Tuesday, March 30, 2010

The Sandra Bullock Trade

The Sandra Bullock Trade
By NYT David Brooks

Published: March 29, 2010

Two things happened to Sandra Bullock this month. First, she won an Academy Award for best actress. Then came the news reports claiming that her husband is an adulterous jerk. So the philosophic question of the day is: Would you take that as a deal? Would you exchange a tremendous professional triumph for a severe personal blow?

On the one hand, an Academy Award is nothing to sneeze at. Bullock has earned the admiration of her peers in a way very few experience. She’ll make more money for years to come. She may even live longer. Research by Donald A. Redelmeier and Sheldon M. Singh has found that, on average, Oscar winners live nearly four years longer than nominees that don’t win.

Nonetheless, if you had to take more than three seconds to think about this question, you are absolutely crazy. Marital happiness is far more important than anything else in determining personal well-being. If you have a successful marriage, it doesn’t matter how many professional setbacks you endure, you will be reasonably happy. If you have an unsuccessful marriage, it doesn’t matter how many career triumphs you record, you will remain significantly unfulfilled.

This isn’t just sermonizing. This is the age of research, so there’s data to back this up. Over the past few decades, teams of researchers have been studying happiness. Their work, which seemed flimsy at first, has developed an impressive rigor, and one of the key findings is that, just as the old sages predicted, worldly success has shallow roots while interpersonal bonds permeate through and through.

For example, the relationship between happiness and income is complicated, and after a point, tenuous. It is true that poor nations become happier as they become middle-class nations. But once the basic necessities have been achieved, future income is lightly connected to well-being. Growing countries are slightly less happy than countries with slower growth rates, according to Carol Graham of the Brookings Institution and Eduardo Lora. The United States is much richer than it was 50 years ago, but this has produced no measurable increase in overall happiness. On the other hand, it has become a much more unequal country, but this inequality doesn’t seem to have reduced national happiness.

On a personal scale, winning the lottery doesn’t seem to produce lasting gains in well-being. People aren’t happiest during the years when they are winning the most promotions. Instead, people are happy in their 20’s, dip in middle age and then, on average, hit peak happiness just after retirement at age 65.

People get slightly happier as they climb the income scale, but this depends on how they experience growth. Does wealth inflame unrealistic expectations? Does it destabilize settled relationships? Or does it flow from a virtuous cycle in which an interesting job produces hard work that in turn leads to more interesting opportunities?

If the relationship between money and well-being is complicated, the correspondence between personal relationships and happiness is not. The daily activities most associated with happiness are sex, socializing after work and having dinner with others. The daily activity most injurious to happiness is commuting. According to one study, joining a group that meets even just once a month produces the same happiness gain as doubling your income. According to another, being married produces a psychic gain equivalent to more than $100,000 a year.

If you want to find a good place to live, just ask people if they trust their neighbors. Levels of social trust vary enormously, but countries with high social trust have happier people, better health, more efficient government, more economic growth, and less fear of crime (regardless of whether actual crime rates are increasing or decreasing).

The overall impression from this research is that economic and professional success exists on the surface of life, and that they emerge out of interpersonal relationships, which are much deeper and more important.

The second impression is that most of us pay attention to the wrong things. Most people vastly overestimate the extent to which more money would improve our lives. Most schools and colleges spend too much time preparing students for careers and not enough preparing them to make social decisions. Most governments release a ton of data on economic trends but not enough on trust and other social conditions. In short, modern societies have developed vast institutions oriented around the things that are easy to count, not around the things that matter most. They have an affinity for material concerns and a primordial fear of moral and social ones.

This may be changing. There is a rash of compelling books — including “The Hidden Wealth of Nations” by David Halpern and “The Politics of Happiness” by Derek Bok — that argue that public institutions should pay attention to well-being and not just material growth narrowly conceived.

Governments keep initiating policies they think will produce prosperity, only to get sacked, time and again, from their spiritual blind side.

13 small things to simplify your workday

“Do the difficult things while they are easy and do the great things while they are small. A journey of a thousand miles must begin with a single step.” ~Lao Tzu

Post written by Leo Babauta.

One of the best things I did when I decided to simplify my life was to simplify my workday — first at my day job and later, by quitting my day job, in the work I do now as a writer and entrepreneur.

I’ve eliminated most of the routine, boring, administrative tasks with a few simple principles.

These days, I have eliminated the non-essentials, and can focus on what I truly love: creating.

Not everyone can make such drastic steps toward simplicity, but if you have some control over your workday, you can do a few small things that will simplify things greatly.

If you don’t have control, or if you find yourself thinking, “I can’t do these things”, I’d start to ask why not? Is it possible to change things, if not today then over the long term? I found that often I thought something wasn’t possible (working from home, for example), but in the long run they were.

You don’t need to do all of these things — pick just one, and try it. Then try another and see if it works. Experiment to find what works for you.

And enjoy the simple work life.

1.  Start early. Going into work early was one of my favorite tricks — it was quiet, before the phones and chatter and meetings started, and I could get a lot of work done in peace. By the time everyone else was getting started, I’d gotten two or three big tasks checked off.

2.  Limit your hours. It’s ironic, because so many people work long hours and think they’re getting more done and being more productive. But they’re throwing brute hours at the problem. Instead, cut back on your hours and set a limit — say 6 or 7 hours a day — and get your most essential work done within that limit. If you know you’re only working 6 hours today, you’ll be sure to get the important tasks done first and waste less time. Limits force you to be effective.

3.  Make a short list. Make a long list of all the tasks you need to do … then make a short list of 1-3 things you really want to get done. Choose so that, if you got only these tasks done, you’d be proud of what you did today. Start with the most important task, before checking email or reading online.

4.  Batch distractions. What are your common distractions? Perhaps things like email, reading blogs, Twitter or another social network? Set a time for these, preferably later in the day: say, from 3-4 p.m. Don’t do the distractions before then. By grouping them all into one time period, you allow yourself to do other work first, but still get in your distraction time. Another approach might be to do them for 10 minutes at the end of each hour — but stick to that 10-minute limit!

5.  Write shorter emails. If email takes up a lot of your day, the simple change of limiting yourself to 3-4 sentences per email will make a big difference. First, it’ll drastically shorten the time it takes to write or respond to emails. And second, it’ll shorten responses to your emails, which means you’ll spend less time reading email.

6.  Limit meetings. The fewer the better. Some top Google executives just do 5-minute meetings — anyone who attends these meetings had better be prepared, and concise. If you can get out of meetings and just get the notes, or find an alternative way to communicate, it could save you hours per week.

7.  Automate. The fewer repetitive and routine tasks you have to do, the more time you’ll free up for creating and important work. So automate wherever possible: have people fill things out electronically, or get info from your website instead of emailing or calling you, or use a service that automatically processes payments or ships your product, and so on.

8.  Eliminate paperwork. I used to deal with a lot of paperwork, and even then I knew it was a waste of my time. If businesses and organizations could have paperwork filled out electronically, it would save a lot of paper, copying, filing, and duplicate effort. Whenever possible, eliminate paperwork in favor of digital. This might be more of a long-term move.

9.  Clear your desk. This can be done in a few minutes. Clear everything off the top of your desk. Only put back a few essential items. Everything else should be: filed, given to the appropriate person, given a permanent spot in a drawer, or trashed/recycled. Make quick decisions and then get back to work.

10.  Get away. If you can get out of your office, you can find a peaceful spot where you can focus on important work. Find a spot where you can work, turn off the Internet and do your work, and then turn the Internet back on so you can email or upload it to the appropriate spot. Working from home is a good option here. The more you can do this (it might be once a week, or an hour a day, or half of every workday), the better.

11.  Take breathing breaks. Every 15-20 minutes, get up from your desk, and take a breathing break. It could be simply walking around the office, saying hi to someone, or even better, getting outside to get some fresh air. Walk around, get your blood circulating, perhaps massage your neck and shoulders if you feel tension. Do some pushups if you want to get fitter. When you get back to work, remind yourself what you want to be working on, and clear away all distractions.

12.  Practice a focus ritual. Every hour or two, do a refocus ritual. This only takes a minute or two. You might start it by closing down your browser and maybe other open applications, and maybe even take a walk for a couple of minutes to clear your head and get your blood circulating. Then return to your list of Most Important Tasks and figure out what you need to accomplish next. Before you check email again or go back online, work on that important task for as long as you can. Repeat this refocus ritual throughout the day, to bring yourself back. It’s also nice to take some nice deep breaths to focus yourself back on the present. More focus rituals.

13.  Schedule big blocks of creative time. Not everyone can do this, but when possible, put a big block of 3-4 hours in your schedule for creating or doing other important work. Make this time inviolate, and don’t allow meetings or other things to be scheduled during this time. Be ruthless about clearing distractions and doing the work you love during these blocks, taking breathing breaks as necessary. Rejoice in your creativity.

Saturday, March 27, 2010

Blame is Contagious, Except When People Have High Self-Worth

Blame is Contagious, Except When People Have High Self-Worth

1. One of the most revealing tests of a leader or organization is "what happens when people fail" (especially, creating psychologically safety rather than a climate of fear is important, as is accountability for mistakes).

2. Emotions, especially negative ones, are dangerously contagious.  Indeed, one of the main themes of The No Asshole Rule is that one of the most reliable way to turn into a jerk is to have a boss who is a jerk or to enter a swarm of of them -- it is hard to resist catching the poisoning. 

A recent study by Nathaniel Fast at USC (who got his PhD at Stanford) and Stanford Business School Professor Larissa Tiedens in the November, 2009 issue of theJournal of Experimental Social Psychology provides compelling new evidence of the nuances of how an especially vile form of nastiness spreads -- blaming others when things go wrong.  The article is called “Blame Contagion: The Automatic Transmission of Self-Serving Attributions” and is apparently the first series of experiments that have ever examined if blaming others spreads like a contagious disease. Plus it contains a fascinating twist -- blame was highly contagious EXCEPT when the researchers first took steps to help research subjects bolster their self worth.  There is a great summary of on the USC website here.  But some key highlights are (quoted from the summary):

1. Anyone can become a blamer, Fast said, but there are some common traits. Typically, they are more ego defensive, have a higher likelihood of being narcissistic and tend to feel chronically insecure.

2. The experiments showed that individuals who watched someone blame another for mistakes went on to do the same with others.In one experiment, half of the participants were asked to read a newspaper article about a failure by Gov. Schwarzenegger, who blamed special interest groups for the controversial special election that failed in 2005, costing the state $250 million. A second group read an article in which the governor took full responsibility for the failure. Those who read about the governor blaming special interest groups were more likely to blame others for their own unrelated shortcomings, compared with those who read about Schwarzenegger shouldering the responsibility. (the emphasis in mine).

3. Another experiment found that self-affirmation inoculated participants from blame. The tendency for blame to spread was completely eliminated in a group of participants who had the opportunity to affirm their self-worth. “By giving participants the chance to bolster their self-worth, we removed their need to self-protect though subsequent blaming,” Fast said.

This last finding is especially important and has all sorts of interesting implications for leadership, life, and  especially politics.  Apparently, pointing fingers at others is not only contagious, it is amplified by insecurity and apparently eliminated when people feel valued and esteemed.   Note this crucial to the effectiveness of a group or organization because, when something goes wrong, if the response is a "circular firing squad" as I have heard it called, then not only do people devote their energy to attacking each other, they have less energy -- and little incentive -- for working on repairing the problem.

Also, this research perhaps helps explain the sad state of much of American politics these days. Blamestorming is a contagious disease that has spread and I am confident that among those in the political ranks (or who aspire to higher office) the incidence of insecurity and especially narcissism is very high.  As an example of someone who plays in both spheres, Carly Fiornia former HP CEO and now candidate for Senate in California was infamous for her narcissism and her penchant for blaming others, as documented in the Fortune article that finally drove he board to fire her.  Turning to her new life as a politician, if  you have not seen her Demon Sheep Attack Ad, you have missed something weird and wonderful). Although Carly does not suffer from insecurity, the narcissism findings ring true.

To return to leadership and management, the lesson from this new research, as well as many other studies of psychological safety. is that great bosses treat mistakes as an opportunity to learn, develop careers, and make the system stronger. And, yes, for accountability too.  As the USC summary of the above research indicates, there are organizations out there that are remarkably good at learning from mistakes, rather than as an opportunity for finger-pointing and humiliation of culprits:

Or managers could follow the lead of companies such as Intuit, which implemented a “When Learning Hurts” session where they celebrated and learned from mistakes, rather than pointing fingers and assigning blame. The blame contagion research provides empirical evidence that such a practice can avoid negative effects in the culture of the organization.

This is damn good advice for any boss.

Friday, March 26, 2010

Refuse to Be Afraid

Michael Josephson Commentary: Refuse to Be Afraid

Tim Wrightman, a former All-American UCLA football player, tells a story about how, as a rookie lineman in the National Football League, he was up against the legendary pass rusher Lawrence Taylor. Taylor was not only physically powerful and uncommonly quick but a master at verbal intimidation.

Looking young Tim in the eye, he said, “Sonny, get ready. I’m going to the left and there’s nothing you can do about it.”

Wrightman coolly responded, “Sir, is that your left or mine?”

The question froze Taylor long enough to allow Wrightman to throw a perfect block on him.

It’s amazing what we can accomplish if we refuse to be afraid. Fear – whether it’s of pain, failure, or rejection – is a toxic emotion that creates monsters in our mind that consume self-confidence and intimidate us from doing our best or sometimes even trying at all.

As a law professor, I saw scores of capable students fail the bar exam, not because they didn’t know enough but because their anxiety hindered their ability to remember or coherently express what they did know.

For most law graduates, passing the bar exam should be no more difficult than walking across a board 20 feet long and two feet wide. The trouble is, they don’t walk normally because they’re intimidated by the illusion that the board is suspended 100 feet in the air and that getting across is a life-or-death matter. What’s the worst thing that could happen? Embarrassment, inconvenience, and expense – but none of these is fatal.

Perspective is an antidote to fear. Most things you fear will never happen, and even if they do, you can handle it.

This is Michael Josephson reminding you that character counts.

Monday, March 22, 2010

The Disease of Low Expectations

The Disease of Low Expectations, by Michael Josephson

The serious damage done to our economy, social institutions, and personal relationships by widespread cheating and dishonesty is bad enough. But widespread acceptance of such behavior as inevitable threatens to make our future a lot worse. In effect, our culture is being infected by a disease: the disease of low expectations.

The disease is manifested by the corrosive assumption that human nature can’t be expected to withstand pressures or temptations. In other words, when there’s a conflict between self-interest and moral principles, self-interest – in fact, short-term self-interest – will generally prevail.

Thus, whenever a politician lies to get elected, a student cheats to get into college, or an executive commits fraud to save a job or earn a bonus, we blame the system rather than the individual. Under the influence of the disease of low expectations, an increasing army of apologists argue that both the carrot and the stick – previously thought to be valid motivating techniques – should be condemned and eliminated as corrupting influences that create irresistible pressures to cheat.

A school superintendent in Iowa once told me, “Cheating isn’t the problem; it’s the way we test.” We can’t expect students not to cheat, he implied, especially when the stakes are so high.

I wonder whether he would be as comfortable with a similar explanation of recent corporate scandals: “Fraudulent accounting isn’t the problem; it’s the way we compensate executives.”

Don’t buy into this dreadfully pessimistic and perverted perspective about human nature. Cheating is wrong and harmful. Integrity is real and possible. It just takes character.

This is Michael Josephson reminding you that character counts.

Saturday, March 20, 2010

What Makes a City Entreprenurial?

February 2010

Harvard Kennedy School

What Makes a City Entrepreneurial?
By Edward L. Glaeser (Harvard University) and William R. Kerr (Harvard Business School)

Recognizing the powerful correlations between
entrepreneurship and regional economic
growth, state and local policymakers may well
want to do more to encourage entrepreneurship
in their communities. They should, however,
proceed cautiously because economic research
is only just beginning to fully understand key
issues, like the causes of spatial variations in
entrepreneurial activity.

However, the available evidence does suggest
a few tentative policy conclusions. First,
investing too much in attracting large, mature
firms may not be good policy. These fi rms may
provide an immediate headline associated with
new jobs, but growth is more reliably correlated
with small, independent fi rms.

Second, there is little reason to have much
faith in the ability of local governments to play
venture capitalist. Classic economic research
found that Japan’s Ministry of International
Trade and Investment, which was staffed with
Japan’s best minds, generally picked losers.
Why should local investment funds be able to
do any better? Moreover, the evidence linking
growth in local finance and entrepreneurship
suggests that the best role for government is
simply to encourage competition among local
banks and financiers. Finally, while venture
capitalists are highly concentrated in three
large areas—San Francisco, New York, and
Boston—they seem quite capable of investing
outside of those places.

Third, there is much to be said for the strategy
of focusing on the quality of life policies that
can attract smart, entrepreneurial people. The
best economic development strategy may be to
attract smart people and get out of their way.
This approach is particularly appealing because
the downside is so low. What community ever
screwed up by providing too much quality of

Finally, there is a robust link between
educational institutions and certain types of
high return entrepreneurship. The history
of Silicon Valley would be totally different
without Stanford. Good universities have
faculty members who are involved in
local start-ups and train students who may
become entrepreneurs and the employees of
entrepreneurs. These facts do not imply that
universities should be locally subsidized, but
they do suggest that imposing costs that restrict
the growth of such institutions can be costly

Ten Big Ideas Of School Leadership


Ten Big Ideas Of School Leadership

Principal Mike McCarthy shares 30 years of wisdom on how to run a school well.

by Mike McCarthy
Kathy Baron

Mike McCarthy
Credit: Michael Warren

During my senior year of college, I taught math to 26 inmates, none of whom had finished high school. What I faced was 26 examples of the failure of American education. What I did not realize is the profound effect this would have on my career as a school leader. After teaching for five years, I became a principal because I felt that I could help underserved kids better in that role. Here are ten ideas I have learned in the 30 years since I became a principal.

1) Your School Must Be For All Kids 100 Percent of the Time

If you start making decisions based on avoiding conflict, the students lose. This is what sustained me through one of my most difficult decisions. I asked the school district to let our school health center offer birth control after four girls became pregnant in one semester. For this group of kids, the health center at King was their primary health care provider. Although we offer birth control to our students, we are not the birth control school; we are the school that cares about all of its kids. This decision was the right one, and it cemented for all time the central values of King.

2) Create a Vision, Write It Down, and Start Implementing It

Don't put your vision in your drawer and hope for the best. Every decision must be aligned with that vision. The whole organization is watching when you make a decision, so consistency is crucial.

3) It's the People, Stupid

The secret of managing is to keep the guys who hate you away from those who are still undecided. (That's adapted from Casey Stengel.) Hire people who support your vision, who are bright, and who like kids.

4) Paddles in the Water

In Outward Bound, you learn that when you are navigating dangerous rapids in a raft, the only way to succeed is for everyone in the boat to sit out on the edge and paddle really hard, even though everyone would rather be sitting in the center, where it's safer. At King, in times of crisis, everyone responds with paddles in the water.

5) Find Time to Think During the Day

They pay me to worry. It's OK to stare at the wall and think about how to manage change. I have 70 people who work at King. Even the most centered has three bad days each school year. Multiply that by 70 people and that's 210 bad days, which is more than the 180 school days in a year. So, me, I am never going to have a good day -- just get over it.

6) Take Responsibility for the Good and the Bad

If the problems in your school or organization lie below you and the solutions lie above you, then you have rendered yourself irrelevant. The genius of school lies within the school. The solutions to problems are almost always right in front of you.

VIDEO: How Principal Mike McCarthy Sustains a Culture of Collaboration

Running Time: 07:31 min.

7) You Have the Ultimate Responsibility

Have very clear expectations. Make sure people have the knowledge, resources, and time to accomplish what you expect. This shows respect. As much as possible, give people the autonomy to manage their own work, budget, time, and curriculum. Autonomy is the goal, though you still have to inspect.

8) Have a Bias for Yes

When my son was little, I was going through a lot of turmoil at King, and I did not feel like doing much of anything when I got home. One day, I just decided that whatever he wanted to do, I would do -- play ball, eat ice cream, and so on. I realized the power of yes. It changed our relationship. The only progress you will ever make involves risk: Ideas that teachers have may seem a little unsafe and crazy. Try to think, "How can I make this request into a yes?"

9) Consensus is Overrated

Twenty percent of people will be against anything. When you realize this, you avoid compromising what really should be done because you stop watering things down. If you always try to reach consensus, you are being led by the 20 percent.

10) Large Change Needs to be Done Quickly

If you wait too long to make changes to a school culture, you have already sanctioned mediocre behavior because you're allowing it. That's when change is hard, and you begin making bad deals.

Mike McCarthy is the principal of Helen King Middle School in Portland, Maine. The Maine Principals’ Association (MPA) named him as Maine's 2010 Middle School Principal of the Year.

This article was also published in the April 2010 issue of Edutopia magazine as "Mike McCarthy's Ten Big Ideas Of School Leadership".

Thursday, March 18, 2010

The Best Business Model in the World

The Best Business Model in the World: "

One of the 'golden rules' of investing we have at our firm, Cue Ball, is that we value the business model over the financial plan. In fact, we value the business model over any particular sector for investment and like to say that we are 'business model driven' (versus sector-driven). There is not necessarily a consistent definition for business model, but the Wiki definition is good enough. It says a business model is 'the rationale of how an organization creates, delivers, and captures value.' Consistent with this definition, we see the business model as the explanation of how a firm translates an idea into value, or more bluntly, into money. There is no doubt that at the heart of a business model is the monetization model.

Over the years we have learned that having a business does not necessarily mean that you have a business model. Think of the dot-com heyday, when shipping 89-cent pet foot in an $18 Fed Ex package was a business. (Some of that delusional hubris has resurged in some recent online media businesses that believe that you can wait to figure out how you'll make money). Some call us an old school VC, but if you come knocking at our door looking to pitch your idea, you have to have clarity on how you are going to make money from your idea — cash flow is still the basis for a sound business the last time we checked.

In our previous lives running businesses, my partners and I have seen and experienced one business model that we love the best, based on fundamental cash flow and the ability to grow that cash flow as the business scales.

Here it is: recurring revenue + fixed cost leverage = superior cash flow.

If you can find a business that has highly repeatable revenues (and often paying in advance for that recurring revenue) and if you can keep your CAPEX to, say, less than 10%, then you probably have a winner. Businesses that capture this model are often correlated with some differentiated form of intellectual property (IP). Think about examples such as royalties from content; franchise fees from multi-unit branded chains; subscription revenues from software applications, licensing fees from brands, and licensing fees from technology or patents.

The unifying theme between all of these examples is that there is usually an upfront investment to develop some form of the IP (content, software, brands, retail formats, or technology) and once that is developed and proven there is an ability to charge for that product or service on a recurring fee basis. This is not necessarily a cheap investment but if you get it right, you create a defensible moat based on the IP created. From that point on, so long as on-going research and development and CAPEX can be managed, there is tremendous leverage in this model.

The buzz around SaaS (software as a service) is driven by the attractiveness of this 'build once run many times' model whereby the marginal cost of each incremental sale is diminutive. It is no coincidence that the most generous philanthropist and one of the world's richest men, Bill Gates, practices this business model.

During my years of working with my partner Dick Harrington at The Thomson Corporation (now Thomson-Reuters), we focused on finding and building 'must-have' information services that held the potential for highly repeatable revenue. Understanding that this was the goal, we focused maniacally on the metric of what percent of our revenue represented recurring revenue. Businesses that offer something that is 'must have' often exhibit recurring revenue of greater than 90 percent and that is what we eventually achieved across most of our businesses at Thomson. Or put another way, less than 10 percent of customers churn each year. We rarely consider a business model that is not approaching at least 75 percent recurring revenue, with the potential to get over 90 percent.

Another attractive characteristic of this model is that you often get the cash upfront. Consider subscriptions that get renewed and paid before the delivery of those services. While you need to recognize the revenue as services are delivered you have the benefit of upfront cash. As the digital age rapidly evolves, we are inspired and keep a close eye to those changes. But the most important thing for us is to see if those technologies and new businesses can have a rational business model.

There are of course examples of businesses that have had extraordinary valuations and liquidations events before they have demonstrated the soundness of a business model. But those businesses are more dependent on timing of value capture than the stability of true customer value and real sustainable cash flow generation.

But a business model where you get the vast majority of your customers coming back every year, where the cost to deliver an additional customer approaches zero at scale, and where you get a lot of the cash upfront — what more can you ask for? This is a business model we love and it may indeed be the best business model in the world.


Sunday, March 14, 2010

Six Steps of CEO Decision Making

Blogging Innovation: Six Steps of CEO Decision Making - Innovation blog articles, videos, and insights


Six Steps of CEO Decision Making

by Mike Myatt

If you incorporate the following metrics into your decision making framework you will minimize the chances of making a bad decision:

1. Perform a Situation Analysis: What is motivating the need for a decision? What would happen if no decision is made? Who will the decision impact (both directly and indirectly)? What data, analytics, research, or supporting information do you have to validate the inclinations driving your decision?

2 Subject your Decision to Public Scrutiny: There are no private decisions. Sooner or later the details surrounding any decision will likely come out. If your decision were printed on the front page of the newspaper how would you feel? What would your family think of your decision? How would your shareholders and employees feel about your decision? Have you sought counsel and/or feedback before making your decision?

3. Conduct a Cost/Benefit Analysis: Do the potential benefits derived from the decision justify the expected costs? What if the costs exceed projections, and the benefits fall short of projections?

4. Assess the Risk/Reward Ratio: What are all the possible rewards, and when contrasted with all the potential risks are the odds in your favor, or are they stacked against you?

5. Assess Whether it is the Right Thing To Do: Standing behind decisions that everyone supports doesn't particularly require a lot of chutzpah. On the other hand, standing behind what one believes is the right decision in the face of tremendous controversy is the stuff great leaders are made of. My wife has always told me that "you can't go wrong by going right," and as usual I find her advice to be spot on. Never compromise you value system, your character, or your integrity.

6. Make The Decision: Perhaps most importantly you must have a bias toward action, and be willing to make the decision. Moreover as a CEO you must learn to make the best decision possible even if you possess an incomplete data set. Don't fall prey to analysis paralysis, but rather make the best decision possible with the information at hand using some of the methods mentioned above. Opportunities and not static, and the law of diminishing returns applies to most opportunities in that the longer you wait to seize the opportunity the smaller the return typically is. In fact, more likely is the case that the opportunity will completely evaporate if you wait too long to seize it.

If you develop the appropriate blend of a bias to action with an analytical approach to decision making your stock as CEO will surely rise. Good luck and good decision making...

Saturday, March 13, 2010

The Wisdom Manifesto - Umair Haque - Harvard Business Review

The Wisdom Manifesto - Umair Haque - Harvard Business Review

    The Wisdom Manifesto

Today's zombieconomy has been a long time coming. If 
you've been following our discussions, you saw it rising 
as early as 2006. The roots of this deep recession are 
about what zombies lack: consciousness, intelligence, 
and, at root, wisdom.

America, it was once said, is the richest country in the 
world. And though Wall St, Washington, and Europe 
are focused on exploding deficits and rising debt
both are effects of a deeper cause. We're poor in the 
single way that counts the most: In terms of institu-
tional capital, we're bankrupt. It is institutions that 
allocate and create mere financial capital — and 
without better ones, we're learning, prosperity must 

There's a simpler way to express institutional capital. 
It's about wisdom. It is because we've beggared our-
selves of wisdom that we're bereft of cash, jobs, and 
meaning.  The scarcest, rarest, and most valuable 
resource in the world today is wisdom. The coun-
tries, companies, and people that possess it will pros-
per. In many ways, wisdom is the opposite of strategy 
— and today, it is strategy, bought by the dozen from 
legions of besuited, back-slapping consultants, that is 
cheap, abundant, and worth little.

How large is the economic gap between wisdom and 
strategy? It begins in the billions. JPMorgan wasn't wise, 
and now it has to set aside $3 billion in "model-
uncertainty reserves." Toyota wasn't wise — and the 
price of that lack of wisdom is already $10 billion and 
rising. Think wisdom's warm-and-fuzzy? 

Think again. It's as hard-as-nails, and as sharp as a razor.

Here's a nine step plan to go beyond mere strategy and 
begin bringing a little wisdom into your own organization.

Express. Most organizations have values — vague, boring, 
meaningless statements about what's important to...them. 
Values, of course, are the basis of strategy. That kind of 
megalomaniacal egoecontricity's so 20th century. Wisdom 
isn't about what you "value" — it's about how everyone values 
you. To get wise, articulate your essence: the change you 
want to see in the world. That means literally crafting a 
statement of intent about "the world", like Google: "to 
organize the world's information and make it universally 

Energize. Wisdom doesn't happen by hanging out in the 
VIP section and sipping Grey Goose — though the deal-
making of strategy often does. It happens by understanding 
the who, why, what, and how of suffering. Do you, or does 
your organization spend any time with those who are made 
worse off by what you do? Almost none do. But that's the 
only source of the most explosive kind of horsepower — 
not just physical or intellectual energy, but emotional 
and ethical energy.

Channel. Once you're energized, it's time to channel 
your energy most productively. How wide is the gap 
between the change you want — and the change that 
is? Most people, like most organizations, focus on 
living up to a "best practice", or living to the expecta-
tions of beancounterly analysts or warmongering chief-
tains. Forget it. Wisdom is measured against a higher 
standard than mere strategy: the one set by what people, 
communities, and society lack. If your organization 
doesn't have them yet, start building them.

Ignite. Strategy is carried out militaristically, by doling 
out formulaic tasks to be completed. Wisdom, in 
contrast, requires space for experimentation and play — 
for people to find new ways to change the world. 
Google's 20% time is going the way of dinosaur — 
and so, unfortunately, is its wisdom. If you don't get 
time at work to ignite wise ideas, ask for some, or 
better yet: take some.

Evoke. Strategy is the application of force. Wisdom 
is the application of love. Strategy suppresses, but 
Wisdom evokes. Its test is the ability to spark new 
ideas, concepts, and solutions. That is how to be 
valued by people, communities, and society — and 
it's what Starbucks is learning at mystarbucksidea
The lesson? Stop working and start evoking.

Examine. Apple won't be defeated the day Microsoft 
makes an Applier phone. It will be defeated the day 
Apple makes a more Microsoftian gadget. The rule? 
Strategy's battle is defeating a rival, by any means 
necessary. But Wisdom's battle is the real one: never 
to compromise your essence, the way you want to 
change the world. Wise organizations — like wise 
people — spend time every day examining whether 
the rot of compromise has led, unintentionally, to 

Raise. Strategy is concerned with the low: profit, 
here and now, by any means necessary allowed 
within the rules of the game. Wisdom, in contrast, 
is about what's higher. Can you hold yourself up to 
a higher standard than the bare minimum rule-makers 
ask for — and by doing so, create morevalue? That's 
the difference between Wall St's "regulatory arbitrage" 
real-world question Wisdom asks to ask ourselves 
every day to reset and continually raise the bar.

Be. Strategy is about doing; wisdom is about being. 
Strategy asks us to seek examples of people or 
organizations who are "doing things right" — and 
do what they did. The result? At best, a lack of 
improvement, and at worst, a vicious downward spiral 
in standards, quality, and value creation. Stop look-
ing for examples. Set an example. One that, like 
Threadless, the world hasn't seen before — because 
no one's had, well, the wisdom.

Renew. Strategies are as disposable as a cheap 
plastic razor. But wisdom is eternal. And that means 
that it's a ceaseless quest for learning. Here's the 
measure of a wisely spent day: one where you learned 
five new things. At the end of the day, can you articulate 
them? If you can't, odds are you're not acting wisely. 
Wise organizations institutionalize everyone's daily 
learning, and a simple path to wisdom is to be the 
person in your organization that brings the Rule of 
Fives to life.

Are you wise — or merely clever, smart, and cunning? 
If it's the latter, prepare to be hit by a neutron blast of 
disruption. The 21st century isn't just about bigger and 
faster: Strategy is obsolete. It's time to wise up.

Wisdom is a Jupiter-sized topic. The principles above 
are far from the only ones, the best ones, or the "right" 
ones. So fire away in the comments with your own 
principles, reflections, or further examples.