Saturday, February 6, 2010

Book Report: The Lucifer Effect

Absolutely terrifying, a must read. Zimbardo is the mad scientist behind the famed Stanford Prison Experiment (SPE) which took place in the 70s. A group of entirely typical and mentally stable college-aged kids were thrust into a mock-prison environment where they were rapidly transformed into sadistic prison guards and downtrodden prisoners. Set up in the basement of a Stanford building used as a mock-prison, participants were randomly assigned to roles: either inmates or guards. In mere days the "guards" became increasingly violent and abusive and it wasn't until Zimbardo's girlfriend and fellow psych researcher freaked out that the experiment was abruptly halted (after only one of the two planned weeks had been completed). Zimbardo uses his learnings from the SPE to help understand how horrors like Abu Ghraib, Darfur, and the Holocaust happen. The book challenges conventional thinking around the idea of free will. While we instinctively believe that we independently govern our own behavior, Zimbardo convincingly demonstrates how "the situation" dramatically influences your actions. While it's very hard to accept that you (yes you) could act terribly given the right pressures and environment you'd be hard pressed after reading this book to maintain that you're somehow immune.

While Zimbardo didn't write his book specifically for leaders/managers his work carries a valuable lesson. We the creators of the systems in which people work, live, and play, are responsible for systemic behaviors within our organizations. Placing blame for misdeeds primarily on "bad apples" (which is what the military effectively did with Abu Ghraib) is misguided when there is evidence of systemic problems (a "bad barrel"). The incentives we put in place, the small things we ignore, all send important signals through the chain of command. It's our duty to sweat the details and make sure the emergent behaviors at the other end are ones we're be proud of.

Sunday, August 2, 2009

Book Report: Pour Your Heart Into It

I suspect it's far more interesting to read this book today with 20/20 hindsight than it would have been when it was originally published about 10 years ago. Howard Schultz (CEO of Starbucks) penned this as the Starbucks brand was peaking. The book provides an interesting history of the company from birth to several years after their IPO, but indulges in a decent amount of "we did a kick ass job." We can all agree that the Starbucks team created an incredibly memorable brand that will sustain over the long haul, but it's meaning today is very disconnected from the vision Howard Schultz puts forth in the book.

To his credit, Howard writes candidly about the company's struggle to keep Starbucks grounded in it's premium coffee roots while trying to reach an ever more mainstream audience. At one important turning point in the company's early history, an influential member of the executive team succeeded in pushing the company towards a customer focus (as opposed to a product focus). This brings up an interesting question for all CEOs, should you be in the business of providing whatever a customer says they need? People like fats, sugars, and salts so if you're a food service organization should you load up your products with those things? It's an interesting question and one that pulls at the tension between delivering to your customer something you believe in vs something they'd happily buy. Howard laments the idea that anyone would ever compare Starbucks to McDonalds, yet today the two companies are now tellingly locked in a marketing battle. How do you stay true to your core while still continuing to meet the demands of Wall Street for eternal growth? 

Other books I've read recently...

Lives of Ants - Yes an odd choice for me, but an okay survey of the ant species. Not that exciting of a read, but I'll leave you with two fun takeaways: there are ant species that raise livestock (aphids) and others that raise crops (fungi). Crazy!

The Language Instinct - Pretty interesting (key elements of language are innate, children without language can create new full featured languages, theory of a universal system underlying all languages), but Pinker dives too deep and the book gets very technical and ultimately boring. I ended up skipping around and didn't reading everything... 

Sunday, April 26, 2009

Book Report: Animal Spirits - How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

Another econ book, guess I can't get enough of them these days. Due to Shiller's involvement I had high hopes, but found it pretty disappointing. I didn't get the sense that the authors really thought through who their audience might be. It seemed far too light for economists (even armchair ones) and maybe too advanced for a mainstream audience (though we'll have to watch the sales figures). 

The basic premise is that the core models on which we've long built macro economic theories are far too simplistic and therefore wrong. Markets of all types are influenced dramatically by "animal spirits" (aka human psychology) and we need to find ways to successfully incorporate this new understanding. The authors suggest that theirs is a unique insight and as a result we can finally understand why our macro econ models are so broken: "Our theory of animal spirits provides an answer to a conundrum: Why did most of us utterly fail to foresee the current economic crisis?"  I found this statement a bit too bold, shouldn't behavioral economics pioneers like Daniel Kahneman and Vernon Smith share in the credit? Also beyond a light weight discussion of their theory and it's grand implications there isn't much depth to back up their claims (though I'm not saying the ideas are wrong). Further research is left as an exercise to the reader or the current crop of grad students...

If you haven't been following the latest economic thinking since undergrad (and you went to undergrad 10+ years ago) you might find this book illuminating, otherwise I'd probably skip it.

Sunday, April 12, 2009

Book Report: The Rise and Decline of Nations

Finally finished this one, eek that took a while. Rise and Decline of Nations was dry as matzoh, but it did leave me with some ideas to chew on...

The basic theme is wonderfully simple: special-interest groups (aka distributional coalitions) are bad. Through influencing government policy and collective action (price fixing, etc) over time they manage to tax each of us, thereby reducing our wealth while increasing theirs (in an extremely inefficient way). 

One key takeaway for me was when Olson explained why consumers (like you and me) don't defend themselves against these groups...

Olson provides 9 implications of having special interest groups operate in a stable society over time (paraphrased more or less here): 

1. No country will obtain an optimal economic outcome through competition between groups since only those with something significant to gain by organizing (distributional coalition) are represented. 

2. Older stable societies have more special interest groups.

3. Small groups can organize easier and have more power in a newly formed societies.

4. Special interest groups on balance reduce economic efficiency and make political life divisive. 

5. Very large groups (encompassing) have some incentive to do what is best for society and are less damaging. 

6. Groups make decisions far more slowly than individuals.

7. Groups slow down society's ability to adjust to changing conditions and technologies, reducing economic growth. 

8. Once successful, a group seeks to limit diversity of incomes and values. They also work to restrict membership (to protect the value of the benefits obtained for each existing member).

9. More groups means more regulation and government involvement. 

Thursday, March 26, 2009

South Park on the Economy

Banker: How can I help you young man?

Stan: I got a hundred dollar check from my grandma and my Dad said I should put it in the bank so it can grow over the years.

Banker: Well thats fantastic, a really smart decision young man. We can put that check in a money market mutual fund that will reinvest the earnings into foreign currency accounts with compound interest... and it's gone.

Stan: Uh what?

Catch the full episode for some "gallows" humor.

Saturday, February 21, 2009

Book Report: Work Hard. Be Nice.

Another good book on some of the positive change now happening in the world of education. Jay Mathews tells the story of the founding and success of KIPP (Knowledge is Power Program) charter schools. Started in Houston about 15 years ago by two Teach for America teachers (Levin and Feinberg) the program has since grown to 66 schools in 19 states. KIPP has had considerable success boosting test scores and hence college preparedness of kids from underprivileged backgrounds.

Perhaps the most important takeaway is that change is not easy. Overcoming bureaucratic sclerosis (both in the world of education and most certainly anywhere else an old guard exists) is a serious challenge no matter how good your program or idea. In addition, great success also attracts great scrutiny and the book touches on the many probing questions raised by skeptical critics as KIPP schools and it's unique program became more widely known and celebrated. Fortunately, despite significant resistance and opposition KIPP continues to expand and looks poised to transform education for the better. 

After reading this text and Whatever it Takes I'm quite optimistic that the charter system will be ultimately hailed a roaring success. While there is still a long way to go, the program has clearly fostered creativity and experimentation in education, which was so badly needed. 

Monday, February 16, 2009