Category Archives: Business

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.

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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.

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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.

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