G100 Notebook | January 2013

What Does the Shale Revolution Mean for Geopolitics?

The growing production of shale gas is only part of the energy story of 2013. Equally consequential, as the New York Times reported on Christmas day, is what it will mean for the rest of the world:

The major geopolitical impact of shale extraction technology lies less in the fact that America will be more energy self-sufficient than in the consequent displacement of world oil markets by a sharp reduction in U.S. imports. This is likely to be reinforced by the development of shale oil resources in China, Argentina, Ukraine and other places, which will put additional pressure on global oil prices.

Hiring for a Start-Up in China

A superb, short look at what a Silicon Valley entrepreneur learns about hiring talent in China:

In China, I have found that a different mindset dominates. When I started recruiting talent for my new company, before candidates asked about our strategy, they asked how much money we had. They wanted to know what my plans were for IPO. One candidate told me that he expected “a seven-figure package” (in US dollars). While there was some interest in our plans for China’s mobile market, their primary concerns were economic and reputational: how could I prove to them that they would become rich, and that our company would be famous?

Larry Page: Why Competition Isn’t Enough of an Incentive

Wide ranging interview with Google CEO in Wired on why his company tries to think big. He provides this somewhat contrarian view of the value of competition:

I worry that something has gone seriously wrong with the way we run companies. If you read the media coverage of our company, or of the technology industry in general, it’s always about the competition. The stories are written as if they are covering a sporting event. But it’s hard to find actual examples of really amazing things that happened solely due to competition. How exciting is it to come to work if the best you can do is trounce some other company that does roughly the same thing? That’s why most companies decay slowly over time. They tend to do approximately what they did before, with a few minor changes.

Has Britain Lost Control of Public Spending?

Economist Tyler Cowen, who spoke at the G100 Fall Meeting, points out this startling article from the British press:

[Chancellor of the Exchequer] Osborne’s fatal problem is that he is proving unable to deliver any meaningful reduction in the size of the state. The extent of his failure will come as a shock to many. Remarkably, public spending actually went up last year as a share of our national income, according to a devastating analysis by the OECD.

Bill Gates: We Aren’t Measuring the Impact of College Education

Bill Gates recent essay on why “measurement” may be the single most important driver of public policy is worth reading carefully. As one would expect, he offers rich illustrations of how systems of setting goals and measuring progress is making a dent in global poverty and disease. Then he turns to the problem of U.S. colleges:

In the U.S., we should be measuring the value being added by colleges. Currently, college rankings are focused on inputs—the scores and quality of students entering college—and on judgments and prejudices about a school’s “reputation.” Students would be better served by measures of which colleges were best preparing their graduates for the job market. They then could know where they would get the most for their tuition money.

Marc Cuban: Are Colleges Going Out of Business?

Cuban believes that U.S. higher education is like the newspaper industry a decade ago: refusing to see how the internet is undermining its business model:

Before you go to college, or send your child to a 4 year school you better check their balance sheet. How much debt does the school have? How many administrators making more than 200k do they have? How much are they spending on building new buildings? None of which add value to your child’s education, but enrollment declines will force schools to increase their tuition and nail you with other costs. They just create a debtor university that risks going out of business.

What Exactly Is Strategy? A G100 Discussion

A.G. Lafley’s new book, Playing to Win, will be published next month. Here is what he had to say in a recent interview on the book’s central thesis:

The reality is most companies, most not for profits, most governments don’t understand what strategy is. They think it’s a vision or a mission. They think it’s a plan, or a part of a plan. They don’t understand that it begins with a clear definition of what is winning.

What Would a Microsoft’s Investment in Dell Mean?

Intelligent, if slightly cynical, assessment of news that Microsoft is investing in a deal to take Dell private. Author Jean-Louis Gassée, General Partner of Allegis Capital, asks what business Dell will be in at the end:

[The deal] would give Microsoft some amount of control over the restructured Dell, a seat on the Board of Directors, perhaps, with ways to better align the PC maker’s hardware with Redmond’s software. Microsoft wants Dell’s reinvigorated participation in the “Windows Reimagined” business.

… Better vertical integration without having to pay the full price for ownership, the putative “several billion dollars” would give Microsoft a significant ownership, 10% or 15%. [Yet] this is completely at odds with the buyout’s supposed intent: getting out of the PC clone race to the bottom.

“I’ve been practicing my craft as a CEO for 33 years”

Video of Mickey Drexler speaking at Stanford Business School last November. Always interesting. Brutally candid (at 19 minute mark) on why CEOs need to know their industry – and why an MBA may not prepare you.

Is China Growing or Slowing?

Chinese Economy Expanded at End of 2012, Data Shows
New York Times, January 17, 2013

China FDI Shows Full-Year Decline as Economic Expansion Slows
Bloomberg BusinessWeek, January 13, 2013