Sunday, March 28, 2010

The Dao of The Strategist: Playing the Fishing Game

Each body of water has its risk and its rewards. The good fisherman usually possesses the skill and the gear to match the challenge for that body of water.

He assessed that body of water based on the configuration of the terrain, the current and future settings of that specific terrain and what are his available contingencies.

Jiang Tai Gong
The great Jiang Tai Gong (the author of The Six Secret Teachings) was a sage-strategist (and a fisherman) who advised King Wu on the overthrow of the Shang dynasty (of ancient China), in order to create the Zhou dynasty. (This dynasty lasted over 700+ years.)

Jiang Tai Gong believed in the following five concepts:
  1. Understanding the big picture;
  2. Targeting the best opportunity within the big picture;
  3. Establishing a position of strategic influence;
  4. Creating the bait that enables the big fish to come willingly; and
  5. Waiting patiently until the circumstances ripen.

Before implementing your strategic intent, ask yourself these questions?
  • Is your plan based on the proper assessment of your competitive arena?
  • Is your plan focused on the right target?
  • Is the initial stage of your plan based on establishing a strategic advantage?
  • Do you provide a strategic value that entices the customers to come to you?
  • Does your plan enables your team to operate and compete as a team?
  • Do you have the advantage that allows you to waiting patiently until the circumstances ripen?
  • Does your plan includes the circumstances that enabled you to maximize your opportunities while mitigating risks?
If you cannot answer the above questions, you might need our Compass360 Consulting strategic consulting services.

To properly succeed, one's grand strategic plan must have technical specifics to do the following:
  • maximizing profits;
  • minimizing costs;
  • mitigating risks;
  • accelerating the delivery of the intent; and
  • ensuring quality
Does your plan have those technical points?

"One who excels at warfare, seeks victory through the strategic configuration of power, not from reliance on men. Thus he is able to select men and employ strategic power."
- Sunzi’s view on Strategic Power (Sawyer's translation)

When a Compass team builds and connects with their plan (the Tangible Vision), they see the critical path that leads to the completion of the goal by collaboratively configure a strategic influence that allows them to complete their goal effectively.

Does your project team do that?

... In retrospect, the experienced strategist (the Compass Strategic Implementer) knows that fishing is more than the act of baiting a hook and dropping it in the water. He or she knows that the key to success is having a plan the creates the strategic positioning and resources to bait and lure.

Copyright: 2010 © Compass360 Consulting Group (C360 Consultants).
Copying, posting and reproduction in any form (without prior consent) is an infringement of copyright

Friday, March 26, 2010

Notes from the Virtual Desktop Strategist

To be an above average strategist, we suggested the following learning points to our audience:
  • Realize the importance of competition;
  • Understand the fundamentals of intelligence gathering;
  • Recognize the various degrees of deception through the competition's use of orthodox and unorthodox tactics; and
  • Understand the connective "top down" aspect of the big picture through the use of the Seven Military Classics (Strategy Classics) principles.

Understanding the grand picture from a top down view will enable you to connect the dots and reap the rewards.

Good luck!

Sunday, March 21, 2010

The Dao of Making Decisions

People understand numbers, but they do not understand the conceptual process of strategic surprising. ... To be successful in its execution, one must have the plan and the preparation process for staging the competition. It begins by seeing the tangible big picture in terms of advantages and advantages . During the deliberation, the decision-maker and the strategists must ask themselves many questions regarding to the big picture and whether they are able to execute the surprise play.


The following news item is from "advanced nfl stat dot com":

Polian thinks Belichick made the right call on the infamous 4th and 2 play. But according to him, "All of the statistical analysis that’s done over the course of a season means nothing."
As one of the guys who authored that analysis, I find it ironic that the rest of his comments were laced with pseudo-statistical mumbo-jumbo:
"It was fourth-and-2, and if we get the ball back, there’s a pretty strong likelihood based on what we had done up to that point that we were going to have a good chance to win the game. And they had been very successful in the Tom Brady era going for it on fourth down, and their most successful playwith Tom Brady was a quarterback sneak."

Polian added, “Was it the right call? In my opinion, it was 100 percent the right call. He knew his team. He knew the tactics involved. He gave the ball to Faulk,which was the second-most-effective guy in short yardage. So it was the right decision from a football standpoint.

Polian comes to his purely non-statistical conclusion that Belichick made the right call based on the following concepts:

-pretty strong likelihood
-going to have a good chance
-they had been very successful
-most successful

Let me get this straight. All of the statistical analysis is 'meaningless,' but vague, intuitive estimates of mitigating circumstances un-anchored to any overall baseline probability of success means it was 100 percent the right call? Got it.

Sean Payton doesn't seem to think it's meaningless.

In case there is a coach or GM who actually wants to know what 'pretty strong likelihood,' 'good chance,' or 'very successful' actually mean from a 'football standpoint', I know a guy.

Friday, March 19, 2010

Notes from the Virtual Desktop Strategist

What is a Gadget Play?
A specific category of tactical plays that is designed to deceive the opposition in certain situations.

The Essence of the Gadget Play
It does not normally win games. However, the successful execution of this type of play could shift the emotional momentum of the competition and the crowd.

When should One Call a Gadget Play?
Whenever one is confidentially in during the preparation and practice of the play.

Compass Rule: The amount of time that it takes to plan and prepare (for the execution of the play) is inversely proportionally to the amount of time it takes to implement it.

The Key to Quick Decision-Making
Compass Rule: The effectiveness of one's decision is based on their view of the big picture.

Do you know your big picture? What are the attributes behind your big picture? If you don't know, talk to us about it.


New coach puts vast experience to a special task

Ron Kroichick, Chronicle Staff Writer Wednesday, March 17, 2010

It's tempting, after some quick research, to suspect new Cal special teams coordinator Jeff Genyk is something of a gunslinger, throwing caution to the wind in his approach to college football. Genyk finished his run as Eastern Michigan's
head coach, after all, with a wild 56-52 victory over rival Central Michigan. Check out quarterback Andy Schmitt's numbers on that November 2008 day - a Division I record 58 completions in 80 attempts for 516 yards.

One week earlier, Schmitt went 50-of-76 in a loss to Temple. So the Bears are going to fake punts with abandon and run crazy reverses on kickoff returns? Well, maybe not. Those eye-catching numbers aside, Genyk strikes a measured and analytic tone as he dives into spring practice with the task of upgrading Cal's special teams. He also brings an uncommon background to Berkeley, more than the usual assortment of stops on the coaching ladder.

Start with this: Genyk has an MBA from Western Michigan and another master's degree (in education and social policy) from Northwestern. He worked in private business for nine years before starting his coaching career and spent last season as an ESPN analyst, working ACC games while also starting a consulting business and doing some motivational speaking. Few special teams coaches, for that matter, list five years as a Division I head coach on their resume. Genyk's stay at Eastern Michigan did not exactly unfold as planned - he was fired after posting a 16-42 record - but the experience shaped the way he will perform his job at Cal.

"It certainly should bring the ability to be decisive," Genyk said after the Bears' first workout Thursday at Memorial Stadium. "Maybe not always correct, but I think anytime you have five years of college head-coaching experience, it really allows you to make quick decisions. You can be decisive with yourself, the players and the staff." His decisiveness also comes from personal experience. Genyk was a quarterback and punter in his playing days at Bowling Green, and he handled special teams for the final eight of his 12 seasons (1992-2003) at Northwestern.

Genyk, in other words, should have some credibility when he counsels Cal's kickers and punters. "It helps not only that I did the actual task, but probably more importantly that I've coached it for so long," he said. "So when I put together their drills and their practice plan, hopefully it makes sense to them."
The Bears have some work to do on special teams, shortcomings that prompted the dismissal of Pete Alamar shortly after the team's Poinsettia Bowl loss to Utah. Most noticeably, Cal ranked ninth in the Pac-10 in kickoff coverage last season and 10th in field-goal percentage (.625, 15-of-24).

That last stat clearly rankled head coach Jeff Tedford. Vince D'Amato and Giorgio Tavecchio had their moments in 2009, but they were each only 2-of-6 on kicks between 30 and 49 yards.

"Jeff has a good background with kickers and punters, and that's something we really needed," Tedford said of Genyk. "... I think coaching our kickers is going to be a big deal. He's got a plan for those guys, and they're going to improve every day." Genyk added, "Both those kids have a great desire to get better.

Physically, they have the talent to be very good. I think they need to get mentally stronger. You're going to miss a field goal and you may pull a kickoff out of bounds. How do you respond after that? That's what I'm working on."

E-mail Ron Kroichick at
This article appeared on page B - 3 of the San Francisco Chronicle

Saturday, March 13, 2010

The Dao of Strategy: Making Decisions

What principles of Go (weiqi) can one apply to their business strategy approach?

Following are some of our favorite re-paraphrased principles:
  • Recognizing the configuration of the terrain, the state of the situation and the competitors within it;
  • Comprehending the configuration of informational flow that occurs in one's grand terrain;
  • Knowing the reasons behind the direct and indirect influences within the grand terrain; and
  • Realizing who is adjusting, who is standing their ground and their reasons behind it.
The strategic advantage is knowing the current actions within the terrain, the process behind it and the rationale behind it.

With the proper assessment, you can make the easy decisions for maximizing your profits and minimizing your costs.


Humans No Match for Go Bot Overlords
By Brandon Keim

For the last two decades, human cognitive superiority had a distinctive sound: the soft click of stones placed on a wooden Go board. But once again, artificial intelligence is asserting its domination over gray matter.

Just a few years ago, the best Go programs were routinely beaten by skilled children, even when given a head start.
Artificial intelligence researchers routinely said that computers capable of beating our best were literally unthinkable. And so it was. Until now.

"It's a silly human conceit that such a domain would exist, that there's something only we can figure out with our wetware brains," said David Doshay, a
University of California at Santa Cruz computer scientist. "Because at the same time, another set of humans is just as busily saying, 'Yes, but we can knock this problem into another domain, and solve it using these machines.'"

In February, at the Taiwan Open — Go's popularity in East Asia roughly compares to America's enthusiasm for golf — a program called MoGo beat two professionals.
At an exhibition in Chicago, the Many Faces program beat another pro. The programs still had a head start, but the trend is clear.

Arrayed by opposing players trying to capture space on its lined 19x19 grid, the black and white Go stones can end a game in 10171 possible ways — about 1081 times more configurations than there are elementary particles in the known universe.

Faced with such extraordinary complexity, our brains somehow find a path, navigating the possibilities using mechanisms only dimly understood by science.
Both of the programs that have recently defeated humans used variations on mathematical techniques originally developed by Manhattan Project physicists to coax order from pure randomness.

Called the
Monte Carlo method, it has driven computer programs to defeat ranking human players six times in the last year.
That's a far cry from chess, the previous benchmark of human cognitive prowess, in which Deep Blue played Garry Kasparov to a panicked defeat in 1997, and Deep Fritz trounced Vladimir Kramnik in 2006. To continue the golf analogy, computer Go programs beat the equivalents of Chris Couch rather than Tiger Woods, and had a multi-stroke handicap. But even six victories was inconceivable not too long ago, and programmers say it won't be long before computer domination is complete.

There is, however, an asterisk to the programs' triumphs.
Compared to the probabilistic foresight of our own efficiently configured biological processor — sporting 1015 neural connections, capable of 1016 calculations per second, times two — computer Go programs are inelegant. They rely on what Deep Blue designer Feng-Hsiung Hsu called the "substitution of search for judgment." They crunch numbers.

"People hoped that if we had a strong Go program, it would teach us how our minds work. But that's not the case," said Bob Hearn, a Dartmouth College artificial intelligence programmer. "We just threw brute force at a program we thought required intellect."

If only we knew what our own brains were doing.

Inasmuch as human Go prowess is understood, it's explained in terms of pattern recognition and intuition. "When there are groups of stones arranged in certain ways, you can build visual analogies that work very well. You can think, 'This configuration radiates influence to that part of the board' — and it turns out it's a useful concept," said Hearn. "The revolutionary people in the field have an intuitive sense, and can look at things completely differently from other people."

Image-based neuroscience supports this explanation, albeit vaguely. When researchers led by
University of Minnesota cognitive neuroscientist Michael Atherton scanned the brains of people playing chess and compared them to Go-playing brains, he found heightened activation in the Go players' parietal lobes, a region responsible for processing spatial relationships. But these observations, said Atherton, were rudimentary. "The higher-level stuff, we didn't figure out," he said.

In a more recent brain-scanning study,
Japanese researchers compared professional and amateur Go players as they contemplated opening- and end-stage moves. Both displayed parietal lobe activity. During the end stages, however, professionals had extremely high activity in their precuneus and cerebellum regions, where the brain integrates a sense of space with our bodies and motions.

Put another way,
professionals fuse their consciousness into the decision tree of the game.
Go players have an ability "to think creatively and prune the search tree in an aesthetic sense," said Atherton. "They have a feel for the game."
Artificial intelligence researchers historically tried to harness this pattern-based approach, however poorly understood, to their Go programs. It wasn't easy. "When I've talked to Go professionals about how they come to their decisions, it's been difficult for them to describe why a move is right," said Doshay at UCSC, who designed a Go computer program called SlugGo. "Go is a game of living things, and you talk about it that way, as if the patterns might be alive."

But if turning cryptic statements from Go masters into working algorithms for determining the statistical health of game patterns was impossible, there didn't seem to be any other way of doing it. "It was possible to sidestep the cognitive issues by throwing brute force at chess," said Hearn, "but not at Go."

Compared to the challenge posed to a Go program, Deep Blue's computations — possible moves in response to a move, carried 12 cycles into the future — are back-of-the-napkin scribblings.
"If you look at the game trees, there's about 30 possible moves you can make from a typical position. In Go, it's about 300. Right away, you get exponential scaling," said Hearn.

With every anticipated move, the possibilities continue to scale exponentially — and unlike chess, where captured pieces are counted immediately,
Go territory can switch hands until the game's end. Running a few branchesdown the tree is useless: take one step, and it needs to be pursued, exponential scale by scale, until the game end.

According to Doshay, the number of Go's end-states — 10171 — is almost inconceivably smaller than the 101100 different ways of getting there. Without patterns to eliminate whole swaths of choices from the outset, computers simply can't cope with it, at least not within time frames contained by the universe's remaining existence. But to Doshay,
guiding computers with human-rules patterns was wrong from the beginning.

"If you want computers to do something well, you concentrate on the ways computers do things well," he said.
"Computers can generate enormous quantities of random numbers very rapidly."

Enter the Monte Carlo method, named by its
Manhattan Project pioneers for the casinos where they gambled. It consists of random simulations repeated again and again until patterns and probabilities emerge: the characteristics of an atomic bomb explosion, phase states in quantum fields, the outcome of a Go game. Programs like MoGO and Many Faces simulate random games from start to finish, over and over and over again, with no concern for figuring out which of any given move is best.
/// There are always people who become totally obsessed with the technicalities of the game and forget their grand purpose in life.

"At first, I was dismissive," said Hearn. "I didn't think there was anything to be gained from random playouts." But the programmers had one extra trick: they crunched the accumulated statistics, too. Once a few million random games are modeled, probabilities take form. Thus informed, the programs devote extra processing power to promising branches, and less power to less-promising alternatives.

The resulting game style looks human, but aside from a few rough human heuristics, the patterns articulated by our intuitions are unnecessary.

"The surprising, mysterious thing to me is that these algorithms work at all," said Hearn. "It's very puzzling."

Puzzling it might be, but the game is almost over. Hearn and others say that, having started to beat human professionals,
Monte Carlo-based programs will only get better. They'll incorporate the results of earlier games to their heuristic arsenal, and within a few years — a couple decades at the most — be able to beat our best.

What is the larger significance of this? When computers finally triumphed at chess, the world was shocked. To some, it seemed that
human cognition was less special than before. But to others, the competition is an illusion.

After all, behind every machine is the hand that made it.

"There's a strong tendency in humans to have a conceit about how far we've advanced," said Doshay. "But we've only really started programming computers."
Original article:

Thursday, March 11, 2010

The Profile of a Strategic Leader

Therefore a skilled commander seeks victory from the situation and does not demand it of his subordinates. ... He selects his men and they exploit the situation. ... He who relies on the situation uses his men in fighting as one rolls logs or stones. Now the nature of logs or stones is that on stable ground they are static; on unstable ground, they move. If square, they stop; if round, they roll. Thus, the potential of troops skillfully commanded in battle may be compared to that of round boulders which roll down from the mountain heights. - AoW, 5 (Griffith translation)


Mike Montgomery a thinking man's coach

Saturday, March 6, 2010

(03-05) 21:55 PST -- The consummate coach can take the five guys on his basketball team and beat you, and then take your five guys and beat his five guys. In the case of Mike Montgomery, he can build a power at Stanford and then years later find himself cutting down the nets for archrival Cal.

"Your job as a coach is to put your players in a position to be successful," Montgomery said. "Regardless of the situation."

Even if you're at Stanford, which has the most severe academic restrictions of any major-conference program. Or at Cal, where he coaches a freewheeling style very different from what he had on the Farm, with big centers down low.

Last Saturday at Haas Pavilion, Montgomery's Bears locked up the program's first conference regular-season title in 50 years, this after his Cardinal ended a 36-year Stanford drought in 1999.

"I'm sure it seemed weird to some people, going to work for your archrival, but the bottom line is he gets paid to do a job," said Utah State coach Stew Morrill, a close friend and former assistant of Montgomery's. "And boy does he do it well."

Cal athletic director Sandy Barbour put a scare in the rest of the Pac-10 when she brought in the gun for hire two years ago. And Montgomery's put some more notches on his belt. The Bears are 20-9 heading into today's game at Stanford and have all but sealed a second straight appearance in the NCAA Tournament - after finishing ninth under coach Ben Braun in 2007-08.

"It's very pleasing to see this group of seniors grow like they have, together," Montgomery said. "We're playing well right now."

Montgomery, 63, draws little attention to himself.

He was asked if he had gotten any phone calls congratulating him on Cal's title.

"No, people know me," he deadpanned. "Over the years, they know it's better to let me be."

Montgomery is happy for his players, who have been getting slaps on the back in the community.

"I think everybody's excited. A lot of people waited a long time and probably were fearful of being let down again," he said. "When we finally won, it was probably a load off a lot of people's minds. It's been pretty positive."

Winning approach

On Monday, Montgomery showed his players a videotape of all the things they had been doing well lately, from making the extra pass on offense to helping out teammates on defense.

Senior guard Patrick Christopher ate it up.

"Coach sees the glass as half empty most of the time," Christopher said. "So when he pours a little bit of water in there, it gets your attention."

Montgomery is admittedly a no-nonsense type on the court - " I want things done right," he said.

When he came to Berkeley, his resume - he now is 11 wins shy of becoming the 34th Division I basketball coach with 600 - demanded the Cal players' attention.

"Coach has had great teams in the past," senior forward Theo Robertson said. "Everything he says has worked and is proven."

"Obviously we needed some type of direction from Coach," senior point guard Jerome Randle added. "He put us in the right spots on the court to be successful."

/// The key is to explain to the players how an individual effort can improve the overall team result and how it can benefit each individual player.

A chess match

Montgomery considers the game a chess match, and clearly enjoys pre-game strategy sessions and late-game management.

"He is one of the most logical coaches there is," said Butler athletic director Barry Collier, a friend and former Montgomery assistant. "I know that's not going to win many points in a sexy contest."

Besides being an excellent evaluator of talent, Montgomery breaks the game down to a simple formula - if you shoot a higher percentage than you allow, limit turnovers to 10 a game and out-rebound your opponent, you win.

"In a world of chaos, he has unbelievable common sense," Morrill said. "It's a wonderful attribute. He never panics and is able to sort things out."

With the Bears, he's sorted out a roster that is more suited to shooting jumpers than scoring inside.

"We're not big and strong," Montgomery said. "Even if I wanted to be that kind of team, we can't be. We've gone with what we do best. And we've gotten better defensively and fundamentally."

He's given Randle, Christopher and Robertson the freedom to pull up for three-pointers on the fast break and has made peace with the fact that center/power forward Jamal Boykin prefers shooting 15-footers to playing with his back to the basket.

"One of the greatest things he's done is that he's allowed us to play our game," Boykin said. "He's never said, 'Don't take that shot.' He's allowed some unconventional players to still be creative, under his basic structure."

/// Focusing on one's strengths usually create a state of predictability for the well-prepared opposition.

Sister schools

Montgomery is not a flashy guy - the Long Beach native calls himself a homebody who prefers to curl up in a chair - and that helps explain why he is currently wearing a Cal sweater, with some Stanford ones still in the closet.

"There are places where it's national championship or nothing, and the graduation rate is not a factor," Montgomery said. "I don't think I would be very happy at those places."

There are obviously many things that differentiate Stanford, a private university, from Cal, a public school, and the cultures on the two campuses, but they do have similar values when it comes to academics and athletics.

The Cardinal hadn't finished higher than fifth in more than a decade when Montgomery arrived on the Farm in 1986.

"At Stanford, they didn't really feel like they could win," Montgomery said. "It didn't seem to be in the cards. 'This is what we are.' "


From 1986 to 2004, Montgomery led the Cardinal to 12 NCAA Tournament appearances, including the 1998 Final Four.

"One of the best things Mike did at Stanford was convince everybody nationwide that there is no excuse for not being a great student and a great basketball player," Collier said. "That's a testament to his ability."

After Stanford

Montgomery left Stanford to try his wares at the highest level, the NBA. He was 68-96 in two seasons with the Golden State Warriors, learning for himself how much more power the players wield than the coaches.

"The whole dynamic changes," he said.

He then worked as a television commentator for two years but was anxious to jump back into the college ranks when Barbour came calling.

"He is an expert at his craft," said Barbour, who was never concerned that Montgomery had become synonymous with Stanford. "But even more importantly, he has a passion for creating something special on behalf of the institution and the young men in the program."

Montgomery got to coach at a Pac-10 school that he respected, got to keep living in the Bay Area and got to work with his son, John, the Bears' director of basketball operations.

And simply, he got to coach. That's what Mike Montgomery is, after all, a coach.

"I like the way the game fits together," he said. "At the same time, it's made up of people with dreams and aspirations. And the bottom line is how you blend the different types of personalities into the same mind-set. That's where the challenge comes in."

Montgomery file

-- 589-264 record (236-123 in Pac-10, fifth all-time)

-- First coach in Pac-10 to win title with two different teams

-- Five Pac-10 titles

-- One Final Four and two Sweet 16 appearances

-- 12 straight 20-win seasons

-- 11 straight appearances in NCAA Tournament

E-mail Vittorio Tafur at

This article appeared on page B - 1 of the San Francisco Chronicle

Tuesday, March 9, 2010

Be Aware of The Media-Driven Expert

Whenever a new expert enters into our reality, we usually ask them about their approach. Our questions focus on their objectives, their tactics, their means and their modes. Overall, we do our own footwork.

Honouring the Worthy (Tai Gong Six Teachings-Civil Teaching Chapter 9)

King Wen asked Tai Gong:”Among those I rule, who should be elevated, who should be placed in inferior positions? Who should be selected for employment, who to cast aside? What affairs should be banned and what affairs need control?”

Tai Gong said:”Elevate the worthy and place the unworthy in inferior positions. Choose the sincere and trustworthy, eliminate the deceptive and artful. Prohibit violence and chaos, stop extravagance and ease. Accordingly, one who exercises kingship over the people recognizes the ‘six hazards’ and ‘seven harms’.”

King Wen said:“I would like to know more about them.”

Tai Gong said:”For the ‘six hazards’:

“First, if your subordinates build large palaces and mansions, pools and terraces and amble about enjoying the pleasures of scenery and female musicians, it will ‘injure’ the King’s virtue.”

“Second, when the people are not engaged in agriculture and sericulture but instead give rein to their tempers and loitering about, disdaining and transgressing the laws and prohibitions, not following the instructions of the officials, it harms the King’s influence.”

“Third, when officials form cliques and parties - obfuscating the worthy and wise, obstructing the ruler from feeling the pulse of the state - it ‘injures’ the King’s authority.”

“Fourth, when scholars are contrary-minded and conspicuously display ‘high moral standards’ - taking such behavior to be powerful expression of their disposition - and have private relationships with other feudal lords - slighting their own ruler - it ‘injures’ the King’s awesomeness.”

“Fifth, when subordinates disdain titles and positions, are contemptuous of the administrators, and are ashamed to face hardship for their ruler, it ‘injures’ the motivation of meritorious subordinates.”

“Sixth, when the strong clans encroach on others - seizing what they want, insulting and ridiculing the poor and weak - it ‘injures’ the work of the common people.”

“The seven harms:”

“First, men without wisdom or strategic planning ability are generously rewarded and honored with rank. Therefore, the strong and courageous who regard war lightly take their chances in the battlefield. The King must be careful not to employ them as generals.”

“Second, they have reputation but lack substance. What they say and their stand is constantly changing. They conceal the good and spread the bad. They are always seeking short-cuts. The King should be careful not to make plans with them.”

“Third, they make their appearance simple, wear ugly clothes, spouting no regard for office in order to seek fame, and talk about non-desire in order to gain profit. They are ‘fakes’ and the King should be careful not to bring them near.”

“Fourth, they wear strange caps and belts and their clothes are very elaborate. They listen widely to the disputations of others and speak speciously about unrealistic ideas, displaying them as a sort of personal adornment. They dwell in poverty and live in tranquility, deprecating the customs of the world. They are cunning people and the King should be careful not to favor them.”

“Fifth, with slander, obsequiousness and pandering, they seek office and rank. They are reckless, treating death lightly, out of their greed for salary and positions. They are not concerned with major affairs but move solely out of avarice. With lofty talk and specious discussion, they please the ruler. The King should be careful not to employ them.”

“Sixth, they have buildings elaborately carved and inlaid. They promote artifice and flowery adornment, in turn interrupting agriculture. You must inhibit them.”

Seventh, they con people, practice sorcery and witchcraft, advance unorthodox ways and circulate inauspicious sayings, befuddling good people. The King must stop them.”

“Now when the people do not give their best, they are not our people. If the officers are not sincere and trustworthy, they are not our officers.

- Paraphrased from Dr. Sawyer translation of the Seven Military Classics of Ancient China

For Psychic, Suit Came as Surprise

Published: March 4, 2010

He calls himself “America’s Prophet,” a psychic, trained by Nepalese monks in the art of time travel, who can foretell the future of the stock market. But to the authorities, Sean David Morton is simply a fraud — and a really, really bad psychic.

In a case that seems ripped from the pages of the satirical newspaper The Onion, the Securities and Exchange Commission sued Mr. Morton for securities fraud on Thursday, claiming he swindled more than $6 million from investors by promising them “piles of money,” along with spiritual happiness. “I have called ALL the highs and lows of the market giving EXACT DATES for rises and crashes over the last 14 years,”

Mr. Morton claimed at one point, according to the documents filed in connection with the case. Next to the Ponzi scheme orchestrated by Bernard L. Madoff, the Morton case might seem like little more than a footnote in the annals of financial fraud. But the story is so unlike the usual Wall Street fare — it touches on late-night talk radio, a company called Magic Eight Ball and the Dalai Lama — that even in this post-Madoff world it all seems a bit hard to fathom.

By his own reckoning, Mr. Morton is a modern-day Nostradamus.
According to his Web site,, the Dalai Lama sent him to a monastery in Nepal, where a fusion of Eastern spirituality and Western psychic techniques helped him develop the “spiritual remote viewing” system. He told The Los Angeles Times in 1991 that he grew up in Texas, the son of a public relations official for NASA. His dinner table companions, he said, were astronauts, who told him of their sightings of extraterrestrial life.

Mr. Morton’s reach was broad. He solicited investors through a newsletter with 20,000 subscribers, run through his Delphi Investment Group; his Web site; and his frequent appearances on radio shows like “Coast to Coast,” a late-night syndicated program focused on the paranormal. He and his wife, Melissa, created three unregistered vehicles for their investors.

One was called Magic Eight Ball Distribution.
The S.E.C. named Mrs. Morton and a religious organization the couple founded as relief defendants, meaning that the regulator is seeking to retrieve profits from them but has not filed civil charges against either.

According to the S.E.C., Mr. Morton pledged to invest the money he collected with foreign currency traders, who would act according to his psychic revelations. The strategy purportedly earned returns as high as 117 percent over five-month periods.
The reality, the S.E.C. claims, was less impressive — and fraudulent.

In court filings, the agency claims that Mr. Morton actually deposited only $3.2 million into the trading accounts. The rest was funneled to various entities, with $240,000 sent to the Prophecy Research Institute, a nonprofit religious group set up by the Mortons. His predictions weren’t particularly accurate, either.

On a Nov. 21, 2001, radio broadcast, Mr. Morton predicted that the Dow Jones industrial average would rise between April and June of 2002, cresting at “12,000 or so” by December of that year. According to the S.E.C., the index fell that year, ending at 8,341. “Morton’s self-proclaimed psychic powers were nothing more than a scam to attract investors and steal their money,” George S. Canellos, the director of the S.E.C.’s New York regional office, said in a statement.

Neither of the Mortons could be reached for comment on Thursday. But as part of a 2009 lawsuit aimed at halting an S.E.C. investigation, the Mortons argued that they were the targets of “two (or more) dishonest and incompetent S.E.C. employees, who apparently need to justify a trip to California in order to visit Disneyland and eat In And Out Burgers at the taxpayers’ expense.”

A federal judge dismissed that lawsuit in December. Diana B. Henriques contributed reporting.

In summary, one can never tell a book by its cover. ...

Sunday, March 7, 2010

Another Classic AoW Principle That Always Works

Our associates has reported to us that they have seen various San Francisco and Silicon Valley startups who operate on the fly while not knowing their goal and their priorities. They believed in being flexible and agile to the conditions of the marketplace. The outcome is usually a waste of time and resources. The cause is due to a lack of research and poor strategic assessment of their marketplace.

While believing that their operating process is flawless, these entrepreneurs function in a trial and error mode. Some of them do not even have a tangible business plan. Retrospectively, they are maneuvering from the seat of their pants. ... It sometimes amazes us that they have received venture capital.

“In antiquity, when the Yin dynasty arose, they had I Chih who served in the Hsia. When the Chou arouse, they had Lű Ya [ The T’ai Kung ] in the Yin. Thus enlightened rulers and sagacious generals who are able to get intelligent spies will invariably attain great achievements. This is the essential of the military, what the Three Armies reply on to move.” - AoW 13

Nothing changes then. Nothing changes now. Businesses and ventures who have succeeded in this global economy, are those who have a superb intelligence gathering system, a thorough strategic assessment process and a well-built strategic plan.

Compass Rule: Always assess the big picture before making your next move.
More food for thoughts:
  • Do you assess the big picture every month?
  • Are your plans based on your gathered intelligence?
  • Do you have a well-built business plan?

Dot-com bust ripples still felt 10 years later
Tom Abate, Chronicle Staff Writer
Sunday, March 7, 2010

With just $20,000 in cash but gobs of gumption, ambition and talent, Ethan Bloch and two partners are turning an idea into a Web-based business.

"I came to San Francisco to build a big company that does important things," said the 24-year-old Baltimore native.

Last year, Bloch co-founded, which creates personal and professional profiles of people by gathering information from social networks, data it then sells to marketers.

"We're either going to make it big or fail spectacularly," said Bloch, who became fascinated with the region as a teenager growing up during the dot-com era.

"It was definitely inspirational," Bloch said.

Wednesday will be 10 years to the day that a plunge in the Nasdaq index punctured the dot-com bubble and ended the most frantic race to riches since the Gold Rush.

From its March 10, 2000, peak of 5,132.52, this index of tech and biotech stocks fell to a low of 1,114.11 on Oct. 9, 2002. The bust caused a brief recession and had longer-lasting - but not entirely negative - impacts on the region's startup economy.

Today the Nasdaq is muddling along at 2,326.35, where it closed Friday. But despite another recession and a harsh environment for raising money, the region remains an entrepreneurial mecca.

"Silicon Valley is a state of mind," said Oliver Muoto, 41, who co-founded a $94 million Internet startup in 1998 that sold at a huge loss four years later.

"People came out here knowing they would be successful," said Muoto, who now runs Metablocks, a music software company in Menlo Park. "It was a time of excess."

Nationwide data provided by the National Venture Capital Association tell part of the story.

In 1999 and 2000, Wall Street invested in 534 venture-backed initial public offerings.

Those IPOs made huge profits for venture capital firms, which plowed money back into startups. In 2000, at the peak of the bubble, VCs made nearly 8,000 investments valued at $100.5 million.

But in recent years, as Wall Street has shown less appetite for IPOs, VCs have made fewer investments in startups.

In 2008 and 2009, the association said, a total of just 18 venture-backed companies went public. So far in 2010, seven companies have delayed or postponed IPOs, while 11 others that did go public, including Hayward's Anthera Pharmaceuticals, had to cut their share prices first.

Without Wall Street to offer a profitable "exit strategy" for early stage investments, venture funds have been putting less money into startups. In 2009, venture firms nationwide made just under 2,800 deals worth $17.7 million. Silicon Valley continued to get the lion's share of startup cash - 39 percent last year - but there is far less money sloshing around the region than in the past.

"Venture capital is going through a restructuring," said John Taylor, research director for the venture capital group.

Too much money
Geoff Yang, a founding partner of Redpoint Ventures, a venture capital firm in Menlo Park, said the dot-com era proved that bigger was not better when it came to funding startups.

"The venture capital industry can only absorb a certain number of dollars," Yang said, before too much money starts chasing the finite number of ideas with the home run potential that VCs expect.

Veteran entrepreneurs look back on the dot-com era as an aberration.

Steve Perlman, 48, who worked at Apple in the late 1980s and helped start many companies including WebTV Networks Inc., which Microsoft Corp. acquired in 1997 for $503 million, said the tech sector was always eccentric.

"I remember when I first went to Atari in 1982 there was a guy designing an Indiana Jones game who liked to crack a leather whip in the halls," said Perlman, who is developing a Web-based game-playing site,

But many dot-com entrepreneurs lacked the personal commitment and fiscal discipline necessary for success, he said.

"During the WebTV startup, there was a point when we were almost flat out of cash and I had to mortgage my house," Perlman said. "I came very close to losing everything."

The dot-com era's stock-option millionaires created an expectation of quick riches, said Elizabeth Charnock, chief executive of Cataphora, a private firm in Redwood City that does sophisticated information sifting for law firms and investigative agencies.

Charnock, 43, who came to Silicon Valley in 1989, worked for some large companies before getting into a dot-com startup that blew up so disastrously that, when she started Cataphora in 2002, she avoided venture capital or angel financing.

"It's either revenue or it does not exist," said Charnock, who employs about 70 people and bills in excess of $10 million.

"One of the damaging things the bubble did is that everybody is still thinking that is what they should be able to achieve," she said, "to work like dogs for two years and make millions when it takes a lot longer to build a business."

But perhaps today's young entrepreneurs have learned some lessons from the dot-com excess, and from the necessity of adapting to the near drought in venture capital.

Lessons of failure
Bloch said last week he attended a standing-room-only event called FailChat, an offshoot of FailCon, a conference held last year in San Francisco. The idea is to get entrepreneurs to share the many lessons taught by failure - such as how important it is to create products, generate sales and earn profit.

"We were founded in January of last year and we turned a small profit in December," Bloch said proudly.

E-mail Tom Abate at
This article appeared on page D - 1 of the San Francisco Chronicle