The Key to Every Successful Business is Agility Christopher Worley Contributor Professor of Strategy at NEOMA University France – Dec 11 2014.

With most economic indicators suggesting that the Great Recession is coming to an end, it’s tempting for a business that has successfully weathered the storm to breathe a sigh of relief and look forward to business as usual. But experience tells us that complacency is the worst mistake a business — especially a startup — can make.

Just ask Digital Equipment Corporation (DEC), the precursor to Microsoft and Apple and creator of the minicomputer. By 1990, DEC was riding high, ranked only behind IBM in the computer industry. But under the leadership of Ken Olsen — who once famously derided the emerging personal computer, saying, “There is no reason for any individual to have a computer in his home” — DEC stuck with its original vision and its product lines, which were incompatible with emerging operating systems.

Related: Learning to Adapt Is the Key to Success

Olsen was removed from the board in 1995 and DEC was purchased by Compaq in 1998. By then, the company had lost money for five of its last seven years.

Complacent companies believe they have figured out the formula to success. In reality, there is no business as usual, no magic formula that leads to sustained high performance and financial success at companies. The long-term and repeated successes of high-performing companies are actually due to constant reinvention — their agility.
Most entrepreneurs start with a culture of agility and a commitment to be responsive to the changing needs of the clients/customers. But as organizations grow and evolve, much of that entrepreneurial daring is replaced with a dogged fixation on “The Plan” — or, in the other extreme, thrashing around in the face of crisis and trying to adapt with urgent, costly and often ineffective crisis management and organization restructuring.

An examination of hundreds of businesses over 20 years of operations has shown us that rather than digging in their heels, successful companies do a better job at four things: establishing a climate for revising strategies, perceiving and interpreting environmental (external) trends and disruptions, testing potential responses, and implementing the most promising changes.

They have a culture of continuous agility. In essence, they have “agility routines.”

With recent research suggesting that the expected life of a new American company is about six years, entrepreneurs who have enjoyed some success, but want to take their business to the next level, must adopt a culture of agility to survive.

1. Strategizing

New business owners must first focus on establishing an aspirational purpose, developing a widely shared strategy and managing the climate and commitment to execution. While it sounds obvious, too many entrepreneurs are focused instead on goals: being number one in the market or meeting threshold monthly financial targets.

An agile organization develops a dynamic strategy with change in mind and has a process for modifying the strategy in the face of change, based on aspirational targets — beyond profitability — that unify and inspire stakeholders.

Related: The One Thing You Need to Keep Your Business Relevant

Perceiving

Next comes the process of broadly, deeply and continuously monitoring the environment to sense change and rapidly communicate these perceptions to decision-makers, who interpret and

formulate appropriate responses.

Agile organizations use the perceiving routine to assess what is happening in their environment better, faster and more reliably than their competition. Entrepreneurs, in particular, fall in love with their products and ideas, and with the original business plans that back them. But this does not allow organizations to be agile. After all, if you’re producing croissants and the marketplace suddenly wants donuts, you’d better come up with a cronut & quickly.

Understanding the Four Measures of Volatility By Scott Rothbort

Updated from 3/8/2007 at 2:15 p.m. EST

“Volatility” is a term that is increasingly interjected into financial market commentary by the press and professionals. In fact, Bloomberg Radio has a daily “Volatility Report.” While the term is being thrown around with a seemingly high degree of expertise, I find that the concept is not well understood by most commentators and the average investor. This module of TheStreet University will cover the four main types of volatility measures:

◾historical volatility;
◾implied volatility;
◾the volatility index; and
◾intraday volatility.

Type 1: Historical Volatility

Volatility in its most basic form represents daily changes in stock prices. We call this historical volatility (or historic volatility) and it is the starting point for understanding volatility in the greater sense. Historic volatility is the standard deviation of the change in price of a stock or other financial instrument relative to its historic price over a period of time. That sounds quite eloquent but for the average investor who does not command an intimate knowledge of statistics, the definition is most overwhelming.

Think of a Pendulum

To help you visualize the concept of volatility, think of a pendulum like in the picture below. The pendulum is constructed from a steel ball, attached to a rope and then suspended from a ceiling.

http://www.thestreet.com/content/image/38564.include

The pendulum starts at the resting state when our ball is at point 2 (the mean). If you raise the ball to point 1 and let it go, the ball would then swing from point 1 to point 3. Over time that ball will swing back and forth always passing though point 2. If this were a stock, the difference in distance from point 1 to point 2 or from point 2 to point 3 represents the volatility in the movement of the stock price.

So as not to get into any trouble with physicists out there, the formulas for standard deviation and movement of a pendulum are different and I am not equating the two from a statistical perspective. Rather, I am only using the pendulum as a visual aide. Stocks with a swing that is greater from point 1 to point 2 vs. that of another stock will have a higher volatility than the other stock.

Now imagine a wind hitting the metal ball. The force of that wind will increase a stock’s volatility. Market corrections, increases in uncertainty or other causal factors of risk will be the wind that shifts volatility higher. Say that there is no wind, but rather calm over the markets. Since there is no outside force to apply motion to the pendulum, the arc of the movement from point 1 to point 3 will decrease. This is when volatility declines. Some call this complacency, but it is generally viewed as a market with low or declining volatility.

Source : http://www.thestreet.com

TERRAINS@Atv006kiranraj

T- Trade
E-Execute
R-Review
R-Rate
A- Analyse
I-Indulge
N-Nudge
S-Sacrament

Terrain , this encourages me to take up this training initiative for StockMarkets, to operate as a consultant, to work on development as a trader, on trades & trade offs.

discuss on log about leverage, per se quid pro quo.

Ms KiranRaj SP
Sole Proprietor / owner / Director

Adventure Terrain Ventures.

Stock market prices are a terrible thing to anchor to Indraneal Balasubramanian Indraneal Balasubramanian, Engineer+Finance MBA by training

I have often seen people knowingly or unknowingly anchoring to the price of a stock, perceiving say a Rs 100 stock as cheaper than a Rs 1000 stock. Not only is this is bad because as an investor you should be worrying about the business fundamentals not the share price fluctuations, but does not consider the size of the business or the scale of it’s sales or profitability at all.

To illustrate this idea, consider the following

MRF Limited
Current Price: Rs 39557

Nestle India Limited
Current Price:  Rs 6923

Gati Limited
Current Price Rs 224

ITC Limited
Current Price: Rs 332

What does this tell you? Absolutely nothing of value on its own. This isn’t a race where a share starts at it’s face value of say 10 and continues growing from there on. Along the way, adjustments like splits, bonuses and share buybacks need to be considered.

Thus we get to the idea of number of shares outstanding. When you buy a share, you are buying a small % of the company, or to be precise 1/(no of shares outstanding of the company). You can use this multiple to figure out the market capitalization of the company as well as the total earnings.

Assume this cake represents the business

Each slice represents a share of the goods. Whether you slice it 10 ways or 20, the size of the cake is not affected by how it is sliced, only the size of the slice is changed. The quality of the cake is also completely independent of the size and manner of slicing. You can have a terrible large cake or a wonderful small cake (and vice versa) depending on the skill of the baker (management) and the ingredients used (fundamental economics of the business)

This post might seem simplistic to those who are aware of fundamental valuation, but I think this basic analogy needs to be drilled into every investor’s head.