Success Books

Success Secrets: Don't Tolerate "badness"

2011-04-18T07:35:00.000-05:00

In my last post, I mentioned Hedge Fund giant Ray Dalio's intolerance of "badness" . It really does seem that it takes an intolerance of problems to build a truly great organization. Here is an article about commodity giant Glencore, which makes the same point. A key quote: "Those stresses are in part explained by a culture in which blunders are not tolerated.". Link posted at The Reformed Broker.

Success Book Reviews: Ray Dalio's "Principles"

2011-04-17T14:17:00.002-05:00

How do you become a billionaire? Solving one important problem at a time. That is one of the messages I take from one of the most unique “Success Books” I have ever read, billionaire Ray Daio’s Principles. The PDF is, apparently, freely available ( I don’t know if this has changed or will change)

The more I delve into the science of personal achievement, the more I am amazed at the incredible wealth of information that has been made freely available by successful people, such as Charlie Munger (billionaire), Charles Koch (billionaire) and many others. We are truly living in a wondrous age where such masters are eager to part with their secrets.

Why would these guys do such things? Why would they part with such life-changing information, passing it on to the rest of us at zero or trivial cost? They are certainly not dumb. On reason could be that they may welcome the compounding effect that their works produce. In other words, if a billionaire writes a book that stimulates others to be entrepreneurial, visionary, productive, disciplined, etc, this could, eventually, have a significantly positive effect on the environment that the billionaire himself live in. For instance, hugely successful investor Monish Pabrai, took his idol, Warren Buffett to a $650,000 lunch, using profits accumulated by emulating Buffet (the money went to a charity Buffett favors). Great link about it here.

Ray Dalio built and runs the largest hedge fund in the world (as of 2010), Bridgewater, managing, at the time of this writing, over $90 billion in assets. He wrote the Principles as a management document. Apparently the principles are “fractal” in that they worked for him, as the head of Bridgewater, and they work at all levels beneath him in the organization he created. So the incentive is clear in this case.

His Principles range from the general and universal, down to the incredibly specific. What is the key to building such a might organization as Bridgewater? An unflinching acceptance of reality, and the refusal to tolerate problems (also termed “badness”). Consider this: where might the tolerances be more lax? Building a skyscraper or building an investment company? I would have to answer “probably the latter”. Maybe that’s why very few skyscrapers fall down, and so many organizations do. Dalio’s tolerances, in my opinion, are much closer to engineering /architectural tolerances, than a “soft”, “people-oriented” business tolerances.

Dalio has assembled a far-reaching exhaustive roup of rules designed to unmask “badness”. One of the reasons may be that people are not girders. They don’t come in standard sizes and specifications. Girders don’t have hidden agendas, egos, laziness, or lack of motivation. People, of course, do. So Dalio provides some methods to cut through the foibles of individual human behavior in order for the group to function as (in his term) a “machine”.

In the books and interviews I have read, it has seemed to me that many successful men such as Jamie Dimon, Bill Gates, and Jack Welch, have that same characteristic. Small, nagging problems, often related to peoples’ underperformance, just cannot be tolerated because they have a “multiplier effect”; perhaps similar to a bunch of rivets in a suspension bridge , if each rivet is just a little under “spec” , the sum total could be catastrophic.

One of Dalio’s tools for rooting out problems seems simple: an “issues log”. Once you keep careful track of issues, you are well on the way to solving them. Simple? Maybe. Butt is the first time I encountered such a tool, and I am a bbig fan of success tools. I have kept lists of goals, I have lists of visualizations, affirmations, etc, but I have never kept a separate “issues” log. But, when you think of it, how else can you continually improve the purity of the outputs of your efforts?

Dalio also uses his incisive drive for clarity to make sure we separate functions (such as issue drilldown vs problem solving) so as not to muddy the waters when optimizing the organization

There is lots more in the Principles. These principles demand courage. Personal courage. They demand faith that huge results come from facing every aspect of reality, working with it, and improving your results as quickly as possible.

This may be the most outstanding document of its kind, ever. I think it is a life-changing read.

Success Master Skills: Pay Up For Knowledge

2011-04-13T16:27:00.000-05:00

I have written in this blog before that life is now so complex, and the paths to success so specialized, that expert knowledge is needed in almost every area of life, if oen wants to make the most of one’s efforts.

Well, last year, I decided to take a dose of my own medicine. Instead of “going it alone” with a few books, I decided to head out into the world and take some courses with experts. The result?

The results exceeded my wildest dreams. Every facet of my life improved. So, I strongly recommend the following Success Secret: Pay up for knowledge!

In March 2010 I took an statistics-oriented trading course from John Joseph , a brilliant trader, system developer, and CTA. Immediately, my trading systems improved, and I have been much more consistently profitable as a result

In May, 2010 I went to the Market Technicians Association Symposium in New York and, as an outgrowth of that trip, managed to learn some key material which I put to use in my longer term trading, and which has yielded some very satisfying results in the almost 12 months since the Symposium.

In June 2010 I took three weeks of training in Microsoft Access, because, thanks to the trading course just mentioned, I was generating so much data that I had to put it together and keep track of it much better. Result? Much better record keeping, much faster and more creative “slicing and dicing” of my data. Also, the ability to handle many more systems.

From August to October, I took the Dale Carnegie Course, their flagship course. This was truly life-changing. I had known a few people who took it, and so, 30 years too late, I took it myself. My life changed for the better immediately: better friendships, less of an “edge” to my interactions with others, and so much more. I will be studying that material for a lifetime.

None of these efforts was cheap. And not only in money terms. You have to face your demons and come to terms that, to get a better life, you must admit you are not an expert. But once you go through that door, the rewards are truly beyond measure.

2010 was my Annus Mirabilis. May 2011 be yours.

Success and Convexity Part 5: Negative Convexity

2010-08-23T20:24:00.000-05:00

This is Post 5 in my series on Success and Convexity. For our non-mathematical purposes, we’ll define positive convexity as opening the door to many good things while limiting the access of many bad things.

What then is negative convexity in the world of personal success and achievement? It's negative luck. It is opening the door to many bad things. Maybe not even consciously opening the door, but just leaving the door open, or even forgetting to close it. If you do this in your house, it’s not that you know something bad will come in, it’s that you don’t have any good idea what may come in. You are giving unrestricted access to negative possibilities.

Our goal should be, for the most part, to restrict access to “the unknown bad things” that can happen. We only want things to get “out of control” on the good side of things. We want to get into a line of work with an unlimited upside; around friends with drive, courage, vision and good hygiene. We want to make sure we wander into bookstores and libraries and classrooms and not wander into bars and crack houses and , hopefully, as few greasy burger joints as we can manage.

Here are some examples of negative convexity. Often these actions turn out badly because they “open the door” to unknown bad things.

Giving your opinion
Sad to say, no one wants to hear your opinion. And the louder your opinion, the less someone wants to hear it. Furthermore, down the road, that person may retaliate in some way if your opinionated remark has injured their self-esteem. Oh…another minor point…your opinion could be totally wrong. The point is, favoring the world at large with your many "fascinating" opinions is a virtual “kick me” sign to the universe, and can open the door to a surprising number of repercussion, many of them painful

Using credit and leverage
The more you lever up, the more it can work against you in the exact proportion to the amount you have borrowed/leveraged. Much of the financial agony of the past few years was caused by huge amounts of leverage, from homeowners putting up miniscule amounts as down payments, to giant banks borrowing against those same mortgages at 30-to-1 margins. There are even hints that the U.S. Government could lose it’s own Triple-A credit rating because of too much borrowing. Again, it is the “unknown” side of the coin that is the bombshell. You don’t know what will precipitate the destructive side of leverage: you might lose your job; your industry could go into a slump; you could have miscalculated the whole nature of the bet you made. The fact is you just don’t know, but one thing you can know is that leverage is a door to the unknown. You never know what might walk through.,

Avoid washing your hands, annual checkups, exercise
None of these actions are a ticket to doom. What they are is a ticket to the unknown. You don’t wash your hands? Well…perhaps you will never get sick from some germ. Or maybe you’ll be sick 2,3,or 4 weeks per year and it will just “slip under the radar”, with those lost weeks of productivity, family activities, friends, etc just “gone” without your even thinking about them.

Skipped your checkup? So what? You’re feeling fine. Maybe there’s nothing there. Or maybe you have something quiet and chronic that could chew up a few years of your life, but you won’t know that for a while.

Don’t exercise enough? Maybe you lose an hour of life per hour of exercise…I don’t know. Maybe you lose just a teeny biit of flexibility over time, so when you have to lift that heavy object, instead of some aches and pains, you rupture something. Again, these are issues of playing the odds. Of letting the unknown, or ignored, into your life. And once it gets in, because convexity tends to increase, you may find yourself in the “steep part of the curve of “hurt”, when you never needed to be there.

More on Negative Convexity in another post.

Success and Convexity Part 4: More on Positive Convexity

2010-08-07T19:42:00.000-05:00

This is post 4 in my series on convexity. For the purposes of these posts, out definition of positive convexity will be opening the door to many good things, while limiting the access of incoming bad things.

I mentioned in my last post two secrets to adding positive convexity to our lives:
1. Hard Work and
2. Exploratory behavior.

Here are two more:

3.Margin of Safety

Shakespeare said “discretion is the better part of valor”. Woodworking experts admonish “measure twice and cut once”. Billionaire Warren Buffett and his mentor Benjamin Graham emphasized investing with a “margin of safety”, a level of business value that would endure no matter what the price or vicissitudes of the business, thus making it safer to invest in. Airplanes and space shuttles are designed with redundancy: multiple systems that can be pressed into service if a main system (hydraulic, navigation, etc) fails.

For us to “spread our wings” in our chosen field, to take advantage of the many opportunities for positive convexity (strings of good outcomes building on each other), each step should be taken only after the worst-case scenario is considered.’’

A simple example would be buying a house. If you, for instance, were to buy the house with 100% cash, you could take full advantage of the positive convexity of the purchase: the potential that your investment would increase over time. Furthermore, if you paid with cash, you would have no worries about meeting the mortgage, ever, thus you would have the absolute minimum chance of losing that house. This would meet our laymen’s definition of convexity of maximizing the planned and unplanned positive outcomes, while cutting off the risk of outsized negative outcomes.

Do the scheduled maintenance on your car. Get your checkup. Eat your bran flakes. File your taxes on time. Why? Because these actions generate margins of safety, allowing you to “blossom” the rest of the time. They “cut off the tails” of the “bad” side of the “curve”. They limit your downside, and then your creativity and drive can generate the”upside”.

4.Noticing and recording

Noticing and recording is an amazingly effective method of creating positive convexity. Walking around with a notebook or voice recorder will exponentially increase the number of “positive inputs” that you experience everyday. In a moment, a million-dollar idea can be captured before it disappears into your unconscious. Or you may see something: a book, a piece of property, a new product, etc and note it down for future reference. Many of us get terrific inspiration when we are out walking or driving…the kind of inspiration that might change your life. If you take 3 notes a day that’s over a thousand new inputs per year. One out of a hundred might even be a breakthrough. And ten breakthroughs a year is a lot of positive convexity.

5. Consistency

Woody Allen once said "eighty percent of success is showing up". A pithy and ever-so-true Success Secret. I went to the grocery store today and they didn't have my favorite focaccia bread. Big deal? Sure, but now, in the back of my mind, I have this meme that reminds me: "well, if you go out of your way, they might not have the focaccia". Similarly, if you don't show up, your clients, friends, etc may start taking you off the "guaranteed list" and putting you on the "maybe" list. On the other hand, if you always pick up the phone, meet your deadlines, get your eight hours sleep, etc, you create a "base" from which to build. You certainly wouldn't like it if various bodily organs worked "inconsistently". How could you get through your day? We should expect of ourselves the same consistency that we expect of many of the small, but priceless goods and services we enjoy today without even thinking about it. Many nations don't have consistent power, water, and other infrastructure. Whole countries get avoided by international investment because you can't build a factory there, because you don't know if the lights will be on. Consistency seems like a little thing, but it is a base from which positive convexity can be built.

Success and Convexity Part 3: Generating Positive Convexity

2010-07-25T09:52:00.000-05:00

This is Part 3 of Success and Convexity. I will begin to cover the factors that can encourage “positive convexity”. How can we accrete higher and higher levels of success in our lives? Our careers? How can we use the randomness of the Universe to produce positive outcomes for us, and for those positive outcomes to produce further outcomes?

Factors Generating Positive Convexity

1. Hard work
Renowned golfer Lee Trevino has said “the harder I work, the luckier I get”. He’s right. Recent research has revealed that skilled participants in athletics are more prone to have “streaks” (consecutive positive outcomes). A “streak” would be an excellent example of positive convexity. Life presents random events, but the ability to capitalize on those events is represented by the hard work, “deliberative practice”, etc which goes into skill-building.

Hard work on a challenging topic, which involves out passionate interest, also may generate iterative reflection. As a young composer (35 years ago), and as a trading system programmer now, I would wonder: “when is this composition finished? Am I done ? How do I know?” That’s because once a creative person looks at their work, they frequently make changes based on how the work looks to them. This process can go on and on. In fact, The process is not limited to an individual work, but may last a lifetime, as work upon work generates new “answers”, new music, new algorithms, new solutions.

And that is exactly the positive convexity we are looking for. If we can generate a current of interest that carries us along through our work, this concentrates our focus and allows expertise to build on top of expertise.

2. Exploratory behavior
Luck (or what we currently call “luck”), is correlated with exploratory behavior. Whenever you are “out and about”, whether at a bookstore, an event, a family gathering, a class, etc you are bringing your skills and goals with you. The fact that "you are you", tends to “filter” the randomness of your encounters, as you respond to the outside world’s inputs, oriented, as you are, toward your own goals and intentions. You “collapse the wave function” of the world by allowing the world to impinge upon your particular mindset. You literally “see” different “worlds” from other people. Therefore, the more experiences you seek out, the more often a small percentage of those experiences will be relevant to your goals and ambitions.When I am driving with a particular friend of mine, I am always startled that she sees so many new restaurants, stores, etc on the very streets that I drive through every day. She simply “expects” different things from the world, and as a result, she gets them.

We'll continue our series on generating positive convexity in an upcoming post.

Success and Convexity Part 2

2010-06-09T20:58:00.000-05:00

This is Part 2 of a series exploring personal success and Convexity. For purposes of this blog I have defined convexity as opening the door to many good things, while limiting the access of incoming bad things. I suggested that convexity means seeking an unbounded upside and a bounded downside.Why do we have such a two-sided concept such as convexity? There might be a lot of explanations, but one way of looking at it is this: the same forces that can contribute to a bright and successful life: passion, energy, curiosity, attractiveness, charisma, intelligence….can also morph into destructive forces. Even “pure chance”, which has often contributed to spectacular breakthroughs, can, in the form of entropy, seep in and undermine the finest career, the most sterling reputation, the most secure future.

Another scenario is single-focus “tunnel vision” in which the individual makes progress on a given front, but ignores the errors and defects accumulating on other fronts which can sabotage the hard-won success.

Still another common occurrence is that a person who has achieved excellence in one field assumes he or she has excellence in another field, or even all fields, which of course, leads to blind alleys and failure.

For Instance :

Consider the countless stories of sports and entertainment greats who made tens of millions of dollars, but ended up destitute due to some combination of personal defects (drugs, over-spending, or other unsavory activities). These people succeeded in achieving an “unbounded upside” but failed to create a “bounded downside” to secure the benefits of that success.

Consider Long Term Capital Management, a team of brilliant financial minds, including some Nobel Prize Winners, who caused a near-meltdown of the world financial system when those same , previously-successful money-making formulas imploded.

Consider that Leonard Nimoy made …vocal albums?

Pat Boone made Rock albums???

Bill Clinton achieved the Presidency but was nearly impeached because he …ahem…allowed access to, his..er…unbounded downside????

The above areas demonstrate the potential of “negative convexity”.

However, it is also important, while guarding against downside risks, to consider this: where can I generate “unbounded upside”? How can I maximize the “happy accidents” that can put me on the path to success? How can I maximize my “luck”, opportunities, or skills to geometrically or exponentially improve my situation over the years and decades?

A starlet gets discovered on Hollywood and Vine.
A graduate student (William Sharpe) changes his thesis topic and leaves the path of obscurity ending up with a Nobel Prize.
The molecular structure of Benzene is discovered in a dream!!!

Yes, we can try to avoid the unbounded downside, but, also, how do we discover the unbounded upside?

We’ll consider these factors in upcoming posts.

Success and Convexity Part 1

2010-06-08T22:49:00.008-05:00

I am going to do a series of posts about personal success and Convexity. It’s an interesting word and can be used as a lens to view personal success from multiple angles. In a previous series of posts I explored the metaphor of entropy and personal success. However, recently, as I was reading the magnificent books by Steven Drobny Inside the House of Money and The Invisible Hands , I noticed that many of the brilliant hedge fund managers he interviewed repeatedly used the term “convexity” to define the characteristics of the financial returns they were seeking. Now there are precise financial definitions of this term, but my overall impression was that these investors were using convexity to define an investment that had a strong potential to do increasingly well if conditions were right, but had the additional property of not creating a ruinous loss if things went bad. In short, they were seeking something like this:

Now, this blog has often tried to take concepts from the business and scientific world and examine them for their potential to facilitate personal success. So, it occurred to me one day that Convexity might be one of those concepts.

Simply put, convexity (and here I am speaking of positive convexity), might be defined as opening the door to many good things, while limiting the access of incoming bad things. We seek convex outcomes. Things that could get better and better. And a much-to-be hoped-for corollary of those outcomes would be: we also want to achieve those outcomes at as low a risk as possible. Strictly speaking, we would like an unbounded upside and a bounded downside.

We’ll examine this concept further in upcoming posts.

Success Tools: Google Voice for Idea Capture

2010-01-06T13:40:00.008-06:00

Idea capture is a crucial area for personal achievement and success. It is a key component of David Allen's GTD methodology and a key success secret of creatives, entrepreneurs, and innovators of all stripes. No, you are not going to remember that light bulb flash of an idea in 6 hours, or tomorrow, or when you get around to it. You are going to forget about your new concept, that new product you glanced at at the mall, that new restaurant you passed, that short conversation you had with a potential client, etc., unless you record the memo immediately.

Google Voice is my newest favorite success tool for this process, although it does about a million other things. I use it primarily for voice memos, as a companion to the pocket spiral notebook I carry around, surgically attached to my body (OK, just kidding). How many ideas do you have per day? You may never know until you record them in a reliable way. Google voice really helps. Google voice allows me to call, send a voice memo to myself, and also reminds me about it later when a transcript and audio file show up in my email. If I'm in my car, I can't pull out my spiral notebook and record ideas, but I can speed dial Google Voice in a flash.

Case in point: I was wandering around Costco the other day and, today, 4 days later, I happened to review my Google Voice memos from that trip. At least 6 important (and forgotten) items came up, which I had sent to myself 4 days ago. Now multiply this by 365 days and you can imagine the implications of retaining all of those potentially lost inputs. In my own experience I almost never recall everything I dictated to Google Voice.

I am only scratching the surface of what Google Voice does, but it has already proven priceless.

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Success book Reviews; Thomas Stanley "Stop acting Rich"

2009-12-28T13:35:00.005-06:00

Thomas Stanley , best-selling author of The Millionaire Next Door has added a fascinating new work to his paradigm-shifting catalog of research on the wealthy. It is Stanley who taught us that the rich often live frugal lives, buying Sears suits instead of Armani, and driving Chevrolets instead of Bentley. He continues that superb research here. From watches to wines, the millionaires just don't fit "central casting". They buy inexpensive brands, drink inexpensive alcohol and live in inexpensive houses.

Stanley also introduces a "glittering rich" category . He suggests that many non-rich "aspirationals" spend their money imitating the extremely successful decamillionaires, who actually can afford the high-priced brands, which few "garden variety" millionaires would ever touch.

Over and over Stanley shows us how deluded we are in our consumption-oriented lifestyles. The people we are imitating are often laughing at us...all the way to the bank. Their bank, that is.

Success Videos: Jamie Dimon at Harvard

2009-12-26T16:21:00.002-06:00

I've watched Jamie Dimon's career unfold for over a decade now and it is gratifying to notice the harmony between his articulated principles and the actual results he has achieved. This video is probably the most extensive exposition of his principles that I have found. I'll mention a few points of importance, but the video is well worth watching in full.

Lifted almost verbatim from Denton's "Executive Charisma" is the injunction to treat all employees, from clerk to CEO, equally. Now "equally" , for Dimon, means, with intellectual honesty, without politics, and with loyalty to a vibrant J.P. Morgan, not loyalty to a particular person's job, title, salary, etc.

Another key quality for the leader (and the organization) is lifelong learning. One key quality that emerges over and over in the stories of leaders such as Bill Gates, Warren Buffet, Charlie Munger, and others is the central element of reading as a central activity for any successful person. I would say, in my observation of my fellow human beings, I have never seen any rule more frequently ignored. And they wake up at age 60 and wonder why their life's a mess.

A few other gems: Seek the best models, not the second-best. Continuous improvement. Seek relentlessly for the facts. Seek the full information. Get "the right people in the room"...i.e. the people who will be implementing or otherwise dealing with the results of your executive decisions.

I won't belabor my commentary, please watch this remarkable video.

Success Master Skills - More Passion, Less "Balance"?

2009-12-24T23:16:00.004-06:00

Great post on work-life balance at Journey of a Serial Entrepreneur. Makes simlar points to a few of my own remarks in my review of Pete Peterson's new book. Usman Sheik is a startup founder and loves his work. Like many successful people, he sees the lines between work and "the rest of life" as blurred. There is work-as drudgery, and there is work-as-passion. And when work is your passion, there may not be as much need for "balance".

Success Secrets: Reading and Thinking

2009-12-23T10:50:00.006-06:00

Here is a short video by investor (and Warren buffett disciple) Monish Pabrai and a long video of Bill Gates and Warren Buffett. In both videos it is clear that the key to these peoples' success is not hyperactivity, but reading and thinking. They spend huge parts of their days reading, and they rank it as their most important activity. Even Pabrai, already a Buffett admirer, was struc by how "empty" Buffett's schedule was. You don't look very busy when you're reading, but the results speak for themselves.

Success Book Reviews: Pete Peterson, American Dreamer

2009-12-17T21:37:00.003-06:00

What a life. In The Education of an American Dreamer Pete Peterson, billionaire founder of the Blackstone group and one of the most successful leaders ever in business and government, has given us a fast-paced look at a dynamic career. Hugely successful at a young age, in both advertising and also as the very young CEO of Bell and Howell, he moved on to Washington (Secretary of Commerce), Lehman Brothers, and, eventually private equity firm Blackstone. Along the way he was tapped to run numerous foundations, and later set up several himself. The book moves quickly, and , as an autobiography, it is sometimes difficult to get beyond the surface to the “WHY”…how did such success came so easily to this individual? I picked up a few principles as I read, and was gratified to see that, at the end of the book, Peterson himself dubbed them to be part of his key success factors.

First, it is important to note a bit of what Peterson might call “dumb luck”. Like Warren Buffett and Alan Greenspan, Peterson was spared military service and as such got a head start in university environments that were somewhat depleted of competition. A lot of bright young males were busy fighting in WWII and Korea while Peterson, Greenspan, Buffett, and others were already finishing business school.

But there was a lot more than luck involved in Peterson’s career. Peterson developed two key success factors early, perhaps partially due to his MBA work at the University of Chicago: he had an analytical bent, and an interest in communicating his ideas. It is interesting to note that, around the time of his attendance at U of C, economics was undergoing a transformation from a more “literary” to a “quantitative” discipline. And, in his early work at McCann Erickson, the advertising agency, he did much the same: he became a champion of research, as well as an expert at making that research client-centric. As far as communicating, it is interesting to note that the young Alan Greenspan, while immersed in his studies of American business statistics, was, like Peterson, eager to communicate the ideas he was uncovering. Both men strove to reach a wider audience through speaking and writing articles. Buffett also strove to teach.

Another two success characteristics are, interestingly, also highlighted as success drivers in Thomas Scwheich’s informative book Staying Power : a relaxed attitude toward career “pre-planning”, and a willingness to lead an “un-balanced”, career-centric lifestyle. Schweich’s interviews with successful people echo what Peterson also claims to be a key principle: avoid a restrictive set of career goals: “follow your bliss”. As far as the consequences of imbalance are concerned, Peterson suffers two divorces , most likely related to his career focus. In my own life, I’d tend to agree with the “work ethic” approach: “work/life balance” is not conducive to high achievement. That’s just the way it is.

I won’t reveal all of Peterson’s “lessons learned”, but I will mention that Peterson appears to be quite comfortable among all sorts of people, something we introverts envy. As I think back and wonder how his interpersonal skills might have developed, I focus on his many years of working in his father’s café. I wonder if being around so many different types of people at such a young age perhaps enabled the development of self-confidence. It’s one thing to be a great student (which he was) , and altogether another thing to be at ease and unafraid among the mighty of the earth (Rockefeller, Kissinger, etc.). Perhaps it all started at his dad’s café in Nebraska.

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Success Book Reviews: Benton's "Executive Charisma" Part 2

2009-12-08T20:38:00.003-06:00

This is Part 2 of my review of D. A. Benton’s Executive Charisma: Six Steps to Mastering the Art of Leadership. Part 1 is here.

Benton has enumerated “The Sacred Six” components of Executive Charisma:

1. Be the first to initiate
2. Expect and give acceptance to maintain self-esteem
3. Ask questions, and ask favors
4. Stand tall, straight, and smile
5. Be human, humorous, and hands on
6. Slow down, shut up and listen

A few personal reactions to her concepts follow.

Be the first to initiate
In my acquaintance with successful people, this was probably the very greatest difference between them and a typical person. I would go so far as to say that the more often you initiate, and the more significant the goals, the greater chance you will have in personal success. Successful people think in terms of big dreams. They go where they have to go, meet the people they have to meet, and take continuous action in the direction of their goals. They do not wait for others to approve. If they move one inch ahead of the pack every day, because of a propensity to initiate, that adds up to miles ahead over the years.

Be human, humorous, and hands-on
There were two or three great leaders I enjoyed being around in a crisis. They always knew how to lighten the emotional burden when things got tough. They never took a situation, or themselves, too seriously. By behaving in this way, they drew good people around them. Since people enjoyed their company, they got good advice, good mentoring, advance information that was helpful to the business, and, of course, were able to bring in a lot of business. Now, being an enjoyable person does not mean they were not, to use the rest of Benton’s phrase, “hands-on”. I remember several instances in my career as a music arranger and producer, when extremely high-ranking executives would work with me well into the night (or the next morning!!!) on a project, adjusting it down to the very finest details. These people were truly gifted: they are as hard-working as they were likable, and these qualities brought them outstanding (and much-deserved) success.

Expect and give acceptance to maintain self-esteem
I suspect that this point is the “secret ingredient” that underlies the success of so many truly outstanding people. In my work with some top people, I never felt I was being demeaned as a person, even if my work was being criticized. Also, I am astounded at how often these highly successful people used praise to initiate a meeting, and how often I was treated as a knowledgeable expert first, and as part of a results-oriented project second.. Not that I wasn’t an expert, but these people went out of their way to “put me in the room”. At the table. They knew that they needed great input from everyone around them, and the only way to get it was to make them feel comfortable, and on an equal footing.

The rest of Benton’s “Sacred Six” are equally important. Her book is loaded with examples and “how-to’s”. As I often do with inspiring books, I took the time to make an outline of the whole book so that I can refer to it easily in the future. And, speaking of the future, if you want to have one in business or in life, you should read this book.

Success Book Review: D. A. Benton "Executive Charisma"

2009-12-08T19:57:00.003-06:00

D.A. Benton is an internationally recognized speaker, coach, author and consultant. She is an expert on executive skills, image, presentation, and effectiveness. Her wonderful book, Executive Charisma: Six Steps to Mastering the Art of Leadership is a cornucopia of secrets about successful leadership behavior. Although I am not now part of a large organization, I certainly wish I had read it during the years I was interfacing with executives at billion-dollar companies. As I think back to those who rose to great heights, and as I watch high-ranking leaders on television, the crucial principles that Benton elucidates in “Executive Charisma” leap out in strong relief. If one could master even one of her “Sacred Six” principles, it would probably make a huge positive change in their career. Master all six…and it’s a home run. But, there is no single moment of mastery. As Benton repeatedly reminds the reader: mastering her principles is a lifelong, vere-ending task.

Benton's "Sacred Six":
1. Be the first to initiate
2. Expect and give acceptance to maintain self-esteem
3. Ask questions, and ask favors
4. Stand tall, straight, and smile
5. Be human, humorous, and hands on
6. Slow down, shut up and listen

In my next post I will discuss a few of her concepts in more detail.

Success Secrets: Ken Griffin, Billionire

2009-10-29T14:28:00.003-05:00

Wonderful article on Bloomberg today about billionaire Ken Griffin of Citadel Investment Group. What can we mere mortals take away from an article about this titan? At least two key details.

Detail 1:
"He was always comparing himself to the biggest players on Wall Street,” says Frank Meyer, former head of Glenwood Capital Investments LLC"

As Brian Trac y says in so many of his books and tapes, part of your success depends on your chosen" reference group". Clearly Griffin, even as a student, saw his reference group as the the biggest and best

Detail 2:
" 'In retrospect, I wish I had had less leverage,' Griffin says..."

Warren Buffett calls leverage a "weapon of mass destruction". Both Jamie Dimon and Sandy Weil believed in a "fortess balance sheet" with a preponderance of assets over liabilities.

It is no surprise that, over and over again the key success secrets uncovered in this blog emerge as part of the personality structure of the greats. The only mystery...why so many have so much trouble emulating them. But then...that's why they're great.

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Success Videos: Craig Barret's (In)Telling advice

2009-10-28T13:23:00.004-05:00

I was listening to one of my favorite Podcasts, Entrepreneurial Thought Leaders, which was presenting a talk by Craig Barrett , former CEO and Chairman of the Board of Intel. In the middle of the podcast, as Barrett was discussing advice to the students, he mentioned this as his first concept:

“There is no replacement for sophisticated problem-solving methodology in life”

I repeat, for emphasis

“There is no replacement for sophisticated problem-solving methodology in life”

Note, he did not say “in business”. He said “in life”. This statement is the core of why this blog exists. Simple problem-solving methods don’t always work. From-the-gut “solutions” don’t always work. Life is complicated. Life is probabilistic. Modern life contains many many domains of expertise that have to be dealt with, either by learning, or by retaining the services of someone who has learned that domain. Even a “rising tide” may not lift your “boat” without expertise and problem-solving skills. Here are some of the methodologies I have come across throughout this blog, which relate to Barrett's advice:

Kepner and Tregoe "The Rational Manager"

Michel Michalko "Cracking Creativity"

Plan/Do/Check/Act , or, the Deming/Shewhart Cycle, mentioned by Barrett in his talk

G. Polya "How To Solve it"

But, in reality, this entire blog exists for the purpose of searching out methodologies that reach across domains, from business, to personal planning, to solving life problems. and Barrett's statement is a concise and telling reinforcement of this idea, probably the best statement, from a distinguished source, of what I am attempting here.

Success Tools: Thomas Stanley's website

2009-10-21T10:48:00.005-05:00

I am an unabashed fan of Thomas Stanley and his breakthrough book The Millionaire Next Door, so it was a great pleasure to come across both a new book Stop Acting Rich: ...And Start Living Like A Real Millionaire and his wonderful website.

Thomas Stanley has studied millionaires for decades, and the results of his research have uniformly shown the rich to be primarily hardworking, unostentatious people, who live far below their means and who very much enjoy hard work, saving, investing, and the simple pleasures of family life . The website also contains a blog, which is useful for continuous inspiration as well as the wonderful nuggets of fact he serves up. For instance, this quote from his blog post Avoiding The Money Pit:

There are nearly three times more millionaire households (1,138,070 versus 403,211) living in homes valued at $300,000 or less than there are millionaires living in homes valued at $1 million or more.

I'm sure I will be heading back to his site frequently for inspiration and instruction

New On My Reading List: Pete Peterson, Billionaire

2009-10-21T10:42:00.003-05:00

Pete Peterson, legendary American businessman, public servant, co-founder of the Blackstone Group, and billionaire, has written an extraordinary autobiography. I am in the midst of reading it and hope to review it shortly. It has a lot in common with other biographies of World war II vintage titans, like Warren Buffett and Alan Greenspan. More to come.

Success tools: Free Startup Consulting

2009-10-15T11:28:00.003-05:00

I've been a fan of the StartupNation podcasts for some time. Thanks to my membership on their site I received this link regarding Startmeup, an extensive free business startup consulting service from Resourcenation. The service apparently includes (according to the landing page) :

"A dedicated consultant

A customized startup schedule

Weekly articles, tutorials and advice tailored to the stage of your business

Assistance to help you find the best resources

Support in setting up your legal entity, insurance, marketing and more"

I am constantly amazed at how the ongoing process of disintermediation continues. Layer by layer, in our age, access to knowledge is being democratized, with the ongoing potential for a huge increase in individual productivity. I intend to explore these resources fully.

Success Books: Soon To be Reviewed

2009-10-11T13:56:00.004-05:00

My reading is getting ahead of my reviewing. Here are two books I've enjoyed recently, and hope to review shortly:

Hugely true, honest, and practical.

I tried the exercises in this book and found they had an effect. Luck is not magic (at least not PURE magic). More in my upcoming review.

Success Secrets: Mind-Body 'Links"

2009-10-11T13:24:00.004-05:00

Two links from Science Daily:

Body Posture Affects Confidence in Your Own Thoughts
"Researchers found that people who were told to sit up straight were more likely to believe thoughts they wrote down while in that posture concerning whether they were qualified for a job.

On the other hand, those who were slumped over their desks were less likely to accept these written-down feelings about their own qualifications."

Mediterranean Diet Associated with Reduced Risk of Depression
"Individuals who followed the Mediterranean diet most closely had a greater than 30 percent reduction in the risk of depression ..."

Imagine. Thousands of volumes have been written about confidence, positive mental attitude, etc. Yet, what if two of our most basic basic habits, our posture and our food intake, had an overwhelming effect on our entire view of the world and ourselves? One of the key takeaways of this research is summarized in the old adage: "man makes the habits, then habits make the man". Another conclusion might be that the evidence continues to come in that we have responsibility for ourselves. Even such intimate, and seemingly uncontrollable traits as depression, self-confidence, etc, are subject to the influence of self-responsibility. It is we, not our family history, that choose to sit up straight. It is we, not our genetic makeup, or our "class", etc, who are responsible for, potentially, our susceptibility to depression, etc. Imagine if 100 million people switched from therapists and pill-popping to merely sitting up straight and eating right.

I'm no opponent of either psychotherapy or psycho-pharmacology, but it is instructive to remember that, 50 years ago, the "well known fact" that exercise and cardiovascular health are linked, was not well-known at all. In 50 more years, the links between our physical selves and our psychological selves may turn out to be a commonplace assertion.

Certainly we associate confidence with an upright bearing. Soon I will be reviewing D.A. Benton's Executive Charisma: Six Steps to Mastering the Art of Leadership, which devotes an entire chapter to this fact. The chapter heading: "Stand Tall, Straight, and Smile".

Success Videos: McKinsey Quarterly interviews John Chambers

2009-07-11T16:03:00.004-05:00

I just came a cross a McKinsey Quarterly video interview with Cisco's John Chambers. I continually marvel at the intimate connection a listener can have with the greatest minds on earth, now that the Internet is in full bloom. In the days before the Internet, weeks or months might go by before you could hear anything remotely "deep" about science, business, technology, etc on any of the 3 (!) TV channels you had access to. Airtime was simply too valuable to "waste" on anything that didn't appeal to millions. Well, those days are over. The Web is alive and crackling with brilant ideas from all corners of the world, providing undreamd-of insights fromthe eladers in every field.

What's interesting about the Chambers interview is how many principles of personal success and achievement he discusses, in the context of his work running Cisco, one of the largest corporations in the country. Here are a few of the principles Chambers discusses in this remarkable interview:

Opportunity must be seized quickly.
This is as true (or more so) in personal achievement as in corporate achievement. I always think back to this principle as so beautifully expressed in A.Z.H. Carr's "How to Attract Good Luck". Opportunities are short windows, and in this time of technological hyperdrive, the time windows of these opportunities are even shorter than ever.

Build Replicable Processes Around Successful Methodologies
Whether it's the "gold standard" processes embodied in the Toyota Production System, or the highly successful individuals mentioned in the wonderful book "Rich like Them", a key element of success is finding a successful methodology and then creating replicable, specified actions to repeat that process over and over. There is a "virtuous spiral" in what Chambers is doing, because if the methodology is replicating management methodologies throughout the corporation, you get a "sorcerer's apprentice"-like result of exponentially growing outputs. Sort of like fishermen teaching fishermen how to teach fishing.

The Reality Principle
Because Chambers works hard to see the world the way it actually is, instead of how he wishes it to be, he has been able to lead the company through decades of changing technologies and changing business conditions. He tells us that he shares the leadership role with his clients, and is willing to be led by them and their needs. He also tells a key story of being willing to change his mind as he embraced Web 2.0 as a game-changing technology, thanks to his ability to listen to those around him , and act on what he learned.

Success Requires Quantity
Chambers has over 30 key priorities he is personally working on. The company is posied to make a huge amount of acquisitions. But quantity is not just a key driver of business. Great athletes need to win consistently ...large quantities of games. Great concert artists must play hundreds of concerts per year , all at peak levels of skill. Charles Murray, in his magisterial work on genius, Human Accomplishment, explains that the great geniuses were all incredibly prolific: Michelanfelo, Bach, DaVinci, Edison, all poured fourth huge quanities of brilliant outputs...gifts to the world in abundance. In our personal achievements, we should get involved in a pursuit that allows us to produce robust quantities of whatever our aptitudes generate: ideas, products, articles,books, businesses, whatever.

Success Requires Long Time Perspective
Chambers: "The results we get today are because of what we did five years ago". He tells us he thinks in hierarchical time frames of distant future (5-10 years), medium term (2-4 years), and the "execution" time frame of 12-18 months. All great enterprises, great families, great investors, etc know how to play down the board. To have "long time perspective". Chambers is gifted in being able to exist within three time frames at once. Quite an achievement.

Remove Under performers
Lastly...This interview is short (5 segments about 5 minutes each) yet, at east twice, he makes it clear that employees who are not in sync with the vision and management practices at Cisco don't last long. Makes sense. he has over 60,000 committed employees to think about, and can't afford the negative momentum of uncommitted or cynical employees. Like Chambers, we need to put aside what does not work, in order to throw our energies into what does.

Related Posts:

How to Attract Good Luck - Part 1

How to Attract Good Luck - Part 2

How to Attract Good Luck - Part 3

The Toyota Production System Part 1

The Toyota Production System Part 2

The Toyota Production System Part 3

The Toyota Production System Part 4

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Success Videos: David Swenssen, Yale Endowment

2009-07-07T21:31:00.004-05:00

In a recent post, I mentioned the latest edition of David Swensen's Pioneering Portfolio Management. Here is a remarkable video of the man himself, speaking to Yale students about the methods he uses to create his phenomenal investment results for Yale's Endowment.

Success Tools: The Optimism File

2009-07-07T19:56:00.003-05:00

I have been experimenting with a technique which I came up with recently. I call it “The Optimism File”. This technique is slightly different from other visualization techniques such as goal-setting or affirmations. With goal-setting, you define a task or state that you would like to exist in the future. With affirmations, you flood the subconscious mind with a statement about the future state of your life, the idea being that the future state will manifest itself as you thoroughly internalize the desired outcome

With the "Optimism File” you stay closer to the here-and-now, concentrating on plausibly positive outcomes of near-term events. You are actually “re-setting your probabilities”. Here’s what you do: consider for a moment some upcoming event , perhaps a sales meeting, an interview, a workout session, an investment, or (in my case) a trade I might make. Now, in any of these types of events it is plausible to have a favorable outcome, or, perhaps, a less favorable outcome. Unfortunately, I sometimes tend to think pessimistically, so, I decided that I would create an exercise where I would write out plausible positive outcomes that actually could occur, related to upcoming events. It’s essentially a “set of optimistic training wheels” to “switch on” an optimistically biased outlook.

The meeting on Friday might end with me getting promoted
The Cubs might win this weekend
This trading system has been 70% profitable so I could make a good profit this week

You get the idea. As Sandra Anne Taylor has suggested eloquently, in her book Quantum Success: The Astounding Science of Wealth and Happiness, we do create our reality. Certainly we can set goals for future achievements (and we should) , and we absolutely should write affirmations and wish-lists. But these techniques deal with realities a bit “further down the road” than the next meeting, the next set of weightlifting reps, etc. So, if you make a written entry in your “Optimism File”, it has a tendency to re-set your inner “take” on reality-as-it-is. Or, at least, reality “right around the corner”. Perhaps within an hour, a day, or a week.

I also make notes when the entries in the file “come true”, in order to further convince myself that it is “OK” to envision good outcomes. So often, we try to “protect” ourselves with statements such as “hey, if it goes wrong, no biggie”, or “this sales prospect probably won’t buy…she never does”. So, the “Optimism File” is a ”safe” zone where you can predict that things will “go right”. At the very least, you feel better as you read the entries, and sometimes there are pleasant surprises as the “Optimism File” entries come true.

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New On My Reading List

2009-06-23T21:09:00.001-05:00

David Swensen taught a generation of portfolio managers how to achieve decades of market-beating returns, yet, to this day, no one seems to be able to catch up to the brilliant chief of Yale's Endowment. A generous gift to investors everywhere from one of the greatest minds in the history of the field.

New on My Reading List

2009-06-23T20:54:00.008-05:00

I am loving this multi-biography of the elite group of Jewish Hungarian physicists who changed the world of twentieth century science. Why don't people also mention that this unusual line of brilliant scientists has continued into the 21st century, including Microsoft's Charles Simonyi , and Intel's Andrew Grove?

Success Book Reviews: Michalko's "Cracking Creativity"

2009-06-23T20:41:00.003-05:00

Imagine having Albert Einstein or Leonardo DaVinci around to help out when you are stuck on a problem. Or perhaps Steve Jobs, or T.S. Eliot. Or maybe Thomas Edison or Nikola Tesla to offer a different point of view when you were stuck looking for a solution. Michael Michalko’s Cracking Creativity: The Secrets of Creative Genius may be the next best thing to “channeling” these great minds.

Michalko’s research has broken down a lot of the “mystery” surrounding the production of new and brilliant insights, solutions, and models. He puts these techniques into our hands in great profusion. Like a “tool chest of the mind”, I think someone would be hard-pressed NOT to generate a wealth of ideas and solutions once they started using these remarkable tools.

So, what do geniuses do that we can emulate to solve our problems and deliver new breakthroughs in our own lives.? First and foremost, think in terms of “a lot”. Whether it is a lot of approaches to the problem, a lot of potential solutions, a lot of subcategories of the problem, or drawing from a lot of different fields, geniuses always generate a lot of output, and then cull the best solutions from that output. Call it “divergent/convergent” thinking if you will. Instead of a “Eureka” moment, think in terms of hundreds of small-caps “eureka’s”.

Problem Statement Techniques
Michalko starts here, and urges us to restate the problem from as many perspectives and levels as possible. Use different descriptions, levels of abstraction, alternate wordings, questions, etc. Sometimes this technique alone may even solve the problem

Diagrams and Graphics
Michalko makes a good case that , during the Renaissance, human productivity improved dramatically as scientists and thinkers began to use graphic representations of their concepts. Michalko presents several techniques for diagramming problems that can shed a while new light on sub-problems, systems, interrelationships, and cause-effect chains.

Idea Generation
For most of us, idea generation is not a “process” but a more-or-less haphazard act. Reading Michalko, it becomes clear that, with Michalko’s techniques, most of us could produce ideas in much larger quantities, and with much more diversity, thereby allowing us a much larger field to select from as we develop the most important ideas.. A few of Michalko’ insights:

Geniuses produce quantity first, deferring judgment to a later stage of the process

Geniuses continue to elaborate on ideas, allowing many variations and improvements to take place

Geniuses work at improving different parts of an idea

Geniuses keep accurate records of their ideas

Geniuses search for unusual “triggers” for ideas: different fields, random words, fantasy, “what if” scenarios, abstractions, and “creative accidents” all contribute to the creation of new solutions and concepts

Collaboration
Geniuses often work with multiple great minds in non-judgmental ways. This process similar to Napoleon Hill’s “Master Mind” concept, allows multiple perspectives, and multiple lines of thought, to intersect in powerful ways.

So...does this stuff work? For me, absolutely. I tried using a few of Michalko’s concepts in my ongoing work developing a particular style of trading system. Within one evening, I could see that the results would produce a system approximately 6 times as effective as the previous version of the system, and, furthermore, that the algorithm generated would be applicable to other trading systems as well.

Be ready for lightning to strike when you use the techniques of Cracking Creativity.

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Success Book Reviews: "Rich Like Them"

2009-02-14T15:33:00.005-06:00

Ryan D’Agostino’s Rich Like Them: My Door-to-Door Search for the Secrets of Wealth in America's Richest Neighborhoods is a modern-day echo of one of the world’s greatest success books, Napoleon Hill’s Think and Grow Rich! In that classic, Hill describes a 20-year project which he undertook at the behest of steel magnate Andrew Carnegie, to interview the world’s most successful men, Men like Henry Ford, Theodore Roosevelt and Thomas Edison. While I am unaware that concrete evidence exists of Hill’s project, it certainly very well may have taken place. One thing is for sure, Ryan D’Agostino undertook a very similar project. He literally knocked on doors in America’s richest neighborhoods and flat-out asked the occupants of these mansions how they got rich. This then is the “real deal”: actual interview data on how folks get rich and successful in modern-day America.

Here are a few of the success characteristics of these achievers.

Find something you are willing to do for 20 years or more
This may be the central tenet in the book. It is consistent with wealth-building practices of all the “greats”, from Warren Buffett to Steve Martin. Wealth is built over time. Long periods of time doing valuable things. I can’t recall one interviewee in the book who made their money in “one shot”.

Whether it’s deal-making, shrimp-shelling, art gallery ownership or entrepreneurship, the rich people in D’Agostino’s book derive their wealth from many, many repeated transactions. You have to have something, some talent, product, asset or process to sell, and then you have to have the love, or drive, or fascination to do it over and over again. There are no one-hit wonders. Many of D’Agostio’s subjects repeatedly state that, currently, they don’t need the money: they have more than enough money to live comfortably. They do their work because they love it.

Search for and seize opportunity
As in Carr’s How to Attract Good Luck, the successful people of this nation keep their eyes open. They pay attention to their instincts and know, or sense, when an opportunity is unusual.

Consider Real Estate
It is somewhat of a truism that an inordinate number of personal fortunes have been built in this country on real estate. The subjects of D’Agostino’s inquiry are no exception. The rich seem to start accumulating real estate early in their lives, and buy and sell properties regularly. There are two key reasons why this strategy may work: First, the government actively supports home ownership. Mortgage interest deductions, government-backed mortgage entities, etc all exist to foster home ownership which, in turn, fosters industries, trades, and professions of all kinds. Secondly, the leverage available in real estate is often double (or more) than the leverage available in, say, the stock market. You can “play a bigger game” in real estate. In other words, it’s easier to get rich by pyramiding your winnings.

Find a compatible life partner and pick good parents
This trait is not overtly mentioned by D’Agostino, but a careful reading of the text suggests a lot of evidence in its favor. Of course, you can’t pick your parents, however, my offhand guess is that the majority of D’Agostino’s subjects had excellent relationships with their fathers and/or their spouses. Good families that transmit good values to their kids can produce richer kids. It may not be an accident that, besides being great at math when they were young, both Alan Greenspan and Warren Buffet had stockbrokers as fathers. Similarly, you can’t keep a lot of wealth if you’re divorcing all the time. A lot of D’Agostino’s subjects seem to be stable, long-married couples with kids.

Summing up, take the advice of Ryan D’Agostino’s subjects. Start Early. Take reasonable risk. Stay married. Stay the course. And buy real estate. Oh, and read Rich Like Them. It's great.

Success Secrets : 10 Years to Mastery

2009-02-03T21:17:00.002-06:00

In my recent review of Steve Martin's auto-biographical tour-de-force Born Standing Up: A Comic's Life, I referred to the emerging research indicating that "deliberate practice" over about 10 years appears to be the prerequisite for mastery in many fields. In that vein, I recently noticed a post from uber-blogger Steve Rubel on the same subject entitled, Become an Expert with the Power of Deliberate Practice. Well worth reading, and an additional confirmation of this theory.

New On My Reading List

2009-02-01T17:57:00.000-06:00

Great book. I'll be reviewing it soon.

Steve Martin Part 2

2009-02-01T17:25:00.003-06:00

In my last post I discussed Steve Martin’s Born Standing Up: A Comic's Life with, as usual, an eye for catching those traits which matched those of high achievers in other fields. Besides the ones mentioned, here are a few more

Debt aversion
Steve Martin avoided debt, and paid for everything with cash. Truly high achievers accumulate assets first, spend later. Warren Buffett, spent very little on his house, car, clothes, etc., till long after he had hit billionaire status. Sandy Weill and former protégé Jamie Dimon believed in a “fortress balance sheet” where assets could more than cover liabilities.

The "Snowball" Concept
Of course, the recent landmark biography of Warren Buffett is called The Snowball. Just what is the snowball? I call it a compounding effect created by applying a successful, self-reinforcing process at larger and larger scales. In other words, a key aptitude or competence can naturally unfold and expand. With Warren Buffett it was perceiving and unlocking value. With Sandy Weill it was, among other things, the ability to motivate brokers and efficiently manage a back office. The trick is to find a particular competence that can be “scaled up”. With Steve Martin it was a combination of his outstanding writing, performing skills as well as the easy, comfortable friendships he made and kept over a lifetime that helped him transition from the “low capitalization” world of standup comedy to the “high capitalization” world of movies.

Serenity of achievement
This isn’t really an achievement factor, but I want to note delightful couple of passages in Steve Martin’s books, right after several career breakthroughs, in which he describes a state of serene calm. I have felt this state of “post achievement” bliss a couple of times in my life. There is, at this moment, a sense of self-trust, a harmony between the potential you worked to develop and the actuality of an achievement that occurred, that s an almost mystical moment. You are doing “what you were meant to do”. There is an assurance, a stillness. You are “in flow”. Anyway, it was gratifying to hear it described so beautifully by the great Steve Martin.

I wish this state upon each and every reader at least once in their life.

Success Book Review: Steve Martin: "Born Standing Up"

2009-01-30T11:30:00.007-06:00

Steve Martin’s Born Standing Up: A Comic's Life, an autobiographical memoir, is, first, and foremost, a masterpiece. Secondly, it is an authoritative summation of the success principles that appear over and over on this blog. Touchingly written, honest, funny, sad, and inspiring, it's just plain great literature. Anyone who has watched Martin’s brilliant work, especially his stand up work in the 70’s, will be a customer for this book. I, for one, have always wondered what lurked behind the madman/self-parodying/ always-delightful exterior. While we don’t get every last scandalous juicy detail, we get the important bits to piece together the puzzle.

But, beyond that, the book illustrates another point: whether you’re a golf pro/tycoon like Greg Norman, a chess master, like Josh Waitzkin, or a standup comedian, there are common traits and characteristics of many achievers. Startlingly, Steve Martin is, in this respect, amazingly congruent with other high achievers in the manner in which he exemplifies these principles Throughout the course of this blog, I have assembled the success principles I have derived from many outstanding achievers, coaches, and researchers. Here are a few common threads that unite Steve Martin with a host of other successful achievers.

10 Years to Mastery
Frequently in his book the figure of ten years comes up. Ten years between starting his true career till worldwide fame and fortune arrived. It turns out that much research (here and here) has been done on expert performance and, you guessed it, 10 years to mastery is about right. Many a child “prodigy” has, in fact, been hard at work on piano, math, chess, gymnastics, etc for at least 10 years. In fact, Martin’s narrative adds an exclamation point to that research, because we see it is no less true in madcap comedy routines than it is in quantum physics Nobel Laureates.

Deliberate Practice
This is the addendum to “10 years to mastery”. You need to add “deliberate practice”: focused review and improvement of your performance in your key success areas. You can’t just go through the motions. You have to think about what it is you need to do to get better. Steve Martin took plenty of notes after his performances, and, later on, also recorded his act for further review.

Creative inspiration,+knowledge-seeking followed by highly specified activities
This paradigm works everywhere from the Toyota shop floor, to my own previous specialty (commercial music), my current field (coding trading systems), and straight on to Steve Martin’s brilliant career achievement. You have to constantly invent, or search for, ideas on how to get the job done, and then tightly specify the actions needed to implement those ideas. Steve Martin mentions speaking his lines while, at the same time, mentally “living in the future", of his next move, his next prop, his next joke. He also mentions a tighter and tighter focus on “precision”, to the microscopic level: the movement of a finger could make or break a joke, as he tells it. Again, his journey illuminates these qualities, and we can see how they might apply to a baseball pitcher, a race car driver, an Olympic diver, etc.

One more note: mere ideas without precision execution will lead to mediocrity or failure, as does repetitive execution without a constant source of new inputs (either from internal or external sources of creativity).

Networking and Likability
While networking and likability are not mentioned per se in Steve Martin’s book, it is clear that he was able to find, keep, and utilize his excellent relationships with others to move forward in his career. He had long, multi-year relationships with theaters and clubs where he could practice his craft. Friends offered to manage him. Ex-girlfriends got him work. He often sought and received excellent advice from other comics, and even, on occasion, used others’ material, with their permission. You cannot do this without being likable, without building and maintaining your network. I get the impression that people naturally gravitated to this well-spoken, good-looking, freethinking and talented guy. He may not have needed to concentrate very much on this aspect of success, but it is clear he was great at it.

Mental Models
Steve Martin was driven to educate himself. Logic, art history, poetry, and philosophy are only a few of the areas he consciously turned to. Charlie Munger has frequently mentioned having a suite of “mental models” for taking in reality through different perspectives. Martin’s book is loaded with analogies to art. And it is clear that he uses his highly developed mind to “think about what he is doing”. Much as 20th century artists and musicians used “classical” forms and ideas to frame, or "set up" their excursions into new territory, Steve Martin's comedy is “referential”: it is “meta-comedy”, or, comedy about a guy doing comedy. This comes, in part, from having developed mental models to view and re-frame experience.

Success comes on the far side of failure
As Ben Stein puts it, you just have to “stay at the table “ till you win, hopefully enjoying yourself in the process. Just before his biggest breakthrough, when he went from a live audience of 90 to an audience of 40,000, Steve Martin was nearly broke. Reality , and success in particular, is not linear. Breakthroughs can happen right after the most disheartening turn of events. You cannot really put a time limit on success, because things have to “lime up” just right, even though the groundwork may have been laid years before.

The key point is this: Steve Martin is probably the most famous standup comedian ever. And I , for one, have a huge respect for that one-in-a million gift. But , for the rest of us, it is instructive that, as Lee Trevino once said: “The harder I practice, the luckier I get”. The success principles illustrated by Martin’s meteoric rise to fame (preceded by a mere 10 – 20 years of performing!!!) are actually applicable to success in many areas. His book, besides being a piece of sheer beauty, can help bring out the “star” shining in each of us.

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Success Secrets: Self-management the GE Way?

2009-01-06T09:04:00.003-06:00

I recently posted a video of Jack Welch, ex-CEO of General Electric, speaking brilliantly at MIT. In the video, he reiterated some of the key practies he used to power GE to dominance. Can Jack Welch’s techniques, used to manage corporate behemoth General Electric, be used in our individual efforts towards personal achievement? Yes, they can.

Jack Welch Technique: 20/70/10 (Reward the top 20%, encourage/coach the middle 70%, fire the bottom 10%)
In our personal projects, we can get deeper and deeper into what works. This area is equivalent to Jack Welch's "top 20%". We should concentrate on doing more in the areas in which we are successful. These are “golden”. These areas include our natural aptitudes. We should expand this territory by meeting more people in our field, stressing our core competencies, and getting training in contiguous and appropriate skills. Toyota stresses continuous improvement down to the tiniest level…and it’s already the best-in-class automaker. Charlie Munger has suggested that the best results we are getting should be the benchmarks for the next investments we make. In other words…use our best to make the rest better.

The “middle 70%” is the area of our average aptitudes. This is the area where we may not be outstanding, but it includes areas that are important to our lives. These areas (perhaps diet, exercise, “giving back”, etc) are amenable to an organized approach to productivity (checklists, regular monitoring, etc). They are not “natural” for us, but they are important. We can improve in them, and we must, while taking into account that we may not be “stars” in that particular firmament.

The “bottom 10%" corresponds to what’s not working. Relationships, goals and plans, outright failures. So, how do we “fire” the bottom 10% if it’s only ourselves? First, we can outsource. If we are not organized, we can hire a consultant who can help us organize. If we dress badly, we can get a personal shopper. Another method is to “outsource” the job to software. I felt I needed budgeting help recently so I found YNAB, a superb budgeting program. It’s a lot more organized than I am and much better at keeping categories and totals straight.

Another technique: “fire” what’s not working. Just stop doing it. Stop watching TV shows that are meaningless. Stop hanging out with whiners and complainers. Stop consuming food and drink that are bad for you. “Fire” the unproductive behaviors and people in your life.

Jack Welch Technique: Let employees repeatedly know where they stand
Welch comes down hard on bosses that fire without warning. He is a champion of regular employee reviews. This concept is not far from Drucker’s “What gets measured gets done”. So, in our personal goals and plans, how regularly do we sit down with ourselves and review? Do we actually know what’s working? Do we have benchmarks to check for our income, health, contacts, learning goals, business plan? The better-specified our activities are, and the more frequently measured, the more successful they will be. Forget about keeping track “in your head”. It’s virtually impossible. And, the more categories you are measuring, the fuzzier your “off the cuff” reviews will be.

Jack Welch Technique: Spend 5% on planning, 95% on execution
Plans are great, but they always change. Military planners know that planning is crucial, but that all plans get torn up the moment the battle starts. We must avoid perfectionism, which may be procrastination in disguise. All important things are “hard”. All important tasks involve painful new behaviors, learning, adjusting, and just plain hard work. Life is too short not to get it done. Furthermore, life moves so fast that an extended period of planning, instead of just working, may, in itself, make the plan outdated and obsolete. There is no substitute for actually “doing it’

Jack Welch Technique: A manager’s job is to constantly fire up the troops.
Well… YOU are the “troops”. How often do you read and write positive affirmations? How often do you visualize success? How about multiple levels of success? 1 year out? 5 years out? 20 years out? Do you keep a journal of good things that happen to you? Compliments people pay you? Did you frame that first check from the new business? Do you keep a “dreams list”? Remember, you are a human being, not a machine. Your fuel is emotion. Passion. Even envy, greed, and lust have their place. Get the fires burning. Never let them go out. Jack Welch is still going strong. He knows whereof he speaks.

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New On My Reading List

2009-01-06T07:14:00.004-06:00

I am currently reading "Cracking Creativity" by Michael Michalko. Outstanding collection of creativity-enhancing techniques. I hope to post a full review soon. The book illuminate the techinques of the world's great geniuses (Einstein, DaVinci , et al), and goes on to present a dazzling collection of very usable techniques for idea generaton, problem-framing, and problem solving.

Success Book Reviews: Warren Buffett and "The Snowball" Part 4

2009-01-04T13:55:00.004-06:00

This is part 4 of a “review” of Alice Schroeder’s remarkable biography of Warren Buffett, "The Snowball”. Actually, this topic would be better categorized as part of my Success Secrets category, since, as always on this blog, my goal is to elucidate the behaviors, disciplines, and mental models of the most successful people. Part 1 is here. Part 2 is here. Part 3 is her e.

Buffett Secret # 6 Stick to your Circle of Competence
Both Buffett and his lifelong sidekick Charlie Munger, arguably two of the smartest business minds on the planet, repeatedly emphasize that they themselves stick to a very few investment methodologies, and only work in business lines that they understand thoroughly. Why would they admit this? Why would this be important to know? Well, firstly, it takes years and years to be good at something. Trying to be good at too many things is not going to work. Also, simple business concepts are going to be easier to apply broadly than complex business concepts. Market dominance, for instance, is a simple concept . Semantic Web Asynchronous Transfer, for instance, is a complex concept.

Secondly, there are very few “snowballs” out there (meaning, a line of activity that produces consistent results that work repeatedly, and can be compounded over decades). So, if there is a line of activity that seems to be accumulating results in a “snowball-like” manner, you use that information to stick to what you are doing, rather than succumb to boredom or “master of the universe syndrome” and veer off-course.

Thirdly, you are less likely to be deceived by others if you thoroughly understand the potential of a business. This understanding is easier to achieve if you limit your "circle of competence" to simple businesses, as Buffett does. You can then bid intelligently, and to recognize when something is “too good to be true”. You thus avoid many meltdowns and bad decisions.

Buffett Secret #7: Focus for a lifetime
Buffett’s own description of his main “secret”, according to Alice Schroeder, is “focus”. You must be drawn obsessively to you main pursuit. It must dominate your waking and sleeping hours. "Love", "passion", "obsession", while not exactly the right words, convey the feeling of someone in the grip of a “virtuous circle”, where what he does not only works, but brings out the best in a person, and also captivates him, urging him higher and higher. Often, this type of success allows others to follow along and succeed as well. Berkshire stock turned many an average investor into a multi-multi-millionaire.

But focus is different from “focus for a lifetime” just as a driveway is different from an interstate. Do you have something that will keep you fascinated for decades? That makes you “skip to work” in the morning, as Buffet claims he does? Does the concept drive you to gain knowledge, hone skills, ask questions, and be the type of person that other people love to do business with? Will it make you the kind of person people feel safe with? Confident with? Sure of? Focus for a lifetime can, indeed, be the crowning achievement of a lifetime.

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Success Book Reviews: Warren Buffett and "The Snowball" Part 3

2009-01-04T12:47:00.009-06:00

This is part 3 of a “review” of Alice Schroeder’s remarkable biography of Warren Buffett, "The Snowball”. Actually, this topic would be better categorized as part of my Success Secrets category, since, as always on this blog, my goal is to elucidate the behaviours, disciplines, and metal models of the most successful people. Part 1 is here. Part 2 is here. We continue...

Buffett Secret # 3: Hire or acquire skill sets that are lacking
One of the startling revelations (to me , at least) in the book was the fact that Buffett took the Dale Carnegie course. My image of Buffett, before this book, was that of a brilliant analytical individual whose insights into corporate structure and value allowed him to buy companies cheaply. While that is absolutely true, it turns out that it frequently took a lot of interpersonal skills to buy the kind of assets he was seeking, especially if these assets were not publicly available. This is one of the areas where interpersonal skills are required. Another is in encouraging and “firing up” your employees to consistently perform at their highest level ( a fact that Jack Welch also addresses in a video I posted recently).

What Buffett and Welch reveal to us is that you ignore the human component of your business at your peril.

Sometimes you hire, rather than acquire, the lacking skill sets. To improve the results of his insurance businesses, Buffett hired the outstanding Ajit Jain. Jain proved to be such an outstanding risk manager that his name is bandied about as a successor to Buffett himself at Berkshire Hathaway.

Buffett Secret # 4: Keep Expenses low. Stay away from “Glamour”
Buffett never maxed out on fancy homes, fancy cars, fancy hobbies, or fancy possessions. Now, we can never know exactly how much of this is actually true, but we do know, from Schroeder, that Buffett basically maintained a singe residence, a home in Omaha, Nebraska, for the whole of his working life. This is a far cry from the deca-million-dollar Manhattan condos maintained by lavish-spending CEOs. Similarly, Buffett often bought into “low-glamour” businesses such as flooring, metal fabricators, shoes and furniture. Why? Because the cash flows from the businesses were cheaper than cash flows of more glamourous businesses. Also, because he candidly admitted that he didn’t understand high tech. While Buffett could match brains with highest of high-tech CEOSs, my own guess is that, to Buffett, the long-term value of the cash-flow stream of a high-ech business is more difficult to predict than the long term value of massively scaled business based on serving a huge and slowly-changing need. Coffee roasters instead of Javascript, as it were.

Buffett Secret # 5: Find a Supportive Mate
Buffett, always a keen scout of talent, picked Suzie to be his wife. N Suzie he found a woman who was willing to allow Buffett the time and mental tranquility to achieve his full potential. In my own experience, I have seen the demands of family, often channeled through the society’s pop-psychology lens, stifle nascent potential, in the interests of fulfilling dubious “needs” (such as consumer goods, fine houses, “work/life balance”) . Truly great careers, and great achievements , need decades to come to their full fruition, and the achiever needs supportive people around hm, to “wall off” distractions, provide empathy and understanding, and to provide approval and comfort during rough times. A tranquil marriage, free of divorce or major psychological upheavals, has to have been the greatest success secret of all

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Success Videos: Jack Welch at MIT

2009-01-04T11:25:00.003-06:00

Here's a great video of GE ex-CEO Jack Welch speaking at MIT in April, 2007. One of Welch's core principles, among his many, is that he deals with what actually is, rather than what should be. We are so blessed in this Internet Age to be able to get hours and hours of instruction from the actual leaders, the actual winners in their fields. We are also blessed by the fact that so many leaders (Welch, Warren Buffett, Charlie Munger and others) live so long. Why? because it is more difficult, statistically, to be a "fluke" if you have a multi-decade track record of success. Someone who has been succeeding, without major derailments, and with minimum scandal, for 30 or 40 years is very likely to be the "genuine article", and to posses the true markers, the true principles, of success and achievement. These are people whose voices we should be listening to, an heeding, as we go about achieving our own goals.

Success Book Reviews: Warren Buffett and "The Snowball", Part 2

2008-12-10T22:22:00.004-06:00

This is part 2 of a “review” of Alice Schroeder’s remarkable biography of Warren Buffett, "The Snowball”. Part 1 is here. I put the term “review” in quotes because what I have bee trying to do on this blog is abstract the qualities that generate personal success and achievement, whether from biographies, websites, etc. As such, I tend to look at the material I am reviewing with a view towards gaining a glimpse at the successful practices of our highest achievers, and, if possible, cross-referencing these characteristics with those of other achievers I have discussed on this blog.

Here are a few of the success secrets that Buffett seems to have practiced, some of which appear in the biographies of other successful people

Buffett Secret # 1: Go to New York

What? What kind of Success Secret is that??? Actually, Woody Allen got it half right. He said “The Secret of Success is Just Showing Up”. What he might have added is “ Just Showing Up In New York City”. Several of the outstanding successes chronicled in this blog have passed through and “caught fire” in New York City: Andy Grove, Sandy Weill, and Allen Greenspan are three of them. All four (Buffett included) had transformative experiences in Post W.W. II New York City. And they are only four of millions who “got their shot” in New York (others included me, and my father). The broader rule is phrased as: “Go where there is a ‘critical mass’ of knowledge or activity in your field”. Ben Stein also mentions this Success Secret in his beautifully written “How Successful People Win”. You grow corn in Iowa and make chips in Silicon Valley NOT THE OTHER WAY AROUND. We view Warren Buffett as basically a Nebraskan. Thanks to Schroeder, we see…not so. Besides his formative experiences studying and working for Value Investing dean Benjamin Graham, Buffett traveled to New York countless times on business for decades. Often times he did it “on the cheap”, rooming with relatives or friends, or in inexpensive hotels. But Go he did.

Buffett Secret #2: Go Wherever You need to go to do business or gain knowledge

Knowledge is often not nearby nor easily obtained. Buffett went far into the countryside to many a rural business to assess its value prospects. In his early years he also managed to track down other businessmen who were already assembling collections of businesses, as he wished to do, and sit down with them for talks. Always, always he would ask questions, and, because he schooled himself in interpersonal skills, he got the answers he needed to make buy/sell decisions. I was struck by what, at least to me, seemed to be a key difference between Buffet and another Titan, Alan Greenspan, who seemed to spend more time in the New York/Washington corridor. One difference between he men, it seemed to me, was that Buffett had “ownership money” on the line. He was actually buying things, as opposed to Greenspan’s early career, as a consultant. Buffett needed to examine each prospective business purchase as with a jeweler’s loupe. The tiniest asterisk in a corporate report might mean an hours long interrogating of target management. As such, Buffet had to be “present” in intellect and in physically Being There. Greenspan, on the other hand, was gifted with a broad, big-idea view, and thus tasked himself with assembling masses of smaller details into a larger tapestry, initially for his consulting clients, later for the Federal Reserve.

The key point is, “getting from, here to there” requires an enormous expenditure of energy. A bias for activity, and enough assertiveness to get the data, confront (or cajole) when (absolutely) necessary. You can’t do it from behind a desk, and, usually, not (solely) in your own backyard.

More Success Secrets of Buffett’s “Snowball” in upcoming posts.

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Success Book Reviews: Warren Buffett and "The Snowball" Part 1

2008-12-06T09:23:00.007-06:00

Alice Schroeder has written a monumental, authorized biography of Warren Buffett. The amazing Buffett is often classed as the world’s richest man. His public image, as a smiling, relaxed, avuncular presence would lead one to ask “Is that all it takes to become the world’s richest man?” Thankfully, the answer is “no”. It appears that what it took for Warren Buffett to succeed was very much what it takes for all of us to succeed, and, for vast success, none of the skills needed for success can be omitted from one’s personal “portfolio” of skills.

What surprised me most about the book was the “disconnect” between the Warren Buffet I thought I understood and the Warren Buffet of Schroeder’s book. I had an image of Buffett as a brainy, savvy stock investor, basically picking businesses by their balance sheets, buying stock when it was cheap, and leaving management alone, as he sat in his Omaha office contemplating his next share purchase. What I learned was that Buffett was no “shrinking violet”, but was hugely proactive, a determined networker, and that he learned to become an absolute master at recruiting others to achieve what he desired to achieve. He has actively sought opportunities to teach, speak, and associate with other prominent and successful people. This side of him goes far beyond the pure “investor” side. As a matter of fact, many investors with similar approaches (the members of Buffett’s “Graham and Doddsville”) succeeded admirably without the need for the limelight.

What is the Snowball?

Perhaps the most prominent feature of Buffett’s career is the Snowball itself. The Snowball is the difference between success and massive success. It is a skill, a goal, a process, and an achievement, all “rolled up” in one, and it is the Snowball itself I want to discuss here.

The Snowball is a compounding effect created by applying a successful, self-reinforcing process at larger and larger scales. Because it is a compounding effect, the process needs to be maintained with as little disruption as possible, for as long a time span as possible.

Bufett's “Snowball” could be defined as the purchase of underpriced cash-flow streams, combined with the re-deployment of those cash flows toward the purchase of future cash flow streams.

This blog has previously examined other Snowball effects, such as the career of Citigroup chairman Sandy Weill and golfer Greg Norman.

In Weill’s case, the competencies used to create the Snowball included brokerage management skills, especially back-office management and balance sheet survivability. In Norman’s case, it was exploitation of a personal brand into wider and wider arenas.

All three, Weill, Buffet, and Norman needed to be skilled at projecting personal presence in order to move to higher and higher levels of leverage (i.e. bigger and bigger businesses). In at least one case, Buffett’s, he consciously took Dale Carnegie classes to improve his abilities in this area.

What does it take to build the Snowball?

First and foremost, a core skill set and a passion derived from success utilizing the skill set. Buffet had a passion for “the business of business” since his first paper route. He came to learn that his love for the details of business could produce increasing success.

Because larger and larger scale is needed, delegation skills become important

Because increasing the span of the business is important, the ability to appreciate the differences, as well as the similarities, of the next acquisition is important.

The ability to scale attention span is important: sometimes a wide-ranging view of a business, sometimes weekly sales figures of a branch network, even product-by product scrutiny. Sometimes you're studying yearly sales in the billions, sometimes one-cent price-increases.

Because the span of the pursuit continues to increase, delegation skills are important. The ability to “size up” a manager becomes a required skill. Since all-too-human people are involved, there is always a chance for error and errors often occur.

Because Buffet’s core competence is, basically, purchasing underpriced cash-flow streams, it is important to have the interpersonal skills to persuade owners of those streams to sell to him at a price he considers valuable. These skills can be “good cop” skills, or “bad cop” skills.

Because the compounding effect takes decades to mature, personal passion and willingness to stick to routine, and maintain consistent analytical rigor is crucial.

I’ll continue my discussion of The Snowball in a future post.

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Entropy: Entropy Reduction In Depth Part 2

2008-11-13T20:42:00.004-06:00

This post is Part 2 of Entropy Reduction in Depth. Part 1 is here. And the Entropy category link is here. In these posts, and other posts on Entropy in Human Achievement, I am developing the concept that the removal of Entropy (disorder, dissipation of energy) is a key component in all human achievement, and has been articulated, in countless ways, by all the great authors and speakers on human achievement.

Use existing processes until measures dictate otherwise
In my previous post, I mentioned the opposite principle: “Abandon processes if measurements dictate”. Though it seems I am suggesting the opposite now, these two processes are “twin processes”, and both produce entropy reduction: that key quality that eliminates the extraneous impediments to “useful work” and channels energy into productive paths. You must not abandon a process that is working without good reason. And that reason should be measurable. If a process has not been in place for long, one should not expect the measurement of success to be large, however, if the success is nonzero, and at all measurable, and if, from that measure, you can deem that process to be taking you in a nonrandom direction, consider keeping the process going. If you have not lost a pound in 4 years, and you change your eating and exercise habits, and then, after 30 days you have lost 1 pound, that may seem like a small victory. But, it is in fact a non-random result which is matching your goal and your plan. You should not change that process, although there is reason to attempt “Spiral Development” of that process

Develop your processes iteratively; Spiral Development
When I was involved in a creative field, I never quite knew when a piece was “done”. This is because creativity is oftentimes an iterative process. From the germ of an idea, a first draft is made, or a few lines are written. These initial outputs act as the beginning of a feedback loop into the artist’s brain, which then produces related and refined outputs which enrich and expand the initial germ of an idea. Ultimately, the artistic work is born, not artificially, but organically, as a spiral path toward a finished project.

Similarly, we can reduce the entropy, or disorder of our success processes by going deeper into the implications of any plans that seem to have promise. We can proceed along the “lines of least resistance”, i.e. digging deeper into those elements that seem most promising, exciting, or effective at a given (current) stage. Which elements of your plan are working? Which elements could be doubled? Tripled? Which elements would expand with a little extra equipment? With the help of a consultant? Maybe a plan is working, but needs better and more exhaustive metrics so othe shape of the whole can be perceived with more detail; so the overall direction can become clearer.

Developing spirally means reflecting on the current state of a good plan to make it better, rather than shifting to a new plan.

Bach did not seem to get tired of composing fugues, and, as a matter of fact, was still writing one as he lay on his deathbed. Spiral development becomes ever more fascinating as the output becomes more successful. Another example might be Amazon.com. This company has spirally developed its core competencies of inventory, delivery, search, convenience, etc from its beginnings as a bookseller to a huge, multi-line retailer. And then they spirally developed their back-office processes into still more businesses. Again, all grown organically. Spirally.

More entropy reduction techniques in Part 3

Entropy: Entropy Reduction In Depth, Part 1

2008-11-04T11:23:00.003-06:00

My series of posts on Entropy in Human Achievement is growing, so I will refer you to this category link for previous posts.

I recently discussed Productive Entropy and how to add to productive entropy. We are truly blessed in this digital age , to have so many sources of information available to us, from the familiar Books, TV, Radio, to podcasts, blogs, Google searches, etc. Properly deployed, the huge amount of input we get can be streamlined: the Productive entropy of all these inputs cam be further turned into the Negentropy of organized behavior. What tools do we have to reduce entropy, to magically transform all of our inputs, ideas, new knowledge, speculation, advice, etc into “the capacity for useful work”? I recently listed 50 techniques. Here is an in-depth discussion of a few.

Debrief/Review
A key tenet of modern military practice is the debrief or the after-action review. The faster our “turnaround cycle” for learning from previous experience, the faster we can make progress. By scrutinizing, categorizing, and contemplating recent experiences from the outside world, we can elucidate general principles, practices we want to implement next time, and new pathways for productive activity. The next time we go out into the battle, we will be taking a little less entropy with us. A great book that includes the debrief process is James Murphy’s Flawless Execution: Use the Techniques and Systems of America's Fighter Pilots to Perform at Your Peak and Win the Battles of the Business World .

Metaphor
“An atom is like a little solar system”. Person “A” is “like” person B. Centrifugal force is “like” a ball on twirling on a string. A biological cell is “like” a microprocessor. “As you stretch, visualize yourself has a marionette bending on a string”. Using metaphor can temporarily transform the raw data of our senses into a form which allows us to implement the data productively. Quantum, physics suggests to us that the physical world does not, in a sense, even exist until we measure it. The equations of physics are replete with representations of “forces” , “fields”, ”spin”, ”charm” and other designations, about which scientists actually know very little, except that they make sense mathematically. Yet the “standard model” of quantum physics is the most accurate model of any physical process yet discovered. And it’s all metaphor. What metaphor does is highlight selected and essential characteristics of an object or process, temporarily focusing on the similarity to other objects/processes. By eliminating other (dissimilar) aspects, the mind is able to concentrate and operate on the object in an "as if" state. For instance, a “heart patient” is similar to other “heart patients” even though the patient may be totally different from other heart patients in a variety of respects. But, for the purposes of “right now”, we are not treating the patient’s race, religion, occupation, or reading habits. We are focusing on the “heart patient” metaphor.

Reduce “Local” Decision-making
What if you decided one day to abandon all habits and made new decisions for each action you took? When to get up, when to brush your teeth, how much toothpaste to squeeze out of the toothbrush, whether you would go to work today, which route you would take, etc? In all likelihood, your life would come to a standstill, overwhelmed by entropy. We make sense out of our lives by reducing that entropy through categorical decision-making. This does not mean we cannot take plenty of time and thought to make decisions, but that, once we do, we should use the power of those decisions to reduce the level of “disorder” (entropy) in our lives. Making frequent decisions carries a “cost” in time and also in probability. For instance, if you know the donut place runs out of sprinkled donuts by 9am, you know your chances are better if you get there before 9am. Sure, you can take a chance, sleep late, and, from time to time, they still have the sprinkled donuts at 9:10. But you have re-sequenced your whole routine, spent time thinking it over, perhaps got a little uneasy “feeling” about the outcome of the new decision, and also reduced the probability of the sprinkled donut being there when you get there. Remember, you don’t have a probability series for getting there at 9:05, or another one for 9:10, etc. You actually don’t know the probability of anything but 9am. So you have sacrificed the probability, changed your routine, and spent time on a decision when you could have been putting on your shoes and being out the door already.

This kind of “local” decision-making adds up. If you continue to re-schedule meetings, skip classes, change your exercise routine, buy items on a whim, buy stocks on “hot tips”, this will continue to cost energy, time, money, and efficiency. A classic case would be the case of compound interest. All those people looking for a quick way to wealth, who change their ideas, careers, and investments rapidly, and without a “categorical” decision on what they are going to do long-term, are at a disadvantage compared to the slow, steady investor who consistently makes a good return, and takes fewer losses. Compound interest requires a removal of “entropy”. When this entropy is removed, and the investor sticks to their categorical decision over a period of decades, the slow, steady, mathematical process of wealth accumulation procedes like a juggernaut. I am indebted to the ideas of Thomas Sowell’s Knowledge And Decisions, which goes into these concepts in great depth, and at the highest possible level.

Abandon Processes if Measurements Dictate
As the old saying goes, “if you find yourself in a hole, stop digging”. The cessation of measurably bad processes is a positive act: the reduction of entropy. There are plenty of creative ways to try new processes, new people, new careers, new approaches. The beauty of “Productive Entropy” is that the current digital age provides a nearly unlimited (and nearly free) supply of possible solutions to any problem. We want to remove the entropy around productive processes, to allow them to flourish; we want to discard processes (no matter how ordered or determined) that, by measurement, show a lack of productivity. Discarding processes that measure poorly is discarding entropy.

I will consider more entropy reduction processes in depth in part 2.

Success Master Skills: Adding "Productive Entropy"

2008-10-25T20:04:00.006-05:00

This is my fifth post on Entropy in Human Achievement The others are :

Part 1
Part 2
Part 3
Part 4

I have suggested in earlier posts that achievement is related to the reduction of entropy, or disorder, in our lives, so that our energies can be focused and re-focused on the important “leverage points” that can potentially bring about the best outcome in our lives.

But there are also times and situations when we need to “shake things up” a bit. We need to add entropy, not remove it. We need to widen the view. We need to search for gold in different lands.

In today’s world, where new business models and new business concepts can spring up overnight, where technology can change in an instant, we can only find new entrepreneurial niches by casting the widest possible net, so that, later, we can reduce entropy, and mine the “gold”. Here are a few ways to add Productive Entropy.

Study a wide range of topics, especially early in life.
Some people call this ”priming the pump”. You never know where a good solution will come from. Innovation expert Phil McKinney subscribes to huge numbers of magazines. Thomas Schweich , in his book Staying Power : 30 Secrets Invincible Executives Use for Getting to the Top - and Staying There, recounts the careers of many successful people who kept their options open early in their careers, which, he says, allowed them to gain a wide variety of connections and experience.

One great example is Warren Buffett, now a multi-billionaire specializing in what he terms a small “circle of competence”. While his current entropy content is reduced, allowing him to focus on his unsurpassed investment style, it was not always so. In her remarkable book The Snowball: Warren Buffett and the Business of Life, author Alice Schroeder uncovers the fact that Buffett was involved in innumerable business activities before turning to stock investments: he owned a tenant farm, owned a gas station, sold used golf balls, and managed newspaper circulation, all the while devouring mountains of business information at a breakneck pace and with incredible focus on detail. Furthermore, although somewhat socially awkward in his youth, Schroeder’s biography makes it clear that he made friends wherever he went, often with people a generation or more older than him. Again, adding variety, and “disorder” (entropy) into his life.

The point is, he first had the drive and opportunity to “add productive entropy” by taking in both practical and theoretical knowledge, for at least a full decade in his early life prior to settling on stocks and investments as a career.

Acquire and Use Multiple Mental Models
This is a “blind man and the elephant” idea, very much understood and taught by Warren Buffett’s longtime associate (and fellow billionaire) Charlie Munger. Munger excels at viewing human events through a multitude of conceptual lenses: mathematics, probabilistic, psychological, biological, evolutionary, and others. Another method Munger uses is “inversion”: viewing a problem in reverse, to get a different perspective. Again, this adds “Productive Entropy”, i.e. disruption, or “creative destruction", into the problem-solving arena.

Read, Read, Read
Alice Schroeder (again in “the Snowball”) quotes a description of the young Charlie Munger as “a book with legs”. This refers to his lifelong addiction to reading. If there is one characteristic that seems to be the most highly correlated with success of all that I have studied (except, perhaps, for the concept of entropy reduction itself), it is the “productive entropy” of reading. The “entropy” of reading adds new facts, new procedures, and, with any luck, new overarching principles by which you can better understand and effect the events in your life. Then, again, after the exposure to the “entropy” of the new material, you remove the entropy by fitting the best ideas into your own goals and plans.

Music and Art
Music , Visual Art, Theatre, Poetry often deliberately disrupt in order to then re-order reality. The poems of John Donne, with their startling metaphors “short-circuit” the brain, allowing it to view an object on a wholly different light. I have listened to Bach’s “Well-Tempered Clavier” all of my adult life, and often feel hat there is an “order behind the order” of the brilliant counterpoint. Multiple channels of information creating a new information stream (if God talked, would it be in multi-part music?). My point is, the jaw-dropping experience of great art makes us “normal” people have to use different “mental muscles” to convert the data into a stream we can comprehend and appreciate, very much like the task of slowly removing the “entropy” surrounding a task. Even scientific research seems to indicate that music , specially, can add to IQ and productivity.

Go Where the Action Is
The brightest minds in business know to go where the business is. Wherever the best and the brightest in a particular field congregate, that is the "casino" where a “roll of the dice” has the greatest probability of landing on “7”. There is maximum “entropy, in the sense of a lot of ideas brewing and bubbling in busy, populous area. Silicon Valley is a good example of “productive entropy”. A million projects, a billion ideas, a million people, disorder waiting to become order.

Go to conferences and seminars, watch webinars
You add “disorder” by coming into contact with unknown people, companies, and concepts. This effect is multiplied exponentially by the increasing number of conferences that archive their videos. From the Singularity Summit to Stanford University, to the Cato Institute, new ideas by brilliant minds pour onto the web every day. If we take the time to sample these new inputs, our own brains will re-integrate the information, removing entropy, and fashioning new tools for productive pursuits.

Browse forums in (and out of) your field
Scroll through the forums in your area of business. As a trader, I have found innumerable trading ideas online, as well as new friends, books to study, and other unexpected gems.

Lists, Brainstorming, Idea-Generation, ”Capture Mechanisms”
The mind can continuously improve its idea-generating capacity with practice. Productive Entropy in this case is the free-flowing generation of ideas: Hurson’s “Divergent Thinking” (Think Better: An Innovator's Guide to Productive Thinking). Many successful businessmen, artists, writers, keep an “idea capture” device (voice recorder, notebook, etc) with them at all times. The external world (people, signs, events) and the internal world (internal dialogue, dreams, flashes of inspiration) are often sending us solutions, new directions, new inputs, in an ”entropic” fashion. We need to ‘love” the “disorder” of recording any remotely relevant input, for later entropy-removal, (i.e. the transformation into “useful” inputs to a process). Currently, anything useful that comes in to my field of view usually ends up in my personal wiki: websites, ongoing transactions, GTD categories, article links, etc. That way I can find it later, tag it, link it, etc.

I feel it is urgent to take in new ideas (“Productive Entropy”). Others don’t. I run into people constantly who drown out new directions, alternatives, solutions, etc in the din of their own (internal or external) monologue. “Not Invented Here” is alive and well. But , without new inputs (“Productive Entropy”), we are simply a self-justificatory entity: we have the “order” of living in a changeless mental landscape, comfortable, predictable, but frozen and inflexible.

We, as human beings, are privileged to be the only known creatures on Earth who can consciously and rationally adapt to the changes we ourselves make in the Universe. These changes will, whether we like it or not, inject entropy into our lives: our jobs, relationships, procedures, and relevance/irrelevance of our state of knowledge. We need to get out ahead of that tidal wave as much as possible by welcoming the entropy, and incorporating it into our goals, plans and achievements

Success Book Reviews: 3 Quick Takes

2008-10-21T20:14:00.006-05:00

I took the audio versions of Fox's book and Pickens' book along on a recent car trip across country. Fox's book was a truly outstanding and exhaustive treatment of client service, promotion, and self-management techniques, clearly written by a master. I found the sheer volume of ideas to be indicative of an incredible generosity. Fox is clearly a master and an insider, and this book is the next best thing to a world-class course in "How to Make The Sale Happen", with a minor in "How Not to Look Like An Idiot In Business".

Pickens' life end exploits are hugely entertaining. In one sense, his life reflects a habit of thinking big, learned at an early age,which, by its very nature, produced knock-on effects throughout his career. That lesson alone was worth the price of the book.

I have just begin to read Buffet's book, and I'm loving it. There are fascinating parallels with Alan Greenspan in some facets of Buffett's early development, notably facility and interest in data and statistics, while Buffett's Omaha-based practical streak added a penchant for making money and salesmanship, which led in a different direction. I plan on further comments at a later date.

Success Master Skills: Can Entropy be Good?

2008-10-21T19:52:00.003-05:00

In the previous posts about entropy in human achievement (here, here, here), I have portrayed entropy as a villain: as the seeping disorder that destabilizes our plans, and often our lives. I’ve urged that we become aware of the sources of entropy in our lives and that we take measures to control the process. The less “noise” we allow into our lives, the more we can focus on what really matters to us. We not only free up time, but we allow the brain the time it needs to slowly iterate through our subject matter, producing more and better outputs the longer we fixate on a particular task.

So, are there any areas where entropy is good in our lives? Any ways in which we should be (gasp!) adding entropy? Is there such a thing as “Productive Entropy?”

Of course. Perhaps my favorite book of the year, Tim Hurson’s Think Better: An Innovator's Guide to Productive Thinking describes the methods of “convergent/divergent” thinking. In the ”divergent” phase, we add entropy: we open our minds to all sorts of solutions, alternatives, fantasies, questions, etc in search for the proper frameworks of problems and solutions. Then, Hurson leads us to the “convergent thinking” zone, in which we carefully sift and sort through the ideas we have discovered, in a sense, removing entropy to find the “gold” in the ideas.

There are times when entropy (disruption, variety, surprise, distraction, shocks of one kind or another) is crucial to the unfolding of our existence. There is the well-known story about the discovery of Penicillin, accidentally, because a culture of bacteria had mysteriously died in the presence of certain mold. There was also the hugely disruptive “failure” of the Michelson-Morley experiment which failed to detect an “ether wind”, thus leading to Einstein’s Theory of Relativity, and a revolution in physics.

In terms of bettering our own lives, adding entropy allows a re-ordering of knowledge, of experience, of implications and possibilities, often leading to positive outcomes. For instance,whenever a client’s ”normal” supplier is unavailable, a new supplier might be able to step in. A blind date might lead to romance and marriage, A Paradigm Shift (for instance, from electro-mechanical relays to transistors) can open whole Universes of opportunity. Author Clayton Christensen goes so far as to describe an “innovator’s dilemma” because of the continual encroachment of new methods and technologies moves up the value chain, disrupting business models as it goes. One of the first books I reviewed on this site, Carr's How to Attract Good Luck
is, in essence, a manual for selectively adding “productive entropy” into one’s life. As Carr describes it, the concept of luck could be deconstructed to mean “chance meeting the prepared mind combined with a positive, adventurous outlook and a willingness to be flexible”.

In an upcoming post, I’ll describe some methods to add “productive entropy” .

Success Master Skills: 50 Ways to Reduce Entropy in Daily Life

2008-10-19T09:45:00.007-05:00

This post is technically Part 3 in my series on Entropy in Human Achievement. Part 1 is here Part 2 is here. Entropy is the disorder that seeps into our lives on a daily basis. With each lost credit card, misplaced phone number, wrong turn, late arrival, we rob ourselves of the satisfaction of getting what we truly want. Our energy and forward motion is blunted or blocked entirely. As we set up procedures in advance, we clear the way for more personal satisfaction, because we spend more time doing what we actually want to be doing. We don't waste energy "finding our way back" to our daily tasks and purposes. Here are just a few of the things we can do to prevent entropy from entering our lives. I will comment on some of these items in subsequent posts.

Develop routines for as many life areas as possible (eating, exercising, saving, recreation, cell phone charging etc)
Make lists
Prioritize tasks
Work from a list each day
Set benchmarks for diet, exercise, finance, etc
Quantify activities and plans. Measure results quantitatively
Log the hitting of the benchmarks
Work on big projects first, and longest
Use checklists for multi-step tasks you do frequently
Use checklists for multi-step tasks you do infrequently
Send incoming calls to voicemail
Give new processes time to work. Change processes with deliberation.
Processes that work are rare. Eliminate or change successful processes very carefully if at all
Increase resources allocated to successful processes
Exit failing processes quickly, despite emotional attachment
Go to bed at the same time every night
Stay in one relationship
Reward successes of big projects
Stay away from volatile , erratic people
Stay away from lazy people
Stay away from people who use or previously used drugs
Stay away from failing people
Always assume there is a better expert than you on any topic
Obtain outside expertise for all important tasks and goals (consultants, books, courses)
Keep a notebook and/or voice recorder for recording ideas
Read and write affirmations
Write your goals frequently
Stop doing what isn’t working. Review this often
Measure twice and cut once
Measure your weight and keep records
Measure your cholesterol and keep records
Use maps and GPS when driving
Develop some form of personal information management
Take pictures of all belongings for insurance purposes. Store offsite
Back up all data frequently
Use label makers, file cabinets, file folders and databases
If something is a “whim”, identify it as such and don’t do it right now
Keep a journal of what is working in your life and review it
Put cell phone, keys, wallet, glasses, in the same place every night
Use GTD
Value the retention of capital as much as the spending of money
Save at least ½ of any windfall
Go for intrinsic rewards rather than extrinsic rewards
Avoid tying rewards to the approval of others
Keep carry-on bags with you
Do all scheduled automobile maintenance
Practice asset allocation strategies in investments
Never enter a gambling casino. Do not engage in gambling.
Get professional medical opinions on any health issues
Do not smoke

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Success Master Skills: Entropy in Human Achievment, Part 2

2008-10-16T12:52:00.002-05:00

Why Remove entropy from our lives?

I have two friends who are traders. One works day and night, listening to every news story on CNBC, subscribing to 10 websites with different price patterns, options strategies, stock picks, etc. This person often loses sleep keeping up with all the developments worldwide. He is an unending fountain of the latest economic, business, and political opinion on all aspects of the stock market, the state of the US dollar, interest rates, etc. etc. etc.

The other guy is a total bore. All he does is trade a couple of systems. Over and over again, that’s all he does. System says buy? He buys/ System says sell? He sells. He has no knowledge of who is being interviewed on CNBC. He doesn't subscribe to IBD, WSJ or FT. Nothing to say at all on the weighty subjects of currencies, trade, or the Baltic Dry Index.

Oddly, the second guy is doing better than the first guy. Why? Because he has removed vast amounts of entropy from his trading process. The amount of random energy coming into the “system” is small.

On a much more lofty scale, consider Warren Buffett and Charlie Munger, the avuncular billionaires of Berkshire Hathaway. Warren Buffett has made tens of billions of dollars restricting his investments to those he feels best fit into his “circle of competence”. He sees no payoff in pursuing investments that don’t fit into that circle. Classic entropy reduction. On the other hand, consider an example where a successful , high-performance achiever, basketball star Michael Jordan, decided to try his hand at baseball, a deliberate injection of randomness and disorder (entropy) into a successful career. The result was, predictably, a less-than-stellar outcome.

Why are high-performance people generally hard to reach, or even loners? Because they are consciously reducing the entropy in their lives. They reduce the flow of randomness into their lives by reducing access. High achievers have 1,2 ,3 things to do that are vastly more important than the other 90 things other people want them to do. They know the payoff from their highest-value tasks so, the elimination of a $10.00 task in order to succeed at a $1000 task is a no-brainer for them. The higher the value of the payoff from an activity, the more the high-achiever “loses” by concentrating on a lower-value task. This “loss” is also known as “opportunity cost”. This is the most obvious reason for reducing entropy: you reduce opportunity cost.

Consider McDonalds. Here is a classic example of entropy reduction. Could anyone have imagined at the inception of McDonalds that removing entropy from the production of a 10 cent hamburger would create a multi-billion-dollar industry? Staggeringly, that’s what the McDonalds brothers did. They focused their attention very tightly on reducing disorder in the area of food preparation. Not only did they drastically restrict their menu, but they painstakingly injected more and more order (“negentropy”) into the process, specifying activities down to the smallest detail. If that’s what entropy reduction could accomplish for the lowly burger, imagine what it can do for us in our areas of personal achievement?

One final example of the “why” of removing entropy: the concept of division of labor has been the single most colossal force in lifting mankind out of the primordial mud in which we have been trapped for a million years of dark, agonizing existence. From the very moment that the first “farmer” declared himself into existence, the well-being of the entire human race was drastically improved. Every single product we use, every idea we employ, every drama we watch on TV, every pill we take, is unimaginably better than anything we could create on our own, because they were created by reducing entropy: concentrating on “the one thing” instead of “the many things”. As labor divides, subdivides, and subdivides again, entropy continues to be reduced, the value of the work done increases, and mankind lifts itself p by it’s bootstraps.

Don’t believe me? I’ll cook for you sometime and you will beg me to return to my higher-valued tasks.

Here is a summation of the "Why" of reducing entropy:

1. Controlled attention leads to increased knowledge

2. Specified actions lead to more predictable results than unspecified actions

3. A quantity of energy directed into fewer channels leads to better output than the same quantity of energy directed into many channels

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Success Master Skills: Entropy in Human Achievement, Part 1

2008-10-02T14:01:00.005-05:00

“Depend upon it, Sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully”. Dr. Samuel Johnson’s famous quote illustrates the topic of these next few posts: the study of entropy (or the removal of same) in human achievement. Johnson’s hapless criminal was able to improve his concentration so quickly because, unfortunately, most of his entropy was about to be removed. But, in the fortnight leading up to his rendezvous with the gallows, his metaphorical entropy, the degree of disorder in his life, tended to fade away, and , Johnson implies, the criminal’s mind was focused on, presumably, his highest priorities. And that is the key to entropy and human achievement.

Entropy is, strictly speaking, a scientific term which can be roughly translated as “the degree of disorder in a system”. Interestingly for our current metaphorical definition of entropy, high entropy is sometimes described by scientists as a state where there is such a smooth distribution of energy that there is no capacity for what physicists call “useful work”. Now, it’s been many years since high school physics classes for me, so I won’t presume to discuss the strict scientific definition. But think, for a moment about entropy: “A state of disorder that reduces the capacity for useful work “ Or, consider Entropy’s opposite, negentropy. Wikepedia declares: “negentropy is the force that seeks to achieve effective organizational behavior and lead to a steady predictable state” These definitions point us to a very useful conclusion about personal achievement:

Personal Achievement is facilitated and defined by the removal of entropy from our personal systems.

Another way to look at is to look at all those comic book superheroes: Spiderman, Batman, the Fly, the Human Torch, etc. Each one represented a concentration of a particular set of “powers” to the exclusion or diminution of other powers, activities, etc. These lucky (and unlucky) individuals were examples of trading a wide span of activities (perhaps akin to “normal life”) in return for high achievement in a very selected arena. As such, there was a lot they had to give up (a “normal” identity, “normal” relationships, a 9-to-5 schedule, etc). Presumably, these heroes thought it was worth it, at least most of the time.

Another example of reducing entropy, over centuries, would be the concept of “division of labor”. By concentrating on smaller and smaller sub specialties, individuals, companies, and even whole countries have been able to drastically improve their well-being, lifespan, food supply, educational base, etc. In other words, their over the eons, and , especially since the Industrial Revolution, mankind has, through removal of entropy via division of labor, drastically improved its “capacity for useful work”.

In our areas of personal achievement, we can become more effective, as we reduce the entropy in our lives. We have a higher probability of succeeding at any goal, the more we consciously strip away the entropy surrounding that goal. Every time you “burn a bridge”, use a recipe, turn off the phone, measure “good” and “bad” cholesterol, cancel a magazine subscription, fill out a “to do list” or go through the “pros and cons” of a process, you are removing entropy from your life. And that leads to more and more “capacity for useful work”. Useful? Useful to us. Useful to the creation of the lives we want to live, to the creation of the relationships we want to be involved in, the security we want to feel, the peace of mind we yearn for.

Success Tools: Statistics Tsunami

2008-09-14T16:55:00.004-05:00

What do baseball, technical analysis, web-based marketing, politics, medicine, and matchmaking have in common? A lot of profitable businesses based on statistics.

The more statistics we gather, the less reality lies to us. The more we know about which strategies win and which strategies don't, the more we can we can focus our business and personal efforts on the truth.

This focus can a apply to a million-person cohort of teenage consumers, or your own sequential blood lipid readings.

There's nothing wrong with a "gut " feeling. It's a start. it's an inspiration. A hypothesis. But to take results to the bank, start generating the numbers.

But, "anything can be proved with statistics", right? Well, consider that statistics are going to "lie" a lot less when your own prosperity, health, retirement, etc. is on the line. Are you going to cook your own data? Do you want to lie to yourself about what products (from your own company) are selling? What your blood pressure is? What you've been consuming for lunch?

This revolution is occurring because of faster, more powerful computers. Also because of the ease of collecting electronic information: almost all data generated today is generated digitally. It starts digital, and stays digital. Stock prices, mouse clicks, sports stats, Amazon purchases, survey results, etc. All of the data is already in the perfect form to be digested by statisticians and theorists. Not only is your laboratiory super-sophisticated, you have, in essence, an unending supply of experimental subjects

Does that mean the market for originality and creativity is dead? Hardly. The world will always need creative ideas, breakthrough concepts. The good news is that it will be a lot easier to verify those hunches, not just in raw numbers, but with the many tests and measures of validity that statisticians have developed over the years. The behavior you see at your own local mall, that funny feeling you get when you eat the wrong food...all of this can now be checked by huge banks of data. If your hunch is right, the value of that hunch is multiplied a millionfold. if wrong? There's always room for more hunches.

And what about the un-obvious? The non-blockbuster? Now, instead of being tossed aside, your Long Tail product may be far more marketable than in previous generations. Statistics is not just for megahits. Perhaps your soap dish appeals to married woodcutters over 40 but only after the Equinox. You can test for that. Perhaps socks with "Z" in the third letter might all go up on the full moon. Pull up the data and backtest it.

Statistics is going to continually reinvent itself as a powerful tool in all of our lives. We will be learning more about our world, ur neighbors, and ourselves, than ever before...and we are going to profit mightily from it.

New on My Reading List

2008-09-11T20:30:00.004-05:00

Actually, I am already reading this fascinating book. In a recent post on idea capture I noted that ideas themselves were becoming more and more powerful, but cheaper and cheaper to monetize. The Numerati exemplifies this trend. Businesses are not being built on iron and steel, or even silicon chips and copper wire, but on data itself, or at least transformed beyond recognition by data, modeling, and statistics. We see it in Google's advertising model, and even in it's statistically based translation capabilities; in such disparate fields a Major League Baseball and computerized financial trading, the real "action" is taking place deep inside statistical models.

And our own lives can be affected profoundly by the statistics we keep on ourselves. But that is a story for another post.

Success Tools: Sony ICD-UX80 Digital Voice Recorder

2008-09-10T19:40:00.004-05:00

I am loving my new Sony ICDUX80 Digital Voice Recorder. As a devotee of David Allen's Getting Things Done, I have kept small spiral notebooks "surgically attached" to my body for two years, and my daily routines and tasks have been immeasurably clarified , in part, due to jotting down ideas, references, etc. But I produced more notes in five minutes with this device than in a whole work day with the paper notebook. The main reason is that I don't have to appreciably interrupt my routine to stop walking, reach in my pocket, open the notebook, take out the pen, and, finally, scrawl a note to myself. The audio dictation process is actually mores streamlined than writing notes with a pen, and the USB port allows you to plug the device right into your computer and listen to the mp3 files it generates , by clicking on them on the screen.

The device allows a ridiculous 581 hours of recording, has crystal-clear stereo recording quality, and is certainly an evolutionary leap from tape-based voice recorders. I very much look forward to my new surgical attachment.

Success book Reviews: Josh Waitzkin "The Art of Learning

2008-09-10T19:07:00.010-05:00

Josh Waitzkin, is, of course, the subject of the Hollywood film Searching for Bobby Fischer, and was an eight-time National Chess Champion in his youth. But I certainly didn’t know he want on to become a World Champion Tai Chi competitor. His book, The Art of Learning: An Inner Journey to Optimal Performance is a rare prize: a portrait of how a high performer views the art of high performance, written by the expert himself. Often, the master of a discipline is not as good at teaching it as performing it, so we are really luck to have both a superb performer and a superb explicator in the same person.

There are dozens of lessons to be learned from this excellent book about personal success and achievement. I’ll just pick a few here.

From the book:
“I have long believed that if a student of virtually any discipline could avoid ever repeating the same mistake twice…he or she would skyrocket to the top of their field."

Waitzkin is articulating a key tenet of performance improvement: accurate recording of unsuccessful (and successful) actions, and a spiral method for improving the ouputs, hopefully permanently, as a result of the review. Jam’s D. Murphy’s great book “Flawless Execution"
mentions a key practice that fighter pilots use: the after-mission debrief. If someone makes the same mistake twice, of course, fighter pilots could die…so it’s crucial to eliminate mistakes.

This general concept is no different when one examines the Toyota Production Method. To make great cars well, the process needs to be examined by each worker, bolt by bolt, on a daily basis.
The reward here is, of course, not just elimination of errors, but the relentless improvement in your mastery of the discipline.

In my own statement of Major Definite Aim I find I am continually adding more and more statements of the methods I use, and those I avoid. This process allows me to slowly “sculpt” my actions, and take tighter and tighter aim at my goal.

Another concept Waitzkin discusses , he names Investment in Loss.

On the way to greatness, performance is going to fluctuate. Be willing to perform sub-optimally in the process of increasing your results at another point. Be willing to look bad. Think of Tiger Woods, persistently re-working his swing. Or, consider Sandy Weill, one-time chairman of Citibank. He was willing to “look bad”, and walk out on American Express , and re-start his career at the bottom in order to shine later on. He was willing to spend in the desert” before coming back from obscurity

Another concept Waitzkin brings up, recovery time, holds true throughout many facets of human achievement, and is not limited to sports. For instance Ben Stein makes the point that you should never be expected to “shrug off” big setbacks to your goals, but, rather, you should take some time to let the emotional wounds heal.

The general rule that performance “regresses to the mean” is also applicable here. No journey toward any goal makes purely linear progress. Emotionally, we wish that every day could be “above average”…something that is patently unattainable. But, Waitzkin and Stein tell us, we don’t have plod through the bad patches like robots. We can ease off, make the difficult times as comfortable as can be, and then come back stronger than ever. If we pick large goals, then the journey is going to be a “marathon”, not a ”sprint”, so we have to pace ourselves.

Watzkin’s Chapter on Making Smaller Circles should be read by everyone who wants to “start at the top and work up”, a phrase I love, penned by Harvey MacKay. Waitzkin built up his Tai Chi skills by very careful attention to individual components, practicing very small , separated Tai Chi movements for hours or weeks, rather than practicing complicated combinations. Similarly, he would think through chess positions with only three pieces on the board, studying the subtle combinations generated by those few pieces, and then gradually incorporate this knowledge into his overall game. Similarly, a student of the virtuoso composer/pianist Sergei Rachmaninoff marveled at how slowly the master practiced the pieces he was working on. This slow practice, was, of course, the key to his phenomenally incisive playing on the concert stage. There is more than muscle memory involved here. Often, the components of a larger methodology are elegant statements in themselves, and pack a lot of subtlety into a small component. In my trading systems, I have found fruitful paths in subtle variations of my existing systems, because, as I got to know them better, I could draw out more potential.

It is instructive to meditate on very simple concepts that, in their subtlety, can lead to amazing ramifications. Of course, one of the most awe-inspiring is the “on/off”, “one/zero” motif of all digital computing. And look what an incredible world it has built. What could seem more simple than 1/0, on/off, yes/no, and yet we may never see the end of variations built on this deepest of symbolic simplicities. “One/Zero” is of course, the key tenet of logic As Aristote says…”A thing cannot be and not be at the same time”... the centerpiece of all rationality, and also at the core of the very machines we use. Truly…small circles an yield great results.

These points are only a few of the many contained in this fascinating book. They mesh well with the points in many of the other books and sources mentioned in this blog. The light of success shines through many prisms.

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Success Secrets: Top 10 Reasons for Thinking Long-Term

2008-08-11T21:27:00.005-05:00

What if this were true: no goal is worth achieving unless it takes at least 100 of something to get there. If it were true, how would that affect the way we think about what goals we set for ourselves? How would it structure our daily lives? What if we only looked at goals that take at least 100? 100 customers, 100 days, 100 wins, 100 attempts, 100 months, 100 miles, 100X improvement, etc

I was thinking about the definition of a long term goal, and why long-term goals seem to be so much more inspiring, and so much more worthwhile. Here are my Top 10 Reasons for Thinking Long Term.

1. If 100 iterations are necessary, it makes us pick something worth doing. If I wanted to pick something that would really get me somewhere after 100 days or 100 weeks, I am going to pick something pretty important.

2. Longer time frames allow small changes to add up. Small changes on the way to a goal are often not inspiring or even invisible. But thinking in longer time scales allows more space between evaluations, allowing the invisible successes to become visible by building up. Your sales statistics, IRA balance, or body weight may not change in a dramatic way in a week. But in 100 days, or 100 weeks, you are more likely to see those results.

3. The learning curve. As you “get used” to a particular endeavor, your efficiency at it improves. If you’ve been using a particular tool for 6 months, you are going to be a lot more fluent than if you use it for 6 minutes. We underestimate the results we can get because we don’t allow ourselves to adapt to the situation over time.

4. Success is an iterative pursuit. You get better as you see the results of the last iteration. I think this is an underestimated benefit of long-term thinking. As you begin to pursue a project, each activity along the way become open to improvement. Let’s say your goal is to win a footrace in 100 days. You begin to see the components of that event as separate categories to improvement. The start, the finish, your stride, your pace. Then you begin to see inputs to each area that will improve that component. You work backward: your warm-ups, your sleep, your attitude, your nutrition, etc. Each area comes under scrutiny, and gets improved iteratively, as previous attempts are evaluated. None of these iterations can happen quickly. They come to the surface gradually, over time. Only through a longer-term point of view can these benefits be realized.

5. Commitment over time reduces competition. People get bored (but not you). People give up (but not you). People try something easier (but not you). People don’t show up month after month (but you do). Before you know it…there’s no one competing…but you.

6. Statistics, to have meaning, need a lot of events. As a trader, my work improved as I understood that any given event has very little meaning. You need a lot of events just to track your progress. Reality is “lumpy”. You have good days, you have bad days. But things smooth out if you have enough events. The trajectory becomes clear. The progress emerges from the ‘noise”. But only if you have enough events, attempts, results, etc to be able to see the arc of your progress clearly.

7. Reputation takes time to build. How many trials has your attorney won? How many years has your money manager beaten the S&P? Reputation is, in part, a function of time. And it’s not merely “results” which accrete over time. Your single-minded intensity will attract like-minded people with ideas, will attract mentors, will attract professionals and even competitors who can help you. But only if you have become a “known” quantity. At the far end of the scale, an investor like Warren Buffett, a music producer like Quicy Jones, a filmmaker like Steve Spielberg…these people spent decades achieving their mythical status. Their lives are quests. There is no goal. There is no end. This type of stature is built with decades of commitment.

8. Acquiring knowledge takes time. There is so much knowledge being generated in every field, that any significant goal is going to require significant expenditure of time to acquire that knowledge. These days, you may not even know here “square one” is until a few months of pursuing a long-term goal. Furthermore, it may take a lot of time to merely identify high-quality sources of knowledge.

9. Luck has a better chance to work over time. You’ve been thinking about a problem for a year. You wander into a bookstore, you leaf through your favorite magazine and…bam!! Out of nowhere, a solution is staring you in the face. I have had very significant breakthroughs by wandering into one more seminar, on one more topic, going over ground I thought was already covered. But it wasn’t. The new fragments added to the older data, and I was able to make progress.

10. You can relax. It’s not just about today. You have the dual reward of being proud of your discipline while on your way to the higher reward of the actual achievement of your goal

11. (I exceeded my goal of “Top 10”). Rewards tend to compound. And longer-term pursuits allow ever-higher waves of compounding. Success at a given level allows you to re-set your sights on higher goals. Success locally begets success nationally, with exponential results. Notoriety attracts higher levels of notoriety. Skills compound at accelerating rates. Your ability to focus on key drivers improves. Here’s an example: my trading results from July 1, 2008 to August 11, 2008 are almost equal to my trading results from Jan 1 2008 to July 1 2008. That’s right: I made nearly six months of profits in the seventh month of the year. How? Commitment, attention to each component of my plan, better-directed research, doing more of what works, and luck. But if I had given up in month 6, I would have given up 43% of my year-to-date profit.

If you select shorter term goals, as opposed to longer term goals, you are giving up an entire “probability funnel” of successes that come at the 3^rd try, the 10^th week, the 30^th book, the 80^th business conference. These are unknowns, but not as “unknown” as we might think. We know that if we stick to a long-term goal, we will definitely acquire more knowledge about it, meet more people in the field, find more helpers, etc. than if we switch goals, or give up too easily. Don’t believe me? Check out Michael Jordan’s lifetime record…in baseball.

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Success Videos: Marc Andreessen at Startup School

2008-08-06T16:46:00.006-05:00

As I was writing my last post about Marc Andreessen's take on Charlie Munger, I came across a great video of Andreessen speaking at Startup School . I strongly recommend watching the entire video, but here are a few important points outlined by this successful and seasoned entrepreneur:

1. If you are concentrating on anything besides your core competency before you really have a core competency, you are kidding yourself. The core competency is the best ticket to all the other entrepreneurial functions (hiring great people, getting backers, etc).

2. That core must be first and foremost generated by you and your inner group. It's much easier to hire an echelon of employees to administrate your breakthrough than to have them help create your breakthrough.

3. "A" people hire "a" people and "b" people hire "c" people. Corollary: the level of a work group (engineers, vice presidents, etc) defaults to the level of the lowest-quality member of that category. To avoid this error: attempt to raise the average performance level with each new hire. Without constant and ruthless attention, employee quality will drop.

4. Luck is a timing phenomenon. Good ideas abound and repeat (Friendster, Facebook). Timing is the difference between success and failure and is often random. Don't confuse a function of randomness (i.e. timing) with genius. The implication , as Ben Stein says, is , you must develop your capabilities and then hang in there: "stay at the table" till you win.

5. Finally, pay attention to commitments. In the context of his talk, he was referring to financial commitments. In this respect he reflects the teachings of banking wizards Sandy Weill and Jamie Dimon both of whom support the concept of a "fortress balance sheet"...a strong preponderance of assets over liabilities.

As I listened to Andreessen I was also struck by his skill at conceptualizing. Beyond being a brilliant engineer, he takes a conceptual view of his art...as Brian Trac y might say "What am I trying to do, and how am I trying to do it?". His respect for the random nature of reality, as well as his quick humor are hallmarks of his ability to think beyond the task-focus of the moment...and yet he reminds us over and over, if you don't hit that core task with all you've got, you're just kidding yourself.

Success Secrets: Marc Andreessen on Charlie Munger

2008-08-06T11:41:00.004-05:00

I have devoted an entire category on this blog to the thought of billionaire Charlie Munger. Munger's goals, int his many speeches and writings, often concerns the psychological behavior of humans, which, when understood, leads to success in business and other areas of life. His thought is truly deep, and so far above the "basics" of achievement skills, it might fall into a separate category, perhaps "Meta-Success".

It is truly gratifying to see Marc Andreessen's post: The Psychology of Entrepreneurial Misjudgment, Part1: biases 1-6 on his blog recently. Andreesson generously gives the reader his "take" on Munger's classic "The Psychology of Human Misjudgment". Andreesson, founder of Mosaic, Netscape, Ning, etc has been extraordinarily successful, and, from this post, it is easy to see why: he is able to abstract individual experiences into larger conceptual frameworks. This post is an extraordinary read, and I hope he will go on to discuss all 25 of Munger's principles. I have created a digest of the principles here.

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Success Tools: Topics du Jour

2008-07-15T21:37:00.003-05:00

Luciano Passuello has come up with a great twist on journalling: the Topics du Jour. In a terrific blog post he presents a "one journal topic per day" method of journalling about the most important aspects of your life. His post suggests making a 30-item list (one for each day of the month) and then writing a paragraph or to about "today's topic" (Career, Health, Relationships, whatever). Of course you don' need to match 30 topics with a 30-day month. 10 topics will do, or any number, so long as you cycle through them, jounalling on one topic a day.

Passuello argues forcefully that ta many "Top-Down", "Big-Picture" goal-setting excercises tend to freeze the creative portion if the mind, whereas little mini-essays keep your mind free to meditate, fantasize, and create without the straitjacket of heavy duty, organized planning. Please read his post. It's a great idea.

In my posts on the Major Definite Aim (here and here ) I came to a similar conclusion. Just bringing the aim into the mind on a regular basis naturally generates solutions and alternatives. I also agree that these solutions emerge naturally over time, as the mind reflects back on the progress made so far. I have found solutions often tend to evolve over months, and even years, and Passuellos "Du Jour" method is a great way to keep the mind engaged with the important topics of your life. Furthermore, since, in his method, the mind gets a bit of rest between re-appearances of the topic, the unconscious has a chance to come into play, bringing with it many powerful resources. Of course, one of the earliest references to a cyclical method of self improvement was the Autobiography of Benjamin Franklin:

I made a little book, in which I allotted a page for each of the virtues. I rul’d each page with red ink, so as to have seven columns, one for each day of the week, marking each column with a letter for the day. I cross’d these columns with thirteen red lines, marking the beginning of each line with the first letter of one of the virtues, on which line, and in its proper column, I might mark, by a little black spot, every fault I found upon examination to have been committed respecting that virtue upon that day.

So, we are in good company.

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Success Videos: Nathan Myhrvold

2008-07-10T10:18:00.003-05:00

A short interview with Nathan Myhrvold, subject of the previous post.

Success Tools: Idea Capture

2008-07-10T08:55:00.004-05:00

I recently came across an article by Malcom Gladwell about Nathan Myhrvold's company Intellectual Ventures (thanks to fellow-Twitterite Angela Maiers ). The purpose of this company, Gladwell explains, is "to make insights—to come up with ideas, patent them,and then license them to interested companies." While this is not so very different from Thomas Edison's workshop over a century ago, I would argue that the scale of Myhrvold's undertaking is noteworthy. There are a number of reasons for this:

1. Every scientific discipline has branched and sub-branched , and the volume of actionable discoveries and research is of enormous magnitude.

2. The number of actionable problems , those amenable to profitable solutions, has also increased. A century ago we didn't need Universal Remotes, methods of syncing our address books, or even a reliable place to put our car keys. We only knew of a fraction of treatable diseases. In the pharmaceutical field, we didn't know what a receptor was so there was no impetus to do research on blocking them. In fact, separate discipline of just generating problems would probably be a profitable venture.

3. There are a lot of technologies that "work" now. A lot more than 100 years ago. There are infinite ways these working technologies can combine to produce beneficial and profitable outputs. One of the amazing takeaways from Gladwell's article is how much new inventions are feasible just from the combining of already successful technology or research from disparate fields.

Thus, today, we need a lot of ideas. And , as Gladwell's article demonstrates, a good collection of ideas, from various disciplines, can generate , not a few, but hundreds of profitable businesses.

And here is the best part: a lot of these ideas can be monetized without excessive capitalization, or even the creation of a business. Patents can be licensed without building factories. Algorithms can be written for cellphones without building a cellphone. E-books can be published without a printing plant. Songs can be mixed and distributed without building a million-dollar recording studio.

So, the first imperative is: capture those ideas. One of my favorite bloggers, Matthew Cornell has a superb post on idea capture and, in another post, discusses the vast amount of ideas he and others collect... numbers in the 10,000 idea range are discussed!

This is not unusual. Gladwell reports that at an informal dinner, the group from Intellectual Ventures generated eight single-spaced pages and thirty-six different inventions.

Idea capture is crucial. Large numbers of ideas are crucial. In the old model, a business was built from a single idea (Fedex, McDonald's, Starbucks, etc). But now, it is clear that ideas themselves are capital. Ideas themselves are currency. Creativity and knowledge capture is a source of profit apart from the execution of the idea. Exposure to ideas from multiple sources is crucial. Besides patents, other sources of direct profitability from ideas includes: writing, composing music, trading, real estate referrals, algorithm design ,marketing, consulting of all kinds, even Internet site names. I am sure there are many more. I am going to predict that, in the future there will be an ever-decreasing cost of monetizing our ideas.

So I suggest you collect a lot of them.

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Mind Power: Research Confirms Power of Visualization

2008-07-08T20:36:00.003-05:00

I have written before about my own and others' strongly held belief in the power of visualization (for instance here and here ). Well, stop the presses. A post in Smart Economy Entitled Mind's Eye Influences Visual Perception details scientific research that has found that, to quote Smart Economy "what we see with the mind's eye directly impacts our visual perception" Smart Economy again: This is the first research to definitively show that imagining something changes vision both while you are imagining it and later on (italics mine).

There is also evidence, apparently, that the longer you visualize, the more your perception is influenced. This research may end up verifying what a lot of people thought was kind of "spooky": all the claims that repeated visualizations, guided imagery, even goal-setting, "treasure mapping", etc. do have at least some basis in scientific research.

"You'll see it when you believe it" May be truer than any of us can have imagined. Please read the entire post.

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Success Tools: Your Own Personal Wiki

2008-06-16T11:15:00.003-05:00

Imagine a Wikipedia of your own life. Everything you’re interested in: subjects, people, projects, links, products, methods…all taggable, searchable, and available from anywhere. Well, it’s here, and it’s free. It’s called Tiddlywiki, a personal wiki program, and its online “cousin”, Tiddlyspot,where you can store your wiki for retrieval from any web connection.

As with many of my recent “discoveries”, I was prompted to search for wiki software from a hint dropped by productivity guru Matthew Cornell who mentioned to me that he was using a wiki program. As far as I am concerned, this is an amazing Personal Information Manager or PIM. You can link to your own local files, to the web, and within your own wiki. You can create your own unlimited collection of “tiddlers” (equivalent to Wikipedia entries) and tag them, link them, put them in menus…and I’ve only been at this a few days. Also, you can save your wiki offline and also upload it to the web.

The implications of this are huge.

I went over to my local Apple Store yesterday, borrowed an iPhone, and…in seconds, there was my wiki, with all the data I had entered, available to me on a hand-held device. As the Apple salesman looked on, I entered everything he told me about the iPhone onto my wiki, and, later, when I got home, there it all was.

There is a tremendous amount of support for this product at Tiddlywiki.org as well as on Google Groups. I am only beginning to discover the uses of this flexible, ubiquitous, easy-to-use information tool. But my intuition is: it is nothing less than life-changing.

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Success Secrets: The Toyota Production Method Part 4

2008-05-26T17:52:00.004-05:00

I am discussing the Toyota Production System, as articulated in a great article by Clayton Christensen . Earlier posts are here , here, and here. In particular, I am attempting to broaden the scope of the discussion beyond the car business, into various business and life domains.

To review, the four key principles, as defined in Christensen's article are:

1. Highly Specified Activities
2 Clearly define the transfer of material and information
3. Keep the pathway for every product and service simple and direct
4. Detect and solve problems when and where they happen

Principle 4 , as articulated n Christensen’s article is is “Detect and solve problems where and when they happen using the scientific method”. The article elaborates the method later:

Analyze the current state of things
Document it
Formulate a hypothesis that includes an experiment with an expected outcome that could be measured and compared with the actual outcome

In my own experience, particularly with my trading activities, this comparison of expected with actual results led me to the greatest progress. But I was unable to make any progress until I documented my results with enough detail to be able to draw some statistical conclusions. This data opened my eyes and I was indeed able to make certain hypotheses about how to reduce my losing trades, and increase my performance. Often enough, the changes I made seemed to work.

Without adequate documentation, you can’t change your weight, your cholesterol, your finances, or any other measurable commodity in your life. Once documented, it is much easier to generate testable hypotheses for change.

I should mention that the documentation/hypothesis/solution process is not necessarily limited to numerically measurable events. I have mentioned Doug Newburg’s concept of Resonance from time to time. A simple journal of what seems to be working and what seems to be not working often has great results. If you feel lousy after eating a candy bar and great after a brisk walk, making a “Resonance Diary” can reinforce what is working and what is not working in your life. In my monthly reviews of my journal, I have a section I call “What works”. As I look at that section over time, I see patterns in behaviors that seem to work, as well as those I want to change.

Similarly to the other facets of the Toyota Production System, specifying an action is key to understanding it. Specifying a process is the key to consistency. And, in problem solving, specifying and carefully documenting the problem is the key step in the solution. Along these lines I also recommend some of the Kepner-Tregoe methods found in The Rational Manager .

Life comes at us in random order, good and bad, without any chapter headings or identifiable rhyme or reason. But we can take a lesson from Toyota in how we choose to order that experience, and also how we choose to optimize our actions in order to get the greatest rewards.

Success Secrets: Bloomberg on Jamie Dimon

2008-05-23T17:15:00.004-05:00

Bloomberg has posted a terrific article about JP Morgan CEO Jamie Dimon . I have mentioned both Dimon, mentor, Sandy Weil (who built the Citibank Colossus) here and here. I have been fascinated with Dimon’s success ever since he was CEO of Bank One and also because of his prominence in Sandy Weil’s book The Real Deal: My Life in Business and Philanthropy .

The entire Bloomberg article is worth saving, but here are a few of the Success Secrets..

1. Stay within your “Circle of Competence. This Success Secret is deceptive in its simplicity and vast in its power. Billionaire Charlie Munger mentions it frequently. Another related Munger/ Warren Buffett hallmark: understand your business thoroughly. If this were football, the concept would be “work hard on the fundamentals”. Exotic ideas have their place, but being really good at “making the doughnuts” has a high probability of creating a winning business. There are a lot more successful accountants than Perpetual Motion Machine builders.

From the Bloomberg article:

He {Dimon} says that insurance, for instance, is an outlier for a bank. "You have to stay focused on where you can win," he says

And again…

Dimon largely steered clear of both collateralized debt obligations…and so- called structured investment vehicles”…

And again

"JP Morgan is still very interested in raising deposits the old-fashioned way," {i.e. seeking consumer deposits, credit cards, etc} …. "Dimon has access to federally insured deposits, and that's a huge advantage in the world that's developing.

2. Stay risk averse. Dimon focuses on maintaining a strong balance sheet (also mentioned often in Sandy Weil’s book),and called by Dimon, a Fortress Balance Sheet. From the Bloomberg article:

Dimon spent much of the past three years streamlining a bank he says he wants defined by efficiency, stable sources of revenue and risk management that protects assets, a concept he refers to as his "fortress balance sheet….sources of funding can disappear very quickly."

This Success Secret is as valuable in personal life as it is in business life, and as true (or truer) of small business as big business. The less debt, the better. The more ready cash, the better.

3. Intense, obsessive work ethic

From Bloomberg:
Dimon is a fanatic about details, says one former competitor, David Komansky. "Jamie has always had a full tank of gas," says Komansky, who ran Merrill Lynch from 1996 to 2002. "It's very much about having your oar in the water all the time, 24 hours a day, 7 days a week and dealing with hundreds and hundreds of unrelated issues every day. Jamie has clearly excelled at the management dimension of these jobs."

Elsewhere in the article an associate says “, that when he worked for Dimon, he rarely saw him take a break. While other executives may relax by reading about sports, "Jamie would read a 10K," he says. "It's related to his doggedness to get stuff done."

So, to review a few of the Success Secrets of Jamie Dimon

1. Read the Bloomberg article. It’s great.
2. As simple a business model as possible
3. Stay risk averse. Hone your “fortress” to withstand the inevitable chaos that surrounds life and business
4. Maintain an intense work ethic. If you’re not interested enough to work hard, it might pay to find something that will keep you fascinated.

Some related posts:

Scwheich's "Crashproof Your Life"

Obsession

Scott Young on task completion

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Success Secrets: The Toyota Production System Part 3

2008-05-21T11:03:00.005-05:00

I am discussing the Toyota Production System, as articulated in a great article by Clayton Christensen Earlier posts are Here and Here. In particular, I am attempting to broaden the scope of the discussion beyond the car business, into various business and life domains.

To review, the four key principles are:

1. Highly Specified Activities
2 Clearly define the transfer of material and information
3. Keep the pathway for every product and service simple and direct
4. Detect and solve problems when and where they happen

Today I am discussing Rule 2: Clearly Define Transfer of materials and information, and a corollary mentioned in the article is: Pathways must be simple and direct.

It is easy to see that this rule has a far wider applicability than building automobiles.

There are at least three consequences of violating this rule:

1. Diffusion or confusion of responsibility
2. Loss or degradation of information
3. The Incentive Bias

How do these consequences unfold?

If you don’t know who is going to FedEx the job to the client…it probably won’t get done.

If you don’t know who is going to take Jimmy to soccer practice, …it probably won’t get done.

Another example of paths that are not “simple and direct" comes from my experience as a trader. In the late 90’s the only way to get an order to the pit was to phone my broker. Electronic futures trading was not available at that time (at least to me). I would call the number, wait for the guy to answer, tell him my order, he would phone it into the pit, and then, sometime between 5 and 30 minutes later, I would get my fill. Sometimes the market would move hundreds of dollars away from the point I wanted to enter at, causing losses for me, but gains for a lot of the other providers in the chain. Now, since I can electronically enter the trades myself, I get filled at the price I expect, and I save a lot of money.

What does it mean when you eliminate just one person from an information path?

One fewer salary
One fewer set of benefits
One fewer person to be out sick, late, on vacation
One fewer person who forgot to listen to their voicemail, read their email, get the memo…etc

The savings of time, money, and angst are clearly huge as one pares down the path in a process.

As you pare down the people in a given process path, you also progressively eliminate what Charlie Munger calls the Incentive Bias. I have mentioned Charlie Munger’s work extensively. The Incentive Bias states that individual suppliers (salespeople, brokers, doctors, lawyers, ad infinitum) will serve you in accordance with the incentives that benefit the supplier, not necessarily the customer. I am not saying the incentive bias is 100% bad, after all, the profit motive is what creates all the services we use every day. However, as these biases accumulate, the efficiency of the process path degrades. Suppose you have five people in your process path. If each one of them just holds you up long enough to take a 15-minute coffee break, you’ve lost over an hour. And a coffee break is the smallest incentive bias I can think of. More normally, your suppliers want to make money by billing you extra hours, supplying you in ways that maximize their profits, working on their highest paying client (not you), etc. If you keep the path “simple and direct”, eliminating as much incentive bias as possible, through online purchases, auction tactics, “no haggle” pricing, careful questioning, you are actually using the Toyota Production system to your advantage.

I’ll continue my discussion of TPS in an upcoming post.

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Success Secrets: The Toyota Production System Part 2

2008-05-17T13:05:00.005-05:00

This is Part two of my discussion of a recent article on the Toyota Production System (TPS). Part 1 is here.

Although the authors of the article applied TPS to a semiconductor plant, I feel it’s worthwhile to generalize this industrial concept to our pursuit of better outputs in all areas of our lives and work.

The Toyota system as mentioned in the article, contains four key points that combine to continuously improve productivity and output.

1. Highly Specified Activities
2 Clearly define the transfer of material and information
3. Keep the pathway for every product and service simple and direct
4. Detect and solve problems when and where they happen

Item 1 : Highly Specified Activities

The more completely and accurately we describe our activities, the more able we are to determine which steps in those activities might be subject to improvement. If the inputs to our activities keep changing, it is difficult, if not impossible, to determine the origin of the results we are getting, much less to obtain better outputs.

The article further defines the specification process as: “all work shall be highly specified as to the content, sequence, timing, and outcome”.

But this process is applicable in far more areas of life than building cars. Consider these examples:

Who’s going to lose weight fastest?

Person A:
“I’m trying to cut back on starches and sweets”

Person B:
“I reduced my calorie intake from 1800 to 1300 per day with only n grams of fat per meal. I added an additional hour per week of exercise beyond the 3 hours I was doing. I expect to lose about 1 pound per week over the next 20 weeks, to attain my goal of X pounds”

Or …here’s another example:

Who’s going to sell more?

Person A:
“I called up a bunch of purchasing managers to see if they needed any aluminum”

Person B:
“This month I am targeting purchasing managers in the machine tools field within 150 miles of our main plant who have returned my questionnaire about the tradeoffs between fast turnaround aluminum products vs. cost. My goal is to increase sales to this market by 15% by the end of Q2”.

I would bet on Person B in both of the foregoing instances. Surely, there are people who can “wing it”, or, perhaps have a highly developed intuition, or a great situational sense of what actions to take at the moment, but for the broad sweep of humanity, I would bet on detailed specifications to achieve repeatable outputs.

And, there is another reason why highly specified activities are desirable. What do you do if your program is not working? How do you change your diet if all you wrote down is “I am trying to cut back”? On the other hand, If you know the content of your meal plan, as well as your exercise regimen, as well as your weight on each day, you have a measurable set of inputs and outputs; a stationary series of data points , enabling you to measure the effect on each “moving part” if you decide to change it. In other words, you can’t go to “Plan B” if you don’t even know what “Plan A” was.

Thomas Edison’s 10,000 attempts to come up with a filament for the electric light bulb is a well-known story, but consider this: unless he had kept meticulous (“highly specified”) records of the failures, i.e. the materials that didn't work, we’d still be living by candlelight!! In other words, careful specification procedures vastly improve the net effect of the experiment. So much so, that Edison may have not been able to give us the electric light without carefully documenting what did not work.

This point reminds us that all the careful specifying in the world will not substitute for the creative input necessary to create a processes, and for the drive necessary to sustain a process. Far from turning us into a bunch of robots, the process of specification is merely the enabler of creativity. But only when the creative process is allowed to be specified, can the results turn into repeatable outputs. You might be able to bake a chocolate cake without specifying, but not 10,000 chocolate cakes, due in 24 hours. The specification process thus leverages creativity.

We’ll discuss the other three TPS processes in upcoming posts.

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Success Secrets: The Toyota Production System Part 1

2008-05-13T21:28:00.003-05:00

A wonderful post at Next Big Future led me to a fascinating article by Harvard Business School guru Clayton M. Christenson and associates, “The New Economics of Semiconductor Manufacturing”. The article tells of their experiments applying the Toyota Production System (TPS) to a semiconductor fab. The results were astounding. Christensen's team writes:

"In just seven months, the organization was able to reduce the manufacturing cost per wafer by 12 percent and the cycle time—the time it takes to turn a blank silicon wafer into a finished wafer, full of logic chips—by 67 percent. It did all this without investing in new equipment or changing the product design or technical specifications. And this short experiment has exposed only the tip of the iceberg."

My first thought (after removing my jaw from the floor) was: “Heavens! This is a major plant run by a major manufacturer (Christensen won’t say who). I thought this kind of plant was already ruthlessly efficient. You mean they don’t even know how many wafers they have in the fab (yes, that is one of the questions the team suggests asking!!) ??? Apparently, that is only one of a litany of seemingly obvious data points that are not routinely tracked in such environments. But the miracle is that such amazing improvements can be wring out of such granular, simple, straightforward and relatively easy-to-obtain data. This is not he first time this blog has explored the astounding results that flow from some fairly simple "specifying" procedures.

Elsewhere in this blog I have mentioned a magnificent article on checklists , and how such lists have drastically cut infection rates in hospitals, where it was assumed that the highly trained staff already knew the processes well. But it was discovered that , to use a quote from Christensen, “memory fades quickly”. The more detailed and concrete the specifications in the hospital, the more patients were saved. It’s that simple. Christensen’s article mines a similar vein. If you don't know exactly what you're doing, you won;t be able to measure it properly, and you will have absolutely no chance of improving it. In short, highly specified procedures are the key to vast improvements in output, no matter what the area of inquiry.

In upcoming posts I will discuss the four key Toyota Production System (TPS) principles outlined in Christensen’s article, and I’ll attempt to broaden their application to personal and business success . The principles are:

1. Highly Specified Activities
2. Clearly define the transfer of material and information
3. Keep the pathway for every product and service simple and direct
4. Detect and solve problems when and where they happen using the scientific method.

As I continue this blog, I am always fascinated at how much one can “cross-pollinate” best practices, even from such seemingly disparate worlds as a semiconductor fab, to a hospital room, to our own lives as individuals, single practitioners, or just running a Saturday errand. Stay tuned.

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Success Secrets: Secrets of the VC's

2008-05-11T20:41:00.005-05:00

Do the superstars of the VC world have any success secrets that the rest of us can use? What could we possibly have in common with John Doerr and Michael Moritz, who bankrolled the likes of Amazon and Google? Actually in this keynote presentation at the National Venture Capital Association, these men reveal a few gems that reflect actions that all of us can take to achieve success. Would you believe that John Doerr went for Dale Carnegie sales training, spending his own money to do so? What of the fact that Michael Moritz, a very well-known person indeed, still chooses to wear unique styles of socks to create memorability and stand out a bit? Many coaches recommend the same techniques for all of us to be noticed. Also, both men, at various times in their professional lives, learned the virtues of using rigorous quantitative techniques to aid productivity and avoid mistakes due to emotional judgements, not unlike Charlie Munger, whose name appears int his blog a lot. Here's the whole podcast:

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Success Secrets: DARPA and Success

2008-05-11T17:26:00.004-05:00

I have been downloading a couple dozen PDFs from Darpatech, a symposium where DARPA (the government’s futuristic science arm) meets with and presents ideas to outside scientists and companies.

These PDFs are actual speeches given at Darpatech that both explain what DARPA’s current objectives are, and are also clearly intended to inspire and excite scientists and engineers to join in the work they are conducting.

The DARPA programs of the past and present are awe-inspiring. DARPA has literally re-invented our world since is inception in 1958. The Saturn rocket, the Internet, Stealth, night vision, cell phone and gps components, and UAVs are just a few of the extraordinary results of DARPA research. In the amazing PDFs available on the symposium site, new ideas are described that will continue to revolutionize all of our lives: a 90% reduction in the cost of Titanium, autonomous vehicles that drive as well or better than you or I (especially “I’), and even “programmable matter”.

The PDFs are an incredible read, but there is another reason I am mentioning DARPA on this blog: DARPA deliberately makes the impossible possible. And that is, at its core, what this blog is all about. Darpa has proven time and time again that imagination routinely becomes reality. DARPA is not a motivational organization. Darpatech is not a “feel good” seminar. DARPA creates new realities, out of “thin air”, every day. And not only that, their mandate is to go for “new concepts and systems whose feasibility is still unknown and risky”, in the words of Dr. Tony Teather the current DARPA director. He goes on to say that “We search for those ideas world-wide that may make a tremendous difference, and whose time has come to bring them to the near side as fast as possible”. In short, they aim to make the impossible possible.

So here is the paradox. In most of our daily lives, we aim for reasonably achievable goals (career advancement, recognition, financial security, the solution of various home, family, career, or life-logistics problems). We work at these problems every day. We probably get reasonable success, and, through reading and studying books, tapes, websites, etc we can measurably improve or output.

But DARPA has chosen much more challenging problems, has an incredible batting average, and has changed the world, not by selecting easy problems, but by selecting the hardest problems that exist!!! We’re scrambling to get a home business started, or get 10% in our IRA, and they’re trying to invent tele-robotic surgery!!! And succeeding better than us!!!

There are deep lessons to be learned from the “idea” of DARPA. Lessons that impact our personal success.

1. It is crucial to remember in a world of discouragement, often filled with dream-killing people and heart-breaking setbacks, that far more ambitions goals than ours are being routinely accomplished on a day-to-day basis.

2. An ambitious, “outside the envelope” – type goal attracts higher quality minds, organizations, and solutions than an incremental , current-technology goal. Just reading the speeches of the DARPA directors makes it clear that they are utilizing the inspiring quality of a revolutionary project to bootstrap the project itself from fantasy to reality.

3. When viewed as a problem of “personal leverage”, if we really though about it, we might only work on high-risk/high-reward projects!! Clearly the results of 2 years spent on a 2X goal would be vastly less significant than 2 years spent on a 100X goal. The same two years goes by. But if the goal is even partly attained, the outputs of even a failed 100x might dwarf those of the 2X goal.

4. Even if the 100x goal is not specifically achieved, there is an overwhelming possibility that new connections (human, technological, conceptual, methodological, and more) will more than repay the time spent on the 100x goal.

5. The DARPA method works incredibly well. Its results have been so outstanding that we may well question ourselves as to why we spend even a minute on any incremental, uninspiring, humdrum project. The DARPA method may work better than any other goal-setting method in the history of mankind. By consciously focusing on inspiring outcomes that could create vast and profound effects, and yet have no known methods of achievement, DARPA has arguably instantiated more positive change in our world in the last 50 years than in the previous 5,000.

I am going to end this post with a theorem. Perhaps I will call it the Task Magnitude Theorem. It states: Achievement is more dependent on task selection than ability. I repeat: Achievement is more dependent on task selection than ability. I will be returning to this topic. It is the essence of what DARPA does, and what we all can do. I am not saying it is true. But what would be the personal implications if it were true?

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Commentary: "I Am" Vs "I Do"

2008-04-10T20:18:00.003-05:00

Imran Rahman has a superb post at Dream Manifesto entitled “Two Simple Habits for a More Fulfilled Life”. It starts with a great quote from Aristotle: “We are what we repeatedly do. Excellence then, is not an act, but a habit.” The entire post is a must-read, but I think Rahman’s core concept is crucial. There is a difference between “I am” , which can be almost anything: a lie, an inflated self-concept, self-deception, a relic of misplaced, overindulgent parenting, or a vow that is not ever meant to be kept, and “I do”, as in “I pretty much do the same productive (and hopefully not unproductive) things day after day, week after week, year after year”. “I am” is waiting to be proved or disproved, "I do" is petty darn obvious to anyone who has known you for more than five minutes.

For instance:

I do… perform a Weekly Review every..well..week, thanks to David Allen’s Getting Things Done. This has led to much more serenity in my life. I know where things are filed. I know what is coming up for me next week, next month, in 6 months, etc. I know what my projects are, and what is the most important project to be doing right now.

I do... have a “Mindfulness List”, which I read every morning. Things to keep in mind. What I should be eating (and not eating). How I should be exercising. Reminders to try (sigh) to stop judging people so much. Reminders that “peace” is more important than winning an argument (sigh, again).

I do… Use checklists. Since I do a lot of trading, it is important to get it right over and over again. Exactly right. Some of what I do is very sequential and I have often got the steps wrong. The checklist is a lot better than my memory, and the results of the procedures are very satisfying.

I do… (thank-you Mathew Cornell ) keep a giant Personal Information Manager spreadsheet with every important site that I may want to revisit someday, or that I may want to refer a friend to. This has been extremely helpful.

I do… "debrief” myself after a particularly jarring trading experience, and I re-read these debriefs on a monthly basis, adding them to a “Lessons Learned” file. Thank you “Murph” Murphy .

I do… Write up monthly and yearly “Highlights” so I remember what worked, and what didn’t, reminding myself that assertiveness works and anger doesn’t, that praise always works and criticism never does, and, very often, reminding myself (with some surprise) that life is pretty good, and that I am truly blessed with wonderful friends and family.

These items have progressed from being what I do to being what I am. Five years ago I was not doing these things, and, thanks to this blog, and my intention to learn and grow, now I am doing these things. Aristotle was right. I now “am” these things as much as any other description of myself. And I like these things because I chose them. I chose them and I choose to keep doing them. Perhaps choice is partially the difference between the “I am” and the “I do”. Between “I can’t help what I am” and "I CAN help what I am". Of course, these actions I repeat so often are all means to an end, but they are also a “carving out” of the self. A rejection of entropy. A stand against chaos. Out of all the things I could be doing: sleeping, watching TV, engaging in “pity parties”, eating chocolate sundaes, I CHOOSE TO DO THESE THINGS INSTEAD. These items separate me from mere impulse. From unconsciousness. From drift (hah! Not enough). They make me who I am. They are who I am.

Who are you?

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Commentary: Are you "Too good" for Motivational Tapes?

2008-04-07T22:41:00.003-05:00

Are you too good to listen to motivational tapes? Too cool? Too smart? Too successful? Immune to that kind of sincerity and challenge? That first question occurred to me for two reasons. First: I have a bookshelf full of motivational tapes (my favorite is Brian Tracy), but I had not been listening to them much lately. Around New Years, I put on some of Brian’s tapes again, and really enjoyed them, and, of course, focused on them with a whole new set of reference experiences than I had possessed a few years back. Secondly, I was enjoying an excellent Harvey Mackay podcast, when he mentioned the most interesting thing: Tiger Woods, he said, had been listening to motivational tapes since age six!!! I looked it up on the Internet. It apparently is true.
I have had a reasonably successful life, although I won’t be on the cover of Time anytime soon. But, looking back, I can trace some profound differences between my life and those of others I know, right back to those motivational tapes. To those tapes I owe the concepts that financial independence is/should be a major goal in everyone’s life; that a “workaholic mentality” is fit and proper , and not to be scoffed-at and snickered-at by folks who are “too smart” for that sort of thing. Or what about the idea of taking time every morning to do visualization, affirmations, and a review of your major goals? These behaviors are not “natural”. I learned every one of them (and dozens more) from motivational tapes.

Now, as I look around me, I wonder “why isn’t ‘X’ working harder? ..doesn’t he know he won’t be able to work forever?” Or “Why is ‘Y’ getting their investment advice from a talking head on CNBC instead of delving into what makes people really rich?” You see people literally shooting themselves in the foot looking for quick bucks. Equating income with wealth (and going broke in the process), and living in quiet despair, when merely putting on a tape or a CD could begin a transformational process, both inside, and, later, outside, that would imbue their lives with prosperity, excitement, and peace of mind far beyond what can be achieved by stumbling around, dreaming, whining, and, most likely, losing.

I challenge anyone who wants to accomplish more in life, who may feel that he/she is getting “passed by” in the great parade, to spend one year listening to the likes of Brian Tracy, Jim Rohn, Harvey Mackay, or Dennis Waitley. You will immediately find that your daily actions have implications you never dreamed of. You’ll find you have “permission” to work harder, save more, dream bigger, move beyond the constraints of your peer group, and develop respect for individualism, determination, and excellence, instead of “getting along”, moaning about “the rich”, or looking for the next easy way out of a jam.

Some people had this kind of mentoring in their family. I , for the most part, did not. In the marathon of life, I was not first out of the gate. But my “coaches”, the above masters of personal success, really got me into some kind of shape. I am eternally grateful.

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Success Book Reviews: Boothman on Rapport

2008-04-07T22:04:00.002-05:00

Nicholas Boothman's How to Make People Like You in 90 Seconds or Less Less is one of the most astoundingly applicable personal-development books I have come across. Within days of finishing this short volume, I found that I was able to build rapport with others much more easily, and, indeed, I found that people I had just briefly met were positively glowing by the end of the conversation. In conversations with people I already knew, I frequently found that people did not seem to want to stop interacting, and that people were telling me much more personal details about themselves than I had been accustomed to hearing.

On the surface, the book appears to be a succinct review of certain features of NLP , Neurolinguistic Programming , a psychological discipline related to how humans “encode” their reactions into the state of their bodies. A simple example might be how difficult it is to feel sad while consciously smiling. But Boothman, who has used these techniques extensively in his role as a professional photographer, has been able to capture and translate NLP theory into easily-remembered routines that anyone can apply to build rapport with others.

I also found myself surprised at how often I was failing to apply his techniques: when you notice, for instance, that you are not making eye contact, or that you are subtly pointing your body away from the person you are trying to build rapport with, you realize what mistakes you my have been making for years. In my case, perhaps my whole life.

I don’t want to give away the whole book, so I will refrain from discussing the many techniques Boothman offers, but I do want to mention the question of authenticity. Are we being “authentic” when we practice these techniques? Well…I was a lot more “authentic” when I played piano badly, than when I learned to play by instruction. But the real goal was not "authenticity, but rather to use technique to bring out the more important values in the music. And that is what is going on when we apply Boothman’s techniques. The goal is not the technique, but the communication that arises from employing the technique. Sure…I would be more “authentic” using the limited vocabulary I had when I was three years old, before I was “educated” in more advanced forms of language. But it is the very advancement in technique that allowed me to communicate better. For my money, I have no interest in “being my old self” if I can accomplish more by adding new, effective behaviors.

And, believe me…Boothman’s techniques are awesomely effective. Read this book.

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Success Secrets: Talking to Executives

2008-02-26T16:45:00.002-06:00

Interpersonal skills are one of my prime concerns at this point in my life, and there is a wonderful post dealing with parts of that skill set on PhD Confidential entitled Top 10 Ways to communicate with Executives.

The blogger, Dorianne, has a wealth of experience with large corporations, and has clearly honed her skills well. The list is equally important to small businesses, especially in their role as suppliers to larger entities.

In my own previous life in a small business, I found that we could always learn more about several of Dorianne’s points. One, “Present Alternatives” is illustrative. In a meeting with the executive, you are an “arrow in the executive’s quiver”. You may think you have “the solution” to the executive’s problem, and you are ready for a signature and a purchase order. But you may not know even a small bit of WHY you were called into the job in the first place. Maybe it is only to supply a bunch of alternatives. And there you go…you only supplied one. Think that executive will ever call you again?

At any rate, Dorianne has an entire list of insightful techniques of dealing with an executive, because she has been on the other side of the desk. Tis post, and this blog, are definite must-read.

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Success Podcasts: LearnOutLoud.com

2008-02-04T20:23:00.000-06:00

I just came across a huge podcast site named LearnOutLoud.com which claims to be “your one-stop destination for audio and video learning.” And they very well may be right. I just downloaded 56 lectures on Statistics from UC Berkeley. And it was free.

The list of major subject areas on the site includes:

Arts & Entertainment
Biography
Business
Education & Professional
History
Languages
Literature
Philosophy Politics
Religion & Spirituality
Science
Self Development
Social Sciences
Sports & Hobbies
Technology
Travel

With dozens of courses within each major heading. I was also delighted that, in iTunes, the statistics course automatically numbered itself in the order of the lectures. Very cool. Besides, Berkeley, I also saw at least one course from Harvard, among the selection of courses.

Beside the free courses, I see on the site a large selection of paid downloads, many in the $10.00 range. The download categories include:

Arts & Entertainment (51 items) Biography (63 items) Business (138 items) Education & Professional (64 items) History (154 items) Languages (49 items) Literature (274 items) Philosophy (48 items) Politics (79 items) Religion & Spirituality (325 items) Science (77 items) Self Development (1010 items) Social Sciences (107 items) Sports & Hobbies (37 items) Technology (4 items) Travel (21 items)

I expect to spend many happy hours going through all the possibilities on this site. We do live in fantastic times.

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Success Secrets: Can You Spot Leadership?

2008-02-03T14:43:00.000-06:00

I came across a great post on The Practise of Leadership blog entitled Spotting a New Leader. In my experience with leaders, these qualities are spot-on. Please read the entire post. In brief, the characteristics to look for are:

Leadership in the past.
The capacity to create or catch vision.
A constructive spirit of discontent.
Practical ideas
A willingness to take responsibility
A completion factor
Mental toughness.
Peer respect
Family respect
A quality that makes people listen to them

Since this blog also covers personal success, I think we should ask ourselves: "How Many of these qualities do I need to inspire myself?" If we aim to develop mental toughness, a willingness to take on responsibility, etc, we can first lead ourselves, and then, perhaps, others will also choose to be led by us.

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Success Podcasts: Bloomberg on the Economy

2008-02-01T22:54:00.000-06:00

Bloomberg on the economy is one of my favorite podcasts. And yesterday, host Tom Keene had a fascinating conversation with Robert McTeer, the distinguished and brilliant former president of the Federal Reserve Bank of Dallas , who is also quite visible on numerous business TV shows and cable channels. I was delighted that , int he interview, McTeer, in effect, said that he (like myself) uses his iPod almost exclusively for podcasts, and is a special fan of the Bloomberg podcasts. He confirmed my growing intuition that these podcasts far beyond the ordinary. Over the last year, I began to understand that the Tom Keene podcasts were unique: brilliantly insightful interviews with the top minds in world finance, presented on a daily basis. I, for one, felt that my “mental model” of the world economy was slowly coming into focus as thnaks to my daily dose of Bloomberg.

There is something very special about Tom Keene, who clearly has profound economic knowledge, and the ability to demonstrate detailed understanding and fascination with each and every guest on his program. And he seems to know every book, theory, and equation in existence. Keene podcasts anywhere from one to three or four podcasts per day, and the sum total of his podcasts adds up to a cross-section of the brightest and most penetrating (not to mention up-to-date) thinking on economics and investment available to the podcast listener. I find that ongoing listening to Keene creates a shifting “cloud of knowledge”, a broad-brush consensus about current topics in the economy and investment world. And I also find that this consensus generally gets it right as far as predictions and trends go.

This multiple view, coming from so many eminent investment professionals and economists, is the closest thing most of us will get to an ongoing conversation with the “best and the brightest” in their field. The sheer volume of quality interviews, combined with up-to-the-nanosecond timeliness, is something that could not have happened before the Internet. These are fun times indeed.

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Success Tools: Andrea Nierenberg - Networking Expert

2008-01-29T20:32:00.000-06:00

Andrea Nierenberg is a networking expert who counts among her clients such global behemoths as Citibank and Astra Zeneca. She has a superb site, which showcases her wide range of skills and services including her books, training programs and keynotes.

One of my favorite parts of the site is the generous article archive, which covers a wide range of topics such as:

Networking With Your "Tribe" - Working Smarter
Vision for the Year
"Prop Up" Your Speaking
Company Picnic Pointers
Maximizing Incentives
The Mirror of Your Mind
How to Make Trade Shows Terrific
Learning News Tricks
Build Office Morale through Building Relationships
The Art of Appreciation
How to Build Credibility in Your Market
Customer Service - From The Inside Out
Good Ways to Deliver Bad News
Dealing with the Creeps
Helping Introverted Employees to Become Better Networkers
How to Motivate a Staff
The Art of Networking
Electronic Etiquette
Dealing with Bad Boss Behavior
Build Your Business Through Smart Networking
Eight Essential Communications Skills
What's in a Word?

I've already printed out a few, and look forward to digging into more of the articles, as well as checking out her books.

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I recently enjoyed....

2008-01-29T12:51:00.000-06:00

Success Book Review: Ben Stein's Latest

2008-01-28T21:15:00.000-06:00

I have been reviewing books on personal prosperity here at the Success Books blog for over a year now. I have found something instructive in nearly every book I have read, but Ben Stein’s books have been among the few that I have not only read, but outlined, reread, and actually profited from. His latest, Yes, You Can Supercharge Your Portfolio!: Six Steps for Investing Success in the 21st Century written with financial planning expert Phil DeMuth, is no exception.

Ben Stein’s mission in this book is nothing less than to transform our portfolios from random accumulations of stocks, funds, etfs, whatever, which we have collected over the years because of articles, fads, relatives, brokers (good or bad), etc, into a mathematically sound, high-return, low-risk collection, carefully selected and weighted for maximum reward-to-risk.

Stein is essentially bringing Modern Portfolio Theory down from the Ivory Tower of endowments, hedge funds and similar esoteric entities, to us, the investing public. What Modern Portfolio Theory tells us is that groups of high-return, but weakly correlated assets deliver the financial equivalent of a “free lunch”: the returns add up, but the risks, because of the weak correlations, can, in part, cancel each other out, leaving us with more predictable returns over the years. This reduced volatility will theoretically allow us to spend more of the returns, since they will not vary as dramatically year-over-year, as other, less ingeniously-constructed portfolios might.

Chapter by chapter, Stein and DeMuth teach us how to start with a strong core portfolio of broad stock indexes, and both supercharge returns and reduce risk, through the addition of various other asset classes: bonds, stocks indexes of various capitalizations, international equities, REITs, commodity funds, and even individual stocks, hand-picked to fit like a glove within the design of a model portfolio.

Stein and Demuth also point us to a website where we can “test-drive” our shiny new portfolio, and even (gulp) take a peek at how well (or dismally) our current, non-supercharged portfolio might do over the years.

This book is infused with Stein’s droll wit, and he keeps the tone upbeat and lighthearted…an amazing feat given the weightiness of the subject matter. It’s a relatively short book, at 178 pages. Worth a day’s read, if by chance you want to save your financial future from disaster.

Read this book.

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Commentary: Major Definite Aim

2008-01-27T07:49:00.001-06:00

I recently posted about Napoleon Hill’s concept of the Major Definite Aim, and how my own recent experiences with it have, for me, confirmed its value as one of the greatest success principles. I came across an interesting anecdote in Harold Evans’ book They Made America: From the Steam Engine to the Search Engine: Two Centuries of Innovators, an exhaustively researched collection of biographies of the inventors and entrepreneurs that , innovation by innovation, created our modern world over the last two and a half centuries.

Leo Hendrik Baekeland was the brilliant chemist who created Bakelite, the revolutionary plastic that transformed industrial design in the first half of the 20th century. He was blessed with superb scientific gifts, and turned down the prospect of professorships in his native Belgium to try his luck in America.

But brains aren’t enough.

At one point facing isolation and ruin , seriously ill, and with growing debts, he was clearly facing utter failure. Then, in Baekeland’s words:

“..it dawned upon me that instead of keeping too many irons in the fire, I should concentrate my attention on one single thing which would give me the best chance of the quickest possible results”

That “one single thing” of course was the Major Definite Aim. Baekeland went on to make a fortune.

The instructive point here is that brains, hard work, or any other talent, are only a single component of the success puzzle. The Major Definite aim focuses the mind, and even the brightest of the bright can benefit immensely from it. We cannot merely work hard (a prerequisite, of course, for any achievement) , but we have to think about how to best focus that work.

One single thing.

So simple. So profound.

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Commentary: Denali , Entropy, and You

2008-01-13T20:26:00.000-06:00

I recently watched a PBS special on a group of climbers doing scientific research on Denali (formerly named Mt McKinley) and ,coincidentally, I recalled that someone I knew while in graduate school had also recently climbed Denali. Now, I am no mountaineer, not even close. And I watched the TV show with great anxiety, as I realized that the lack of oxygen, fierce and unpredictable weather, and sheer cold, could (and does) kill many a climber.

Yet, it occurred to me that, in a sense, Denali is an example of the “entropy” we all experience in a quest for personal success. In a sense, climbing such a peak is “safer”, in a convoluted sense, than is our day to day journey toward our personal goals.

Why would this be? Because, on Denlai the forces of entropy, the forces of disorder, the forces that conspire to freeze you, starve you, and suffocate you are brutally obvious. Yet, in our daily lives, those same forces, just as powerful, are subtle, incremental, sometimes existing just below our awareness. Some of them are in the famous “important but not urgent” quadrant of our lives, where the fate of our wealth, longevity, and spiritual happiness reside. This is not a 10 day climb. This is a 90-year trek. It’s called our lives. But if we persist in ou rignorance of these forces, slowly, but just as surely as the gusts of Denali, we will freeze, starve, or suffocate.

Also, gladly, there is a high peak, with a breathtaking vista, which we all can reach on that trek. And we can be just as proud as the most heroic mountaineer, if we make it to the summit, having survived, planned for, adjusted for, improvised, and disciplined ourselves for that arduous ascent.

So, what are the forces of entropy that sneak in, unseen and unheard, to plague our own ascent of life’s Denali? Procrastination, refusal to save and invest, the lure of debt, refusal to study and learn, about our capabilities, our fitness, our nutrition, our abilities to relate to others. The climber, with a good team, knows what to expect. But so do we. Yet the climber is utterly sure of death if she fails, while we, lulled by our “safe” job, “never been sick a day in my life”, “what’s a little drink among friends” “new credit card” etc, face just as sure a demise, just as sure a fall into the crevasse of ill health, death, financial ruin, etc but, because our climb is long and the gradient easy, and we have seen such good weather in our youth, been praised by our parents, teachers, counselors, etc…we are in a much greater danger. The climber is absolutely certain of freezing to death. But we ignore the odds. We skip a day of exercise. We spend a dollar instead of saving it. We “wing it” at the major presentation. We cut class.

And we fail. Because we don’t see ourselves as on Denali. Because the metaphor of the relentless cause-and-effect , law-of-nature status of Entropy, this metaphor, I say, eludes us. At our peril.

You are on Denali, my friend. Not for 10 days, but for your entire life. But you are in luck. Hearty bands of climbers, the great authors mentioned in this blog and elsewhere, the Napoleon Hills, the W. Clement Stones, the Tony Robbins’, and all the rest, have climbed to the peak before you. They are throwing lines down. They have ample nourishment and warmth for you. They stand atop the summit, drinking in their glorious success, surveying the earth below, and they eagerly pitch in to help you, O weary climber, if you will but grasp a line, use their compass, see through their spyglass.

You can cheat the wind. You can prepare for the cold. You can find the key route. You can provision your camp. And you can gain the peak.

You can conquer your Denlai.

Success Book Reviews: Alan Greenspan's "Age of Turbulence"

2008-01-04T12:12:00.000-06:00

Alan Greenspan’s book, The Age of Turbulence: Adventures in a New World ,is a miracle. This is an epic book. A brilliant economic mind who was an “insider” witness to one of the most extraordinary periods in economic history, as well “present at the creation”. A mind with the concentration to follow the most microscopic business statistics (sheet metal orders, etc) and also be able to take in the sweeping panorama that marked the spectacular success of free-market capitalism from 1945-2006.

He saw the demise of both Communist central planning (the fall of the Soviet Union) and United States central planning (Nixon’s ill-fated wage and price controls); the spectacular recovery of Europe and Japan after World War II and the free-market miracle that transformed China from a backwater of poverty into the number-two economy in the world; the re-emergence of free-market economics in the 70s and 80s, as country after country abandoned their disastrous flirtations with centrally planned economies,
and he courageously communicates the somber truth that great economic success requires risk, and when there is risk, there is loss as well as gain.

More sweeping (because of its truth) than an Ayn Rand Novel, the characters in Greenspan’s magisterial narrative are not fiction: Rand herself, Brezhnev, Gorbachev, Nixon, Ford, Reagan, Deng Xiaoping, and all the rest, are the real embodiments of the forces surging around this magnificent life. And at the dead-center bull’s-eye of the second half of the Twentieth Century, the most ebullient expansion of human prosperity in the history of mankind, sat Alan Greenspan. As first the outstanding student, then outstanding mentee, then, for decades the ultimate insider, as well as laser-sighted observer of towering analytical ability, and as a communicator who could actually talk to politicians and (wonder of wonders) get through to them, Greenspan had no peer.

And the cornerstone for each of these roles was one word: results. Greenspan got results. He did “it” (as Art Williams might say). The “it” was whatever it took to understand the problem whether it was saving an economy or forging the safety of Social Security. What were not innate skills, he learned. He was willing to listen to a Rand, a Burns, a Baker. Part of his genius was knowing what he did not know, and getting that new knowledge into his knowledge base. He talks with deep gratitude of Fed staffers who would tutor him in arcane banking lore, who would collate and feed him the best academic papers, who would do the studies that he needed to do his work. He praises the great political compromisers who helped him save Social Security, and extols the greatness of a truly “normal” guy, the deeply loved President Gerald Ford.

Since this is a blog about success, what can we learn about Greenspan that can help us even a little bit in our success journey? Not surprisingly, there are some clues.

1. One thing that we can admire, though not duplicate, is innate ability. Greenspan had an innate gift for mathematics, statistics, and code (which would translate into music as well as computer programming). These skills are also hallmarks of Jewish children, who for generations memorized and studied the Talmud (although Greenspan does not overly emphasize his Jewish heritage). Interestingly, Greenspan describes an optimistic mother, and a somewhat distant stockbroker father, who was also an author. One is struck by the sense that there was no parental negativity or neurosis to get in the way of Greenspan’s growth. The mother was cheerful, the father was not around to fight Oedipal battles with. Also, the father had written a book dedicated to Greenspan, and it is curious that Greenspan explains his early rise to fame through his ability to write prolifically and thus find an audience for his output. It is also interesting that he would be asked to demonstrate his mental math skills at family gatherings, thus already imprinting the idea that these skills could be the route to success.

2. Location and demographics. New York was becoming the center of the world during and after World War Two. It was the stage on which American success was played out. I have elsewhere reviewed books about Andrew Grove and Sandy Weill, (who also had a distant father, which may have allowed his ego strength to flourish) both of whom (besides being Jewish) were intellectually enraptured by New York. The lesson: go where the epicenter of success lies, or, as Ben Stein says: the prizes are only handed out if you are playing at “the table” (the stage upon which the big stakes games are played). Now, in the 1940s, Alan Greenspan did have some luck: as he was denied the opportunity to go to war, he was able to build his career earlier than those returning from overseas, and thus had a head start on his generation. And his generation was a lot smaller than the baby boomers. And, as a young man, he already knew Paul Volcker, Arthur Burns, and not much later, Cheney and Rumsfeld. As Ben Stein has recounted, people don’t hire the best people, they hire the best people THAT THEY KNOW. So, as his small, tight-knit cohort moved up the ranks, they hired the best person they knew: Greenspan.

3. As I wrote in “Follow your Bliss off a Cliff” , one should seek the interface between your skill set and what the Universe wants you to do. For Greenspan, when the phone rang, it was not for his Julliard clarinet playing, it was for his business analysis skills. He was smart enough not to fight it.

4. Learn from those with complementary skills. He allowed Ayn Rand to awaken a thirst for knowledge outside of the realm of pure numbers, clearly learned more of the art of compromise and group leadership from the heavy hitters in the Reagan administration, and may have learned “power networking” strategies from the glittering, brilliant, and highly-connected women in his life, notably Barbara Walters and Andrea Mitchell (his current wife).

5. Like Charlie Munger, much discussed in this blog, Greenspan recognized, and constantly deepened his “circle of competence” . As the consummate “Mr. Inside” he did not attempt to be “Mr. Outside”. No Greenspan talk shows. No Greenspan self-help books. No Greenspan golf tournaments. And thus, precious little conflict of interest . No “going Hollywood” and betraying the inner circle.

6. Another key cornerstone is epitomized in the decision-tree topic of “MiniMax regret”. What that means is, Greenspan would sometimes search for the alternative that might best minimize the most future regret. As the Hippocratic Oath recommends: “first do no harm”. In other words, consider multiple scenarios and don’t just pay attention to the upside. Many broke traders might do well to listen carefully.

7. Lastly, Greenspan knew how to keep his mouth shut, a technique recommended at least since the time of Benjamin Franklin. Reports from his Ayn Rand days tell of Greenspan’s habitual silence, and he himself mentions that playing cards “close to the vest” is a hallmark of central bankers.

This book is many things. A chronicle of a life. A chronicle of an age. A chronicle of personal, national, and ideological success. It may well end up as one of the most important historical narratives of the second half of the Twentieth Century. We now, all of us, live as kings, taking for granted plentiful food, abundant opportunities for advancement, long life, warmth, technological wizardry and even multiple means of safeguarding our future financial security. We owe all of this abundance to free-market Capitalism, for the Market is indeed a more miraculous than any fabled Genie, Indeed, under Capitalism, our wishes, not limited to the storied three, nay, even three hundred, actually, miraculously, create their own fulfillment.

Success Tools: Harvey Mackay's Website

2007-12-14T21:41:00.000-06:00

Networking guru Havey Mackay has a great site that I just discovered. The famed author of Swim with the Sharks Without Being Eaten Alive has included downloadable checklists, podcasts, rss feeds and more. You can't get enough good networking advice in this world, and I reccommend a visit to Mackay's site.

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Success Tools: The Major Definite Aim

2007-12-14T08:16:00.000-06:00

If you haven’t read Napoleon Hill’s Think and Grow Rich this would be a good time to pick it up. This book is one of the “uber-classics” of success literature, and many successful people re-read it frequently. One of the main concepts in the book is the Major Definite Aim: a short paragraph defining your main goal and how you plan to implement it. The MDA is re-read on a daily basis.

I first tried using the MDA in 1981 when I set a ridiculously high goal for a future income. It worked.

Recently, I set a trading goal using the MDA. I wrote out an exact amount that I wished to attain in my trading account, and I started writing down those actions and approaches I deemed necessary to achieve that goal.

I achieved that goal within 45 days, I am happy to say.

Now, as I reflect upon this gem of a concept, I can see a number of aspects that wise Mr. Hill embedded in this success tool that I did not see years ago when I was starting out in my career.

First, The Major Definite Aim acts as a prioritizing system. If you are constantly stating to yourself what your MDA is, other ideas, opportunities, and distractions are automatically prioritized downward, below our MDA. The existence of the MDA will create cognitive dissonance when you attempt to violate it by focusing on other priorities.

Second, the list of methods that you generate for achieving your MDA keeps you pursuing your main course of action. In the case of my trading MDA it kept me trading my systems day in, day out, without obsessing on any particular daily result. In other words, it worked as a “forcing system” to encourage both persistence and consistency. I have no doubt that there were fewer deviations in my behavior than there would have been had I not been referencing my Major Definite Aim.

Here are a couple of examples of how it worked for me:

I am an emotional, “jumpy” person. I often say and do things that I wish I hadn’t, and my emotional nature has derailed a lot of progress in my life. One of the “methods” that I listed under my MDA was “Maintaining emotional balance and focus, and engaging in behavior that promotes emotional balance and focus”. I was surprised particularly at how I was able to “edit out” behaviors that I knew would cause animosity from other people in my life: I knew I had a particular path to pursue, and I knew that I did not want to be distracted by emotional skirmishes as I pursued that path. Thanks to that same “method”, I also found that I was less apt to engage in over-simulative behavior. I did not want to come into my trading room one morning filled with self-loathing or with a splitting headache. Thanks to the MDA, and my list of methods of achieving it, I was able to stay on an even keel.

Another bad habit is taking “discretionary” trades, outside of my system, usually out of panic. I noticed I tend to lose money on these trades. I listed as one of my MDA “methods” to “take no discretionary losing trades”. I am positive that part of the reason I attained my goal so easily was because I was not “driving with the brakes on” (by losing money when I didn’t have to).

Finally, I want to mention one other benefit I found from the MDA. I found that I was constantly coming up with new methods to add to my list of how I was planning to achieve my goal. I found myself producing a flow of creative ideas related to my Major Definite Aim. I have posted frequently on Mind Power and I believe that a Major Definite Aim produces a response in the unconscious that results in an outpouring of creative solutions directed toward your goal.

Adding it all up, the Major Definite Aim provides a compass to your daily activities. All activities, whether related to the MDA or not, are automatically referenced to the MDA , which you read to yourself frequently. You begin to see each action, each possibility in terms of whether it leads toward, or away from, your Major Definite Aim. Remember also, the Universe is chaotic. Random. It is we, through our minds, wishes, thoughts, and plans, who affect this formless collection of events in ways that lead us to our goal.

I find the concept of the Major Definite Aim of even more value to me today than it was when it first changed my life, many years ago.

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2007-12-12T16:14:00.001-06:00

Visit The Success Books Store

Success Tools: Checklists Revisited

2007-12-12T16:11:00.000-06:00

I’ve posted recently about Charlie Munger and his recommendation that people employ checklists. Recently a post by Monica Jackson, which in turn linked to an article in the New Yorker reaffirmed the immense benefits of checklists, especially in Intensive Care settings. But I submit that Charlie Munger’s insistence on the use of checklists has even more far-reaching implications. We associate checklists often with aircraft takeoff procedures, because so many complex and critical procedures need to be performed in a synchronized and (hopefully) error-free manner. However, in our modern lives there are many areas of our lives that are increasingly complicated, and I think that is what Charlie Munger is getting at. As simple a task as going out on daily errands would benefit from a checklist procedure. So would locking up the house before a trip. Or meeting wth a handyman on a range of home improvement tasks. What about meetings which occur rarely, but with important professionals, such as attorneys or doctors?

The simple fact is, the case for “winging it” is weak, and getting weaker. The truly historic results achieved in the ICU environment even regarding well-known and “rote” procedures, is enough to give one pause.

Ok…that’s everything on my list.

Success Secrets: Best of the Year Part 3

2007-12-04T21:11:00.001-06:00

I have been reviewing what success techniques have worked best for me in the past year. This is part 3. Part1 is here and Part 2 is here .

A few more techniques that improved my results this year:

Decision-making techniques

Decision trees, Expected Monetary Value, and pencil-and paper rough diagramming of solutions

My interest in decision-tree methodology got re-kindled when I read Charlie Munger’s statement that Warren Buffett thinks naturally in terms of decision trees (I have a lot of posts about Munger here). Thinking about future events, and assigning a probability and quantitative (or dollar) outcome (if possible) to each alternative branch has been a major factor in various trading and investing methodologies I have been following. I also found the various decision-making methods mentioned in Kepner and Tregoe’s The Rational Manager to be very effective.

In some cases all I needed to do was draw a very simple two-line diagram and think “one step” into the future. In my trading methods, I was able to double the efficiency of one of my methods by simply thinking about the results of two alternate hypotheses. In fact, just writing out possible outcomes rather than leaving them in my head made vast differences in my results this year.

Munger and Buffett’s "Circle of Competence"

Methodologies that succeed are to be cherished, reflected-upon, and improved. They should not be replaced unless other methodologies can be shown to be superior. This does not mean that new ideas should not be explored. Of course, new ideas and innovations are crucial. But Munger reminds us that many fortunes can be made with just a few, core insights. Those successful insights must not be changed or discarded on a whim. I found that I made great progress by improving on things that had quantitatively worked already, although it bruised my ego that these slight improvements often succeeded better than more “original” ideas. The more “mercilessly” I “interrogated” new procedures by comparing them to existing successful ones, the more powerful my “circle of competence” became. The circle is a small, charmed space, and not a lot gets in, but what does get in produces strong results.

GTD Techniques

In October 2006 I began assimilating Robert Allen’s Getting Things Done: The Art of Stress-Free Productivity . In particular, my initiation of the Weekly Review, a good filing and archiving system, and keeping a handy pocket notebook nearby have truly helped me “know what I’m doing”. My “Agendas” folder helps me collect thoughts I want to pursue with specific individuals, and my “Waiting For” folder helps me keep track of ongoing “trigger” events out into the future. Allen’s unique insights into how to stay organized allow the human mind to free itself from being a “to do list”, and to expand into the creativity and results-producing engine it can be. Once I began to “trust the system”, my productivity began to soar. Once you begin to feel the power of knowing that data is being sent to a trusted place, the feeling of relief is palpable. You never want to go back.

Final Thoughts on 12 months of results:

As Munger might say, “Me” is less important than “Results”
Follow the data
Entertain all new ideas, but put your “big money” on what works
Seek the highest opportunity cost possible
Trust and improve your Circle of Competence
Think on Paper
Walk through decision scenarios
View progress as an endless process

Success Secrets "Best Of the Year" Part 2

2007-12-01T16:14:00.000-06:00

I have been posting on the “Top Success Techniques” that have worked for me in the past year. Part 1 of this post is here. Here are two more techniques that have contributed to my progress this year

Never giving up/Paying attention to all solutions that appear.

The human brain, the unconscious, the imagination, etc. are always working on solutions. The brain is constantly comparing our desired goals with feedback from our results to date on those goals. It then suggests new ideas, images, courses of action, etc. that may lead us toward better solutions. If we record and respect those ideas, they can help us discover still more paths which could take us to our goals, and which also “feed back” into our brain, which, in a “virtuous circle”, will produce still more ideas and solutions.

Some of my best personal results this last 12 months have emerged from combining and refining certain trading and investment results based on sets of previous results that were successful. I found that I could in some cases triple the results by combining already-successful methods in new ways. By paying attention to the ideas coming at me from both the “outside world” (the actual results) and the “inside world” (new ideas that continue to be generated from my brain), I am “bootstrapping” my results upward.

As long as one perseveres, reality will continue to produce new possibilities that lead us toward the solution to our problems…if we stay aware of new possibilities,, and if we make the effort o explore the possibilities that appear. Every avenue must be pursued, even unlikely ones. Another reason why “never giving up” is important, is because solutions are not singular, but “iterative”. Partial solutions lead to new ideas that then produce better partial solutions, that yield still better results…ad inifinitum. Interestingly, the nature of just what IS a solution, and even just what is the problem , may change. But none of this can be known in advance. We actually have to “run the simulation”, try the alternatives, reflect, and try again.

A corollary of this concept is that, since success become viewed as a process, there is actually less disappointment, and more serenity, since there is only an ongoing series of approximations toward higher and higher levels of success, rather than a “pass/fail” approach to our goals.

"Quantum Success " Techniques

This gem of a book, Quantum Success: The Astounding Science of Wealth and Happiness , by Sandra Anne Taylor is a collection of literally life-changing techniques to re-make your world. This book is one of the most powerful and profound books I have ever read. According to Taylor our world is an a state of quantum indeterminacy, which only resolves itself as the observer (us) begins to “create it” through observation. We, in effect, create the world we want to see.

Some of my favorite techniques from this book:

Releasing desperation…

Becoming aware of how often we can make choices that influence our lives…

Staying patient and calm…relying on persistent, focused action rather than “one-shot” plans or single-focus solutions…

Written “re-programming techniques” to “wipe out” thought patterns that are unproductive...

One of the points Taylor makes is that we can literally change our world hour by hour through conscious mindfulness of our mental state. Here is one small example:

I am an emotional person. I, unfortunately, let things “get to me”. Through Sandra Anne Taylor’s book, I came to the conclusion that my emotional nature was producing a “domino effect” by which I would get upset when something went “wrong”, and my reaction would impair my productivity in subsequent activities throughout the day, even though they were unrelated to the event that initially “set me off”. To paraphrase on of Colin Powell’s “rules” , “serenity is a success multiplier”. Why is this important? For me, I need a reason to generate internal calm going into a situation. That is, before the destabilizing event occurs. If I know I am consciously calming myself for the purpose of reducing chaos throughout the day, it helps me work through the “withdrawal” necessary to disengage from the unproductive, addictive, “stimulus” of high emotional levels.

In my life as a trader, this has helped me vastly reduce the number of impulsive trades that I might make, as I realize that the “reward” is not in the momentary excitement of a trade, but in the long-term outcome of a set of behaviors.

Another way of looking at Ms. Taylor’s work is that success can be viewed less as a “high” and more of a “low buzz” of intensity, as Doug Newburg puts it .

To be continued…

Techtags: Success,Productivity,Personal Development,Serenity

Success Secrets: Best Techniques of the past Year

2007-11-25T19:10:00.000-06:00

This blog was started in October 2006 . It has helped me collect and comment on the best books, blogs, sites, and techniques for achieving personal success. I have learned an incalculable amount by pursuing and collecting these techniques, and have made substantial personal progress from applying what I have learned. Since I just passed my “one year Anniversary”, I thought I would discuss some of the techniques that have worked the best for me this past year. This is Part 1 of a series .

1. Books

Reading books probably remains the single most underutilized success technique. Blogs are great. News sites are informative and current. But books contain detailed expositions of the best knowledge that is available, and often this knowledge is time-tested and proven. Books allow for more subtle and complex explanations, and for deeper examination of the topic under study. In my particular field of interest, trading and investing, I have read hundreds of books, and made steady, profitable progress.

Here are a few of my favorites (general success, not trading) from the past year:

How Successful People Win: Using Bunkhouse Logic to Get What You Want in Life

Ben Stein is a master of many fields. It is a gracious gift to us that he chooses to explain a lifetime's-worth of success techniques in a beautifully literary and philosophical way. Stein's advice is at an extremely high level: beyond category, and applicable to everyone.

Quantum Success: The Astounding Science of Wealth and Happiness

This book, by Sandra Anne Taylor, contains some truly original and highly effective techniques for changing your life. I mention a few of them in a continuation of this post. I have not seen any of her techniques duplicated in any other source. She is a true original.

Getting Things Done: The Art of Stress-Free Productivity

This book can make anyone better organized. Life just keeps on getting more complicated. This methodology cuts it down to size. As with Quantum Success, I will be elaborating on just what I like about this method in a continuation post.

Plus...many other books on trading, investing, and finance . Coming from a creatie field, i was not a natural trader. But I have made slow, steady, and positive progress. The financial results have been rewarding, but the psychic results have been even more rewarding. The reults are directly relatd to relentless readign of books on trading and investing. There is no substitute. not CNBC, not blogs, not anything.

2. Visualization techniques

Why do visualization techniques work? I sure as heck don’t know, but I feel strongly that they do, indeed work. There are dozens of types of techniques. Maybe they connect us with a universal source of Infinite Power. Maybe they create templates for the brain to match, bringing reality into “consonance” with our thoughts Maybe the world is in a constant state of quantum flux,and our thoughts “resolve” that flux into a single pathway. Maybe our view of the world, from inside of our limited bodies and brains, is just a “keyhole view” of what is out there, and, like Plato says, we are viewing a pale reflection of reality through our limited range of senses.

But whatever it is, visualizing seems to help make sense of our intentions. It helps tell ourselves (and the Universe?) just what it is we want. By concretizing our dreams, we “collapse the waveform” of possibility, focusing it, objectifying it, clarifying it and…perhaps manifesting it. Here are some of the techniques that have worked for me (and others) this past year:

“Pray for others first, asking for the same things that you want”
This technique appears to have true power. I have seen people that I have prayed for make remarkable turnarounds in their lives.

One such person beat his entire 2006 sales in the first month of 2007

Another went from a small , practically invisible services shop to vice president of a multi-billion dollar company. This happened early in 2007.

Yet another went from a condo in foreclosure to multiple job offers, equity participation in a successful firm, and additional outside consulting work. All in 2007.

Visualization using Huna breathing techniques
I have seen some remarkable results using the techniques I learned on HunaTrainer.Com
Visualization using the “energy ball” technique has brought some fascinating people into my life.

Daily Goal Exercise from Mr. Wang
In a recent post, I mentioned Mr. Wang’s approach of writing a page worth of goals down every morning. This technique opens a unique doorway from the unconscious as well as focuses the strongest goals, since they appear on a frequent basis.

I will continue to discuss some techniques that have worked for me this past year in Part 2.

Success Secrets: Munger "Misjudgment" Single Post

2007-10-25T19:22:00.000-05:00

Recently, I posted a series of posts related to Charlie Munger’s “Psychology of Human Misjudgment”. This post is intended to combine all the previous posts in one handy location.

Charlie Munger is well-known as vice-Chairman of Berkshire Hathaway , whose chairman is fellow billionaire Warren Buffett. In many speeches and writings, Munger has tried to elucidate the various mental “shortcut algorithms” we humans have evolved over the eons to make decisions quickly. Since we are living in a more complicated era than our primate ancestors, it is incumbent on us to be able to parse out when these vestigial processes are unduly influencing decisions that could be made more rationally.

We are indebted to Munger for his pursuit of these principles, because they frequently represent “blind spots” in our cognition. These “misjudgment tendencies” are so much a part of our nature that , without the checklist provided by Munger, we might never see them. Indeed I would be surprised if , even with years if self-examination, we could ever detect all of them in our own decision-making process.

Munger’s ideas on this subject have continued to deepen and broaden over the years. My goal is to create an accessible summary of these landmark ideas, but nothing substitutes for Munger’s own words. Please read the original. This summary is my attempt to compress the ideas into a shorter space, and to include an alternate descriptor for each tendency which might aid quick recall. Or, not. The most recent collection of Munger’s include 25 concepts. The list here is derived from that numbering.

1. Munger Descriptor: Reward and Punishment Superresponse Tendency
Alternate Descriptor: Each person responds most strongly to what they view as the strongest incentives and the strongest disincentives.

Expect that people will operate in their own self interest, including doctors, lawyers, brokers, your friends, relatives, employees and employers.

Structure incentives correctly, and you get great results. Structure them incorrectly, even by accident, and expect disaster.

Reflect constantly on the real incentives of any person you are dealing with. “What are they getting out of this?”

2. Munger Descriptor: Liking/loving Tendency
Alternate Descriptor: Humans have a natural tendency to like and love, and to want to be liked and loved.

This tendency can be used to mold behavior, good and bad. In other words, this tendency can be a driver of behavior. People will sacrifice their lives for what they love. They will adopt the habits, likes, and dislikes of those they love. And they will ignore the faults of those they love.

Implicit in Munger’s treatment is the concept that we should expect this tendency to override “rational” or other “expected” behavior.

3. Munger Descriptor: Disliking/Hating Tendency
Alternate descriptor: The tendency to dislike and hate can be used to mold behavior

Hatred can bond people as strongly as love.

Again, we should expect this tendency to override “rational” or other “expected” behavior.

Munger suggests the following “antidotes” as means for moving towards rational behavior:

Checklists
Deliberation
Seek disconfirming evidence (contrary to your “gut”)
Identification of self-interest with the best decisionmaking processes available
Liking/Admitting the most competent, ethical people
Keeping track of mistakes in judgment

4. Munger Descriptor: Doubt-Avoidance Tendency
Alternate Descriptor: Making decisions too quickly because of emotional, rather than rational reasons

Expect people to make hurried, possibly bad, decisions under stress. Attempt to avoid this tendency when making your own decisions.

5. Munger Descriptor: Inconsistency-Avoidence Tendency
Alternate Descriptor: We are habit-driven. We behave in a manner we deem consistent with our identity.

Expect people to be trapped in habits of thought for their lifetime. Expect people to ignore evidence when it is counter to their identity.

To adopt a new (good) habit, use the concept of consistency with the new identity to reinforce the habit. “Fake it until you make it”.

To avoid self-consistency bias, look for disconfirming evidence.

6. Munger Descriptor: Curiosity Tendency
Alternate Descriptor: Curiosity Tendency

Curiosity can aid the quest to reduce the other ‘human misjudgments”. Munger’s mention of the less-curious Romans (as opposed to the Greeks) is a reminder that we can gain much practical use from the curiosity of others that have gone before us.

7. Munger Descriptor: Kantian Fairness Tendency
Alternate descriptor: People in civil societies often behave as they would like others to behave toward them.

Munger notes that this behavior appears to have become much more common after Kant formulated his “Categorical Imperative” . The implication (to my mind) is that human reason can have a civilizing effect.

8. Munger Descriptor:Envy/Jealousy Tendency
Alternate Descriptor: Jealousy and envy are stronger in common practice than we allow ourselves to believe.

This is the “500 pound gorilla in the room” kind of trait that no one talks about, although, as Munger reminds us, it is screamingly apparent in families, universities, and all manner of professional firms. We ignore this trait at our peril.

9. Munger Descriptor: Reciprocation Tendency
Alternate descriptor: Tendency to reciprocate both favors and harm

Expect reciprocation for favors awarded and for perceived harm done. Feuds can be endless and last for generations. “Turning the other cheek” may be unnatural, and even dangerous, especially in advanced cultures that should want to protect themselves from aggression.

The tendency to reciprocate can be both positive (helping to deepen the bonds of productive relationships) or negative (as when we are led to grant favors that should not be granted, because we have been granted a favor).

10. Munger Descriptor: Influence-From-Mere-Association-Tendency
Alternate descriptor: The power of association encourages feeling over thought.

The power of association can influence behavior as when a product is promoted with a lifestyle, military service is promoted with impressive music, or when a product is “upscaled” (as in coffee with Starbucks). A second type of association occurs when we trick ourselves into repeating a behavior because it succeeded for us “the last time”. Thirdly, we may misjudge people’s abilities because we don’t alike a particular aspect of the person, and “tar” the entire person, or even a whole group of persons , “with the same brush”, although individuals vary widely from groups to which they may belong.

Munger explains to us that we human beings tend to use mental shortcuts that tempt us to avoid “drilling down” from the general to the particular. Another aspect is that our feelings are an older part of our brain anatomy, whereas our rational side is a newer evolutionary tool, that often gets downplayed because it doesn’t “feel” as “true”.

11. Munger Descriptor: Simple Pain-Avoiding Psychological Denial
Alternate Descriptor: Full or Partial Denial of Painful Facts

Expect extremely painful memories or unpleasant facts to be “re-configured” or denied. Expect that people simply find some facts (such as death, failure, chemical dependency) too painful to bear, so they act as if these unpleasant facts do not exist or deny the strength of those facts.

12. Munger Descriptor: Excessive Self-Regard Tendency
Alternate Descriptor: Overestimating one’s uniqueness in any area

We regard anything “like us”, or any decision we make, or anything we own, as “special” because it is something we personally have initiated, approved, etc. People we like, or people “like us”, are “better”, get the benefit of the doubt, etc. Munger always counsels us to search for “disconfirming evidence”. One interpretation: the stronger you “feel” it, the more you should check it before doing it.

13 Munger Descriptor: Overoptimism Tendency
Alternate Descriptor: Optimism without rational foundation

Expect failure if plans are not made rationally. Use mathematical probability techniques. Let the mathematics determine whether a business splan is “rosy”. Use the most pessimistic projections.

14. Munger Descriptor: Deprival Superreaction Tendency
Alternate Descriptor: Unusual sensitivity to real or perceived loss

Something perceived as “taken away” (money, power, perks, status, a comfortable situation) is perceived as a much more painful event than if the same status had never occurred.

This is a subtle and powerful observation and, as Munger says, much “ideological” , religious, and bureaucratic conflict may be traceable to this seldom remarked-upon tendency.

15. Munger Descriptor: Social-Proof Tendency
Alternate Descriptor: Irrationally following the example of others

Expect people to use this unfortunate decision-making shortcut. Conformity can lead to financial problems (“keeping up with the Jones’s”), or even international tragedy (when totalitarian and genocidal regimes slowly use social proof to co-opt a society). Munger tells us that the ability to ignore the urge to follow others, when they are wrong, is a key success factor.

16. Munger Descriptor: Contrast-Misreaction Tendency
Alternate descriptor: We “read too much” into situations involving contrast, and, conversely, pay too little attention to small changes, just below our level of awareness.

A bad price seems good because it is “on sale” from an even higher price. We accept a bad situation simply because it feels better than a previous, even worse situation. Alternatively, we underestimate the consequences of small changes, as when someone becomes addicted to a bad habit or dangerous substance in small steps, or when one becomes dishonest little by little.

17. Munger Descriptor: Stress-Influence Tendency
Alternate descriptor: Stress can cause semi permanent changes in mental states.

Munger suggests that stress-induced depression can be coped-with, even without drugs, and he further theorizes that high stress can be used as a “brainwashing” and even an “un-brainwashing” tool.

18. Munger Descriptor: Availability-Misweighing tendency
Alternate descriptor: Proximity effect

The nearness (or proximity) of an influence can unduly magnify that influence, whereas rational thought would not allow such emphasis. This could apply to easily available (but non-nutritious) junk food, ideas in the media that are irrational (but are so prevalent that we tend to believe them more readily), or basing a decision on statistics, although countervailing “common sense” reasons might be unquantifiable.

19. Munger Descriptor: Use-It-Or-Lose-It-Tendency
Alternate descriptor: Decay of unpracticed skills

Munger recommends practice of various intellectual skills,not just in themselves, but because each intellectual skill provides a “latticework of theory” through which to organize experience. Lose ,say, a particular mathematical skill, and you will lose that “doorway” to understanding experience.

20. Munger Descriptor: Drug-Misinfluence Tendency
Alternate descriptor: impaired judgment due to drugs

Munger’s entry on this one is short, but passionate. Drugs are a recipe for failure in life. I’d like to add that, from my on observations, I believe that there are many degrees of judgment impairment due to drug use, and that the ability to focus and concentrate is swiftly, and perhaps permanently impaired by drug use. I suspect that several generations of Americans have lost their edge due to drugs being available freely, and I don’t see a change in that profile anytime soon.

21. Munger Descriptor: Senescence-Misinfluence Tendency
Alternate descriptor: Mental deterioration with age

Mental agility will decline with age, but can be maintained with practice. Munger is, of course, correct: new research continues to come in about using both mental and physical exercise to maintain mental capacity in later years.

22. Munger Descriptor: Authority-Misinfluence Tendency
Alternate descriptor: Irrationally strong obedience to authority

People tend to follow authority, even though this obedience can produce negative results. Literal interpretation can produce tragic (or even darkly humorous, but disastrous) effects. Blind obedience can also produce horrors of immense magnitude (as in the Nazi-created Holocaust).

23. Munger Descriptor: Twaddle Tendency
Alternate descriptor: Tendency to say meaningless things. At length.

Much is said in our world that is meaningless, and it is often misconstrued to be meaningful. So much is meaningless that the volume of “twaddle” impairs our ability to go about our lives in meaningful ways. Munger exhorts us to make real effort to separate people and ideas that have meaning from his vast overload of people and ideas that, in fact, have little or no meaning or value.

24. Munger Descriptor: Reason-Respecting Tendency
Alternate Descriptor: People tend to comply when a reason, even a bad one, is given.

Munger hastens to remind us that he strongly believes that the use of the word “why”, and the use of a “latticework of theory” are invaluable in assimilating learning and experience. In general, his entire monograph is in favor of finding dispassionate reasoning processes. This particular mention of “Reason-Respecting Tendency” is to remind us that the word “reason” may not, in fact, be an adequate reason for anything, even if someone says it is.

25. Munger Descriptor: Lollapalooza Tendency
Alternate Descriptor: Multiple influences acting together can produce extreme consequences.

An example might be when one would jump to a conclusion due to both Availability- Misweighting (access to easily available data) and Doubt-Avoidance tendency (tendency to quickly remove doubt).