Tag Archives: Decision Making

An Investment Analysis of Home Buying: Renting is Sometimes the Better Choice

January 14, 2015 By in Investments Tags: , ,

Buying a home is an admonishment that is drummed into the heads of most people. Buy don’t rent. Renting is throwing money away. At least if you lose everything, you’ll have some place to sleep. At least that’s what people say. But is it rational? Before you decide to invest such a large amount of money, don’t you want to analyse it a bit? You know, the same way you analyse a share purchase that costs a fraction of the cost of a home? Or analyse the merits of a Samsung versus an iPhone?

I think that the main confusion is due to the fact that there are several issues interwoven into this decision. In particular, two cash flows are being net off, thus hiding a valuable insight. To understand this, consider somebody who is renting a house. He pays rent to the owner of the house which results in a cash outflow to the renter and a cash inflow to the owner. When the renter is the owner these two cash flows do not go away, they just cancel each other out. Absurd as this may initially seem, getting to grips with this unintuitive insight is key to making intelligent investment decisions. Continue reading →

Leaders are the Drivers of Corporate Change

November 18, 2014 By in Leadership Tags: , ,

The Change Management industry is doomed. Change means uncertainty. Uncertainty means risk. Risk means danger. Humans are genetically coded to avoid danger. Therefore they will always resist corporate change.

Change management consultants (‘CMCs’) will advise that winning employee buy in is critical. But how do you do that? How do you convince employees that an unknown future is better than a known present? Maybe if the present is really bad, but by then things are usually too late. Continue reading →

Negotiation: Appeals to Authority and the Burden of Proof

November 13, 2014 By in Negotiation Tags: , ,
This entry is part 5 of 6 in the series Negotiation

This article is part of the Negotiation Series.

Have you ever been in involved in a discussion or argument, knowing that you are correct and/or the other person is incorrect but had a hard time proving that you are right or the other person wrong? It is extremely frustrating. It can also be damaging to your career. The frustration comes from your difficulty in expressing logical arguments and, more often, recognising the logical fallacies in your opponent’s arguments. I’ll use an example of an executive who used false logic to try gain access to a large amount of funds. I will highlight the fallacies used in negotiation and how to counter them. Continue reading →

Deconstructing Strategy

October 27, 2014 By in Strategy Cornerstone, Strategy Tags: , ,
This entry is part 1 of 3 in the series Strategy

I think that it is safe to say that most people entering the work force view strategy as some kind of mystical plan developed by all knowing executives using arcane skills. At the other end of the spectrum I don’t think that there exists a C-level executive who at least once didn’t wonder whether strategic planning wasn’t a ritualistic sham, a cosmic joke played on executives the world over. I know that I have experienced both feelings.

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SMEs: The Ignored Middle Child of Banking?

October 23, 2014 By in SME Tags: , , ,

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In developing various business plans for SME credit I often review why the commercial banks do not lend to this sector proportional to its contribution to GDP. I have written at length about some of my main ideas but I think there are several secondary issues that also play a role. One is the positioning of SME loans on the risk/reward curve relative to the two main alternatives: corporate loans and retail loans.

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