Think Further

Congratulations! Today is the day of your wedding, the most precious day of your life. You look stunning and so does your loved one. All of your family and friends are present. The venue looks beautiful. The sun is shining and everyone is smiling. You both made your vows and now everyone is raising a glass of champagne in order to celebrate your love. Everything is perfect, but for one fact, you don't actually like champagne. Neither do many of your guests. Everyone drinks it, but it doesn't necessarily mean that they like it.

Maybe you do like champagne, but many people (including me) don't. I find the taste just okay. However, every time that I want to celebrate something meaningful, I suddenly feel the urge of popping a bottle of champagne. After all, that's what people do when they get married, get promoted, buy their first house, graduate from college or simply start the New Year.

The truth is that everyone knows that drinking champagne is not about the taste of it, it's about the ritual: Getting a cold bottle with a fancy French label, popping the cork, and finally, making a toast. Champagne is the drink that you share with the people you care about and celebrate your achievements with. The taste truly is secondary.

When people are designing a business plan, they should consider the champagne case. If you wish to be truly successful, you must think further than simply the utility of your product or service. There already are too many good options out there. You must find a way to make your offer meaningful and part of your customers lives. Renowned restaurateurs understand that they are selling much more than fancy food, they are selling emotions. It's about how the food, ambience and service makes you feel. It's about the taste, smell, texture, what you see and what you hear. It's about stimulating all of your senses to make that dining experience truly remarkable. In a way, that's what a bottle of champagne does. Take a look at the picture below; it probably makes you reminisce. By being attached to the concept of celebration, champagne is present in the most special moments of your life. How priceless is that?

Why You Should Fail

"You are a failure."

The sentence above is very harsh, isn't it? Maybe you’ve heard it before or not. However, we can all imagine how it would feel to hear that from someone we love or look up to. It would hurt, and we would not feel good about ourselves.

From early on we learn that failing is bad and succeeding is good. Through thousands of examples we see that those who fail live horrible lives and those who succeed live the most awesome lives. The first, we pity. The second, we admire.

When we are kids, parents and professors teach us about the dangers of failure. They say that if we fail, we won´t pass our grade and we´ll stay behind everyone else. They say that if we keep failing, we´ll become a bump and no one will want to be anywhere near us. Indeed, failing seems very frightening.

I´m not here to say that failing is good and succeeding is bad. On the contrary, failing sucks & it feels bad and succeeding is good & it feels awesome. No one can say otherwise. However, what if failing is a necessary evil?

For most people that didn´t truly succeed, the case is not that they failed every time that they tried to break out of their shell, the so called comfort zone. They didn´t truly succeed because they stayed in their shell. They were too afraid of trying, too afraid of failing.

Now think of someone that failed, someone that is going through real hardship. This person doesn´t have much more to lose. Because of that, fear has been stripped away; they have nothing to lose by trying.

Think of some of the greats, those that we truly admire: Walt Disney, Thomas Edison, Oprah, Steven Spielberg, J. K. Rowling, Einstein, Van Gogh, Darwin, Henry Ford, Stephen King, The Beatles, Michael Jordan and Elvis Presley. These are just a few examples of people that failed before they succeeded. Some of them failed bigger than others, but what´s important here is that they were brave enough to try something and didn´t stop when the door was shut on their face. They kept trying, they kept pushing, they kept their head up and they believed in themselves.

As Michelangelo once said: “The greatest danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it.”

Living in fear is far worse than failing. While failing is frightening and sucks, sometimes is what we need in order to take a chance and reach our full potential.

Thanks for reading!

Best,
Pedro

McDonald's: The Struggle of a Soulless Company

"Mommy, can we please, please, please go to McDonald's??"

Today, the sentence above seems far fetched. Which child or person with the right mind-set would beg for McD's? And if they do, please take them to Five Guys or any other burger joint, really.

McD's is in big trouble; their sales keep falling and, well, their burgers suck. Competition is very fierce and consumer preference has changed. McD's core customer still lines up in the drive-through, but the company needs to appeal to a broader customer base. These other customers want higher quality and better tasting food.

McD's certainly knows all of this (I hope). Though, addressing the issue is complicated. If they continue with low-quality food, they will continue to suffer from falling sales. If they decide to offer high-quality food, their service will become slower and more expensive, which most likely will alienate their core customers.

What can they do? Where should they go?

Right now, McD's is trying to be everything to everyone. They want to continue being fast, but also offer high-quality food and customization. This solution seems like the easy way out of the problem. However, you cannot have quality and customization, while still being just as fast. That's just common sense. Drive-through customers, 2/3 of McD's business, will not wait another 1 or 2 minutes for their burger. As the line grows bigger, people will just drive away. Also, with better quality food comes a higher price. If McD's becomes slower and more expensive, their core customers will most certainly revolt. In addition,when brands decide to appeal to everyone their image becomes blurred and they tend to fail.

Times have changed, McDonald's. That is the hard truth. You got stuck on a price war against other chains and lost sight of current consumer preference. You need to reinvent yourself, once again. You need a better image and better food. I know, I know... you are trying to improve your image with campaigns such as “Our Food, Your Questions”and "billions heard" instead of "billions served", but that alone is not enough. In order to succeed in today's world, you must stand for something. What is your creed?

For a company with McDonald's size, change comes slowly. The picture above was taken in NYC in February. It shows an awful looking golden arches signage with the old tagline and a few letters missing. If McDonalds wants to succeed, it will need to do more, and faster. People have no pity for when the Goliath's of our world fall, and everyone likes an underdog.

McDondald's needs to focus big time on their burger and on their image. It needs to stop trying to win customers with wraps, salads, and chicken crap. Yes, it's great to have salads and apples, but the chain must simplify their menu and offer a clearer vision. People still want to eat burgers, just not McDonald's burgers.

Additional info:
McDonald's is the worlds largest burger chain, with 36,000 stores worldwide and about 14,000 of those are in the US.
McDonald's burger was ranked as the worst burger in the U.S. by Consumer Reports
McDonald's is facing their worst sales decline in 10 years

Consumer Reports: Taste Champs (July, 2014)

Are All of Our Memories Real?

As human beings, our experiences and major life events are fundamental in shaping who we become. We hold these memories very dearly to our heart, and with reason. We rationalize that to lose these memories would be to lose our identity. However, what if these memories were not completely real; what if we fabricated part of these memories?

In How we are, Vicent Deary, a psychologist at Northumbria University, explains that our brain, the most incredible and complex thing known to man, is not equipped to keep perfect records of memories. It would take too much time, energy, and space to do so. At best, our brain only keeps very good records for a few days. For long term purposes, it keeps only the gist of memories - central information that is enough to keep the memory alive. When we try to recover that memory in detail, our brain will recover the gist of it, and for the details, it will guess a probable version of what happened.

Below is an excerpt from Subliminal: How Your Unconscious Mind Rules Your Behavior, by Leonard Mlodinow:

P. 60-61

"After a talk on criminology in Berlin, a student stood up and shouted a challenge to the distinguished speaker, one Professor Franz von Liszt, a cousin of the composer Franz Liszt. Another student jumped to his feet to defend von Liszt. An argument ensued. The first student pulled out a gun. The other student rushed to him. The von Liszt joined the fray. Amid the chaos, the gun went off. The entire room erupted into bedlam. Finally, von Liszt shouted for order, saying it was all a ruse. The two enraged students weren't really students at all, but actors following a script. The altercation had been part of a grand experiment. The purpose of the exercise? To test everyone's powers of observation and memory. Nothing like a fake shootout in psych class to liven things up.

After the event, von Liszt divided the audience into groups. One group was asked immediately write an account of what they had seen, another was cross-examined in person, and other were asked to write reports a little later. In order to quantify the accuracy of the reports, von Liszt divided the performance into fourteen bite-sized components, some referring to people's actions, others to what they said. He counted as errors omissions, alterations, and additions. The students' error rates varied from 26 to 80 percent. Actions that never occurred were attributed to the actors. Other important actions were missed. Words were put into the arguing students' mouths, and even into the mouths of students who had said nothing."

The problem with this happening, is that details can change a memory dramatically. This inaccurate guessing by our brain has caused many conflicts, from couples arguing over what happened on their first date, to witnesses giving wrong information at trials - without knowing that they were doing so.

It's pretty scary to think that some of our most important memories are not 100% accurate: Our first kiss, our wedding day, our child's birth, or the day that a loved one passed away... My best advice is to remember that it did happen, and although it may not have happened exactly how you think it did, in many cases, the gist of it and the emotion associated with that memory is all you really need.

As Mlodinow explains, from an evolutionary perspective, our memory is efficient and accurate. It has allowed our ancestors to remember the safest way back to camp, which creatures to avoid, and where to search for food.

Thanks for reading!

Best,
Pedro

The Amazing People That Surround You

You learn more by listening than by speaking; that’s just common sense. What is surprising, however, is how little people actually listen to one another.

When we first meet someone, we analyze every little detail about them: looks, clothing, posture, speech, handshake, smile, eye contact, etc... After we gather all of these verbal and nonverbal cues, we form our first impression of them. Impressions are very important; they could lead you to getting your dream job or not, getting a good grade or not, or getting a date with your future spouse or not.

Our minds need to classify things in order to work more efficiently. Classification helps us find information that we have stored in our brain. Therefore, it makes sense that we also classify people: “Oh, he's a marketing guy”, “He's a muscle head”, “She’s a nerd”. The problem is that our classifications are far from optimal. We classify and simplify people by what we assume they are, not by who they truly are. Nonverbal cues are very informative, especially to our unconscious, but unless we were are all like the guy from The Mentalist, we will never get the full picture just from that. It takes listening to do so.

The worst part is that we hardly change our first impression of someone. After we form our initial opinion, we unconsciously only accept data that will support our original view of that person. Contradictory data is either minimized or discarded.

By focusing on actually listening to what the person has to say, we will learn who that person truly is. Every human being is complex and filled with skills, talents, and passions. More importantly, everyone is more than just a label.

Listen a little more. You will be astonished by the amazing people that surround you.

Thanks for reading!

Best,
Pedro

Oil: Economies Walk a Thin Line

Few things can make the world spin like the price of oil; the world is still heavily dependent on the “Black Gold”. Alone, the price of oil can determine the economic success or failure of some of the richest countries in the world, global corporations, currencies, and the fate of millions of jobs.

When oil is priced high, like it was in June at $107 a barrel, countries that are big exporters – Saudi Arabia, Russia, Iraq, Nigeria, Iran… have a tremendous stream of cash coming in. However, as history tells, countries that are heavily dependent on exporting commodities will suffer from market swings. Today, the price of oil is under $50 a barrel, a drop of more than 50%, and some economies are hurting.

                                                                                                    
As The Economist explained, there are four factors causing this huge depreciation.

1. Weak demand: Sluggish global economic growth, increased efficiency, and the growth of other energy sources.

2. Oversupply: USA has become the world’s largest oil producer. Though it does not export crude oil, it now imports much less.

3. Turmoil in Iraq and Libya—two big oil producers with nearly 4m barrels a day combined—has not affected their output.

4. The Saudis and their Gulf allies could curb production sharply, but they have decided not to sacrifice their own market share to restore the price.

Thus far, the biggest loser seems to be Russia. On top of being highly dependent on the high price of oil, the country is also facing economic sanctions by Western nations (due to the conflict in Ukraine). The depreciation of the ruble, which closely follows the oil price, means that purchasing power has fallen. A weaker ruble also makes it harder to pay foreign debt. Russian firms have a high foreign corporate debt that needs to be paid by the end of 2015, about $130 billion.

On the other side of the political spectrum, the American economy is currently doing very well. However, when it comes to oil, it seems that it’s facing a double-edged sword. Cheaper oil means that Americans have extra income to spend, boosting consumer spending. Though, a lot of the recent increase on American oil production is from shale formations. These shale oil companies borrowed a lot of capital, expecting that price of oil would be at around $100. The current technology makes shale oil an expensive procedure, which is unsustainable long-term with the current price. The International Energy Agency estimates that oil from shale formations costs $50 to $100 a barrel to produce, compared with $10 to $25 a barrel for conventional supplies from the Middle East and North Africa.

For Saudi Arabia, the largest oil exporter in the world, a 50% drop on its main source of income is terrifying. However, the country is on a better position than the USA and Russia. Firstly, Saudi Arabia has $900 billion in reserves. Secondly, their oil can be extracted very cheaply, at around $5 or $6 a barrel. That gives Saudi Arabia a cost advantage over USA and Russia. If the price stays at current level, shale oil companies might run out of business, which would reduce the supply of oil and lead to higher prices.

The price of oil will eventually rise, but no one knows when this will happen and if it will reach the $100 mark again. In the meantime, many countries and corporations will have to walk a thin line.

Thanks for reading!

Best,
Pedro

Sources
Image of public domain: http://en.wikipedia.org/wiki/Oil_well
The Economist
http://www.economist.com/blogs/economist-explains/2014/12/economist-explains-4
http://www.economist.com/news/leaders/21635472-economics-oil-have-changed-some-businesses-will-go-bust-market-will-be
Bloomber, The International Energy Agency estimates...http://www.bloomberg.com/news/2014-10-07/shale-boom-tested-as-sub-90-oil-threatens-u-s-drillers.html

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