See what Others Miss - Blog

Managing Down Labor Expenduitures

6/13/2011 6:19:21 PM

Companies have and will continue to make earnings by managing down labor expenditures. The "new normal" may be 9% unemployment, not the 6% many have in mind.

Suppose you were a baseball manager and were accustomed to putting nine players out in the field. Now pretend you were only allowed to play with 7 players. With fewer players allowed on the field, choosing who to put in the line-up becomes exponentially riskier. That’s the other side of this story that appeared in today's Wall Street Journal.

Unconventional Talent

2/17/2011 6:44:46 PM

A Lesson Learned from the PGA Tour for Corporate Executives

Tempo is not in pro golfer Tommy Gainey’s vocabulary. His swing begins with a swirl and ends with a violent follow-through that reminds you a little of Arnold Palmer’s finish and a little of a farm hand hurling a hay bale. Yet there stood Gainey in the final round of the 2011 Phoenix Open, a stroke back with two holes to play. He had held the lead after the third round and now needed to drive the par-four 17th green for a chance to beat the leaders. The announcers could barely contain their disbelief that the unconventional Gainey remained in contention, but his unconventional talent is exactly why Scott Dow became one of Gainey’s sponsors a year earlier.

Dow is founder and CEO of The Dow Group, a unique firm specializing in what they call “performance speculation.” And Gainey had the unconventional talent that Dow felt would make him a successful professional golfer—but it was the kind of talent that’s easy to overlook. After their professional relationship began, Gainey won twice on the Nationwide Tour in 2010 and qualified for the PGA Tour.

Gainey, 35, is the kind of unconventional talent Dow helps his corporate clients evaluate. Born in a small South Carolina town, Gainey didn’t attend a big university on a golf scholarship; he attended Central Carolina Technical College and then worked on an assembly line wrapping insulation around hot-water heaters. In 1998, he started his professional golf career, at first knocking around golf’s minor league tours.

We often ignore such talents, Dow says, because they come from unconventional places. Their approaches to their professions may even make us uncomfortable. “To find unconventional talent that can shift the competitive balance of your organization,” Dow says, “you have to overcome three common bias blind spots.” Dismissing those with unconventional backgrounds is one such bias. Consider that many great talents found their own paths to success: Architect Frank Lloyd Wright, jazz drummer Buddy Rich and inventor Thomas Edison. The flipside of dismissing talent from untraditional backgrounds is overestimating the ability of those with more traditional backgrounds. For example, Dow says, “People see All-American or Ivy League credentials but don’t see failing momentum. In Tommy, we saw a late bloomer picking up momentum. We didn’t see his unconventional background as a disadvantage. We saw it as a throwback to the early days of professional golf.”

The second common bias is sight-based. We have a mental picture of what performance potential is supposed to look like, Dow says, and this mental picture comes from what we’ve seen in the past. We tap our minds for images of successful professional golfers and we might come back with a “Phil Mickelson.” When we contrast Tommy’s swing with Phil’s there's a disconnect – our brain says something must be wrong with Tommy. Dow refers to these as “error messages.” Even Tommy’s habit of wearing two gloves doesn't jibe because we can’t recall mental images that tell us that two gloves are okay. So what did Dow see in Gainey? “It wasn’t so much what I saw, it's what I didn't see,” says Dow, “I didn't see the contradictions others apparently do.”

That we equate success with certain methods and approaches is the third common bias. The routines of the typical PGA pro include an instructor, a sports psychologist and maybe a fitness regimen. Gainey is self-taught, and he practices at home by playing money games with his buddies. “A lot of the guys out there have decided that they need help figuring out their swing, getting their heads right, and getting in shape to play,” says Dow. “Tommy figures he can win right now and just needs to stay sharp. Golf is such a game of confidence and Tommy believed he was ready to win now – we liked his approach.”

“These three common biases create what we call a ‘flashlight effect,’ ” says Dow. “Your flashlight casts such a small circle it severely limits the image and experiences you’re comfortable with... And when it comes time for the hired to do the hiring, the organization has conditioned them to use the same little flashlight.” Then your company ends up in a “doomed loop of conventional talent,” he says.

Dow says his clients are all looking for the same thing – innovation, breakthroughs in productivity and creative solutions to persistent problems. There’s nothing wrong with “conventional talent,” he says, but your portfolio of human capital should diversify with unconventional talent, too. Unconventional talent is often the key to innovation, creative problem solving and the diversity CEOs espouse.

His recommendations: First, look for these biases in yourself and know that you are receiving subconscious error messages that affect your decisions. Second, simply recognize the error message as the outer boundary of your comfort zone. Third, make a conscious effort to cross this boundary and explore the world of the unconventional. And finally, judge the unconventional on the merits, not your error messages.

Unconventional Talent: A Lesson from the PGA Tour for Corporate Executives

Is Randy Moss just filling a "short term utility" role for the Vikings?

12/14/2010 2:50:38 PM

The acquisition of Randy Moss by the Minnesota Vikings is similar to an organization filling a short term need to accomplish an important project. It is the business strategy of hiring an individual on a project basis with no long term commitments, thus the individual is seen as a “short term utility" for the organization.

The Vikings know Moss possesses the skills and experience to give them their best chance to complete their organization's "project"; which is win the Super Bowl this year. This was not an investment strategy in human capital for the future; it is about recognizing a weakness or gap that is likely to be a big roadblock to achieve success in the near future and finding a solution for it. Both parties understand the relationship and are motivated to be successful.

Who wins with this: Moss or the Vikings?.....This is win-win situation for both parties. Moss is highly motivated to perform and seen as a good teammate with the clock ticking of him becoming a free agent after this season. The Vikings get a highly skilled and motivated player with short term financial responsibilities.

It will be interesting to see at the conclusion of the season, if the Vikings or any of the other teams in the NFL see Moss as a "long term utility"? Or is he at a point in his career where the best investment strategy in him is as a "short term utility"?

Will be interesting to watch play out......

Moss has no promise of a long term engagement with the Vikings, so what they could be potentially doing with him is what more companies might want to consider in certain situation with investment in human capital.

Instead of being “locked” up long term with a person that you are not sure is a fit in the locker room or is part of the vision of the long term strategy of the business, you can take an investment strategy of bringing them in with an understanding that it is a full time employee on short term agreement (90 days, 180 day) with evaluation at the end of that period to discuss a permanent relationship. You could also just bring that person in as a consultant.

The coaches, players, leaders of the organization, and the owner all understand that this could be a short term relationship but both sides need it be successful to drive to the outcome they desire in the short term, which is win a Super Bowl this year.

Overall the Vikings are taking very little risk in bringing Moss into the team. He is familiar and has a level of emotional connect with the environment of the city and fans, but most importantly Moss is very motivated to prove his worth to all the other NFL team to get a financially rewarding contract at the end of this season when he is a free agent.

Grading the Ryder Cup Captains Picks

12/13/2010 2:51:49 PM

The captain picks by Corey Pavin and Colin Montgomery were analyzed before the Ryder Cup, but how did it actually play out?

Did the picks overachieve or underachieve for their captains?

Pavin's Captain Picks:
Tiger Woods, Stewart Cink, Rickie Fowler and Zach Johnson
They went 6-3-5
Total points of 8.5

USA needed 14 points to retain the Cup. The captain picks make up 33.3% of team, yielded 60% of points needed to retain Cup.

On the deciding day 3 matches though... the four captains picks provided half a point, which included Luke Donald's and Lee Westwood's big win against Woods and Stricker.

Pavin's 4 captain’s picks won 3 points in singles.

Overall Pavin's picks overachieved by 180%.

Montgomery's Captain Picks: Padraig Harrington, Luke Donald, and Edoardo Molinari
They went 5-4-2
Total of 6 points

Europe needed 14.5 points to win back the Cup. The captain picks make up 25% of team yielded, 41% of the points they needed to win Cup.

On the deciding day 3 matches though... Monty's three captain’s’ picks delivered 3 points

Monty's 3 picks won 1.5 points in singles.

Overall, Monty's picks overachieved by 164%.

What is “See what others miss”?

12/9/2010 2:47:07 PM

Whether it is in business, sports, or the performing arts seeing performance potential and performance problems before they are apparent to everyone else is a competitive edge. The best talent evaluators or fund managers see performance potential and performance problems before they become apparent to everyone else. All of us have access to the same information, but the "the best" view the information differently, and they pay attention to things that others choose to discount. We help companies get the greatest return from their speculative investment in human capital. We can help you limit your financial exposure tied to underperformance and disappointing returns. Our investment advisors enable you to see performance that you may miss.

Look at it in this way. How often after a relationship ends, whether it is in business or with life issues that we have these thoughts to ourselves:

What was I thinking?... How did I not see that?... They really pulled the wool over my eyes!... What a con artist?... How could I have not known that?

After seven years of research and thousands of performance selections made, we have created a patented methodology, leveraging an investment model that enables you to make stronger performance selections and “See what others miss”.

Stay tuned to this blog as we will address what prevents us from “seeing” information more clearly.