“As the parent of a four-year-old and a four-year-old who just inherited an additional $540 billion in bailout this week (on top of the $840 billion that everyone already knew about), I felt the need to write a primer that speaks to them.” A primer on the subprime mortgage crisis, written for the young ones. [via hoovers biz]
Tag: business
Liar’s Poker: Rising Through the Wreckage on Wall Street (review: 4/5)
This makes the third Michael Lewis book I’ve read (see also my take on Moneyball and The Blind Side from last fall). It’s another good one. Liar’s Poker is Lewis’ first book. He writes about his years on Wall Street working with the Salomon Brothers investment firm during the heady 1980s. It’s a biography of the company’s internal breakdown and the revolutions that swept through the investment banking industry (like mortgage-backed securities and junk bonds) that made some people piles and piles of money.
Lewis’ writing is good and often funny:
The greatest of absurdity of the college investment banking interview was the people the investment banks sent to conduct them. Many of them hadn’t worked on Wall Street for more than a year, but they had acquired Wall Street personas. One of their favorites words was professional. Sitting stiffly, shaking firmly, speaking crisply, and sipping a glass of ice water are professional. Laughing and scratching your armpits are not…
I did not learn much from my stack of Wall Street rejection letters except that investment bankers were not in the market for either honesty or my services (not that the two were otherwise related). Set questions were posed to which set answers were expected. A successful undergraduate investment banking interview sounded like a monastic chant.
Lewis manages to get in to Salomon Brothers through some lucky connections, makes it through the months of lectures and hazing of the training program, and finally gets to the trading floor that’s dominated by a law-of-the-jungle ethos. Some of the best parts are these antics among the workers. People throwing phones at trainees, office pranks, verbal abuse, gluttony (“We’d order four hundred dollars of Mexican food,” says a former trader. “You can’t buy four hundred dollars of Mexican food. But we’d try—guacamole in five-gallon drums, for a start.”). It’s wonderfully disturbing.
If you are a self-possessed man with a healthy sense of detachment from your bank account and someone writes you a check for tens of millions of dollars, you probably behave as if you have won a sweepstakes, kicking your feet in the air and laughing yourself to sleep at night at the miracle of your good fortune. But if your sense of self-worth is morbidly wrapped up in your financial success, you probably believe you deserve everything you get. You take it as a reflection of something grand inside you. You acquire gravitas and project it like a cologne.
Lewis nails both the bizarre sociology inside the firm and the broader industry shifts. A lot of the stuff about mortgage bonds and junk bonds gives a good background on what’s happening on the market right now. Definitely worth reading.
Dan Roam has shared the “Napkin Tools” from his book. (I wrote a wee review of The Back of the Napkin a while ago). New offerings in PDF format include the Visual Thinking Codex, the SQVID, and the Rule.
When I heard that milk jugs are being redesigned for better efficiency, I felt a sort of witless glee. Part of that is my usual response to efficiency. And also because most of my high school employment was in the local Kroger, stores #444 and #432 (I still remember that…?). I mostly did night stock, but also spent one summer in the Dairy section. Although throwing crates around in the heat of the shelving moment is really fun,1 dealing with crates is a chore, every single day. Some days I would have killed for a nice waist-level pallet of jugs, rather than a 7-foot tower of crates. There’s also a good audio slideshow about the square milk jugs and some of the problems the customers are having. [via austin kleon]
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1. Plenty of reasons I really liked stock work (lots of trade-offs, but still noteworthy): I got to work alone, but plenty of joking and yelling back and forth. I could yell or sing when I wanted. I got to walk around. There were very few irate customers at 3am, unlike a Saturday afternoon bagging groceries. There’s also a good bit of healthy destruction involved (wielding a box cutter, breaking down cardboard, tossing damaged product out in the aisles, etc.). And on most nights, things looked perfect when I’d leave in the early morning. I love that severe contrast. Make an absolute mess when I’m working, and then polish it to something where no one can tell it was any different.
MagCloud is a new print-on-demand service just for magazines. I’m surprised this didn’t exist already.
I like the idea of a corporate artist in residence. Surely a few companies would buy into it?
The Back of the Napkin (review: 3.5/5)
Dan Roam does a pretty good job with this one: The Back of the Napkin: Solving Problems and Selling Ideas with Pictures. One of Roam’s main arguments (sometimes belabored) is that we were all comfortable drawing when we were in kindergarten. Somehow we got frigid. We play visually dumb. We don’t need to.
Visual thinking is neglected, but luckily we’re hard-wired for it. When we see things, we instinctively begin to sort out the essentials and answer a few questions. We can’t help it:
- who/what?
- how much/many?
- when?
- where?
- how?
- why?
Visual thinking borrows from that natural process a bit more intentionally. It starts with looking (collecting & screening data), seeing (selecting & grouping), then imagining (reconfiguring, manipulating, analogizing), and finally showing (cleaning up, putting it all together). And, hey, what do you know… according to Roam’s model, the ways we see things and the questions we need to answer match up directly with the tools we have to show things:
- who/what? = portraits
- how much/many? = charts
- when? = timelines
- where? = maps
- how? = flowcharts
- why? = multi-variable plots
That’s one of the basic insights that’s really nice to be reminded of. We have specific tools to answer specific questions. Roam also has the SQVID, a framework that helps you figure out how to present the information in the most appropriate way for the intended audience, tracing your way through 5 choices:
Simple vs. elaborate
Quality vs. quantity
Vision vs. execution
Individual attributes vs. comparison
Delta (change) vs. status quo
And when you cross-reference the SQVID with the model, you get a codex that guides you to whatever pictures you need to make for the problems you need to solve. The acronyms and frameworks sound a bit confusing outside of the book, but Roam ties it together pretty nicely with lots of visuals throughout. And it’s actually kind of… practical. That doesn’t mean that the products of visual thinking are guaranteed to be easy or simple, no more than writing or talking about the ideas would be:
One of the most important virtues of visual thinking is its ability to clarify things so that the complex can be better understood, but that does not mean that all good visual thinking is about simplification. The real goal of visual thinking is to make the complex understandable by making it visible—not by making it simple.
An obvious weakness for the book: it’s really hard to learn something like this from a book. You can learn about it. But it’s one of those things that you have to DO, and more examples are always helpful. The long case study that takes up the last 40% of the book lets you see the different frameworks in action, but it’s also kind of boring to read about the same fictional software company and its fictional competitors and fictional customers for 100 pages. I imagine this was a tough part of the book to write as well.
I’d still recommend it. Heaven knows it’s refreshingly different from most of the other books in the business section, and there’s some real meat in there.
For one year I worked at a regular nine to five job, and I remember well the strange, cozy feeling that comes over one during meetings. I was very aware, because of the novelty, that I was being paid for programming. It seemed just amazing, as if there was a machine on my desk that spat out a dollar bill every two minutes no matter what I did. Even while I was in the bathroom! But because the imaginary machine was always running, I felt I always ought to be working. And so meetings felt wonderfully relaxing. They counted as work, just like programming, but they were so much easier. All you had to do was sit and look attentive.
Meetings are like an opiate with a network effect.
The Definitive Drucker (review: 2.5/5)
It’s almost always the anecdotes that bore me in business books. The Definite Drucker is a sort biography of the ideas of Peter Drucker, the late consultant and management guru. I like a lot of the theory and philosophy, but when we get to the struggles of Motorola’s supply chain or decreasing overhead at Colgate-Palmolive, I tune out a little bit.
But it’s not at all hard to cherry-pick some good stuff, and Drucker is full of good ideas. Here’s one line in particular that I’d really like to bust out in a meeting: “What would it take for us to seriously consider this idea?”
There’s another interesting bit about specializing in what you’re good in, “core competencies” if you must. The analogy is to distinguish between your “front room” and “back room”. The last line is great:
The first step in structuring a collaboration is to identify your company’s ‘front room,’ which Peter defiined as your strengths, or the activity that is most important for you to do—that which stirs your passion and shows off your excellence. Everything else is your backroom, and it can be almost everything. One of Peter’s famous quotes is, ‘the only thing you have to do is marketing and innovation.’
If you’re sufficiently focused, “the only thing you have to do is marketing and innovation.” What a great goal.
The last little tidbit I really liked is about management style, bureaucracy, and decision-making. Again, the last line is fantastic:
It is part of our basic strategy to maintain the kind of working atmosphere that is attractive to the high-talent people we need to serve our clients well. Such an approach should include a philosophy of relying on autonomy and responsible self-government by the individual just as far as we can. Operationally, this means that the burden of proof should always rest with the proponent of centralized control and bureaucratic rules.
Update: Oh, and one more line that I twittered the other day: “It is good to do one thing right. Don’t do too much.”
Business on the back of the napkin, a slideshow of basic doodling frameworks: portraits, charts, maps & timelines.
A long essay on why crunch mode doesn’t work. The gist is that productivity peaks within the first 4, 5, or 6 hours of the day, then starts dropping. Eventually it dissolves completely. In the long run, that continuous overtime isn’t helping you or your company.
A Whole New Mind (review: 2.5/5)
I first heard about A Whole New Mind: Moving from the Information Age to the Conceptual Age when Joshua Blankenship posted this excellent quote from author Daniel Pink. Great stuff, so I found the book, which isn’t as great.
The premise is that the Information Age was led by left-brained, linear-thinkers. Now, as we enter the Conceptual Age, the balance is shifting such that right-directed, sympathetic, synthetic thinkers are more and more valuable.
To survive in this age, individuals and organizations must examine what they’re doing to earn a living and ask themselves three questions:
- Can someone overseas do it cheaper?
- Can a computers do it faster?
- Is what I’m offering in demand in an age of abundance?
Luckily the book isn’t about outsourcing paranoia, but about some soft skills and sensibilities you’ll need: Design, Story, Symphony, Empathy, Play, and Meaning. The book is heavy on the anecdote, and generally light-hearted, but not particularly gripping. Like some other pop-business books I’ve read like The Long Tail and The Tipping Point, I think it would have been great as a long essay. As a book it feels a bit thin. I’ve heard excellent things about Pink’s other book Free Agent Nation, so maybe that’s worth a look.
I’m really fascinated with this idea of coworking. The trend has gotten some press in NPR, Business Week, Wired, and the New York Post, among others. Folks like Jelly, Citizen Space, and Independents Hall are all doing really cool things, making a business of it. Looks like there’s a coworking group just getting started in Atlanta, too.
Making Memes
Tim Walker writes about meme entrepreneurship. I love it. Go read it. Unless I misunderstand the point, it seems like a lot of folks are already working in that vein—writers. Just glancing at my bookshelf, there’s Florida and his Creative Class, Friedman and his Flat World, Weinberger‘s Miscellany, Anderson‘s Long Tail.
I don’t mean that to sound flip, because I think these all occupy an interesting middle ground. The ideas aren’t quite as heady and broad as, let us say, praxeology (brilliant though it is). But they’re a step up from the mundanities of something like Six Sigma. For the most part, the far ends of that bell curve can be safely ignored, unless it happens to be your pet interest. But if you’re paying attention, strong arguments in that middle ground can force a conversation. That is what great memepreneurs do well.
Tim brings out a political example to contrast bad memes with fruitful memes. “Bush is stupid” vs. ÄúBush pursues dangerous ideas—expensive dangerous ideas.Äù The latter is more effective because it comes across as not a simple couched argument or opinion, but an invitation to explore. Provocative, sure. Good memes usually are. But more than that, it’s actually a functional starting point. The best memes are forward-looking.1 That’s one reason I always liked political theory more than any other field of political science. I get to escape those messy details of policy and history and think about what could be.
I’ll let Tim close it out:
We need better memes in the world to counter all the stupid ones that drive so much of our behavior. I would say Äúthat drive so much of our thinking,Äù but in fact the purpose of many of these memes is to relieve us from thinking, so that we reflexively reach for the products weÄôve had marketed to us, or reflexively reach for the attitudes that favor certain special interests within the society. (Note that these special interests can be political, commercial, religious, or what have you. I take the broad view here.) But those of us who are awake to these tendencies can work to shape them in other, better directions.
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1. Bureaucrats and pundits are not. Though I’m willfully ignorant talking-head culture, I’ve seen enough to convince me that they tend to be far more concerned with digging up old grievances and winning now than actually caring about the future. It’s the nature of the gig. See “Property Rights and Time Preference” [pdf]
A Toyota factory in Georgetown, Kentucky, has a fairly relentless culture of improvement: “Doing the task and doing the task better become one and the same thing. This is what it means to come to work.”
Small is the New Big: and 183 Other Riffs, Rants, and Remarkable Business Ideas (review: 3.5/5)
I love the jacket design Small is the New Big. Really, how could you not pick it up? And luckily, the contents of Seth Godin’s collection don’t disappoint too much.
This is one of those books I like to call “toilet books”–a collection of short, snappy sparks to get you thinking about how to be better. Sort of a daily devotional for marketing and entrepreneurial nerds. It’s hard to summarize because he zips (or is that zooms?) from topic to topic, but you’ll find that Godin is obsessed with: freebies, lagniappe, surprises; JetBlue; change; agility; remarkableness; customer advocacy; etc. And he’s similarly frustrated with: protocol, American Airlines, stagnation, old-school advertising, risk aversion. Worship is reserved for the relentlessly focused who are doing special work on their own terms. Cool. It’s a nice little anthology, Godin has some great ideas and thought experiments, and I had some truly ‘eureka’ moments. But is it remarkable? It’s worth a glance or two.
Hugh MacLeod has 10 questions for Seth Godin. Seth on wealth: “Look, there are 8 million millionaires in the USA. Why do these people go to work every day? Why not downsize appropriately and just sit on the beach? Because they’re too smart. They realize that the purpose of living isn’t to bake in the sun until you die.”
The Tipping Point (review: 2/5)
I’d seen this book pop so often recently I figured it was some sort of sign. I have to say, The Tipping Point was about as disappointing as Malcolm Gladwell‘s more recent book, Blink. Which doesn’t necessarily mean it was bad, just disappointing.
The topic is the “tipping point,” that mysterious fulcrum where obscure flips to famous, niche products turn to commodities, where just a nudge can cause dramatic changes.
What I was really interested in was the tipping point itself. I wanted Gladwell to really dig in to that moment, that place of change–what I actually read was mostly about popularity and influence in general. I think the book suffers from too few examples explored too deeply–e.g., 40 pages on strategies for children’s television production. Perhaps more disappointing is that, like Blink, this is something of a “feel-good” book, even though it still feels journalistic. I didn’t perceive much passion or much challenge. The book ended up feeling less like an well-constructed argument than a guided tour.
On the upside, I can appreciate that Gladwell is perceptive enough to come up with this idea, to identify some tipping influences, and show how this arises in everyday life. As in Blink, he does a great job of digging up those obscure little psychology and sociology studies and expanding on them, not to mention some great interviews. Like always, Gladwell’s writing is very accessible, and it only takes a couple hours to breeze through. Take it or leave it.
Mark Larson 