Books – Page 167 – artdiamondblog.com

CEO Michael Dell’s Management Advice

Source of book image: http://ramz-thoughts.blogspot.com/2007/12/new-addition-to-my-book-shelf.html

I have had Direct from Dell on my ‘to-read’ list for years, and it finally made it to the top. The book has some interesting anecdotes, and some useful generalizations, but not as many as I had hoped.
In fairness, if I had read the book closer to its publication year, in 1999, maybe some of the observations would have seemed fresher, that today seem like stale clichés.
For example, it is clever to quote (p. 209) the hockey player Wayne Gretzky as saying that he doesn’t skate to where the puck is; he skates to where it will be. And then apply the saying to business by advising that managers skate, not to where the profits currently are, but to where the profits will be in the future. Reading this in Dell’s book did not excite me, because I had already read it in Christensen and Raynor. But Dell’s book came out before Christensen and Raynor, and it’s not a failing of the Dell book that I had read the Christensen and Raynor book first.
But some of what Dell writes, was a cliché even back in 1999. For example, it is a cliché that customers should matter; but simply saying ‘listen to your customers’ is not very useful. Sometimes customers are not very articulate about what they would value, and sometimes they need to be educated, and sometimes your current customers might not buy an innovation that other potential customers might love.
Christensen and Raynor in The Innovator’s Solution, have emphasized the desirability of thinking about what job customers need to have done.
One useful bit of advice in Direct from Dell is that companies should segment themselves into different units to serve different kinds of customers. This might be a useful stratagem to make it easier to execute Christensen and Raynor’s advice. (But it goes against another common dictum in management books: achieve economies by cutting out duplication and by achieving economies of scale.)
The book has some interesting examples and observations, but the signal to noise ratio is not as high as in the very best management books by former CEOs, such as in Andy Groves’ Only the Paranoid Survive and in Jack Welch’s Jack: Straight from the Gut.

References:
Christensen, Clayton M., and Michael E. Raynor. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.
Dell, Michael. Direct from Dell: Strategies That Revolutionized an Industry. New York: HarperCollins Publishers, Inc., 1999.
Grove, Andrew S. Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company. New York: Bantam Books, 1999.
Welch, Jack. Jack: Straight from the Gut. New York: Warner Business Books, 2001.

Business Model More Effective than Charity at Helping Poor

Nobel-Peace-Prize-winning economist Muhammad Yunus. Source of image: online version of the WSJ article quoted and cited below.

(p. A9) In his new book, “Creating a World Without Poverty,” Mr. Yunus . . . defines social business as “cause-driven” rather than profit-driven. And yet, it is not a charity: Its owners are entitled to recoup their investments, and the social business must recover its full costs, or more, even as it concentrates on creating products or services that provide a social good. It does this by charging a fee for its products and services. (One example: a business that manufactures and sells low-priced, nutritious food products to underfed children. Grameen America is also a social business.)
Mr. Yunus freely acknowledges that the free market has done a great deal for the poor. “I didn’t say that what is there is wrong. I said the structure was not complete. One piece was missing. We couldn’t express within the business world all the things we want to do for others.”
He argues that in today’s world, people whose main ambition is to help those in need tend to be pushed into philanthropy, which isn’t always the most efficient way to bring about change. In philanthropy, he says, the “dollar has only one life, you can use it once . . . social business dollar has endless life, it recycles. And you build institutions.” He continues, “when it’s an institution you bring creativity into it. You bring innovations into it. You bring continuity into it.”
Mr. Yunus argues that it’s extremely difficult to bring efficiency to charity. But “the moment you bring in a business model, immediately you become concerned about the cost, about the revenue, the sustainability, the surplus generation, how to bring more efficiency, how to bring new technology, how to redesign, each year you review the whole thing . . . charity doesn’t have that package.”

For the full article, see:
EMILY PARKER. “THE WEEKEND INTERVIEW with Muhammad Yunus; Subprime Lender.” The Wall Street Journal (Sat., March 1, 2008): A9.
(Note: first ellipsis added; other ellipses in original.)

Global Warming Alarmists “Want Us to Sacrifice Liberty”

President of the Czech Republic, Vaclav Klaus. Source of photo: online version of the WSJ article quoted and cited below.

In addition to his insights into global warming, Vaclav Klaus is an advocate of the work of Joseph Schumpeter.

(p. A9) Mr. Klaus is . . . interested in the politics of global warming. He has written a book, tentatively titled “Blue, Not Green Planet,” published in Czech last year and due out in English translation in the U.S. this May. The main question of the book is in its subtitle: “What is in danger: climate or freedom?”
He likens global-warming alarmism to communism, which he experienced first-hand in Cold War Czechoslovakia, then a Soviet satellite. While the communists argued that we must all sacrifice some freedom in pursuit of “equality,” the “warmists,” as Mr. Klaus calls them, want us to sacrifice liberty — especially economic liberty — to prevent a change in climate. In both cases, in Mr. Klaus’s view, the costs of achieving the goal, and the impossibility of truly doing so, argue strongly against paying a price of freedom.
. . .
In Europe, Mr. Klaus has the reputation of a firebrand, if not a loose cannon. This is a president, after all, who calls global warming “alarmism” a “radical political project” based in a form of “Malthusianism” that is itself grounded on a “cynical approach [by] those who themselves are sufficiently well-off.”
“It is not about climatology,” he insists. “It is about freedom.”

For the full article, see:
BRIAN M. CARNEY. “The Weekend Interview with Vaclav Klaus; The Contrarian of Prague.” The Wall Street Journal (Sat., March 8, 2008): A9.
(Note: ellipsis added.)

“Theory” Said Gene Sequencing Technique Was “Impossible”

In the book The Genome War, the story is told about how the leading theorist proved the impossibility of the gene sequencing technique. It was the Venter group that gave it a try and proved it could work. This story is similar to the one about theory saying that what Marconi was trying, was impossible. (See: Larson, 2006.)
Rosenberg and Birdzell (1986) discuss the case that theory had proven how solid objects fall. But Galileo’s experiments proved them wrong. This established the primacy of experiment and evidence, over theory.
When governments decide, they usually do what is safe, which is to follow current theory (or in rare cases, they pick Lysenko).
The entrepreneurial system, takes advantage of the tacit individual knowledge that is out there, but not yet theoretically defensible, and allows it to percolate to success.

References:
Larson, Erik. Thunderstruck. New York: Crown, 2006.
Rosenberg, Nathan, and L.E. Birdzell, Jr. How the West Grew Rich: The Economic Transformation of the Industrial World. New York: Basic Books, 1986.
Shreeve, James. The Genome War: How Craig Venter Tried to Capture the Code of Life and Save the World. 1st ed. New York: Alfred A. Knopf, 2004.

How the Government Caused the Dust Bowl

(p. A9) Washington never learns from its mistakes. In “The Worst Hard Time,” Timothy Egan notes how federal price supports encouraged farmers in World War I to plow up millions of acres of dry grasslands and plant wheat. When the price of wheat crashed after the war, the denuded land lay fallow; then it blew away during the droughts of the 1930s, turning a big chunk of America into a Dust Bowl.

For the full commentary, see:

Ernest S. Christian and Gary A. Robbins. “Stupidity and the State.” The Wall Street Journal. (Eastern edition). (Sat., June 7, 2008): A9.

“Become Pioneers of Leapfrog Technology”

Here is the latest entry in my continuing effort to document uses of the “leapfrog” concept in business and innovation. The entry below appears in a table entitled “Strategy Milestones” and is under the third of three column headings, which is entitled “Long Term (5+ Years).”

(p. 149) Become pioneers of leapfrog technology

Source:
Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.
(Note: the quotation is presented as being Bossidy’s.)

Bestsellers Rejected Many Times Before Acceptance

Source of graphic: online version of the WSJ article quoted and cited below.

(p. W2) Leonard Mlodinow’s book “The Drunkard’s Walk: How Randomness Rules Our Lives” explores how chance controls the world. In one chapter, the author, who has a doctorate in theoretical physics from the University of California, Berkeley, and is a former writer for “Star Trek: The Next Generation,” looks at the number of big-time writers whose early works were, at first, rejected by publishers. He mentions how authors such as Vladimir Nabokov and Sylvia Plath suffered rejection. “Many books destined for great success had to survive not just rejection, but repeated rejection,” Mr. Mlodinow writes. “There exists a vast gulf of randomness and uncertainty between the creation of a great novel…and the presence of huge stacks of that novel…at the front of thousands of retail outlets.” Below, some examples he cites of rejections for authors who went on to become famous.

For the full story, see:

Robert J. Hughes. “ADVISER; What’s ‘Happening’; CULTURAL FIGURES | Books; Randomness and Rejection.” The Wall Street Journal (Fri., June 13, 2008): W2.
(Note: ellipses in original.)

Source of book image: http://ecx.images-amazon.com/images/I/41uQY8DkQ5L._SS500_.jpg

The Role of Private Enterprise in Sequencing the Human Genome

Source of book image: http://www.genomenewsnetwork.org/articles/2004/02/20/genome_war.php

The race to decode the genome always seemed like an appealing test case of the relative efficiency of government versus private enterprise. But the results seem muddy because sometimes in the media the outcome has been described as a win for Craig Venter’s private Celera corporation, and other times, as a tie.
For years I have wanted to learn more, and now I have finally done so by reading James Shreeve’s fascinating The Genome War.
It is clear from the book that the entrance of Celera, greatly accelerated the government’s own efforts to sequence the human genome. So one important lesson is that, no matter who “won the race, the consumer benefited from the entrance of a private competitor.
Also clear, is that Venter’s group took advantage of public resources and results. Their primary zeal was for sequencing the genome, rather than for promoting private enterprise.
Regrettably, this is a common case: many entrepreneurs take the institutions of their economy as given, and make use of government when it suits their short-run objectives.
Officially the results were announced as a tie. But the main bone of contention had been over Celera’s advocacy and use of the “whole genome shotgun” technique for sequencing the gene. The government group had attacked the method as impractical and unreliable.
The proof of who “won” in a deeper sense, was that after the contest was over, everyone, including the government, was using the “whole genome shotgun” technique.
Another lesson is that the usual scientific goal of immediately releasing findings, may actually reduce the information available to the public. If, as with the genome, the information is costly to obtain, allowing a period of proprietary ownership of the information, provides private entrepreneurs with the incentive to discover the information in the first place. Another case of unintended consequences: if we fully follow the alleged idealism of academic scientists, we will end up with less scientific knowledge, not more.

Reference to book:
Shreeve, James. The Genome War: How Craig Venter Tried to Capture the Code of Life and Save the World. 1st ed. New York: Alfred A. Knopf, 2004.
(Note: My comments are based on the whole book. A paragraph on pp. 366-367 is especially important.)

“Most Interview Processes Are Deeply Flawed”

(p. 129) Developing leaders begins with interviewing and assessing candidates. I’m not talking about overseeing the HR department and interviewing finalists; I’m talking about hands-on hiring. Most interview processes are deeply flawed. Some people interview well, and some people don’t. A person who doesn’t interview well may nonetheless be the best choice for the job. That’s why it’s so important to probe deeply, know what to listen for, and get supplemental data. It takes time and effort to drill down further, but it’s always worth the trouble.

Source:
Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.
(Note: the quotation is presented as being Bossidy’s.)

Robust Dialogue Fosters Creativity and Innovation

Omaha culture puts a huge emphasis on surface politeness. (When I first arrived here, I was sometimes thought to be from New York, a thought that I took as a complement, although that was not how it was intended.)
Bossidy and Charan emphasize that harmony is an over-rated virtue–that what they call “robust dialogue” is important for getting things done.

(p. 102) You cannot have an execution culture without robust dialogue—one that brings reality to the surface through openness, candor, and informality. Robust dialogue makes an organization effective in gathering information, understanding the information, and reshaping it to produce decisions. It fosters creativity—most innovations and inventions are incubated through robust dialogue. Ultimately, it creates more competitive advantage and shareholder value.
. . .
(p. 103) . . ., harmony—sought by many leaders who wish to offend no one—can be the enemy of truth.

Source:
Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.
(Note: ellipses added.)

In Many Capitalist Companies “People Think They’re Involved in Socialism”

Empirical comparisons between capitalism and socialism are in some ways unfair to capitalism, because many capitalism managers act as though they believed in socialist ideas. The difference in productivity and economic growth would be even greater, if capitalist managers consistently acted as though they believed in capitalism. Consider the following, from a portion of Execution written by Larry Bossidy:

(p. 73) Larry: When I see companies that don’t execute, the chances are that they don’t measure, don’t reward, and don’t promote people who know how to get things done. Salary increases in terms of percentage are too close between top performers and those who are not. There’s not enough differentiation in bonus, or in stock options, or in stock grants. Leaders need the confidence to explain to a direct report why he got a lower than expected reward.
A good leader ensures that the organization makes these distinctions and that they become a way of life, down throughout the organization. Otherwise people think they’re involved in socialism. That isn’t what you want when you strive for a culture of execution. You have to make it clear to everybody that rewards and respect are based on performance.

Source:
Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.
(Note: in the book, the quotation is presented as being Bossidy’s.)