Stephen Shu, PhD

In the past month I’ve blogged twice about offshoring and outsourcing.

In the first post, I summarized some key points in a BusinessWeek article about the outsourcing of innovation. From a skills perspective, it may have had some interest from those involved with orchestrating supply chains. Perhaps a bit of a narrow focus.

In the second post, I tried to draw in some additional focus on how significant the offshoring force will be on the overall economy. That might have drawn some interest from professionals looking out for themselves as to how to keep their skills fresh. A bit broader of an audience.

Here’s something also close to home but not necessarily directly associated with the aspects of keeping skills fresh and worrying about where jobs will go. The topic is how to make sure your children are adequately prepared for the global future with language skills. May be more important now than ever given the offshoring revolution I described. May also be a good domestic business opportunity for those that can be more aggressive with providing language tutorial services, value-added services, or lower-cost services to the youth market.

A quote from the article that triggered this post ("Great Toddle Forward"):

JaNiece Rush of Lifestyle Resources, a placement agency, says 35
percent more families have requested Mandarin-speaking nannies this
year than last. At the Pavillion Agency, requests for Mandarin-speaking
sitters are up tenfold since 2000, says Clifford Greenhouse, mainly
from “extremely affluent” parents. Some of these parents are Chinese or
have adopted Chinese babies. But others want to give their toddlers a
leg up in globalized society.

Timing for children on the language front is more critical that other learning areas. For me, I can only speak English. I waited until graduate school to take Mandarin – it’s hard to learn that late in life – and it would not be possible for me to conduct business in China without being immersed much more. So keep language in the back of your mind as you think about your kids. Transferring preconceived ideas from one’s own past about language may less relevant given globalization.

Steve Shu

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Very coincidental that related to my prior posts on financial markets and "The Wisdom of Crowds" that venture capitalist Fred Wilson posts about the potential of Bubble 2.0 contrasted by the real promises of Web 2.0. Is Fred thin-slicing what he is seeing and applying tacit knowledge to hint about the dangers ahead? Are free markets always wise?

I really like Fred’s closing comments:

I don’t have any good answers to these problems, but I’ll say this:

If you were at the first party, then you should never forget how it felt when it was over. 

Drink responsibly this time.

I was planning on posting something I missed before (in a
managerial-decision making post) on forward thinking about regret to
assist with decisions. Fred’s comments are a good example forward thinking about regret to resolve a decision that can’t be rigorously reasoned out.

Steve Shu

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Update (3/29/05): I realize that I probably should not draw such a close parallel to the markets addressed in the hot hand fund post and Fred Wilson’s post. I suspect that Fred’s post has more focus on the venture capital markets as opposed to the overall market bubble burst we saw in Bubble 1.0. That said, the gist of my post was to provoke thought about when collective thought breaks down because of groupthink or other reasons.

Jeff Nolan (SAP Ventures) has an interesting post covering consolidation in the software industry. There are at least three key undercurrents to his post covering background of this sector of the economy, M&A philosophy from the perspective of platform vendors, and the importance and practicalities of post-merger integration within the software space.

Jeff’s pragmatism shines through in this part of his post:

… Probably the single biggest thing you can do with an
acquired company is know what members of the management team and rank-and-file
that will be leaving the combined companies no later than 12 months after the
acquisition. The fact is that when you have large companies buying small
companies most of the people won’t mesh together for the simple fact that
entrepreneurs and people attracted to startups don’t like big companies. So
knowledge transfer and integration becomes a critical success factor.

Although I’ve pointed out some general M&A studies done in the consulting industry here (not to mention another study by McKinsey here [free subscription required] that reveals "that 70 percent of mergers failed to achieve the predicted
revenue synergies, while cost synergies were overestimated by at least
25 percent in a quarter of the mergers"), Jeff’s post is great because it signals some experiences specific to software sector M&A. Clearly, not all M&A deals create an exitus of personnel. In the M&A scenarios that have  been closer to home for me (generally telecom space), one key aspect of many deals is that management typically goes out Day 0 to proactively "re-recruit" personnel – e.g., management assumes that M&A deals create tension that must be relieved. That said, from the people I know who have been involved in M&A in the software space, the day after the deal it is not uncommon for those in the acquired company to have looks on their faces like they are reporting to prison even though their pockets may have been lined with gold.

Steve Shu

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