmakers.

Premieres: 7th May. Repeats: 17, 20, 26 May.

2. HOLIDAY DREAMING – this movies hails from Taiwan, a land where the local film industry has been suffering for a long time from the onslaught of Hollywood movies but is recently seeing a revival.

Premiere: 31 May

C. For those who loves Bollywood movies:

1. GURU – This Mani Ratnam movie stars Aishwarya Rai and hubby and is a sure Bollywood entertainer.

Premiere: 2 May. Repeats: 7, 12, 21, 31 May.

2. ANTHONY KAUN HAI – translates as Who is Anthony, this movie by Sanjay Dutt (Sanju Baba) is an action comedy. Sanjay Dutt is quite a good actor and seeing him in LAGE RAHO MUNA BHAI is really fun, for example. We see his normal fun and charm in ANTHONY KAUN HAI as well.

D. For Hong Kong/Japanese/Korean movie lovers:

1. DOG BITE DOG – Edison Chen (heh heh!!) acting in this action thriller. Sam Lee is good in this movie. But beware, the intense action may upset your stomach.

Premiere: 16 May. Repeats: 21, 26 May.

2. 200 POUNDS BEAUTY – A very entertaining Korean Rom-com. Good movie to watch to unwind after a day of work.

Premiere: 10 May. Repeats: 13, 21, 29 May.

3. THE GREAT YOKAI WAR – by the ever great Takashi Miike, this action-fantasy is a welcome change from Miike’s who is more well known for his violent flicks (although this is not entirely true).

Premiere: 17 May. Repeats: 20, 28 May.

For more comprehensive synopsis, please Google them or search on IMDB.

The above movies will be my pick if you ask me for a handful of movies to look out for in the channel.

Coming up in June, it is also quite exciting. We have:

1. FLOWER IN THE POCKET
2. AFTER THIS OUR EXILE
3. PAN’S LABYRINTH
4. MY WIFE IS A GANGSTER 3
5. BAIK PUNYA CILOK

So look out for this. Am in the process of closing a bunch of very good movies, which I will announce when the deed is done! Very excited!

Price and Pricing

One of the most enjoyable aspect of my job is tweaking the scheduling strategy. The impact on the channel’s performance is direct and scheduling is more of a science backed by in-depth analysis of data. Eventually, a pattern will emerge and the gaps are as glaring as daylight. Another aspect of why this is so fascinating is because the scheduling landscape moves all the time because the competition is not dumb. They react accordingly, whether by accident or by design, and therefore it is necessary to be vigilant on the changing landscape and put in counter strategies. It is really like playing chess and when the numbers show positive results, it is very satisfying, just like winning a good game of weiqi.

As people who knows me knows, I am quite interested in economics and pricing does interest me too. In the course of my work, I have heard detailed analysis on pricing strategies employed, or should be employed and both of these arguments aims at the same aspect of our organisation.

One argument is such that when the ratings of a particular programme is consistently very high, one should raise the price of advertising slots to maximise advertising revenue. For timeslots or programmes that is not popular, the price should be reduced or bundled and sold as a package together with the high ratings programme. This, to many people, is actually common sense but common sense is actually a rare commodity. The real question here is this: what is the maximum price can one put in relation to the ratings numbers? Say, in the standard price list, a 30 seconds spot costs RM4,000 no matter where the spot is placed in the channel. Now, say the 7am slot has a low ratings number of X and the 9pm slot has a high ratings number of Y. Is it possible from here to construct a mathematical equation to shows the path to the optimum pricing for advertising for both these slots?

The other argument has to do with perception instead on real ratings numbers. Now, this is a lot more tricky but I can assure you that it is founded on precise mathematics as well. The key here is really competitive advantage. To what extent can a company differentiate its products based on its competitive advantages from what is available in the market will determine how much extra money they can charge. Differentiation has a lot to do with elasticity, the more differentiated, or perceived to be differentiated, the less elastic will be the price. As Bruce Greenwald and Judd Kahn said in their book “Competition Demystified”, there is really actually one aspect of Porter’s Five Forces that stands heads and shoulders above the other Forces and that is The Barriers To Entry.

Barriers to Entry, according to the authors, is really determined by three kinds of genuine competitive advantages. These are: Supply advantages, Demand advantages and Economies of Scale. As for my current company, although some people said that it is protected by the Government via licenses etc. looking at its history, it is exactly these three factors that see it win the competition. It has superior product supply – often exclusivity deals, a captive demand customer based on formed habits and stickinessof the programmes and the general economies of scale of its customer base and thus reducing its average cost per customer.

All the above needs further qualifications and needs to be guarded against. For example, in terms of supply, the exclusive content can easily be taken away by a player who has better connections with the supplier and/or and offer a significantly higher price. What is there to stop this from happening? In terms of demand, viewing habits can be changed via a superior product and marketing.

Ok, back to the question of pricing. If the company has differentiated its products effectively via the competitive advantages gained, the company should be able to charge a higher price compared to other players in the market. For example, say there is one channel that has its audience spend 40% of their TV viewing time on and the company decides to now start charging the customers after a period of free viewing. How much can it charge? There is a math in this and the correct number can be computed.

One fascinating way to compute the number is via equations using Game Theory. A simple example, here’s an abstract representation of Bargaining Problems:

[v1(z) + t] + [v2(z) – t] = v1(z) + v2(z),

where v1(z) is player 1’s benefit of z in monetary terms, t is the amount of money to be transfered between players 1 and 2.

The surplus in the bargain is represented by the following:

v1(z) + v2(z) – d1 – d2,

where d1 and d2 is the outcome for both players 1 and 2 if no agreement is made.

The above are the abstract and here is the standard bargaining solution. The standard bargaining solution is a mathematical representation of efficiency and proportional division (based on each player’s bargaining power). Each player is assumed to obtain his default payoff plus his share of the surplus. The mathematical equation is this:

d1 + n1(v* – d1 – d2) = v1(z*) + t,

where n1 is player 1’s relative barganing power, v* is the maximum joint value by determining the value z* that maximises v1(z)+ v2(z)

With the above equation, solve for t to find the optimum amount of money to transfer between the players.

Still with me? hmmmm…..I am not sure if I am still with myself. But if you put some effort and follow the equations carefully, it is really common sense.

Let’s try to put this into the pricing problems that we have and see if we can find the answer.

NOTES ON SOME INDUSTRY TRENDS IN HONG KONG/CHINA, KOREA & JAPAN

A. China/Hong Kong

With the Olympics upcoming, the State Administration of Radio, Film and Television (SARFT) is facing more intense political pressure to step up the censorship of politically sensitive content. This new zeal follows the controversial release of the movies LUST, CAUTION and LOST IN BEIJING and the tightening of the censorship screws has affected more than 50 productions/co-productions that is currently ongoing, with the highest profile of them all, SHANGHAI which is one of the Weinstein’s company’s joint production and has a US3million set built being denied a shooting permit.

This will affect the supply of especially big blockbusters in the coming years. However, it is expected that the producers can work around the issue as there do not seem to be a shortage of production funds still pouring into China. In fact, the situation is not that there is a lack of funds but a lack of stars and talent as the securing of these talents relies more on personal connections. Another serious issue that China faces is a lack of distribution channels as there are not as many companies interested in investing in distribution as they are in production and also due to regulatory restrictions.

Hong Kong home grown production continues to experience difficulty with continual reduction in the number of films produced, reduction in cinema admission as well as the drop in the quality of movies, and this is compounded with a lack of new talent. However, to counter this, the Hong Kong government via the Hong Kong Film Development Council has recently set up a film development fund amounting to $300million to finance small-medium productions to encourage greater production activities as well as to create employment opportunities and grooming of new talent. With just less than one year, 7 projects have already been approved and with this effort, it is expected to invigorate the Hong Kong film industry.

B. Korea

There is an apparent slowdown in the Korean film industry. While the number of production actually increased by almost 13%, only about 10% of the movies released actually made profits. It also saw a big decrease in film exports, of almost 70% between 2005 and 2007 while production costs increase by at least 50% from 2006 to 2007. The drop in cinema admission is made more painful by the fact that almost 80% of the film revenues come from theatrical release as there is almost no home entertainment due mainly to piracy and online illegal downloads. The reduction of the Screen Quota from 146 day to 73 days added to the pain.

The main reason for the decrease is due mainly to the marked drop in the quality of the films itself and this can be seen from the movies being released recently.

However, the Korean Film Council (KOFIC) realizes this (in fact identified this as a crisis situation) and has kick-started a new 5 year strategy to tackle the problem, from 2007 to 2011. The objective of this plan is basically double domestic and international market share and increase export revenue by almost 4-fold by 2011. It plans to do so by several measures which include the setting up of a Film Development Fund of approximately USD547million over the 5 years and the development and strengthening of various infrastructure such as research, production and post-production support.

With the above and the involvement of the telecom companies (KT and SK Telecom) which plans to inject a large amount of money into film production and distribution, the outlook is still upbeat.

C. Japan

Japanese domestic market has seen a dip since its big breakthrough in 2006 where total number of Japanese movies released topped 417 titles and domestic market share reached more than 53%, the highest in about 20 years. Total number of movies released in 2007 dropped to 407 titles but still much higher than the 356 titles in 2005 and 310 titles in 2004. The noted trend is the re-making/adaptation of popular Japanese novels, dramas and manga/anime into feature length movies such as TOKYO TOWER, ALWAYS: SUNSET ON 3^RD STREET, NARUTO etc. While these are popular in the domestic market, many of these movies could not travel outside Japan. In fact, only about 10% of Japanese movies can travel outside of Japan and as such the Japanese must make more effort to market the movies outside of Japan so reach a larger audience. It must also be noted that the quality of Japanese movies is improving and in many productions, have regained its past glory and have surpassed the quality of Korean and even Hong Kong movies.

Hongkong Filmart

Am now back from the Hong Kong Film Market. I was looking forward to it for months and now it is over. And the Hong Kong International Film Festival is still happening…. Sigh… How I wish I am still there watching movies and mingling with people who genuinely love movies.

The biggest talk of town in the market is of course the censorship issues with China following the issue with LUST, CAUTION and LOST IN BEIJING. I have watched both of these movies of course, and I don’t see what the problem is, despite Tony Leung exposing his nuts for all to see and the very real sex scenes while Fan Bing Bing bares her top and got herself involved in a few sex scenes. But these are really nothing (compared to, say, 9 SONGS or LIES or BATTLE IN HEAVEN etc.) Well, as we always say, when in Rome….

On the first day of the Filmart, there was a conference on Co-Production models in Asia and one of the panelist said that they have no problems with China’s censors. His argument is that they can make commercial movies and make money and entertains people and they do not need to challenge the authorities to make movies. In fact, he said, the people demand entertaining movies and not movies that challenges the establishment/status quo etc. Needless to say, this guy is from Hollywood. He has no idea that movies is not just a medium to entertain, it is also a powerful medium where people can be challenged intellectually and emotionally, and as such make themselves a better human being, a more enlightened person who is aware of the world he/she lives in, within and without. Of course, he is entitled to his position and is entitled to keep on making money and running to the bank, buying big cars and big bungalows and private jets etc.

Met so many stars and directors, I became numb to them. Of course meeting Yoji Yamada was great but nothing really beats seeing Shu Qi. She is just absolutely gorgeous! Much more so in real life! (Plus I don’t think she is a bad actress as many would immediately say ;-)) Also met Gigi Leung whom I have wanted to meet for a long time but meeting her real life is sort of disappointing. She is so fake and looked so worn down.

Some of the movies that I have watched over the few days:

KABEI

A tad over-drawn and a tad over-dramatic at the end but still is a damn good movie. There have been so many World War II movies that I have seen but this one is well told, is humorous and at the same time sad and the director’s grip is so firm, frame by frame. It is like watching TWENTY FOUR EYES but this time zoomed into the micro life of a family living through the war. My rating for this movie is 8.5/10

MONGOL

I have known the story of Genghis Khan and watching this movie, the story is not of prime importance to me as I find myself anticipating when that particular event happens in the movie. I was looking for how well the movie is made production wise, acting wise. How well the story is told and put together. And it didn’t disappoint. Despite quite a few continuity flaws, the movie is well made in general and the battle scenes looked believable although the final battle scene is quite an anti-climax. In this recent days, we are so spoilt with good battle scenes, nothing could really surprise us (say WARLORDS and ASSEMBLY, for example). My rating for this movie is 8/10.

PARIS

This “little” film is part of the film market screening which I didn’t plan to watch at first but the distributor (Studio Canal) insisted that I should go and watch it after we talked about movies and the smart-ass me began to talk about French movies (you see, most buyers do not really know movies and do not really love movies. They are in it primarily as business people, not movie lovers). I looked at the cast line-up and is pretty impressive, so what the hell, I sped up some meetings and pushed some backwards and made time for the screening. And I didn’t regret it. It is about the life of several people, each with their own set of issues to deal with. Sounds like nothing, which is true but it is all in the execution and the acting. Just very much heart warming. I rate this movie 7/10.

ONCE UPON A TIME IN COREA

A Korean commercial film about the Japanese’s exploit in Korea during World War II where they look for a huge diamond which is very valuable etc. Quite well made throughout and entertaining. Mass market stuff. I will rate this 5/10.

THE MAN WHO WAS SUPERMAN

Another Korean commercial movie about a man who thought he is superman. So he went around helping people, talked about global warming and all the social ills stuff. Of course, he is not superman and the movie took a dramatic turn at the end which tried to make the audience cry. All in all, a long drawn and quite a waste of film stock. I will rate this movie 3.5/10.

AN EMPRESS AND THE WARRIORS

Was looking forward VERY much to watch this movie. Afterall, it was helmed by Ching Siu Tung who also made movies like SWORDSMAN II and A CHINESE GHOST STORY etc. But alas! How bad is that movie! Pure waste of film with bad actors who are not really acting, feeble plot and bad, bad music video. Ouch!! The battle scenes are the only thing that has something to talk about but then again, as I have said in MONGOL above, it is really nothing much. Kelly Chen actually wanted to look authoritative is really horrible. Brigette Lin just need to look at you and you will be scared to the knees. And when Kelly tried to be cute and adorable, she also sucks. Again, compare this to Brigette Lin in her romantic mood, the world melts….. sigh….. I will rate this movie 4.5/10.

BLIND MOUNTAIN

This Cannes Un Certain Regard movie is truly a gem. Movies should be like this. This is director Li Yang’s second movie after the equally moving BLIND SHAFT. BLIND MOUNTAIN is about sold-off bride which is quite a rampant practice in China. It tells the story of a girl who was cheated and sold off to a remote village far into the mountain and her struggles to stay alive and plans her escape. Bad luck befalls her again and again and you will have to watch the movie to see the ending. A truly magnificent movie. I will rate this movie 9/10.

SIVAJI

I didn’t know what the fuss was all about when this movie was released in the theaters and delayed watching it again and again. So I have finally watched it and my opinion of this movie is that I really liked it! You have your typical Indian movie with drama, romance, action and song and dance throughout but this movie is a well made blend of all those plus a critic of the Indian society of corruption. Having lived in India for a while, I can help but nod my head at how bad the corruption in India is. I will rate this movie 7.5/10.

Well. that’s about it this time. Maybe more later.

Three Excellent Business Books

I have read many business books and I enjoy reading them a lot. I consider the following three of the best I have read:

The Hedgehog Concept

It just amazes me, this thing called politics. When tens of thousands of people are going to the streets and demand your resignation, you retaliate and threaten to declare a state of emergency. What emergency? You just quit and there are no emergencies. When so many people come to the streets in earnest, there must be something badly wrong with you. This thing called politics, if you are good at it, you can do whatever you want. Even the King cannot do much. This also applies to office politics.

What then is the key in getting so much power that gives you that much measure of immunity and arrogance? The key is in knowing the system inside out (so that you can manipulate it at will if you need to) and knowing the right people and get them in your gang, and at the same time, convince them that they should be led by you.

After reading “Blue Ocean Strategy” as noted in my earlier entry, the desire to read more business books kept growing. The new job that I am getting into may also be a reason for me to want to read back these books. I have even bought Kaplan and Norton’s latest book, “Alignment” and get a refresher on the Balanced Scorecard concept and especially the Strategy Focused Organisation, the best book and most outstanding idea from their oeuvre, in my humble opinion.

However, that said, I felt that the best management book that I have read, best being defined as the management book that actually affected me from inside out, is Jim Collin’s “Good to Great”. Read a good article of it here.

The book has great ideas but the idea that hit me really hard was the Hedgehog concept plus the elaboration on will and discipline.

What is the Hedgehog concept? It is at once easy to understand and at the same time, hard to grasp. Here’s an excerpt:

“Picture two animals: a fox and a hedgehog. Which are you? An ancient Greek parable distinguishes between foxes, which know many small things, and hedgehogs, which know one big thing. All good-to-great leaders, it turns out, are hedgehogs. They know how to simplify a complex world into a single, organizing idea — the kind of basic principle that unifies, organizes, and guides all decisions. That’s not to say hedgehogs are simplistic. Like great thinkers, who take complexities and boil them down into simple, yet profound, ideas (Adam Smith and the invisible hand, Darwin and evolution), leaders of good-to-great companies develop a Hedgehog Concept that is simple but that reflects penetrating insight and deep understanding.”

Great Baduk players, for example, display this Hedgehog concept. The politician mentioned above is a master of the Hedgehog concept. Jack Welch is a master of the Hedgehog concept. Gandhi is a great master of this concept as well. In fact, it is true. All the great people that comes to my mind are great Hedgehog concept pracitioners. To be great, I reckon, I must learn this Hedgehog concept and with great will, humility and discipline, things should work out well. I hope.

Baduk and Blue Ocean Strategy

I am currently reading a book called the “Blue Ocean Strategy”. I have always enjoyed reading books on strategy and about business (recently also acquired and read “The Google Story”, “The Apple Way” and “How Dell Does It”), a habit acquired during my student days, when reading “In Search of Excellence” and “The Seven Military Classics of Ancient China” gave me a lot of kick and motivation. A very fulfilling feeling.

“Blue Ocean Strategy” (BOS) is something quite new and to me, is very refreshing after reading a string of books by say, the Michael E. Porter, Robert Kaplan gang. The book is about “how to create uncontested market space and make the competition irrelevant.” The idea is that there is no point competing in the existing market space where every company in the market is fighting to death to protect and expand on the limited market. The pie is constant and even if the company wins the fight, the reward is also not very great. Blue Ocean Strategy is about creating a new, uncontested market space, where the reward, if successful, is far greater. The book goes on to provide case studies and tools on how to use this new strategic concepts and with case studies ranging from “Cirque du Soleil” to the movie theatre industry to the manufacturing and services industry, the idea is very convincing.

One part of the book hit me hard and banged the idea into my head. It says, “..Part of the explanation for this [i.e. competiting in existing markets] is that corporate strategy is heavily influenced by its roots in military strategy……. Described in this way, strategy is about confronting an opponent and fighting over a given piece of land that is both limited and constant. Unlike war, however, the history of industry shows us that the market universe has never been constant; rather, blue oceans have continuously been created over time. To focus on the red ocean is therefore to accept the key constraining factors of war – limited terrain and the need to beat an enemy to succeed – and to deny the distinctive strength of the business world: the capacity to create new market space that is uncontested.”

After reading all that, I begin to think about the game of Go. The nature of Go is Blue Ocean. Yes, the board is limited in size, i.e. 19 grids times 19 grids, 361 intersections. It is finite and limited but in the course of the game, the players carve out new territories (“market space”) all the time and as part of the strategy, to sometimes exit a particular section of the board and play at another part of the board, the “uncontested” market. Unlike international chess for example, there is no focus of only one market, but many markets can be created and losing in one market does not mean losing the whole thing (think, for example, the Luo Xihe vs. Choi Cheolhan triple ko game).

Going down into a bit of detail of the strategic implementation as stated in the book, it said:

“Formulation principles:

Reconstruct market boundaries
Focus on the big picture, not the numbers
Reach beyond existing demand
Get the strategic sequence right”

The above is so relevant to playing Baduk!

Let me finish the book and see if I can learn more, and hopefully this also improves my baduk skills along with my management skills.

Film Industries' Models

For the past two days, I was attending a seminar on the film industries’ models in Asia and Europe. Surely this is not a seminar to discuss what waistlines and hiplines and bosomlines film actors and actresses should have to qualify as a model in Asia or Europe. It is a seminar to discuss how the state/government can do to help the fragile film industry. As the speaker from Korea, Mr. Kim Hong-Joon said, it’s like a forum to discuss guerrila war tactics against the Hollywood domination.

Some very interesting thoughts and facts were presented, if you care about the film industry. Will talk more about this later.

The seminar was organised by the Asia-Europe Foundation (ASEF). You can get more information on the programme and seminar outline from their website, or you can click here for a shortcut.

If there is one thing that screamed out in this seminar, it is this: the national film industry at least for countries in Asia and Europe needs help (yes, even the Koreans have a quota system to protect its industry). Something has to be done. Well, this is not something new, by the way. The film industry was lucrative in its early days, but surely not now. Even in Hollywood, the average rate of return for investment in feature films is about minus 5%. According to a Hollywood financier, only 3 out of 10 movies will do well and one will hit the jackpot. The rest are losers. So one wonders why people still bother to make films. I am not going into that here but it’s food for thought for you, if you have not been thinking about that already.

I am waiting for some slides from the seminar to be able to properly talk about the various schemes and models each country represented used to help their national film industry. In general, we see in Europe the establishment of film funds to provide financial assistance to the film makers. Some of these funds are actually used as grants and do not need to be repaid even if the producers have recouped their investment, as in the case of Sweden.

Oh well, while waiting for the slides to come in, I might as well state some facts here for your interest.

1. In South Korea, as I mentioned earlier, the government protects the film industry by making it compulsory for each screen (mind you, not each location) to play a Korean film at least 146 days out of 365 days.

2. In France, 36% of the film production cost is financed by TV stations. The logic is really this: with the advent of TV, the cinema suffered and as a result, TV should contribute back to the film funds. Something like that. Furthermore, there is a quota for French TV stations as well. They must show 60% European content out of which 40% of them must be in French. Poor TV people….

3. The Swedish film funds actually provide grants of up to 75% of the production cost and these money need not be repaid. The percentage of the grant depends on how big the film is. The smaller the film, the bigger the grant, so a lot of producers actually make small films and earn more money than those commercial people. As Mr. Eiffel Mattsson, the representative from Sweden whom I conversed with during lunch, people are exploiting the fund and new regulations are now being studied to remedy the situation. He also commented on the state of the film industry in his country and is now despearately looking for the next Ingmar Bergman (surely you must have at least watched <Wild Strawberries> and the <Seventh Seal>?)

4. According to the UNESCO stats, 3.6billion people watches Bollywood films while 2.6billion people watches Hollywood films. The Indians actually produces and screens an average of over 1,000 films a year.

5. Thailand do not really have an organisation (like CNC, KOFIC or FINAS) to take care of its industry but plans to do so. However, the government allows up to 8 years of tax free period if films are produced/shot in Thailand. It is interesting to note that the Thais used to produced over a hundred films before 1990 but dropped to 8 films in around 1996. How they have improved now….

I just wonder, if the film industry needs such an enormous state financing, it will cease slowly to be an economic enterprise because it exists not because people want to watch their national movie, but the state deems it important to protect some sort of a cultural heritage. I have always believed that to be able to have a sustainable film industry, it has to be market-drive. State support can only do as much as providing, at most, a quota for the exhibitors to screen national movies and granting repayable, interest-bearing loans of up to say a maximum of 50% of the production cost, but I don’t think giving money by way of grants and subsidies to filmmakers will work in the long term.

There is an envy-hate feeling towards Hollywood films just because they are doing so well and is eroding their national films. [The only two countries that has a 90 over percent share of its film market is the USA and India]. But in the first place, why would Hollywood be so powerful? The answer lies in the their genius in enterprise and the many years of hardwork to establish their network. They control everything from production to the distribution and marketing of the products. They nurture their stars. They make movies that the general public enjoy. And they are conglomerates, controlling various media platforms that acts synergistically to give their product maximum exposure, and also window to recoup their investment. In short, they are agressive people, working very, very hard to survive in a market-driven, competitive environment. Only in this way would any industry, not only the film industry, thrive.

Before I end this post, I would like to share with you here something about this powerful Hollywood sexopoly.

If you really care that much and want to know more about this Hollywood business, you can read this.

Now, if all these cannot satisfy your appetite still, read this: Why Hollywood Rules the World, and Whether We Should Care.