Wednesday, December 26, 2007

The Last Kings

The holiday story reminds me of the story of the three wise men coming to see the new born King. There's something unseemly about kings to the average person. Why should someone hold power over others only because of their bloodline? You only have to look as far as Cuba to see the fallacy of this approach as 76 year old Raul Castro who is taking power from his brother Fidel who has ruled Castro for over 40 years.

Americans find the idea of a King ruling over details of their daily life somewhat unappealing although people around the world have varying regards for their monarchs who sometimes are perceived as the lesser evil with the alternative being predatory politicians or police forces. The monarchs in the Middle East are probably responsible for much of the instability in the world and are responsible at least indirectly for the World Trade Center attacks and other terrorist activities around the world. From the perspective of the every day Saudi citizen, the US is largely responsible for supporting the Saudi monarchy, enabling Saudi royals to get a disproportionate amount of their national wealth and to perpetuate a tradition of royal privilege.

One approach to consider (although not likely to occur) is for all the monarchs to set into action a process of transferring power and assets to their people over a period of time. Not too many royals are Nobel Peace Prize winners or even well known outside of their countries within a generation or two. By setting up a mechanism for transferring 10% of the sovereign assets to stakeholders like schools, hospitals, fire stations, etc. each year in the form of stock shares, people around the world will realize greater self determination and stability. As more institutions derive their funding from dividends in enterprises that are design to serve the stake holders and not to be the piggy banks of monarchs, despots and tyrants, the world will become a safer place. No king is necessarily asked to abdicate, only distribute 10% of their remaining assets each year. The next generation of royals won't like the fact that they no longer have special privilege due to their bloodline, but then how much blood has been spilled over the centuries to maintain the power and influence of kings. (See my post from November 27, 2005 for previous comments on establishing stock ownership by community institutions of oil assets in Iraq.)

What we need today are the return of the Wise Men. If the best and the brightest from Iran, Iraq, Saudi Arabia, Syria, Jordan, etc. were to get together to plan the peaceful transition of wealth from the monarchs, we might find a new sense of collaboration in the region. Few people remember the names of the previous Mideastern kings. If the current monarchs were to endow world class universities and institutions in their names, they might be remembered in history for not only being the last kings, but also the greatest.

Saturday, December 22, 2007

My Hats Off the Jack

I look back at the twelve years I spent working at Jack In The Box (JBX) with warmth and many fine memories. It was during my experience there that my thinking on competitive strategy galvanized as each week the relative competitive advantage of the Jack In The box brand was tested against the offerings of much larger competitors like McDonalds, Taco Bell, Burger King, etc.

Early on, Jack In The Box leadership realized that trying to compete directly against the McDonald's was an effort of futility. Differentiation and the development of competitive advantage became the watchword and during my time there, over 100 products were launched. During a recent visit to Jack In The Box (I do still go there from time to time) I tried their new Sirloin Steak Melt. It was a delightful taste that combined the Grilled Sourdough bread that was introduced in 1989 along with the Sirloin Steak which has come back periodically in various transformations since it was first introduced in the early 1990's. The memory of those flavors encouraged me to try their newest version which got me to spend $4.29 for a sandwich in an industry where the Jumbo Jack and all of the signature burgers at competitive restaurants battle over the $2 burger.

In the years that have followed, I'm happy to report that the team at Jack In The Box has continued to successfully pursue this strategy which gives me not only the opportunity to stop in for a tasty meal but also a financial reward. After the eColi issue in 1993, I felt that the market had oversold Jack In The Box stock and I purchased shares in my retirement account at the equivalent of about $3. Even with the recent decline in their share price to the mid twenties, this has turned out to be a tasty investment.

Sunday, December 09, 2007

Shut Up Hugo

The news recently reported on the latest idiocy from Venezuelan would be dictator Hugo Chavez. Despite stacking the deck for his recent constitutional reform package that would have scrapped term limits on his rule with popular items like reducing the workday to six hours and giving pensions to street vendors and housewives, the voters failed to vote his way. Essentially, Chavez tried to buy votes with some goodies for the poor and the working man but even that did not provide enough competitive advantage to offset the concerns that "President for Life" could result in a socialistic agenda that would likely erode personal property rights. Chavez's true colors were shown recently after he threatened to nationalize banks own by Spanish interests if Spain's king does not apologize for telling Chavez to "shut up."

Let's applaud the Venezuelan people for rejecting Hugo's recent threats against democracy. The USSR dissolved and the Berlin Wall fell as the people wanted the same freedoms enjoyed by Westerners. Let this be a lesson to Hugo and his like.