Nomad Influencer

Super Bowl's Lessons From Mrs. Brady

2012-02-10T10:32:00.000-05:00

Another year, another Super Bowl. As the planet knows by now, the New York Giants did it again. They beat the New England Patriots again. They had a late 4th Quarter winning drive again. Their team did just enough to beat an opponent that was every bit their equal. Yet post-game media was focused on the losing Quarterback's wife, super model and business star Gisele Bundschen, and her comments after the loss.

Here is the quote: "My husband cannot f------ throw the ball and catch the ball at the same time. I can't believe they dropped the ball so many times," the supermodel and wife of the famed quarterback said in a video captured by theinsider.com, a gossip website.

On the surface, this is just more unimportant gossip we are used to in our media. However what stood out to me was the lesson in between the story. I'm not going to talk so much about the comment, whether its right or wrong, or the silly reactions across the internet. Thats all irrelevant. But the lesson I'm talking about is one we can use everyday in our business and lives.

Teams win together and lose together. This is something I learnt at a young age when I switched from an individual sport in tennis to a team sport in football (American Football for you soccer fans). Coaches taught us the importance of 11 men on the field doing their job perfectly in order to win. "Every play is designed to be a touchdown," our coach would say at practice. "Its just a question of every man doing his job."

What I learnt on a football field I have used all my life. My sophomore year in high school I missed a block and the guy hit our running back for a fumble on the last drive of the game. I went home knowing I had lost the game for us. My coach called the house that night to talk to me. "You missed your block, Shar, but you didn't lose the game for us. We lost the game." It didn't do anything for me at the time, believe me.

But years later his words rang in my ear when I was leading a team that spent 9 months on a complex and strategic sales cycle only to come up short in the 11th hour. Management called for a few heads to roll and I fought against this. We lost the deal as a team and our people did a heck of a job getting us to the last round against bigger and better known competition. The client gave us pointed feedback about why we lost and they hit on our weak points which, like Gisele, we could have said let us down. But this is false justification and ultimately the team went on to win other deals and be successful.

I don't know the first thing about Gisele Bundschen but based on her reaction I would assume she hasn't really played competitive team sports. Why should she, she is on track to be the first billion dollar super model. I'm guessing team sports were not in the plan when she was modeling at an early age.

Over the years I have managed and worked with thousands of people. There is a difference in professionals that have played competitive team sports, or been in team situations like the military. This is a generalization and before you misinterpret my comments, its not an absolute rule - I have worked with plenty of folks who never played a sport or took part in a team activity, and they have been great. I've also worked with team players who were not up to par. But there is a difference in thought process, communication and the basic acceptance that we are as strong as the weakest link in our chain.

Successful people know they have to depend on others to be successful. Those who think its all about them are not successful for long. Teams learn to leverage their strengths, and they don't dwell on failure. Great leaders understand this and optimize their teams with the best talent they can find, as long as that talent can work together.

Working and playing in teams has taught me it doesn't matter if you have the league MVP on your side, if one part of the team fails we all do. You have to analyze failure and fix what needs to be fixed, but the objective is to move on and win the next one. Individuals have to understand their role as contributors as well as team members.

It sounds so simple yet we have created an environment that doesn't take into account the importance of competition, winning and losing, and team effort. For example, I can't understand the concept of giving a trophy to everyone that participates because we don't want them to feel left out. What planet do these people live on? Fairness is not about rewarding or recognizing failure. Fairness is about creating competitiveness equality so the best win. If that sounds unfair then good luck to you.

The Fallacy of Social Proof

2012-02-08T01:00:00.000-05:00

Herd behavior is an epidemic in our society today. Known as large groups conforming to choices which may be either correct or mistaken as a result of social influence, psychology research goes pretty deep into this phenomenon. One definition I read for social proof is people assuming the actions of others to reflect correct behavior for a given situation. This effect is prominent in ambiguous social situations where people are unable to determine the appropriate mode of behavior, and is driven by the assumption that surrounding people possess more knowledge about the situation. Regardless of semantics, social proof is in every part of our world.

No doubt in some situations conforming to social norms is the right thing to do. But in business the fallacy of social proof is costing companies and our society billions of dollars each year. I spend most of my professional live working with companies who are trying to solve some kind of problem that involves change. Change is a difficult thing. People, in general, refuse to embrace change unless they are comfortable with it. But most change is anything but comfortable, so the ensuing resistance often results in inaction.

None of this is new to most of you who follow my blog. You are all in different businesses and have been involved with situations where people get in the way of driving improvements because of change. What I try to focus decision makers and influencers on every time I engage in change management is the fallacy of social proof. Entire company cultures are based on shopping around ideas and proposals to gain group acceptance before proceeding. My argument is that need for social proof is unnecessary and costs your organization millions every year.

Here are a few stats we pulled together in my company based on over 1500 projects in 30 countries the past several years:

- 90% of initiatives require some form of change management both inside and outside the organization;
- Approximately 23% of "new initiatives" or "new programs" actually happen. 77% never make it out of the gate;
- Less than 10% of companies admit to mandating initiatives as a way of doing business. Over 90% believe in gaining acceptance or support before moving ahead;
- On average, companies spend 5 months shopping new initiatives internally before deciding on moving ahead. That means many spend more than 2 quarters to get new initiatives off the ground...if successful;
- 80% of decision makers believe initiatives that were shelved for lack of support should have been executed.

The above translates to one thing in my mind: massive waste, inefficiency and lost opportunity.

I have been working with a financial institution that is on the brink of closing it doors. Having accepted TARP funding from the government back in 2008, this institution has yet to pay back a single penny on its loan and its future looks grim. Several initiatives over the past 3 years have failed to get off the ground, and the ones that did have failed to produce results due to half-hearted implementation. The people in this organization have a poor track record of driving the necessary change required to bolster revenues and they are running out of time.

One SVP told me that several initiatives proposed in the past two years failed to get the buy-in of people in the field. I understand the need for equipping those on the front lines with the belief in what you are asking them to do, its a huge part of getting things done right. But when you are on the brink of chapter 11 I'm not sure this step is as important as times past. At some point leaders have to direct, enforce and, if necessary, mandate. Truly great companies take the same approach when times are great.

Another top performing investment bank on Wall Street has a culture of getting buy-in before launching massive initiatives. This firm's belief is that they have the best people in the world working for them, so if your initiative can withstand the bombardment of questions, arguments and resistance, you will implement and succeed in a big way once you obtain social proof. Those ideas that don't make it are shelved. Its not uncommon for initiatives to be debated for 12 months or more. They believe this approach has made all the difference to their success, and its part of their DNA.

Perhaps where I have seen the most damage done from the fallacy of social proof is in the non-profit world. One organization I have served on the board of took three years to make some tough decisions related to leadership and finances. The need to get buy-in from Board members, Foundations and key staff members prevented much needed changes and cost the organization several hundred thousand dollars as a result of inaction. Everyone knew three years ago what needed to be done, but it took three years to gain support to do what we knew was right 36 months ago.

There is no silver bullet when it comes to driving change, and if you don't have support for major initiatives then they will ultimately fail. But leadership can short-cut the ridiculous amount of time, resource and money it takes to do the right thing. Or at least shorten it drastically. And remember, if you want to change behavior you have to address the basic human need for certainty. The best way to achieve this is through inspirational leadership.

New Low For The British

2012-02-04T14:58:00.000-05:00

This past week the British government stripped former RBS CEO Fred Goodwin of his knighthood.

More than anyone alive, the man once known as Sir Fred, came to be associated with the reckless corporate spending of Labour’s boom years, and the greed, vanity and hubris that accompanied them. Fred Goodwin has been the poster child of the 2008 financial crash in the UK and the politicians exploited the people's sentiments by stripping him of the title he was given in 2004. Personally, I think this is one of the lowest points for the British, and a mockery of our intelligence.

There were many other guilty people, not excluding some leading ministers, who have yet to accept responsibility for the decisions that led to the fall of British banking and its economy. Fred Goodwin is an easy target and many of my British friends seem to be satisfied that the government has acted justly in stripping him of his title. Human nature is fascinating, we love a good lynching when things go wrong instead of addressing the true causes of our problems.

I had the honor of working with Fred Goodwin's team between 2000 and 2005. I do not know the man personally and I am not arguing the fact he made a number of bad decisions that led to the fall of RBS. But the vilification of this one-time Forbes Man of the Year by the British media and state is truly disgusting in my view. Goodwin's accomplishments between 2000 and 2007 cannot be argued, and while the man is far from perfect, the charade of scapegoating him for the past 4 years is a rare glimpse into the ugly side of British politics and society.

Many of you will disagree with my views here and thats okay. We can agree to disagree. But consider my arguments for a moment. We live in a society based on a system of law, the UK being an example of a democratic free society. The Financial Services Authority (FSA) attempted to bring charges to Goodwin in 2009 and 2010 but could not find any legal basis, instead concluding that RBS is to blame for ‘multiple poor decisions’ during his stewardship, highlighting its £50billion bid for Dutch bank ABN Ambro in 2007 as an irresponsible ‘gamble’.

Having some insight into those decisions from my time as an advisor to RBS, I agree Sir Fred's biggest mistake was to overpay for a poor performing bank with substantial toxic assets in the US mortgage industry. RBS pre-ABN Ambro did not have the exposure to these risky assets that ultimately brought the house down. I recall a time the Bank was posting profits of £10billion a quarter, and creating over 100,000 jobs from the time Goodwin took over the small Scottish bank and turned it into the 7th largest financial services group in the world. No complaints during those times of performance.

Unlike the bankers and hedge fund managers that have been tried and found guilty of breaking the law for personal gain, Goodwin doesn't fall into the category of thief, cheat or criminal. Arrogant, yes. Ruthless, definitely. But criminal, no. Yet the media and politicians have pressed ahead, forcing him to give back 33% of his pension, and now stripping him of his knighthood in an attempt to shame the man and his family. Vindictive behavior that accomplishes nothing other than satisfying the ugliness of British society in my view, and setting a very dangerous precedent for business leaders in that country.

In the wake of the Queen’s removal of his knighthood on the recommendation of Whitehall’s obscure Forfeiture Committee, many have tried to justify the government's actions, especially given there have been no criminal charges against Fred Goodwin. Many have sited precedents for taking away honours from people who have not been behind bars, such as Jean Else, a teacher stripped of her damehood in 2011, or Zimbabwean tyrant Robert Mugabe, undoubtedly guilty of heinous crimes, but never prosecuted. But these examples are not good ones.

Under Goodwin's leadership the once prudent RBS embarked on a frenzy of reckless lending and crazy acquisitions which left the bank perilously short of capital when the bubble burst. It was bailed out at a cost to the taxpayer of £45billion. For this he lost his job and the financial penalties that go with that, and his reputation as a business leader left in ruins. Legally and ethically it should end there, but four years later we are still pressing ahead with hurting the man and his family anyway we can, short of hanging him in the town square.

My issue with this is the message we are giving to business leaders, entrepreneurs and anyone who is willing to take the risk of creating a business. It used to be that if you made a mistake in business you would lose financially and reputationally. Now we are saying if you f*ck up we will ostracize you and your family, take away any wealth you may have legally earned in the past, and strip you of your basic human rights to privacy, safety and existence. Fortunately for Fred Goodwin, the man, they have misjudged just how tough this SOB is. He will never bow to society's hatred no matter how hard they come at him.

To me, this is a low point for the British people and another example of how villainous their government and media can be. History is riddled with the meddling of the British, causing some of the biggest catastrophe's of our world, including the current siutations in Palestine and Iran, to name just two. As an admirer of all the accomplishments and history of Britain, this past week has been shameful.

BS Thyself Not

2012-01-20T01:26:00.000-05:00

I had a boss early in my career who was one of those philosophical types, always dropping sayings or quotes to make his point. He thought he was quite smart and cool, very pleased with himself when he could drop a Churchill or Emerson quote, two of his favorites. We all thought he was a bore at the time.

Yet years later I've been thinking a lot about a quote he repeated time and time again after meeting with clients. We were a consulting firm focused on the marketing operations area in a variety of industries. Our clients often hired us with an outcome in mind and used our findings to drive sales, marketing and product strategy. This was pre-internet days (I'm getting old) and information was still a hard commodity to collect, analyze and interpret into actionable data. Our work often served as proof to support an ambitious marketing executive's ideas and career aspirations. At least three of our clients moved on to C-level positions on the back of successful marketing initiatives we supported. It was a great game and we had front row seats.

But I digress.

The quote we heard over and over again after client meetings was "BS Thyself Not". Not sure where he came up with this one, I can't find a single reference to it, but they are three of the most truthful words I know. Especially in today's world.

Our clients were masterful at avoiding the truth. One executive was hell-bent on pricing his new product at a premium to compete with the leader in the market. The trouble was our research didn't support this view. Pricing research was a big practice area for us. I interviewed potential customers myself and there was no way they were paying the same price point for our client's product than the leaders. The brand equity wasn't there. The client moved ahead anyway.

20 years later nothing has changed, except perhaps the BS has gotten bigger and broader. People want to believe. They need to believe.

Companies BS themselves. Management BS shareholders. Salesmen sell BS. Entrepreneurs live on BS. Politicians BS everyone. Government loves to BS. The Media is full of BS. Celebrities believe their BS. People buy the BS.

BS Thyself Not.

People have a lot of difficulty with this. We can be put in a situation on a daily basis where we have to choose between doing what we believe is right and what is convenient. It takes courage, discipline and character to do the right thing every time. After all we don't want to offend anyone in this politically correct society we have sprouted. Or God forbid we do something unpopular or are perceived not to be a team player. BS Thyself Not.

I've certainly faced right or wrong decisions too many times to count, as I'm sure you have. Some are tougher than others. But one thing I have learned is there is no justification to BS thyself. Even if it means putting it all on the line. An excellent book about this topic is A Time To Betray by Reza Kahlili.

BS Thyself Not. Did the cowards at Penn State BS themselves that they didn't know or they did all they could? Does President Obama really think his administration has done a good job with the economy? Do we really believe our education system is doing right by our children? Do the Kardashians really think they have talent? BS Thyself Not.

We have heard leading politicians from both sides say over the years that everyone in Washington is well-intentioned even if they are wrong. This is perhaps the most absurd BS I have heard. It not only attempts to justify some of the BS our government officials do in our name, but tries to make it noble. Nonsense. BS Thyself Not.

The words resonate louder today than back in those days. But the time my old boss really nailed it was when we called him out on his new girlfriend who was half his age. Hey Boss, why is this beautiful lady in love with you? My great body he responded! And then he said BS Thyself Not!

The Need For Quantifiable Objectives

2012-01-15T20:29:00.000-05:00

2012 is meant to be the year America makes its economic comeback. Since the economy tanked in 2007-8, we have been conditioned to believe that economic power and superiority has passed to China and our era was over. The US has too much debt, not enough prospect for growth, and we have outsourced our way to becoming an irrelevant economy.

Our politicians haven't helped. Knee-jerk reactions to the financial crisis and rising healthcare costs have resulted in damaging regulations that continue to keep a stranglehold on progress. Record high unemployment, real-estate losses and extremely tight credit markets add to the picture of gloom that started 2011.

However the year ended with a realization that while all of these concerns are valid, the picture is not rosier elsewhere. China is showing too many cracks in its economy, political and social status. India and Brazil are still shining but the risks are higher than ever in those economies too. Political instability around the world are major concerns for investors. And Europe is potentially going to bring down any hopes of growth in the global economy for decades.

There is no better place to invest your money than the US. Thats how we ended 2011 and the outlook for 2012 is hopeful, at best.

In my business I speak with business executives across all industries of the economy. Operational excellence is an area that is not only full of opportunity for companies to exploit, but is crucial to any hope of building a strong future. The best companies are focused on achieving efficiency, managing and reducing risk, increasing quality, while containing costs. This has to be a top three focus for any CEO and management team in 2012 and beyond. We are not going to sell our way out of the threats to our future.

Yet in discussions with top executives of both Fortune 500 and mid-cap companies, we are encountering a very relaxed, "do-nothing" attitude. At a high-level, many companies believe they have done enough in the past 10 years and if it ain't broke, don't fix it.

Areas of focus have shifted to sustainability, CSR (Corporate Social Responsibility) and mandated statistics around how many female or diverse board members we have. While these may be important areas to look at, they are neither quantifiable or impactful to the challenges we face as an economy. I am not suggesting we dismiss these areas, but they do nothing for fixing the problems and challenges we face.

Business managers have to focus on key performance indicators that can be measured. In a meeting with a Chief Procurement Officer last week I was told that their top objective for 2012 is to convince their organization to share notes across divisions in the hope of finding leverage. No numerical objectives, no savings targets, no sense of urgency to find efficiencies. This is a global $7B industrial company after all.

Another COO at a $200m company had us review their packaging spend. They spend $2.5m a year with 7 suppliers. They have no contracts in place and their suppliers have increased prices three times a year for the past 4 years. No one can explain why. We found tremendous opportunity to improve this area, save cost and reduce the risk associated with unpredictability. His people panicked and he told us he didn't want to "force his people to do something they didn't want to". I wonder what his shareholders would say.

A Fortune 500 financial services firm has taken a beating in the past three years from the regulations and backlash of the crash. Supply Chain Risk is an area of focus and to their credit they have done a nice job investing in a team of people to oversee key suppliers across their business. Our firm has deep expertise in this area, having worked with a dozen clients in the past three years on risk management in the supply base. After several meetings it became clear that they have absolutely no hard measurable objectives in this area. No cost savings, no service improvements, no innovation targets and no clear risk metrics. "We want to improve this area in 2012" is the goal for 20 people.

I have spent 20 years working with people in a variety of industries. My main learning is that the people in the heart of operations rarely do the right thing. The mindset is simple: is my job secure? Is my influence and power being reduced? Am I losing control? Only if these questions are addressed do they ask is this the right thing for our business?

The best clients I have worked with have a culture of discipline. Discipline, after all, is all about doing the right thing, at the right time, for the right reasons, no matter how hard. They are becoming a rare breed and hard to find, especially in companies of any significant size i.e. $100m and above.

I am very hopeful about the future of our country because there are still many companies and individuals who are focused on changing the world. Whether its a company like Apple who has single handedly killed the status quo of the PC market, the cell phone market, the software market and the music industry, or the many start-ups in Silicon Valley and around the country, these companies, led by courageous leaders, are taking markets away from lazy incumbents hoping for a sense of security.

Blackberry is a great example of a company that took the world by surprise in 2000 and is now at risk of dying. Remember Motorola? Krispy Kreme was talk of the town in 2003. Kodak. Blockbuster. Chrysler. Kmart. Royal Bank of Scotland. The US Post Office. Fannie and Freddie. And all the ones we haven't heard of.

The list is long and many will have you believe these companies weren't innovative enough or didn't listen to their customers. I believe the real reason why they have fallen is the inability to execute. Too many people inside these companies were pre-occupied with maintaining the status quo, protecting their jobs and keeping a firm control of their perceived power inside the company.

Execution is as much about setting the right quantifiable goals and metrics, as it is strategy, innovation and leadership. We have to fix this in America as this is where we face competition from Asia and Brazil.

Who Are You Spending Your Time With?

2011-12-27T06:14:00.000-05:00

I've been relaxing in Zanzibar off the coast of Tanzania the past week. Zanzibar was on a very long list of places I have always wanted to travel. Known as the Isle of Spice, the history and beauty of this place deserves a closer look. I highly recommend you google it and read about what makes this small island nation so unique. From its Islamic roots as a trading post to its unique architecture, Zanzibar has far exceeded any expectations I had when I packed my bags and set off for the 20-hour trip.

But enough about the place, this post is about some of the thoughts one gathers when you are relaxing on a sandy beach overlooking the Indian Ocean and wondering what cocktail to try next. Christmas has always been a time of reflection to me. In the early years of my career, the only time off I took was the five days between Christmas and New Years when the business truly shut down and no one would return calls. You look back on the year and ask yourself all kinds of questions: what did I achieve? What did I learn? What can I do better?

These questions never get old and perhaps the only difference today is that we tend to ask ourselves that question more often than just once a year. At least I hope you do. This year the question that has preoccupied me is am I spending my time with the people I want to?

Given my nomadic background, my close family lives on a different continent from me and to say that I miss them is an understatement. I come from a very close family and, while we have lived apart for many years now, we are extremely close. Like any other relationship, we have all made choices that impact where we live. My parents are committed to living in Europe. I am committed to the US. Reasons don't matter, its the way it is.

But going beyond family, the crux of my question is more about the people we interact with every day. Colleagues, clients, neighbors, friends...Are the people we spend significant time with the right people?

The Zanzibaris are some of the purest human beings I have ever met. A mix of Africans, Indians and Arabs, you wouldn't know it given their behavior towards one another. At first I thought they tolerate each other. But after spending a week here and getting to know many of them, its more than tolerance. Its a basic respect for one another. Zanzibar is primarily Islamic, yet the muslim walking in the mosque stops to wish me a Merry Christmas.

"Its Jesus' birthday today!" he yells with a big smile on his face. "Merry Christmas!"

I learnt at an early age that you have to be extremely picky about the people you associate with. I know, it sounds arrogant. But I don't really care, I remember too many so called 'friends' of my parents taking advantage of their good nature when I was young. I have always been extremely choosy about who I call friend, who I share my time with and who I let in my personal circle. Family members don't get a pass either, plenty a cousin, aunt or uncle felt my size 11 boot up their rear end as I threw them out of my circle. Who you spend time with is important.

And so as I look back on 2011 I feel blessed to have met some great people and spent time with them. My partners in our business are truly high quality people who are about doing the right thing no matter what. I can't think of a finer group of people to work with around the world. And the new friends I have made this year are just as amazing. Having spent time at the Leaf and Bean in Pittsburgh, you meet some unique individuals from all walks of life.

From the 74 year-old entrepreneur launching another ambitious business to the Haliburton exec building his own cigar brand on the side to the owner of the bakery round the corner, high quality people come in all shapes and sizes. I am very thankful for having incredibly high standards when it comes to people I spend time with.

Too many folks don't think about this question. We have a choice as to who we spend time with, who we let in our circle, and who we don't. Quality of life is not just about how much money you make, how many things you can buy etc. Its about who you spend your time with (and who you don't).

Interestingly we ponder this question when it comes to choosing a mentor or coach. Several organizations I am involved with try to engineer mentorship programs, but I have always believed mentors are more impactful when the relationship develops naturally.

I recall early in my career I was assigned a mentor by the company who was simply horrendous in my view. Arrogant, pompous, and extremely frustrated, this Director and I were not meant to be. It left a very bad taste in my mouth when it comes to forced mentorship programs that some companies promote. The situation changed later when some terrific leaders took notice of my hard work and took me under their arm. They made a true difference in my life and continue to do so today.

Friends are no different. By holding a high standard, especially as adults, we attract the right people and avoid the bad. Take a few minutes to think about this question as you relax over the holidays and prepare for what will likely be another massive year for you and the world.

How Will You Measure Your Life?: Guest Post

2011-11-22T19:38:00.000-05:00

Thanksgiving is my favorite holiday of the year. This American dose of culture should truly be exported to the rest of the world. Not only is the meaning of Thanksgiving a noble one, but the fact that it brings families together for a day or two makes it that much more special.

But the sad fact for many American families is that the Turkey holiday is one of the very few times in the year they actually sit down with their family to enjoy a meal and each other. All kinds of statistics show most families rarely break bread together, and when they do its a kind of forced occurrence. My father taught us a lot of things at the dinner table, I can't imagine not having that kind of quality time with my kids in the future.

Thanksgiving is also a time of reflection on life and the many blessings we have. In this spirit I want to share an incredible post my good friend Martin from London sent me. Clayton Christensen is a well known Harvard Professor and his piece on How Will You Measure Your Life? is full of wisdom collected over a lifetime. I hope you enjoy it as much as I did. Enter Professor Christensen...

How Will You Measure Your Life?
by Clayton M. Christensen
Harvard Business School

Before I published The Innovator’s Dilemma, I got a call from Andrew Grove, then the chairman of Intel. He had read one of my early papers about disruptive technology, and he asked if I could talk to his direct reports and explain my research and what it implied for Intel. Excited, I flew to Silicon Valley and showed up at the appointed time, only to have Grove say, “Look, stuff has happened. We have only 10 minutes for you. Tell us what your model of disruption means for Intel.” I said that I couldn’t—that I needed a full 30 minutes to explain the model, because only with it as context would any comments about Intel make sense. Ten minutes into my explanation, Grove interrupted: “Look, I’ve got your model. Just tell us what it means for Intel.”

I insisted that I needed 10 more minutes to describe how the process of disruption had worked its way through a very different industry, steel, so that he and his team could understand how disruption worked. I told the story of how Nucor and other steel minimills had begun by attacking the lowest end of the market—steel reinforcing bars, or rebar—and later moved up toward the high end, undercutting the traditional steel mills.

When I finished the minimill story, Grove said, “OK, I get it. What it means for Intel is...,” and then went on to articulate what would become the company’s strategy for going to the bottom of the market to launch the Celeron processor.

I’ve thought about that a million times since. If I had been suckered into telling Andy Grove what he should think about the microprocessor business, I’d have been killed. But instead of telling him what to think, I taught him how to think—and then he reached what I felt was the correct decision on his own.

That experience had a profound influence on me. When people ask what I think they should do, I rarely answer their question directly. Instead, I run the question aloud through one of my models. I’ll describe how the process in the model worked its way through an industry quite different from their own. And then, more often than not, they’ll say, “OK, I get it.” And they’ll answer their own question more insightfully than I could have.

My class at HBS is structured to help my students understand what good management theory is and how it is built. To that backbone I attach different models or theories that help students think about the various dimensions of a general manager’s job in stimulating innovation and growth. In each session we look at one company through the lenses of those theories—using them to explain how the company got into its situation and to examine what managerial actions will yield the needed results.

On the last day of class, I ask my students to turn those theoretical lenses on themselves, to find cogent answers to three questions: First, how can I be sure that I’ll be happy in my career? Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness? Third, how can I be sure I’ll stay out of jail? Though the last question sounds lighthearted, it’s not. Two of the 32 people in my Rhodes scholar class spent time in jail. Jeff Skilling of Enron fame was a classmate of mine at HBS. These were good guys—but something in their lives sent them off in the wrong direction.

As the students discuss the answers to these questions, I open my own life to them as a case study of sorts, to illustrate how they can use the theories from our course to guide their life decisions.

One of the theories that gives great insight on the first question—how to be sure we find happiness in our careers—is from Frederick Herzberg, who asserts that the powerful motivator in our lives isn’t money; it’s the opportunity to learn, grow in responsibilities, contribute to others, and be recognized for achievements. I tell the students about a vision of sorts I had while I was running the company I founded before becoming an academic. In my mind’s eye I saw one of my managers leave for work one morning with a relatively strong level of self-esteem. Then I pictured her driving home to her family 10 hours later, feeling unappreciated, frustrated, underutilized, and demeaned. I imagined how profoundly her lowered self-esteem affected the way she interacted with her children. The vision in my mind then fast-forwarded to another day, when she drove home with greater self-esteem—feeling that she had learned a lot, been recognized for achieving valuable things, and played a significant role in the success of some important initiatives. I then imagined how positively that affected her as a spouse and a parent. My conclusion: Management is the most noble of professions if it’s practiced well. No other occupation offers as many ways to help others learn and grow, take responsibility and be recognized for achievement, and contribute to the success of a team. More and more MBA students come to school thinking that a career in business means buying, selling, and investing in companies. That’s unfortunate. Doing deals doesn’t yield the deep rewards that come from building up people.

I want students to leave my classroom knowing that.

Create a Strategy for Your Life

A theory that is helpful in answering the second question—How can I ensure that my relationship with my family proves to be an enduring source of happiness?—concerns how strategy is defined and implemented. Its primary insight is that a company’s strategy is determined by the types of initiatives that management invests in. If a company’s resource allocation process is not managed masterfully, what emerges from it can be very different from what management intended. Because companies’ decision-making systems are designed to steer investments to initiatives that offer the most tangible and immediate returns, companies shortchange investments in initiatives that are crucial to their long-term strategies.

Over the years I’ve watched the fates of my HBS classmates from 1979 unfold; I’ve seen more and more of them come to reunions unhappy, divorced, and alienated from their children. I can guarantee you that not a single one of them graduated with the deliberate strategy of getting divorced and raising children who would become estranged from them. And yet a shocking number of them implemented that strategy. The reason? They didn’t keep the purpose of their lives front and center as they decided how to spend their time, talents, and energy.

It’s quite startling that a significant fraction of the 900 students that HBS draws each year from the world’s best have given little thought to the purpose of their lives. I tell the students that HBS might be one of their last chances to reflect deeply on that question. If they think that they’ll have more time and energy to reflect later, they’re nuts, because life only gets more demanding: You take on a mortgage; you’re working 70 hours a week; you have a spouse and children.

For me, having a clear purpose in my life has been essential. But it was something I had to think long and hard about before I understood it. When I was a Rhodes scholar, I was in a very demanding academic program, trying to cram an extra year’s worth of work into my time at Oxford. I decided to spend an hour every night reading, thinking, and praying about why God put me on this earth. That was a very challenging commitment to keep, because every hour I spent doing that, I wasn’t studying applied econometrics. I was conflicted about whether I could really afford to take that time away from my studies, but I stuck with it—and ultimately figured out the purpose of my life.

Had I instead spent that hour each day learning the latest techniques for mastering the problems of autocorrelation in regression analysis, I would have badly misspent my life. I apply the tools of econometrics a few times a year, but I apply my knowledge of the purpose of my life every day. It’s the single most useful thing I’ve ever learned. I promise my students that if they take the time to figure out their life purpose, they’ll look back on it as the most important thing they discovered at HBS. If they don’t figure it out, they will just sail off without a rudder and get buffeted in the very rough seas of life. Clarity about their purpose will trump knowledge of activity-based costing, balanced scorecards, core competence, disruptive innovation, the four Ps, and the five forces.

My purpose grew out of my religious faith, but faith isn’t the only thing that gives people direction. For example, one of my former students decided that his purpose was to bring honesty and economic prosperity to his country and to raise children who were as capably committed to this cause, and to each other, as he was. His purpose is focused on family and others—as mine is.

The choice and successful pursuit of a profession is but one tool for achieving your purpose. But without a purpose, life can become hollow.

Allocate Your Resources

Your decisions about allocating your personal time, energy, and talent ultimately shape your life’s strategy.

I have a bunch of “businesses” that compete for these resources: I’m trying to have a rewarding relationship with my wife, raise great kids, contribute to my community, succeed in my career, contribute to my church, and so on. And I have exactly the same problem that a corporation does. I have a limited amount of time and energy and talent. How much do I devote to each of these pursuits?

Allocation choices can make your life turn out to be very different from what you intended. Sometimes that’s good: Opportunities that you never planned for emerge. But if you misinvest your resources, the outcome can be bad. As I think about my former classmates who inadvertently invested for lives of hollow unhappiness, I can’t help believing that their troubles relate right back to a short-term perspective.

When people who have a high need for achievement—and that includes all Harvard Business School graduates—have an extra half hour of time or an extra ounce of energy, they’ll unconsciously allocate it to activities that yield the most tangible accomplishments. And our careers provide the most concrete evidence that we’re moving forward. You ship a product, finish a design, complete a presentation, close a sale, teach a class, publish a paper, get paid, get promoted. In contrast, investing time and energy in your relationship with your spouse and children typically doesn’t offer that same immediate sense of achievement. Kids misbehave every day. It’s really not until 20 years down the road that you can put your hands on your hips and say, “I raised a good son or a good daughter.” You can neglect your relationship with your spouse, and on a day-to-day basis, it doesn’t seem as if things are deteriorating. People who are driven to excel have this unconscious propensity to underinvest in their families and overinvest in their careers—even though intimate and loving relationships with their families are the most powerful and enduring source of happiness.

If you study the root causes of business disasters, over and over you’ll find this predisposition toward endeavors that offer immediate gratification. If you look at personal lives through that lens, you’ll see the same stunning and sobering pattern: people allocating fewer and fewer resources to the things they would have once said mattered most.

Create a Culture

There’s an important model in our class called the Tools of Cooperation, which basically says that being a visionary manager isn’t all it’s cracked up to be. It’s one thing to see into the foggy future with acuity and chart the course corrections that the company must make. But it’s quite another to persuade employees who might not see the changes ahead to line up and work cooperatively to take the company in that new direction. Knowing what tools to wield to elicit the needed cooperation is a critical managerial skill.

The theory arrays these tools along two dimensions—the extent to which members of the organization agree on what they want from their participation in the enterprise, and the extent to which they agree on what actions will produce the desired results. When there is little agreement on both axes, you have to use “power tools”—coercion, threats, punishment, and so on—to secure cooperation. Many companies start in this quadrant, which is why the founding executive team must play such an assertive role in defining what must be done and how. If employees’ ways of working together to address those tasks succeed over and over, consensus begins to form. MIT’s Edgar Schein has described this process as the mechanism by which a culture is built. Ultimately, people don’t even think about whether their way of doing things yields success. They embrace priorities and follow procedures by instinct and assumption rather than by explicit decision—which means that they’ve created a culture. Culture, in compelling but unspoken ways, dictates the proven, acceptable methods by which members of the group address recurrent problems. And culture defines the priority given to different types of problems. It can be a powerful management tool.

In using this model to address the question, How can I be sure that my family becomes an enduring source of happiness?, my students quickly see that the simplest tools that parents can wield to elicit cooperation from children are power tools. But there comes a point during the teen years when power tools no longer work. At that point parents start wishing that they had begun working with their children at a very young age to build a culture at home in which children instinctively behave respectfully toward one another, obey their parents, and choose the right thing to do. Families have cultures, just as companies do. Those cultures can be built consciously or evolve inadvertently.

If you want your kids to have strong self-esteem and confidence that they can solve hard problems, those qualities won’t magically materialize in high school. You have to design them into your family’s culture—and you have to think about this very early on. Like employees, children build self-esteem by doing things that are hard and learning what works.

Avoid the “Marginal Costs” Mistake

We’re taught in finance and economics that in evaluating alternative investments, we should ignore sunk and fixed costs, and instead base decisions on the marginal costs and marginal revenues that each alternative entails. We learn in our course that this doctrine biases companies to leverage what they have put in place to succeed in the past, instead of guiding them to create the capabilities they’ll need in the future. If we knew the future would be exactly the same as the past, that approach would be fine. But if the future’s different—and it almost always is—then it’s the wrong thing to do.

This theory addresses the third question I discuss with my students—how to live a life of integrity (stay out of jail). Unconsciously, we often employ the marginal cost doctrine in our personal lives when we choose between right and wrong. A voice in our head says, “Look, I know that as a general rule, most people shouldn’t do this. But in this particular extenuating circumstance, just this once, it’s OK.” The marginal cost of doing something wrong “just this once” always seems alluringly low. It suckers you in, and you don’t ever look at where that path ultimately is headed and at the full costs that the choice entails. Justification for infidelity and dishonesty in all their manifestations lies in the marginal cost economics of “just this once.”

I’d like to share a story about how I came to understand the potential damage of “just this once” in my own life. I played on the Oxford University varsity basketball team. We worked our tails off and finished the season undefeated. The guys on the team were the best friends I’ve ever had in my life. We got to the British equivalent of the NCAA tournament—and made it to the final four. It turned out the championship game was scheduled to be played on a Sunday. I had made a personal commitment to God at age 16 that I would never play ball on Sunday. So I went to the coach and explained my problem. He was incredulous. My teammates were, too, because I was the starting center. Every one of the guys on the team came to me and said, “You’ve got to play. Can’t you break the rule just this one time?”

I’m a deeply religious man, so I went away and prayed about what I should do. I got a very clear feeling that I shouldn’t break my commitment—so I didn’t play in the championship game.

In many ways that was a small decision—involving one of several thousand Sundays in my life. In theory, surely I could have crossed over the line just that one time and then not done it again. But looking back on it, resisting the temptation whose logic was “In this extenuating circumstance, just this once, it’s OK” has proven to be one of the most important decisions of my life. Why? My life has been one unending stream of extenuating circumstances. Had I crossed the line that one time, I would have done it over and over in the years that followed.

The lesson I learned from this is that it’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time. If you give in to “just this once,” based on a marginal cost analysis, as some of my former classmates have done, you’ll regret where you end up. You’ve got to define for yourself what you stand for and draw the line in a safe place.

Remember the Importance of Humility

I got this insight when I was asked to teach a class on humility at Harvard College. I asked all the students to describe the most humble person they knew. One characteristic of these humble people stood out: They had a high level of self-esteem. They knew who they were, and they felt good about who they were. We also decided that humility was defined not by self-deprecating behavior or attitudes but by the esteem with which you regard others. Good behavior flows naturally from that kind of humility. For example, you would never steal from someone, because you respect that person too much. You’d never lie to someone, either.

It’s crucial to take a sense of humility into the world. By the time you make it to a top graduate school, almost all your learning has come from people who are smarter and more experienced than you: parents, teachers, bosses. But once you’ve finished at Harvard Business School or any other top academic institution, the vast majority of people you’ll interact with on a day-to-day basis may not be smarter than you. And if your attitude is that only smarter people have something to teach you, your learning opportunities will be very limited. But if you have a humble eagerness to learn something from everybody, your learning opportunities will be unlimited. Generally, you can be humble only if you feel really good about yourself—and you want to help those around you feel really good about themselves, too. When we see people acting in an abusive, arrogant, or demeaning manner toward others, their behavior almost always is a symptom of their lack of self-esteem. They need to put someone else down to feel good about themselves.

Choose the Right Yardstick

This past year I was diagnosed with cancer and faced the possibility that my life would end sooner than I’d planned. Thankfully, it now looks as if I’ll be spared. But the experience has given me important insight into my life.

I have a pretty clear idea of how my ideas have generated enormous revenue for companies that have used my research; I know I’ve had a substantial impact. But as I’ve confronted this disease, it’s been interesting to see how unimportant that impact is to me now. I’ve concluded that the metric by which God will assess my life isn’t dollars but the individual people whose lives I’ve touched.

I think that’s the way it will work for us all. Don’t worry about the level of individual prominence you have achieved; worry about the individuals you have helped become better people. This is my final recommendation: Think about the metric by which your life will be judged, and make a resolution to live every day so that in the end, your life will be judged a success.

Do The Right Thing

2011-11-16T12:49:00.000-05:00

I was traveling through Nicaragua last month for a week and was blown away by everything that country has to offer. The city of Granada is the oldest town in all of Central and South America. Beautiful colonial architecture, very safe and bustling with tourist friendly activity. The Mombacho volcano shadows the town that sits on Lake Nicaragua, one of the largest fresh water lakes in the world. Great food and friendly people, lots of nice hotels and restaurants make for a great long weekend getaway (4-5 day stay is perfect).

What struck me most about Nicaragua and its people however was the entrepreneurship. It’s not the same version as we see here in the US - entrepreneurship that stems from determination and adventure in a free society (yes, I believe we still have a free society regardless of the doom and gloom you read in the media). Nicaraguans are relentless entrepreneurs out of necessity and survival. It’s a different genesis but still results in the same hard-nosed, do-or-die imperative that makes entrepreneurs so different from the average Joe.

What is remarkable to me when I travel around the world is the attitude of the people you meet. Some folks in the US are of the view that we need more life 'balance' and should emulate our European cousins more. Others take a more extreme view that we are better off with our own blend of socialism so everyone is taken care of. On the other end of the spectrum there are hardcore believers in minimal government and every man for himself. And in-between you have a whole range of views from conservative to independent to liberal.

This is all nonsense. We need to wake up and embrace our roots as a country that was built on hard work, values, and defending our individual rights to pursue happiness. All of this under a system of laws that reward doing the right thing.

In Nicaragua I witnessed hard working people who, while limited in skills and quality, put their family, faith and society ahead of anything else. I don't want to paint a rosy picture, there are serious flaws especially with regards to morality and corruption, but if you are a native Nica caught in the system you have two basic choices: make your way or perish.

As someone who is privileged to be living in the United States I took a lot of lessons from the week I spent there. Hard work, clarity of goals and family are truly the core elements of wealth. I left Nicaragua determined to seek simplicity in every avenue of life back home. It is easy to complicate things through focusing on the wrong things, getting stuck on issues that have no bearing on your happiness, health or purpose.

I see this every day with the clients I work with. My client asked me the other day why is it so hard to get people to do the right thing. I asked him what does he mean by 'do the right thing'? The challenge in our world today is that the pace of change is faster than it ever has been in the past. Companies, and especially their employees, don't handle this well. When you propose a change to employees it takes more than arguing that it’s the right thing. Employees are flawed in that their thought process is as follows:

- Is my job safe?

- Is my power reduced?

- And only then do they think, okay, lets do the right thing.

Some say this is human nature, and while this may be true, it doesn't make it anymore right. When proposing change you have to address this flawed thinking on the part of all affected, but the mistake many companies make is to try to build consensus at the individual level. That’s not going to happen when change brings a shift in someone's position, power or job security.

I was faced with this recently when working with the CEO of a manufacturing company. We found an opportunity to run a simple project on their packaging spend where we believe there is significant savings and improvement opportunity with a broader supply base. These guys don't even have contracts in place. We agreed terms with the CEO and sent the agreement for signature at his request. The CEO didn't want to "force" his team to do the project but strongly encouraged them to go with it. What do you think happened?

The little purchasing guy who has been responsible for this area felt personally at risk. The resistance and confusion he created was awesome. My personal conclusion is that he is either in bed with his current suppliers or at the very least knows he is exposed for not doing his job the past 10 years. Needless to say the project is stalled and we don't expect that to change. This one guy managed to torpedo a change that would have improved the performance of the company. And the CEO is going to let him get away with it - this is criminal in my view.

This kind of situation happens every day in companies, small and large, as well as in everyday life. We saw the most unbelievable example of this at Penn State with the child abuse situation. Cowards take the easy way out. Doing the right thing is what we have to find our way back to.

Jack Welch once said, "When the pace of change outside the company higher than inside the company, the end is near." I think Jack's words go beyond change. When our people choose not to do the right thing more often than doing the right thing then the end is inevitable.

Why the Peter Principle Works: Guest Post

2011-08-31T10:16:00.000-04:00

There is so much crap on the internet these days I find myself craving something good to read. Magazines and Newsletters are no different. Twitter is a minefield of useless sh*t people say. Its like every idiot with a keyboard is a writer now, or I should say 'blogger'. Trouble is they don't have a heck of a lot to say...at least that that I find of interest.

Yet Steve Tobak's blog The Corner Office on BNET is one of the few consistent pieces that leaves you learning something new every time. The other day I read his piece on the Peter Principle and it brought back memories of colleagues competing for promotions and titles, high-performers reaching far beyond their means and a little start-up company that dreamt of changing the world one day.

Steve's article is an insightful read on how things really are in the corporate system in America. Love it or hate it, individuals are made up of egos and courage, and those who have more than the rest of us rise to the very top of their world. Question is can they stay there or will they be knocked off their perch?

I hope you enjoy Steve's guest post and check out his blog The Corner Office on BNET sometime...its one of the few credible reads out there.

Why the Peter Principle Works
By Steve Tobak
August 15, 2011

Everyone’s heard of the Peter Principle - that employees tend to rise to their level of incompetence - a concept that walks that all-too-fine line between humor and reality.

We’ve all seen it in action more times than we’d like. Ironically, some percentage of you will almost certainly be promoted to a position where you’re no longer effective. For some of you, that’s already happened. Sobering thought.

Well, here’s the thing. Not only is the Peter Principle alive and well in corporate America, but contrary to popular wisdom, it’s actuallynecessary for a healthy capitalist system. That’s right, you heard it here, folks, incompetence is a good thing. Here’s why.

Robert Browning once said, “A man’s reach should exceed his grasp.” It’s a powerful statement that means you should seek to improve your situation, strive to go above and beyond. Not only is that an embodiment of capitalism, but it also leads directly to the Peter Principle because, well, how do you know when to quit?

Now, most of us don’t perpetually reach for the stars, but until there’s clear evidence that we’re not doing ourselves or anyone else any good, we’re bound to keep right on reaching. After all, objectivity is notoriously difficult when opportunities for a better life are staring you right in the face.

I mean, who turns down promotions? Who doesn’t strive to reach that next rung on the ladder? When you get an email from an executive recruiter about a VP or CEO job, are you likely to respond, “Sorry, I think that may be beyond my competency” when you’ve got to send two kids to college and you may actually want to retire someday?

Wasn’t America founded by people who wanted a better life for themselves and their children? God knows, there were plenty of indications that they shouldn’t take the plunge and, if they did, wouldn’t succeed. That’s called a challenge and, well, do you ever really know if you’ve reached too far until after the fact?

Perhaps the most interesting embodiment of all this is the way people feel about CEOs. Some think pretty much anyone can do a CEO’s job for a fraction of the compensation. Seriously, you hear that sort of thing a lot, especially these days with class warfare being the rage and all.

One The Corner Office reader asked straight out in an email: “Would you agree that, in most cases, the company could fire the CEO and hire someone young, smart, and hungry at 1/10 the salary/perks/bonuses who would achieve the same performance?”

Sure, it’s easy: you just set the direction, hire a bunch of really smart executives, then get out of the way and let them do their jobs. Once in a blue moon you swoop in, deal with a problem, then return to your ivory tower. Simple.

Well, not exactly.

You see, I sort of grew up at Texas Instruments in the 80s when the company was nearly run into the ground by Mark Shepherd and J. Fred Bucy - two CEOs who never should have gotten that far in their careers.

But the company’s board, in its wisdom, promoted Jerry Junkins and, after his untimely death, Tom Engibous, to the CEO post. Not only were those guys competent, they revived the company and transformed it into what it is today.

I’ve seen what a strong CEO can do for a company, its customers, its shareholders, and its employees. I’ve also seen the destruction the Peter Principle can bring to those same stakeholders. But, even now, after 30 years of corporate and consulting experience, the one thing I’ve never seen is a CEO or executive with an easy job.

That’s because there’s no such thing. And to think you can eliminate incompetency from the executive ranks when it exists at every organizational level is, to be blunt, childlike or Utopian thinking. It’s silly and trite. It doesn’t even make sense.

It’s not as if TI’s board knew ahead of time that Shepherd and Bucy weren’t the right guys for the job. They’d both had long, successful careers at the company. But the board did right the ship in time. And that’s the mark of a healthy system at work.

The other day I read a truly fantastic story in Fortune about the rise and fall of Jeffrey Kindler as CEO of troubled pharmaceutical giant Pfizer. I remember when he suddenly stepped down amidst all sorts of rumor and conjecture about the underlying causes of the shocking news.

What really happened is the guy had a fabulous career as a litigator, climbed the corporate ladder to general counsel of McDonald’s and then Pfizer, had some limited success in operations, and once he was promoted to CEO, flamed out. Not because he was incompetent - he wasn’t. And certainly not because he was a dysfunctional, antagonistic, micromanaging control freak - he was.

He failed because it was a really tough job and he was in over his head. It happens. It happens a lot. After all, this wasn’t just some everyday company that’s simple to run. This was Pfizer - a pharmaceutical giant with its top products going generic and a dried-up drug pipeline in need of a major overhaul.

The guy couldn’t handle it. And when executives with issues get in over their heads, their issues become their undoing. It comes as no surprise that folks at McDonald’s were surprised at the way he flamed out at Pfizer. That was a whole different ballgame.

Now, I bet those same people who think a CEO’s job is a piece of cake will have a similar response to the Kindler situation at Pfizer. Why take the job if he knew he couldn’t handle it? The board should have canned him before it got to that point. Why didn’t the guy’s executives speak up sooner?

Because, just like at TI, nobody knows ahead of time if people are going to be effective on the next rung of the ladder. Every situation is unique and there are no questions or test that will foretell the future. I mean, it’s not as if King Solomon comes along and writes who the right guy for the job is on the wall.

The Peter Principle works because, in a capitalist system, there are top performers, abysmal failures, and everything in between. Expecting anything different when people must reach for the stars to achieve growth and success so our children have a better life than ours isn’t how it works in the real world.

The Peter Principle works because it’s the yin to Browning’s yang, the natural outcome of striving to better our lives. Want to know how to bring down a free market capitalist system? Don’t take the promotion because you’re afraid to fail.

The Number One Success Factor

2011-07-22T18:58:00.000-04:00

The difference between success and getting by in life could be down to whether you understand the simple rules of networking. At least that is what some 20 extremely successful individuals I have been informally interviewing tell me. And it agrees with my own experience of launching my company, BrainNet, in North America the past year. The trouble is the majority of people still do not understand how or why they need to be networking.

The basic problem is one of being open to connect with people you do not know. The majority of people are wired not to take calls or connect with people they don't know. Its human nature, and understandable to a degree, especially if you had a few bad experiences like the guy who called me last year claiming we went to school together except he was 7 years younger and never been outside of the US (my MBA was in Europe). Regardless, my discussions with highly successful people from all walks of life told me they are always open to making contact with new people no matter how obscure at first.

I spoke to 20 individuals who have either built successful businesses or reached pinnacle levels in their career. I didn't just focus on big, I also spoke with people who have had success in Small and Medium sized endeavors.

Lets start with Rich. For the past 21 years Rich has built a successful niche business qualifying what he terms "projects" that need financing and introducing the good ones to private investor communities. Rich's business is highly specialized as it is based solely on the strength of the relationships he has built with private people who manage and advise private wealth. That means he has to find the "good" projects, qualify them and the individuals behind them, and by introducing them to the money people he is essentially putting his name on the project.

In 21 years Rich has built a very comfortable business for himself, traveling the world to qualify projects, never been sued, and successfully financed hundreds of projects in over 80 countries. While hard work, constant travel (he was US Airway's number one frequent flyer last year), and long hours are all pre-requisites, Rich claims his number one success factor has been his ability to network, build relationships and quickly qualify what is real and what is not, what has potential, and what doesn't.

"On average I look at 250 projects a year, work on 50 and may only secure financing for 25% of them. But the relationships I have built are the true assets in my business. I build friendships and relationships that have lasted two decades." His basic advice to anyone is always treat new contacts with respect and integrity, even if they are not the real thing.

My former boss and friend, Dave, has a similar approach he believes have been key to his successful career. Just shy of 50, Dave has an impressive resume - PhD from Princeton, published a book, Gulf War I veteran, helped build a start-up into a Nasdaq listed company as CEO, served in a number of Undersecretary positions for the United States and now a top executive with one of the most successful Hedge Funds on the planet.

Working under Dave I can honestly say he is one of the most remarkable professionals I know, but his biggest strength is how artfully he manages relationships. One of the busiest men on the planet, Dave always returns your e-mails or calls. When working for him he taught me his system for successful networking. He kept what he called a call list - one column was a list of people he wanted to reach out to, the other was folks he owed a response to because they reached out to him.

As a rule, 15% of his daily call list was people who had nothing to do with the business. He claimed those relationships helped bring new ideas and inspiration that indirectly helped him do a better job. And he always made a point of staying connected with the people he felt were both inspiring and interesting. A great practice that I adopted years ago when we worked together and has served me well.

Sitting at your desk and in front of your computer is a sure recipe for a mediocre life. Yes, there is a need to get the work done and that means spending some time in the office making sure things get done, but the real value is created out in the world, either on the phone or where the people are. No matter what your job is, you need to spend the right amount of time connecting with people who, on the surface, have nothing to do with your day-to-day work.

An article in Forbes' August 2011 edition about innovators makes the perfect case. The cover of next month's magazine has Mark Benioff, founder and CEO of Salesforce.com. In the article Mark talks about the time he spends talking and meeting young people. “My job is to guide Salesforce. I can’t sit in headquarters and pretend I’m in touch. Odds are, what we’re using today will be obsolete in a few years. The past is never the future. But it’s easy to get caught up in the continuum.”

An old friend and colleague, Martin, shared some great insight with me when he took a year off and looked for his next adventure. He was adamant about finding the right opportunity, so he spent a lot of time networking and researching his next move. When I caught up with Martin 9 months into his search year, he said the people you think are the ones who can help usually are not. All his leads and introductions to good opportunities came from where he expected it least.

My own experience validates this. Building BrainNet this past year has been a lesson in all that is both good and bad with how we do business in the US. A global company from Switzerland, BrainNet has built one of the largest Supply Chain and Procurement firms outside of North America. Our brand is relatively unknown in this market so the early years of our business in North America depend on building relationships and making the market aware of our capabilities and existence. This depends heavily on our ability to make introductions, connect and network with decision makers in large, medium and small businesses.

Looking back on our progress you can see the good and bad. There are have been people who have been very open to getting to know us and learning about our unique and compelling value proposition. They have taken the time to return calls and e-mails, meet in person and share what matters most to them. They have helped us think through how we can make BrainNet North America a strong business for our clients and ourselves. These folks have been great.

Trouble is they represent maybe 10 percent of the people we have connected with this past year. Coming into this adventure we had discussions with a large number of people in our personal network that gave us a lot of lip service about helping introduce us to our target market, or even stating a willingness to work with us themselves. Most have done the opposite, not returning calls or emails, and generally being non-responsive.

On the surface you can justify this in a number of ways - they are busy, they don't need what we have to offer, we are unproven etc. But the reality is none of these reasons are valid. You have to make time for people because you don't know what the future holds. You have to learn about what is out there because no one has all the answers, no matter how smart you think you are. And the wait and see approach most mid-level executives take with companies and people they don't know is both shortsighted and ineffective.

Why? Because business is about relationships. Everyone will agree with this, but most people don't adhere to this principle. If you don't take the time to build strong relationships at the people level then no legal contract or business arrangement can work effectively or optimally.

Personal experiences again validate this. In 2000 I walked into the office of a Chief Procurement Officer (CPO) of a British glass manufacturer to start a pilot project in eSourcing. The relationship I personally built with this individual was instrumental in both of our careers. Approximately 6 weeks into the 12-month pilot, the CPO left the company for a bigger role in one of the UK's top banks. 8 months after that he contacted me to start a pilot at the bank but under the condition that I would personally lead the relationship. It was a defining moment for my career in the company, and our successful execution of the pilot program became a career-maker for him in the bank. Today he is COO of another top bank in the UK and we share a good beer on my trips to London.

On the opposite side, I worked with an organization back in the early 2000s that had a deep working relationship with IBM. The trouble was it was a very strained and adversarial relationship, often resulting in executives walking out of meetings and pointing fingers at each other. "We have to reduce our dependency on IBM" the CIO would say time and time again. At the time they did $150m of business year with IBM. When I returned to the client in 2009, the same people continued to bash IBM and undermine the relationship every chance they got. But they now did $255m of business a year with them. They were "married" to IBM and didn't even realize it.

On an individual level it is clear in my mind you have to nurture and invest in relationship building. In my view it takes six things to do this effectively:

1) Be Open. You have to change your habit of keeping people at arms-length and connect with them at every opportunity. With tools like LinkedIn, e-mail and the myriad of social activities in your area, this is relatively effortless now.

2) Follow Through. In America we have become a 'lip-service' culture and this is going to take us down in the long run. If you meet someone and exchange contact details, then follow through with a note or invitation to connect on LinkedIn (I am not an advocate of using Facebook for this). The number of times people say they will follow-up with you and fail to do so is staggering. It makes you look like a punk, to be blunt.

3) Treat It As A Learning Exercise. There is no relationship or connection that doesn't teach you something. Even negative experiences (think the sales pest) teach you how to better filter and qualify relationships.

4) Be Global. Geography doesn't matter anymore. We can build relationships with people on the other side of the world. My strongest connections this past year have been in Silicon Valley, China, Atlanta and NYC, even though I'm based in Pittsburgh. Expand your horizon even if you haven't left the neighborhood.

5) Have Integrity. Your reputation is everything. Treat people with integrity and respect, even if they don't always deserve it. There is no room for arrogance or neglect when building connections and relationships.

6) Have Courage. This is where most people fall short, especially if they work in a corporation. The CYA mentality in big companies is a disease. People put up walls thinking they are protecting their company and themselves, but this is a fallacy. Meeting with people you don't know should be a part of your day-to-day business to learn what’s out there and create opportunity for your company and you first. Successful people get where they are with help, not by themselves.

How open are you to connecting to the unknown?

Solving The Gender Gap - How Not To...

2011-06-28T13:16:00.000-04:00

Why are regulators so short sighted? They think a single regulation can fix everything thats wrong with a complex issue. The past few weeks I have scanned a ton of titles regarding countries establishing quotas for the number of female directors serving on executive boards. Malaysia is the latest to come out and establish a rule that states “30% of all corporate decision-makers must be women”. Really?

Before I go on with why the Malaysians and a dozen others who have released similar quota-bearing rule changes are wrong, let me share my views on the problem they are trying to address - the problem of inequality between men and women in the workplace. In a nutshell:

• At the core, Men and Women are fundamentally different in many ways, including physically, emotionally and their approach to reasoning. If you disagree, that’s your problem. These are facts and the planet should come to terms with it and move on.

• I fundamentally believe there is an imbalance in the number of women decision-makers in business – there isn’t enough of them in positions of authority and decision-making.

• I do not believe there is a trend, conspiracy or male-driven agenda behind this imbalance. My theory is its due to how corporate culture has evolved since 1901. There is a 70-year lag in terms of women moving into the modern workforce and this is the cause of the gap we see today. The gap is closing and will plateau over time, probably never at 50-50, but at an optimal balance.

• I believe this imbalance is a lost opportunity. Women have proven time and time again that they are as good if not better than their male counterparts to produce when it matters.

• I believe the responsibility for an individual to achieve their personal aspirations both professionally and personally lies squarely on the shoulders of that individual. Period.

• I don’t believe there is any “rule”, “policy” or tinkering of any kind that can correct this problem. Let me be very clear about this – I am not in favor of any normalization or force-fitting when it comes to the performance of individuals in any situation.

• I believe in the individual. Therefore there are many examples of women being ridiculously successful in the workplace and equally there are many examples of women failing or underachieving in the workplace. Same for men. It has nothing to do with gender.

There you have it, my naked views. Now you know where I’m coming from when I say setting quotas for the number of women in roles is pure politics and wrong. In fact, if I were a woman I’d be insulted at the suggestion that I cannot earn my place to the top without regulations. What an outrage! And it doesn’t even address the problem.

Setting quotas changes some of the fundamental laws of our universe – that each individual brings something unique and different to the table; that a meritocracy is better than phony entitlement systems; that competition is a healthy way for individuals to fulfill their true potential; that outcomes are the single most important measure of a professional. By forcing companies to choose their people based on gender, race or any other factor other than ability, you are undermining the very principles that have propelled humanity since history began.

Play this out for a second – I have 10 people on my board and 3 have to be women per the new law. What if there are 10 men that are more qualified? Now I have to settle for 3 individuals who are not the best options for me. How does that benefit my company, my shareholders, my employees, my customers or even society?

I know it sounds harsh, but it’s the dumbest solution to a problem that is slowly, but surely correcting itself. I spent many years listening to HR and Legal advise me on the need to meet certain unwritten quotas when I worked at corporations. “You must have more female managers” or “we need more minorities”. I never listened to this nonsense and stuck with what I always knew worked – get the best people for the job.

By following this policy I was able to develop strong management teams over my career. At one company I had three direct reports who were my key leaders for our region. Two of them were Indian males, one of them was a woman. We made a great team and our results showed it.

In another company I had to put together a team that was tasked with delivering complex solutions around the world to our clients. Again I chose not to listen to quota suggestions from the PC police. We put together the best team instead – 3 commercial leaders globally, all of them male. 1 operational leader with global responsibility for the business, a female. Her team was made up of 3 female leaders covering the US, UK and Europe, all of them extremely talented. This team delivered huge results over a 5-year period and my people were successful.

Last January a well-known local business in Pittsburgh won the annual Martin Luther King Jr. Diversity and Leadership awards. Pamela’s Diner is one of Pittsburgh’s best-known breakfast places, with 8 or so locations across the greater Pittsburgh region, employing over 50 people.

Upon receiving their award, owners Gale and Pam gave a short yet powerful speech where they said they were humbled by the recognition but initially had trouble understanding their nomination. “At Pamela’s we don’t let gender, race, sexual orientation, tattoos or piercings prevent us from hiring the best people,” said Gale. They have no diversity policy, they just hire, train and keep the best people. This is the solution to your imbalance problem.

Yet we repeatedly see arbitrary rules and policies coming out of regulators trying to manipulate statistics. Where is the common sense?

This topic is broad and cannot be fully covered in a blog post, so let me part with some thoughts on how women can do better for themselves in the workplace – these are purely my views, call them my unsolicited advice.

First, know yourself.

What are you capable of? What do you want out of your career? What would make you truly happy? One open question I have is could the reason why there are less women than men in high stress, high responsibility jobs be because they don’t want the job? I have personally known several women who worked hard to rise in the corporation only to realize its not for them. So know yourself.

Know the beast you are trying to slay.

If you work for someone you need to know three things about them in order to succeed in your job: what is their personal ambition? What are they measured on (goals, objectives etc.)? How does your contribution help or hurt them?

Know the environment you are living in.

Corporations are like worlds on to themselves. Planet Google is just so different from Planet Ford, so just because you were successful at Ford doesn’t mean you are going to make it at Google. You need to understand what does it take to be recognized and succeed in the company you work for. You have to know the culture of the place to understand your path.

Hold your direct Boss accountable.

So many employees don’t get this, regardless of gender. You must have the conversation with your boss about the same things you need to know about him: what is your ambition? What matters most to your career? Where do you want to be in a year, in three years etc. And how is your Boss going to help you get there?

This is such an important thing and I can honestly say the majority of professionals don’t get it. You have to ask your Boss to help you achieve your goals, get their commitment, then hold them as accountable as you hold yourself.

Finally, be ready to work hard. Really really hard.

People are funny animals. I had a recent graduate in my office interviewing for a job. After a decent conversation, this unproven 22-year old asked “How much does the position pay? I need $80k a year”.

What happened next is best kept out of print, but I will tell you this – if you are not willing to work as hard as you can each and every day, you need to reset your expectations of serving on boards and carrying executive titles. There is nothing glamorous about dealing with the challenges and duties that come with these roles. Many people can’t handle it and so when they fail to achieve the results, they are quick to blame discrimination instead of holding themselves accountable. There is no short cut to hard work.

The Russian Fat Loss Secret: Guest Post

2011-06-05T16:18:00.000-04:00

A couple of months ago I met Jose on a trip to Honduras and we are now good friends. Jose is General Manager of a well-known hotel chain in Atlanta and, like me, he loves to travel and see all the world has to offer. As we smoked cigars and enjoyed the beautiful country of Honduras, Jose shared his biggest fear with me. Approaching 50 years of age, Jose is 50lbs over weight and struggles with his energy levels. Like many over weight people, what frustrated Jose most was the lack of understanding why, after years of being in decent shape, his body was now giving way to love handles, a gut and a feeling of labor just to get up in the morning.

Jose, like many people who reach their mid-thirties is experience a natural blockage of his system that comes from four things:

1) lack of exercise;

2) a build up of toxins from the food he eats, the air he breaths and a myriad of other exposures to foreign toxins that enter the body;

3) a lack of sufficient nutrition, enzymes and vitamins the body needs to function properly;

4) his body’s unique deficiency rate which is basically how it reacts to the three points above.

In 2003-4 I weighed 355lbs. I was heading for an early grave and what bothered me the most is I didn’t really understand why. I knew I didn’t exercise regularly, but I also wasn’t an over eater. In fact, I ate less in volume than most people I knew, yet here I was going from pant size to pant size every 6 to 9 months and not understanding what the hell is going on. If I knew then what I know now, I would have been able to address my weight issue effectively when I was 30 years old.

Luckily, fate and a little initiative led me to finding a path that has changed my life. In 2008 I was introduced to a nutritional cleanse system called Isagenix, and after watching a 300lb 50 year old Doctor lose 90lbs in 120 days, I decided to give it a try. I’ll spare you the details and get to the results. In 30 days I lost 25lbs. In 90 days I was down almost 60lbs and had such high energy levels I was back in the gym for the first time in over 8 years. After 90 days I got off the system and went into a “maintenance mode”, eating normally, exercising, yet still cleansing every 2 to 3 weeks. After a year on the program I was down over 100lbs.

Today I am at a stable 225lbs, down from a high of 355lbs. A year ago I had gone all the way down to 196lbs, a result of running between 18 and 23 miles a week. At 196lbs I didn’t feel that great, I had lost all muscle mass and knew I was fairly weak. So I changes my training regimen and opted for more weight training and plyometric exercises, less long distance running. I am in the gym 2 to 3 times a week now, and go for a couple of 2-mile runs a week. This has helped me maintain a weight of 225lbs yet get all my strength back. I feel better than I have ever felt in my life.

Jose got on Isagenix 30 days ago and is already down 25lbs. He wants to lose another 25lbs and hold his weight at 250lbs. I meet people all the time who struggle with their weight and their health. Its not just overweight people, its also hard working professionals who are low on energy, don’t exercise regularly, don’t feel good. Yet they are not sure what to do. I have personally introduced over 15 people to Dr. Joe, the Doctor who guided me through the process. Most of them have seen similar results to Jose and I. A few didn’t, but that’s their own doing. If you want something bad enough you can achieve it.

Many people unfortunately see temporary results as a yield of dieting. They cut their calories and of course lose weight. But they don’t really understand why they have lost weight and why their body gains the weight back with a vengeance. It goes back to the secret formula of exercise, toxin build-up, lack of nutrition, enzymes and vitamins, and accepting that your unique body is prone to weight gain with age.

While a program like Isagenix can help you address points 2 and 3 (and you need to understand the science and logic behind these two), you have to also exercise. And the secret to exercising is to make it fit into your life, not make your life fit around exercise. It’s a crucial factor that many people refuse to understand, even professional trainers who design 5 day a week training programs for average people who will never be able to stick to them. So as I was scanning the many headlines this past week, I came across a must-read article that nicely describes why a 50 year old like Jose can make a significant life-change with exercise and nutrition in less than 30 days.

If any of you want to learn more about Isagenix I’m happy to introduce you to Dr. Joe and let him tell you about the science behind it and why it has worked for so many people like Jose and I. But to address the exercise question, I’m happy to share this incredible guest post by Bill Hartman. Enter Bill…

The Russian Fat Loss Secret
Learn the proven way to sculpt a lean, muscular body

By Bill Hartman, P.T., C.S.C.S.
12 May, 2011

Ever hear the adage, “Train like an athlete to look like an athlete?” It’s a popular mantra among strength coaches today, since it encourages folks to focus on total-body strength and all-around fitness—instead of just lying on the floor doing crunches.   

But there’s been one downside: Plenty of guys have asked me what how to do “two-a-days”—as in two workouts per day. This is usually because they read that this is what some sculpted world-class athlete does.   

My answer: If your goal is to lose fat and build muscle, you don’t need two-a-days. In fact, two-a-days would actually be too much training for the average person. (Even in the unlikely scenario that you had the time.) The truth is, even the best athletes don’t thrive on two-a-day workouts.   

To understand why, I’ll need to give you a bit of history lesson. But by the time I finish, I will have revealed the training secrets that have built some of the best athletes in the world. And these same secrets will turn your body into a fat-burning machine.   

***  

Here in the United States, we’re a melting pot of different cultures. This gives us a diverse gene pool that produces amazing genetic freaks—who can run faster, jump higher, and throw harder than almost anyone in the world.   

Now those of us in the fitness industry would like to attribute these athletes’ performances to our superior training methods. But that’s rarely the case. In America, strength coaches frequently overtrain many of our best young athletes, pushing them to exhaustion with hours and hours of intense training. So in the end, the athletes who break records are most often the ones who are so physically gifted that they can thrive at their sports in spite of these extreme training methods. Not because of them.

Of course, if longer and more frequent workouts aren’t the answer, what is? Well, you’ve heard the phrase work smarter, not harder, right? That’s the solution. And turns out, some fitness experts have known exactly what to do for a very long time.

Let me explain: Before the fall of the Berlin Wall and the collapse of the Soviet Union, the Russians lacked genetic diversity because they were a closed society. So what did Russian sports scientists do? They carefully studied and analyzed fitness performance until they discovered the best way to train athletes. The result: Some of the greatest athletic performances on the planet.

Don’t believe me? I have proof.

Back in 1984, the Russians and other Eastern-bloc countries decided to boycott the summer Olympics. So their athletes participated in an “alternative Olympics,” called the Friendship Games. And when the two competitions were over, it was clear that the Russian sports scientists really knew how to develop great athletes.

To give you perspective, 140 countries participated in the Olympics, while approximately 50 nations competed at the Friendship Games. Nevertheless, the Friendship Games athletes outperformed the Olympic Games sportsmen in 20 of 41 track and field events. In fact, a bunch of Olympic gold medalists wouldn’t have even placed in many of the events since more than 60 Friendship Game results were good enough to secure medals at the Olympics. The Russians broke numerous world records and would have been some of the top Olympians in weightlifting and wrestling. In other words, the Russian athletes were better prepared and better trained. Period.

Now, the secrets that I’m about to give you are based on a small piece of this Russian sports science. They’re not really secrets anymore, but principles. And I use them with many athletes at my private training facility, IFAST, in Indianapolis. The results have been beyond impressive. Not only have our athletes’ performances improved tremendously, but these clients have become even leaner—without trying. What could be better than that?

The Science Behind The Russian Fat Loss Secret

A quick biology lesson: Your muscles are composed of fast-twitch fibers and slow-twitch fibers. Heavy strength training targets the fast-twitch fibers and, of course, helps to build muscle. But it doesn’t do a lot for your slow-twitch fibers.

Endurance-based training, on the other hand, targets your slow-twitch fibers and ignites fat loss. But as just about any longtime runner can tell you, it doesn’t help you pack on muscle.

Which prompts a seemingly obvious solution: Why not combine training methods and achieve the best of the both modes?

Enter what I call The Russian Fat Loss Secret: a strength-aerobic workout that targets both your fast-twitch and your slow-twitch muscle fibers. This is the same strategy used by Russian sports scientists decades ago. So you build muscle and strength, burn fat, and improve your total-body fitness fast.

The best part: It couldn’t be simpler. For example, each workout contains heavy-lifting and explosive exercises. These movements are designed to hit your fast-twitch muscles, which have the greatest potential for size and strength gains. They’ve also been shown to require more energy to contract than slow-twitch fibers, providing an additional benefit.

To train your slow-twitch fibers, I prescribe “tempo” exercises within each workout. The idea is to perform an exercise at a slow but steady tempo from start to finish. I’ll use the “barbell tempo squat” as an example. This is simply a barbell squat in which you take two seconds to lower the weight, and 2 seconds to lift the weight—all without pausing at the top or the bottom of the exercise. One important point: You’ll have to lower the load—a lot—for these tempo moves. Too much weight and you’ll still be focused on your fast-twitch fibers, which won’t give you all the benefits of this combo approach.

But here’s why tempo exercises work. When doing the barbell tempo squat, for example, your legs are under constant, low-level tension. This reduces the blood flow to your working muscles, depriving them of oxygen for an extended period of time. With less oxygen, your muscles react by creating more mitochondria. Mitochondria are tiny powerhouses in your muscle cells that produce energy.

So the more mitochondria you have, the more energy you can produce. And the more energy you can produce, the harder and the longer you can exercise before you run out of gas.

Now, can you guess what mitochondria like to use to produce this energy? Body fat. That’s right: The more mitochondria you have; the more fat you can burn.

There’s one last key piece to this puzzle. To end each workout, I include an intense “metabolic accelerator,” such as the kettlebell jump or kettlebell swing. These are power exercises that you do quickly for about 10 seconds, interspersed with about 50 seconds of rest. So it’s sort of like doing eight to ten 100-yard sprint intervals, but without the need for a track. That means they’re great for burning calories and boosting your post-workout metabolism, which results in even greater fat loss.

The upshot: By following the strength-aerobic principles of The Russian Fat Loss Secret, you’ll get the muscle-sculpting benefits of heavy lifting and the fat-loss benefits of endurance-based training. What’s more, you can achieve fantastic results in just three workouts a week. Now doesn’t that sound a lot better than two-a-days?

Want to try it? The Russian Fat Loss Workout is available exclusively on Men’s Health Personal Trainer. There you’ll find Hartman’s complete four-week plan, and have access to our customizable nutrition program—which will help you create the best diet for your goals, lifestyle, and preferences. Click here to learn more!

Time To Cancel The Cable Subscription, Honey

2011-05-31T23:26:00.003-04:00

The US has a very different culture of work and rest than Europe. Three times a year the country slows to a halt and people disconnect to be with family and friends. This past weekend was one of those occasions, Memorial Day weekend. Everyone was off on Monday and the streets were awfully quiet as people stayed home, attended cook outs and hopefully stopped to remember and honor those who gave everything for the rest of us.

Having lived in the US for over 5 years now, I generally enjoy Thanksgiving, Fourth of July and Memorial Day weekend. Like for most Americans the rest of the year is a bit of a blur as I work on my business, spend time with the various start-ups I advise and the community organizations I'm involved with. Don't get me wrong, as a Nomad I have plenty of time to play and travel. But these three weekends are truly times to reflect and, well, do nothing.

So with a friend visiting us over the weekend, I was exposed to some traditional American TV. I haven't really watched TV for over a decade, even when I lived in Brussels and London. Some nights I'd come home from work, tired and in need of disconnecting, so I'd pick up the remote, scan the various channels to see what was going on in the world. Television overseas is interesting in that you have several channels from each European country - BBC to see what the Brits are debating, French talk shows that are incredibly intellectual and philosophical, Italian flair TV, Spanish food channels etc. And there are nowhere near the amount of ads we have on American TV.

Since moving to the US I stopped watching all TV for good. The main reason was there was just too many other things to do - work was all consuming, outdoor activities like golf and travel were more accessible here, and I love to read. A lot. Plus cable is a major rip off here - the average household spends over $100 a month on their cable. Thats over $1,200 a year. Even the 45m Americans at the center of the Healthcare debate somehow manage to have their cable TV so they can watch sports, reality shows and the myriad of other channels available to the American public.

But this past weekend I had lost control of the remote control which meant no Apple TV or Netflix (these I do watch when I'm in the mood and its too bad the Europeans don't have them yet). Strictly reality shows about obese brides shopping for wedding dresses, wannabe singers and dancers mostly making fools of themselves, Football stars trying to dance, the phenomena of "hoarders", people who's homes are full of useless stuff they are obsessed with having, several remodeling shows for homes and gardens, average Joe's traveling the country gorging themselves under the label 'Man vs. Food', and a myriad of other programs that turn losers into celebrities. Yes, I'm talking about strippers, porn stars, criminals and gangsters who all seem to have their own reality shows where they bare all and TV stations sell ads. Even the "News" programs are garbage - since when did news anchors give their opinion on whats right or wrong? Give me the facts please, hold your 2 cents.

America is glued to its television.

Television shows that kill brain cells.

I felt millions of my brain cells die a horrific death on Sunday afternoon as we decided to stay in and relax. After 3 hours of scanning the channels and watching a few of these popular shows I can honestly say I am dumbfounded (and dumber). How can people watch this crap? I googled the stats and it turns out these channels have tens of millions of viewers who tune in each day and night to watch useless material. Maybe its an escape from reality, but then there is the stat that says the average TV viewer spends 14 hours a week watching cable shows. Thats an average of 14 hours, which means some watch upwards of 20 hours a week - almost an entire day.

Something is terribly wrong.

I lost three hours of my life on Sunday that I'll never have back, but I quickly went back to doing more productive things with my time. I had dinner with a new friend of mine last night, Louis. Louis is an American who spent over a decade in Japan, studying Japanese and working for a financial services firm before starting his own innovation company 5 years ago with the backing of a Japanese VC. He returned to Pittsburgh where he grew up to set up an office, hire local talent from CMU and build the US presence of his promising company. Louis had spent the entire weekend working. He doesn't even have cable.

The past month Louis and I have spent quite a few evenings smoking a good cigar and discussing the many culture shocks we have both had moving back to the States. Louis observed that its very difficult to have a social connection to the average person here if you are not up on all these reality shows, entertainment gossip, sports and sitcoms. Just look at the joke that is Charlie Sheen and Two and a Half Men. I have never watched an entire episode of that show, not because its trashy like the reality shows, but because I never get anything out of watching it. It has absolutely no value to me. Yet its been prime news for the past two months, watched by millions here and around the world, followed on Twitter, Facebook and all news sources. Individuals have spent hours on this one topic and they have nothing to show for it.

It is what it is, we are not going to change the pop-culture or whatever you call it. But I do believe individuals have a choice and should think about what they are doing with their time. I recently attended a Board meeting for a non-profit I serve on where a few of the Board members attending had not been to a meeting in over a year. At the break I approached them one by one to get a feel for why they didn't have 2 hours a quarter to meet their responsibilities.

These are not people who watch television instead of meeting their duties, they are working professionals, family men and women with kids, and active in the community. They just struggle juggling everything and need to make better choices about what to commit to (or not). But it made me think that these are the minority. Most people complain they don't have time to do what is needed, yet they spend an average of 14 hours on the couch thinking its "relaxation" time. BS.

I have another acquaintance who I run into at a local coffee house I go to when I'm not traveling. He works 5 jobs to make ends meet, including working at the coffee house on Sundays and holidays like this past Monday. While he isn't a sitcom or reality TV addict, this guy does spend a lot of time watching sports. He knows all there is to know about the professional teams in the city. Interestingly his strength is that he is a people person, so it helps to talk sports. Yet he would love to be earning more money and doing something more with his life. There is a disconnect.

You have to choose whether you want to be a producer in life, and that means understanding what value you get from the various activities you choose to follow. One could easily suggest that spending time on a golf course or in the gym is the equivalent of another man's TV time, but I don't buy that comparison. Golf is a recreational activity and most people don't do it alone. Those who decide to dedicate the 4+ hours a round it takes to golf do so understanding the value they get out of it. And spending time in the gym, well, just look in the mirror and ask yourself whether you need to spend some of those 14 hours a week there instead of on the couch.

Years ago a mentor taught me the importance of time management. I always perceived it as a 'work' thing. He taught me that time management is first and foremost about your life goals. He drew me a simple plan carving up my life into 5 components he called buckets: Personal, Business, Financial, Relational and Spiritual. "Its the same for everyone" he said. Under each bucket you write down your goals and objectives, which you can change when and as you see fit. But write them down, and write them down as an action, not an outcome i.e. don't write "lose weight", instead write "Go to the gym 4 times a week, start a diet, take Yoga class" etc. Actions are the goals.

Once you have completed this exercise (which could take a few days if done properly), you then want to identify, on a daily basis, the highest value activities (HVAs) that you accomplished that day to achieve your goals. Its an eye-opening exercise. The first week I did this I struggled to come up with even one thing that was truly an HVA to my goals. Yet I was 'busy' and tired from the 12 hours I put in that day. Many of us are time wasters, we just don't want to admit it. Successful people aren't. And I define successful by their own measures, no one else's.

My personal opinion: shut off the cable, save the money and get a Netflix subscription. Go to a friends place to watch the game. Use the resources on the internet to stay up on the news that really matters. Avoid anything that dumbs you down, avoid anyone that speaks in absolutes (yes, you the right and the left) and beware the man with only one book. Its time to take back control of your life.

The Seeds of Our Destruction: Guest Post

2011-05-23T09:38:00.001-04:00

I am in the process of applying for my citizenship. Its incredible how much history is behind what made the US the country it is today. As history has taught us, there is no perfect. There is no country or era in history where things were perfect. You can definitely categorize historic periods in terms of growth, evolution and innovation. And you can also map depression, war and turmoil.

The founding of the United States is often labeled as one of the defining moments of the world as we know it today. The founding fathers who penned what is arguably the most amazing constitution and declaration of independence are often referred to by conservatives and historians for having the wisdom, self-lessness and courage to define this great nation. I tend to agree. However, historians and those who document time can romanticize even the ugliest of things.

It was thus with keen interest that I read Ziad Abdelnour's recent post from earlier this month titled "The Seeds of our Destruction - An Academic Outlook". Ziad has become one of my favorite people to follow, and his firm, Blackhawk Partners Inc. are a different kind of financial management company. Its not often anymore that one reads something and truly learns from it, the internet is more full of garbage than quality. I hope you enjoy this as I did.

The Seeds of our Destruction – An academic outlook.

By Ziad K. Abdelnour, Founder & President, Financial Policy Council, Inc. On 02 May 2011

When I became a citizen of the United States, I had to study the nation’s history in order to pass my citizenship examination. I approached this task with the same focused intensity with which I approach every challenge. I wanted to be as well versed on American history as the average person who was born here.

Imagine my surprise when I discovered that the average native-born citizen knows very little about their nation’s history. Many people with whom I have talked think that 1776 is the date we celebrate the victory of the United States over the British. It isn’t. It is the year that Thomas Jefferson wrote the Declaration of Independence. The American Revolutionary War went on for another seven years. A study by the American Historical Association randomly selected four hundred people from “Who’s Who in America” to take a multiple choice test on a general overview of American history. Over 70% of the respondents thought that Thomas Jefferson was one of the framers of the Constitution in 1787. He wasn’t. He was in Paris at the time, serving as Minister to France. Had he been in Philadelphia, we might not have some of the economic problems that we have today.

The common misconception is that the War for Independence was fought for political liberty. That is simply not true. The inhabitants of the American colonies were almost all British subjects who shared the same rights and privileges of any man or woman walking down Fleet Street in London. The Englishmen who settled in the New World brought with them charters that protected their rights and liberties as granted under the Magna Carta, the Great Charter issued in 1215 by King John and the basis for all British law.

What America fought for and won was economic liberty. In 1763, George Grenville became Britain’s Prime Minister. That country was broke from their Seven Years War with France. Grenville’s solution was to impose a series of direct taxes and trade regulations on the prosperous American colonies. The Americans would have none of it. On July 4, 1776, the 56 delegates to the Continental Congress adopted and signed the United States Declaration of Independence declaring that the thirteen American colonies were now independent and sovereign states and were no longer part of the British Empire. In 1781, the several sovereign American States formed a “firm league of friendship with each other” codified as the Articles of Confederation and called themselves The United States of America. The War for Independence finally ended with the signing of the Treaty of Paris and the Treaties of Versailles on September 3, 1783.

The Americans knew they had created something new and different; something that had never been done before. They had established a nation whose economy was based upon merit, not upon garnering the favor of the crown or some royal advisor. They had created an economy in which reward was in direct proportion to effort; where the laws of supply and demand determined a man’s success in the marketplace instead of the arbitrary dictates of some governmental authority. They had created a land where anyone could come up with an idea or provide a needed good or service and make as much money as they could for as long as they could.

America needed a government that supported and nourished this new economic model. They knew they had the resources to become a mighty nation if they just could find the balance between freedom and regulation; but there had to be checks and balances. History had taught them that the Utopian dream of communal sharing of resources and responsibilities was a beautiful vision and a lofty goal; but one that always broke down in the face of human self interest. They reasoned that what they needed was a central government with strong but limited powers to ensure that there was fair trade between the states and protection from foreign influence and interference.

In the summer of 1787, delegates from all of the states except Rhode Island, met in Philadelphia for the purposes of discussing ways to fix the Articles of Confederation. They wanted to have a stronger central government with powers over foreign and domestic commerce. They also hoped to find an acceptable means for Congress to fairly and reasonably collect tax revenues from the individual state treasuries. Virginia lawyer, James Madison, was joined by New York banker, Alexander Hamilton, in convincing other delegates to scrap the Articles of Confederation and adopt a new constitution for a completely new form of government; a union of sovereign states under a central government of elected representatives – a federal republic. Madison’s motives were his concerns over the fragile bonds of the Articles; Hamilton’s motives, it turned out, were far more pecuniary in nature.

Alexander Hamilton was a member of the New York delegation along with State Supreme Court Justice Robert Yates and John Lansing, Jr., the mayor of Albany. Hamilton, the illegitimate son of a Scottish prodigal and a married French Huguenot woman, had been born into abject poverty around 1757 on the island of St. Nevis in the Caribbean. He had come to Boston in 1773, presenting himself as the grandson of Scottish nobleman John Hamilton and eventually landed in New York where he attended King’s College, now known as Columbia College. His intelligence, ambition and organizational talents led him to serve as Washington’s aide-de-camp during the war. He later distinguished himself in combat, attaining the rank of Colonel. Hamilton married Elizabeth Schuyler in 1780, the daughter of one of the wealthiest businessmen in New York. In 1784, he founded the Bank of New York, America’s oldest continuously operating bank.

The Man Who Would Be King

Hamilton was a man driven by a need for social status and a craving for Fame. He was an elitist who viewed the people of the American colonies as having “the passiveness of the sheep in their compositions” and unable to be roused from “the lethargy of voluptuous indolence.” He disguised his true disdain for his fellow citizens with an avowed mission to serve “the public good,” but held a firm distaste for anything parochial and regarded the “local attachment” to the interest of the states over that of the nation as undermining the American cause and his own ambitions. Management and control of his public image was a paramount obsession with Hamilton. Defense against a perceived slur was what eventually led to his untimely death in a duel with Aaron Burr in 1804.

On Monday, June 18, 1787, he rose in the Philadelphia convention to offer his opinions as to which direction the delegates ought to take regarding amending the existing Articles of Confederation. He spoke candidly because the candidates had passed a motion to conduct the convention in secret; however, James Madison was taking notes as an unofficial recording secretary. What neither Hamilton nor anyone else knew at the time was that Judge Yates was also recording statements almost verbatim, using a form of shorthand he had developed to record testimony before his court.

Hamilton supported scrapping the existing compact and writing an entirely new guiding document for the nation. Hamilton was “fully convinced that no amendment of the Confederation leaving the states in possession of their sovereignty could possibly answer the purpose.” Hamilton was a nationalist and an adherent of the mercantilist model of economics. His plan was for a strong central government that controlled the economy through a central bank.

Mercantilism is often confused as a preference of business and industry over agriculture. It is, in fact, the use of the government to fulfill ones personal objectives and self interest. In other words, if Goldman the Sockmaker becomes the favorite haberdasher of the king, then Goldman gets to make all of the king’s clothing. He also gets to produce all of the finery for the royal family, all of the clothing for the members of the court, garments for the castle servants, the uniforms for the king’s army and so on. All of the other tailors in the realm have to scramble for the leftovers. Mercantilism creates an elitist commercial monopoly which eventually corrupts the state bureaucracy and infuriates its citizens. America was founded and originally set up to expressly counteract mercantilism by diffusing power in such a way that there would be no place that a mercantilist entity could find a single patron with whom to curry favor.

Hamilton’s proposal would have codified the wealthy elite as the upper chamber of a bicameral parliament, elected the President for life and effectively transplant the English form of monarchy and mercantilism to American soil. There were even persistent rumors that he was involved in a conspiracy to actually establish a monarchy on America’s shores by installing the Duke of York, King George III’s son, to rule.

He was voted down by the convention. In fact, Hamilton’s continual machinations and backroom conniving so infuriated his fellow New Yorkers that Yates and Lansing left the convention in July, ethically negating Hamilton’s role at the convention. As was to be the model throughout his political career, Hamilton was never one to be hindered by what he considered to be minor technicalities. He wasn’t allowed to participate in further votes, but when the final resolution was drafted, Alexander Hamilton was one of the signers of the new Constitution. He also worked tirelessly to see that the nation’s new compact was ratified, writing 51 of the 85 Federalist essays that explained the new Constitution and have shaped interpretation of that document ever since. New Hampshire became the ninth State to ratify the new Constitution of the United States of America on June 21, 1788, and the new federal government began operations just eight months later.

George Washington became the nation’s first President in 1789 and his Cabinet consisted of just seven men. John Adams was Vice President, Thomas Jefferson was Secretary of State, Henry Knox was the Secretary of War, Samuel Osgood was the Postmaster General, John Jay was the Secretary of Foreign Affairs and the Attorney General was Edmund Randolph. Washington remembered his former aide and, on the recommendation of Robert Morris, named Alexander Hamilton as the first Secretary of the Treasury. Hamilton was considered to be one of the brightest candidates for the position despite the fact that he was self-taught in the law, economics and finance.

In his “First Report on the Public Credit,” delivered to Congress on January 14, 1790, Hamilton laid out a plan for the establishment of a properly managed but ongoing national debt as the vehicle for easy credit and prosperity for all. The federal government would assume all of the old debts of the Confederation in exchange for new government bonds paying 4% interest. He was convinced that the only path to success in any society was to tie the interests of the wealthy, the primary government bondholders, to the state in the belief that they would support his dreams of a larger, centrally controlled government. He maintained that his plan would restore land values, stimulate manufacturing, lower interest rates and “promote the increasing respectability of the American name.” This new scheme was widely endorsed by people all over the country who quickly exchanged their worthless Confederation notes for new Treasury bonds. He then introduced a series of tariffs and excise taxes in order to raise the revenue to back the bonds.

It was claimed to be merely an unfortunate coincidence of the day that the news of the payoff was slow to reach the nation beyond the city limits of New York, allowing many of Hamilton’s friends and relatives the opportunity to scour the countryside buying up old Confederation notes from unsuspecting holders for pennies on the dollar. Hamilton scoffed at those who raised questions of impropriety and arrogantly waved off their concerns stating that “how things are done governs what can and will be done: the rules determine the nature and the outcome of the game.” This philosophy became known as Hamiltonianism and underscored the policies and platforms of his newly formed political party, the Federalists. Continuing his campaign for “the common good,” he had the federal government assume the debts which the individual states had accumulated fighting the War of Independence.

The second nail that Hamilton drove into America’s free-market coffin came in 1790 with the establishment of the Bank of the United States. This was the nation’s second attempt at a central bank. The Bank of North America had been chartered by the Continental Congress in 1781 and was organized by Philadelphia merchant and Revolutionary War financier Robert Morris. By 1783, the Bank of North America had died an ignoble death under allegations of fraud and mismanagement; however, Hamilton convinced Congress that this new central bank was going to be different.

Thomas Jefferson considered Hamilton to be dangerously ambitious and raised the point that the Constitution did not grant Congress the power to create a bank or any other entity. With uncanny foresight, Jefferson wrote “To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition.”

Hamilton countered in his Opinion on the Constitutionality of an Act to Establish a Bank that “principles of (Constitutional) construction like those espoused by the Secretary of State (Jefferson) and the Attorney General (Edmund Randolph) would be fatal to the just and indispensible authority of the United States.” Then Hamilton delivered the estocada, or ‘death blow’ to the free market economic model. He claimed that the Constitution “implied” power to the federal government by the very fact that the government was sovereign and had the right to assume any power it needed to perform its duties as a sovereign entity.

“It is not denied,” argued Hamilton, “that there are implied as well as expressed powers and that the former are as effectually delegated as the latter.”

In one swift and deliberate motion, the concept of limited government was tossed out the window and the new government assumed the authority to do nearly anything it wanted.

This plan was opposed by Thomas Jefferson, James Madison and others as a concentration of economic power in the hands of the central government, and more specifically, in the hands of Alexander Hamilton. The proposal was defeated in Congress five times before Hamilton and Jefferson struck a deal. Hamilton agreed to support Jefferson and Madison’s plan to move the nation’s capital out of New York to a new, centrally-located national capital city which they had planned in northern Virginia. His price was their support of his central bank plan. Jefferson didn’t believe the Congress would ever approve Hamilton’s blatant grab for federal power, so he agreed to Hamilton’s offer. Because of the way he had doled out the advance notices for funding and paying the government bonds on the war and old Continental debts, Hamilton knew he had the votes he needed to get his bank charter through Congress. Thus was Washington DC created, as well as the establishment of the perpetual debt of the federal government and its ability to use taxation policies to affect political policies and social agendas.

On February 24, 1791, Washington signed the bill chartering the Bank of the United States and formalizing the principle of implied powers for Congress. The new American economy was quickly introduced to boom-bust business cycles as the federal government borrowed, spent too much and then printed money to cover its shortcomings. Between 1791 and 1796, price levels jumped 72%.

Hamilton wasn’t finished defining the new government to his own specifications. He had one more act to fulfill his dream of a New Britain; the federal government had to function in the mercantilist model, centrally controlling the economy and involving itself in every aspect of the citizen’s daily life. In December of 1791, he submitted his magnum opus to Congress, The Report on Manufactures. This report was in response to a request from Congress for Hamilton’s opinion on “the means of promoting such as will tend to render the United States, independent of foreign nations, for military and other essential supplies.”

In the first few paragraphs, Hamilton acknowledged the commonly held notion that “it can hardly ever be wise, in a government, to give direction to the industry of its citizens. This, under the quick-sighted guidance of private interest, will, if left to itself, infallibly find its own way to the most profitable employment: and it is by such employment that the public prosperity will be most effectually promoted. To leave industry to itself, therefore, is in almost every case the soundest as well as the simplest policy.” This is commonly referred to as a laissez-faire economic model in which transactions between private parties are free from excessive government interference in the form of regulations, taxes or tariffs.

Hamilton then proceeded for 26,000 words; laying out a detailed economic policy that not only decidedly opposed a laissez-faire economy, but was firmly rooted in English mercantilist principles. He went into exhaustive detail listing the specific industries that the government should promote and outlining the instruments the government could use to exercise economic control over these favored industries. Tariffs and bounties were to become the weapons of choice in Hamiltonian economics.

His grand ambition blinded him to one small truth; government bureaucrats have no way of knowing which enterprises will thrive and which won’t. They are usually operating on nothing but theoretical knowledge and supposition; they have no skin in the game and often have little accountability for the mistakes that they make.

I have no dispute with the historical portrait of Alexander Hamilton as an intelligent and articulate man who had a smooth way of ingratiating himself with the affluent and powerful; however, the portrait of him as a Champion of Freedom and Liberty simply isn’t true in the looking glass of historical investigation. He was an ambitious and arrogant nationalist who held the notion of individual sovereignty in contempt. He was more than willing to rewrite historical fact to prove his point. On June 29, 1787, he put forth the argument that the citizens of the states had never been sovereign and that the states themselves were merely “artificial beings” that had nothing to do with the creation of the union. This statement revealed an illogical sense of reality in the mere fact that the Constitution which created the national government had to be ratified by the individual states, each of them choosing to voluntarily enter into a compact with each other for the purpose of “forming a more perfect union.”

The Hamilton Legacy

When Thomas Jefferson became President in 1800, he rolled back or eliminated many of the taxes and tariffs that Hamilton had encouraged. The charter of the Bank of the United States was allowed to lapse in 1811 under James Madison, but Madison was forced to charter the Second Bank of the United States due to the debts incurred by the War of 1812; a war ignited, coincidentally, by the mercantilist policies of Britain.

Hamilton’s legacy was further codified in 1819 when Chief Justice John Marshall, a Federalist and self-described admirer of Hamilton, ruled in McCulloch v. Maryland that the word “necessary” in the necessary-and-proper clause of the Constitution didn’t mean “indispensable,” but instead meant “appropriate;” almost quoting Hamilton verbatim in the ruling. Marshall had also concocted the power of “judicial review” in his 1803 ruling in Marbury v. Madison that was based largely upon Hamilton’s inferences in Federalist No. 78; that “the authority which can declare the acts of another void must necessarily be superior to the one whose acts may be declared void.”

President Andrew Jackson became so incensed by the loose credit policies and the currency manipulation of the national bank that he made it his personal mission to return the nation to hard currency. This caused the Depression of 1837 and a twenty-six year period known as the “Free Banking” Era during which the money supply and price controls fluctuated wildly, causing many banks to last no more than five years.

Abraham Lincoln invoked Hamilton’s thesis on the unlimited power of the federal government when he prosecuted the wholly unnecessary and antithetical military action against the states that chose to secede from the Union which they had voluntarily entered just seventy-four years earlier. Lincoln then used Hamiltonian reasoning to pay for his $3-billion War of Northern Aggression by initiating a federal income tax civil and signing into law the Legal Tender Act of 1862. This legislation gave the federal government the power to print a national paper currency. The accompanying National Bank Acts of 1863 created a series of national banks which issued the “greenbacks,” a fiat currency backed up by Treasury securities. It also created the Office of the Comptroller of the Currency and charged him with regulating the banks and controlling monetary policy.

Thomas P. Kane, former Deputy Comptroller of the Currency from 1886 until 1922, believed that a system was necessary that offered the advantages of a centrally controlled currency, but had none of the inherent opportunities for political favoritism and malfeasance that had been the bane of the Bank of the United States. In his comprehensive history of banking entitled “The Romance and Tragedy of Banking” (Bankers Publishing, 1922), he noted that there may have been too much optimism for the National Bank Act because “… history teaches us that the public faith of a nation alone is not sufficient to maintain a paper currency. There must be a combination between the interests of private individuals and the government. ”

According to Kane, the first of four major bank panics during the forty year National Banking Era occurred in 1873 and was caused by New York bankers manipulating the Stock Exchange by “creating and fostering the fictitious valuations attained at home and abroad for railroad and other corporate securities…”

The Congress had been so anxious to have a transcontinental railroad that they employed Hamilton’s tactic of bounties in the Pacific Railroad Act of 1862, creating political entrepreneurs like Thomas Clark Durant. They chartered the Union Pacific Railroad to head west from Iowa and the Central Pacific Railroad to head east from San Francisco. For each mile of track they laid, they were given twenty sections of land and loans ranging from $16,000 per mile across flat prairie to $48,000 per mile in mountains. Nobody in the federal government thought to have oversight on the project, resulting in massive waste and corruption. Union Pacific ended up defaulting on $16-million in government loans which sent the stock market into a tail spin.

Fortunately for the nation, for every political entrepreneur who needed government financial grants or guarantees to launch their business, there were more market entrepreneurs who saw a need and invested their own capital and sweat equity to come up with a solution. This was the entrepreneurial spirit that had launched America and had seen it through its growing pains. By the first decade of the Twentieth Century, it appeared that it had returned in full force. Nearly 20,000 banks had been opened and over 80% of them were not national banks. What was even more alarming to the tight-knit banking fraternity in New York City was that these upstarts held more than half of the nation’s deposits, were maintaining a healthy balance between debt and savings, were not exceeding the reserve limits based on the gold and silver that they held and were making profits! Even the federal government was using its stockpile of gold to redeem its bonds and was reducing the national debt. To the Ivy League disciples of Hamilton’s principles of perpetual debt, this was sacrilege.

The Panic of 1907 was “officially” caused by a failed attempt to corner the copper market and led to a two week period of bank runs and a near collapse of the stock market. Historical anecdotal evidence points to the crisis having been ignited when J.P. Morgan published rumors that the Knickerbocker Trust Company was insolvent. Whatever the true cause, the Panic prompted Congress to create the National Monetary Commission. The Commission, led by Republican U.S. Senator Nelson Aldrich of Rhode Island, spent $300,000 for a year long fact-finding tour of Europe to study European central banking methods and monetary policy. That is the equivalent of $20.2 million dollars today. The visible result was a 30 volume report on the history of banking in Europe that was designed to make the American people think that the issue had been well researched. Not as visible was the process used to draft the legislation that was to finally and permanently bring Hamilton’s dream to reality.

What relevance does the nation’s first Treasury Secretary have today? He has become the patron saint of those who worship at the altar of Big Government and eternal deficit spending. Robert Rubin, the former Goldman Sachs Co-Chairman and U.S. Treasury Secretary during the Clinton administration, has started a forum to honor Hamilton and to further his philosophy of government and economics. “The Hamilton Project” is under the auspices of the Brookings Institution, a liberal think tank based in Washington, DC. The stated philosophy of this new venture is “long-term prosperity is best achieved by fostering economic growth and broad participation in that growth, by enhancing individual economic security, and by embracing a role for effective government in making needed public investments.”

It is a fitting tribute to Hamilton, the man who created the system that made it all possible. Unfortunately, the phrase “broad participation” doesn’t mean that there should be a sharing of the economic growth by a greater number of Americans. You must remember, this is banker-speak. The correct interpretation is finding a wider assortment of ways for the banksters and the federal bureaucrats to appropriate the fruits of that economic growth for their personal aggrandizement. Rust never sleeps.

Footnotes

i McDonald, Forrester, Alexander Hamilton: a biography (New York: W.W. Norton & Company, 1979), p. 4.
ii Ibid, p. 19.
iii Madison, James, Notes of Debates in the Federal Convention of 1787, (New York: W. W, Norton & Company by arrangement with Ohio University Press, 1840), Pg. 129.
iv Chernow, Ron, Alexander Hamilton (New York: Penguin Press, 2004), p. 237.
vDiLorenzo, Thomas J., Hamilton’s Curse: how Jefferson’s archenemy betrayed the American revolution – and what it means for Americans today (New York: Three Rivers Press, 2008), p. 45.
vi Alexander Hamilton: First Report on the Public Credit (Chicago: Encyclopedia Britannica, 1982) Annals of America, Vol. 3, pp. 407 – 415.
vii McDonald, p. 123.
viii Kroos, Herman E., ed. Documentary History of Banking and Currency in the United States (New York: Chelsea house, 1983), vol. III, pp. 147-48.
ix Chernow, Ron, p. 354.
x Gordon, John Steele, Hamilton’s Blessing: The Extraordinary Life and Times of Our National Debt (New York: Penguin, 1997), p. 29.
xi Rothbard, Murray N., A History of Money and Banking in the United States: The Colonial Era to World War II (Auburn, Alabama: Ludwig von Mises Institute, 2002), p. 69.
xii Lowrie, Walter and Clarke, Matthew, eds., American State Papers, Documents, Legislative and Executive, of the Congress of the United States, etc. etc., (Washington DC, 1832), Volume V, pp. 123-144.
xiii DiLorenzo, p. 103.
xiv DiLorenzo, p. 26.
xv Chernow, p. 355.
xv Kane, Thomas P., The Romance and Tragedy of Banking, (Boston: Bankers Publishing, 1922), p. 6.
xvii Ibid. p. 47.
xviii Folsom Jr., Burton W., The Myth of the Robber Barons, (Herndon, Virginia: Young America’s Foundation, 2010), pp. 18-19.
xix Kolko, Gabriel, The Triumph of Conservatism, (New York: The Free Press of Glencoe, a division of the Macmillan Co., 1963), p. 140.

A Walk On The Nomad Side

2011-04-29T10:12:00.001-04:00

Earlier this month I got on a flight to Tegucigalpa, the capital of Honduras. The trip was a mix of business and pleasure. Business comprised of visiting the operations of the biggest tobacco grower in the world, and pleasure was every other minute I spent in the country. This small Central American country is a land of beauty beyond my expectations.

As a global Nomad I have traveled extensively in Europe, Middle East and North America, but Central and South America are virgin territory. My expectations were low, but what I experienced during my 5 day visit was key rules of the Nomad Influencer that somehow I had filed away in the vaults of my mind.

The essence of a place is it's people, it's culture, it's history and it's food. If you use these four dimensions to understand the place you are in this very moment then you are well on your way to becoming a nomad. And you learn to appreciate places in a very real way.

It's easy to forget these simple things when one is so caught up in life. And there lies the secret IMHO to what makes a good life.

For the past nine months I have been heads down focused on building my business with my partner Bill, and I realized I had lost a grip on the balance you need to lead a healthy, happy and successful life. It does my family and health no good if I'm consumed by my work. And ironically it does my business no good either, no matter what you read in these opinion heavy times.

Simplicity is the true secret to a good life. My grandmother told me this so it must be true. And everywhere I went in Tegucigalpa and the surrounding towns, I was reminded of this. Not to confuse poverty or lack of means for simplicity, there is a lot of that too, but people for the most part are content and live a pure life.

The minimum wage per the government is $10 a day. This alone should make a good business case for setting up production in this country and it's neighbor, Nicaragua. There were two things I noticed in people here: they are extremely friendly, making eye contact and smiling no matter who we encountered, and they are eager to work.

I can't remember the last time I was in a place where people were so eager to work. I have a few High Tech clients that have a culture of loving to work, and we certainly had that spirit in the early days of FreeMarkets where we believed we were changing the world and thus on a mission...from God...at least it felt that way. But here, in third world Honduras, people are eager to work because it means putting food on the table and having a purpose filled life.

Carolina's Tamales

Out of necessity is born entrepreneurship. And everywhere we went there was creative entrepreneurship. My favorite part of the trip was when we pulled over by the side of the road to have beer and tamales at Carolina's Tamales. In the middle of nowhere this Honduran family had set up shop under the sawed off roof of a yellow school bus, selling cerveza and home made tamales over a wood fire stove. The front of the former school bus was the bar, behind it was the kitchen, and behind that they stored everything. If you continued past the bus there was a tent where this family of four slept.

The views were breathtaking, the beer cold and the tamales perfect. As we watched the sun go down and puffed on our Rocky Patel Old Worlds in the middle of the mountains of Honduras, I couldn't help but feel blessed to be alive.

Reflections On Good-To-Great: Guest Post

2011-03-23T21:44:00.000-04:00

I recently posted about the The Key To Gen Y Is Gen X. As an advisor to clients I am always surprised by the lack of understanding Gen X has for the mindset of Gen Y. Most of us who are older than 30 don't seem to realize how fast the world is changing around us. I recently read that the Nokia-Microsoft partnership is going to produce its first phone in two years. Really? Two years? Have these guys even thought about what the smart phone landscape will be like in two year? I don't think we even know who all the players will be two years from now (Facebook will likely be a main competitor), so how can you be designing products for two years from now?

The gap between Gen X and Gen Y is huge, yet I firmly believe neither can be successful in the coming decade without fully understanding and partnering with each other. Business models are changing, and they are not limited to certain industries.

If you are a CEO in a Fortune 1000 company its time to go back to school on understanding your market, and your culture. And its not only CEOs. CIOs are going to have to revisit their entire approach to IT in companies. COOs will need to overhaul their manufacturing process. Marketing and Sales are already making huge shifts in how they connect to their markets. And they are all going to have to understand a little part of the business called Supply Chain.

We are seeing a major change in the landscape of doing business, even though the key fundamentals of business will not change - even the Federal Government can't regulate its way around this fact. At my company, BrainNet, we are tackling these issues every day with clients who realize they have to change, they have to innovate, and that starts inside their organization.

It was therefore particularly interesting to read the reflections of a 21-year old entrepreneur on Jim Collins' classic Good-To-Great. When you talk to business executives from Gen X and older they will tell you Good-To-Great is like a bible for how management should operate. Yet Francis Pedraza's guest post does an incredible job of giving us insight into how Gen Y's mind works, and why proven business principles like those outlined in Good-To-Great may not work for the next generation, but more importantly, are not appealing to future Zuckerbergs of business.

Enter Francis Pedraza, Founder and CEO of The DoBand Campaign...

Reflections On Good-To-Great

by Francis Pedraza

Socrates, I feel ya! One of the things I’ve discovered about my job, is that the more I know, the more I realize how much I don’t know. I run a startup, and I’ve exchanged notes with plenty of other entrepre-doers. We face challenges and opportunities of daunting scope, operate in conditions of extreme uncertainty, we’re under-resourced, and yet we’ve gotta make rain in the desert. Sound familiar?

One feeling that rears its ugly head every so often is that of inadequacy. “Nothing prepared me for this!”

To cope with this, the DoBand team decided to start a book club. We figured it would be a dose of good ol’ OTJ training. ‘Cause “learning the hard-way” ain’t fun.

We polled our advisors for suggestions, and we’ve got quite an ambitious list to work through. Most of these were recent titles, geared specifically towards technology startup stuff. But at the top of the list, we had Good to Great, by Jim Collins. Shahriar Broumand of Nomad Influencer (@sbroumand) had cited it on numerous occasions, and recommended it highly. It was a classic. So we gave it a whirl.

What didn’t work for me.

To make this critique really meta (and cheesy) – Good-to-Great could have gone from good to great.

First off, this whole book could’ve been much shorter. As you’ll see below, the concepts aren’t that hard to grasp. Don’t waste my time, thanks.

Secondly, what about a prequel titled Sucky-to-Good? That’s probably more relevant for most organizations out there. Hey, I’d buy it! Startups struggle with problems so basic that most of the problems in this book seem like luxuries. Don’t acquire too many companies? No kidding! At their worst, all of these companies had steady revenue streams making them tens or hundreds of millions a year. They face a very different set of challenges. Startups need to learn to crawl, then to walk, then hopefully to run. But this book is about winning races. That’s important to remember.

To tell you the truth, I’d been avoiding this book for a while. For as long as I can remember, since the dawn of my business consciousness, it’s been something I’ve put off. It’s one of my dearly beloved uncle Nasser’s favorite books of all time. Yet somehow I had this sense that I’d find it too restrictive, too stiff, too stodgy, too dogmatic. Basically, I had a bizarre prejudice for this book.

…Oddly warranted, actually. The not-so-good (or great, hehe – sorry, couldn’t resist the cheap pun) thing about this book is it’s style. It’s just so irritating. Allow me to explain.

Partly it stems from the fact that Jim Collins hails from an earlier generation. He hails from a long line of business writers that MBAs and Fortune 500 corporate-types adore. From my Gen Y tech-startupy perspective, it makes me cringe to hear him heap praise upon crusty establishment companies. How did Nucor, Philip Morris, Circuit City, and Walgreens make his elite list of “great” companies? Overcoming my negative impressions of these companies and their “old economy” industries wasn’t easy. I had to imagine them a few decades back. Still, it was painful. Do I really aspire to build companies like this? No! Ugh. Yuck.

At least Collins’ lineup of role-model companies alerts us to our biases. We love sexy brands, gorgeous design, cutting-edge technology, insanely great products, and big ideas. But linoleum floored, florescent lighted 24-7 drug-stores on every corner? Nah, that’s not so attractive. But wouldn’t it be so much more attractive if it made us rich and consistently beat the market? Sure it would. We admire charismatic guru entrepreneurs like Steve Jobs who do business ‘their way’ (as Richard Branson put it), not the quiet, humble types that Collins’ trumps up as “Level 5″ executives.

So we have a bias. But conversely, so does Collins! There’s a selection bias – the companies that fit the research criteria all tended to start out as stagnant mid-cap companies in established industries. None were in markets experiencing exponential growth. None faced pressure from below – Kimberly Clark didn’t have to face much pressure from disruptive startups, it started in the paper-mill business. Enter a CEO that puts in place a strong management culture, and all of a sudden these formerly unremarkable companies get their act together. They start tapping into remarkable operational efficiencies by focusing on how to use what they’re best at to address market opportunities. No magic there!

Collins talks at length about the selection process for the Good-to-Great companies, and it’s a very specific set of criteria: businesses that 3x the market index for 15+ years, before ~1990. It turns out only about 15 made the cut. Why didn’t Coke, P&G, and other 20th century big corporate names make the cut? For the same reason that America can’t grow as fast as China – they were already “great”! This rigid slice also precludes any analysis of the success stories behind the most dynamic companies driving growth in today’s economy – Apple, Virgin, Google, Facebook, etc. We’re living in an age of exponential growth – I refer you to Time Magazine’s recent piece on The Singularity movement – and one in which tiny startups with just a few million in capital can release products that disrupt huge industries. Instead of making this disclaimer from the start, Collins’ goes out of his way to say that his study applies to all companies, everywhere. That’s simply not true. Most companies are totally different animals.

Then there’s the “rah-rah” mantra and the cult lingo. Jim Collins very deliberately coins new phrases to describe his concepts. Carving out a fresh vocabulary did ensure that the main points weren’t obscured by pre-defined constructs. Ok, fine. But once he makes his point, he reiterates it too frequently. The taxonomy gets in the way: it’s like watching him beat a dead horse, but at least he gets his point across… Collins clearly tried very hard to elevate this book to the status of a “classic.” He’s quite a promoter: constantly talking up his team, touting his (quasi-scientific) breakthrough research, and promulgating tenuous aphorisms. For those who buy all his hype, they treat this as their bible.

Above all, what turned me off about this was how Collins’ positions his arguments as timeless principles showing us THE WAY to build companies that enjoy enduring success. To some, that illusion of clarity and solidity is comforting. For lack of a better word, I’ll describe it as an ancient ‘conservatism’ – people want to heed the wise and obey their tried and true wisdom. It gives them a simple, straightforward worldview to help them structure their business thinking. To steal Collin’s own phrase, it let’s them plod around with a “hedgehog concept”. Sadly, reality is too dynamic and complex for such rigid success formulae. While I’ll candidly admit that I don’t have all the answers, I’ll also confess that I’m scared of people who have so neatly packaged all the answers. Besides how it comes across as condescending, it makes me feel like my wings have been clipped. “Follow these rules, and you will surely succeed” – sucks all the creative oxygen out of the room. I have a visceral aversion to that. That’s why I think I instinctively avoided books like by Covey, Collins, Drucker, and others. As an entrepreneur, I thrive in a context where problems and solutions are unknown. The journey is explorative. It’s an art, with some science – not vice versa. Machiavelli makes this point so well in Il Principe – if you’re not flexible and adaptive, if you can’t embrace paradoxes and ambiguity, you might succeed in one situation, but you’ll fail when conditions change.

Sorry if that offended anyone. But hey, it’s the blogosphere, and part of my academic training encouraged skepticism. So the contrarian came out first.

What worked for me.

From memory, here’s a smattering of concepts that I find useful.

First and foremost, get the right people on the bus. It’s about people, people, people! This really stood out to me, because I’ve made this mistake before. Like a lot of startup founders, I’m tempted to start by making a compelling pitch for our product and vision, and getting as many people excited about that as possible. If they were excited enough to join, great, come a’board! But this romance fades, and they loose energy, because you didn’t really secure full commitment from them up front, or test their mettle to see if they had the right skills and competence for the job. It becomes a problem when you need to pivot, because they signed up for the original vision.

Hire slow, fire fast. Collins classifies people as A-players, B-players, or C-players. Remove the C-players. See if you can find the B-players a different seat on the bus, so that they can become A-players, otherwise they’re better of getting off the bus, because there isn’t the right place for them in your organization. Leaders in Collins’ “great” companies began their reform programs not by setting a vision, or rallying the troops, or “aligning” their management teams, but by firing and hiring. Don’t settle!

Discussing this point with the venerable Nomad Influencer really drove home how costly hiring decisions can be, especially in a startup. In percentage terms, every new hire is a huge chunk of your workforce, and they contribute DNA to the culture. If you mess up, it takes three months to find out, and three months to find a replacement, and three months to train the replacement, so that you’re 9 months behind! Woah. That puts things in perspective.

Collins makes it clear that when you do hire the right people, it pays insane dividends, like not having to micro-manage, or even to manage. You can lead and be relieved of the stress of making sure people are doing work and have a strategy for getting things done. If they’re the right people, they’ll manage themselves.

The “Level 5″ Leader. Collins’ blows up the idea that struggling companies need to bring on charismatic ego-centric leaders from the outside (like Lee Iacocca at Chrysler) to save them. Their egos discourage contrarian thinking. They put yes-men in management positions, instead of strong managers. They can’t hire people that are smarter than them. They create a leadership void when they leave. Instead, Collins’ model leaders are almost pathetically humble, but have maniacal commitments to the company’s success. They hire the right people. They focus on systems. They get out of the way.

What I like about this theme, which runs throughout the book, is that it’s unexpected. He deprecates “guru-worship” in favor of principled leadership and rational systems. There’s a lot to learn from his “level 5″ leaders. But sadly, I’m only half convinced. What about Steve Jobs? There’s clearly an exception to the rule.

The Hedgehog Concept. So named after one of Aesop’s fables, the basic idea here is that the breakthroughs at the “great” companies were driven by a clear understanding of what they could be the best in the world at, what their most important metrics were, and what their business models would be. When I state it this simply, it seems, well… simple. That’s the point. Collins does a great job of explaining the sophistication behind this simplicity – it took years of market experience for the companies to formulate their hedgehog concept, and once they had it, it was a lens for them to evaluate everything.Collins points out that doing things for the sake of complexity is a very real temptation for many egoist executives. Growth by acquisitions is also a temptation…

The Flywheel Concept. This has to be one of the most poorly defined concepts ever! It comes at the end of the book. Yet I found it to be one of the most powerful take-aways. It’s basically a study of momentum. The insight here was that the “great” companies just kept chipping away at their “hedgehog” concepts, quietly, and steadily, year after year. At first, there’s too many conflicting inputs and too much noise to see if anything’s happening. Eventually, the “flywheel” (look it up, I had to!) starts to rotate under the weight of its own momentum, creating accelerated returns. It all comes together, spinning faster and faster and faster, and that’s when all money gets churned out.

This really hit me. People tend to overestimate in the short-term, and under-estimate in the long term. Sustained and focused effort is an enormously powerful force. It’s like erosion. That’s very encouraging if you’re planning to stay in the game over the long-haul. Just keep at it. Churn the wheel. Keep going. It will ramp…

The Stockdale Paradox. A story of a Vietnam POW provides the watershed emotional event in the book. It’s VERY moving. I cried. Basically, the POWs that didn’t make it, snapped because they always expected to get rescued by Christmas. When Christmas came and went, they thought they’d get rescued by Easter. After setting their hopes high and watching them get crushed again and again, they gave up. Colonel Stockdale was the most senior officer there, and he survived by mentally committing for the long, long-haul. He did not put a target date on “success” (rescue). It was always at some indefinite point in the future. He knew that this would be a defining episode in his life, and he had remarkable patience.

Collins makes a brilliant point that’s resoundingly true: you’ve got to have complete faith in ultimate success, without trying to time it, and yet (here’s the paradox) be able to confront the darkest and most terrible realities of your current predicament with brutal objectivity, and do whatever’s necessary to survive.

Very moving. Just for this one story, it’s worth reading the book.

Where Is The Courage?

2011-03-19T18:10:00.001-04:00

The lack of courage in corporate America is frightening. From CEOs and Board Directors to Senior leaders and middle management, the lack of courage to do the right thing and make the hard decisions is a sign that we, as a society, are firmly in decline. Yet I personally see this as an opportunistic environment to step up and take action, speak up and be heard, and, most importantly, to stand tall and lead when so many others fail to do so.

Its not hard to site examples of every part of corporate America lacking courage. Extreme cases like the failures of Board of Directors at Enron, Tyco and Worldcom back in the early 2000s to protect their shareholders come to mind. Or more recently, the demise of financial service firms who were once the toast of the town but are now frowned upon from Los Angeles to Edinburgh.

When you dig deep into these examples you find numerous cases of individuals seeing the pending train crash but failing to take action to prevent it. The RBS story is a prime example of senior people failing to stand up to then CEO Sir Fred Goodwin as he pushed the bank further into risk. I worked for years on a program under Sir Fred, he is a fine human being who surrounded himself with too many ‘Yes Men’, and that ultimately brought him and thousands of people down.

No, as you read this text I have no doubt all of you can think of one or two personal experiences where someone, perhaps even yourself, lacked the courage to speak up, say what everyone was thinking, and ultimately do the right thing. No one likes to rock the boat, especially when they are in it.

While with my experience I shouldn’t be surprised about how much cowardice we have in our system, what really disappoints me is how we are teaching our young professionals coming from the education system on how to be cowards. Of course we don’t call it that, but that’s exactly what it is. A lack of courage that results in individuals playing along with the group as opposed to challenging it.

I recently judged the annual Fellows Program at The Coro Center for Civic Leadership where I serve on the Board. If you are not familiar with Coro and specifically its prized Fellows Program (a national program across several major cities including Pittsburgh), I strongly encourage you to get in touch with the Coro office closest to you and ask to be invited to judge next year’s interviews. It’s a great experience and you’ll enjoy it.

About 350 applicants around the country show up to one of the Coro locations on the same day and go through a national interview process that is judged by public, private and non-profit leaders in the community. In Pittsburgh we had approximately 80 judges participate this year, and 40 applicants. The applicants are hoping to be one of the 64 chosen nationally, so its really about demonstrating, through a well structured process, that you are the best candidate for one of these 64 spots. Its about competing with your peers, who are also very talented and accomplished individuals in their own right, all of whom have graduate degrees.

But hence the problem. These youngsters didn’t seem to get the memo that this is a competition and you are supposed to compete.

The first part of the day they are put in teams of 6 and go through 4 team exercises where they are judged by a mix of “stationary” judges and “following” judges. As a following judge I got to follow my 6 candidates and watch them participate in all 4 exercises. My fellow stationary judges got to see all the candidates participate in a single exercise. The afternoon is spent conducting individual interviews with the 6 candidates and then you add up the scores and provide a total score for each individual.

I was really disturbed by the failure of all 6 candidates to take a strong position in the exercises they did. They basically sat on the fence when it came to the team exercises and failed to impose their individual leadership, initiative, creativity or beliefs, even as the judges pressed them in each exercise. It was extremely disappointing. Its as if everyone wanted to show they can play nice on a team when what we were looking for was individual character and strength.

It leads me to believe that our education system is not only failing our kids in terms of developing world class skills and capabilities, but its teaching them that its more important to play nice and get along with everyone than stand up and challenge for what you believe in.

When I asked one candidate in particular who was extremely talented but holding back in each exercise why she took a certain position she replied she didn’t want to go against the team even though she would have opted differently. Really?

Everyone is entitled to their view on this, but I have no patience for people who lack the discipline to do the right thing no matter how hard. Seek the truth, tell it like it is, and don’t worry about hurting someone’s feelings. It doesn’t matter as long as you bring out the truth.

I treat my customers this way and believe it’s a key reason why they are loyal to me. They want to hear my views on what works in their business and what doesn’t. That’s why they hire me in the first place. So if the baby is ugly then we tell them the baby is ugly. And we deal with the consequences. That’s courage. That’s discipline. That’s how you make a difference.

The Most Interesting Interview In The World: Guest Post

2011-03-14T00:38:00.000-04:00

I spent a wonderful weekend in Washington DC. You can say what you want about the type of creatures that lurk in those waters (politicians, lobbyists, special interests, POTUS...) but that city is first class. From the hip cafes of Capital Hill to the cobble stones of Georgetown, Washington DC is a romantic city calling for the kind of attention reserved only for a special someone.

And so as I sat at DC Coast last night enjoying an impeccable dinner and taking in the scenes, I was reminded of one of the coolest characters to ever hit our television screens: Jonathan Goldsmith. You may know him by the title "The Most Interesting Man in the World" from the Dos Equis beer campaign. My American friends often laugh at me when I point to Goldsmith as a true picture of how human beings are meant to live this life. What do they know? They live to work and as I often tell them "everybody dies, but not everybody lives".

What is interesting about "The Most Interesting Man in the World" is that he is real. He is not some character Dos Equis or an Ad Agency made up. And thats what I find incredible. Goldsmith is a real, walking, talking, breathing modern man, and at age 72 he exemplifies how we should strive to live our lives. Male or female, married or single, parent or child, nationality and religion regardless.

I have always been a firm believer in the individual. I hold this belief higher than any other in my life. My spirituality and my values are tightly wrapped around my belief in individual human beings. It is my whole purpose for blogging. So as I walked the streets of our nation's capital and experienced the many wonderful aspects of DC life on a spring weather weekend, I could swear I was among the most interesting people in the world. And that made me think of "The Most Interesting Man in the World".

Below is an interview with Jonathan Goldsmith conducted in November 2010. It provides a glimpse into the man that reminds us we are all interesting in our own way, and have a little Nomad in us no matter where we are or what we do with our short time on this Earth.

The Most Interesting Interview In The World

by Andrew Del-Colle

He’s a pop culture phenomenon. He’s a lady’s man and a man’s man (but to be clear, he prefers the ladies). He’s an amphibious hero, having saved two people’s lives—once in a snowstorm and once in the ocean. Maybe that’s why he lives on a sailboat. Seriously. The most interesting part: it’s all true. So it’s no wonder Jonathan Goldsmith secured the role of “The Most Interesting Man in the World,” the Dos Equis beer campaign, now entering its sixth year. And sure, the commercials embellish his accomplishments a bit. But with a real resume so intriguing, the looks to match, and a gift with words, we’re not even sure he’s acting anymore.

Hoping some of his interestingness might rub off, we asked Goldsmith to share with us his insights on life, women, and always looking your best. He agreed under one condition: The interview had to be conducted entirely in Punic, an extinct language once spoken in Northern Africa. It was hell to prepare for, but damn was it interesting.

Andrew: What does it mean to be an interesting man? Do one’s exploits need to be larger than life, or do they merely need to be unexpected—or maybe a mixture of both?

Jonathan: I think it might be a mixture of both, but I find that people that have interests become interesting. People that are not interested are uninteresting people. It almost doesn’t matter what you’re interested in, but if you are open, you know, you’ll be more enjoyable to be around. The more that you can discuss, the more peripheral awareness you have of the events of the day—politically, in the arts, in whatever is au courant, on the scene, so to speak, de rigueur—is the way to be. Be open. Be aware. Drink it in and be somebody that people want to talk to.

A: What’s something specific guys can do to increase their interestingness?

J: Very simply read a good newspaper for starters. And read all the good books that you can. I find that women enjoy men that have a broad periphery of knowledge. Most people, from my vantage point, go through life just watching it like a parade. They live vicariously through other people, and they’re not in it. They’re not participating in their own experience. So I say participate. Branch out. Think out of the box. Do out of the box. Be open.

A: Does a beard automatically make someone more interesting?

J: Well I think it catches people’s eye. It’s quick to identify—you know, the guy with the beard. That’s better than the chick with the beard.

A: Can’t argue with that. Say a guy can’t grow an impressive beard. What’s a good accessory to pique interests?

J: Have a New York Times under your arm or some erudite, sophisticated publication. (chuckling) And it could also be something like House Beautiful. Don’t be afraid to get in touch with your feminine side [ed.–What Women Can Teach You About Real Strength]. Women like that.

A: In the commercials, your character always seems to be the center of attention. How can a guy keep people interested while regaling them with a good story?

J: Well, he should know the story that he’s going to tell pretty well. And he should not make it too lengthy. Verbosity will kill more good stories. People’s eyes start to roll. Get to the point. Make it vivid—see it. It’s like what a good actor does. He lives the character. Well, live the story. It’s much more exciting if you’re excited about the story you’re telling.

A: Also in the commercials, you’re often accompanied by a colorful group of characters from all around the world. How important is the company one keeps?

J: You know what they say about birds of a feather. You hang around with dolts and jerks and nonparticipants and slobs that don’t care about their physical appearance or their dress, it says something about you in the eyes of other people, and also, it should say something to you about yourself.

A: Well then, how should an interesting man dress?

J: Well, it depends, is he swimming?

A: OK, let’s try this again. What should be an interesting man’s approach to fashion?

J: Interesting clothes. Not anything that cries out to say, “Hey, look at me,” that you’re screaming for attention, because that’s really obnoxious, I think. But if you’re out in the country, there are some very stylish things to wear: North Face, Patagonia, L.L. Bean. If you’re in the city and you’re in a sophisticated area and it’s cold, you might want to put on a Burberry coat, the old trench coat style. You want to look sharp. You want to look like you’re hip, like you’ve got the latest, and you’re put together well. It’s not ostentatious. It’s a blend—kind of a sexy, sophisticated blend [hopefully, a bit like the Style section of The Cache].

A: What makes an interesting woman?

J: Same qualities. Same thing. No difference. One other thing that I didn’t answer before, but it’s the same. What I like in a woman is a sense of capriciousness, mischievousness, a childishness, but not an inanity. Somebody that can laugh, and that can laugh at themselves, is a good listener, and is just generally interested in hearing what you have to say. It’s very disarming to people. I’ve met some big celebrities, and important people and politicians in my life. I’ve lived for a little while, and one of the things that always stands out, the people that I remember, are the ones that made you feel like they really were interested in what you had to say.

A: Definitely. I’ve heard others say that exact same thing. So then where’s a good place to find an interesting woman?

J: It’s all around. (chuckling) I guess a place might be close to a coffee shop. Close to a girl’s college. Like when Willie Sutton was asked why did he rob banks, and he said that’s where the money is. Think where are women, and go to those areas. Certainly supermarkets I did very, very well at. I remember my line going back 50 years. It was, “Excuse me, how do you tell when a pepper is ripe. Could you help me?” They love that. Women like to help. It’s disengaging. It’s not threatening. Another line that worked for me—just the opposite—was, “Any chance of having a child with me? I know it’s sudden, but forgive me, I just had to ask.” Something just disarming that makes them chuckle, and you can get away with some really nice things. But you have to be very careful, and you would only make that approach with somebody that obviously shared or showed some interest and was approachable to you. Also, go to churches and synagogues when they have certain classes or night school for ladies. Those are very good, too. (laughing) You go where the fish are.

A: What are a few words every man should live by?

J: Be a gentleman, for sure. I think that really is so important. I think wise guys get wise-guy women. Nice guys, aware guys, gentleman get kind, thoughtful women that respond to them.

A: I think we’re seeing a bit of a resurrection of the iconic gentleman in today’s culture with the popularity of Mad Men and certain fashion trends [see our recent post on Nerd Boyfriend].

J: Absolutely, but then of course, it’s pulled right back into the sewer pit with the Jersey Shore and the housewife shows and some of the crap that’s on television. It’s boring and shallow. For God’s sakes, you don’t have to be a Rhodes Scholar, but learn something about the world. Be aware. If you’re not aware, you’re deadly and boring as far as I’m concerned. And develop a vocabulary. I realized when I was a child—and certainly more now—that intelligent people speak better. So when I was a kid, for a long time, because I wasn’t a very good student, I would learn a different word everyday.

A: It’s amazing what one word can do.

J: Oh absolutely. They say, “Hey, this person has a brain in their head. That’s nice. I’ll remember that.” You want to be remembered. You want to be remembered for a sense of style, panache, charm, a smile. You know, you want to be different. Because most people just get by. They do the minimum. They’re lazy. I think that’s one of the most boring things that I can be involved with. I just flee from people that are inert, that don’t reach out, that don’t do things, that don’t take chances. Over with.

A: You’re 72. You’re in great shape and work out six days a week. What’s your secret to staying fit and active for so long?

J: Well, number one my father was my hero. My father was a Phys. Ed. teacher and track and football coach. He got me started lifting weights when I was in high school and got me into athletics. I loved being in shape, and I wanted to look good. When I became an actor, certainly I realized that that was important. I kind of resent people that are slovenly. I kind of resent people that don’t treat their body as a temple. At my age, life goes very, very quickly, and I want to make it last as long and be as healthy as I possibly can [best small changes for a healthier life].

A: And what’s number two?

J: I also had a health scare not terribly long ago in 2002. Although I thought I was in great shape, I had two blockages in my arteries, and I went to a cardiac surgeon. He says, “We’ll just do a simple, rather routine angioplasty on you. We’ll put in two stents.” So I’m on the table, I’m anesthetized, and the doctor comes up and says, “You have a choice. You can have open-heart surgery right now or two stents.” And I say, “What are you talking about? You said I had a little blockage.” He said, “My friend, you are lucky to be alive. You have a 100 percent blockage of the main coronary artery and an 87 percent blockage of another artery.” And I said, “My God, I don’t know. What should I do?” He says, “You can have the stents.” So I had the stents. After that, when I was conscious and completely coherent, he said, “You have no idea; at any moment, you could have died if it wasn’t for the fact that because of your exercise”—here’s the whole thrust of what I want to get out there for everybody—”you developed circuitous routes of blood flow, so that you had a decent supply for your cardiac needs even though you had the main artery 100 percent blocked.” So it was exercise that saved my life [Get Injury-Proofed in 5 Minutes].

A: Wow. What a great story. Our audience will really appreciate that one. Earlier you mentioned saving lives. You’ve actually saved two lives yourself. What’s it feel like to save a person’s life?

J: It’s very humbling. It’s very touching, and you never forget it. It feels really good.

A: I believe it. OK, so before we end this interview, there’s just one thing I have to ask: What’s your favorite line from the ad campaign?

J: “He once warned a psychic.” That would be it. Hands down.

From Capitalism Comes Charity

2011-02-27T23:49:00.001-05:00

Last night I was reminded again of the power of capitalism. The word conjures up different emotions to different people, but to me capitalism has always been a social system based on the recognition of individual rights. Its that simple, don't complicate it with your many interpretations, opinions and intellectual derivatives. And the individual is what I personally believe to be the most powerful and important entity above any group or system of belief. Including religion. The individual is what makes human beings so wonderful, not groups.

And so last night, attending the annual McGuire Memorial charity auction dinner in Pittsburgh, I was reminded once again why individuals are such amazing people, and why capitalism is what has distinguished America from other countries as the nation who's citizens give the most. To learn more about the McGuire Memorial you can see an old post called The Choice of Giving, or go here. They are truly an amazing organization with an amazing leadership that has changed the lives of many for the better.

Last nights dinner had over 400 attendees and hundreds of donated items up for auction. The live auction was especially high quality, with people donating luxury homes and condos in exotic places like Barbados and the Greek Isles, fetching several thousand dollars for McGuire. One guy even auctioned off his hair for $35,000, having it shaved on stage. He was Chairman of the Board of McGuire. At the end of the evening, after lots of bidding and significant funds raised (a bird told me they were over $300,000 which would equate to 1% of their annual budget), they put forth several key projects where they had a gap in funds and asked the guests if they wished to help make up the difference.

Now realize the projects they are trying to fund are not 'nice to haves', but rather 'must haves' that impact the quality of life of the special people they take care of at McGuire. The last item was a new special needs van for wheel chairs, costing $40,000. McGuire Memorial have a fleet of vans and each van clocks 50,000 miles a year, meaning it lasts for about 2 to 2.5 years before being replaced. Here is what happened when they put up this big ticket item asking for help.

The table next to us was made up of the two guys who own Premier Transportation in Atlanta, GA, a truck transportation company. Mike and Joe, the owners, have been a Platinum Sponsor to the McGuire Memorial auction for a few years now. They donate two bright yellow and bright orange Camaro SS' for raffling each year. Two lucky people paid $25 for their winning ticket and they were announced last night. McGuire sold over 4,500 tickets for the raffle, raising over $112,000. In addition to the two Camaro's (estimated cost $58k), Mike and Joe bid on a host of items including a $10,000 dinner with a legendary Pittsburgh Steeler and his wife. When the fund raising for the Van went up, another bidder gave $20,000 and Mike and Joe gave the remaining $20,000.

As I sat observing the generosity of these guys and a select few others who gave a lot more than the rest of us, it hit me that what makes these people so giving is the success they have worked hard to create. Mike and Joe are not Wall Street bankers or over-priced Lawyers, not that I personally believe there is anything wrong with both those professions. They are two men that have built a profitable business (in a very tough market by the way), and this gives them the choice to give to causes and organizations they support. I don't know what their link is to McGuire Memorial, an organization in Western Pennsylvanian far far way from their home in Atlanta. But give they did, spending approximately $100,000 in one evening, almost a third of the total money raised at the event.

But again, this was a choice they made. No one forced them to. No one tried to guilt them into giving because they have more than others. And they didn't come to the auction planning to give as much as they did. They watched what was happening and did their part because they wanted to.

I left the event motivated to work harder at what I do. We all have organizations we want to support, and some of us give what we can. I am blessed in many ways, and can honestly say I never begrudge another man his success or wealth. I live a full life and know I am privileged in many ways. I give as much as I can, both in cash and in kind, but last night I really wanted to be very very wealthy because I would not have hesitated to match what Mike and Joe gave to McGuire and get them a second van.

Capitalism has been defined and butchered by those who believe others, be it governments, welfare or some form of authority, are responsible for the well-being of individuals. I disagree. Individuals are what we should be celebrating, not Unions. The achievement of individuals is what we should be holding up in society, not mindless reality show "stars" that frankly show the worst of human beings. My words are harsh, I know, but the world is a harsh place.

When I posted about Charity a year ago I researched the numbers and found a clear correlation between those who give the most and those who have the most. To be clear, this is not to say that people who are not wealthy (by whatever definition you want to use) don't give, thats not true. But the amount of giving coming from people who have built wealth is astronomical. This is interestingly similar to the amount of tax paid by the wealthy compared to the rest of tax payers, but I digress.

As I finish this post I am raising a glass of single malt scotch to Mike and Joe. They epitomize all that is great about the human race and what we are capable of. You don't have to be a household name like Branson, Gates or Zuckerberg to be generous and help make the world a better place. You just have to be a capitalist.

25 Guys to Avoid on Wall Street: Guest Post

2011-02-26T13:57:00.002-05:00

I recently participated in an executive workshop where they made us look back on our career and dissect the key milestones to understand what exactly happened. One of the areas was focusing on the key people who have influenced your career, either knowingly or unknowingly. What was really interesting was when one of the participants said he got more from avoiding certain individuals in his career. That really struck me as insightful given my own career path.

So when I read this excellent piece by Ash Bennington and John Carney I knew they were on to something significant, even with the humorous penmanship. There really are people in our circle that we are better off avoiding. And I don't mean just professionally. But rarely are we conscious of this. Bennington and Carney focus on Wall Street, but I believe Bennington's list of 25 can easily apply to any industry, especially software, consulting and financial services in general. What is harder is applying these principles to your personal life, especially since some of the people you are better off avoiding may be family or friends.

I hope you enjoy this great piece as I did!

25 People To Avoid on Wall Street

by Ash Bennington, John Carney

There are lots of critical skills you need to succeed on Wall Street. It helps to understand market forces. A facility with numbers is useful. Having a feel for group dynamics is necessary to succeed on trading desks and deal teams. Superb time management, verbal acuity, and judgment are all important.

But, mostly, what you need to do is avoid the things that will destroy your career. And most of the things that will destroy your career go under the general heading of “people.”

I asked NetNet reporter Ash Bennington to look back on his years on Wall Street—where he was a vice-president at Credit Suisse and BB&T—and assemble a list of the people you need to avoid. I thought there might be three or four. I was way off. Ash returned with a list of 25 people to avoid.

You might want to print this out and carry it with you. When you meet someone new, scan the list. Decide if they are someone to avoid. Alternatively, you should take a look at the list and ask if you are on it. If you are, well, don’t be surprised when your colleagues start avoiding you. — John Carney

- Avoid the guy who calls you 'Chief'. He doesn't remember your name.

- Avoid the guy who went to Hotchkiss and Yale and wears Nantucket reds during the summer. He doesn't think you belong.

- Avoid the dim-witted back-slapping managing director. He's not as smart as you are—but he's been throwing guys like you under the bus since you were in grade school.

- Avoid the consultant hired by the dumb managing director to do his math for him. Not only will he throw you under the bus, he's smarter than you are.

- Avoid the guy who always wants you to be his alibi when he cheats on his wife. ("Hey man, is it cool if I tell Kathy that we're going fly fishing in Canada this weekend?"). No, dude: It's not cool.

- Avoid the guy who keeps failing the CFA Level 1. He's looking for someone to blame.

- Avoid the girl who cries at her desk. (You can ignore my advice on this one—but either way, you won't make that mistake twice.)

- Avoid the guy who offers his clients 'a very special opportunity' to invest in anything. He has a problem with cocaine.

- Avoid any man who has floppy hair after age 30—he's a complete toolbox.

- Avoid the guy who throws his phone across the trading floor whenever his positions go south. He's an angry dude, and the more time you spend with him the more reasons he'll find to dislike you.

- Avoid anyone who tells you that you should relax and have a couple of drinks—at 9:15 on a Tuesday morning. You're not cool enough to hang out with this guy.

- Avoid anyone who won't relax and have a couple of drinks—at 9:15 on a Thursday night. They're not cool enough to hang out with you—and ultimately they'll resent you for it.

- Avoid any broker who tells you his client is going to DTC in 50MM in securities from Europe and he needs to borrow a C-Note. Just for the weekend. And this is the last time.

- Avoid the banker who never seems to close a deal but still manages to remain employed. He's got something ugly on somebody—and you don't want to be involved.

- Avoid anyone who tells you to 'take one for the team'. He got where he is by convincing dopes like you to jump in front of an oncoming train.

- Avoid the guy who tells you, "Seriously, all I do is work and then go home and lift." He's telling you the truth—and he's as dumb as a stone.

- Avoid anyone who sits within eye-line of your desk: They know what time you show up and what time you leave—and chances are they think you're a lazy punk.

- Avoid anyone who is ten years older than you are—and is still more junior in the reporting structure. He hates you more than you could ever imagine.

- Avoid the guy who posts Facebook pictures of himself getting arrested at the Saint Patrick's Day parade. The guy is fearless—and he thinks you're a complete coward.

- Avoid the guy who hangs his suit coat on the back of his chair to show off his suspenders. He either still thinks it's 1985 or he's trying to compensate for something.

- Avoid the guy who can drink all night, take a shower, and come into the office as crisp as a $100 bill. He's got an oxlike constitution—and it will be fatal to your career to try to emulate his example.

- Avoid the guy who keeps telling you: "Without the back office, you overpaid clowns wouldn't even have a job." He's right—but you don't need to hear it.

- Avoid the guy who won't share his Adderall: It just speaks to his character.

- Avoid anyone on Wall Street dumb enough to pick a fight with Bess Levin.

- Avoid the guy who gets drunk and loves to brag about never losing in arbitration: He's going to get indicted. (Trust me on this one.)

Why Black Is My Favorite Color

2011-02-07T16:38:00.000-05:00

Black. Strictly speaking, black isn’t a color at all. It is, in fact, the absence of all color, of light and, indeed, of anything else. Black does not reveal all, but keeps the most important things under wraps. It has an allure epitomised by the legendary ‘little black dress’. Quite simply, it symbolises the power of attraction.
Much like my favorite color, I believe the best leaders manage their business with an absence of color, light or anything else that is not relevant to what the business' objectives are. And thats what makes them so appealing to the rest of us. Think Steve Jobs, Richard Branson, Indra Nooyi or the legendary Jack Welch.

And the challenge in today's business world is that there is a lot of external factors trying to make their way to your management agenda. Think social initiatives like diversity or the environment. Think contemporary fads like social media or politically motivated initiatives associated with suffering around the world. Let them in at your own risk.

The world is full of distractions. Its incumbent on you to block those distractions out to ensure you achieve and exceed your personal and professional goals. You are no good to your family, friends or causes if you aren't happy with your own performance. Yet the majority of professionals surveyed in a dozen job satisfaction surveys over the past two years complain they are not happy or satisfied with their own performance (as well as other factors). To them I say its up to you to change that, not your company or management.

Its not that things like the environment or social media are not important, quite the contrary. They are just not what makes a business successful. Period. You can't give to a cause if you are out of business, and it doesn't matter how great your Twitter account is if you have no results. You can't market your way out of failure contrary to what the marketers will tell you. No, business is about relentless focus on the things that matter, not the nice to haves.

As an active Advisory Board member to several organizations I often see how easily they let non-essential factors get in the way of execution. Business after all is about execution and people, so why do we spend half our time during the day doing things that bear no impact on our stated goals and objectives? I don't just mean the Facebook, Twitter or YouTube kind of distractions. I'm talking about business leaders letting competitors, consultants, critics and even customers get in the way of achieving their goals.

One thing I have learnt in building businesses is that you have to focus on the few things that matter most, nothing else. Much like the color black, its essential to block out the multitude of things that don't matter and focus on how you are going to execute your plan. Anything more may actually be anti-productive and kill your ability to achieve results.

Simple example: if you want to run a marathon in 7 months then you need to know what you need to do today in order to be able to run 26.4 miles in 7 months from now. Too many people who train for marathons will go out and try to run 10 miles when really all you may need to do is actually just run 2 miles today. By mile 5 you start to doubt your ability to get to 10 miles, and by mile 7 you give up on the whole idea and head for a beer. If you had worked out that all you need to do today is run 2 miles and then 2.5 miles in three days from now, then 3.5 miles by next week, then there is no doubt in my mind that you would achieve 26.4 miles come 7 months from now.

Your business works exactly the same way, regardless of whether you are an entrepreneur, a manager or an employee. Distractions are everywhere. When I was building a managed service business for a software company I remember the first few months of our project was mired by internal nonsense that had nothing to do with our main objective of getting the business off the ground. I quickly scrapped all the color the Finance, Sales, and Management were adding burdening us with and huddled the team around one simple goals: get customer number 1. In the ninth month of our first year we landed our first customer with a 5 year contract.

I had a CEO of a medical technology company once tell me that his job was to watch all his employees to ensure they got things done and didn't get side tracked. He had a policy of no personal internet usage at work. What a crock. I recently heard Jason Fried refer to checking your personal e-mail or twitter account at work as just another form of a cigarette break - its not a productivity killer or distraction, its a necessary component of humans taking multiple breaks during a work day. I agree with this. The real productivity killer is you, if you let yourself focus on the non-essentials and spend all your time on Facebook or YouTube. No amount of management or oversight is going to change that, only you can.

To help me focus on whats important I always identify the "highest value actions" that relate to a specific goal. Actions accompany goals and objectives. For example, if your stated goal is to lose 10 lbs, its not enough to write it down and carry it with you on a piece of paper. To lose weight is an outcome, not an action, so you have to identify the 3 or 4 or 5 actions you must take in order to lose 10 lbs i.e. drink 8 glasses of water per day, work out 3 times a week, eat more protein, eliminate carbs after 5pm, get 8 hours sleep a night etc...

Again, your business works much the same way. A CEO who needs to cut cost has to identify the most important 4 or 5 actions that need to happen in order to cut cost. A salesman trying to earn a seven figure income needs to focus on making 10 to 20 daily calls associated with customers and prospects. The founders of a start-up need to focus on getting to a viable product that they can then test in the market and prove there is a need people are willing to pay for. Think about how much external color others will try to put on these scenarios. You have to block it out. You have to focus on the things that matter. You have to go black.

People Matter: What The Turmoil In The Middle East Has Taught Us

2011-01-31T14:15:00.000-05:00

This past week I have been asked by numerous friends and colleagues what my thoughts are on the demonstrations in Egypt. The world has been watching as tens of thousands of people hold anti-government rallies across the land of the Pharaohs, and another Mid-East government collapses in a short period of time, and thus far without major human casualties. I am always hesitant to offer my opinion on politics because I don’t believe it adds much value. Politics is a dirty game in case your mother never told you, and I try to steer clear away from it, but what I do love to talk about, and encourage every individual to be aware of, is the important lessons coming out of events like Egypt.

My view is the most important lesson from both Tunisia and Egypt is this: people matter. That is the lesson for governments, leaders, dictators, capitalists, socialists whatever you are. People matter. That is what we are seeing in the Middle East today, and the planet needs to get its arms around this important lesson because its not just in the Middle East where we have forgotten this lesson, its pretty much all over the world.

A few blogs back I commented that the price of rice has doubled this past year, impacting poorer regions of the world in devastating ways. In 2009 I visited my grandmother in Iran, first time I had returned there for over 30 years, and not too long after the demonstrations that took place in that country post Presidential elections. I spent 4 days there and came away with these observations:

- I saw no hate or anger towards the West. To the contrary the average person on the street went out of their way to make me feel welcome and tell me what they liked about the US, UK etc.

- Teheran is a city of 15 million inhabitants, and everyone is hustling all day no different from New York City. It was amazing to see the productivity that was happening in that city, be it at the markets, or on street corners.

- Everyone is focused on making a buck. I mean everyone.

- The most important thing to Iranians is food. The only thing that matters is having food on the table to feed your family and invite your friends. This is what they live for.

- Any and all hardships I witnessed were related to food – the availability, quality and cost.

Which brings me back to the unrest in Egypt, Tunisia and Yemen. The combination of unemployment, high prices and soaring food prices will bring down any government, even our own. A person that can’t work to earn a living and put food on the table is not just desperate, they are without options and thus fighting for survival. Why politicians globally fail to understand this basic principle is beyond me. People matter.

There is a prime lesson to be taken for those of us managing people in business, too. People matter. How often do leaders fail to focus on their people when managing a team? We set goals and objectives which people have to execute, yet the number of companies and their leaders who fail to take proper care of their people far outweighs those that do.

A good friend and mentor of mine once confessed he is not good with people, and the less he interacts with them, the better. I understand his perspective but the thinking is flawed. Understanding people and what is important to them is going to get you a lot further in life than avoiding them. And you just may learn something from them too. I certainly have and its incredibly rewarding.

I follow some basic principles in how I manage a team no matter what the project or situation:

1) Set the vision first;

2) Ensure buy in from each individual team member – this is an important step and will determine if you have the right team;

3) Understand what each individual’s personal needs are – what’s in it for them?;

4) Set clear objectives/outcomes for each individual that a) contribute to the vision and b) cater to the needs of that individual i.e. Jim wants to be a General Manager but lacks sales experience, so Jim’s job is to sell X$s per quarter;

5) Be an enabler for each individual, not an inhibitor. My job is to help each individual team member achieve the objectives set for them, which in turn helps me achieve the vision and goals for the group. Many leaders create obstacles for their teams by getting in the way.

This is really basic stuff but few leaders actually take the time to do this correctly. Understanding that people matter, and their success goes far beyond the company’s success is a fundamental component of leadership and success. I’m not suggesting putting yourself or your people before the company, that would be a mistake, but not focusing on your people would be a colossal error.

Think about the 10 or 20 year span of a successful person’s career – its all about the people. A guy like eBay’s Pierre Omidyar or Tesla’s Elon Musk started out by building a business (Omidyar built eBay while Musk co-founded PayPal), but then moved on to other endeavors, yet the people who helped achieve those accomplishments remain a big part of what they do today. People matter, and while businesses come and go, and change happens constantly, the people in your life always remain a factor.

So when I’m asked about the situation in Egypt my simple response is People Matter. No amount of power, military or otherwise, can get in the way of this. If Mubarak and other leaders in the region understand one thing from all this, let it be this. Otherwise its time to go.

The Key To Gen Y is Gen X

2011-01-22T17:58:00.000-05:00

As I sit in the Leaf & Bean in Pittsburgh's Strip District this fine Saturday morning, the NY Jets are arriving at their hotel to challenge the Pittsburgh Steelers in tomorrow's AFC Championship game. Whats interesting about both teams is that arguably the key to their success thus far has been a handful of Generation Y players - young rookies or second or third year veterans who are no older than 23 or 24 years old. However, what makes players like the Jets' Mark Sanchez or the Steeler's Mike Wallace successful is the support, leadership, guidance and experience of the Generation X players around them. In short, for Generation Y to be a success they need Generation X.

While the case in professional football is evident, I believe the same holds true for the economy, especially start-ups. Across America's colleges and Universities the fashionable thing is to become an entrepreneur, start a business in your dorm room. Role models: Facebook's Mark Zuckerberg and Groupon's Andrew Mason. This generation is remarkable, focused on innovation and able to leverage the tools and power of the web like no previous generation could in the past. But the key for their success will rest with the involvement of Generation X. Here is why.

Successfully running and growing a business is an art that knows no exceptions. It doesn't matter how smart you are, how fast you are (Gen Y are very quick), or how much risk you are willing to take - you have to create value, earn a dollar, keep your costs low, and turn a profit to survive. And most importantly you have to be able to execute flawlessly. As relentless and exciting as Gen Y are, it takes experience, focus and luck to be successful, no different than previous generations.

I am involved with a number of start-ups across the country by sitting on their Advisory Boards. Its one of the most fulfilling experiences, and I can honestly say I learn as much from these young, hard working entrepreneurs as I hope they learn from my experiences. The past two years of activity prove the case for more involvement from experienced generations. While the products and concepts these young companies create are truly remarkable, the challenges they face are pretty much par for the course:

Funding - while funding for start-ups took a big hit as a result of the financial crash, there is more money available today than we have seen since early 2000. Angel Investors are providing enough of a lifeline for anyone with half an idea to take a shot at entrepreneurship. The issue is that both parties rarely know what they are doing. Angel Investors are either roulette players who place small bets on dozens of numbers in the hope that one hits, or they are simply inexperienced individuals masquerading as investors. Majority of Angel Investors have nothing to offer the entrepreneur other than money, and this leads to the majority of early start-ups failing as they burn through the little cash they get. This creates little value for anyone.

Cash Burn - more often than not a business goes under because it runs out of cash, not opportunity. There are lots of great ideas in the graveyard. Many start-ups burn through cash in dramatic fashion, spending as if they were IBM or Capital Hill. Mistakes include paying hefty salaries, trying to build a product, and market it and shot-gun sell it all at the same time, or outsource development, legal services and other functions before even having a proven product. It doesn't make sense. Bootstrapping is the way to go. Develop a product first, prove there is a market second.

Focus – A lack of focus is like a cancer that slowly kills you. One start-up I am involved with wanted to set up a sales organization before it even had a product. Half a dozen people paid hourly to develop business with customers, partners and other organizations. It was like hunting an elephant with an Uzi when what you really need is a Sharp Shooter. Getting customers when you have a concept is really about finding one or two potential companies who are willing to help you build a prototype because they believe in your vision. Thats it. Focus on what is necessary, not what is nice to have.

Simplicity - if lack of focus is cancer then failure to keep things simple is suicide. As part of my supporting a start-up I agreed to coach a few key team members. I was blown away by how smart these kids are. But its also their biggest weakness. They take the simplest problem and over-intellectualize it to the point where nothing happens. We forget that the majority of people are not rocket scientists, data crunching consultants or intellectuals. They are average people and if you can't make something that is simple for them to use or understand, then you will fail. If Apple has taught us anything its that simplicity (and nice design) will beat sophisticated complexity every time.

People - Venture Capitalists will tell you the reason many investments fail is because of the people involved. You wouldn't expect a small start-up to have HR issues, but they do. If you don't have the right leader then you are going to have major people issues. And sometimes its not the leadership, its the ‘too’ intelligent Gen Y team member who forgets his place and doesn't understand team dynamics. I recently experienced this first hand when a company I'm on the Board of had to part ways with three of its key people. They didn’t get it, and refused to listen expecting instead to be listened to. This episode probably set us back 3 or 4 months, which is a lifetime in start-ups. Good people management means having people in the right seat on the bus, and exiting others off the bus.

I believe the role that experienced advisors and mentors can play in start-ups, or even Fortune 500 companies, is key to helping younger generations be successful. As I work to build my own business my game plan for talent is simple: establish an experienced leadership team across all aspects of our business and recruit the best young talent our schools produce under them. My leadership team will do a great job of teaching the inexperienced team members and getting them to produce at the highest levels in a relatively short time. Its not an age thing, its a quality thing. Hiring smart, hungry people is not enough if you don't have the right experienced leaders to support them and get them producing fast.

Whoever wins tomorrow's game in Pittsburgh will demonstrate my theory. Watch the rookies on both teams and see how the veterans have allowed them to succeed. More importantly ask yourself how many talented Gen Yers do you have around you that would benefit from your support and leadership?

Go Steelers!

Some Thoughts On Charitable Giving: Guest Post

2011-01-14T10:57:00.000-05:00

Alan Veeck is a good friend, former colleague and a Who To Know of the Pittsburgh community and the VC world. Alan and I had a great follow up conversation on Twitter to my last post about The Problem With Charitable Giving, and it sparked Alan into action writing his own thoughts. I enjoyed his words and I'm sure you will too. If you are not following Alan on Twitter or his Blog Pittsburgh Ventures, I highly recommend you do. In the meantime here are Alan's thoughts on Charitable Giving.

Some Thoughts On Charitable Giving

By Alan Veeck

One of my friends wrote a very thoughtful post the other day, The Problem With Charitable Giving. Actually, I think he should have entitled it The Solution to Charitable Giving, because he presents as many solutions as problems in his post.

I want to expand more on the largest point he makes – the notion of individual giving as the best way to manage charitable giving. The individual can choose their charity and likely drive success – by making more direct human contact, monitoring/driving for results, keeping overhead low, etc.

Step back a moment: charity comes from the Latin word caritas, which translates as love, one of the three theological virtues. I believe most people think of charity as giving money, but it is really much more than that. It is giving of your time. And the best charitable giving is composed of giving of your time in two ways.

Way #1: Money is nothing more than a unit of exchange for your work, and by giving your money you are giving of your work, your time (see idiom, time is money). This is the very impersonal, mechanical (but often very important!) side of charitable giving.

Way #2: Giving of your person. I would argue that only when you give your money with your personal time does it meet the true definition of charity, the non-mechanical definition of charity – caritas. This is the hard bit.

Most human problems need real people’s time, not just the work component of their money, to find a solution. If you write a check to a large, impersonal organization, you will likely be doing some good, but you are also likely diluting the goodness you do. If you meet the person who needs the charity (zeroth degree) or meet the people directly providing the charitable services to the person who needs charity (first degree), you can get involved in helping to think through solving the problem. When you are close to the problem, you can better help find the solution.

To take an example, I think very specifically of the natural unit of organization in our society – the family. My wife and I provide our money (our work – Charity, Way #1) to feed, clothe, and shelter our kids. But we charitably give our time (our love, our person – Charity, Way #2) to rear our kids to grow into capable adults able to lead happy, fulfilling lives. Trust me, this is the hard part – this is the expensive part. This is real, grass-roots charity; it is the core of that other idiom, “charity begins at home.”

It is the same with “fixing” homelessness or preventing child abuse – throwing money at the problem might fix some aspects of it, but at its core it is a human behavior problem, and the solution to that is not just in money, but in the human component of personal time. That is why individual giving is so important and so much more effective than organizational giving – it involves real people who can give some amount of their time along with their money.

I don’t think the “problem” of poverty ever goes away, even if you get the world’s best organizer/organization on it. A wise philosopher once said, “The poor you will always have with you” and I have learned over the first half of my life that this is very true.

The Problem With Charitable Giving

2011-01-07T03:21:00.000-05:00

I'm a big believer in giving. I personally give a percentage of my annual earnings to various organizations I support. But that process has got so much harder in recent years because of the murky waters in non-profits and charities. And in an interesting discussion in Brussels this evening I got some great thoughts from our European brethren on the whole topic of giving. My belief comes down to this: any giving you do should be in the same manner as investing a dollar. And frankly, you are better off investing a dollar that would yield a return than giving a dollar away. Contradictory to my opening sentence, but let me explain.

The discussion tonight started with the change in the quality of rice in the world. The group I was with travels regularly across the Middle East, Central Asia and Europe, and they have noticed a major change in the quality of rice over the past year. I added that the price of rice has increased by 50% in the last year alone at the crop levels. And given 75% of the world's population depends on rice for its major staple, its once again the third world and the poor who suffer most as a result. It just got twice as hard for some to feed their families in certain parts of the world.

And then someone commented that "If you really wanted to solve the problem of the world's poor then we would have done it by now." Interesting. Do you agree? True or False? I guess its hard to substantiate such a statement and we went on for a long time discussing the merits and flaws of this comment. Obviously there was no answer by the end of the evening, but it makes you ask yourself how can we realistically solve a problem that is not only so broad, but who's roots are so diverse? Personally I am exhausted just thinking about it, but at the same time I believe there isn't a single solution that any government, rock star or Billionaire has put on the table that can seriously make more of an impact than you or I could personally.

Say what?

Again, I believe there isn't a single solution that any government, rock star or Billionaire has put on the table that can seriously make more of an impact than you or I could personally.

To make my point you have to look at how the world approaches the entire 'space' called Giving - be it charities, non-profits, NGOs, or other governmental efforts to help others. I think there are two extremes at the end of the spectrum: on one end you have the American private citizen, and on the other end you have the United Nations. Everything else, from the Gates foundation to the Red Cross to Save The Children to that little non-profit in your town that is trying to save the last pond creature, falls in between these two extremes when it comes to the space of Giving.

The private citizens of the United States have given more to causes than any other group in the world. Its frankly remarkable. This is a fact supported by a ton of data available all over the internet, and applauded by the likes of Bono and others for years. Its not because Americans are more charitable than other nations. Its because until now, the American people have had the opportunity to earn more money and keep more of it (less taxes) than any other populated nation in the Western Hemisphere. Yes, they are inclined to give more because of their culture, education and values taught by immigrant roots, but none of this would be possible if they weren't the wealthiest nation on earth. The difference of course is they get to choose to give away what they want, no government decides for them. And give they do.

On the other end of the spectrum you have the United Nations. This group is the largest organization in the world focused on the redistribution of wealth in the world, taking billions of dollars in resources and funds from the West and distributing it to the rest of the world in the name of humanity. Its the longest running scheme that is responsible for the most inefficient use of man's resources. Numerous audits and investigations into the UN's activities have found time and time again that financially this organization's activities are anything but transparent and no one can honestly say what happens to the money passing through the UN from its member nations. Millions are going to 'middle men' while pennies go to the real causes. The oil for food scandal in Iraq during Saddam Hussein's reign should have been a clear indication of whats wrong with this entity.

So how can you, one person, make a difference? From the guy in the street asking for a handout to the UN you just don't know where your dollars go. Non-profits and charities are inefficient. More importantly, every dollar you spend, the majority (as high as 98% in some cases) goes to "overhead". Unacceptable by any standard. If you ran your business that way you would be out of business pretty quickly. Now there are exceptions, but the fact of the matter is those hard earned dollars you are giving away to fulfill your charity goals are not getting to the people who need it. There has to be a better way.

And this is where we come to the point about a single person having just as much, if not more, of an impact than any organization set up as a 'Giver'. If you are in a position of wealth today then you should stop giving away your dollars (or Euros or Yen or whatever) to a 'middle man' disguised as a charity or non-profit who pockets more than half for himself, and start creating wealth. Become an entrepreneur. Put your money into a project that is going to yield a result directly as a result of your support. They are all around you and ultimately they can have the kind of impact that the billions we give to charities across the world have failed to have.

In my mind the Entrepreneur sits on top of the pile of Givers. He just doesn't call himself a 'giver', he is a 'producer'. Take the barber who has been cutting my hair in Brussels for years. If I have a trip scheduled back to Brussels then I'll skip a haircut and wait until I get to Rodolphe's on the Avenue Louise. This guy started over 10 years ago as a little 2 chair barber shop in the most anti-business country in the world where taxes are so high you would rather stay home and watch re-runs of General Hospital. Yet he worked tirelessly for the last decade to build his business and 3 months ago moved three doors down to a much bigger space where he has added American style health and beauty offerings, and employing 5 people in the process. And thats where I'd argue Rodolphe has made more of an impact with his business than any charity would have with the same amount of money.

You are crazy, Nomad. People are dying over there and you are talking about hiring people in Brussels.

Really? How about this - one of the people Rodolphe has hired is from Indonesia, a massage specialist who will give you a 5 minute head massage before your haircut. She has a family in Brussels but sends back 20% of her salary to her family in Indonesia. Thats after taxes mind you. Hmmm, I'd say thats more impact than Feed Indonesia would have with the same amount of money. Then there is Georges, the South African barber who finds himself employed now in Rodolphe's establishment. He feeds his family by working there, but what Rodolphe told me is that he is the hardest working, most reliable barber he has had since working in the business. The people in the third world need opportunity, not hand outs. I can go on and on about the impact Rodolphe's little enterprise is having.

We ate lunch at an amazing Italian restaurant called "La Creche des Artistes". It was one of the best meals I have had in a long time. The owner is 30 year old Alessandro. He took over the restaurant from his folks who retired after 25 years in the business. Alessandro's entire staff are either Asian or African. He finds their work ethic superior to the numerous Belgo-Italians who have come and gone in his establishment. And before you say "well its cheaper to hire an African than an Italian" let me warn you the market is a lot more regulated here so that argument doesn't really hold water. The service is impeccable at Alessandro's restaurant and I counted 5 people at the lunch shift who clearly depend on his business to feed their families and live in Belgium. Create opportunity for those willing to take it. Thats impact.

So what about that starving child in Sudan or Earthquake victims in Haiti? Short answer is I don't know, maybe you should consider giving your time and flying out to these locations for a few weeks or months to do what you can if it makes you feel better, but the answer isn't in giving a dollar to a relief organization who spends 98 cents on its operations and gives 2 cents to the children. I attended a presentation by the COO of a prominent global charity not too long ago where she was updating us on Haiti, and I was sadly disappointed. I came away feeling even less confident that these people can competently manage the money we give them blindly. But I do admire them for doing what they do and that brings me to my next and final point.

There are mostly wonderful people working in charities, non-profits and NGOs who have nothing but the best of intentions. The fact that their organizations are inefficient should not stop you from giving your money to them if thats what you want. Its your decision. But I'd encourage you to prioritize and be much more stringent about who you give it to if you want to truly have an impact. And I urge you to step back from the emotions of charity for a second and rethink the credibility of outrageous movements like "Banish Poverty Forever" or "Banish Hunger Forever" that ignorant celebrities chisel in your brain. These sound good but they are lost at the outset and do not benefit those intended. A dose of reality is truly needed so we can actually make a difference in the world.

My advice to you 'Givers' is to look past the teary eyed causes and find the kind organizations and projects to get involved with where you can actually see the direct impact of your donations, time and intellectual property. For example, I have found the most deserving organization to give to this past year in Robert Morris University, a stellar school in my new home town of Pittsburgh. Having spent time with the President, his management team and some of the Deans, I can tell you I didn't hesitate to take out my checkbook and donate a significant part of my annual giving dollars to them. They are making things happen and the energy on campus from students to teachers to Alumni is electrifying. I didn't get the same vibe from CMU or Harvard who have monster endowments. The RMU community are doing great things and I'm not even an Alumni.

I'd love to hear your thoughts about this subject. There is so much more to say, so many perspectives to write, but the night is calling and my flight back to the US awaits me. If you take anything from this unusual Nomad post let it be this - you alone can make more of a difference in a single person's life than any organization or charity by simply being the best at what you do. Go out and make it happen.