BlackBerry Abandons Sale, Replaces CEO

Beleaguered Canadian smartphone maker BlackBerry abandoned its sale process Monday and simultaneously announced its CEO Thorsten Heins was being replaced. BlackBerry had a deal in place with Fairfax financial, which already owns 10% of the company’s shares to buy the company’s remaining shares for $9 each. Rather than taking the company private, Fairfax is going to inject $1B into the business as part of a convertible debt deal.

Heins took over the company in early 2012 after the company lost billions in market value and continued to erode the company’s value. Heins is being replaced by John Chen on an interim basis. Chen is formerly the chairman and CEO of database/enterprise mobile app developer Sybase which was acquired by SAP in 2010.

Chen suggested yesterday that he’ll focusing on making the company a leader in business services, but said the company has no plans to exit the smartphone business or break up the company.

The company’s stock price peaked at 2009 at nearly $90 per share. In early 2011, it was $70. Today, BlackBerry is expected to open at about $6.60 per share.  

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Why You Can't Stop Checking Your Phone

Over the weekend I was at a housewarming with a few friends. At one point in the evening, two of us were called out for incessantly being on our phones. I hadn't realized how much time I spent on it over the course of the evening and mused that it isn’t Apple’s fault my iPhone battery dies so quickly when it was brought to my attention. In an effort to unplug and be present with our friends, we tossed our phones in the corner of the room. Being ten feet away from my phone felt uncomfortable, and I didn’t even last an hour before picking it up again.

The physiological stress reaction in response to not being able to check a cell phone is something that affects many smartphone users. Constant use of smartphones hinders communication and signals rudeness is social setting, but this inability is psychologically based and can be downright dangerous in other settings.

The dangers of texting and driving have received a great deal of publicity and nearly everyone agrees it is hazardous. In fact, 94% of people believe it should be illegal, but 33% of American adults do it each month anyways. The numbers behind texting and driving speak for themselves. Texting while driving doubles the likelihood of getting into an accident and in 2011 alone texting caused 213,000 car crashes, 387,000 injuries, and 2,331 deaths. We know the dangers and think it should be outlawed, yet we’re doing it anyways. Why?

When standing in line or waiting at a stop light, there is a seemingly physical urge to look at your smartphone. When your phone vibrates, it feels as if that text message is burning a hole in your pocket, compelling you to check it. Psychology tells us this is a conditioned stress based response. The notifications on a smartphone induce the physiological markers of stress and the only way to reduce that stress, urge, or anxiety is to check the phone.

Your phone goes off, you get the urge to check it, you check your phone, and then the urge goes away. If you think back to your introduction to psychology class, this is an example of operant conditioning, and more specifically, negative reinforcement. Negative reinforcement is the process of increasing the likelihood a behavior will occur by removing an unpleasant stimulus after the behavior occurs. In the example of your smartphone, you checking your smartphone (the behavior) removes the urge or stress (the unpleasant stimulus) so you’re more likely to continue checking it in the future. You check your phone and bad feeling goes away so you keep checking it. It’s a cyclical and cumulative process. This process of negative reinforcement is largely responsible for how the compulsions of Obsessive Compulsive Disorder (OCD) are developed, maintained, and strengthened. In many ways, attached smartphone users are similar to individuals with OCD.

As this pattern of negative reinforcement repeats, the responses are strengthened and become automatic. Like me at the party, many people respond to their phone without thinking or even realizing they are doing so. In other words, using your smartphone becomes an automatic process.

Automatic processing is the result of our brains creating shortcuts for things we do frequently, so we can save cognitive resources for more complex or important tasks. Your phone has programmed your brain to habitually check it, and to send out an unpleasant feeling when you don’t. Recent research has shown people whose cellphone use is driven by such automated habits are more likely to text and drive. These cognitive processes are the reason people text and drive when they know they shouldn’t or interact with their phone in the presence of others despite knowing they are being rude. Keep in mind, these phenomena do not justify such behavior, they merely explain it.

Psychology has not been as helpful at finding quick and simple ways to reduce phone checking compulsions as it has explaining it, but there are some in the works. I think exploratory interventions for texting and driving and should target the compulsory feelings that spur us to check our phones. I would consider applying treatments typically used for OCD like cognitive behavioral therapies (CBT). Prolonged Exposure is one of those treatments. To use PE, the individual would be exposed to that stressful feeling of knowing you have a text and not being able to check it for an extended period of time. By having this feeling, not being able to check it and then being shown that nothing bad happened from not checking it that stress response is lessened over time.

Systematic desensitization with reciprocal inhibition may also have merit as a treatment. That big technical name represents a treatment that is typically used to treat phobias. Essentially, the person is walked through a series of anxiety producing scenarios (in this case would include thinking you have an important text message, notification, or alert) while going through relaxation exercises. Pairing the stress inducing stimulus (thinking you have a text) with relaxation techniques teaches the body to automatically manage the stress of not checking a smartphone.

Using smartphones at inappropriate times can be explained by basic psychology, so interventions to reduce it should feature psychological methods. Shaming people, threatening them with jail time, or disabling their phones only addresses a symptom and ignores the root cause of the behavior. Even using behavior modification techniques, there is not a simple solution to reducing dependence on smartphones as everyone knows how hard it is to break a habit. Awareness is the first step to changing this behavior, especially since smartphone use has become an automatic process for many people. If you see someone glued to their phone at an inappropriate time, it is worth bringing it to their attention because like me at the party, they may not even realize they are doing it.

Follow me on Twitter @Aaron_Kraus

 

The Weekend Hangover

Morning all, I’m right there with you today. After a great Friday night, we’re going to get through Saturday morning together. Grab some water, B12, and something easy on your stomach before settling in to get through your Weekend Hangover.

A study came out recently describing The Cheater’s High. Ever wonder why some people cheat even at the simplest of games? People who believe they get away with cheating experience a thrill of self-satisfaction analogous to that of winning a game. Cheating and getting away with it feels good, so people continue to do it.

Hey, my eyes are up here! While the stereotype of men is that their gaze wonders, people tend to focus on a woman’s face more than their body, especially when prompted to evaluate the personality of someone in a picture. However, when asked to evaluate the appearance of someone, both men and women focus on the body of the individual. When asked to evaluate someone’s personality from a picture, men tend to give pretty women higher scores. We call that one “Halo Error.”  Women are not so kind to pretty women. The takeaway from this research is that when evaluating appearances, men and women are equally objectifying with their gazes.

Only .77% (not a typo) of leaders are perceived as being both goal and socially focused.

What 100 years of research shows about effective leadership: The phrase “it depends” can be translated into “nothing specific”, which can be translated into, “not much.”

Give feedback like a sports coach: I’ve had some good coaches that were brutally honest with their feedback, which I appreciated. Others I had to interpret consequences for feedback. This post says managers should use more encouragement because of how effective it is. I can only think of one coach from my high school and college athletic career combined that offered encouragement. Maybe I’m just lucky.

“Atlas Shrugged” is full of terrible business advice: I personally loved the book Atlas Shrugged by Ayn Rand, but I don’t interpret its writing verbatim. Many of the principles described in the book including hard work, earning what one gets, and using rational objectivity in business are worthwhile premises. However, if one interprets the book too literally and carries these principles beyond their logical extreme, then like any principle, the advice becomes lousy. I liked the book in large part because of Rand’s ability to turn a phrase. Some of my favorite quotes from the book include,

  • “If you don’t know, the thing to do is not to get scared, but to learn.”
  • “I never found beauty in longing for the impossible and never found the possible to be beyond my reach.”
  • “There is no such thing as a lousy job - only lousy men who don't care to do it.”
  • “Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”
  • “Danger is merely an opportunity for a brilliant performance.”
  • “When I die I hope to go to heaven--whatever the hell that is--and I want to be able to afford the price of admission.”

The Red Sox won the World Series this week much to my satisfaction, but the Cardinals proved yet again they are a strong, classy, and well run team. This is a great post on how the St. Louis Cardinals keep building World Series caliber teams.

Wikipedia has a management problem, and it may be impossible to solve. The decline of Wikipedia.

The devil is in your snooze button and hell comes in 9 minute intervals.

One of the most important aspects of having a job you love is working in a caring environment. 

Sometimes I post articles featuring concepts I think completely miss the point, and this is one of them. One startup believes texting is the future of hiring, because 48% of phones are still flip, one in five adults don’t use the internet, and 59% of the American workforce is hourly. Texting may have merit for recruiters and talent acquisition specialists now, but if you look at the trends, these statistics will NOT be nearly this high in a few years. If I were founding a startup, I would look to enter a market that wasn’t rapidly diminishing. But that’s just me.

This is a neat study. I’m not sure the practical implications, but it was interesting to read nonetheless.  Individuals have an optimal walking speed–a speed that minimizes energy expenditure for a given distance, so males being bigger on average tend to walk faster than females. The study showed that males walk at a significantly slower pace to match the females’ paces when the female is his romantic partner. Ladies, want to tell if a guy is in love with you? If so, see if he slows down to match your pace when you’re walking together. If he does, he loves you. If not… there’s always match.com.

The average age of a World Series viewer this year was 54.4 years old and that number is trending higher. Why kids aren’t watching baseball.

Do clutch players or a hot hand exist in sports?

Textual Relations: when it comes to couples texting, quality of the text not quantity predicts healthy relationships.

Picture Andrew Luck during his senior year at Stanford sauntering up to a freshmen girl he’s never met before in the middle of the crowded campus quad and asking if he could kiss her. Apparently, that is a thing at Stanford University and how upper classmen welcome freshmen to campus. Nerds are weird. This “kissing orgy” leads to the “kissing disease.”

The biggest whiskey drinkers in the world are not who you’d think.

Another cool study on the power of a name: When people were playing The Prisoner’s Dilemma (detailed in this post from a few weeks ago) they were more likely to cooperate when it was labeled “The Community Game” than when it was labeled “The Wall Street Game.” I wonder if that is any reflection on people’s perception of Wall Street…

For the I/O Psych and HR Crowd: Heads up, religious discrimination cases are on the rise.

Do bigger prizes lead to bigger effort? The short answer is yes, but the research is fascinating. 

Does the “Best” Team Always Win the World Series? The answer may have been no last year when Detroit won, but being a biased Red Sox fan, the answer is undoubtedly yes this year. (Note: Read the article and ignore my commentary.)

How the brain filters out noise to stay focused and on task

Anheuser-Busch InBev’s core profit grows 10.5%

Anheuser-Busch InBev’s core profit grows 10.5% because you like to party.

Higher selling prices and cost-cutting measures helped beer giant Anheuser-Busch InBev’s earnings rise 10.5% to $4.66B to beat expectations. Revenue increased 3% to $11.73B, but expectations were of $11.86B.

Anheuser-Busch InBev is the maker of Budweiser, Beck’s, and Stella Artois, and recently added Corona to its list of taps when it bought Grupo Modelo. Last week i wrote that AB InBev is the third best beer company, and this earnings report solidified that ranking. The company sold more than 1 out of ever 5 beers consumed worldwide last year.

Beer sales slipped in Brazil 5% and slightly in the United States, although domestic profit margins increased due to new products Bud Light Lime and Straw-Ber-Rita. It’s Friday, so I’m going to say there is a 70% chance you’re going to be drinking an AB InBev product at some point over the next 72 hours. For me, that probability is closer to 100%.

 

Starbucks beats earnings, but shows slowed growth in Asia

Starbucks shares fall following earnings

If only Instagram were indicative of market earnings. Despite all the pictures of Starbucks pumpkin spice lattes polluting social networks over the last month, shares of the coffee company fell 2.5% after earnings were released on Wednesday. Starbucks’s net profit rose to $481M, up from $359M and an EPS of $.63 beat expectations. Revenue grew 13% to $3.8B to meet expectations. It wasn’t all good news though, as sales growth slowed in Asia. Last week I wrote about how Starbucks pissed off the Asian media by charging more for their drinks in China than the U.S. Perhaps it is time to rethink that strategy.

 

Sony’s net loss widened as TV, Movie, and Smartphone businesses slump

Sony’s net loss widened, shares slump.

In an earnings announcement this week, Japanese electronics giant Sony told investors the company lost $196M in the quarter ending Sept. 30 even though sales climbed 10.6%. The loss was largely a result of poor performance in Sony’s movie business, but its TV business also remained unprofitable and smartphone segment lags far behind Apple and Samsung. One hedge fund investor has called for Sony to spin-off its entertainment division through an IPO in an effort to streamline the company and return it to profitability. Sony’s current CEO took over last year and is attempting to turn the company around through cost cutting measures and investment in the smartphone business. Sony is expected to receive a boost when it releases the PlayStation 4 videogame console next month, as the company expects to sell 5M units by the end of March. Shares of Sony are down over 11% at the time of writing.

 

Facebook beats earnings on strong mobile ad revenue

Facebook announced earnings on Wednesday and beat expectations as the world’s largest social network continued to boost profits on the back of mobile ads. Mobile ad revenue rose to 49% of revenue up from 41% in Q2. Facebook’s adjusted profit doubled from this time last year to $621M with $.25 EPS and revenue was up 60% to $2.02B. This jump can be attributed to both high prices for mobile ads and more frequent ad clicks by users.

Twitter, whose IPO is set to take place in the coming weeks, has to be thrilled by the news of mobile advertising success on another social network. Facebook has endured user backlash over having ads injected into the social streams of users on behalf of all social networks. Since they have become commonplace on Facebook, social users will be fully desensitized to  advertisements by the time other social networks like Twitter, Pinterest, and even SnapChat start including them in users social feeds.

Not everyone was excited though. Despite great numbers, investors were leery after earnings were released and the stock dropped on the announcement that Facebook will not increase the number of ads in user feeds and that teenagers were using the Web site less. Roughly 1 in 20 posts on Facebook user’s news feeds is an advertisement. Even with teenagers using the social network less, the website averaged 728M unique users per day which represents an increase of 25% from a year ago. Investor confidence has since returned as the stock finished up on Thursday.

Here is a full look at the numbers.

 

US Budget deficit down to $680B, National debt up to $17T:

For the first time in five years, the U.S. Government is spending less than $1 trillion more than it is taking in. On Wednesday, the government announced the deficit for the 2013 budget was $680.3B, down significantly from $1.09T in 2012. The narrowing was a result of higher revenue (more taxes) and less spending. Revenue climbed to $2.77T and spending fell to $3.45T. Obama set the record for a budget deficit in 2009, spending $1.4T more than the government brought in. A budget deficit of $680B is nothing to celebrate on its own, but put in context it can be celebrated as a small win for government. While this is certainly an improvement, it is still the fifth-largest deficit of all time.

The budget deficit is the gap between the government’s revenue and how much it spends. The national debt, which rose to $17.1T is how much money the U.S. government owes others in total. About 28% of national debt is owed to another arm of the federal government itself, with the largest single creditors being Social Security’s two trust funds. China is the largest overseas creditor, but it owns only about 7.6% ($1.28T) of the U.S.’s total debt. Japan owns $1.1T in U.S. debt.

Largely due to the Federal Reserve’s efforts to keep interest rates low, the U.S. government is paying historically low rates on its debt. Don’t let that soothe you too much though, even with an average interest rate on public debt of 2.43% interest alone on the national debt was about $222.75B in 2013. The interest on U.S. debt alone would rank as the 44th largest GDP in the world, ahead of Iraq, Portugal, and Ireland. 

Travelers rejoice as FAA allows electronic devices during entire flights

Thursday, the FAA announced they will start allowing passengers to use electronic devices during all phases of their flights including takeoff and landing. The policy will allow passengers to use electronic devices gate to gate and is expected to be implemented by airlines before the new year. Passengers will still not be permitted to make phone calls during flights, but they will be able to connect to Wi-Fi, browse the internet, read e-books, play games, and watch videos during all phases of the flight with limited exceptions. This policy development will not change passengers behavior, it will only permit what everyone already does on flights anyways. 

Here is the link to the FAA’s press release.