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Thursday, January 10, 2008

Wharton on Global Economy, Law, Finance, Marketing and HR...

Super newsletter from the University of Pennsylvania.
A great resource!


Knowledge@Wharton

Jan 9 - Jan 22

What's Hot
What's Ahead for the Global Economy in 2008? Reports from Around the Network

Though the subprime mess and rising oil prices slammed the U.S. economy during much of 2007, other emerging markets -- especially China and India -- seem to be on a roll. China's growth rate of more than 11% is likely to continue, and India, too, should be able to sustain a high rate of GDP growth, even if it slows from last year's 9%. Latin America, meanwhile, is cautiously optimistic but could see a moderate decline in 2008. The Knowledge@Wharton Network sites -- including Universia Knowledge@Wharton, China Knowledge@Wharton and India Knowledge@Wharton -- spoke with Wharton faculty and other experts about what to expect during the coming year.

http://knowledge.wharton.upenn.edu/article/1871.cfm

Law and Public Policy
(Podcast with Transcript)
How Arab Countries Are Coping with Globalization

At the beginning of 2008, crude prices are at record highs, creating immense wealth for oil-exporting nations in the Middle East. Yet the Arab economies also face what economists call "a demographic bulge of a fast-growing labor force" -- and the challenge of creating enough jobs for the population. This is happening at a time when the arrival of China and India is raising the competitive stakes for other emerging economies that want to make their mark on the global economic stage. How are the Arab economies dealing with these challenges? Howard Pack, a professor of business and public policy at Wharton, and Marcus Noland, a senior fellow at the Peterson Institute for International Economics, address these issues in a book titled, The Arab Economies in a Changing World. Knowledge@Wharton recently spoke with Pack about his book.
http://knowledge.wharton.upenn.edu/article/1878.cfm

Human Resources
From Incentives to Penalties: How Far Should Employers Go to Reduce Workplace Obesity?

This month, more than half of Americans probably made health-related New Year's resolutions, but few are likely to fulfill them. Employees at CFI Westgate Resorts in Orlando, Fla., might consider themselves lucky: They have an incentive to get healthy. If they join in the company-wide weight-loss contest and reach their goals, they could win cash prizes or a luxury vacation. Westgate isn't the only employer trying to push employees, especially obese ones, into healthy lifestyles. But using incentives, and in some cases penalties, to change employee behavior raises a host of legal, moral and practical questions, according to Wharton experts and others.
http://knowledge.wharton.upenn.edu/article/1876.cfm

Managing Technology
Marketing Presidential Candidates on the Web Goes Mainstream: But Does It Get Votes?

The January 3 Iowa caucuses and the January 8 New Hampshire primary showcased the 2008 presidential campaign's ongoing political dogfight as candidates battled for their parties' nominations. Under the surface, however, the scrum represents a tipping point in the use of the Internet as a campaign tool, say experts at Wharton. In many respects, the 2008 race resembles any sophisticated Internet marketing campaign that lets consumers swap information, connect with friends and perhaps make a purchase -- or, in this case, a donation. Indeed, selling a candidate may not be much different than selling any other high-end item, although possibly less effective.
http://knowledge.wharton.upenn.edu/article/1874.cfm

Leadership and Change
The World Wildlife Fund's Carter Roberts on the Bushwhacking Theory of Life

The ability to "connect the dots" -- work the connections between local conditions and global forces, and between the non-profit, private and government sectors -- is necessary whether you work in the private sector or for a conservation group, according to Carter S. Roberts, president and CEO of the United States' World Wildlife Fund (WWF). During a recent Wharton Leadership Lecture, Roberts spoke about corporations' responsibility to promote environmental initiatives, the need for communication skills, the WWF's latest successes and the importance of thinking about, in advance, "what you want your legacy to be."
http://knowledge.wharton.upenn.edu/article/1875.cfm

Marketing
'What Are You Giving Away?' The Challenges of Marketing in Asia

Western companies looking to do business in Asia, especially in China, don't always confront a homogenous market, and the ways that consumers make decisions about what to buy aren't always predictable, according to a group of marketing experts who spoke at the 2007 Wharton Asia Business Forum. Like developed-world consumers, many urban Chinese people are technologically savvy and comfortable seeking product information on the web. But unlike them, they don't typically show brand loyalty and are often more motivated by price than perceptions of product quality or prestige. Panelists included executives from Estee Lauder, Bain & Co., Colgate Palmolive and Swain Tours.
http://knowledge.wharton.upenn.edu/article/1872.cfm

Finance and Investment
How Investing in Intangibles -- Like Employee Satisfaction -- Translates into Financial Returns

Contrary to management theories developed in the Industrial Age, employee satisfaction is an important ingredient for financial success, according to a new research paper by Wharton finance professor Alex Edmans. His findings also challenge the importance of short-term financial results and may have implications for investors interested in targeting socially responsible companies. The paper is titled, "Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices."
http://knowledge.wharton.upenn.edu/article/1873.cfm

Leadership and Change
Is One Global Model of Corporate Governance Likely, or Even Desirable?

In Germany, labor unions traditionally have had seats on corporate boards. At Japanese firms, dozens of loyal managers cap off careers with a stint in the boardroom. Founding families hold sway on Indian corporate boards. And in China, Communist Party officials are corporate board fixtures. But as companies continue to globalize, should they consider adopting one uniform model of corporate governance? Or do global investors benefit from diverse governance structures? Wharton faculty and others offer their opinions.
http://knowledge.wharton.upenn.edu/article/1877.cfm

_________________________________________________________________

Articles from Around the Network

China Knowledge@Wharton
Building Workplace Trust in Some Cultures Blurs the Line Between Professional and Personal Life

http://www.knowledgeatwharton.com.cn/index.cfm?fa=viewfeature&articleid=1767&languageid=1

Universia Knowledge@Wharton
David Bach: 'Managing Nonmarket Relations Proactively' Is a Key to Business Success

http://www.wharton.universia.net/index.cfm?fa=viewfeature&id=1455&language=english

India Knowledge@Wharton
Does Microfinance Need Regulators? Nobel Laureate Yunus Thinks So...

http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4246

Knowledge@SMU
Games People Play: Can Singapore Power-Up Fast Enough to Claim a Share of the Bounty?

http://knowledge.smu.edu.sg/index.cfm?fa=viewfeature&id=1073

Knowledge@W. P. Carey
New Attitudes, Technology Paint a Brighter Future for Videoconferencing

http://knowledge.wpcarey.asu.edu/index.cfm?fa=viewfeature&id=1524

Knowledge@Emory
Is the Private Equity Buyout Boom on the Decline?

http://knowledge.emory.edu/index.cfm?fa=viewfeature&id=1105

_________________________________________________________________

Articles and Links from Knowledge@Wharton Sponsors

Cisco Systems, Inc.:
Innovation: Transforming the Way Business Creates
http://knowledge.wharton.upenn.edu/weblink/366.cfm

GE Commercial Finance:
Industry Research Monitor Special Issue: The Liquidity Crisis of 2007
http://knowledge.wharton.upenn.edu/weblink/364.cfm

HCL Technologies:
Envisioning the Medical Device Company of the Future
Register now to listen to the latest research findings on this topic.
http://knowledge.wharton.upenn.edu/weblink/367.cfm

Wharton Executive Education:
Creating and Leading High Performance Teams
This executive training program challenges executives with leading teams in diverse contexts. Apply now.
http://knowledge.wharton.upenn.edu/weblink/365.cfm

_________________________________________________________________
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Monday, January 07, 2008

The Laws of Relationship Capital

The Fourth Law

By Adam J. Kovitz, CEO, Editor-in-Chief
Adam's Bio Email article RSS feed Share on facebook

As we continue to discuss the ten Laws of Relationship Capital, it is always good to have a quick review. The first two laws (detailed in Part 1 and Part 2) relate to whom and/or what can possess Relationship Capital. The Third (detailed, so far in Part 3) through Sixth Laws focus on the mechanics of Relationship Capital. Both Third and Fourth Laws deal respectively to the famous “Quantity vs. Quality” debate that most networking strategists ponder when debating in which networks to invest their time as well as deploy their marketing strategies.

The Fourth Law

If the Third Law is a statement of the effects and implications of quantity and its effect on Relationship Capital, then (by process of elimination) the Fourth Law does the same for quality:

Relationship Capital Value increases or decreases proportionally as the perceived quality of relationship increases or decreases.

The Fourth Law while simply stated and seemingly intuitive has some major implications.

Relationship Capital Value

The Fourth Law introduces the concept of Relationship Capital Value. The reason for this is that the first three laws discuss Relationship Capital from a capacity standpoint. The Fourth Law implies that due to perceived quality, the value of Relationship Capital Value (measured in “Relationship Points” or RPs, as per RNIA) can fluctuate, much like a company’s stock, over time. Therefore, Relationship Capital can exist in three basic states:

  1. Positive – the perceived relationship by both parties involved is one that is favorable, pleasurable, enhancing, meaningful, useful and/or supports the sustainability and/or survival of the person, product or business unit in question
  2. Negative – the perceived relationship by both parties involved is one that is unfavorable, toxic, diminishing, meaningless, useless and/or leads to eventual destruction of the person, product or business unit in question
  3. Neutral (zero) – the relationship is unknown, unrecognized, brand new, irrelevant, inert, forgotten and/or has no effect whatsoever upon a person, product or business unit. The Fifth Law addresses this state in greater detail.

Perceived Quality

The Effects of Time: Influence and Impact

The Fourth Law also implies the element of time as perceptions regarding specific relationships change based upon actions (or lack thereof). In Newtonian physics, any value measured over time can be researched and used for further analysis to gain a better understanding of the world around us. Much in the way, velocity is the rate of distance traversed over time, influence is the rate at which Relationship Capital changes over time:

In = DRC / Dt

Where:
In = Influence (measured in RP/s)
RC = Relationship Capital
t = Time

In the same way that acceleration is the rate of change in velocity over time, relational impact is the rate at which influence changes over time:

Im = DIn / Dt

Where:
Im = Impact (measured in RP/s2)
In = Influence
t = Time

Therefore, if we were to graph the Relationship Capital of a person, product or business unit over time, we could look at the rate of change (a steep rise due to the endorsement of a popular figure or a moderate decline due to layoffs) to determine its influence. We could also quantify the level of impact generated (positively or negatively) due to particular events that took place. Imagine doing this for historical figures, identifying areas of psychological trauma, etc. The possibilities are endless when we perform this type of analysis.

Reputational Mass

The longer one’s Relationship Capital remains relatively consistent at a value while the number of connections grows, the more of a reputation (or tendency) it has, and becomes much harder to change due to inertial effects. Last month we stated an equation of the Third Law as:

RC = S(R)

Where:
RC = Relationship Capital, and
R = Number of relationships

As we stated, this was inaccurate, and relied on the Fourth Law, but was useful for purposes of illustration. The more accurate statement is:

Rm = S(R)

Where:
Rm = Reputational Mass (measured in connections), and
R = Number of relationships

Take, for example, an historical figure like Sir Isaac Newton, with whom we all have a relationship even though he has long gone. Because of his deeds, accomplishments and actions, he has earned a reputation based upon the Relationship Capital profile that he developed over the course of his life. If a new historian suddenly shocked the world with evidence “contrary to popular opinion”, information would be suspect and unlikely to change the value of his Relationship Capital too quickly unless considerably substantiated and widely accepted, which actually did happen (to a much lesser extent) upon the discovery of Einstein’s Theory of Relativity.

Reputational Momentum

As Newton’s First Law states: “Objects at rest, tend to stay at rest and objects in motion tend to stay in motion, unless acted upon by an outside force”, there is a link between Relationship Capital and reputation. If Reputational mass exists, then what happens when we dramatically increase (or decrease) Relationship Capital over a considerably shorter period of time and have a considerable number of relationships? You got it…reputational momentum, which can be calculated as:

Rp = Rm * In

Where:
Rp = Reputational momentum (measured in connectionsRP/s)
Rm = Reputational mass
In = Influence

Reputational Force

For Relationship Capital to drastically change amongst all connections there would need to be a considerable amount of reputational force exerted on such a system through action and deed. Again, if one’s network has mass which can build momentum, reputational force must be exerted to positively or negatively influence it or to bring it to rest. Therefore, based upon Newton’s Second Law:

FReputational = Rm * Im

Where:
FReputational = Reputational force (measured in connectionsRP/s2)
Rm = Reputational mass
Im = Impact

Over time, reputational force could be quantified and analyzed, based upon individual actions like direct mail, advertising, word-of-mouth, genocide, keeping promises, misdirection, etc. as a means to influence Relationship Capital. Again, the implications are quite substantial. Was this what Isaac Asimov foretold in his groundbreaking Foundation series of books when he introduced the concept of Psychohistory? Time, will indeed tell.

Next month we will be taking a break from the ten Laws of Relationship Capital to indulge in what has become a February tradition at The National Networker as we celebrate our third anniversary; my State of the Industry Address. In March, we will resume with Part 5 and the Fifth Law of Relationship Capital…stay tuned!

The Emergence of the Relationship Economy

Relationship Capital is the cornerstone of the Relationship Economy, which I have defined as “a business and social ecosystem in which one’s interconnectedness and integrity determine wealth, prosperity and success.” I am proud to have contributed discussion of the Ten Laws of Relationships Capital to the upcoming book The Emergence of the Relationship Economy, due out on January 19, 2008 as an eBook and on February 1, 2008 in hardcopy. It is being considered a “must read” for anyone responsible for the strategic direction of their business. If you would like to purchase your own copy of The Emergence of the Relationship Economy, please click here.


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UTTERZ: mobile blogging

Utterz: Mobile Blogging Done Right?

Sid Yadav - does a nice writeup about UTTERZ and how simple it is to use. He reminds me that I have to put calling the moo-hotline back on my list of things to do. I sampled while active in MySpace.

Utterz is a mobile blogging service that enables you to blog pictures, videos, or text via e-mail or record a voice utter using their phone number. These are then posted and published to the widgets that you’ve attached to your blog(s), or just simply your blog on Utterz. The Maynard, MA-based startup is currently patent pending and attempts to offer a compelling solution to moblogging — a space that’s yet to strike chords and deem useful to its early adopters.


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The Emergence of The Relationship Economy

The Emergence of The Relationship Economy
The Emergence of the Relationship Economy features TNNWC Founder, Adam J. Kovitz as a contributing author and contains some of his early work on The Laws of Relationship Capital. The book is available in hardcopy and e-book formats. With a forward written by Doc Searls (of Cluetrain Manifesto fame), it is considered a "must read" for anyone responsible for the strategic direction of their business. If you would like to purchase your own copy, please click the image above.

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