Growth5 Blog

Wednesday, October 20, 2010

Can the Twitter Mood Predict the Stock Market?

According to this article, the overall mood on Twitter can predict how the stock market is going to move in the following two to six days.

Unfortunately, the two to six day time horizon is a bit too long to predict exactly when these shifts are going to take place, but it's an interesting study. Here are the highlights:
1. "The report (pdf), authored by Johan Bollen, Huina Mao and Xiao-Jun Zeng, says that the degree of "calmness" of the Twitterverse can predict -- with 87.6 percent accuracy -- how the Dow Jones Industrial Average will move, two to six days before the movements occur."

2. The researchers examined two existing Twitter mood tracking tools: OpinionFinder and Google-Profile of Mood States.

3. Researchers were surprised that it was "calmness," not positive/negative moods, that ended up being the better predictor of future market conditions. The researchers say their findings "offer no information on the causative mechanisms that may connect public mood states with DJIA values in this manner." While "calmness" might predict market movements, it doesn't necessarily cause them.
Sean Carton forwarded this article to me. In his email he asked, "so will people now start trying to "pump and dump" the Twitterverse? :)"

Or most certainly "short and distort" it.

Thanks Sean!

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Friday, October 15, 2010

Five Secrets to Entrepreneurial Success

In this article, Virgin Group (360 companies) Chairman, Richard Branson, discusses his five secrets to entrepreneurial success. The highlights:

1. Enjoy What You Are Doing
Starting a business takes a lot of hard work and a lot of your time. Might as well enjoy that time.
"A businesswoman or a businessman is not unlike an artist. What you have when you start a company is a blank canvas; you have to fill it. Just as a good artist has to get every single detail right on that canvas, a businessman or businesswoman has to get every single little thing right when first setting up in business in order to succeed. However, unlike a work of art, the business is never finished. It constantly evolves."
2. Create Something That Stands Out
"...you’ve got to do something radically different to make a mark today."
See the Blue Ocean Strategy.

3. Create Something That Everybody Who Works for You is Really Proud of
Your employees are your most important asset. If they're proud of what they're doing, there's an excellent chance your product will show it.

4. Be a Good Leader
To be a good leader, you need to be a good listener.
"You need to know your own mind but there is no point in imposing your views on others without some debate. No one has a monopoly on good ideas or good advice."
5. Be Visible
Employees and clients will have the best suggestions and ideas. Ask them how things could work better, what they tell you will be incredibly valuable to your business.

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Thursday, October 7, 2010

Italian Lessons: Learning Leadership on a Bike

As you may recall from this post, our Chief Marketing Officer, Greg Conderacci, spent just over five days in late August cycling 1,001 miles as part of the 1001 MIGLIA ITALIA ultra-long-distance bike race that started and ended in Nerviano, Italy. His goal was to finish in five days.

Greg ended up finishing in 5 days, 4 hours and 37 minutes – an average of 193 miles a day. During all that time on the bike, Greg learned some valuable leadership lessons. Here is Greg's report from the ride:
CHIUSI DELLA VERNA — It’s 4 a.m. I’ve just raced my bicycle 350 miles across northern Italy, climbing thousands of feet through soaring mountain passes. I have 650 miles to go.

I’ve slept about an hour in the last 48. I’m at a race checkpoint in this tiny town and before me is breakfast: a bowl of tepid rice with a few bits of vegetables, crusty bread and a glass of water. I have two thoughts: first, breakfast doesn’t look too bad; second, thank God I am not lost.

It’s 1001 Miglia Italia, one of the longest bicycle races of its kind in the world. For me, the Miglia is a unique laboratory to test the power of a central business question: “Do you know where you’re going?”

Much is made in the literature of leadership about vision, direction and the clear communication of both. Great leaders can chart a path through difficult and dangerous times.

So, what does that have to do with a bike race?

For years, I have found that business imitates ultra-long-distance cycling. The 1001 Miglia is not just a race; it is a 1,000-mile exercise in navigation under duress. In the race, there are few route signs and almost no posted road names. It’s incredibly easy to get lost.

Like some leaders, Italians don’t think about getting around the way we do. They use their experience, instinct and knowledge to find their way. We use signs.

Leadership lesson: As a leader you may know where you’re going, but the people following you are looking for signs.

The Impact of confusion

Although I was actually lost only once, I often felt that I was. It was enormously debilitating, draining energy that could have gone into turning the pedals.

The impact of confusion becomes clear — right from the 9 p.m. start. The Italians in the pack tear down the road at more than 25 mph as if the race is 25 miles and not 40 times that long.

We handful of Americans let them go, but as soon as their taillights disappear into the night, we begin to worry: “Is this still the right road?” Instantly, we ride slower, groping our way through the night.

We are simulating perfectly a high-performance team that has just been given unclear direction. We don’t want to go the wrong way; we don’t want to waste time standing still; we don’t want to go alone into the featureless night.

Finally, we make a decision and commit to it. Fortunately, just down the road, a painted white arrow points the way. Placed by the organizers, these are few and far between, but we are overwhelmingly grateful for this one. The feeling of relief is immediate and energizing.

But the feeling lasts only until the next decision point. Did we miss a turn or should we continue on?

Is it REALLY obvious?

Like many leaders, the Italian organizers do not give directions when they believe the choice is obvious. We soon discover that what is obvious to some is not obvious to all.

Leadership lesson: Just because you wrote the memo six months ago, don’t assume everybody remembers it. It never hurts to reaffirm the key principles of your leadership.

We roll along, reassured that one of our number has a GPS. But we soon learn it’s a two-edged sword. The GPS wants to show us the shortest way between points and not necessarily the actual race course. Also, with hundreds of turns on the twisty, 1,000-mile course, it sometimes misses one.

Leadership lesson: Don’t trust too much to technology to communicate your message. The e-mail, the blog, the Tweet, the e-newsletter are all fine. But they’re not as good as hearing it from you, face to face.

Your view and theirs

As you might expect, a ride around Italy offers amazing scenery: breath-taking descents through hairpin turns; ancient castles perched on hilltops; endless vineyards laden with grapes; startling vistas of villages nestled along the sea. But soaking up the view can easily lead to a missed turn.

Leadership lesson: News — even good news — can blur your message and confuse your direction. Employees wonder: When things change, does the direction change, too? Be careful to explain how developments do or don’t impact your plan.

Often, we ride through towns whose street patterns were created by oxcarts and trod by the Roman legions. In these villages, the streets can run in every direction, with no clear main road.

This instant multiplication of choices abruptly slows progress, especially in mountain towns. The reason is clear: risk. One wrong turn and a fast 20-minute descent could easily lead to hours of extra climbing.

Leadership lesson: Make your direction extra clear when your followers face confusing choices or when risk increases unexpectedly.

It sounds right but...

One morning, after four hours’ sleep, I roll swiftly along a road well-marked by those wonderful painted white arrows. “At last,” think I, “the organizers have given us a clear route.”

But the arrows only lead down a blind alley and I find myself completely lost for the first time. Turns out, many rides use similar white arrows and I am following the wrong ones.

Leadership lesson: Watch out for messages that sound similar to yours but lead in a different direction. For example, you urged staff to cut costs, but not at the expense of customer service. Yet, somehow, the last part of that message got lost.

Finally, covering 1,000 miles on a bike in five days while climbing the equivalent of two Mount Everests can be a little tiring.

Four days and 750 miles into the race, I am becoming very, very stupid. Running on about 10 hours’ total sleep, I struggle to remember even the simplest things. I am cranky. I am panicky about losing my way. I stop repeatedly to ask directions. I am having difficulty clipping my feet into my pedals.

Relative to my fellow riders, I am doing well. However, ahead lie some of the steepest climbs and sharpest descents on corkscrew roads with marginal surfaces. These are not the kind of roads to tackle half- asleep.

I stop and sleep for six hours, which moves me far back into the pack. But I ride well the last day of the race and finish healthy.

Leadership lesson: Even though everybody seems to be doing fine and the goal is in sight, don’t push your followers too hard. Their ability to sustain your vision and follow your direction erodes with exhaustion. Better to do the job right (and maybe even a little late) than to press on to disaster.

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