Business & Management Books Review

The Subtle Art of Not Giving A F*ck

2024-10-29T00:08:00.003-07:00

The title of this book is certainly eye catching and Netflix even made a film of it. Oh well, I am attracted to the title especially post Covid where one's perspective on life certainly changes. Whether one's approach to life will change permanently post Covid or it is only temporary, only time will tell. Anyway, for me, this book does offer some insights or rather reminders on how we can approach life. I would think that everyone's take on life would be different and this Author just give you his take on his approach.

For me, this book is suitable for casual reading, e.g. while stuck in the airport or on a lazy Sunday afternoon just to remind us that sometimes, we don't have to take things too seriously. Anyway, as usual, the followings are some excerpts from the book which I find illuminating (Words in blue are mine):

1) A confident man doesn't feel a need to prove that he's confident. A rich woman doesn't feel a need to convince anybody that she's rich. Either you are or you are not.

2) Albert Camus: "You will never be happy if you continue to search for what happiness consists of. You will never live if you are looking for the meaning of life."

3) "Don't hope for a life without problems. There's no such thing. Instead, hope for a life full of good problems."

4) True happiness occurs only when you find the problems you enjoy having and enjoy solving.

5) What determines your success isn't, "What do you want to enjoy?" The relevant question is, "What pain do you want to sustain?" The path to happiness is a path full of shitheaps and shame. (A lot of people trying out in either sports, business, career, etc. should remember this point. It is easy to enjoy things that you like but to be successful in any endeavour, it is how much you are willing to suffer for it.)

6) ......our struggles determine our successes.

7) If you want to change how you see your problems, you have to change what you value and/or how you measure failure/success.

8) When we feel that we're choosing our problems, we feel empowered. When we feel that our problems are being forced upon us against our will, we feel victimized and miserable.

9) .....we, individually, are responsible for everything in our lives, no matter the external circumstances. (Have you ever met people who blamed others for their lives with statement such as "If only my parents are rich, If only I am born taller, If only I have better superiors/bosses, etc.??)

10) Accepting responsibility for our problems is thus the first step to solving them.

11) Many people may be to blame for your unhappiness, but nobody is ever responsible for your unhappiness but you. This is because you always get to choose how you see things, how you react to things, how you value things. You always get to choose the metric by which to measure your experiences.

12) Many people become so obsessed with being "right" about their life that they never end up actually living it.

13) ......weird but true: we don't actually know what a positive or negative experience is. Some of the most difficult and stressful moments of our lives also end up being the most formative and motivating. (An open minded approach to life?)

14) Evil people never believe that they are evil; rather, they believe everyone else is evil.

15) .....the more you try to be certain about something, the more uncertain and insecure you will feel. But the converse is true as well: the more you embrace being uncertain and not knowing, the more comfortable you will feel in knowing what you don't know.

16) The more we admit we do not know, the more opportunities we gain to learn.

17) "No, ma'am," Picasso said. "It took me over sixty years to draw this." (This is about a story where a woman asked Picasso for the napkin in which he was drawing on in a cafe in Spain. The woman said that she will pay for it and Picasso replied "Sure, it will be twenty thousand dollars.". Of course, the woman is shocked and said that it is too much for something which Picasso only spend like two minutes to draw it and the above is how Picasso replied. This of course, strikes a chord in me being in the engineering consulting business as many a time, people don't realize that certain skills require many years of experience, time and sacrifice before reaching the required level of competency.)

18) We can truly be successful only at something we're willing to fail at. If we're unwilling to fail, then we're unwilling to succeed.

19) If you lack the motivation to make an important change in your life, do something - anything, really - and then harness the reaction to that action as a way to begin motivating yourself. (Just do it!!!)

20) Entitled people, because they feel as though they deserve to feel great all the time, avoid rejecting anything because doing so might make them or someone else feel bad. And because they refuse to reject anything, they live a valueless, pleasure-driven, and self-absorbed life. (I have certainly seen my fair share of people who only wants to make good decisions. For example, their recommendations would be everyone should get good salary increments or bonuses so that everyone can be happy without offering how to do it within the reality of a fixed budget.)

21) Consumer culture is very good at making us want more, more, more. Underneath all the hype and marketing is the implication that more is always better. I bought into this idea for years. Make more money, visit more countries, have more experiences, be with more women.

But more is not always better. In fact, the opposite is true. We are actually often happier with less.

22) We are all aware on some level that our physical self will eventually die, that this death is inevitable, and that its inevitability - on some unconscious level - scares the shit out of us. Therefore, in order to compensate for our fear of the inevitable loss of our physical self, we try to construct a conceptual self that will live forever. This is why people try so hard to put their names on buildings, on statues, on spines of books. It's why we feel compelled to spend so much time giving ourselves to others, especially to children, in the hopes that our influence - our conceptual self - will last beyond our physical self. That we will be remembered and revered and idolized long after our physical self ceases to exist.

23) .......all the meaning in our life is shaped by this innate desire to never truly die.

24) How will the world be different and better when you're gone? What mark will you have made? What influence will you have caused?

In summary, this book serves as a reminder that we should truly live the life based on our own values and ask ourselves the question whether we regretted/enjoyed the way we live our life when our short journey/adventure in this life is coming to an end? We have to stop living the life based on other's dreams or what was shoved into our head by mainstream media, social media, marketing, etc. Sometimes, we just gotta not give a f*ck to those things which do not conform to our values. Happy living!

Grinding It Out: The Making of of McDonald's by Ray Kroc with Robert Anderson

2017-10-12T17:24:00.001-07:00

This is an old book which is first published in 1977 and that was before I was even born!!! Nobody though can argue that the lessons and wisdoms by Ray Kroc is out of place in the modern world. In fact, the book is an apt reminder that we need to put in hard work and persistence in all our ventures as the title of the book "Grinding it out" suggests. We can certainly agree that it seems that everyone is only interested in quick ventures and the old fashion way of working hard and "grinding it out" seems to be out-of-fashion. Ray Kroc is certainly inspiring as he starts working on his McDonald ventures at the age of 52 where most of us are probably planning for our retirement. Well, he certainly did not retire at age 55 or 60 and in fact continued working actively (not just as a figurehead) until he died of heart failure on January 14, 1984 at age 82. Reading this book is so easy (in fact, I completed it in Senai Airport while waiting for my flight home) and just by reading his book you can feel the passion and energy of the man who brought us perhaps the most recognizable restaurant chain in the world and also a place which most of us have fond memories of. And by coincidence that I have just completed reading the book on Google prior to this, I find that the success of both organizations can be attributed to one single powerful factor: The power of open collaboration. Both Google and McDonald are receptive to ideas from its users/advertisers (Google) and customers/franchisees (McDonald) and it is through such exponential source of ideas and acting on those feedbacks which enabled both companies to grow exponentially. This book is certainly one of the must-read books which a father passes to his son to learn important life lessons as well.

The following are some excerpts from the book which I hope you will find useful (Words in blue are mine):

1) A little bit of luck helps, yes, but the key element, which too many in our affluent society have forgotten, is still hard work - grinding it out.

2) "As long as you're green you're growing, as soon as you're ripe you start to rot."

3) But you have to take risks, and in some cases you must go for broke. If you believe in something, you've got to be in it to the ends of your toes. Taking reasonable risks is part of the challenge. It's the fun." (You got to have such spirit if you wish to be an entrepreneur)

4) A good executive does not like mistakes. He will allow his subordinates an honest mistake once in a while, but he will never condone or forgive dishonesty.

5) But perfection is very difficult to achieve, and perfection was what I wanted in McDonald's. Everything else was secondary for me.

6) I believe that if you hire a man to do a job, you ought to get out of the way and let him do it.

7) A well-run restaurant is like a winning baseball team, it makes the most of every crew member's talent and takes advantage of every split-second opportunity to speed up service.

8) You must perfect every fundamental of your business if you expect it to perform well.

9) He has a narrow vision that allows him to see income only in terms of cash in his register. Income for me can appear in other ways; one of the nicest of them is a satisfied smile on the face of a customer. That's worth a lot, because it means that he's coming back, and he'll probably bring a friend. A child who loves our TV commercials and brings her grandparents to a McDonald's gives us two more customers. This is a direct benefit generated by advertising dollars. But the begrudger has a hard time appreciating this - he wants to have his cake and eat it too. (Remember to always think long-term)

10) The begrudger regards competition with envy. He wants to learn their secrets and, if possible, undermine them. He'll often go out of his way to give the competition a bad name. (Don't be a begrudger!!!)

11) My way of fighting the competition is the positive approach. Stress your own strengths, emphasize quality, service, cleanliness, and value, and the competition will wear itself out trying to keep up.

12) "Listen, Harry, you don't know me, so I am going to forgive you for that," I said. "But let's get this straight, once and for all. I want nothing from you but a good product. Don't wine me, don't dine me, don't buy me any Christmas presents. If there are any cost breaks, pass them on to the operators of McDonald's stores."

13) I maintained that authority should go with a job. Some wrong decisions may be made as a result, but that's the only way you can encourage strong people to grow in an organization. Sit on them and they will be stifled. The best ones go elsewhere.

14) I believe that less is more in the case of corporate management; for its size, McDonald's today is the most unstructured corporation I know, and I don't think you could find a happier, more secure, harder working group of executives anywhere.

15) There is a cross you must bear if you intend to be head of a big corporation: you lose a lot of your friends on the way up. It's lonely on top.

16) "Hell's bells, when times are bad is when you want to build!" I screamed. "Why wait for things to pick up so everything will cost you more? If a location is good enough to buy, we want to build on it right away and be in there before the competition. Pump some money and activity into a town, and they'll remember you for it." (If you are confident in your product and have carried out the necessary homework, one should be brave when others are fearful. Sounds familiar?)

17) "Nothing recedes like success. Don't let it happen to us or you."

18) I believe that if you think small, you'll stay small. (Remember to think big! And put actions into the thinking otherwise thinking big alone is also known as day dreaming!)

19) But of course, where McDonald's is concerned, I favor the high side. Fred Turner does, too, and I like his thinking on it, which is that business will expand to tax the facilities provided. In other words, if you have a few extra feet of griddle and an extra fry station, or if you install one more cash register than existing business requires, you'll be challenged to put them to use.

20) There is a common fallacy that money will solve problems. It won't. Money creates problems, and the more you have, the bigger the problems, not the least of which is how to spend it wisely.

21) "I believe that if two executives think the same, one of them is superfluous." (Don't get yes-men in your team)

22) ...... getting out of the kitchen if you can't stand the heat. (Quote from President Harry Truman on pros and cons of every profession. Complaining about it won't help one bit!)

23) "Press On: Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent."

24) You have to learn to know the joy of "working and being let work."

25) Achievement must be made against the possibility of failure, against he risk of defeat. It is no achievement to walk a tightrope laid flat on the floor. Where there is no risk, there can be no pride in achievement and, consequently, no happiness. The only way we can advance is by going forward, individually and collectively, in the spirit of the pioneer. We must take the risks involved in our free enterprise system. This is the only way in the world to economic freedom. There is no other way.

I just Googled it and found that at the end of 2016, there are actually 36,899 McDonald's in the world! At the time of writing the book, there are about 4,177 stores at the end of 1976 and Ray Kroc was thinking of 10,000 even then. I guess even he may be surprised how much it has grown since then but this is testament to the organization which he has left behind that it has continued to grow at such phenomenal rate even when he is no longer around. The legacy which he left behind affects the entire world and we possibly will never see another Ray Kroc in our lifetime and for that, we have to appreciate the tenacity and foresight of the man who gave us the golden arch restaurant.

Google - How Google Works

2017-10-09T02:33:00.001-07:00

After a two years hiatus welcoming and taking care of my two little precious ones, it is good to kick-start back the blog with an excellent book by Eric Schmidt & Jonathan Rosenberg (with Alan Eagle) titled "Google - How Google Works". I guess this book is important especially after becoming a father as Google has practically changed our way of life and that includes the relationship between parents and their children. I guess our children would no longer look at parents as their primary source of information and Google is certainly part of our everyday live. Google has practically transformed how we use information and as such, this book gives us an insight on how it has become one of the major disruptor (for the better, in my opinion) and most valuable company in the world.

As usual, the following are some of the excerpts (words in blue are my own opinion) from the book which I hope you will find useful:

1) .....the founders ran it on a few simple principles, first and foremost of which was to focus on the user. They believed that if they created great services, they could figure out the money stuff later. If all they did was create the world's best search engine, they would be very successful.

2) .....best way to achieve that excellence was not via a prescribed business plan, but rather by hiring the very best engineers we could and then getting out of the way. (I guess this is important in the new way information is made accessible to almost anyone. With the speed of innovation that is happening, the winner would be those that can adapt and innovate the fastest and as such, a company should cultivate a culture of constantly adapting and evolving. By hiring the best and let the best mind work with a high degree of autonomy are important in the knowledge economy because let's face it, the older executives can't keep up with the fast changes that are happening in terms of technology innovation, popular culture, consumer tastes, new ways of working, etc.)

3) .....most knowledge workers in traditional environments develop deep technical expertise but little breadth, or broad management expertise but no technical depth. (The challenge now is to be adaptable. This is why it is important to get a solid technical education as this needs many years of formal education while management expertise can be developed from working experience as long as the technical person approaches work with an open mind and accepts challenges. One of the challenges faced by technically inclined worker is the inability to work well in a team, i.e. lack of social skills and this aspect needs to be emphasized in science and technology education)

4) .....multidimensional, usually combining technical depth with business savvy and creative flair..............a "smart creative", and they are the key to achieving success in the Internet Century.

5) Not every smart creative has all of these characteristics, in fact very few of them do. But they all must possess business savvy, technical knowledge, creative energy, and a hands-on approach to getting things done. Those are the fundamentals.

6) (On managing smart creative) It is also why they are uniquely difficult to manage, especially under old models, because no matter how hard you try, you can't tell people like that how to think. If you can't tell someone how to think, then you have to learn to manage the environment where they think. And make it a place where they want to come every day.

7) .....when starting a new company or initiative, culture is the most important thing to consider. (And you must live it too! What kind of culture you envisage for your company? Is it a highly systematic organization with fixed working hours? If that is the culture, you must also follow the culture. If you envisage a flexible and creative working environment where opinions from all levels of the organization are welcomed, you must be willing to listen and consider all opinions and to take all the opinions seriously and act on the good ones)

8) So ask the team: What do we care about? What do we believe? Who do we want to be? How do we want our company to act and make decisions? Then write down their responses.

9) The difference, though, between successful companies and unsuccessful ones is whether employees believe the words.

10) Offices should be designed to maximize energy and interactions, not for isolation and status. Smart creatives thrive on interacting with each other. The mixture you get when you cram them together is combustible, so a top priority must be to keep them crowded.

11) For a meritocracy to work, it needs to engender a culture where there is an "obligation to dissent".

12) ....."it doesn't matter who you are, just what you do." (On meritocracy in Google)

13) And whenever possible, avoid secret organizational documents.

14) Debbie Biondolillo, Apple's former head of human resources, who said, "Your title makes you a manager. Your people make you a leader."

15) You want to invest in the people who are going to do what they think is right, whether or not you give them permission. You'll find that those people will usually be your best smart creatives.

16) When a CEO looks around her staff meeting, a good rule of thumb is that at least 50 percent of the people at the table should be experts in the company's products and services and responsible for the product development. This will help ensure that the leadership team maintains focus on product excellence. Operational components like finance, sales, and legal are obviously critical to a company's success, but they should not dominate the conversation.

17) And generally, in our experience, once a knave, always a knave. (Tom Peters: "There is no such thing as a minor lapse of integrity.") (Google's stand on the standard they aim to set for their employees)

18) But as long as their contributions match their outlandish egos, divas should be tolerated and even protected. Great people are often unusual and difficult, and some of those quirks can be quite off-putting.

19) Marrisa Mayer, who became one of Silicon Valley's most famous working mothers not long after she took over as Yahoo's CEO in 2012, says that burnout isn't caused by working too hard, but by resentment at having to give up what really matters to you.

20) A stagnant, overly "corporate" culture is anathema to the average smart creative.

21) When Israeli tank commanders head into combat, they don't yell "Charge!" Rather, they rally their troops by shouting "Ah'cha'rye," which translates from Hebrew as "Follow me."

22) Leadership requires passion. If you don't have it, get out now.

23) .....a venture capitalist will always follow the maxim of investing in the team, not the plan.

24) .....foundational blueprint for how to create an Internet Century success story: Bet on technical insights that help solve a big problem in a novel way, optimize for scale, not for revenue, and let great products grow the market for everyone.

25) Giving the customer what he wants is less important than giving him what he doesn't yet know he wants.

26) When customers have low barriers to exit, you have to work to keep them.

27) Larry again: "Obviously we think about competition to some extent. But I feel my job is mostly getting people not to think about our competition. In general I think there's a tendency for people to think about the things that exist. Our job is to think of the thing you haven't thought of yet that you really need. And by definition, if our competitors knew that thing, they wouldn't tell it to us or anybody else."

28) Be proud of your competitors. Just don't follow them.

29) For a manager, the right answer to the question "What is the single most important thing you do at work?" is hiring.

30) The higher up you go in most organizations, the more detached the executives get from the hiring process. The inverse should be true.

31) A workforce of great people not only does great work, it attracts more great people.

32) When people are talking about their professional experience, they know the right answers to these questions - most people don't like a loner in the work environment. But when you get people talking about their passions, the guard usually comes down and you gain more insight into their personalities. (On hiring questions)

33) Henry Ford said that "anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young. The greatest thing in life is to keep your mind young."

34) You must work with people you don't like, because a workforce comprised of people who are all "best office buddies" can be homogeneous, and homogeneity in an organization breeds failure. A multiplicity of viewpoints - aka diversity - is your best defense against myopia.

35) Expanding the aperture brings risks. It leads to some failures, and the start-up costs for hiring a brilliant, inexperienced person are higher than those of hiring a less-brilliant, experienced one. The hiring manager may not want to bear the costs, but such concerns need to be set aside for the greater good. Hiring brilliant generalists is far better for the company.

36) When you completely delegate recruiting, quality degrades.

37) CEOs, professors, and venture capitalists always (correctly) preach the primacy of people when it comes to success,......

38) Committees should have enough members to allow a good range of viewpoints, but should be small enough to allow an efficient process; four or five is a pretty good number. The best composition promotes a wide variety of perspectives, so aim for diversity: in seniority, in skills and strengths (since people will often favor people cut in their own mold), and in background.

39) Some managers want absolute control over building their teams. When we instituted the committee system, some people hated it and even threatened to leave. That's OK. If someone cares that much about having absolute control over their team, perhaps you don't want them around. Dictatorial tendencies rarely contain themselves to just one aspect of work.

40) The urgency of the role isn't sufficiently important to compromise quality in hiring.

41) Top performers get paid well in athletics, and they should be in business too. If you want better performance from the best, celebrate and reward it disproportionately.

42) Pay outrageously good people outrageously well, regardless of their title of tenure. What counts is their impact.

43) ..... getting great work out of the best performers outweighs any team problems from perceived unfairness.

44) Do the best thing for the person and make the organization adjust. (On accommodating smart creatives)

45) Because people seldom leave over compensation, the first step to keeping them is to listen. They want to be heard, to be relevant and valued.

46) The first thing you should do when a valuable employee tells you he is leaving is try to change his mind. The second is congratulate him on the new job and welcome him to your company's alumni network.

47) When people are right out of school, they tend to prioritize company first, then job, then industry. But at this point in their career that is exactly the wrong order. The right industry is paramount, because while you will likely switch companies several times in your career, it is much harder to switch industries.

48) The answer lies in understanding that when it comes to making decisions, you can't just focus on making the right one. The process by which you reach the decision, the timing when you reach it, and the way it is implemented are just as important as the decision itself. Blow any of these, and the outcome will likely be negative.

49) "Visual reasoning usually works more effectively when relevant information is shown side by side. Often, the more intense the detail, the greater the clarity and understanding." (Tips on effective presentations)

50) If you are in charge, do not state your position at the outset of the process. The job is to make sure everyone's voice is heard, regardless of their functional role, which is harder to achieve when the top do puts a stake in the ground. (This is very important if you want constructive opinions from your team instead of having yes men agreeing to your decisions which is useless aside from inflating your own ego)

51) The job of the decision-maker, then, is to get the timing just right. Exhibit a bias for action, to cut off debate and analysis that is no longer valuable, and start moving the team to rally around the decision. But don't be a slave to a sense of urgency. Maintain flexibility until the last possible moment.

52) So a key skill to develop as the CEO or senior leader in a company is to know which decisions to make and which to let run their course without you.

53) There is a mistake technical and scientific people make. We think that if we have made a clever and thoughtful argument, based on data and smart analysis, then people will change their minds. This isn't true. If you want to change people's behavior, you need to touch their hearts, not just win the argument.

54) (Rules for meetings):

a) Meetings should have a single decision-maker/owner.

b) The decision-maker should be hands-on.

c) Even if a meeting is not a decision-making meeting - for example it's designed to share information or brainstorm solutions - it should have a clear owner.

d) Meetings are not like government agencies - they should be easy to kill.

e) Meetings should be manageable in size.

f) Attendance at meetings is not a badge of importance.

g) Timekeeping matters.

h) If you attend a meeting, attend the meeting.

55) You have to focus on your core business. You have to love it.

56) Bill Gates in 1999: "Power comes not from knowledge kept but from knowledge shared. A company's values and reward system should reflect that idea." Leadership's purpose is to optimize the flow of information throughout the company, all the time, every day.

57) One of Eric's most basic rules is sort of a golden rule for management: Make sure you would work for yourself.

58) The best tool we have found for this is the self-review: At least once per year, write a review of your own performance, then read it and see if you would work for you. And then, share it with the people who do in fact work for you. (May be difficult to get honest feedback in Asian companies but at least the first part would help in our review of our own performance)

59) An important first step in managing a successful partnership is to acknowledge those differences and assume that they are here to stay.

60) Champion racecar driver Mario Andretti: "If everything seems under control, you're just not going fast enough." (A little bit of stress never kills! In fact, my CEO always quote a study on animals which showed that animals without stress die faster!)

61) And don't forget to make people smile. Praise is underused and underappreciated as a management tool. When it is deserved, don't hold back.

62) As business managers, we like to manage things. Want something done? Then put someone in charge of it. But innovation stubbornly resists traditional, MBA-style management tactics. Unlike most other things in business, it cannot be owned, mandated, or scheduled.

63) Google knows that in the Internet Century user trust is just as important as dollars, euros, pounds, yen, or any other currency. Product excellence is the only way for a company to be consistently successful, so our prime directive when it comes to product strategy is to focus on the user.........

64) ..... Steve Jobs maxim that "you have to be run by ideas, not hierarchy."

65) Voltaire wrote, " The perfect is the enemy of the good." Steve Jobs told the Macintosh team that "real artists ship". New ideas are never perfect right out of the chute, and you don't have time to wait until they get there. Create a product, ship it, see how it does, design and implement improvements, and push it back out. Ship and iterate. The companies that are the fastest at this process will win. (Don't interpret the message wrongly. It is not an excuse to ship out lousy products or services. Just don't aim for perfection as nothing is perfect in this world!)

66) To innovate, you must learn to fail well. Learn from your mistakes.........

67) And don't stigmatize the team that failed: Make sure they land good internal jobs.

68) Management's job is not to mitigate risks or prevent failures, but to create an environment resilient enough to take on those risks and tolerate the inevitable missteps.

69) As Dilbert cartoonist Scott Adams says, "It helps to see failure as a road and not a wall. Mulla Nasrudin, the thirteenth-century wise fool of Sufi lore, seconds the notion: "Good judgment comes from experience: experience comes from bad judgment."

In summary, there is so much to learn from Google and I am sure Google will be studied for a long time in management courses. The recurring theme from the book is certainly the positivity surrounding the company and how it embraces innovation. For innovation to thrive, brave and open-minded management is a must and the last excerpts quoting Dilbert cartoonist and Mulla Nasrudin would serve any CEOs well in their quest to build great and sustainable company.

Good luck and all the best!

Antifragile - Things That Gain from Disorder by Nassim Nicholas Taleb

2015-08-09T08:05:00.002-07:00

Nassim Nicholas Taleb's (Author of The Black Swan) works are always thought provoking and not your normal mainstream stuff such as how to get rich quick, how to be happy, bla bla bla. His works often lead us to ask more questions and challenge the so-called conventional wisdom. This is why he is one of my favourite author and one will always look at the world differently after reading his book. In his latest work, as the title suggests, it is about things that gain from volatility, disorder or chaos and he has made it clear that it is not robust. Robust simply means that it can withstand volatility, disorder or chaos, whereas antifragile (a term coined by Nassim) is about things that GAIN from volatility, disorder or chaos. Sounds interesting? It also made an argument about the intervention from policy makers and politicians in an attempt to regulate the economy which usually results in making the conditions worse. In the book, Nassim highlights it is important to be antifragile in order to benefit from disorder rather than be fragile, i.e. appears to be beneficial in the short-term but is unable to withstand disorder and collapse at the first instance of volatility. For example, it is fragile if you are making small gain in the share market, say for 3 years and the moment a financial crisis such as what occurred in 2008 appears, you lose your entire fortune and even maybe more.

I don't think I am doing the book a favour by summarising its contents here but as what Nassim himself said in the book, every sentence in the book was a derivation, an application, or an interpretation of the short maxim: Everything gains or loses from volatility. Fragility is what loses from volatility and uncertainty. The followings are some excerpts from the book which I am sharing (words in blue are mine):

1) Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile.

2) And we can almost always detect antifragility (and fragility) using a simple test of asymmetry: anything that has more upside than downside from random events (or certain shocks) is antifragile; the reverse is fragile.

3) .....depriving systems of stressors, vital stressors, is not necessarily a good thing, and can be downright harmful. (The point here is a little bit of stress or harm to our body, life, etc. is not a bad thing as it build up resistance)

4) How do you innovate? First, try to get in trouble. I mean serious, but not terminal, trouble.

5) It is quite perplexing that those from whom we have benefited the most aren't those who have tried to help us (say with "advise") but rather those who have actively tried - but eventually failed - to harm us.

6) In a natural environment, people die without aging - or after a very short period of aging. For instance, some markers, such as blood pressure, that tend to worsen over time for moderns do not change over the life of hunter-gatherers until the very end. (Here, the author is trying to point out that symptoms of aging such as high blood pressure is a result of modern lifestyle)

7) For an illustration of how families of organisms like harm in order to evolve (again, up to a point), though not the organism themselves, consider the phenomenon of antibiotic resistance. The harder you try to harm bacteria, the stronger the survivors will be - unless you can manage to eradicate them completely. The same with cancer therapy: quite often cancer cells that manage to survive the toxicity of chemotherapy and radiation reproduce faster and take over the void made by the weaker cells.

8) You may never know what type of person someone is unless they are given opportunities to violate moral or ethical codes.

9) He who has never sinned is less reliable than he who has only sinned once. And someone who has made plenty of errors - though never the same error more than once - is more reliable than someone who has never made any. (Would you trust someone who has never made any error? That person is most likely to be a person who never make big decisions and avoid decision making just to make himself look good)

10) Variations also act as purges. Small forest fires periodically cleanse the system of the most flammable material, so this does not have the opportunity to accumulate. Systematically preventing forest fires from taking place "to be safe" makes the big one much worse. For similar reasons, stability is not good for the economy: firms become very weak during long periods of steady prosperity devoid of setbacks, and hidden vulnerabilities accumulate silently under the surface - so delaying crises is not a very good idea. (I guess the same applies to exposing children to germs and small illnesses. Parents should not be over-protective which may end up making their children "fragile")

11) In business and economic decision making, reliance on data causes severe side effects - data is now plentiful thanks to connectivity, and the proportion of spuriousness in the data increases as one gets more immersed in it. A very rarely discussed property of data: it is toxic in large quantities - even in moderate quantities. (Remember the saying: Too much of a good thing is BAD!)

12) ..... statement by the financier Warren Buffet that he tries to invest in businesses that are "so wonderful that an idiot can run them. Because sooner or later, one will."

13) Success brings an asymmetry: you now have a lot more to lose than to gain. You are hence fragile. (This sometimes explain why big corporations loses their competitive edge to smaller, more nimble competitors - partly it is due to smaller companies taking bigger risk and sometimes, the risk pays off)

14) When you become rich, the pain of losing your fortune exceeds the emotional gain of getting additional wealth, so you start living under continuous emotional threat. (There is optimum amount for everything. Moderation is key - even for money)

15) An intelligent life is all about such emotional positioning to eliminate the sting of harm, which as we saw is done by mentally writing off belongings so one does not feel any pain from losses. The volatility of the world no longer affects you negatively.

16) The fragility that comes from path dependence is often ignored by businessmen who, trained in static thinking, tend to believe that generating profits is their principal mission, with survival and risk control something to perhaps consider - they miss the strong logical precedence of survival over success. To make profits and buy a BMW, it would be a good idea to, first, survive.

17) ..... if something is fragile, its risk of breaking makes anything you do to improve it or make it "efficient" inconsequential unless you first reduce that risk of breaking.

18) Georges Simenon, one of the most prolific writers of the twentieth century, only wrote sixty days a year, with three hundred days spent "doing nothing." He published more than two hundred novels. (Focus is very important. Do not equate busyness with productivity - http://businessmanagementbooksreview.blogspot.com/2014/05/focus-hidden-driver-of-excellence.html)

19) The strength of the computer entrepreneur Steve Jobs was precisely in distrusting market research and focus groups - those based on asking people what they want - and following his own imagination. His modus was that people don't know what they want until you provide them with it.

20) ..... halo effect, the mistake of thinking that skills in, say, skiing translate unfailingly into skills in managing a pottery workshop or a bank department, or that a good chess player would be a good strategist in real life. (For successful people, don't be too confident or cocky on your own ability!)

21) People with too much smoke and complicated tricks and methods in their brains start missing elementary, very elementary things. Persons in the real world can't afford to miss these things; otherwise they crash the plane.

22) ...... less is more in action: the more studies, the less obvious elementary but fundamental things become; activity, on the other hand, strips things to their simplest possible model.

23) The sociologist of science Steve Shapin, who spent time in California observing venture capitalists, reports that investors tend to back entrepreneurs, not ideas. Decisions are largely a matter of opinion strengthened with "who you know" and "who said what," as, to use the venture capitalist's lingo, you bet on the jockey, not the horse.

24) Let me stop to issue rules based on the chapter so far. (i) Look for optionality; in fact, rank things according to optionality, (ii) preferably with open-ended, not closed-ended payoffs; (iii) Do not invest in business plans but in people, so look for someone capable of changing six or seven times over his career, or more (an idea that is part of the modus operandi of the venture capitalist Marc Andreessen); one gets immunity from the backfit narratives of the business plan by investing in people. It is simply more robust to do so; (iv) Make sure you are barbelled, whatever that means in your business.

25) You select people on their ability to hang around, as a filter, and studious people were not good at hanging around: they needed to have a clear task.

26) But there is something central in following one's own direction in the selection of readings: what I was given to study in school I have forgotten; what I decided to read on my own, I still remember. (The same applies to profession? You are likely to excel in the profession which you chose rather than forced to?)

27) ..... if you can say something straightforward in a complicated manner with complex theorems, even if there is no large gain in rigor from these complicated equations, people take the idea very seriously.

28) Someone with a linear payoff needs to be right more than 50 percent of the time. Someone with a convex payoff, much less. The hidden benefit of antifragility is that you can guess worse than random and still end up outperforming. Here lies the power of optionality - your function of something is very convex, so you can be wrong and still do fine - the more uncertainty, the better.

29) ..... if you have favourable asymmetries, or positive convexity, options being a special case, then in the long run you will do reasonably well, outperforming the average in the presence of uncertainty. The more uncertainty, the more role for optionality to kick in, and the more you will outperform. This property is very central to life.

30) ..... charlatans are recognizable in that they will give you positive advice, and only positive advice, exploiting our gullibility and sucker-proneness for recipes that hit you in a flash as just obvious, then evaporate later as you forget them. (Beware of seminar where they teach you how to get rich quick!)

31) Yet in practice it is the negative that's used by the pros, those selected by evolution: chess grandmasters usually win by not losing; people become rich by not going bust (particularly when others do); religions are mostly about interdicts; the learning of life is about what to avoid.

32) ..... we know a lot more what is wrong than what is right, or, phrased according to the fragile/robust classification, negative knowledge (what is wrong, what does not work) is more robust to error than positive knowledge (what is right, what works).

33) Rephrasing it again: since one small observation can disprove a statement, while millions can hardly confirm it, disconfirmation is more rigorous than confirmation.

34) For the Arab scholar and religious leader Ali Bin Abi-Taleb (no relation), keeping one's distance from an ignorant person is equivalent to keeping company with a wise man.

35) ..... Steve Jobs: "People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying no to 1,000 things."

36) We are built to be dupes for theories.

37) An attribution problem arises when the person imputes his positive results to his own skills and his failures to luck.

38) As in anything with words, it is not the victory of the most correct, but that of the most charming - or the one who can produce the most academic-sounding material.

39) Factum tacendo, crimen facias acrius: For Publilius Syrus, he who does not stop a crime is an accomplice.

40) So opinion makers who were so proudly and professionally providing idle babble will eventually appear to win an argument, since they are the ones writing, and suckers who got in trouble from reading them will again look to them for future guidance, and will again get in trouble.

41) Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have - or don't have - in their portfolio.

42) Look at it again, the way we looked at entrepreneurs. They are usually wrong and make "mistakes" - plenty of mistakes. They are convex. So what counts is the payoff from success.

43) Take this simple heuristic - does the scientific researcher whose ideas are applicable to the real world apply his ideas to his daily life? If so, take him seriously. Otherwise, ignore him.

44) Anything one needs to market heavily is necessarily either an inferior product or an evil one. (Good to remember this. Example includes Coke, McDonald, cigarettes, etc.)

45) ..... I wonder why people don't realize that, by definition, what is being marketed is necessarily inferior, otherwise it would not be advertised.

46) ..... marketing beyond conveying information is insecurity.

This latest book by Nassim Nicholas Taleb somewhat reinforces his earlier idea of Black Swan event and how fragile we can be to such extreme event. We can be making money from the stock markets and financial crisis can wipe out our entire gain and more. This is why Nassim Nicholas Taleb advocates that we should instead be antifragile and seek to benefit from the volatility. This strategy, while it does make sense, is not easy to execute. We will need to be patience and to go against the current (that includes our friends and family members) is not easy as we will somewhat seem to be "crazy" or "stupid" for quite a long time before being proven right (if ever we live long enough to be proven right and not ends up being an outcast before that happens). In investment, we also need to have substantial reserves before our "bet" comes true because it is difficult to time the event. As such, it is important to understand the idea presented by Nassim and adjust it to real life situation. In summary, this is an excellent book and it would be "crazy" not to read it unless you believe in the adage: Ignorance is bliss!

Glenfiddich 15 years - Even non-regular whisky drinkers would love it!

2015-04-19T22:53:00.002-07:00

Glenfiddich Single Malt Scotch Whisky - 15 years (ABV: 40%)

The Solera Vat - Unique to Scotch whisky, our Solera Vat marries whiskies matured in sherry, bourbon & new oak casks and is always kept at least half full. This creates a rich & complex whisky which increases in depth & intensity each year.

(Description on the bottle case of the Glenfiddich 15 years)

Glenfiddich is the world's best selling single malt and what better way to start this blog by sharing my thoughts on this excellent whisky. Everything about this whisky is beautiful from the unique case which is easily recognisable as unique to Glenfiddich to the colour of the whisky. Just take a look at the beautiful golden brown colour of the whisky after absorbing the characteristics of the sherry, bourbon and oak casks. This 15 year old is unique in a sense that this Solera blending not only adds depth but a different softer mouth-feel. What you have is therefore, a whisky with richer depth and feel with a little bit of sweetness from the sherry and bourbon casks. More on the taste later but let's start by appreciating its beautiful and rich colour.

Like appreciating any fine whisky, a crystal clear glass will enhance the experience. You can see from the picture below the beautiful colour of the whisky as it reflects the light from its surrounding. It is just begging us to further explore this water of life.

Before sharing my own amateur thoughts on this great whisky, the following are tasting notes from some real expert.

From "The World Atlas of Whisky, 2nd Edition" by Dave Broom (coincidentally a Glenfiddich Award-winning Author):

Nose: Ripe and very soft with a character akin to plum jam and baked apple.

Palate: Soft and silky. Thicker than 12 year old with stewed black fruit, coconut notes, and dried grass.

Finish: Ripe and full.

Conclusion: Solera adds a richer depth and feel.

From "1001 Whiskies You Must Try Before You Die":

The nose just draws you in, slowly revealing layers of fruit, from apple and pear to more tropical flavours, such as mango. There is a touch of pie crust, too. In the mouth, more depth is discovered with malt, fruit, and oak grip. The finish is woody and fruity.

Now, for my own personal description of the whisky. I always sample the whisky two ways, i.e. with or without ice. Let's face it. For us living in the tropics, we may not fully enjoy a warm whisky simply because of our hot and humid weather and sometimes, ice do bring out the flavour of the whisky.

Let's start with without ice:

Sweetness with spicy finish. Long aftertaste that lingers and feels strong (to me) even though ABV is only 40%.

With ice:

Dilutes the smell but also mellow down the strong taste. Brings out the sweetness and smoothness of the 15 years from its days in the sherry and bourbon casks. One drawback of adding ice is that it also dulls the colour of the whisky and that greatly upsets me since I really appreciates the sight of the whisky in its golden brown colour. Not sure if using chilled whisky stone instead of ice would have the same effect on taste but minus the adverse effect of dulling its colour. Would update this review once I manage to source for some good quality whisky stone.

So, in conclusion, this would be my personal opinion on how to enjoy this fine whisky:

1. Start by appreciating its smell and colour undiluted in a crystal clear glass.

2. Add just one or two pieces of ice and enjoy!

Of course, good drinking companion always help!

RON97 price would be the same as RON95 price soon?

2014-10-15T00:07:00.003-07:00

The recent hike in RON95 petrol price by another 20sen to RM2.30 is of course, least welcomed by all Malaysians. This is because it will not just affect driving cost but will cause prices of other essential goods to rise as well. Anyway, with anger subsiding and Malaysians starting to adjust to higher oil price, it is interesting to take a look at the world oil price currently.

The chart is interesting because on 9th September 2014, RON97 price was actually reduced by 10sen to RM2.75 from the last revision in June 2014. From the chart above, Brent Crude Oil price in June 2014 is about USD107/bbl and in September 2014, it has dropped to about USD103/bbl. As such, if a drop of USD4/bbl translates to 10sen reduction in RON97 price, based on the latest Brent Crude Oil price of about USD85/bbl, the reduction of USD18/bbl would translates to 45sen reduction in RON97 price? This would mean RON97 price would be RM2.30 and would be the SAME AS RON95!!!

Isn't that interesting? Not sure what would happen then and how would the government justify the increase in RON95 price or are we expecting a reduction in RON95 price in line with falling international crude oil prices?

Disclaimer: The above computations are based on simple assumptions. Of course, the price mechanism would be more complicated as it is based on a managed float mechanism (I don't know how that works though) but the assumptions that RON97 price should drop in line with dropping international crude oil price should hold.

David & Goliath: Underdogs, Misfits and the Art of Battling Giants by Malcolm Gladwell

2014-09-26T16:40:00.001-07:00

Once again, Malcolm Gladwell has written an excellent book which makes you think differently about conventional wisdom. Well, it actually should not surprises us anymore as Malcolm is after all, the guy who introduced concepts such as tipping points, 10,000 hours training, etc. In his latest book titled David & Goliath, Malcolm have elegantly shown us that what we perceived as weakness can be turned on its head and becomes an advantage just like how David with its perceived weaknesses can defeat the giant Goliath by using its advantages such as being more mobile and agile compared to the cumbersome and slow Goliath. The book is such a joy to read (as usual and what we have come to expect from Malcolm Gladwell) and it will makes you think differently about different aspects of life from money, sports, crime, etc. The book certainly makes it argument clear that sometimes too many of a good thing may be bad for us and this also applies to money and even also imprisonment of criminals. Surprising findings? Well, it would not be surprising anymore after you have read Malcolm's latest book. As such, I would recommend this book to everyone just for the sole objective that we should always be open minded to so-called foregone conclusions. For me, it is important that we approach life with an open and inquisitive mind and we will find life such a joy and full of excitement.

As usual, some extracts from the book which I find useful:

1) "Any fool can spend money. But to earn it and save it and defer gratification - then you learn to value it differently." (Such a simple and yet powerful statement. The marketing media is actually very powerful and they have successfully created the image that anyone who is careful with their money is perceived as stingy and is not desirable. Similarly, I have met a lot of women who is proud to display their "skills" in spending money and how they can differentiate different branded goods. For this I would like to add my own quote: "It is easy to find women who can spend money but it is very difficult to find a woman who is careful with your money and values it. When you find such a woman, then you have found a woman who loves you and cares about both of your future.") :p

2) Money makes parenting easier until a certain point - when it stops making much of a difference.

3) ..... we form our impressions not globally, placing ourselves in the broadest possible context, but locally - by comparing ourselves to people "in the same boat as ourselves." Our sense of how deprived we are is relative. (We always compare ourselves with people surrounding us. As such, ask yourself which one would be happier? The person who is the worst among the best or the person who is the best among the worst? Is it worth it if your child's results are average and you still force him/her to pursue tough career such as medicine where he/she will likely ends up being the worst among the best?)

4) "A lot of people think that going to an academically selective school is going to be good," he said. "That's just not true. The reality is that it is going to be mixed." (By the psychologist Herbert Marsh who pioneered the Big Fish - Little Pond theory).

5) ...... if you want to see the positive effects of elite schools on self-concept, you are measuring the wrong person. You should be measuring the parents." (Another powerful statement. Are we as parents guilty of fulfilling our own pride and ego when we make certain decisions for our children and then mask it as for their own good?)

6) ..... what is learned out of necessity is inevitably more powerful than the learning that comes easily. (It is important for any leaders/managers to develop a culture of curiosity within your organisation where people would look for solutions out of necessity as opposed to an organisation who expects to be spoon-fed with solutions from their leaders/managers.)

7) As the playwright George Bernard Shaw once put it: "The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man." (Again, this makes you thing. Is it a bad thing if you have a team member who is "unreasonable" and who may seems difficult to manage but can deliver if given the right motivation? Well, everyone has their own skills and weaknesses. As such, as leader/manager, it is up to us to nurture the various talents and bring out the best from each individual.)

8) ..... learning how to deal with the possibility of failure is really good preparation for a career in the business world. (I guess this not only applies in the business world but on life too. It is important that we learn how to deal with failure.)

9) Courage is not something that you already have that makes you brave when the tough times start. Courage is what you earn when you've been through the tough times and you discover they aren't so tough after all. (So, courage is earned through experience.)

10) ..... we need to remember that our definition of what is right is, as often as not, simply the way the people in positions of privilege close the door on those on the outside. (This can be seen in politics where the ruling party would term those who are challenging them as ungrateful, disloyal, etc. even though for a healthy democracy, it is important to have opposing views.)

11) "It has been said that most revolutions are not caused by revolutionaries in the first place, but by the stupidity and brutality of governments," Sean MacStiofain, the provisional IRA's first chief of staff, said once, looking back on those early years.

12) We often think of authority as a response to disobedience: a child acts up, so a teacher cracks down............... disobedience can also be a response to authority. If the teacher doesn't do her job properly, then the child will become disobedient. (This certainly got me thinking. If someone reporting to me starts to acts up, is it because of his/her inherent difficult behaviour or is it because I have not done my job as a leader properly?)

13) Instead of responding in a 'let me control your behaviour' way, the teacher needs to think, 'How can I do something interesting that will prevent you from misbehaving in the first place?' (Applies to any manager/leader as well. How do I do something that will prevent my staff from misbehaving in the first place?)

14) When people in authority want the rest of us to behave, it matters - first and foremost - how they behave. This is called the "principle of legitimacy," and legitimacy is based on three things. First of all, the people who are asked to obey authority have to feel like they have a voice - that if they speak up, they will be heard. Second, the law has to be predictable. There has to be a reasonable expectation that the rules tomorrow are going to be roughly the same as the rules today. And third, the authority has to be fair. It can't treat one group differently from another. (Important points to all leaders/managers. This principle of legitimacy also applies to how a company is run!).

15) And when the law is applied in the absence of legitimacy, it does not produce obedience. It produces the opposite. It leads to backlash.

In summary, this is an excellent book which I would recommend to everyone. The extracts from the book which I listed above is short not because there are not many useful lessons from the book but because Malcolm is such a good writer than reading his book is like reading a story book. As such, to do justice to his works, it is important to read the book itself to appreciate his arguments and reasoning.

Have a nice weekend!

Gandhi, CEO: 14 Principles to Guide & Inspire Modern Leaders

2014-07-28T17:31:00.000-07:00

Gandhi, the name itself will invokes awe and admiration. A man known to be steadfast in his beliefs and principles and continues to inspire us that anything is possible as long as truth is on our side. The principles embodied in Gandhi's revolution are important lessons to all leaders as it is a truly sustainable path towards leadership. Before Gandhi, revolutions are commonly associated with violence, war and riots but Gandhi turned this association on its head with his concept of non-violent resistance. What I admire most is Gandhi assumed the British Lords to be ignorant rather than evil and the best way to counter ignorance is education rather than retaliation. If we believe in this in our day-to-day challenges as a manager/leader, we would certainly do better and time would be far more productive if we focus on educating our co-workers or clients rather than retaliating. This book by Alan Axelrod provides a quick reference to modern leaders on principles of management inspired by Gandhi but of course, readers are advised to form their own judgement because after all, the principles are interpreted by Alan Axelrod and not directly from Gandhi himself which is why my next target is to read Gandhi's autobiography. Nevertheless, the book is concise and easy to read and would be useful to any leaders/managers.

Excerpts from the book summarised below (Words in blue are mine):

1. Never compromise on your no-compromise zone, but never confuse a refusal to compromise with a refusal to communicate.

2. You want to be neither an unthinking autocrat nor an unthinking democrat. You don't want to lead in the blind conviction that you and only you are right, but neither do you want to lead by following the majority. (It is not easy to be a good and inspiring leader. For me, the middle path is the best way as demonstrated by the statement above. There are times when you need to be an autocrat and there are times you need to be a democrat.)

3. If you mean to make a difference in the world or in your company, you cannot wait for others to begin the change, and you cannot wait even for your own changes to become widespread, let alone universal. Begin the project, no matter how ambitious, with yourself. Begin now. (Just do it!)

4. Do not hesitate to set perfection as the goal of your organisation, but, in so doing, you must also recognize that only imperfection will move you and your enterprise toward that goal. For this reason, never criticize imperfection. Nurture it. Exploit it. Manage it. It is the fuel that drives every worthwhile endeavor.

5. It is never a good leadership strategy to ignore potential problems, to fail to evaluate risks, to willfully refuse to anticipate pitfalls, or to turn your back on contigency planning. However, it is an invariably fatal strategy to allow the anticipation of trouble to paralyze you or your enterprise.

6. The best attitude is to embark with the expectation of success, not failure. (Plan for the worse, hope for the best!)

7. A complex business enterprise cannot be run on forced obedience. Voluntary cooperation - self-direction toward common goals - is required, and it is the task of CEOs and managers to secure it day by day. (Important question to ask ourself is does your employees believe in what they are doing? Do they feel they belong to the organisation and will do their best to uphold the company's good reputation? I have seen this in some companies and that would be the task of any CEOs or managers that ultimately, their employees are proud of what they are doing and also the company)

8. An organization built on coercion is designed to collapse.

9. Businesses do no business with other businesses; people do business with people. Treat everyone with respect, render everyone fair value for value received, and those people will return to you time and again.

10. An effective manager ensures that each worker understands not just the assigned task, but what that task contributes to the greater "commonwealth" - i.e. the company.

11. The best-run companies are characterized by individual pride and satisfaction in doing excellent work toward common goals that pervade the entire organization.

12. Whatever else Gandhi's campaign to abandon caste was, it was a call for each person to strive to earn a worthwhile identity through hard work, noble service, and necessary sacrifice. These constitute virtue, and virtue, in turn, constitutes moral identity. This lesson applies in any field of endeavor.

13. The will of the majority, he held, must not cancel the vote of the minority; however, where "there is no principle involved and there is a programme to be carried out, the minority has got to follow the majority. But where there is a principle involved, the dissent stands, and it is bound to express itself in practice when the occasion arises."

14. In any collaborative endeavor, if everyone is thinking alike, no one is really thinking. (Dissenting views are not evil and rejected outright. What is important is how we manage it)

15. The CEO cannot afford to neglect the human capital of the enterprise. Whether you make shoes or sell stocks, every business is first and foremost a people business.

16. The ideal toward which any CEO should lead his company is a productive, profitable existence without him and, indeed, without any central authority.

17. A CEO's effectiveness can be measured by the degree to which she renders her presence optional to the organization. The best leaders lead to become unnecessary. (Not easy to emulate in real life situation. It requires the person to have strong confidence in his own abilities so that he is confident enough to make himself unnecessary)

18. Accept the past as a teacher, but remember that the measure of a successful teacher is the number of students who rise above his example, and the very greatest teachers are those who produce students much greater than themselves.

19. "A foolish consistency," Emerson (Ralph Waldo Emerson) wrote, "is the hobgoblin of little minds." Emerson did not scorn consistency, but only foolish consistency - consistency for the consistency's sake, that serves no rational and valuable purpose.

20. The great leadership issue, therefore, is one of navigation: the creation of purposeful, productive movement within an environment of movement.

21. An organization should be more than the sum of its people, just as a viable government must be more than the sum of its leaders.

22. "History shows that all reforms have begun with one person."

23. A leader earns his stripes every day.

24. Gandhi taught that leadership is not a title or an official position, but rather a way of life, and life is lived when you are in company as well as when you are in solitude.

25. To avoid escalation and bring about amelioration, begin by making an effort to understand the motives behind the behavior you wish to change.

26. The most successful generals are those who never allow the enemy to select the battlefield. To do so yields a significant advantage, often both strategically and tactically. Similarly, the most successful CEOs never allow their company to be forced to compete on someone else's terms. The surest way to win is to play to your strengths. The surest way to lose is to play to the strengths of your competition.

27. ..... the effective CEO devises means of persuasion that demonstrate a benefit to all, including all those who take different sides in a dispute.

28. Winning is not about the gratification of the ego - "bragging rights" - but about doing the best you can for your organization. (Actually, it is not about winning. It should be about doing what is best for the organization)

29. Restraint is the surest mark of true leadership power. Compliance won is always more effective - and far easier to sustain - than compliance coerced.

30. Provided that you dream ambitiously enough, the approach - not the attainment - defines success.

31. Leadership requires the exercise of judgment. To surrender judgment to principle, policy, or ideology is to surrender leadership itself.

32. Serve people, not ideas. This is the one item of ideology that is of unfailing value to all, at all times.

33. If your destination is a mile away, you would be foolish to refuse to take the first step just because that single step did not span the entire mile. (To take small steps is very important in any endeavour even if that step may not be in the right direction. With wrong steps, at least you found out the right direction and starts walking towards your goal)

34. Blame achieves nothing; whereas taking responsibility lets you take command by identifying those aspects of a transaction, a project, or a problem that are under your control or on which you can act. Assigning blame is almost always valueless, whereas taking responsibility offers great value insofar as it empowers you to act productively.

35. Make it your business to identify discontent among all your customers, external and internal, and among your potential customers - the segment of the market you have yet to penetrate. Having found it, explore it, embrace it, and work with it. Let discontent drive the innovation of your enterprise.

36. Never let yourself be boxed in or your subject limited by a question posed to you. Don't evade the question or withhold an answer. Instead, remake, rework, and redefine the question so that you can give the fullest, most useful, and most accurate answer possible - an answer that delivers the greatest value to the questioner, to you, and to your enterprise.

37. Battles must be chosen with the same care as that devoted to choosing anything costly. Squandering your treasure and your time on a cheap battle is no way to lead your enterprise to prosperity or to assert yourself as an effective CEO. Before you embark on a dispute, consider that, win or lose, you will incur costs.

38. A creative, productive enterprise requires individually creative, productive people who routinely contribute their individuality to achieve common goals, yet do not yield their individual responsibility. The only viable leadership path for such an organization is that of noncoercive example.

39. The CEO who merely bemoans the existence of competitors in a crowded market deserves the failure to which he dooms his enterprise. An effective business leader, on the other hand, is always thankful for competitors because their existence makes his enterprise competitive.

40. One of Gandhi's favorite American writers, Ralph Waldo Emerson, wrote that "nothing great is ever accomplished without enthusiasm." (I am a great believer in this. If you hate your job, it is time to look for a new job)

41. A corollary to the smell test is the following rule of thumb: If a proposed course of action requires elaborate rationalization, there is probably something wrong with it. Ethical and ethically profitable ideas are generally capable of the most elegantly simple presentation, whereas ethically dubious ideas usually call for long-winded exercises in tortured logic. (Good to remember this to detect dubious schemes)

42. The ideal motivational talk marries head to heart, and the best way to do this is to present ideas, objectives, and goals that, in themselves, join together intellect and emotion. A genuinely inspiring program embodies inherently inspiring values and, therefore, readily lends itself to a motivational presentation that is both intellectually cogent and emotionally compelling.

43. Gandhi's great innovation in conducting revolutionary change was to regard the powers that be, in so far as they do wrong, to be suffering from ignorance, not evil intentions. The appropriate response to ignorance is education, not retaliation.

In summary, Gandhi has shown us a sustainable approach to leadership and it has withstood the acid test of time. Unlike modern approach which focuses on short-term rewards which is often accompanied with catastrophic failure in the long-term (e.g. financial crisis of 2008), the guiding principle of leadership should always be to serve society with honesty and sincerity. This would never go wrong.

AND THAT"S THE WAY IT WAS.........

2014-07-25T01:23:00.000-07:00

Was going through my old man's stuff and found a piece of old yellowed paper. Such inspirational words that it reminded me again why I chose this profession in the first place.

AND THAT'S THE WAY IT WAS..........

"Engineering. It is a great profession. There is the fascination of watching a figment of the imagination emerge through the aid of science to a plan on paper. Then it moves to realization in stone or metal or energy. Then it brings jobs and homes to men. Then it elevates the standards of living and adds to the comforts of life. That is the engineer's high privilege.

"The great liability of the engineer compared to men of other professions is that his works are out in the open where all can see them. His acts, step by step, are in hard substance. He cannot bury his mistakes in the grave like doctors. He cannot argue them into thin air or blame the judge like the lawyers. He cannot, like the architects, cover his failures with trees and vines. He cannot, like the politicians, screen his shortcomings by blaming his opponents and hope the people will forget. The engineer simply cannot deny he did it. If his works do not work, he is damned...

"... unlike the doctor his is not a life among the weak. Unlike the soldier, destruction is not his purpose. Unlike the lawyer, quarrels are not his daily bread. To the engineer falls the job of clothing the bare bones of science with life, comfort, and hope. No doubt as years go by the people forget which engineer did it, even if they ever knew. Or some politician puts his name on it. Or they credit it to some promotor who used other people's money... But the engineer himself looks back at the unending stream of goodness which flows from his successes with satisfactions that few professions may know. And the verdict of his fellow professionals is all the accolade he wants."

-Herbert Hoover-

Focus: The Hidden Driver of Excellence

2014-05-17T21:13:00.001-07:00

This book by the bestselling author of Emotional Intelligence, Daniel Goleman is timely as I believe we are becoming the most distracted generation in recent history. With all the distractions presented by electronic gadgets such as smart phone, tablet, television, etc. and social media such as facebook, twitter, etc., focus has been become a rare commodity. I guess all of us are guilty of being distracted all the time and we may not realise that we are not living up to our full potential simply because we are easily distracted all the time. This book is timely as it shows us that focus is very important in all aspects of our life from working to personal relationship. It also shot down the myth on the importance of multi-tasking and shows us it is more important to be fully engaged at a particular task instead of juggling multiple balls and ended up dropping all the balls. I am a believer that focus is very important and in this age of distractions, the one who is able to stay focus and ignore the distractions will emerge triumphant.

Some excerpts from the book which I hope you will find useful in your journey towards being focus (and stop checking your facebook news) - words in blue are mine:

1) For leaders to get results they need all three kinds of focus. Inner focus attunes us to our intuitions, guiding values, and better decisions. Other focus smooths our connections to the people in our lives. And outer focus lets us navigate in the larger world. A leader tuned out of his internal world will be rudderless; one blind to the world of others will be clueless; those indifferent to the larger systems within which they operate will be blindsided.

2) Writing about the coming information-rich world, he (Nobel-winning economist, Herbert Simon) warned that what information consumes is "the attention of its recipients. Hence a wealth of information creates a poverty of attention." (The challenge for us is to make use of appropriate information and not be swarmed by information overload)

3) ..... Rick Aberman, who directs peak performance for the Minnesota Twins baseball team, tells me, "When the coach reviews plays from a game and only focuses on what not to do next time, it's a recipe for players to choke." (It is always better to be positive than negative)

4) While mind wandering may hurt our immediate focus on some task at hand, some portion of the time it operates in the service of solving problems that matter for our lives.

In addition, a mind adrift lets our creative juices flow. While our minds wander we become better at anything that depends on a flash of insight, from coming up with imaginative wordplay to inventions and original thinking. In fact, people who are extremely adept at mental tasks that demand cognitive control and a roaring working memory - like solving complex math problems - can struggle with creative insights if they have trouble switching off their fully concentrated focus. (The key is knowing when to focus and when to relax. Relaxation of the mind is also important. The part of our brain for intensive focusing also needs a refreshing break)

5) Open time lets the creative spirit flourish; tight schedules kill it.

6) A random survey of thousands of people found focus in the here-and-now understandably was highest by far while they were making love (apparently even among those people who answered that badly timed inquiry from a phone app). A more distant second was exercising, followed by talking with someone, and then playing. In contrast, mind wandering was most frequent while they were working (employers take note), using a home computer, or commuting. (Sex is also good for the mind!)

7) At the neural level mind wandering and perceptual awareness tend to inhibit each other: internal focus on our train of thought tunes out the senses, while being rapt in the beauty of a sunset quiets the mind. This tune-out can be total, as when we get utterly lost in what we're doing.

8) Tightly focused attention gets fatigued - much like an overworked muscle - when we push to the point of cognitive exhaustion. The signs of mental fatigue, such as a drop in effectiveness and a rise in distractedness and irritability, signify that the mental effort needed to sustain focus has depleted the glucose that feeds neural energy.

9) Such restoration (attention restoration) occurs when we switch from effortful attention, where the mind needs to suppress distractions, to letting go and allowing our attention to be captured by whatever presents itself. But only certain kinds of bottom-up focus act to restore energy for focused attention. Surfing the Web, playing video games, or answering e-mail does not.

10) ..... our tone of voice matters immensely to the impact of what we say: research has found that when people receive negative performance feedback in a warm, supportive tone of voice, they leave feeling positive - despite the negative feedback. But when they get positive performance reviews in a cold and distant tone of voice, they end up feeling bad despite the good news.

11) Another antidote to groupthink: expand your circle of connection beyond your comfort zone and inoculate against in-group isolation by building an ample circle of no-BS confidants who keep you honest.

A smart diversification goes beyond gender and ethnic group balance to include a wide range of ages, clients, or customers, and any others who might offer a fresh perspective. (Go and meet people!)

12) "Sunlight", as Supreme Court justice Felix Frankfurter once said, "is the best disinfectant." (This statement refers to transparency as the best policy)

13) Epigenetics, the science of how our environment affects our genes, tells us that inheriting a set of genes is not in itself enough for them to matter. Genes have what amounts to a biochemical on/off switch; if they are never turned on we may as well not have them. The "on" switch comes in many forms, including what we eat, the dance of chemical reactions within the body, and what we learn.

14) Willpower emerged as a completely independent force in life success - in fact, for financial success, self control in childhood proved a stronger predictor than either IQ or social class of the family of origin. (Delayed gratification must be trained from young)

15) High self-control predicts not just better grades, but also a good emotional adjustment, better interpersonal skills, a sense of security, and adaptability.

16) Bottom line: kids can have the most economically privileged childhood, yet if they don't master how to delay gratification in pursuit of their goals those early advantages may wash out in the course of life.

17) Another bottom line: Anything we can do to increase children's capacity for cognitive control will help them throughout life.

18) The timing of the gesture interprets its meaning. If your timing is off, a positive statement can have negative impact.

19) Empathy entails an act of self-awareness: we read other people by tuning in to ourselves.

20) One cost of the frenetic stream of distractions we face today, some fear, is an erosion of empathy and compassion. The more distracted we are, the less we can exhibit attunement and caring.

21) As William Osler, the father of medical residency training, wrote in 1904, a doctor should be so detached that "his blood vessels don't constrict and his heart rate remains steady when he sees terrible sights." Osler recommended doctors have the attitude of a "detached concern."

22) The most robust entity takes in the greatest amount of relevant information, understands it most deeply, and responds most nimbly.

23) Smart practice always includes a feedback loop that lets you recognize errors and correct them - which is why dancers use mirrors. (We must always learn from our mistakes)

24) Positive emotions widen our span of attention; we're free to take it all in. Indeed, in the grip of positivity, our perceptions shift. As psychologist Barbara Fredrickson, who studies positive feelings and their effects, puts it, when we're feeling good our awareness expands from our usual self-centered focus on "me" to a more inclusive and warm focus on"we".

25) ...... positivity, in turn, has great payoffs for performance, energizing us so we can focus better, think more flexibly, and persevere. (Ever wondered why successful people are always positive? I don't think they are positive because they are successful but rather it is because they are positive that they became successful)

26) "You need the negative focus to survive, but a positive one to thrive," says Boyatzis. "You need both, but in the right ratio."

That ratio would do well to flip far more to the positive than the negative, in light of what's known as the "Losada effect," after Marcial Losada, an organizational psychologist who studied emotions in high-performing business teams. Analyzing hundreds of teams, Losada determined that the most effective had a positive/negative ratio of at least 2.9 good feelings to every negative moment (there's an upper limit to positivity: above a Losada ratio of about 11:1, teams apparently become too giddy to be effective). The same ratio range holds for people who flourish in life, according to research by Barbara Fredrickson, who is a psychologist at the University of North Carolina (and a former research associate of Losada). (A balance between negative and positve feelings is important and successful people is generally more positive)

27) Global economic data shows that once a country reaches a modest level of income - enough to meet basic needs - there is zero connection between happiness and wealth. Intangibles like warm connections with people we love and meaningful activities make people far happier than say, shopping or work.

28) Directing attention toward where it needs to go is a primal task of leadership. Talent here lies in the ability to shift attention to the right place at the right time, sensing trends and emerging realities and seizing opportunities. (Leaders take note. One of our main task is to keep the team focus and at the same time are attuned to others and the outside world)

29) Leadership itself hinges on effectively capturing and directing the collective attention. Leading attention requires these elements: first, focusing your own attention, then attracting and directing attention from others, and getting and keeping the attention of employees and peers, of customers or clients.

30) ...... "deciding what not to do is as important as deciding what to do."

31) "The most successful leaders are constantly seeking out new information," says Ruth Malloy, global director of Hay Group's leadership and talent practice.

32) ..... nonacademic abilities like empathy typically outweigh purely cognitive talents in the makeup of outstanding leaders. (We all know why academic abilities alone would not guarantee future success. So, remember to always hone your soft skills like empathy, communication, etc.)

33) Baron-Cohen's research finds that in a small - but significant - number of people this strength (excels at systems analysis) comes coupled with a blind spot for what other people are feeling and thinking, and for reading social situations. For that reason, while people with superior systems understanding are organizational assets, they are not necessarily effective leaders if they lack the requisite emotional intelligence.

In summary, the book is timely for this generation which are constantly distracted. When we say focus, it is not merely at work or the task at hand. It encompasses every aspects of our life. When we are focused on our relationship, the relationship would flourish and we would have meaningful and quality connections with the people we love and care about. If we are distracted, what we have would be superficial connections and it is therefore, not surprising if the relationship do not work out or we feel something is missing. The same thing applies to work, the environment, etc. In summary, we should FOCUS on things that matter in our life, work, etc. during our short adventure on earth and hope that when we leave, we would leave our mark here, in a positive manner of course.

This Time is Different: Eight Centuries of Financial Folly

2014-05-04T20:50:00.000-07:00

This book by Carmen M. Reinhardt and Kenneth S. Rogoff is well- researched and the title basically summarises the sentiment preceding a financial crisis, i.e. people always think that the party can always goes on, i.e. stock market will continue to rise, house prices will continue to rise and we can continue to "gamble" in the financial markets and retire in the Maldives because "this time is different". This book demonstrates that financial crisis is a norm rather than the exception from the early days of gold coins until the recent crisis in the late 2000s which the Authors termed as the Second Great Contraction. As such, it is important that we learn from the recent crisis and realise that perhaps there is nothing different from each financial crisis and it is always driven by greed and our ignorance. One of the main theme of the book is that fast rising house prices is an important indicator of potential banking crisis leading to full-blown financial crisis and regulators should also look at house prices for signs of trouble. This is important because traditionally, people always view investment in real estate as "safe" and house prices will never go down. However, in this book, it is shown that house prices will also go down in a financial crisis and it usually takes longer for it to recover compared to equities. Another danger of real estate fueling asset bubble leading to financial crisis is that politicians are usually reluctant to burst real estate bubble and very often, election pledges include a promise of everyone owning their own house including providing loans to those who would not be able to service the loan at the first sign of economic downturn such as rising interest rates, etc. and also encouraging speculative activities in real estate because it gives the impression of encouraging economic growth. However, this is all not sustainable and it is always the same leading to financial crisis, i.e. easy credit fueling unsustainable equities, real estate, etc. which ultimately lead to popping of the bubble. Perhaps, it is not so different after all.

The followings are excerpts from the book which I hope you will find useful (Words in blue are mine):

1) If there is one common theme to the vast range of crises we consider in this book, it is that excessive debt accumulation, whether it be by government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom.

2) Economists do not have a terribly good idea of what kinds of events shift confidence and of how to concretely assess confidence vulnerability. What one does see, again and again, in the history of financial crises is that when an accident is waiting to happen, it eventually does. When countries become too deeply indebted, they are headed for trouble. When debt-fueled asset price explosions seem too good to be true, they probably are. But the exact timing can be very difficult to guess, and a crisis that seems imminent can sometimes take years to ignite.

3) Periods of prosperity (many of them long) often end in tears.

4) It appears that those that risk default the most when they borrow (i.e., those that have the highest debt intolerance levels) borrow the most, especially when measured in terms of exports, their largest source of foreign exchange.

5) ..... without taking into account country-specific debt intolerance factors, we can see that when the external debt levels of emerging markets are above 30-35 percent of GNP, risks of a credit event start to increase significantly. (Note: Malaysia's debt is currently about 55 percent of GDP without taking into consideration other government-guaranteed debts and it does not look like it will reduce anytime soon. Scary numbers don't you think?)

6) ..... modern literature on empirical growth increasingly points to "soft" factors such as institutions, corruption, and governance as far more important than differences in ratios of capital to labor in explaining cross-country differences in per capita incomes. (Is it any surprise that Malaysia's per capita income is far less than Singapore? Just look at public institutions, corruption and governance of both countries)

7) ..... economic theory tells us that even a relatively fragile economy can roll along for a very long time before its confidence bubble bursts, sometimes allowing it to dig a very deep hole of debt before that happens.

8) Weakening global growth has historically been associated with declining world commodity prices. These reduce the export earnings of primary commodity producers and, accordingly, their ability to service debt. (I am just wondering if Malaysia's government ever consider the scenario when oil and palm oil prices start to drop and whether we would be able to service our debt?)

9) Peaks and troughs in commodity price cycles appear to be leading indicators of peaks and troughs in the capital flow cycle, with troughs typically resulting in multiple defaults.

10) An even stronger regularity found in the literature on modern financial crises is that countries experiencing sudden large capital inflows are at risk of experiencing a debt crisis. (We should remember that one of the contributors to the Asian financial crisis in 1997/1998 is the strong yen with massive capital inflows from Japan to other Asian economies and the bubble burst when the yen starts to appreciate and the capital inflows reversed. Interested readers should read the book by Andrew Sheng for first hand account of the Asian financial crisis of 1997/1998. Summaries of the book are in the following link: http://businessmanagementbooksreview.blogspot.com/2011/06/from-asian-to-global-financial-crisis.html)

11) As has been shown repeatedly over time, the governments of emerging markets are prone to treat favorable shocks as permanent, fueling a spree in government spending and borrowing that ends in tears.

12) Inflation during the year of an external default is on average high, at 33 percent. However, inflation truly gallops during domestic debt crises, averaging 170 percent in the year of the default.(Brace for massive inflation in the event of default)

13) Although many now-advanced economies have graduated from a history of serial default on sovereign debt or very high inflation, so far graduation from banking crises has proven elusive. In effect, for the advanced economies during 1800-2008, the picture that emerges is one of serial banking crises.

14) We find that real estate price cycles around banking crises are similar in duration and amplitude across the two groups of countries (advanced and emerging countries).

15) Periods of high international capital mobility have repeatedly produced international banking crises, not only famously, as they did in the 1990s, but historically.

16) One common feature of the run-up to banking crises is a sustained surge in capital inflows, which Reinhart and Reinhart term a "capital flow bonanza".

17) Mendoza and Terrones, who examine credit cycles in both advanced and emerging market economies using a very different approach from that just discussed, find that credit booms in emerging market economies are often preceded by surges in capital inflows. They also conclude that, although not all credit booms end in financial crisis, most emerging market crises were preceded by credit boom.

18) Notably, for both groups (developed and middle-income countries) the duration of declines in real housing prices following financial crises is often four years or more, and the magnitudes of the crashes are comparable.

19) ..... the outsized U.S. borrowing from abroad that occurred prior to the crisis (manifested in a sequence of gaping current account and trade balance deficits) was hardly the only warning signal. In fact, the U.S. economy, at the epicenter of the crisis, showed many other signs of being on the brink of a deep financial crisis. Other measures such as asset price inflation, most notably in the real estate sector, rising household leverage, and the slowing output - standard leading indicators of financial crises - all revealed worrisome symptoms (Malaysia is showing similar symptoms, i.e. asset price inflation, rising household leverage and slowing output. Should we be worried?)

20) Between 1996 and 2006 (the year when prices peaked), the cumulative real price increase was about 92 percent - more than three times the 27 percent cumulative increase from 1890 to 1996! Refer Figure 13.2 from the book which is reproduced here:

Now, let's compare Malaysia's housing price index for high-rise below:

See any similarities?

21) Empirical work by Bordo and Jeanne and the Bank for International Settlements suggested that when housing booms are accompanied by sharp rises in debt, the risk of a crisis is significantly elevated. (This seems to be case for Malaysia where the housing booms are accompanied by sharp increases in household debt which reached a record high of 86.8% of GDP at end-2013)

22) This literature on financial crises suggests that markedly rising asset prices, slowing real economic activity, large current account deficits, and sustained debt buildups (whether public, private, or both) are important precursors to a financial crisis.

Let's have a quick comparison for Malaysia:

a) Markedly rising asset prices (Malaysia have that)

b) Slowing real economic activity (Looks choppy at the moment but let's assume that it is not slowing down at the moment)

c) Large current account deficits (Not yet, but it appears that our current account surplus is on a downward trajectory. Refer graph below.)

d) Sustained debt buildups (Malaysia have that)

(Source: http://www.tradingeconomics.com/malaysia/current-account-to-gdp)

So, from the above, it looks like Malaysia is showing some signs of vulnerability and I guess we should monitor closely our current account and economic activity and hope it would not go into negative territory.

23) ..... sustained capital inflows have been particularly strong markers for financial crises,..............financial liberalization or innovation has also been a recurrent precursor to financial crises........

24) ..... a massive run-up in housing prices usually precedes a financial crisis. (Scary thoughts isn't it?)

25) More often than not, a financial crisis begins only after a real shock slows the pace of the economy; thus it serves as an amplifying mechanism rather than a trigger.

26) Broadly speaking, financial crises are protracted affairs. More often than not, the aftermath of severe financial crises share three characteristics:

- First, asset market collapses are deep and prolonged. Declines in real housing prices average 35 percent stretched out over six years, whereas equity price collapses average 56 percent over a downturn of about three and a half years.

- Second, the aftermath of banking crises is associated with profound declines in output and employment. The unemployment rate rises an average of 7 percentage points during the down phase of the cycle, which lasts on average more than four years. Output falls (from peak to trough) more than 9 percent on average, although the duration of the downturn, averaging roughly two years, is considerably shorter than that of unemployment.

- Third, as noted earlier, the value of government debt tends to explode; it rose an average of 86 percent (in real terms, relative to precrisis debt) in the major post-World War II episodes.

27) Kaminsky and Reinhart's "twin crises" work;....... concluded that financial liberalization often preceded banking crises; indeed, it helped predict them.

28) For banking crises, real housing prices are nearly at the top of the list of reliable indicators, surpassing the current account balance and real stock prices by producing fewer false alarms.

In summary, this is an excellent book compiling various financial crises from the early days of Napoleonic wars to the recent crisis in late 2000s which the Authors termed as the Second Great Contraction. As the title suggests, too much of a good thing usually led to tears and we should learn from previous crises and not fall into the "This time is different" syndrome. I particularly like this quote from the book:

There is nothing new except what is forgotten.

- Rose Bertin

Malaysia's Economy: Why we should look at oil price closely

2014-03-24T02:38:00.002-07:00

Recently, The Edge, through its regular updates on Malaysia's current economic conditions has highlighted that Malaysia's revenue consists of up to 47% from petroleum or petroleum-related exports. Well, according to official estimates from the Ministry of Finance (Estimates of Federal Government's Revenue for the Year 2014), some of the important figures are summarised below:

Total revenue:

RM 224,094 Million + RM150 Million (additional revenue from measures announced in Budget 2014) = RM224,244 Million

Petroleum income tax:

RM 28,275 Million (based on average crude oil price - Tapis of USD 110.00 per barrel in 2014)

From the above, it can be seen that a sizeable portion of Malaysia's revenue is from petroleum income tax alone which is approximately 12.6% of total revenue.

Based on 2014 budget, the total allocation of RM 264.4 billion translates to fiscal deficit of 3.5% of GDP (revenue of RM 224.2 billion and GDP of RM 1154 billion - backcalculated based on fiscal deficit of 3.5%) or deficit of RM40.2 billion.

As can be seen above, the petroleum income tax forecasted for 2014 is based on average crude oil price - Tapis of USD 110.00 per barrel in 2014. As such, it would be interesting to take a look at historical oil price shown below:

From the above, it can be seen that the current oil price is near its historical high (nominal price) and it is also high after adjusted for inflation. The current high oil price is not expected to persist and in fact, the current commodities boom is known as the commodities super cycle and the high price is attributed to demand from emerging markets such as China, India, etc. However, recent data from China and other emerging markets have indicated that the stratospheric growth rate of early 21st century is a thing of the past and growth is expected to moderate. In addition, the production of crude oil in US is on an uptrend (chart below) due to the discovery of shale oil and this will have an impact on oil prices simply because US is the top consumer of oil in the world (refer table below).

Source: Wikipedia

As such, assuming crude oil price moderates to USD60 per barrel, that would translate to Tapis oil price of approximately USD70 per barrel (assuming USD10 premium for Tapis over crude oil). This would be mean a drop of about 36% from the assumed price of USD110. Using back of the envelope calculations, this drop of about 36% would translate to RM10 billion reduction from petroleum income tax alone. The actual reduction is expected to be even higher because the estimated revenue for 2014 is expected to decrease by 7% due to a reduction of Tapis oil price from USD115 per barrel in 2013 to USD110 per barrel in 2014 which is equivalent to a drop of approximately 4%. So, a drop of 4% in oil price translates to a 7% reduction in petroleum income tax and therefore, the RM10 billion reduction calculated above is conservative.

The reduction of oil prices would also of course reduce our government fuel subsidy and if oil prices were to reduce to USD60 per barrel, the government would probably save about RM2-3 billion after taking into account the recent price hike.

Note: EPU reported subsidy of RM2.4 billion based on average WTI crude price of US25.24 per barrel in 2001. In 2004, the subsidy is RM4.8 billion based on the average international oil price of US41.60 per barrel (Source: http://www.epu.gov.my/c/document_library/get_file?uuid=f438db0e-8106-489b-ac5e-2ee3f04d2575&groupId=283545)

So, the savings from reduction of subsidy is far less compared to reduction from revenue and let's not forget that we are only looking at petroleum income tax which is only 12.6% of total revenue. As mentioned earlier, other petroleum related revenue contributes up to 47% of Malaysia's total revenue.

As such, I am not entirely convinced that Malaysia will be able to achieve the reduction in fiscal deficits as highlighted in the recent budget. If oil price starts to go down, our fiscal deficits will go up as well and just the RM 10 billion reduction in petroleum income tax will results in our fiscal deficits going up to about 4.3% (from target of 3.5%). The deficits would be significantly even higher if other reductions in petroleum related revenue are taken into consideration.

Therefore, I would urge fellow Malaysians to look at oil price carefully and not to celebrate if oil price were to go down as we would not be able to enjoy the cheaper oil price if the economy is not doing well. If our fiscal deficits go up, our credit ratings would also be downgraded and borrowing costs would also go up and that would be really painful for the country. That is why some countries such as Norway actually save up on excess revenue generated due to high oil prices in order to prepare for rainy days. I hope my analysis is wrong and we would continue to be prosperous and live happily.

p.s. Other pieces of news recently which seems to reinforce my view that our country's finances are not well-managed:

1. 24th March 2014 - Additional RM2 billion sought for additional expenses.

(http://www.thestar.com.my/News/Nation/2014/03/24/Parliament-RM2bil-additional-expenses/).

2. I also noticed that one of the revenue stated in the Ministry of Finance's estimate is securitization of government employees' loan which translates to a "revenue" of RM4.2 billion. To me, this just means we are borrowing more money now to spend. Don't seem to me to be a prudent move.

Getting to YES: Negotiating Agreement Without Giving In

2013-12-20T19:41:00.001-08:00

Let's face it. We have to negotiate everyday from trivial issues such as negotiating with your wife or children what to have for dinner to important negotiations at work, in personal lives, etc. Negotiation is a facet of life which we cannot ignore and some of us may dread the very mention of the word. I like this book by Roger Fisher and William Ury (with Bruce Patton, editor) as the objective of the negotiation by the Authors are to make sure the negotiated agreement is as fair as possible to the negotiating parties and the book always emphasize the importance of conducting negotiation with integrity, honesty and respect. What I liked most about the book is the message that we should never bargain over positions which is counterproductive and diminishes the prospect of an acceptable agreement for all parties. Instead of negotiating over positions, we should always deliberate on the reasons behind our terms and to work out creative solutions together which is acceptable to the negotiating parties.

The following are excerpts from the book which I am sharing with all of you (words in blue are my own opinion):

1) Any method of negotiation may be fairly judged by three criteria: It should produce a wise agreement if agreement is possible. It should be efficient. And it should improve or at least not damage the relationship between the parties.

2) When negotiations bargain over positions, they tend to lock themselves into those positions. The more you clarify your position and defend it against attack, the more committed you become to it. The more you try to convince the other side of the impossibility of changing your opening position, the more difficult it becomes to do so. Your ego becomes identified with your position. You now have a new interest in "saving face" - in reconciling future action with past positions - making it less and less likely that any agreement will wisely reconcile the parties' original interests. (It is important to bear in mind in negotiations that we should not start the negotiation over our positions but rather the interests/rationale behind our terms so that we are not locked in counterproductive argument in defending our positions)

3) ........ pursuing a soft and friendly form of positional bargaining makes you vulnerable to someone who plays a hard game of positional bargaining. In positional bargaining, a hard game dominates a soft one.

4) If your response to sustained, hard positional bargaining is soft positional bargaining, you will probably lose your shirt.

5) ........ alternative to positional bargaining: a method of negotiation explicitly designed to produce wise outcomes efficiently and amicably........... principled negotiation or negotiation on merits, can be boiled down to four basic points.

People: Separate the people from the problem.
Interests: Focus on interests, not positions.
Options: Invent multiple options looking for mutual gains before deciding what to do.
Criteria: Insist that the result be based on some objective standard.

6) To sum up, in contrast to positional bargaining, the principled negotiation method of focusing on basic interests, mutually satisfying options, and fair standards typically results in a wise agreement. The method permits you to reach a gradual consensus on a joint decision efficiently without all the transactional costs of digging in to positions only to have to dig yourself out of them.

7) Whatever else you are doing at any point during a negotiation, from preparation to follow-up, it is worth asking yourself, "Am I paying enough attention to the people problem?" (Negotiation involves people and as such, it is natural that we pay attention to people as well)

8) Their thinking is the problem. Whether you are making a deal or settling a dispute, differences are defined by the difference between your thinking and theirs.

9) As useful as looking for objective reality can be, it is ultimately the reality as each side sees it that constitutes the problem in a negotiation and opens the way to a solution.

10) The ability to see the situation as the other side sees it, as difficult as it may be, is one of the most important skills a negotiator can possess. (Important point!)

11) Agreement becomes much easier if both parties feel ownership of the ideas.

12) Face-saving involves reconciling an agreement with principle and with the self-image of the negotiators. Its importance should not be underestimated.

13) Many emotions in negotiation are driven by a core set of five interests: autonomy, the desire to make your own choices and control your own fate; appreciation, the desire to be recognized and valued; affiliation, the desire to belong as an accepted member of some peer group; role, the desire to have a meaningful purpose; and status, the desire to feel fairly seen and acknowledged. Trampling on these interests tends to generate strong negative emotions. Attending to them can build rapport and a positive climate for problem-solving negotiation.

14) No matter how many people are involved in a negotiation, important decisions are typically made when no more than two people are in the room.

15) The more quickly you can turn a stranger into someone you know, the easier a negotiation is likely to become.

16) ....... however precarious your relationship may be, try to structure the negotiation as a side-by-side activitiy in which the two of you - with your different interests and perceptions, and your emotional involvement - jointly face a common task.

17) A common error in diagnosing a negotiating situation is to assume that each person on the other side has the same interests. This is almost never the case.

18) Inviting the other side to "correct me if I'm wrong" shows your openness, and if they do not correct you, it implies that they accept your description of the situation.

19) People listen better if they feel that you have understood them. They tend to think that those who understand them are intelligent and sympathetic people whose own opinions may be worth listening to. So if you want the other side to appreciate your interests, begin by demonstrating that you appreciate theirs. (Being a good listener is also important in negotiation)

20) If you want someone to listen and understand your reasoning, give your interests and reasoning first and your conclusions or proposals later.

21) You will satisfy your interests better if you talk about where you would like to go rather than about where you have come from.

22) If they feel personally threatened by an attack on the problem, they may grow defensive and may cease to listen. This is why it is important to separate the people from the problem. Attack the problem without blaming the people. Go even further and be personally supportive.

23) Show them that you are attacking the problem, not them.

24) Successful negotiation requires being both firm and open.

25) Skill at inventing options is one of the most useful assets a negotiator can have.

26) In most negotiations there are four major obstacles that inhibit the inventing of an abundance of options: (1) premature judgment; (2) searching for the single answer; (3) the assumption of a fixed pie; and (4) thinking that "solving their problem is their problem."

27) Outlaw negative criticism of any kind. (On brainstorming)

28) At the very least, if you and the other side cannot reach first-order agreement, you can usually reach second-order agreement - that is, agree on where you disagree, so that you both know the issues in dispute, which are not always obvious.

29) As a negotiator, you will almost always want to look for solutions that will leave the other side satisfied as well. If the customer feels cheated in a purchase, the store owner has also failed; he may lose a customer and his reputation may suffer.

30) Look for items that are of low cost to you and high benefit to them, and vice versa.

31) To produce an outcome independent of will, you can use either fair standards for the substantive question or fair procedures for resolving the conflicting interests. Consider, for example, the age-old way to divide a piece of cake between two children: one cuts and the other chooses. Neither can complain about an unfair division. (I just like the example of children dividing a piece of cake. Simple and elegant solution)

32) Never yield to pressure, only to principle.

33) Silence is one of your best weapons. Use it. If they have made an unreasonable proposal or an attack you regard as unjustified, the best thing to do may be to sit there and not say a word. If you have asked an honest question to which they have provided an insufficient answer, just wait. People tend to feel uncomfortable with silence, particularly if they have doubts about the merits of something they have said.

34) When you ask questions, pause. Don't take them off the hook by going right on with another question or some comment of your own.

35) Making yourself open to correction and persuasion is a pillar in the strategy of principled negotiation.

36) A good negotiator rarely makes an important decision on the spot. The psychological pressure to be nice and to give in is too great. A little time and distance help disentangle the people from the problem.

37) One way to try to head off this problem (ambiguous authority) is to clarify early in the negotiation that "nothing is agreed until everything is agreed," so that any effort to reopen one issue automatically reopens all issues.

38) You must decide on your own whether you want to use tactics you would consider improper and in bad faith if used against you. (For me, we should not go down to the same low level as those who use dirty tactics. We must be aware though when dirty tactics are being used against us but we must not let it taint us)

39) No one, however, can make you skillful but yourself. Reading a pamphlet on Royal Canadian Air Force fitness program will not make you physically fit. Studying books on tennis, swimming, riding a bicycle, or riding a horse will not make you an expert. (From today onwards, I would embrace challenging negotiation rather than avoid it. This is the only way I can get better at it. Technical people such as engineer would do well to remember that our learning should not be confined to technical knowledge only and "other" skills such as negotiation will make us a better engineer, consultant and probably a better person as well)

40) Many people tend to measure success by how far the other party has moved. Even if the first figure is a wholly arbitrary assertion of "sticker price" or "retail value," buyers will often feel happy about getting something for less. They have not checked the market. They do not know what their best alternative would cost, so they derive satisfaction from paying less than the first "asking price." (This may be the same tactic used by retailers by promoting sales campaign or warehouse sale where on the surface, it appears prices have been slashed and unsuspecting customers thought that they have gotten themselves a good bargain. It is important for consumers to check the market price!)

41) The best rule of thumb is to be optimistic - to let your reach exceed your grasp. Without wasting a lot of resources on hopeless causes, recognize that many things are worth trying for even if you may not succeed. The more you try for, the more you are likely to get. Studies of negotiation consistently show a strong correlation between aspiration and result. Within reason, it pays to think positively.

42) Your reputation for honesty and fair-dealing may be your single most important asset as a negotiator.

43) On inventing an elegant option, consider the sealed-bid stamp auction. The auctioneer would like bidders to offer the most they might conceivably be willing to pay for the stamps in question. Each potential buyer, however, does not want to pay more than necessary. In a regular sealed-bid auction each bidder tries to offer slightly more than their best guess of what others will bid, which is often less than the bidder would be willing to pay. But in a stamp auction the rules state that the highest bidder gets the stamps at the price of the second-highest bid. Buyers can safely bid exactly as much as they would be willing to pay to get the stamps, because the auctioneer guarantees that they will not have to pay it! No bidder is left wishing that he or she had bid more, and the high bidder is happy to pay less than was offered. The auctioneer is happy knowing that the difference between the highest and second-highest bids is usually smaller than the overall increase in the level of bids under this system versus regular sealed-bid auction. (This is an elegant solution and I would think it will work beautifully for other bids such as construction contracts, consultancy works, etc. where currently, the lowest bid is usually awarded the works and many times, it ends up with less than satisfactory results)

44) Convincing the other side that you are asking for no more than is fair is one of the most powerful arguments you can make.

In summary, this is a good book on principled negotiation which has certainly opened my eyes. Previously, I tried to avoid tough negotiation as the experience is often unpleasant as it involves the test of will between two opposing parties. After reading this book, I would look at negotiation as a process to obtain a fair and satisfactory agreement for both parties and the process should not be viewed negatively. For without negotiation, there would never be a way to move forward.

That's all folks. Wishing you a Merry Christmas and Happy New Year. Let us hope that the year 2014 will be a peaceful year with conflicts resolved through principled negotiation.

The Prince by Niccolo Machiavelli (English translation by N.H. Thomson)

2013-11-16T19:24:00.001-08:00

This literary classic is one of the most influential book ever written and for good or for worse, the name Machiavelli is synonymous with unscrupulousness, deviousness, and cruelty. For me, one have to understand the circumstances and time in which Machiavelli lives and I admire Machiavelli for his honesty about the subject. Are we a hypocrite if we label Machiavelli as unscrupulous and cruel even though we know that human beings are capable of such deeds? Anyway, the book is a must read even if it is just to understand how the term Machiavellian measures came about. As for passing judgement on Machiavelli, I will leave it to each individuals. For me, I am guided by the following quote:

"Emerge from the mud untainted; understand cunning but do not use it" - A Ming-dynasty writer.

The book does offer some relevant insights for management:

1) Injuries, therefore, should be inflicted all at once, that their ill savour being less lasting may the less offend; whereas benefits should be conferred little by little, that so they may be more fully relished (Same as restructuring, all painful measures must be quick and effective. After that, assures everyone that the company is on the right path and so that staff won't be at the edge of fear and not productive. This is usually difficult because we tends to delay making difficult decisions and this often prolongs the pain. This is a dillema because we sometimes tend to label decisive leaders who make quick but painful decision as heartless and cruel!)

2) He must therefore keep his mind ready to shift as the winds and tides of Fortune turn, and, as I have already said, he ought not to quit good courses if he can help it, but should know how to follow evil courses if he must (Again, a good leader is someone who remains unwavering towards his goal and at the same time, able to make difficult and painful decisions if he/she needs to)

3) As to how a Prince is to know his Minister, this unerring rule may be laid down. When you see a Minister thinking more of himself than of you, and in all his actions seeking his own ends, that man can never be a good Minister or that you can trust (Can this statement be applicable to selecting/promoting staff to management level? Can it be rewritten as follows? When you see an employee thinking more of himself than of the company/people he lead, and in all his actions seeking his own ends, that man can never be a good leader/manager or that you can trust)

This is only a simple summary and I will leave you with the following quote which I read from a newspaper article and I find it inspiring in how we should conduct ourselves:

"You can easily judge the character of a man by how he treats those who can do nothing for him" - Johann Wolfgang von Goethe

Property Market in Malaysia - Bubble or No Bubble?

2013-08-13T04:13:00.001-07:00

In June 2011, in one of my earlier posting, http://businessmanagementbooksreview.blogspot.com/2011/06/from-asian-to-global-financial-crisis.html), I have predicted that the property market is due for a correction sometime in 2012 and one of the charts which I have shown in that posting is reproduced below:

Anyway, we all know that my prediction is WRONG and Malaysia continues to enjoy excellent growth in the property market (p.s. I have to admit that I am a pessimist). As such, I thought it will be a good time for me to do a review on the current property market in Malaysia. The first chart which I am sharing is an update of the above earlier chart as we now have information on the values of property transaction in 2011 and 2012 which is shown below:

So, from the updated chart, it appears to show that property transactions have reached its peak in 2012 and is it heading for a correction?

Next, I would like to share a chart which shows the house price index from 1988 to 2012 for terrace and high-rise properties in Malaysia:

From the graph, I would interpret as generally, the rise in house prices for terrace houses are still ok while for high-rise, it is not sustainable. It sort of makes sense because I would think that high-rise properties are more popular to speculators. What do you think?

The above chart prompted me to analyse further the data and the two charts below show the 1-year percentage change of the house price index for terrace and high-rise respectively:

For terrace houses, it does appear the rate of increase is not too drastic but it does show some softening in 2012.

For high-rise, it does seem the recent run-up in prices is too drastic and steep correction is expected soon?

This makes me wonder which city is most susceptible to a price correction and for that, the chart below would offer some guidance:

At first look, we may have the impression that Pulau Pinang and KL are at risk of a steep price correction for high-rise properties but if we were to analyse the value of overhang properties, we can see some interesting numbers.

From the additional information, I would think that Selangor would be facing the highest risk of a steep price correction because of the following reasons:

a) The value of overhang properties increased significantly from Q1 2012 to Q1 2013, i.e. from RM394 Million to RM1.2 Billion!!!

b) To make matters worse, the unsold under construction properties is a staggering 9,077 units which increases from Q1 2012 where the unsold under construction units is 7,712.

As such, the value of overhang properties and number of unsold under construction units in Selangor have increased from Q1 2012 to Q1 2013 and for me, that is indicating some indigestion!!! And by the way, from an engineering point of view, the house price index for KL, Selangor and Pulau Pinang is increasing at an exponential rate since 2008/2009 and for fellow engineers or mathematicians, we all know how exponential increase will lead to infinity. So, we can interprete the chart in two ways, i.e. property prices will reach sky high or property price also cannot defy gravity and will need to fall down soon. I will leave the interpretation to you.

Have a good day.

Be Excellent at Anything: Four changes to get more out of work and life

2013-06-30T00:14:00.000-07:00

At first look, I thought the book is about how we can improve our performance at work so that we can be excellent at anything. For instance, we may be good at technical aspects of our work but may be poor in terms of motivating and providing leadership to the team which we lead. Well, it was certainly a lesson not to jump into conclusion too fast especially just by looking at the surface. As the title (".......to get more out of work and life") suggests, the book is about how we can have a meaningful life and to have the best adventure during our short stay here on earth. The book is good where it provides guidance and practical examples on how we can improve our work performance while at the same time, have a meaningful and happy life outside of work. For me, more importantly, it prompted me to ask myself some questions which are neglected in the chaos and hectic lifestyle of all of us modern animals. I certainly do not want to only realize that I have not "lived" when I am fifty or sixty and it may be too late by then. It also prompted me to ask myself what would give me the most satisfaction and contentment when it was time for me to check-out from this adventure on earth. Would I have any regrets? Have you asked yourself such questions lately?

Actually, the book is well written and there is also summary/action steps at the end of each chapter. Anyway, the original intention of this blog is to share some excerpts from the book which I find useful/motivating and as usual, the followings are excerpts which I am sharing with all of you (Words in blue are my own opinion):

1) The way we're working isn't working in our own lives, for the people we lead and manage, and for the organizations in which we work. We're guided by a fatal assumption that the best way to get more done is to work longer and more continuously. But the more hours we work and the longer we go without real renewal, the more we begin to default, reflexively, into behaviors that reduce our own effectiveness - impatience, frustration, distraction, and disengagement. They also take a pernicious toll on others.

We live in a gray zone, constantly juggling activities but rarely fully engaging in any of them, or fully disengaging from any of them. The consequence is that we settle for a pale version of the possible.

(Are you suffering from the above or you noticed that someone which you are leading is suffering some of the behaviors described above due to over-working or burnt out? Are you passionately engaged in your work or you are doing it half-heartedly and not to the full potential which you know you are capable of?)

2) Human beings, on the other hand, need to meet four energy needs to operate at their best: physical, emotional, mental, and spiritual.

3) Perhaps no human need is more neglected in the workplace than to feel valued. (Employees need to feel valued! As leader, we need to let our employees know that they are valued)

4) The single most important factor in whether or not employees choose to stay in a job, Gallup has found, is the quality of their relationship with their direct superiors. (Different people may interpret this statement differently. For me, a good quality relationship is where we work for someone which continue to inspire us to reach higher and to grow as a person and not necessarily as your best friend at work)

5) Consciously cultivating a more realistically optimistic perspective refuels our emotional reservoir (Be positive. No one likes to be around a grouch)

6) Is the life you're leading worth the price you're paying to live it? (Powerful question isn't it? We have to constantly ask ourselves this question)

7) "There is always an optimal value," explained the philosopher Gregory Bateson, "beyond which anything is toxic, no matter what: oxygen, sleep, psychotherapy, philosophy." The Stoic philosophers referred to this paradox as anacoluthia, the mutual entailment of virtues. No virtue, they argued, is a virtue by itself. Even the noblest virtues have their limits. (This is a philosophy which I strongly believe. Everything should be in moderation from money, work and even having fun. The same goes with management philosophy, there should be middle ground between compassion, making the hard decisions, etc.)

8) We create the highest value not by focusing solely on our strengths or by ignoring our weaknesses, but by being attentive to both.

9) Self-control, Baumeister hypothesized, operates the same way a muscle does during resistance training. Exposed to continuous stress, the muscle becomes progressively depleted of strength, until ultimately it can't exert any more energy and fails. If we have to rely on willpower to sustain a new behaviour, the overwhelming likelihood is that we'll eventually fail.

10) By defining precisely when we're going to undertake a behavior, we reduce the amount of energy we have to expand to get it done. Often, when we make a commitment to a new behavior such as exercising, we fail to recognize that unless we set aside a specific time to do it, it's unlikely we will.

11) Maintenance and refueling are as critical to victory as racing itself. That's because the higher the demand, the greater and more frequent the need for renewal. (Don't burn out yourself!)

12) Taking care of yourself physically won't turn you into a great performer - it's just one piece of a more complex puzzle - but failing to do so assures that you can't ever perform at your best. (Do you neglect your health in the pursuit of career advancement?)

13) William Dement, the widely acknowledged dean of sleep researchers, argues that sleep may well be more critical to our well-being than diet, exercise, and even heredity. (It seems that modern workers are increasingly sacrificing sleep in the pursuit of career advancement and jeopardising their own long-term growth)

14) So how much sleep do we need? The National Sleep Foundation recommends between seven and nine hours.

15) Numerous studies of great performers suggest they sleep more than the rest of us, not less. (I should have used this book against my parents for complaining that I sleep too much during the day during my student days. Hehehe. Anyway, don't misinterpret the statement. It doesn't mean that the more you sleep, the better you are at whatever you are doing. It just means great performers knew the importance of sleep and pace themselves accordingly to ensure sustainable long-term performance)

16) Sleep is not simply cognitively restorative but also a time during which considerable learning occurs. Although the acquisition of knowledge occurs only during waking life, there is evidence that we process, consolidate, and stabilize memory during sleep.

17) Whether it's evenings and weekends truly off, longer and more regular vacations, brief breaks during the day at ninety-minute intervals, short afternoon naps, or a minimum of seven to eight hours of sleep a night, the overwhelming evidence is that our health and productivity are enhanced by a rhythmic movement between work and rest.

18) ....... three principles that we believe are fundamental to sustainable high performance. The first is that we cannot expect growth or improvement in any dimension of our lives without intentionally and regularly challenging our current capacity. The second is that intense effort for short periods, followed by intentional rest and recovery, is more efficient, more satisfying and ultimately more productive than moderate, continuous effort for longer periods of time. The third principle is that Aesop had it wrong in his classic fable about the tortoise and the hare. It isn't the tortoise, slow and steady, that wins the race. Rather, it's the hare, who balances intense burst of energy with intermittent periods of recovery.

19) Metabolism is the rate at which we burn calories, and eating breakfast stokes it and also gives us energy for the day ahead. (Breakfast is important!!!)

20) The third problem with negative emotions is their impact on others. The research is increasingly clear that all emotions are contagious, for better or for worse. (Be happy and positive and the world will be a better place)

21) We think of leaders as "chief energy officers." The core challenge for leaders, we believe, is to recruit, mobilize, inspire, focus and regularly refuel the energy of those they lead - to nudge them toward high positive. (For me, the greatest sense of satisfaction is when seeing the person which you lead grow together with you)

22) Our core emotional need is to feel secure - to be valued - and challenges to our self-worth do just the opposite. They make us feel devalued and insecure. Most of us find such feelings uncomfortable at best and intolerable at worst.

23) Whether inflated self-regard is a thin cover for inadequacy or an inflated and unwarranted confidence, it's at least as dysfunctional as insecurity.

24) When a trigger lands you in the "Survival Zone," the first key is to calm your physiology. That requires applying what we call the Golden Rule of Triggers: whatever you feel compelled to do, don't. Instead take a deep breath, and then feel your feet. Buy time until your body calms down, so that you can make an intentional choice about how to best respond to the trigger. (Helps prevent us from responding in a way which we regret later)

25) Expecting to succeed, in short, makes us more likely to succeed. "Each of us can be considered an active player in the quality of our experiences," writes Schneider, "with at least partial control of whether good things happen. Realistically, having a good attitude is likely to pay off." (Attitude, attitude and attitude determine our success)

26) ....... "the Stockdale Paradox."......."You must never confuse faith that you will prevail in the end - which you can never afford to lose - with the discipline to confront the most brutal facts of your current reality, whatever they might be."

27) In its 2007 study of 90,000 employees in eighteen countries, Towers Perrin found that the single highest driver of engagement was whether or not senior management was perceived to be sincerely interested in employees' well-being. An organization's reputation as a great place to work was the highest driver of retention; second was the satisfaction of employees with the organization's people decisions. The third was having a positive relationship with one's direct supervisor. The conclusion is inescapable: truly valuing people pays huge dividends.

28) We recognized that we needed to pause to celebrate our successes along the way, or else people get burned out and feel taken for granted.

29) Because the impact of bad is stronger than good, the first rule for an effective leader is simply to avoid devaluing emotions: anger, intimidation, disparagement, and shame.

30) Treat employees well, make them feel more valued, and they will treat their customers well.

31) Herbert Simon, a polymath who wrote more than a thousand scientific papers and won the Nobel Prize in Economics, saw our current attentional crisis coming forty years ago. "What information consumes is rather obvious," he wrote in 1971. "It consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention." (I think many of us can relate to this. The quality of our attention seems to be deteriorating due to information overload. We are bombarded with constant information from TV, smartphone, etc. to the extent that it is also affecting our attention to our loved ones and our surroundings. This is the same with work that too much information can be paralysing and we are so busy replying e-mails, phone calls, etc. that we are rarely focused on the more important task)

32) If you want those in your charge to be effective at delaying gratification and focusing their attention effectively, it goes a long way to make them feel cared for and secure.

33) Obvious as that may seem, the act of prioritizing - focusing on what's likely to add the greatest value over the longest term - doesn't come to us naturally. It requires both awareness and intentionality. At a practical level, it means setting aside regular time to reflect on and define priorities, rather than simply plunging into the next task that comes into your mind or reacting to the next request that flashes up on your computer screen.

34) Control your attention, and you control your life. I truly believe that.

35) ..... many analytically gifted, left-hemisphere-driven leaders who lack the capacity to connect emotionally with those they lead. At the opposite end, extreme empathy may lead to an inability to create boundaries with others, while high creativity may be accompanied by a spacy inability to follow through and translate ideas into actions. (This explains why technical people like engineers are usually lousy businessman because technical people are dominated by left-hemisphere of our brain and engineers lack the ability to connect emotionally with others such as Clients. At the other end, highly creative people which is dominated by right-hemisphere brain lack the efficiency of getting things done systematically unlike engineers. So, the key here is to realise our inherent biological weaknesses and how to overcome it, e.g. perhaps engineers need to spend more time socialising to develop our social skills)

36) While working on The Last Supper, Leonardo da Vinci regularly took off from painting for several hours at a time and seemed to be daydreaming aimlessly. Urged by his patron, the prior of Santa Maria delle Grazie, to work more continuously, da Vinci reported to have replied, immodestly but accurately, "The greatest geniuses sometimes accomplish more when they work less."

37) Arie de Geus, a former head of planning at Royal Dutch Shell, conducted a studies of companies that have lasted the longest. "The ability to learn faster than competitors," he argued, "may be the only sustainable competitive advantage." (The challenge for a company is then to instill a culture of learning within the organization and to treat every unique job as an opportunity to learn. The same applies to individuals)

38) Any organization that fails to build a robust learning program for its employees - not just to increase their skills but also to develop them as human beings - ought to expect that its people won't get better at their jobs over time and may well get worse.

39) "He who has a why to live for," said Nietzsche, "can bear almost any how." When something really matters to us, we bring vastly more energy to it in the form of focus, conviction, passion, and perseverance.

40) ...... that once our basic needs are met, money has little to no impact on our happiness. Nonetheless, the typical pattern in any addiction is to progressively do more of whatever the addictive behavior may be, in an increasingly futile effort to recapture the initial pleasure it provided.

41) We derive the most powerful sense of purpose when our values fuel behaviors that serve something beyond ourselves.

42) "Your time is limited, so don't waste it living someone else's life," Apple CEO Steven Jobs told Stanford's graduating class in 2005, just a year after he was diagnosed with pancreatic cancer at the age of forty-nine.

43) The limitations we set on ourselves are mostly our own. The willingness to delay immediate gratification in the pursuit of excellence is the surest way to achieve rich, deep, and enduring satisfaction.

44) "A person with ubuntu," explains Archbishop Desmond Tutu, "is open and available to others, affirming of others, does not feel threatened that others are able and good, for he or she has a proper self-assurance that comes from knowing that he or she belongs in a greater whole and is diminished when others are humiliated or diminished."

45) A review of more than 150 leadership studies found that integrity is the value employees care most about in their leaders. Honesty is second, and humility is third. The other qualities employees most value include care and appreciation, respect for others, fairness, listening responsively, and reflectiveness.

46) If you lead or manage others, here are the sorts of questions you might ask yourself and request others to answer about you:

a) Do you actively support people in taking care of themselves physically? Do you model these behaviors yourself?
b) Do you truly value, regularly recognize, and express appreciation to those who work for you?
c) Do you respect and trust your employees and treat them as adults capable of making their own decisions about how best to get their work done?
d) Do you believe passionately in what you're doing, and do you give people who work for you a compelling reason beyond a paycheck to come to work every day?

47) "Before my illness, I had considered commitment king among virtues. After I was diagnosed, I came to consider consciousness king among virtues. I began to feel that everyone's first responsibility was to be as conscious as possible all the time....Looking at how some of the people around me had managed their lives, I lamented that they had not been blessed with this jolt to life. They had no real motivation or clear timeline to stop what they were so busy at, to step back, to ask what exactly they were doing with their life. Many of of them had money; many of them had more money than they needed. Why was it so scary to ask themselves one simple question: Why am I doing what I'm doing?" (written by Eugene O'Kelly, the former CEO of accounting firm KPMG in the last months of his life, before he succumbed to brain cancer at the age of fifty-three)

I think the last point best sums up the lessons from the book. Do we know our priorities? If we say that we needed more money for our loved ones but we are now sacrificing our time with them, is this the correct path? Do we know why we are doing what we are doing?

Good luck and have a good and happy life ahead!

Housing bubble in Malaysia?

2013-06-19T21:10:00.003-07:00

10,000 Milestone

2013-06-13T02:33:00.001-07:00

Well, this little blog have hit a small milestone last week with 10,000 hits. It is in fact nothing to shout about but it does signify a milestone for me personally. Anyway, looking at the journey so far, it is good to look back and ask ourselves some questions. In this posting, there would be no answer, only questions as I believe the key to finding the right solutions is to ask the right questions in the first place.

1. To be a good leader, do you engage with your co-workers such that you have more than just a professional relationship? There seems to be two school of thoughts here:

a) Keep your distance and maintain the relationship as strictly professional so that when it comes to tough decisions, you are not influenced by personal emotion.
b) Be more than a colleague and get to know your colleagues personally so that you know what is his dreams, life values and aspirations.

2. Do you discuss and explain every management decisions with people who you worked with or in some cases, there is no need for them to know as they may not be ready or mature enough to handle the information?

3. In a company, just like in a football team, we need goalkeepers, defenders, midfielders and strikers. Of course, the strikers will get most of the attention but how do we ensure the goalkeepers and defenders of a company understand their role and is happy with their contributions in the company rather than envious of the strikers?

4. In leading a company, does 100% democracy work where decisions are based on consensus or it should be based on the wisdom of the management in making tough and unpopular decisions but good for the company's long-term growth?

5. Does absolute freedom works where we treat our co-workers like adult rather than children and let them work freely, e.g. not necessary for fixed office hour, as long as they deliver the final product within the fixed timeline or people always need discipline in order to perform?

What do you think?

Happy Father's Day.

p.s. My father is my biggest inspiration and I strive to be just like him. I remember that whenever I tell him that I did not do so well in my studies, he will just ask me: "Have you tried your best? If yes, there is nothing to be ashamed of. If not, then you should try your best the next time".

Management Lessons from Football: Inspired by Sir Alex Ferguson's Retirement

2013-05-13T23:18:00.003-07:00

As much as I hate to admit it, Sir Alex Ferguson is indeed one of the greatest, if not "the" greatest football manager in the modern game. With his recent decision to retire, it somehow struck me that football does indeed offers us many management lessons which we can adopt in our organization:

1. A team full of star players would be useless unless they can function as a team. Look at Manchester City. With all the money which they have spent, one would have expected them to perform better. As such, it is important to get players (or workers) who wanted to play (or work) for the team (or organization).

2. In any organization, it is important to have players (or workers) of different skills and personalities. You certainly cannot have a team with strikers only. As such, it is important to place equal emphasis on workers of different skills, e.g. the manager (i.e. workers who is good at managing teams and getting things done who is like the hard working midfielder such as Roy Keane, Michael Carrick, etc. - not spectacular, but get things done) and the technician (i.e. workers who provides the spark in the organization or someone with in-depth technical knowledge who is like Robin Van Persie, Eric Cantona, etc.).

3. Every now and then, an imported player (or personnel from outside the organization) would be good for the team (or organization) if the imported player (or personnel) adds value to the team (or organization) and does not jeopardize the team's (or company's) harmony. Look at what Eric Cantona and Robin Van Persie contributes to Manchester United. Similarly, player who disrupts the team's harmony should be kicked out as soon as possible.

4. It is important to develop the right culture in any organization. With the right mentality, challenges can be overcome together rather than resort to negative in-fighting. One of the traits which makes Manchester United so successful is their belief, determination and never say die attitude. I don't think it is a coincidence that they can grind out results when they have an off-day or perform last minute heroics which are features of champions from the Liverpool team of the 80's to the Manchester United team of the 90's.

5. It is important to develop the organization to the extent that it is able to attract junior talents. This is the same for a company as well as for a football team. Manchester United would not be so successful if it did not manage to attract young talents such as Ryan Giggs, David Beckham, Paul Scholes, etc. and develop them into world class talent.

Finally, I also find it amazing that Sir Alex Ferguson is "only" a manager for 26 years. If we were to compare with other organization in the private sector, it would be considered a failure if someone is "only" a manager for 26 years and not promoted to Director or something like that. This struck me because I have encountered challenges where one of the reasons given by a colleague for leaving a company is because of not promoted to Director even though remuneration, working environment, etc. is not an issue. What he wanted is only the title and recognition. So, if we were to use football manager as an example, can we give job satisfaction irregardless of the title as long as the person feels he is in control and given due recognition of his role/contributions? The Directors should also be happy to be out of the limelight and let the manager handle the spotlights. Or maybe it is just because Directors are paid less in a football club compared to a Manager (I really don't know)?

Happy inspiring and looking forward to Brendan Rogers vs David Moyes.

Adapt: Why Success Always Starts with Failure

2013-03-03T04:44:00.002-08:00

The latest work from Tim Harford who is one of my favourite authors is another good read and perhaps, explain in an easy to understand manner the importance of adapting and why we should not be afraid of failure. For those who have read Tim Harford's works, you will know that Mr. Harford always manages to get his message across with good arguments and real life examples. It is such good story telling skills which makes his works such a joy to read. This book with the simple title of "Adapt" explains why we should always be brave enough to try new things and to embrace failure as part of the process. The title of the book is apt as the most important part of embracing failure is the ability to learn from the failure and move on, i.e. adapt. If we did not learn anything from the failure, well, we will just keep on tripping on the same mistakes and I am sure, that is not something which we look forward to.

Again, I have selected some excerpts from the book which I find useful especially when things don't seem to be going to plan. It is good to remind ourselves that experiencing failure is part of the "joy" of life and to remind ourselves to move forward with the lesson/experience gained. Words in blue are my own opinion.

1) To survive and be profitable it is not enough to be good; you must be one of the best. (This is especially true in the age of the internet where information is readily available including your company's track records, customer satisfaction, etc.)

2) In a complex, changeable world, the process of trial and error is essential. (The point here is that the world is getting more complex and we cannot wait for the ideal solution, if ideal solution can be devised in the first place.)

3) But whether we like it or not, trial and error is tremendously powerful process for solving problems in a complex world, while expert leadership is not. (As a leader, our role is to guide our people towards a process of solving problems and not providing direct solution where the direct solution may be completely wrong! As a follower, we should not also expect our leader to provide the solution but we should devise a process towards solving the problem with the leader stepping in whenever the process is veering off its course.)

4) The great economic psychologists Daniel Kahneman and Amos Tversky summarised the behaviour in their classic analysis of the psychology of risk: 'a person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise'. (Some of us may have experienced this first hand before. I think the most common place where we can observe this behaviour is in a casino. For example, we have loss considerable money and we tend to place one last bet of the same amount that we have loss with the hope of recouping our money. This happens because we have not accepted the loss and we ended taking huge gambles which we would not have taken in other circumstances.)

5) The economist Terrance Odean has found that we tend to hang on grimly, and wrongly, to shares that have plunged in the hope that things will turn around. We are far happier to sell shares that have been doing well. Unfortunately, selling winners and holding on to losers has in retrospect been poor investment strategy.

6) Faced with a mistake or a loss, the right response is to acknowledge the setback and change direction. Yet our instinctive reaction is denial. That is why 'learn from your mistakes' is wise advice that is painfully hard to take.

7) ...... recipe for successfully adapting. The three essential steps are: to try new things, in the expectation that some will fail; to make failure survivable, because it will be common; and to make sure that you know when you've failed.

8) ..... organisations which ignore internal criticism soon make dreadful errors.......

9) ..... bright ideas emerge from the swirling mix of other ideas, not from isolated minds.

10) But once a new idea has appeared, it needs the breathing space to mature and develop so that it is not absorbed and crushed by conventional wisdom.

11) And in the quest for truly original research, some failure is inevitable. (This not only applies to research. To create a responsive and dynamic organisation, it is important that the management accepts that some failure is inevitable and what is important is how we learn from the failure and move on. If the organisation do not expect failure at all, it will paralyse its own people as no one would dare to try new things which benefit the company or make important decisions and the company will end up with the motto: "The less we do, the better as there will be less chance of a failure". After all, the best way to avoid failure is to do nothing.)

12) Correlation is a treacherous guide to causation. (Don't rely on correlations too much!!!)

13) In a lecture of 1755, Adam Smith declared that 'little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes and a tolerable administration of justice: all the rest being brought about by the natural order of things.' In other words, if the government can just get the basics right, everything else will gradually follow in time, and foreign aid can help - if only it is properly tested. (I would think that the same principle applies to a company. If a company or its management manage to get the basics right, i.e. condusive working environment for employees to thrive and contribute, clear reward system and a system of check and balance, the organisation will probably take off on its own. What do you think?)

14) ..... three different types of error. The most straightforward are slips, when through clumsiness or lack of attention you do something simply didn't mean to do.

15) ..... violations, which involve someone deliberately doing the wrong thing.

16) Most insidious are mistakes. Mistakes are things you do on purpose, but with unintended consequences, because your mental model of the world is wrong. (This reminds us of the famous statement by General Von Manstein on the German Officer Corps:

There are only four types of officer. First, there are the lazy, stupid ones. Leave them alone, they do no harm......Second, there are the hard working intelligent ones. They make excellent staff officers, ensuring that every detail is properly considered. Third, there are the hard working, stupid ones. These people are a menace and must be fired at once. They create irrelevant work for everybody. Finally, there are the intelligent lazy ones. They are suited for the highest office.

I guess General Von Manstein also realise that the most insidious of errors are mistakes and hard working but stupid people tends to do the most mistakes. This is just to put the message across in a direct manner but for me, hard working is an important trait which I value the most. This is because there is no way for us to know whether we are stupid or intelligent as some good decisions are probably due to luck. Anyway, if we are hard working, we can certainly fulfill our own potential and if we are lazy, no amount of talent in the world will make us successful.)

17) There are three essential steps to using the principles of adapting in business and everyday life, and they are in essence the Palchinsky principles. First, try new things, expecting that some will fail. Second, make failure survivable: create safe spaces for failure or move forward in small steps. As we saw with banks and cities, the trick here is finding the right scale in which to experiment: significant enough to make a difference, but not such a gamble that you're ruined if it fails. And third, make sure you know when you've failed, or you will never learn. As we shall see in the next chapter, this last one is especially difficult when it comes to adapting in our own lives.

18) Being willing to fail is the essential first step to applying the ideas of Adapt in everyday life.

19) ..... three obstacles to heeding that old advice, 'learn from your mistakes': denial, because we cannot separate our error from sense of self-worth; self-destructive behaviour, because like the game-show contestant Frank, or Twyla Tharp when marrying Bob Huot, we compound our losses by trying to compensate for them; and the rose-tinted processes outlined by Daniel Gilbert and Richard Thaler, whereby we remember past mistakes as though they were triumphs, or mash together our failures with our successes.

20) The ability to adapt requires this sense of security, an inner confidence that the cost of failure is a cost we will be able to bear. Sometimes that takes real courage; at other times all that is needed is the happy self-delusion of a lost three-year-old. Whatever its source, we need that willingness to risk failure. Without it, we will never truly succeed. (Fortune favours the bold?)

In summary, this book reminds me to be brave and to try new things, adapt and move on. Which one do you think is better? To have tried, failed and try again or to live in regrets that you have never tried and you can only wonder, what if? I think most of us know the answer to that question.

'Ever tried. Ever failed. No matter. Try again. Fail again. Fail better' - Samuel Beckett.

Top 3 Recommended Authors

2013-02-13T19:51:00.004-08:00

My recommended top 3 authors on subjects ranging from economy, business, finance and general management/philosophy are based on the following criteria:

1) After reading the book, you would have a great feeling of being "enlightened" or prompt you to have a complete re-assessment of your views of the world or approach to life, finance or management, i.e. the book has a profound impact on me.

2) The Author has produced more than one good work and every book which you have read by the same Author gives you the same excitement.

3) The book is grounded in practicality and is based on real-life experience, i.e. practical and realistic.

Based on the above criteria, my list of top 3 authors are as follows (with no order of preference):

1) Nassim Nicholas Taleb

The words that I would use to describe Nassim Nicholas Taleb is brilliant, frank and unconventional. His two books, "The Black Swan" http://businessmanagementbooksreview.blogspot.com/2011/04/black-swan-impact-of-highly-improbable.html and "Fooled by Randomness" http://businessmanagementbooksreview.blogspot.com/2012/06/fooled-by-randomness-hidden-role-of.html are simply brilliant and he certainly explained a lot of questions which have always puzzled me and opened up my mind. To me, an Author who is able to open up my mind and made me questions a lot of the established rules/norms are very important and for that, Nassim Nicholas Taleb's books are a must read for me.

2) Malcolm Gladwell

Books by Malcolm Gladwell is so easy to read and insightful. That is not surprising since he introduced the concept of tipping point to the world. His four books books, "The Tipping Point", "Blink", "Outliers" http://businessmanagementbooksreview.blogspot.com/2011/10/outliers-story-of-success-by-malcolm.html and "What the Dog Saw" http://businessmanagementbooksreview.blogspot.com/2012/01/what-dog-saw-and-other-adventures.html are all classics and should be in everybody's book shelf.

3) Tim Harford

Tim Harford made economic relevant to everyone and explained economic concepts using simple language and practical examples. His works are also easy to read, practical and insightful. The book, "The Undercover Economist" http://businessmanagementbooksreview.blogspot.com/2011/07/undercover-economist.html is one of my must read book. His other works such as "Logic of Life" http://businessmanagementbooksreview.blogspot.com/2012/04/logic-of-life-uncovering-new-economics.html and "Adapt" continue Mr. Hardford's previous good works on how to present important but sometimes "dry" subject in an easy to read format.

That's it folks. Just my humble opinion on three of my favourite Authors. You may have different opinions and I would like to hear your opinions and look forward to be introduced to other great works.

Take care and may the year of the snake brings you good health and joy. Happy Chinese New Year.

Inspiration from JAL CEO

2013-01-25T01:46:00.003-08:00

When it comes to crunch time, can we be like JAL CEO? Only time will tell whether we can rise to the occassion.

http://youtu.be/AqFxK3GMEkA

The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money

2013-01-24T01:30:00.001-08:00

First of all, a happy belated new year to everyone. A new year will give us renewed hope and ethusiasm as we strive to further improve ourself and to further enjoy our lives. I picked up this book by Carl Richards in a book fair and it was a bargain as the book only costs RM10. The book is about how we can improve our behaviour with respect to money as the title of the book suggests. The book is easy to understand and is quite readable. It strikes me as I am also a victim of my own irrational behaviour with money and as such, I find the book a timely reminder to not follow the herd with respect to investing and how I manage my money. I guess the sketch shown in the book cover describes most of us.

As usual, I would like to share excerpts of the book which I find useful (Words in blue are my own opinions):

1) But in the end, financial decisions aren't about getting rich. They're about getting what you want - getting happy. And if there is a secret to getting happy, it's this: be true to yourself. (Do you know what you REALLY want in life to be happy? Are you following others definition of happiness?)

2) The more expensive stocks (or houses) are, the more risky they are - yet that's when we tend to find them most attractive. (We are all worried that we might miss the train - if we don't buy now, we would not be able to afford it.)

3) ....... as the historian and philosopher George Santayana said (more or less), those who don't remember the past just get hammered again and again.

4) The next time you're about to make an investment decision because you're sure you're right, take the time to have what I call the OC (Overconfidence Conversation). It's been a truly powerful tool to help people in their decisions. Find a friend, spouse, partner, or anyone you trust, and walk them through your answers to the following questions:

- If I make this change and I am right, what impact will it have on my life?
- What impact will it have if I'm wrong?
- Have I been wrong before?

5) Before you invest your hard-earned money, ask yourself: Are you buying a particular investment because you think it's a good investment? Or are you relying on a Greater Fool to come along? If so, doesn't that make you - no offense - a bit foolish yourself?

6) It turns out that fees are the only factor that reliably predicts a fund's performance. The higher the expense ratio - the cost of owning the fund - the worse the performance for shareholders. This is a case where you actually get what you don't pay for.

7) Trying to figure out which fund will lead the pack during the next quarter or next year or next decade is a fool's game. Focus instead on finding a low-cost investment that you can stick with over the long haul.

8) (On a friend who wrote stock-picking stories): He eventually quit writing stock-picking stories. "It's a little like writing about horse racing," he says. "It's really fun, and you learn a lot about how companies operate and how people try to value stocks. Sometimes you can help weed out the worst stocks, and once in a while you come across something that works out and you think it's because you're smart. But in the end most of it is just entertainment. You know that, and you hope no one takes it too seriously. But you know some people do."

9) This reminds me of another problem confronting every investor. We have a tendency to assume that what we do know is more important than what we don't know.

10) My point was that decisions should be based on principles, not on our feelings about what's going to happen.

11) If people make enough guesses, they are bound to get at least a few of them right. Even a broken clock is right twice a day. So don't take it too seriously when someone calls a market turn correctly. Most likely, it's luck.

12) (On life planning): First, imagine you are financially secure. How would you live your life? What would you change? Next, imagine a doctor tells you that you have only five to ten years to live - but you won't feel sick. What will you do in the time remaining? Finally, this time the doctor says you have twenty-four hours. What feelings arise? What did you miss?

13) I don't know what constitutes a bad or good time to invest. The point is that it's always a good time to stop the cycle of selling low and buying high.

14) Set a course, realize that you'll certainly be wrong, and plan on making course corrections often. Remember: the ongoing process of planning - not the plan - will keep you headed toward your goals and out of the behavior gap.

15) ..... Jim Rogers: "Any economy which saves and invests and works hard always wins out in the future over countries which consume, borrow, and spend."

16) While making wise decisions about how you invest your money is important, it doesn't have nearly the impact of working hard and saving more - let alone starting a business, going back to school, or reinventing yourself in any number of ways.

17) Investment decisions should be made based on what we know, not how we feel.

18) Slow and steady capital is far more concerned with avoiding large losses than with chasing the next great investment. Being slow and steady means that you're willing to exchange the opportunity of making a killing for the assurance of never getting killed.

19) Moral: if you decide to be slow and steady, remember to take with a huge grain of salt all those stories of people getting rich quick. Slow and steady capital is short-term boring. But it's long-term exciting.

20) The goal isn't to make the "perfect" decision about money every time, but to do the best we can and move forward. Most of the time, that's enough.

In summary, a good book but I guess it won't make it into the best sellers list. Don't get me wrong, it has got nothing to do with the content but the message. People like to hear advise on how to get rich quick and easy with the least of hard work while this book highlights the importance of hard work and slow and steady investing. Not exciting but in my own humble opinion, it is the truth and the earlier that we accept it, the better our lives would be.

The 80/20 Principle: The Secret of Achieving More With Less

2012-11-09T14:28:00.002-08:00

Every now and then, you will come across a book that gives you the "WOW" feeling after you have read it. I have that feeling after reading "The Black Swan", "Fooled by Randomness", "Who Says Elephant Can't Dance", etc. Well, I would rank this book by Richard Koch to be among the must read books on business and management. The term 80/20 principle or Pareto Law is so commonly used in daily business and management situations and the realisation of this principle and putting it into practice is what separates effective managers and leaders from those struggling to make the leap to the next step. The relevance of the principles highlighted in the book is more pronounced in the new digital age given that everything is moving at breakneck speed and things are supposed to be completed "yesterday". It also seems to appear that the world is moving towards the ratio of 90/10 or even 95/5 from 80/20 but regardless of the actual ratio, it serves to remind us how the world works and things are not proportionate and we should wise up and focus our limited energy and resources on things that matters.

As usual, the following are some of the exerpts from the book which I find useful and I hope you will find it useful too (words in BLUE are my own opinions):

1) ...... what happens first, even something ostensibly trivial, can have a disproportionate effect.

2) A small lead early on can turn into a larger lead or a dominant position later on,........

3) Improving on nature, refusing to accept the status quo, is the route of all progress: evolutionary, scientific, social and personal. George Bernard Shaw put it well: 'The reasonable man adapts himself to the world. The unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.' (I have earlier posted a section from the book by Alan Axelrod (Gandhi, CEO) titled "Get Ready to be a Lonely Leader" and the above statement reminds us that the road to greatness can sometimes be lonely)

4) Long-term clients tend not to be price sensitive. (Richard Koch reminds us it is more worthwhile to focus on existing or long-term clients)

5) Choose our careers and employers with extraordinary care, and if possible employ others rather than being employed ourselves.

6) Only do the thing we are best at doing and enjoy most.

7) The 80/20 Principle applied to business has one key theme - to generate the most money with the least expenditure of assets and effort.

8) A product has only to be 10 percent better value than that of a competing product to generate a sales difference of 50 percent and a profit difference of 100 per cent. (This is true in almost every aspects of life from business to sports. Teams that qualified for Champions League may be 10% better than teams that don't but in terms of revenue, teams that qualified stand to reap extra revenue of up to 90% more (90/10 ratio) and that is why it can make or break a team depending on qualifications to the lucrative Champions League. Note: The ratio is only an example which I am making up from gut feeling and not based on actual numbers).

9) If you can identify where your firm is getting back more than it is putting in, you can up the stakes and make a killing. Similarly, if you can work out where your firm is getting back much less than it is investing, you can cut your losses.

10) Outsourcing is a terrific way to cut complexity and costs. The best approach is to decide which is the part of the value-adding chain (R&D-manufacturing-distribution-selling-marketing-servicing) where your company has the greatest comparative advantage - and then ruthlessly outsource everything else. (This statement is easy to understand. We all have limited time and resources and as such, it is best to focus in the area where we can do our best. In my opinion, there is an optimum size for a given company to balance between being overly complex which may results in loss of focus and inefficiency but at the same time, an optimum size to spread fixed cost, e.g. overhead costs. The same principle also applies to each individual. We should focus on the part which we can value-add and delegates the rest.)

11) All organizations, especially large and complex ones, are inherently inefficient and wasteful. They do not focus on what they should be doing. They should be adding value to their customers and potential customers. Any activity that does not fulfil this goal is unproductive.

12) Note that there are always apparently good reasons trotted out as to why you need the unprofitable 80 per cent of products, in this case the fear of 'losing stature' by having a smaller product line. Excuses like this rest on the strange view that shoppers like to see a lot of product they have no intention of buying which distracts attention from the product they like to buy. Whenever this has been put to the test, the answer in 99 per cent of cases is that delisting marginal products boosts profits while not harming customer perceptions one jot.

13) ..... do not start your project until you have stripped it down to one simple aim. (Focus, focus, focus).

14) Faced with an impossible time scale, [project members] will identify and implement the 20 percent of the requirement that delivers 80 percent of the benefit. Again, it is the inclusion of the 'nice to have' features that turn potentially sound projects into looming catastrophes.

15) In the planning phase, write down all the critical issues that you are trying to resolve. (If there are more than seven of these, bump off the least important). Construct hypotheses on what the answers are, even if these are pure guesswork (but take your best guesses). Work out what information needs to be gathered or processes need to be completed to resolve whether you are right or not with your guesses. Decide who is to do what and when. Replan after short intervals, based on your new knowledge and any divergences from your previous guesses.

16) Impatient people don't make good negotiators.

17) One of the most important decisions someone can make in life is their choice of allies.

18) Productivity on most projects could be doubled simply by halving the amount of time for their completion.

19) Hard work leads to low returns. Insight and doing what we ourselves want lead to high returns.

20) ..... make everyone repeat back to him what they were going to do.

21) Once in your profession, if making money is really important to you and if you are any good at what you do, you should aim to become self-employed as soon as possible and, after that, to start to employ others.

22) Spend your time and emotional energy reinforcing and deepening the relationships that are most important.

23) You alone cannot make yourself successful. Only others can do that for you. What you can do is to select the best relationships and alliances for your purposes.

24) Spend more time with the contacts you enjoy, particularly if they can also be useful to you.

25) 10 golden rules for career success:

i) Specialize in a very small niche; develop a core skill.
ii) Choose a niche that you enjoy, where you can excel and stand a chance of becoming an acknowledged leader
iii) Realize that knowledge is power
iv) Identify your market and your core customers and serve them best
v) Identify where 20 percent of effort gives 80 percent of returns
vi) Learn from the best
vii) Become self-employed early in your career
viii) Employ as many net value creators as possible
ix) Use outside contractors for everything but your core skill
x) Exploit capital leverage

26) Increasingly, the most important class distinction in advanced societies is not ownership of land or even of wealth, but ownership of information.

27) Whether you are employed, self-employed, a small or large employer or even the head of state, you have core customers on whom your continued success depends.

In summary, this is a good book as it opened up my mind that I should focus my limited time and energy on the important 20% that will give me 80% of the results. This is important as we move up the management chain as time would be a major constraint and we need to focus our energy and resources on value-added works and not bogged down by "routine" works. It is important for any manager/leader to be able to make this leap or else, they will be held back in their progress and to me, this book certainly helps.

The Arrogance of Growth

2012-10-31T01:46:00.003-07:00

I was fortunate enough to read an article by Mr. Rajeev Peshawaria who is the CEO of ICLIF, a leadership think-tank titled "The Arrogance of Growth" and wish to share the three simple rules by Mr. Rajeev which I find useful:

1) Try to help as many people as you can even if they seem of no use to you. You never know when they might be of help. At the very least, you can only benefit from their best wishes and gratitude.

2) When you walk into a meeting, ask three questions before giving your opinion. Even if you are totally convinced about the topic at hand, asking three questions might give you some new information, and prevent you from digging yourself into a hole.

3) Seek more to learn, and less to preach. By all means share your expertise and vast knowledge, but also try and learn something from everyone you meet.

Remember, it is important to be a leader who inspire confidence but is not arrogant. Again, it's a fine line again. So, to be a good leader, it is all about striking the right balance.