W
Strategic Concepts & Mechanics
Primary Evidence
"His office building Republic Plaza was once the joint tallest in Singapore, and his crown jewel condominium The Sail was at one point the world’s tallest residential property. Both remain downtown landmarks. Some of the best hotels in the country are his, including the St. Regis, JW Marriott, W in Sentosa, and the new Singapore EDITION Hotel."
"If δ < 1 (the unit gains in N are more than offset by the losses in O for W). CP is unlikely. For CP, the margins would have to be attractive enough in N to offset both the lower prices in N and the volume losses. Thus the incumbent would need to anticipate volume gains in N which more than offset the cannibalization of O volume induced by their entry into N. One of the ironies of CP is that the higher the incumbent’s margins, the higher the SLM. This of course simply reflects that W has more to lose by erosion of their O business. CP therefore can present a potent challenge to an entrenched highly successful incumbent. The potential for cognitive bias (History’s Slave) can be usefully explored by noting the elements of the SLM equation. In considering entry into N, the incumbent will often exhibit a cognitive bias that raises their expected δ, and thus increases SLM. They have more certainty regarding ∆OQ than NQ so they often understate NQ. For example, someone within W who wishes to push ahead and enter N is often incented not to promise too much. Thus this creates a cognitive skew toward CP. The potential for agency effects (Job Security) can also be looked at through the lens of the SLM equation. Example 1. An important decision influencer is the division head responsible for the O business. The O business has been the corporation’s bread and butter, so this person’s voice carries a lot of weight. However, the N business results are attributed to another division or group. So using my example from this chapter, imagine that the active fund managers would get no credit for the assets under management in the newly formed passive funds, a quite realistic assumption. This arrangement assures that NQ = 0 for this individual (group), and this means δ = ∞ assuring CP. Example 2. At the CEO…"