The benefits of limiting your freedom

Posted on September 18, 2019

A tale of two cities

Detroit was a uniquely American success story. Originally a strategically situated trading post, it rose to its greatest prominence in tandem with the booming automotive industry. The city was home to several pioneering industrialists whose names still appear on car badges. Drawn by the thriving economy, the population swelled nearly tenfold from the late 1880s until it peaked not far from the two million mark in the 1950s.

That would unfortunately be the high point of the city’s arc. Social unrest and economic dislocations soon led to a dramatic exodus of jobs and people, which triggered a steady downward spiral. Increasingly drained of resources, the city was unable to provide basic services and blight began to consume whole neighborhoods. Many with the means to leave did so, amplifying the burden on remaining taxpayers. In 2013 the process hit its natural endpoint, when Detroit filed for the largest municipal bankruptcy in American history. Read more…

The only larger government wealth funds are either based on oil resources or are owned by China, which has 250 times Singapore’s population. ↩
The U.S. Constitution is often considered to be an exemplar of inflexibility, as changing it is extremely difficult, requiring the coordination of so many diverse stakeholders that it is very rarely done. That’s either a feature or a bug, depending on your point of view. ↩
Echoed in Jesus’s admonition to “enter by the narrow gate, for wide is the gate and broad is the way that leads to destruction.” ↩
A fifth-grade classmate once forced me to hold a ten-dollar bill of his the weekend before a class trip, as he knew he wouldn’t be able to resist spending it if it was in his pocket. As it wasn’t mine I couldn’t spend it either, so Brian had his $10 safe and sound the next week. ↩

out over one’s skis

Posted on September 12, 2019

to be extended past the point of stability or what is warranted by the facts, or to have slightly exceeded the bounds of competence, credibility, or prudence, such that one now risks embarrassment or potentially losing control of the situation should things accelerate; from the principle in downhill skiing that the one should remain balanced properly over the skis’ contact points, so as to avoid loss of equilibrium and a potential wild tumble down the slope, which can happen quickly depending on the steepness of the mountain; to be out over one’s skis is usually due to callowness or eagerness but not bad intent, and the use of this expression can be a gentle admonition to someone without impugning their motivations, as in “I know you wanted to make a good impression but disclosing those results early means we’re now a bit over our skis”

Why you’re not as smart as you think

The pitfalls of experience

Posted on September 11, 2019

The Midas touch

Imagine you’ve been wildly successful in a highly visible role, celebrated for your genius in introducing innovations to a market not traditionally known for them. On the strength of that track record you vault into another space with untapped potential, and once again everything you touch becomes gold. You have already exceeded expectations twice when a new opportunity beckons.

It would be natural to extrapolate from experience and assume your vision will translate smoothly to this new situation. After all, those instincts are what made you so effective. Apply more of the same magic, and what could go wrong?

In the case of one prominent retail executive, the answer was almost everything. Along the way a company with a storied heritage was nearly driven off a cliff. But rewind to the beginning of the story, when there was far more promise.

Ron Johnson got his start at Mervyn’s, a solidly middle-of-the-road department store owned by a retail conglomerate with a portfolio of brands. Among these was Target, at the time an unremarkable concept that happened to be headquartered in Johnson’s hometown. He moved over to that chain, arriving in time to help shape Target’s ascent from undifferentiated retailer to mass-market tastemaker. Read more…

Earning it the nickname “Tar-ZHAY”, pronounced in the French style, as the associations between elan and Frenchiness are obvious to all. ↩
This was the era of the “Dude, you’re getting a Dell” guy advertising computers available through their website. Dell then was all about direct-to-consumer and as of 2019 still has no dedicated retail stores. They had a plan and they’re sticking to it. ↩
The Apple Store on Fifth Avenue in Manhattan beneath the iconic glass cube is open 24 hours a day, for those who for some reason need to make large financial outlays on premium tech at three in the morning. ↩
These stores also turned out to be the perfect place to hawk iPhones, although they didn’t come out until 2007. ↩
Literally, as in he kept his residence in California and flew in to the office near Dallas on a private jet. ↩
As per the usual conventions of corporate politics, Johnson was technically told by the board that his resignation would be accepted. And he ended up losing the $50 million, but don’t feel too bad for him—his Apple wealth means he won’t be hustling on LinkedIn to find a job.↩
Perhaps, but history will not record any alternate outcomes. ↩
Evoking James Baldwin’s related quote on the matter: “If the relationship of father to son could really be reduced to biology, the whole earth would blaze with the glory of fathers and sons.” ↩
And in the aggregate always will be, this side of paradise. ↩
As the saying goes, it’s better to be lucky than smart. ↩

eye chart

Posted on September 5, 2019

a graph or slide featuring a thoughtless jumble of dense text or objects, poor layout, hard-to-read color schemes, etc., such that comprehending the information and grasping the intended message is difficult; used to draw attention to these flaws without being overly derogatory, as in “I’ll admit this breakdown of GDP by country is a bit of an eye chart but I wanted to fit the whole world on one page”; named for the routine eye examination tool in which those being tested are required to identify increasingly inscrutable letters or symbols to gauge their visual acuity; in lieu of presenting such a chart, the reader would be well advised to spend the time crafting a graphic that is more likely to be understood

The checklist for great presentations

Six steps to making them better

Business

Posted on September 4, 2019

If you are even remotely connected to modern organizational life you have sat through your fair share of presentations, be they routine readouts to a small team or the spotlit keynote before an audience of hundreds. Although a few of these might stick with you afterwards, those are the rare exceptions as most fail to leave much of an impression. The experiences tend to be unremarkable, often monotonous or draining, occasionally cringe-inducing.1

But unless they were part of some elaborate performance art stunt, those speakers did not set out to bore or confuse you. To the extent they even thought about it, they sincerely believed their content was valuable and would be appreciated.

If you have been on the other side and tasked with giving the message, you know firsthand the challenge of capturing an audience’s attention. The default method for delivering these presentations usually involves imitating the patterns used previously, with maybe some updated slides. Yet if those are rarely effective as a listener, consider what that means when you adopt the same approach as a speaker. Read more…

I was going to say enervating, but then I’d sound like someone cramming vocabulary for the GMAT. ↩
Perhaps unwillingly if they were forced to attend the meeting, but that gives you even more of a reason to exceed expectations. ↩
Unless you have some active hecklers, in which case you might have to speak up more. ↩
Seriously people, if one more person pastes an unedited screenshot of an Excel spreadsheet into a slide and then projects it in a low-contrast environment 20 meters from the audience I think Edward Tufte is going to have a conniption. ↩
If the venue is particularly advanced perhaps you could pipe in smells to help make your point, which is a good idea if your subject matter is related to foodstuffs, less so if you’re talking waste removal. ↩
Actually, given advances in speech technology Alexa might come across as more human than your more wooden human speakers. ↩
The temptation may be overwhelming, but please do not read word-for-word text from slides. The audience can do that perfectly well on their own, and if they can’t read the text then why are you showing it? ↩
Or group text, or flyer, or Slack post. ↩
Before Jerry Seinfeld’s first of many sets on the Tonight Show with Johnny Carson, he rehearsed his five-minute monologue 200 times. ↩

Two simple ways to make better decisions

Crowd management

Posted on August 28, 2019

Step right up

Community gatherings and carnivals have long entertained attendees with guessing games, in which a glass jar containing some vast quantity of small objects is kept on display, with a prize going to the person whose entry is closest to the actual number. Counting the items directly is impossible, so these attractions might feel like a casual exercise in estimation. They can seem random but intriguingly they tend not to be.

A variation on this theme is a contest to guess the weight of something, perhaps an agricultural product or livestock.1 This approach was the one taken by the early 1900s British country fair attended by statistician Francis Galton, which featured an ox as the subject.2

As you might expect, those who entered the competition submitted guesses that covered a wide range.3 Some with poor bovine sense were absurdly high or low, which would have amused the farmers in the crowd who surely knew better from their years handling livestock.

The guesses by themselves weren’t remarkable, but when Galton averaged them together an astonishing finding emerged. The resulting figure was 1,197 pounds, just one away from the actual total. Although the ox’s weight was difficult for any one person to gauge, a crowd of attendees with varying expertise was able to determine it essentially perfectly. Read more…

At a childhood picnic I very carefully considered the weight of a watermelon, deliberating intensely and going back and forth before settling on the comically precise guess of 2 ½ pounds. The actual weight was 25 lbs. ↩
Actually its post-slaughter weight, for which some knowledge of butchery would be valuable. ↩
In an inexplicable streak of luck I have thrice won such guessing competitions, coming home with jars of pennies, popcorn kernels, and candy corn, the last of which was far too much sugar for anyone to eat. ↩
Galton was a polymath and one of the first to fervently advocate for eugenics, a part of his reputation that isn’t looked on as favorably as his statistical prowess. ↩
He was also the force behind planned obsolescence, in which perfectly serviceable products are rendered unappealing by the introduction of slightly tweaked new models every year, so yeah maybe not all great. ↩
In practice, exercising this well is easier said than done, even in a place like McKinsey. ↩
And if you are, you’re probably not that genius. ↩

legs

Posted on August 27, 2019

the ability to endure or sustain performance for meaningful periods of time, or to accomplish a desired objective; the term itself is neutral and can be used to describe something positive (“That old promotional campaign really has legs, it’s been boosting sales for the past three quarters) or negative (“We’re going to have to close out last year’s model, it just doesn’t have the legs”); perhaps from association with horse racing or athletics, in which the ability to maintain speed despite getting tired towards the end of a longer race was associated metonymically with the legs themselves

How to create a culture that lasts

Lessons from the fall

Posted on August 21, 2019

House of cards

When the accountants have no idea what’s going on, leaders struggle to explain the choices they’re making, and even savvy Wall Street-types who dig into this stuff for a living are thoroughly baffled, you can bet something bad is about to happen.

Such was the situation faced by a dominant company focused on energy trading, with the trendy made-up name of Enron.1 It had ridden the wave of deregulation to shake up a staid industry, in the process becoming a favorite of both the media and investors. Its executives lived lifestyles commensurate with their success, with access to a fleet of no less than six corporate jets used indiscriminately for both business and pleasure.

Several top leaders amassed paper fortunes in the tens if not hundreds of millions of dollars, using their new wealth to rise in political and social prominence. Ambitious university graduates were choosing the company over more traditional, stable options. A business magazine named it “most innovative” several years in a row. Read more…

It was originally going to be called Enteron, until someone realized this is a term for the digestive tract. ↩
As it turns out, for Enron this was a feature and not a bug. ↩
The destruction of Arthur Andersen created a free-for-all for the remaining accounting firms as they sought to snag their former competitor’s clients. ↩
This reasoning was similar to that behind the regulation on U.S. political advertising requiring candidates to state directly that they approve the message during the ad itself. Presumably politicians would hesitate to associate so openly with unsavory messages. ↩
Another executive committed suicide as the situation was unravelling. ↩

whisper number

Posted on August 20, 2019

an informal figure, usually relating to a valuation or price of some kind, which is not officially shared in order to preserve negotiating flexibility and leverage; it is nonetheless floated quietly among select parties in order to test the waters for a potential transaction, as in “I know they said they don’t want to talk selling price yet, but what’s the whisper number?”; in its original Wall Street usage the term refers to estimates of earnings that are privately known by financial insiders before the public release of corporate reports

Extend your horizons and do what others can’t

Longer term thinking

Posted on August 14, 2019

Sounds good

It started with a disappointing audio system.

A diligent MIT engineering student was nearing the end of his doctoral studies, and as a classical music fan he decided to purchase the best stereo he could find as a reward for his hard work. He had been taking apart and repairing radios since he was a child, so he knew far more than the average consumer about what made them work.

Despite researching the best options available, the quality of the resulting purchase was underwhelming.1 This triggered in Amar Bose an obsessive interest in figuring out how to reproduce sound in ways that were more pleasing, even if they defied conventional wisdom. So began decades of scientific research into acoustics, which came naturally given his later status as one of MIT’s most popular professors.

His work soon reached a point where commercialization was the right next step, leading to the founding of the Bose Corporation. It would go on to make significant advances in audio technology, including noise-cancelling headphones and custom systems for luxury cars and large public spaces.2

When embarking on this path Bose did one thing very differently: he chose to maintain it as a closely-held, private entity. It grew slowly and deliberately instead of taking in external investment that would instantly ratchet up the pressure to grow. Even after his speakers started capturing significant market share he resisted the lure of IPO riches. Read more…