Meta Cognition for Business Communication

Meta Cognition mean thinking about thinking.

What this means is that thinking about how you come to a conclusion. It means thinking about the assumptions which were the basis of your way of thinking. By questioning your assumptions, you can see how you come to the conclusion.

People always use assumptions when they make decisions. However, people sometimes assume that those assumptions are given and there no other alternative assumptions. This blind spot is what sometimes be the cause of organizational downfall.

By actually thinking about how you think, you are basically playing what strategists like to call "war games", which means thinking many steps beyond, and try to see every probable event that might happen. Doing this will help prepare you of what might happen and think ahead of what actions should be taken should the event materialize.

3 blog links I would like to share

I would like to share three blog links I found to be informative.

1. http://timothysykes.com/

This website belongs to Timothy Sykes, who started stock trading with his $12,415 bar-mitzvah money and ended up with over $1.5 million in just a few years. Although some of his gains were from the dot-com bubble, he obtained his wealth by trading penny stocks. A penny stock is a stock that has low price and low market capitalization and usually considered to be risky. Though some of the information on the website may not be useful, I believe understanding many different kinds of trading technique can help a stock trader to devise his/her own trading technique.

2. http://agoraphilia.blogspot.com/2004/08/suicide-bombed.html

This blog site is interesting since it applies the principles of economics on many actions that people do. For example, in a blog titled “Superfunding part 1 & 2”, the author discussed about the liability faced by superheroes if they decided to do one thing instead of another. For example, should the superhero risk the lives of 5 people to save 40 people? The article discusses the dilemma of superheroes when faced with conflicting choices.

3. http://www.fatpitchfinancials.com/

This blog focuses on value investing, which is investment based on the fundamental performance of the company, not based on the movement of the stock in the stock market. This is a great site because it provides contrasting view on many websites that espouses technical analysis, which is investing based on the stock market without looking at the financial statements of the company itself.

Scarcity >>> Choices >>> Opportunities

Scarcity >>> Choices >>> Opportunities

For those who are not familiar with the study of economics, the statement above might be cryptic. However, for those who understand the basic principles of economics, the statement is the basic reasoning of differentiation in competitive strategy.

If you take a long-term view, and I mean really, really long view, everything in the universe is finite, which means everything is limited. For the purpose of explaining the relationship between economics and competitive strategy / strategy management, I will stay within the boundary of capital (fund and land resources) and human resources.

The concept of scarcity applies to strategy management because each company only has limited resources. Out of those resources, a company needs to maximize profit (note that I chose the word “profit” instead of “revenue”) since basically that is how a company is measured whether or not it uses its fund efficiently. To maximize profit, a company needs to be efficient. To be efficient, a company has to choose among a myriad of business strategies on how to create profit, more specifically, economic profit. For example, Southwest could have chosen from many strategies on how to provide air transportation services. However, because of the intense competition of the airline industry, Southwest had to choose one strategy and aligned all of its operating activities to ensure its activities work toward one goal, which is supporting the business strategy. In this case, Southwest had determined to be a low cost provider of air travel. To be a low cost provider, Southwest has to minimize cost, which was achieved by only having one kind of airplane, thereby Southwest needed only to stock spare parts for only one kind of airplane. The company’s mechanics also only need training for one type of airplane, which lowers the training costs. To further minimize cost, Southwest eliminated in-flight food, aside from soft drinks and snacks.

So far I have only discussed the relationship between scarcity and choices. So how does opportunity fit into the equation? From the example above, we can see that Southwest has chosen to offer bare bones services. This fact represents opportunities because by focusing to do one thing, Southwest cannot do other things. An example would be if you had $5 and you can choose among pizza, burger, or spaghetti, where each item costs $5. If you choose to use $5 to buy pizza, then you cannot have a burger or spaghetti. Now substitute pizza with low cost airline, burger with high-class airline, and spaghetti with cargo airline. By choosing one, you forgo other choices, and these other choices can be taken by other companies as a way to differentiate themselves.

Of course, Southwest can go into high class airline provider, however, doing that force them to add different kind of airplanes, thus increasing the total cost of providing services. This misalignment of operating activities eventually will make Southwest’s competitive strategy unfocused, which might enable other companies to take over as the leader of low cost provider, hence destroying the competitive advantage that Southwest had in the first place and lowering the profits.

In conclusion, nowadays, for a company to be profitable, it needs to specifically focus on which segment of customers is the company trying to serve. By focusing on a distinct type of customers, the market becomes fragmented, which opens up opportunities for other companies by trying to satisfy the needs of customers who are in different market segment. Hence, the opportunity.

Why I love Offense Strategy in Basketball

What is strategy? According to one of many definitions from Webster dictionary, strategy is "the art of devising or employing plans or stratagems toward a goal". Essentially, this means that strategy is about using resources at your disposal directed toward an objective, in this case, winning a basketball game. People are divided as to which one is more important? Offense or defense? For me, I believe that offense is more important. There are two main reasons why I prefer offense.

First, it is my belief that to win the game, no matter how good your defense is, eventually you need score more points than the opponent does. Since you need to score points, why not dedicate more resources toward creating a great offense?

Second reason, which is more on a personal note, is that creating an offense strategy is more complex, hence, more fun. To understand this, I need to explain about shooting percentages and defense. No matter how good your defense is, most of the time, the opponent will be able to get some shots off, and when the ball is in the air, on defense there's nothing more you can do except fighting for rebounding positions and hope that it is a missed shot.

In professional level, players in practice need to achieve an 85% shooting field goal (shooting from anywhere in the court, not including free throws) to translate it into a 45-50% shooting field goal in actual game. Therefore, even without defenders /dummy defenders, there is still a 15% probability of not making the shot. This probability goes even higher in an actual game, which is 50-55% of not making the shot. This means that your ability to prevent the opponent from scoring is also dependent on the opponent team's ability to shoot.

On offense, though I believe not everything is within your direct control (such as the stamina or basketball IQ of the defenders), you have to use more resources or at least do more thinking/analysis since not only you have to contend with the defenders, but eventually you have to shoot the ball and score more points than your opponent does. Not only that the offense has to exploit the weaknesses of the defense, but also make sure that the team is able to create good scoring opportunities (high probability shots) by creating 1-on-1, 2-man, or 3-man plays which necessitates teamwork and clear objectives on each offensive possession.

Even though creating a defense strategy is challenging by itself. In terms of effort/amount of thinking expended, creating an offense strategy is even more challenging because of the two reasons explained above (defenders and shooting percentages).

...and that is why I love offensive strategy in basketball.

(Next topic: What I learned from Economics and Michael E. Porter)