We recently attended the DFA Annual 401(k) Conference in Chicago. A revelation gaining wide acceptance in the industry is that retirement plan goals must shift from asset valuations and returns to an assessment of a participant’s retirement income requirements: sustainable future income. While this paradigm shift is ongoing among professionals, participants are still behind the curve. DFA’s Managed DC platform, which was conceived and designed by Nobel Laureate Robert Merton is the most visible effort we know of to help and encourage 401(k) participants to focus on income rather than asset value.
The Harvard Business Review article linked below discusses the above points as well as how plan participants who concentrate on an income goal can be influenced to increase savings rates. Retirees don’t spend asset values, they spend the income that can be generated by those values. Failing to identify and target realistic income steams during the accumulation phase can have dramatic negative consequences.
Merton’s comments about risk are particularly insightful in view of recent papers and articles that have suggested individuals in the distribution phase should extend pre-retirement risk levels for longer periods. The reasoning is that longer expected lifespans argue equities (i.e. risk) are necessary to increase probabilities that retirees will be able to maintain purchasing power.
The idea of using annuity units as a yardstick for the amount of future sustainable income is a powerful counter to this argument. Once an individual has amassed a pool of assets that enables purchase of a deferred annuity with sufficient future income distributions, taking and accepting risk becomes a less important consideration.
Over the past year, we’ve heard several times that a new age in medicine is dawning. Specifically,the focus of medicine is evolving from treatment of the sick to prevention of illness; health care instead of sick care. A greatly enhanced ability to individualize treatment based on unique personal characteristics combined with the power of digital communication facilitated by smartphones is imminent. These advances will change all our lives.
The implications of extended client lifetimes for our business cannot be overemphasized. The probability that average lifespans will increase significantly within the next 5-10 years calls for reexamination of the meaning of retirement income. We’ll be hearing and talking more about this subject in the coming months. The article linked below appeared in today’s Wall Street Journal.
The year is off to a fast start with no clear directions indicated for the capital markets. The good news is that investing doesn’t have to rely on picking the best time to get in or out. A good strategic, long term plan and discipline trumps guessing.
Many of the world’s economic system and business leaders are meeting in Davos with a lot of attention being paid to concerns about wealth inequality in addition to considering the forces at play that will influence the coming year’s rate of economic growth.
The articles highlighted and linked to in this posting deal with a variety of themes including the management of your most important contacts, and how our brains seem to be hardwired to like short term goals. The article about the questions you should ask your staff each week was particularly thought provoking. I recommend each of them as time worthy for your consideration. Good reading!
In her book, The Entrepreneurial Instinct: How Everyone Has the Innate Ability to Start a Successful Business, author Monica Mehta explores the role of brain chemistry in entrepreneurship. In this excerpt, she details goal setting.Achieving your goals isn’t just about hard work and discipline. It’s about physiology. By understanding how the brain processes success and failure, you can jump-start your productivity to create a winning streak and put an end to failed New Year’s resolutions.The more times you succeed at something, the longer your brain stores the information that allowed you to do so well in the first place. That’s because with each success, our brain releases a chemical called dopamine. When dopamine flows into the brain’s reward pathway (the part responsible for pleasure, learning and motivation), we not only feel greater concentration but are inspired to re-experience the activity that caused the chemical release in the first place.
This is why the cultivation of small wins can propel you to bigger success, and you should focus on setting just a few small achievable goals. While your ambitions can remain grand, setting the bar too high with goals can actually be counterproductive. Each time we fail, the brain is drained of dopamine making it not only hard to concentrate but also difficult to learn from what went wrong.
Most of us focus too much time and energy on growing our networks, when research shows that more is not necessarily better. Instead, follow this advice to forge better, stronger connections with the contacts who matter most.
I have 765 LinkedIn contacts. According to analyses of LinkedIn data, I’m connected with more people than 67.6 percent of LinkedIn users. That means I’m earning an A in networking, right? Not so fast.
Too often, we collect contacts like people used to collect stamps or pennies. More names, more cards, more sense of accomplishment. But we can get distracted from the real riches of our relationships by constantly seeking new ones. Not only is this a mistake; it also runs contrary to how our brains operate.
The Magic Number: 150
You may have heard of Robin Dunbar or the Dunbar Number. Dunbar, an evolutionary primatologist, discovered a relationship between the size of the mammalian neocortex and the number of social relationships we can maintain. That number in human groups is 150. That’s not to say that some tremendously gifted networkers can’t handle larger numbers. But the average person tops out around 150.
The people in our Village (as Dunbar calls the 150) are those who know us best. They’re our allies, our advocates, our friends, and our colleagues. They’ve worked side-by-side with us over the years and they know our strengths and our limitations. They have tremendous assets and gifts, yet so many of us focus so much energy on expanding our networks that we forget the connections we already have.
In 1990, Gary Hamel and C.K. Prahalad introduced a highly influential–and often misunderstood–idea in business. Here’s what it really means.
Sometimes an idea can seem so astounding, so insightful, so revolutionary and smart that its influence is legendary. That’s the way you could describe the 1990 Harvard Business Review paper The Core Competence of the Corporation. In a dozen printed pages, C.K. Prahalad and Gary Hamel laid out the notion that corporations had missed a principle that was critical to success–core competencies.
As the pair write in the first paragraph of the paper:
The most powerful way to prevail in global competition is still invisible to many companies. During the 1980s, top executives were judged on their ability to restructure, declutter, and delayer their corporations. In the 1990s, they’ll be judged on their ability to identify, cultivate, and exploit the core competencies that make growth possible–indeed, they’ll have to rethink the concept of the corporation itself.
Few other ideas in business have been so influential. Talk to entrepreneurs today and chances are you’ll hear about supporting core competencies and possibly outsourcing non-core aspects of their companies. Unfortunately, as influential as Prahalad and Hamel have been, they were also widely and profoundly misunderstood.
Reexamining Core Competencies
Many in business have taken the concept of core competencies to mean, find what you excel at–or perhaps what you enjoy doing–and to minimize the work you need to do in other areas. For example, a company might decide that it is exceedingly good in marketing and assume that it could leave product development, IT support, accounting, and fulfillment to others through outsourcing.
But the two authors explicitly argued against treating support of core competence as a way of reducing costs:
Nor does core competence mean shared costs, as when two or more SBUs use a common facility–a plant, service facility, or sales force–or share a common component. The gains of sharing may be substantial, but the search for shared costs is typically a post hoc effort to rationalize production across existing businesses, not a premeditated effort to build the competencies out of which the businesses themselves grow.
A competence is an area in which the company either already has or can obtain expertise, knowledge, and experience and that can contribute to a variety of products, possibly aimed at disparate markets. But rather than a random assortment of goods, what the company does is make use of deep competencies, the way 3M excelled in Post-It notes, coated abrasives, pressure-sensitive tapes, and magnetic and photographic films because of its competencies in “substrates, coatings, and adhesives.”
I am not a mind reader, but I’ve tried playing one at work. I think we all have. I used to imagine that I could peer into the silent void of a discussion with an employee and their thoughts and feelings would magically pop in my head. It never happened.
We are in the feedback business. Through running my company, 15Five, on our own product, I have found that regularly asking questions is an agile and lightweight way of keeping up with what’s really going on. Answers become conversations about what is most essential and meaningful for the team and the company, and those conversations transform into action.
1. What’s going well in your role? Any wins (big or small) this week?
This is a great place to start. Employees get to celebrate and even brag a little about all the positive stuff that happened that week by simply answering that question.
This includes the small things that often get overlooked because they aren’t related to top priorities. As a bonus, you will glean what employees consider triumphs relative to the goals of the organization.
2. What challenges are you facing? Where are you stuck?
The quickest way to overcome challenges and get unstuck is to say, “I’m stuck!” When we can identify where we’re stuck and then bring someone else’s attention to the challenge at hand, we are in a position to receive the coaching and guidance that helps us think about the issue in a fresh new way.
Often just writing about where we’re stuck begins the process of getting clear on how to resolve it ourselves.
3. What is the business doing, or can be doing, to make you more successful?
You don’t know what you don’t know until you ask your team the right questions.
Employee success is a dynamic and always evolving process. Sometimes what your team needs is more training or a one on one meeting. Other times they require help with learning a specific skill set.
This question gives permission to ask for the things that will move the needle forward and build more engaged and happy teams.
If you’re not exercising this emotional muscle, you’re probably setting yourself up for failure.
I’m utterly convinced that the key to lifelong success is the regular exercise of a single emotional muscle: gratitude.
People who approach life with a sense of gratitude are constantly aware of what’s wonderful in their life. Because they enjoy the fruits of their successes, they seek out more success. And when things don’t go as planned, people who are grateful can put failure into perspective.
By contrast, people who lack gratitude are never truly happy. If they succeed at a task, they don’t enjoy it. For them, a string of successes is like trying to fill a bucket with a huge leak in the bottom. And failure invariably makes them bitter, angry, and discouraged.
Therefore, if you want to be successful, you need to feel more gratitude. Fortunately, gratitude, like most emotions, is like a muscle: The more you use it, the stronger and more resilient it becomes.
The best time to exercise gratitude is just before bed. Take out your tablet (electronic or otherwise) and record the events of the day that created positive emotions, either in you or in those around you.
Did you help somebody solve a problem? Write it down. Did you connect with a colleague or friend? Write it down. Did you make somebody smile? Write it down.
What you’re doing is “programming your brain” to view your day more positively. You’re throwing mental focus on what worked well, and shrugging off what didn’t. As a result, you’ll sleep better, and you’ll wake up more refreshed.
Reprogramming Your Brain
More important, you’re also programming your brain to notice even more reasons to feel gratitude. You’ll quickly discover that even a “bad day” is full of moments that are worthy of gratitude. Success becomes sweeter; failure, less sour.
The more regularly you practice this exercise, the stronger its effects.
Over time, your “gratitude muscle” will become so strong that you’ll attract more success into your life, not to mention greater numbers of successful (i.e., grateful) people. You’ll also find yourself thanking people more often. That’s good for you and for them, too.
This method works. If you don’t believe me, try it for at least a week. You’ll be amazed at what a huge difference it makes.
When Matthew Levey launched his all-natural beef-jerky company in 2010, he and his two co-founders rode their bikes to as many New York City grocery stores as they could to conduct in-store demos and sign up new accounts. After signing up 60 stores in the first month, the three realized that the strategy was neither sustainable nor scalable.
“We knew we needed to do demos to create awareness and promote our brand,” says Levey, who runs Brooklyn-based Field Trip Beef Jerky with Tom Donigan and Scott Fiesinger. “But we also knew we couldn’t spend five hours a day passing out samples and still grow our business.”
The entrepreneurs hired a sampling team to market their products in stores, a move that has helped their business expand steadily. Today, Field Trip products are sold in more than 5,000 retail locations nationwide.
“Even though it was a very important part of our business, delegating that job to someone else freed up our time so we could focus on growth and building our bottom line,” Levey says.
We’ve all heard startup founders describe themselves as “chief cook and bottle washer.” But while multitasking may be necessary in the earliest days of a venture, it’s important to know when to let go of nonessential tasks so you can focus on the areas that are necessary to build your business.
Here are eight types of tasks you should be delegating in order to propel your startup forward in the most efficient way.
1. Tasks that keep you from growing your business
When Levey and his team realized that the hours they spent on a bike en route to product samplings were not enabling them to scale to a nationwide platform, they hired a demo team. “Getting customers to trial something is important, but we also realized it wasn’t a good use of our time, because it wasn’t conducive to our long-term growth,” he says.
Independent contractors were brought on to handle sampling and inform customers about the products’ nutritional facts; that freed Field Trip’s founders to pursue new accounts, which today include several major grocery chains, as well as JetBlue Airways, Vitamin World and Costco.
2. Activities that will help speed up cash flow
As a small company represented in huge grocery stores with more than 50,000 SKUs, Field Trip found that its relatively modest invoices often would get overlooked. “Checks for $100 get lost against the $10,000 checks pretty easily, so we were hounding the stores just to get paid,” Levey explains.
The founders discovered that hiring distributors not only got them paid faster, it also enabled them to get paid with a few large checks rather than many small ones. The company now employs more than 25 distributors.
“By delegating that work to distributors, our accounts receivable have significantly improved, as has the timing of our working capital,” he says. “We’re getting our money faster, and we’re also getting checks that were previously going unpaid because we didn’t have time to follow up on them.”
How To Be A Super-Achiever: The 10 Qualities That Matter
This is an update of a story by Jenna Goudreau. Forbes
What do actor Alec Baldwin, game-show champion Ken Jennings and baseball icon Yogi Berra have in common?
That’s what husband-and-wife duo Camille Sweeney and Josh Gosfield set out to discover. For their bookThe Art of Doing: How Superachievers Do What They Do and How They Do It So Well, they interviewed 36 star performers who climbed to the tops of their fields.
“We didn’t want to theorize about success,” says Gosfield. “We went straight to the source, finding the most amazing people in all fields and asking them, ‘How do you do what you do?’”
In interviews with top achievers, including actress Laura Linney, Zappos CEO Tony Hsieh and crossword mastermind Will Shortz, patterns emerged. No matter how diverse their goals or crafts, these super-achievers shared many of the same habits. How can you follow in their footsteps? These are the 10 qualities that will set you apart, say Sweeney and Gosfield.
1. Dedication to a Vision
“Every great success starts with inspiration, but not every inspiration leads to success,” says Gosfield. “The most common thing we found was these people’s devotion to the day-to-day struggle.” Glossy magazine success stories often don’t show the dark moments, the daily grind or flagging energy that super-achievers endure to realize their goals.
2. Intelligent Persistence
One thing successful people know: Dedication and blind persistence are two very different things. “You can work hard but not smart,” says Sweeney. “When something’s not working, you’ve got to tweak it. Some people just keep banging their heads against the wall.” Instead of doggedly using the same ineffective tactics, super-achievers pivot and try to tackle the problem from a different angle.
3. Fostering A Community
Star performers know they can’t achieve success on their own. Instead, they must galvanize a group of people around their idea or goal. Teamwork, or having an ecosystem of supporters, turns out to be essential. It doesn’t just include partners and coworkers. It might also mean employees, customers, investors, mentors, fans and social media followers. The authors quote business guru Guy Kawasaki: “First you have to create something worthy of an ecosystem. Then pick your evangelists.”
4. Listening and Remaining Open
“You don’t normally think of hard-charging, action-oriented leaders as being good listeners,” says Sweeney. “These people’s ability to practice the art of listening helped them learn what they needed to know about the world around them.” For example, Zappos’ Hsieh asked all his employees to share their personal values so that he could incorporate them into the company’s culture. Likewise, Linney says she never accepts a role unless she has read and reread the script so many times that she fully understands it.