on 04-Sep-2022 (Sun)

Taleb posits two worlds: Mediocrestan and Extremistan. He describes Mediocrestan by having the audience imagine a group of 100 people and their distribution of weights. Then he says to determine how the average weight of the group would change if we added the heaviest person in the world to that group. It turns out to not affect the average that much – even if we add a 1,000 pound person, it shifts the average by only 0.5% or so. This is the world of the normal Gaussian distribution that we understand very well with standard deviations and the like.

Now do the same thought experiment, but use people’s wealth instead. Imagine a group of 100 typical people, and their average wealth. Now add Bill Gates to the group. At this point, 100 of the 101 people in the group are below average in wealth, and Bill Gates has approximately 100% of the wealth of the group. This is the world of Extremistan, where outliers can blow up the normal distribution. This is the world of the Black Swan.

And what’s interesting is that we are so bad at dealing with Extremistan. We just don’t intuitively get it, even though we are surrounded by examples of it. Finance and wealth. Book publishing (a significant portion of all book sales are Harry Potter books). The music industry. eBay. We live in an Extremistan world, but our intuition (evolved in a simpler time without network effects) is still stuck in Mediocrestan. So we have to beware of our instincts, because they will get the wrong answers. And we have to beware of charlatans using Mediocrestan theories because they are calculable – it’s like physicists treating everything as a simple harmonic oscillator because that’s the only equation they can solve.

In mathematics and science, a nonlinear system is a system in which the change of the output is not proportional to the change of the input.

A star is defined as a business which is the #1 player in its market niche, and its market is growing fast (at least 20% - 30% per year). These two simple characteristics, set apart the business success stories, which make their backers tens of millions of pounds, from the run-of-the-mill businesses that just about breakeven but never make anyone rich.

If you are founding a business, look for a gap in the market where you will be number one from the beginning. And look for a niche big enough that you can sustain rapid growth for many years. Once you establish a leadership position, do everything you can to retain it. More importantly, if you fail to get a leadership position, or you find your niche is not as big as you thought, it is better to cut your losses and direct your efforts elsewhere.

If you are an investor, look for embryonic star businesses that you can back, where you can have an active say in their management (and ensure they remain stars).

If you lack the resources to found or invest in a business, try your utmost to find a star business and go to work for them – the ‘first 20 people’ in on the ground floor can reap the benefits later on by getting shares or options. What’s more, working for a star business is much more fun and a much better learning experience than working for big corporates.

Koch exhorts every reader to try one of these three: found, invest in or work for a star business.

“Between 95% and 99% of businesses are not stars. For every 20 ideas you have, you can confidently junk 19 of them, because they won’t be ideas for a star venture. This saves an awful lot of money, sweat, toil and tears. Star ventures are rare...but they contribute over 95% of long-term value and probably at least 120% of the cash ever generated.”

To use the chart, analysts plot a scatter graph to rank the business units (or products) on the basis of their relative market shares and growth rates.

Cash cows is where a company has high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, yet corporations value owning them due to their cash-generating qualities. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. Cash "milked" is used to fund stars and question marks, that are expected to become cash cows some time in the future.

Dogs, more charitably called pets, are units with low market share in a mature, slow-growing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off once short-time harvesting has been maximized.^[6]

Question marks (also known as a problem child or Wild dogs) are businesses operating with a low market share in a high-growth market. They are a starting point for most businesses. Question marks have a potential to gain market share and become stars, and eventually cash cows when market growth slows. If question marks do not succeed in becoming a market leader, then after perhaps years of cash consumption, they will degenerate into dogs when market growth declines. When shift from question mark to star is unlikely, the BCG matrix suggests divesting the question mark and repositioning its resources more effectively in the remainder of the corporate portfolio.^[6] Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

• Stars are units with a high market share in a fast-growing industry. They are graduated question marks with a market- or niche-leading trajectory, for example: amongst market share front-runners in a high-growth sector, and/or having a monopolistic or increasingly dominant unique selling proposition with burgeoning/fortuitous proposition drive(s) from: novelty, fashion/promotion (e.g. newly prestigious celebrity-branded fragrances), customer loyalty (e.g. greenfield or military/gang enforcement backed, and/or innovative, grey-market/illicit retail of addictive drugs, for instance the British East India Company's, late-1700s opium-based Qianlong Emperor embargo-busting, Canton System), goodwill (e.g. monopsonies) and/or gearing (e.g. oligopolies, for instance Portland cement producers near boomtowns),^{[ citation needed ]} etc. The hope is that stars become next cash cows.

Stars require high funding to fight competitors and maintain their growth rate. When industry growth slows, if they remain a niche leader or are amongst the market leaders, stars become cash cows; otherwise, they become dogs due to low relative market share.

Typically between the ages of 3.5 years - 7 years you should begin to hear correct productions of “SH.”

However, if you notice your child struggling to accurately produce this sound, you shouldn't wait until age 7 to begin practicing.

For a quick tip, try saying “eeeeeee.” Then, bring your lips into a rounded position, keeping your voice on. You should automatically produce a “SH” sound just by changing the lip position. It should sound like “eeeeeeessshhhhhh.” How cool is that? The reason this works is because the “eeeee” helps get your tongue in the correct position. The rounded lips take care of the rest.

How to Produce the “SH” Sound

In order to say a correct “SH” sound, how the tongue is positioned in the mouth is extremely important. The tongue should be in a neutral position in the mouth - level, and not too high or too low. The sides of the back of the tongue should touch the insides of the top back molars. This is a good way to determine if the tongue is at the right level. The tongue tip should point towards the front teeth, and sit just slightly behind the two front teeth.

Once the tongue is in this position, round the lips and blow air over the tongue. This is what makes the “SH” sound! Try it yourself.

Identify “SH” Words in Everyday Speech

A child has to be able to identify correct “SH” words in order to change their productions. So make it a point to point out words with “SH” in everyday speech. You should also make it a point to trying using these words routinely in your daily conversations, and have your child point them out every time they hear one.

Have fun and make it a game! See who can identify the most “SH” words in a day.

Identify Correct Vs. Incorrect Productions

Here is another simple but very effective game you can play with your child to improve their “SH” sounds. Say the “SH” sound for your child correctly and incorrectly - then have your child identify and spot the difference.

Keep tabs on this to monitor their accuracy. You will want to make sure your child is 100% accurate in their ability to discriminate between correct and incorrect productions before beginning actual practice of the sounds.

Once your child understands the correct placement, start by practicing the “SH” sound in isolation - this means just the “SH” sound by itself, and not in words. Have your child imitate your productions after you. It can help many children to have a direct model. Over time, try to fade your modeling and allow your child to say the “SH” sound on their own.

When your child can produce the “SH” sound in isolation easily, it is then time to move on to syllable level. You will continue practicing in very structured contexts. The typical order of progression a speech therapist would follow in treatment includes: isolation level, syllable level, word level, phrase level, sentence level, conversation level.

Activity Ideas

To keep your child engaged in practice you have to keep things new and exciting! What’s great about speech practice is that almost any activity can be used to improve speech and language skills.

First, decide on an activity that your child loves. Maybe they love arts and crafts, are very active and love playing outside, or they’re competitive and love a fun board game. Whatever it may be, find a way to work in some practice of the “SH” sound into this activity. You can do this by having your child practice a few productions in between each of their turns.

Let Your Child Be The “Teacher”

Take it from me: Kids love this activity! Flip the roles and let your child be the one to ask you speech questions for a change! Many kiddos think it's exhilarating to be in the "driver's seat" and do the quizzing themselves.

Let’s pretend that you are practicing the /th/ sound with your child. You can try letting your child present the target words to you - like "throw," "think," or "thunder." As you play along, make sure to pronounce some words correctly, and others incorrectly. Have your child listen attentively and monitor how well they can identify your mistakes and then promptly correct them for you - this serves as indirect practice for them. Even though your child is playing the teacher, they’re really doing the work!

SH from /s/

1. Have your child say /s/ (ssssssssss).
2. While you child is saying the /s/ sound have them pucker their lips slightly and move their tongue back slowly until you hear a good SH sound.

SH from “ee”

1. Have your child say “ee.” Then have them say “ee” in a whisper with no voice.
2. While whispering the “ee” sound have your child move their lips into a pucker position. This should result in a SH sound.

• Visual Cues

Your little ones are likely already very familiar with the /sh/ sound in the form of “shushing”. When a child sees someone with puckered lips with their finger resting on them, they usually recognize the symbol for being quiet. Use this familiarity to help teach cue your child to make the /sh/ sound. Put your own finger to your lips in the “shhh” symbol, and encourage your child to “shush” you back. Gradually, your child will become more comfortable with making the /sh/ sound and will be able to use it in syllables and words as well.

• Tactile Cues

When the /sh/ sound is pronounced correctly, a small stream of air escapes from between the lips. Have your little one put her hand in front of your lips as you make the sound to feel the air. Then, ask her to put her hand in front of her own mouth while she makes the sound. Can she feel the air? This is a sign she can use to tell if she is making the sound right.

• Awesome /sh/ Activity

Ask your child to help you instate “quiet time” around the house before naptime or bed time. Walk around with your child “shh-ing” everything: “shhh, door! Shhh, couch! It’s naptime!” This is a silly way to work in fun practice that kids love. In just a few minutes of “shh-ing” the house, your child will get to say the /sh/ sound tons of times!

To be successful, a company should have a portfolio of products with different growth rates and different market shares. The portfolio composition is a function of the balance between cash flows. High growth products require cash inputs to grow. Low growth products should generate excess cash. Both kinds are needed simultaneously.

—  Bruce Henderson^[7]

As originally practiced by the Boston Consulting Group,^[11] the matrix was used in situations where it could be applied for graphically illustrating a portfolio composition as a function of the balance between cash flows.^[3] If used with this degree of sophistication its use would still be valid. However, later practitioners have tended to over-simplify its messages.^{[ citation needed ]} In particular, the later application of the names (problem children, stars, cash cows and dogs) has tended to overshadow all else—and is often what most students, and practitioners, remember.

Perhaps the most important danger^[11] is, however, that the apparent implication of its four-quadrant form is that there should be balance of products or services across all four quadrants; and that is, indeed, the main message that it is intended to convey. Thus, money must be diverted from 'cash cows' to fund the 'stars' of the future, since 'cash cows' will inevitably decline to become 'dogs'. There is an almost mesmeric inevitability about the whole process. It focuses attention, and funding, on to the 'stars'. It presumes, and almost demands, that 'cash cows' will turn into 'dogs'.

The reality is that it is only the 'cash cows' that are really important—all the other elements are supporting actors. It is a foolish vendor who diverts funds from a 'cash cow' when these are needed to extend the life of that 'product'. Although it is necessary to recognize a 'dog' when it appears (at least before it bites you) it would be foolish in the extreme to create one in order to balance up the picture. The vendor, who has most of his (or her) products in the 'cash cow' quadrant, should consider himself (or herself) fortunate indeed, and an excellent marketer, although he or she might also consider creating a few stars as an insurance policy against unexpected future developments and, perhaps, to add some extra growth. There is also a common misconception that 'dogs' are a waste of resources. In many markets 'dogs' can be considered loss-leaders that while not themselves profitable will lead to increased sales in other profitable areas.

Using Mnemonic Techniques

To illustrate the phenomenon of increasing returns to scale, and the incredible competitive advantage the Ford Motor Company has gained in the early 1900s over its competitors though specialization of labor based on semi-automated assembly lines, the student might wish to note that in 1914 the FMC produced 270,000 cars with 13,000 employees; while the other 299 American auto companies at the same time, with 66,000 employees produced just 290,000 cars. The example posses a serious dilemma to a database developer. Each of the number quoted makes up useless garbage knowledge. However, taken together, the figure combine into a vivid and compelling illustration of increasing returns to scale and their importance in running any kind of business. Demanding from the student the understanding of increasing returns to scale deprives the example from its strong emotional overtones, as the student might identify him or herself with Henry Ford’s business cunning. Depriving the example from numbers takes a great deal of its vividness. The two proposed solutions are: (1) limit the question to an estimated figure that shows the FMC lead in the market, and (2) use Cloze deletion to dismember the above sentence, and use mnemonics to memorize the involved numbers. The first approach might look as follows:

Q: What was the share of the American automobile market commanded by the Ford Motor Company in 1914?

A: Close to 50%

or using Cloze deletion and mnemonic techniques:

Q: In 1914 the Ford Motor Company produced 270,000 cars with 13,000 employees; the other ... American auto companies, with 66,000 employees produced just 290,000 cars.

A: 299 (Ford turns on a light switch to see how many competitors he has got, and ... only two cats spring up turning their tails)

The seemingly flippant comments in the parentheses above are part and parcel of mnemonic representation. In the example above, an eleven-member peg list has been used with the number two represented by a light switch (the switch has two states: on and off), and nine represented by a cat ("cat has nine lives").

As the analysis of intractable items in numerous databases show that numbers take the lead in making items indigestible to human memory, the use of numbers in databases of all sort should be limited to the absolute minimum. As the discussed database on microeconomics was notably sparse in numbers (mathematical formulas do not count here), the above example [ed. Ford Motors early edge example] was a notable exception, and, perhaps for that reason, did not cause any serious recall problems. However, had there been more such numerically saturated cases, the issue could have started being a problem.