What does it matter for investments? We invest in companies, so we have to think about every aspect of business, including R&D/ new product development and production processes. In the sense that the evolution in these and other business factors may lead to more efficient uses of capital in the companies that take advantage of these trends, the question becomes: how does it NOT matter?

More than just a good article, this is a fine example of concise analysis/ synthesis of a given issue. A short text is never meant to be all-encompassing and “definitive”: the best such short articles usually touch on pros and cons but, most of all, raise points for further study.

The reading lists come one from Seth Godin and another from the Financial Times. The FT named “Poor Economics” its 2011 Business Book of the Year, but other finalists also look pretty interesting. In this page you can see how the process works, excerpts from all finalists and the winners of past editions. One of the 2011 finalists, Daniel Yergin’s “The Quest”, was reviewed recently in the New York Times. Mr. Yergin is the famous author of “The Prize”, about the “history” of oil – reviewed by the NYT in 1990 – while “The Quest” is about its “future”.

Last but not least, an article that says something we’ve been saying for a while, although they only apply it to “western sovereign debt”: that one should question the “risk-free” status associated with it. In this asset class’ case, it has regulatory implications that could have a huge impact. In summary, it’s generally OK for banks to assume ‘zero’ risk for a western sovereign bond, so it’s collateral for huge leverage for riskier assets, loans, trades etc. – what happens when this ‘safe’ part of your balance sheet isn’t safe anymore? You can check out our articles on the subject below:

Life without a risk-free benchmark – July 22nd, 2011

Beware of safe havens – July 29th, 2011

Don’t panic – August 9th, 2011

The “risk-free” conundrum – September 7th, 2011

Is high volatility the new reality? – September 14th, 2011

Prof. Sasser’s point: seeing things that others didn’t was nice, but seeing it through and changing the world was Steve Jobs’ genius. More comments inside.

Here’s the video:

Prof. Sasser then played Steve Jobs’ amazing graduation speech at Stanford in 2005, which I’ve posted here before. When it was over, he asked us to ponder his lessons and apply them to what we could change in our companies and in our lives today.

I’m writing this in my new Macbook that has just arrived in the mail today – of all days. It’s a wonderful machine, but more importantly it’s an impressive experience of superb hardware and software integration. But then again I already knew it would be, having been a Mac user for quite a while. In fact, if you start from my Spectrum Ed II from 1986, in which I programmed my first Basic code at age 8, it’s been a wonderful ride.

I’m sure I’m not the only one looking at his or her computer a little differently since yesterday.

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“Any sufficiently advanced technology is indistinguishable from magic.” – Arthur Clark, 1973

“Witchcraft to the ignorant, …. Simple science to the learned”. – Leigh Brackett, 1942

“…a performance that may some day be considered understandable, but that, in these primitive times, so transcends what is said to be the known that it is what I mean by magic.” – Charles Fort, 1932

So far it’s been great to watch, starting with 3M’s CEO George Buckley on the first video – after some 19:25 of introductions, congratulations and sponsor messages – although even that part wasn’t half bad, and not just because of the pretty decent joke about Obama being irish. Then Mr. Buckley quipped about how the company should have branded “3M” in Neil Armstrong’s boots that landed on the moon – “that was our greatest marketing mistake”… Long live British humor.

We’ve stumbled upon a series of videos by Bloomberg Television on Game Changers, and the first episode we saw is fantastic and profiles Steve Jobs. There are many interesting moments and lessons, but one that stuck with us is about the power of ideas and the inspiration/ motivation they bring – not just to potential customers but, in Apple’s case at a time when morale was at the lowest point, also internally. That’s when the team finally “awoke” and all that brilliance in engineering/ product design/ marketing was brought together to create, as a VC says in the video, “the greatest comeback in corporate history”.

We also highlight two groundbreaking and extremely timely TV spots that changed Apple’s history – and more.

Bloomberg Game Changers, Episode 2: Steve Jobs (47:39)

The 1984 Macintosh launch spot on Superbowl Sunday, 1984. Directed by Ridley Scott and shown just on that occasion, it’s considered one of the best TV ads of all time:

This is a pearl of a video. A 1983 Steve Jobs keynote explains the “1984″ ad context – and then shows it to a spellbound audience of (admittedly) Apple fans:

The second TV ad is “Here’s to the crazy ones”, and came at a time when Apple was in trouble and Steve Jobs had just been brought back as interim CEO. As one guy argues in the Bloomberg video, it’s almost as if the ad was directed more for the people at Apple than for the “outsiders”.

Finally: Steve Jobs’ commencement speech at Stanford University in 2005. Brilliant.

UPDATE: we received requests and suggestions by our readers, so we post two new and impressive videos:

A young Steve Jobs introduces the Macintosh in 1984 (5:11):

This is another version of the 1983 keynote we have already posted above, but after that part there’s a skilfully-edited section of the TV coverage of the Mac launch at the time. Very interesting stuff (9:55):

First of all, it’s humbling that such a commonsensical notion about the brain has been at least in dispute for almost 15 years, while we still get everyday stories of “right side vs. left side”. Good reminder to keep one’s preconceived notions in check – including the assumption that the current line of thinking is definitive.

The author then goes into the “modern” theory and highlights some alternative approaches to try to stimulate insights, the “Aha!” moments. Here are a few quotes that caught our attention:

- “The shelves of the brain are stocked with what you’ve seen or heard or read about what others have done before. This process takes place naturally in every human brain, but active study can accelerate and improve it (…)” – indeed. Compare it to two quotes by Charlie Munger: “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none, zero.” and “Spend each day trying to be a little wiser than you were when you woke up.”

This is from our “Why we write” page on Buysiders.com:

“At IP we seek to fight our structural cognitive limitations acting with discipline and dedication in 4 fronts: (…) 1) Investing our attention in the acquisition of “frameworks”, “mental models”, “vocabularies” and information of several disciplines, industries, companies, geographies, business models, vehicles and investment structures. These resources form a tacit knowledge mosaic that: a) creates context(s) for us to understand and organize the innumerable stimuli we receive, helping distinguish what is relevant and what is not; b) functions as a repository of information with potential to be used in the future; c) encourages our creativity, providing us with perspectives and starting points different from the “average view” for everything we do.”

Another quote from the article:

- “The presence of mind Clausewitz describes is akin to the calm state that precedes a flash of insight, (…) when your brain is relaxed and wandering, instead of focused on a particular problem.” – Again we turn to Charlie Munger, who has said: “We both (Charlie Munger and Warren Buffett) insist on a lot of time being available almost every day to just sit and think. That is very uncommon in American business. We read and think.”

Finally, the author describes GE in the 1990′s. Then-CEO Jack Welch and his Chief Learning Officer Steve Kerr had a method for problem-solving that the author considers very clever. Describing the method he calls “the GE matrix” he says:

- “(…) Then ask the most important question you can ever ask to solve any problem of any kind: Has anyone else in the world ever made progress on any piece of this puzzle?” – Or, as we’ve written in a 2009 post: “(…) But we can greatly improve where and how we get our “building blocks” by looking abroad. We joke that it’s the “crystal ball that works” – we wish it was that good, but we find more and more over the years that we gain valuable insights. (…) In some cases, NOT doing it may blind you to risk factors not previously seen.”

We’d like to add another dimension to the first and third quotes we’ve highlighted above: networking. Part of the active, relentless effort to acquire mental models, knowledge, facts and other building blocks involves getting to know the right people and foster these relationships. As we’ve written (again…) in the “Why We Write” page:

“2) Building up and developing a local, national and international “intelligence network”. According to our experience, it is not very “wise” to leave out of consideration, in a strict process of evaluation of investments, the input of people who know much more than you about some key points of your analysis. (…) There are also thousands of formal and informal specialists spread throughout Brazil and worldwide. They are former company administrators, regulators, shareholders, investors, consultants. They are very useful on several manners: as independent sources of information on companies, people background checks (administrators, shareholders), as ‘devil advocates’, for specific aspects of an investment thesis, and are also useful to make us get quickly up to speed with respect to relevant themes that take place in countries different from ours.”

Other references at Buysiders.com:

- Creative problem-solving – Dec. 20th, 2010.

- Multidiscplinary approach and communication – Feb. 17th, 2010.

And as we always stress: view it critically, play with the idea, try to contradict it or apply it in some other field(s). In this particular case it may be hard to do so, because Mr. Pogue’s delightfully terrible songs can really stick in one’s mind.