Innovation has for years come from designers and marketers, from the creators of new products. The top innovation consulting firms all spring from the roots of building new products. “Most innovative” lists are populated by … well, Apple is always first … then comes a predictable list of companies that make cool products: Nike, Samsung, etc.
But today’s new generation of innovators knows that innovation is no longer limited to the domain of companies who makes things you can see and touch.
The clothing retailer Urban Outfitters, for example, has grown from under $500 million in revenue to nearly $3 billion over the past ten years. Not only does the company consistently grow faster than the competition, they are also significantly more profitable.
I asked the CEO to explain his success. He seems to have a secret formula. Why aren’t competitors copying him? He gave me four reasons:
- While his main competitors want to appeal to a broad customer base, Urban Outfitters cares only about one: college students.
Traders may find it slightly disconcerting to learn what is going on inside their bodies when volatility rises and falls, says John Coates, senior research fellow in neuroscience and finance at the University of Cambridge and author of “The Hour Between Dog and Wolf: Risk Taking, Gut Feelings, and the Biology of Boom and Bust.” Coates, a former derivatives trader at Goldman Sachs and Deutsche Bank, says, “It is entirely possible that trading is an addictive behavior.”
The role biology plays in risk taking was a key topic during Coates’ keynote address, “New Research in Neuroscience & Finance; The Biology of Risk Taking,” at the Chicago Board Options Exchange Risk Management Conference in Carlsbad, Calif.
Why it important to study the neuroscience of risk
“Every blowup we’ve seen north of $1 billion that shakes a bank to its foundation is handed to us by traders at the end of a two- or three-year winning streak. (read more…)
Financial derivatives are sometimes a savior, but in other times, a curse. Although their earliest documented use was in the form of rice futures in the 1700s, they have grown in popularity in recent times for hedging known risks, but have also drawn criticism as a tool of speculation. American International Group, for example, lost $18 billion on credit default swaps during the financial crisis.
Nearly $40 billion has been lost in derivative-related events over the past decade, forcing government officials and regulators to develop controls to prevent such massive losses from occurring with such frequency. As a result, we have the Dodd-Frank Act, more than 2,200 pages of new rules, not including the many interpretative regulations that have followed. Hedging foreign exchange risk is a legitimate activity for any corporation engaged in cross-border commerce, but Dodd-Frank did not choose to exclude altogether this valid risk-mitigating activity.
The Commodity Futures Trading Commission is the regulatory body tasked with administering the legislation with regards to foreign exchange and with oversight of over-the-counter derivatives and swaps. (read more…)
As the year ends, many people make their annual contributions to their favorite charities. The average American donates $298 in cash each year to charities, according to Esri, world’s leader in geographic information systems (GIS). Types of charities include animal welfare, disease cures and post-disaster assistance. Educational charities receive $100, on average, from Americans who donate. Religious charities benefit the most, receiving $915 annually, on average. What types of Americans are most likely to contribute to each charity type? Who are these Americans, and where do they live?
Charitable cash contributions
Charitable contributions are received from all over the country and from all types of Americans. Esri provides Consumer Spending data that details, by geography, the likely average amount spent on a product or service per adult or household. As noted above, Esri estimates that an average American gives $298 per year in cash to a charity.
The people that give the most live along the Eastern Seaboard and in and around large cities such as Los Angeles, San Francisco, Chicago, and Denver. (read more…)
These days, planning for retirement is a concern for most Americans. In the past, many Americans relied on Social Security and company pensions to fund their retirement. Today, Social Security does not pay enough for some people to be comfortable in their retirement, and most companies have eliminated pensions (if they had them to begin with). Therefore, making 401(k) and IRA contributions are critical to people’s retirement to ensure that they have enough money once they stop working.
The average American contributes $1,325 to retirement accounts per year, according to Esri, world’s leader in geographic information systems (GIS). What types of Americans are most likely to contribute? Who contributes to 401(k) accounts? What about IRA accounts? Where do these Americans live?
401(k) contribution
401(k) retirement accounts allow Americans to contribute to their retirement directly from their regular paychecks. The contributions are pre-tax and are often matched by employers to encourage savings. Not everyone contributes though. Some either do not feel they have the funds to do so or they do not see the value. (read more…)
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