In this case the Vikings is a TV show which is entering in its 2nd year, looking through various channels on the internet – the History Channel was found and a few episodes of Viking were watched. The show is entertaining, both males and females will likely enjoy the main characters but what is of interest to this blog is the theme of one of the shows. The individual males pledge their alliances to the earl or king who will defend them in times of war. In addition, every summer the Vikings would sail on ships to the east to raid other known kingdoms for their riches. Thus part of the culture was to ensure when war is fought, they are physically prepared. One of the group has heard stories about going to the west, this was a time when people did not know the earth was round, to navigate the seas were unknowns and many thought somewhere out west, if you went you would not come back. Those are very large obstacles to contend with, however one of group heard about a new method or technology to determine whether the ship was going in a direction they thought they were going when they are in the ocean and all you can see is the sea. Coupled with a new ship design (the type of ship that is now commonly associated with Vikings) the young man was determined to go west against the wishes of the leadership. The consequences of disobeying your earl or king was an early death, but determination and hearing stories of untold riches in the west lead the young man to lead a ship to England. They were fortunate in the first voyage to land at a monastery and steal the religious icons, thus when they arrived back, riches were brought forth and all was forgiven.

The next trip was after a larger prize because one of the captured monks at the monastery told them about life in England, so the Vikings both knew what to expect and were prepared for fighting. In the case of the Vikings, they left many dead and were not concerned whether the number was high or low, which is a reason why others would quickly fear them.

Linking to dividend paying stocks, in the above case, the earl and kings were only interested in raiding the known lands in the east, not sending resources to the west, because going east although the plunder was not large it was reasonably consistent in size. In many dividend paying companies, when the yearly returns are consistent, there is limited desire to explore new venues. The problem is unless there is very large treasury, someone is likely to doing the exploring. If there is a large treasury, companies can be bought even at high multiples, 99% of the people have a price to sell at. It is important for all companies to do exploring or research and development, otherwise the consistency which is valued will drop over time.

There are more questions than answers, till the next time – to raising questions

Recently read a book called Merchant Kings by Stephen Brown, Douglas & McIntyre, Vancouver, 2009. In the book, Mr. Brown outlines the individuals that ran country related trading firms which were owned by investors, the wealthiest members of the country, but also were backed by the resources of the host country. The 6 trading companies outlined are the Dutch East India Company, The English East India Company, The Dutch West Indies Company, the Russian American Company, the Hudson’s Bay Company, and the British South Africa Company. Similar to all private trading companies, the aim of the company is to make a profit for the shareholders and pay a healthy dividend. The easiest method to do this was to control a monopoly or be a monopoly like business. Along the way for the all these companies, decisions were made to use the native population as serfs – to do the cultivation of resources so the trading companies could resell in Europe at a very high markup.

In the north, the Russians had discovered Bering Sea and the rich animal life in the north which lead to a Moscow backed company was set up to trade in animal skins including Sea Otter. Alexsandr Baranov ran the operations in what is now known as Alaska and quickly realized the best method to operate was to have a monopoly thus ensuring prices remained high and inventory of animals remained sustainable. When Mr. Baranov first arrived there was hundreds of thousands of sea otters, it did not take long to reduce the numbers significantly for other competitors and countries were discovering the north. As time went on the Russian America Company expanded to have operations from Alaska to California primarily focused on sea otters with headquarters in Sitka, Alaska. After Mr. Baranov left the leadership, the company’s fortunes declined and eventually the company lands were sold to the US in the Alaska purchase.

In what is now know as Canada, the King gave ownership to all the lands that drained into Hudson’s Bay which turnout to be most of Canada, to the Hudson Bay Trading Company. The interest was a rival French company sending beaver pelts to Europe. The beaver felt was used in hat making and at the time the fashion of the day was for everyone to wear a hat. Some of the hats were passed down from one generation to the next. Fortunately for the Hudson Bay Company the lands they were given by the King were rich in beavers. The person in charge of the operation was Sir George Simpson who had merged the competitors to strengthen the company and have a monopoly. Mr. Simpson ruled the land as a baron, however his primary concern was fur trading and fur trading conflicts with people, so he did not want too much population in the region. The country of England decided to send its people including convicts, orphans, and offers of free land to citizens to Australia and Canada. Much of the lands of Rupert’s Land became provinces of Canada with Hudson Bay moving into retail stores and another part cultivated mineral resources.

In Africa, Cecil Rhodes made his money consolidating the diamond mines in South Africa and then controlling the gold mines in order to keep prices high or the minimum stable. You may have heard about Rhodes Scholars, DeBeers diamonds, Consolidated Gold Fields, the country of Rhodesia these were all done by Cecil Rhodes. He started with diamond mines owning a mine and reinvesting the profits. As time went on, greater capital was needed to mine the diamonds and the company DeBeers was formed and soon it was a leading firm and paying dividends of 25%. Mr. Rhodes wished to monopolize the diamond trade and did a unfriendly merger with the help of European financing. Soon gold was discovered in the Rand in South Africa and Mr. Rhodes used a similar process with Consolidated Gold Fields. For all his power in business, he believed in the superiority of white Anglo Saxons particularly the British Empire thus his companies operations would have fit easily into the apartheid system that would develop in South Africa.

Linking to dividend paying stocks, people for hundreds of thousands of years have been trading goods and services and in the 1600’s much of the world was influenced by company trading companies. The goal was to go to lands bring back goods and sell them at a higher price and pay dividends to the shareholders. 300 or 400 years ago, much was taken by force, ideally there is change today or at least we hope there is. Looking back at the 6 companies which ruled parts of their world, all but one went out of business which means it is still a hard job to maintain a profitable dividend company over the years.

There are more questions than answers, till the next time – to raising questions

Last week while browsing through a goodwill store, the video Pirates of the Caribbean was seen, not surprisingly having seen it on the screens many years ago the video cost was $3.00 for a dollar and on that day half price. The movie is based on real life – when Columbus discovered the Americas, while trying to find a shorter route to the South China Seas (because the spice trade was very profitable) Columbus declared the land for Spain. Not long after, gold fever struck the next group of adventures and soon the Aztec empire was gone and Spain controlled the countries. The gold mines of Mexico quickly made the Spanish the wealthiest country in Europe and other countries wanted a share. England had smaller ships and encouraged their people to rob the Spanish – Francis Drake achieved his fame this way. The pirates of the day were entrepreneurs who did not want to pay their share to the crown on any country. The navy of England and others were sent to bring the gold back to England and only tolerate a small amount of linkage.

The above is related to a book called Merchant Kings by Stephen Brown, Douglas & McIntyre, Vancouver, 2009. In the book, Mr. Brown outlines 6 firms that that ran country related trading firms that were owned by investors, the wealthiest members of the country, but also were backed by the resources of the host country. The 6 trading companies outlined are the Dutch East India Company, The English East India Company, The Dutch West Indies Company, the Russian American Company, the Hudson’s Bay Company, and the British South Africa Company. Similar to all private trading companies, the aim of the company is to make a very healthy profit for the shareholders and pay a dividend. The easiest method to do this was to control a monopoly or be a monopoly like business. Along the way for the all these companies, decisions were made to use the native population as serfs – to do the cultivation of resources so the trading companies could resell in Europe at a very high markup.

In the case of the Dutch East India Company – in what is now called Indonesia, but in the 1600’s was called Sumatra, Java, Borneo, Banda Islands – spices such as cloves, nutmeg, cinnamon, and other spices were grown. When the Dutch East India Company arrived the previous traders were from Arabian and came through the Italian city of Venice. Naturally the stores they told of how the spices were arrived at reinforced the spices were at the ends of the earth. For someone in Europe to go to the South China Seas meant to go around Africa, through the Arabian Sea and around India. The journey would take two or three years and not all ships made it back with their cargos. At the time in Europe much of the year the food that was placed on the dinner table was very bland, spices brought out the flavours of the food. Having spices in the house was in demand and a profitable business for those who imported them. The Dutch East India Company was the most aggressive in the area and secure their monopoly were lead by Jan Pieterszoon Coen.

The British East India Company was a rival to the Dutch East India Company and after having been defeated, regrouped in India to take advantage of the silks and cotton trade. Also India was a major provider to the world of saltpeter which was a major ingredient in gunpowder. As a country, England backed the British East India Company and a number of wars were shorten when the other side did not have gunpowder. From controlling the saltpeter trade, the company eventually defeated the Moguls who ruled India. The leader of the company was Sir Robert Clive. The shift from the Moguls to the company would control the treasury of India, later profits went down because to influence the economic cycle is one thing to administer a country is more expensive undertaking and not something companies wish to do. The administration was taken over by the British military and India was in the British orbit. The British East India Company imported teas which is why the UK drinks teas (in was less expensive that coffee). when profits were down in India, the company began extensively trading with China and along the way discovered illegal drugs (opium) is very profitable.

With success in the South China Seas, the Dutch formed the Dutch West Indies Company which went to what is now called New York but then was called New Amsterdam. The company charter claimed all the lands that was drained by the Hudson River. People were still looking for a quick method to go to the South China Seas. The head of company in New Amsterdam was Pieter Stuyvesant who ran the city similar to a company town but the town never produce any mineral riches and company towns are taxed at higher rates. Eventually more people other than Dutch came to New York as well as the British controlled New England and the Mid Atlantic states sent their navy into New York and Mr. Stuyvesant surrounded the lands to the British who changed the name to New York. In the years to come the American Revolution was fought and a country would evolve the United States.

The other 3 companies will be highlighted in part 2

Linking to dividend paying stocks, in all the above examples, from a financial point of view, they were successful as they found areas to be strong and create monopoly and sending dividends to the shareholders. How all the above people did what they do is the subject of many books, although for a long time all those trading companies were sending profits and dividends to the shareholders in Europe. Should a company be running a country? such as they did from 1600 to 1900’s that is interesting question?

There are more questions than answers, till the next time – to raising questions

The material is from Tom Peters book The Circle of Innovation published by Vintage Books,1999. Many of the themes outlined in Mr. Peters book have not changed and many companies have still not figured out how to do innovation. Companies do parts of innovation, but forget the other parts. Mr. Peters outlines 15 themes to help companies innovate better.

11. Become a Connoisseur of Talent – when you were younger, you likely tried many things – some you liked, you did not. The ones you liked drew you in and you did more of them. The stuff you did not like, means others do. Hiring great talent is hiring people like you and not like you – whom you hire for the attitude and train them. Practicing diversity means more ideas, points of view and possible approaches.
If you were depreciating a physical asset you would write it off at 10 or 20%; if you look at the people have they depreciated? do you have a formal investment strategy to build them up or talent renewal program?

12. It’s a Woman’s World – women are the drivers of the economy, if your company is not focused on them, it is missing them it is going out of business. To stay in business, look at the effect that women make on purchasing your products and services and returning to purchase them and see if you are catering to them or not. Most likely you need to change something.

13. Little Things are the Only Things – to stay competitive in the marketplace the design of the product is more important than ever. Bad design losses sales. Your objective is to give the client … that what he/she never dreamed he/she wanted.

14. Love all, Serve all – great service is the greatest innovation. Look around who provides great service on a consistent basis, why? and why not your company? One method to do this is hire, reward and promote convivial, customer-obsessed folks.

15. We’re Here to Live Life Out loud – be passionate about your life. Passion demands people and telling the truth.

Linking to dividend paying stocks, one of the easiest things to see on the list is how does your company target women. Women make most of the decisions in the economy, they can make or break you. Some of the others are internal but are reflected in the many reports which company’s give and are available to be seen.

There are more questions than answers, till the next time – to raising questions

The material is from Tom Peters book The Circle of Innovation published by Vintage Books,1999. Many of the themes outlined in Mr. Peters book have not changed and many companies have still not figured out how to do innovation. Companies do parts of innovation, but forget the other parts. Mr. Peters outlines 15 themes to help companies innovate better.

6. All Value Comes from the Professional Services- People come to work everyday and arrive in a department, the way of thinking is all value chain elements are services; all services can be outsourced? why should the company keep the department if outsourcing is better? If you changed titles of departments from Manager of … to Managing Director …, besides a title change would that inspire a different way of thinking. If the Managing Director knew either improve customer service by thinking like a client or be outsourced would that improve customer service? Would the Managing Director visit every internal client to see how they could do better? could every job be turned into a project? could the department be changed to thinking about improvements and better problem solving rather than responding? could standards be pushed up to WOW? would you have better people?

7. The Intermediary is Doomed – if you chop out the middle management, do your people have the ability to change from an organization to organizers? One method to do this is to empower your customers. In many industries the gate keepers to the information changes by allowing customers access to information which gives them more power to do. Those that are left are the top are responsible for network and character of the organization and those at the bottom have greater ability to do and make decisions that are in the customers interest.

8. The System is the Solution – part of the system is to ensure your forms/documents match beauty, grace, parsimony and focus. Are the forms easy for people to read and do? The other part of systems and perhaps more important is the social side or people. Face to face still counts.

9. Create Waves of Lust – just about everything in the world can be commoditized, but to combat it you have to provide Great or WOW service or WOW experience. What makes your product or service which allows the customer to say WOW that is great? Find it and do it.

10. Tommy Hilfiger Knows – to stand out in the crowd you need great branding. Branding means creating a distinct personality and telling the world about it. The only way you do it is to have an obsession with branding in every department and every decision should reflect branding. How much? no one knows, but it is an art. Leverage is good, too much leverage is bad.

a few more rules for part 3

Linking to dividend paying stocks, much of the rules are internal but they reflect to the customers and potential customers. How is your company’s brand? what does head office look like when you do your homework about the company?

There are more questions than answers, till the next time – to raising questions

Continuing with the theme of innovation, recently read The Circle of Innovation by Tom Peters published by Vintage Books,1999. Many of the themes outlined in Mr. Peters book have not changed and many companies have still not figured out how to do innovation. Companies do parts of innovation, but forget the other parts. In the service economy the greatest asset is people, but if you look around do most companies treat and pay their employees as their greatest asset? The answer not surprisingly is no, often companies ask for innovation, but stability for the employee remains off the table. In just about every group meeting of employees the author has been in, the first question was about job stability, the second how the company can do better. Each and every employee would know the competitive landscape has changed, more is asked, less is given and whatever fat existed is just not there anymore. Even in these conditions companies can and need to innovate.

Mr. Peters has 15 themes of how innovation works and includes
1. Distance is Dead – with high speed internet which is the standard, we are all neighbours. Some you like, some you work with, but you all share something and every year it is easier to communicate with those around the world as it is to communicate with those around the block. Another aspect is cutting jobs, while part of any solution, is only a short term fix; the more important question is how does the company innovate to grow?

2. Destruction is cool – in many ways it is easier to destroy an organization than to change it. However most of us do not want to destroy, we prefer to change at the margins. It is hard, destruction means to try a new approach using the tools of the trade which now exist. One company the author worked for spent many dollars on a new motto for their letterhead, the consultants noted each aspect of the motto represented a different strength of the company. Most of us in the audience and customers thought it was ugly and liked the old one better. The moral is just because something is new, it is not necessarily better if it does not reach the customers. The understanding has to go beyond the designers.

3. You can’t live without an Eraser – the eraser means to wipe out some of the old thoughts about how business is done so you can figure out how business is done today. Part of that is having an organization that accepts mistakes, learns from them and keeps trying without firing everyone. Mr. Peters has a great chart with questions is failure tolerated? do ideas flow? do we swing for the fences or hit singles? do we thrive on change? do we take a new idea and test it..fast? we think anyone can be a big winner?
Another aspect to innovation is cost, many expect costs to be high. In a survey in Inc. – the cost to start up a company 34% of the time was less than $10,000 and 59% of the time less than $50,000. The numbers indicate to start does not need a great amount of resources. To do the next steps to a roll out to potential customers and existing customers that is where the resources are needed. The point is to start and test does not need many resources.

4. We are all Michelangelos – can every department be converted into a business? Mr. Peters would say yes. If it was a business would it be serving its customers or would they want to go somewhere else? If the number one reason for switching providers is service, are the departments within the company delivery the service to both inside and outside customers? Could every department be providing awesome customer service? why not? does the leadership see and acknowledge the lowest paid employees as great people or are they seen as cogs in a wheel?

5. Welcome to the White-Collar Revolution – to stay in the job, the question is how have you made your company a better place?
more in part 2 and 3.

Linking to dividend paying stocks, every company whether they pay dividends or not has to live and breath innovation. Much of innovation stems from the leadership at the top, do they really want it or do they say they want it? When the company is living off its dividends it is easier to say than really want to. When the company is losing money or market share, it typically moves to wanting it more. As a shareholder, you have to look to see if your company wants innovation, has new revenue streams and is the dividend safe?

There are more questions than answers, till the next time – to raising questions.

In the town where the author’s parents are from, one of the natural pieces of the environment is a river and the town is located on the mouth of the river. As an outsider looking in you would think the town would have a good marina to service the boats that come down the river, but for a variety of reasons, the town only built a marina for 20 boats. If you think about recreational boat traffic, boats can only go on the river, there are no alternatives, which means the boats coming by the river go right on by and stop at other towns and cities with marinas. This summer, the town is breaking ground or dredging to build the new marina which is 50 years in coming. When the town was formed industrial uses dominated the landscape because the rivers were the main highway to transport goods and services. As time moved by, the industrial uses were replaced by commercial ones or park land, because park land can be maintained at low costs. Over the past 10 years or so the local community groups have raised money to put in walkways, benches to enhance the parks which is good. The commercial uses decided that being on the water was a great thing and now have patios for people to sit and eat by the water. 15 years ago the government offered money to local communities to build up the marina but the local government did not want to spend any money, to keep taxes low and no deficit funding (understandable reasons) but every town and city around it enhanced their marinas on the senior level of government dollars. By the time, the town reacted the program was fully funded. It has taken 15 years, but in the spring time the town will finally capitalize on their location on the river.

Linking to dividend paying stocks, in this case the town has cautious for understandable reasons but it missed the increased recreational uses of boats and many dollars because of its stance. Sometimes dividend paying companies must take a risk to capitalize on future opportunities, when purchasing the stock ensure it has an idea of the future will retaining its profit making ventures.

There are more questions than answers, till the next time – to raising questions

Many of us who live in urban areas live near the water and our first view of the water is from a recreational point of view, which is a great way to see it. However if we look back, the water meant a great deal more to the our way of life. Living in the northeast, the body of water known as the Great Lakes with cities of Detroit, Chicago, Cleveland, Buffalo, Toronto, Montreal dominate the landscapes. From the library a book about the history of the Great Lakes called The Golden Dream by Ronald Stagg, Dundurn Press, Toronto, 2010 was picked up. In this book the example is the St Lawrence Seaway where ships can travel halfway through North America. When the earliest explorers came they were trying to find a shorter way to China than going around Africa. Also the usual hunting for gold and silver was a reason to go travelling, which a couple of hundred years later was found. When the explorers travelled down the St. Lawrence they came across rapids, where hydro electric plants are now days, but the rapids must been similar to the ones seen on the west coast. As settlements grew up on the other side of the rapids and given the roads of the day were the rivers, many thoughts went into how to move goods around the rapids. In the early years, because the boats were relatively small, canals were built to accommodate the small boats.

Every 10 years brought an increasing sized boats and no real plans to enlarge the canals, by the time there was a desire to enlarge the canals because the grain trade and bulk commodities such as coal and iron ore were needed to be shipped at a cost effective manner, there was never an agreement who should pay for the expansion of the canals or locks on the Seaway. Part of the reason was other possible methods were coming forth – railways can move commodities to ocean ports, roads and trucks, and various towns and cities had grown up not dependent on the shipping. With most operations there tends to be competing interests who have to taken care of. That which seems logical to do or the straight line thinking, in the real world of needing government help, the line with waver and flow until the people with the greatest concern with the problem are in power. One or another community will benefit or think they will benefit and other communities think they will suffer or may suffer with the investment by the governments. In the case of the Seaway with two countries and their appropriate levels of government nothing is simple, except the dream.

Linking to dividend paying stocks, in the case of the Seaway, which was designed for the freighters to move commodities at a lower price than the competitors, by the time governments invested in the Seaway (years had passed) the economy had changed. The backbone of the economy moved from ships, to rail, to road and from the large institutional uses on the waterfront to more recreational uses. Every time there was a shift, there company would have to be flexible enough to capitalize on it and keep their competitive position. As a shareholder you have to be aware of the competing interests towards your company, how they change and how important they are. Goodwill moves for all sorts of reasons.

There are more questions than answers, till the next time – to raising questions

The book The Disney Touch by Ron Grover published by Richard D Irwin, Homewood, Illnois, 1991 provides the material for this column. The characters of Disney of Mickey Mouse, Goofy, and Pluto and the early movies of Snow White, Cinderella and Pinocchio are known are the world and loved by many people. The stories are universal to people and Walt Disney did an excellent job in creating them. As a business person, Walt needed help except for similar to many founders of companies he made most of the decisions by himself. There were many reasons why this developed including during the early years the company almost did not survive. It is not surprising when founders risk all of their assets and credit lines before the company experiences regional or international growth, the founders have a certain management style. As the company grew, Walt Disney envisioned theme parks although the one in Florida was larger because Disney did not like all the land uses around the California site. He was trying to have a particular image of the park and surrounding land uses. Eventually, Walt Disney passed away and his successors ran the company like Walt would have wanted. That type of management works for a couple of years, but will quickly go down, because very few new projects will come forth. In the case of Disney, shares traded on the stock exchange and it was not long before various people recognized Disney had great assets but were not using them.

Many homes have a dvd and video cassette player. Disney has a wonderful library of movies that were worth millions of dollars. Although they technically were not in a vault, since very few people had access, the originals could have been in a vault. The new management examined the video market and took a long time to break the ties of the old management. If they released a movie in video would people still want to see it on the movie screens. Remember people in the movie industry thought a movie is to be made to be played only on the big screen. Eventually management released Pinocchio and learned lessons about price points. When Sleeping Beauty was released it broke new records. The video cassette/ dvd release would now be part of corporate strategy and earnings for the company.

Kids of all ages like Disney stuff, most of it was to be found in Disney theme parks. The new management wanted to test whether people would buy in a store in any mall. The day the test store was to open, line ups were to be found. Disney expanded on the experience and there are now many Disney stores, including those in the theme park.

People like Disney TV shows and Disney similar to everyone else tried a cable TV network, without a great deal of thinking behind it. The name Disney worked in the early years, however the expectations were not realized and soon there was more people leaving the service as there was coming in. A revamp needed to be done to bring value and quality to cable program. It showed the company just because the name is Disney does not make it a winner. People choose to come back for very good reasons which need to exist.

The same thing happened with TV programs, for a while Disney on Sunday evenings was one of the lowest rated shows. the entire TV strategy was overhauled to make it connect to viewers.

Disney started in animation with Walt Disney drawing the Mickey character. The number of people doing animation dwindled until the new management put resources into it and found good stories to do and tell. Movies such as the Little Mermaid and Lion King were be made and equally important sell very well.

Linking to dividend paying stocks, Disney is shown as an example of a stock with great assets than needed to be renewed to connect to audiences. Many companies have the same thing, they have a great brand but something slips along the way, the assets constantly need to be evaluated to ensure they connect to their customers. At annual meetings, you want to know how does the company keep connecting to its audience? and do you think they are?

There are more questions than answers, till the next time – to raising questions