Retirement Researcher Blog: Public Speaking and more Q&A from ...

On May 18, I presented a webinar on the 4% Rule for Advisors4Advisors. I was quite surprised that almost 200 people logged. I think of lot of those learned about it here. Thank you for joining, and I hope you found it to be a worthwhile use of an hour.? I try not to do too much self promotion, but I am interested to do more public speaking on retirement planning issues and it may help if I can provide some endorsements to get you thinking about having me as a speaker. Andy Gluck wrote a very favorable article about the presentation. A few of his generous comments include:

"And that?s what makes Pfau?s presentation so valuable. He is a great teacher. He connects the dots in complicated statistical analysis to make the topic easy to understand."

"Pfau... whose research in the years ahead is sure to have significant influence on financial planners, insurance agents, CPAs, investment advisors, wealth managers, product manufacturers, and other segments of the financial advice industry."

"Pfau ? an academic with no interest in selling product or protecting the provinces that have long characterized the financial advice business"

I especially appreciate that last one, as what I am trying to do here at my blog is to present retirement planning information that is independent, data-driven, and research based.Thanks.

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As there were many questions and not enough time, I agreed to write up a blog post to answer questions posed during the webinar.? Here it is:

Q: Comment on idea of drawing down assets on purpose anticipating "spend
rate" decreasing. Also comment on how Long-term care impacts.

The basic 4% rule indicates that you use a constant inflation-adjusted withdrawal amount throughout the entire 30 year period. But I have recently explored two reasons why people might decrease spending as they age. First, as I investigated at Advisor Perspectives in " How Do Spending Needs Evolve During Retirement?", people may naturally spend less as they slow down at later ages. Second, it is rational to plan to intentionally reduce spending since the probability of survival decreases with age. Both of these links explain how this allows for more spending earlier in retirement. Long-term care is the great unknown, though. The first link addresses that. How to properly plan for large and uncertain health expenses is an important issue in need of more research.

Q: With most respectiable estimates for stock and bond returns for the

next 7-15 years being in the low single digits maybe mid at best net of

inflation its painfully obvious 4% won't work. ?How does your research

account for projected returns on various asset classes which

historically over long periods of time is fairly easy to estimate?

Usually, research is based on the historical data. In the presentation, I did discuss two more alternatives considered in Joseph Tomlinson's work. These are to adjust bond returns to match current bond yields, and to assume a lower forward-looking equity premium. These assumptions do cause a substantial increase for the failure of the 4% rule as shown in the presentation.

Q: Great presentation! ?Doesn't this make a case for equity-indexed

products with income riders? ?I've never used them before but have been

considering as of late.

I will return to this question again later. I need to study equity indexed annuities more before I can provide a suitable answer.

Q: in terms of a retirement saver's asset allocation, does it ever make

sense to consider the present value of their social security payments as

a "government bond" in their overall retirement asset allocation?

Yes, I think so. Retirement income strategies should be based on a retiree's human, social, and financial capital, not just financial capital. So you can think of Social Security as sort of like a bond. Alternatively, in matching assets to liabilities, Social Security provides a good match for basic needs, which allows for a more aggressive asset allocation to meet discretionary needs. This is another way of developing the same sort of point.

Q: i follow wade's blog, and based on his research and his summaries of

other advisors' research, it seems like (at the end of the day), a

withdrawal rate in the 3-4% range is usually the "answer." have we seen

enough research to generally agree that range is "okay"?

3-4% is in the range of what is supposed to be safe in a worst-case scenario. It is not the average outcome. I have come to think that the floor/upside approach has a lot of potential for retirement. 3-4% should typically work out, but there is no guarantee and it is important to at least have your basic needs met, no matter the outcome. After all, as RMA curriculum board member Mike Zwecher wrote, retirees "only get one whack at the cat."

Q: In a previous webinar-I believe last year-you had a speaker

discussing MPT and highly diversified strategies whose returns would

have more than provided for a 4% SWP, even starting in adverse

environments. Isn't this therefore too simplistic and doesn't take into

account the ability of advisors and managers to outperform eoither on an

absolute or on a risk-adjusted basis.

This research assumes that people earn the returns provided by the market indices, and my Monte Carlo simulations assume a symmetric sort of distribution for market returns. If you develop a strategy that supports higher returns, lower volatility, or less downside risk than the underlying indices, then your abilities can be used to support a higher withdrawal rate. If you do think you can provide this superior outperformance, I do suggest that you take up Bob Seawright's Active Management Challenge.

Q: Guaranteed Annuities with Living Benefits solves most of the issues

you raise!

Yes, they are designed to provide downside protection and upside potential all in one convenient package. Given their potentially high fees, I wonder if keeping these goals separate (such as with partial annuitization with a SPIA for a floor and a diversified portfolio for the upside) may still be a better approach for retirees. But you do raise an interesting point.

Q: Wade - Review Moshe Milefshiy's maretials

Moshe Milevsky is great. I once wrote that he is The Simpsons of the retirement planning research world. There is a famous episode of South Park in which Butters tries to bring disarray to the town of South Park. But for every evil scheme he considers, it turns out that The Simpsons already had a plot point about the same thing. In the case of retirement planning, Moshe Milevsky has already done it all.? I did review his book, Pensionize Your Nestegg (Part 1 and Part 2). He has some new books coming out this year, and I will be sure to review those too.

Q: How does the intergration of Alternative Assets figure in to your

analysis?

Q: Thanks Wade! ?very interesting perspective and analysis. ?I like the

use of Monte Carlo to show clients how their spending might turn out.

Thanks.

Q: Do I unerstand then ?that ?teh client needs to plan ?to have

guarantees ?through pensions and annuities , but inflation ?reduces

value by 50% over ?30 years. and discretionary ? returns ?may not have

continued well.

Yes, inflation risk is one of the big three risks retirees face, in addition to longevity risk (outliving assets) and sequence of returns risk. Inflation-adjusted SPIAs for flooring and building a TIPS ladder are two ways to deal with this.

Q: but what if the goal is ?to use up teh wealth in life. ?If I live 30

years , if Ilive 40 years, ?how much can I take from my accounts each

year using averages and having nothing left ?

In general, withdrawing a constant inflation-adjusted amount over retirement is not an optimal strategy. If you do not want to annuitize and do not worry about leaving a bequest, you could use a strategy such as withdrawing ( 1 / remaining life expectancy ) each year. This could cause your withdrawals to fall to uncomfortably low levels if we experience bad market returns, but it will help to make sure your wealth is getting used up.

Q: What are the ending wealth values for your MC alternative to the

Trinity Study?

Q: then you include admin fees and advisor fees and a retiree can not

take any money out of the portfolio?!

Yes, this is a problem. You can see about the impact of fees (which more generally represents underperformance from the indices... if managers produce alpha to counteract their fees, then this issue doesn't apply) in Figure 9 on page 17 of my article "Capital Market Expectations, Asset Allocation, and Safe Withdrawal Rates." Just follow the links for a free PDF download of the article.

Q: Have you considered the effects of a "diversified" portfolio over

these time periods? ?Does it make a difference? ?Small quibble, but I

would have to disagree that Social Security is guaranteed.

Social Security will need to have some cuts at some point, so your point is well taken. Nothing is truly guaranteed.

Q: Talk more about bond laddders as a hedge.

Q: Don't TIPs lack deflation protection?

You can't lose the real value of your principal if there is deflation. I'm not sure what you are getting at with the question. Are there other assets that will perform better with deflation? Maybe, and deflation could cause TIPS prices to fall for those who want to sell before the maturity date. But the idea is to hold the TIPS to their maturity date and not try to actively trade them. In this regard, you don't have to worry about deflation.

Q: How would you measure the maximization ultilization of assets on an

individual client basis? ?Asset optimization strategy measurements?

I'm sorry, I'm not sure, but I think your question might be getting at: how do we define the proper utility function for individual clients?? It is hard. But as I explain in "Spending Amounts vs. Spending Value," it is impossible to avoid the idea of utility and just doing something which incorporates diminishing returns from additional spending may do a lot to help us get better solutions, even if the exact preferences of the individual cannot be modeled. I think this is becoming an active area for research in financial planning now with work by Joseph Tomlinson and by students and professors at Texas Tech University. Dick Purcell, who hates the over-mathematization of utility maximization, did suggest that the figures I showed in this blog entry do provide the type of info retirees could use to figure out their preferences.

Q: What did you mean when you said that using corporate bonds, as in the

Trinity study, caused more failueres? Is that because of behavioral

issues -- investors selling due to volatility?

No, it is not because of behavioral issues. The research assumes that people do not make mistakes, and that they stick to the chosen asset allocation. The issue is that corporate bonds are more volatile than intermediate-term government bonds, and this volatility causes slight increases in failure rates. Safe withdrawal rates are a delicate balance between return and volatility, and in this case the extra return from the corporate bonds was not enough to compensate for the extra volatility.

Q: What's you opinion about using scenario planning to comes up with return

and risk inputs on asset clases? Any system for economic scenario

analysis that you like? Have you designed one? Windham Capital's Mark

Kritzman came up with one and spoke about it at one of my webinars. It's

an interesting approach for making assumptions about the future.

(Kritzman manags about $35B and wrote the quant portin of the CFA exam.

Let me know if I can make an introduction to get you a look at his

software.)

This sounds interesting and potentially useful. Yes, I'd be happy to learn more. Thanks.

Q: One really important thing you said was that asset allocation is not

that important for retirees. Please explain. And try to include some

idea of what that means for advisors.

In terms of downside protection, there are a wide range of stock allocations that end up doing just about as well as one another. That showed up in Figure 2.3 and Table 2.3 of my presentation. In terms of upside, more stocks provides more upside potential.?

What might this mean for advisors? I hadn't thought about that much, but let me try to provide a quick answer. Perhaps one area is that advisors can focus on other issues (such as building a floor, dealing with some of the emotional aspects of the retirement decision, etc.) with their clients and not get overly worried about choosing a perfect asset allocation.

You mentioned to previous articles that you wrote. Can we provide them

on A4A?

Thanks for that question. I do maintain my Retirement Researcher blog where I will surely provide a link to anything I write in the future. Please consider an email subscription to it (it's free). I am also a monthly columnist at Advisor Perspectives. I put a lot of effort into those columns and sometimes they are mini-research articles. The archives can be found here. And as for research articles, I have them all listed at my university webpage. Most of my retirement planning research is near the top of the list.

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Dancing droplets reveal physics at work

Magnetic fields can deflect liquid oxygen

Web edition : Thursday, May 17th, 2012

View the video

Throw water into a hot pan, and it will sizzle so fast that the drops actually levitate across the surface. Physicists have now taken this phenomenon, called the Leidenfrost effect, a step further: Using magnets, the scientists directed droplets of liquid oxygen to speed up, slow down and change course as they scoot across a sheet of glass.

Magnetic fields force the tiny blobs to travel in a mesmerizing dance, says David Qu?r?, a physicist at ESPCI Paris Institute of Technology in France. He and his colleagues describe the work in an upcoming Physical Review E.

Leidenfrost drops form when a drop hits a surface much hotter than the liquid?s boiling temperature. The liquid evaporates so quickly that the droplet starts to float on its own vapor, cushioned from below. This insulating layer also reduces friction between the droplet and the surface. Given a push, a droplet 1 millimeter across can slide for several meters before finally slowing down and stopping.

?There are some interesting questions about these frictionless systems,? Qu?r? says. So he decided to look at how magnetic fields might influence this bizarre motion. He chose to study oxygen because it boils at such a low temperature that it naturally forms Leidenfrost drops at room temperature. In its liquid form, oxygen is also paramagnetic, meaning that it is attracted to the poles of a magnet.

The scientists threw oxygen droplets onto a sheet of glass, beneath which lay a small circular magnet. Depending on the angle at which the drop approached the magnet, the drop either got deflected away or swooped partway around the magnet like a comet swinging past Jupiter. Occasionally, the magnet?s field captured a droplet into a permanent orbit. ?You can hang these drops on the ceiling if the magnet is strong enough,? Qu?r? says.

Friction between the drops and the surface changes as the droplets change shape, he adds ? allowing scientists to better explore the forces that control friction.

The Leidenfrost effect occurs in many industrial processes that involve liquid droplets and hot surfaces, and so physicists have long wanted to better understand and control it, says Tuan Tran, a physicist at the University of Twente in the Netherlands. In 2006, scientists reported using a textured surface to dictate the way drops moved. The new work using magnets, Tran says, ?could be seen as a second cornerstone in controlling Leidenfrost droplets.?

The team is now investigating how water drops containing magnetic-sensitive particles behave in the same situation, which may open the door to more practical applications.

An oxygen droplet floating on its vapor (approaching from left at 12 centimeters per second) can be deflected by a small magnet (moving from bottom center at 7 centimeters per second) held beneath a sheet of glass. Such movies reveal the elusive behavior of droplets subject to what?s known as the Leidenfrost effect.
Credit: K. Piroird et al/Physical Review E 2012


Found in: Matter & Energy

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Blade Runner Writer in Talks for Sequel

Warner Bros/Courtesy Everett Collection

"Blade Runner"

Original Blade Runner writer Hampton Fancher is in talks to pen an idea for an untitled sequel to the classic sci-fi film for director Ridley Scott and studio Alcon Entertainment.

Alcon and Scott are mum on plot details but they confirm that the story will be set ?some years after the first film concluded,? according to a statement released Thursday.

Blade Runner, which hit theaters in 1982 starring Harrison Ford, was an adaptation of the Phillip K. Dick story Do Androids Dream of Electric Sheep? Fancher shared screenplay credit with David Peoples.

The movie was a box-office disappointment when it was first released but has since become one of the most important films in the sci-fi genre. Ford played a ?blade runner,? an expert on artificial humans, who is brought in to hunt down several rebellious "replicants."

Fancher, an actor who appeared on shows such as Gunsmoke, Rawhide and 77 Sunset Strip, wrote fiction on the side. Despite co-writing Blade Runner, his screenwriting career never took off, although he did pen the 1989 crime movie The Mighty Quinn and wrote and directed the 1999 serial killer thriler The Minus Man, which starred Owen Wilson and Sheryl Crow.

Scott is producing with Alcon?s Broderick Johnson and Andrew Kosove as well as Bud Yorkin and Cynthia Sikes Yorkin.

Frank Giustra and Tim Gamble, who run Thunderbird Films, are executive producing.

Fancher is repped by APA and attorney Matt Saver.

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The Social Side of Strategy


In 2009,?Wikimedia?launched a special wiki?one dedicated to the organization?s own strategy. Over the next two years, more than 1,000 volunteers generated some 900 proposals for the company?s future direction and then categorized, rationalized, and formed task forces to elaborate on them. The result was a coherent strategic plan detailing a set of beliefs, priorities, and related commitments that together engendered among participants a deep sense of dedication to Wikimedia?s future. Through the launch of several special projects and the continued work of self-organizing teams dedicated to specific proposals, the vision laid out in the strategic plan is now unfolding.

Wikimedia?s effort to crowdsource its strategy probably sounds like an outlier?after all, the company?s very existence rests on collaborative content creation. Yet over the past few years, a growing number of organizations have begun experimenting with opening up their strategy processes to constituents who were previously frozen out of strategic direction setting. Examples include 3M, Dutch insurer AEGON, global IT services provider HCL Technologies, Red Hat (the leading provider of Linux software), and defense contractor Rite-Solutions.

While such efforts are at different stages, executives at organizations that are experimenting with more participatory modes of strategy development cite two major benefits. One is improving the quality of strategy by pulling in diverse and detailed frontline perspectives that are typically overlooked but can make the resulting plans more insightful and actionable. The second is building enthusiasm and alignment behind a company?s strategic direction?a critical component of long-term organizational health, effective execution, and strong financial performance that is all too rare, according to research we and our colleagues in McKinsey?s organization practice have conducted.

Our objective in this article isn?t to present a definitive road map for opening up the strategy process; it?s simply too early for one to exist. We?d also be the first to acknowledge that for most organizations, ?social? strategy setting represents a significant departure from the status quo and should be experimented with carefully?whether that means trying it out in a few areas or creating meaningful opportunities for participation in the context of a more traditional strategy process. (For more on intelligent experimentation, see sidebar, ?Collaborative strategic planning: Three observations.?) Nonetheless, we hope that by sketching a picture of some management innovations under way, we will stir the thinking of senior executives eager to benefit from experimenting with such approaches. If you?ve ever wondered how to inject more diversity and expertise into your strategy process, to get leaders closer to the operational implications of their decisions, or to avoid the experience-based biases and orthodoxies that inevitably creep into small groups at the top, it may be time to try shaking things up.

Lessons from the fringe

The best way to describe the possibilities of community-based strategy approaches is to show them in action. Two examples demonstrate the lengths to which some companies have already gone in broadening their strategy processes, as well as the degree to which the executives who participated are convinced of the benefits.

Rethinking planning at HCL Technologies

HCL Technologies, the Indian IT services and software-development company, had enjoyed rapid growth since its founding, in 1998. With growth, however, the company?s business-planning process had become unwieldy. Vineet Nayar, HCL?s chairman and CEO, along with his top team, were providing input to hundreds of business unit?level plans each year. Nayar realized that he and his team had neither the expertise nor the time to deliver all the detailed feedback that each business plan deserved, so he challenged his colleagues to use three key principles to revamp the planning process: make peer review a core component of strategy evaluation, create radical transparency across units, and open up the conversation to large cross-sections of the company.

The solution was to turn the company?s existing business-planning process?a live meeting called Blueprint, which involved a few hundred top executives?into an online platform open to thousands of people. The new process, dubbed My Blueprint, was launched in 2009, with 300 HCL managers posting their business plans, each coupled with an audio presentation. More than 8,000 employees (including several members of the teams that had submitted plans) were then invited to review and provide input on the individual blueprints. A surge of advice followed. The inclusive nature of the process helped identify specific ideas for cross-unit collaboration and gave business leaders a chance to obtain detailed and actionable feedback from interested individuals across the company.

This exercise quickly began yielding business results. One HCL executive we spoke with credited the new process with a fivefold increase in sales to an important client over two years. The key, the executive explained, was the detailed comments?from more than 25 colleagues, ranging from junior finance professionals to software engineers? that together highlighted the need to reframe the business plan away from an emphasis on commoditized application support and toward a handful of new services where HCL had the edge over larger competitors. The employees provided more than good ideas: several even helped assemble the materials the executive needed to deliver the successful proposal.

The high degree of transparency increased the quality of insights, not just their volume. As Nayar notes, ?Because the managers knew that the plans would be reviewed by a large number of people, including their own teams, the depth of their business analysis and the quality of their planned strategy improved. They were more honest in their assessment of current challenges and opportunities. They talked less about what they hoped to accomplish and more about the actions they intended to take to achieve specific results.? At the conclusion of the inaugural My Blueprint process, there was broad consensus that participatory business planning had been far more valuable than the traditional top-down review process.2

Red Hat?s new road map

Red Hat is the leading provider of open-source software. In 2008, its leadership team began taking a new approach to strategy development. After defining an initial set of priorities for exploration, Red Hat?s leaders formed teams devoted to each priority. To boost the odds they would stretch toward new solutions, the company ensured that the team leaders?all members of the company?s C-suite?were far removed from their areas of responsibility. The company?s chief people officer, for example, was tasked with analyzing its financial model, while the CFO explored potential operational enhancements.

The teams used wikis and other online tools to generate and organize ideas and made these ?open? so that any Red Hat employee could respond with comments or suggestions. The idea generation phase lasted five months and included company-wide updates and online chats with the CEO. Over that period, the best ideas coalesced into nine strategic priorities.

To ensure accountability for developing the priorities further and for making them actionable, the company tasked a new group of executives to lead teams exploring each of the nine areas. These leaders were senior functional ones whose responsibilities put them a level or two below the C-suite. Each of their teams fleshed out one or two of the most important strategic initiatives and was empowered to execute the plans for them without further approvals.

This effort has reshaped the way Red Hat conducts strategic planning. Instead of refreshing strategy yearly on a fixed calendar, the company now updates and evaluates strategy on an ongoing basis. Initiative leaders use customized mailing lists and other tools to receive input continuously from employees and communicate back to them via town hall?style meetings, Internet chat sessions, and frequent blog posts. The company maintains its annual budget process, which is informed by the evolving funding needs of the initiatives.

The fresh perspectives generated by the new planning process have been instrumental in spurring value-creating shifts in the company?s direction. For example, a respected Red Hat engineer used the new process to make the case for a significant change in the way the company offers virtualization services for enterprise data centers and desktop computer applications. The changes led to the acquisition of an external technology provider?a move that would have been unlikely in the days when the company used its old, less inclusive planning process.

Red Hat?s vice president of strategy and corporate marketing, Jackie Yeaney, cites three key benefits of the company?s new approach: first, the process generated ?more creativity, accountability, and commitment.? Second, ?By not bubbling every decision up to the senior-executive level, we avoided the typical 50,000-foot oversimplification? of issues. And third, ?We improved the flexibility and adaptability of the strategy.? With the responsibility for planning and execution now in the hands of the same people doing the work, responsiveness to new opportunities or shifts in the market has increased dramatically.3

Closer to home

Some leaders may wonder about borrowing approaches from Red Hat, Wikimedia, or other companies that consider crowdsourcing a part of their institutional DNA (and for which confidentiality issues may be less pressing than they are for many organizations). For these executives, we would note the experiments of more traditional companies, such as 3M, AEGON, and Rite-Solutions. A look at how these organizations are introducing a social side to strategy can help senior executives determine how much further they want to go in their own companies.

Market-based strategy at Rite-Solutions

One way of experimenting with more open strategic direction setting is to create internal markets where legacy programs and new perspectives compete on an equal footing for talent and cash. Rite-Solutions, a Rhode Island?based software provider for the US Navy, defense contractors, and first responders (such as fire departments), is pioneering a game-based strategy process whose foundation is an internal stock exchange it calls Mutual Fun.

Would-be entrepreneurs at Rite-Solutions can launch ?IPOs? by preparing an Expect-Us (rather than a prospectus)?a document that outlines the value creation potential of the new idea?as well as a Budge-It list that articulates the short-term steps needed to move the idea forward. Each new stock debuts at $10, and every employee gets $10,000 in play money to invest in the virtual idea market and thereby establish a personal intellectual portfolio. The money flows to ideas that are attracting volunteer effort and moving steadily from germination toward commercialization. A value algorithm revalues each stock, based on the number of Budge-It items completed, inflows and outflows of employee money, and opinions about the stocks expressed in an online discussion board. When an IPO gains momentum and breaks into the company?s Top 20, the initiative is funded with seed money; more is awarded depending on the ability to meet various stage gate milestones. What?s more, when ideas help Rite-Solutions make or save money, those who have invested intellectual capital and contributed to the idea?s realization receive a share of the benefits through bonuses or real stock options.

The internal market for ideas has bolstered the company?s pipeline of new products, and the 15 ideas the company has thus far launched as a result now account for one-fifth of Rite-Solutions? revenues. Some of the blockbusters were generated in unexpected places?including Win/Play/Learn, a Web-based educational tool licensed by toy maker Hasbro. The source of the idea: an administrative assistant.4

Improving market analysis at 3M

In April 2009, 3M decided to reinvigorate its Markets of the Future process?a critical input to the company?s strategic planning. Previously, says Barry Dayton, the company?s knowledge-management strategist, this process had ?consisted of a small group of analysts doing research [about] megatrends and resulting markets of the future.?5?The company invited all of its sales, marketing, and R&D employees to a Web-based forum called InnovationLive, which over a two-week period attracted more than 1,200 participants from over 40 countries and generated more than 700 ideas. The end result was the identification of nine new future markets with an aggregate revenue potential in the tens of billions of dollars. Since then, 3M has held several additional InnovationLive events, and more are on the way.

The alignment advantage

Spend a few minutes talking with the senior executives involved in any of the initiatives described earlier, and it?s immediately apparent how powerful it is when thousands of people are deeply engaged with a company?s strategy. Those employees not only understand the strategy better but are also more motivated to help execute it effectively and more likely to spot emerging opportunities or threats that require quick adjustments.

Reviewing the data

Research we?ve conducted using McKinsey?s organizational-health index database suggests that none of this should be surprising. That database, which contains the results of surveys collected over more than a decade from upward of 765,000 employees at some 600 companies, facilitates analysis of the nature of organizational health, the factors contributing to it, and its relationship with financial performance. One thing we and our colleagues have seen over and over again through our work is that many organizations struggle with strategic alignment: even at the healthiest companies, about 25 percent of employees are unclear about their company?s direction. That figure rises to nearly 60 percent for companies with poor organizational-health scores.6

Similarly, we?ve found that the actions companies can take that are most helpful in aligning individuals with the organization?s direction are moves like ?making the vision meaningful to employees at a personal level? and ?soliciting employee involvement in setting the company?s direction.? If that?s right, it suggests that making more employees part of the strategy process should be a powerful means of aligning them more closely with the company?s overall direction. The payoff for such cohesion is significant: companies with a top-quartile score in directional alignment are twice as likely as others to have above-median financial performance.

Mobilizing middle management

Of course, adopting social-strategy tools doesn?t automatically create alignment. Companies must create it actively, particularly among middle managers, who as the guardians of everyday operations bear the brunt of making any company?s strategy work.

One airline saw its efforts to mobilize the workforce impaired by the silent noncooperation of middle management in several departments. Closer inspection revealed that middle managers didn?t disagree with the discussion that was under way but felt they deserved a bigger voice in it?and should have been included earlier. They also felt uneasy with the level of transparency in a dialogue involving some 2,000 people, accustomed as they were to managing on a need-to-know basis.

The Dutch insurer AEGON sidestepped problems such as these by breaking its strategy discussion into manageable topics related to everyday operational practices. That allowed middle managers to assume responsibility for the discussion and contribute their expertise. In the words of Marco Keim, CEO of AEGON The Netherlands, ?We started a digital-networking platform called AEGON Square and got the conversation going. People gathered in communities of practice and started sharing ideas on how to make the new strategy work. Dialogue really helped in fostering organization-wide alignment.?

Ultimately, middle managers were among the effort?s most enthusiastic supporters?both as contributors themselves and as active recruiters of participants. (In the end, 3,000 employees, 85 percent of the total, participated over 12 months.) Keim acknowledged, though, that building this alignment required a significant cultural change toward more openness, which took time to take hold and required regular reaffirmation by senior executives.

The evolution of strategic leadership

It takes courage to bring more people and ideas into strategic direction setting. Senior executives who launch such initiatives are essentially using their positional authority to distribute power. They?re also embracing the underlying principles?transparency, radical inclusion, egalitarianism, and peer review?of the Web-based social technologies that make it possible to open up direction setting.

Taking these principles to their logical conclusion suggests a shift in the strategic-leadership role of the CEO and other members of the C-suite: from ?all-knowing decision makers,? who are expected to know everything and tell others what to do, to ?social architects,? who spend a lot of time thinking about how to create the processes and incentives that unearth the best thinking and unleash the full potential of all who work at a company.7?Making this shift doesn?t imply an abdication of strategic leadership. The CEO and other top executives still have the right?indeed, the responsibility?to step in if things go awry, and of course they continue to be responsible for making the difficult trade-offs that are the essence of good strategy.

But it also may be increasingly important for strategists to lead in different ways. For example, to convey the message that the contribution of employees is of vital importance, top executives should constantly confirm that it is and set the example themselves. This approach requires a more direct, personal, and empathetic exchange than a traditional town hall meeting allows. For a mass digital dialogue to succeed, people need to express themselves openly, which may leave some participants feeling exposed. Leaders can help by demonstrating vulnerability as well?peeling off the layers of formal composure.

Another important element of social-strategy leadership is honestly assessing the readiness of the organization to open up and, in light of that, determining the best way to stimulate engagement. This sounds simple, but overlooking it can be costly. As part of a new strategy dialogue, the leaders of one mutual insurance company enthusiastically called upon its workforce to share reflections on an innovative, soon-to-be-launched life insurance product. Despite the leaders? expectation that the open call would generate a torrent of endorsements, it was met with a deafening silence. Closer inspection revealed that people were acutely aware of the strategic importance that senior management attached to this innovation. And nobody wanted to wreck the party by openly sharing the prevailing doubts, which were widespread. The doubts proved well founded: within a few months of being launched, the new product was declared a failure and shelved.

This cautionary tale points to a final element of strategic leadership: figuring out ways to encourage dissenting voices. Enabling employees to communicate through ambient signals instead of relying on words and elaborated opinions is an effective way to lower the threshold and still catch the prevailing mood. Familiar examples of ambient dialogue include polls, ?liking,?8?and voting?simple functions that allow participants to express an opinion without being exposed. More powerful and sophisticated forms of ambient dialogue include prediction markets (small-scale electronic markets that tie payoffs to measurable future events) and swarming (the visually aggregated representation of the emergent mood or motion within an organization).9

Consider how a prediction market might have helped the mutual insurer. The opening market quotation for the new life insurance product would probably have taken a steep dive, revealing the negative assessment of the internal market. This would have immediately alerted managers to potential weaknesses, without exposing the employees who had the courage to reveal the problems.

While these are still early days for social strategy, its potential to enhance the quality of dialogue, improve decision making, and boost organizational alignment is alluring. Realizing that potential will require strategic leaders to flex new muscles and display real courage.

By?Arne Gast and Michele Zanini, from:?https://www.mckinseyquarterly.com/Strategy/Strategy_in_Practice/The_social_si...

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What do you think 2009 Supreme Court Decision: Illegal Aliens Not ...

// 6 Comments

Question by THE GREATEST GODDESS JILL: What do you think 2009 Supreme Court Decision: Illegal Aliens Not Guilty of Identity Theft? Stealing is legal?
2008: ?Generally speaking, people who come into the United States don?t go out and steal an identity. They generally purchase a set of identity documents for the purpose of being able to work.? (Chris Joseph, Esq.)

2006: ?U.S. citizens are being forced to share their identities with undocumented immigrants to give corporate America a steady supply of cheap labor.? (Melody Millet, victim)

2002: ?Use of fraudulent documents by aliens is extensive.? (Richard Stana, GAO)

MSNBC attributes the 2008 quote to Chris Joseph, Esq., who defended an illegal alien accused of identity theft. As the victim of the crime was attempting to regain his credit score, good name and overall reputation, an undocumented worker used the victim?s papers for the sake of finding work, offering up identification when pulled over for traffic violations and also getting credit.

The attorney cleverly shifts the blame for victimizing an American from the shoulders of an illegal immigrant to a ?system? that prevents undocumented workers from finding employment ? and to ruthless sellers of identities who mislead them. Suggesting that illegal immigrants who buy these papers do not know or understand that the identities actually belong to someone else who will be harmed by their use, the attorney is able to argue in court that while guilty of the act the defendant was not guilty of intent.

Generally speaking, the two must be tied together in order to gain a conviction.

Figures by the Federal Trade Commission suggest that ? with respect to identity theft ? employment purposes only played a role in approximately 83,000 cases reported back in 2005. Another kettle of fish altogether is credit card fraud, which appears to be highest in Border States. This highlights that there is a lot more to identity fraud than merely the use of a nine-digit number to assist an undocumented worker to find gainful employment (doing jobs Americans won?t do?) and feeding a hungry family.

In fact, the connection between illegal aliens and identity theft is not new but it has been ignored and swept under the rug. Going back to 2006, improperly allocated wages due to 9 million unacceptable Social Security number account matches have totaled 0 billion. These funds go into the Social Security Administration?s ?Earnings Suspense File.? It is unclear what happens to these funds afterward. Suffice it to say that neither the illegal worker nor the owner of the social security number benefits; this suggests that the government ? in some way ? benefits from the funds, which in turn may present an awkward conflict of interest.

After all, would a cash-strapped government entity really be all that quick to close the pump that supplies it with 0 billion in the span of a few years?

Going back to identity theft facts in figures, in Utah alone some 1,800 mismatched Social Security numbers came from children who were in the system as receiving welfare benefits. A bit of digging reveals that their data somehow also showed up as being in the pile of numbers to which state tax payments were allocated. The assumption here is that a group of people is using the children?s Social Security numbers for work purposes.

Travel back even further in time ? to a 2002 report by Richard Stana of the United States General Accounting Office ? and it is clear that identity theft and illegal aliens are federal problems that appear joined at the hip. Pointing to counterfeiting operations that supply undocumented immigrants with employment eligibility documents, the report?s author warns that fighting identity theft must be at the forefront of actions taken by legislators and also law enforcement.

Today identity theft is the pink elephant in the room where discussions about illegal aliens, the Dream Act and comprehensive immigration reform take place: combining the two has become politically incorrect. In fact, a 2009 Supreme Court decision overturned the identity theft conviction of an undocumented worker because it found that the illegal alien?s action was lacking intent to defraud the owner of the papers. Buying papers to find employment, the court reasoned, is a far cry from intending to steal someone?s identity for personal profit.

http://news.yahoo.com/s/ac/20101221/us_ac/7451598_2009_supreme_court_decision...

Best answer:

Answer by Fernando
because they?re usually not stealing the identity but just making up a number that happens to belong to someone and they don?t use it against the owner or to get social programs but to work.

Give your answer to this question below!

Other Available Vanity Numbers:

  1. Would a legal department or a court ever use a toll-free number?
  2. What do you think of this illegal workers demand jobs back fired for allegedly having invalid SS numbers?
  3. How do I call social security from the country of Honduras?
  4. is prank calling illegal, if its not repetitive or threating or mean?
  5. I received a ?Notice of Determination of Invalid Claim, section 1277? HOW SHOULD I DO?

Tags: 2009, Aliens, court, Decision, Guilty, Identity, illegal, legal, Stealing, Supreme, Theft, think

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North Lebanon calm after Syria spillover clashes

TRIPOLI, Lebanon (AP) ? Lebanese troops have deployed in tense areas of the northern city of Tripoli after three days of sectarian clashes in a spillover of the 14-month-long conflict in neighboring Syria.

Lebanese army and police forces are patrolling the city as residents start to reopen their shops and check their property for damages.

An Associated Press reporter in Tripoli says no gunmen were seen in the streets on Tuesday.

Tripoli is Lebanon's second-largest city and its Sunni and Alawite residents are bitterly split over loyalties linked to the Syrian uprising. The three days of clashes pitted neighbor against neighbor.

At least five people died and 100 were wounded in the gunbattles that erupted late Saturday.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

TRIPOLI, Lebanon (AP) ? Firing assault rifles and rocket-propelled grenades, Lebanese gunmen clashed in street battles Monday as sectarian tensions linked to the 14-month-old uprising in Syria bled across the border for a third day.

At least five people have been killed and 100 wounded in Lebanon's second-largest city since the gunbattles erupted late Saturday, security officials said. Residents say differences over Syria are at the root of the fighting, which pits neighbor against neighbor and raises fears of broader unrest that could draw in neighboring countries.

Lebanon and Syria share a complex web of political and sectarian ties and rivalries, which are easily enflamed. Tripoli has seen bouts of sectarian violence in the past, but the fighting has become more frequent as the conflict in Syria worsens.

The fighting camps break down along sectarian and political lines. On one side are Sunni Muslims who support the rebels trying to oust Syrian President Bashar Assad. On the other are members of the tiny Alawite sect, followers of an offshoot of Shiite Islam who are Assad's most loyal supporters.

The recent clashes were sparked by the arrest of Lebanese national Shadi Mawlawi, an outspoken critic of Assad. The Sunni fighters say the root of the latest conflict in Tripoli is across the border.

"Syria. It wants it this way. It wants to start a battle here so it can say, look, even in Lebanon the Sunnis are killing the Alawites," said Mustafa Nashar, 35, whose family lives in an apartment overlooking Syria Street, which cuts through the overwhelmingly Sunni Bab al-Tabbani neighborhood.

Posters supporting the Syrian opposition hang on walls, and pictures of a local activist shot by a sniper in similar clashes in February read "Greetings to the free martyrs of Syria" and bear the Syrian revolutionary flag.

Groups of men, many carrying assault rifles and wearing military-style vests, ducked through trash-strewn alleys. The residents who remained in the neighborhood took cues from fighters about when to sprint across alleys to evade the snipers up the hill.

A car with children crouching in the back sped past one alley, a bullet pinging the pavement behind it.

The Lebanese army set up a small position a few hundred meters (yards) away from the fighting, but no soldiers or police could be seen in the immediate area.

Mohammed Jaber, a 49-year-old fighter and Tripoli resident, said local fighting has been going on for decades in Tripoli, but the Syria unrest has set it off again.

"The old has become new," he said. "Once the Syrian revolution started, we supported all efforts to get rid of the regime."

Sunnis comprise the majority in Syria, but Assad and his fellow Alawites play an outsized role in the country's government and security forces, prompting seething resentments. Inspired by the revolts in Tunisia and Egypt, Syrian protesters defied the authoritarian regime and began taking to the streets in March 2011 to call for political reform. But a relentless government crackdown led many in the opposition to take up arms. Some soldiers also have switched sides and joined the rebels.

World powers have backed a peace plan for Syria that was put forward by U.N.-Arab League envoy Kofi Annan, but the bloodshed has not stopped. More than 100 U.N. observers have been deployed in Syria to oversee a truce between the government and armed rebels. The U.N. estimates the conflict has killed more than 9,000 people.

On Monday, Syrian troops shelled the rebel-held town of Rastan, sparking intense clashes that sent bloodied victims flooding into hospitals and clinics, activists said.

An amateur video posted online Monday showed gunmen apparently taking control of an army position that was being used to shell Rastan. The video showed a tank, an armored personnel carrier and a military truck in flames.

"The raid liberated the military position," the narrator said.

Rami Abdul-Rahman, the head of the Britain-based Syrian Observatory for Human Rights, said 23 soldiers were reportedly killed in the clashes. He cited rebel fighters but did not identify them, and the account could not be independently confirmed.

Rastan, just north of the restive city of Homs, has been under rebel control since January. The Observatory and the activist Local Coordination Committees said the latest shelling of Rastan started on Sunday.

An amateur video showed a young girl who apparently suffered shrapnel wounds in her thigh undergoing treatment in a makeshift Rastan hospital while screaming in pain. Asked where her mother was, the girl cried: "She died!"

Another video showed four dead men, half of their bodies covered in a green sheet.

Also Monday, the Observatory and the LCC said government troops stormed the Damascus suburb of Qaboun, where they conducted raids and deployed snipers on roofs of buildings.

In Brussels, the European Union imposed visa bans and asset freezes Monday on three new people associated with the Syrian regime ? bringing to 128 the number of Assad supporters targeted by the bloc.

Michael Mann, spokesman for EU foreign policy chief Catherine Ashton, said two Syrian entities also were added to the boycott list, which now includes 43 Syrian companies, banks and other organizations.

The new measures, the 15th round of EU sanctions against Assad's regime and its supporters, were adopted at a meeting of EU foreign ministers. The bloc will name the individuals and entities involved on Tuesday, Mann said.

In Damascus, state-run TV said the results of last week's parliamentary elections will be made public Tuesday. The government has praised the vote as a milestone in promised political reforms, but the opposition boycotted the polls and said they were designed to strengthen Assad's grip on power.

____

Mroue reported from Beirut.

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IT Reseller Interviews Steve Berry, director at Maxa Technologies ...

14th May 2012

IT Reseller spoke with Steve Berry, director at Maxa Technologies, about a number of recent newly formed partnerships the company has formed within the autoID technology space.

steve-berry-maxatec

The past few months have seen the forming of a number of major new vendor partnerships at Maxa Technologies, (Maxatec). In January, the company was appointed as a distributor for Arbor Technology, a designer and manufacturer of rugged tablet computers based in Taiwan. Arbor has evolved in recent years as one of the major players within the rugged tablet PC market space. Established in 1993, and with a firm foothold in the embedded and network computing sector, the release of its range of rugged tablet computers in 2010 marked a significant step in Arbor?s strategic product roadmap. Maxatec director Steve Berry commented that Arbor?s product offerings fit well with Maxatec?s expanding mobile computing product set. ?The quality and performance of the company?s Gladius range is superb,? he said, ?and we have been delighted with the all-round support offered to us from Arbor UK and its HQ in Taiwan as we have been gearing up to release the products to our channel. It is essential for us to select supportive partners with high-quality products, and Arbor fits this remit exceptionally well. We have already seen significant interest from resellers in some of our key market areas, and this is a really encouraging start to our partnership.?

e-motion-ip54-rated-tablet

The Gladius range of rugged tablet PC?s from Arbor consist of 7?, 8? and 10? options. It features a fanless design and the dual li-ion battery packs provide about 8 hours of running time. The G0720 and G0820 both have sunlight readable touchscreens and a range of industry specifications including IP54 and MIL-STD-810F, making the products suitable for outdoor use. In addition to the Gladius range, Arbor also offers a range of tablets for the medical and healthcare markets. Design features include: anti-vibration and shock specifications, biometric fingerprint validation, safety requirements for medical electrical systems, radio disturbance and immunity characteristics and much more.

Business on the move

Other news released this January was Maxatec?s UK distributor agreement with Bulgarian EPoS solutions supplier, Datecs, for the Datecs MPED-400 mobile pin-entry device (PED). The MPED-400 is a PCI EMV and Common Criteria-approved device. With a host of connectivity options including Bluetooth, USB and Serial, the PED can be used for a wide range of payment applications; from fixed point of sale to payments taken in the field. The ergonomic and Arbor?s Gladius G1056 tablet lightweight design means the MPED-400 is well-suited to business on the move. Berry commented that with the ?Handpoint Headstart? payment application and the Handpoint payment gateway, a wide range of new opportunities are opened up to mobile chip and pin. He added that the PCI and Merchant Bank approved gateway allows payments to be processed efficiently and Hoeft & Wessel?s skeye.e-motion rugged IP54-rated tablet securely through an internet connection. The platforms which the solution can work upon are Windows Mobile, Windows CE, Windows PC, Android and IoS.

Gladius-G1056

These announcements followed hot on the heels of a deal signed between Maxatec and Hoeft & Wessel last December for the distribution of Hoeft & Wessel?s Skeye handhelds. Berry comments that Hoeft & Wessel?s primary focus is on quality and innovation, expertise and reliability, offering a wide range of products for the wholesale & retail and logistics sectors. The quality, German-designed and engineered products include the Skeye.Dart, a robust top-of-the-line PDA, the Skeye.e-Motion, a rugged IP54 rated tablet and the Skeye.POS, a versatile mobile or stationary POS Datecs? MPED-400 mobile pin entry terminal. Maxatec will be distributing the full Hoeft & Wessel mobile product portfolio which, in addition to the products mentioned earlier, includes the Skeye.Integral mobile rugged handheld device, the Skeye.Allegro, a flexible rugged mobile device with IP65 rating, and the Skeye.Pad, a high performance tablet for a wide range of applications in the field service and logistics sectors.

Complementary portfolio
MPED-400
Berry commented that Hoeft & Wessel?s Skye handheld products perfectly complement Maxatec?s existing portfolio in the UK. He added that Maxatec will be working closely with Hoeft & Wessel?s UK sales manager, Paul Carrington, to develop the reseller base and focus on specific target market areas, while also driving leads and sales back into the channel. ?Hoeft & Wessel have grown in the domestic market in Germany in the German-speaking territories by manufacturing in some cases very customer-specific solutions,? Berry pointed out. ?They are very close to the retail market and offer some products that are quite unique and very focused at specific challenges in retail. At Maxatec we were very attracted by that because it fits with our own history in this vertical sector. We were also attracted to the unique differences Hoeft & Wessel?s solutions can offer the UK market. They are not your average set of handhelds and their range also moves into some quite retail-specific small tablets that don?t overlap with the range provided by Arbor.?

Channel incentives

With all these recent new partnerships, Berry believes Maxatec will continue to attract an ever wider reseller base, incentivised by both compelling product offerings and Maxatec?s own dedicated service and support expertise. ?We continue to adopt a more long-term channel approach in that we set out to offer good product with reliable technical backup,? he said. ?With this strategy in place we are recruiting resellers that aren?t merely attracted by short-term incentives. Partners come to us because of the support and technical expertise we offer as well as the quality of the product we supply. Our products might be lesser-known brands but they are selected for quality and saleability first and foremost. These products haven?t become commoditised in the way that, say, a laptop PC has become, so there remain many communication, battery management and mounting issues etc. This scenario can provide attractive revenue opportunities for the channel. The stack them high and sell them cheap model doesn?t work for us or our vendor and reseller partners.?

www.itrportal.com

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