How I Made 12% Over Two Years by Sheer Procastinastion

Here is an update on a piece I wrote about gold fever in early 2011.  By failing to jump on the bandwagon, I made over 12% on my non-investment (i.e., I avoid losing it).

PS:  The guy I (fortunately) did not listen to worked for a celebrated hedge fund investor who made billions of dollars in 2007 by short selling sub-prime mortgages.

PPS: Check out the excellent comments on that post by Ian Thorpe, Guy Pfefferman, and April Harding.

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Fetishes in Successful Companies

Affluent companies and organizations often develop fetishes.  These fetishes are practices that get associated with the success of a company or organization, but which are only enabled by - rather than drivers of - the organization's affluence.  Sometimes these fetishes are harmless; they are uncorrelated with success and just a minor "tax" on the system.  Sometimes the correlation is actually negative, but the company is doing so well that no one in management or on staff realizes the impact on performance.

You can surely think of many examples of this - maybe even in your own organization.  Here is one example with a happy ending, however.  Google has been known from its earliest days for hiring people who are among the smartest in the world. The ways in which Google went about assessing candidates was legendary.  It asked for college transcripts and SAT scores, invited the "smartest" people tom come in for an interview, and then subjected the candidates to brainteasers such as:

• How much should you charge to wash all the windows in Seattle? 
• How many times a day does a clock’s hands overlap? 
• You are shrunk to the height of a nickel and your mass is proportionally reduced so as to maintain your original density. You are then thrown into an empty glass blender. The blades will start moving in 60 seconds. What do you do? 

As Google's revenues and stock price soared, so did the legend surrounding its staff selection process.  The impression was created - inside and outside Google - that that selection process was helping drive the company's success. (Some have even credited the free food in Google's cafeteria.)

But, alas, the selection process has turned out to have no predictive relationship to the actual performance of staff. Laszlo Bock, an SVP at Google, said: "We found zero correlation.  It's a complete random mess..."

This example is noteworthy because Google itself did the analysis, and in the process they turned a fetish into a hypothesis that was found to be wrong. Now Google is using what they call behavioral interviewing: “Give me an example of a time when you solved an analytically difficult problem.” This approach is a lot less clever than the brainteasers they used to prefer - but it seems to work much better.

(And, by the way, following these changes, Google now has teams where 14 percent of the members have never even been to college.)


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Complexity and Humility

The recognition of complexity is at its core a view of the world that that makes us more humble and more open. It is the awareness that too often our interventions will not achieve what we wanted and we will be shocked by unintended consequences. (The fact that, following the creation of the Cap-and-Trade Carbon Emission Scheme as a clever new artificial market, more coal is being burned in Europe than before is a mind-boggling example.) At the same time, it is the acknowledgement that simplistic “can do” thinking and linear approaches in organizations and markets, which are by definition complex, won’t be sufficient. And it is the prod to us to better understand why.

That is from a nice recent post by Ben Ramalingam.  He notes:

Of course we know [my note: a lot of leaders still don't!] that constantly dialing down expenses and investments to boost short-term margins inevitably damages the long-term health of the company. It takes a complexity approach to keep competing values and priorities and the effects of decisions on all of them in view — and not just for management, but equally for investors, analysts, and regulators.

And goes on to say:

There has been no watershed event to make it true that managers will apply complexity science to their work today, whereas they could not, or would not, yesterday. Rather, there has been a gradual change in mindset, pushed along by the increasingly evident damage of narrow, simplistic thinking. The toolkit that allows us to understand the dynamics of large systems has continued to evolve. And the reassuring truth has been reasserted that, on top of the logic of algorithms, human values and judgment are essential.

Managers, I think, should now get ready to face the full complexity of their organizations and economic environments and, if not control them, learn how to intervene with deliberate, positive effect. Embracing complexity will not make their jobs easier, but it is a recognition of reality, and an idea whose time has come.

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100 Days of Gratitude, Day 35 - Ibu Sophia

While I was living in Jakarta from 1987 to 1992, I was the luckiest person in the world.  Why?  Because I got to eat Ibu Sophia’s cooking every day.  I ate like a king – and many guests did as well.  During those years, I traveled all around the country and ate in food stalls, cheap restaurants, fancy restaurants, and many homes.    She was the best cook in Indonesia, hands down.

But she not only fed me.  Even though I was in my late 20s and early 30s, she looked after me like a mother.  Born in the Semarang area, probably in the 1930s, she had little formal schooling, but nonetheless had great curiosity about the world.

She loved having guests and finding out what they did. 

One night, we had General Olusegun Obesandjo, the former (elected) President of Nigeria, to dinner.   He was majestic in bearing and arrived in very colorful robes.  He ate a huge amount, and then he went into the kitchen.  I peeked in through the door. Though he could not speak her language he spent several minutes with Ibu Sophia, complimenting her cooking and even flirting.  When I asked her about it the next morning, she blushed deeply and said, "Where is he from?  What does he do?  He is a very interesting man."  

How grateful I am to have known – and been cared for – by Ibu Sophia.  She died last month, peacefully, surrounded by her family.  I will miss her.

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Leadership Principles 1-3

After spending the last decade in a start-up environment, I have recently joined the senior team at a more established global organization.  This has made me reflect on some things that I learned about leadership and management earlier in my career, when I was at a large organization.  Here are a few:

1. Good leaders help synthesize a compelling vision that motivates people and helps guide their action.
2. But good leaders don't just enunciate a vision; they also create a context that enables their teams to succeed.
3. Good leaders assemble teams with a variety of backgrounds and perspectives relevant to the opportunities and challenges at hand.  And then they create processes that enable these perspectives to be productively brought to bear as teams plan, debate, and execute.

More to come. I welcome your comments, corrections, and additions.

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Feedback Loops for Aid?

My dishwasher died over the holidays.

The first thing I did was go to Consumer Reports to find out what their experts considered the best bet for a replacement.  I was on the verge of ordering one of their top-ranked models when I decided to click on the “User Reviews” tab.  I was shocked to see that the model was ranked only 2.5 out of 5 stars by actual users.  Consumers had a wide range of complaints, describing how hard it was to load and the length of the wash cycle, and others complained the thing broke down too often.  So I kept going down the list of recommended models until I found one that the experts liked and the users loved, and then I went online and ordered it.  It was simple, and it took less than an hour.

What if governments – and even regular citizens – had a similar tool to use in development projects?  Or better yet – why don’t they?   Read more...

[Cross-posted from my blog at the Center for Global Development.]

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100 Days of Gratitude - Day 34: GlobalGiving Gang

[Cross-posted from the GlobalGiving Blog]

The other day a friend asked me to look back at my professional career and tell her what I was most proud of.

“What do you mean?” I asked.

“Well, you did all those multi-hundred million dollar projects at the World Bank in the 1980s and 1990s.  And then you were instrumental in creating the original Innovation and Development Marketplaces there.

“And now GlobalGiving has helped over 7,000 projects around the globe get $100+ million in funding from 300,000 donors and some of the most innovative companies in the world.  Plus, GlobalGiving is one of the few online giving platforms that has attained financial self-sustainability.  So which of those things are you most proud of?” she asked.

I paused, but only briefly.

“What I am most proud of is the team that we have built.  Every time I walk in the office I have an almost overwhelming sense of pride in the people there.  If you come visit some day, you will feel a hum in the large, wide-open space. People will be concentrating intensely, but periodically the room will be punctuated by laughter or by a bang on the office gong, signaling some milestone or breakthrough.

“If you keep watching, you will see that someone has hit a road block or has a question, and he will walk over to a colleague’s desk to ask for help.  The two of them will confer quietly. Someone else will look up from their work and come over to join the conversation. If you get closer, you will hear that the task at hand involves something that most teams would consider impossible.  And yet the problem gets solved, and the impossible is achieved – if not the same day, then the next day, or in any case soon.

“In the area where we have our weekly all-hands meetings, you will see what some team members have inscribed in big letters high on the wall:

ALWAYS OPEN

NEVER SETTLE

COMMITTED TO WOW

LISTEN=> ACT=> LEARN=> REPEAT

“Those are not just words – they really are the tenets that guide our actions and decisions day in and day out.

“They are the values that explain why the team can do exceptional things when others are stymied.

“They are the principles that explain why forty people can run and continually improve a platform that supports thousands of heroic project leaders and hundreds of thousands of donors in over one hundred countries.

“They are the reason why you ain’t seen nothing yet.  GlobalGiving has achieved a lot in its first ten years.  But just wait until you see what GlobalGiving does in the next decade.”

That’s what I told my friend.

Good ideas are a dime a dozen. Well-executed ideas are rare, and there is no team that can execute like the gang at GlobalGiving.  My deepest appreciation goes to everyone who has been on our team since we first opened our doors ten years ago. Thank you all for making me so proud.

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100 Days of Gratitude - Day 33: Tom Bird

Coach Tom Bird

From age ten, I was the oldest male in our household of six.  Maybe for that reason, I have never liked submitting to authority; since I had to figure out how to do so many things myself, I resisted others telling me what to do. Though I have had many great bosses, mentors, and friends along the way (many of them described in this Gratitude series), I never had a coach until I met Tom Bird.

Tom walked into our offices at GlobalGiving five or six years ago, seemingly a random introduction from a friend.  At first, I tried to figure out what he wanted. He had worked at a big medical company, then become a successful entrepreneur who built and sold a thriving records management business.  After that, he went to Harvard Divinity School.

"How can I help you?" I asked.

"Well, I'm just trying to figure out a way to do some good," Tom replied simply.  "So I'm here just to get your advice on how to do that."

Over the next hour, it became clear that the ratio of Tom's (intelligence + wisdom)/ego was off the  charts.  Plus, I had rarely ever met someone that I just personally liked so much.  To be honest, I am a little bit of a loner, and though I know a lot of people I don't have a lot of close friends.  Almost immediately, I wanted to have Tom as a friend.

After he left, I told Mari she needed to meet him, and after she did, we both knew we had to get him on our board.  He was gracious enough to accept.  Since our founding board chair Dave Goldwyn was about to finish his term, we soon found ourselves at lunch with Tom, asking him - despite the short 'dating' period, to consider taking on the chairmanship.  He asked to think about it for a few days, did some due diligence, and said yes.

It is difficult to exaggerate the contributions Tom made to GlobalGiving while he was chair (he just stepped down this year, though he remains on the board).  He brought an extraordinary combination of enthusiasm and ideas, together with realism and practicality.  He coached us on how to prudently run a  growing business, but also at every turn he urged us not to be constrained by conventional wisdom and to, above all, focus on social impact.  "You are trying to change the world here," he would say.  "And that means that despite all obstacles and setbacks you have to keep the faith and press ahead."

Tom's insights, advice, and encouragement were all key drivers of the milestones we've celebrated over the past eighteen months: financial self-sustainability; $100+ million in funding facilitated; and nearly 7,000 projects funded in over 110 countries by 300,000 individual donors and a long list of some of the world's most innovative and socially-oriented companies.

Almost all athletes know they need a coach - someone whom they trust to push them, sometimes hard, to achieve greater performances than they could achieve on their own.  Many business and non-profit leaders feel that they can (or should) do it all on their own, and I used to be that way, too.  Fortunately, a few years back I found a coach -  a great one - in Tom Bird.  That made a huge difference in my life, and for that I am most grateful.


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100 Days of Gratitude - Day 32: Guy Pfeffermann

Guy Pfeffermann

Bill Drayton of Ashoka describes social entrepreneurs as people who "to the core of their being, [are] committed to serving the good of all."

Nothing better describes Guy Pfeffermann, but it took me years to realize it. I first met him at the World Bank in the mid-1990s, and I recall vividly how annoyed I was by his iconoclasm.

The bank, like many organizations, had a strong culture that dictated how we wrote, how we talked, and how we acted.  This culture guided and constrained the narratives we constructed in our work.  But in meetings Guy was constantly straying from these narratives, flouting the well-trodden and predictable analytical grooves (ruts) that scripted our discussions.  He insisted on using plain words instead of our jargon, he told seemingly pointless stories, and he had no reservations about laughing out loud at some absurdity.

From my point of view, this was annoying, because it impeded the flow and predictable outcome of the meetings, hence delaying our work.  It was all the more strange since Guy was the Chief Economist of the bank's private sector arm, the International Finance Corporation.

Over time, Guy's determination to always look at the world with fresh eyes started to grow on me, but I was not totally won over. When Mari suggested that we ask Guy to be on our board at GlobalGiving in 2003, I was polite but skeptical.  Yet doing a start-up like GlobalGiving requires nothing more than a fresh set of eyes, and Guy's perspective became a strong guiding force for us in the following years.  When we struggled with business challenges, Guy was always the first to remind us why we had left the bank to start GlobalGiving in the first place.  I credit him with keeping us focused on our mission through rocky times.

Guy is proof that entrepreneurial ventures can come late in life.  In 2003, after he retired from the World Bank - where he had worked for nearly forty years! - he was not content to go quietly into a comfortable retirement.  During his career, he had noticed that students in the developing world had very poor access to good business training, so he decided to address this by creating and launching the Global Business School Network.  GBSN matches top-tier business schools in richer countries with ambitious business schools in poorer countries.

The other day, about fifteen years after we first me, Guy took me to lunch to discuss some of his own challenges with getting GBSN to the next level. I tried to help him in the same way he had helped me nearly a decade before. As we settled the bill and left the restaurant, I realized that there are few people in the world with whom I would rather have spent the last hour.  Guy has shown me what it's like to being committed, really committed, to serving the good of all.  And for that, I am very grateful.

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100 Days of Gratitude - Day 31: Peter Iver Kaufman

Peter Kaufman

"Excuse me, Professor, but is that tie 100% polyester or just 90%?"

Those were my first words to Peter Kaufman back in 1980.  My girlfriend thought he was the cat's meow, and she had dragged me to one of his religious studies classes at the University of North Carolina, where I was a sophomore. The class discussion was lively but seemed ridiculous to me. It had little to do with religion; Peter just kept badgering us about how we knew what we were saying was true.

The whole thing was incredibly irritating, and it was not helped by the tie Peter was wearing, which was shiny, wide, and garish.  Hence my wise-acre challenge to him at the end of class.

"What do you mean?" he exclaimed, and looked down at his tie, brushing at a stain.  "What's wrong with this?" he said and brushed at the stain a few more times.

"Well it looks like something from about 1968," I replied.

"Maybe it is, maybe I got it for my college graduation," he said, with a twinkle in his eye. And he brushed at it again.

And thus began my relationship with one of my greatest professors, mentors, and friends. Eventually I became a religious studies major (the most unlikely of majors for me), and he pushed, pushed, pushed me to do all sorts of crazy things, including traveling around the world one semester while taking all my courses on a self-study basis.

A few years ago, I got a call from an organization in Texas.  The director said, "We like the work you are doing at GlobalGiving, and we want to give an award to the person who taught you how to be an entrepreneur. Can you send us his name and bio?"

Without hesitation, I sent them Peter's bio, and after a few days they called me back.  "Are you sure you sent us the right person?  This seems to be a religious studies professor who has written books like Thinking of the Laity in Late Tudor England."

"Oh, don't be fooled by that," I replied.  "He only writes those things to jump through the hoops he needs to be a professor.  What he really does is bug the crap out of his students to convince them not to accept conventional wisdom, and to look at the world in different ways. Surely that is what entrepreneurship is all about, isn't it?"

They agreed and gave him the award.  Characteristically, Peter turned it down (or tried to - I never found out what happened).

Peter taught at UNC-Chapel Hill for thirty years, during which time he won so many teaching awards it got monotonous.  In 2008, the University of Richmond's Jepson School stole him away to become the George Matthews and Virginia Brinkley Modin Professor of Leadership Studies.  Before leaving for Richmond, Peter decided to become a traditional entrepreneur himself at age 60-something, launching the Scholars Latino Initiative to advance the idea that all students, no matter their background, should be able to have access to a college education.

I have seen Peter a couple of times in the last few years and can confirm that his ties have changed - they are now only years rather than decades behind the current fashion, and they sport a much higher natural fiber content.  But one thing has not changed.  Peter is still his irascible self, urging his students, his peers, and above all himself to never accept the status quo, and to see the world in new ways.

Over the years, Peter has affected the lives of thousands of students - including mine, in fundamental ways - and the actions of those thousands of students have in turn improved the lives of hundreds of thousands or maybe millions of people.  For that, I am grateful - we should all be.



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