In the mid-80’s, when Jack Welch launched GE x10 he said: “I would love to have a management team that really understood theÂ x10 equation. It’s the value-added role in the management process”. At that time GE was a USD35 billion manufacturer of everything from locomotives to light bulbs. By the time Jack left in 2001 GE market value had maximised to USD484 billion making it the most valuable company in the world.
Today, the most valuable company in the world is Google. In February 2013, WIRED Magazine’s Steven Levy interviewed Larry Page of Google and wrote: “Larry Page lives by the gospel of 10x. Most companies would be happy to improve a product by 10 percent. Not the CEO and cofounder of Google. The way Page sees it, a 10 percent improvement means that you’re basically doing the same thing as everybody else. That’s why Page expects his employees to create products and services that are 10 times better than the competition.”
Since what you measure is what you get we may now need to escape from double-entry accounting and leap to triple-entry.
The old accounting system is DICO or double-entry. DI + CO. Debit In and Credit Out. That’s been OK for measuring the financial capital of an enterprise.
However, we may also need to account for the Intellectual Capital (IC) of an enterprise. We now need DI + CO + IC.
DI accounts for dollars coming into the enterprise. CO accounts for dollars going out of the enterprise and IC accounts for XIO value created by the enterprise–IC dollars.
How does a Chief Executive Officer (CEO) make a strategic business decision?
How does an executive form an opinion on the balance between a return on an allocation of resources and the potential risk involved?
How do bankers or investors decide to invest their capital and how do they weigh up the balance between the hoped for Return On Investment (ROI) and the possible loss of their capital?
How do they ‘see’ a business? On what basis is their ‘perception’ of the business formed? How do they get a map of a business?
Amazingly, most of today’s investment and business decisions are still based on an invention that has not yet been updated for over 500 years!
In Venice in 1494, a Franciscan monk and collaborator of Leonardo Da Vinci, Fra Luca Pacioli, invented double-entry bookkeeping and published the world’s first textbook on accounting principles and practice. Ever since, this has been the basis of investment decisions. Double-entry bookkeeping shows a map of how money and goods flow through a business.
This allowed investors and business people to ‘see’ a business, evaluate risk and return and then form an opinion on whether or not to make an investment.
In those days and even on through the industrial revolution, a business consisted of things. Things are tangibles like property, buildings, inventories, cash in the bank and so on. So the double-entry bookkeeping system seemed like a useful way of organising one’s view of the ebb and flow of these tangibles and one simply accepted this way of looking at things and then went on to make one’s investment decision.
That was then, this is now. Since the knowledge and information revolutions, it’s hard to imagine how young business people could be misled more than to be given the impression that this is what today’s businesses are still made up of – tangibles. Yet we find that in business colleges and MBA programs around the world the medieval measurement, the ‘double-entry’ view of a business, is still being taught as though it were enough.
In the 2000s we already have computers that can do more than 100 billion computations a second and we are still using pre-Newtonian physics to make our business decisions. In the next few years, this will have to change.
In knowledge-based companies like Microsoft and Google what does the traditional accounting system capture? Hardly anything.
The old accounting system is blind to knowledge-based assets and is often limited to just considering labour and material costs. In today’s fastest-growing, market-responsive businesses the cost components of many products are intellectual capital like R&D and customer-service and XIO created-value.
As clever companies increasingly recognise their intellectual assets, they will increasingly direct their attention to developing those assets. When it comes to productivity, ten heads are always better than one and that means Bottom-up innovation. Bottom-up cost-savings and bottom sales revenues.
Intellectual Capital (IC)
These ‘far-seeing enterprises’ will be exploiting, managing and measuring the primary ingredient of their economic performance, their intellectual capital or IC as it is now being called. The intangible IC assets of information, knowledge and skill will be formalised, captured and leveraged to produce higher-valued assets, higher performance and a more profitable enterprise.
Also, hi-tech manufacturing companies of today and tomorrow will derive most of their value-added from knowledge and skill. This will have to be accountable. Those businesses that are not accounting for their IC assets will be under-valued and left behind. Those that do will more than double their assets and move ahead.
ICD and Investing in People
In business, people are now becoming more important than money because they can do XIO thinking. IC is becoming the most valuable asset of many corporations. Triple-entry accounting is how a modern business gets a more accurate view of its people assets when knowledge and innovation is its chief resource.
Suppose you are an investor. You can form a more useful and realistic perception of companies like Google by accounting for their ‘soft’ IC assets than you can by merely accounting for their ‘hard’ assets like their office buildings, cash and equipment.
FACT: The value of the tangible (money) assets on today’s balance sheet is exceeded many times by the value of the IC (people) assets of the enterprise.
FACT: The intellectual capital of the enterprise is the raw material from which all financial results are derived.
FACT: The intellectual capital owned by the enterprise can be measured, managed and developed along with the financial capital and tangible assets currently recorded on the balance sheet of the enterprise.
WIRED Magazine, Cover Story February 2013 by Steven Levy:
“Larry Page lives by the gospel of 10x. Most companies would be happy to improve a product by 10 percent. Not the CEO and cofounder of Google. The way Page sees it, a 10 percent improvement means that you’re basically doing the same thing as everybody else. That’s why Page expects his employees to create products and services that are 10 times better than the competition.”
Multiply Your Business by 10!
In this exciting book, Michael Hewitt-Gleeson introduces a new way to think about business. He describes the x10 meme – the innovative idea of multiplying your business by 10.
Currently the business growth meme in most people’s brain is 10% per annum. Here the author stresses that the market is changing rapidly and businesses cannot stay the same. The 10% per annum meme is outdated and needs to be upgraded.
X10 is the focus for future thinking and for customer-driven businesses bent on profit share. Using three easy-to-follow tutorials, Hewitt-Gleeson guides you through The x10 Memeplex. Finally, a case study plan helps people to transfer these ideas into their own business practices.
This book will change the way everyone thinks about business. Go ahead. Read the x10 gospel. Infect your mind with the x10 meme. Be like Larry Page and multiply your business by ten!
DOWNLOAD THE x10 BOOK HERE & PASS IT ON:
Who is the one person you know who would most benefit from a copy of this x10 book? Pass it on.
(This file has been already been scanned for viruses).
How much would you pay for a grilled cheese sandwich? $6? Maybe $7, if it was deliciously fresh and you were really hungry?
In 2004, Diane Duyser from Florida, USA sold a ten-year-old grilled cheese sandwich for US$28,000. And the reason for the 4,000-fold inflation?
This particular snack showed a pattern of browning that Ms. Duyser claimed resembled the Virgin Mary. Others agreed enough to create a news story that reached across the globe, piquing the interest of eBay bidders with deep pockets.
Religious icons have a habit of turning up in the most unlikely places. In recent years, the Virgin Mary has also been spotted in a pretzel that sold for US$10,600 and in a wooden stump near the cliffs in the Sydney suburb of Coogee (“Our Lady of the Fence Post”), while Mother Theresa has appeared in a cinnamon roll (the “Nun on a Bun”).
Although devotees herald the blessings bestowed upon them by these apparitions (before selling to the highest bidder), science takes a more sober view, ascribing the phenomenon to coincidence, aided by a few quirks of neural processing that underlie our everyday perception. This is known as “pareidolia”.
Seeing patterns in noise
Pareidolia occurs when an indistinct and often randomly formed stimulus is interpreted as being definite and meaningful. This is something with which everyone has at least some experience, whether exercising their imagination as a cloud-gazing child, or seeing images in a textured ceiling during the last few waking moments of the day.
Examples in history abound. Indeed, Leonardo da Vinci remarked upon this technique to inspire artists, while Italian painter Arcimboldo was famous for portraits in which the faces were actually arrangements of food.
Although vision is most commonly involved, the other senses are not excluded.
Auditory pareidolia appears to be the most plausible explanation for the “backmasking” controversies of the 1980s, when rock bands were accused of embedding subliminal Satanic messages in their music, which were supposedly revealed when the tracks were played in reverse.
But why is this error of perception so prevalent, and why does it so often involve faces, and specifically those of religious icons?
The ubiquity of faces
There can be no doubt that faces, as visual stimuli, are somewhat special.
At the slightest glance, we can extract information on age, gender, race, and mood from a face, and decide whether this is a friend to be approached, or a foe to be avoided.
From birth, humans show a fascination with faces that continues throughout our lives.
Given that babies’ blurred vision serves to exclude more distant objects while the faces of family members and friends are thrust into view, it is not surprising that we all become face experts, training our brains to search for and identify faces in any situation.
As social animals, we constantly surround ourselves with faces, putting this skill to the test every day.
The neural basis of pareidolia
When presented with a stimulus, the human visual system uses information flowing in two different directions. These are referred to as “bottom-up” and “top-down” processes.
Bottom-up processing starts with the smallest possible element of the stimulus and builds in complexity. As collections of photons hit the receptors in our retinae, they are encoded as spots of colour.
These signals are combined across the image at the next levels of processing, where the brain uses templates to detect edges, then corners, basic shapes, and eventually objects (including faces).
An important brain region in the face detection process is an area in the brain’s temporal lobe known as the fusiform face area (FFA).
We have no conscious choice in the matter. The search for faces is automatic, using a coarse template roughly corresponding to the general configuration of a face (for example two eyes, side-by-side, above a nose, above a mouth).
The coarseness of this template means that we will very rarely miss a face that is presented to us, even if visibility is poor, but this also opens the possibility that it may be activated by similar patterns other than faces.
This contention is supported by functional Magnetic Resonance Imaging (fMRI) studies, which show significant FFA activation not only when faces are presented, but also when non-face stimuli are mistaken for faces.
It is likely that this activation is the neural basis of pareidolia.
Does religious thinking encourage pareidolia?
While the bottom-up neural machinery whirrs away, top-down processes flow in the opposite direction.
Here, the perception of a stimulus can be affected by an observer’s knowledge, expectations, beliefs and motivations.
Although these factors are harder to measure, they can undoubtedly have an influence over what we see, and seem to play a prominent role in pareidolia.
The Rorschach inkblot test is a well-known example of using pareidolia to tap into motivations, emotional functioning, and other higher-level psychological characteristics.
Although pareidolic experiences are commonly reported during schizophrenic episodes and during the use of hallucinogens such as LSD, all “normal” people also experience this illusion on some level.
But there are some groups who are especially susceptible.
A 2012 study from Finland showed that those with strong religious beliefs, or belief in the paranormal were more likely to identify a face in a random stimulus compared to sceptics or non-religious observers.
It seems likely their low threshold for pareidolia is a factor in the large number of examples that involve historical religious figures.
In addition, many of the faces that are often reported, such as Jesus and the Virgin Mary, are individuals who predate photography, and whose facial identity cannot be known, other than through iconography.
As such, the stimulus could match any one of many possible representations of Jesus or the Virgin Mary, making such apparitions more likely still.
Miracle or coincidence? You be the judge
Given the massive array of random stimuli human beings could possibly be exposed to, it is inevitable that some of them will bear a degree of similarity to certain non-random visual patterns, such as faces.
In these cases, it is not surprising that the brain activity caused by the face itself and the coincidentally similar visual pattern will be closely related, leading our rough and ready face templates to be matched, and for the brain to detect a face where there is none.
Coincidences happen. It would be truly amazing if they never did.
But then, who would notice?
Kevin Brooks has received funding from The Australian Reserach Council.
1. As thinkers, we have the right to use thinking in a quiet and confident manner.
2. As thinkers, we have the right to have pride in our thinking skill.
3. As thinkers, we have the right to use that skill and to consider a “thinking reaction” rather than a reaction based on emotion or experience alone. The thinking might make use of experience and emotion, but these would be part of the thinking instead of controlling it.
4. A thinker has the right to escape from current views of situations and to search for much better views of situations.
5. A thinker has the universal right to be wrong.
6. A thinker does not have to defend a point of view at all costs. There is the right to see other points of view and the right to design a much better decision.
7. A thinker has the right to acquire wisdom or to seek it out wherever it may be found. Wisdom is quite distinct from the sort of cleverness that is taught in school. Cleverness may be useful for dealing with set puzzles or defending local truths but wisdom is required for designing a safer future.
8. A thinker has the right to get on with his or her own work and to get along with other thinkers and if things go wrong a thinker has the right to think things through and to fix them without creating a fuss.
9. A thinker has the right to spell out the factors involved in a situation and also the reasons behind a decision.
10. Above all, a thinker has the right to be asked to think about something, to focus thinking in a deliberate manner upon any subject. Thinking can be used as a tool by the thinker at will. The use of this tool can be enjoyable whatever the outcome. This applied thinking is practical—the sort of thinking that is required to get things done.