Musings on Business Optimization, Economics, and Vocations

Many times through the classes I facilitate in New Orleans or through my work with Emerge Dynamics , I am asked what the drivers of a business' value are.  There are many.  However, here I describe an often overlooked, yet very important driver: Company Specific Risk. Whether my role is as a consultant or as an investor, I work closely with the companies I align myself with to identify and methodically reduce company specific risk, thereby increasing their valuation.  As described below, a company can increase its valuation by reducing Company Specific Risk, even without growing sales or profitability by one dollar.  But here's a nice perk.  When companies identify Company Specific Risk and then develop an implementation plan to reduce it, not only does that alone increase valuation, but sales and profitability usually increase as well.  A double bonus.   I was facilitating a class this week during which the students were trying to understand the d...

What is wealth? Wealth is often misunderstood.   When the word “wealth” is spoken, people often bring to mind images of opulence.   For me, it used to conjure up images of a cartoon I enjoyed as child, Duck Tales, in which Scrooge McDuck would swim through gold coins in his money vault.   So, if these are the images that come to our minds then it might be natural that when we speak of increasing wealth, one might assume that we are speaking of adding a few more coins to the vaults of those wealthy like Scrooge McDuck.   This isn’t the case.   Merriam-Webster gives one definition of wealth as “abundance of valuable material possessions or resources, abundant supply, all property that has a money value or an exchange value, all material objects that have economic utility; especially: the stock of useful goods having economic value in existence at any one time.” This definition is more appropriate. We are not only talking about the rich getting riche...